PIPELINE FINANCING LEASE AGREEMENT
by and between
GENESIS NEJD PIPELINE, LLC
as LESSOR
and
DENBURY ONSHORE, LLC,
as LESSEE
for the North East Jackson Dome Pipeline System
Dated: May 30, 2008
All
right, title and interest of Lessor under this Financing
Lease, which includes Lessor’s interest in the property
subject to this Financing Lease, have been collaterally
assigned to and are subject to a security interest in favor of
Genesis SPE 1 (as defined below) pursuant to a Collateral
Agreement (the “ Collateral
Agreement ”). This Financing Lease has
been executed in several counterparts. To the
extent, if any, that this Financing Lease constitutes chattel
paper (as such term is defined in the Uniform Commercial Code
as in effect in any applicable jurisdiction), no lien on this
Financing Lease may be created through the transfer or
possession of any counterpart other than the original
counterpart containing the receipt therefor executed by
Genesis SPE 1, on or following the signature page
hereof.
This
counterpart is an original counterpart.
TABLE OF
CONTENTS
|
1.
|
Definitions
|
1
|
|
2.
|
Demise
and Quiet Enjoyment.
|
12
|
|
3.
|
Lease
Term and Repayment Obligations.
|
14
|
|
4.
|
Consideration.
|
16
|
|
5.
|
Use
and Operation of Pipeline System.
|
20
|
|
6.
|
Shipments
|
21
|
|
7.
|
Alterations
and Improvements
|
22
|
|
8.
|
Maintenance
and Repair
|
22
|
|
9.
|
Representations
and Warranties of Lessor
|
22
|
|
10.
|
Representations
and Warranties of Lessee
|
23
|
|
11.
|
Special
Covenants of Lessee
|
25
|
|
12.
|
Indemnification
|
27
|
|
13.
|
Risk
of Loss
|
27
|
|
14.
|
Sale
or Assignment
|
27
|
|
15.
|
Events
of Default and Remedies.
|
28
|
|
16.
|
Estoppels
|
35
|
|
17.
|
Notices
|
36
|
|
18.
|
Limitation
of Liability
|
37
|
|
19.
|
Casualty
and Condemnation
|
37
|
|
20.
|
Environmental
Matters
|
39
|
|
21.
|
Notice
of Environmental Matters
|
40
|
|
22.
|
Miscellaneous.
|
40
|
Exhibits
:
|
Exhibit
A-1
|
Pipeline
System
|
|
Exhibit
A-2
|
Rights-of-Way
|
|
Exhibit
B
|
Amortization
Schedule
|
|
Exhibit
C
|
Dispute
Resolution Procedures
|
|
Exhibit
D-1
|
Mississippi
Conveyance
|
|
Exhibit
D-2
|
Louisiana
Conveyance
|
|
Exhibit
F-1
|
Exchange
Deed of Trust (MS)
|
|
Exhibit
F-2
|
Exchange
Mortgage (LA)
|
|
Exhibit
G
|
Exchange
Guaranty
|
|
Exhibit
H-1
|
UCC
Financing Statement (DE)
|
|
Exhibit
H-2
|
UCC
Financing Statement – Fixtures (LA)
|
|
Exhibit
I-1
|
Memorandum
of Lease, Deed of Trust, Security Agreement and UCC Fixture Filing
(MS)
|
|
Exhibit
I-2
|
Notice
of Lease, Mortgage and Security Agreement (LA)
|
Schedules :
|
Schedule
1(i)
|
Knowledge
(Lessor)
|
|
Schedule
1(ii)
|
Knowledge
(Lessee)
|
|
Schedule
10.C
|
Outstanding
Consents and Violations
|
|
Schedule
10.E
|
Exceptions
to Compliance with Applicable Laws
|
|
Schedule
10.F
|
Exceptions
to Condition of Pipeline System Representation
|
|
Schedule
10.H
|
Environmental
Matters
|
|
Schedule
10.H
|
Outstanding
Environmental Permits
|
|
Schedule
10.I
|
Unsatisfied
Liabilities
|
PIPELINE
FINANCING LEASE AGREEMENT
THIS PIPELINE FINANCING LEASE AGREEMENT (this “
Financing
Lease ”) dated this 30 th
day of May, 2008 (the “ Effective Date
”), is entered into by and between GENESIS NEJD PIPELINE,
LLC a Delaware limited liability company (“
Lessor
”) and DENBURY ONSHORE, LLC ,
a Delaware limited liability company (“ Lessee
”).
R E C I T A L S:
WHEREAS,
Lessor and Lessee desire to enter into this Financing Lease
for the North East Jackson Dome Pipeline System located in the
State of Mississippi and the State of Louisiana, pursuant to
which Lessee leases the North East Jackson Dome Pipeline
System and 100% of its capacity on an exclusive basis from
Lessor.
W I T N E S S E T H:
NOW
THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which being hereby acknowledged, Lessor and
Lessee agree as follows:
1.
Definitions
. As used in this Financing Lease, the following
terms have the meanings specified below:
“
Administrative
Agent ” means Fortis Capital Corp. and any
replacement or successor agent pursuant to the Applicable
Credit Agreement.
“
Affiliate
”, (for purposes of this Financing Lease only and
without thereby altering the determination of the existence of
an affiliate relationship of Lessor and Lessee for other
circumstances, when used with reference to (i) Lessor, for
only so long as the MLP Entities would be considered
Affiliates of Lessor pursuant to the definition in clause
(iii) below, “Affiliate” shall include MLP, its
subsidiaries and its general partner, Genesis Energy, Inc.
(collectively, the “ MLP
Entities ”) and (ii) Lessee,
“Affiliate” shall include DRI and its subsidiaries
(it being understood that notwithstanding clauses (i) and
(ii), the MLP Entities shall not be considered Affiliates of
DRI and its other subsidiaries, or vice versa), (iii) any
other Person, means and includes any Person which directly or
indirectly, through one or more intermediaries, controls, or
is controlled by, or is under common control with, such
Person. The term “control” (including the terms
“controlling,” “controlled by” and
“under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of any Person,
whether through ownership of voting securities, by contract or
otherwise.
