-----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, PVTRtlA9EwzdBaRkV5yx7/rncXev+nHqHJEvFirmPtGiVyPmMzXIUVE208/sFaGy 3Hh6PIQeRYu8VCwk8FSAnA== 0001022321-05-000046.txt : 20051013 0001022321-05-000046.hdr.sgml : 20051013 20051012202358 ACCESSION NUMBER: 0001022321-05-000046 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20051011 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051013 DATE AS OF CHANGE: 20051012 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: 1205 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12295 FILM NUMBER: 051135926 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 8-K 1 f8k101105.txt FORM 8-K DATED OCTOBER 11, 2005 =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): October 11, 2005 GENESIS ENERGY, L.P. (Exact name of registrant as specified in its charter) Delaware 1-12295 76-0513049 (State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) File Number) Identification No.) 500 Dallas, Suite 2500, Houston, Texas 77002 (Address of principal executive offices) (Zip Code) (713) 860-2500 (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: ___ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ___ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240-14a-12) ___ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b)) ___ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c) =============================================================================== Item 1.01. Entry into a Material Definitive Agreement. On October 11, 2005, Genesis Energy, L.P. ("GELP") entered into a Second Production Payment Purchase and Sale Agreement with Denbury Onshore, LLC ("Denbury"), a wholly-owned subsidiary of Denbury Resources, Inc. Under the terms of this agreement, GELP acquired a third carbon dioxide (CO2) volumetric production payment of 80.0 billion cubic feet (Bcf) of CO2 for approximately $14.4 million. Denbury assigned to GELP two wholesale CO2 marketing agreements with third parties. In addition, Denbury and GELP executed a Third Carbon Dioxide Transportation Agreement, providing for the transportation of the CO2 by Denbury to the third parties. Genesis Energy, Inc., the general partner of GELP, is a wholly-owned subsidiary of Denbury Resources, Inc. GELP issued the attached press release dated October 12, 2005, as set forth in Exhibit 99.1 attached hereto. Item 9.01. Financial Statements and Exhibits (c) Exhibits The following materials are filed as exhibits to this Current Report on Form 8-K. Exhibit. 99.1 Copy of Genesis Energy, L.P.'s press release dated October 12, 2005. 99.2 Third Production Payment Purchase and Sale Agreement between Denbury Onshore, LLC and Genesis Crude Oil, L.P. executed October 11, 2005. 99.3 Third Carbon Dioxide Transportation Agreement between Denbury Onshore, LLC and Genesis Crude Oil, L.P. 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, INC., as General Partner Date: October 13, 2005 By: /s/ ROSS A. BENAVIDES ----------------------------------- Ross A. Benavides Chief Financial Officer EX-99 2 pr101105.txt PRESS RELEASE DATED OCTOBER 12, 2005 FOR IMMEDIATE RELEASE Contact: Ross A. Benavides Chief Financial Officer (713) 860-2528 GENESIS ENERGY, L.P. COMPLETES ACQUISITION OF CO2 ASSETS FROM DENBURY RESOURCES October 12, 2005 - Genesis Energy, L.P. (AMEX:GEL) announced today that it has completed an acquisition of an interest in 80.0 Bcf of CO2 under a volumetric production payment, plus certain marketing rights, from Denbury Resources, Inc. (Denbury) for $14.4 million. A Denbury subsidiary is the general partner of Genesis. Mark J. Gorman, President and CEO of Genesis said, "We are pleased to complete this transaction. This is the third volumetric production payment that we have acquired from Denbury. It is a continuation of our ongoing work with Denbury to develop strategic opportunities that mutually benefit our Unitholders and their shareholders. This transaction will be accretive and contributes to our ability to increase the distribution." Genesis purchased the CO2 assets from Denbury for $14.4 million in cash. Denbury assigned to Genesis an interest in 80.0 Bcf of CO2 under a volumetric production payment and Denbury's existing long-term CO2 supply agreements with two of its industrial customers. The terms of the industrial sales contracts include minimum take-or-pay volumes and maximum delivery volumes. Denbury will also provide processing and transportation services for a fee. For the next five years, based upon current conditions, Genesis projects that approximately $3.2 million per year in operating income will be generated from this CO2 acquisition. The purchase was funded with Genesis' revolving credit facility with a group of banks led by Bank of America. Genesis Energy, L.P. operates crude oil common carrier pipelines and is an independent gatherer and marketer of crude oil in North America, with operations concentrated in Texas, Louisiana, Alabama, Florida, and Mississippi. Genesis Energy, L.P. also operates a wholesale CO2 sales business. This press release includes 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 Genesis believes that its expectations are based upon reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those in the forward looking statements herein include the timing and extent of changes in commodity prices for oil, ability to obtain adequate credit facilities, environmental risks, government regulation, the ability of the Partnership to meet its stated business goals and other risks noted from time to time in the Partnership's Securities and Exchange Commission filings. EX-99 3 psa.txt THIRD PRODUCTION PAYMENT PURCHASE AND SALE AGREEMENT THIRD PRODUCTION PAYMENT PURCHASE AND SALE AGREEMENT Between DENBURY ONSHORE, LLC and GENESIS CRUDE OIL, L.P. October 11, 2005 24 TABLE OF CONTENTS ARTICLE I CERTAIN DEFINITIONS......................................2 ARTICLE II PURCHASE AND SALE OF THE PRODUCTION PAYMENT..............7 ARTICLE III PROCESSING AND TRANSPORTATION OF PRODUCTION PAYMENT GAS.................................................8 ARTICLE IV ASSIGNMENT OF ADDITIONAL INDUSTRIAL SALE CONTRACTS.......9 ARTICLE V REPRESENTATIONS AND WARRANTIES OF DENBURY...............10 ARTICLE VI REPRESENTATIONS AND WARRANTIES OF GENESIS...............14 ARTICLE VII PAYMENT TO DENBURY......................................15 ARTICLE VIII DISCLAIMER OF WARRANTIES................................15 ARTICLE IX INDEMNITY...............................................16 ARTICLE X CLOSING.................................................17 ARTICLE XI COVENANTS AND AGREEMENTS OF DENBURY.....................18 ARTICLE XII EXCHANGE OF INFORMATION; AUDIT RIGHTS...................21 ARTICLE XIII NOTICES.................................................22 ARTICLE XIV DISPUTE RESOLUTION......................................23 ARTICLE XV CURTAILMENTS AND INTERRUPTIONS..........................23 ARTICLE XVI MISCELLANEOUS PROVISIONS................................23 Exhibits Exhibit A - Form of Assignment of Production Payment Exhibit B - Net Revenue and Working Interests in the Wells Comprising the Subject Interests Exhibit C - Form of Contract Assignment Exhibit D - Form of T&P Agreement Exhibit E - Dispute Resolution Procedures Exhibit F - Form of Agreement with Lenders THIRD PRODUCTION PAYMENT PURCHASE AND SALE AGREEMENT THIS THIRD PRODUCTION PAYMENT PURCHASE AND SALE AGREEMENT (this "Agreement"), executed as of this October 11, 2005 and effective as of September 1, 2005 (the "Effective Date"), is by and between DENBURY ONSHORE, LLC, a Delaware limited liability company ("Denbury"), whose address is 5100 Tennyson Parkway, Suite 3000, Plano, Texas 75024, and GENESIS CRUDE OIL, L.P., a Delaware limited partnership ("Genesis"), whose address is 500 Dallas Street, Suite 2500, Houston, Texas 77002. In this Agreement, Denbury and Genesis are sometimes referred to individually as a "Party" and collectively as the "Parties". FOR AND IN CONSIDERATION of the payments and mutual covenants to be made in this Agreement by the Parties and the benefits derived by the Parties from this Agreement, the Parties agree as follows: RECITALS A........Denbury owns certain undivided oil, gas and mineral leasehold, royalty and mineral interests in and to those lands commonly referred to as the Hollybush field, the South Pisgah field and the Goshen Springs field, as more particularly described in Exhibit A attached to the Assignment (as defined below). B........Denbury is currently engaged in a program with respect to the Subject Interests (as defined below) on the Subject Lands (as defined below) for the exploration, development, production and sale of CO2. C........In connection with that certain Production Payment Purchase and Sale Agreement executed on November 14, 2003 and effective as of September 1, 2003 between Denbury's predecessor and Genesis (such agreement, as amended, supplemented, modified or restated from time to time, the "First Purchase and Sale Agreement"), Denbury's predecessor sold and conveyed and Genesis purchased and paid for (1) all of such predecessor's rights, title, and interests in and to certain industrial sale contracts covering the sale of CO2 by such predecessor to third parties and (2) a volumetric production payment in and to CO2 produced, saved, and sold from the Subject Interests, upon and subject to the terms and conditions provided in the First Master Documents (as defined below). D........In connection with that certain Second Production Payment Purchase and Sale Agreement executed on August 26, 2004 and effective as of July 1, 2004 between Denbury and Genesis (such agreement, as amended, supplemented, modified or restated from time to time, the "Second Purchase and Sale Agreement"), Denbury sold and conveyed and Genesis purchased and paid for (1) all of Denbury's rights, title, and interests in and to certain industrial sale contracts covering the sale of CO2 by Denbury to third parties and (2) a volumetric production payment in and to CO2 produced, saved, and sold from the Subject Interests, upon and subject to the terms and conditions provided in the Second Master Documents (as defined below). E........Denbury now desires to sell and convey and Genesis now desires to purchase and pay for (1) all of Denbury's rights, title, and interests in and to certain additional industrial sales 2 contracts covering the sale of CO2 by Denbury to third parties, and (2) an additional volumetric production payment in and to CO2 produced, saved, and sold from the Subject Interests, upon and subject to the terms and conditions provided in the Master Documents. ARTICLE I CERTAIN DEFINITIONS 1.1. For purposes of this Agreement, the following capitalized terms shall have the meanings herein ascribed to them and the capitalized terms defined in the opening paragraph and subsequent paragraphs by inclusion in quotation marks and parentheses shall have the meanings ascribed to them: "Additional Industrial Sale Contracts" means the EPCO Contract and the Sandhill Group Contract. "Additional Volumes" is defined in Section 4.4. "Agreement with Lenders" means that certain Third Agreement with Lenders to be entered into between JPMorgan Chase Bank, N.A., as Administrative Agent for the Banks under the Credit Agreement (each of such terms as defined in the Agreement with Lenders) and Genesis in the form attached hereto as Exhibit F, as the same may be amended, supplemented, modified or restated from time to time. "Applicable Plant" means each dehydration and/or processing plant owned by Denbury through which CO2 attributable to that portion of the Subject Interests that is dedicated to an Additional Industrial Sale Contract is processed, and "Applicable Plants" means all of such plants. "Assigned Contract Interests" is defined in Section 4.1. "Assignment" means the Third Assignment of Production Payment to be entered into between Denbury and Genesis in the form attached hereto as Exhibit A, as the same may be amended, supplemented, modified or restated from time to time. "Audited Party" is defined in Section 12.3. "Bank Liens" means the liens created under or pursuant to that certain Fifth Amended and Restated Credit Agreement dated as of September 1, 2004 among Denbury, as borrower, Denbury Resources Inc., as parent guarantor, the financial institutions listed therein, JPMorgan Chase Bank, N.A., successor by merger to Bank One, N.A., as Administrative Agent, Calyon New York Branch, and Fortis Capital Corp., as Syndication Agents, and Union Bank of California, N.A., and Comerica Bank, as Documentation Agents, as amended, supplemented, or modified from time to time. "BCF" means one billion cubic feet of CO2. "Call Option" is defined in Section 2.4. 3 "Call Settlement Date" is defined in Section 2.4. "Claims" is defined in Section 9.1. "Closing" is defined in Section 10.1. "Closing Date" is defined in Section 10.1. "CO2" is defined in the Assignment. "Contract Assignment" means the Third Assignment of Contracts and Bill of Sale to be entered into between Denbury and Genesis in the form attached hereto as Exhibit C, as the same may be amended, supplemented, modified or restated from time to time. "Daily Maximum Quantity" is defined in the Assignment. "Day" is defined in the Assignment. --- "Dedicated Contract Quantity" means (a) with respect to the Sandhill Group Contract, the "Dedicated Contract Quantity" as that term is defined in Section 4.1 of the Sandhill Group Contract and (b) with respect to the EPCO Contract, the "Daily Contract Quantity" as that term is defined in Section 1.1 of the EPCO Contract. "Deficiency" is defined in Section 4.4. "Delivery Points" is defined in the T&P Agreement. "Denbury Indemnified Party" is defined in Section 9.2. "Denbury Pipeline" shall have the same meaning as "Transporter's Pipeline" as such term is defined in the T&P Agreement. "Effective Date" is defined in the opening paragraph of this Agreement. "Environmental Claims" is defined in Section 5.14. "Environmental Contaminants" is defined in Section 5.14. "Environmental Laws" means all federal, state and local Governmental Requirements regulating or otherwise pertaining to the environment, including without limitation the following as from time to time amended and all others whether similar or dissimilar and whether now existing or hereafter enacted: the Oil Pollution Act of 1990, as amended ("OPA"); the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986; the Resource Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act amendments of 1980, and the Hazardous and Solid Waste Amendments of 1984; the Hazardous Materials Transportation Act, as amended; the Toxic Substance Control Act, as amended; the Clean Air Act, as amended; the Clean Water Act, as amended; and all regulations promulgated pursuant thereunder. 