ex10_3.htm


    
      
Exhibit 10.3

     

    
      CLASS
B AGREEMENT

      (Blount)

      


      


      This
Class B Agreement (Blount) (the “Agreement”) made February 5, 2010 by and among
Denbury Resources Inc. (“Denbury”), Denbury Gathering & Marketing, Inc.
(“DGM”), Joseph A. Blount, Jr. (the “Subject Member”) and Genesis Energy, LLC
(“Genesis GP”) (Denbury, DGM, the Subject Member and Genesis GP are collectively
referred to herein as the “Parties,” and sometimes individually as a
“Party”).

      


      RECITALS

      


      1.        
    DGM, as the Class A Member, and Genesis GP entered into
that certain Limited Liability Company Agreement of Genesis Energy, LLC,
effective December 29, 2008, which agreement was amended by that certain First
Amendment thereto entered into among DGM, Genesis GP, the Subject Member, and
Grant E. Sims (“Sims”), Robert V. Deere (“Deere,” and together with Sims the
“Other Class B Members”) effective December 31, 2008, pursuant to which the
Subject Member and the Other Class B Members were admitted as the Class B
Members of Genesis GP (such agreement, as amended, the “GP LLC
Agreement”).

      


      2.           
 Among its other provisions, Section 3.02(e)(2) of the GP LLC Agreement
provides that “In the event of a Change of Control, [Genesis GP] shall be required to
redeem each Class B Members’ Individual Class B Interest for the Redemption
Amount...and the Class B Members shall cease to be Members of [Genesis GP] as of
the effective date of the Change of Control... .”

      


      3.            
Genesis GP adopted the Genesis Energy, LLC Deferred Compensation Plan effective
as of December 31, 2008 (the “Deferred Compensation Plan”) and pursuant to
Deferred Compensation Grants (the “Deferred Compensation Grants”) effective
December 31, 2008 between Genesis GP and respectively the Subject Member and
Sims, Genesis GP granted deferred compensation to each of the Subject Member and
Sims (the “Deferred Compensation”).

      


      4.            
Pursuant to a Guaranty Agreement (herein so called) dated as of December 31,
2008, Denbury guaranteed to the Subject Member and to his respective permitted
successors and assigns the payment by Genesis GP of certain obligations (the
“Guaranteed Obligations”).  The Guaranteed Obligations included the
obligation of Genesis GP to pay any Redemption Amount and any Deferred
Compensation and certain ancillary obligations.

      


      5.            
Denbury and DGM, as the Selling Parties, have entered into that certain Purchase
Agreement dated December 17, 2009, as the same has been or may be amended (the
“Purchase Agreement”) with Q Genesis Acquisition, LLC (“Buyer”) setting forth
the terms and conditions of a transaction (the “Sale Transaction”) pursuant to
which DGM has agreed to sell to Buyer, and Buyer has agreed to purchase from
DGM, the Class A Interests (herein so called and in the GP LLC Agreement called
the “Class A Ownership Interests”) in Genesis GP, on the terms and conditions
therein provided.

      


      6.            
Buyer and the Other Class B Members have agreed upon the terms and conditions of
the merger of Buyer into Genesis GP subsequent to the closing of the Sale
Transaction (the “Merger”), and that as part of the Merger any remaining equity
interest held by the Other Class B Members in Genesis GP will be converted into
equity interests in the entity surviving the Merger.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      7.    
        The Parties enter into this
Agreement to confirm the effect of the Sale Transaction with respect to the
Class A Interests, and the treatment of the Subject Member, his Redemption
Amount and Deferred Compensation and the guaranty thereof, and the termination
of the Guaranty Agreement, and the amendment of the GP LLC Agreement, in
connection with the Sale Transaction.

      


      8.     
       Capitalized terms used in this
Agreement, and not otherwise defined, will have the meaning as provided in the
GP LLC Agreement.

      


      AGREEMENTS

      


      In
consideration of the mutual terms, conditions and other agreements set forth
herein, the Parties agree as follows:

      


      1.          
  Transfer
of Class A Interests.  Effective simultaneously with the
closing of the Sale Transaction, the Class A Interests will be transferred to
Buyer, Buyer will be admitted as the Class A Member of Genesis GP in
substitution of DGM with all the rights and powers of the Class A Member under,
and will be bound by the terms and conditions of, the GP LLC Agreement, DGM will
cease to be the Class A Member, a Change of Control will have occurred, and DGM
will cease to have or exercise any right or power as a member of Genesis GP
except for rights of indemnification as contemplated by the GP LLC Agreement,
the Partnership Agreement and the Purchase Agreement.

