Exhibit 10.1

Execution Version

AMENDED AND RESTATED LIMITED LIABILITY

COMPANY AGREEMENT

OF

NORTH DAKOTA PIPELINE COMPANY LLC

A DELAWARE LIMITED LIABILITY COMPANY

DATED AS OF NOVEMBER 25, 2013

THE UNITS IN NORTH DAKOTA PIPELINE COMPANY LLC HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY JURISDICTION. NO UNIT MAY BE SOLD OR OFFERED FOR SALE (WITHIN THE MEANING OF
ANY SECURITIES LAW) UNLESS A REGISTRATION STATEMENT UNDER ALL APPLICABLE
SECURITIES LAWS WITH RESPECT TO THE UNIT IS THEN IN EFFECT OR AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THOSE LAWS IS THEN APPLICABLE TO THE UNIT. A
UNIT ALSO MAY NOT BE TRANSFERRED OR ENCUMBERED UNLESS THE PROVISIONS OF THIS
AGREEMENT ARE SATISFIED. PURCHASERS OF UNITS SHOULD BE AWARE THAT THEY WILL BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THEIR INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.

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TABLE OF CONTENTS

 

          Page  

ARTICLE I

  

DEFINITIONS

     1   

Section 1.01

  

Definitions

     1   

Section 1.02

  

Other Definitions

     19   

Section 1.03

  

Construction

     19   

ARTICLE II

  

ORGANIZATIONAL AND OTHER MATTERS

     20   

Section 2.01

  

Formation

     20   

Section 2.02

  

Name

     20   

Section 2.03

  

Limited Liability

     20   

Section 2.04

  

Registered Office; Registered Agent; Principal Office in the United States;
Other Offices

     20   

Section 2.05

  

Purposes

     21   

Section 2.06

  

Foreign Qualification

     21   

Section 2.07

  

Term

     21   

ARTICLE III

  

MEMBERS; REPRESENTATIONS

     21   

Section 3.01

  

Units; Members

     21   

Section 3.02

  

Unit Certificates

     23   

Section 3.03

  

Conflicts of Interest

     24   

Section 3.04

  

Representations, Warranties and Covenants

     25   

ARTICLE IV

  

BOOKS AND RECORDS

     27   

Section 4.01

  

Books, Records, Access

     27   

Section 4.02

  

Tax Returns

     28   

Section 4.03

  

Tax Partnership

     28   

Section 4.04

  

Tax Elections

     28   

Section 4.05

  

Tax Matters Member

     29   

Section 4.06

  

Entity Level Taxation

     30   

Section 4.07

  

Bank Accounts

     30   

ARTICLE V

  

CAPITAL CONTRIBUTIONS

     30   

Section 5.01

  

Initial Capital Contribution of Members; Unit Issuances

     30   

Section 5.02

  

Further Capital Contributions

     31   

Section 5.03

  

Failure to Fund Capital Contributions

     33   

Section 5.04

  

Certain Consequences of Default

     34   

Section 5.05

  

Withdrawal of Capital

     36   

Section 5.06

  

Capital Accounts

     37   

Section 5.07

  

Advances by Members

     38   

ARTICLE VI

  

ALLOCATIONS

     38   

Section 6.01

  

Allocations of Net Profits, Net Losses, Special Net Profits and Special Net
Losses

     38   

Section 6.02

  

Regulatory Allocations

     39   

Section 6.03

  

Curative Allocations

     41   

Section 6.04

  

Tax Allocations

     42   

 

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TABLE OF CONTENTS

(continued)

 

          Page  

ARTICLE VII

  

DISTRIBUTIONS

     42   

Section 7.01

  

Distributions

     42   

Section 7.02

  

Withholding

     44   

ARTICLE VIII

  

MANAGEMENT OF THE COMPANY

     44   

Section 8.01

  

Management under Direction of Management Committee

     44   

Section 8.02

  

Number, Tenure and Qualification

     50   

Section 8.03

  

Voting Proxies; Quorum; Meetings of Management Committee

     51   

Section 8.04

  

Resignation of Managers and Management Committee Alternates

     53   

Section 8.05

  

Removal of Managers and Management Committee Alternates

     54   

Section 8.06

  

Vacancies

     54   

Section 8.07

  

Fees and Expenses of Managers and Management Committee Alternates

     54   

Section 8.08

  

Members

     54   

Section 8.09

  

Delegation of Authority to Officers

     55   

ARTICLE IX

  

OPERATING AND CONSTRUCTION MANAGEMENT AGREEMENT

     55   

Section 9.01

  

Operating and Construction Management Agreement

     55   

ARTICLE X

  

INDEMNIFICATION; DUTIES

     56   

Section 10.01

  

Power to Indemnify in Actions, Suits or Proceedings

     56   

Section 10.02

  

Authorization of Indemnification

     56   

Section 10.03

  

Expenses Payable in Advance

     56   

Section 10.04

  

Nonexclusivity of Indemnification and Advancement of Expenses

     57   

Section 10.05

  

Survival of Indemnification and Advancement of Expenses

     57   

Section 10.06

  

Limitation on Indemnification

     57   

Section 10.07

  

Indemnitor of First Resort

     57   

Section 10.08

  

Insurance

     58   

Section 10.09

  

Severability

     58   

ARTICLE XI

  

DUTIES OF MEMBERS, MANAGERS AND OFFICERS

     58   

Section 11.01

  

Fiduciary Duties; Limitation of Liability

     58   

ARTICLE XII

  

INSURANCE

     61   

Section 12.01

  

Operator Insurance

     61   

Section 12.02

  

Company Insurance

     61   

Section 12.03

  

Member Insurance

     61   

 

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TABLE OF CONTENTS

(continued)

 

          Page  

ARTICLE XIII

  

LIMITATIONS ON TRANSFERS

     62   

Section 13.01

  

Transfer of Units

     62   

Section 13.02

  

Conditions Precedent to a Transfer of Units

     63   

Section 13.03

  

Admission of Substitute Members

     64   

Section 13.04

  

Issuance of Units; Issuance of Additional Units; Admission of Additional Members

     64   

Section 13.05

  

Rights and Obligations of Additional Members and Substitute Members

     65   

Section 13.06

  

No Other Persons Deemed Members

     65   

Section 13.07

  

Tag-Along Transactions

     65   

Section 13.08

  

Right of First Refusal

     67   

Section 13.09

  

Transfer and Exchange

     68   

Section 13.10

  

No Publicly Traded Company

     68   

Section 13.11

  

Amendments to this Agreement

     68   

Section 13.12

  

No Encumbrances by Members

     68   

ARTICLE XIV

  

GROWTH CAPITAL PROJECTS; EMERGENCY EXPENDITURES; LONG TERM RESPONSE

EXPENDITURES; AND NON-GROWTH INTEGRITY PROJECTS

     69   

Section 14.01

  

Growth Capital Projects

     69   

Section 14.02

  

Emergency Expenditures and Long Term Response Expenditures

     73   

Section 14.03

  

Non-Growth Integrity Projects

     74   

ARTICLE XV

  

SANDPIPER PROJECT IN-SERVICE DATE TRANSACTIONS

     74   

Section 15.01

  

Sandpiper Project In-Service Date Transactions

     74   

Section 15.02

  

Allocation of Revenues and Expenses

     75   

ARTICLE XVI

  

DISSOLUTION AND LIQUIDATION

     76   

Section 16.01

  

Dissolution

     76   

Section 16.02

  

Notice of Dissolution

     76   

Section 16.03

  

Liquidation Upon Dissolution

     76   

Section 16.04

  

Termination

     78   

Section 16.05

  

No Obligation to Restore Capital Accounts

     78   

Section 16.06

  

Liquidation of Sandpiper Facilities

     79   

Section 16.07

  

Distributions in Kind

     80   

ARTICLE XVII

  

MISCELLANEOUS PROVISIONS

     80   

Section 17.01

  

Notices

     80   

Section 17.02

  

Governing Law

     80   

Section 17.03

  

Dispute Resolution

     80   

Section 17.04

  

Waiver of Jury Trial

     82   

Section 17.05

  

Entire Agreement; Amendments

     82   

Section 17.06

  

Confidentiality

     82   

 

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TABLE OF CONTENTS

(continued)

 

          Page  

Section 17.07

  

Termination

     83   

Section 17.08

  

Sandpiper Project Spend Profile

     84   

Section 17.09

  

Management Committee Deadlocks; Negotiations; Buyout Right

     84   

Section 17.10

  

Waiver

     88   

Section 17.11

  

Severability

     88   

Section 17.12

  

Ownership of Property and Right of Partition

     88   

Section 17.13

  

Successors and Assigns

     88   

Section 17.14

  

Further Assurances

     89   

Section 17.15

  

Parties in Interest

     89   

Section 17.16

  

Specific Performance

     89   

Section 17.17

  

Publicity

     89   

Section 17.18

  

Certain Expenses

     89   

Section 17.19

  

Counterparts

     89   

 

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Exhibit A   Form of Call Notice Exhibit B   Form of Operating and Construction
Management Agreement Exhibit C   Form of Guaranty Exhibit D   Management
Committee and Officers Exhibit E   Form of Addendum Agreement Exhibit F  
Sandpiper Project Spend Profile Schedule I   Growth Capital Projects Schedule II
  Sandpiper Facilities Schedule III   Issuance of Initial Units

 

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AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

OF

NORTH DAKOTA PIPELINE COMPANY LLC

This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”)
of North Dakota Pipeline Company LLC, a Delaware limited liability company (the
“Company”), dated as of November 25, 2013 (the “Effective Date”), is adopted,
executed and agreed to by the Company and the parties executing this Agreement
in their capacity as Members of the Company.

W I T N E S S E T H:

WHEREAS, the Company has been formed as a limited liability company under the
Delaware Limited Liability Company Act (as it may be amended from time to time,
the “Act”) by filing the Certificate of Formation of the Company (the
“Certificate”) with the Secretary of State of the State of Delaware on April 23,
2001 and by the execution of the Limited Liability Company Agreement of the
Company dated April 23, 2001 (the “Original Agreement”) by the member named
therein; and

WHEREAS, the Members wish to amend and restate the Original Agreement in its
entirety and be admitted to the Company as Members as provided herein.

NOW, THEREFORE, in consideration of the mutual covenants, rights and obligations
set forth in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which each Member hereby acknowledges and confesses,
the Members hereby agree to amend and restate the Original Agreement in its
entirety and adopt the following:

ARTICLE I

DEFINITIONS

Section 1.01 Definitions. As used in this Agreement, the following terms have
the following meanings:

“300% Payout” means, at any time of determination and with respect to the
Proposing Member with respect to any Non-Participatory Growth Capital Project,
the time at which the Non-Participatory Growth Capital Project Amount of such
Proposing Member has been reduced to zero.

“AAA” has the meaning set forth in Section 17.09(c).

“Accredited Investor” has the meaning set forth in Regulation D promulgated
under the Securities Act.

“Act” has the meaning set forth in the recitals of this Agreement.

“Addendum Agreement” has the meaning set forth in Section 13.03.

 

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“Additional Member” means any Person that is not already a Member that acquires
(a) any Units directly from the Company or (b) any other equity securities of
the Company, which Person is admitted to the Company as a Member pursuant to the
provisions of Section 13.04(a).

“Adjusted Capital Account Balance” means with respect to any Member, the balance
in such Member’s Capital Account as of the end of the relevant Fiscal Year,
after giving effect to the following adjustments:

(a) credit to such Capital Account any amounts which such Member is obligated to
restore, because of a promissory note to the Company or otherwise pursuant to
Section 1.704-1(b)(2)(ii)(c) of the Treasury Regulations, or is deemed to be
obligated to restore pursuant to the penultimate sentence in each of
Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Treasury Regulations, after
taking into account thereunder any changes during such year in “partnership
minimum gain” (within the meaning of Section 1.704-2(b) of the Treasury
Regulations) and in “partner nonrecourse debt minimum gain” (within the meaning
of Section 1.704-2(i) of the Treasury Regulations); and

(b) debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4); 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6) of the Treasury Regulations.

This definition of Adjusted Capital Account Balance is intended to comply with
the “alternative economic effect” test of Section 1.704-1(b)(2)(ii)(d) of the
Treasury Regulations and shall be interpreted consistently therewith.

“Affected Member” means any non-Defaulting Member in connection with a situation
where a Defaulting Member has failed to pay an amount owed under the terms of
this Agreement at the time in question.

“Affiliate” means, with respect to any Person, any Person directly or indirectly
through one or more intermediaries, Controlling, Controlled by or under common
Control with such Person.

“Affiliate Contract” means a Contract between the Company, on the one hand, and
any Member or any Affiliate of any Member, on the other hand.

“Agreement” has the meaning set forth in the preamble of this Agreement.

“Aggregate Converted Class A Units” has the meaning set forth in Section
3.01(h).

“Aggregate Interim SP Capital Expenditures” means an amount equal to all capital
expenditures made by the Company or by Enbridge or its Affiliates on behalf of
the Company in respect of the Sandpiper Project between the Effective Date and
the Sandpiper Project In-Service Date.

“Aggregate ISD Capital Expenditures” means (a) the Aggregate Pre-Effective Date
SP Capital Expenditures, plus (b) the Aggregate Interim SP Capital Expenditures,
plus (c) the Growth Capital Project Expenditures Amount, plus (y) the Classic
System ISD Value.

 

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“Aggregate Pre-Effective Date SP Capital Expenditures” means an amount equal to
all capital expenditures made by the Company or by Enbridge or its Affiliates on
behalf of the Company in respect of the Sandpiper Project as of the Effective
Date.

“Assets” means the Company’s and its Subsidiaries’ right, title and interest
from time to time in all items of economic value owned or leased by the Company
and its Subsidiaries, including real property, equipment and other tangible
personal property, and Contracts, data and records, and other intangible
personal property. For the avoidance of doubt, the “Assets” include any of the
Facilities.

“Available Cash” means, as of any date of determination, Cash On Hand From
Operations, less Cash Reserves; provided that, for the avoidance of doubt,
“Available Cash” shall not include any Special Available Cash.

“Budget” means (i) the Budget as defined in the Operating and Construction
Management Agreement, or (ii) any other budget relating to the Company, any of
its Subsidiaries, or any of the Assets or Facilities, in each case that is duly
approved by the Management Committee or deemed approved as set forth herein. For
the avoidance of doubt, (x) any Default Budget in effect shall also be
considered a “Budget” for all purposes hereunder and (y) the Sandpiper Project
Spend Profile, or any other capital cost estimate, capital expenditures schedule
or other similar instrument relating to the amount and timing of capital
expenditures with respect to the Sandpiper Project shall not be a “Budget.”

“Budget Amendment” has the meaning set forth in the Operating and Construction
Management Agreement.

“Business” means the affairs, activities and operations conducted by the
Company, its Subsidiaries or the Operator with respect to the Assets. For the
avoidance of doubt, the Business shall not include the Non-Company Projects.

“Business Day” means any day except a Saturday or Sunday on which commercial
banks in Texas and Calgary, Alberta, Canada are generally open for business.

“Buyout Offer” has the meaning set forth in Section 17.09(e)(i).

“Buyout Notice” has the meaning set forth in Section 17.09(d)(i).

“Buyout Purchase Price” has the meaning set forth in Section 17.09(d)(i).

“Buyer Appraiser” has the meaning set forth in Section 17.09(d)(ii).

“Calendar Month” means any of the months of the Gregorian calendar.

“Calendar Quarter” means a period of three consecutive Calendar Months
commencing on the first day of January, the first day of April, the first day of
July and the first day of October in any Calendar Year.

 

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“Calendar Year” means a period of 12 consecutive Calendar Months commencing on
the first day of January and ending on the following 31st day of December,
according to the Gregorian calendar.

“Call Notice” means any call notice in substantially the form attached hereto as
Exhibit A and issued by the Management Committee to the Class A Members pursuant
to Section 5.02(a) or Section 5.02(c), to the Class B Members pursuant to
Section 5.02(b), or to the Proposing Member in respect of a Non-Participatory
Growth Capital Project pursuant to Section 5.02(f) requesting the making of
capital contributions by such Members to the Company.

“Capital Account” has the meaning set forth in Section 5.06(a).

“Cash On Hand From Capital Transactions” means, as of any date of determination,
the amount of such cash and cash equivalents of the Company and its Subsidiaries
that have been funded by capital contributions from the Members of the Company
or borrowings from any third party.

“Cash On Hand From Operations” means, as of any date of determination, all cash
and cash equivalents of the Company and its Subsidiaries on hand at such time
less Cash On Hand From Capital Transactions.

“Cash Reserves” means the aggregate cash reserves approved by the Management
Committee in connection with the determination of Available Cash as being the
amount necessary to account for the usual and ordinary expenses to be incurred
by the Company and its Subsidiaries in connection with the operation and
maintenance (but only to the extent that capital expenditures for such
maintenance are Core Maintenance Capital Expenditures) (as applicable) of the
Facilities (other than any Non-Participatory Growth Capital Project) for one or
more of the succeeding three Calendar Months, including (in each case, other
than with respect to any Non-Participatory Growth Capital Project): (a) all
operating costs and expenses; (b) all Core Maintenance Capital Expenditures;
(c) the Management Fee; (d) ad valorem taxes and assessments on real and
personal property of the Company and its Subsidiaries; (e) the aggregate amount
of interest related to indebtedness for borrowed money incurred by the Company
under the Revolver or any other revolving credit facility approved by the
Management Committee that will become due and payable; and (f) a contingency
amount, as determined by the Management Committee, to account for unanticipated
expenses incurred with respect to any of the foregoing; provided, that in no
event shall such contingency amount exceed the Cash Reserve Contingency Cap.

“Cash Reserves Contingency Cap” shall mean an amount determined by
Super-Majority Management Committee Approval pursuant to Section 8.01(c), which
amount shall initially be $10,000,000.

“Certificate” has the meaning set forth in the recitals of this Agreement.

“Chief Executive Officer Impasse” has the meaning set forth in Section 17.09(b).

“Chief Executive Officer Impasse Notice” has the meaning set forth in Section
17.09(b).

 

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“Claim” means any claim, demand, suit, action, investigation, proceeding
(whether civil, criminal, arbitrative, investigative, or administrative),
governmental action, cause of action, and expenses and costs associated
therewith (including attorneys’ fees and court costs), whether now existing or
hereafter arising, whether known or unknown, including such item involving or
sounding in the nature of breach of contract, tort, statutory liability, strict
liability, products liability, Encumbrances, contribution, indemnification,
fines, penalties, malpractice, professional liability, design liability,
premises liability, environmental liability (including investigatory and cleanup
costs and natural resource damages), safety liabilities (including OSHA
investigations, litigation and pending fines), deceptive trade practices,
malfeasance, nonfeasance, negligence, misrepresentation, breach of warranty,
tortious interference with contractual relations, slander or libel.

“Class A Member” means any Member owning Class A Units and identified as a
Class A Member on the Member Schedule, as the same may be amended from time to
time.

“Class A Percentage Interest” means, with respect to any Class A Member, the
quotient (expressed as a percentage) obtained by dividing the number of Class A
Units owned by such Class A Member at the time of determination by the total
number of Class A Units issued and outstanding as of such time.

“Class A Units” has the meaning set forth in Section 3.01(a).

“Class A Unit Sub Capital Account” has the meaning set forth in Section 5.06(c).

“Class B Member” means any Member owning Class B Units and identified as a Class
B Member on the Member Schedule, as the same may be amended from time to time.

“Class B Percentage Interest” means, with respect to any Class B Member, the
quotient (expressed as a percentage) obtained by dividing the number of Class B
Units owned by such Class B Member at the time of determination by the total
number of Class B Units issued and outstanding as of such time.

“Class B Units” has the meaning set forth in Section 3.01(a).

“Class B Unit Sub Capital Account” has the meaning set forth in Section 5.06(c).

“Classic System ISD Value” means an amount equal to $912,500,000, which amount
represents the Members’ agreed value of the assets of the Company, EP Bakken GP,
and EP Bakken LP on the Sandpiper Project In-Service Date (excluding, for the
avoidance of doubt, any value attributable to the Sandpiper Facilities or any
Growth Capital Projects).

“Code” means the Internal Revenue Code of 1986, as amended.

“Commencement Date” has the meaning set forth in Section 14.01(a).

“Commission” means the United States Securities and Exchange Commission.

“Company” has the meaning set forth in the preamble of this Agreement.

 

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“Company Sale” means, directly or indirectly, (a) a merger, business combination
or consolidation involving the Company and its Subsidiaries, on the one hand,
and one or more Third Parties, on the other hand, following which the Members do
not hold a majority of the Equity Interests of the Person surviving or resulting
from such merger or business combination, (b) a sale or other disposition of all
or substantially all of the assets of the Company and its Subsidiaries to one or
more Third Parties, whether in a single transaction or a series of related
transactions, or (c) a Transfer, whether in a single transaction or a series of
related transactions, of all or substantially all of the Equity Interests in the
Company (by merger, exchange, consolidation or otherwise) to one or more Third
Parties.

“Conflict Activity” means (a) the amendment to, or waiver of, any rights of the
Company or any of its Subsidiaries under any Affiliate Contract, (b) the
enforcement of any rights of the Company or any of its Subsidiaries under any
Affiliate Contract, including (i) enforcing any rights of the Company or any of
its Subsidiaries under any Affiliate Contract in connection with any breach or
default (or alleged breach or default) thereunder by the Conflicted Member (or
any of its Affiliates), (ii) making or enforcing any Claims by the Company or
any of its Subsidiaries for indemnification under any Affiliate Contract or
(iii) enforcing any rights of the Company or any of its Subsidiaries in
connection with any dispute with a Conflicted Member (or any of its Affiliates)
under any Affiliate Contract, (c) the enforcement of any rights of the Company
or any of its Subsidiaries under any Affiliate Contract in connection with any
bankruptcy, reorganization, liquidation or dissolution of the Conflicted Member
(or any of its Affiliates), (d) the exercise of discretionary rights by the
Company or any of its Subsidiaries under any Affiliate Contract and
(e) enforcing any rights of the Company under this Agreement in connection with
any breach or default (or alleged breach or default) hereunder by the Conflicted
Member.

“Conflicted Member” means a Member that is (or has an Affiliate that is):
(a) the counterparty to the Company or any of its Subsidiaries under an
Affiliate Contract; or (b) the adversary or counterparty opposite the Company or
any of its Subsidiaries on any other transaction or dispute giving rise to a
Conflict Activity.

“Construction” and its derivatives mean, with respect to any facility or
project, all activities relating to the construction thereof.

“Construction G&A Fee” has the meaning set forth in the Operating and
Construction Management Agreement.

“Contract” means any written or oral contract or agreement, including an
agreement regarding indebtedness, lease, mortgage, license agreement, purchase
order, commitment, letter of credit or any other legally binding arrangement.

“Control” (including the correlative terms “Controlled by” and “Controlling”)
means the possession, directly or indirectly, of the power to direct, or to
cause the direction of, the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise.

 

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“Core Maintenance Capital Expenditures” means all capital expenditures of the
Company and its Subsidiaries other than Emergency Expenditures, Long Term
Response Expenditures, expenditures for Non-Growth Integrity Projects and
capital expenditures for Growth Capital Projects.

“Covered Person” means each current and former (i) Member Covered Person,
(ii) Manager (solely in such Person’s capacity as a Manager), (iii) Officer
(solely in such Person’s capacity as an Officer) and (iv) any other Person whom
the Management Committee expressly designates as a Covered Person in a written
resolution; provided, that, Covered Person shall not include any of the
foregoing Persons to the extent that they are acting in the capacity of the
“Operator” (or a director, manager, officer, employee or representative
thereof).

“Cure Amount” has the meaning set forth in Section 5.04(e).

“Cure Period” has the meaning set forth in Section 5.04(d).

“Deadlock Fair Market Value” has the meaning set forth in Section 17.09(d)(i).

“Default” has the meaning set forth in Section 5.03(a).

“Default Budget” has the meaning set forth in the Operating and Construction
Management Agreement.

“Default Notice” has the meaning set forth in Section 5.03(a).

“Default Period” means the period during which the applicable Member remains in
Default under Section 5.03(a), and ending when all of the Defaulting Member’s
Defaults have been cured in full.

“Defaulting Member” has the meaning set forth in Section 5.03(a).

“Defaulting Member Deemed Contribution Amount” is defined in Section 5.03(b).

“Depreciation” means, for each Fiscal Year or other period, an amount equal to
the depreciation, amortization, or other cost recovery deduction allowable with
respect to an Asset for such year or other period, except that if the Gross
Asset Value of an Asset differs from its adjusted basis for Tax Purposes at the
beginning of such year or other period, except as required by Section 1.704-3(d)
of the Treasury Regulations, Depreciation shall be an amount which bears the
same proportion to such beginning Gross Asset Value as the Federal income tax
depreciation, amortization, or other cost recovery deduction for such year or
other period bears to such beginning adjusted tax basis; provided, however, that
if the Federal income tax depreciation, amortization, or other cost recovery
deduction for such year is zero, Depreciation shall be determined with reference
to such beginning Gross Asset Value using any reasonable method selected by the
Management Committee.

“Design” and its derivatives mean, with respect to any facility or project, all
activities relating to the engineering and design thereof.

 

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“Dispute” has the meaning set forth in Section 17.03(a).

“Dispute Notice” has the meaning set forth in Section 17.03(b).

“Due Date” has the meaning set forth in Section 5.03(a).

“Economic Risk of Loss” has the meaning set forth in Treasury Regulation
Section 1.752-2(a).

“Effective Date” has the meaning set forth in the preamble of this Agreement.

“Emergency Expenditure” has the meaning set forth in the Operating and
Construction Management Agreement.

“Emergency” has the meaning set forth in the Operating and Construction
Management Agreement.

“Enbridge” means Enbridge Energy Partners, L.P.

“Enbridge Class A Units” has the meaning set forth in Section 3.01(h)(ii).

“Enbridge Group” means Enbridge and any permitted Transferee of Enbridge who is
a Member.

“Encumbrance” means, with respect to any property or asset, any mortgage, deed
of trust, lien, pledge, charge, claim, security interest, restrictive covenant
or easement or encumbrance of any kind in respect of such asset, whether or not
filed, recorded or otherwise perfected under applicable Law, as well as the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such property or asset.

“Encumber” and other derivatives shall be construed accordingly.

“EP Bakken GP” means Enbridge Pipelines (Bakken) L.L.C., a Delaware limited
liability company and wholly owned subsidiary of Enbridge.

“EP Bakken LP” means Enbridge Pipelines (Bakken) L.P., a Delaware limited
partnership and subsidiary of Enbridge and EP Bakken GP.

“Equity Interests” means, with respect to any Person, (a) capital stock,
membership interests, partnership interests, other equity interests, rights to
profits or revenue and any other similar interest in such Person, (b) any
security or other interest convertible into or exchangeable or exercisable for
any of the foregoing, whether at the time of issuance or upon the passage of
time or the occurrence of some future event, and (c) any warrant, option or
other right (contingent or otherwise) to acquire any of the foregoing.

“Executive Vice President Impasse” has the meaning set forth in Section
17.09(b).

 

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“Executive Vice President Impasse Notice” has the meaning set forth in Section
17.09(b).

“Existing Facilities” means the pipeline systems and related facilities and
equipment owned or leased by the Company and its Subsidiaries other than the
Sandpiper Facilities.

“Facilities” means, collectively, the Sandpiper Facilities, the Existing
Facilities, and all Growth Capital Projects and Non-Growth Integrity Projects
(including all future Growth Capital Projects and Non-Growth Integrity
Projects).

“Fair Market Value” of an asset means the price at which a willing seller would
sell, and a willing buyer would buy, the asset, free and clear of all
Encumbrances, in an arms’ length transaction for cash, without time constraints
and without being under any compulsion to buy or sell. Except as otherwise
provided herein, the Fair Market Value of an asset shall be determined with
Super-Majority Management Committee Approval.

“FERC” means the United States Federal Energy Regulatory Commission.

“Fiscal Year” means the taxable year of the Company which shall end on
December 31 of each calendar year unless, for U.S. federal income tax purposes,
another taxable year is required.

“GAAP” means generally accepted accounting principles in the United States,
consistently applied.

“Governmental Authority” means any federal, state, local, municipal, tribal or
other government; any governmental, regulatory or administrative agency,
commission, body or other authority exercising or entitle to exercise any
administrative, executive, judicial, legislative, regulatory or taxing authority
or power; and any court, governmental or arbitral tribunal, including any tribal
authority having or asserting jurisdiction.

“Gross Asset Value” means with respect to any Asset, the Asset’s adjusted basis
for Tax Purposes, except as follows:

(a) the initial Gross Asset Value of any non-cash Asset contributed by a Member
to the Company shall be the gross Fair Market Value of such Asset on the date of
contribution;

(b) the Gross Asset Values of all Assets shall be adjusted to equal their
respective gross Fair Market Values (taking into account Section 7701(g) of the
Code) at each of the following times:

(i) the acquisition of additional Units by any new or existing Member in
connection with a contribution to the Company of cash or property other than a
de minimis amount (within the meaning of Section 1.704-1(b)(2)(iv)(f) of the
Treasury Regulations);

(ii) the distribution by the Company to a Member of more than a de minimis
amount of Company property as consideration for Units (within the meaning of
Section 1.704-1(b)(2)(iv)(f) of the Treasury Regulations);

 

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(iii) the grant of Units as consideration for the provision of services to or
for the benefit of the Company by any new or existing Member (within the meaning
of Section 1.704-1(b)(2)(iv)(f) of the Treasury Regulations);

(iv) the liquidation of the Company within the meaning of
Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations; and

(v) the acquisition of an interest in the Company by any new or existing Member
upon the exercise of a noncompensatory option in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv)(s). If any noncompensatory options are
outstanding upon the occurrence of an event described in clause (i) above
through this clause (v), the Company shall adjust the Gross Asset Values of its
properties in accordance with Treasury Regulation
Sections 1.704-1(b)(2)(iv)(f)(1) and 1.704-1(b)(2)(iv)(h)(2);

provided, however, that the adjustments pursuant to clauses (i), (ii), (iii) and
(v) above shall be made only if the Management Committee reasonably determines
that such adjustments are necessary or appropriate to reflect the relative
economic interests of the Members in the Company and, provided further, if any
noncompensatory options are outstanding upon the occurrence of an event
described in this paragraph (b)(i) through (b)(v), the Company shall adjust the
Gross Asset Values of its properties in accordance with Treasury Regulation
Sections 1.704-1(b)(2)(iv)(f)(1) and 1.704-1(b)(2)(iv)(h)(2);

(c) the Gross Asset Value of any non-cash Asset distributed to any Member shall
be the gross Fair Market Value of such non-cash Asset on the date of
distribution;

(d) the Gross Asset Values of Assets shall be increased (or decreased) to
reflect any adjustments to the adjusted basis of such Assets pursuant to
Sections 734(b) or 743(b) of the Code, but only to the extent that such
adjustments are taken into account in determining the Capital Accounts pursuant
to Section 1.704-1(b)(2)(iv)(m) of the Treasury Regulations, and subsection (g)
under the definition of Net Profits and Net Losses below; provided, however,
that Gross Asset Values shall not be adjusted pursuant to this subsection to the
extent that the Management Committee reasonably determines that an adjustment
pursuant to subsection (b) of this definition is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subsection; and

(e) if the Gross Asset Value of an Asset has been determined or adjusted
pursuant to subsection (a), (b) or (d) of this definition, such Gross Asset
Value shall thereafter be adjusted by the Depreciation taken into account with
respect to such asset for purposes of computing Net Profits and Net Losses and
items of income, gain, loss and deduction to be allocated to the Members.

“Growth Capital Project” means (a) the projects described on Schedule I attached
hereto, (b) the acquisition, design, development or construction of any
additional assets or facilities by the Company or any of its Subsidiaries,
(c) with respect to any physical Asset, any physical enhancement or series of
physical enhancements that would increase the throughput capacity (including by
expanding pump station capability) or extend the useful life or operational
efficiency, of or to any existing portion of such Asset, or (d) any additional
tankage facilities to

 

10

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be constructed on property owned by the Company or any of its Subsidiaries, in
the cases of clauses (b), (c), and (d), related to the transportation of crude
oil by pipeline and related activities to or from the Williston Basin in Montana
and North Dakota; provided, however, that for the avoidance of doubt, none of
the following shall be a “Growth Capital Project” hereunder: (i) any project
related to any Growth Capital Project included in a previously approved Budget
(or Budget Amendment, Participatory Growth Capital Project Budget or
Non-Participatory Growth Capital Project Budget (or amendment thereto)) after
giving effect to any variance thereto permitted pursuant to the Operating and
Construction Management Agreement, (ii) any Emergency Expenditure, Long Term
Response Expenditures or any Non-Growth Integrity Project, (iii) additional
tankage facilities to be constructed at Enbridge Energy, Limited Partnership’s
terminal located in Superior, Wisconsin, (iv) any project related to the
transportation of crude oil by means other than pipeline, and (v) any projects
related to the Lakehead System (the projects identified in clauses (iii),
(iv) and (v), the “Non-Company Projects”).

“Growth Capital Project Expenditures” means with respect to any Reimbursed
Growth Capital Project, the total capital expenditures made by the Company or by
Enbridge or any of its Affiliates on behalf of the Company, EP Bakken GP or EP
Bakken LP in respect of such Reimbursed Growth Capital Project prior to the
Sandpiper Project In-Service Date.

“Growth Capital Project Expenditures Amount” means an aggregate amount equal to
the amount of all Growth Capital Project Expenditures.

“Growth Capital Project Reimbursement Amount” means an aggregate amount equal to
the amount of all Growth Capital Project Reimbursement Contributions.

“Growth Capital Project Reimbursement Contribution” has the meaning set forth in
Section 14.01(c).

“Growth Capital Project Request” has the meaning set forth in Section 14.01(a).

“Independent Appraiser” has the meaning set forth in Section 17.09(d)(ii).

“Impasse” has the meaning set forth in Section 17.09(b).

“Impasse Notice” has the meaning set forth in Section 17.09(b).

“Initial Capital Account Balance” has the meaning set forth in Section 5.06(b).

“Initial Election Period” has the meaning set forth in Section 14.01(a).

“Initial Offer Price” has the meaning set forth in Section 17.09(e)(i).

“Initiating Holder” has the meaning set forth in Section 13.07(a).

“Interest Rate” means the rate of interest per annum publicly announced from
time to time by Wells Fargo Bank, National Association as its prime rate in
effect plus 3%. Each change in the rate of interest shall be effective from and
including the date such change is publicly announced as being effective (or, if
such rate is contrary to any applicable usury Law, the maximum rate permitted by
such applicable Law).

 

11

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“Lakehead System” has the meaning set forth in the Transaction Agreement.

“Law” means any constitution, decree, resolution, law, statute, act, ordinance,
rule, directive, order, arbitral award, treaty, code or regulation and any
injunction or final non-appealable judgment or any interpretation of the
foregoing, as enacted, issued or promulgated by any Governmental Authority.

“Liabilities” means any and all Claims, payments, charges, judgments,
assessments, liabilities, losses, damages, penalties, fines or costs and
expenses, including any reasonable fees of attorneys, experts, consultants,
accountants, and other professional representatives and legal or other expenses
incurred in connection therewith and including liabilities, costs, losses and
damages for personal injury, illness or death, property damage, Contract claims,
torts or otherwise.

“Liquidating Trustee” has the meaning set forth in Section 16.03(a).

“Long Term Response Expenditures” means the costs (other than Emergency
Expenditures), required in Operator’s reasonable discretion, to (i) restore the
Assets or re-obtain compliance with applicable Laws following, and directly
resulting from, an Emergency and (ii) to address or mitigate the effects of such
Emergency in accordance with the ordinary course standards, policies and
procedures of Operator and its Affiliates in relation to similar Emergencies
with respect to assets of a similar nature as those affected by such Emergency.
For the avoidance of doubt, costs associated with Non-Growth Integrity Projects
shall not be Long Term Response Expenditures.

“Management Committee” has the meaning set forth in Section 8.01(a).

“Management Committee Alternate” has the meaning set forth in Section 8.02(a).

“Management Committee Approval” has the meaning set forth in Section 8.01(b).

“Management Fee” has the meaning set forth in the Operating and Construction
Management Agreement.

“Manager” has the meaning set forth in Section 8.01(a).

“Marathon Shipper” means Marathon Petroleum Company LP, a Delaware limited
partnership and an Affiliate of Williston.

“Marathon Shipper Reimbursement Payment” has the meaning set forth in Section
16.06(c).

“Marathon TSA” means that certain Transportation Services Agreement between the
Company and Marathon Shipper.

 

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“Mediation Date” has the meaning set forth in Section 17.09(c).

“Mediation Drop Dead Date” has the meaning set forth in Section 17.09(c).

“Member” means any Person executing this Agreement as of the date hereof as a
member or hereafter admitted to the Company as a member as provided in this
Agreement, but such term does not include any Person who has ceased to be a
member of the Company.

“Member Covered Person” means, with respect to each Member, (a) such Member in
its capacity as a Member (including in its capacity as Tax Matters Member, if
applicable), (b) each of such Member’s officers, directors, liquidators,
partners, equityholders, managers and members in their capacity as such,
(c) each of such Member’s Affiliates (other than the Company and its
Subsidiaries) and (d) each of their respective officers, directors, liquidators,
partners, equity holders, managers and members in their capacity as such and any
representatives, agents or employees of any Person identified in
clauses (a)-(c) of this definition whom the Management Committee expressly
designates as a Member Covered Person with Super-Majority Management Committee
Approval (and, if prior to the Sandpiper Project In-Service Date, the consent of
a Williston Manager); provided, that, Member Covered Person shall not include
any of the foregoing Persons to the extent that they are acting in the capacity
of the Operator (or a director, manager, officer, employee or representative
thereof).

“Member Indemnitees” has the meaning set forth in Section 10.07.

“Member Indemnitors” has the meaning set forth in Section 10.07.

“Member Schedule” has the meaning set forth in Section 3.01(g).

“MPLX LP” means MPLX LP, a Delaware limited partnership.

“Negotiation Period” has the meaning set forth in Section 17.03(c).

“Net Earnings” means, for a period, the net sum of the aggregate amount of
(a) all cash or cash equivalents (other than contributions and loans) received
by the Company during such period minus (b) the amount of operating cost and
expenses paid during such period (or if the Company, for such period, does not
have any operating costs or expenses, expenses paid during such period which are
similar in nature to operating costs and expenses).

“Net Profits” or “Net Losses” means, for any Fiscal Year, an amount equal to the
Company’s taxable income or taxable loss for such Fiscal Year, as determined
under Section 703(a) of the Code (including all items required to be separately
stated under Section 703(a)(1) of the Code) and Section 1.703-1 of the Treasury
Regulations, but with the following adjustments:

(a) any tax-exempt income, as described in Section 705(a)(1)(B) of the Code,
realized by the Company and not otherwise taken into account in this subsection
shall be added to such taxable income or taxable loss;

 

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(b) any expenditures of the Company described in Section 705(a)(2)(B) of the
Code for such Fiscal Year or treated as being so described in
Section 1.704-1(b)(2)(iv)(i) of the Treasury Regulations and not otherwise taken
into account in this subsection shall be subtracted from such taxable income or
taxable loss;

(c) in the event the Gross Asset Value of any Asset is adjusted pursuant to
subsection (b) or (c) of the definition of “Gross Asset Value,” the amount of
such adjustment shall be taken into account as gain or loss from the disposition
of such asset for purposes of computing Net Profit or Net Loss;

(d) any item of income, gain, loss or deduction that is required to be specially
allocated to a Member under Section 6.02 or Section 6.03, shall not be taken
into account in computing such taxable income or taxable loss;

(e) the amount of any gain or loss required to be recognized by the Company
during such Fiscal Year by reason of a sale or other disposition of any Asset,
shall be computed as if the Company’s adjusted basis in such Asset for Tax
Purposes were equal to the Gross Asset Value (net of Depreciation) of the Asset
disposed of, notwithstanding that the adjusted tax basis of such Asset differs
from its Gross Asset Value;

(f) in lieu of depreciation, amortization and other cost recovery deductions
taken into account in computing such taxable income or loss, there shall be
taken into account Depreciation for the Fiscal Year or other applicable period;

(g) to the extent an adjustment to the adjusted tax basis of any Asset pursuant
to Section 734(b) or Section 743(b) of the Code is required pursuant to
Section 1.704-1(b)(2)(iv)(m) of the Treasury Regulations in determining Capital
Accounts, the amount of such adjustment shall be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the adjustment
decreases the basis of the asset) from the disposition of the Asset and shall be
taken into account for purposes of computing such taxable income or taxable
loss; and

(h) Special Net Profits and Special Net Losses (and items thereof) and items
allocable with respect to a Non-Participatory Growth Capital Project that are
described in Section 6.02(i) or Section 6.03 shall not be taken into account in
computing Net Profits and Net Losses.

If the Company’s taxable income or taxable loss for such Fiscal Year, as
adjusted in the manner provided above in subsections (a) through (g) of this
definition, is (i) a positive amount, such amount shall be the Net Profits for
such Fiscal Year or (ii) a negative amount, such amount shall be the Net Losses
for such Fiscal Year.

“Non-Company Projects” has the meaning set forth in the definition of “Growth
Capital Project.”

“Non-Conflicted Member” means, in the context of a Conflict Activity, any Member
that is not the Conflicted Member with respect to such Conflict Activity.

 

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“Non-Growth Integrity Project” means any capital project (excluding any Long
Term Response Expenditures) that Operator determines in its reasonable
discretion is necessary, except in the case of or resulting from an Emergency,
(a) in order for the Facilities to comply with applicable Laws or (b) in order
to maintain or restore the integrity and safe operation of the Facilities and to
prevent damage to any portion of the Facilities or personal injury of any person
beyond that which Operator is required to do in order to meet the Standard of
Care under the Operating and Construction Management Agreement.

“Non-Participating Member” means, with respect to any Non-Participatory Growth
Capital Project, the Member that elects not to participate in such
Non-Participatory Growth Capital Project.

“Non-Participatory Growth Capital Project” has the meaning set forth in
Section 14.01(d).

“Non-Participatory Growth Capital Project Amount” means, at any time of
determination and with respect to any Member with respect to any
Non-Participatory Growth Capital Project, three times the amount of the
Non-Participatory Growth Capital Project Contributions made by such Member with
respect to such Non-Participatory Growth Capital Project, less all distributions
made to such Member prior to such time of determination on account of such
Non-Participatory Growth Capital Project pursuant to Section 7.01(b)(i).

“Non-Participatory Growth Capital Project Budget” has the meaning set forth in
Section 14.01(d)(i).

“Non-Participatory Growth Capital Project Contribution” has the meaning set
forth in Section 5.02(f).

“Non-Proposing Member” has the meaning set forth in Section 14.01(a).

“Officers” has the meaning set forth in Section 8.09(a).

“Open Season” has the meaning set forth in the Marathon TSA.

“Operating and Construction Management Agreement” means that certain Operating
and Construction Management Agreement, dated as of the Effective Date, between
the Company and the Operator, attached hereto as Exhibit B (or, if applicable,
any subsequent agreement entered into pursuant to Section 9.01).

“Operator” means Enbridge (U.S.) Inc., or such other entity providing services
to the Company pursuant to the Operating and Construction Management Agreement.

“Opt Out Sandpiper Call Notice” has the meaning set forth in Section 5.02(b).

“Original Agreement” has the meaning set forth in the recitals of this
Agreement.

“Other Investments” has the meaning set forth in Section 3.03(a)(i).

“Participatory Growth Capital Project Budget” has the meaning set forth in
Section 14.01(c).

 

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“Payout Date” has the meaning set forth in Section 14.01(a).

“Person” means any individual, partnership, corporation, limited liability
company, trust or other entity.

“Pipeline Operations” means, collectively, the ownership, operation,
maintenance, repair, start-up, commissioning and decommissioning of the
Facilities.

“Precedent Agreement” means that Precedent Agreement, dated as of the Effective
Date, between the Company and Marathon Shipper.

“Procurement” and its derivatives mean all activities relating to the
procurement and handling of all services, materials, equipment and construction
equipment necessary for any Design and Construction of the Facilities.

“Project Sandpiper Liquidating Trustee” has the meaning set forth in
Section 16.06(a).