4 "Environmental Liabilities" is defined in Section 5.14. "Environmental Permits" is defined in Section 5.14. "EPCO Contract" means that certain Carbon Dioxide Sale and Purchase Contract dated July 11, 2001 by and between EPCO Carbon Dioxide Products, Inc., as Buyer, and Denbury Resources, Inc., as Seller, as amended by (a) Amendment to Carbon Dioxide Sale and Purchase Contract dated August 15, 2001, (b) letter agreement dated August 29, 2001. and (c) Amendment to Carbon Dioxide Sale and Purchase Agreement dated September 1, 2003. "Excess Volumes" is defined in the Assignment. "First Assignment" means that certain Assignment of Production Payment by Denbury's predecessor to Genesis, dated November 14, 2003, effective as of September 1, 2003, and recorded in Volume 1040 at Page 73 of the Official Records of Rankin County, Mississippi, as the same may be amended, supplemented, modified or restated from time to time. "First Contract Assignment" means that certain Assignment of Contracts and Bill of Sale dated November 14, 2003 and effective as of September 1, 2003 by Denbury's predecessor, as Assignor, to Genesis, as Assignee, as the same may be amended, supplemented, modified or restated from time to time. "First Master Documents" means the First Purchase and Sale Agreement and all agreements executed in connection therewith or pursuant thereto, including, but not limited to, the First Assignment, the First Contract Assignment, and the First T&P Agreement, as the same may be amended, supplemented, modified or restated from time to time. "First Production Payment" means that certain volumetric production payment conveyed by Denbury's predecessor to Genesis pursuant to the First Assignment and in accordance with the terms and conditions of the First Purchase and Sale Agreement, as the same may be amended, supplemented, modified or restated from time to time. "First Purchase and Sale Agreement" is defined in Recital C above. "First T&P Agreement" means the Carbon Dioxide Transportation Agreement dated November 14, 2003, effective September 1, 2003, between Denbury's predecessor, as transporter, and Genesis, as shipper, as amended, supplemented, modified, or restated from time to time. "Genesis Indemnified Party" is defined in Section 9.1. "Governmental Authority" means any nation or government, any state or other political subdivision thereof and any person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Governmental Requirement" means any law, statute, code, ordinance, order, determination, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, 5 license, authorization or other directive or requirement, energy regulations and occupational, safety and health standards or controls, of any Governmental Authority. "Leases" means the leases described, referred to or identified in Exhibit A-1 to the Assignment, together with any renewals or extensions of such leases, and any replacement leases, insofar and only insofar as they cover the Subject Lands (or a portion thereof). "Lost Interest" is defined in Section 11.10. "Master Documents" means this Agreement and all agreements executed in connection herewith or pursuant hereto, including but not limited to the Assignment, the Contract Assignment and the T&P Agreement. "Material Adverse Effect" means a material adverse effect upon (a) the validity or enforceability of the Master Documents, or (b) the financial condition of Denbury or Genesis, as applicable, or (c) the ability of Denbury or Genesis, as applicable, to perform its obligations under the Master Documents. "MCF" means one thousand cubic feet of CO2. "Month" means a period beginning on the first Day of a calendar month and ending at the beginning of the first Day of the next succeeding calendar month. "Permitted Liens" means (a) lessor's royalties, overriding royalties, and division orders covering oil, gas and other hydrocarbons, reversionary interests and similar burdens existing as of the Effective Date; (b) operating agreements, unit agreements and similar agreements, and any and all federal and state regulatory orders and rules (including forced pooling orders) to which the Subject Interests are subject; (c) liens for Taxes or assessments not due or pursuant to which Denbury is not delinquent; (d) preferential rights to purchase and required third-party consents to assignments and similar agreements with respect to which (1) waivers or consents have been obtained from the appropriate parties, or (2) required notice has been given to the holders of such rights and the appropriate time period for asserting such rights has expired without an exercise of such rights; (e) all rights to consent by, required notices to, filings with, or other actions by governmental entities in connection with the sale or conveyance of oil, gas and mineral leases or interests therein if the same are customarily obtained after such sale or conveyance; (f) easements, rights-of-way, servitudes, permits, surface leases and other rights in respect of surface operations, pipelines, grazing, logging, canals, ditches, reservoirs or the like; and easement for streets, alleys, highways, pipelines, telephone lines, power lines, railways and other easements and rights-of-way, on, over or in respect of any of the Subject Interests; (g) liens of operators relating to obligations not due or pursuant to which Denbury is not delinquent; (h) title problems commonly encountered in the oil and gas business which would not be considered material by a reasonable and prudent person engaged in the business of the ownership, development and operation of oil and gas properties with knowledge of all the facts and appreciation of their legal significance; (i) the Bank Liens; and (j) the Prior Production Payments. "Person" means any individual, natural person, corporation, joint venture, partnership, limited partnership, trust, estate, business trust, association, governmental entity or other entity. 6 "Personal Property" means improvements, machinery, equipment, gathering lines, tanks, fixtures and other personal property and equipment of every kind and nature now or hereafter used or held for use in connection with the exploration, development or operation of the Subject Interests; provided, however, that the term "Personal Property" shall not include the Denbury Pipeline or the Applicable Plants. "Prior Contract Assignments" means, collectively, the First Contract Assignment and the Second Contract Assignment. "Prior Master Documents" means, collectively, the First Master Documents and the Second Master Documents. "Prior Production Payments" means, collectively, the First Production Payment and the Second Production Payment. "Production Payment" is defined in the Assignment. "Production Payment Gas" is defined in the Assignment. "Receipt Point" is defined in the T&P Agreement. "Reserve Report" means "Data on Estimated Proved Carbon Dioxide Reserves as of December 31, 2004" of the Appraisal Report as of December 31, 2004 on Certain Properties Owned by Denbury, SEC Case, of DeGolyer and MacNaughton dated February 2, 2005. "Retained Obligations" is defined in Section 11.12. "Scheduled Delivery Volumes" is defined in the Assignment. "Sandhill Group Contract" means that certain Contract for Sale of Carbon Dioxide effective as of August 1, 2005, by and between Sandhill Group, LLC, as Seller, and Denbury Onshore, LLC, as Buyer. "Second Assignment" means the Second Assignment of Production Payment by Denbury to Genesis, dated August 26, 2004, effective as of July 1, 2004, and recorded in Volume 2004 at Page 326 of the Oil & Gas Records of Rankin County, Mississippi, as the same may be amended, supplemented, modified or restated from time to time. "Second Contract Assignment" means the Second Assignment of Contracts and Bill of Sale dated August 26, 2004 and effective as of July 1, 2004 by Denbury, as Assignor, to Genesis, as Assignee, as the same may be amended, supplemented, modified or restated from time to time. "Second Master Documents" means the Second Purchase and Sale Agreement and all agreements executed in connection therewith or pursuant thereto, including, but not limited to, the Second Assignment, the Second Contract Assignment, and the Second T&P Agreement, as the same may be amended, supplemented, modified or restated from time to time. 7 "Second Production Payment" means that certain volumetric production payment conveyed by Denbury to Genesis pursuant to the Second Assignment and in accordance with the terms and conditions of the Second Purchase and Sale Agreement, as the same may be amended, supplemented, modified or restated from time to time. "Second Purchase and Sale Agreement" is defined in Recital D above. "Second T&P Agreement" means the Second Carbon Dioxide Transportation Agreement dated August 26, 2004, effective July 1, 2004, between Denbury, as transporter, and Genesis, as shipper, as amended, supplemented, modified, or restated from time to time. "Seller's Reserves" means (a) "Seller's Reserves" as defined in the Sandhill Group Contract, and (b) "Carbon Dioxide reserves in and under the Source Field" as defined in the EPCO Contract. "Subject Interests" is defined in the Assignment. "Subject Lands" is defined in the Assignment. "T&P Agreement" means the Third Carbon Dioxide Transportation Agreement to be entered into between Denbury and Genesis in the form attached hereto as Exhibit D, as the same may be amended, supplemented, modified or restated from time to time. "Taxes" is defined in the Assignment. "Term" means the period beginning on the Effective Date and ending on the date on which 80.0 BCF of Production Payment Gas is delivered pursuant to the Production Payment. "Transportation Fee" is defined in the T&P Agreement. ARTICLE II PURCHASE AND SALE OF THE PRODUCTION PAYMENT 2.1. Upon the terms and subject to the terms of this Agreement, Denbury agrees to sell and convey and Genesis agrees to purchase and pay for the Production Payment. 2.2. The Production Payment will be assigned by Denbury to Genesis pursuant to the Assignment. 2.3. Genesis shall look solely to the receipt of Production Payment Gas as provided herein for satisfaction and discharge of the Production Payment, and Genesis shall not have any other recourse against Denbury for the payment and discharge of the Production Payment. However, the foregoing provision shall not relieve Denbury of any obligation to respond in damages for any breach of any of the covenants, agreements and obligations of Denbury hereunder or under any other Master Document. 8 2.4. Genesis hereby grants Denbury the option to repurchase the Production Payment pursuant to the terms of this Section 2.4 (the "Call Option"). If pursuant to Section 2.8 of the T&P Agreement, the Transporter (as defined in the T&P Agreement) elects to exercise its Call Option (or is deemed to have elected to exercise its Call Option), Denbury shall notify Genesis of the date on which the repurchase will be consummated (the "Call Settlement Date"), which date must be a Business Day and must occur no sooner than five Business Days and no later than 30 days after the date on which Transporter delivered (or was deemed to have delivered) notice of its intent to exercise the Call Option. On the Call Settlement Date, Genesis and Denbury shall execute documentation sufficient to terminate the Production Payment and the other Master Documents, cause the reconveyance to and assumption by Denbury of the Additional Industrial Sale Contracts, and contemporaneously therewith, Denbury shall pay to Genesis in immediately available funds, a purchase price equal to the estimated cash flow from the remaining volumes obligated to be delivered pursuant to the Production Payment discounted to present net value using a twelve percent (12%) per annum discount rate. The estimated cash flow from the remaining volumes obligated to be delivered pursuant to the Production Payment shall be based upon a forecast prepared by Denbury and furnished to Genesis, and if Genesis objects to such forecast, then such matter may be submitted to and resolved in accordance with the arbitration provisions contained in Article XIV. 2.5. In the event of any express conflict between the terms and provisions of this Agreement and the terms and provisions of the Assignment, the terms and provisions of the Assignment shall control. The inclusion in this Agreement of provisions not addressed in the Assignment shall not be deemed a conflict, and all such additional provisions contained herein shall be given full force and effect. ARTICLE III PROCESSING AND TRANSPORTATION OF PRODUCTION PAYMENT GAS 3.1. After the Closing, Denbury agrees to transport Production Payment Gas from the Receipt Points, and redeliver Production Payment Gas at the Delivery Points, in accordance with the provisions of the T&P Agreement. All Production Payment Gas shall be delivered by Denbury to the Delivery Points in compliance with the requirements set out in the T&P Agreement with respect to pressure, quantity and quality specifications. Under the T&P Agreement, Genesis will pay Denbury a Transportation Fee (as adjusted in accordance with the terms of the T&P Agreement), which initially shall be $0.16 per MCF, for transportation of the Production Payment Gas from the Receipt Points, processing of the Production Payment Gas through the Applicable Plants, and redelivery of the Production Payment Gas to or on behalf of Genesis at the Delivery Points. 