EXHIBIT 10.3
DISTRIBUTION SUPPORT AGREEMENT
This DISTRIBUTION SUPPORT AGREEMENT, dated as of December 3, 1996 (this
"Agreement"), is entered into by and between GENESIS CRUDE OIL, L.P., a Delaware
limited partnership ("Genesis OLP"), and SALOMON INC, a Delaware corporation
("Salomon").
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and as an inducement to consummate the transactions
contemplated by the Genesis OLP Partnership Agreement (as hereinafter defined),
the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Terms Defined by Reference to the Genesis OLP Partnership
Agreement. All capitalized terms used herein and not defined herein shall have
the meanings provided therefor in the Amended and Restated Agreement of Limited
Partnership of Genesis Crude Oil, L.P., dated as of December 3, 1996 (the
"Genesis OLP Partnership Agreement"), without giving effect to any amendments or
modifications to the Genesis OLP Partnership Agreement subsequent to the Closing
Date that would modify or amend in any respect any of such terms not defined
herein unless such amendment or modification is consented to in accordance with
the provisions of Section 3.6.
SECTION 1.2. Terms Defined Herein. The following definitions shall be for all
purposes, unless otherwise clearly indicated to the contrary, applied to the
terms used in this Agreement.
"Agreement" means this Distribution Support Agreement, as it may be amended,
supplemented or restated from time to time.
"Aggregate Ceiling" means, with respect to any Quarter, an amount equal to the
product obtained by multiplying (a) four, times (b) the Minimum Quarterly
Distribution as in effect for such Quarter, times (c) the sum of (i) the number
of OLP Common Units Outstanding as of the Closing Date, plus (ii) the number of
OLP Common Units, if any, issued after the Closing Date to Genesis MLP pursuant
to Section 5.2(a)(ii) of the Genesis OLP Partnership Agreement; provided,
however, that the number of OLP Common Units, if any, calculated as provided in
clause (c) of this definition shall be proportionately adjusted in the event of
any combination or subdivision of OLP Common Units, however effected, with the
result that, after taking into account an adjustment to the Minimum Quarterly
Distribution resulting pursuant to the Genesis OLP Partnership Agreement due to
such combination or subdivision, there shall not be any change in the Aggregate
Ceiling as a result of such combination or subdivision.
"API Contributor" means Salomon unless and until Salomon has transferred its
obligations under this Agreement to a transferee pursuant to and in compliance
with Section 2.6, and thereafter shall mean the transferee of such obligations.
"Cumulative OLP Common Unit Arrearage" has the meaning assigned to the term
"Cumulative Common Unit Arrearage" in the Genesis OLP Partnership Agreement.
"General Partner" means Genesis Energy, LLC unless and until Genesis Energy, LLC
has transferred its General Partner Interest in Genesis OLP in compliance with
the requirements of Section 4.6 of the Genesis OLP Partnership Agreement, and
thereafter shall mean the transferee of such General Partner Interest.
"Genesis Energy, LLC" means Genesis Energy, L.L.C., a Delaware limited
liability company, and its successors.
"Genesis MLP" means Genesis Energy, L.P., a Delaware limited partnership, and
its successors.
"Genesis MLP Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of Genesis Energy, L.P., dated as of December 3, 1996, as it
may be amended, supplemented or restated from time to time.
"Genesis OLP" means Genesis Crude Oil, L.P., a Delaware limited partnership, and
its successors.
"Genesis OLP Partnership Agreement" has the meaning assigned to such term in
Section 1.1.
"Investment Grade Entity" means (a) a Person that has any long-term unsecured
debt obligations that are rated Qualified Investment Grade or (b) in the case of
a Person (i) who does not have long-term unsecured debt obligations, (ii) whose
long-term unsecured debt obligations are not rated by S&P, Moody's or an NRSRO
or (iii) who is not a U.S. Person, a Person having, in the reasonable judgment
of the API Contributor, credit quality comparable to that of a Person described
in clause (a) of this definition.