“Projected In-Service Date” has the meaning set forth in Section 14.01(a).

“Proposing Member” has the meaning set forth in Section 14.01(a).

“Purchasing Member” has the meaning set forth in Section 17.09(d)(iii).

“Records” has the meaning set forth in Section 4.01(a).

“Recovery Claim” has the meaning set forth in the Operating and Construction
Management Agreement.

“Regulatory Allocations” has the meaning set forth in Section 6.03.

“Reimbursed Growth Capital Project” has the meaning set forth in
Section 14.01(c).

“Renounced Business Opportunity” has the meaning set forth in Section 3.03(c).

“Revolver” has the meaning set forth in Section 15.01(d).

“Sale Notice” has the meaning set forth in Section 13.07(a).

“Sandpiper Facilities” means the crude oil pipeline system and related
facilities and equipment described in Schedule II.

“Sandpiper Project” means the Design, Construction and Procurement of the
Sandpiper Facilities.

“Sandpiper Project In-Service Date” means the date on which the Sandpiper
Facilities are placed into commercial service.

“Sandpiper Project Spend Profile” has the meaning set forth in Section 17.08.

 

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“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations thereunder as in effect from time to time.

“Seller Appraiser” has the meaning set forth in Section 17.09(d)(ii).

“Selling Member” has the meaning set forth in Section 17.09(d)(iii).

“Senior Vice President Impasse” has the meaning set forth in Section 17.09(b).

“Senior Vice president Impasse Notice” has the meaning set forth in Section
17.09(b).

“Special Available Cash” means, with respect to any Non-Participatory Growth
Capital Project for any period, the net of the cash proceeds received by the
Company that are fairly attributable to such Non-Participatory Growth Capital
Project (including cash proceeds from the sale of the Non-Participatory Growth
Capital Project or insurance proceeds from the damage or destruction of the
Non-Participatory Growth Capital Project) less all expenses (including loans)
paid with respect to such Non-Participatory Growth Capital Project and any
amounts applied to any reserves necessary to account for the usual and ordinary
expenses to be incurred by the Company in connection with the development,
operation and maintenance of such Non-Participatory Growth Capital Project,
including (a) all operating and capital costs and expenses (including, for the
avoidance of doubt, construction costs) that are fairly attributable to such
Non-Participatory Growth Capital Project; (b) the portion of the Management Fee
that is fairly attributable to such Non-Participatory Growth Capital Project and
the Construction G&A Fee paid with respect to such Non-Participatory Growth
Capital Project; (c) ad valorem taxes and assessments on real and personal
property of the Company and its Subsidiaries that are fairly attributable to
such Non-Participatory Growth Capital Project; and (d) capital costs and
expenses (including, for the avoidance of doubt, construction costs) for
Non-Growth Integrity Projects, Long Term Response Expenditures or Emergency
Expenditures with respect to such Non-Participatory Growth Capital Project.

“Special Capital Account” has the meaning set forth in Section 5.06(d).

“Special Net Losses” means, with respect to any Non-Participatory Growth Capital
Project, a computation with respect to such Non-Participatory Growth Capital
Project calculated in the same manner as Net Losses are computed, but taking
into account only items relating to such Non-Participatory Growth Capital
Project.

“Special Net Profits” means, with respect to any Non-Participatory Growth
Capital Project, a computation with respect to such Non-Participatory Growth
Capital Project calculated in the same manner as Net Profits are computed, but
taking into account only items relating to such Non-Participatory Growth Capital
Project.

“Special Target Amount” means, with respect to any Member with respect to any
Non-Participatory Growth Capital Project for any taxable year of the Company, an
amount (which may be either a positive or negative balance) equal to the
hypothetical distribution (or contribution) such Member would receive (or
contribute) if the Non-Participatory Growth Capital Project, including cash
reserves attributable thereto, was sold for cash equal to its Gross Asset Value
(taking into account any adjustments to Gross Asset Value for the taxable year),
all

 

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liabilities allocable to the assets were then satisfied according to their terms
(limited, with respect to each nonrecourse liability, to the Gross Asset Value
securing such liability) and all remaining proceeds from the disposition of the
Non-Participatory Growth Capital Project were distributed pursuant to
Section 7.01(b), reduced by the amount of partnership minimum gain and partner
nonrecourse debt minimum gain (as defined in Section 1.704-2 of the Treasury
Regulations) that would be charged back to the Member from the disposition of
the Non-Participatory Growth Capital Project as determined pursuant to
Section 1.704-2 of the Treasury Regulations or any successor provisions
immediately prior to the sale.

“Subject Units” has the meaning set forth in Section 17.09(d)(i).

“Subsidiary” means, with respect to any Person, any corporation, partnership,
limited liability company, joint venture or other legal entity of any kind of
which such Person (either alone or through or together with one or more of its
other Subsidiaries), owns, directly or indirectly, more than 50% of the capital
stock, general partner interests, limited partner interests, managing member
interests or other Equity Interests the holders of which are (a) generally
entitled to vote for the election of the board of directors or other governing
body of such legal entity or (b) generally entitled to share in the profits or
capital of such legal entity.

“Substitute Member” means any Person who acquires from a Member any or all of
the Units held by such Member and is admitted to the Company as a Member
pursuant to the provisions of Section 13.03.

“Super-Majority Management Committee Approval” has the meaning set forth in
Section 8.01(c).

“Tag-Along Seller” has the meaning set forth in Section 13.07(a).

“Tax” means any taxes, charges, fees and other assessments imposed by any
Governmental Authority, including income, margin, profits, gross receipts, net
proceeds, alternative or add-on minimum, ad valorem, real property, personal
property, value added, turnover, sales, use, environmental, stamp, leasing,
lease, user, excise, duty, franchise, capital stock, transfer, registration,
license, withholding, social security (or similar), unemployment, disability,
payroll, employment, or other tax, including any interest, penalty, or addition
thereto, whether disputed or not.

“Tax Matters Member” has the meaning set forth in Section 4.05(a).

“Tax Purposes” means for purposes of Federal income taxation and for purposes of
certain State income tax laws that incorporate or follow Federal income tax
principles.

“Third Party” means any Person other than (a) the Company, (b) any direct or
indirect Subsidiary of the Company and (c) any Member or any Affiliate of any
such Member.

“Topping Purchase Price” has the meaning set forth in Section 17.09(e).

“Topping Purchasing Member” has the meaning set forth in Section 17.09(e).

 

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“Topping Selling Member” has the meaning set forth in Section 17.09(e).

“Topping Unit Price” has the meaning set forth in Section 17.09(e).

“Total Votes” has the meaning set forth in Section 8.03(a).

“Transaction Agreement” means that certain Transaction Agreement, dated as of
the date hereof, between Enbridge and Williston.

“Transfer” means the sale, assignment, pledge, hypothecation, conveyance,
transfer or other voluntary or involuntary disposition (by gift or otherwise,
and whether as security or otherwise) by a Member of all or a portion of his,
her or its Units. “Transferor,” “Transferee,” “Transferred” and “Transferring”
have meanings corresponding to the foregoing.

“Treasury Regulations” means the regulations promulgated by the U.S. Department
of the Treasury under the Code, as they may be amended from time to time. All
references herein to sections of the Treasury Regulations shall include any
corresponding provision or provisions of succeeding, similar, substitute,
temporary or final Treasury Regulations.

“Unit” means a membership interest in the Company of a Member representing a
fractional part of the membership interests of all the Members (including the
Class A Units and the Class B Units); provided, however, that any class or group
of Units issued shall have the relative rights, powers and duties set forth in
this Agreement.

“Wholly-Owned Affiliate” means, with respect to any Member, an Affiliate of such
Member that is wholly owned, directly or indirectly, by the ultimate parent of
such Member.

“Williston” means Williston Basin Pipe Line LLC, a Delaware limited liability
company.

“Williston Class A Units” has the meaning set forth in Section 3.01(h)(i).

“Williston Effective Date Capital Contribution” has the meaning set forth in
Section 3.01(c).

“Williston Group” means Williston and any permitted Transferee of Williston who
is a Member.

“Williston Managers” is defined in Section 8.02(a).

Section 1.02 Other Definitions. Other terms defined herein have the meanings so
given them.

Section 1.03 Construction. Whenever the context requires, the gender of all
words used in this Agreement includes the masculine, feminine, and neuter.
Whenever the context requires, words imparting the singular number shall include
the plural, and words imparting the plural number shall include the singular.
All references to Articles and Sections refer to articles and sections of this
Agreement, all references to “employed by the Company” shall be construed as
meaning “employed by the Company or any direct or indirect wholly-owned
Subsidiary of the

 

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Company,” all references to “including” shall be construed as meaning “including
without limitation” and all references to Exhibits are to Exhibits attached to
this Agreement, each of which is made a part of this Agreement for all purposes.
The words “hereof,” “hereto,” “hereby,” “herein,” “hereunder” and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular section or article in which such words appear.
The word “or” shall not be exclusive. The word “U.S.” means the United States of
America, the word “Federal” means U.S. federal and the word “State” means any
U.S. state. Whenever this Agreement refers to a number of days, such number
shall refer to calendar days unless Business Days are specified. Whenever any
action must be taken hereunder on or by a day that is not a Business Day, then
such action may be validly taken on or by the next day that is a Business Day.
Any rule of construction to the effect that any ambiguities are to be resolved
against the drafting Member, or any similar rule operating against the drafter
of an agreement, shall not be applicable to the construction or interpretation
of this Agreement.

ARTICLE II

ORGANIZATIONAL AND OTHER MATTERS

Section 2.01 Formation. The Company was formed as a Delaware limited liability
company pursuant to and in accordance with the provisions of the Act upon the
filing of a Certificate conforming to the Act in the office of the Secretary of
State of the State of Delaware. The rights and obligations of the Members and
the administration and termination of the Company shall be governed by this
Agreement and the Act. This Agreement is the “limited liability company
agreement” of the Company within the meaning of Section 18-101(7) of the Act. To
the extent that this Agreement is inconsistent in any respect with the Act, this
Agreement shall control, unless otherwise provided under the Act.

Section 2.02 Name. The name of the Company is “North Dakota Pipeline Company
LLC” and the business of the Company shall be conducted under that name, or
under any other name adopted by the Management Committee in accordance with the
Act.

Section 2.03 Limited Liability. The debts, obligations and liabilities of the
Company, whether arising in contract, tort or otherwise, shall be the debts,
obligations and liabilities solely of the Company, and a Member shall not be
obligated personally for any of such debts, obligations or liabilities solely by
reason of being a Member.

Section 2.04 Registered Office; Registered Agent; Principal Office in the United
States; Other Offices. The registered office of the Company in the State of
Delaware shall be the initial registered office designated in the Certificate or
such other office (which need not be a place of business of the Company) as the
Management Committee may designate from time to time in the manner provided by
Law. The registered agent of the Company in the State of Delaware shall be the
initial registered agent designated in the Certificate or such other Person or
Persons as the Management Committee may designate from time to time in the
manner provided by Law. The principal office of the Company in the United States
shall be at such place as the Management Committee may designate from time to
time. The Company may have such other offices as the Management Committee may
determine appropriate.

 

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Section 2.05 Purposes. The purposes of the Company are to engage, directly or
indirectly through its Subsidiaries, in the acquisition, design, development,
construction, operation, and management of traditional crude oil pipeline
facilities to or from the Williston Basin in Montana and North Dakota and to
engage in such other activities and services as are directly related thereto.

Section 2.06 Foreign Qualification. Prior to conducting business in any
jurisdiction other than the State of Delaware, the Management Committee shall
cause the Company to comply, to the extent procedures are available, with all
requirements necessary to qualify the Company as a foreign limited liability
company in such jurisdiction. Each Member shall execute, acknowledge, swear to
and deliver all certificates and other instruments conforming to this Agreement
that are necessary or appropriate to qualify, or, as appropriate, to continue or
terminate such qualification of, the Company as a foreign limited liability
company in all such jurisdictions in which the Company may conduct business.

Section 2.07 Term. The Company commenced on the date the Certificate was filed
with the Secretary of State of the State of Delaware and shall continue in
existence until it is liquidated or dissolved in accordance with this Agreement
and the Act.

ARTICLE III

MEMBERS; REPRESENTATIONS

Section 3.01 Units; Members.

(a) Unit Designations. The Units shall initially be divided into two classes of
Units referred to as “Class A Units” and “Class B Units.” The Company is
initially authorized to issue an unlimited number of Class A Units and Class B
Units.

(b) Issuance of Initial Class A Units. On the Effective Date, (i) all of the
membership interests held by Enbridge immediately prior to the Effective Date
will be converted into the right to receive from the Company 1,000 Class A
Units, and (ii) the Company will issue to Enbridge such Class A Units, as set
forth opposite its name on Schedule III under the heading “Initial Class A
Units.”

(c) Issuance of Initial Class B Units. On the Effective Date, (i) the Company
will issue to Enbridge the number of Class B Units set forth opposite its name
on Schedule III under the heading “Initial Class B Units” (which number of Class
B Units equals 62.5% of the Aggregate Pre-Effective Date SP Capital Expenditures
divided by $1.00) and (ii) Williston will contribute to the Company cash in the
amount set forth opposite its name on Schedule III under the heading “Effective
Date Capital Contribution Amount” (which contribution amount equals 37.5% of the
Aggregate Pre-Effective Date SP Capital Expenditures (the “Williston Effective
Date Capital Contribution”)), and, in exchange for such contribution, the
Company will issue to Williston the number of Class B Units set forth opposite
its name on Schedule III under the heading “Initial Class B Units” (which number
of Class B Units equals the Williston Effective Date Capital Contribution
divided by $1.00).

 

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(d) Tax Treatment. The Members acknowledge and agree that the foregoing
contributions and Unit issuances shall be treated for U.S. federal income tax
purposes, in accordance with Revenue Ruling 99-5 (Situation 2), as a
contribution by Enbridge of all of the assets of the Company, EP Bakken GP and
EP Bakken LP to a partnership in exchange for an interest in the partnership and
as a contribution by Williston of the Williston Effective Date Capital
Contribution to a partnership in exchange for Class B Units in the partnership.

(e) UCC Securities. Units shall constitute “securities” governed by Article 8 of
the applicable version of the Uniform Commercial Code, as amended from time to
time after the Effective Date.

(f) Fractional Units. Any fractional Units that would otherwise be issued
pursuant to this Agreement shall be rounded to the nearest whole Unit (with any
one-half Unit being rounded up to the nearest whole Unit).

(g) Member Schedule. The Company shall maintain one or more schedules of all of
the Members from time to time, including their respective mailing addresses,
number of Units held, and Class A Percentage Interests and Class B Percentage
Interests (such schedules, as the same may be amended, modified or supplemented
from time to time, collectively the “Member Schedule”). A copy of the Member
Schedule with respect to the Members holding Class A Units and Class B Units as
of the Effective Date is attached as Schedule III.

(h) Conversion of Class B Units. On the Sandpiper Project In-Service Date, all
of the outstanding Class B Units held by Enbridge and Williston will convert
into an aggregate number of Class A Units (such number, the “Aggregate Converted
Class A Units”) equal to (x) the product of (a) the Aggregate ISD Capital
Expenditures, divided by (b) $1.00, minus (y) the number of Class A Units then
held by Enbridge and its Affiliates; provided, however, that if any Member is a
Defaulting Member at the time of the Sandpiper Project In-Service Date, such
conversion shall be delayed until the earlier of (i) such time as such Member is
no longer in Default or (ii) the expiration of all applicable Cure Periods.

(i) In connection with such conversion, if Williston and its Wholly-Owned
Affiliates then own Class B Units, Williston and any of its Wholly-Owned
Affiliates to which Williston has transferred any Class B Units in accordance
with Article XIII will receive an aggregate number of Class A Units (the
“Williston Class A Units”) equal to (x) the sum of (A) the aggregate amount of
all capital contributions made by Williston to the Company in respect of the
Sandpiper Project (including, for the avoidance of doubt, the Williston
Effective Date Capital Contribution_but subject to Section 5.04(d)(i)(B)), plus
(B) the Growth Capital Project Reimbursement Amount, minus (C) the Cure Amount
(if applicable), divided by (y) $1.00.

(ii) In connection with such conversion, Enbridge and any of its Wholly-Owned
Affiliates to which Enbridge has transferred any Class B Units in accordance
with Article XIII will receive an aggregate number of Class A Units (the
“Enbridge Class A Units”) equal to the Aggregate Converted Class A Units, minus
the number of Williston Class A Units.

 

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(i) Adjustments. If, at any time after the Sandpiper Project In-Service Date,
any of the Aggregate Interim SP Capital Expenditures is determined to have been
incorrect at the time such Contribution Amount was made to the Company, then:

(i) the Company shall recalculate the number of Williston Class A Units and
Enbridge Class A Units in accordance with Section 3.01(h)(i) and
Section 3.01(h)(ii) using such amounts as adjusted to reflect the accurate
Aggregate Interim SP Capital Expenditures, and the Member Schedules (and the
number of Class A Units and the Class A Percentage Interests of the Class A
Members) shall be updated to reflect the adjusted number of Williston Class A
Units and Enbridge Class A Units resulting from such recalculation;

(ii) in the event the Class A Members have made capital contributions in respect
of any Call Notices subsequent to the Sandpiper Project In-Service Date but
prior to (x) the adjustment contemplated by clause (ii) above or (y) the
issuance of any Class A Units pursuant to Section 5.02(c)(z) and the resulting
adjustment to the Class A Units and Class A Percentage Interests of the Class A
Members, then in connection with any Call Notice issued to the Class A Members
subsequent to any such adjustment, the Class A Member whose Class A Percentage
Interest was increased in such adjustment shall fund all or such portion of such
subsequent Capital Call(s) as is necessary to result in such Class A Member
having made aggregate capital contributions to the Company in the amount that
such Class A Member would have made pursuant to such earlier Call Notices had
the adjusted Class A Percentage Interest been known at the Sandpiper Project
In-Service Date; and

(iii) in the event the Company has made distributions to the Class A Members
subsequent to the Sandpiper Project In-Service Date but prior to (x) the
adjustment contemplated by clause (ii) above or (y) the issuance of any Class A
Units pursuant to Section 5.02(c)(z) and the resulting adjustment to the Class A
Units and Class A Percentage Interests of the Class A Members, then in
connection with any distribution made to the Class A Members subsequent to any
such adjustment the Class A Member whose Class A Percentage Interest was
increased in such adjustment shall receive all or such portion of such
subsequent distributions as is necessary to result in such Class A Member having
received aggregate distributions pursuant to this Agreement in the amount that
such Class A Member would have received pursuant to such earlier distributions
had the adjusted Class A Percentage Interest been known at the Sandpiper Project
In-Service Date.

Section 3.02 Unit Certificates. Units may be (but need not be) represented by
certificates in such form as the Management Committee shall from time to time
approve, but shall be recorded in a register thereof maintained by the Company,
and shall be subject to such rules for the issuance thereof as the Management
Committee may from time to time determine. If the Management Committee elects to
certificate the Units and a mutilated certificate is surrendered to the Company,
or if a Member claims and submits an affidavit or other evidence satisfactory to
the Company to the effect that its certificate has been lost, destroyed or
wrongfully taken, the Company shall issue a replacement certificate if the
Company’s requirements are met. If required by the Management Committee, such
Member must provide an

 

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indemnity bond, or other form of indemnity, sufficient in the judgment of the
Management Committee to protect the Company against any loss which may be
suffered by the Company. The Company may charge such Member for its reasonable
out-of-pocket expenses in replacing a certificate which has been mutilated,
lost, destroyed or wrongfully taken.

Section 3.03 Conflicts of Interest.

(a) Generally. Each of the Company and the Members acknowledges and affirms that
each of the Members and their respective Affiliates:

(i) (A) have participated (directly or indirectly) and/or will participate
(directly or indirectly) in investments in corporations, joint ventures, general
partnerships, limited liability companies, limited partnerships and other
entities, including those engaged in various aspects of businesses that may be,
are or will be competitive with the Business or that could be suitable for the
Company or its Subsidiaries (“Other Investments”), (B) have interests in,
participate with, aid and maintain seats on the boards of directors or similar
governing bodies of, Other Investments, and (C) may develop or become aware of
business opportunities for Other Investments; and

(ii) may or will, as a result of or arising from the matters referenced in
clause (i) above, the nature of the Members’ and their respective Affiliates’
respective businesses and other factors, have conflicts of interest or potential
conflicts of interest.

(b) Waiver of Conflicts. Except with respect to Growth Capital Projects, which
the Members hereby acknowledge and agree must be pursued through the Company or
its Subsidiaries and offered by the Proposing Member to the other Member for its
participation, in each case in accordance with Section 14.01, and without
limiting in any respect the Operator’s duties under the Operating and
Construction Management Agreement, each of the Company and the Members (in its
own name and in the name and on behalf of its Subsidiaries) expressly (x) waives
any such conflicts of interest and agrees that none of the Members or their
respective Affiliates shall have any liability to any Person, including any
Member or Affiliate thereof or the Company or its Affiliates with respect to
such conflicts of interest or potential conflicts of interest and
(y) acknowledges and agrees that none of the Members or their respective
Affiliates or any of their respective representatives shall have any duty to
disclose to the Company, any other Member or the Management Committee any
business opportunities, whether or not competitive with the Business and whether
or not the Company or any of its Subsidiaries might be interested in such
business opportunities for itself. Each of the Company and the Members (in its
own name and in the name and on behalf of its Subsidiaries) also acknowledges
that the Members, their respective Affiliates and their representatives have a
duty not to disclose confidential information of or related to the Other
Investments. Each of the Company and the Members (in its own name and in the
name and on behalf of its Subsidiaries) hereby:

(i) agrees that (A) the terms of this Section 3.03 to the extent that they
modify or limit a duty or other obligation, if any, that any of the foregoing
may have to the Company or another Member under the Act or other applicable Law,
rule or regulation, are reasonable in form, scope and content; and (B) the terms
of this Section 3.03 shall control to the fullest extent possible if such terms
conflict with a duty, if any, that any of the foregoing may have to the Company
or another Member under the Act or any other applicable Law, rule or regulation;
and

 

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(ii) waives any duty or other obligation, if any, that any Member or any of
their respective Affiliates may have to the Company or any Member, pursuant to
the Act or any other applicable Law, rule or regulation, to the extent necessary
to give effect to the terms of this Section 3.03.

(c) Business Opportunities. Subject to Section 17.06 and without limiting in any
respect the Operator’s duties under the Operating and Construction Management
Agreement and except with respect to Growth Capital Projects, which the Members
hereby acknowledge and agree must be pursued through the Company or its
Subsidiaries and offered by the Proposing Member to the other Member for its
participation, in each case in accordance with Section 14.01, but otherwise to
the fullest extent permitted by Law, each of the Company and the Members (in its
own name and in the name and on behalf of its Subsidiaries) hereby renounces any
interest or expectancy in any business opportunity, transaction or other matter
in which either Member or their respective Affiliates participate or desire to
participate and that involves any aspect related to the Business of the Company
or its Subsidiaries, other than any such business opportunity that is presented
to a Manager solely in such individual’s capacity as a Manager (whether at a
meeting of the Management Committee or otherwise) and with respect to which
neither the Member that designated such Manager nor any of its Affiliates had
independently received notice of such business opportunity prior to disclosure
to the Manager in its capacity as Manager (each such business opportunity, a
“Renounced Business Opportunity”). None of the Members or their respective
Affiliates shall have any obligation to communicate or offer any Renounced
Business Opportunity to the Company or its Subsidiaries or the other Member and
may pursue any Renounced Business Opportunity solely for its own account.

(d) Acknowledgement. Each of the Company and the Members (in its own name and in
the name and on behalf of its Subsidiaries) acknowledges, affirms and agrees
that (i) the execution and delivery of this Agreement by each Member is of
material benefit to the Company and its Subsidiaries and the other Member, and
that neither Member would be willing to (A) execute and deliver this Agreement
and (B) make its agreed respective capital contributions to the Company, without
the benefit of this Section 3.03 and the agreement of the parties thereto; and
(ii) it has reviewed and understands the provisions of §§ 18-1101(b) and (c) of
the Act.

Section 3.04 Representations, Warranties and Covenants.

(a) Each Member, severally and not jointly, hereby represents and warrants to
the Company and each other Member that the following statements are true and
correct as of the date hereof:

(i) (A) such Member is duly incorporated, organized or formed (as applicable),
validly existing, and (if applicable) in good standing under the Laws of the
jurisdiction of its incorporation, organization or formation; and (B) such
Member has full power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and all necessary actions by its board of
directors, shareholders, managers, members, partners, trustees, beneficiaries or
other applicable Persons necessary for the due authorization, execution,
delivery and performance of this Agreement by such Member have been duly taken;

 

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(ii) such Member has duly executed and delivered this Agreement and the other
documents contemplated herein, and, assuming due execution by the other parties
hereto and thereto, each of this Agreement and such other documents constitutes
the legal, valid and binding obligation of such Member enforceable against it in
accordance with its terms (except as may be limited by bankruptcy, insolvency or
similar Laws of general application and by the effect of general principles of
equity, regardless of whether considered at law or in equity);

(iii) such Member’s authorization, execution, delivery, and performance of this
Agreement does not and shall not (A) conflict with, or result in a breach,
default or violation of, (1) the organizational documents of such Member,
(2) any contract, obligation or agreement to which such Member is a party or is
otherwise subject, or (3) any Law, order, judgment, decree, writ, injunction or
arbitral award to which such Member is subject; or (B) require any consent,
approval or authorization from, filing or registration with, or notice to, any
Governmental Authority or other Person, unless such requirement has already been
satisfied;

(iv) the Units to be acquired by such Member pursuant to this Agreement will be
acquired for investment for such Member’s own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof in
violation of applicable securities Laws;

(v) such Member is an experienced investor in securities and acknowledges that
it can bear the economic risk of its investment in the Units acquired pursuant
to this Agreement and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment
in the Units;

(vi) such Member is an Accredited Investor;

(vii) such Member understands that the Units issued hereunder have not been, and
will not be, registered under the Securities Act, by reason of a specific
exemption from the registration provisions of the Securities Act, which depends
upon, among other things, the bona fide nature of the investment intent and the
accuracy of such Member’s representations as expressed herein; such Member
further understands that the Units acquired by it hereunder are “restricted
securities” under applicable U.S. federal and state securities Laws and that,
pursuant to these Laws, such Member must hold the Units acquired by it hereunder
indefinitely unless they are registered with the Commission and qualified by
state authorities, or an exemption from such registration and qualification
requirements is available; and

(viii) such Member understands that no public market now exists for the Units or
any other securities issued by the Company, and that the Company has made no
assurances that a public market will ever exist for the Units or any other
securities issued by the Company.

 

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(b) Williston hereby covenants to the Company and Enbridge that it shall
maintain a guaranty, in the form attached hereto as Exhibit C, from Marathon
Petroleum Corporation in favor of the Company of all of its contribution
obligations under Section 5.02(b) and Section 5.02(c)(z). For the avoidance of
doubt, such guaranty shall only apply to the first $1,220,000,000 contributed by
Williston pursuant to Section 5.02(b) and Section 5.02(c)(z).

ARTICLE IV

BOOKS AND RECORDS

Section 4.01 Books, Records, Access.

(a) The Company shall keep and maintain accurate, proper and complete books and
records of accounts, taxes, financial information and all matters pertaining to
the Company and its Subsidiaries in accordance with GAAP, showing all costs,
expenditures, sales, receipts, assets and liabilities and profits and losses and
all other records necessary, convenient or incidental to recording the Business
(the “Records”). The Members shall have the right (i) to inspect (at such
inspecting Member’s expense) the Records, (ii) to consult from time to time with
the Officers and the supervisors or independent accountants of the Company (and
its direct or indirect Subsidiaries) at their respective place of business
regarding operating and financial matters and (iii) to visit and inspect any of
the properties of the Company (and any of its direct or indirect Subsidiaries),
in each case, so long as the exercise of such rights does not interfere with the
Business. A Member may, at its option and its own expense upon ten (10) days’
advance written notice to the Company, conduct internal audits during reasonable
business hours of the Records; provided, however, that such audit rights may not
be exercised more than once in any calendar year. Audits may be conducted by
employees of the Member, or an Affiliate of the Member, or by independent
auditors retained by the Member.

(b) The Members shall have reasonable access to the Management Committee,
Officers and facilities of the Company and its Subsidiaries. The Management
Committee shall prepare, or cause to be prepared, and cause the Company to
provide to the Members the following reports:

(i) as soon as practicable after the Company’s Fiscal Year-end, audited
consolidated financial statements of the Company (consisting of an income
statement, balance sheet, statement of Members’ equity and a statement of cash
flows), prepared in accordance with GAAP, for the previous Fiscal Year and a
schedule showing any variance between actual and budgeted figures; provided,
however, that for the Fiscal Year ended December 31, 2013, such consolidated
financial statements of the Company may be unaudited;

(ii) as soon as practicable after any Calendar Month, unaudited consolidated
financial statements of the Company (consisting of an income statement and
balance sheet), prepared in accordance with GAAP, for the previous Calendar
Month and a schedule showing any variance between actual and budgeted figures;

 

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(iii) as soon as practicable after any Calendar Quarter, unaudited consolidated
financial statements of the Company (consisting of an income statement, balance
sheet, statement of Members’ equity and a statement of cash flows), prepared in
accordance with GAAP, for the previous Calendar Quarter and a schedule showing
any variance between actual and budgeted figures;

(iv) promptly upon request, copies of any Budget;

(v) prompt notice of any event that would reasonably be expected to have a
material effect on the Business or the Company’s financial condition; and

(vi) such other reports and information (in any form, electronic or otherwise)
as either Member may reasonably request or as the Management Committee may
determine.

Section 4.02 Tax Returns. The Company shall prepare, or cause to be prepared,
and timely file all U.S. federal, state and local and foreign tax returns
required to be filed by the Company. Each Member shall furnish to the Company
all pertinent information in its possession relating to the Company’s operations
that is necessary to enable the Company’s tax returns to be timely prepared and
filed. The Company shall deliver to each Member as soon as practicable after the
end of each calendar year a Schedule K-1 together with such additional
information as may be required by the Members (or their owners) in order to file
their individual returns reflecting the Company’s operations; provided, however,
that, in any event, the Company shall deliver a draft Schedule K-1 to each
Member no later than June 15 of the year following such calendar year. The
Company shall bear the costs of the preparation and filing of its tax returns.

Section 4.03 Tax Partnership. It is the intention of the Members that the
Company be classified as a partnership for U.S. federal income tax purposes.
Unless otherwise approved by each Member, neither the Company nor any Member
shall make an election for the Company to be excluded from the application of
the provisions of subchapter K of chapter 1 of subtitle A of the Code or any
similar provisions of applicable state Law or to be classified as other than a
partnership pursuant to Treasury Regulation Section 301.7701-3.

Section 4.04 Tax Elections. The Company shall make the following elections on
the appropriate forms or tax returns:

(a) to adopt the calendar year as the Company’s Fiscal Year, if permitted under
the Code;

(b) to adopt the accrual method of accounting for U.S. federal income tax
purposes;

(c) to elect to amortize the organizational expenses of the Company as permitted
by Code Section 709(b);

(d) if a distribution of the Company’s property as described in Code Section 734
occurs or a transfer of Units as described in Code Section 743 occurs, on
request by notice from any Member, to elect, pursuant to Code Section 754, to
adjust the basis of the Company’s properties so long as the Tax Matters Member
determines that the Code Section 754 election is in the best interests of the
Company and the other Members; and

(e) any other election the Management Committee may deem appropriate and in the
best interests of the Company.

 

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Section 4.05 Tax Matters Member.

(a) The tax matters partner of the Company pursuant to Code Section 6231(a)(7)
shall be a Member designated from time to time by the Management Committee
subject to replacement by the Management Committee. (Any Member who is
designated as the tax matters partner is referred to herein as the “Tax Matters
Member”). The initial Tax Matters Member as of the Effective Date shall be
Enbridge. The Tax Matters Member shall take such action as may be necessary to
cause to the extent possible each other Member to become a notice partner within
the meaning of Code Section 6231(a)(8). The Tax Matters Member shall inform each
other Member of all material tax matters that may come to its attention in its
capacity as Tax Matters Member by giving notice thereof on or before the
twentieth (20th) day after (or if applicable, such shorter period as may be
required by the appropriate statutory or regulation provisions) becoming aware
thereof, and, within that time, shall forward to each other Member copies of all
material written communications it may receive in its capacity as Tax Matters
Member. In addition to the foregoing, each Member shall provide the other
Members with copies of all correspondence or summaries of other communications
with the Internal Revenue Service or any state, local or foreign taxing
authority (other than routine correspondence and communications) regarding tax
treatment of the Company’s operations.

(b) The Tax Matters Member shall take no action without the authorization of the
Management Committee, other than such action as may be required by Law. Any
reasonable, documented cost or expense incurred by the Tax Matters Member in
connection with the performance of its duties as Tax Matters Member, including
the preparation for or pursuance of administrative or judicial proceedings,
shall be paid by (or reimbursed by) the Company.

(c) The Tax Matters Member shall not enter into any extension of the period of
limitations for making assessments on behalf of the Members without first
obtaining the consent of the Management Committee. The Tax Matters Member shall
not bind any Member to a settlement agreement without obtaining the consent of
such Member. Any Member that enters into a settlement agreement with respect to
any Company item (within the meaning of Code Section 6231(a)(3)) shall notify
the other Members of such settlement agreement and its terms within fifteen
(15) days from the date of the settlement. Notwithstanding the foregoing, no
Member shall enter into settlement negotiations with the Internal Revenue
Service or any state, local or foreign taxing authority with respect to any
issue concerning the Company’s income, gains, losses, deductions, or credits if
the tax adjustment attributable to such issue (assuming the then current
aggregate tax rate) would be $1,000,000 or greater, without first giving
reasonable advance notice of such intended action to the other Members.

 

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(d) No Member shall file a request pursuant to Code Section 6227 for an
administrative adjustment of Company items for any taxable year without first
notifying the other Members. If the Management Committee consents to the
requested adjustment, the Tax Matters Member shall file the request for the
administrative adjustment on behalf of the Members. If such consent is not
obtained within thirty (30) days from such notice, or within the period required
to timely file the request for administrative adjustment, if shorter, any
Member, including the Tax Matters Member, may file a request for administrative
adjustment on its own behalf. Any Member intending to file a petition under Code
Sections 6226 or 6228 or any other Code section with respect to any item
involving the Company shall notify the other Members of such intention and the
nature of the contemplated proceeding. In the case where the Tax Matters Member
is the Member intending to file such petition on behalf of the Company, such
notice shall be given within a reasonable period of time to allow the other
Members to participate in the choosing of the forum in which such petition will
be filed.

(e) If any Member intends to file a notice of inconsistent treatment under Code
Section 6222(b), such Member shall give reasonable notice under the
circumstances to the other Members of such intent and the manner in which the
Member’s intended treatment of an item is (or may be) inconsistent with the
treatment of that item by the other Members.

Section 4.06 Entity Level Taxation. If the Company is or becomes subject to
taxation as an entity in any jurisdiction, the burden of such tax shall be
shared among the Members in proportion to their respective percentage interests.
Further, in the event the Company is treated for purposes of any existing or
future taxation as a member of a consolidated, combined or unitary group for tax
purposes with either Member or an Affiliate thereof, the Members shall enter
into a customary tax sharing agreement, pursuant to which the Members shall
agree to bear their respective shares of any such taxes in proportion to their
respective Percentage Interests, which taxes shall be determined as the greater
of zero and the difference between (i) the taxes imposed on the consolidated,
combined or unitary group including the Company and any Affiliate owned by the
Company that is included in such consolidated, combined or unitary group and
(ii) the taxes that would have been imposed on the consolidated, combined or
unitary group if the Company and any Affiliate owned by the Company had not been
included in such consolidated, combined or unitary group. The Company and any
Affiliate owned by the Company shall not be responsible for and shall be
indemnified by the other members of the consolidated, combined or unitary group
for any tax of any such group that is in excess of the amount determined
pursuant to the preceding sentence.

Section 4.07 Bank Accounts. The Company shall establish such bank accounts in
the name of the Company as provided in the Operating and Construction Management
Agreement or as otherwise determined by the Management Committee.

ARTICLE V

CAPITAL CONTRIBUTIONS

Section 5.01 Initial Capital Contribution of Members; Unit Issuances. On the
Effective Date, each of the Members listed on Schedule III shall receive the
number of Units as provided in Section 3.01(b) and Section 3.01(c) and as set
forth opposite its name on Schedule III under the heading “Initial Class A
Units” or “Initial Class B Units,” and within ten (10) days after the Effective
Date, (a) Enbridge shall contribute all of the outstanding Equity Interests in
each of EP Bakken GP and EP Bakken LP as a capital contribution and
(b) Williston shall make the

 

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Williston Effective Date Capital Contribution to the Company in the amount set
forth opposite its name on Schedule III under the heading “Effective Date
Capital Contribution Amount.” The amount set forth on Schedule III under the
heading “Aggregate Capital Contribution Amount” represents the amount of cash,
together with the initial Gross Asset Value of any Assets (including, with
respect to Enbridge, the Equity Interests in each of EP Bakken GP and EP Bakken
LP), that each Member has contributed, or been deemed to have contributed, to
the Company as of the date the contributions contemplated by this Section 5.01
have been made.

Section 5.02 Further Capital Contributions.

(a) Subject to Section 5.02(f), from time to time after the Effective Date but
prior to the Sandpiper Project In-Service Date, and following the issuance of a
Call Notice, the Class A Members shall make additional cash contributions to the
Company (i) in amounts and at such times as shall be determined by the
Management Committee in accordance with the terms and provisions of this
Agreement (including, without limitation, the provisions of Section 8.01(d)) and
(ii) in an amount equal to the amount that the Company is required to pay to the
Operator (or otherwise) pursuant to (and in accordance with) the terms and
provisions of the Operating and Construction Management Agreement (in each case
other than any amounts as may be necessary for the Design, Construction and
Procurement of the Sandpiper Facilities and all other capital and operating
expenses (including, for the avoidance of doubt, construction costs)
attributable to the Sandpiper Facilities, which amounts shall be subject to
capital calls pursuant to Section 5.02(b) below). All such capital contributions
shall be made by the Class A Members to the Company in proportion to their
respective Class A Percentage Interests. The Class A Members shall not be issued
any Units in exchange for any capital contributions made in accordance with this
Section 5.02(a).

(b) Subject to Section 5.02(f) and Section 5.02(g), from time to time after the
Effective Date but prior to the Sandpiper Project In-Service Date, and following
the issuance of a Call Notice, which shall be consistent with the Sandpiper
Project Spend Profile, the Class B Members shall make additional cash
contributions to the Company (i) in amounts and at such times as shall be
determined by the Management Committee in accordance with the terms and
provisions of this Agreement and (ii) in an amount equal to the amount that the
Company is required to pay to the Operator (or otherwise) pursuant to (and in
accordance with) the terms and provisions of the Operating and Construction
Management Agreement, in each case, in respect of the Design, Construction and
Procurement of the Sandpiper Facilities and all other capital and operating
expenses (including, for the avoidance of doubt, construction costs)
attributable to the Sandpiper Facilities. All such capital contributions shall
be made by the Class B Members to the Company in proportion to their respective
Class B Percentage Interests; provided that such capital contributions in
respect of an Opt Out Sandpiper Call Notice (as defined below) shall be made
100% by Enbridge. Upon receipt by the Company of any such capital contributions
from or on behalf of existing Class B Members, the Company shall issue to each
contributing Class B Member additional Class B Units at a price of $1.00 per
Class B Unit in the amount of such Class B Member’s capital contribution.
Notwithstanding anything to the contrary in this Agreement, Williston shall be
entitled to elect not to make capital contributions in accordance with this
Section 5.02(b) in respect of any Call Notice delivered pursuant to this
Section 5.02(b) to the extent such Call Notice, together with all previous Call
Notices delivered pursuant to this Section 5.02(b), requests capital
contributions from Williston in excess of an aggregate of

 

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$1,220,000,000. If Williston desires to elect not to make capital contributions
pursuant to any such Call Notice, Williston shall deliver written notice to the
Company and Enbridge of such election within 10 days of its receipt of such Call
Notice (an “Opt Out Sandpiper Call Notice”). If Williston does not deliver such
notice within such 10 day period, Williston shall be deemed to have agreed to
make the capital contributions required pursuant to such Call Notice. Williston
shall not be deemed to be in default under this Agreement in connection with its
election not to make capital contributions in accordance with any Opt Out
Sandpiper Call Notice.

(c) Subject to Section 5.02(f), Section 5.02(g), Section 14.02 and
Section 14.03, from time to time from and after the Sandpiper Project In-Service
Date and following the issuance of a Call Notice, the Class A Members shall make
additional cash contributions to the Company (i) in amounts and at such times as
shall be determined by the Management Committee in accordance with the terms and
provisions of this Agreement (including, without limitation, the provisions of
Section 8.01(c)) and (ii) in an amount equal to the amount that the Company is
required to pay to the Operator (or otherwise) pursuant to (and in accordance
with) the terms and provisions of the Operating and Construction Management
Agreement, but, subject to Section 5.02(f), solely to the extent such amount
cannot be paid with cash flows from the Company’s operations. Except as
otherwise provided herein, including Section 14.02 and Section 14.03, all such
capital contributions shall be made (x) 50% by Williston and 50% by Enbridge
until such time as Williston shall have made (or be deemed to have made) capital
contributions to the Company in an aggregate amount equal to $1,180,000,000,
(y) following such time, by the Class A Members to the Company in proportion to
their respective Class A Percentage Interests and (z) notwithstanding the
foregoing clauses (x) and (y), 37.5% by Williston and 62.5% by Enbridge to the
extent such capital contributions relate to Aggregate Interim SP Capital
Expenditures or other capital expenditures (excluding, for the avoidance of
doubt, capital expenditures related to Growth Capital Projects) necessary to
complete the Sandpiper Facilities that were placed into service on the Sandpiper
Project In-Service Date. Upon receipt by the Company of any such capital
contributions from or on behalf of existing Class A Members, the Company shall
issue to each contributing Class A Member additional Class A Units at a price of
$1.00 per Unit (unless otherwise agreed by the contributing Class A Members at
the time of such issuance) in the amount of such Class A Member’s capital
contribution.

(d) On the Sandpiper Project In-Service Date, Williston shall make a cash
contribution to the Company in an amount equal to the Growth Capital Project
Reimbursement Amount.

(e) Prior to 300% Payout with respect to any Non-Participatory Growth Capital
Project, the Management Committee shall issue Call Notices to the Proposing
Member with respect to such Non-Participatory Growth Capital Project at such
times and for such amounts as may be necessary for the Design, Construction and
Procurement of the Non-Participatory Growth Capital Project and all other
capital and operating expenses (including, for the avoidance of doubt,
construction costs) attributable to such Non-Participatory Growth Capital
Project. Following the issuance of any such Call Notice, the Proposing Member
shall make a cash capital contribution to the Company equal to the full amount
specified in such Call Notice (each, a “Non-Participatory Growth Capital Project
Contribution”). The Proposing Member shall not be issued any Units in exchange
for Non-Participatory Growth Capital Project Contributions. Following 300%
Payout with respect to any Non-Participatory Growth Capital Project, the Class A
Members shall make cash contributions to the Company to fund the ongoing
operation and maintenance of such Non-Participatory Growth Capital Project in
accordance with the provisions of Section 5.02(c).

 

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(f) Except as otherwise provided in this Section 5.02, in no event shall any of
the Members be required to make any capital contributions to the Company after
the date hereof, and no third party shall have the right to cause the Company to
require any capital contributions of the Members. The Members hereby acknowledge
and agree that Long-Term Response Expenditures, Non-Growth Integrity Projects
and Growth Capital Projects will be funded solely with Cash On Hand From Capital
Transactions.

(g) Notwithstanding anything to the contrary in Section 5.02(b) and
Section 5.02(c), in the event the Company determines that the amount of any
invoice previously paid by the Company or any of its Subsidiaries was improperly
included or excluded from the capital contribution obligation in respect of
which Enbridge or Williston made any previous capital contribution to the
Company, the Company shall adjust any subsequent Call Notices made pursuant to
Section 5.02(b) or Section 5.02(c) to allocate to Enbridge or Williston, as
applicable, an appropriate corrective adjustment amount.