3.2. The processing and transportation of Production Payment Gas by Denbury as described in this Article shall be subject to the terms and provisions contained in this Article, as such terms and provisions may be further described or supplemented by the T&P Agreement. In the event of any conflict between the terms and provisions of this Article and the terms and provisions of the T&P Agreement, the terms and provisions of the T&P Agreement shall control. The inclusion in this Agreement of provisions not addressed in the T&P Agreement shall not be 9 deemed a conflict, and all such additional provisions contained herein shall be given full force and effect. ARTICLE IV ASSIGNMENT OF ADDITIONAL INDUSTRIAL SALE CONTRACTS 4.1. At the Closing, Denbury will assign to Genesis all of its right, title, and interest in and to the Additional Industrial Sale Contracts (the "Assigned Contract Interests"), subject to the terms and conditions contained in the Additional Industrial Sale Contracts. The Assigned Contract Interests will be assigned by Denbury to Genesis pursuant to the Contract Assignment. Notwithstanding such assignment, Denbury shall be obligated to continue to comply with the Retained Obligations. 4.2. At the Closing, Genesis will assume the cost and responsibilities of administering the Assigned Contract Interests with respect to rights and obligations arising after the Effective Date and will report the sales and values of such sales to Denbury on a Monthly basis on or before the 10th day of each succeeding Month, in a manner and format agreed upon between the Parties, in order that Denbury can timely pay royalties attributable to the Production Payment Gas sold pursuant to the Additional Industrial Sale Contracts. Notwithstanding anything herein to the contrary, without the prior written consent of Denbury, Genesis shall not amend or otherwise modify any terms or provisions of the Additional Industrial Sale Contracts if such amendment or modification of the Additional Industrial Sale Contracts shall in any manner whatsoever, directly or indirectly, modify the Retained Obligations or otherwise increase any obligations of Denbury under any of the Master Documents, including but not limited to any increase of the sales and delivery requirements under the Additional Industrial Sale Contracts. If Denbury elects not to consent to any proposed amendment, Denbury shall provide a written explanation setting out the reasons for such election. 4.3. In the event of any conflict between the terms and provisions contained in this Article IV and the terms and provisions of the Contract Assignment, the terms and provisions contained in the Contract Assignment shall control. The inclusion in this Agreement of provisions not addressed in the Assignment shall not be deemed a conflict, and all such additional provisions contained herein shall be given full force and effect. 4.4. If at any time or from time to time during the Term Genesis determines that 80.0 BCF is not sufficient to satisfy the sales and delivery requirements of the Additional Industrial Sale Contracts (a "Deficiency"), Genesis shall promptly furnish Denbury with written notice of such determination, and such notice shall contain sufficient detail that is reasonably calculated to enable Denbury to determine the basis for Genesis' determination of such Deficiency. If, after receipt of such notice, Denbury agrees with Genesis' assessment of a Deficiency, Denbury agrees to amend the Production Payment to include such additional volumes of CO2 that are necessary to enable Genesis to satisfy the sales and delivery requirements of the Additional Industrial Sale Contracts. If Denbury fails to agree with Genesis' assessment of a Deficiency, then such matter shall be resolved pursuant to Article XIV. The agreed-upon amount of additional volumes necessary to enable Genesis to satisfy the sales and delivery requirements of the Additional Industrial Sale Contracts (the "Additional Volumes") 10 shall be sold by Denbury to Genesis on the same terms and conditions, mutatis mutandis, as applicable to the Production Payment by virtue of this Agreement, and the value of, and consequently the consideration to be paid by Genesis to Denbury for, the Additional Volumes shall be calculated based on estimated cash flow from the Additional Volumes discounted to present net value using a twelve percent (12%) per annum discount rate. Notwithstanding the foregoing, if it is determined that the Deficiency has occurred, in whole or in part, as a result of the sale by Genesis of Excess Volumes, Denbury shall not be obligated to deliver those Additional Volumes which are attributable to the sale of Excess Volumes by Genesis. 4.5. The Sandhill Group Contract is subject to certain obligations to pay commissions as more particularly described in Section 2.02 of that certain Purchase and Sale Agreement dated effective April 1, 2001, by and between Denbury Resources Inc., as Buyer, and Magna Carta Group, L.L.C., Madex, Inc., Moran-Rankin County, L.L.C., and Charles H. Simpson, as Seller (the "Commission Obligation"). At the Closing, Genesis will assume the Commission Obligation to the extent that it relates to the Sandhill Group Contract. ARTICLE V REPRESENTATIONS AND WARRANTIES OF DENBURY Denbury hereby represents and warrants to Genesis as follows: 5.1. Denbury is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware. Denbury possesses the legal right, power and authority, and qualifications to conduct its business and own its properties (including the Subject Interests), except where the failure to so possess would not, individually or collectively, have a Material Adverse Effect. Denbury has the legal right, power and authority (i) to execute and deliver the Assignment and to convey to Genesis the Production Payment and all of the rights and privileges appurtenant thereto and (ii) to execute and deliver this Agreement and the other Master Documents and to perform all of its obligations hereunder and thereunder. 5.2. The execution, delivery and performance by Denbury of this Agreement and the other Master Documents are within its powers and authority, have been duly authorized by all necessary board of director action on the part of Denbury and do not and will not (i) violate any Governmental Requirement currently in effect having applicability to Denbury, other than violations which would not, individually or collectively, cause a Material Adverse Effect, or (ii) violate any provision of Denbury's governing and organizational documents, or (iii) result in a breach of or constitute a default (excluding breaches or defaults which, individually or collectively, would not have a Material Adverse Effect) under any indenture, bank loan, or credit agreement or farm-out agreement, program agreement or operating agreement, or any other agreement or instrument to which Denbury is a party or by which Denbury or its properties may be currently bound or affected, or (iv) other than the Master Documents and/or other than matters which would not individually or collectively cause a Material Adverse Effect, result in or require the creation or imposition of any mortgage, lien, pledge, security interest, charge, or other encumbrance upon or of any of the properties or assets of Denbury (including the Subject Interests). 11 5.3. This Agreement and the other Master Documents have been duly executed and delivered by Denbury, and this Agreement and the Master Documents constitute the legal, valid, and binding acts and obligations of Denbury enforceable against Denbury in accordance with their terms, subject, however, to bankruptcy, insolvency, reorganization, and other laws affecting creditors' rights generally and general principles of equity. There are no bankruptcy, insolvency, reorganization, receivership or arrangement proceedings pending, being contemplated by or, to Denbury's knowledge, threatened against Denbury. 5.4. Denbury is not in default under any Governmental Requirement, indenture, agreement, or instrument which would reasonably be expected to cause a Material Adverse Effect nor does any fact or condition exist at this time that would reasonably be expected to cause a Material Adverse Effect in the future under any Governmental Requirement, indenture, agreement or instrument; and all consents and waivers of preferential purchase or other rights required in connection with the valid conveyance to Genesis of the Production Payment or the execution and delivery of this Agreement and the other Master Documents have been obtained or the time for giving such consents or waivers has expired following a written request therefor, other than those consents and waivers which if not obtained, would not individually or collectively have a Material Adverse Effect. 5.5. All advance notifications to third parties of the transactions contemplated herein and in the other Master Documents required in connection with the valid conveyance to Genesis of the Production Payment or execution and delivery of this Agreement and the other Master Documents have been timely and properly given, other than those notifications which, if not obtained, would not individually or collectively have a Material Adverse Effect. 5.6. All authorizations, consents, approvals, licenses, and exemptions of, and filings or registrations with, any Governmental Authority, that are required for the valid execution and delivery by Denbury of, or the performance by Denbury of its obligations under, this Agreement or the other Master Documents have been obtained or performed or the period for objection thereto expired, other than those which, if not obtained or performed, would not individually or collectively have a Material Adverse Effect. 5.7. To Denbury's knowledge, the Reserve Report (i) was prepared in accordance with customary engineering practices, and (ii) is based on historical information that is accurate and complete in all material respects. The Subject Interests constitute all of the properties and interests reflected in the Reserve Report that relate to the production of CO2. Set forth on Exhibit B attached to this Agreement is a true and correct statement of Denbury's working interest and net revenue interest in and to each well noted on such Exhibit B except to the extent that such interest is incorrect as the result of an act or omission that does not arise by, through or under Denbury and except for discrepancies which would not be considered material by a reasonable and prudent person engaged in the business of the ownership, development and operation of oil and gas properties with knowledge of all the facts and appreciation of their legal significance. The interests reflected on such Exhibit B are owned by Denbury free and clear of any lien or encumbrance arising by, through or under Denbury, other than Permitted Liens. 5.8. All Taxes imposed or assessed with respect to or measured by or charged against or attributable to the Subject Interests, the Personal Property, the Denbury Pipeline and the 12 Applicable Plants have been duly paid, except for Taxes not yet due and payable or pursuant to which Denbury is not delinquent. 5.9. There are no suits or proceedings pending or, to Denbury's knowledge, threatened against Denbury, the Subject Interests, the Denbury Pipeline, the Applicable Plants or any of the Personal Property before any Governmental Authority, that, if decided adversely to the interest of Denbury, would reasonably be expected to have a Material Adverse Effect; provided, however, that notwithstanding the foregoing, Schedule 5.9 includes a list of current litigation affecting any of the Subject Interests, the Denbury Pipeline, the Applicable Plants, and the Personal Property. 5.10. Except with respect to those matters which would not individually or collectively have a Material Adverse Effect, (i) the Leases are in full force and effect, and (ii) Denbury has complied with the terms of all Governmental Requirements applicable to Denbury or applicable directly to the Subject Interests. 5.11. All rents and royalties with respect to the Leases have been paid in a timely manner (excluding any failures to pay which would not individually or collectively have a Material Adverse Effect), and all liabilities of any kind or nature incurred with respect to the Leases have been paid before delinquent (excluding any liabilities or failures to pay which would not individually or collectively have a Material Adverse Effect); Denbury has not received any notice of default or claimed default with respect to the Subject Interests or any part thereof that would reasonably be expected to result in a Material Adverse Effect; and except for matters which would not individually or collectively have a Material Adverse Effect, all wells, facilities and equipment which constitute part of the Personal Property and the Denbury Pipeline and the Applicable Plants are in good repair and working condition and have been designed, installed and maintained in accordance with generally accepted industry standards and all applicable Governmental Requirements. 5.12. Denbury has not violated any Governmental Requirement or failed to obtain any license, permit, franchise or other governmental authorization required for the ownership or operation of any of the Personal Property or the Denbury Pipeline or any of the Applicable Plants, except for violations which would not individually or collectively have a Material Adverse Effect. Except for matters which would not individually or collectively have a Material Adverse Effect, the Personal Property, the Denbury Pipeline and the Applicable Plants have each been maintained, operated and developed in conformity with all applicable Governmental Requirements of all Governmental Authorities having jurisdiction and in conformity with the provisions of all leases, subleases or other contracts comprising a part of the Subject Interests. 5.13. Since the date of the Reserve Report, there has not been any reduction in the rate of production of CO2 from any of the Subject Interests that would reasonably be expected to have a Material Adverse Effect. 