Item 8.01 Other Events
Genesis Sale
On February 5, 2010, Denbury Resources Inc. (the "Company") and one of its
subsidiaries sold all of the subsidiary's Class A membership interests in
Genesis Energy, LLC, the general partner of Genesis Energy, L.P. ("Genesis"), to
an affiliate of Quintana Capital Group L.P. for net proceeds of approximately
$82 million (including those related to Genesis management incentive
compensation and other selling costs). This sale gives the buyer control of
Genesis' general partner. The sale of the Company's interests in the general
partner does not include the sale of its approximate 10% ownership of Genesis'
outstanding common units.
Proposed Litigation Settlement
Three shareholder lawsuits styled as class actions were filed against Encore
Acquisition Company ("Encore") and its board of directors in relation to the
pending merger of Encore with and into the Company (the "merger"). The lawsuits
are entitled Sanjay Israni, Individually and On Behalf of All Others Similarly
Situated vs. Encore Acquisition Company et al. (filed November 4, 2009 in the
District Court of Tarrant County, Texas), Teamsters Allied Benefit Funds,
Individually and On Behalf of All Others Similarly Situated vs. Encore
Acquisition Company et al. (filed November 5, 2009 in the Court of Chancery in
the State of Delaware) and Thomas W. Scott, Jr., individually and on behalf of
all others similarly situated v. Encore Acquisition Company et al. (filed
November 6, 2009 in the District Court of Tarrant County, Texas). The Teamsters
and Scott lawsuits also name the Company as a defendant. The complaints
generally allege that (1) Encore's directors breached their fiduciary duties in
negotiating and approving the merger and by administering a sale process that
failed to maximize shareholder value and (2) Encore, and, in the case of the
Teamsters and Scott complaints, the Company aided and abetted Encore's directors
in breaching their fiduciary duties. The Teamsters complaint also alleges that
Encore's directors and executives stand to receive substantial financial
benefits if the transaction is consummated on its current terms. The plaintiffs
in these lawsuits were seeking, among other things, to enjoin the merger and to
rescind the merger agreement.
Encore and the Company have entered into a Memorandum of Understanding with the
plaintiffs in these lawsuits agreeing in principle to the settlement of the
lawsuits based upon inclusion in the Company's and Encore's joint proxy
statement/prospectus for the merger of additional disclosures requested by the
plaintiffs, and agreeing that the parties to the lawsuits will use best efforts
to enter into a definitive settlement agreement and seek court approval for the
settlement which would be binding on all Encore shareholders who do not opt-out
of the settlement.