(h) Each capital call made by the Management Committee pursuant to this
Section 5.02 shall be made pursuant to a Call Notice delivered to all of the
Class A Members (in the case of a capital call made pursuant to Section 5.02(a)
or Section 5.02(c)), all of the Class B Members (in the case of a capital call
made pursuant to Section 5.02(b)), or the Proposing Member (in the case of a
capital call pursuant to Section 5.02(e)). Each Member that receives a Call
Notice shall, subject to the other provisions of this Section 5.02, have 20
Business Days from the issuance of a Call Notice pursuant to this Section 5.02
to make such Member’s required capital contribution pursuant to this
Section 5.02.

Section 5.03 Failure to Fund Capital Contributions.

(a) Except as otherwise provided in Section 5.02, if any Member fails to pay in
full when due (any such date, a “Due Date”) any undisputed amount owed to the
Company under a Call Notice issued pursuant to this Article V, and if such
failure is not cured within 20 days of such Due Date, then such Member shall be
deemed to be in default under this Agreement (a “Default”), and shall be
referred to herein as a “Defaulting Member.” The Company shall give notice of
such default (a “Default Notice”) to the Defaulting Member and the Affected
Member. A Default Notice shall include a statement of the amount the Defaulting
Member has failed to pay. If such Member cures such failure within such 20 day
period, the Company shall issue Class A Units or Class B Units to the Defaulting
Member in accordance with Section 5.02 (as applicable based on the subsection of
Section 5.02 pursuant to which such Call Notice was issued) as if such capital
contributions were timely made thereunder.

(b) Any amount in Default and not paid when due under this Agreement shall bear
interest at the Interest Rate from the applicable Due Date to the date of
payment.

 

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Section 5.04 Certain Consequences of Default.

(a) Notwithstanding any other provision in this Agreement to the contrary, in
addition to any remedies available to the Company at law or in equity:

(i) if Williston is in Default on the Sandpiper Project In-Service Date and such
Default is not cured prior to expiration of all applicable Cure Periods, the
Company shall apply the Cure Amount to the conversion formula relating to
Class A Units to be issued to Williston and Enbridge upon conversion of their
Class B Units as contemplated by Section 3.01(h), and upon such conversion,
Williston shall be deemed not to be in Default; and

(ii) during the Default Period (whether before or after the Sandpiper Project
In-Service Date) a Defaulting Member shall have no right to, and shall cause its
Affiliates and the Managers designated by such Defaulting Member, not to (in
each case as applicable at such time):

(A) make any proposal under this Agreement;

(B) (1) be counted for purposes of determining a quorum for any vote of the
Management Committee or (2) vote on any matter with respect to which Member
approval, Management Committee Approval or Super-Majority Management Committee
Approval is required under the express terms of this Agreement and, in each
case, the vote of the Managers designated by the Defaulting Member shall be
deemed held by Managers designated by the other Member (in the case of any
required approval of the Managers) and the Units held by the Defaulting Member
shall not be counted as outstanding (in the case of any required approval of any
Members);

(C) request or call any meetings of the Management Committee;

(D) access any data or information relating to the Business (except to the
extent such Member or an Affiliate of such Member or an employee of such Member
or Affiliate of such Member is the Operator, and such data or information is
necessary for such Member or Affiliate to perform its responsibilities in such
capacity);

(E) Transfer all or any part of its Units, except for any Transfer (in
accordance with the terms of this Agreement) of all of its Units to a Person who
simultaneously with such Transfer satisfies or causes to be satisfied in full
the amount in Default;

(F) propose, participate or elect to participate in any proposed Growth Capital
Projects under Section 14.01;

(G) in the event of a Transfer by any other Member, exercise its right to be a
Tag-Along Seller under Section 13.07 or its right of first refusal under
Section 13.08; or

(H) exercise its rights under Section 13.04(b).

 

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For the avoidance of doubt, a Defaulting Member shall continue to be bound by
all of its obligations under this Agreement during the Default Period, including
the obligation to make additional capital contributions.

(b) Upon the commencement of a Default Period, the Company shall send the
Affected Member a statement of the amount that the Defaulting Member failed to
contribute to the Company pursuant to this Agreement, and the Affected Member
may contribute to the Company such amount within 15 days following receipt of
such statement. If the Affected Member contributes such amount to the Company,
the Company shall issue Class A Units or Class B Units to the Affected Member in
accordance with Section 5.02 (as applicable based on the subsection of
Section 5.02 pursuant to which the capital call related to such Default was
issued) as if such contribution were made by the Affected Member thereunder. If
the Affected Member does not contribute such amount within such 15-day period,
then (i) the Members and the Management Committee shall be deemed to have
unanimously determined not to make the expenditure to which such defaulted
capital call relates (notwithstanding any prior authorization to make such
expenditure in any Budget), (ii) the Defaulting Member shall no longer be deemed
to be in Default with respect to such contribution, and (iii) any amount
previously contributed to the Company by the Affected Member pursuant to this
Section 5.04(b) (and the Defaulting Member in the case of a partial Default)
with respect to such capital call shall promptly be returned by the Company to
the Affected Member (and the Defaulting Member if applicable) and such amounts
shall not be considered to have been contributed by the Affected Member (or the
Defaulting Member, if applicable) to the Company and any Units issued in respect
of such amounts shall be cancelled.

(c) Within 30 days after the Affected Member makes any contribution under
Section 5.04(b) (the “Cure Period”), the Defaulting Member shall be entitled to
cure the applicable Default by reimbursing the Affected Member for the entire
amount of such contribution made by the Affected Member, together with interest
thereon at the Interest Rate. Any such contributions made by the Affected
Member, to the extent so reimbursed by the Defaulting Member, shall be treated
as advances made by the Affected Member on behalf of the Defaulting Member and
shall, for purposes of this Agreement, constitute loans made by the Affected
Member to the Defaulting Member rather than contributions by the Affected Member
to the Company (and any Units issued to the Affected Member in accordance with
Section 5.04(b) shall be cancelled). Any such reimbursement payments (except to
the extent made in respect of accrued interest on any defaulted contributions)
made by the Defaulting Member to the Affected Member shall be treated as capital
contributions by the Defaulting Member, and the Company shall issue Class A
Units or Class B Units to the Defaulting Member in accordance with Section 5.02
(as applicable based on the subsection of Section 5.02 pursuant to which the
capital call related to such Default was issued) as if such capital
contributions were timely made thereunder.

(d) Unless the applicable Default is cured in full by the Defaulting Member
pursuant to Section 5.04(c) within the Cure Period, (i) the Defaulting Member
shall have no right to receive distributions from the Company pursuant to
Section 7.01, and such distributions shall instead be made to the Affected
Member, until the Affected Member shall have received an

 

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amount of such distributions sufficient to reimburse the Affected Member for any
such contributions made by the Affected Member (less any reimbursement payments
made to the Affected Member by the Defaulting Member pursuant to
Section 5.04(c)), together with interest thereon at the Interest Rate (less any
interest payments made to the Affected Member by the Defaulting Member pursuant
to Section 5.04(c)), and (ii) the Defaulting Member shall remain a Defaulting
Member unless and until the Defaulting Member makes a cash payment to the
Affected Member equal to the amount of any defaulted contributions funded by the
Affected Member plus interest thereon at the Interest Rate (the “Cure Amount”)
(less any reimbursement payments made to the Affected Member by the Defaulting
Member pursuant to Section 5.04(c)). Notwithstanding the foregoing, with respect
to any Default occurring prior to the Sandpiper Project In-Service Date, a
Defaulting Member will be entitled, at any time prior to the fifth Business Day
before the Sandpiper Project In-Service Date, to make a cash payment to the
Affected Member equal to the Cure Amount (less any reimbursement payments made
to the Affected Member by the Defaulting Member pursuant to Section 5.04(c)),
and to thereby no longer be considered a Defaulting Member. In the event the
Defaulting Member makes any such payment of the Cure Amount to the Affected
Member after the expiration of the Cure Period, the Affected Member, in its sole
discretion, shall be entitled to elect to either (i) forfeit, for no
consideration, any portion of the Units issued to the Affected Member pursuant
to Section 5.04(b) and not be credited for making any capital contribution to
the Company with respect to the contributions funded pursuant to Section 5.04(b)
to the extent such contributions were made in exchange for any Units that the
Affected Member elects to forfeit, in which case (A) such amounts that are not
treated as capital contributions by the Affected Member pursuant to this clause
(i) shall be treated as advances made by the Affected Member on behalf of the
Defaulting Member (such amounts, in the aggregate, the “Defaulting Member Deemed
Contribution Amount”) and shall constitute loans made by the Affected Member to
the Defaulting Member rather than contributions by the Affected Member to the
Company, (B) the Defaulting Member shall be deemed to have timely made a capital
contribution to the Company in an amount equal to the Defaulting Member Deemed
Contribution Amount (except with respect to any portion of the Defaulting Member
Deemed Contribution Amount that is comprised of interest on the contributions
made by the Affected Member pursuant to Section 5.04(b)) for all purposes under
this Agreement (other than Section 3.01(h)(i)), and (C) the Company shall issue
Class B units to the Defaulting Member in accordance with Section 5.02(b) in
respect of such portion of the Defaulting Member Deemed Contribution Amount that
is treated as a capital contribution hereunder, and/or (ii) retain any portion
of the Units issued to the Affected Member pursuant to Section 5.04(b) and be
credited as having made capital contributions to the Company in the amount of
the contributions made by the Affected Member pursuant to Section 5.04(b) to the
extent such contributions were made in exchange for any Units that the Affected
Member elects to retain, in which case the payment of the Cure Amount by the
Defaulting Member shall not be treated as a capital contribution to the Company
by the Defaulting Member for any purposes under this Agreement and the
Defaulting Member shall not be issued any Class B Units in respect of such
payment, to the extent any amount of such payment is treated as a capital
contribution by the Affected Member pursuant to this clause (ii).

Section 5.05 Withdrawal of Capital. No Member shall have the right to withdraw
any capital from the Company or to have its Units redeemed by the Company;
provided, however, that the Management Committee may, in its sole discretion,
determine to distribute capital to the Members from time to time in accordance
with the terms hereof and, with the consent of the affected Member, cause the
Company to redeem all or a portion of the Units of such Member.

 

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Section 5.06 Capital Accounts.

(a) “Capital Account” means, with respect to any Member, an account that is
maintained for such Member in accordance with the provisions of
Section 1.704-1(b)(2)(iv) of the Treasury Regulations and to the extent
consistent with such Treasury Regulations has, as of any given date on or after
the Effective Date, a balance calculated as follows:

(i) a balance equal to such Member’s Initial Capital Account Balance; plus

(ii) the aggregate amount of cash that has been contributed to the capital of
the Company as of such date by or on behalf of such Member (without duplication
of the amount of any cash included in a Member’s Initial Capital Account
Balance); plus

(iii) the Gross Asset Value of any property other than cash that has been
contributed to the capital of the Company as of such date by such Member and the
amount of liabilities assumed by any such Member under Section 752 of the Code
or which are secured by any Assets distributed to such Member; plus

(iv) the aggregate amount of the Net Profits that has been allocated to such
Member as of such date pursuant to the provisions of Section 6.01 or
Section 16.03, any items of income or gain which are specially allocated to such
Member pursuant to Section 6.02 or Section 6.03 and any other positive
adjustments required by the Treasury Regulations and that have not been
previously taken into account in determining such Member’s Capital Account;
minus

(v) the aggregate amount of the Net Losses that have been allocated to such
Member as of such date pursuant to Section 6.01 or Section 16.03, the amount of
any item of expense, deduction or loss which is specially allocated to such
Member pursuant to Section 6.02 or Section 6.03 and any other negative
adjustments required by the Treasury Regulations and that have not been
previously taken into account in determining such Member’s Capital Account;
minus

(vi) the aggregate amount of cash that has been distributed to or on behalf of
such Member; and minus

(vii) the Gross Asset Value of any property other than cash that has been
distributed to or on behalf of such Member as of such date and the amount of any
liabilities of such Member assumed by the Company under Section 752 of the Code
and the Treasury Regulations or which are secured by any property contributed by
such Member to the Company.

Notwithstanding the foregoing, Capital Accounts shall not be adjusted for any
items that constitute an adjustment to Special Capital Accounts.

 

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(b) Each Member’s initial Capital Account balance shall be equal to the amount
set forth opposite such Member’s name on Schedule III under the heading “Initial
Capital Account Balance” (with respect to each Member, its “Initial Capital
Account Balance”).

(c) A Member that has more than one class of Units shall have a single Capital
Account that reflects all such Units; provided, however, that the Capital
Accounts shall be maintained in such manner as will facilitate a determination
of the portion of each Capital Account attributable to each class of Units (the
portion of the Capital Account attributable to Class A Units, the “Class A Unit
Sub Capital Account,” and the portion of the Capital Account attributable to
Class B Units, the “Class B Unit Sub Capital Account”).

(d) “Special Capital Account” means, with respect to any Member, an account to
be created at the inception of a Non-Participatory Growth Capital Project and
thereafter to be maintained for such Member relating solely to such
Non-Participatory Growth Capital Project in the manner specified for Capital
Accounts in Section 5.06(a). Any Special Capital Account shall only take into
account allocations of Special Net Profits and Special Net Losses (and items
thereof) attributable to such Non-Participatory Growth Capital Project,
Non-Participatory Growth Capital Project Contributions made with respect to such
Non-Participatory Growth Capital Project, distributions of Special Available
Cash with respect to such Non-Participatory Growth Capital Project and any other
items that adjust Capital Accounts that are properly attributable to such
Non-Participatory Growth Capital Project, in each case as though such
Non-Participatory Growth Capital Project were the sole asset, and its ownership
and operation were the sole activity, of the Company. Prior to 300% Payout for a
Non-Participatory Growth Capital Project, the Special Capital Account of the
Non-Participating Member shall be zero.

Section 5.07 Advances by Members. If the Company does not have sufficient cash
to pay its obligations, then any or all of the Members may (but will have no
obligation to) advance all or part of the needed funds to or on behalf of the
Company, which advances will constitute a loan from such Member or Members to
the Company, will bear interest and be subject to such other terms and
conditions as agreed between such Member or Members and the Company and will not
be deemed to be contribution to the capital of the Company.

ARTICLE VI

ALLOCATIONS

Section 6.01 Allocations of Net Profits, Net Losses, Special Net Profits and
Special Net Losses.

(a) Prior to the Sandpiper Project In-Service Date:

(i) except as provided in Section 6.01(a)(iii) and Section 16.03(c)(ii), after
giving effect to the special allocations set forth in Section 6.02 (other than
Section 6.02(i)) or Section 6.03, Net Profits and Net Losses for any Fiscal Year
attributable to the Assets or Facilities of the Company other than the Sandpiper
Facilities shall be allocated between the Members holding Class A Units in
accordance with their respective Class A Percentage Interests;

 

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(ii) except as provided in Section 6.01(a)(iii), Section 16.03(c)(iii) and
Section 16.06, after giving effect to the special allocations set forth in
Section 6.02 (other than Section 6.02(i)) or Section 6.03, Net Profits and Net
Losses for any Fiscal Year attributable to the Sandpiper Facilities shall be
allocated between the Members holding Class B Units in accordance with their
respective Class B Percentage Interests; and

(iii) after giving effect to the special allocations set forth in
Section 6.02(i) or Section 6.03 that relate to each Non-Participatory Growth
Capital Project, Special Net Profits and Special Net Losses attributable to such
Non-Participatory Growth Capital Project shall be allocated between the Members
in such a manner as to result in, as nearly as possible, the Special Capital
Accounts of the Members with respect to such Non-Participatory Growth Capital
Project being equal to their respective Special Target Amounts with respect to
such Non-Participatory Growth Capital Project.

(b) After the Sandpiper Project In-Service Date:

(i) except as provided in Section 6.01(b)(ii) and Section 16.03(b)(ii), after
giving effect to the special allocations set forth in Section 6.02 (other than
Section 6.02(i)) or Section 6.03, Net Profits and Net Losses for any Fiscal Year
shall be allocated between the Members holding Class A Units in accordance with
their respective Class A Percentage Interests; and

(ii) after giving effect to the special allocations set forth in Section 6.02(i)
or Section 6.03 that relate to each Non-Participatory Growth Capital Project,
Special Net Profits and Special Net Losses attributable to such
Non-Participatory Growth Capital Project shall be allocated between the Members
in such a manner as to result in, as nearly as possible, the Special Capital
Accounts of the Members with respect to such Non-Participatory Growth Capital
Project being equal to their respective Special Target Amounts with respect to
such Non-Participatory Growth Capital Project.

Section 6.02 Regulatory Allocations. The following allocations shall be made in
the following order:

(a) To the extent required by Section 1.704-2(f) of the Treasury Regulations, if
there is a net decrease in “partnership minimum gain” (within the meaning of
Section 1.704-2(b)(2) of the Treasury Regulations) in a Fiscal Year, then each
Member shall be specially allocated items of income and gain (including gross
income) arising during that Fiscal Year (and if necessary subsequent Fiscal
Years), equal to such Member’s share of the net decrease in partnership minimum
gain. The items to be so allocated shall be determined in accordance with
Sections 1.704-2(f)(6) and 1.704-2(j)(2) of the Treasury Regulations. If, in any
Fiscal Year that has such a net decrease, the minimum gain chargeback
requirement would cause a distortion in the economic arrangement between the
Members and it is not expected that the Company will have sufficient other
income to correct that distortion, the Management Committee may in its
reasonable discretion seek to have the Internal Revenue Service waive the
minimum gain

 

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chargeback requirement in accordance with Section 1.704-2(f)(4) of the Treasury
Regulations. This Section 6.02(a) is intended to comply with the minimum gain
chargeback requirement in Section 1.704-2(f) of the Treasury Regulations and
shall be interpreted consistently therewith.

(b) If there is a net decrease in “partner nonrecourse debt minimum gain”
(within the meaning of Section 1.704 2(i)(4) of the Treasury Regulations) in any
Fiscal Year, then each Member that has a share of the “partner nonrecourse debt
minimum gain” as of the beginning of the Fiscal Year shall be specially
allocated items of income and gain arising during that Fiscal Year (and if
necessary subsequent Fiscal Years) to the extent required by
Section 1.704-2(i)(4) of the Treasury Regulations. The items to be so allocated
shall be determined in accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2)
of the Treasury Regulations. A Member shall not be subject to this provision to
the extent that an exception is provided by Section 1.704-2(i)(4) of the
Treasury Regulations and any administrative guidance issued by the Internal
Revenue Service with respect thereto. Any “partner nonrecourse debt minimum
gain” allocated pursuant to this provision shall consist of first, gains
recognized from the disposition of Assets subject to “partner nonrecourse debt”
(within the meaning of Section 1.704-2(b)(4) of the Treasury Regulations), and,
second, if necessary, a pro rata portion of the Company’s other items of income
or gain (including gross income) for that Fiscal Year (and if necessary
subsequent Fiscal Years). This Section 6.02(b) is intended to comply with the
minimum gain chargeback requirement in Section 1.704-2(i)(4) of the Treasury
Regulations and shall be interpreted consistently therewith.

(c) In the event any Member unexpectedly receives any adjustments, allocations
or distributions described in Section 1.704-1(b)(2)(ii)(d)(4),
Section 1.704-1(b)(2)(ii)(d)(5) or Section 1.704-1(b)(2)(ii)(d)(6) of the
Treasury Regulations, which creates a negative Adjusted Capital Account Balance
for its Capital Account, then items of Company income and gain (consisting of a
pro rata portion of each item of Company income, including gross income and gain
for such Fiscal Year and, if necessary, for subsequent Fiscal Years) from
Business conducted by the Company shall be specially allocated to such Member in
an amount and manner sufficient to eliminate, to the extent required by the
Treasury Regulations, the negative Adjusted Capital Account Balance so created
as quickly as possible; provided that an allocation pursuant to this
Section 6.02(c) shall be made if and only to the extent that such Member would
have a negative Adjusted Capital Account Balance after all other allocations
provided for in this Article VI have been tentatively made as if this
Section 6.02(c) were not in the Agreement. It is the intent that this
Section 6.02(c) be interpreted to comply with the alternate test for economic
effect set forth in Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations.

(d) If there are any “nonrecourse deductions” (within the meaning of
Sections 1.704-2(b)(1) and 1.704-2(c) of the Treasury Regulations) in a Fiscal
Year, then each Member shall be allocated an amount of such nonrecourse
deductions as determined by the Management Committee to be consistent with the
allocations of related or similar items under this Article VI and with
Section 1.704-2 of the Treasury Regulations.

(e) If there are any “partner nonrecourse deductions” (within the meaning of
Section 1.704-2(i)(1) of the Treasury Regulations) in a Fiscal Year, then such
deductions shall be allocated to the Member that bears the economic risk of loss
for the “partner nonrecourse

 

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liability” (within the meaning of Section 1.704-2(b)(4) of the Treasury
Regulations) to which the deductions are attributable. If more than one Member
bears the economic risk of loss for such “partner nonrecourse liability,” the
“partner nonrecourse deductions” attributable to such “partner nonrecourse
liability” shall be allocated between the Members according to the proportion in
which they bear such economic risk of loss.

(f) To the extent an adjustment to the adjusted Tax basis of any Company asset
pursuant to Section 734(b) or 743(b) of the Code is required, pursuant to
Section 1.704-1(b)(2)(iv)(m) of the Treasury Regulations, to be taken into
account in determining Capital Accounts, the amount of such adjustments to the
Capital Accounts shall be treated as an item of gain (if the adjustment
increases the basis of such asset) or loss (if the adjustment decreases the
basis of such asset) and such gain or loss shall be specially allocated between
the Members in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted pursuant to Section 1.704-1(b)(2)(iv)(m) of
the Treasury Regulations.

(g) The Net Losses allocated pursuant to Section 6.01 shall not exceed the
maximum amount of Net Losses, losses or deductions that can be so allocated
without causing any Member to have a negative Adjusted Capital Account Balance
at the end of any Fiscal Year. If some, but not all, of the Members would have a
negative Adjusted Capital Account Balance as a consequence of such allocations,
the limitation set forth in the preceding sentence shall be applied on a
Member-by-Member basis so as to allocate the maximum permissible Net Losses and
items of loss and deduction to each Member under Section 1.704-1(b)(2)(ii)(d) of
the Treasury Regulations. All Net Losses in excess of the limitation set forth
in this Section 6.02(g) shall be allocated to the Members in proportion to their
respective positive Adjusted Capital Account Balances, if any, and thereafter to
the Members in accordance with their interests as determined by the Management
Committee in its reasonable discretion. If any Member would have a negative
Adjusted Capital Account Balance at the end of any Fiscal Year, the Capital
Account of such Member shall be specially credited with items of Company income
(including gross income) and gain from Business conducted by the Company in the
amount of such excess as quickly as possible.

(h) If, as a result of an exercise of a noncompensatory option to acquire an
interest in the Company, a Capital Account or Special Capital Account
reallocation is required under Treasury Regulation
Section 1.704-1(b)(2)(iv)(s)(3), the Company shall make corrective allocations
pursuant to Treasury Regulation Section 1.704-1(b)(4)(x).

(i) Allocations corresponding to those set forth in the foregoing subsections of
this Section 6.02 shall be made with respect to each Member’s Special Capital
Account prior to the allocation pursuant to Section 6.01(a)(iii) or
Section 6.01(b)(ii) of Special Net Profits and Special Net Losses attributable
to each Non-Participatory Growth Capital Project to which the allocation
relates.

Section 6.03 Curative Allocations. The allocations set forth in Section 6.02
(the “Regulatory Allocations”) are intended to comply with certain requirements
of Sections 1.704-1(b) and 1.704-2(b) of the Treasury Regulations.
Notwithstanding any other provisions of this Agreement other than the Regulatory
Allocations, the Regulatory Allocations shall be taken into account in
allocating Net Profits or Net Losses (or Special Net Profits or Special Net
Losses in

 

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the case of any Non-Participatory Growth Capital Project) or other items of
income, gain, loss and deduction between the Members (or to the Proposing Member
with respect to such Non-Participatory Growth Capital Project) so that, to the
extent possible, the net amount of such allocations of other items and the
Regulatory Allocations to each Member (or such Proposing Member) shall be equal
to the net amount that would have been allocated to such Member (or such
Proposing Member) if the Regulatory Allocations had not been part of this
Agreement. The Management Committee shall reasonably determine, with respect to
each Fiscal Year, how to apply the provisions of this Section 6.03 in a manner
that is likely to minimize the economic distortions that might otherwise result
from the Regulatory Allocations.

Section 6.04 Tax Allocations. Except as otherwise provided in this Section 6.04,
for Tax Purposes, the income, gain, loss or deduction (or any item thereof) for
each Fiscal Year shall be allocated to and between the Members in the same
manner as the correlative items are allocated pursuant to the provisions of
Section 6.01, Section 6.02 and Section 6.03 for such Fiscal Year.
Notwithstanding any other provision of this Agreement to the contrary, any
income, gain, loss or deduction recognized by the Company for Tax Purposes in
any Fiscal Year with respect to all or any part of an Asset that (a) is required
to be allocated between the Members in accordance with Section 704(c) of the
Code and the Treasury Regulations so as to take into account the variation, if
any, between the adjusted tax basis of such Asset and the initial Gross Asset
Value of such Asset at the time of its contribution, or (b) is required to be
allocated between the Members in accordance with the principles of
Section 704(c) of the Code and the Treasury Regulations following the adjustment
to the Gross Asset Value of an Asset pursuant to this Agreement, shall be
allocated to the Members in the manner so required. The Company shall elect to
use the remedial allocation method pursuant to Section 1.704-3(d) of the
Treasury Regulations or such other method or methods as determined by the
Management Committee to be appropriate and in accordance with the applicable
Treasury Regulations. Any (i) recapture of Depreciation or any other item of
deduction shall be allocated, in accordance with Section 1.1245-1(e) of the
Treasury Regulations, to the Members that received the benefit of such
deductions, and (ii) recapture of tax credits shall be allocated to the Members
in accordance with applicable Law. Tax credits of the Company shall be allocated
between the Members as provided in Sections 1.704-(b)(4)(ii) and
1.704-1(b)(4)(viii) of the Treasury Regulations. The income tax allocations made
pursuant to this Section 6.04 shall not be reflected in any Member’s Capital
Account.

ARTICLE VII

DISTRIBUTIONS

Section 7.01 Distributions.

(a) Subject to the other provisions of this Agreement, all Available Cash shall
be distributed to the Class A Members of record in proportion to their
respective Class A Percentage Interests. All distributions made pursuant to this
Section 7.01(a) shall be made to the holders of record of the applicable Class A
Units as set forth on the Member Schedule on the last day of the Calendar
Quarter with respect to which a distribution is made. Subject to the other
provisions of this Article VII and other than upon a liquidation of the Company
pursuant to Section 16.03 or of the Sandpiper Facilities prior to the Sandpiper
Project In-Service Date pursuant to Section 16.06, all Available Cash shall be
distributed to the Class A Members

 

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(i) prior to the Sandpiper Project In-Service Date, at such time as the
Management Committee determines in its sole discretion, and (ii) after the
Sandpiper Project In-Service Date, at such time or times as the Management
Committee determines in its sole discretion, but in any event at least once per
Calendar Quarter.

(b) Subject to the other provisions of this Article VII and other than upon a
liquidation of the Company pursuant to Section 16.03, Special Available Cash
attributable to each Non-Participatory Growth Capital Project shall be
distributed at such times as is determined by the Proposing Member or the
Management Committee, as the case may be, in accordance with Section 7.01(c).
Special Available Cash attributable to each Non-Participatory Growth Capital
Project shall be distributed to the Class A Members at such times in the
following order of priority:

(i) first, to the Proposing Member with respect to such Non-Participatory Growth
Capital Project until such time as the positive balance in its Non-Participatory
Growth Capital Project Amount with respect to such Non-Participatory Growth
Capital Project has been reduced to zero; and

(ii) thereafter, to the Class A Members in proportion to their respective
Class A Percentage Interests.

(c) For so long as a Proposing Member has a positive balance in its
Non-Participatory Growth Capital Project Amount with respect to any
Non-Participatory Growth Capital Project, Special Available Cash with respect to
such Non-Participatory Growth Capital Project shall be distributed at such times
as is determined by the Proposing Member of such Non-Participatory Growth
Capital Project in its sole discretion. At any time that a Proposing Member does
not have a positive balance in its Non-Participatory Growth Capital Project
Amount with respect to any Non-Participatory Growth Capital Project, Special
Available Cash with respect to such Non-Participatory Growth Capital Project
shall be distributed at such times as is determined by the Management Committee
in its sole discretion, but in any event at least once per Calendar Quarter.

(d) Notwithstanding anything in this Section 7.01 to the contrary, on the
Effective Date, the Company shall distribute to Enbridge an amount equal to the
Williston Effective Date Capital Contribution and such distribution shall be
treated, to the maximum extent possible, as a reimbursement of capital
expenditures incurred by the Company, EP Bakken GP or EP Bakken LP, or by
Enbridge (or any of its Affiliates) on behalf of the Company, EP Bakken GP or EP
Bakken LP in respect of the assets of the Company, EP Bakken GP or EP Bakken LP
in the two years prior to the Effective Date in accordance with Treasury
Regulation Section 1.707-4(d).

(e) Notwithstanding anything in this Section 7.01 to the contrary, on the
Sandpiper Project In-Service Date, the Company shall distribute to Enbridge an
amount equal to the Growth Capital Project Reimbursement Amount and such
distribution shall be treated, to the maximum extent possible, as a
reimbursement of capital expenditures incurred by the Company, EP Bakken GP or
EP Bakken LP, or by Enbridge (or any of its Affiliates) on behalf of the
Company, EP Bakken GP or EP Bakken LP, in respect of the assets of the Company,
EP Bakken GP or EP Bakken LP in the two years prior to the Effective Date, in
each case, in accordance with Treasury Regulation Section 1.707-4(d).

 

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Section 7.02 Withholding. Any amount withheld pursuant to the Code or any
foreign, State or local tax Law or treaty with respect to any payment,
distribution or allocation to the Members shall be treated for all purposes of
this Agreement as distributed to the Members pursuant to Section 7.01. The
Management Committee is authorized to withhold from distributions to a Member
and to pay over to any Governmental Authority any amount required to be so
withheld pursuant to the Code or any other Federal, foreign, State or local Law,
and shall treat any withheld amount as having been distributed to such Member
with respect to which such amounts were withheld for all purposes of this
Agreement.

ARTICLE VIII

MANAGEMENT OF THE COMPANY

Section 8.01 Management under Direction of Management Committee.

(a) Except as may be required under the Act, the Business shall be managed and
controlled by a board of “managers” (as such term is used in the Delaware Act)
(the “Management Committee” and each member of the Management Committee, a
“Manager”). Subject to the following sentence, the Management Committee shall
have full and complete authority, power and discretion to manage and control the
Business and to make all decisions regarding those matters and to perform any
and all other acts or activities customary or incidental to the management of
the Company and its Subsidiaries. Approval of the Management Committee shall be
required for any action proposed to be taken by or on behalf of the Company or
any of its Subsidiaries (i) by the Officers, if such action is not expressly
delegated by the Management Committee to the Officers in accordance with
Section 8.09, (ii) by the Operator, if such action is not expressly delegated to
the Operator by the Management Committee or requires the approval of the Company
pursuant to the Operating and Construction Management Agreement, and (iii) by a
Proposing Member, if such action is not otherwise permitted to be taken by such
Proposing Member pursuant to the terms and provisions of this Agreement,
including Section 14.01.

(b) Except as otherwise expressly delegated by the Management Committee and
subject to Section 8.01(c) and Section 8.01(d), all actions proposed to be taken
by or on behalf of the Company or any of its Subsidiaries, and all actions that
pursuant to this Agreement require action by, the approval of, or a
determination by the Management Committee, shall require the affirmative vote or
consent of the Managers representing more than 50% of the Total Votes eligible
to vote or consent on such matter acting in accordance with Section 8.03
(“Management Committee Approval”).

(c) Subject to Section 8.01(f), the following actions proposed to be taken by or
on behalf of the Company or any of its Subsidiaries shall require the
affirmative vote or consent of the Managers representing at least 85% of the
Total Votes eligible to vote or consent on such matter acting in accordance with
Section 8.03 (“Super-Majority Management Committee Approval”):

 

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(i) approving any Budget (other than, for the avoidance of doubt, (A) a Default
Budget, (B) any line item in any Budget related to Emergency Expenditures or
Long-Term Response Expenditures, (C) any Non-Growth Integrity Project Budget
that is consistent with the limitations set forth in Section 14.03(a), (E) any
Participatory Growth Capital Project Budget or (F) any Non-Participatory Growth
Capital Project Budget, which, in the cases of clauses (B) through (D), is
included in any Budget) or changing the amount of the Cash Reserves Contingency
Cap;

(ii) approving any amendment or modification (A) that is beyond the variance
permitted pursuant to the Operating and Construction Management Agreement to
(1) any Budget (other than, for the avoidance of doubt, (x) a Default Budget,
(y) any line item in any Budget related to Emergency Expenditures or Long-Term
Response Expenditures or (z) any Non-Growth Integrity Project Budget except as
set forth in clause (B) below) previously approved in accordance with
Section 8.01(c)(i), (2) any Participatory Growth Capital Project Budget, or
(3) any Non-Participatory Growth Capital Project Budget; provided that from time
to time prior to 300% Payout with respect to any Non-Participatory Growth
Capital Project, the Proposing Member may in good faith, without the approval of
any other Person, approve any amendments or modifications to the
Non-Participatory Growth Capital Project Budget for such Non-Participatory
Growth Capital Project as are reasonably required, or (B) to any Non-Growth
Integrity Project Budget to increase the total amount of expenditures approved
to be included in any such Non-Growth Integrity Project Budget pursuant to
Section 14.03(a);

(iii) approving any Call Notice; provided, however, that Call Notices requesting
contributions to the Company from the Members shall be permitted without
Super-Majority Management Committee Approval for the following:

(A) expenditures included in any then-current Budget (but, subject to
Section 5.02(f), solely to the extent that such budget’s expenditures cannot be
paid with cash flows from the Company’s operations), any then-current
Participatory Growth Capital Project Budget or any then-current
Non-Participatory Growth Capital Project Budget, in each case, after giving
effect to the variance thereto permitted pursuant to the Operating and
Construction Management Agreement, that has been approved or deemed approved in
accordance with the terms of this Agreement and the Operation and Construction
Management Agreement;

(B) Emergency Expenditures;

(C) Long Term Response Expenditures;

(D) capital expenditures for Non-Growth Integrity Projects included in any
then-current Non-Growth Integrity Project Budget; or

(E) expenditures required or permitted to be made without the approval of the
Company or the Management Committee pursuant to the Operating and Construction
Management Agreement;

 

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(iv) any amendment, extension, or termination of the Operating and Construction
Management Agreement;

(v) entering into any operating leases or the incurrence of indebtedness (or any
guaranty of indebtedness or obligations of any other Person) in excess of
$10,000,000 in the aggregate, other than current liabilities incurred in the
ordinary course of business or borrowings in the ordinary course of business
under the Revolver or any other revolving credit facility approved by the
Management Committee;

(vi) any Encumbrance of the Company’s Assets that would cause (at the time such
Encumbrance is made) the aggregate of all Encumbrances of the Company’s Assets
to exceed $10,000,000;

(vii) the commencement by the Company of any proceeding or the filing of any
petition seeking relief under any bankruptcy or insolvency Law with respect to
the Company, or the consent to the institution of, or the failure to contest in
a timely and appropriate manner, any such proceeding or filing; the application
for or consent to the appointment of a receiver, trustee, custodian,
sequestrate, conservator or similar official with respect to the Company; the
making of a general assignment for the benefit of creditors of the Company; the
admitting in writing of the Company’s inability to pay its debts as they become
due; or the taking of any action by the Company for the purpose of effecting any
of the foregoing;

(viii) the purchase, exchange or acquisition of any Equity Interests of another
Person (other than any wholly-owned Subsidiary), including through merger,
consolidation or other extraordinary business combination with any other Person,
where the consideration represents more than $10,000,000;

(ix) the purchase, sale, disposition, assignment, conveyance, transfer, lease,
exchange or acquisition of assets (including another business or line of
business) by the Company, where the consideration represents more than
$10,000,000;

(x) the registration of any Equity Interests in the Company under the Securities
Act or any foreign securities Laws or any public offering of Equity Interests in
the Company;

(xi) authorizing or issuing any additional Equity Interests of the Company,
including Units (other than Units issued to Members in exchange for such
Members’ capital contributions pursuant to Section 5.02), and admitting as an
Additional Member the Person to whom such Units are issued;

(xii) the creation or authorization of any additional class or category of
Members;

 

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(xiii) public representations, announcements, press releases, or press briefings
concerning the Facilities that specifically name a Member; except that a Member
shall have the right to report material events as required by applicable
securities exchange rules and regulations;

(xiv) (A) the entering into of any agreement, transaction, commitment or
arrangement (except to the extent (i) it is solely in connection with any
Non-Participatory Growth Capital Project prior to 300% Payout with respect to
such Non-Participatory Growth Capital Project, (ii) it will not, directly or
indirectly, adversely affect the non-participating Member’s interest in the
Company and (iii) all of its terms, obligations and liabilities will be
performed or will expire prior to such 300% Payout) with any Member or any
Member’s Affiliates or with any entity in which any such Person owns a
beneficial interest and (B) the entering into or amendment, modification or
supplementation (or waiver of any rights under) of any agreement, transaction,
commitment or arrangement (except to the extent (i) it is solely in connection
with any Non-Participatory Growth Capital Project prior to 300% Payout with
respect to such Non-Participatory Growth Capital Project, (ii) it will not,
directly or indirectly, adversely affect the non-participating Member’s interest
in the Company, and (iii) all of its terms, obligations and liabilities will be
performed or will expire prior to such 300% Payout) with any of the Company’s
officers, employees or agents or with any individual related by blood, marriage
or adoption to any such individual or with any entity in which any such Person
or individual owns a beneficial interest;

(xv) any change of the Company’s name or, except with respect to amendments to
the Member Schedule permitted pursuant to this Agreement without any Management
Committee approval, any amendment or restatement of the Certificate or this
Agreement;

(xvi) a change in the purpose of the Company from that contemplated by
Section 2.05;

(xvii) agreements and approvals for connections in or out of the Facilities
(other than with respect to any Non-Participatory Growth Capital Project prior
to 300% Payout with respect to such Non-Participatory Growth Capital Project);

(xviii) the permanent shutdown of the Facilities;

(xix) the entering into, modification or termination of any joint tariff and
other tariff agreements, tariff settlement agreements, tariff filings and
shipper charges involving the Facilities, or the setting or changing of
published tariff rates on the Facilities;

(xx) the liquidation, dissolution or other recapitalization or reorganization of
the Company;

(xxi) a Company Sale;

 

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(xxii) the conversion of the Company from a limited liability company to another
business entity or structure;

(xxiii) entering into any joint venture with any Person;

(xxiv) the designation of the registered agent of the Company;

(xxv) the execution, amendment, or termination of any Contract that (A) has a
value of greater than $10,000,000 in any Calendar Year, or (B) is for a term of
at least two years (in each case except to the extent (i) such Contract is
solely in connection with any Non-Participatory Growth Capital Project prior to
300% Payout with respect to such Non-Participatory Growth Capital Project,
(ii) such Contract will not, directly or indirectly, adversely affect the
non-participating Member’s interest in the Company, and (iii) all of such
Contract’s terms, obligations and liabilities will be performed or will expire
prior to such 300% Payout);

(xxvi) any change to the Sandpiper Project involving changes to the diameter of
the pipe, recipient or delivery points, expansion of the design or capacity of
the Sandpiper Facilities, or any other material change to the scope of the
Sandpiper Project; and

(xxvii) the release, compromise or settlement of any Claim against EPND where
the damages or economic effect of such Claim is reasonably estimated to exceed
$10,000,000; and

(xxviii) the (A) release, compromise or settlement of or the instigation of any
Recovery Claim where the damages or economic effect of such Recovery Claim are
reasonably estimated to exceed $10,000,000 or (B) the institution of any
Recovery Claim (other than a Recovery Claim where the primary relief sought by
such Recovery Claim is specific performance, injunctive relieve or a temporary
restraining order); and

(xxix) entering into any Contract providing for or otherwise committing to take
any of the foregoing actions in this Section 8.01(c), or delegating authority to
any Person to approve any such actions.

(d) Except as otherwise expressly permitted to be taken without approval of the
Management Committee pursuant to Section 8.01(a), prior to the Sandpiper Project
In-Service Date all of the actions set forth in Section 8.01(c) proposed to be
taken by or on behalf of the Company or any of its Subsidiaries shall require
Super-Majority Management Committee Approval and the consent of one Williston
Manager, provided that:

(i) the consent of a Williston Manager shall not be so required for:

(A) the approval of any Call Notice (including any Opt Out Sandpiper Call
Notice) under Section 8.01(c)(iii) in respect of capital contributions required
under Section 5.02(b);

 

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(B) subject to Section 8.01(d)(i)(C), the actions set forth in
Section 8.01(c)(xxv), except with respect to the execution, amendment, or
termination of any Contract that has a term of at least two years (except to the
extent such Contract is solely in connection with any Non-Participatory Growth
Capital Project prior to 300% Payout with respect to such Non-Participatory
Growth Capital Project and all of such Contract’s terms, obligations and
liabilities will be performed or will expire prior to such 300% Payout);

(C) the actions set forth in Sections 8.01(c)(i), 8.01(c)(ii), 8.01(c)(iii),
8.01(c)(ix) (other than sales outside the ordinary course of business), and
8.01(c)(xxv) to the extent they are to be taken solely in connection with the
Sandpiper Project or otherwise relate to the Sandpiper Facilities; or

(D) any of such actions at any time that Williston is a Defaulting Member;

(ii) for the purposes of this Section 8.01(d), the language in
Section 8.01(c)(i) shall be replaced in its entirety with the following:

“approving any Budget (other than, for the avoidance of doubt, (A) a Default
Budget, (B) the Budget attached to Exhibit B of the Operating and Construction
Management Agreement, which the Members hereby agree is deemed to be approved,
(C) any line item in any Budget related to Emergency Expenditures or Long-Term
Response Expenditures, (D) any Non-Growth Integrity Project Budget that is
consistent with the limitations set forth in Section 14.03(a), (E) any
Participatory Growth Capital Project Budget or (F) any Non-Participatory Growth
Capital Project Budget, which, in the cases of clauses (C) through (E), is
included in any Budget) or changing the amount of the Cash Reserves Contingency
Cap;”

(iii) for the purposes of this Section 8.01(d), the language in
Section 8.01(c)(xvii) shall be replaced in its entirety with the following:

“agreements and approvals for trunkline connections in or out of the Facilities
(other than (A) with respect to any Non-Participatory Growth Capital Project
prior to 300% Payout with respect to such Non-Participatory Growth Capital
Project and (B) those negotiated by the Company in the ordinary course pursuant
to common carrier requirements under applicable Law);”

(iv) for the purposes of this Section 8.01(d), the language in
Section 8.01(c)(xix) shall be replaced in its entirety with the following:

“the entering into, modification or termination of any joint tariff and other
tariff agreements, tariff settlement agreements, tariff filings and shipper
charges involving the Facilities, or the setting or changing of published tariff
rates on the Facilities, other than: (A) routine annual filings of FERC indexing
adjustments of tolls; (B) the routine filing of costs and volumes pursuant to
the annual cost of service parameters as defined in any Contracts to which the
Company is a party; and (C) the filing of uncommitted rates for the Sandpiper
Project;”

 

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(e) Notwithstanding anything to the contrary herein, the Management Committee
and a Williston Manager (as applicable) shall be deemed to have approved any of
the actions, decisions and/or other matters set forth in Section 8.01(b),
Section 8.01(c) and Section 8.01(d) if such actions, decisions and/or other
matters are (i) undertaken or performed as reasonably necessary for any
Emergency Expenditure (to the extent such Emergency Expenditure is authorized to
be incurred by the Operator pursuant to the Operating and Construction
Management Agreement) or (ii) included in any Budget (including, for the
avoidance of doubt, any Default Budget, any Non-Growth Integrity Project Budget,
any Participatory Growth Capital Project Budget and any Non-Participatory Growth
Capital Project Budget included in any Budget), taking into account the variance
thereto permitted by the terms and provisions of the Operating and Construction
Management Agreement or any Growth Capital Project Request related to a
Participatory Growth Capital Project.