"Letter of Credit" means a letter of credit issued by a Qualified Bank, which
letter of credit meets the requirements set forth in Section 2.7.
"MLP Unit" has the meaning assigned to the term "Unit" in the Genesis MLP
Partnership Agreement.
"MLP Unitholder" has the meaning assigned to the term "Unitholder" in the
Genesis MLP Partnership Agreement.
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor thereto.
"NRSRO" means a rating agency that is designated by the Securities and Exchange
Commission as a nationally recognized statistical rating organization.
"OLP Common Unit" has the meaning assigned to the term "Common Unit" in the
Genesis OLP Partnership Agreement.
"OLP Subordinated Unit" has the meaning assigned to the term "Subordinated Unit"
in the Genesis OLP Partnership Agreement.
"OLP Unit" has the meaning assigned to the term "Unit" in the Genesis OLP
Partnership Agreement.
"OLP Unitholders" has the meaning assigned to the term "Unitholders" in the
Genesis OLP Partnership Agreement.
"Qualified Bank" means a commercial bank whose long-term unsecured debt
obligations are rated Qualified Investment Grade at the time of issuance of a
Letter of Credit by such commercial bank.
"Qualified Investment Grade" means (a) a rating of at least BBB- by S&P, (b) a
rating of at least Baa3 by Xxxxx'x or (c) a rating by any other NRSRO that is
comparable to the ratings of S&P and Xxxxx'x described in clauses (a) and (b) of
this definition.
"Quarterly Ceiling" means, with respect to any Quarter and any contribution
contemplated hereby, an amount equal to the product of (i) the Minimum Quarterly
Distribution as in effect for such Quarter, times (ii) the number of OLP Common
Units Outstanding on the Record Date with respect to such Quarter.
"Required Contribution" has the meaning assigned to such term in Section 2.7.
"S&P" means Standard & Poor's Ratings Group, or any successor thereto.
"Salomon" means Salomon Inc, a Delaware corporation, and its successors.
"Support Period" means the period commencing on the Closing Date and ending on
the earlier to occur of (a) the first day after the day on which Available Cash
is distributed with respect to the Quarter ending December 31, 2001, (b) the
first day of any Quarter beginning after December 31, 1999 in respect of which
(i) distributions of Available Cash from Operating Surplus on each of the
Outstanding OLP Common Units and OLP Subordinated Units with respect to the
four-Quarter period immediately preceding such date equaled or exceeded the
sum of the Minimum Quarterly Distribution on all of the Outstanding OLP
Common Units and OLP Subordinated Units during such period, (ii) the Adjusted
Operating Surplus generated during the four-Quarter period immediately
preceding such date equaled or exceeded 133% of the sum of the Minimum
Quarterly Distribution on all of the Outstanding OLP Common Units and OLP
Subordinated Units during such period and (iii) there are no outstanding
Cumulative OLP Common Unit Arrearages, and (c) the date this Agreement
terminates in accordance with its terms and as contemplated by Section 2.3.
"Trustee" has the meaning assigned to such term in Section 2.7.
"U.S. Person" means a Person who is organized and existing under the laws of the
United States of America or any state thereof.
ARTICLE 2
DISTRIBUTION SUPPORT
SECTION 2.1. Distribution Support. The API Contributor agrees that, if the
amount of Available Cash from Operating Surplus (before giving effect to the
purchase of APIs as described below) with respect to any Quarter ending during
the Support Period is less at the relevant time than the amount necessary to
distribute the Minimum Quarterly Distribution as in effect for such Quarter on
all OLP Common Units Outstanding on the Record Date with respect to such
Quarter, then, on the date of determination of Available Cash with respect to
such Quarter, the API Contributor, subject to the limitations of this Agreement,
will contribute (or cause to be contributed) to Genesis OLP, in exchange for
APIs, cash in an amount equal to the lesser of (a) the amount that would enable
Genesis OLP to distribute the Minimum Quarterly Distribution as in effect for
such Quarter on all OLP Common Units Outstanding on the Record Date with respect
to such Quarter, (b) an amount equal to the Quarterly Ceiling with respect to
such Quarter and (c) the amount, if any, by which the Aggregate Ceiling with
respect to such Quarter exceeds at the relevant time the Unrecovered Capital of
the APIs Outstanding on the Record Date with respect to such Quarter.