      


      2.      
      Redemption Amount, Amendment
of GP LLC Agreement.

      


      (a)    
       As a result of the Change of Control
effected by the Sale Transaction, and as provided in Section 3.02(e)(2) of the
GP LLC Agreement pursuant to which in the event of a Change of Control Genesis
GP is required to redeem the Subject Member’s Individual Class B Interest for
the Redemption Amount, and the Subject Member ceases to be a Member of Genesis
GP, the Parties agree that effective simultaneously with the closing of the Sale
Transaction the Subject Member’s Individual Class B Interest will be redeemed
for the Redemption Amount as provided in Section 3.02(e)(2) of the GP LLC
Agreement, which amount will be paid to the Subject Member as part of the
closing of the Sale Transaction, the Subject Member will cease to be a Member of
Genesis GP as a result of the Change of Control effected by the Sale
Transaction, and the Subject Member will no longer have any rights under the GP
LLC Agreement other than the right to receive the Redemption Amount in the
amount stated in Section 2(d) below and other than rights, if any, against
Genesis GP under Article 7 thereof.

      


      (b)       
    The Subject Member agrees that upon payment to him of
his Redemption Amount as part of the closing of the Sale Transaction, the
Subject Member will have received his Redemption Amount and all other amounts to
which he is entitled under the GP LLC Agreement; and

      


      (c)      
     Effective simultaneously with closing of the Sale
Transaction, and without further action on his part, the Subject Member hereby
releases Genesis GP, Denbury, DGM, and the Buyer and their respective Affiliates
(as that term is defined in the Purchase Agreement), from any and all liability
or obligation for payment of the Redemption Amount or any other amounts to which
he is entitled under the GP LLC Agreement.  The Subject Member
expressly agrees that the Buyer and its Affiliates are third party beneficiaries
of such release.  The release in this Section 2(c) is conditioned and
will be effective upon the Subject Member being paid his Redemption Amount in
the amount provided in Section 2(d) below.


      
        
           


        

        
          2

          
            

          

        

        
           


        

      


      (d)       
    The Parties agree that the Subject Member’s Redemption
Amount as of the closing of the Sale Transaction is $4,917,248.23, and that such
Redemption Amount will be used in connection with determining the purchase price
to be paid by Buyer to DGM in connection with the Sale Transaction.

      


      (e)           (i)      
      Notwithstanding the Change of Control
effected by the Sale Transaction, and notwithstanding the provisions of Section
3.02(e)(2) of the GP LLC Agreement pursuant to which in the event of a Change of
Control Genesis GP is required to redeem each Class B Members’ Individual Class
B Interest for the Redemption Amount, and the Class B Members cease to be
Members of Genesis GP, the Parties desire and intend that no Redemption Amount,
or only a portion of the Redemption Amount, shall be paid to the Other Class B
Members as a result of the Sale Transaction and that following closing of the
Sale Transaction the Other Class B Members shall continue to be Members of
Genesis GP.

      


      (ii)       
    To give effect to the desire and intent expressed in
Section 2(e)(i) above, the Parties agree that effective immediately prior to the
closing of the Sale Transaction, but subject to such closing occurring,
notwithstanding any provision of Section 3.02(e)(2) thereof to the contrary, the
GP LLC Agreement is hereby amended to provide that instead of the Other Class B
Members’ Individual Class B Interests being redeemed for the Redemption Amount
and the Other Class B Members ceasing to be Members of Genesis GP as a result of
the Change of Control effected by the Sale Transaction, the Other Class B
Members will not cease to be Members of Genesis GP as of the effective date of
such Change of Control and no, or only a portion of, the Redemption Amount shall
be paid to any Other Class B Member, but instead effective simultaneously with,
and by virtue of, the Merger the Class B Ownership Interests of the Other Class
B Members that are not redeemed will be converted into equity interests in the
entity surviving the Merger; and

      


      (iii)           This
Section 2(e) will constitute part of the Genesis GP LLC Agreement.