(f) Notwithstanding anything to the contrary herein:

(i) (A) any Conflict Activity shall be subject to the sole approval of the
Managers that have been designated by the Non-Conflicted Member, (B) neither the
Conflicted Member nor the Managers designated by the Conflicted Member shall
have the right to vote on or consent to any approval in connection with any
action by the Management Committee in respect of such Conflict Activity, (C) the
presence of any Managers designated by the Conflicted Member shall not be
required for purposes of determining the presence of a quorum in connection with
any such action, and (D) the Non-Conflicted Member or the Managers designated by
such Non-Conflicted Member may conduct or cause to be conducted any Conflict
Activity on behalf of the Company.

(ii) this Section 8.01(f) shall not apply at any time that a Non-Conflicted
Member is a Defaulting Member.

(g) All decisions taken by the Management Committee pursuant to this
Section 8.01 shall be conclusive and binding on all Members.

(h) Notwithstanding anything to the contrary in Section 8.01, any Growth Capital
Projects shall be approved in accordance with Section 14.01.

Section 8.02 Number, Tenure and Qualification.

(a) The Management Committee initially shall consist of four Managers. Prior to
the Sandpiper Project In-Service Date, Enbridge shall be entitled to designate
two individuals to serve on the Management Committee as Managers and, so long as
Williston continues to hold 10% of the Class B Units, Williston shall be
entitled to designate two individuals to serve on the Management Committee as
Managers (the “Williston Managers”). From and after the Sandpiper Project
In-Service Date, Enbridge shall be entitled to designate two individuals to
serve on the Management Committee as Managers, for so long as any member of the
Enbridge Group holds any Class A Units, and Williston shall be entitled to
designate two individuals to serve on the Management Committee as Managers, for
so long as any member of

 

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the Williston Group holds any Class A Units. Each of Enbridge and Williston, for
so long as it is entitled to designate any individuals to serve on the
Management Committee as a Manager, shall also be entitled to designate one
Person (each, a “Management Committee Alternate”) to act as such Member’s
alternate Manager in the absence of such Member’s designated Manager(s). Each
Manager may bring to any Management Committee meetings such observers and
advisors as it may deem appropriate. The initial Managers designated by Enbridge
and the initial Williston Managers designated by Williston are set forth on
Exhibit D.

(b) Each Member shall have the right to change its Manager(s) or its Management
Committee Alternate at any time by giving notice of such change to the Company
and the other Member.

(c) Any Manager (and any Management Committee Alternate) designated in
accordance with this Section 8.02 shall be immediately removed from the
Management Committee (or its position as a Management Committee Alternate, as
applicable) at such time that the Member that designated such Manager (or
Management Committee Alternate) is no longer entitled to designate any Managers
under Section 8.02(a).

(d) Neither the Managers nor the Management Committee Alternates need be
residents of the State of Delaware. Each Manager and Management Committee
Alternate shall be an employee of the Member or an Affiliate of the Member that
designated such Manager or Management Committee Alternate and shall hold office
until such Manager’s or Management Committee Alternate’s, as applicable,
successor shall be duly designated or until the earlier of such Manager’s or
Management Committee Alternate’s, as applicable, death, removal or resignation.

(e) A Person that serves as a Manager or Management Committee Alternate shall
not be required to be a Manager or Management Committee Alternate, as
applicable, as his sole and exclusive occupation, and Managers and Management
Committee Alternates may have other business interests and may engage in other
investments, occupations and activities in addition to those relating to the
Company.

(f) (i) If any of a Member’s Managers is absent or unavailable or there is a
vacancy in any of such Member’s Managers, then the other Manager(s) designated
by such Member shall be entitled to cast the entire number of Total Votes
attributable to the Class A Percentage Interest (at the time of the applicable
Management Committee vote) of the Member that designated such Managers and
(ii) if a Member provides notice to the other Member, then such Member’s
Management Committee Alternate shall be authorized to act as a “Manager” for all
purposes hereunder for the duration of such designated Manager’s absence.

Section 8.03 Voting Proxies; Quorum; Meetings of Management Committee.

(a) Any Manager may vote at a meeting by a written proxy executed by that
Manager and delivered to the Management Committee. Subject to
Section 5.04(a)(iii)(B), attendance (either in person, by remote communication
pursuant to Section 8.03(g) or by proxy) of a Manager representing each Member
that is then entitled to designate any individuals to serve as Managers shall
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Management Committee; provided, however, that, at any time that both Enbridge
and Williston are entitled to designate individuals to serve as Managers,
(i) any Managers that recuse themselves from a meeting or vote shall be counted
as present for quorum purposes and (ii) if a quorum is not present at two
consecutive meetings due to the absence of a Manager representing the same
Member (and, if such Member has provided notice to the other Member that such
Member’s Management Committee Alternate is authorized to act as a “Manager”
pursuant to Section 8.02(f)(ii), then the absence of such Management Committee
Alternate), then, until a meeting is attended by a Manager representing such
Member (or such Management Committee Alternate), there shall be deemed to be a
quorum if a Manager representing the other Member is in attendance (either in
person, by remote communication pursuant to Section 8.03(g) or by proxy) at any
meetings thereafter. On any action by the Management Committee (whether at a
meeting or by written consent), the Managers shall collectively have 100 votes
to cast on, or consent to, such action. The collective votes of each Member’s
Managers shall, for purposes of Management Committee Approval and Super-Majority
Management Committee Approval, be deemed to be equivalent to (A) the Class A
Percentage Interest (at the time of such vote) of the Member that designated
such Managers multiplied by (B) 100; provided, however, that (1) if either of
Enbridge or Williston Transfers any Class A Units to any Person that is not an
Affiliate of Enbridge or Williston, as the case may be, the collective votes of
each Member’s Managers shall be deemed to be equivalent to (x) the total number
of Class A Units held by the Member that designated such Managers, divided by
the total number of Class A Units held by the Enbridge Group and the Williston
Group, multiplied by (y) 100; and (2) prior to the Sandpiper Project In-Service
Date, the Managers designated by Enbridge shall be entitled to collectively
exercise 100 votes and the Williston Managers shall not be entitled to any votes
(but, for the avoidance of doubt, a Williston Manager’s consent shall be
required for any action set forth in Section 8.01(d)). The sum of the collective
votes of each Member’s Managers shall be referred to herein as the “Total
Votes.” Except as otherwise expressly provided in this Agreement, any action or
event relating to business conducted at a Management Committee meeting shall be
deemed approved by the Management Committee only if such action or event
receives the required approval of the Management Committee and consent of a
Williston Manager (as applicable) at a meeting at which a quorum is present or
is approved by written consent as provided in Section 8.03(f).

(b) The Management Committee may establish such subcommittees as it may deem
appropriate, together with the rules governing the activities of such
subcommittees. The functions of such subcommittees shall be to serve in an
advisory capacity only. Each Member that is entitled to designate any
individuals to serve as Managers shall have the right to designate an agreed
upon number of representatives to serve on each subcommittee.

(c) The Management Committee may hold its meetings in such place or places,
within or without the State of Delaware, as the Management Committee may from
time to time determine by resolution. At all meetings of the Management
Committee, business shall be transacted in such order as shall from time to time
be determined by resolution of the Management Committee.

 

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(d) Regular meetings of the Management Committee shall be held at such times and
places as shall be designated from time to time by resolution of the Management
Committee. Notice of such regular meetings shall not be required if held at the
times and places set forth in the relevant resolution and such resolution has
been provided to each Manager.

(e) Special meetings of the Management Committee may be called by (i) any
Manager or Managers having at least 15 Total Votes and (ii) if prior to the
Sandpiper Project In-Service Date, by a Williston Manager, in each case, on at
least 48 hours personal, written, telegraphic, telephonic, wireless or
electronic notice to each Manager, which notice must include appropriate dial-in
information to permit each Manager to participate in such meeting by means of
telephone conference. Such notice need not state the purpose or purposes of such
meeting, except as may otherwise be required by the Act.

(f) Notwithstanding any other provision herein to the contrary, any action
required or permitted to be taken at any meeting of the Management Committee
with Management Committee Approval, Super-Majority Management Committee Approval
or consent of a Williston Manager may be taken without a meeting if a consent in
writing (whether evidenced by a signed hard copy, electronic mail or otherwise),
setting forth the action so taken, shall be provided by the number of Managers
having the number of Total Votes and the consent of a Williston Manager (as
applicable) that would be required to take the applicable action at a meeting of
the Management Committee and, when so provided, such written consent shall
constitute Management Committee Approval or Super-Majority Management Committee
Approval of such action and the consent of a Williston Manager (as applicable),
as the case may be, and notice of any such action taken shall be provided to
those Managers who have not consented in writing promptly following the taking
of such action; provided, however, that no such consent (and none of the actions
taken by the Company pursuant thereto) will be authorized or valid unless such
consent is provided to all of the Managers and the Members at least two (2) days
prior to the effective date on which the actions proposed in such consent are
taken or become effective.

(g) Subject to the requirement for notice of meetings, members of the Management
Committee may participate in a meeting by means of a conference telephone,
similar communications equipment, or other electronic means by which all
Managers participating in the meeting can hear each other, and participation in
such a meeting shall constitute presence in person at such meeting, except where
a Manager participates in the meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is not lawfully
called or convened.

(h) Attendance of a Manager at any meeting of the Management Committee
(including by telephone) shall constitute a waiver of notice of such meeting,
except where such Manager attends the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened and notifies the other Managers at such meeting
of such purpose.

Section 8.04 Resignation of Managers and Management Committee Alternates. A
Manager or Management Committee Alternate may resign from the position of
Manager or Management Committee Alternate, as applicable, at any time by giving
written notice to the Members and each Manager. The resignation of a Manager or
Management Committee Alternate shall take effect upon receipt of notice thereof
or at such later time as shall be specified in such notice; and unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.

 

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Section 8.05 Removal of Managers and Management Committee Alternates. Subject to
the automatic removal provisions of Section 8.02(c), a Manager or Management
Committee Alternate may only be removed by the consent of the Member then
entitled to designate such Manager or Management Committee Alternate in
accordance with Section 8.02(a).

Section 8.06 Vacancies. Any vacancy in the position of a Manager or Management
Committee Alternate that is created by the death, removal or resignation of a
Manager or Management Committee Alternate, as applicable, shall be filled by the
Member then entitled to designate such Manager or Management Committee Alternate
in accordance with Section 8.02(a); provided, however, that any vacancy created
on the Management Committee pursuant to Section 8.02(c) as a result of a Member
and its Affiliates ceasing to hold any Units shall automatically cause the
number of Managers constituting the Management Committee to be reduced by the
number of such vacancies. A Manager or Management Committee Alternate designated
to fill a vacancy shall hold office until a successor shall be designated, or
until such Manager’s or Management Committee Alternate’s, as applicable, earlier
death, removal or resignation.

Section 8.07 Fees and Expenses of Managers and Management Committee Alternates.
A Manager or Management Committee Alternate shall not be entitled to any fees
for serving as a Manager or Management Committee Alternate. Each Member shall be
responsible for all out-of-pocket costs and expenses incurred by its Managers
and Management Committee Alternate in their respective capacities as Managers or
Management Committee Alternate, as applicable.

Section 8.08 Members. Subject to the terms of the Operating and Construction
Management Agreement and the rights, authorities, duties and obligations of the
Operator thereunder, and except for the right to (a) consent to or approve
certain matters as expressly provided in this Agreement or (b) cause the Company
to undertake Growth Capital Projects pursuant to Section 14.01, no Member in its
capacity as a Member shall have any power or authority to manage or control the
Business, to bind the Company or any of its Subsidiaries in any way, to pledge
the Company’s or any of its Subsidiaries’ Assets, to enter into agreements on
behalf of the Company or any of its Subsidiaries or to otherwise render the
Company or any of its Subsidiaries liable for any purpose. Except as otherwise
expressly provided in this Agreement, the Members shall have no voting rights or
rights of approval, veto or consent or similar rights over any actions of the
Company and any references in this Agreement to any of the foregoing terms shall
be deemed to include each other term. Any matter requiring the consent or
approval of any of the Members pursuant to this Agreement may be taken without a
meeting, without prior notice and without a vote, by a consent in writing,
setting forth such consent or approval, and signed by the holders of not less
than the number of outstanding Units necessary to consent to or approve such
action. Prompt notice of such consent or approval shall be given by the Company
to the Member that has not joined in such consent or approval.

 

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Section 8.09 Delegation of Authority to Officers.

(a) The Management Committee may appoint such officers of the Company as the
Management Committee may deem necessary or advisable (collectively, the
“Officers”), and such Officers shall have the power, authority and duties
delegated herein or otherwise by resolution of the Management Committee, in each
case, to the extent the same have not previously been delegated to the Operator
(pursuant to the Operating and Construction Management Agreement or otherwise);
provided, however, that prior to appointing any such Officers, the Company shall
notify Williston of its intent to make such appoint and provide Williston a
reasonable opportunity to consult the Company with respect thereto. Officers may
be given titles or may be designated as “authorized persons.” Subject to the
first sentence of this Section 8.09(a), to the extent authorized by the
Management Committee, any Officer may have responsibility for the management of
the normal and customary day-to-day operations of the Company, provided that any
delegation of authority to an Officer to take any action must be approved in the
same manner as would be required for the Management Committee to approve such
action directly. The Officers of the Company as of the Effective Date are set
forth on Exhibit D hereto. The Officers of the Company are required to promptly
notify the Management Committee of any material occurrences or incidents
relating to the Business. Subject to Section 8.01(c)(xxiv), and notwithstanding
anything to the contrary in this Agreement, the Management Committee may, in its
sole discretion, remove any Officer with or without cause at any time.

(b) Officers of the Company shall not be entitled to any fees for serving in
such capacity. Each Member shall be responsible for all out-of-pocket costs and
expenses incurred by its or its Affiliates’ employees that are Officers of the
Company in their capacity as Officers. The Company shall not hire, nor shall it
be permitted to have, any employees.

(c) No Member shall be liable to the Company or the other Member for any action
taken or not taken by an employee of such Member that is taken in such
employee’s capacity as an Officer of the Company.

(d) None of the Officers of the Company shall be “managers” of the Company under
Section 18-401 of the Delaware Act.

ARTICLE IX

OPERATING AND CONSTRUCTION MANAGEMENT AGREEMENT

Section 9.01 Operating and Construction Management Agreement. Except as
otherwise provided herein, the Business, the Pipeline Operations of the Company
and its Subsidiaries, the management of the Design, Procurement and Construction
of the Facilities, any Emergency Expenditures, any Long Term Response
Expenditures and any Non-Growth Integrity Projects, in all cases, shall be
conducted by the Operator pursuant to the terms of the Operating and
Construction Management Agreement. In the event the Operator is removed or
resigns, in each case in accordance with the terms and provisions of this
Agreement and the Operating and Construction Management Agreement, the
Management Committee, with Super-Majority Management Committee Approval and, if
prior to the Sandpiper Project In-Service Date, the consent of a Williston
Manager, shall have the right to either (A) assign the Operating and
Construction Management Agreement to any Member or any Affiliate of a Member as
the new Operator thereunder or (B) enter into a new operating and construction
management agreement

 

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in such form as the Management Committee, with Super-Majority Management
Committee Approval and, if prior to the Sandpiper Project In-Service Date, the
consent of a Williston Manager, may approve with any Person that is not a Member
or an Affiliate of any Member. Any such new operating and construction
management agreement entered into by the Company shall then constitute an
“Operating and Construction Management Agreement” as such term is used in this
Agreement.

ARTICLE X

INDEMNIFICATION; DUTIES

Section 10.01 Power to Indemnify in Actions, Suits or Proceedings. Subject to
Section 10.06, the Company shall indemnify any Covered Person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative arising out of or incidental to the Business or by reason of such
Person’s status as a Covered Person, against any and all losses, claims,
expenses (including reasonable attorneys’ fees), costs, liabilities, damages,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such Covered Person in connection with such action, suit or proceeding;
provided, however, that such Covered Person shall not be indemnified by the
Company if there has been a final and non-appealable judgment entered by a court
of competent jurisdiction determining that, in respect of the matter for which
such Covered Person is seeking indemnification hereunder, and taking into
account the acknowledgments and agreements set forth in this Agreement, such
Covered Person committed bad faith, fraud or willful misconduct or criminal
wrongdoing. Any indemnification provided hereunder shall be satisfied solely out
of the assets of the Company, as an expense of the Company. No Covered Person
shall be subject to personal liability by reason of these indemnification
provisions.

Section 10.02 Authorization of Indemnification. Any indemnification under this
Article X (unless ordered by a court) shall be made by the Company unless the
Management Committee determines in a specific case that indemnification of a
Covered Person is improper in the circumstances because such Covered Person has
not met the applicable standard of conduct set forth in Section 10.01. Such
determination shall be made by Super-Majority Management Committee Approval. To
the extent that a Covered Person has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in Section 10.01, or in
defense of any claim, issue or matter therein, such Covered Person shall be
indemnified against expenses (including reasonable attorneys’ fees) actually and
reasonably incurred by such Covered Person in connection therewith, without the
necessity of authorization in the specific case.

Section 10.03 Expenses Payable in Advance. Reasonable expenses incurred or
reasonably expected to be incurred by a Covered Person in defending or
investigating a threatened or pending action, suit or proceeding referred to in
Section 10.01 shall be paid by the Company in advance of the final disposition
of such action, suit or proceeding upon written request by such Covered Person
and receipt of an undertaking by or on behalf of such Covered Person to repay
such amount if it shall ultimately be determined that such Covered Person is not
entitled to be indemnified by the Company as authorized by this Article X.

 

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Section 10.04 Nonexclusivity of Indemnification and Advancement of Expenses. The
indemnification and advancement of expenses provided by or granted pursuant to
this Article X shall not be deemed exclusive of any other rights to which a
Covered Person seeking indemnification or advancement of expenses may be
entitled under any agreement, contract, vote of Members or Management Committee
or pursuant to the direction (howsoever embodied) of any court of competent
jurisdiction or otherwise, both as to action in such Covered Person’s official
capacity and as to action in another capacity while holding such office, it
being the policy of the Company that indemnification of the Persons specified in
Section 10.01 shall be made to the fullest extent permitted by Law. The
provisions of this Article X shall not be deemed to preclude the indemnification
of any Person who is not specified in Section 10.01, but whom the Company has
the power or obligation to indemnify under the provisions of the Act or
otherwise.

Section 10.05 Survival of Indemnification and Advancement of Expenses. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Article X shall, unless otherwise provided when authorized or ratified,
inure to the benefit of the heirs, executors and administrators of a Covered
Person. Any amendment, modification or repeal of this Article X or any provision
hereof shall be prospective only and shall not in any way affect the limitations
on liability of the Covered Persons, or terminate, reduce or impair the right of
any past, present or future Covered Person, under and in accordance with the
provisions of this Article X as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification or
repeal, regardless of when such claims may arise or be asserted.

Section 10.06 Limitation on Indemnification. Notwithstanding anything contained
in this Article X to the contrary, except for proceedings to enforce rights to
indemnification, the Company shall not be obligated to indemnify any Covered
Person in connection with a proceeding (or part thereof) initiated by such
Covered Person on behalf of such Covered Person unless such proceeding (or part
thereof) was authorized or consented to by the Management Committee, with
Super-Majority Management Committee Approval. Nothing in this Article X shall be
deemed to apply to any action, suit, proceeding or dispute with respect to a
Covered Person’s employment relationship with the Company or any Affiliate of
the Company, and no Covered Person shall be indemnified by the Company for any
acts or omissions by such Person that constitute a breach of the terms of any
such employment relationship.

Section 10.07 Indemnitor of First Resort. The Company and each Member hereby
acknowledge that certain of the Covered Persons (the “Member Indemnitees”) have
certain rights to indemnification, advancement of expenses or insurance provided
by a Member or certain of its Affiliates (collectively, the “Member
Indemnitors”). The Company hereby agrees, and the Members hereby acknowledge,
that: (a) to the extent legally permitted and as required by the terms of this
Agreement and the Certificate (or by the terms of any other agreement between
the Company and a Member Indemnitee), (i) the Company is the indemnitor of first
resort (i.e., its obligations to each Member Indemnitee are primary and any
obligation of the Member Indemnitors to advance expenses or to provide
indemnification for the same expenses or liabilities incurred by any Member
Indemnitee are secondary), and (ii) the Company shall be required to advance the
full amount of expenses incurred by a Member Indemnitee and shall be liable for
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in settlement, without regard to any rights that a Member Indemnitee may have
against the Member Indemnitors, and (b) the Company irrevocably waives,
relinquishes and releases the Member Indemnitors from any and all claims for
contribution, subrogation or any other recovery of any kind in respect of any of
the matters described in clause (a) of this sentence for which any Member
Indemnitee has received indemnification or advancement from the Company. The
Company further agrees that no advancement or payment by the Member Indemnitors
on behalf of any Member Indemnitee with respect to any claim for which a Member
Indemnitee has sought indemnification from the Company shall affect the
foregoing and that the Member Indemnitors shall have a right of contribution
and/or be subrogated to the extent of such advancement or payment to all of the
rights of recovery of such Member Indemnitee against the Company.

Section 10.08 Insurance. The Company may cause to be maintained directors’ and
officers’ insurance, at its expense to protect itself and each Manager and
Officer, and any Covered Person in accordance with this Article X.

Section 10.09 Severability. The provisions of this Article X are intended to
comply with the Act. To the extent that any provision of this Article X
authorizes or requires indemnification or the advancement of expenses contrary
to the Act or the Certificate, the Company’s power or obligation to indemnify or
advance expenses under such provision shall be limited to that permitted by the
Act and the Certificate, and any limitation required by the Act or the
Certificate shall not affect the validity of any other provision of this
Article X.

ARTICLE XI

DUTIES OF MEMBERS, MANAGERS AND OFFICERS

Section 11.01 Fiduciary Duties; Limitation of Liability.

(a) Except with respect to Growth Capital Projects, which the Members hereby
acknowledge and agree must be pursued through the Company or its Subsidiaries
and offered by the Proposing Member to the other Member for its participation,
in each case, in accordance with Section 14.01, and without limiting in any
respect the Operator’s duties under the Operating and Construction Management
Agreement, to the maximum extent permitted by applicable Law and notwithstanding
any provision of this Agreement to the contrary:

(i) No Member, in its capacity as a Member, shall have any fiduciary or other
duty (and each Member and the Company hereby waive any and all such duties) to
the Company, any other Member, any Manager or any other Person that is a party
to or is otherwise bound by this Agreement other than the implied contractual
covenant of good faith and fair dealing.

(ii) To the maximum extent permitted by applicable Law, whenever a Member, in
its capacity as a Member, is permitted or required to make a decision or take an
action or omit to take an action (including wherever in this Agreement that any
Member is permitted or required to make, grant or take a determination, a
decision, consent, vote, judgment or action at its “discretion,” “sole
discretion” or under a grant of similar authority or latitude), such Member
shall be entitled to consider only such interests and factors, including its
own, as it desires, and shall have no duty or obligation

 

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to give any consideration to any other interest or factors whatsoever. To the
maximum extent permitted by applicable Law, no Member shall be liable to the
Company or to any other Member for losses sustained or liabilities incurred as a
result of any act or omission (in relation to the Company, any transaction, any
investment or any business decision or action, including for breach of duties
including fiduciary duties) taken or omitted by such Member, unless there has
been a final and non-appealable judgment entered by a court of competent
jurisdiction determining that, in respect of such act or omission, and taking
into account the acknowledgments and agreements set forth in this Agreement,
such Member engaged in bad faith, fraud, willful misconduct or criminal
wrongdoing.

(iii) No Manager or Management Committee Alternate (in such Person’s capacity as
a Manager or Management Committee Alternate) shall have any fiduciary or other
duty (and each Member and the Company hereby waive any and all such duties) to
the Company, any Member, any other Manager or Management Committee Alternate or
any other Person that is a party to or is otherwise bound by this Agreement
other than the implied contractual covenant of good faith and fair dealing. To
the maximum extent permitted by applicable Law, no Manager or Management
Committee Alternate (in such Person’s capacity as a Manager or Management
Committee Alternate) shall be liable to the Company or to any Member for losses
sustained or liabilities incurred as a result of any act or omission (in
relation to the Company, any transaction, any investment or any business
decision or action, including for breach of duties including fiduciary duties)
taken or omitted by such Manager or Management Committee Alternate (in such
Person’s capacity as a Manager or Management Committee Alternate), unless there
has been a final and non-appealable judgment entered by a court of competent
jurisdiction determining that, in respect of such act or omission, and taking
into account the acknowledgments and agreements set forth in this Agreement,
such Manager or Management Committee Alternate (in such Person’s capacity as a
Manager or Management Committee Alternate) engaged in bad faith, fraud, willful
misconduct or criminal wrongdoing. Each Member acknowledges and agrees that any
Manager or Management Committee Alternate designated by a Member pursuant to
Section 8.02(a) shall serve in such capacity to represent the interests of the
Member that designated such Manager or Management Committee Alternate and shall
be entitled to consider only such interests (including the interests of the
Member that designated such Manager or Management Committee Alternate) and
factors specified by the Member that designated such Manager or Management
Committee Alternate. To the maximum extent permitted by applicable Law, a
Manager or Management Committee Alternate, in performing his or her duties and
obligations as a Manager or Management Committee Alternate under this Agreement,
shall be entitled to act or omit to act at the direction of the Member that
appointed such Manager or Management Committee Alternate, considering only such
factors, including the separate interests of such appointing Member, as such
Manager, Management Committee Alternate or Member chooses to consider, and any
action of a Manager or Management Committee Alternate or failure to act, taken
or omitted in good faith reliance on the foregoing provision shall not, as
between the Company and the other Member, on the one hand, and such Manager or
Management Committee Alternate and the appointing Member, on the other hand,
constitute a breach of any duty (including any fiduciary or other similar duty,
to the extent that such duty exists under the Act or any other applicable Law,
rule or regulation) on the part of such Manager, Management Committee Alternate
or appointing Member, or any other Manager, Management Committee Alternate or
Member.

 

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(iv) No Officer (in such Person’s capacity as an Officer) shall have any
fiduciary or other duty (and each Member and the Company hereby waive any and
all such duties) to the Company, any Member, any Manager, any Officer or any
other Person that is a party to or is otherwise bound by this Agreement other
than the implied contractual covenant of good faith and fair dealing. To the
maximum extent permitted by applicable Law, no Officer (in such Person’s
capacity as an Officer) shall be liable to the Company or to any Member for
losses sustained or liabilities incurred as a result of any act or omission (in
relation to the Company, any transaction, any investment or any business
decision or action, including for breach of duties including fiduciary duties)
taken or omitted by such Officer (in such Person’s capacity as an Officer),
unless there has been a final and non-appealable judgment entered by a court of
competent jurisdiction determining that, in respect of such act or omission, and
taking into account the acknowledgments and agreements set forth in this
Agreement, such Officer (in such Person’s capacity as an Officer) engaged in bad
faith, fraud, willful misconduct or criminal wrongdoing.

(b) Each Member Covered Person may rely on (i) any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, bond,
debenture, paper, document, signature or writing reasonably believed by it to be
genuine, (ii) any certificate signed by an officer, agent or representative of
any Person in order to ascertain any fact with respect to such Person or within
such Person’s knowledge, and (iii) the provisions of this Agreement and the
advice of counsel, accountants and other professionals that is provided to the
Company or such Member Covered Person and, in each case, such Member Covered
Person shall not be liable to the Company or to any other Member for such
reliance, provided that, there has not been a final and non-appealable judgment
entered by a court of competent jurisdiction determining that, in respect of
such reliance, and taking into account the acknowledgments and agreements set
forth in this Agreement, such Member Covered Person engaged in bad faith, fraud,
willful misconduct or criminal wrongdoing.

(c) Each Manager and Management Committee Alternate (in such Person’s capacity
as a Manager or Management Committee Alternate) may rely on (i) any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, paper, document, signature or writing reasonably
believed by it to be genuine, (ii) any certificate signed by an officer, agent
or representative of any Person in order to ascertain any fact with respect to
such Person or within such Person’s knowledge, and (iii) the provisions of this
Agreement and the advice of counsel, accountants and other professionals that is
provided to the Company or such Manager or Management Committee Alternate and,
in each case, such Manager or Management Committee Alternate shall not be liable
to the Company or to any Member for such reliance, provided that, there has not
been a final and non-appealable judgment entered by a court of competent
jurisdiction determining that, in respect of such reliance, and taking into
account the acknowledgments and agreements set forth in this Agreement, such
Manager or Management Committee Alternate engaged in bad faith, fraud, willful
misconduct or criminal wrongdoing.

 

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(d) Each Officer (in such Person’s capacity as an Officer) may rely on (i) any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, paper, document, signature or writing
reasonably believed by it to be genuine, (ii) any certificate signed by an
officer, agent or representative of any Person in order to ascertain any fact
with respect to such Person or within such Person’s knowledge, and (iii) the
provisions of this Agreement and the advice of counsel, accountants and other
professionals that is provided to the Company or such Officer and, in each case,
such Officer shall not be liable to the Company or to any Member for such
reliance, provided that, there has not been a final and non-appealable judgment
entered by a court of competent jurisdiction determining that, in respect of
such reliance, and taking into account the acknowledgments and agreements set
forth in this Agreement, such Officer engaged in bad faith, fraud or willful
misconduct or criminal wrongdoing.

(e) Notwithstanding anything in this Agreement to contrary, nothing in this
Section 11.01 shall limit or waive any claims against, actions, rights to sue,
other remedies or other recourse the Company, any Member or any other Person may
have against any Member, Manager or Officer for a breach of contract claim
relating to any binding agreement.

ARTICLE XII

INSURANCE

Section 12.01 Operator Insurance. The Company acknowledges that, pursuant to the
Operating and Construction Management Agreement, the Operator is required to
obtain, at the Company’s sole cost and expense, the kinds of insurance and
amounts of coverage set forth in the Operating and Construction Management
Agreement.

Section 12.02 Company Insurance. The Operator shall, as directed by the Company
in writing, administer the Company’s insurance in accordance with Article X
hereunder and the Operating and Construction Management Agreement, including
(i) procuring and maintaining, at the Company’s expense, any and all insurance
policies required to be maintained by the Company, (ii) monitoring compliance
with the terms and conditions of all such insurance policies,
(iii) administering claims and obtaining recoveries for and on behalf of the
Company under such insurance policies, and (iv) facilitating reimbursement of
reasonable Member insurance premium expenses for such insurance procured in
accordance with Section 12.03.

Section 12.03 Member Insurance. A Member may, purchase or arrange for insurance
or a self-funded or self-insurance program to provide insurance coverage for the
value of its Units in excess of or not covered by the insurance mandated
pursuant to the Operating and Construction Management Agreement, the benefit of
which may accrue to such Member with respect to such Units. If such insurance is
purchased, each Member shall cooperate with the Operator to obtain reimbursement
for insurance premium expenses incurred and directly resulting from this
Section 12.03. The Management Committee shall annually review and approve the
Company’s reimbursement of each Member’s incurred reasonable insurance premium
expenses in accordance with Section 5.1 of the Operating and Construction
Management Agreement. For purchased insurance or any other type of insurance or
self-insurance arranged to cover such loss, each Member shall waive rights of
recovery and shall cause its insurers to waive rights of subrogation in favor of
the Company and its Subsidiaries, the

 

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Members and the Operator, as applicable, but only to the extent of the
indemnification obligations herein or in the Operating and Construction
Management Agreement. All insurance deductibles, retentions, self-insured
fronting arrangements, self-insurance or similar program cost and expense
applicable to such coverage shall be the sole responsibility of the Member
obtaining such insurance. Each Member hereby agrees to make cash contributions
to the Company pursuant to Section 5.02 in order to fund the costs of any claim
or liability for which insurance proceeds are reasonably expected to be received
from any such insurance policies maintained by a Member under this
Section 12.03. Subject to the foregoing sentence, each Member also hereby agrees
to contribute to the Company the proceeds of any such insurance policies upon
receipt of such proceeds, to the extent such Member has not already made cash
contributions to the Company pursuant to Section 5.02 in order to fund the costs
of any claim or liability for which such insurance proceeds are received.

ARTICLE XIII

LIMITATIONS ON TRANSFERS

Section 13.01 Transfer of Units.

(a) Subject to the other provisions set forth in this Agreement, any Member may
Transfer its Units; provided that prior to the Sandpiper Project In-Service
Date, no Member shall Transfer any of its Units without the consent of the other
Member unless such Transfer is (i) to a Wholly-Owned Affiliate of such Member or
(ii) in connection with a Company Sale; and provided further, if such Member
does not Transfer all of its Units pursuant to such Transfer, it must Transfer
10% or more of the outstanding class of Units being transferred pursuant to such
Transfer. Any attempted Transfer of Units other than in compliance with this
Agreement (including a Transfer not in compliance with the foregoing provisos)
shall be null and void and of no force or effect. Any Member that Transfers any
of its Units shall promptly provide written notice thereof to the Company and to
the other Member. Notwithstanding anything to the contrary in this Agreement, a
Member and its Affiliates to which any Units have been Transferred shall
collectively be entitled to the rights and subject to the obligations of such
Member pursuant to this Agreement and, for all purposes of this Agreement
(including the determination of such Member’s applicable Class A Percentage
Interest or Class B Percentage Interest (as applicable) and its entitlement to
designate Managers pursuant to Section 8.02(a) and the determination of the
Total Votes of such Member and its Affiliates pursuant to Section 8.03(a)), such
Member and such Affiliates shall be deemed to be, and shall be treated as, one
and the same Member.

(b) A transferring Member shall, notwithstanding the Transfer, be liable to the
Company and the other Member for its obligation to fund in accordance with
Section 5.02 its portion of any contributions required to be made pursuant to
any Call Notice delivered pursuant to Section 5.02, in each case, accrued under
this Agreement on or prior to the effective date of such Transfer, but shall be
released from any other obligations thereafter accruing under this Agreement
with respect to its Units being Transferred, except in the case where the
Transfer at issue is made to an Affiliate, in which case the transferring Member
shall remain liable for all such obligations. In addition to the foregoing, each
transferring Member shall, notwithstanding the Transfer, be entitled to any
distributions made by the Company pursuant to this Agreement to the extent the
same were accrued on or prior to the effective date of such Transfer.

 

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(c) If, following any Transfer of Units by a Member, neither such Member nor any
of its Affiliates holds any Units, then any Affiliate of such Member (or such
Member, as applicable) then serving as Operator under the Operating and
Construction Management Agreement shall be subject to removal from such position
pursuant to the terms of Section 2.3.2(d) thereof.

(d) Each Member that is an entity that was formed for the sole or principal
purpose of directly or indirectly acquiring Units or an entity whose principal
asset is its Units, or direct or indirect interests in Units, agrees that it
will not permit dispositions of Equity Interests in such Member in a single
transaction or series of related transactions if such dispositions collectively
would result in Equity Interests in such Member being owned or Controlled by a
Person or Persons that do not own or Control Equity Interests in such Member as
of the date that such Member became a Member; provided, however, that,
notwithstanding anything to the contrary in this Agreement, (i) the Equity
Interests of Williston may be Transferred to any of its Wholly-Owned Affiliates
or any Subsidiary of MPLX LP without restriction and without any breach or
violation of this Agreement and (ii) in furtherance of the foregoing, the
Company and the Members acknowledge and agree that none of the rights and
obligations set forth in this Article XIII shall apply to any such Transfer.

Section 13.02 Conditions Precedent to a Transfer of Units. Each Transfer of
Units shall be subject to the terms hereof, and, as a condition precedent to the
Company recognizing such Transfer, each transferor must satisfy all of the
requirements (including the proportionate Transfer of its funding obligations)
and not violate any of the Transfer restrictions set forth in Section 13.01, and
each Transfer must meet the following conditions to the reasonable satisfaction
of the Managers designated by the non-transferring Member:

(a) Except in the case of a Transfer involuntarily by operation of Law, the
transferor and transferee shall execute and deliver to the Company such
documents and instruments of conveyance as may be reasonably necessary or
appropriate to affect such Transfer. In the case of a Transfer involuntarily by
operation of Law, the Transfer shall be confirmed by presentation to the Company
of legal evidence of such Transfer, in form and substance reasonably
satisfactory to counsel to the Company. In all cases, the Company shall be
reimbursed by the transferor or transferee for all reasonable costs and expenses
that it incurs in connection with such Transfer.

(b) The transferor and transferee shall furnish the Company with the
transferee’s taxpayer identification number, sufficient information to determine
the transferee’s initial tax basis in the Units transferred and any other
information reasonably necessary to permit the Company to file all required
federal and state tax returns and other legally required information statements
or returns. Without limiting the generality of the foregoing, the Company shall
not be required to make any distribution otherwise provided for in this
Agreement with respect to any transferred Units until it has received such
information.

(c) Such Transfer shall be exempt from all applicable registration requirements
and such Transfer may not violate any applicable Laws regulating the transfer of
securities, including the Securities Act.

 

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(d) Such Transfer will not cause the Company to be deemed to be an “investment
company” under the Investment Company Act of 1940.

(e) Such Transfer, together with all other Transfers within the preceding
12 Calendar Months, will not cause the Company to be treated as having been
terminated under Section 708(b)(1)(B) of the Code.

(f) Subject to Section 8.01(c)(xv), Section 8.01(d), and Section 17.05, the
transferor, the transferee and the non-transferring Member shall, if necessary,
have amended, restated, modified or waived, as applicable, any provision of this
Agreement that they may have determined in good faith to be necessary or
desirable in order to facilitate such Transfer, reflect terms and conditions
with respect to the ongoing regulation and management of the Company and provide
for the relative rights and obligations of such transferor, such transferee and
such Member with respect to the Company, in each case, including any such
amendments, restatements, modifications or waivers as may be necessary in order
to provide for the circumstance that, following such Transfer, there shall be
more than two Members; provided, however, that the Members hereby acknowledge
and agree that this Section 13.02(g) shall in no event be deemed to limit or
otherwise affect the rights of a Member with respect to any Transfer of its
Units in accordance with the express terms and conditions of this Agreement.

Section 13.03 Admission of Substitute Members. Upon compliance with all of the
provisions of this Agreement regarding Transfers and the delivery to the Company
by a transferee of an executed addendum agreement in the form attached as
Exhibit E (an “Addendum Agreement”), (a) such transferee shall be deemed to be a
party hereto as if such transferee were the transferor and such transferee’s
signature appeared on the signature pages of this Agreement, and shall be deemed
to be a Substitute Member and (b) the applicable transferor shall thereafter
cease to be a Member to the extent of the Member Interest and associated Units
so transferred.

Section 13.04 Issuance of Units; Issuance of Additional Units; Admission of
Additional Members.

(a) Subject to Section 8.01(c)(xi), Section 8.01(c)(xii), and Section 8.01(d),
the Company may admit an Additional Member by issuing to such Additional Member
Class A Units or any other class of Units as may be determined by the Management
Committee. Such Additional Member shall be admitted to the Company with all the
rights and obligations of a Member if such Additional Member shall have executed
and delivered to the Company (i) an Addendum Agreement and (ii) such other
documents or instruments as may be required in the Management Committee’s
reasonable judgment to effect the admission. No issuance of Units otherwise
permitted or required by this Agreement shall be effective, and no purchaser of
any such issued Units from the Company shall be deemed to be a Member, if the
foregoing conditions are not satisfied. Subject to Section 8.01(c)(xv),
Section 8.01(d), and Section 17.05, the Members shall, if necessary, amend,
restate, modify or waive, as applicable, any provision of this Agreement that
they may determine in good faith to be necessary or desirable in order to
facilitate such admission, reflect terms and conditions with respect to the
ongoing regulation and management of the Company and provide for the relative
rights and obligations of such Additional Member and such continuing Members
with respect to the Company.

 

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(b) In the event the Company issues additional Units pursuant to
Section 13.04(a) each Class A Member shall be entitled to purchase its pro rata
share (based upon its Class A Percentage Interest) of such Units, other than
(i) issuances of Units pursuant to Capital Notices as contemplated hereby, or
(ii) issuances of Equity Interests as consideration in an acquisition or other
strategic transaction. If fewer than all Class A Members so elect to purchase
such additional Units, each Class A Member that desires to purchase such
additional Units shall be entitled to purchase a number of such additional Units
equal to the product of (A) the number of such additional Units, multiplied by
(B) a fraction, the numerator of which is the number of Class A Units held by
such Class A Member, and the denominator of which is the aggregate number of
Class A Units held by all Class A Members that desire to purchase such
additional Units.

Section 13.05 Rights and Obligations of Additional Members and Substitute
Members.

(a) A transferee of Units that has been admitted as a Substitute Member or a
purchaser of any newly issued Units from the Company that has been admitted as
an Additional Member in accordance with Section 13.03 or Section 13.04, as
applicable, shall have all the rights and powers and be subject to all the
restrictions and Liabilities under this Agreement relating to a Member holding
the same class of Units held by such Additional Member or Substitute Member,
including the obligation to fund such Additional Member’s or Substituted
Member’s proportion of any contributions pursuant to Section 5.02.

(b) Admission of an Additional Member or Substitute Member shall become
effective on the date such Person’s name is recorded in the Member Schedule and
on the other books and records of the Company, which shall occur no later than
the date such Person has satisfied the requirements for becoming a Substitute
Member or Additional Member set forth in Section 13.03 or 13.04, as applicable.
Upon the admission of an Additional Member or Substitute Member, the Company
shall, without the consent of any other Person, revise the Member Schedule to
(i) reflect the name and address of, and Units held by, such Additional Member
or Substitute Member, (ii) eliminate or adjust, if necessary, the name, address,
and Units of the predecessor of such Substitute Member, and (iii) adjust the
applicable Class A Percentage Interest and Class B Percentage Interest (as
applicable) of each Member.

Section 13.06 No Other Persons Deemed Members. Unless admitted to the Company as
a Substitute Member or Additional Member as provided in this Agreement, no
Person (including an assignee of rights with respect to Units or a transferee of
Units, whether voluntary, by operation of Law or otherwise) shall be, or shall
be considered, a Member. The Company may elect to deal only with Persons
admitted to the Company as Members as provided in this Agreement (including
their duly authorized representatives). Any distribution by the Company to the
Person shown on the Member Schedule as a Member, or to its legal
representatives, shall relieve the Company of all Liability to any other Person
who may have an interest in such distribution by reason of any Transfer by the
Member or for any other reason.

Section 13.07 Tag-Along Transactions. The provisions of this Section 13.07 shall
apply to any proposed Transfer of Class A Units by a holder thereof from and
after the Sandpiper Project In-Service Date:

 

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(a) In the event that any Class A Member (the “Initiating Holder”) determines to
effect, approve or otherwise take any action that would cause the occurrence of
a sale, disposition, or other Transfer of such Class A Member’s Class A Units
(other than to an Affiliate of such Member), and if such Transfer is otherwise
permitted by this Agreement, the Initiating Holder shall deliver written notice
(a “Sale Notice”) to any other Class A Member (the “Tag-Along Seller”) and the
Company, in accordance with Section 17.01, at least 10 Business Days prior to
the consummation of such transaction, offering the Tag-Along Seller the
opportunity to participate in such transaction to the extent provided in this
Section 13.07. The Sale Notice shall contain a description of the material terms
and conditions of the transaction between a Third Party purchaser and the
Initiating Holder, including the names of the parties to the proposed
transaction, the proposed amount and form of consideration and the terms of any
representations, warranties, covenants and indemnification to be provided by the
Initiating Holder.

(b) The Tag-Along Seller may, by written notice to the Initiating Holder
delivered within five Business Days after delivery of the Sale Notice to the
Tag-Along Seller, elect to sell its pro rata portion (based upon its Class A
Percentage Interest) of the Class A Units proposed to be sold by the Initiating
Holder in such transaction and, upon delivery of such notice, the Tag-Along
Seller shall be obligated to Transfer to the Third Party purchaser (subject to
the other terms of this Section 13.07), at the closing of such transaction, its
pro rata portion (based upon its Class A Percentage Interest) of such Class A
Units and the Class A Units to be sold by the Initiating Holder shall be
correspondingly reduced. A Tag-Along Seller so electing to participate in the
sale of Class A Units pursuant to this Section 13.07 shall be required to
provide such representations, warranties and indemnities that the Initiating
Holder has agreed to provide to such Third Party purchaser, and shall otherwise
sell its Class A Units on the same terms as those upon which the Initiating
Holder is selling its Class A Units to such Third Party purchaser.