5.14. Except as set forth on Schedule 5.14 and except with respect to those matters which would not individually or collectively reasonably be expected to result in a Material Adverse Effect, to Denbury's knowledge: (i) Denbury has obtained and maintained in effect all environmental and health and safety permits, licenses, approvals, consents, certificates and other 13 authorizations required in connection with Denbury's ownership or operation of the Subject Lands ("Environmental Permits"); (ii) Denbury's operations on the Subject Lands are in compliance in all material respects with all applicable Environmental Laws and with all terms and conditions of all applicable Environmental Permits, and all prior instances of material non-compliance have been fully and finally resolved to the satisfaction of all Governmental Authorities with jurisdiction over such matters; (iii) Denbury's operations on the Subject Lands are not subject to any third party environmental or health and safety claim, demand, filing, investigation, administrative proceeding, action, suit or other legal proceeding, whether direct, indirect, contingent, pending, threatened or otherwise ("Environmental Claim"), or Environmental Liabilities (as defined herein), arising from, based upon, associated with or related to Denbury's operations on the Subject Lands; (iv) Denbury has not received any notice of any Environmental Claim, Environmental Liabilities or any violation or non-compliance with any Environmental Law or the terms or conditions of any Environmental Permit, arising from, based upon, associated with or related to Denbury's operations on the Subject Lands; (v) no pollutant, waste, contaminant, or hazardous, extremely hazardous, or toxic material, substance, chemical or waste identified, defined or regulated as such under any Environmental Law ("Environmental Contaminants") is present on, or has been handled, managed, stored, transported, processed, treated, disposed of, released, migrated or has escaped on, in, from, or under the Subject Lands as a result of Denbury's operations on the Subject Lands in a manner that has caused an Environmental Claim, Environmental Liabilities or a violation of any applicable Environmental Law; and (iv) the executive management of Denbury is not aware of any facts, conditions or circumstances in connection with, related to or associated with any of the Properties or the ownership or operation, that as of the date of this Agreement could reasonably be expected to give rise to any material Environmental Claim or Environmental Liabilities. As used in this Agreement, the term "Environmental Liabilities" means any and all liabilities arising from, based upon, associated with or related to (i) any Environmental Claim, (ii) any applicable Environmental Permit, (iii) any applicable Environmental Law or (iv) the presence, handling, management, storage, transportation, processing, treatment, disposal, release, threatened release, migration or escape of Environmental Contaminants (including, without limitation, all costs arising under any theory of recovery, in law or at equity), whether based on negligence, strict liability, or otherwise, including, without limitation, remediation, removal, response, restoration, abatement, investigative, monitoring, personal injury, and property damage costs and all other related costs, expenses, losses, damages, penalties, fines, liabilities and obligations (including interest paid or accrued, attorneys' fees, and court costs). 5.15. Denbury has good title to the Additional Industrial Sale Contracts, free and clear of all liens, encumbrances or claims (other than Permitted Liens), and each Additional Industrial Sale Contract is in full force and effect and enforceable against Denbury, and, to Denbury's knowledge, the counterparty thereto. The Additional Industrial Sale Contracts have been conveyed to Genesis free and clear of the Bank Liens. 5.16. Except as set forth on Schedule 5.9 or Exhibit A to the Contract Assignment, (a) there have been no amendments or modifications to the Additional Industrial Sale Contracts; and (b) there are no breaches or defaults under the Additional Industrial Sale Contracts by Denbury or any counterparty to the Additional Industrial Sale Contracts which would reasonably be expected to prevent the practical realization by Genesis of the benefits intended to be provided to Genesis under the Additional Industrial Sale Contracts. 14 5.17. Upon due execution and delivery by Denbury of the Assignment, under Mississippi law, (i) the Assignment will constitute the legal, valid, and binding conveyance of the Production Payment and will constitute a burden upon all of the CO2 production from the Subject Interests, and (ii) the Production Payment will constitute real property. 5.18. Except with respect to the Prior Master Documents, the contracts assigned pursuant to the Prior Contract Assignments, the Additional Industrial Sale Contracts and/or as set forth in Schedule 5.18, (i) neither the Subject Interests, the CO2 attributable thereto nor the Denbury Pipeline are subject, committed, or dedicated to any contract, agreement, or arrangement regarding the transportation or sale of CO2 production; (ii) no third party has any call, right of first refusal or preferential right to purchase or transport any such CO2 that has not been waived or the time for giving such consents or waivers has expired in accordance with the terms of such call or rights; and (iii) no third party has any purchase option with respect to any such CO2 or the Denbury Pipeline. ARTICLE VI REPRESENTATIONS AND WARRANTIES OF GENESIS Genesis hereby represents and warrants to Denbury as follows: 6.1. Genesis is a limited partnership duly formed and validly existing under the laws of the State of Delaware. Genesis possesses the legal right, power and authority, and qualifications to conduct its business and own its properties, except where the failure to so possess would not, individually or collectively, have a Material Adverse Effect. Genesis has the legal right, power and authority to execute and deliver this Agreement, the Assignment and the other Master Documents and to perform all of its obligations hereunder and thereunder, including unanimous approval of the transactions by the audit committee of Genesis Energy, Inc., the general partner of Genesis, such audit committee consisting solely of independent directors (the "Audit Committee"). 6.2. The execution, delivery and performance by Genesis of this Agreement and the other Master Documents are within its powers and authority, have been duly authorized by all necessary board of director action on the part of Genesis Energy, Inc. (in its capacity as general partner of Genesis), and by the Audit Committee and do not and will not (i) violate any Governmental Requirement currently in effect having applicability to Genesis, other than violations which would not, individually or collectively, cause a Material Adverse Effect, or (ii) violate Genesis' limited partnership agreement or other governing documents, or (iii) result in a breach of or constitute a default (excluding breaches or defaults which, individually or collectively, would not have a Material Adverse Effect) under any indenture, bank loan, or credit agreement or farm-out agreement, program agreement or operating agreement, or any other agreement or instrument to which Genesis is a party or by which Genesis or its properties may be currently bound or affected. 6.3. Genesis is not in default under any Governmental Requirement, indenture, agreement, or instrument that would reasonably be expected to cause a Material Adverse Effect nor does any fact or condition exist at this time that would reasonably be expected to cause 15 a Material Adverse Effect now or in the future under any Governmental Requirement, indenture, agreement or instrument; and all consents or approvals under such indentures, agreements, and instruments necessary to permit the valid execution, delivery, and performance by Genesis of the Master Documents have been obtained. 6.4. This Agreement and the other Master Documents have been duly executed and delivered by Genesis, and this Agreement and the Master Documents constitute the legal, valid, and binding acts and obligations of Genesis enforceable against Genesis in accordance with their terms, subject, however, to bankruptcy, insolvency, reorganization, and other laws affecting creditors' rights generally and general principles of equity. There are no bankruptcy, insolvency, reorganization, receivership or arrangement proceedings pending, being contemplated by or, to the knowledge of Genesis, threatened against Genesis. 6.5. All authorizations, consents, approvals, licenses, and exemptions of, and filings or registrations with, any Governmental Authority, that are required for the valid execution and delivery by Genesis of, or the performance by Genesis of its obligations under, this Agreement or the other Master Documents have been obtained or performed or the period for objection thereto expired, other than those which, if not obtained or performed, would not individually or collectively have a Material Adverse Effect; and no consent or vote of the limited partners of Genesis is required for the execution, delivery or performance by Genesis of this Agreement and the other Master Documents under Genesis' limited partnership agreement or other documents to which Genesis is a party. 6.6. There are no suits or proceedings pending or, to Genesis' knowledge, threatened against Genesis before any Governmental Authority, that if decided adversely to the interest of Genesis would reasonably be expected to have a Material Adverse Effect. 6.7. The Production Payment to be acquired by Genesis pursuant to this Agreement is being acquired for Genesis' own account and for investment and not for distribution in violation of applicable securities laws. ARTICLE VII PAYMENT TO DENBURY 7.1. As consideration for the sale of the Production Payment to Genesis and the assignment of the Assigned Contract Interests to Genesis by Denbury, Genesis shall pay to Denbury at the Closing, $14,687,000 in cash. ARTICLE VIII DISCLAIMER OF WARRANTIES 8.1. Denbury has allowed Genesis the opportunity to review the title to the Subject Interests, to satisfy itself as to all matters pertaining to the transactions contemplated by this Agreement, including but not limited to the sufficiency of CO2 reserves attributable to the Subject Interests to satisfy the CO2 delivery requirements under the Assigned Contract Interests, and to conduct other due diligence with respect to the Production Payment, the Subjects 16 Interests, the Subject Lands, the Denbury Pipeline, the Applicable Plants, and the Additional Industrial Sale Contracts as Genesis deems necessary to consummate the transactions contemplated by this Agreement. 8.2. OTHER THAN THE EXPRESS REPRESENTATIONS AND WARRANTIES PROVIDED BY DENBURY HEREIN AND IN THE OTHER MASTER DOCUMENTS, DENBURY MAKES NO WARRANTIES AS TO (i) THE PRESENCE, QUALITY AND QUANTITY OF CO2 RESERVES ATTRIBUTABLE TO THE SUBJECT INTERESTS, (ii) THE AMOUNT, VALUE, QUALITY, QUANTITY, VOLUME OR DELIVERABILITY OF ANY CO2 OR CO2 RESERVES IN, UNDER OR ATTRIBUTABLE TO THE SUBJECT LANDS, (iii) THE GEOLOGICAL OR ENGINEERING CONDITION OF THE SUBJECT LANDS, (iv) THE ABILITY OF THE SUBJECT LANDS TO PRODUCE CO2, INCLUDING WITHOUT LIMITATION, PRODUCTION RATES, DECLINE RATES AND RECOMPLETION OPPORTUNITIES, (v) ANY PROJECTIONS AS TO EVENTS THAT COULD OR COULD NOT OCCUR, (vi) THE ACCURACY, COMPLETENESS, OR MATERIALITY OF ANY DATA, INFORMATION OR RECORDS FURNISHED TO GENESIS IN CONNECTION WITH THE SUBJECT INTERESTS, SUBJECT LANDS, THE DENBURY PIPELINE AND THE APPLICABLE PLANTS, INCLUDING INFORMATION CONTAINED IN ANY EXHIBIT OF THIS AGREEMENT, ANY SEISMIC DATA AND DENBURY'S INTERPRETATION OR ANALYSIS OF SAME, OR (vii) ANY OTHER MATTERS CONTAINED IN OR OMITTED FROM ANY INFORMATION OR MATERIAL FURNISHED TO GENESIS BY DENBURY. ANY DATA, INFORMATION OR OTHER RECORDS FURNISHED BY DENBURY ARE PROVIDED TO GENESIS AS A CONVENIENCE AND GENESIS' RELIANCE ON OR USE OF THE SAME IS AT GENESIS' SOLE RISK. ARTICLE IX INDEMNITY 9.1. Denbury hereby indemnifies Genesis and its successors and assigns and affiliates (each a "Genesis Indemnified Party") against, and agrees to defend and hold each Genesis Indemnified Party harmless from and against, any and all obligations, liabilities, claims, demands, suits, debts, accounts, liens or encumbrances, and all costs and expenses, including reasonable attorneys' fees relating thereto (collectively, "Claims"), that any Genesis Indemnified Party may suffer or incur and that result from (a) the ownership or operation of the Subject Interests, (b) the ownership of the Additional Industrial Sale Contracts prior to the Effective Date, (c) any inaccuracy of any representation or warranty of Denbury contained in this Agreement or in any other Master Document, (d) any breach of any covenant or agreement of Denbury contained in this Agreement or in any other Master Document, including but not limited to the covenants relating to the Retained Obligations; provided, however, that such indemnification shall not be construed to cover or include any of the matters identified in Section 8.2 (including but not limited to disclaimers of warranties relating to CO2 reserves or production) or any Claims to the extent, but only to the extent, such Claims are determined to be not payable because they fall within the scope of the force majeure provisions contained in the Master Documents or the Additional Industrial Sale Contracts. 17 9.2. Genesis hereby indemnifies Denbury and its successors and assigns and affiliates (each a "Denbury Indemnified Party") against, and agrees to defend and hold each Denbury Indemnified Party harmless from and against, any and all Claims that each Denbury Indemnified Party may suffer or incur and that result from (a) except to the extent of any Claims arising solely as a result of Denbury's execution of the Assignment, the ownership or operation of the Production Payment, (b) except to the extent of any Claims arising as a result of Denbury's failure to comply with the Retained Obligations, the ownership of the Additional Industrial Sale Contracts after the Effective Date, (c) any inaccuracy of any representation or warranty of Genesis contained in this Agreement or any other Master Document, or (d) any breach of any covenant or agreement of Genesis contained in this Agreement or any other Master Document; provided, however, that such indemnification shall not be construed to cover or include any Claims to the extent, but only to the extent, such Claims are determined to be not payable because they fall within the scope of the force majeure provisions contained in the Master Documents or the Additional Industrial Sale Contracts. 