-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HNRW02m1eNsZTWXqE4HQ6/djYR7q0fGL4YTDQOJ5O2LMxWNmKtnpVDepdrBHyNY4 lif+S/0+Hb/uO9sS7r9N9g== 0001022321-98-000002.txt : 19980512 0001022321-98-000002.hdr.sgml : 19980512 ACCESSION NUMBER: 0001022321-98-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980511 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENESIS ENERGY LP CENTRAL INDEX KEY: 0001022321 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PETROLEUM BULK STATIONS & TERMINALS [5171] IRS NUMBER: 760513049 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12295 FILM NUMBER: 98615699 BUSINESS ADDRESS: STREET 1: 500 DALLAS SUITE 2500 CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7138602500 MAIL ADDRESS: STREET 1: 500 DALLAS SUITE 2500 CITY: HOUSTON STATE: TX ZIP: 77002 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-12295 GENESIS ENERGY, L.P. (Exact name of registrant as specified in its charter) Delaware 76-0513049 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 500 Dallas, Suite 2500, Houston, Texas 77002 (Address of principal executive offices) (Zip Code) (713) 860-2500 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No -------- -------- This report contains 13 pages GENESIS ENERGY, L.P. Form 10-Q INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements Page Condensed Consolidated Balance Sheets - March 31, 1998 and December 31, 1997 3 Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 1998 and 1997 4 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1998 and 1997 5 Condensed Consolidated Statement of Partners' Capital for the Three Months Ended March 31, 1998 6 Notes to Condensed Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings 12 Item 6. Exhibits and Reports on Form 8-K 12 GENESIS ENERGY, L.P. CONSOLIDATED BALANCE SHEETS (In thousands) March 31, December 31, 1998 1997 -------- -------- Assets (Unaudited) Current Assets Cash and cash equivalents $ 6,080 $ 11,812 Accounts receivable - Trade 180,828 209,869 Related party 14,709 - Inventories 4,017 7,033 Other 2,749 3,488 -------- -------- Total current assets 208,383 232,202 Property and Equipment, at cost 105,285 105,102 Less: Accumulated depreciation (16,159) (16,464) -------- -------- Net property and equipment 89,126 88,638 Other Assets, net of amortization 10,460 10,274 -------- -------- Total Assets $307,969 $331,114 ======== ======== Liabilities and Partners' Capital Current Liabilities Accounts payable - Trade $193,250 $215,159 Related party 3,305 2,832 Accrued liabilities 7,080 6,547 -------- -------- Total current liabilities 203,635 224,538 Commitments and Contingencies (Note 8) Minority Interests 28,656 28,225 Partners' Capital Common unitholders, 8,625 units issued and outstanding 74,163 76,783 General partner 1,515 1,568 -------- -------- Total partners' capital 75,678 78,351 -------- -------- Total Liabilities and Partners' Capital $307,969 $331,114 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. GENESIS ENERGY, L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per unit amounts) (Unaudited) Three Months Ended March 31, 1998 1997 -------- -------- REVENUES: Gathering and marketing revenues Unrelated parties $628,398 $729,521 Related parties 17,500 212,905 Pipeline revenues 4,359 4,056 -------- -------- Total revenues 650,257 946,482 COST OF SALES: Crude costs, unrelated parties 626,342 903,962 Crude costs, related parties 12,353 30,916 Field operating costs 3,361 3,348 Pipeline operating costs 1,865 1,222 -------- -------- Total cost of sales 643,921 939,448 -------- -------- GROSS MARGIN 6,336 7,034 EXPENSES: General and administrative 2,741 2,133 Depreciation and amortization 1,633 1,565 -------- -------- OPERATING INCOME 1,962 3,336 OTHER INCOME (EXPENSE): Interest, net 178 92 Other, net 19 2 -------- -------- Income before minority interests 2,159 3,430 Minority interests 431 686 -------- -------- NET INCOME $ 1,728 $ 2,744 ======== ======== NET INCOME PER COMMON UNIT - BASIC AND DILUTED $ 0.20 $ 0.31 ======== ======== NUMBER OF COMMON UNITS OUTSTANDING 8,625 8,625 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. GENESIS ENERGY, L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended March 31, 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: -------- -------- Net income $ 1,728 $ 2,744 Adjustments to reconcile net income to net cash provided by (used in) operating activities - Depreciation 1,508 1,448 Amortization of intangible assets 125 117 Minority interests equity in earnings 431 686 Gain on asset dispositions (19) - Other noncash charges 407 17 Changes in components of working capital - Accounts receivable 14,332 43,106 Inventories 3,016 4,500 Other current assets 739 184 Accounts payable (21,436) (58,294) Accrued liabilities 126 5,634 -------- -------- Net cash provided by operating activities 957 142 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment (2,047) (457) Increase in other assets (311) (7) Proceeds from sale of assets 70 - -------- -------- Net cash used in investing activities (2,288) (464) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions: To common unitholders (4,313) - To general partner (88) - -------- -------- Net cash used in financing activities (4,401) - -------- -------- Net decrease in cash and cash equivalents (5,732) (322) Cash and cash equivalents at beginning of period 11,812 11,878 -------- -------- Cash and cash equivalents at end of period $ 6,080 $ 11,556 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. GENESIS ENERGY, L.P. CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (In thousands) (Unaudited)