(c) In connection with any transaction in which the Tag-Along Seller elects to
participate pursuant to this Section 13.07, the Tag-Along Seller will take all
necessary or desirable actions reasonably requested by the Initiating Holder
and/or the Company in connection with the consummation of such transaction,
including executing and delivering the applicable transaction documents.

(d) The Tag-Along Seller shall not, except as required by applicable Law,
disclose to any Person any information related to such transaction (including,
without limitation, the fact that discussions or negotiations are taking place
concerning such transaction, or any of the terms, conditions or other facts with
respect to such transaction).

(e) At the closing of any such transaction in which the Tag-Along Seller has
exercised its rights under this Section 13.07, the Tag-Along Seller shall
deliver at such closing certificates or other documentation (or other evidence
thereof reasonably acceptable to the Transferee) representing such Tag-Along
Seller’s Class A Units to be sold, duly endorsed for transfer or accompanied by
duly endorsed instruments of transfer, and such other documents as are deemed
reasonably necessary by the Initiating Holder, the Transferee and/or the Company
for the proper transfer of such Class A Units on the books of the Company.

 

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(f) If any such transaction is consummated, the Initiating Holder and the
Tag-Along Seller will receive that portion of the aggregate consideration paid
by the Third Party purchaser in respect of all Class A Units involved in such
transaction to which such Person would be entitled if an amount equal to the
aggregate consideration were distributed to such Persons in accordance with the
provisions of Article VII, and shall bear its pro rata share (based upon the
aggregate consideration to be paid to such Member) of the costs and expenses of
any such transaction to the extent such costs and expenses are incurred for the
benefit of all such Members and are not otherwise paid by the Company or the
Transferee. Costs and expenses incurred by any such Member on its own behalf
will not be considered costs of such transaction and will be borne solely by
such Member.

(g) Subject to the provisions of this Section 13.07, the Initiating Holder shall
have complete discretion over the terms and conditions of any such transaction,
including price, payment terms, conditions to closing, representations,
warranties, affirmative covenants, negative covenants, indemnification,
holdbacks and escrows. The Initiating Holder shall not have any liability
hereunder if any such transaction is not consummated for any reason.

(h) Enbridge shall have the right in connection with a prospective transaction
subject to this Section 13.07 to require the Company to cooperate fully with
potential acquirers in such prospective transaction by taking all customary and
other actions reasonably requested by Enbridge or such potential acquirers,
including making the Company’s properties, books and records, and other assets
reasonably available for inspection by such potential acquirers, establishing a
physical or electronic data room including materials customarily made available
to potential acquirers in connection with such processes and making its
employees reasonably available for presentations, interviews and other diligence
activities, in each case subject to reasonable and customary confidentiality
provisions. Notwithstanding anything to the contrary in this Agreement, no
Management Committee Approval or Super-Majority Management Committee Approval
shall be required in connection with any action taken by the Company pursuant to
this Section 13.07(h).

(i) If the Tag-Along Seller elects to participate in such a transaction and such
Tag-Along Seller breaches in any material respect any of its obligations under
this Section 13.07 or under any of the applicable transaction documents, then
such Tag-Along Seller will not, without the consent of the Initiating Holder
(which may be withheld in its sole discretion), be permitted to participate in
such transaction, and the Initiating Holder can proceed to close such
transaction excluding the sale of such Tag-Along Seller’s Class A Units
therefrom.

Section 13.08 Right of First Refusal. The provisions of this Section 13.08 shall
apply to any proposed Transfer of Class A Units by a holder thereof from and
after the Sandpiper Project In-Service Date. Except in connection with a
Transfer of Class A Units by a Class A Member to a Wholly-Owned Affiliate of
such Class A Member, any Transfer of Class A Units by a Class A Member shall be
subject to the following procedure. Once the final terms and conditions of a
Transfer have been fully negotiated and are binding on the parties thereto
(subject only to the rights of the non-transferring Class A Members pursuant to
this Section 13.08 and other customary conditions precedent to the consummation
of such Transfer), the Transferor shall promptly disclose all such final terms
and conditions as are relevant to the sale of its Class A Units in a notice to
the other Class A Member, which notice shall be accompanied by a copy of

 

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all instruments or relevant portions of instruments establishing such terms and
conditions. Such other Class A Member shall have the right to, collectively,
acquire all but not less than all of the Class A Units subject to the proposed
Transfer from the Transferor on the terms and conditions disclosed by the
Transferor pursuant to this Section 13.08, if, within 30 days of delivery by the
Transferor of such notice, one or more of the other Class A Members delivers to
the Transferor a counter-notification that it accepts such terms and conditions
without reservations or conditions. If the non-Transferring Class A Member does
not deliver such counter-notification within such time, such Transfer to the
proposed Transferee may proceed without further notice, subject to the other
provisions of this Agreement, under terms and conditions no more favorable to
the Transferee than those set forth in the notice to the non-Transferring
Class A Members; provided that such Transfer shall be concluded within 120 days
from the date of the notice. If such Transfer is not concluded within such
period and the parties thereto desire thereafter to proceed with such proposed
Transfer, the Transferor shall be required to re-offer the subject Units to the
other Class A Member in accordance with the terms and conditions of this
Section 13.08. No Class A Member shall have a right under this Section 13.08 to
acquire any asset other than Units, and no Class A Member shall be required to
acquire any asset other than Units regardless of whether other properties are
included in the subject Transfer.

Section 13.09 Transfer and Exchange. When Units are presented to the Company
with a request to register the Transfer of such Units or to exchange such Units
for Units of other authorized denominations, the Company shall register the
Transfer or make the exchange as requested if the requirements of this Agreement
for such transaction are met; provided, however, that the Units surrendered for
Transfer or exchange shall be duly endorsed or accompanied by a written
instrument of Transfer in form satisfactory to the Company, duly executed by the
holder thereof or its attorney in fact and duly authorized in writing. No
service charge shall be made for any registration of Transfer or exchange, but
the Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith.

Section 13.10 No Publicly Traded Company. No Member shall Transfer all or any
part of its Units in such a manner that, after the Transfer, the Company would
become taxable as a corporation for U.S. federal income tax purposes.

Section 13.11 Amendments to this Agreement. Subject to Section 8.01(c)(xv),
Section 8.01(d), and Section 17.05 the Members shall, if necessary, amend,
restate, modify or waive, as applicable, any provision of this Agreement that
they may determine in good faith to be necessary or desirable in order to
facilitate an admission of a Member in accordance with the terms of this
Agreement, to reflect terms and conditions with respect to the ongoing
regulation and management of the Company, and to provide for the relative rights
and obligations of any additional Member and the continuing Members with respect
to the Company.

Section 13.12 No Encumbrances by Members. Except with respect to Encumbrances in
connection with indebtedness for borrowed money, no Member shall be permitted to
Encumber its Units.

 

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ARTICLE XIV

GROWTH CAPITAL PROJECTS; EMERGENCY EXPENDITURES; LONG TERM RESPONSE
EXPENDITURES; AND NON-GROWTH INTEGRITY PROJECTS

Section 14.01 Growth Capital Projects.

(a) At any time prior to the Sandpiper Project In-Service Date, Enbridge may
cause the Company to undertake a Growth Capital Project in accordance with this
Section 14.01, and at any time from and after the Sandpiper Project In-Service
Date, either Member may cause the Company to undertake a Growth Capital Project
in accordance with this Section 14.01; provided, however, that notwithstanding
the foregoing, in no event will the Company be required to undertake any Growth
Capital Project that would (a) give rise to any right of any Third Party shipper
pursuant to a “most favored nations” or similar preferential rights provision or
(b) alter the rates and other terms of service on file with FERC in respect of
the Company. The Member that causes the Company to so undertake a Growth Capital
Project is referred to herein as the “Proposing Member.” Any such Proposing
Member may propose a Growth Capital Project (and, to the extent the Company has
commenced any Growth Capital Project prior to the Effective Date, Enbridge shall
propose such Growth Capital Project) by delivering a written request (each, a
“Growth Capital Project Request”) to the Company and the non-Proposing Member
(the “Non-Proposing Member”). Subject to Section 14.01(c), if applicable, the
Non-Proposing Member shall have the right, but not the obligation, to
participate in the Growth Capital Project pursuant to this Section 14.01. Any
Growth Capital Project Request shall contain a reasonably detailed explanation
of all material aspects of the proposed Growth Capital Project, including (i) a
good faith estimate of the costs and expenses of developing, operating and
maintaining such proposed Growth Capital Project (including any incremental
increase to the Management Fee payable to the Operator), (ii) the projected
incremental revenues to be derived from the Growth Capital Project, (iii) the
projected unlevered, pre-tax internal rate of return to the Company (calculated
using the “XIRR” function of Microsoft Excel) based on the incremental revenues
and all operating and capital costs and expenses (including any incremental
increase in the Management Fee payable to the Operator) that are attributable to
the proposed Growth Capital Project, (iv) the estimated date on which the
initial capital costs and expenses for the proposed Growth Capital Project would
be incurred (which date shall be not more than 12 months from the date on which
the Growth Capital Project Request is delivered to the Company and such
Non-Proposing Member) (the “Commencement Date”), (v) the estimated date on which
the proposed Growth Capital Project would commence commercial service (the
“Projected In-Service Date”), (vi) the estimated date on which 300% Payout
would, if applicable, be expected to be achieved (the “Payout Date”), (vii) the
estimated schedule of all capital costs and expenses and the timing and amounts
of any related Call Notices, (viii) a description of all material provisions of
any proposed Contracts (including any transportation, throughput or similar
commercial Contracts) in respect of the proposed Growth Capital Project and to
which the Company and any other Person may be a party, (ix) the projected
overall effects (positive and negative) of the proposed Growth Capital Project
on the Company, the Business and the Assets, and (x) design and construction
details with respect to the proposed Growth Capital Project, to the extent not
otherwise described in such Growth Capital Project Request. Such Non-Proposing
Member shall have 60 days from receipt of the Growth Capital Project Request to
elect to participate in such proposed Growth Capital Project as set forth in
this Section 14.01 (such 60-day period, the “Initial Election Period”). Failure
of such Non-

 

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Proposing Member to give timely notice of its election within the Initial
Election Period shall be deemed an election by such Non-Proposing Member not to
participate in such proposed Growth Capital Project. Notwithstanding anything to
the contrary in this Agreement, no Proposing Member may cause the Company to
undertake a proposed Growth Capital Project in which the Non-Proposing Member
elects not to participate unless such proposed Growth Capital Project would not
reasonably be expected to have an adverse financial or operational effect that
is material to the Company, the Business or the Assets.

(b) Unless otherwise determined by the Management Committee with Super Majority
Management Committee Approval and, if prior to the Sandpiper Project In-Service
Date, the consent of a Williston Manager, the Operating and Construction
Management Agreement shall, subject to the terms of this Agreement, govern the
Design, Construction and Procurement and operation of any Growth Capital
Project.

(c) All Members shall be deemed to have agreed and elected to participate in any
Growth Capital Project that has a total capital cost of less than $10,000,000;
provided, however, that no Non-Proposing Member shall be deemed to have agreed
and elected to participate in any further Growth Capital Project if the
aggregate total capital costs of Growth Capital Projects for which such
Non-Proposing Member has been previously deemed to participate pursuant to the
foregoing is in excess of $100,000,000. If the Non-Proposing Member elects to
participate or is deemed to have elected to participate in any Growth Capital
Project: (A) the Design, Procurement and Construction of such Growth Capital
Project shall be managed by the Operator in accordance with the Operating and
Construction Management Agreement, (B) such Growth Capital Project shall be
operated and maintained by the Operator in accordance with the Operating and
Construction Management Agreement, and (C) if applicable, such Growth Capital
Project and the capital costs and expenses thereof set forth in the applicable
Growth Capital Project Request shall be deemed approved under the Operating and
Construction Management Agreement and automatically included in the Budget. The
Proposing Member shall prepare a multi-year budget for such proposed Growth
Capital Project, which budget shall be in substantial accordance with such
Growth Capital Project Request and include all items of capital cost, expense
and revenue in reasonable detail, as well as the permitted variance to be
applicable to such capital costs and expenses and a schedule of contributions
projected to be required in order to fund the capital costs of such Growth
Capital Project and any proposed changes to the Commencement Date or the
Projected In-Service Date (such budget, the “Participatory Growth Capital
Project Budget”) and, within 60 days after the expiration of the Initial
Election Period, deliver a copy of such Participatory Growth Capital Project
Budget to the Company and the other Member. If the aggregate amount of
contributions projected to be required in order to fund the capital costs of
such Growth Capital Project pursuant to such Participatory Growth Capital
Project Budget exceed the aggregate amount set forth in such Growth Capital
Project Request, then such other Member shall have the right to approve or
reject such Participatory Growth Capital Project Budget within 15 days from
receipt of such Participatory Growth Capital Project Budget, such approval not
to be unreasonably withheld, conditioned or delayed. Failure of such other
Member to timely approve such Participatory Growth Capital Project Budget shall
be deemed an election not to participate in such proposed Growth Capital
Project. If Williston elects or is deemed to elect to participate in any Growth
Capital Project proposed by Enbridge prior to the Sandpiper Project In-Service
Date (a “Reimbursed Growth Capital Project”), then (x) on the Sandpiper Project
In-Service Date,

 

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Williston shall contribute to the Company an amount equal to 50% of the Growth
Capital Project Expenditures in respect of such Reimbursed Growth Capital
Project prior to the Sandpiper Project In-Service Date (a “Growth Capital
Project Reimbursement Contribution”) and (y) from and after the Sandpiper
Project In-Service Date, to the extent such Reimbursed Growth Capital Project is
still under development or construction as of the Sandpiper Project In-Service
Date, Enbridge and Williston shall make capital contributions in respect of such
Reimbursed Growth Capital Project as required by Section 5.02(c). If the
Non-Proposing Member elects or is deemed to elect to participate in any Growth
Capital Project proposed by the Proposing Member from and after the Sandpiper
Project In-Service Date, the Proposing Member and the Non-Proposing Member shall
make capital contributions in respect of such Growth Capital Project as required
by Section 5.02(c).

(d) If the Non-Proposing Member elects or is deemed to elect not to participate
in the proposed Growth Capital Project (each such Growth Capital Project, a
“Non-Participatory Growth Capital Project”), then, upon the termination of the
Initial Election Period (or, if applicable, upon the date that such
Non-Proposing Member is deemed to have elected not to participate in such
Non-Participatory Growth Capital Project as a result of its failure to approve a
Participatory Growth Capital Project Budget pursuant to Section 14.01(c)), the
Proposing Member shall proceed as follows:

(i) Unless the Non-Proposing Member is deemed to have elected not to participate
in such Non-Participatory Growth Capital Project as a result of its failure to
approve a Participatory Growth Capital Project Budget pursuant to
Section 14.01(c), the Proposing Member shall prepare a multi-year budget for the
proposed Non-Participatory Growth Capital Project, which budget shall be in
substantial accordance with the applicable Growth Capital Project Request and
include all items of capital cost, operating and maintenance and other expense
and revenue in reasonable detail, as well as the permitted variance to be
applicable to such capital costs and expenses and a schedule of contributions
projected to be required in order to fund the capital costs of such
Non-Participatory Growth Capital Project and any proposed changes to the
Commencement Date, the Projected In-Service Date or the Payout Date (such
budget, the “Non-Participatory Growth Capital Project Budget”) and, within 60
days after the expiration of the Initial Election Period (or, if applicable,
within 60 days after the date that the Non-Proposing Member is deemed to have
elected not to participate in such Non-Participatory Growth Capital Project as a
result of its failure to approve a Participatory Growth Capital Project Budget
pursuant to Section 14.01(c)), deliver a copy of such Non-Participatory Growth
Capital Project Budget to the Company and the Non-Participating Member.

(ii) With respect to each Non-Participatory Growth Capital Project, the
Non-Participating Member shall receive distributions of Special Available Cash
attributable to such Non-Participatory Growth Capital Project in accordance with
Section 7.01(b).

(iii) The Proposing Member with respect to any Non-Participatory Growth Capital
Project shall manage the Operator’s Design, Procurement and Construction of such
Non-Participatory Growth Capital Project in strict accordance with,

 

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and all aspects of such Non-Participatory Growth Capital Project shall be
subject to, the Non-Participatory Growth Capital Project Budget (which, for the
avoidance of doubt, shall be included in the Budget and subject to the variance
thereto permitted by the Operating and Construction Management Agreement) and
the following provisions:

(A) the Non-Participatory Growth Capital Project shall be conducted by the
Operator pursuant to the Operating and Construction Management Agreement at the
Proposing Member’s sole direction, cost and expense and the Proposing Member
shall fund the applicable Non-Participatory Growth Capital Project Budget to the
Company in accordance with Section 5.02(f). Prior to the Sandpiper Project
In-Service Date, no capital contributions made by the Class B Members pursuant
to Section 5.02(b) shall be used towards the Non-Participatory Growth Capital
Project. From and after the Sandpiper Project In-Service Date, other than
Non-Participatory Growth Capital Project Contributions, no funds of the Company
shall be used towards the Non-Participatory Growth Capital Project, and neither
the Company nor the Non-Participating Member shall bear any costs or expenses
(whether operating or capital in nature) with respect to any Non-Participatory
Growth Capital Project prior to 300% Payout. Notwithstanding the foregoing two
sentences, if requested by the Operator, an Officer designated by the Proposing
Member shall participate in such Non-Participatory Growth Capital Project in an
administrative capacity to the extent necessary to facilitate Call Notices in
accordance with the Non-Participatory Growth Capital Project Budget, collection,
segregation and disbursement of Non-Participatory Growth Capital Project
Contributions, payments of expenses, execution of Contracts necessary to the
development and operation of the Non-Participatory Growth Capital Project,
communications with Governmental Authorities and other Third Parties and other
similar administrative functions reasonably related to the Growth Capital
Project;

(B) all assets purchased with Non-Participatory Growth Capital Project
Contributions or otherwise integral to the Non-Participatory Growth Capital
Project shall be the sole property of the Company for all purposes and, except
as otherwise expressly provided in this Agreement or the Operating and
Construction Management Agreement with respect to control by or responsibility
of the Proposing Member, all such assets and all aspects of the
Non-Participatory Growth Capital Project shall be subject to the authority and
control of the Operator;

(C) at all times prior to 300% Payout, all Liabilities arising from or
attributable to such Non-Participatory Growth Capital Project shall be borne
solely by the Proposing Member, including Defaults by the Proposing Member,
abandonment of the Non-Participatory Growth Capital Project by the Proposing
Member and Third Party Claims or Claims of the Company or the Non-Participating
Member. At all times prior to 300% Payout, the Proposing Member shall not be
entitled to indemnification under Article X with respect to any Liability
arising from or attributable to such Non-Participatory Growth Capital Project,
including any Third Party Claims or Claims asserted by the Company or the
Non-Participating Member, and the Proposing Member shall indemnify the Company
and the Non-Participating Member with respect to any such Liabilities to the
fullest extent permitted by applicable Law;

 

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(D) at all times prior to 300% Payout, (1) costs or expenses (whether operating
or capital in nature) with respect to such Non-Participatory Growth Capital
Project shall be borne solely by the Proposing Member, (2) the Company shall
require the Operator to establish and maintain, to the satisfaction of the
Non-Participating Member, the accounts and accounting methodology necessary to
reasonably and adequately account for the revenues, costs or expenses (whether
operating or capital in nature), distributions and any other items necessary to
determine when 300% Payout has been achieved, (3) the Company shall cause the
Operator to furnish quarterly statements of such accounts to the Members, and
(4) the Proposing Member shall be exclusively entitled to receive all Net
Earnings resulting from the Non-Participatory Growth Capital Project through
distributions of Special Available Cash in accordance with Section 7.01(b); and

(E) from and after 300% Payout, (1) all Net Earnings attributable to such
Non-Participatory Growth Capital Project shall become part of the aggregate Net
Earnings of the Company and all Class A Members shall share in such Net Earnings
through distributions of Special Available Cash in accordance with
Section 7.01(b)(ii), (2) costs or expenses (whether operating or capital in
nature) attributable to such Non-Participatory Growth Capital Project shall
become part of the aggregate costs or expenses (whether operating or capital in
nature) of the Company, and (3) at such time as balances of the Members’ Special
Capital Accounts related to such Non-Participatory Growth Capital Project are in
the same proportion as their Class A Percentage Interests, each Member’s Special
Capital Account related to such Non-Participatory Growth Capital Project shall
be terminated, with its balance transferred to such Member’s Capital Account.

Section 14.02 Emergency Expenditures and Long Term Response Expenditures.
Notwithstanding anything to the contrary in this Agreement, if the Company
delivers any Call Notice for Emergency Expenditures or Long Term Response
Expenditures in accordance with Section 5.02(c), Williston shall be entitled to
elect not to make any capital contributions with respect to such Call Notice to
the extent that such Call Notice was approved without Super-Majority Management
Committee Approval pursuant to Section 8.01(c)(iii)(C). Williston may elect not
to make such capital contributions by delivering written notice thereof to the
Company and Enbridge within 10 days of receipt of such Call Notice, and if
Williston so elects, (i) it shall not be deemed to be in Default in connection
with any failure to make such capital contributions, (ii) such capital
contributions shall be made 100% by Enbridge and (iii) the Company shall issue
to Enbridge additional Class A Units at a price of $1.00 per Unit in the amount
of Enbridge’s capital contributions with respect to such Emergency Expenditures
or Long Term Response Expenditures (as applicable) in accordance with
Section 5.02(c). If Williston does not deliver such notice within such 10 day
period, Williston shall be deemed to have agreed to make the capital
contributions required for such Emergency Expenditures or Long Term Response
Expenditures (as applicable) pursuant to such Call Notice.

 

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Section 14.03 Non-Growth Integrity Projects.

(a) The Members hereby agree that expenditures for Non-Growth Integrity Projects
for the three-year period ended December 31, 2016 and for each subsequent
three-year period thereafter shall not exceed $150,000,000; provided that each
such budget for any three-year period beginning on or after January 1, 2017
shall be increased by 10% relative to such budget for the prior three-year
period (each budget for any such three-year period, a “Non-Growth Integrity
Project Budget”). For the avoidance of doubt, the Company shall be entitled to
amend, by Super-Majority Management Committee Approval pursuant to
Section 8.01(c)(ii)(B)), any Non-Growth Integrity Project Budget to provide for
expenditures in excess of the limitations set forth in the immediately preceding
sentence; provided, however, that if any Non-Growth Integrity Project Budget is
so amended, the 10% increase of each subsequent Non-Growth Integrity Project
Budget that is required pursuant to the immediately preceding sentence shall be
applied without giving effect to such amendment.

(b) Notwithstanding anything to the contrary in this Agreement, if the Company
delivers any Call Notice for expenditures related to any Non-Growth Integrity
Project consistent with the Non-Growth Integrity Project Budget and in
accordance with Section 5.02(c), Williston shall be entitled to elect not to
make any capital contributions with respect to such Call Notice to the extent
that such Call Notice was approved without Super-Majority Management Committee
Approval pursuant to Section 8.01(c)(iii)(D). Williston may elect not to make
such capital contributions by delivering written notice thereof to the Company
and Enbridge within 10 days of receipt of such Call Notice, and if Williston so
elects, (i) it shall not be deemed to be in Default in connection with any
failure to make such capital contributions, (ii) such capital contributions
shall be made 100% by Enbridge and (iii) the Company shall issue to Enbridge
additional Class A Units at a price of $1.00 per Unit in the amount of
Enbridge’s capital contributions with respect to such Non-Growth Integrity
Project in accordance with Section 5.02(c). If Williston does not deliver such
notice within such 10 day period, Williston shall be deemed to have agreed to
make the capital contributions required for such Non-Growth Integrity Project
pursuant to such Call Notice.

ARTICLE XV

SANDPIPER PROJECT IN-SERVICE DATE TRANSACTIONS

Section 15.01 Sandpiper Project In-Service Date Transactions. On the Sandpiper
Project In-Service Date, the Company and the Members (as applicable) shall take
such actions as are necessary to effect the following transactions:

(a) All of the outstanding Class B Units held by Enbridge and Williston will be
converted into Class A Units, as contemplated by Section 3.01(h).

(b) Williston shall make a cash contribution to the Company in an amount equal
to the Growth Capital Project Reimbursement Amount, as contemplated by
Section 5.02(d) (and, for the avoidance of doubt, Williston shall not be issued
any Units in respect of such contribution).

 

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(c) The Company shall distribute to Enbridge an amount equal to the Growth
Capital Project Reimbursement Amount, as contemplated by Section 7.01(e).

(d) Unless otherwise determined with Super-Majority Management Committee
Approval, the Company shall use commercially reasonable efforts to maintain a
revolving credit facility of a size and upon terms as are commercially advisable
in the discretion of the Management Committee (with Super-Majority Management
Committee Approval) (the “Revolver”), which shall become effective on the
Sandpiper Project In-Service Date; provided, however, that each of the Members
shall be entitled, in lieu of seeking funds from any third-party lender, to fund
its proportionate share (based on such Member’s Class A Percentage Interest on
the Sandpiper Project In-Service Date) of the Revolver on terms that are
commercially reasonable and consistent with market terms at the time the
Revolver is to become effective. The Company shall be responsible for all costs,
expenses, and fees associated with the establishment and maintenance of the
Revolver. Each Member shall use commercially reasonable efforts to cooperate,
and shall use commercially reasonable efforts to cause its respective officers,
employees and advisors, including legal and accounting personnel, to cooperate,
with the Company and the other Member and their respective representatives in
connection with the arrangement of the Revolver. Notwithstanding the foregoing,
in no event shall either Member be required to (i) collateralize or secure the
Revolver with any assets or businesses owned by such Member (other than the
Assets and businesses of the Company and such Member’s Equity Interests in the
Company) or (ii) provide a guaranty with respect to any obligations or
liabilities under the Revolver.

Section 15.02 Allocation of Revenues and Expenses. Each of Enbridge and
Williston acknowledges and agrees that all revenues, trade payables and other
similar expenses of the Company and its Subsidiaries prior to the Sandpiper
Project In-Service Date (other than with respect to the Sandpiper Project or the
Sandpiper Facilities) shall belong to and shall be borne by Enbridge. In
furtherance of the foregoing, Enbridge and Williston acknowledge and agree that
notwithstanding anything to the contrary herein:

(a) all Available Cash that is attributable to revenues of the Company and its
Subsidiaries prior to the Sandpiper Project In-Service Date (other than any
revenues attributable to the Sandpiper Project or the Sandpiper Facilities), to
the extent distributable pursuant to the terms hereof, shall be distributed 100%
to Enbridge; and

(b) any and all expenses that are paid by the Company or any of its Subsidiaries
prior to the Sandpiper Project In-Service Date (other than any expenses
attributable to the Sandpiper Project or the Sandpiper Facilities), to the
extent that such expenses relate to services or other items to be acquired after
Sandpiper Project In-Service Date, will be resubmitted to the Company and the
Company shall make a distribution to Enbridge equal to such expenses relating to
the post-Sandpiper Project In-Service Date period multiplied by Williston’s
Class A Percentage Interest as of the date such expenses accrue or become
payable; and

 

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(c) Enbridge shall be solely responsible for all Liabilities attributable to
trade payables or other similar expenses of the Company incurred prior to the
Sandpiper Project In-Service Date (other than any trade payables or other
similar expenses attributable to the Sandpiper Project, the Sandpiper Facilities
or any Participatory Growth Capital Project), and, to the extent that the
Company issues any Call Notice for any such Liabilities, Enbridge shall be
responsible for 100% of the capital contributions under such Call Notice and no
Units will be issued to Enbridge in exchange for such capital contributions.

ARTICLE XVI

DISSOLUTION AND LIQUIDATION

Section 16.01 Dissolution. The Company shall be dissolved and its affairs wound
up only upon the occurrence of one or more of the following events:

(a) a dissolution of the Company is approved pursuant to Section 8.01(c)(xix);

(b) the sale or other final disposition by the Company of all or substantially
all of the Assets and the collection of all amounts derived from such sale or
disposition (including all amounts payable to the Company under any promissory
notes or other evidences of indebtedness); or

(c) the entry of a decree of judicial dissolution under the Act.

For the avoidance of doubt, the bankruptcy or dissolution of any Member or
Affiliate of any Member or the occurrence of any other event that terminates the
continued membership of any Member shall not cause the Company to be dissolved
or its affairs to be wound up, and upon the occurrence of any such event, the
Company shall be continued without dissolution.

Section 16.02 Notice of Dissolution. Upon the dissolution of the Company, the
Management Committee shall promptly notify the Members of such dissolution.

Section 16.03 Liquidation Upon Dissolution.

(a) Upon dissolution of the Company, the Management Committee (in such capacity,
the “Liquidating Trustee”) shall carry out the winding up of the Company and
shall immediately commence to wind up such affairs; provided, however, that a
reasonable time shall be allowed for the orderly liquidation of the Assets and
the satisfaction of liabilities to creditors so as to enable the Members to
minimize the normal losses attendant upon a liquidation. The proceeds of
liquidation shall be applied first to payment of all expenses and debts of the
Company and setting up of such reserves as the Management Committee reasonably
deems necessary to wind up the Company’s affairs and to provide for any
contingent liabilities or obligations of the Company.

(b) The Company shall be liquidated in accordance with this Section 16.03(b)
upon dissolution of the Company after the Sandpiper Project In-Service Date:

 

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(i) Any remaining proceeds following the application of Section 16.03(a) shall
be distributed to the Members in accordance with their respective Capital
Account balances (and, in the case of current or former Non-Participatory Growth
Capital Projects for which Special Capital Accounts are then being maintained,
the Members’ respective Special Capital Account balances) after giving effect to
the allocations required by Section 6.02 and Section 6.03 and the allocations of
Net Profits and Net Losses pursuant to Section 16.03(b)(ii) and the allocations
of Special Net Profits and Special Net Losses pursuant to Section 16.03(b)(iii).

(ii) The Net Profits and Net Losses and other items of income, gain, loss and
deduction attributable to the Company shall be allocated between the Class A
Members so that, to the maximum extent possible, each Member’s Capital Account
balance equals the amount of cash that would be distributed to such Member if
liquidating distributions were made in accordance with Section 7.01(a).

(iii) The Special Net Profits and Special Net Losses and other items of income,
gain, loss and deduction arising incident to or from liquidation of any
Non-Participatory Growth Capital Project for which Special Capital Accounts are
then being maintained shall be allocated between the Members so that, to the
maximum extent possible, each Member’s Special Capital Account balance for each
Non-Participatory Growth Capital Project equals the amount of cash that would be
distributed to such Member if liquidating distributions with respect to the
related Non-Participatory Growth Capital Project were made in accordance with
Section 7.01(b).

(iv) The Members intend that Section 6.01(b) and this Section 16.01(b) be
interpreted, to the fullest extent permitted by applicable Law, so as to ensure
that (i) no proceeds arising from the disposition of any Non-Participatory
Growth Capital Project are used to satisfy the liabilities of any asset other
than the Non-Participatory Growth Capital Project, and (ii) no proceeds arising
from the disposition of any asset that is not a Non-Participatory Growth Capital
Project are used to satisfy the liabilities of any Non-Participatory Growth
Capital Project.

(c) The Company shall be liquidated in accordance with this Section 16.03(c)
upon dissolution of the Company prior to the Sandpiper Project In-Service Date:

(i) Any remaining proceeds following the application of Section 16.03(a) shall
be distributed to the Members in accordance with their respective Capital
Account balances (and, in the case of current or former Non-Participatory Growth
Capital Projects for which Special Capital Accounts are then being maintained,
the Members’ respective Special Capital Account balances) after giving effect to
the allocations required by Section 6.02 and Section 6.03 and the allocations of
Net Profits and Net Losses pursuant to Section 16.03(c)(ii) and
Section 16.03(c)(iii) and the allocations of Special Net Profits and Special Net
Losses pursuant to Section 16.03(c)(iv).

(ii) The Net Profits and Net Losses and other items of income, gain, loss and
deduction attributable to the Assets or Facilities of the Company other than the
Sandpiper Facilities arising incident to or from liquidation of the Company
shall be allocated between the Class A Members so that, to the maximum extent
possible, each Member’s Class A Sub Capital Account balance equals the amount of
cash that would be distributed to such Member if liquidating distributions with
respect to Assets or Facilities of the Company other than the Sandpiper
Facilities were made in accordance with Section 7.01(a).

 

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(iii) The Net Profits and Net Losses and other items of income, gain, loss and
deduction attributable to the Sandpiper Facilities arising incident to or from
liquidation of the Company shall be allocated between the Class B Members so
that, to the maximum extent possible, each Member’s Class B Sub Capital Account
balance equals the amount of cash that would be distributed to such Member if
liquidating distributions with respect to the Sandpiper Facilities were made in
accordance with the Members’ relative Class B Percentage Interests.

(iv) The Special Net Profits and Special Net Losses and other items of income,
gain, loss and deduction arising incident to or from liquidation of any
Non-Participatory Growth Capital Project for which Special Capital Accounts are
then being maintained shall be allocated between the Members so that, to the
maximum extent possible, each Member’s Special Capital Account balance for each
Non-Participatory Growth Capital Project equals the amount of cash that would be
distributed to such Member if liquidating distributions with respect to the
related Non-Participatory Growth Capital Project were made in accordance with
Section 7.01(b).

(v) The Members intend that Section 6.01(a) and this Section 16.01(c) be
interpreted, to the fullest extent permitted by applicable Law, so as to ensure
that (i) no proceeds arising from the disposition of any Non-Participatory
Growth Capital Project are used to satisfy the liabilities of any asset other
than the Non-Participatory Growth Capital Project, and (ii) no proceeds arising
from the disposition of any asset that is not a Non-Participatory Growth Capital
Project are used to satisfy the liabilities of any Non-Participatory Growth
Capital Project.

Section 16.04 Termination. The Company shall terminate when all of the Assets,
after payment of or due provision for all debts, liabilities and obligations of
the Company, shall have been distributed to the Members in the manner provided
for in this Article XVI and the Certificate shall have been canceled, or such
other documents required under the Act to be executed and filed with the
Secretary of State of the State of Delaware have been so executed and filed, in
the manner required by the Act.

Section 16.05 No Obligation to Restore Capital Accounts. In the event any Member
has a deficit balance in any of its Capital Accounts at the time of the
Company’s dissolution and following the application of Section 16.03(b)(ii),
Section 16.03(b)(iii), Section 16.03(c)(ii), Section 16.03(c)(iii) and
Section 16.03(c)(iv), it shall not be required to restore such account to a
positive balance or otherwise make any payments to the Company or its creditors
or other Third Parties in respect of such deficiency.

 

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Section 16.06 Liquidation of Sandpiper Facilities.

(a) If the Management Committee determines to terminate the Sandpiper Project
prior to the Sandpiper Project In-Service Date, subject to Section 16.06(b), the
Management Committee (in such capacity, the “Project Sandpiper Liquidating
Trustee”) shall effect the orderly liquidation of the Sandpiper Facilities and
the satisfaction of liabilities to creditors related to the Sandpiper Project so
as to enable the Class B Members to minimize the normal losses attendant upon a
liquidation. The proceeds of liquidation shall be applied first to payment of
all expenses and debts of the Company related to the Sandpiper Project and
setting up of such reserves as the Management Committee reasonably deems
necessary in connection with the termination of the Sandpiper Facilities and to
provide for any contingent liabilities or obligations of the Company in
connection therewith. Any remaining proceeds shall be distributed to the Class B
Members in accordance with their respective Class B Unit Sub Capital Account
balances after giving effect to the allocations required by Section 6.02 and
Section 6.03 and after allocating Net Profits and Net Losses and other items of
income, gain, loss and deduction attributable to the Sandpiper Facilities
arising incident to or from liquidation of the Sandpiper Facilities between the
Class B Members so that, to the maximum extent possible, each Member’s Class B
Sub Capital Account balance equals the amount of cash that would be distributed
to such Member if liquidating distributions with respect to the Sandpiper
Facilities were made in accordance with the Members’ relative Class B Percentage
Interests. Following the distribution of any such proceeds to the Class B
Members, the Class B Units shall be canceled for no additional consideration,
and the holders thereof shall cease to be Class B Members or to have any rights
or obligations under this Agreement (other than the right to receive their
respective portion of any reserves that the Management Committee determines to
distribute).

(b) Notwithstanding anything to the contrary in this Section 16.06, if the
Management Committee determines to terminate the Sandpiper Project prior to the
Sandpiper Project In-Service Date, Enbridge shall be entitled to cause the
Management Committee not to effect an orderly liquidation of the Sandpiper
Facilities and to instead cause the Company to purchase any and all Class B
Units then held by Williston or any of its Affiliates for an aggregate amount
equal to the amount Williston and such Affiliates would have received pursuant
to a liquidation effected pursuant to Section 16.06(a). Following any such
purchase, the Class B Units shall be canceled for no additional consideration,
and the holders thereof shall cease to be Class B Members or to have any rights
or obligations of Class B Members under this Agreement.

(c) The Members acknowledge that Marathon Shipper has certain obligations under
the Marathon TSA to reimburse the Company for a portion of the capital
expenditures incurred by the Company or by Enbridge or any of its Affiliates on
behalf of the Company in connection with the Sandpiper Project in the event the
Sandpiper Project is terminated prior to the Sandpiper Project In-Service Date
(any such reimbursement amount, the “Marathon Shipper Reimbursement Payment”).
Prior to the application of the procedures contemplated by Section 16.06(a) and
Section 16.06(b), the Company shall (A) allocate gross income to Enbridge and
Williston in an amount equal to the amount such party is to be distributed
pursuant to clause (B) of this Section 16.06(c) and (B) make a cash disbursement
(i) to Williston such portion of the Marathon Shipper Reimbursement Payment as
is equal to the aggregate amount of capital contributions made by Williston to
the Company hereunder in connection with the Sandpiper Project (or, if the
amount of such capital contributions exceeds the Marathon Shipper Reimbursement
Payment, the entire Marathon Shipper Reimbursement Payment) and (ii) to Enbridge
the amount (if any) by which the Marathon Shipper Reimbursement Payment exceeds
the aggregate amount of capital contributions made by Williston to the Company
hereunder in

 

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connection with the Sandpiper Project. Notwithstanding anything to the contrary
in this Section 16.06, any portion of the Marathon Shipper Reimbursement Payment
distributed to Enbridge pursuant to this Section 16.06(c) shall be treated, to
the maximum extent possible, as a reimbursement of capital expenditures incurred
by the Company, EP Bakken GP or EP Bakken LP, or by Enbridge (or any of its
Affiliates) on behalf of the Company, EP Bakken GP or EP Bakken LP, in respect
of the assets of the Company, EP Bakken GP or EP Bakken LP in the two years
prior to the Effective Date, in each case, in accordance with Treasury
Regulation Section 1.707-4(d).

Section 16.07 Distributions in Kind. If any Assets are to be distributed in
kind, such Assets shall be distributed to the Members as tenants-in-common in
the same proportions as such Members would have been entitled to cash
distributions if such Assets had been sold for cash by the Company at the Fair
Market Value of such Assets. Notwithstanding the foregoing, the Members shall
have the right to assign their interest to such in-kind distribution to any
Person.

ARTICLE XVII

MISCELLANEOUS PROVISIONS

Section 17.01 Notices. All notices provided for or permitted to be given
pursuant to this Agreement must be in writing and shall be given or served by
(a) depositing the same in the United States mail addressed to the party to be
notified, postpaid and certified with return receipt requested, (b) depositing
the same with a national overnight delivery service company that tracks
deliveries, addressed to the party to be notified, with all charges paid and
proof of receipt requested, (c) by delivering such notice in person to such
party, or (d) by facsimile or email transmission (with email delivery
confirmation). All notices are to be sent to or made at the addresses set forth
in Schedule III attached hereto. All notices given in accordance with this
Agreement shall be effective upon delivery at the address of the addressee. Each
Member shall have the right from time to time to change his, her or its address
by written notice to the other Member(s).

Section 17.02 Governing Law. This Agreement and the obligations of the Members
hereunder shall be construed and enforced in accordance with the Laws of the
State of Delaware, excluding any conflicts of law rule or principle that might
refer such construction to the laws of another state or country.

Section 17.03 Dispute Resolution. Claims and controversies arising out of or
relating to this Agreement shall be determined and resolved in accordance with
the following procedures:

(a) Any Claim arising out of or relating to this Agreement, including the
meaning of its provisions, or the proper performance of any of its terms, its
breach, termination or invalidity (each, a “Dispute”) shall be resolved in
accordance with the procedures specified in this Section 17.03, which until the
completion of the procedures set forth in Section 17.03(c) shall be the sole and
exclusive procedure for the resolution of any such Dispute, except that any
party, without prejudice to the following procedures, may file a complaint to
seek preliminary injunctive or other provisional judicial relief, if in its sole
judgment that action is necessary to avoid irreparable damage or to preserve the
status quo. Despite that action the parties shall continue to participate in
good faith in the procedures specified in this Section 17.03.

 

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(b) Any party wishing to initiate the dispute resolution procedures set forth in
this Section 17.03 with respect to a Dispute not resolved in the ordinary course
of business must give written notice of the Dispute to the other party (a
“Dispute Notice”). The Dispute Notice shall include (i) a statement of that
party’s position and a summary of arguments supporting that position, and
(ii) the name and title of the executive who will represent that party and of
any other Person who will accompany the executive in the negotiations under
Section 17.03(c).

(c) If any party has given a Dispute Notice under Section 17.03(b), the parties
shall attempt in good faith to resolve the Dispute within 30 days of the
delivery of the Dispute Notice (such period, the “Negotiation Period”) by
negotiations between executives who have authority to settle the Dispute and who
are at a Senior Vice President or higher level of management than the Persons
with direct responsibility for administration of this Agreement or the matter in
Dispute. Within 15 days after delivery of the Dispute Notice, the receiving
party shall submit to the other a written response. The response shall include
(i) a statement of that party’s position and a summary of arguments supporting
that position and (ii) the name and title of the executive who will represent
that party and of any other Person who will accompany the executive. During the
Negotiation Period, such executives of the parties shall meet at least weekly,
at a mutually acceptable time and place, and thereafter during the Negotiation
Period as more often as they reasonably deem necessary, to attempt to resolve
the Dispute.

(d) All applicable statutes of limitation and defenses based upon the passage of
time shall be tolled while the procedures specified in Section 17.03(c) are
pending. The parties shall take any action required to effectuate that tolling.
Each party is required to continue to perform its obligations under this
Agreement pending completion of the procedures set forth in Section 17.03(c),
unless to do so would be impossible or impracticable under the circumstances.

(e) Any Dispute that cannot be resolved during the Negotiation Period may, at
the option of any party hereto, be resolved and decided by the Federal or State
courts located in Harris County, Texas. The parties hereby irrevocably waive, to
the fullest extent permitted by applicable Law, any objection which they may now
or hereafter have to the laying of venue of any such Dispute brought in such
courts or any defense of inconvenient forum for the maintenance of such Dispute.
Each of the parties hereto agrees that a judgment in any such Dispute may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by Law. This consent to jurisdiction is being given solely for purposes
of this Agreement and is not intended to, and shall not, confer consent to
jurisdiction with respect to any other dispute in which a party to this
Agreement may become involved. Each of the parties hereto hereby consents to
process being served by any party to this Agreement in any suit, action,
proceeding or counterclaim of the nature specified in this subsection (e) by the
mailing of a copy thereof in the manner specified by the provisions of
Section 17.01. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY.

 

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Section 17.04 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY
KNOWINGLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT
WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR ANY
ANCILLARY AGREEMENT OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR
ENFORCEMENT THEREOF.