9.3. No person entitled to indemnification hereunder or otherwise to damages in connection with or with respect to the transactions contemplated in the Agreement and the other Master Documents shall settle, compromise or take any other action with respect to any Claim that could prejudice or otherwise adversely impact the ability of the person providing such indemnification or potentially liable for such damages to defend or otherwise settle or compromise with respect to such Claim. 9.4. Each Party entitled to indemnification hereunder or otherwise to damages in connection with the transactions contemplated in Agreement or the other Master Documents shall take all reasonable steps to mitigate all losses, costs, expenses and damages after becoming aware of any event or circumstance that could reasonably be expected to give rise to any losses, costs, expenses and damages that are indemnifiable or recoverable hereunder or in connection herewith. 9.5. The indemnification provisions provided for in this Agreement shall be applicable whether or not the losses, costs, expenses and damages in question arose solely or in part from the gross, active, passive or concurrent negligence, strict liability or other fault of Genesis or Denbury, as applicable. The parties acknowledge that this statement complies with the express negligence rule and is conspicuous. ARTICLE X CLOSING 10.1. Unless the Parties otherwise agree in writing, the closing of the transactions contemplated by this Agreement (the "Closing") will occur on the date this Agreement is executed as first set forth above (the "Closing Date") 10.2. At the Closing, the following events shall occur, each being a condition precedent to the others and each being deemed to have occurred simultaneously with the others: 18 (a) Genesis shall deliver to Denbury the cash consideration described in Section 7.1 by wire transferring immediately available funds to the account of Denbury pursuant to wiring instructions furnished by Denbury to Genesis prior to the Closing Date; (b) The Parties shall execute, acknowledge and deliver the Assignment and the Contract Assignment; (c) The Parties shall execute and deliver the T&P Agreement; (d) Denbury shall obtain and deliver to Genesis multiple executed originals of (i) the Agreement with Lenders executed by the holders of the Bank Liens, and (ii) an acceptable release of liens with respect to the Bank Liens encumbering the Subject Interests conveyed to Genesis pursuant to the Assignment; and (e) The Parties shall execute and deliver any other documents or instruments necessary or appropriate to effect or support the transactions contemplated in this Agreement, including but not limited to any amendments or other modifications of the Prior Master Documents that may be necessary or appropriate due to the execution and delivery of the Master Documents. 10.3. Promptly following the Closing, Genesis will cause counterparts of the Assignment, a mutually agreeable Memorandum of T&P Agreement, the Agreement with Lenders and financing statements to be filed for record in all appropriate records in appropriate filing locations. Genesis will pay for all documentary, filing and recording fees required in connection with the filing and recording of the Master Documents. ARTICLE XI COVENANTS AND AGREEMENTS OF DENBURY During the Term, and unless Genesis otherwise agrees in writing, Denbury covenants as follows, and agrees and undertakes, to perform each and all of the following covenants at Denbury's sole and entire cost and expense: 11.1. Denbury will (without regard to the burden of the Production Payment) conduct and carry on the development, maintenance and operation of the Subject Interests with reasonable and prudent business judgment and in accordance with good oil and gas field practices and all applicable Governmental Requirements, and will drill such wells as a reasonably prudent operator would drill from time to time in order to develop the Subject Interests and to protect them from drainage. Nothing contained in this Section, however, shall be deemed to prevent or restrict Denbury from electing not to participate in any operation that is to be conducted under the terms of any operating agreement, unit operating agreement, contract for development or similar instrument affecting or pertaining to the Subject Interests (or any portion thereof) and allowing consenting parties to conduct nonconsent operations thereon, if such election is made by Denbury in good faith and in conformity with sound field practices. After the date of this Agreement, Denbury shall not enter into any transaction(s) or agree to any arrangements which, after taking into account then current required third party sales (including 19 sales under the Additional Industrial Sale Contracts) and Denbury's and its affiliates' usage, would result or be reasonably anticipated to result in an inability of Denbury to deliver the Scheduled Delivery Volumes to Genesis. 11.2. Denbury shall not voluntarily abandon any well heretofore or hereafter completed for production of CO2 on any of the Subject Lands or surrender, abandon or release any Subject Interest or any part thereof; provided however, that nothing in this Agreement shall obligate Denbury to continue to operate any well or to operate or maintain in force or attempt to maintain in force any Lease when, in Denbury's reasonable opinion, exercised in good faith and as would a prudent operator not burdened by the Production Payment, such well or Lease ceases to produce or is not capable of producing in paying quantities (without regard to the burden of the Production Payment) and it would not be economically practical, in Denbury's reasonable judgment (determined without regard to the burden of the Production Payment), to restore the productivity of such well by reworking, reconditioning, deepening, or plugging back such well. The expiration of a Lease in accordance with its terms and conditions shall not be considered to be a voluntary surrender or abandonment of such lease. 11.3. With respect to all oil, gas and mineral leases included in the Subject Interests, Denbury will in all material respects comply with, or cause to be complied with, all pertinent Governmental Requirements that from time to time are promulgated to regulate the production or sale of CO2. 11.4. Certain of the Subject Interests may have been heretofore pooled and unitized for the production of CO2. Such Subject Interests are and shall be subject to the terms and provisions of such pooling and unitization agreements, and the Production Payment shall apply to and affect only that portion of the production from such units that accrues to such Subject Interests as burdened, encumbered or otherwise affected by any and all applicable pooling and unitization agreements. Denbury shall have the right and power to pool and unitize any of the Subject Interests and to alter, change or amend or terminate any pooling or unitization agreements heretofore or hereafter entered into, as to all or any part of the Subject Lands, upon such terms and provisions as Denbury shall in its sole discretion determine. If and whenever through the exercise of such right and power, or pursuant to any Governmental Requirement hereafter enacted, any of the Subject Interests are pooled or unitized in any manner, the Production Payment, insofar as it affects such pooled or unitized Subject Interests shall also be pooled and unitized, and in any such event such Production Payment shall apply to and affect only the production that accrues to such Subject Interests, as burdened, encumbered or otherwise affected by such pooling and unitization. 11.5. Denbury shall pay, or cause to be paid, before delinquent, all Taxes, except Taxes being contested in good faith. In the event that after the expiration of the Term, additional Taxes should be charged against Genesis which are attributable to Production Payment Gas produced during the Term and delivered to Genesis at the Receipt Point(s), Denbury shall be obligated to pay such Taxes. 11.6. Subject to the provisions of Section 2.4 hereof and Section 2.8 of the T&P Agreement, Denbury will at all times maintain, preserve and keep all Personal Property in good repair, working order and condition in all material respects, and promptly make all necessary and 20 proper repairs, renewals, replacements and substitutions, to the end that the value of such Personal Property, shall in all material respects be fully preserved and kept in such condition as at all times to permit the most efficient and economical use and operation thereof. 11.7. Denbury will (i) use all commercially reasonable efforts to promptly pay, or cause to be paid, as and when due and payable all material rentals and royalties payable in respect of the Subject Interests or the production therefrom, and all material costs, expenses and liabilities for labor and material to the extent that the same are attributable to the Subject Interests, the Personal Property, the Denbury Pipeline, or the Applicable Plants, (ii) never permit any lien (other than Permitted Liens) to be affixed or burden the Subject Interests or Personal Property, even though inferior to the Production Payment, for any such bills which may be legally due and payable (other than Permitted Liens or liens which, individually or collectively, could not have a Material Adverse Effect), and (iii) never permit to be created or to exist in respect to any of the Subject Interests or the Personal Property, any other or additional lien on a parity with or superior to the Production Payment, except for Permitted Liens or other than liens which, individually or collectively, could not have a Material Adverse Effect. 11.8. Denbury shall not resign as operator of any Subject Interest operated by Denbury until and unless the successor operator has been approved in writing by Genesis, such approval not to be unreasonably withheld or delayed. 11.9. Denbury agrees to furnish Genesis, upon request, with copies of all electrical logs, core analyses, and completion reports relating to any well now or hereafter drilled upon the Subject Lands. Denbury agrees to furnish Genesis, upon request, with full information regarding the condition of the wells and the lease operations relating to the Subject Interests. The reasonable cost of copying any data and information described in this Section shall be paid by Genesis. Furthermore, Denbury's disclosure of the data and information described in this Section is subject to and may be limited by any confidentiality obligations or other restrictions to which Denbury may be subject. 11.10. In the event that any Lease or other interest that constitutes a part of the Subject Interests should expire or terminate for any reason (a "Lost Interest"), and within one (1) year from date of such expiration or termination of such Lost Interest, Denbury should reacquire such Lost Interest, then such Lost Interest shall be charged and burdened with the Production Payment to the same extent that the Lost Interest was charged and burdened with the Production Payment, and Denbury agrees to execute such documents and agreements as may be necessary or appropriate to effect the intent and purpose of this section. 11.11. Airgas Obligations. The provisions of Section 11.11(b) and (c) of the First Purchase and Sale Agreement (along with the definitions of all applicable defined terms) are hereby incorporated herein by reference for all purposes as if stated herein in full. 11.12. Denbury acknowledges that, pursuant to this Agreement and the Contract Assignment, Genesis is acquiring all of Denbury's rights, interest and obligations in the Additional Industrial Sale Contracts. Notwithstanding such acquisition, there are certain covenants and obligations under the Additional Industrial Sale Contracts that must be satisfied by the owner or operator of the Subject Interests. Accordingly, Denbury covenants that, until the 21 termination of the Additional Industrial Sale Contracts and subject to the applicable force majeure provisions in the Additional Industrial Sale Contracts, Denbury will fully and timely perform each and every covenant and agreement in the Additional Industrial Sale Contracts which must be performed by the Seller (as defined in the Additional Industrial Sale Contracts) and which relates to the ownership and operations of Seller's Reserves, the production of carbon dioxide from Seller's Reserves, and/or the measurement, metering, testing and other transportation services related thereto, including but not limited to the obligations and covenants in Sections 5.1, 6.3, 7.2, 7.3, 7.4, 8.1 and the first sentence of the second paragraph of Section 4.1 of the Sandhill Group Contract, and Sections 2.5, 5.3, 6.1, 6.4, 7.1, 7.2, 8.1 and 8.2 of the EPCO Contract. The covenants and agreements of Denbury described in this section are collectively referred to herein as the "Retained Obligations". 11.13. Denbury shall not sell CO2 to any Buyer (as such term is defined in each of the Additional Industrial Sale Contracts), unless each Buyer has purchased from Genesis, pursuant to each of the Additional Industrial Sale Contracts, the Dedicated Contract Quantity applicable to such Additional Industrial Sale Contracts. 11.14. For so long as the Additional Industrial Sale Contracts are in force and effect, the Production Payment Gas delivered by Denbury to Genesis shall meet the minimum quality specifications set forth in the Additional Industrial Sale Contracts. 