Partners' Capital ------------------------------ Common General Unitholders Partner Total ----------- ------- ------- Partners' capital at December 31, 1997 $76,783 $1,568 $78,351 Net income for the three months ended March 31, 1998 1,693 35 1,728 Cash distributions for the three months ended March 31, 1998 (4,313) (88) (4,401) ------- ------ ------- Partners' capital at March 31, 1998 $74,163 $1,515 $75,678 ======= ====== =======
The accompanying notes are an integral part of these consolidated financial statements. GENESIS ENERGY, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Formation and Offering In December 1996, Genesis Energy, L.P. ("GELP") completed an initial public offering of 8.6 million Common Units at $20.625 per unit, representing limited partner interests in GELP of 98%. Genesis Energy, L.L.C. (the "General Partner") serves as general partner of GELP and its operating limited partnership, Genesis Crude Oil, L.P. ("GCOLP"). The General Partner owns a 2% general partner interest in GELP. Transactions at Formation At the closing of the offering, GELP contributed the net proceeds of the offering to GCOLP in exchange for an 80.01% general partner interest in GCOLP. With the net proceeds of the offering, GCOLP purchased a portion of the crude oil gathering, marketing and pipeline operations of Howell Corporation ("Howell") and made a distribution to Basis Petroleum, Inc. ("Basis") in exchange for its conveyance of a portion of its crude oil gathering and marketing operations. GCOLP issued an aggregate of 2.2 million subordinated limited partner units ("Subordinated OLP Units") to Basis and Howell to obtain the remaining operations. Basis' Subordinated OLP units were transferred to its then parent, Salomon Smith Barney Holdings Inc. ("Salomon") in May 1997. Unless the context otherwise requires, the term "the Partnership" hereafter refers to GELP and its operating limited partnership. 2. Basis of Presentation The accompanying financial statements and related notes present the consolidated financial position as of March 31, 1998 and 1997 for GELP and its results of operations, cash flows and changes in partners' capital for the three months ended March 31, 1998 and 1997. The financial statements included herein have been prepared by the Partnership without audit pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they reflect all adjustments (which consist solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial results for interim periods. Certain information and notes normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, the Partnership believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1997 filed with the SEC. Basic net income per Common Unit is calculated on the number of outstanding Common Units of 8,625,000. For this purpose, the 2% General Partner interest is excluded from net income. Diluted net income per Common Unit did not differ from basic net income per Common Unit for either period presented. The Common Units that will be issued in accordance with the Restricted Unit Plan are antidilutive. 3. Adoption of Accounting Standards SFAS No. 130, "Reporting Comprehensive Income", was issued in June 1997, with adoption required for fiscal years beginning after December 31, 1997. SFAS No. 130 requires the presentation of an additional income measure (termed "comprehensive income"), which adjusts traditional net income for certain items that previously were only reflected as direct charges to equity. For the quarters ended March 31, 1998 and 1997, there is not a difference between "traditional" net income and comprehensive net income. SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information", was issued in June 1997, establishing standards for the way that public business enterprises report information about operating segments and related information in interim and annual financial statements. The Partnership has evaluated the applicability of the Statement and has concluded that the Partnership does not meet the criteria which required business segment reporting. 4. Credit Resources GCOLP entered into credit facilities with Salomon (collectively, the "Credit Facilities") pursuant to a Master Credit Support Agreement. GCOLP's obligations under the Credit Facilities are secured by its receivables, inventories, general intangibles and cash. Guaranty Facility Salomon is providing a Guaranty Facility through December 31, 1999 in connection with the purchase, sale and exchange of crude oil by GCOLP. The aggregate amount of the Guaranty Facility is limited to $400 million for the year ending December 31, 1998 and $300 million for the year ending December 31, 1999 (to be reduced in each case by the amount utilized at any one time pursuant to the Working Capital Facility, as described below, and by the amount of any obligation to a third party to the extent that such third party has a prior security interest in the collateral under the Master Credit Support Agreement as described below). GCOLP pays a guarantee fee to Salomon which will increase