SECTION 2.2. Issuance of APIs to the API Contributor. Genesis OLP shall issue
one API (having an initial Unrecovered Capital of $100) in exchange for each
$100 contributed (or caused to be contributed) by the API Contributor to Genesis
OLP pursuant to Section 2.1.
SECTION 2.3. Termination of Distribution Support Obligation Upon the
Dissolution and Liquidation of Genesis OLP. Upon the occurrence of the
Liquidation Date, the obligations of the API Contributor under this Agreement
shall terminate and the Support Period shall end immediately, retroactive to the
end of the last Quarter preceding the Liquidation Date with respect to which
distributions of Available Cash have been paid or are payable to holders of the
OLP Common Units. After such termination, the API Contributor shall not be
required to contribute (or cause to be contributed) any cash in exchange for
additional APIs from Genesis OLP.
SECTION 2.4. Rights of API Holders. As a result of the contribution of cash
in exchange for APIs, the holder of such APIs will become a non-voting limited
partner of Genesis OLP with a capital account in Genesis OLP and the right to
require Genesis OLP to redeem such APIs as provided in the Genesis OLP
Partnership Agreement and as provided in Section 2.5. APIs will not be
allocated any items of Genesis OLP income, gain, loss, deduction or credit,
except as otherwise expressly provided in the Genesis OLP Partnership Agreement.
SECTION 2.5. Redemption of APIs in Excess of Required Amount. In the event
that cash is contributed to Genesis OLP in exchange for APIs pursuant to this
Agreement and subsequent thereto it is determined that any portion of such cash
was not required to be so contributed by reason of the limitations contained in
this Article 2, then Genesis OLP shall redeem the APIs issued in exchange for
the portion of such cash not required to be so contributed as promptly as
practicable prior to any distributions of Available Cash with respect to the OLP
Common Units.
SECTION 2.6. Permitted Assignment by the API Contributor. The API
Contributor may transfer its obligations under this Agreement and be relieved of
its obligations hereunder at any time, provided that the transferee of such
obligations (a) unconditionally assumes all of the API Contributor's obligations
under this Agreement, (b) is an Affiliate of the General Partner, (c) is a
Person (i) who is a U.S. Person or (ii) who agrees to abide by and submit to the
jurisdiction of the United Kingdom or the United States of America with respect
to matters arising out of this Agreement and at the time of transfer is not
organized or based in any jurisdiction that is subject to any general provision
under the laws or regulations of the United States of America prohibiting U.S.
Persons from making investments in or conducting business with such
jurisdictions and (d) at the time of such transfer and after giving effect to
the assumption either (i) is an Investment Grade Entity or (ii) has arranged
for a Letter of Credit that satisfies the requirements of Section 2.7 to be
issued by a Qualified Bank for the account of Genesis OLP which Letter of Credit
secures the transferee's obligations under this Agreement to contribute cash to
Genesis OLP in exchange for APIs pursuant to Section 2.1.