Section 17.05 Entire Agreement; Amendments. This Agreement and its Exhibits and
the Operating and Construction Management Agreement and the Transaction
Agreement and their attachments collectively constitute the entire agreement
among the Members relative to the governance of the Company and supersedes all
prior contracts or agreements with respect to the Company, including the
Original Agreement, whether oral or written. Subject to Section 8.01(c)(xv) and
Section 8.01(d), no amendment of this Agreement shall be valid or binding upon
the Members, nor shall any waiver of any term of this Agreement be effective,
unless such amendment or waiver is in writing and signed by Members holding a
total of 85% of the outstanding Class A Units.

Section 17.06 Confidentiality.

(a) Each Member agrees that this Agreement and the terms and conditions
contained herein and all proprietary, confidential or other non-public
information received from or otherwise relating to, the Company or its
Subsidiaries, the other Member, or any Third Party who has entrusted the Company
with confidential information with the expectation that such information will be
kept confidential, is confidential and that such Member shall not, and shall
cause its Affiliates and any Managers appointed by it or its Affiliates not to
(i) disclose or otherwise release such information to any other Person or
(ii) use such information for anything other than as necessary and appropriate
in carrying out the Business, in each case, without the prior consent of the
Company or, in the case of proprietary, confidential information about any
Member, without the prior consent of such Member; provided, however, that
nothing in this Agreement shall restrict any Member (or other Person referred to
above) from disclosing information (A) that is already publicly available
through no breach by such Member (or other Person referred to above), (B) that
was or becomes known to such Person other than as a result of disclosure by or
on behalf of the Company or any of its Subsidiaries or a party subject to
contractual, fiduciary or other disclosure obligations with respect to such
information or is independently developed by such Person without reference to
such information, (C) to the extent required by applicable Law or rule or
regulation of any Governmental Authority or stock exchange rules, (D) in
response to any summons or subpoena or discovery or similar request by or before
any court, arbitrator or Governmental Authority or pursuant to a request by a
regulatory authority having jurisdiction over the business of such Person;
provided that with respect to any disclosure pursuant to this clause (D), such
Member or other Person shall use reasonable best efforts to notify the Company
and the other Members in advance of such disclosure so as to permit the Company
and the other Members, as applicable, to seek a protective order or otherwise
contest such disclosure, and such Member or other Person shall use reasonable
best efforts to cooperate, at the expense of the Company, with the Company and
any Members in pursuing such protective order, or (E) to such Member’s (or its
Affiliates’) officers, managers, members, investors, employees, partners,
auditors, insurance broker or underwriters, counsel or other representatives, so
long as such Persons are informed of the confidential nature of such information
and the terms of this Section 17.06 or are subject to an equivalent
confidentiality obligation to such Member. The obligations of the parties
hereunder do not preclude any Member from disclosing information to its
beneficial owners or representatives or as it may reasonably deem to be
appropriate in connection with financial reporting.

 

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(b) Notwithstanding the provisions of Section 17.06(a), the Enbridge Group shall
have the right to require the Company to cooperate fully with potential
acquirors in such prospective transactions by taking all customary and other
actions reasonably requested, including making the Company’s properties, books
and records, and other assets reasonably available for inspection by such
potential acquirors, establishing a physical or electronic data room including
materials customarily made available to potential acquirors in connection with
such processes and making its employees reasonably available for presentations,
interviews and other diligence activities, in each case subject to reasonable
and customary confidentiality provisions. The Company shall provide assistance
with respect to these actions as reasonably requested.

(c) Notwithstanding the provisions of Section 17.06(a), the Enbridge Group shall
have the right to provide proprietary, confidential or other non-public
information it has received from the Company in its capacity as a Member to any
proposed Transferee in accordance with this Agreement if (i) prior written
notice is provided to the Management Committee of such Transfer to such proposed
Transferee, and (ii) such proposed Transferee has executed a confidentiality
agreement in form and substance reasonably satisfactory to the Management
Committee.

Section 17.07 Termination.

(a) Notwithstanding anything to the contrary herein, if (i) the Company (acting
by Management Committee Approval) determines not to proceed with the Open Season
or (ii) the Company does not execute the Marathon TSA following the end of the
Open Season, in each case following a determination by the Company (acting by
Management Committee Approval) not to proceed with the Sandpiper Project, then
Williston shall have the right (in its sole discretion), and from and after the
one year anniversary of such determination, Enbridge shall also have the right
(in its sole discretion), to cause the Company to repurchase all of the Class B
Units then held by Williston and any of its Transferees for an aggregate
purchase price equal to the aggregate capital contributions made to the Company
by Williston, and following such repurchase Williston and such Transferees shall
cease to be Class B Members and shall thereafter have no further rights or
obligations under this Agreement.

(b) Notwithstanding anything to the contrary herein, if Marathon Shipper does
not execute the Marathon TSA at the time contemplated by the Precedent
Agreement, Enbridge shall have the right (in its sole discretion) to (i) cause a
liquidation pursuant to Section 16.06 or (ii) cause the Company to repurchase
all of the Class B Units then held by Williston and any of its Transferees for
an aggregate purchase price equal to the aggregate amount Williston and such
Transferees would receive if the Company were to effect a liquidation pursuant
to Section 16.06, and following such repurchase Williston and such Transferees
shall cease to be Class B Members and shall thereafter have no further rights or
obligations under this Agreement.

 

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(c) Notwithstanding anything to the contrary herein, if (i) the Company executes
the Marathon TSA following the completion of the Open Season but allocates to
Marathon Shipper less than the volumes contemplated by the Marathon TSA as
executed by Marathon Shipper or (ii) the Company amends the terms of the
Marathon TSA and Marathon Shipper does not execute such amended form of Marathon
TSA at the time contemplated by the Precedent Agreement for the volumes
contemplated by the initial form of the Marathon TSA, Williston shall have the
right (in its sole discretion) to cause the Company to repurchase all of the
Class B Units then held by Williston and any of its Transferees for an aggregate
purchase price equal to the aggregate capital contributions made to the Company
by Williston, and following such repurchase Williston and such Transferees shall
cease to be Class B Members and shall thereafter have no further rights or
obligations under this Agreement.

(d) Notwithstanding anything to the contrary herein, if the Company terminates
the Marathon TSA pursuant to Section 4.01(a), Section 4.01(b) or Section 4.01(c)
thereof, (i) Williston shall have the right (in its sole discretion) to cause a
liquidation pursuant to Section 16.06 and (ii) from and after the one year
anniversary of such termination of the Marathon TSA, Enbridge shall have the
right (in its sole discretion) to cause a liquidation pursuant to Section 16.06.

(e) Notwithstanding anything to the contrary herein, if Marathon Shipper
terminates the Marathon TSA pursuant to Section 4.02(a), Section 4.02(b) or
Section 7.03.3 thereof, (i) each of Enbridge and Williston shall have the right
(in its sole discretion) to cause the Company to repurchase all of the Class B
Units then held by Williston and any of its Transferees for an aggregate
purchase price equal to the aggregate amount Williston and such Transferees
would receive if the Company were to effect a liquidation pursuant to
Section 16.06, and following such repurchase Williston and such Transferees
shall cease to be Class B Members and shall thereafter have no further rights or
obligations under this Agreement, and (ii) Enbridge shall have the right (in its
sole discretion) to cause a liquidation pursuant to Section 16.06.

Section 17.08 Sandpiper Project Spend Profile. Enbridge has provided to
Williston a projected spend profile for the Sandpiper Project (the “Sandpiper
Project Spend Profile”), which is attached hereto as Exhibit F. Such spend
profile sets forth projections of the estimated quarterly capital expenditures
to be made by the Company in respect of the Sandpiper Project. The Company shall
issue Call Notices under Section 5.02(b) for capital contributions in respect of
the Sandpiper Project quarterly in advance (except as may be reasonably required
in connection with the development of the Sandpiper Project, in which case the
Company shall issue such Call Notices when so required). Subject to
Section 8.01(c)(xxvi), Enbridge may amend the Sandpiper Project Spend Profile to
the extent reasonably necessary to permit the Company to satisfy, in a timely
fashion, the obligations of the Company with respect to the Sandpiper Project.

Section 17.09 Management Committee Deadlocks; Negotiations; Buyout Right.

(a) Management Committee Deadlocks. From and after the Sandpiper Project
In-Service Date, if the Management Committee reaches an impasse on resolving a
decision presented to the Management Committee for approval, then any Manager
who determines that such dispute is of such significance and magnitude that it
requires additional extraordinary measures to resolve, by written notice to the
other Managers given within three Business Days after the initial vote on such
matter or proposal (or, if such matter or proposal is proposed to be

 

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approved by written consent in lieu of a meeting of the Management Committee,
after it is reasonably evident that such written consent will not receive such
required approval), may call a meeting of the Management Committee to reconsider
such matter or proposal, such meeting to be held when, where and as reasonably
specified in said notice, but not less than three Business Days nor more than
seven Business Days after the date of such notice. If such meeting is called and
held as herein provided and the matter or proposal is offered at such meeting
again and (i) does not receive the required approval of the Management Committee
for such matter or proposal or (ii) a quorum is not present at such meeting,
then any Manager may within three Business Days thereafter submit the matter to
executive negotiations in accordance with Section 17.04(b).

(b) Executive Negotiations. If, at the meeting contemplated in Section 17.09(b),
the Managers in good faith are unable to agree on a course of action to address
the reason for the meeting, any Manager may declare an impasse (“Impasse”) by
giving written notice to the other Managers (an “Impasse Notice”). Within five
Business Days after receipt of such Impasse Notice, an executive of each Member
(or a parent Affiliate of such Member) who has the authority to settle the
Impasse and who is at a Senior Vice President or higher level of management of
such Member (or such parent Affiliate) shall enter into good faith discussions
to reach an agreement that will end the Impasse. If a decision is not made by
common accord that ends the Impasse within 30 days after the date that such
executives begin such discussions, then any Manager may declare an impasse of
such executives (a “Senior Vice President Impasse”) by giving written notice to
the other Managers (a “Senior Vice President Impasse Notice”). Within five
Business Days after receipt of such Senior Vice President Impasse Notice, an
executive of each Member (or a parent Affiliate of such Member) who has the
authority to settle the Senior Vice President Impasse and who is at an Executive
Vice President or higher level of management of such Member (or such parent
Affiliate) shall enter into good faith discussions to reach an agreement that
will end the Senior Vice President Impasse. If a decision is not made by common
accord that ends the Senior Vice President Impasse within 30 days after the date
that such executives begin such discussions, then any Manager may declare an
impasse of such executives (an “Executive Vice President Impasse”) by giving
written notice to the other Managers (an “Executive Vice President Impasse
Notice”). Within five Business Days after receipt of such Executive Vice
President Impasse Notice, the Chief Executive Officer of each Member (or the
ultimate parent of such Member) shall enter into good faith discussions to reach
an agreement that will end the Executive Vice President Impasse. If a decision
is not made by common accord that ends the Executive Vice President Impasse
within 30 days after the date that such executives begin such discussions, then
any Manager may declare an impasse of such executives (a “Chief Executive
Officer Impasse”) by giving written notice to the other Managers (a “Chief
Executive Officer Impasse Notice”), and the Chief Executive Officer Impasse
shall be submitted to non-binding mediation in accordance with Section 17.09(c).

(c) Non-Binding Mediation. Within 20 Business Days of receipt by the Managers of
a Chief Executive Officer Impasse Notice (the “Mediation Date”), the Members
shall submit the Chief Executive Officer Impasse to non-binding mediation, using
any mediator upon which the Members mutually agree, provided that any such
mediator must be qualified by his or her education, training and experience in
the crude oil pipeline industry. If the Members are unable to mutually agree
upon a mediator within 10 Business Days following the receipt of the Chief
Executive Officer Impasse Notice, the Chief Executive Officer Impasse shall be

 

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referred to the Houston, Texas office of the American Arbitration Association
(“AAA”) for mediation, provided that any mediator of the AAA assigned to mediate
the matter giving rise to the Chief Executive Officer Impasse must be qualified
by his or her education, training and experience in the crude oil pipeline
industry. The mediation shall be conducted in accordance with the Commercial
Arbitration Rules and the Mediation Procedures of the AAA, with such changes
thereto as may be agreed upon by the Members prior to such mediation. The cost
of the mediator will be borne equally by the Members. If such mediation does not
result in the resolution of the Chief Executive Officer Impasse within 60 days
following the submission thereof to mediation (the “Mediation Drop Dead Date”),
each Member will be entitled to exercise the rights set forth in
Section 17.09(d).

(d) Buyout Right.

(i) Following completion of the procedures set forth in Sections 17.09(a)
through (c), either Member may elect, by delivering written notice (a “Buyout
Notice”) to the other Member within 30 Business Days of the Mediation Drop Dead
Date, to purchase all, but not less than all, of such other Member’s Units (the
“Subject Units”) for an amount equal to the fair market value of the Company as
determined in accordance with the provisions of this Section 17.09(d) (the
“Deadlock Fair Market Value”) multiplied by 1.30 and multiplied further by the
Class A Percentage Interest represented by the Subject Units (the “Buyout
Purchase Price”); provided, however, that if both Members have provided a Buyout
Notice in accordance with the foregoing, then the provision of Section 17.09(e)
shall apply.

(ii) The Deadlock Fair Market Value of any Subject Units shall be determined in
accordance with the following procedure. The Buyout Notice will identify a
nationally recognized investment banking firm retained by the proposed
purchasing member, which firm will be experienced in the valuation of companies
operating in the business of crude oil pipelines and facilities similar in
nature and scope to that operated by the Company (the “Buyer Appraiser”). On or
before the 10th day following receipt by the other Member of the Buyout Notice,
the receiving Member will notify the other Member of the nationally recognized
investment banking firm experienced in the valuation of companies operating in
the business of crude oil pipelines and facilities similar in nature and scope
to that operated by the Company that it has retained (the “Seller Appraiser”).
Within 10 days of the selling Member’s selection of the Seller Appraiser, the
Buyer Appraiser and the Seller Appraiser will select a third, independent,
nationally recognized investment banking firm experienced in the valuation of
companies operating in the business of crude oil pipelines and facilities
similar in nature and scope to that operated by the Company (the “Independent
Appraiser”) If the Independent Appraiser so chosen shall resign or otherwise
fail or become unable to serve as independent appraiser, a replacement
Independent Appraiser shall be chosen by the Buyer Appraiser and the Seller
Appraiser in the same manner. The cost of the Independent Appraiser will be
borne equally by the Members, and each Member will otherwise bear the cost of
the appraiser selected by it. The Company shall, and shall instruct the Operator
to, provide the Independent Appraiser with all information and data reasonably
necessary to make a determination of Deadlock Fair Market Value of the Company,
subject to a customary confidentiality agreement. The Independent Appraiser
shall report to the Members its determination of the Deadlock Fair Market Value
of the Company within 30 days after appointment, and such determination shall be
final and binding on both Members, absent manifest error.

 

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(iii) Within 30 days of the Independent Appraiser’s determination of the
Deadlock Fair Market Value, provided that the Chief Executive Officer Impasse
has not otherwise been resolved by the Members prior to such determination, the
Member that delivered the Buyout Notice (the “Purchasing Member”) shall be
required to deliver the Buyout Purchase Price for the Subject Units to the other
Member (the “Selling Member”) in exchange for the Subject Units. Unless
otherwise agreed to by the Members, the Buyout Purchase Price for the Subject
Units shall be payable only in cash, by wire transfer of immediately available
funds. The Selling Member shall not be required to provide any representations,
warranties or indemnities in connection with such sale of the Subject Units,
other than customary (including with respect to qualifications) representations,
warranties and indemnities concerning (1) the Selling Member’s valid title to
and ownership of the Subject Units, free of all liens, claims and encumbrances
(excluding those arising under applicable securities laws), (2) the Selling
Member’s authority, power and right to enter into and consummate such sale of
the Subject Units, (3) the absence of any violation, default or acceleration of
any agreement to which the Selling Member is subject or by which its assets are
bound as a result of such sale of the Subject Units, and (4) the absence of, or
compliance with, any governmental or third party consents, approvals, filings or
notifications required to be obtained or made by the Selling Member in
connection with such sale of the Subject Units. Upon delivery of the Buyout
Purchase Price, the Company shall, without the consent of any other Person,
revise the Member Schedule to reflect the purchase of the Subject Units by the
Purchasing Member.

(e) Topping Procedure.

(i) In the event both Members have provided Buyout Notices within the time frame
required by Section 17.04(d)(i), then within 45 Business Days following the
Mediation Drop Dead Date each Member will simultaneously provide to the other
Member a written notice stating the purchase price (the “Initial Offer Price”)
at which it would purchase all, but not less than all, of the other Member’s
Subject Units (a “Buyout Offer”); provided that any such Initial Offer Price
must equal or exceed the Deadlock Fair Market Value of such Subject Units
multiplied by 1.30. The Member who received the Buyout Offer with the highest
Initial Offer Price on a per Unit basis will have 30 days from receipt of such
Buyout Offer to either (A) accept the Buyout Offer, or (B) acquire the Subject
Units of the offering Member at the same per Unit price as set forth in the
offering Member’s Buyout Offer (the “Topping Unit Price”). The failure of the
receiving Member to respond within the specified time frame will be deemed to
automatically constitute an acceptance of the Buyout Offer. The purchase price
(the “Topping Purchase Price”) to be paid by the Member (the “Topping Purchasing
Member”) that acquires the Subject Units of the other Member (the “Topping
Selling Member”) shall be equal to the Topping Unit Price multiplied by the
number of Subject Units then held by the Topping Selling Member.

 

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(ii) Within 30 days of the receiving Member’s determination (or deemed
determination) to accept the Buyout Offer or to acquire the Subject Units in
accordance with Section 17.09(e)(ii), the Topping Purchasing Member shall be
required to deliver the Topping Purchase Price for the Subject Units to the
Topping Selling Member in exchange for the Subject Units. Unless otherwise
agreed to by the Members, the Topping Purchase Price for the Subject Units shall
be payable only in cash, by wire transfer of immediately available funds. The
Topping Selling Member shall not be required to provide any representations,
warranties or indemnities in connection with such sale of the Subject Units,
other than customary (including with respect to qualifications) representations,
warranties and indemnities concerning (1) the Topping Selling Member’s valid
title to and ownership of the Subject Units, free of all liens, claims and
encumbrances (excluding those arising under applicable securities laws), (2) the
Topping Selling Member’s authority, power and right to enter into and consummate
such sale of the Subject Units, (3) the absence of any violation, default or
acceleration of any agreement to which the Topping Selling Member is subject or
by which its assets are bound as a result of such sale of the Subject Units, and
(4) the absence of, or compliance with, any governmental or third party
consents, approvals, filings or notifications required to be obtained or made by
the Topping Selling Member in connection with such sale of the Subject Units.
Upon delivery of the Topping Purchase Price, the Company shall, without the
consent of any other Person, revise the Member Schedule to reflect the purchase
of the Subject Units by the Topping Purchasing Member.

Section 17.10 Waiver. No consent or waiver, express or implied, by any Member of
any breach or default by any other Member in the performance by the other Member
of his, her or its obligations hereunder shall be deemed or construed to be a
consent or waiver to or of any other breach or default in the performance by
such other Member of the same or any other obligation hereunder. Failure on the
part of any Member to complain of any act or to declare any other Member in
default, regardless of how long such failure continues, shall not constitute a
waiver of rights hereunder.

Section 17.11 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstances shall be invalid or
unenforceable to any extent, and such invalidity or unenforceability does not
destroy the basis of the bargain between the parties, then the remainder of this
Agreement and the application of such provisions to other Persons or
circumstances shall not be affected thereby and shall be enforced to the
greatest extent permitted by Law.

Section 17.12 Ownership of Property and Right of Partition. A Unit in the
Company shall be personal property for all purposes. No Member shall have any
right to partition the property owned by the Company.

Section 17.13 Successors and Assigns. Except as otherwise specifically provided
herein, this Agreement shall be binding upon and inure to the benefit of the
Members and their respective permitted successors and assigns.

 

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Section 17.14 Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.

Section 17.15 Parties in Interest. This Agreement shall be binding solely upon,
be enforceable solely by, and inure solely to the benefit of, each Member and
his, her or its permitted successors, assigns, and Transferees, and nothing in
this Agreement (express or implied) is intended to confer upon any other Person
any rights or remedies of any nature whatsoever under or by reason of this
Agreement; provided, however, that Member Indemnitors are express third party
beneficiaries of the terms of Section 10.07, and Member Covered Persons and
Covered Persons are express third party beneficiaries of Article X and
Article XI.

Section 17.16 Specific Performance. Each Member agrees that the other Members
would be damaged irreparably and would have no adequate remedy at law in the
event any of the provisions of this Agreement are not performed in accordance
with their specific terms or are otherwise breached. Accordingly, each Member
shall be entitled to seek an injunction or injunctions to prevent breaches of
this Agreement by the other Members and to enforce specifically this Agreement
and the terms and provisions hereof, this being in addition to any other
remedies to which such Member is entitled at law or in equity, without proof of
actual damages or any obligation to post any bond or other security as a
prerequisite to obtaining equitable relief. Each Member agrees not to dispute or
resist any such application for relief on the basis that another Member has an
adequate remedy at law or that damage arising from such non-performance or
breach is not irreparable.

Section 17.17 Publicity. The Company shall not make any press release, public
announcement or other public communication (including an internet posting, web
blog or other electronic publication) that (a) makes reference to the Company,
this Agreement or the transactions contemplated herein without prior Management
Committee Approval or (b) makes reference to any Member or Managers designated
by such Member without prior written approval of such Member.

Section 17.18 Certain Expenses. Except as otherwise specified in this Agreement
or the Operating and Construction Management Agreement, each Member shall pay
its own costs and expenses incurred in connection with the execution and
delivery of this Agreement and any agreements related hereto that are executed
and delivered on the date hereof.

Section 17.19 Counterparts. This Agreement may be executed in any number of
counterparts (including by facsimile or .pdf attachment containing the
applicable signature(s)) with the same effect as if all signing parties had
signed the same document. All counterparts shall be construed together and
constitute the same instrument.

[SIGNATURE PAGES FOLLOW]

 

89

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned has entered into this Agreement as of the
date first written above.

 

MEMBERS: ENBRIDGE ENERGY PARTNERS, L.P. By:   Enbridge Energy Company, Inc.,  
its general partner By:   /s/ Mark Maki   Name: Mark Maki   Title: President
WILLISTON BASIN PIPE LINE LLC By:   /s/ Garry L. Peiffer   Name: Garry L.
Peiffer   Title:   Executive Vice President of               Corporate Planning
and Investor &               Government Relations

SIGNATURE PAGE

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

OF

NORTH DAKOTA PIPELINE COMPANY LLC

 

--------------------------------------------------------------------------------

EXHIBIT A

CALL NOTICE

[See Attached]

 

EXHIBIT A

--------------------------------------------------------------------------------

EXHIBIT A

FORM OF CALL NOTICE

NORTH DAKOTA PIPELINE COMPANY LLC

CALL NOTICE

Reference is made to the Amended and Restated Limited Liability Company
Agreement (as amended, supplemented and restated from time to time, the “LLC
Agreement”) of North Dakota Pipeline Company LLC (the “Company”), dated as of
[            ], 20[    ]. Terms used in this Call Notice and not otherwise
defined herein shall have the respective meanings set forth in the LLC
Agreement. Pursuant to Section 5.02[    ] of the LLC Agreement, the Company
hereby requests that Members make capital contributions to the Company as
follows:

 

1. Aggregate Amount of Capital Call: $                

 

2. Date funds are required to be received by the Company (the “Due Date”):
            , 20    

 

3.      Use of Proceeds:  

 

    

 

    

 

    

 

 

4. Capital contribution of each Member:

 

Member

   Capital Contribution  

Enbridge Energy Partners, L.P.

   $ [                 ] 

Williston Basin Pipe Line LLC

   $ [                 ] 

 

5. Number and class of Units to be issued to each Member in return for capital
contribution:

 

Member

  

Units Issued

Enbridge Energy Partners, L.P.

   [    ] Class [A] [B] Units

Williston Basin Pipe Line LLC

   [    ] Class [A] [B] Units

 

6. Instructions for Wire Transfer:                                          
       

[Signature page follows.]

 

NORTH DAKOTA PIPELINE COMPANY LLC

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

EXHIBIT A

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned has executed this Call Notice on behalf of
the Company on this             day of             , 20    .

 

NORTH DAKOTA PIPELINE COMPANY LLC By:  

 

  Name:  

 

  Title:  

 

 

NORTH DAKOTA PIPELINE COMPANY LLC

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

EXHIBIT A

--------------------------------------------------------------------------------

EXHIBIT B

OPERATING AND

CONSTRUCTION MANAGEMENT AGREEMENT

[See Attached]

 

EXHIBIT B

--------------------------------------------------------------------------------

Execution Version

OPERATING AND CONSTRUCTION MANAGEMENT AGREEMENT

BETWEEN

NORTH DAKOTA PIPELINE COMPANY LLC

AND

ENBRIDGE (U.S.) INC.

Dated November 25, 2013

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

 

         Page  

1.0

 

Definitions; Interpretation

     1   

1.1

 

Definitions

     1   

1.2

 

References and Rules of Construction

     6   

2.0

 

Operator

     6   

2.1

 

Operator Identified

     6   

2.2

 

Term

     6   

2.3

 

Resignation or Removal of Operator

     6   

3.0

 

Duties of Operator

     7   

3.1

 

Independent Contractor

     7   

3.2

 

No Agency

     7   

3.3

 

Services

     7   

3.4

 

Limitation of Authority

     10   

3.5

 

Warranty

     11   

4.0

 

Schedule of Charges

     11   

4.1

 

Management Fee and Construction G&A Fee

     11   

4.2

 

Direct Expenses

     12   

4.3

 

Adjustments to Fees and Expenses

     12   

5.0

 

Budgets

     13   

5.1

 

Preparation and Approval of the Budget

     13   

5.2

 

Preparation and Approval of Budget Amendments

     13   

5.3

 

Authority for Extra Budget Expenditures

     13   

5.4

 

Payment of Costs

     13   

6.0

 

Emergencies; Ownership of Assets

     14   

6.1

 

Emergencies

     14   

6.2

 

Ownership of Subject Facilities, Land Rights and Materials

     14   

6.3

 

Proprietary Rights

     14   

7.0

 

Accounting; Reports

     16   

7.1

 

Maintenance of Accounts; Statements

     16   

7.2

 

Banking

     16   

7.3

 

Owner Funds

     16   

7.4

 

Disbursements to Members

     16   

7.5

 

Audits

     16   

 

i

--------------------------------------------------------------------------------

7.6

 

Government Reports

     17   

7.7

 

Maintenance of and Access to Records

     17   

7.8

 

Periodic Reports and Statements

     17   

8.0

 

Force Majeure

     18   

8.1

 

Procedure

     18   

8.2

 

Definition

     18   

8.3

 

Strikes

     18   

8.4

 

Duty to Mitigate

     18   

9.0

 

Insurance

     18   

9.1

 

Insurance

     18   

9.2

 

Premiums, Deductibles, etc

     19   

10.0

 

Claims

     19   

10.1

 

Claims

     19   

10.2

 

Mutual Release and Indemnification

     19   

11.0

 

Confidential Information; Publicity

     22   

11.1

 

Confidential Information

     22   

11.2

 

Publicity

     24   

12.0

 

General Provisions

     24   

12.1

 

Notices

     24   

12.2

 

Governing Law

     25   

12.3

 

Waiver of Jury Trial

     25   

12.4

 

Dispute Resolution

     25   

12.5

 

Entirety of Agreement

     26   

12.6

 

Captions or Headings

     27   

12.7

 

Assignment

     27   

12.8

 

Duplicate Originals

     27   

12.9

 

No Third Party Beneficiary

     27   

12.10

 

Severability

     27   

12.11

 

Waiver

     27   

12.12

 

Successors and Assigns

     27   

12.13

 

Exhibits

     27   

12.14

 

Joint Efforts

     27   

12.15

 

Counterparts

     27   

Exhibits

 

Exhibit A

  Insurance

Exhibit B

  Initial Budget

 

ii

--------------------------------------------------------------------------------

OPERATING AND CONSTRUCTION MANAGEMENT AGREEMENT

This OPERATING AND CONSTRUCTION MANAGEMENT AGREEMENT (as the same may be amended
from time to time in accordance herewith, this “Agreement”) by and between North
Dakota Pipeline Company LLC, a Delaware limited liability company (“Owner”), and
Enbridge (U.S.) Inc., a Delaware corporation (“Operator”), is made and entered
into as of November 25, 2013 (“Effective Date”). Owner and Operator may be
referred to herein collectively as the “Parties” or each, individually, as a
“Party.”

RECITALS

WHEREAS, Enbridge Energy Partners L.P. (“EEP”) and Williston entered into that
certain Amended and Restated Limited Liability Company Agreement of Owner, dated
as of even date herewith (such agreement, as it may be amended, modified or
supplemented from time to time, the “LLC Agreement”), to govern the management,
ownership and operation of Owner and its assets;

WHEREAS, Owner intends to plan, design, develop and construct the Sandpiper
Facilities and all other Facilities; and

WHEREAS, Owner desires to retain the services of Operator to Manage the Design,
Procurement and Construction of, and to operate and maintain the Facilities, and
to provide certain other services related to the Facilities, in each case, on
the terms and conditions set forth in this Agreement.

NOW, THEREFORE, for and in consideration of the foregoing, the mutual covenants
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Parties, the Parties hereby
agree as follows:

AGREEMENT

 

1.0 Definitions; Interpretation.

1.1 Definitions. The following terms, as used in this Agreement, shall have the
following meanings.

“Affiliate” has the meaning set forth in the LLC Agreement.

“Agreement” has the meaning set forth in the Preamble.

“Audit Period” has the meaning set forth in Section 7.5.2.

“Available Cash” has the meaning set forth in the LLC Agreement.

“Bankrupt” means, with respect to any Person, (a) the filing by such Person of a
voluntary petition seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under the U.S. Bankruptcy Code (or
corresponding provisions of future Laws) or any other insolvency Law, or a
Person’s filing an answer consenting to or acquiescing in any such petition,
(b) the making by such Person of any assignment for the benefit of its creditors
or the admission by a Person of its inability to pay its debts as they mature or
(c) the expiration of sixty (60) days after the filing of an involuntary
petition under the U.S. Bankruptcy Code (or corresponding provisions of future
Laws) seeking an application for the appointment of a receiver for the assets of
such Person, or an involuntary petition seeking liquidation, reorganization,
arrangement or readjustment of its debts under any other

--------------------------------------------------------------------------------

insolvency Law, unless the same shall have been vacated, set aside or stayed
within such sixty (60) day period.

“Budget” means (a) for the remainder of calendar year 2013 and each of the
calendar year 2014, 2015 and 2016, the budget attached hereto as Exhibit B,
which covers all forecasted operating costs, capital expenditures for
maintenance that Operator reasonably anticipates to be made or incurred by or on
behalf of Owner during such periods and the then-applicable Non-Growth Integrity
Project Budget, (b) in each other calendar year during the term of this
Agreement, a budget provided by Operator to Owner (and which is approved by the
Management Committee) that reasonably covers all forecasted operating costs and
expenditures, capital expenditures in connection with maintenance and Long Term
Response Expenditures (if any) that Operator reasonably anticipates to be made
or incurred by or on behalf of Owner during the applicable calendar year and the
then-applicable Non-Growth Integrity Project Budget, (c) any then applicable
budgets (which have been approved by the Management Committee or otherwise
deemed approved under the terms of the LLC Agreement) with respect to any
Participatory Growth Capital Project or Non-Participatory Growth Capital Project
and (d) all forecasted capital costs and expenditures that Operator reasonably
anticipates to be made or incurred in connection with its performance of the
Services with respect to the Sandpiper Facilities prior to the Sandpiper Project
In-Service Date, including the Sandpiper Project Spend Profile; provided, that
in each of the cases of clauses (a), (b) and (c), the Budget shall include the
amount of any permitted variance thereto pursuant to Section 5.3.

“Budget Amendment” has the meaning set forth in Section 5.2.

“Business” has the meaning set forth in the LLC Agreement.

“Business Day” means a day (other than a Saturday or Sunday) on which commercial
banks in Texas and Calgary, Alberta, Canada are generally open for business.

“Capital Account” has the meaning set forth in the LLC Agreement.

“Cash Reserves” has the meaning set forth in the LLC Agreement.

“Claim” has the meaning set forth in the LLC Agreement.

“Claim Notice” has the meaning set forth in Section 10.2.6(a).

“Confidential Information” has the meaning set forth in Section 11.1.1.

“Construction” and its derivatives mean, with respect to any facility or
project, all activities relating to the construction thereof.

“Construction G&A Fee” has the meaning set forth in Section 4.1.2.

“Contract” has the meaning set forth in the LLC Agreement.

“Default Budget” has the meaning set forth in Section 5.1.

“Design” and its derivatives mean, with respect to any facility or project, all
activities relating to the engineering and design thereof.

“Dispute” has the meaning set forth in Section 12.4.1.

 

2

--------------------------------------------------------------------------------

“Dispute Notice” has the meaning set forth in Section 12.4.2.

“EEP” has the meaning set forth in the Recitals.

“Effective Date” has the meaning set forth in the Preamble.

“Emergency” has the meaning set forth in Section 6.1.

“Emergency Expenditures” has the meaning set forth in Section 6.1.

“Owner” has the meaning set forth in the Preamble.

“Owner Improvements” has the meaning set forth in Section 6.3.2.

“Owner Indemnitees” means Owner and its Affiliates (other than Operator) and
their respective partners, members, directors, officers, managers, employees,
contractors, agents and other representatives.

“Owner Intellectual Property” has the meaning set forth in Section 6.3.1.

“Facilities” has the meaning set forth in the LLC Agreement.

“FERC” means the U.S. Federal Energy Regulatory Commission.

“Force Majeure” has the meaning set forth in Section 8.2.

“GAAP” means U.S. Generally Accepted Accounting Principles as consistently
applied.

“Governmental Authority” has the meaning set forth in the LLC Agreement.

“Growth Capital Project” has the meaning set forth in the LLC Agreement.

“Indemnified Party” has the meaning set forth in Section 10.2.6.

“Indemnifying Party” has the meaning set forth in Section 10.2.6.

“Initial Call Amount” has the meaning set forth in Section 5.4.2.

“Intellectual Property” means patents and copyrights, whether registered or not,
and rights in confidential information and know-how and equivalent rights
(including, in all cases, applications and rights to apply therefor) arising
anywhere in the world.

“Interstate Commerce Act” means the version of the Interstate Commerce Act under
which FERC regulates oil pipelines, 49 U.S.C. app. §§ 1, et seq. (1988), and the
regulations promulgated by the FERC thereunder.

“Land Rights” has the meaning set forth in Section 3.3.7(a).

“Law” has the meaning set forth in the LLC Agreement.

“Liabilities” has the meaning set forth in the LLC Agreement.

 

3

--------------------------------------------------------------------------------

“Liability Claim” has the meaning set forth in Section 10.1.1.

“Licensed Intellectual Property” has the meaning set forth in Section 11.1.3.

“Lien” means, with respect to any property or asset, any mortgage, deed of
trust, lien, pledge, charge, claim, security interest, restrictive covenant or
easement or encumbrance of any kind in respect of such asset, whether or not
filed, recorded or otherwise perfected under applicable Law, as well as the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such property or asset.

“LLC Agreement” has the meaning set forth in the Recitals.

“Long Term Response Expenditures” has the meaning set forth in the LLC
Agreement.

“Manage” or “Management” and their respective derivatives mean, with respect to
any facility or project, the management and administration of the Design,
Procurement and Construction of such facility or project through the in-service
date thereof.

“Management Account” has the meaning set forth in Section 7.2.

“Management Committee” has the meaning set forth in the LLC Agreement.

“Management Fee” has the meaning set forth in Section 4.1.1.

“Member” has the meaning set forth in the LLC Agreement.

“Negotiation Period” has the meaning set forth in Section 12.4.3.

“Non-Growth Integrity Project” has the meaning set forth in the LLC Agreement.

“Non-Growth Integrity Project Budget” has the meaning set forth in the LLC
Agreement.

“Non-Participatory Growth Capital Project” has the meaning set forth in the LLC
Agreement.

“Operator” has the meaning set forth in the Preamble.

“Operator Improvements” has the meaning set forth in Section 6.3.2.

“Operator Indemnitees” has the meaning set forth in Section 10.2.1.

“Operator Intellectual Property” has the meaning set forth in Section 6.3.1.

“Participatory Growth Capital Project” has the meaning set forth in the LLC
Agreement.

“Parties” and “Party” has the meaning set forth in the Preamble.

“Person” has the meaning set forth in the LLC Agreement.

 

4

--------------------------------------------------------------------------------

“Procurement” and its derivatives mean all activities relating to the
procurement and handling of all services, materials, equipment and construction
equipment necessary for any Design and Construction of the Facilities.

“Quarterly Estimate” has the meaning set forth in Section 5.4.

“Recommended Activity” has the meaning set forth in Section 10.2.4.

“Records” has the meaning set forth in Section 6.3.5.

“Recovery Claim” has the meaning set forth in Section 10.1.2.

“Related Contracts” means two (2) or more Contracts between each of Owner (or
Operator on behalf of Owner), on one hand, and one (1) or more Third Parties
that are Affiliates of each other, on the other hand, that address, in form and
substance, generally the same aspect of the Business or subject matter and that
are entered into on or near the same date.

“Sandpiper Facilities” has the meaning set forth in the LLC Agreement.

“Sandpiper Project In-Service Date” has the meaning set forth in the LLC
Agreement.

“Sandpiper Project Spend Profile” has the meaning set forth in the LLC
Agreement.

“Services” means all the services to be performed by Operator and all duties of
Operator, in each case, pursuant to or as otherwise set forth in this Agreement,
including the Management, Design, Procurement, and Construction of the
Facilities, and the operation, upkeep, repair and/or maintenance thereof.

“Shortfall Estimate” has the meaning set forth in Section 5.4.1.

“Special Available Cash” has the meaning set forth in the LLC Agreement.

“Special Capital Account” has the meaning set forth in the LLC Agreement.

“Standard of Care” means that, in its performance of the Services, Operator acts
in a good and workmanlike manner, in accordance with: (a) reasonable, customary
and prudent construction management and operating practices in the pipeline
industry for operations of a similar size and nature to Owner; and (b) all
applicable Law and any other applicable rules and requirements of Governmental
Authorities; provided, that in no event shall Operator be obligated to comply
with the foregoing if such compliance would result in a breach by Operator of
applicable Law.

“Subcontractor” means any Third Party engaged by Operator to provide services or
materials related to (or in place of) the services to be provided by Operator
pursuant to this Agreement.

“Super-Majority Management Committee Approval” has the meaning set forth in the
LLC Agreement.

“Third Party” means any Person that is not a Party or a Member or an Affiliate
of a Party or a Member.

“Third-Party Claim” has the meaning set forth in Section 10.2.6(b).

 

5

--------------------------------------------------------------------------------

“Units” has the meaning set forth in the LLC Agreement.

“Williston” means Williston Basin Pipe Line LLC, a Delaware limited liability
company.

“Williston Manager” has the meaning set forth in the LLC Agreement.

1.2 References and Rules of Construction. All references in this Agreement to
Exhibits, Articles, Sections, subsections and other subdivisions refer to the
corresponding Exhibits, Articles, Sections, subsections and other subdivisions
of or to this Agreement unless expressly provided otherwise. Titles appearing at
the beginning of any Articles, Sections, subsections or other subdivisions of
this Agreement are for convenience only, do not constitute any part of this
Agreement and shall be disregarded in construing the language or meaning of this
Agreement. The words “this Agreement,” “herein,” “hereby,” “hereunder” and
“hereof,” and words of similar import, refer to this Agreement as a whole and
not to any particular Article, Section, subsection or other subdivision unless
expressly so limited. The words “this Article,” “this Section” and “this
subsection,” and words of similar import, refer only to the Article, Section or
subsection hereof in which such words occur. The word “including” (in its
various forms) means “including without limitation.” All references to “$” or
“dollars” shall be deemed references to United States Dollars. Each accounting
term not defined herein will have the meaning given to it under GAAP. Pronouns
in masculine, feminine or neuter genders shall be construed to state and include
any other gender, and words, terms and titles (including terms defined herein)
in the singular form shall be construed to include the plural and vice versa,
unless the context otherwise requires. Exhibits referred to herein are attached
hereto. References to any Law or agreement shall mean such Law or agreement as
it may be amended from time to time. Whenever any action must be taken hereunder
on or by a day that is not a Business Day, then such action may be validly taken
on or by the next day that is a Business Day.

 

2.0 Operator.

2.1 Operator Identified. Subject to the terms of this Agreement, Operator is
hereby retained to perform, or cause to be performed, the Services.

2.2 Term. The term of this Agreement begins on the Effective Date and ends upon
the earliest to occur of: (a) the termination of the LLC Agreement, (b) the
written consent of the Parties, (c) the permanent abandonment or shutdown of the
Facilities and the completion of the Services of Operator in connection
therewith or (d) the date that the resignation or removal of Operator pursuant
to Section 2.3 becomes effective in accordance with the provisions of
Section 2.3.3.

2.3 Resignation or Removal of Operator.

 

  2.3.1 Optional Resignation. Operator may resign at any time by sending written
notice to Owner.

 

  2.3.2 Removal of Operator. Operator shall be removed upon the occurrence of
any of the following:

 

  (a) Operator becomes insolvent or Bankrupt;

 

  (b) Operator dissolves, liquidates or terminates its existence;

 

  (c)

(i) Operator breaches the Standard of Care or any material obligation under the
Agreement; (ii) such breach causes or is reasonably likely to cause material
harm

 

6

--------------------------------------------------------------------------------

  (as defined below); (iii) Owner provides Operator written notice of such
breach within a reasonable time after Owner becomes aware of such breach; and
(iv) such breach has not been cured within sixty (60) days after receipt by
Operator of a breach notice, provided that if such breach is not reasonably
capable of being cured within a sixty (60) day period, Operator shall not be
subject to removal if Operator expeditiously commences to cure such breach
following its receipt of a breach notice and continues to diligently proceed
with such cure within such longer period of time as shall be reasonably
necessary to cure such breach; provided, that for the purposes of this
Section 2.3.2(c), “material harm” means loss or damage to Owner in excess of
$50,000,000 that is directly caused by Operator’s breach;

 

  (d) Operator and its Affiliates cease to own any Units; or

 

  (e) Operator assigns or purports to assign its right or ability to conduct the
Services without prior written consent of Owner.

 

  2.3.3 Effectiveness of Resignation or Removal. Notwithstanding anything to the
contrary set forth herein, the resignation or removal of Operator pursuant to
the foregoing provisions of this Section 2.3(c) shall not become effective, and
Operator shall not be relieved of its duties as Operator under this Agreement
until the earlier of (a) the date that is ninety (90) days after the date of the
delivery of the notice of removal or resignation (or, in the case of removal,
such earlier date as is specified in the notice of removal), as applicable, and
(b) the date that Operator’s successor has been appointed by Owner and has
entered into an agreement with Owner pursuant to which it has agreed to perform
all of the duties, responsibilities and obligations of Operator set forth in
this Agreement.

 

  2.3.4 Dispute. Any dispute regarding this Section shall be addressed pursuant
to the terms of Section 12.4 (Dispute Resolution) and Operator shall not be
removed until it has finally been determined that the conditions to the removal
of Operator under Section 2.3.2 were met.

 

3.0 Duties of Operator.

3.1 Independent Contractor. In the performance of any Services by or through
Operator for Owner pursuant to this Agreement, Operator conclusively shall be
deemed an independent contractor, with the right and authority to direct and
control all services and other work being performed by the employees of Operator
and its Affiliates and all Subcontractors. Owner shall have no right or
authority to supervise or give instructions to any such Persons and such Persons
at all times shall be under the direct and sole supervision and control of
Operator. It is the understanding and intention of the Parties that no
relationship of master and servant or principal and agent shall exist between
Owner, on the one hand, and the employees, agents or representatives of Operator
or its Affiliates, on the other hand.

3.2 No Agency. Except as expressly set forth herein, nothing in this Agreement
shall be deemed or construed to authorize Operator to act as an agent,
principal, servant or employee for Owner for any purpose whatsoever and, except
as expressly permitted by this Agreement, Operator shall not hold itself out as
an agent, principal, servant or employee of Owner to any Person.