over its term, thereby increasing the cost of the credit support provided to GCOLP under the Guaranty Facility from a below-market rate to a rate that may be higher than rates paid to independent financial institutions for similar credit. At March 31, 1998, the aggregate amount of obligations covered by guarantees was $175.0 million, including $96.0 million in payable obligations and $79.0 million of estimated crude oil purchase obligations for April 1998. Working Capital Facility Salomon has agreed to provide GCOLP, through June 30, 1998, with a Working Capital Facility of up to $50 million, which amount includes direct cash advances not to exceed $35 million outstanding at any one time and letters of credit that may be required in the ordinary course of GCOLP's business. The interest rate for the Working Capital Facility is equal to the federal funds rate plus 5/8%. The Partnership had no letters of credit outstanding at March 31, 1998. No direct cash advances were outstanding at March 31, 1998. The Partnership expects to arrange for a working capital facility through one or more third party lenders prior to the expiration of the availability of the Working Capital Facility. There can be no assurance of the availability or the terms of credit for the Partnership. The General Partner believes that the Credit Facilities will be sufficient to support the Partnership's crude oil purchasing activities and working capital requirements. No assurance, however, can be given that the General Partner will not be required to reduce or restrict the Partnership's gathering and marketing activities because of limitations on its ability to obtain credit support and financing for its working capital needs. 5. Transactions with Related Parties Sales, purchases and other transactions with affiliated companies, in the opinion of management, are conducted under terms no more or less favorable than those conducted with unaffiliated parties. Sales and Purchases of Crude Oil A summary of sales to and purchases from related parties of crude oil is as follows (in thousands). Three Months Three Months Ended Ended March 31, March 31, 1998 1997 --------- --------- Sales to affiliates $17,500 $212,905 Purchases from affiliates $12,353 $ 30,916 General and Administrative Services The Partnership does not directly employ any persons to manage or operate its business. Those functions are provided by the General Partner. The Partnership reimburses the General Partner for all direct and indirect costs of these services. Total costs reimbursed to the General Partner by the Partnership were $3,546,000 and $3,656,000 for the three months ended March 31, 1998 and 1997, respectively. The Partnership entered into a Corporate Services Agreement with Basis pursuant to which Basis, directly or through its affiliates, provided certain administrative and support services for the benefit of the Partnership. Such services included human resources, tax, accounting, data processing, NYMEX transaction clearing and other similar administrative services. The Partnership ceased to receive services under the agreement at December 31, 1997. Charges by Basis under the Corporate Services Agreement were $353,000 for the three months ended March 31, 1997. Treasury Services The Partnership entered into a Treasury Management Agreement with Basis. Effective May 1, 1997, Salomon replaced Basis as a party to the Treasury Management Agreement. Under the Treasury Management Agreement, the Partnership invests excess cash with Salomon and earns interest at market rates. At March 31, 1998, the Partnership had $8.2 million in funds deposited with Salomon under the Treasury Management Agreement. At March 31, 1997, the Partnership had $6.2 million in funds deposited with Basis under the Treasury Management Agreement. Such amounts have been classified in the consolidated balance sheet as cash and cash equivalents. For the three months ended March 31, 1998, the Partnership earned interest of $151,000 on the investments with Salomon. For the three months ended March 31, 1997, the Partnership earned interest of $97,000 on these deposits by the Partnership with Basis. Credit Facilities As discussed in Note 4, Salomon provides Credit Facilities to the Partnership. For the three months ended March 31, 1998 and 1997, the Partnership paid Salomon $154,000 and $191,000, respectively, for guarantee fees under the Credit Facilities. The Partnership paid Basis $82,000 for interest under the Credit Facilities during the 1997 period. 6. Supplemental Cash Flow Information Cash received by the Partnership for interest was $184,000 and $183,000 for the three months ended March 31, 1998 and 1997, respectively. Payments of interest were $8,000 and $59,000 for the three months ended March 31, 1998 and 1997, respectively. 