      


      3.       
     Deferred
Compensation.

      


      (a)     
      The Administrative Committee (as that term
is defined in the Deferred Compensation Plan) has adopted resolutions
terminating and liquidating the Deferred Compensation Plan and the Deferred
Compensation Grants effective immediately prior to, and conditioned on the
occurrence of, the closing of the Sale Transaction.  In connection
with such termination, DGM will contribute funds to Genesis GP in the amount of
$1,007,228.54 with respect to Sims, and in the amount of $866,685.03 with
respect to the Subject Member, in each case being the Maximum Deferred
Compensation Amount (as that term is defined in their respective Deferred
Compensation Grants), and as part of the closing of the Sale Transaction Genesis
GP will pay such amounts respectively to Sims and the Subject Member (less
withholding as provided in Section 5 of their respective Deferred Compensation
Grants), but be deemed to have paid such amounts immediately prior to such
closing, in liquidation of their rights and interests under the Deferred
Compensation Plan and their respective Deferred Compensation Grants and in
liquidation of Genesis GP’s obligations with respect thereto.

      


      (b)      
     The Subject Member acknowledges and agrees
that:


      
        
           


        

        
          3

          
            

          

        

        
           


        

      


      (i)         
   Effective immediately prior to, and conditioned on the
occurrence of, the closing of the Sale Transaction, the Deferred Compensation
Plan and his Deferred Compensation Grant will be terminated; and

      


      (ii)        
   Upon receipt by him at closing of the Sale Transaction of his
Maximum Deferred Compensation Amount in the amount shown above (less withholding
as provided in Section 5 of his Deferred Compensation Grant), he will have
received payment in full of all amounts to which he is entitled under the
Deferred Compensation Plan and his Deferred Compensation Grant and in connection
therewith, and without further action on his part, he hereby releases Genesis
GP, Denbury, DGM, and the Buyer and their respective Affiliates, from any and
all liability or obligation for payment of any amounts under the Deferred
Compensation Plan or his Deferred Compensation Grant.  The Subject
Member expressly agrees that the Buyer and its Affiliates are third party
beneficiaries of such release.

      


      4.       
     Guaranty Agreements,
Release.  Effective simultaneously with the closing of the Sale
Transaction, and without further action on his part:

      


      (a)   
        the Subject Member hereby agrees
that Denbury is released and forever discharged from any and all liability or
obligation of any nature whatsoever to the Subject Member under the Guaranty
Agreement, and that the Guaranty Agreement, and any and all liabilities and
obligations of Denbury thereunder, are released, forever discharged, cancelled,
terminated, void and of no further force or effect whatsoever.  The
Subject Member agrees that at the closing of the Sale Transaction he will mark
the original executed copy of the Guaranty Agreement “Cancelled and Void,” sign
and date beneath such marking, and return the same to Denbury; and

      


      (b)       
    the Subject Member hereby agrees that Denbury, DGM, and
their respective officers, directors, employees, agents and affiliated entities
are released and forever discharged from any and all liability, obligation,
claim, or cause of action of any nature whatsoever, to or of the Subject Member
arising under, related to or growing out of the Genesis GP LLC Agreement or the
rights of the Subject Member thereunder.

      


      5.       
     Subject Member
Authority.  The Subject Member acknowledges and agrees that he
has full power and authority to execute this Agreement and make and perform the
agreements herein contained without the joinder of any third party.

      


      6.        
    Miscellaneous.

      


      (a)      
     This Agreement shall inure to the benefit of, and
be binding upon, the Parties hereto and their respective successors and
permitted assigns; provided, however, that no Party shall assign or delegate any
of the obligations created under this Agreement without the prior written
consent of the other Parties.  Except as expressly provided in this
Agreement, nothing in this Agreement will confer on any person not a Party, or
the legal representative of any such person, any rights or remedies of any
nature or kind whatsoever under or by reason of this Agreement.

      


      (b)      
     All legal, accounting and other fees, costs and
expenses of a Party incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the Party incurring such fees,
costs or expenses.


      
        
           


        

        
          4

          
            

          

        

        
           


        

      


      (c)        
   All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
on receipt if delivered personally or sent by overnight courier or sent by
facsimile (with evidence of confirmation of receipt) to the Parties at the
following addresses:

      


      (i)        
    If to Denbury or DGM, to:

      


      Denbury
Resources Inc.

      5100
Tennyson Parkway, Suite 1200

      Plano,
Texas  75024

      Facsimile:
972-673-2051

      Attention:
Phil Rykhoek

      


      with a
copy to:

      


      Baker
Hostetler LLP

      1000
Louisiana, Suite 2000

      Houston,
Texas  77002

      Facsimile:
(713) 751-1717

      Attention:
Donald W. Brodsky

      


      (ii)     
      If to Genesis GP, to:

      


      Genesis
Energy, LLC

      919
Milam, Suite 2100

      Houston,
Texas  77002

      Facsimile:
713-860-2640

      Attention:
Ross A. Benavides, its Secretary

      


      (iii)           If
to Subject Member, to:

      


      Joseph A.
Blount, Jr.