“
Airgas
” means (a) Airgas Carbonic Enterprises, Inc., and (b)
its Affiliates and its and their successors and assigns that
have or claim rights under any Airgas Document.
“
Airgas
Documents ” means, collectively, and as may be
amended, modified, or otherwise supplemented from time to
time, (a) the Purchase and Sale Agreement dated January 18,
2001 among NEJD Pipeline Company Inc., Airgas and DRI, (b)
Pledge of Production Proceeds and Trust Agreement made
February 2, 2001 among DRI, Airgas, NEJD Pipeline Company,
Inc. and others (the “ Airgas
Pledge ”), (c) the Right of First Refusal and
Option to Purchase Agreement dated February 2, 2001 by and
between Airgas and DRI (the “ Airgas
ROFR ”), (d) the Amended and Restated Carbon
Dioxide Sale and Purchase Contract dated January 1, 2001 by
and between DRI and Airgas Carbonic Inc. as amended by (i) the
Amendments to Amended and Restated Carbon Dioxide Sale and
Purchase Contract effective respectively July 1, 2001 and
September 19, 2001 by and between DRI and Airgas Carbonic Inc.
and (ii) the Addendum to Carbon Dioxide Sale and Purchase
Contract dated August 1, 2006 by and between Genesis Crude
Oil, L.P. and Airgas Carbonic Inc.
“
Airgas
Pledge ” has the meaning provided in the
definition of Airgas Documents.
“
Airgas Rights
Determination ” means the issuance or entry of a
judgment, order, finding, award or other determination by a
court of law, arbitrator or arbitration panel, whether or not
final or appealable, (a) that as a result of any of the Pledge
and Related Actions Airgas may enforce a right of first
refusal, a right to prior consent, or other compliance
requirement or claim under any of the Airgas Documents, or (b)
that any of the Pledge and Related Actions be enjoined or
declared void because the provisions of any of the Airgas
Documents were not complied with in connection with any such
Pledge and Related Action.
“
Airgas
ROFR ” has the meaning provided in the definition
of Airgas Documents.
“
Applicable
Credit Agreement ” has the meaning set forth in
the C&A.
“
Applicable
Laws ” means and includes any and all laws,
ordinances, orders, rules, regulations and other legal
requirements of all governmental bodies (state, federal,
tribal and municipal) having jurisdiction over the ownership,
financing, use, occupancy, operation and maintenance of the
Pipeline System, as such may be amended or modified from time
to time.
“
Bankruptcy
Event ” means, with respect to any Person, the
entry of a decree or order by a court of competent
jurisdiction adjudging such Person as bankrupt or insolvent,
or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or
in respect of such Person under the Federal Bankruptcy Code or
any other applicable law, or appointing a receiver,
liquidator, assignee, trustee, sequestrator (or other similar
official) of such Person 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 Person 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 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.
“
Base
Rent ” has the meaning set forth in Section 4.A
hereof.
“
Board of
Governors ” means the Board of Governors of the
Federal Reserve System of the United States of
America.
“
Business
Day ” means a day other than a Saturday, Sunday
or other day on which commercial banks in New York, New York
and Houston, Texas are authorized or required by law to
close.
“
C&A
” means the Consent and Agreement, dated as of the date
hereof, among Lessee, DRI, MLP, Genesis SPE 1, Lessor and the
Administrative Agent.
“
Carbon
Dioxide ” means a substance primarily composed of
molecules containing one atom of carbon and two atoms of
oxygen and containing at least 95 percent (dry basis) by
volume of such molecules.
“
Cash
Prepayment Only Default ” has the meaning set
forth in Section 15.B(1).
“
Cash
Prepayment Option ” has the meaning set forth in
Section 15.C.
“
Casualty
” means any damage or destruction of all or any portion
of the Pipeline System as a result of a fire, flood,
earthquake or other casualty or catastrophe.
“
Charges
” has the meaning set forth in Section 22.O
hereof.
“
Claims
” means any and all obligations, liabilities, losses,
actions, suits, judgments, penalties, fines, claims, demands,
settlements, costs and expenses (including, without
limitation, reasonable legal fees and expenses) of any nature
whatsoever.
“
Closing
Agreement ” means that certain Closing Agreement
with respect to the Pipeline System, by and between Lessor and
Lessee, dated as of the Effective Date.
“
Collateral
Agreement ” has the meaning set forth on the
cover page hereto, as amended, restated, supplemented or
otherwise modified, refinanced or replaced, in each case from
time to time.
“
Collateral
Lien ” means any Lien created by the Collateral
Agreement or any exercise of rights under the Collateral
Agreement upon a Lease Event of Default.
“
Condemnation
” means, with respect to the Pipeline System, any
condemnation, requisition, confiscation, seizure or other
taking or sale of the use, access, occupancy, easement rights
or title to the Pipeline System or any part thereof, wholly or
partially (temporarily or permanently), by or on account of
any actual or threatened eminent domain proceeding or other
taking of action by any Person having the power of eminent
domain, including an action by a Governmental Body to change
the grade of, or widen the streets adjacent to, the Pipeline
System or alter the pedestrian or vehicular traffic flow to
the Pipeline System so as to result in a change in access to
the Pipeline System, or by or on account of an eviction by
paramount title or any transfer made in lieu of any such
proceeding or action (as a result of which, in all cases,
there is a material adverse effect on the operation of the
Pipeline System). A “Condemnation”
shall be deemed to have occurred on the earliest of the dates
that use, occupancy or title vests in the condemning
authority.
“
Contingent
Payments ” means amounts payable to Lessor
pursuant to Section 12 and/or pursuant to Section 5(g) of the
C&A.
“
Conveyance
” means those certain conveyance documents in the forms
attached hereto as Exhibit
D-1 and D-2
.
“
Default
Interest ” and “ Default Interest
Rate ” have the meanings set forth in
Section 15.E.