7. Contingencies The Partnership is subject to various environmental laws and regulations. Policies and procedures are in place to monitor compliance. The Partnership's management has made an assessment of its potential environmental exposure and determined that such exposure is not material to its consolidated financial position, results of operations or cash flows. As part of the formation of the Partnership, Basis and Howell agreed to be responsible for certain environmental conditions related to their ownership and operation of their respective assets contributed to the Partnership and for any environmental liabilities which Basis or Howell may have assumed from prior owners of these assets. The Partnership is subject to lawsuits in the normal course of business and examination by tax and other regulatory authorities. Such matters presently pending are not expected to have a material adverse effect on the financial position, results of operations or cash flows of the Partnership. As part of the formation of the Partnership, Basis and Howell agreed to each retain liability and responsibility for the defense of any future lawsuits arising out of activities conducted by Basis and Howell prior to the formation of the Partnership and have also agreed to cooperate in the defense of such lawsuits. 8. Distributions On April 8, 1998, the Board of Directors of the General Partner declared a cash distribution of $0.50 per Unit for the three months ended March 31, 1998. This distribution will be paid on May 15, 1998, to the General Partner and all Common Unitholders of record as of the close of business on April 30, 1998. The Subordinated OLP Unitholders will not receive a distribution for that period. 9. Subsequent Event On April 17, 1998, the Partnership closed on an asset acquisition from Falco S&D, Inc., a regional crude oil gathering and marketing company with operations primarily in Louisiana and East Texas. The acquisition was funded from working capital. GENESIS ENERGY, L.P. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Genesis Energy, L.P., operates crude oil common carrier pipelines and is one of the largest independent gatherers and marketers of crude oil in North America, with operations concentrated in Texas, Louisiana, Alabama, Florida, Mississippi, New Mexico, Kansas and Oklahoma. The following review of the results of operations and financial condition should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto. Results of Operations - Three Months Ended March 31, 1998 Compared with Three Months Ended March 31, 1997 Selected financial data for this discussion of the results of operations follows, in thousands, except volumes per day. Three Months Ended March 31, 1998 1997 ---- ---- Gross margin Gathering and marketing $3,842 $4,200 Pipeline $2,494 $2,834 General and administrative expenses $2,741 $2,133 Depreciation and amortization $1,633 $1,565 Operating income $1,962 $3,336 Interest income (expense), net $ 178 $ 92 Volumes per day Wellhead 110,723 106,811 Bulk and exchange 342,908 339,467 Pipeline 89,519 80,789 Gross margin from gathering and marketing operations is generated by the difference between the price of crude oil at the point of purchase and the price of crude oil at the point of sale, minus the associated costs of aggregation and transportation. The absolute price levels of crude oil do not necessarily bear a relationship to gross margin, although such price levels significantly impact revenues and cost of sales. As a result, period-to-period variations in revenues and cost of sales are generally not meaningful in analyzing the variation in gross margin. Such changes are not addressed in the following discussion. Pipeline gross margins are primarily a function of the level of throughput and storage activity and are generated by the difference between the regulated published tariff and the fixed and variable costs of operating the pipeline. Changes in revenues, volumes and pipeline operating costs, therefore, are relevant to the analysis of financial results of the Partnership's pipeline operations. Gross margin from gathering and marketing operations was $3.8 million for the quarter ended March 31, 1998, as compared to $4.2 million for the quarter ended March 31, 1997. In the first quarter of 1998, margins between sales prices for crude oil and the prices paid to producers for the oil were narrower than in the first quarter of 1997. Pipeline gross margin was $2.5 million for the quarter ended March 31, 1998, as compared to the pipeline gross margin of $2.8 million for the first quarter of 1997. Pipeline throughput increased by 8,730 barrels per day between the two periods. In the latter half of 1997, the Partnership began transporting crude from a new area in Texas, increasing its revenues. Although volumes transported increased, gross margin declined. This decline can be attributed primarily to the cost of repairs that were required to the Main Pass pipeline. General and administrative expenses were $2.7 million for the three months ended March 31, 1998, an increase of $0.6 million over the 1997 period. The increase in 1998 was primarily attributable to two factors. In the 1998 period, the Partnership recorded a non-cash charge of $0.4 million related to its Restricted Unit Plan. The estimated total charge for the Restricted Unit Plan is being recognized ratably over the three-year vesting period beginning in 1998. In addition, in 1998 the Partnership no longer benefited from the sharing of certain services with Basis Petroleum, Inc., under the terms of a Corporate Services Agreement as it did in 1997. Depreciation and amortization was flat at $1.6 million for the two periods. Liquidity and Capital Resources Cash Flows Cash flows from operating activities were $1.0 million for the three months ended March 31, 1998. The timing