      6914
Cutten Parkway

      Houston,
Texas  77069

      Facsimile:
_______________

      


      


      or to
such other persons or at such other addresses as shall be furnished by any Party
by like notice to the other Parties.  No change in any of such
addresses shall be effective insofar as notices under this Section 6(c) are
concerned unless such changed address is located in the United States of America
and notice of such change shall have been given to the other Parties as provided
in this Section 6(c).

      


      (d)    
       This Agreement represents the entire
agreement and understanding of the Parties with reference to the matters set
forth herein.  This Agreement supersedes all prior negotiations,
discussions, correspondence, communications, understandings and agreements
between the Parties relating to the subject matter hereof or thereof and all
prior drafts of such documents, all of which are merged into this
Agreement.  No prior drafts of this Agreement and no words or phrases
from any such prior drafts shall be admissible into evidence in any action or
suit involving this Agreement.


      
        
           


        

        
          5

          
            

          

        

        
           


        

      


      (e)        
   Any Party to this Agreement may, by written notice to the
other Parties:  (a) extend the time for the performance of any of the
obligations or other actions of the other Parties; (b) waive compliance with any
of the agreements of the other Parties contained in this Agreement; or (c) waive
performance of any of the obligations of the other Parties created under this
Agreement.  The waiver by any Party of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach, whether or not similar, unless such waiver specifically states that it
is to be construed as a continuing waiver.  This Agreement may be
amended, modified or supplemented only by a written instrument executed by all
of the Parties.

      


      (f)         
   This Agreement shall be deemed severable, and the invalidity
or unenforceability of any term or provision hereof shall not affect the
validity or enforceability of this Agreement or of any other term or provision
hereof.  Furthermore, in lieu of any such invalid or unenforceable
term or provision, the Parties intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
term or provision as may be possible and be valid and enforceable.

      


      (g)      
     Facsimile transmission of any signed original of
this Agreement or retransmission of any signed facsimile transmission of this
Agreement shall be the same as delivery of an original.  At the
request of any Party, another Party will confirm facsimile transmission by
signing and delivering a duplicate original of this Agreement.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original and all of which together shall be considered one and the
same agreement.

      


      (h)       
    This Agreement shall be governed by and construed in
accordance with the internal and substantive laws of the State of Texas and
without regard to any conflicts of laws concepts that would apply the
substantive law of some other jurisdiction.

      


      (i)        
    To the fullest extent permitted by applicable law, the
Parties hereby irrevocably submit to the jurisdiction of the courts of the State
of Texas and the federal courts of the United States of America, located in
Harris County, Texas over any dispute arising out of or relating to this
Agreement or any of the transactions contemplated hereby, and each Party
irrevocably agrees that all claims in respect of such dispute or proceeding
shall be heard and determined in such courts.  The Parties hereby
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the venue of any dispute
arising out of or relating to this Agreement or any of the transactions
contemplated hereby brought in such court or any defense of inconvenient forum
for the maintenance of such dispute.  Each Party agrees that a
judgment in any dispute heard in the venue specified by this section may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by applicable law.

      


      (j)        
    Each of the Parties hereby irrevocably waives, to the
fullest extent permitted by law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement.


      
        
           


        

        
          6

          
            

          

        

        
           


        

      


      IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
above written.

      


      


      
        	 
      	
                DENBURY
      RESOURCES INC.

              
	 
      	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/

              	
                Mark C. Allen

              
	 
      	
                Name:

              	
                Mark
      C. Allen

              
	 
      	
                Title:

              	
                Senior
      Vice President and Chief Financial Officer

              
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                DENBURY
      GATHERING & MARKETING, INC.

              
	 
      	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/

              	
                Mark C. Allen

              
	 
      	
                Name:

              	
                Mark
      C. Allen

              
	 
      	
                Title:

              	
                Senior
      Vice President and Chief Financial Officer

              
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                /s/ Joseph A. Blount,
Jr.

              
	 
      	
                Joseph
      A. Blount, Jr.

              
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                GENESIS
      ENERGY, LLC

              
	 
      	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/

              	
                Ross A. Benavides

              
	 
      	
                Name:

              	
                Ross
      A. Benavides

              
	 
      	
                Title:

              	
                General
      Counsel

              


      

       

       

      7