11.15. Section 5.2 of the Sandhill Group Contract ("Section 5.2") provides that, upon the occurrence of certain events more particularly described therein, the Buyer (as defined therein) may elect to treat the CO2 delivered to Buyer thereunder and recover treatment costs incurred by Buyer by reducing the price payable to Genesis for such CO2 in the manner described in such Section 5.2. If, in accordance with Section 5.2, the Buyer elects to treat the CO2 delivered to the Buyer under the Sandhill Group Contract and reduces the amount of the proceeds otherwise payable to Genesis thereunder, then Denbury agrees to reimburse Genesis for the incremental reduction of proceeds received by Genesis under the Sandhill Group Contract resulting from such actions by the Buyer. ARTICLE XII EXCHANGE OF INFORMATION; AUDIT RIGHTS 12.1. After the Closing, (a) Denbury will keep Genesis advised of Denbury's activities in the fields encompassing the Subject Lands insofar as such activities relate to the terms and provisions of this Agreement, (b) each Party shall promptly give, or cause to be given to the other Party, written notice of any event or circumstance, including, but not limited to every adverse claim or demand made by any Person or any Governmental Authority, that could reasonably be expected to have a Material Adverse Effect, (c) each Party shall give or cause to be given to the other Party written notice of every default under the Additional Industrial Sale Contracts and every adverse claim or demand made by any Person or any Governmental Authority related to the Additional Industrial Sale Contracts, promptly upon obtaining knowledge of such default, claim or demand and shall include in such notice a description in reasonable detail of the default, claim or demand and if such Party obtained knowledge of such default, claim or demand as a result of the receipt of a written notice, a copy of such written 22 notice, and (d) each Party shall also provide information to the other Party as needed to confirm compliance with each Party's obligations under this Agreement and the other Master Documents, to keep the other Party updated as to matters relating to this Agreement and the other Master Documents, from time to time, and in response to reasonable inquiries by the other Party. 12.2. After the Closing, each Party, by notice in writing to the other Party, shall have the right to audit the other Party's accounts and records relating to the Production Payment, the Additional Industrial Sale Contracts, and compliance with this Agreement and the other Master Documents. Audit rights pertaining to the T&P Agreement are subject to the terms and provisions with respect to auditing as set forth in the T&P Agreement. Audit rights otherwise pertaining to the Production Payment, the Additional Industrial Sale Contracts, or other compliance issues under this Agreement and the other Master Documents are subject to the terms of Section 12.3 but shall not be construed as a measure or means to access or to effect change in the audited party's control structure. 12.3. Audits shall not be conducted more than twice each year without prior approval of the Party whose records are being audited (the "Audited Party"), and shall be made at the expense of the Party conducting the audit. The Audited Party shall reply in writing to an audit report within thirty (30) days after receipt of such report. The Parties will endeavor to agree upon and make any adjustments revealed to be necessary by any audit reports submitted by the Audited Party pursuant to the provisions of this Section. If the Parties cannot agree on any adjustment, the disputed adjustment will not be made, and such disputed adjustment shall be resolved in accordance with the dispute resolution provisions described in Section 14.1. ARTICLE XIII NOTICES 13.1. All notices under this Agreement must be in writing. Any notice with respect solely to the matters in the T&P Agreement shall be in accordance with the provisions pertaining to notices set forth in the T&P Agreement. Any other notice under this Agreement may be given by personal delivery, facsimile or email transmission, U.S. mail (postage prepaid), or commercial delivery service, and will be deemed duly given when received by the Party charged with such notice and addressed as follows: If to Denbury: Denbury Onshore, LLC 5100 Tennyson Parkway, Suite 3000 Plano, TX 75024 Attn: Ray Dubuisson Telephone: 972-673-2044 Fax: 972-672-2299 email: rayd@denbury.com If to Genesis: Genesis Crude Oil, L.P. 500 Dallas, Suite 2500 Houston, TX 77002 Attn: Mark Gorman 23 Telephone: (713) 860-2500 Fax: (713) 860-2640 email: mgorman@genesiscrudeoil.com 13.2. Either Party, by written notice to the other, may change the address or the individual to which or to whom notices are to be sent under this Agreement. ARTICLE XIV DISPUTE RESOLUTION 14.1. Except as may be otherwise specifically provided herein, all disputes arising under or in connection with this Agreement shall be resolved in accordance with the procedures described in Exhibit E attached hereto and incorporated herein by reference for all purposes. ARTICLE XV CURTAILMENTS AND INTERRUPTIONS 15.1. The provisions of Section 15.1 of the First Purchase and Sale Agreement (along with the definitions of all applicable defined terms) are hereby incorporated herein by reference for all purposes if as if stated herein in full. ARTICLE XVI MISCELLANEOUS PROVISIONS 16.1. This Agreement and the other Master Documents constitute the entire understanding between the Parties relating to the subject matter hereof, and supersede all prior negotiations, discussions, agreements and understandings between the Parties, whether written or oral, regarding the subject matter of this Agreement. 16.2. This Agreement may be amended, modified, and supplemented only by written instrument executed by both Parties and explicitly referred to as an amendment to this Agreement. 16.3. The waiver by either 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. 16.4. Neither Party shall be liable to the other for any special, indirect, consequential or punitive damages of any nature, or for attorneys' fees. 16.5. The interests of the Parties in this Agreement, and the interests acquired by virtue of this Agreement and the interests retained by Denbury in the Subject Lands, may not be subsequently assigned, either in whole or in part, unless (i) any such assignee expressly agrees in writing to assume and perform all of the assignor's obligations under this Agreement and the other Master Documents, and (ii) such assignment is made and accepted expressly subject and 24 subordinate to this Agreement and the other Master Documents. Further, any subsequent assignment, either in whole or in part, to an entity that is not as financially creditworthy at the time of the assignment as the assignor shall require the consent of the other party hereto, which consent may not be unreasonably withheld or delayed. Subject to the compliance with the terms of clauses (i) and (ii) above, either Party may encumber or pledge its respective interests in connection with a financing without the consent of the other Party. Any purported assignment, sale, conveyance or other transfer 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 nothing contained in this Agreement, express or implied, is intended to confer upon any other person or entity any benefits, rights, or remedies. 16.6. If any provision of this Agreement is found by a court of competent jurisdiction to be invalid or unenforceable, that provision will be deemed modified to the extent necessary to make it valid and enforceable, and if it cannot be so modified, it shall be deemed deleted and the remainder of this Agreement shall continue and remain in full force and effect. 16.7. This Agreement shall be governed by and construed according to the laws of the State of Texas, excluding any conflicts-of-law rule or principle that might apply the law of another jurisdiction. Venue for any arbitration, lawsuit or other legal action in any way pertaining to this Agreement or any other Master Document shall be in Dallas, Dallas County, Texas. 16.8. The Parties agree to do, execute, acknowledge and deliver all further acts, conveyances and instruments as may be reasonably necessary or appropriate to carry out the provisions of this Agreement. 16.9. The omission of certain provisions of this Agreement from the Assignment does not constitute a conflict or inconsistency between this Agreement and the Assignment, and will not effect a merger of the omitted provisions. To the fullest extent permitted by law, all provisions of this Agreement are hereby deemed incorporated into the Assignment by reference. The headings and titles in this Agreement are for convenience only and shall have no significance in interpreting or otherwise affect the meaning of this Agreement. 16.10. This Agreement may be executed in counterparts, each of which shall constitute an original and all of which shall constitute one document. 16.11. This Agreement may be circulated and executed by facsimile transmission, and in such event, the signatures of the Parties on facsimiles shall be considered as original and self-proving for all purposes. 16.12. Genesis and Denbury agree to treat the Production Payment as a "production payment" under Section 636(a) of the Code. Both Genesis and Denbury agree (i) to file all federal income tax and state income tax returns consistent with this Section 16.12, and (ii) to use a comparable yield of 7.5% for purpose of Treasury Regulation Section 1.1275-4(b). [SIGNATURE PAGE FOLLOWS] 25 This Agreement is executed as of the date set out in the first paragraph of this Agreement, but shall be effective as of the Effective Date. DENBURY: DENBURY ONSHORE, LLC By: Phil Rykhoek ---------------------------------- Phil Rykhoek Senior Vice President and Chief Financial Officer GENESIS: GENESIS CRUDE OIL, L.P. By: Genesis Energy, Inc., Its General Partner By: Mark J. Gorman ----------------------------- Mark J. Gorman President EX-99 4 transport.txt THIRD CARBON DIOXIDE TRANSPORTATION AGREEMENT THIRD CARBON DIOXIDE TRANSPORTATION AGREEMENT BETWEEN DENBURY ONSHORE, LLC AS "TRANSPORTER" AND GENESIS CRUDE OIL, L.P. AS "SHIPPER" i Table of Contents Page DALLAS1 1049097v5 28040-00031 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. Non-Exclusive Transportation................................3 2.4. INTENTIONALLY OMITTED.......................................4 2.5. Operation of Transporter's Pipeline.........................4 2.6. Transporter's Processing Rights.............................4 2.7. Excess Quantities...........................................4 2.8. Call Option.................................................4 ARTICLE III RATES AND CHARGES................................................5 3.1. Initial Rate...................................... .........5 3.2. Adjusted Rate...............................................5 3.3. Minimum Rate................................................5 3.4. Tax Reimbursement...........................................5 ARTICLE IV TERM; EARLY TERMINATION FOR DEFAULT...............................5 4.1. Term........................................................5 4.2. Default.....................................................6 4.3. Occurrence of Default.......................................6 ARTICLE V RECEIPT POINTS, DELIVERY POINTS AND PRESSURES......................6 5.1. Receipt Points and Delivery Points..........................6 5.2. Responsibility..............................................7 5.3. Pressure Criteria...........................................7 ARTICLE VI QUANTITY..........................................................7 6.1. Delivery Rates..............................................7 6.2. Cooperation Regarding Deliveries............................7 ARTICLE VII QUALITY SPECIFICATIONS...........................................8 7.1. Specification...............................................8 7.2. Testing.....................................................8 7.3. Disclaimer..................................................8 ARTICLE VIII OWNERSHIP AND OPERATION OF FACILITIES...........................9 8.1. Facility Ownership..........................................9 ARTICLE IX MEASUREMENT.......................................................9 9.1. Measurement Point...........................................9 ii 9.2. Procedure...................................................9 9.3. Atmospheric Pressure........................................9 9.4. Meter Standards.............................................9 9.5. Temperature.................................................9 9.6. Density.....................................................9 9.7. Samples.....................................................9 ARTICLE X FORCE MAJEURE.....................................................10 10.1. Definition.................................................10 10.2. Extended Force Majeure.....................................10 10.3. Strikes and Lockouts.......................................10 ARTICLE XI NOTICES..........................................................11 11.1. Transporter Notices........................................11 11.2. Shipper Notices............................................11 11.3. Change of Address..........................................11 ARTICLE XII PAYMENT, AUDIT AND FINANCIAL RESPONSIBILITY.....................11 12.1. Payment....................................................11 12.2. Auditing...................................................11 12.3. Failure to Pay.............................................12 12.4. Financial Responsibility...................................12 ARTICLE XIII WARRANTY.......................................................12 13.1. Warranty...................................................12 ARTICLE XIV GENERAL TERMS AND CONDITIONS....................................13 14.1. Waiver of Breach...........................................13 14.2. Regulatory Bodies..........................................13 14.3. CHOICE OF LAW..............................................13 14.4. Joint Preparation..........................................13 14.5. Assignment.................................................13 14.6. Modification and Entire Agreement..........................13 14.7. Headings...................................................14 14.8. Damage Limitation..........................................14 14.9. Arbitration................................................14 14.10. Master Agreement; Conflicts................................14 1 THIRD CARBON DIOXIDE TRANSPORTATION AGREEMENT THIS THIRD CARBON DIOXIDE TRANSPORTATION AGREEMENT (this "Agreement"), made and entered into effective as of September 1, 2005, by and between DENBURY ONSHORE, LLC, a Delaware limited liability company, hereinafter referred to as "Transporter", and GENESIS CRUDE OIL, L.P., a Delaware limited partnership, hereinafter referred to as "Shipper". WITNESSETH: WHEREAS, Shipper owns an interest in and/or has the right to market or otherwise control the disposition of Carbon Dioxide produced from certain wells located in Rankin County, Mississippi; and, WHEREAS, Transporter owns and operates a gathering system connected to a mainline pipeline extending approximately one hundred eighty-three miles from a point at the outlet flange of a Carbon Dioxide dehydration facility located in Rankin County near Jackson, Mississippi, to a point in White Castle, Ascension Parish, Louisiana, which currently is capable of delivering Carbon Dioxide to the various delivery points; and, WHEREAS, Transporter currently has available pipeline capacity for the transportation of Carbon Dioxide for Shipper; and, WHEREAS, Shipper desires to arrange for the transportation of Carbon Dioxide through Transporter's pipeline and Transporter desires to receive from, transport and redeliver to Shipper 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, Transporter and Shipper hereby agree with each other as follows: ARTICLE I DEFINITIONS 1.1. Defined words and terms. Except where the context otherwise indicates another or different meaning or intent, the following words and terms as used herein shall have the meanings indicated: (a) The term "Additional Industrial Sale Contracts" has the meaning set out in the Master Agreement. (b) 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 a 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, 2 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. (c) The terms "Carbon Dioxide" and "CO2" each mean a substance primarily composed of molecules containing one atom of carbon and two atoms of oxygen and containing at least 99 percent (dry basis) by volume of such molecules. (d) The term "Contract Year" means a period of three hundred sixty-five (365) consecutive days beginning on the first day of a 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. (e) The term "cubic foot" is 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 degrees Fahrenheit. (f) The term "Daily Maximum Quantity" has the meaning set out in the Master Agreement. (g) 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. (h) The term "Delivery Points" has the meaning stated in Section 2.2. (i) The term "Master Agreement" means that certain Third Production Payment Purchase and Sale Agreement executed contemporaneously herewith by Transporter and Shipper, as the same may be amended, supplemented, modified or restated from time to time. (j) The term "Master Documents" means the Third Master Agreement and all agreements executed in connection therewith or pursuant thereto, including but not limited to this Agreement, as the same may be amended, supplemented, modified or restated from time to time. (k) The term "MCF" means 1,000 cubic feet of Carbon Dioxide. 3 (l) The term "MMCF" means 1,000,000 cubic feet of Carbon Dioxide. (m) The term "month" means a period beginning on the first day of a calendar month and ending at the beginning of the first day of the next succeeding calendar month. (n) 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. (o) The term "Production Payment" has the meaning stated in the Master Agreement. (p) The term "psia" means pounds per square inch absolute. (q) The term "psig" means pounds per square inch gauge. (r) The term "Receipt Points" has the meaning stated in Section 2.1. (s) The term "Transportation Fee" has the meaning stated in Article III. (t) The term "Transporter's Pipeline" means Transporter's existing gathering system and pipeline used for the gathering, dehydration and transportation of Carbon Dioxide from wells owned or controlled by Transporter in Rankin County, Mississippi, which gathering system extends from various wellheads owned or controlled by Transporter to a point at the outlet flange of a Carbon Dioxide dehydration facility located in Rankin County, Mississippi, and which pipeline extends from that point to a point in Ascension Parish, Louisiana. (u) The term "Triggering Event" has the meaning stated in Section 2.8. 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 Shipper shall have the right to tender to Transporter at the Receipt Points set forth in Exhibit A (the "Receipt Points") for transportation hereunder any volume of Carbon Dioxide up to the Daily Maximum Quantity. 2.2. Redelivery of Carbon Dioxide. Subject to all of the terms, conditions, and limitations of this Agreement, each day during the term hereof Transporter shall redeliver to Shipper, at the Delivery Points set forth in Exhibit B (the "Delivery Points"), the volume of Carbon Dioxide delivered by Shipper to Transporter at the Receipt Points on such day, as such volumes may be adjusted for Shipper's proportionate share of reductions due to Carbon Dioxide lost and unaccounted for in Transporter's Pipeline and any other loss or shrinkage factor generally applicable from time to time to Transporter's Pipeline. 2.3. Non-Exclusive Transportation. Subject to the qualification as to priority set out in Section 2.4, nothing in this Agreement shall be construed to prohibit Transporter from 4 transporting Carbon Dioxide for a person or persons other than Shipper. Nothing in this Agreement shall be construed to require Shipper to tender any minimum quantity of Carbon Dioxide to Transporter for transportation hereunder. 2.4. INTENTIONALLY OMITTED. 2.5. Operation of Transporter's Pipeline. Except as otherwise provided in Section 2.8, Transporter will at all times maintain, preserve and keep all improvements, machinery, equipment, pipe lines, tanks, fixtures and other personal property and equipment of every kind and nature now or hereafter required in connection with operation of Transporter's Pipeline in good repair, working order and condition, and promptly make all necessary and proper repairs, renewals, replacements and substitutions. Subject to the forgoing and its other obligations hereunder, Transporter may, at its sole discretion, at any time and from time to time, expand, extend, repair, reconfigure or temporarily shutdown Transporter's Pipeline and related equipment. In exercising the foregoing rights, Transporter shall have no liability to Shipper hereunder and shall use all reasonable efforts to minimize any adverse impact on Shipper's rights hereunder. 2.6. Transporter's Processing Rights. Transporter reserves the right, prior to delivery to Shipper at the Delivery Points set forth herein, at the sole cost of Transporter, to process and/or treat Carbon Dioxide received from Shipper hereunder for any purpose; provided, however, subject to Section 7.3, Carbon Dioxide delivered to the Delivery Points shall meet the quality specifications of Article VII hereof. 2.7. Excess Quantities. Shipper may, on any day and upon prior notice to Transporter, tender at the Receipt Point volumes of Carbon Dioxide in excess of the Daily Maximum Quantity, in which event Transporter may, in its sole judgment, transport all or any portion of such excess volumes on a fully interruptible basis. However, the transportation of any excess volumes by Transporter shall otherwise be subject to all of the terms and provisions hereof. 2.8. Call Option. In the event a Triggering Event (as hereinafter defined) occurs, Transporter shall have the right and option to either (i) repair, replace, restore and reconstruct Transporter's Pipeline in substantially the form in which the same existed prior to any such Triggering Event or (ii) exercise (or cause the exercise of) the Call Option provided for in Section 2.4 of the Master Agreement. Transporter shall notify Shipper in writing of its election of one of the options set forth above within thirty (30) days from the date of the Triggering Event. If Transporter elects the option set out in clause (i) above, then Transporter shall commence the restoration work within thirty (30) days from the date of the Triggering Event and diligently prosecute and complete the restoration work within a reasonable time, in no event exceeding twelve (12) months from the date of the Triggering Event. If Transporter elects the option set forth in clause (ii) above, the Call Option set forth in Section 2.4 of the Master Agreement shall be exercised in accordance with the terms thereof. If Transporter fails to notify Shipper of its election of either clause (i) or (ii) above within thirty (30) days from the date of the Triggering Event, Transporter shall, as of such date, be deemed to have delivered notice to Shipper electing to exercise the option set forth in clause (i) above. For purposes hereof, a "Triggering Event" means (a) the entire or partial destruction or damage of Transporter's Pipeline by fire or any other casualty whatsoever; or (b) a mechanic failure or other breakdown 5 of Transporter's Pipeline, which in either case actually renders Transporter's Pipeline inoperable for a minimum period of ninety-five (95) consecutive days. ARTICLE III RATES AND CHARGES 3.1. Initial Rate. For the transportation and dehydration of each MCF of Shipper's Carbon Dioxide received at the Receipt Points during any month, beginning with the date of first deliveries hereunder and continuing through the end of the first Contract Year, Shipper shall pay Transporter a transportation fee (the "Transportation Fee"), which fee shall initially be $0.16 (the "initial rate"). 3.2. Adjusted Rate. Effective on the first day of each Contract Year after the first Contract Year, the Transportation Fee shall be adjusted, upward or downward. Computations to determine such adjustments shall be made utilizing $0.16/Mcf as the base rate. The adjustment shall be based upon the change in the annual average of the Producers Price Index, "PPI," All Commodities, 1982 = 100, as published by the United States Department of Labor, Bureau of Labor Statistics. To determine the adjusted rate for each subsequent Contract Year, the following formula shall be used: Adjusted rate = Base rate x (0.10 + 0.90 x PPI current/PPI base) or the initial rate, whichever is greater. Thus, by way of illustration, should the average PPI for the year 2002 be 125, and the average PPI for the year 2003 be 130, the adjusted price for the subsequent Contract Year, 2004, commencing on the anniversary of the Contract Year, would be computed as follows: $0.16 x (0.10 + 0.90 x 130/125) = $0.16576 3.3. Minimum Rate. Notwithstanding the foregoing, the Transportation Fee, as adjusted herein, shall never be less than $0.16 per MCF. 3.4. Tax Reimbursement. In addition to the Transportation Fee provided for above, Shipper shall reimburse Transporter for all taxes which are levied upon and/or paid by Transporter with respect to the services performed under this Agreement, but only if and to the extent that Shipper has the right to receive reimbursement for such taxes from Shipper's customers under the terms of Shipper's resale contracts with its customers. ARTICLE IV TERM; EARLY TERMINATION FOR DEFAULT 4.1. Term. Subject to the other provisions hereof, this Agreement shall be effective from the date hereof and shall continue in force and effect until the Production Payment is fully discharged. 6 4.2. Default. The occurrence of one or more of the following matters shall constitute a default by a party: (a) the occurrence of a Bankruptcy Event involving such party; (b) 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; and (c) the breach by such party of any other material covenant, agreement, obligation, duty or provision of this Agreement, where such breach continues for thirty (30) days after its 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 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 the right of the other party to terminate this Agreement if other defaults occur before such potential default has been remedied. 4.3. Occurrence of Default. Upon the occurrence of a default by a party, the other party may exercise any right or remedy it may have at law and/or in equity; provided that Transporter shall not be entitled to terminate this Agreement. If pursuant to an arbitration proceeding conducted in accordance with Section 14.9, it is determined that as a result of a Shipper default Transporter has suffered a specified amount of damages, the arbitrators may provide as a remedy to Transporter that Transporter may sell a portion of Shipper's carbon dioxide necessary to generate sufficient proceeds to reimburse Transporter for such damages. ARTICLE V RECEIPT POINTS, DELIVERY POINTS AND PRESSURES 5.1. Receipt Points and Delivery Points. The Receipt Points are set forth on Exhibit A. The Delivery Points are set forth on Exhibit B. Shipper may request at any time and from time to time that Transporter agree to one or more additional Receipt Points or Delivery Points on Transporter's Pipeline. Transporter shall not unreasonably withhold its agreement to the addition of any additional Receipt Point or Delivery Point requested by Shipper as long as Shipper reimburses Transporter for all incremental costs incurred or to be incurred by Transporter as a result of the addition of such Receipt Point or Delivery Point and, with respect to requested Receipt Points only, so long as Transporter owns or controls the well or wells to be producing into the requested Receipt Point. If Transporter's estimated incremental cost to establish an additional Receipt Point or Delivery Point requested by Shipper exceeds $25,000, then Transporter shall be entitled to require that Shipper pay Transporter such estimated incremental cost before agreeing to add such additional Receipt Point or Delivery Point, with a "true-up" payment being made by the appropriate party to the other party when the final, actual incremental costs of such additional Receipt Point or Delivery Point are known. Upon the 7 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 A or Exhibit B, as appropriate. The exact point at which delivery by Transporter to Shipper shall be deemed to be made shall be the flange or weld connecting the facilities of Transporter's Pipeline with the facilities of Shipper or Shipper's designee. 