of payment for crude purchases utilized the cash flows from net income. Operating activities in the prior year period provided cash of $0.1 million primarily due to variations in the timing of payment of crude purchase obligations. For the three months ended March 31, 1998, cash flows utilized in investing activities were $2.3 million as a result of additions in property and equipment, primarily related to pipeline operations. In the 1997 first quarter, investing activities utilized cash flows of $0.5 million also for property and equipment additions. Cash flows utilized in financing activities of $4.4 million in the quarter ended March 31, 1998, were due to the payment of a distribution to common unitholders and the General Partner. Working Capital and Credit Resources As discussed in Note 4 of the Notes to Condensed Consolidated Financial Statements, Salomon extended the term of the Working Capital Facility to June 30, 1998. The Partnership expects to arrange for a working capital facility through one or more third party lenders prior to the June 30, 1998 expiration. Forward Looking Statements The statements in this Report on Form 10-Q that are not historical information are forward looking statements within the meaning of Section 27a of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the Partnership believes that its expectations regarding future events are based on reasonable assumptions, it can give no assurance that its goals will be achieved or that its expectations regarding future developments will prove to be correct. Important factors that could cause actual results to differ materially from those in the forward looking statements herein include changes in regulations, the Partnership's success in obtaining additional lease barrels, refiner demand for various grades of crude oil and the resulting changes in pricing relationships, developments relating to possible acquisitions or business combination opportunities, the success of the Partnership's risk management activities and conditions of the capital markets and equity markets during the periods covered by the forward looking statements. PART II. OTHER INFORMATION Item 1. Legal Proceedings See Part I. Item 1. Note 7 to the Condensed Consolidated Financial Statements entitled "Contingencies", which is incorporated herein by reference. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. 10.18 Amended and Restated Restricted Unit Plan 10.19 Seventh Amendment to Master Credit Support Agreement 27 Financial Data Schedule (b) Reports on Form 8-K. None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GENESIS ENERGY, L.P. (A Delaware Limited Partnership) By: GENESIS ENERGY, L.L.C., as General Partner Date: May 11, 1998 By: /s/ Allyn R. Skelton, II ----------------------------- Allyn R. Skelton, II Chief Financial Officer EX-10 2 EXHIBIT 10.18 GENESIS ENERGY, L.L.C. AMENDED AND RESTATED RESTRICTED UNIT PLAN Genesis Energy, L.L.C., a Delaware limited liability company (the "Company"), hereby amends and restates the Genesis Energy, L.L.C. Restricted Unit Plan (the "Plan") effective as of the 27th day of January, 1998 (the "Effective Date") (though the effective date of the initial Restricted Unit Plan amended hereby is January 27, 1997). SECTION 1. Purpose. The purpose of the Plan is to promote the interests of the Company and Genesis Energy, L.P. ("Genesis MLP") by encouraging Key Employees to remain with the Company by providing a means whereby such individuals may develop a sense of proprietorship and personal involvement in the development and financial success of Genesis MLP, and to encourage them to devote their best efforts to the Business of Genesis MLP, thereby advancing the interests of Genesis MLP and the Company. SECTION 2. Definitions. As used in this Plan: "Committee" means the Compensation Committee of the Board of Directors. "Date of Grant" means the date specified by the Members on which a grant of Phantom Units to a Key Employee is effective. "Distribution" means the amount payable per unit to a holder of a Phantom Unit pursuant to this Plan. "Genesis MLP" means Genesis Energy, L.P. "Genesis MLP Partnership Agreement" means the Amended and Restated Agreement of Limited Partnership of Genesis MLP. "Genesis OLP" means Genesis Crude Oil, L.P. "Key Employee" means any individual who is a key management employee of the Company as determined by the Members. "MLP Common Unit" means a limited partnership interest in Genesis MLP represented by a common unit as set forth in Genesis MLP Partnership Agreement. "Members" means the members of the Company acting through the Committee. "OLP Common LP Unit" means a unit representing a fractional part of the partnership interests of all limited partners and assignees and having the rights and obligations specified with respect to Common Units in the Amended and Restated Agreement of Limited Partnership of Genesis OLP. "OLP Subordinated Unit" means a unit representing a fractional part of the limited partner partnership interests of all limited partners of Genesis OLP and assignees of any such limited partner interest and having the rights and obligations specified with respect to Subordinated Units in the Amended and Restated Agreement of Limited Partnership of Genesis OLP. "Participant" means a Key Employee who is selected by the