“
DRI
Credit Agreement ” means the Sixth Amended and
Restated Credit Agreement, dated as of September 14, 2006, by
and among Lessee, DRI, JPMorgan Chase Bank, N.A., as
Administrative Agent and the lenders party thereto, as
amended, restated, supplemented or otherwise modified,
refinanced or replaced, in each case from time to
time.
“
DRI
” means Denbury Resources Inc.
“
Effective
Date ” has the meaning set forth in the
introductory paragraph hereto.
“
Environmental
Costs and Liabilities ” means, all liabilities,
obligations, responsibilities, Remedial Actions, losses,
damages, punitive damages, consequential damages, treble
damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts and consultants
and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any
of the foregoing or in response to any violation of or
liability under any Environmental Law, to the extent based
upon, related to, or arising under or pursuant to any
Environmental Law, Environmental Permit, order or agreement
with any Governmental Body or other Person, which relates to
any environmental condition, violation of Environmental Law or
a Release or threatened Release of Hazardous Materials,
whether known or unknown, accrued or contingent, whether based
in contract, tort, implied or express warranty, strict
liability, criminal or civil statute.
“
Environmental
Law ” means any foreign, federal, state or local
statute, regulation, ordinance or other legal requirement as
now or hereafter in effect in any way relating to the
protection of or regulation of the environment or natural
resources, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42
U.S.C. § 9601 et seq
.), the Hazardous Materials Transportation Act (49 U.S.C.
§ 5101 et seq
.), the Resource Conservation and Recovery Act (42 U.S.C.
§ 6901 et seq
.), the Clean Water Act (33 U.S.C. § 1251 et seq
.), the Clean Air Act (42 U.S.C. § 7401 et seq
.), the Toxic Substances Control Act (15 U.S.C. § 2601
et
seq .), and the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. § 136 et seq
.), as those laws have been amended, any analogous laws and
the regulations promulgated pursuant thereto.
“
Environmental
Permit ” means any permit or approval required by
Environmental Laws for the operation of the Pipeline
System.
“
Event of
Loss ” means any of the following:
(a) a
Condemnation that involves a taking of Lessor’s entire
interest in the Pipeline System, or that, in the reasonable
judgment of Lessor, is likely to have a material adverse
effect on the use of the residual value of the Pipeline System
(unless the Lessee replaces the portion of the Pipeline System
that has been taken so as to restore the Pipeline System to a
condition in which the Pipeline System is able to operate at
substantially the same capacity as before such Condemnation
and, in the reasonable judgment of Lessor, such restoration
could reasonably be expected to be completed prior to the end
of the Lease Term),
(b) a
Casualty that, in the reasonable judgment of Lessor, is likely
to have a material adverse effect on the use or residual value
of the Pipeline System (unless the insurance proceeds received
in connection with such event are sufficient to repair and
restore the Pipeline System to a condition in which the
Pipeline System is able to operate at substantially the same
capacity as before such Casualty and, in the reasonable
judgment of Lessor, such repair and restoration could
reasonably be expected to be completed prior to end of the
Lease Term), or
(c) the
revocation of any permits or regulatory approvals from
Governmental Bodies or third parties, which permits or
approvals, as the case may be, are necessary for the ownership
and operation of the Pipeline System.
“
Excess
Casualty/Condemnation Proceeds ” means at any
time the excess, if any, of (x) the aggregate of all awards,
compensation or insurance proceeds payable in connection with
a Casualty or Condemnation minus (y) the Financing Lease
Prepayment Amount then outstanding.
“
Exchange
Documents ” has the meaning set forth in Section
15.C hereof.
“
Exchange
Guaranty ” has the meaning set forth in Section
15.C hereof.
“
Exchange
Mortgages ” has the meaning set forth in Section
15.C hereof.
“
Exchange
Note ” has the meaning set forth in Section 15.C
hereof.
“
Exchange Note
Option ” has the meaning set forth in Section
15.C.
“
Exchange or
Prepayment Option ” means either the Cash
Prepayment Option or the Exchange Note Option.
“
Exclusive
Right ” has the meaning set forth in Section 5.B
hereof.
“
Federal Funds
Effective Rate ” means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of
1%) of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York.
“
Financial
Assurances ” means a letter of credit provided by
DRI issued by a financial institution satisfactory to Lessor
in its reasonable discretion, made for the benefit of Lessor
or its designee or the Administrative Agent, payable upon
certification by Lessor or its designee that a Cash Prepayment
Only Default has occurred and is continuing, and otherwise in
form and substance satisfactory to Lessor in its reasonable
discretion in an amount equal to the amount of Base Rent to be
paid under this Financing Lease (i) during four complete
calendar quarters or (ii) during eight complete calendar
quarters if Financial Assurances are provided pursuant to
Section 11.B below, and the corporate credit rating of DRI
drops below B+ issued by Standard & Poor’s Rating
Group, or below a credit rating of B2 issued by Moody’s
Investor Service, Inc. Following the date Financial Assurances
are required to be delivered hereunder until such time as the
event that triggered the requirement of DRI providing such
Financial Assurances is no longer in effect, a renewal or
substitute letter of credit, upon the same terms and subject
to the same conditions as previously described in this
sentence, shall be provided by DRI no later than sixty (60)
days prior to the scheduled expiration date of any then
existing Financial Assurance; provided
, that if such renewal or substitute letter of credit is not
so provided within thirty (30) days prior to the scheduled
expiration date of any then existing letter of credit, the
beneficiary thereof shall be entitled to draw on the existing
letter of credit.
“
Financing
Lease ” has the meaning set forth in the
introductory paragraph hereto.
“
Financing Lease
Documents ” means this Financing Lease, the
Closing Agreement, the Conveyance, the Financing Lease
Guaranty, the Memorandum of Financing Lease, and all other
deeds, financing statements, documents or instruments called
for in the preceding named documents; it being understood that
the C&A is expressly not a Financing Lease
Document.
“
Financing Lease
Guaranty ” has the meaning set forth in Section
4.D hereof.