SECTION 2.7. Letter of Credit. To constitute a Letter of Credit, a letter of
credit must (a) be a letter of credit providing for draws thereunder to be made
directly by a trustee ("Trustee") that is acceptable to Genesis OLP and the API
Contributor, (b) be issued by a Qualified Bank for the account of Genesis OLP,
(c) secure the API Contributor's obligations under this Agreement to contribute
cash to Genesis OLP in exchange for APIs pursuant to Section 2.1, and (d) at all
times be in an amount at least equal to the Aggregate Ceiling less the
Unrecovered Capital of any Outstanding APIs, unless more than one Letter of
Credit is issued and outstanding in which case the aggregate amount of such
Letters of Credit shall at all times be in an amount at least equal to the
Aggregate Ceiling less the Unrecovered Capital of any Outstanding APIs. Each
Letter of Credit must provide that (x) in the event that the API Contributor is
required to contribute cash to Genesis OLP in exchange for APIs pursuant to
Section 2.1 (a "Required Contribution") and such Required Contribution is not
made as required the Trustee will make a draw thereunder in an amount equal to
the amount of the Required Contribution and (y) the Trustee will make a draw
thereunder, in an amount equal to the full amount of such Letter of Credit, 30
days prior to the expiration of any such Letter of Credit, unless on such date
the API Contributor has in place a substitute Letter of Credit or Letters of
Credit. In the event of any draw under a Letter of Credit the amount of such
draw will be paid directly to Genesis OLP in cash.
ARTICLE 3
MISCELLANEOUS
SECTION 3.1. Headings; References; Interpretation. All Article or Section
headings in this Agreement are for convenience only and shall not be deemed to
control or affect the meaning or construction of the provisions hereof. The
definitions in this Agreement shall apply equally to both the singular and
plural forms of the terms defined. All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender, shall include all
other genders, and the singular shall include the plural and vice versa. The
use herein of the word "including" following any general statement, term or
matter shall not be construed to limit such statement, term or matter to the
specific items or matters set forth immediately following such word or to
similar items or matters, whether or not nonlimiting language (such as "without
limitation," "but not limited to," or words of similar import) is used with
reference thereto, but rather shall be deemed to refer to all other items or
matters that could reasonably fall within the broadest possible scope of such
general statement, term or matter.
SECTION 3.2. Benefit of Agreement. This Agreement is not a direct or indirect
guaranty of payment of all or any portion of the Minimum Quarterly Distribution
on any of the OLP Units or of any distribution on any of the MLP Units. The
covenants and agreements contained in this Agreement are for the sole benefit of
the parties hereto and shall not be construed as conferring, and are not
intended to confer, any direct, indirect or third-party beneficiary rights on
any other persons, including without limitation, the OLP Unitholders and the MLP
Unitholders. This Agreement shall be binding upon Genesis OLP and the API
Contributor.
SECTION 3.3. Integration. This Agreement supersedes all previous
understandings or agreements between the parties, whether oral or written, with
respect to its subject matter. This document is an integrated agreement which
contains the entire understanding of the parties. No understanding,
representation, promise or agreement, whether oral or written, is intended to be
or shall be included in or form part of this Agreement unless it is contained in
a written amendment hereto executed by the parties hereto after the date of this
Agreement.
SECTION 3.4 Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one agreement binding on
the parties hereto.
SECTION 3.5 Applicable Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York, to the extent
permitted by law, without regard to the principles of conflicts of law.
SECTION 3.6 Amendments and Waivers. The parties hereto, by mutual agreement
in writing, may amend, modify or supplement this Agreement; provided, however,
that if any such amendment, modification or supplement adversely affects the
holders of the OLP Common Units in any material respect then such amendment,
modification or supplement shall require the approval of holders of more than
50% of the outstanding OLP Common Units (excluding OLP Common Units held by the
API Contributor and any of its Affiliates (other than Genesis MLP)).
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
as of the date first above written.
GENESIS CRUDE OIL, L. P.
By: GENESIS ENERGY, L.L.C., general partner
By: /s/ Xxxx X. xxxXxxx
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Name: Xxxx X. xxxXxxx
Title: President and Chief Executive Officer
SALOMON INC
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Treasurer
/s/ Xxxxxxxx Xxxxxx
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Xxxxxxxx Xxxxxx
Authorized Signatory