Members to receive a grant of Phantom Units under the Plan. "Phantom Unit" means a notional (or phantom) unit granted under the Plan, which upon vesting entitles the Participant to receive an MLP Common Unit. SECTION 3. Phantom Units Available under Plan. Subject to adjustments as provided in Section 6, the maximum number of Phantom Units that may be granted under this Plan shall be 290,909; provided, however, any Phantom Units that are forfeited or which expire for any reason without vesting into MLP Common Units will again be available for grant under this Plan. MLP Common Units to be delivered by the Company upon the vesting of Phantom Units granted under the Plan may be MLP Common Units acquired by the Company in the open market, MLP Common Units acquired by the Company directly from Genesis MLP, Genesis OLP or any other person, or any combination of the foregoing. SECTION 4. Grants of Phantom Units. The Members via the Committee, in their discretion, may from time-to-time grant Phantom Units to any Key Employee upon such terms and conditions as they may determine in accordance with the following: (a) Each grant will specify the number of Phantom Units to which it pertains. (b) Each grant will specify the terms and conditions for the Participant to become vested in such Phantom Units. All Phantom Units outstanding as of the Effective Date are hereby deemed amended to vest over a three year period, with the first one-third to vest on December 31, 1998, the second one-third to vest on December 31, 1999, and the rest to vest on December 31, 2000. Any grants made after January 27, 1998 shall vest on such terms as the members may establish via the Committee. Upon vesting, each Phantom Unit entitles the Participant to receive an MLP Common Unit. (c) In the event of a potential merger or consolidation involving the Company, the potential liquidation or dissolution of the Company or Genesis MLP, a potential sale or other disposition by the Company or Genesis MLP of all or substantially all of its assets, or a potential sale or other disposition by the equityholders of the Company or Genesis MLP of a majority of the equity interests of the Company or of the MLP Common Units, as applicable, to one Purchaser or related Purchasers (any such merger, consolidation, liquidation, dissolution, or sale being referred to herein as a "Significant Event"), then the Company shall waive any and all restrictions on the vesting of Participants' rights under Phantom Units granted pursuant to this Plan, and Participants' rights under their respective Phantom Units shall vest in full, subject to the actual occurrence of the Significant Event. (d) Each grant will be evidenced by an agreement executed on behalf of the Company by an authorized officer and delivered to and accepted by the Participant and shall contain such terms and provisions, consistent with this Plan, as the Members may approve with respect to such grant. (e) All Phantom Units that have vested and been converted into MLP Common Units must be held for one year by the recipient. The Company, will retain possession of such MLP Common Units on behalf of the Participant until the expiration of such year. Upon the occurrence of a Significant Event (as defined in Section 4(c)), in which case all restrictions on MLP Common Units shall terminate, including those described in this Section. (f) The Committee will make loans available to Participants on terms to be determined by the Committee to assist Participants in paying any tax liabilities arising from the grant or the vesting of Phantom Units. (g) All Phantom Units outstanding as of the Effective Date are hereby deemed amended to reflect the terms of the Plan, as amended and restated. SECTION 5. Transferability. No Phantom Units granted under this Plan shall be transferable by a Participant other than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations order. SECTION 6. Adjustments. In the event that (i) any change is made to the MLP Common Units deliverable under the Plan or (ii) Genesis MLP makes any distribution of cash, MLP Common Units or other property to unitholders which results from the sale or disposition of a major asset or separate operating division of Genesis MLP or any other extraordinary event and, in the judgment of the Members, such change or distribution would significantly dilute the rights of Participants hereunder, then the Members may make appropriate adjustments in the maximum number of Phantom Units deliverable under the Plan and may make appropriate adjustments to each outstanding Phantom Unit. The adjustments determined by the Members shall be final, binding and conclusive. SECTION 7. No Fractional Units. The Company will not be required to deliver any fractional MLP Common Units pursuant to this Plan. The Committee, in its discretion, may provide for the elimination of fractions or for the settlement of fractions in cash. SECTION 8. Withholding of Taxes. To the extent that the Company is required to withhold any taxes in connection with any grant or payment made to a Participant or any other person under this Plan, it will be a condition to the receipt of such payment that the Participant or such other person make arrangements satisfactory to the Company for the payment of the balance of such taxes required or requested to be