“
Financing Lease
Prepayment Amount ” means, at any date of
determination, the sum of (a) the unpaid principal balance
following the application of all quarterly installments of
Base Rent theretofore made by Lessee pursuant to this
Financing Lease, as shown in the column entitled
“Balance” on Exhibit B
, (b) any interest earned but unpaid on such principal
balance, including Default Interest pursuant to Section 15.E,
and (c) any other amounts owed by Lessee or DRI to Lessor
under the Financing Lease Documents and/or payable under
Section 5(g) of the C&A to the Lessor or the other
parties thereto (including Contingent Payments), in each case
as of such date of determination.
“
Financing Lease
Transaction ” shall have the meaning set forth in
Section 4.E hereof.
“
GAAP
” means generally accepted accounting principles in the
United States of America applicable at the time of the event
or occurrence of the condition to which GAAP
applies.
“
Genesis Event of
Default ” has the meaning set forth in Section
3.C(4).
“
Genesis SPE
1 ” means Genesis NEJD Holdings, LLC, a Delaware
limited liability company.
“
Governmental
Body ” means any government or governmental or
regulatory body thereof, or political subdivision thereof,
whether foreign, federal, state, tribal or local, or any
agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).
“
Hazardous
Material ” means any substance, material or waste
which is regulated, classified, or subject to liability under
or pursuant to any Environmental Law, including, without
limitation, petroleum and its by-products, asbestos,
polychlorinated biphenyls, radon, mold or other fungi, and
urea formaldehyde insulation.
“
Income
Termination Date ” shall mean, if either occurs,
the earlier of (i) the date on which Lessor accepts in writing
a conveyance in lieu of foreclosure of the liens created in
this Financing Lease and the Memorandum of Financing Lease
covering Lessee's interest in the Pipeline System or (ii) the
date on which a foreclosure sale of such liens has been
completed.
“
Intercompany
Event of Default ” has the meaning set forth in
Section 3.C(4) hereof.
“
Interest
Lien ” means any Lien held by Lessor as a
component of Lessor’s interest in the Pipeline
System.
“
IRS
” has the meaning set forth in Section 4.E
hereof.
“
Knowledge
” means as follows: (i) with respect to Lessor, the
individuals listed on Schedule
1(i) , or their respective successors in the same or
similar officer positions, shall be deemed to have knowledge
of a particular fact or other matter if such individual is
consciously aware of such fact or other matter at the time of
determination after due inquiry; and (ii) with respect to
Lessee, the individuals listed on Schedule
1(ii) , or their respective successors in the same or
similar officer positions, shall be deemed to have knowledge
of a particular fact or other matter if such individual is
consciously aware of such fact or other matter at the time of
determination after due inquiry.
“
Lease Event of
Default ” has the meaning set forth in Section
15.A hereof.
“
Lease
Term ” shall have the meaning set forth in
Section 3.A hereof.
“
Lessee
” means Denbury Onshore, LLC, a Delaware limited
liability company, together with its successors and assigns
permitted pursuant to Section 14 hereof.
“
Lessee Retained
Liabilities ” has the meaning set forth in
Section 2.A hereof.
“
Lessor
” means Genesis NEJD Pipeline, LLC, a Delaware limited
liability company, together with its successors and assigns
permitted pursuant to Section 14 hereof.
“
Lessor
Debt ” has the meaning set forth in Section
3.C(4) hereof.
“
Lessor Financing
Statements ” means UCC financing statements
appropriately completed and executed for filing in the
applicable jurisdiction in order to perfect Lessor’s
security interest in the Pipeline System which secures
Lessee’s performance under the Financing
Lease.
“
Lessor
Lien ” means any Lien on the Pipeline System or
the Financing Lease Documents arising on or after the
Effective Date that is either proven to have been created by
Lessor or proven to have arisen based on any action of or
failure to act by Lessor, the MLP, its subsidiaries, or its
general partner, Genesis Energy, Inc., including with respect
to Lessor Taxes; provided
that, notwithstanding the foregoing, Lessor Liens shall not
include (i) any Interest Lien or other Lien that arises solely
from Lessor’s interest in the Pipeline System but is
otherwise unrelated to any action of or failure to act by
Lessor, the MLP, its subsidiaries or such general partner,
(ii) Permitted Encumbrances, (iii) any Lien consented to or
created or caused by Lessee or its Affiliates, (iv) any Lien
arising out of Lessee’s performance of, or failure to
perform, its responsibilities and obligations under the
Financing Lease Documents, or otherwise out of a matter for
which Lessee is required to provide indemnification pursuant
to this Financing Lease, (v) any Lien related to beneficial
ownership, operation or maintenance of the Pipeline System,
(vi) any Lien created pursuant to the Collateral Agreement or
the Financing Lease Documents, (vii) any Lien created pursuant
to an assignment permitted by Section 14, (viii) any Lien
arising out of or related to Lessee Retained Liabilities, (ix)
any Collateral Lien, or (x) any Lien not created by Lessor
existing immediately prior to the execution and delivery of
this Financing Lease.
