exv10w1



 





EXHIBIT 10.1




August 3, 2006




Grant E. Sims

11505 Quail Hollow Lane

Houston, TX 77024




          Re: Offer to Enter into Employment Agreements



Dear Mr. Sims:



Part I




          A. Genesis Energy, Inc. (“GEI”), the general partner of Genesis Energy, L.P. (the “Genesis”),
hereby offers to enter into employment agreements with Grant Sims and at least two other officers
(the “Officers”), who initially will be Joseph Blount, Jr. and Brad Newell Graves, to act as senior
management of GEI on the terms which are described in concept below. Grant Sims will be the CEO of
GEI, and Joseph Blount and Brad Graves will serve as officers of GEI with titles to be designated
by Grant Sims.



          B. Employment agreements with provisions customary in the industry will be negotiated by GEI
with the Officers (including at least the same fringe benefits, other than participation in the GEI
cash bonus plan and SAR plan, as are provided to other executive officers of GEI), which contracts
will have a four year term and provide in the aggregate for the Officers to receive annual salaries
totaling $810,000, with increases of the annual aggregate salaries if the market capitalization of
Genesis increases for consecutive 90-day periods to: $600 million market capitalization ($900,000
annual aggregate salaries); to $1.0 billion ($990,000 annual aggregate salaries); and above $1.0
billion (annual aggregate salary increases of 10% for each $300 million market capitalization
increase).



          C. In addition, GEI will cause its 2.0% general partner interest in Genesis and GEI’s
incentive distribution rights in Genesis to be owned by the entity in which Management (as defined
below) will acquire an interest as provided below (the “GP Entity”), and the GP Entity will be a
pass-through entity for tax purposes.



          D. The Partnership shall be responsible for the reasonable out-of-pocket transaction costs of
the Partnership and GEI, and shall be responsible for up to an aggregate of $50,000 of the
out-of-pocket transaction costs of the Officers, Management (as defined below) and their
affiliates, in both cases related to consummating the envisioned transactions.



 









 





Part II




          A. In connection with the above, Denbury Resources, Inc. and its non-Genesis affiliates
(“DNR”) offer to enter into contracts with an entity to be formed by Grant Sims (“Management”) that
will include terms described in concept below:





	 	•	 	The ability of Management under the Vesting Schedule below to earn up to 20% of the
equity in the GP Entity, if the Officers bring to Genesis acquisitions from parties other
than DNR (“New Deals”) that earn (using a look-back provision) a minimum un-levered
internal rate of return of 8%. Deals that fail to meet this earning minimum will be
removed from the cumulative quantity of New Deals for vesting purposes. Earning and
vesting of equity interests in the GP Entity is based on the following schedule:





	 	 	 
	VESTING SCHEDULE
	% Vested	 	New Deals
	 	 	(Cumulative)
	2.0%
	 	$   150 million
	4.0%
	 	$   300 million
	6.0%
	 	$   450 million
	8.0%
	 	$   600 million
	10.0%
	 	$   750 million
	12.0%
	 	$   900 million
	14.0%
	 	$1,050 million
	16.0%
	 	$1,200 million
	18.0%
	 	$1,350 million
	20.0%
	 	$1,500 million







	 	•	 	Management will have change of control protection on 16% of the equity in the GP Entity
(if not already vested, but capped at 16%), triggered by a change of control (to be
defined) of DNR, GEI or the GP Entity, along with a “put” option by Management at fair
market value.
	 
	 	•	 	DNR will have a right of first refusal on any proposed disposition of any interest of
Management in the GP Entity.





          B. If approved by the DNR board of directors (including receipt of required fairness
opinions), DNR’s lenders and the Audit Committee of the GP Entity, DNR agrees to sell to Genesis
midstream CO2 assets owned by DNR (currently expected to be the two existing and one
currently planned CO2 pipeline with a currently estimated aggregate replacement value of
$300 million), and contract for exclusive use of those assets on commercially acceptable terms
(including preserving Denbury’s uninterrupted exclusive use of those assets in the event of
Genesis’ sale or bankruptcy) at an expected rate of return of 12% to Genesis over 12 years, but
only if, at the time of each sale by DNR, the sale will not make the ratio of gross value of (1)
consummated New Deals, that at the time of sale are expected to earn a minimum un-levered internal
rate of return of 8%, to (2) assets sold by DNR, to be less than 1.5 to 1.



2









 





     The parties hereto agree to negotiate in good faith definitive agreements to document the
terms of this offer letter, including the more detailed terms previously discussed by various
individuals.


This offer is subject to the successful completion of a background check on Messrs. Sims, Blount,
and Graves.




	 	 	 	 	 	 	 	 	 
	As to Part I	 	 	 	As to Part I.C and Part II	 	 
	 
	 	 	 	 	 	 	 	 
	Genesis Energy Inc.	 	 	 	Denbury Resources Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Susan O. Rheney	 	 	 	/s/ Phil Rykhoek	 	 
	 	 	 	 	 	 	 
	By:

	 	Susan O. Rheney
	 	 	 	Phil Rykhoek	 	 
	Title:

	 	Chairman of the Audit
Committee of the Board of Directors
	 	 	 	Senior Vice President	 	 






	 	 	 	 	 
	 

	 	Accepted	 	 
	 
	 	 	 	 
	 

	 	/s/ Grant E. Sims
 

	 	 
	 

	 	Grant E. Sims	 	 
	 
	 	 	 	 
	 

	 	August 7, 2006
 

	 	 
	 

	 	Dated	 	 






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