withheld, which arrangements in the discretion the Members may include the relinquishment of a portion of each person's Distribution payment. SECTION 9. Distribution Payment.. Company shall distribute to holders of Phantom Units hereunder on a quarterly basis a distribution per Phantom Unit equal to the quarterly distribution on each Subordinated Unit. Said payment shall be made at the same time and in the same manner as the distributions on the Subordinated Units. SECTION 10. Compliance with Securities Laws. Notwithstanding anything herein or in any other agreement to the contrary, Genesis MLP shall not be obligated to sell or issue any MLP Common Units to the Company under the Plan unless and until Genesis MLP is satisfied that such sale or issuance complies with (i) all applicable requirements of the securities exchange on which the MLP Common Units are traded (or the governing body of the principal market in which such MLP Common Units are traded, if such MLP Common Units are not then listed on an exchange), (ii) all applicable provisions of the 1933 Act and (iii) all other laws or regulations by which Genesis MLP is bound or to which Genesis MLP is subject. The Company acknowledges that, as the general partner of Genesis MLP, it is an affiliate of Genesis MLP under the securities laws and it shall comply with such laws and obligations of Genesis MLP relating thereto as if they were directly applicable to the Company. SECTION 11 Administration of the Plan. (a) This Plan will be directed by the Members and administered by the Committee which at all times will consist entirely of directors appointed by the Members of the Company. A majority of the Committee will constitute a quorum, and the action of the members of the Committee present at any meeting at which a quorum is present, or acts unanimously approved in writing, will be the acts of the Committee. (b) Subject to the terms of the Plan and applicable law, the Members shall have the sole power, authority and discretion to: (i) designate the Key Employees who are to be Participants; (ii) determine the number of Phantom Units to be granted to a Key Employee; (iii) determine the terms and conditions of any grant of Phantom Units to a Key Employee; (iv) interpret, construe and administer the Plan and any instrument or agreement relating to Phantom Units granted under the Plan; (v) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration if the Plan; (vi) make a determination as to the right of any person to receive payment of (or with respect to) Phantom Units; and (vii) make any other determinations and take any other actions that the Members deem necessary or desirable for the administration of the Plan. (c) The Members may correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Phantom Unit grant in the manner and to the extent it shall deem desirable in the establishment or administration of the Plan. SECTION 12. Conditional Grants. All grants of Phantom Units are conditional and subject to the following conditions, as well as special conditions set forth in the grant: (a) The employee awarded a grant of Phantom Units must be employed by the Company at the time the Phantom Units vest to MLP Common Units and, prior to such vesting, at the time any Distribution is declared, in order to receive the MLP Common Units and/or any Distribution, as applicable. An employee who is awarded Phantom Units but who either terminates his/her employment with the Company or is terminated by the Company (including as the result of death or disability) forfeits his/her right to the unvested Phantom Units and any subsequent Distribution unless the Board of Directors make a special dispensation or as is otherwise set forth in a written employment agreement with such employee; provided, however, that if an employee is terminated without cause in violation of a written employment agreement between the Company and such employee, then none of the Phantom Units shall be forfeited and they will vest and convert into MLP Common Units immediately without any restrictions, including the restrictions in Section 4(e). (b) The award of Phantom Units may be subject to additional conditions as set forth in the specific Grant Agreement. (c) To the extent the provisions of a Grant Agreement or a written employment agreement are inconsistent with the provisions of the Plan, such provisions of the Grant Agreement or the employment agreement shall control. SECTION 13. Amendments, Termination, Etc. (a) The Plan may be amended from time-to-time by the Company; provided, however, that no change in any outstanding grant may be made that would impair the rights of the Participant without the consent of such Participant, and further, during the Subordination Period (as defined in the OLP Partnership Agreement), no amendment will be made without the approval of a majority of the Unitholders that would increase the total number of MLP Common Units available for grants under the Plan. (b) The Plan will not confer upon any Participant any right with respect to continuance of employment or other service with the Company, Genesis MLP or Genesis OLP, nor will it interfere in any way with any right the Company, Genesis MLP or Genesis OLP would otherwise have to terminate such Participant's employment or other service at any time. (c) No grants may be made under the Plan following the 10th anniversary of its effective date; however, the Company in its discretion may terminate the Plan at any earlier time with respect to any MLP Common Units for which a grant has not heretofore been made. SECTION 14. Governing Law. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with applicable Federal law, and to the extent not preempted thereby, with the laws of the State of Delaware. SECTION 15. Effective Date. The effective date of this plan shall be January 21, 1997; provided however, that the effective date of the amendments reflected in this amended and restated plan shall be January 27, 1998. EX-10 3 EXHIBIT 10.19 SEVENTH AMENDMENT (this "Amendment") dated as of March 20, 1998, to the Master Credit Support Agreement dated as of December 3, 1996, between GENESIS CRUDE OIL, L.P., a Delaware limited partnership ("Genesis OLP"), and SALOMON SMITH BARNEY HOLDINGS INC., a Delaware corporation ("SSB Holdings"), as amended by the First Amendment dated as of May 12, 1997, the Second Amendment dated as of August 22, 1997, the Third Amendment dated as of August 1, 1997, the Fourth Amendment dated as of September 29, 1997, the Fifth Amendment dated as of November 14, 1997, and the Sixth Amendment dated as of February 13, 1998 (as amended, the "Credit Agreement"). A. Genesis OLP and SSB Holdings are parties to the Credit Agreement, pursuant to which SSB Holdings has agreed to extend credit to Genesis OLP, subject to the terms and conditions set forth therein. Capitalized terms used but not otherwise defined herein have the meanings assigned to them in the Credit Agreement. B. To make certain changes requested by Genesis OLP, the parties hereto desire to amend the Credit Agreement as provided herein, subject to the terms and conditions set forth herein. Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. Amendments to Section 1.1. The following amendment is made to the definitions contained in Section 1.1 of the Credit Agreement: (i) The definition of "Working Capital Facility Maturity Date" is hereby amended to read as follows: "Working Capital Facility Maturity Date" shall mean June 30, 1998. SECTION 2. Representations and Warranties. Genesis OLP hereby represents and warrants to SSB Holdings, on and as of the date hereof, that: (a) This Amendment has been duly authorized, executed and delivered by Genesis OLP, and each of this Amendment and the Credit Agreement as amended by this Amendment constitutes a legal, valid and binding obligation of Genesis OLP, enforceable in accordance with its terms. (b) The representations and warranties set forth in Article V of the Credit Agreement are true and correct in all material respects on and as of the date hereof, and will be true and correct after giving effect to this Amendment. (c) No Default or Event of Default has occurred and is continuing, or will have occurred or be continuing after giving effect to this Amendment. SECTION 3. Miscellaneous. (a) THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. (b) This Amendment may be executed in any number of counterparts, each of which shall be an original but all of which, when taken together, shall constitute but one instrument. (c) Except as specifically amended or modified hereby, the Credit Agreement shall continue in full force and effect in accordance with the provisions thereof. As used therein, the terms "Agreement", "herein", "hereunder", "hereinafter", "hereto", "hereof" and words of similar import shall, unless the context otherwise requires, refer to the Credit Agreement as amended hereby. The Credit Agreement, as amended and modified hereby, constitutes the entire agreement of the parties relating to the matters contained herein and therein, superseding all prior contracts or agreements, whether oral or written, relating to the matters contained herein and therein. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the date first written above. SALOMON SMITH BARNEY HOLDINGS INC., By /s/ Thomas W. Jasper --------------------------- Name: Thomas W. Jasper Title: Treasurer GENESIS CRUDE OIL, L.P., by GENESIS ENERGY, L.L.C., its operating general partner, By /s/ Allyn R. Skelton, II ----------------------------- Name: Allyn R. Skelton, II Title: Chief Financial Officer EX-27 4
5 THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE FORM 10-Q OF GENESIS ENERGY, L.P. FOR THE PERIOD ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS CONTAINED IN THAT FORM 10-Q. 1,000 3-MOS DEC-31-1998 MAR-31-1998 6,080 0 195,537 0 4,017 208,383 105,285 16,159 307,969 203,635 0 0 0 0 0 307,969 645,898 650,257 638,695 645,554 0 0 0 2,159 0 1,728 0 0 0 1,728 0 0 GENESIS ENERGY, L.P. IS A MASTER LIMITED PARTNERSHIP AND THEREFORE HAS NO COMMON STOCK OUTSTANDING. GENESIS ENERGY, L.P. IS A MASTER LIMITED PARTNERSHIP. ITS BALANCE SHEET INCLUDES MINORITY INTERESTS IN ITS SUBSIDIARY, GENESIS CRUDE OIL, L.P. OF $28,656 AND PARTNERS' CAPITAL CONSISTING OF THE CAPITAL OF THE COMMON UNITHOLDERS OF $74,163 AND THE CAPITAL OF THE GENERAL PARTNER OF $1,515. TOTAL COSTS INCLUDES DEPRECIATION AND AMORTIZATION OF $1,633. THE MINORITY INTERESTS IN NET INCOME OF GENESIS ENERGY, L.P. IS $431. BASIC NET INCOME PER COMMON UNIT IS $0.20. DILUTED NET INCOME PER COMMON UNIT IS $0.20.
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