“
Lessor Release
Mechanics ” means, subject to Sections 2(b) and
(d) of the C&A, (a) Lessor shall execute and deliver to
Lessee (or to Lessee’s designee) at Lessee’s cost
and expense (including without limitation any Pipeline System
Taxes, but except as herein otherwise expressly provided with
respect to Lessor Liens, Collateral Liens or Interest Liens),
a reassignment and release of Lessor’s entire interest
in the Pipeline System, as it then exists, free and clear of
any Lessor Liens, Collateral Liens and Interest Liens, but
subject to Permitted Encumbrances and without any
representation or warranty, express or implied, regarding
title to, the condition of or other matters with respect to,
the Pipeline System, it being intended that all of the
negations of representations and warranties set forth in
Section 2.E shall also expressly apply in the context of the
Lessor Release Mechanics; (b) Lessor’s interest in the
Pipeline System shall be reassigned and released to Lessee (or
to Lessee’s designee) “ AS IS, WHERE IS
” and in its then present physical condition; (c) Lessor
shall execute and deliver to Lessee such releases as may be
reasonably requested to release Lessor Liens and shall execute
and deliver to Lessee a statement of termination, as
appropriate, of this Financing Lease and the Memorandum of
Financing Lease, and (d) all future obligations of Lessor and
Lessee under this Financing Lease and of DRI under the
Guaranty shall terminate and be released upon consummation of
such reassignment and release of Lessor’s interest in
the Pipeline System to Lessee, provided
that the parties hereto shall retain any and all rights to
pursue remedies provided herein against the other party
pursuant to provisions that expressly survive termination of
this Financing Lease or for damages resulting from breaches by
such other party of obligations under this Financing Lease or
the other Financing Lease Documents and/or the C&A
occurring prior to such termination. If the Lessor
is complying with the Lessor Release Mechanics in conjunction
with the consummation of the Exchange Note Option, then,
notwithstanding anything to the contrary herein, it is
understood and agreed that the Liens granted pursuant to the
Exchange Mortgages are granted in renewal, extension and
rearrangement of the Interest Lien reassigned and released
pursuant to clauses (b) and (c)
above. Notwithstanding anything to the contrary
contained in this Financing Lease, any other Financing Lease
Document or the C&A, in the case of a prepayment as a
result of the occurrence of an Airgas Rights Determination,
the Lessor Release Mechanics shall exclude, and Lessor shall
not be obligated to perform or comply with, any of the
foregoing elements of the definition of Lessor Release
Mechanics that would be prohibited by or materially
inconsistent with the Airgas Rights Determination, and
Lessor’s failure to perform or comply with such elements
that would be prohibited by or materially inconsistent with
the Airgas Rights Determination shall not excuse Lessee from,
or permit Lessee to delay, paying the Financing Lease
Prepayment Amount.
“
Lessor
Taxes ” shall have the meaning set forth in the
definition of “Pipeline System Taxes”
below.
“
Lessor’s
Inspection Right ” has the meaning set forth in
Section 5.A hereof.
“
Lien
” means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, security interest, encumbrance or
preference, priority or other security agreement or any
interest in Property to secure payment of a debt or
performance of an obligation (including, without limitation,
the interest of a vendor or lessor under any conditional sale,
capitalized lease or other title retention
agreement).
“
Margin
Stock ” has the meaning assigned to such term in
Regulation U.
“
Material
Indebtedness ” means any indebtedness for
borrowed money (or guaranty thereof) (other than the
obligations under the Financing Lease Documents or the
C&A) of either DRI, any of Lessee’s other Affiliates
or Lessee (a) in an aggregate principal amount exceeding
$50,000,000 or (b) arising under the DRI Credit
Agreement.
“
Maximum
Rate ” has the meaning set forth in Section 22.O
hereof.
“
Memorandum of
Financing Lease ” means, collectively those
documents filed pursuant to Section 22.M hereof.
“
MLP
” means Genesis Energy, L.P., a Delaware limited
partnership
“
Outstanding
Consents ” shall have the meaning set forth in
the Closing Agreement.
“
Permitted
Encumbrances ” means: (a) any Liens
for Pipeline System Taxes that are not yet due and payable;
(b) materialmen’s, mechanic’s, repairmen’s,
employees’, contractors’ and other similar Liens
or charges arising in the ordinary course of business, so long
as, at any time, no enforcement action with respect to any
such Lien has progressed to the point where a judgment or
decree for foreclosure, or a foreclosure sale, could be
entered or conducted within the next ensuing thirty (30) day
period; (c) all rights reserved to or vested in any
Governmental Body to control or regulate any of the real
property interests constituting a part of the Pipeline System;
(d) easements, rights of way, restrictions and other similar
encumbrances incurred in the ordinary course of business and
which, in the aggregate, are not substantial in amount and
which do not in any case materially detract from the value of
the Pipeline System as it is currently being used or
materially interfere with the ordinary conduct of the Pipeline
System; (e) other Liens not created by, through or under the
Lessee and which do not secure indebtedness for borrowed
money, which Liens are incurred in the ordinary course of
business and which, in the aggregate, are not substantial in
amount and which do not materially detract from the value of
the Pipeline System as it is currently being used or do not,
and could not reasonably be expected to, materially interfere
with the ordinary conduct or transfer of the Pipeline System;
provided
that any such Lien shall be a Permitted Encumbrance for only
so long as, at any time, no enforcement action with respect
thereto has progressed to the point where a judgment or decree
for foreclosure, or a foreclosure sale, could be entered or
conducted within the next ensuing thirty (30) day period; (f)
the rights of grantors and lessors to consent to a transfer of
any Rights-of-Way; and (g) the rights of Airgas with respect
to the Pipeline System under the Airgas
Documents.
“
Person
” means any individual, corporation, partnership, firm,
joint venture, association, joint-stock company, trust,
unincorporated organization, governmental authority or other
entity.
“
Pipeline
System ” means the North East Jackson Dome
Pipeline System in Mississippi and Louisiana as shown on
Exhibit
A-1 hereto, which is a pipeline that begins at the
upstream flange of the twenty-inch (20”) motor-operated
mainline valve C-010 located downstream of Lessee’s
North East Jackson Dome meter station and has interim
termination points at the inlet flanges of the valves or
connections upstream of all Lessee meter facilities at the
various delivery points along the pipeline, and a final
termination point of the pipeline at mile marker M-183 in
Ascension Parish, Louisiana, along with all in-line equipment,
pipes, flanges, valves, fittings,
meters, and related improvements,
fixtures and equipment that are physically attached to and are
a part of the pipe comprising the
pipeline (collectively the “ Pipeline
Equipment ”), including those shown on
Exhibit A
1 hereto, and all rights, interests and estates created
in the Rights-of-Way, and all additions thereto and
substitutions therefor. However ,
the Pipeline System does not and will not include (a)
compressors, pump stations (such as the Brandon pump station
now being constructed), or any other equipment connected to
and used in conjunction with the pipeline but not an in-line
or an attached part of the pipe comprising the pipeline
described above, nor (b) any additions located outside of, or
any Pipeline Equipment that is not physically attached to the
pipeline at points within, the beginning point and termination
points described above, except to the extent that such
additions are substitutions for any portion of the Pipeline
System (including the Pipeline Equipment) as it exists on the
Effective Date.