3.3 Services. From and after the Effective Date, Operator shall perform the
Services for the sole benefit of (and on behalf of) Owner and at all times in
accordance with the Standard of Care and in good faith. Owner hereby delegates
to Operator and authorizes Operator to, and Operator shall, perform

 

7

--------------------------------------------------------------------------------

each of the Services set forth in this Section 3.3 in accordance with the
Standard of Care, subject to the limitations set forth in Section 3.4 or
otherwise contained in this Agreement.

 

  3.3.1 General. Operator shall perform any and all acts and things necessary,
requisite or proper for (a) the efficient and safe Management, Design,
Procurement, and Construction of (i) the Sandpiper Facilities as described on
Schedule II to the LLC Agreement and (ii) any other Facilities contemplated in
the Budget and (b) the operation, maintenance, upkeep and repair of the
Facilities, including, in each case, entering into (or causing Owner to enter
into) any Contract with respect to the Sandpiper Facilities and all of the other
Facilities or the Business or incurring any expense authorized in an approved
Budget or as otherwise permitted hereunder. In addition, Owner hereby authorizes
Operator to do and perform any and all acts and responsibilities delegated to
Operator in the LLC Agreement.

 

  3.3.2 Administration of Business. Operator shall administer the Business and
all other related and ancillary affairs of the Owner, including the regulatory,
financial, accounting and tax affairs of Owner, maintaining the financial, tax
and accounting records of Owner and preparing and distributing financial
statements, notices and reports (including reports to Governmental Authorities)
in accordance with Sections 7.1, 7.2, 7.3, 7.4, 7.6, 7.7 and 7.8 of this
Agreement and as otherwise required pursuant to the LLC Agreement.

 

  3.3.3 Purchase and Sale of Materials and Supplies; Entry into Contracts.
Operator shall (or shall cause Owner to) (a) purchase or cause to be purchased
all necessary materials and supplies, (b) incur (or cause to be incurred) all
such expenses and (c) enter into (or cause to be entered into) such Contracts,
in each case, as may be necessary in connection with the Design, Procurement,
Construction, operation and/or maintenance of the Facilities and/or the
performance of the Services. Operator may sell or dispose of materials and
equipment that are no longer required in connection with all or any portion of
the Facilities.

 

  3.3.4 Personnel. Operator and/or its Affiliate(s) shall employ such personnel
as Operator (and/or its Affiliate(s)) may deem reasonably necessary or
beneficial with respect to (or in connection with its performance of) the
Services. Also, Operator may utilize its or any of its Affiliates’ other
employees to provide all or any portion of the Services. Operator shall employ
reasonable efforts to maintain the number of personnel performing services for
Owner at the optimum level and to keep them organized in a manner which will
afford cost effective and efficient day-to-day operation of the Business.
Operator shall ensure that all such personnel expenses incurred in connection
with its obligations under this Agreement are paid, including compensation,
salary, wages, overhead and administrative expenses incurred by Operator and its
Affiliates and if applicable, social security, taxes, workers compensation
insurance, benefits and other such expenses. Notwithstanding anything to the
contrary in the provisions of Section 10.2, Operator shall indemnify and save
harmless Owner from all claims of liability for wages, salary, taxes or benefits
in respect of Operator’s personnel; provided that, for the avoidance of doubt,
the Operator shall be entitled to charge such wages, salary, taxes or benefits
to Owner to the extent permitted by this Agreement.

 

  3.3.5

Payment of Expenses. In addition to its other payment and reimbursement
obligations set forth in this Agreement and the LLC Agreement, Owner shall be
responsible for payment of Operator’s fees and expenses as set out in this
Agreement. To the extent of available funds in the Management Account, Operator
shall pay and discharge all costs

 

8

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  and expenses on a timely basis. Notwithstanding anything herein to the
contrary, in no event shall Operator be liable in connection with the
performance of its services hereunder or otherwise in breach of this Agreement
if Operator fails, or is otherwise unable, to perform any of such services or
its other obligations hereunder due to the failure of Owner to pay when due any
amounts payable hereunder by Owner.

 

  3.3.6 Liens. Notwithstanding anything to the contrary in Section 10.2,
Operator shall protect and defend Owner, the Facilities and the other assets of
the Business (including rights of way related to the Facilities) from any Liens
arising by, through or under Operator, Operator’s Affiliates, and its and their
respective representatives, contractors or subcontractors of any level, agents
or employees. Operator shall not have any liability to (and shall not be
obligated to release, indemnify or hold harmless) Owner (and each Owner
Indemnitee) for any Claims and/or Liabilities suffered by Owner (or such Owner
Indemnitee) as a result of any Liens (other than Liens that arise in the
ordinary course of carrying out the Services or that are approved by
Super-Majority Management Committee Approval pursuant to the LLC Agreement)
being placed on the Facilities or the other assets of the Business (including
rights of way related to the Facilities) except to the extent (and only to the
extent) that such Liens arise as a result of the Operator failing to comply with
the Standard of Care. Notwithstanding the foregoing, Operator shall have no
liability with respect to any Lien that arises as the result of a failure by
Owner to satisfy its obligations to Operator under this Agreement.

 

  3.3.7 Land Rights.

 

  (a) Except for any route (or portions of any route) for the Facilities which
Operator has already surveyed or has determined not to survey as of the
Effective Date, Operator shall survey the routes for all Facilities with respect
to which development and construction begins after the Effective Date and, to
the fullest extent permitted by applicable Law, acquire all necessary rights of
way, easements, leases, fee titles, permits, surveys and other interests in land
required for the Construction, operation and maintenance of the Facilities
(“Land Rights”).

 

  (b) Owner shall, and shall cause the Members to, use its commercially
reasonable efforts to provide Operator with any information in Owner’s or the
Members’ possession that would be useful to Operator in connection with the
surveying of the routes for the Facilities or the acquisition of Land Rights.

 

  (c) In the acquisition of Land Rights, Operator shall enter into good faith
negotiations with each applicable property owner. Condemnation shall be used to
acquire Land Rights whenever, in Operator’s reasonable discretion, the necessary
Land Rights cannot reasonably and economically be obtained voluntarily, and
Operator shall initiate condemnation proceedings with the appropriate
Governmental Authority and prosecute the same to conclusion in Owner’s name to
the fullest extent allowed by applicable Law.

 

  (d) Owner shall bear the entire cost of obtaining or enforcing such Land
Rights, whether by voluntary conveyance, condemnation or other civil proceedings
(and whether by judgment or settlement).

 

9

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  3.3.8 Common Carrier Operations. Operator shall provide transportation
services on the applicable Facilities on behalf of Owner in conformity with
applicable tariffs and Law applicable to crude oil pipeline common carriers
under the Interstate Commerce Act and other Law.

 

  3.3.9 Tariffs; Measurements; Receipts and Deliveries of Crude Oil;
Connections.

 

  (a) Tariffs. Operator shall file all tariffs and/or changes to established
tariffs (under which tenders of crude oil are transported through the applicable
Facilities) that are required to be filed in connection with the Owner’s
Business with the applicable Governmental Authorities.

 

  (b) Measurements, Receipts and Deliveries of Crude Oil. Operator shall
ascertain and record the quantity and quality of crude oil received into and out
of the Facilities in accordance with all Law.

 

  (c) Connections to Pipeline. Connections (if any) to the Facilities shall be
made by Operator in accordance with all Law.

 

  3.3.10 Workplace Safety.

 

  (a) During the term of this Agreement, Operator shall comply with its then
existing business-wide safety rules.

 

  (b) For all Services performed on any pipeline Facility that includes an
operations or maintenance task that affects the operation or integrity of the
pipeline per the definitions set forth in DOT regulations 49 CFR Subparts 192 or
195, Operator shall furnish “qualified individuals” as defined in such
regulation to perform such tasks. To the extent that Operator elects to use
subcontractors, Operator shall ensure that each subcontractor provides
“qualified individuals” to perform such tasks.

 

  3.3.11 Environmental, Health and Safety Reporting. Operator will prepare and
furnish to Owner a report describing any accidents and environmental incidents
experienced (other than those constituting an Emergency) within thirty (30) days
of such occurrence. During the term of this Agreement, Operator shall comply
with its then existing, business-wide emergency response plan.

3.4 Limitation of Authority. Except in the case of Emergencies, but otherwise
notwithstanding anything in this Agreement to the contrary, Operator shall
obtain the prior written consent of Owner prior to taking any of the following
actions:

 

  3.4.1 any action that would require prior Super-Majority Management Committee
Approval or the consent of a Williston Manager, in each case, pursuant to the
LLC Agreement if such action were proposed to be taken by (or on behalf of)
Owner thereunder;

 

  3.4.2 except with respect to powers of attorney granted for the Procurement of
Land Rights, the granting of powers of attorney with respect to the Management,
Design, Procurement, Construction, operation, maintenance and/or ownership of
the Facilities;

 

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  3.4.3 except to the extent contemplated in the then current Budget, the
entering into, amendment or termination of (a) any Contract or series of Related
Contracts to lower, adjust or relocate a pipeline and/or any pipeline facilities
which are part of the Facilities if the contracting party is not obligated to
pay or reimburse Owner for the entire cost incurred and the non-reimbursable
portion of such costs exceeds Five Million Dollars ($5,000,000) or (b) any
Contract or series of Related Contracts relating to Land Rights that commits
Owner to incur expenses, in the aggregate, of more than Five Million Dollars
($5,000,000) in any calendar year; or

 

  3.4.4 Incur any expense not included in the then applicable Budget for which
reimbursement from Owner would be sought, except for any Emergency Expenditure
or (b) as otherwise expressly set forth in this Agreement or authorized pursuant
to the LLC Agreement.

 

  3.5 Warranty.

 

  3.5.1 Operator warrants that it is experienced in the Services to be
undertaken on behalf of Owner, possess the skills and financial and technical
resources to complete the Services, has the authority to fulfill its obligations
under this Agreement, and will perform the Services at all times in accordance
with the Standard of Care.

 

  3.5.2 Operator may subcontract any part of the Services; provided, however,
that notwithstanding any subcontract entered into by Operator for all or any
part of the Services, Operator shall not be relieved of or released from any of
its obligations or responsibilities under this Agreement. For the purposes of
this Agreement, Services performed by subcontractors shall be deemed to be
Services performed by Operator.

 

  3.5.3 Notwithstanding anything to the contrary set forth in this Agreement,
Operator agrees that any Contracts entered into by Operator with any
Subcontractor for the provision (by such Subcontractor) of services and/or
materials that Operator is obligated to provide pursuant to this Agreement shall
(a) be at an arm’s length basis and shall be competitive in terms of pricing and
other material terms, (b) contain customary indemnity and insurance provisions
that are consistent with the indemnity and insurance provisions set forth herein
(or that are otherwise approved in writing by Owner) and (c) contain customary
warranty provisions and audit rights that are enforceable by Owner (either
directly or as a third party beneficiary) and that are consistent with Owner’s
policies with respect thereto. Without limiting the foregoing and
notwithstanding anything to the contrary set forth herein, Operator shall be
liable to (and shall release, indemnify and hold harmless) Owner (and each Owner
Indemnitee) for any Claims and/or Liabilities suffered by Owner (or such Owner
Indemnitee) to the extent such Claims and/or Liabilities arose out of or in
connection with or attributable or incidental to (i) any actual fraud of any
Subcontractor or (ii) the gross negligence or willful misconduct of any
Subcontractor.

 

4.0 Schedule of Charges.

 

  4.1 Management Fee and Construction G&A Fee.

 

  4.1.1

Management Fee. Commencing on the Effective Date, Owner will pay Operator an
annual fee of Two Million Dollars ($2,000,000) (the “Management Fee”), as the
same may be adjusted pursuant to this Section 4.1.1. The Management Fee will be
prorated during the calendar year in which the Effective Date occurs and will be
increased

 

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  (a) annually (effective on the first (1st) day of each applicable calendar
year after calendar year 2014) by an amount equal to three percent (3%) of the
immediately preceding calendar year’s Management Fee and (b) at any time, by an
amount reasonably proposed by Operator in good faith to reflect (i) additional
Services required on account of any additional Facilities that are placed
in-service, acquired or otherwise procured and (ii) to the extent agreed to by
Owner pursuant to the terms of the LLC Agreement, the actual costs of all
general and administrative Services provided by Operator and overhead costs
incurred by Operator, in each case, in performing the Services (other than
Design, Construction and Procurement) as Operator hereunder. Owner will pay
Operator the annual Management Fee on a monthly basis, in twelve (12) equal
installments, by depositing each installment in the Management Account by the
fifth (5th) day of each calendar month.

 

  4.1.2 Construction G&A Fee. In addition to the foregoing, until the Sandpiper
Project In-Service Date, and during any other period in which any Growth Capital
Project is being Designed and Constructed (and materials Procured in connection
therewith), which period shall end on the date that the Facilities in connection
with such Growth Capital Project is put into service, Owner will pay Operator a
monthly fee equal to one half of one percent (0.5%) of the total amount of all
capital costs and capitalized expenses incurred by Operator in the immediately
preceding calendar month (the “Construction G&A Fee”) with respect to such
Facilities. The Construction G&A Fee shall be increased by an amount reasonably
proposed by Operator and agreed to by Owner (pursuant to the terms of the LLC
Agreement) to reflect the actual costs of all general and administrative
services provided by Operator and overhead costs incurred by Operator, in each
case, in performing the Design, Construction and Procurement services as
Operator hereunder. Owner will pay Operator the Construction G&A Fee by
depositing each installment in the Management Account by the fifth (5th) day of
each calendar month (starting on the fifth (5th) day of the calendar month
following the calendar month in which the Effective Date occurs).
Notwithstanding the foregoing, Owner and Operator acknowledge and agree that the
Construction G&A Fee shall not be applied to any maintenance capital
expenditures or any expenses in connection with any Non-Growth Integrity
Project.

4.2 Direct Expenses. In addition to paying Operator the Management Fee and, if
applicable, the Construction G&A Fee, Owner shall reimburse Operator for all of
the costs and expenses incurred by it in providing the Services, including
(a) for any direct operating and any other out-of-pocket costs and expenses
incurred by it on behalf of Owner (including, for the avoidance of doubt, for
the fully burdened costs and expenses of any employees of Operator who provide
services to (or on behalf of) Owner), (b) for the portion of the fully burdened
costs and expenses (as reasonably allocated by Operator) of any other employees
of Operator who provide services to (or on behalf of) Owner and (c) for any
other costs and expenses required to be reimbursed to Operator by Owner pursuant
to this Agreement.

4.3 Adjustments to Fees and Expenses. Notwithstanding anything to the contrary
herein and except with respect to reimbursements for Emergency Expenditures,
payments and reimbursements to Operator for its costs and expenses pursuant to
this Agreement (including, for the avoidance of doubt, this Article 4) shall
only be made to the extent such costs and expenses are included in the then
applicable Budget. Notwithstanding the foregoing, Operator shall not be entitled
to reimbursement for any costs and expenditures to the extent that the
circumstance giving rise to such costs and expenditures resulted from Operator’s
gross negligence or willful misconduct.

 

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5.0 Budgets.

5.1 Preparation and Approval of the Budget. Starting in calendar year 2016,
Operator shall prepare and present to Owner on or before November 15th the
Budget for the next succeeding calendar year (other than any Non-Participatory
Growth Capital Project Budget or Participatory Growth Capital Project Budget).
Owner shall have thirty (30) days from the date Operator submits such Budget to
approve or reject such Budget in whole or in part. With respect to any part of
any such Budget that is rejected, Operator shall then have thirty (30) days to
resubmit such Budget, or portion thereof, for approval, and, if Operator elects
to resubmit such Budget, or portion thereof, Owner shall have fifteen (15) days
to approve or reject such resubmitted Budget, or portion thereof. Until the
Parties reach agreement with respect to the Budget, the Budget to be used by
Operator and deemed approved by Owner shall include (a) with respect to the
undisputed items of the Budget, the amounts set forth therein for such
undisputed item, (b) with respect to the disputed items of the Budget, amounts
included in the immediately preceding calendar year’s Budget (adjusted upward by
an amount equal to three percent (3%)) plus to the extent any disputed items
were not included in the immediately preceding calendar year’s Budget, an amount
with respect to such items that Operator believes (in its reasonable discretion)
to be necessary or appropriate to meet Owner’s legally binding commitments and
obligations that were entered into pursuant to the terms hereof or to conduct
and maintain Owner’s operations and properties (including the Facilities) in
accordance with the Standard of Care, (c) amounts that Operator believes (in its
reasonable discretion) to be necessary or appropriate with respect to any Long
Term Response Expenditures and (d) any Non-Participatory Growth Capital Project
Budgets, Participatory Growth Capital Project Budgets and any Non-Growth
Integrity Project then in effect (such items, collectively the “Default
Budget”). The Default Budget shall be in effect only until such time as a new
Budget is approved by Owner.

5.2 Preparation and Approval of Budget Amendments. At any time, Operator may
propose amendments to a Budget by presenting a written budget amendment for
approval by Owner (each, a “Budget Amendment”). Owner shall have fifteen
(15) days from the date Operator submits a Budget Amendment to approve or reject
such Budget Amendment in whole or in part. Any part of any Budget Amendment
which is rejected shall either be deleted or resubmitted at the direction of
Owner. Operator shall then have thirty (30) days to resubmit (if it so elects)
any Budget Amendment for approval. Owner shall have fifteen (15) days from the
date Operator resubmits any such Budget Amendment for approval to approve or
reject such re-submitted Budget Amendment.

5.3 Authority for Extra Budget Expenditures. During any calendar year, Operator
shall have the right and authority with respect to such calendar year’s approved
Budget (as such Budget may be amended by any approved Budget Amendment), to make
expenditures up to one hundred and fifteen percent (115%) of (i) all operating
costs and expenditures and maintenance capital expenditures and (ii) any
line-item with respect to Long Term Response Expenditures. Operator and Owner
agree that with respect to any Non-Participatory Growth Capital Project or
Participatory Growth Capital Project, the permitted variance, as determined in
accordance with the LLC Agreement, shall apply in lieu of the one hundred and
fifteen percent (115%) variance in the preceding sentence.

5.4 Payment of Costs. At least forty (40) days prior to each applicable calendar
quarter beginning after the Effective Date, Operator shall notify Owner and
shall prepare and deliver to Owner, a notice of the estimated amount of
expenditures projected to be incurred in such calendar quarter pursuant to the
then applicable Budget (or otherwise pursuant to the LLC Agreement or this
Agreement, including, for the avoidance of doubt, in connection with any
Emergency plus a reasonable contingency amount (the “Quarterly Estimate”). Owner
shall cause the Quarterly Estimate to be deposited in the Management Account on
or before the first (1st) day of the applicable calendar quarter pursuant to the
terms of the LLC Agreement.

 

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  5.4.1 Shortfall Estimates. If Operator reasonably believes that the deposits
made pursuant to Section 5.4 will be insufficient to satisfy the projected costs
and expenses to be incurred during the then current calendar quarter pursuant to
the then applicable Budget (or otherwise pursuant to the LLC Agreement or this
Agreement, including for the avoidance of doubt, in connection with any
Emergency), then Operator shall prepare and deliver to Owner, a notice of the
estimated amount of the shortfall for such calendar quarter (the “Shortfall
Estimate”). Owner shall cause the Shortfall Estimate to be deposited in the
Management Account within Fifteen (15) Business Days of the day Owner received
notice thereof from Operator pursuant to the terms of the LLC Agreement.

 

  5.4.2 Initial Call Notices. On the Effective Date, Operator shall notify Owner
and shall prepare and deliver to Owner a notice of the estimated amount of
expenditures projected to be incurred for the remainder of the then current
calendar quarter pursuant to the then applicable Budget (or otherwise pursuant
to the LLC Agreement or this Agreement, including, for the avoidance of doubt,
in connection with any Emergency) plus a reasonable contingency amount (the
“Initial Call Amount”). Owner shall cause the Initial Call Amount to be
deposited in the Management Account within fifteen (15) Business Days of the day
Owner received notice thereof from Operator pursuant to the terms of the LLC
Agreement.

 

6.0 Emergencies; Ownership of Assets.

6.1 Emergencies. In the event of an Emergency, Operator shall promptly (a) make
all notifications required under applicable Law to the appropriate Governmental
Authorities, (b) implement Emergency response and mitigation measures as are
required by applicable Law or are deemed advisable by Operator to respond to or
mitigate the Emergency, including to protect human health and the environment,
(c) commence any required remediation, maintenance or repair work necessary for
the Facilities and/or Owner to comply with all applicable Law and (d) notify
Owner, as soon as practicable after the occurrence of the event of such
Emergency. Operator’s notification of Owner may be made by any method deemed
appropriate by Operator under the circumstances and does not have to comply with
Section 12.1. Owner shall reimburse Operator for any costs and/or expenses
incurred by Operator in connection with any Emergency (any such costs and
expenditures, “Emergency Expenditures”), within fifteen (15) days of its receipt
of an invoice therefor. For purposes of this Agreement, an “Emergency” shall be
defined as a sudden or unexpected event which causes, or risks causing,
(i) substantial damage to any of the Facilities or the property of a Third
Party, (ii) death of or injury to any Person, (iii) damage or substantial risk
of damage to natural resources (including wildlife) or the environment,
(iv) safety concerns associated with continued operations, (v) imminent failure
or unplanned shutdown of the Facilities or (vi) non-compliance with any
applicable Law, in each case, which event is of such a nature that a response
cannot reasonably await the decision of Owner. For the avoidance of doubt, an
“Emergency” shall include any release or threatened release of hazardous
substances into the environment that requires notification to any Governmental
Authority under applicable Law.

6.2 Ownership of Subject Facilities, Land Rights and Materials. The Facilities
(including all Land Rights and materials acquired by Operator pursuant to this
Agreement) shall, at all times, be owned by Owner. Operator shall purchase all
materials to be incorporated into the Facilities on behalf of Owner, and title
to such materials shall immediately vest in Owner.

6.3 Proprietary Rights.

 

  6.3.1

Operator shall retain all rights to its pre-existing Intellectual Property and
to any Operator Improvements (collectively, “Operator Intellectual Property”).
Owner shall retain all

 

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  rights to its pre-existing Intellectual Property, any Owner Improvements, and
any design, construction, operation or maintenance Records of the Facilities
(collectively, “Owner Intellectual Property”).

 

  6.3.2 With respect to all Intellectual Property conceived, reduced to
practice, authored, developed or created by Operator (including its employees,
agents or representatives) or any Subcontractor under this Agreement or in
connection with the carrying out (or otherwise in the furtherance) of the
Services, to the extent such Intellectual Property (a) relates to or is an
improvement to Operator’s pre-existing Intellectual Property (“Operator
Improvements”), then Operator shall own all right, title, and interest in and to
such Operator Improvements; and (b) exclusively relates to and is an improvement
to the Owner’s pre-existing Intellectual Property (“Owner Improvements”), then
Owner shall own all right, title, and interest in and to such Owner
Improvements.

 

  6.3.3 Owner hereby grants to Operator an irrevocable, perpetual, royalty-free,
paid up, transferable (solely to the extent that such a transfer is to a third
party of the rights and obligations of Operator under this Agreement)
non-exclusive license to use at any time the Owner Intellectual Property solely
to carry out the Services. All rights not expressly granted to Operator in this
Section 6.3.3 are reserved by Owner.

 

  6.3.4 Operator hereby grants to Owner (but not to any member of Owner) and any
assignee or transferee of all or substantially all of the Facilities (including
a member of Owner if such member is the assignee or transferee) a non-exclusive,
royalty-free, paid up license to use (including the right to sub-license to any
future operator of the Facilities or other party providing Management, Design,
Procurement or Construction services to the Facilities but no other Person) at
any time, for the sole and exclusive purpose of the Management, Design,
Procurement, Construction, operation, maintenance, upkeep, repair, alteration,
expansion and shut-down of the Facilities, all Operator Intellectual Property
utilized by Operator during the provision of Services (i) without which it would
not be possible or commercially reasonable to operate, maintain and manage the
Facilities in the manner in which they were designed or constructed and (ii) for
which there is no replacement Intellectual Property that is available in the
market on a commercially reasonable basis or that is otherwise held by or
available to any Person that is reasonably qualified to provide the Services.
All rights not expressly granted to Owner in this Section 6.3.4 are reserved by
Operator.

 

  6.3.5 All tangible and digital copies of the plans, drawings, flow diagrams,
equipment specifications, operating manuals, printouts, computer data or other
records, regardless of form (hereinafter collectively referred to as “Records”),
prepared or authored by Operator or any Subcontractor under this Agreement or in
connection with the carrying out (or otherwise in the furtherance) of the
Services, shall be, as between Operator and Owner, the sole and exclusive
property of Owner; provided that Operator will own all right, title and interest
in and to any portion of the operating manuals of the Facilities which are
common to other facilities of the Operator, which portions, however, shall
expressly be part of the Operator Intellectual Property that is licensed to
Owner pursuant to Section 6.3.4. Owner shall provide Operator with copies of the
Records to the extent (and only to the extent) necessary to give effect to the
license granted to Operator pursuant to Section 6.3.3.

 

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  6.3.6 Operator agrees to use commercially reasonable efforts to cause any
Contract entered into by Operator with any Subcontractor for the provision (by
such Subcontractor) of services that Operator is obligated to provide pursuant
to this Agreement to include provisions that provide for the ownership by Owner
of any Intellectual Property developed under such Contract; provided, that
Operator will have non-exclusive, royalty-free, paid-up license to use
(including the right to sub-license) any such Intellectual Property.

 

7.0 Accounting; Reports.

7.1 Maintenance of Accounts; Statements. Operator shall maintain true and
accurate accounts of all expenses, disbursements, costs and liabilities
chargeable to Owner pursuant to this Agreement, and all revenue accrued and
invoiced, all of which shall be charged or credited to Owner, all in accordance
with GAAP and in accordance with the Uniform System of Accounts (including any
subsequent modifications or revisions thereof) prescribed for oil pipeline
companies by the FERC, its successors or by any other Governmental Authority
having regulatory jurisdiction over Owner or the Facilities, consistently
applied, and Operator shall also maintain the Capital Accounts (and Special
Capital Accounts, if applicable) for each Member. Operator shall maintain such
books of account at its principal place of business and such books of account
shall be open to inspection and examination at reasonable times by Owner. If
necessary, Operator may request from Owner any information necessary for
Operator to fulfill its duties pursuant to this Section 7.1. Operator shall
prepare, or caused to be prepared, and shall submit to Owner the statements,
reports and notices specified in the LLC Agreement within the periods
established in the LLC Agreement.

7.2 Banking. Operator will establish, in Owner’s name and under Owner’s control,
a bank account or accounts (the “Management Account”). Owner will designate
Operator, and such Persons as reasonably requested by Operator, as authorized
signatories to the Management Account, and all withdrawals by Operator from the
Management Account will be made only by Operator or such designated Persons. All
funds of Owner will be used solely for the Business, and all interest and other
benefits pertaining to such account belong to Owner. At no time may Operator
commingle the funds in the Management Account with Operator’s funds or the funds
of any other Person, and such funds may not be subject to the Liens or Claims of
any kind in favor of Operator or its creditors.

7.3 Owner Funds. Operator shall keep funds belonging to Owner on deposit in the
Management Account and, at Owner’s direction, invest such funds. All interest
paid on such funds shall be for the account of Owner.

7.4 Disbursements to Members. Operator shall, within ten (10) days after the end
of each calendar quarter, provide written notice to Owner of its determination
of Available Cash and Special Available Cash, including information as to cash
position, anticipated cash receipts and disbursements and Cash Reserves. If
necessary, Operator may request from Owner any information necessary for
Operator to fulfill its duties pursuant to this Section 7.4.

7.5 Audits.

 

  7.5.1 Owner shall have the right to audit costs charged to Owner’s accounts
and other accounting records maintained for Owner by Operator under this
Agreement.

 

  7.5.2

Upon not less than sixty (60) days’ prior written notice to Operator, Owner
shall have the right (which right may not be exercised more than once in any
twelve (12) calendar month period or more than once with respect to any costs
and expenses incurred in any calendar year) to audit (or cause to be audited)
Operator’s books and records for any

 

16

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  calendar year within the twenty-four (24) calendar month period immediately
preceding the date of such notice (such twenty-four (24) calendar month period,
the “Audit Period”). Owner must provide Operator a written notice of any claims
for all discrepancies disclosed by said audit and related to the Audit Period.
The cost of each such audit shall be borne by Owner. Any such audit shall be
conducted in a manner reasonably designed to result in a minimum of
inconvenience and disruption to the operations of Operator. Unless otherwise
mutually agreed, any audit shall be conducted at the principal office of
Operator or at such other place as the books and records of Operator related to
the Services are maintained. In furtherance of any audit conducted by Owner
pursuant to this Section 7.5, Operator hereby agrees to exercise on behalf of
Owner any audit rights granted in favor of Operator under (a) any Contract
between Operator and Affiliate of Operator and/or (b) any subcontract between
Operator and any Subcontractor.

 

  7.5.3 At the conclusion of an audit, the Parties shall endeavor to settle
outstanding matters expeditiously. To this end, Owner will make a reasonable
effort to prepare and distribute a written report to Operator as soon as
reasonably practicable and in any event within thirty (30) days after the
conclusion of an audit. The report shall include all claims arising from such
audit together with comments pertinent to the operation of the accounts and
records. Operator shall make a reasonable effort to reply to the report in
writing as soon as possible and in any event no later than sixty (60) days after
delivery of the report.

 

  7.5.4 All adjustments resulting from an audit agreed to between the Parties
shall be reflected promptly in Operator’s books and records. If any dispute
shall arise in connection with an audit, it shall be reported to and discussed
by the Parties within sixty (60) days.

 

  7.5.5 Owner shall have the right at any reasonable time to inspect and/or
observe Operator’s Services and the Facilities in order to confirm that such
Services are being performed in accordance with the Standard of Care.

7.6 Government Reports. Operator shall prepare and file any reports required by
any commission or Governmental Authority having jurisdiction over the
Facilities, including all reports, right-of-way alignment maps, field
inventories and valuation reports and statements of reconciliation as may be
required by Governmental Authorities, in each case, in the correct number of
copies required.

7.7 Maintenance of and Access to Records. Operator shall keep, or cause to be
kept, true and complete books of account for Owner in accordance with
Section 4.01 of the LLC Agreement. Operator shall give reasonable access to each
Member, subject to the applicable provisions of the LLC Agreement, to inspect
any of the books, records and operations of Owner for any purpose reasonably
related to the Units owned by such Member. Any such inspection shall occur
during normal business hours upon reasonable notice to Operator and shall be
conducted in a manner which does not cause undue disruption to the operations of
Operator. In addition, if EEP (or any of its Affiliates) is engaged in bona fide
negotiations with a Third Party related to a proposed disposition of the Units
owned by EEP (or such Affiliate, if applicable) and requests books, records, and
other information for disclosure to such Third Party in accordance with the LLC
Agreement, Operator agrees to (a) cooperate with EEP or such Affiliate) and
(b) make books, records and other information available as reasonably required
by EEP (or such Affiliate).

7.8 Periodic Reports and Statements. Operator will analyze operating costs for
control purposes, prepare cash and movements forecasts, and will furnish to
Owner, monthly, unaudited financial statements and such other reports,
statistics, and statements relative to the Business as Owner may

 

17

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reasonably request or as may be required by its financial commitments now in
existence or hereafter entered into.

 

8.0 Force Majeure.

8.1 Procedure. If Operator is rendered unable, wholly or in part, by “Force
Majeure” (as defined below) to carry out its obligations under this Agreement,
other than to make payments then or thereafter due hereunder, then upon Operator
giving notice and full particulars of such Force Majeure to Owner of the cause
relied on, then the obligations of Operator, 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.

8.2 Definition. The term “Force Majeure” means any event not within the
reasonable control of Operator and which by the exercise of reasonable diligence
Operator could not have prevented and is not due to the affected Operator’s
gross negligence or willful misconduct, including, to the extent consistent with
the foregoing, events of nature or the elements, strikes, lockouts or other
labor disturbances, sabotage, wars, blockades, insurrections, riots, epidemics,
landslides, lightning, earthquakes, fires, storms, storm warnings, floods and
washouts, restraints of Governmental Authorities, civil disturbances,
environmental accidents affecting the land, air or water, explosions, breakage
or accident to equipment, machinery or lines of pipe, other casualty
occurrences, in each case, substantially affecting the operational performance
of the Facilities, terrorist acts or the threat thereof targeting all or any
portion of the Facilities, the necessity for making repairs or alterations to
equipment, machinery or lines of pipe or the Facilities in general, freezing of
lines of pipe, partial or entire failure of pipe or other portions of the
Facilities, inability to obtain pipe, materials, equipment, rights of way,
permits, or labor, and any actions by Governmental Authorities that are resisted
in good faith.

8.3 Strikes. It is understood and agreed that the settlement of strikes or
lockouts is entirely within the discretion of Operator, and that none of the
provisions of this Agreement will require the settlement of strikes or lockouts
by acceding to the demands of opposing Persons when such course is inadvisable
in the discretion of Operator.

8.4 Duty to Mitigate. Notwithstanding the occurrence of a Force Majeure,
Operator shall use all reasonable efforts to attempt to mitigate the effects of
such Force Majeure, including the payment of all reasonable sums of money by or
on behalf of Operator, which sums are reasonable given the likely efficacy of
the mitigation measures; provided, however that any reasonable cost or expense
incurred, or reasonable sums of money paid, in each case in accordance with the
Standard of Care, by Operator in an attempt to mitigate the effects of such
Force Majeure shall be charged to Owner and reimbursed to Operator by Owner (as
applicable). Operator shall attempt to continue the performance of the Services,
including any reasonable alternative means for performance which are not
prevented by Force Majeure, insofar as reasonably practicable and to notify
Owner of the steps it plans to take to mitigate the effects of any Force
Majeure.

 

9.0 Insurance.

9.1 Insurance. Operator shall, at the cost and expense of Owner, obtain and
maintain for itself and for the benefit of Owner, the kinds of insurance and
amounts of coverage set forth in Exhibit A. The Operator shall also, as directed
by Owner in writing, administer Owner’s insurance in accordance with Exhibit A
hereunder and the LLC Agreement, including (i) procuring and maintaining, at
Owner’s expense, any and all insurance policies required to be maintained by
Owner, (ii) monitoring compliance with the terms and conditions of all such
insurance policies, (iii) administering claims and obtaining recoveries for and
on behalf of Owner under such insurance policies and (iv) facilitating
reimbursement

 

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of reasonable Member insurance premium expenses for such insurance procured in
accordance with Section 12.03 of the LLC Agreement.

9.2 Premiums, Deductibles, etc. All insurance premiums, expenses, deductibles,
self-insurance retentions or similar programs applicable to the insurance
required hereunder shall be reimbursed by Owner to Operator.

 

10.0 Claims.

10.1 Claims. Liabilities and Claims involving Owner and Operator shall be
handled in the following manner:

 

  10.1.1 Liability Claims. Subject to the limitations set forth in Section 3.4,
Operator shall manage and process any Claim against Operator or Owner, which
arises out of the management, operation, repair or maintenance of the
Facilities, or arises out of or is incidental to the activities carried on or
work performed, required or contemplated by this Agreement (each, a “Liability
Claim”) in accordance with Section 10.1.3.

 

  10.1.2 Recovery Claims. Subject to the limitations of Sections 3.4, Operator
shall assist Owner with prosecuting and/or settling any Claim which Owner has
against one or more Persons that are not Members or Parties (each, a “Recovery
Claim”).

 

  10.1.3 Notice of Claim. In the event that Operator receives any written
Liability Claim that exceeds One Million Dollars ($1,000,000), Operator shall
provide Owner, within ten (10) days of receipt of such Liability Claim, a notice
that includes a brief written summary of the facts regarding such Liability
Claim and a copy of the demand letter, petition, or similar documentation.

 

  10.1.4 Material Adverse Effect. Notwithstanding anything to the contrary in
this Agreement, any and all Claims made against Owner or the Facilities which
involve a criminal complaint or which more likely than not could have a material
adverse effect on the Business shall be referred to Owner for handling.

 

  10.2 Mutual Release and Indemnification.

 

  10.2.1

Indemnification by Owner. Notwithstanding anything in this Agreement to the
contrary (including, for the avoidance of doubt, any failure by Operator to act
in accordance with the Standard of Care), Owner shall be responsible for, shall
pay on a current basis and hereby releases, defends, indemnifies and holds
harmless Operator and its Affiliates (other than Owner) and their respective
partners, members, directors, officers, managers and employees (the “Operator
Indemnitees”) from and against all Liabilities and Claims arising out of,
attributable to, in connection with or incidental to any act or omission of any
Operator Indemnitees in carrying out the Services (including the administration,
operation or maintenance of any of the Facilities) or any other activities
carried out or work performed or required by this Agreement INCLUDING AS A
RESULT OF THE NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE OR PASSIVE) AND ANY
OTHER LEGAL FAULT, INCLUDING STRICT LIABILITY, OF ANY OPERATOR INDEMNITEES,
Owner OR ANY THIRD PARTY; provided, however, that Owner will not be required to
release or indemnify any Operator Indemnitees from any Liabilities or Claims to
the extent such Liabilities or Claims; arise

 

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  out of or in connection with or are attributable or incident to the gross
negligence or willful misconduct of any Operator Indemnitee.

 

  10.2.2 Indemnification by Operator. Except as provided in Section 10.2.4, but
otherwise notwithstanding anything herein to the contrary, Operator shall be
responsible for, shall pay on a current basis and hereby releases, defends,
indemnifies and holds harmless the Owner Indemnitees from and against all
Liabilities and Claims to the extent arising out of or in connection with or
attributable or incidental to the gross negligence or willful misconduct of any
Operator Indemnitee.

 

  10.2.3 Survival of Indemnification Provisions; No Double Recovery. The
provisions of this Section 10.2 shall survive any termination of this Agreement.
Notwithstanding anything to the contrary herein, nothing shall prohibit Operator
from pursuing its indemnity rights under this Section 10.2 against Owner for any
Liabilities and Claims suffered or incurred by Operator in excess of the
insurance coverages required to be maintained by Owner pursuant to this
Agreement. In calculating any amount to be paid by an Indemnifying Party by
reason of the provisions of this Section 10.2, the amount shall be reduced by
all cash tax benefits and other cash reimbursements (including net insurance
proceeds) actually received (directly or indirectly, including by virtue of the
Indemnified Party’s direct or indirect ownership interest in Owner) by the
Indemnified Party with respect to the applicable Claim or Liability.

 

  10.2.4 Recommended Activities. If Operator makes a written recommendation
regarding a specific operational issue not caused by the Standard of Care to
Owner that has resulted in, or would reasonably be expected to result in,
physical damage or harm to Persons or property or any material adverse effect on
Owner, the Business or the Facilities and that would not otherwise constitute an
Emergency, and Owner does not approve the recommendation or the method by which
that Operator wishes to implement such recommendation for any reason (a
“Recommended Activity”), Operator shall not be liable and Owner hereby releases
and defends, indemnifies and holds harmless the Operator Indemnitees from and
against all Liabilities and Claims arising out of, attributable to, in
connection with or incidental to Owner’s failure to approve such Recommended
Activity, or Operator’s failure to undertake a Recommended Activity absent
Owner’s approval thereof. Owner’S AGREEMENT TO RELEASE AND INDEMNIFY OPERATOR
INDEMNITEES PURSUANT TO THIS SECTION 10.2.4 SHALL INCLUDE, WITHOUT LIMITATION,
THE NEGLIGENCE (WHETHER SOLE, CONCURRENT, GROSS, ACTIVE OR PASSIVE) AND WILLFUL
MISCONDUCT OF OPERATOR INDEMNITEES, Owner, ANY MEMBER OR ANY OF THEM.) For
clarification, this Section 10.2.4 shall apply and Owner hereby agrees to
release and to indemnify the Operator Indemnitees even if the failure to
undertake the Recommended Activity would otherwise amount to gross negligence or
willful misconduct.

 

  10.2.5

Disclaimer of Liability. SUBJECT TO THE LAST SENTENCE OF THIS SECTION 10.2.5,
BUT OTHERWISE NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, AS BETWEEN THE
PARTIES, A PARTY’S DAMAGES RESULTING FROM A BREACH OR VIOLATION OF ANY COVENANT,
AGREEMENT OR CONDITION CONTAINED HEREIN OR ANY ACT OR OMISSION ARISING FROM OR
RELATED TO THIS AGREEMENT SHALL BE LIMITED TO ACTUAL DAMAGES AND NONE OF THE
OPERATOR INDEMNITEES OR THE Owner INDEMNITEES SHALL BE ENTITLED TO RECOVER FROM
OPERATOR OR Owner OR THEIR

 

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  RESPECTIVE AFFILIATES ANY INDIRECT, SPECIAL, CONSEQUENTIAL, INCIDENTAL,
EXEMPLARY OR PUNITIVE DAMAGES. EACH PARTY EXPRESSLY RELEASES THE OTHER PARTY
FROM ALL SUCH CLAIMS FOR DAMAGES OTHER THAN ACTUAL DAMAGES. IF A PARTY BECOMES
OBLIGATED TO PAY A PERSON NOT A PARTY ANY INDIRECT, SPECIAL, CONSEQUENTIAL,
INCIDENTAL, EXEMPLARY OR PUNITIVE DAMAGES, AND SUCH PARTY IS ENTITLED TO
INDEMNIFICATION UNDER THE TERMS OF THIS AGREEMENT, THEN SUCH PARTY’S
INDEMNIFICATION RIGHT SHALL INCLUDE ALL INDIRECT, SPECIAL, CONSEQUENTIAL,
INCIDENTAL, EXEMPLARY AND PUNITIVE DAMAGES IT IS OBLIGATED TO PAY.

 

  10.2.6 Indemnification Procedures. For purposes of this Article 10, the term
“Indemnifying Party,” when used in connection with particular Liabilities, shall
mean the party or parties having an obligation to indemnify another party or
parties with respect to such Liabilities pursuant to this Article 10, and the
term “Indemnified Party,” when used in connection with particular Liabilities,
shall mean the party or parties having the right to be indemnified with respect
to such Liabilities by another party or parties pursuant to this Article 10.

 

  (a) To make a claim for indemnification under Section 10.2.1 or 10.2.2 (as
applicable) an Indemnified Party shall notify the Indemnifying Party of its
claim under this Section 10.2.6, including specific details, underlying facts
and the specific basis under this Agreement for its claim (the “Claim Notice”).

 

  (b) In the event that the claim for indemnification is based upon a claim by a
Third Party against the Indemnified Party (a “Third-Party Claim”), the
Indemnified Party shall provide its Claim Notice promptly after the Indemnified
Party has actual knowledge of the Third-Party Claim and shall enclose a copy of
all papers (if any) served with respect to the Third-Party Claim; provided,
however, that the failure of any Indemnified Party to give notice of a
Third-Party Claim as provided in this Section 10.2.6 shall not relieve the
Indemnifying Party of its obligations under Section 10.2.1 or 10.2.2 (as
applicable) except to the extent such failure results in insufficient time being
available to permit the Indemnifying Party to effectively defend against the
Third-Party Claim or otherwise prejudices the Indemnifying Party’s ability to
defend against the Third-Party Claim.

 

  (c) In the case of a claim for indemnification based upon a Third-Party Claim,
the Indemnifying Party shall have thirty (30) days from its receipt of the Claim
Notice to notify the Indemnified Party whether it shall assume the defense of
such Third-Party Claim. The Indemnified Party is authorized, prior to and during
such thirty (30) day period, to file any motion, answer or other pleading that
it shall deem necessary or appropriate to protect its interests or those of the
Indemnifying Party and that is not prejudicial to the Indemnifying Party.

 

  (d)

If the Indemnifying Party shall have assumed the defense of the Third-Party
Claim, the Indemnifying Party shall have full control of such defense and
proceedings, including any compromise or settlement thereof. If requested by the
Indemnifying Party, the Indemnified Party shall cooperate in contesting any
Third-Party Claim that the Indemnifying Party elects to contest. The Indemnified

 

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  Party may participate in, but not control, any defense or settlement of any
Third-Party Claim controlled by the Indemnifying Party pursuant to this
Section 10.2.6(d). An Indemnifying Party shall not, without the written consent
of the Indemnified Party, (i) settle any Third-Party Claim or consent to the
entry of any judgment with respect thereto that does not include an
unconditional release of the Indemnified Party from all liability in respect of
such Third-Party Claim or (ii) settle any Third-Party Claim or consent to the
entry of any judgment with respect thereto in any manner that may materially and
adversely affect the Indemnified Party (other than as a result of money damages
covered by the indemnity).