5.2. Responsibility. As between the parties hereto, and subject to the limitations set forth in other provisions of this Agreement, Transporter shall be responsible for any injuries, losses, expenses, claims, liabilities, or damages caused by the Carbon Dioxide while it is in Transporter's Pipeline until it shall have been delivered to Shipper or Shipper's designee at the Delivery Points, and, after such delivery, Shipper 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. Transporter shall not take title to Shipper's Carbon Dioxide in Transporter's Pipeline merely by receipt of such Carbon Dioxide for Shipper's account 5.3. Pressure Criteria. All Carbon Dioxide tendered by Shipper at any Receipt Point shall be delivered at pressures sufficient to enter Transporter's Pipeline at the working pressures maintained by Transporter at such Receipt Point from time to time. Transporter shall deliver the volumes of Carbon Dioxide as provided for hereunder at the Delivery Points at pressures ranging from 1100 to 1400 psig. Notwithstanding the foregoing, Transporter reserves the right at any time and from time to time, to revise the maximum and/or the minimum pressures set forth above on ten (10) days' prior notice to Shipper to the extent the implementation of any such revision is prudent in light of the operating conditions on the Transporter's Pipeline. ARTICLE VI QUANTITY 6.1. Delivery Rates. Transporter and Shipper shall endeavor to deliver and to accept, respectively, Carbon Dioxide in as reasonable constant rates as is practicable. Transporter and Shipper 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. Upon request from Shipper, Transporter may deliver Carbon Dioxide on any day in excess of the Daily Maximum Quantity, but Transporter shall not be obligated to do so. 6.2. Cooperation Regarding Deliveries. Shipper or Shipper's agent shall notify Transporter monthly, in advance, of Shipper's estimated daily requirements at each of the Receipt Points and the Delivery Points for the next succeeding month and Transporter shall deliver such requirements, up to the Daily Maximum Quantity, out of the volumes received by Transporter at the Receipt Points for Shipper's account. Transporter and, to the extent it will not result in a default under an Industrial Sale Contract, Shipper agree to fully cooperate with each other in adjusting monthly and daily deliveries hereunder. Shipper or Shipper's agent shall give twenty-four (24) hours' prior notice of any additional changes in its daily requirements as may 8 be necessary from time to time and, on receipt of such notice by Shipper, Transporter shall undertake as soon as practicable to conform its deliveries to Shipper's revised daily requirements (up to the Daily Maximum Quantity) and shall notify Shipper as soon as practicable if Transporter is unable to do so. 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 therefor 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 Transporter to Shipper at the Delivery Points shall meet the following specifications (collectively the "Quality Specification"): (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 and sulfur. The Carbon Dioxide shall not contain more than 10 parts by weight of hydrogen sulphide nor more than 35 parts by weight of total sulfur per 1,000,000 parts of Carbon Dioxide. (c) CO2 Volume. The Carbon Dioxide shall be 99% pure (dry basis). (d) Temperature. The Carbon Dioxide shall have a maximum temperature no higher than 90 degrees Fahrenheit. (e) Pressure. The Carbon Dioxide shall have a minimum pressure of 1100 psig. (f) Dew Point. The Carbon Dioxide shall have a dew point of -30(degree) F or lower. 7.2. Testing. Transporter shall ensure that tests to determine the quality of Carbon Dioxide are conducted as often as necessary in Transporter's sole opinion, utilizing approved standard methods in general use. Transporter may furnish Shipper with copies of all test results. Transporter shall give Shipper reasonable notice of all such tests in order that Shipper or Shipper's agent may have its representative present, if Shipper so desires. 7.3. Disclaimer. THE PARTIES HERETO RECOGNIZE AND AGREE THAT TRANSPORTER IS NOT A MERCHANT OF FOOD GRADE OR MERCHANTABLE CARBON DIOXIDE FOR USE IN FOOD OR DRINK OR OTHER CONSUMABLES AND TRANSPORTER IN NO WAY WARRANTS THE MERCHANTABILITY OR FITNESS OF ANY CARBON DIOXIDE DELIVERED OR TO BE DELIVERED HEREUNDER FOR ANY PARTICULAR PURPOSE. 9 ARTICLE VIII OWNERSHIP AND OPERATION OF FACILITIES 8.1. Facility Ownership. Transporter will own, operate and maintain the Transporter's Pipeline, and the pipelines and measurement facilities, including any additional equipment installed by or at the request of Shipper, at each Receipt Point and at each Delivery Point. Transporter will maintain Carbon Dioxide custody to the upstream flange of Shipper's valve on the outlet side of Transporter's measurement facilities at each Delivery Point. Transporter shall be solely responsible for the delivery of Carbon Dioxide to the inlet side of Shipper's tap valve at each Delivery Point. All piping downstream from the Delivery Points shall be the responsibility of Shipper. ARTICLE IX MEASUREMENT 9.1. Measurement Point. The Carbon Dioxide delivered hereunder shall be measured for custody transfer at the Delivery Points in accordance with the standards set out in this Article. 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 Delivery Point shall be based upon 14.73 psia at sea level, corrected to actual elevation, 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 Transporter and Shipper. Computations of pound mass shall also be made in accordance with said manual. 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. 9.6. Density. The density of the Carbon Dioxide shall be determined by an on-line density meter referenced to weight in a vacuum, or by calculation utilizing the pressure, temperature and composition of the Carbon Dioxide flowing through the meter. 9.7. Samples. A composite sample of Transporter's Pipeline Carbon Dioxide stream shall be accumulated during each month and analyzed for its composition by gas chromatograph or other methods agreed to by Transporter and Shipper, at Transporter's expense. 10 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 ten (10) 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 (a) in those instances where either party hereto is required to obtain servitudes, rights-of-way grants, permits or licenses 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 servitudes, rights-of-way grants, permits or licenses, and (b) in 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 or permissions from any governmental agency 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 affecting Transporter's supply sources or processing facilities or gathering system or Transporter's Pipeline shall be deemed to be an occurrence of Force Majeure affecting Transporter hereunder. 10.2. Extended Force Majeure. If, after deliveries have commenced hereunder, an event of Force Majeure significantly affects the amount of Carbon Dioxide Transporter is capable of delivering for a consecutive period of 180 days, then, at any time after such period and prior to the time such event has been remedied, Shipper may cancel 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. 11 ARTICLE XI NOTICES 11.1. Transporter Notices. All notices provided for herein shall be in writing and shall be deemed to be delivered to Transporter when deposited in the United States mail to the following address: DENBURY ONSHORE, LLC Attn: Linda A. Miller 5100 Tennyson Parkway Suite 3000 Plano, Texas 75024 11.2. Shipper Notices. All notices provided for herein shall be in writing and shall be deemed to be delivered to Shipper when deposited in the United States mail to the following address: GENESIS CRUDE OIL, L.P. Attn: Mark J. Gorman 500 Dallas St. Suite 2500 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. ARTICLE XII PAYMENT, AUDIT AND FINANCIAL RESPONSIBILITY 12.1. Payment. Transporter shall furnish Shipper a monthly statement showing (i) the total quantity of Carbon Dioxide received hereunder during the preceding month at each Receipt Point, (ii) the total quantity of Carbon Dioxide delivered hereunder during the preceding month at each Delivery Point, and (iii) the incremental costs incurred by Transporter to add any additional Delivery Points requested by Shipper. Shipper shall make payment by wire transfer to such address as Transporter may designate from time to time on or before the later to occur of (x) the tenth day following the day that Transporter's monthly statement was delivered or (y) the twentieth day of the month following the month that Carbon Dioxide was delivered, such wire transfer being for all amounts payable hereunder. 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 12 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 Shipper fails to pay any amount payable to Transporter hereunder when due, interest thereon shall accrue and be payable at the lesser of (i) the highest legally permissible rate or (ii) the prime lending rate, plus an additional five percent (5%), established by the Chase Manhattan Bank, N.A., New York, from the date when payment was due until the date payment is made. If such failure to pay any amount continues for thirty (30) days or more after the due date of such amount for any reason, then (a) Transporter may suspend its deliveries of Carbon Dioxide hereunder, (b) Transporter shall have the right to make direct deliveries in satisfaction of the delivery requirements in the Additional Industrial Sale Contracts, and (c) such matter shall be resolved in accordance with the arbitration provisions described in Section 14.9. 12.4. Financial Responsibility. Notwithstanding anything to the contrary in this Agreement, should Transporter reasonably believe it necessary to assure payment for transportation of Carbon Dioxide being delivered or to be delivered hereunder, Transporter may at any time, require (i) advance cash payment; (ii) a standby irrevocable letter of credit at Shipper's expense in a form and from a bank acceptable to Transporter, in Transporter's sole opinion; or (iii) other security of a type and form and amount which may be deemed reasonably satisfactory to Transporter. In the event banking or credit information requested by Transporter has not been furnished within a reasonable time in Transporter's sole opinion, Transporter shall have the right, with five (5) days' prior notice, to withhold and/or suspend deliveries hereunder, in addition to any and all other remedies available hereunder; provided that Transporter shall not have the right to terminate this Agreement. ARTICLE XIII WARRANTY 13.1. Warranty. Each party warrants, for itself, its successors, heirs, legal representatives and assigns, to the other party that at the time such party delivers Carbon Dioxide to the other party, such party will have good title to or the good right to deliver such Carbon Dioxide, and that such Carbon Dioxide shall be free and clear from liens, encumbrances and claims of every kind, subject to Permitted Liens. Each party shall indemnify and save the other party 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 such party to the other party. 13 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 federal and state laws and the applicable orders, rules, and regulations of any state or federal regulatory authority having appropriate jurisdiction. 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. Shipper and Transporter 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. Transporter and Shipper understand that Shipper's ability to deliver Carbon Dioxide hereunder is subject to existing and future governmental regulations affecting Transporter's Pipeline. 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. The interests of the parties in this Agreement, and Transporter's interest in the Transporter's Pipeline, may not be subsequently assigned, either in whole or in part, unless (i) any such assignee expressly agrees in writing to assume and perform all of the assignor's obligations under this Agreement, and (ii) such assignment is made and accepted expressly subject and subordinate to this Agreement. Further, any subsequent assignment, either in whole or in part, to an entity that is not as financially creditworthy at the time of the assignment as the assignor shall require the consent of the other party hereto, which consent may not be unreasonably withheld or delayed. Subject to the compliance with the terms of clauses (i) and (ii) above, either party may encumber or pledge their respective interests in connection with a financing without the consent of the other party. Any purported assignment, sale, conveyance or other transfer 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 nothing contained in this Agreement, express or implied, 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 and the other Master Documents contain the entire agreement between the parties with respect to the subject matter 14 hereof, and supersede and terminate all prior negotiations, representations or agreements, whether written or oral, by and between the parties with respect to such subject matter 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. 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 identified in Article XIV of the Master Agreement. 14.10. Master Agreement; Conflicts. This Agreement is delivered pursuant to and as a part of the transactions under the Master Agreement and is made expressly subject thereto. In the event of any express conflict between the terms and provisions of this Agreement and the terms and provisions of the Master Agreement, the terms and provisions of this Agreement shall control. The inclusion in the Master Agreement of provisions not addressed in this Agreement shall not be deemed a conflict, and all such additional provisions contained in the Master Agreement (including but not limited to Section 15.1 thereof) shall be given full force and effect. [SIGNATURE PAGE FOLLOWS] 15 [SIGNATURE PAGE TO THIRD T&P AGREEMENT - PAGE 1 OF 1] 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. ASSIGNOR: DENBURY ONSHORE, LLC By: Phil Rykhoek -------------------------- Phil Rykhoek Senior Vice President and Chief Financial Officer ASSIGNEE: GENESIS CRUDE OIL, L.P. By: Genesis Energy, Inc. a Delaware corporation By: Mark J. Gorman ------------------------------ Mark J. Gorman President -----END PRIVACY-ENHANCED MESSAGE-----