“
Pipeline System
Taxes ” means all Taxes specifically assessed
against the Pipeline System, including Taxes imposed on the
ownership, financing, use, occupancy or possession of the
Pipeline System but specifically not including “
Lessor
Taxes ” which will shall mean all gross receipts,
income or franchise taxes, or other taxes of the nature of
income taxes, to which Lessor is subject solely as a result of
receiving the payments provided to be paid to Lessor
hereunder, but in no event shall Lessor Taxes include amounts
greater than those which would be owing by Lessor had this
Financing Lease been documented as a promissory note payable
by Lessee to Lessor in the principal balance, and payable at
the times and in the amounts, set forth on Exhibit B
, and secured by a deed of trust lien and security interest
covering the Pipeline System.
“
Pledge and
Related Actions ” means (a) the execution and
delivery of the Financing Lease Documents, the C&A and the
SRCA, (b) the pledge of the applicable Financing Lease
Documents, the C&A and/or the SRCA by Lessor to Genesis
SPE 1 pursuant to the Collateral Agreement, (c) the granting
of Liens (the “Upstream Liens”) to various secured
parties directly or indirectly on the assets of Lessor or
Genesis SPE 1 or on the equity interests of Genesis SPE 1, (d)
any change in the Person that is the Lessor pursuant to an
exercise of remedies under the Collateral Agreement or in
connection with the Upstream Liens, or (e) the execution and
delivery of the Exchange Documents by the parties
thereto.
“
Prepayment or
Exchange Terms ” has the meaning set forth in
Section 15.C hereof.
“
Property
” of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or
other assets owned, leased or operated by such Person, and
includes, without limitation, stock, partnership and limited
liability company interests owned or held in any other Person
by such Person.
“
Regulation
T ” means Regulation T of the Board of Governors
as from time to time in effect and all official rulings and
interpretations thereunder and thereof.
“
Regulation
U ” means Regulation U of the Board of Governors
as from time to time in effect and all official rulings and
interpretations thereunder and thereof.
“
Regulation
X ” means Regulation X of the Board of Governors
as from time to time in effect and all official rulings and
interpretations thereunder and thereof.
“
Release
” means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, or
leaching into the indoor or outdoor environment, or into or
out of any property.
“
Remedial
Action ” means all actions to (i) clean up,
remove, treat or in any other way address any Hazardous
Material; (ii) prevent the threatened Release of any Hazardous
Material so it does not endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment;
(iii) perform pre-remedial studies and investigations or
post-remedial monitoring and care; or (iv) to correct a
condition of non-compliance with Environmental
Laws.
“
Rights-of-Way
” means all surface leases, easements, servitudes,
rights-of-way, fee interests, full ownership, leases,
leasehold interests, crossing rights, licenses and other
interests in real property and/or immovable property
associated therewith, initially shown as Exhibit
A-2 hereto, and as the same may exist from time to
time, and all additions thereto and substitutions therefor,
subject to the last sentence of the definition of Pipeline
System.
“
SEC
” has the meaning set forth in Section 11.C
hereof.
“
SRCA
” means that certain Special Representations and
Covenants Agreement, dated as of even date herewith, by and
between MLP and Lessee.
“
Survival
Provisions ” means all provisions of this
Financing Lease which are stated herein to survive the
expiration or termination of this Financing Lease, the
application of the Lessor Release Mechanics or the exercise of
any rights or remedies by Lessor or Lessee hereunder or under
the other Financing Lease Documents or the
C&A.
“
Tax
” or “ Taxes
” means, however denominated, (x) any and all taxes,
assessments, customs, duties, levies, fees, tariffs, imposts,
deficiencies and other governmental charges of any kind
whatsoever (including, but not limited to, taxes on or with
respect to net or gross income, franchise, profits, gross
receipts, capital, sales, use, ad valorem, value added,
transfer, real property transfer, transfer gains, transfer
taxes, mortgage taxes, intangibles taxes, inventory, escheats,
unclaimed property, capital stock, license, payroll,
employment, social security, unemployment, severance,
occupation, real or personal property, estimated taxes, rent,
excise, occupancy, recordation, bulk transfer, intangibles,
alternative minimum, doing business, withholding and stamp),
together with any interest thereon, penalties, fines, damages
costs, fees, additions to tax or additional amounts with
respect thereto, imposed by any federal, state or local taxing
authority of any jurisdiction; (y) any liability for the
payment of any amounts described in clause (x) as a result of
being a member of an affiliated, consolidated, combined,
unitary or similar group or as a result of transferor or
successor liability; and (z) any liability for the payments of
any amounts as a result of being a party to any tax sharing
agreement or as a result of any express or implied obligation
to indemnify any other person with respect to the payment of
any amounts of the type described in clause (x) or
(y).
“
Tax
Return ” means any report, return, document,
declaration or other information or filing (including any
amendments, elections, declarations, disclosures, schedules,
estimates and information returns) required to be supplied to
any federal, state or local taxing authority or jurisdiction
with respect to Taxes, including, where permitted or required,
combined or consolidated returns for any group of entities
that includes any party to this Financing Lease or any
subsidiary of any such party, any documents with respect to or
accompanying payments of estimated taxes, or with respect to
or accompanying requests for the extension of time in which to
file any such report, return, document, declaration or other
information.
2.
Demise and Quiet
Enjoyment .
A.
Demise and
Lease . Lessor, for and in consideration of
the covenants and agreements of Lessee set forth herein, does
hereby demise and lease to Lessee for the Lease Term the
Pipeline System and 100% of its capacity for Lessee’s
exclusive use for transporting Carbon Dioxide, or any other
substance Lessee may determine in its sole
discretion. Lessee has retained the exclusive right
to use the Pipeline System in accordance with Applicable Laws
(including without limitation the right of ingress and egress
to and use of all easements, fee interests, rights-of-way and
crossings comprising the Pipeline System). Lessee
retains and assumes all liabilities and obligations of any
kind or nature with respect to the Pipeline System (including
for Environmental Costs and Liabilities), based upon or
arising from or out of, any condition existing or act, event
or omission occurring, with respect to the Pipeline System, or
the use, occupancy, ownership, operation or maintenance
thereof arising, occurring or resulting (a) on or prior to the
Effective Date, and (b) from and after the Effective Date
(collectively, the “ Lessee Retained
Liabilities ”), except for Lessor
Taxes.