 

  (e) If the Indemnifying Party does not assume the defense of the Third-Party
Claim, then the Indemnified Party shall have the right to defend against the
Third-Party Claim at the cost and expense of the Indemnifying Party, with
counsel reasonably satisfactory to the Indemnifying Party. Any settlement of the
Third-Party Claim shall require the consent of the Indemnifying Party.

 

  10.2.7 Sole Remedy. Other than the removal of Operator as the construction
manager and/or operator (as applicable) of the Facilities pursuant to
Section 2.3.2(c), the right to receive indemnification from Operator pursuant to
Section 10.2.2 shall be the sole and exclusive remedy of Owner for any breach by
Operator of any provision of this Agreement.

 

11.0 Confidential Information; Publicity.

11.1 Confidential Information.

11.1.1 The Parties agree that information related to confidential shipper
information, pricing, cost data and other commercially or operationally
sensitive information relating to the Business that is typically considered
confidential shall be considered “Confidential Information” hereunder, shall be
kept confidential and shall not be disclosed during the term of this Agreement
to any Third Party, except (in each of the following cases, to the extent not
prohibited by the provisions of Section 15(13) of the Interstate Commerce Act):

(a) to an Affiliate of Owner or a Member;

(b) to the extent any Confidential Information is required to be furnished in
compliance with applicable Law, or pursuant to any legal proceedings or because
of any order of any Governmental Authority that is binding upon a Party;

(c) to prospective or actual attorneys engaged by any Party where disclosure of
such Confidential Information is essential to such attorney’s work for such
Party;

(d) to prospective or actual contractors and consultants engaged by any Party
where disclosure of such Confidential Information is essential to such
contractor’s or consultant’s work for such Party;

(e) to a bona fide prospective transferee of a Member’s Units to the extent
appropriate in order to allow the assessment of such Units (including a Person
with whom a Member and/or its Affiliates are conducting bona fide negotiations
directed toward a merger, consolidation or the sale of a majority of its or an
Affiliate’s shares), as long as the Member provides ten (10) days prior written
notice to Owner of its intention to share such Confidential Information and the
transferee executes

 

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a confidentiality agreement with Owner and Operator containing substantially
similar terms and conditions as those set forth in this Section 11.1;

(f) to a bank or other financial institution to the extent appropriate to a
Party arranging for financing;

(g) to the extent such Confidential Information must be disclosed pursuant to
any rules or requirements of any stock exchange having jurisdiction over a Party
or its Affiliates; provided that if such Party desires to disclose Confidential
Information in an annual or periodic report to its or its Affiliates’
shareholders and the public and such disclosure is not required pursuant to any
rules or requirements of any stock exchange, then such Party shall comply with
Section 11.2;

(h) to its respective employees, subject to each Party taking customary
precautions to ensure such Confidential Information is kept confidential; and

(i) any Confidential Information which, through no fault of or breach of this
Agreement by a Party, becomes a part of the public domain.

11.1.2 Disclosure pursuant to Section 11.1.1(d), 11.1.1(e) or 11.1.1(f) shall
not be made unless prior to such disclosure the disclosing Party has obtained a
written undertaking from the recipient to keep the Confidential Information
strictly confidential for the term of this Agreement and to use the Confidential
Information for the sole purpose described in Section 11.1.1(d), 11.1.1(e) or
11.1.1(f), whichever is applicable, with respect to such disclosing Party.

11.1.3 Subject to Section 6.3.4, for the duration of the license granted to
Owner, Owner shall keep confidential and not disclose to any Third Party any of
the Operator Intellectual Property that is licensed to Owner by Operator
pursuant to Section 6.3.4 (the “Licensed Intellectual Property”), except:

(a) to the extent such Licensed Intellectual Property is required to be
disclosed in compliance with applicable Law, or pursuant to any legal
proceedings or because of any order of any Governmental Authority that is
binding upon Owner (provided that (i) Owner shall give written notice to
Operator of any such actual or anticipated disclosure requirement as soon as
reasonably possible with sufficient details to allow Operator to contest any
such disclosure requirement and (ii) Owner shall take such steps as may be
reasonably necessary, upon Operator’s instruction and that are consistent with
applicable Law, to protect the confidentiality of such Licensed Intellectual
Property);

(b) to prospective or actual attorneys engaged by Owner where disclosure of such
Licensed Intellectual Property is essential to such attorney’s work for Owner;

(c) to prospective or actual contractors and consultants engaged by Owner
(including any sublicensee contemplated by Section 6.3.4) where disclosure of
such Confidential Information is essential to such contractor’s or consultant’s
work for Owner; and

(d) to a bank or other financial institution to the extent appropriate to a
Party arranging for financing.

11.1.4 Disclosure pursuant to Section 11.1.3(c) or 11.1.3(d) shall not be made
unless prior to such disclosure Owner has obtained a written undertaking from
the recipient to keep the Licensed Intellectual Property strictly confidential
and to use the Licensed Intellectual Property for the sole purpose described in
Section 11.1.3(c) or 11.1.3(d), whichever is applicable.

 

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11.1.5 In connection with the transfer of all or substantially all of the
Facilities, Owner shall cause the assignee or transferee to agree to
confidentiality obligations with respect to the Licensed Intellectual Property
on substantially the same terms as those set forth in Section 11.1.3 and
Section 11.1.4.

11.2 Publicity.

11.2.1 Without reasonable prior notice to the other Party, no Party will issue,
or permit any agent or Affiliate of it to issue, any press releases or otherwise
make, or cause any agent or Affiliate of it to make, any public statements with
respect to this Agreement, the LLC Agreement, any Confidential Information or
the activities contemplated hereby or thereby, except where such release or
statement is deemed in good faith by such releasing Party to be required by Law
or under the rules and regulations of a recognized stock exchange on which
shares of such Party or any of its Affiliates are listed, and in any case, prior
to making any such press release or public statement, such releasing Party shall
provide a copy of the proposed press release or public statement to the other
Party reasonably in advance of the proposed release date as necessary to enable
such other Party to provide comments on it; provided such other Party must
respond with any comments within two (2) Business Days after its receipt of such
proposed press release.

11.2.2 Notwithstanding anything to the contrary in Section 11.1 or 11.2.1, any
Party or Affiliate of a Party may disclose information regarding the Business
that is not Confidential Information in investor presentations, industry
conference presentations or similar disclosures. If a Member wishes to disclose
any Confidential Information in investor presentations, industry conference
presentations or similar disclosures, such Member must first (i) provide the
other Party with a copy of that portion of the presentation or other disclosure
document containing such Confidential Information and (ii) obtain the prior
written consent of the other Party to such disclosure (which consent may not be
unreasonably withheld, conditioned or delayed).

11.2.3 Notwithstanding anything to the contrary in Section 11.1 or 11.2.1,
(a) in the event of any Emergency endangering property, lives or the environment
or (b) Operator may issue such press releases or public announcements as it
deems necessary in light of the circumstances and shall promptly provide Owner
with a copy of any such press release or announcement.

 

12.0 General Provisions.

12.1 Notices. All notices and communications required or permitted to be given
hereunder shall be sufficient in all respects (a) if given in writing and
delivered personally, (b) if sent by overnight courier, (c) if mailed by U.S.
Express Mail or by certified or registered United States Mail (return receipt
requested) with all postage fully prepaid or (d) sent by facsimile transmission
(provided any such facsimile transmission is confirmed either orally or by
written confirmation) and, in each case, addressed to the appropriate Party
hereto at the address for such Party shown below or at such other address as
such Party shall have theretofore designated by written notice delivered to the
Party giving such notice:

Operator:

Enbridge (U.S.) Inc.

1100 Louisiana, Suite 3300

Houston, TX 77002

Attention: E. Chris Kaitson, Vice President - Law, Deputy General Counsel

 

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Owner:

North Dakota Pipeline Company LLC

1100 Louisiana, Suite 3300

Houston, TX 77002

Attention: E. Chris Kaitson, Vice President—Law, Deputy General Counsel

With a copy to:

539 South Main Street

Findlay, Ohio 45840

Attn: General Counsel

With a copy to:

Jones Day

717 Texas Avenue, Suite 3300

Houston, Texas 77002

Attn: Jeffrey A. Schlegel, Esq.

12.2 Governing Law. THIS AGREEMENT AND THE LEGAL RELATIONS AMONG THE PARTIES
SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS, EXCLUDING ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT MIGHT REFER
CONSTRUCTION OF SUCH PROVISIONS TO THE LAWS OF ANOTHER JURISDICTION. IN RESPECT
OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, EACH
OF THE PARTIES CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY FEDERAL
OR STATE COURT LOCATED WITHIN HARRIS COUNTY, TEXAS, WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS UPON SUCH PARTY, CONSENTS THAT ALL SUCH SERVICE OF PROCESS
MAY BE MADE BY FIRST CLASS REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN
RECEIPT REQUESTED, DIRECTED TO SUCH AT THE ADDRESS SPECIFIED PURSUANT TO
SECTION 12.1, AGREES THAT SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON
ACTUAL RECEIPT THEREOF, AND WAIVES ANY OBJECTION TO JURISDICTION OR VENUE OF,
AND WAIVES ANY MOTION TO TRANSFER VENUE FROM, ANY OF THE AFORESAID COURTS.

12.3 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY KNOWINGLY AND
VOLUNTARILY WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO,
IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR ANY ANCILLARY AGREEMENT
OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF.

12.4 Dispute Resolution. Claims and controversies arising out of or relating to
this Agreement shall be determined and resolved in accordance with the following
procedures:

12.4.1 Any Claim arising out of or relating to this Agreement, including the
meaning of its provisions, or the proper performance of any of its terms, its
breach, termination or invalidity (each, a “Dispute”) shall be resolved in
accordance with the procedures specified in this Section 12.4, which until the
completion of the procedures set forth in Section 12.4.3 shall be the sole and
exclusive procedure for the resolution of any such Dispute, except that any
Party, without prejudice to the following procedures, may file a complaint to
seek preliminary injunctive or other provisional judicial relief, if in its sole

 

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judgment that action is necessary to avoid irreparable damage or to preserve the
status quo. Despite that action the Parties shall continue to participate in
good faith in the procedures specified in this Section 12.4.

12.4.2 Any Party wishing to initiate the dispute resolution procedures set forth
in this Section 12.4 with respect to a Dispute not resolved in the ordinary
course of business must give written notice of the Dispute to the other Party (a
“Dispute Notice”). The Dispute Notice shall include (i) a statement of that
Party’s position and a summary of arguments supporting that position, and
(ii) the name and title of the executive who will represent that Party and of
any other Person who will accompany the executive in the negotiations under
Section 12.4.3.

12.4.3 If any Party has given a Dispute Notice under Section 12.4.2, the Parties
shall attempt in good faith to resolve the Dispute within 30 days of the
delivery of the Dispute Notice (such period, the “Negotiation Period”) by
negotiations between executives who have authority to settle the Dispute and who
are at a Senior Vice President or higher level of management than the Persons
with direct responsibility for administration of this Agreement or the matter in
Dispute. Within 15 days after delivery of the Dispute Notice, the receiving
Party shall submit to the other a written response. The response shall include
(i) a statement of that Party’s position and a summary of arguments supporting
that position and (ii) the name and title of the executive who will represent
that Party and of any other Person who will accompany the executive. During the
Negotiation Period, such executives of the Parties shall meet at least weekly,
at a mutually acceptable time and place, and thereafter during the Negotiation
Period as more often as they reasonably deem necessary, to attempt to resolve
the Dispute.

12.4.4 All applicable statutes of limitation and defenses based upon the passage
of time shall be tolled while the procedures specified in Section 12.4.3 are
pending. The Parties shall take any action required to effectuate that tolling.
Each Party is required to continue to perform its obligations under this
Agreement pending completion of the procedures set forth in Section 12.4.3,
unless to do so would be impossible or impracticable under the circumstances.

12.4.5 Any Dispute that cannot be resolved during the Negotiation Period may, at
the option of any Party hereto, be resolved and decided by the Federal or State
courts located in Harris County, Texas. The Parties hereby irrevocably waive, to
the fullest extent permitted by applicable Law, any objection which they may now
or hereafter have to the laying of venue of any such Dispute brought in such
courts or any defense of inconvenient forum for the maintenance of such Dispute.
Each of the Parties hereto agrees that a judgment in any such Dispute may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by Law. This consent to jurisdiction is being given solely for purposes
of this Agreement and is not intended to, and shall not, confer consent to
jurisdiction with respect to any other dispute in which a Party to this
Agreement may become involved. Each of the Parties hereto hereby consents to
process being served by any Party to this Agreement in any suit, action,
proceeding or counterclaim of the nature specified in this Section 12.4.5 by the
mailing of a copy thereof in the manner specified by the provisions of
Section 12.1. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY.

12.5 Entirety of Agreement. THIS AGREEMENT AND THE LLC AGREEMENT CONSTITUTE THE
ENTIRE AGREEMENT BETWEEN THE PARTIES REGARDING THE DESIGN, CONSTRUCTION,
PROCUREMENT, OPERATION AND MAINTENANCE OF THE FACILITIES, AND SUPERSEDE ALL
OTHER PRIOR AND CONTEMPORANEOUS AGREEMENTS, WHETHER WRITTEN OR ORAL, BETWEEN THE
PARTIES AND RELATED THERETO. NO VARIATION, MODIFICATION OR CHANGE SHALL BE
BINDING UPON A

 

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PARTY UNLESS EFFECTUATED BY AN INSTRUMENT IN WRITING EXECUTED BY A DULY
AUTHORIZED OFFICER OR A DULY AUTHORIZED AGENT FOR IT.

12.6 Captions or Headings. The headings appearing at the beginning of each
Section are all inserted and included solely for convenience and shall never be
considered or given any effect in construing this Agreement, or any provision or
provisions hereof, or in connection with determining the duties, obligations or
liabilities of the Parties or in ascertaining intent, if any question of intent
should arise.

12.7 Assignment. This Agreement and its attendant rights may not be assigned,
transferred, subcontracted or otherwise conveyed by either Party without the
express written consent of the other Party; provided, however, a Party may
assign its rights and obligations under this Agreement to an Affiliate with the
prior consent of the other Party, which consent shall not be unreasonably
withheld. Any such assignment without consent shall be void.

12.8 Duplicate Originals. This Agreement is executed in duplicate originals,
with one (1) original to be retained by Operator and one (1) original to be
retained by Owner.

12.9 No Third Party Beneficiary. Except as provided in Section 10.2, this
Agreement shall be binding solely upon, be enforceable solely by, and inure
solely to the benefit of, each Party and its permitted successors and assigns,
and nothing in this Agreement (express or implied) is intended to confer upon
any other Person any rights or remedies of any nature whatsoever under or by
reason of this Agreement.

12.10 Severability. If any provision of this Agreement or the application
thereof to any Person or circumstances shall be invalid or unenforceable to any
extent, and such invalidity or unenforceability does not destroy the basis of
the bargain between the Parties, then the remainder of this Agreement and the
application of such provisions to other Persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by Law.

12.11 Waiver. No consent or waiver, express or implied, by any Party of any
breach or default by any other Party in the performance by the other Party of
his, her or its obligations hereunder shall be deemed or construed to be a
consent or waiver to or of any other breach or default in the performance by
such other Party of the same or any other obligation hereunder. Failure on the
part of any Party to complain of any act or to declare any other Party in
default, regardless of how long such failure continues, shall not constitute a
waiver of rights hereunder.

12.12 Successors and Assigns. Except as otherwise specifically provided herein,
this Agreement shall be binding upon and inure to the benefit of each Party and
its respective permitted successors and assigns.

12.13 Exhibits. In the event of any conflict between the terms and conditions of
this Agreement and the terms and conditions of any Exhibit, the terms and
conditions of this Agreement shall govern and control.

12.14 Joint Efforts. This Agreement will be considered for all purposes as
prepared through the joint efforts of the Parties, and will not be construed
against one Party or the other as a result of the preparation, submittal or
other event of negotiation, drafting or execution of the Agreement.

12.15 Counterparts. This Agreement may be executed in any number of counterparts
(including by facsimile or .pdf attachment containing the applicable
signature(s)) with the same effect as

 

27

--------------------------------------------------------------------------------

if all signing parties had signed the same document. All counterparts shall be
construed together and constitute the same instrument.

Remainder of page intentionally left blank.

 

28

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of the
Effective Date.

 

OPERATOR Enbridge (U.S.) Inc. By:     Name:   Title:   Owner North Dakota
Pipeline Company LLC By:     Name:   Title:  

Signature Page to

Operating and Construction Management Agreement

--------------------------------------------------------------------------------

EXHIBIT A

INSURANCE

Without limiting any of the obligations and liabilities of either Party at law
or in equity, the Parties shall carry, or cause to be carried and maintained for
the duration of this Agreement, the insurance outlined in this Exhibit A and any
additional insurance as may be required by applicable Law or as may be otherwise
mutually agreed upon by the Management Committee and Operator from time to time:

 

1.0 Operator’s Insurance.

 

  1.1 Statutory Worker’s Compensation in accordance with all applicable
statutory requirements of the state(s) in which the work is performed, in all
state(s) where employees are domiciled or reside, including Alternate Employers
Endorsement and shall waive insurers rights of recovery or subrogation against
Owner and its Affiliates.

 

  1.2 Employer’s Liability Insurance with a limit of One Million Dollars
($1,000,000) each accident, One Million Dollars ($1,000,000) by disease each
employee, and One Million Dollars ($1,000,000) by disease policy limit. Such
insurance shall include a waiver of insurers right of recovery or subrogation
against Owner and its Affiliates and shall add Owner and its Affiliates as
additional insureds.

 

  1.3 Automobile Liability Insurance covering all licensed motor vehicles or
snowcraft and all-terrain vehicles, which are owned, non-owned, leased or
operated by Operator and used in connection with this Agreement with an
inclusive bodily injury, death and property damage limit of Two Million Dollars
($2,000,000) per accident. Such insurance shall include a waiver of insurers
right of recovery or subrogation against Owner and its Affiliates and shall add
Owner and its Affiliates as additional insureds.

 

  1.4 Operator shall provide to Owner within thirty (30) days of the
commencement of this Agreement and upon annual renewal thereafter, evidence of
compliance with this Exhibit in the form of certificates of insurance.

 

2.0 Owner’s Insurance.

 

  2.1 Construction Insurance for Sandpiper Facilities. Commencing with, and
during the term of construction for the Sandpiper Facilities, Owner shall direct
Operator to obtain and maintain construction-specific insurance in such limits
and with such extensions as would be maintained by reasonable and prudent
Operators during similar construction activities, including:

 

  2.1.1

Construction Liability Insurance with a limit to be reasonably determined by
Operator, but in any case not less than Fifty Million Dollars ($50,000,000) for
each occurrence or accident, including property damage, bodily injury (including
death at any time resulting therefrom) and personal injuries sustained by any
Third Party because of bodily injury or destruction of property arising from
construction activities. Such coverage shall include, but not be limited to
Non-owned Automobile Liability, Contractual Liability and Sudden and Accidental
Pollution Liability. Coverage shall extend to include Owner, Operator,
contractors and subcontractors as additional insureds, in connection with the
work and shall waive subrogation against such additional insureds. The policy
shall provide for coverage during the term of construction, and include products

 

Exhibit A-1

--------------------------------------------------------------------------------

  and completed operations coverage for a period not less than twenty-four
(24) months following commissioning of the Sandpiper Facilities.

 

  2.1.2 Course of Construction Insurance with a limit to be reasonably
determined by Operator, but in any case not less than Fifty Million Dollars
($50,000,000) for work being performed in respect of the Sandpiper Facilities,
which shall cover all risks of physical loss or damage to the Sandpiper
Facilities or the work being performed in respect thereto, including all
machinery, materials and supplies at the site of such work, in transit thereto
and intended to become a part of the finished work, or on site awaiting erection
or installation, testing or final acceptance by Operator.

 

  2.1.3 Any other insurance reasonably determined to be necessary by Operator.

 

  2.2 Construction Insurance. During the term of any construction activities, as
applicable, Owner shall direct Operator to obtain construction-specific
insurance in such limits and with such extensions as would be maintained by
reasonable and prudent Operators during similar construction activities. At a
minimum, such insurance shall include Construction Liability Insurance for a
minimum limit of Ten Million Dollars ($10,000,000) for each occurrence or
accident, including property damage, bodily injury (including death at any time
resulting therefrom) and personal injuries sustained by any Third Party because
of bodily injury or destruction of property arising from construction
activities. Such coverage shall include, but not be limited to Non-owned
Automobile Liability, Contractual Liability, and Sudden and Accidental Pollution
Liability. Coverage shall extend to include Owner, Operator, contractors and
subcontractors as additional insureds, in connection with the work and shall
waive subrogation against such additional insureds. The policy shall provide for
coverage during the term of construction, and include products and completed
operations coverage for a period not less than twenty-four (24) months following
commissioning of the Facility.

 

  2.3 Operational Insurance. Commencing at the Sandpiper Project In-Service
Date, Owner shall maintain the following insurance:

 

  2.3.1 Commercial General Liability Insurance with an inclusive bodily injury,
death, and property damage limit of Two Million Dollars ($2,000,000) per
occurrence. This policy shall include coverage for products and completed
operations, railroad liability, severability of interests and cross liability
and shall include contractual liability addressing indemnification under this
Agreement. The policy shall include Operator as named insured and shall waive
all rights of subrogation or recovery against Operator.

 

  2.3.2 Umbrella Liability Insurance written on a “Following Form” basis and
providing coverage excess of operational insurance for Employer’s Liability,
Worker’s Compensation, Automobile Liability and Commercial General Liability
required under this Exhibit, with a combined single maximum limit of Three
Million Dollars ($3,000,000) per occurrence and in aggregate.

 

  2.3.3 Any other insurance as determined by the Management Committee.

 

Exhibit A-2

--------------------------------------------------------------------------------

3.0 The insurance maintained pursuant to this Exhibit shall:

 

  3.1 be with insurance companies authorized to do business in the state(s)
where activities under the Agreement will occur and shall be rated at least
A-VII by AM Best or A by Standard & Poors;

 

  3.2 be endorsed to show, or shall otherwise contain language that such
insurance will be primary to and not contributory with any other insurance
available to Operator and its Affiliates, Owner and its Affiliates and Members.
In the case of construction activities, any construction insurance obtained and
maintained under this Agreement shall be endorsed to be primary with respect to
any other insurance available to Owner, Operator, Members and their Affiliates;

 

  3.3 provide thirty (30) days’ advance notice of cancellation to Owner and
Operator; and

 

  3.4 include a provision that such policy shall survive the default or
bankruptcy of the insured for claims arising out of an event before such default
or bankruptcy.

 

4.0 The Management Committee may consent to alter or waive certain insurance
requirements in this Exhibit. In the event that any insurance described within
this Exhibit other than insurance required by Applicable Law, shall in
Operator’s reasonable opinion be unavailable on commercially reasonable terms,
then Operator shall promptly notify Owner; however, subject to Management
Committee approval, the Parties will remain obligated to maintain such insurance
up to the level, if any, at which such insurance can be maintained on
commercially reasonable terms in the commercial insurance market for similar
Facilities.

 

5.0 Operator shall ensure that the insurance required hereunder be obtained on,
and shall include terms and conditions which are, in Operator’s reasonable
opinion, the best available from the marketplace on reasonable terms and
ordinary or appropriate. Operator shall obtain the prior approval and direction
of the Management Committee with respect to Owner’s insurance, including annual
renewals thereof.

 

6.0 If Operator makes any payments with respect to any losses, damages, claims
or liabilities arising out of this Agreement which are covered by insurance
policies maintained hereunder with the approval of the insurers thereof such
payments shall be reimbursed by Owner to Operator.

 

7.0 Operator and Owner shall cooperate and shall provide each other with such
assistance and materials as is required to support the placement of insurance
and to substantiate such damages or losses for the purposes of claim recoveries
sought under insurance coverage required by this Exhibit or any applicable
Member insurance.

 

Exhibit A-3

--------------------------------------------------------------------------------

EXHIBIT B

INITIAL BUDGET

[See Attached]

 

Exhibit B-1

--------------------------------------------------------------------------------

EPND

 

     Budget
December
2013     Budget
Annual
2014      Budget
Annual
2015      Budget
Annual
2016  

Power

     3,045,044        18,948,029         30,761,925         29,104,719   

Human Resources

     33,830        694,955         715,804         542,312   

Materials & Supplies Purchased

     93,470        1,963,300         1,874,574         1,910,690   

Outside Contract Services

     685,884        8,561,885         8,403,344         6,702,541   

Outside Services

     1,128,692        14,246,897         16,986,726         18,308,125   

Repairs & Maintenance

     151,186        13,233,645         5,930,419         4,520,746   

Rents & Leases

     87,079        1,461,236         2,000,000         1,509,551   

Insurance

     97,005        1,444,812         1,237,570         1,262,866   

Property & Business Tax

     494,357        5,927,871         11,515,132         10,149,727   

Allocations

     1,975,794        25,207,464         29,058,422         32,010,970   

Inventory Adjustments

     501,075        5,296,611         6,408,334         5,375,887   

Other O&A Expense

     (16,886 )      1,966,780         1,424,290         2,456,214      

 

 

   

 

 

    

 

 

    

 

 

 

Total Operating Expenses

     8,276,531        98,953,485         116,316,538         113,854,349   

Maintenance Capital

     933,846        13,947,947         16,334,516         14,571,821   

Integrity Capital

     894,800        65,918,200         8,345,937         5,117,378      

 

 

   

 

 

    

 

 

    

 

 

 

Total

     1,828,646        79,866,147         24,680,453         19,689,199   

--------------------------------------------------------------------------------

EXHIBIT C

FORM OF GUARANTY

[See Attached]

 

EXHIBIT C

--------------------------------------------------------------------------------

Marathon Petroleum Corporation

Guaranty

GUARANTY effective as of             , 2013 by Marathon Petroleum Corporation, a
Delaware corporation (the “Guarantor”) in favor of North Dakota Pipeline Company
LLC, a Delaware limited liability company (the “Creditor”).

For value received and in consideration of the mutual covenants, rights and
obligations as between Creditor and Williston Basin Pipe Line LLC, a Delaware
limited liability company (the “Guaranteed Party”), pursuant to the Amended and
Restated Limited Liability Company Agreement of Creditor, dated             (the
“Agreement”), Guarantor agrees as follows:

 

1. Guaranty. Subject to the terms herein, Guarantor unconditionally and
irrevocably guarantees to Creditor, its successors and permitted assigns, the
prompt payment when due of all capital contributions payable by Guaranteed Party
in accordance with the terms of Section 5.02(b) and 5.02(c)(z) of the Agreement
and any amendments thereto (collectively, the “Obligations”). The aggregate
amount of Obligations guaranteed under this Guaranty by Guarantor shall not
exceed one billion two hundred twenty million ($US 1,220,000,000) U.S. dollars.
This is a guarantee of payment and not of collection. If Guaranteed Party fails
to pay any Obligation, Guarantor will pay such Obligation directly to Creditor
promptly upon Creditor’s demand in accordance with the provisions of this
Guaranty.

 

2. Expenses and Currency. Guarantor agrees to pay all out-of-pocket expenses,
including reasonable attorneys’ fees and court costs, incurred by Creditor in
any litigation, arbitration or proceeding to enforce its rights under this
Guaranty, but only to the extent that the Guarantor is found in such litigation,
arbitration or proceeding to be in default or in breach of the terms of this
Guaranty. The Guarantor shall make payment of each Obligation in the currency
(the “Contract Currency”) in which the Guaranteed Party is required to pay that
Obligation. If the Guarantor makes payment of any Obligation to the Creditor in
a currency (the “Other Currency”) other than the Contract Currency (whether
voluntarily or pursuant to an order or judgment of a court or tribunal of any
jurisdiction), such payment shall constitute a discharge only to the extent of
the amount of the Contract Currency that the Creditor is able to purchase with
such payment on the date of receipt in accordance with normal commercial
practice.

 

3. Limitations. The liability of Guarantor under this Guaranty shall be and is
specifically limited to payments expressly required to be made in accordance
with the Agreement and any out-of-pocket expenses payable pursuant to Section 2
of this Guaranty. EXCEPT TO THE EXTENT SPECIFICALLY PROVIDED UNDER THE TERMS OF
THE AGREEMENT, GUARANTOR SHALL NOT BE LIABLE HEREUNDER FOR, CONSEQUENTIAL,
EXEMPLARY, LOSS OF PROFITS, PUNITIVE, TORT OR ANY OTHER DAMAGES OR COSTS.

 

4. Term. This Guaranty will remain in full force and effect until: (i) all
Obligations of Guaranteed Party have been fully satisfied or extinguished, or
(ii) such time Counterparty consents in writing to the termination of the
Guaranty. Notwithstanding the foregoing, in the event of a termination of the
Agreement, such termination shall not affect or limit in any way the Guarantor’s
liability for the Obligations to the extent that they accrue prior to or in
connection with such termination.

 

5.

Nature of Guaranty. Guarantor’s obligations with respect to any Obligation are
absolute and will not be affected by (1) the existence, validity,
enforceability, perfection, or extent of any collateral for such Obligations,
(2) any change in the name, ownership, objects, capital, constating documents or
by-laws of the Guaranteed Party, or (3) any amalgamation, sale, merger or
re-organization of the Guaranteed Party. If any payment to Creditor for any
Obligation is rescinded or must otherwise be returned for any reason, Guarantor
will remain liable hereunder for such Obligation as if such payment had not been
made. The Guarantor hereby waives all suretyship defenses of every kind and all
payments required hereunder shall be made in accordance with the terms hereof.
Notwithstanding the foregoing, in any action or demand for payment under this
Guaranty, Guarantor reserves the right to assert all rights, counterclaims and
defenses that Guaranteed Party may have against the payment of any Obligation,
other than defenses (1)

 

Page 1

--------------------------------------------------------------------------------

  arising from the bankruptcy, insolvency, incapacity, dissolution or
liquidation of Guaranteed Party, (2) expressly waived in this Guarantee,
(3) arising from the lack of due authorization, execution or delivery by the
Guaranteed Party of the Agreement, and (4) previously asserted by the Guaranteed
Party and successfully and finally resolved in favor of the Creditor by a court
of competent jurisdiction and last resort.

 

6. Consents, Waivers and Renewals. Guarantor agrees that Creditor may, without
giving notice to or obtaining the consent of the Guarantor, enter into
agreements and transactions with the Guaranteed Party, amend or modify
agreements with the Guaranteed Party, settle or compromise any of the
Obligations, grant extensions of time and other indulgences, take and give up
securities, accept compositions, grant releases and discharges, whether full,
partial, conditional or otherwise, perfect or fail to perfect any securities,
release any undertaking, property or assets charged by any securities to third
parties and otherwise deal or fail to deal with the Guaranteed Party and others
(including, without limitation, any other guarantors) and securities, hold
moneys received from the Guaranteed Party and others or from any securities
unappropriated, apply such moneys against part of the Obligations and change any
such application in whole or in part from time to time, all as the Creditor may
see fit, without prejudice to or in any way discharging or diminishing the
liability of the Guarantor under this Guaranty, in each case, except to the
extent that the same constitutes a discharge or release, whether full, partial,
conditional or otherwise, of the Obligations to the Guaranteed Party. Creditor
may resort to Guarantor for payment of any of the Obligations whether or not
Creditor has previously resorted to any collateral security or proceeded against
any other obligor principally or secondarily obligated for any of the
Obligations. Guarantor hereby waives notice of acceptance of this Guaranty, and
also presentment, protest and notice of protest or dishonor of any evidences of
indebtedness guaranteed hereunder.

 

7. Demands and Notice. If Guaranteed Party fails to pay any Obligations, and
Creditor elects to exercise its rights under this Guaranty, Creditor shall make
a written demand on Guarantor (a “Payment Demand”). A Payment Demand shall
identify the Agreement under which demand is being made and identify the amount,
that the amount is unpaid and that any applicable cure period has expired, and
shall contain a statement that Creditor is calling upon Guarantor under this
Guaranty. A Payment Demand conforming to the foregoing requirements will be
sufficient notice to Guarantor to pay under this Guaranty. Notices under this
Guaranty will be deemed received if sent to the address specified below: (i) on
the day received if sent by overnight express delivery, (ii) on the next
business day if served by fax when sender has machine confirmation that the fax
was transmitted to the correct fax number listed below, (iii) four business days
after mailing if sent by certified, first-class mail, return-receipt requested.
Any party may change its address to which notice is to be given hereunder by
providing notice of same in accordance with this section.

 

To Guarantor:    Marathon Petroleum Corporation    Attn: Commercial Credit
Manager – Room 1014-M    539 S. Main St.    Findlay, OH 45840    Phone:
419-421-2172 Fax: 419-421-3153 To Creditor:    Enbridge Pipelines (North Dakota)
LLC    c/o Enbridge Inc.    Attn: Credit Manager    3000, 425 – 1st Street S.W.
   Calgary, AB T2P 3L8

 

8.

Representations and Warranties. Guarantor hereby represents and warrants that
(i) it is a corporation duly organized, validly existing and in good standing
under the laws of Delaware, (ii) the execution, delivery and performance by
Guarantor of this Guaranty have been duly

 

Page 2

--------------------------------------------------------------------------------

  authorized by all necessary corporate action and do not violate Guarantor’s
charter or by-laws, and (iii) this Guaranty constitutes the legal, valid and
binding obligation of Guarantor, enforceable against it in accordance with its
terms (except as enforceability may be limited by bankruptcy, insolvency, and
other similar laws affecting enforcement of creditors’ rights in general and
general principles of equity).

 

9. Miscellaneous. Neither the Guarantor nor the Creditor may assign this
Guaranty nor delegate its rights, interest or Obligations without the prior
written consent of the other party. This Guaranty constitutes the entire
agreement between the parties hereto and supersedes and replaces any previous
guaranty delivered by Guarantor to Creditor for the benefit of the Guaranteed
Party with respect to the Obligations outlined herein. THIS GUARANTY SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.
Each of the Guarantor and the Creditor irrevocably submits to the exclusive
jurisdiction of the courts of Delaware in any action or proceeding arising out
of or relating to this Guarantee and waives any objection to such jurisdiction
on the grounds that it is an inconvenient forum or any similar grounds. The
Guarantor consents to the service of process in any action or proceeding
relating to this Guarantee by Notice to the Guarantor in accordance with the
provisions of Section 7 hereof.

[SIGNATURE ON FOLLOWING PAGE]

 

Page 3

--------------------------------------------------------------------------------

This Guaranty is executed by Guarantor’s duly authorized representative
effective as of the date first written above.

 

MARATHON PETROLEUM CORPORATION By:  

 

  Timothy T. Griffith   Vice President of Finance and Treasurer

 

ACCEPTED AND AGREED TO BY: ENBRIDGE PIPELINES (NORTH DAKOTA) LLC By:  

 

Name: Title:

 

Page 4

--------------------------------------------------------------------------------

EXHIBIT D

MANAGEMENT COMMITTEE AND OFFICERS

Management Committee

Enbridge Designees

Paul Fisher

Andrew Harrington

Williston Designees

David M. Murphy

Craig O. Pierson

Officers

 

EXHIBIT D

--------------------------------------------------------------------------------

EXHIBIT E

FORM OF ADDENDUM AGREEMENT

[See Attached]

 

EXHIBIT E

--------------------------------------------------------------------------------

EXHIBIT E

ADDENDUM AGREEMENT

This Addendum Agreement is made this             day of             , 20    , by
and between             (the “Recipient”) and North Dakota Pipeline Company LLC,
a Delaware limited liability company (the “Company”), pursuant to the terms of
the Amended and Restated Limited Liability Company Agreement of the Company
dated as of November [—], 2013, including all exhibits and schedules thereto (as
amended, supplemented and restated from time to time, the “Agreement”).
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Agreement.

WITNESSETH:

WHEREAS, the Company and the Members entered into the Agreement to impose
certain restrictions and obligations upon themselves, and to provide certain
rights, with respect to the Company and its Units; and

WHEREAS, the Company and the Members have required in the Agreement that all
Persons to whom Units of the Company are issued or transferred must enter into
an Addendum Agreement binding such Persons to the Agreement to the same extent
as if they were original parties thereto and imposing the same restrictions and
obligations on such Persons and the Units to be acquired by such Persons as are
imposed upon the Members under the Agreement;

NOW, THEREFORE, in consideration of the mutual promises of the parties and as a
condition of the purchase or receipt by the Recipient of the Units, the
Recipient acknowledges and agrees as follows:

1. The Recipient has received and read the Agreement and acknowledges that the
Recipient is acquiring Class [    ] Units subject to the terms and conditions of
the Agreement.

2. The Recipient agrees that the Units acquired or to be acquired by the
Recipient are bound by and subject to all of the terms and conditions of the
Agreement, and hereby joins in, and agrees to be bound by, and shall have the
benefit of, all of the terms and conditions of the Agreement to the same extent
as if the Recipient were an original party to the Agreement and shall assume all
obligations of a Member under the Agreement; provided, however, that the
Recipient’s joinder in the Agreement shall not constitute admission of the
Recipient as a Member unless and until the Recipient is duly admitted as a
Member in accordance with the terms of the Agreement. This Addendum Agreement
shall be attached to and become a part of the Agreement.

3. The Recipient hereby represents and warrants, with respect to the Recipient,
as of the date hereof to the Company and the Members the matters set forth in
Article III of the Agreement.

4. Any notice required as permitted by the Agreement shall be given to the
Recipient at the address listed beneath the Recipient’s signature below.

 

NORTH DAKOTA PIPELINE COMPANY LLC

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

EXHIBIT E-1

--------------------------------------------------------------------------------

5. The Recipient is acquiring [    ] number of Class [    ] Units for $[    ]
per Unit.

6. Neither this Addendum Agreement nor any of the rights, interests, or
obligations of the Recipient hereunder may be assigned by the Recipient unless
such assignment is in accordance with the terms and provisions of the Agreement.

7. THIS ADDENDUM AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE CONFLICTS OF LAW
PRINCIPLES OF SUCH JURISDICTION.

8. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY AND VOLUNTARILY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS ADDENDUM AGREEMENT.

[Signature Page Follows]

 

NORTH DAKOTA PIPELINE COMPANY LLC

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

EXHIBIT E-2

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned has executed this Addendum Agreement on the
date first set forth above, with the Recipient being admitted as a Member as of
such date:

 

 

Recipient

Address for notice purposes in accordance with the Agreement:

 

 

AGREED TO on behalf of the Members of the Company.

 

NORTH DAKOTA PIPELINE COMPANY LLC By:     Name: Title:

 

NORTH DAKOTA PIPELINE COMPANY LLC

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

EXHIBIT E-3

--------------------------------------------------------------------------------

EXHIBIT F

SANDPIPER PROJECT SPEND PROFILE

[See Attached]

 

EXHIBIT F

--------------------------------------------------------------------------------

Sandpiper Spend Profile by Yearly Quarter

 

     TOTAL ESTIMATED
SPEND*      37.5% OF
TOTAL  

Q3-2013

   $ 25,475,691       $ 9,553,384   

Q4-2013

   $ 37,507,939       $ 14,065,477   

Q1-2014

   $ 39,302,473       $ 14,738,427   

Q2-2014

   $ 82,146,830       $ 30,805,061   

Q3-2014

   $ 310,913,725       $ 116,592,647   

Q4-2014

   $ 235,709,359       $ 88,391,010   

Q1-2015

   $ 55,649,905       $ 20,868,714   

Q2-2015

   $ 190,863,050       $ 71,573,644   

Q3-2015

   $ 665,393,368       $ 249,522,513   

Q4-2015

   $ 510,270,968       $ 191,351,613   

Q1-2016

   $ 200,155,116       $ 75,058,169   

Q2-2016

   $ 26,462,468       $ 9,923,425   

Q3-2016

   $ 62,659,108       $ 23,497,166   

Q4-2016

   $ 0       $ 0   

 

* Call Notices to be issued quarterly in advance except as provided in the
Agreement.

--------------------------------------------------------------------------------

SCHEDULE I

GROWTH CAPITAL PROJECTS

Plaza Makoti Pipeline (Stanley Deliveries)

Enbridge has been in negotiations with the MHA Nation to reactivate and reverse
the flow of the idle 6” Plaza pipeline and extend it 4 miles providing 20,000
bpd to their proposed Makoti Refinery operated by their Thunder Butte Petroleum
Services Company. This project will allow MHA Nation royalty crude produced on
the Fort Berthold Indian Reservation to feed their Makoti Refinery once the
refinery becomes operational in mid-2015. An origination pump station with
associated facilities will be installed at the EPND Stanley Terminal and
Delivery facilities will be installed at the Makoti refinery site, including
custody transfer & pressure control capabilities prior to the delivery.

Western Expansion

Production from Western MacKenzie and Williams Counties located adjacent to the
Company’s Alexander, Trenton and Little Muddy Stations is expected to see
significant growth over the next 5 years and will likely exceed the Company’s
127,000 bpd Phase 5 Loop capacity during 2014. A three phase project known as
the “Western Expansion” is designed to increase this pipeline capacity into
Beaver Lodge by at least 250,000 bpd and can be in-service prior to the start-up
of the Sandpiper Expansion Project (1Q 2016).

The first phase, the East Forks Station Upgrades, provides an incremental 65,000
bpd of capacity on the existing system and is expected to be in-service 3Q 2014.
The second phase, a 12” (or larger) pipeline from Alexander into Trenton will
increase that segment’s capacity from its current 80,000 bpd to 200,000 bpd. The
third phase, a 16” (or larger) pipeline from Trenton into Beaver Lodge will
provide higher capacity from Alex and Trenton into Beaver Lodge. The forecasted
volume increase to support the expansion project is currently estimated at
120,000 bpd coming from multiple customers both by pipeline connections and
increased truck receipts.

Sanish Pipeline

Production from south of the Missouri River in the counties of McKenzie and Dunn
is expected to increase significantly over the next 10 years.

A Class 4 cost estimate has been developed for the Sanish Pipeline, a 35 mile 12
inch line from Johnsons Corner to Beaver Lodge. It is expected that the project
would be developed in two phases, with initial capacity of 67,000 bpd. With
modest incremental capital expenditures the capacity of the line could be
increased to 100,000 bpd.

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SCHEDULE II

SANDPIPER FACILITIES

375 miles of 24” pipeline with a capacity of 225,000 barrels per day from Beaver
Lodge to an interconnection with the new Clearbrook east terminal and pump
station

A 233 mile 30” pipeline with a capacity of 375,000 barrels per day from
Clearbrook to an interconnection with the existing terminal owned by Enbridge
Energy, Limited Partnership in Superior

Pump stations at Beaver Lodge, Berthold, Lakota and Clearbrook

Tankage to be constructed at Beaver Lodge (300 kbbl shell capacity), Stanley
(135 kbbl shell capacity), Berthold (300 kbbl shell capacity) and Clearbrook
(300 kbbl shell capacity)

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SCHEDULE III

ISSUANCE OF INITIAL UNITS; INITIAL CAPITAL ACCOUNT BALANCES

 

Name   

Effective

Date Capital
Contribution
Amount

   Aggregate
Capital
Contribution
Amount    Initial
Class A
Units      Class A
Percentage
Interest    

Initial

Class B
Units

     Class B
Percentage
Interest     Initial Capital
Account
Balance

Enbridge Energy Partners, L.P.

  

Fair market

value of the

assets of the

Company

  

Fair market

value of the

assets of the

Company

     1,000         100 %      21,066,290         62.5 %   

Fair market

value of the

assets of the

Company

1100 Louisiana, Suite 3300

Houston, TX 77002

Attention: E. Chris Kaitson,

Vice President – Law, Deputy

General Counsel

                  

Williston Basin Pipe Line LLC

   $12,679,774    $12,679,774      —           —          12,639,774        
37.5 %    $12,679,774

539 South Main Street

Findlay, Ohio 45840

Attn: General Counsel

                  

With a copy to: Jones Day

717 Texas Avenue, Suite 3300

Houston, Texas 77002

Attn: Jeffrey A. Schlegel, Esq.