B.
Further
Assurances by Lessor . Upon the request of
Lessee and all at Lessee’s expense, and only if Lessee
reasonably determines that it will only be able to complete
the given action described in clause (i) through (vi) below
with Lessor’s assistance, Lessor agrees to execute and
deliver such agreements and documentation and to perform, or
cooperate with Lessee in performing, all necessary acts with
respect to effectuating Lessee’s use, operation and
quiet enjoyment of the Pipeline System and performing its
obligations and exercising its rights pursuant to the terms
hereof including without limitation, documents and acts
related to (i) determining and contesting Tax liabilities,
(ii) enforcing, modifying, extending, renegotiating, replacing
or obtaining consents or approvals necessary in connection
with the Pipeline System, (iii) entering into contracts or
other agreements not modifying or contravening the Financing
Lease Documents (other than modifications or contraventions
pursuant to Section 5.B) or the C&A, (iv) obtaining,
renewing, extending, making filings or performing acts
required by or necessary to comply with, government permits,
licenses, franchises, approvals and other authorities or
Applicable Law, (v) asserting or defending against claims
against the Pipeline System; and (vi) asserting or defending
against condemnation proceedings against, and recovering
casualty loss relating to, the Pipeline System.
C.
Quiet
Enjoyment . Subject to Lessor’s
Inspection Right and Section 2.D, and subject to the rights of
Lessor contained in Section 15.B and the other terms of the
Financing Lease Documents and/or the C&A to which the
Lessee is a party, the Lessee shall peaceably and quietly
have, hold and enjoy the Pipeline System for the Lease Term,
free of any claim or other action by Lessor or anyone claiming
by, through or under Lessor (other than Lessee or anyone
claiming by, through or under Lessee) with respect to any
matters arising from and after the Effective
Date. Such right of quiet enjoyment is independent
of, and shall not affect Lessor’s rights otherwise to
initiate legal action to enforce the obligations of Lessee
under this Financing Lease.
D.
Title
. Lessor makes no representation or warranty,
express or implied, regarding the Pipeline
System. The Pipeline System shall be subject to the
rights of parties in possession, the existing state of title
(including, without limitation, all Liens except for and
excluding Lessor Liens) and all Applicable
Laws. Lessee shall in no event have any recourse
against Lessor for any defect in or exception to title to the
Pipeline System other than resulting from Lessor Liens or from
Lessor’s failure to comply with the Lessor Release
Mechanics. Lessor’s interest in the Pipeline
System is inferior and subject to the pledge of a trust
account (the “ DRI Trust
Account ”) and funds to be deposited by DRI
therein and the obligation of DRI to make such pledge and to
make monthly payments, as provided in paragraph 4 of the
Airgas Pledge.
E.
Condition of the
Pipeline System . Lessee acknowledges and
agrees that Lessee is solely responsible for the design,
development, budgeting and construction of the Pipeline System
and any alterations or modifications
thereto. Lessee further acknowledges and agrees
that it is leasing the Pipeline System “ AS IS , WHERE IS ”
without representation, warranty or covenant (express or
implied) by Lessor subject to (a) the state of title as
provided in Section 2.D above, (b) the rights of any parties
in possession thereof, (c) any state of facts which an
accurate survey or physical inspection might show, and (d)
violations of Applicable Law which may exist on the Effective
Date (other than as a result of Lessor
Liens). Lessor has not made nor shall be deemed to
have made any representation, warranty or covenant (express or
implied) nor shall be deemed to have any liability whatsoever
as to the title (other than for Lessor Liens), value,
habitability, use, condition, design, operation, or fitness
for use of the Pipeline System (or any part thereof), or any
other representation, warranty or covenant (except Section 2.C
hereof and the obligation to comply with the Lessor Release
Mechanics when required to do so) whatsoever, express or
implied, with respect to the Pipeline System (or any part
thereof). Lessor shall not be liable for any
latent, hidden, or patent defect therein or the failure of the
Pipeline System, or any part thereof, to comply with any
Applicable Law (other than as a result of Lessor
Liens). In addition to the foregoing, Lessee agrees
that Lessor does not warrant that the Pipeline System is free
from hidden, redhibitory or latent defects or vices or that
the Pipeline System is fit for the use intended by Lessee, and
Lessee hereby expressly waives (i) all rights in redhibition
pursuant to Louisiana Civil Code article 2520, et seq.; (ii)
the warranties against hidden or redhibitory defects in the
Pipeline system; and (iii) the warranty that the Pipeline
System is fit for its intended use, each of which would
otherwise be imposed upon Lessor by Louisiana Civil Code
article 2475, Lessee hereby releases Lessor from any liability
for hidden, redhibitory or latent defects or vices under
Louisiana Civil Code articles 2520 through 2548.
F.
No
Obligation of Lessor to Repair, etc . Lessor
shall under no circumstances be required to build any
improvements on the Pipeline System, make any repairs,
replacements, alterations or renewals of any nature or
description to the Pipeline System, make any expenditure
whatsoever in connection with this Financing Lease (other than
for the acquisition of its interest in the Pipeline System in
accordance with and pursuant to the terms of the Closing
Agreement) or maintain the Pipeline System in any
way. Lessee waives any right to (i) require Lessor
to maintain, repair, or rebuild all or any part of the
Pipeline System or (ii) make repairs at the expense of Lessor
pursuant to any Applicable Law, or pursuant to the terms and
conditions of any insurance policy maintained by Lessee, and
all requirements of the issuer of any such policy, contract,
agreement, or covenant, condition or restriction in effect at
any time during the Lease Term.
3.
Lease Term and
Repayment Obligations .
A.
Term .
The term of the Financing Lease will commence at 7:00 a.m.
Central Daylight Time on the Effective Date and expire on the
day that is the twentieth (20th) anniversary thereof (the
“ Lease
Term ”), unless earlier terminated as expressly
provided hereunder.
B.
Mandatory
Repayment . Upon the expiration of the Lease Term as
set forth in Section 3.A above, the parties agree that Lessee
will have the right and obligation to pay to Lessor
consideration in the amount of One Dollar ($1.00) plus the
unpaid amount of the Financing Lease Prepayment Amount, if
any, and receive from Lessor, and Lessor will reassign and
release to Lessee, Lessor’s interest in the Pipeline
System pursuant to the Lessor Release Mechanics for such
consideration with such reassignment and release of
Lessor’s interest in and to the Pipeline System to
Lessee to become effective as of 12:01 a.m. on the next
succeeding day following the expiration of the Lease Term and
thereafter this Financing Lease and the Financing Lease
Guaranty (as defined in Section 4.D below) shall be deemed
terminated and released with no further obligations hereunder
or thereunder, except as provided in the succeeding
sentence. This Section 3.B and the other Survival
Provisions shall survive expiration of the Lease
Term.
C.
Optional
Prepayment . Upon the occurrence of any of
the following events or conditions:
(1) The
removal of the general partner of MLP, as a result of which no
direct or indirect majority-owned subsidiary of DRI is the
general partner of MLP and such removal of the general partner
of MLP occurs without the direct approval of DRI;
(2) Upon
a material breach of the terms of this Financing Lease by
Lessor which remains uncured thirty (30) days after written
notice of such delivered by Lessee to Lessor;
(3) Upon
the occurrence of a Bankruptcy Event with respect to Lessor,
Genesis SPE 1, MLP or any MLP Affiliate;
(4) Upon
the occurrence of an event of default by Lessor, MLP or any
other MLP Affiliate, under any credit facility, financing
arrangement or other indebtedness for borrowed money to which
Lessor, MLP or any MLP Affiliate is a party, co-borrower or
guarantor in an aggregate principal amount exceeding
$10,000,000. For avoidance of doubt, as used in
this Section 3.C(4), the term event of default includes,
without limitation, an “Event of Default” and an
“Intercompany Event of Default” as those terms are
defined in the “Applicable Credit Agreement” (the
terms in quotations having the same definitions as provided in
the C&A) (any event of default triggering this clause (4),
a “ Genesis Event of
Default ”);
(5) Upon
(a) a material breach by MLP of a representation, warranty,
covenant or agreement under the SRCA which does not provide
MLP with a right to written notice and opportunity to cure, or
(b) upon a material breach by MLP of a representation,
warranty, covenant or agreement under the SRCA which provides
MLP with a right to written notice and opportunity to cure and
which remains uncured thirty (30) days after such written
notice thereof is delivered by Lessee to MLP; or
(6) Genesis
NEJD Pipeline, LLC is no longer the Lessor; or
(7) The
occurrence of an Airgas Rights Determination.
the
parties agree that Lessee shall have the option, but not the
obligation, to elect to exercise its option to prepay its
obligations hereunder in accordance with Section 15.C hereof (
provided
that in the event of an Airgas Rights Determination, Lessee
shall be obligated to consummate the Cash Prepayment
Option). Lessor agrees to promptly provide Lessee
with a copy of any notices received by Lessor related to any
Genesis Event of Default.
4.
Consideration
.
A.
Base
Rent . During the Lease Term, Lessee agrees to pay base
rent (“ Base Rent
”) to Lessor for the Pipeline System in eighty (80)
equal quarterly installments paid in arrears, beginning on the
same day of the month as the Effective Date of the 3rd month
following the Effective Date (or if there is no same day in
that month then the last day of that month) and continuing on
the same day of each third month thereafter, in the amount of
$5,166,943 per quarter. By way of example, if the
Effective Date is August 31st of any year, then the first
quarterly installment of Base Rent will be payable on November
30th of that year, and the next quarterly installment of Base
Rent will be payable on February 28th (or if a leap year,
February 29th) of the following year. Exhibit B
sets forth Lessee’s Base Rent payment schedule for the
entire Lease Term. For the avoidance of doubt, the
Base Rent payments made by Lessee during the Lease Term
reflect a full amortization of principal and interest such
that the sum of all equal quarterly installments of Base Rent
will discharge a principal amount totaling $175,000,000 plus
interest earned thereon, over the Lease Term.
B.
Net
Lease .
(1) The
Base Rent set forth in this Section 4 shall be absolutely net
to Lessor, and all costs, expenses, and obligations of every
kind and nature whatsoever relating to the Pipeline System
(other than Lessor Taxes) which may arise or become due during
the Lease Term of this Financing Lease shall be paid by
Lessee. Lessee hereby agrees that it shall not be
entitled to any abatement of rents or of any other amounts
payable hereunder by Lessee, and that Lessee’s
obligation to pay all Base Rent and any other amounts owing
hereunder shall be absolute and unconditional under all
circumstances.
(2) Any
present or future law to the contrary notwithstanding, this
Financing Lease shall not terminate, nor shall Lessee be
entitled to any abatement, suspension, deferment, reduction,
setoff, counterclaim, or defense with respect to the Base
Rent, nor shall the obligations of Lessee hereunder be
affected (except as expressly herein permitted and by
performance of the obligations in connection therewith) by
reason of: (i) any defect in the condition, merchantability,
design, construction, quality or fitness for use of the
Pipeline System or any part thereof, or the failure of the
Pipeline System to comply with all Applicable Law, including
any inability to occupy or use the Pipeline System or any part
thereof by reason of such non-compliance; (ii) any damage to,
removal, abandonment, salvage, loss, contamination of or
release from, scrapping or destruction of or any requisition
or taking of the Pipeline System or any part thereof, (iii)
any restriction, prevention or curtailment of or interference
with any use of the Pipeline System or any part thereof
including eviction; (iv) any defect in title to or rights to
the Pipeline System or any Lien on such title or rights or on
the Pipeline System (other than Lessor Liens); (v) any
bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceedings
relating to Lessor or any other Person
