Exhibit 10.2

DPTS MARKETING LLC

SECOND AMENDED AND RESTATED MEMBER CONTROL AGREEMENT

          THIS SECOND AMENDED AND RESTATED MEMBER CONTROL AGREEMENT, (the
“Agreement”) is made effective as of December 31, 2013 (the “Effective Date”),
by and between Dakota Plains Marketing, LLC, a Minnesota limited liability
company (“DPM”), Petroleum Transport Solutions, LLC, a Minnesota limited
liability company (“PTS”), and DPTS Marketing LLC, a Minnesota limited liability
company (the “Company”).

RECITALS:

          A. DPM, PTS and the Company are parties to that certain DPTS Marketing
LLC Amended and Restated Member Control Agreement dated as of June 1, 2012 and
amended as of August 30, 2012 and as of June 17, 2013 (the “Original
Agreement”).

          B. DPM and PTS constitute all of the Members of the Company.

          C. DPM, PTS and the Company desire to amend and restate the Original
Agreement in its entirety as set forth herein and pursuant to Section 10.5 of
the Original Agreement.

          D. This Agreement is a Member Control Agreement under Chapter 322B of
the Minnesota Statutes, Section 322B.37.

          E. The parties are interested in the growth, development and
management of the Company and in the long-term economic success of the Company
and its business, and mutually desire to make certain agreements relating to the
(i) management and control of the Company and its business, (ii) admission and
termination of Members, and (iii) allocation of income, losses and distributions
between the Members.

AGREEMENTS:

          NOW THEREFORE, in consideration of the foregoing, the mutual terms,
covenants and conditions contained in this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

ARTICLE 1
FORMATION, NAME AND OFFICE, BUSINESS,
TERM, AND DEFINITIONS

          1.1) General. Except as otherwise provided in this Agreement or the
Company’s Operating Agreement, the rights and responsibilities of the Members
shall be as provided under the LLC Act (defined below). It is intended that the
Company be classified and taxed as a partnership for United States income tax
purposes, and no Member shall take any action not required by law to change the
tax status of the Company under the Code (defined below).

          1.2) Name and Principal Office. The name of the Company shall be “DPTS
Marketing LLC.” The Company’s principal office will be 605 North Highway 169,
Suite 1100, Plymouth, MN 55441, or such other place as the Board of Governors of
the Company (the “Board”) may from time to time determine.

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          1.3) Members. The names and addresses of the Members are set forth in
Exhibit A.

          1.4) Term. The Company shall exist perpetually until it is dissolved,
wound up, and terminated in accordance with this Agreement.

          1.5) Purpose. The Company shall be authorized to engage in (a) the
purchase, sale, storage, transport and marketing of hydrocarbons produced within
North Dakota to or from refineries and other end-users or Persons, wherever
located, and the conduct of Trading Activities (defined below); and (b) any
other lawful activities as the Board of Governors may determine from time to
time.

          1.6) Definitions. Unless the context otherwise specifies or requires,
the terms defined in this Section shall have the meanings given them in this
Section for purposes of this Agreement. Certain other capitalized terms used in
this Agreement are defined within this Agreement.

 

 

 

          (a) Affiliate. “Affiliate” means, with respect to any Person, any
other Person directly or indirectly controlling, controlled by or under common
control with such Person. For purposes of the immediately preceding sentence,
the term “control” (including, with correlative meanings, the terms
“controlling”, “controlled by” and “under common control with”), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through ownership of voting securities, by contract or
otherwise.

 

 

 

          (b) Agreement. “Agreement” means this Member Control Agreement as it
may be further amended or supplemented from time to time.

 

 

 

          (c) Articles of Organization. The “Articles of Organization” means the
document filed with the Secretary of State of Minnesota by the Organizer as they
may be further amended or supplemented from time to time.

 

 

 

          (d) Capital Accounts. The “Capital Accounts” means the capital
accounts maintained by the Company for each Member in respect of such Member’s
Company Interest.

 

 

 

          (e) Code. The “Code” means the Internal Revenue Code of 1986, as
amended. All references to a section of the Code or the treasury regulations
promulgated under the Code shall mean and include any subsequent amendment or
replacement of that section.

 

 

 

          (f) Company. The “Company” means DPTS Marketing LLC, a Minnesota
limited liability company, formed upon the filing of the Articles of
Organization with the Secretary of State of Minnesota.

 

 

 

          (g) Company Interest. “Company Interest” means all of a Member’s right
and interest in the Company.

 

 

 

          (h) Damages. “Damages” means any and all losses, liabilities, claims,
damages, deficiencies, fines, payments, assessments, taxes, liens, costs and
expenses (other than expenses for Labor Overhead), whenever or however arising
and whether or not resulting from third-party claims (including the reasonable
costs and expenses of any and all proceedings or other legal matters; all
amounts paid in connection with any demands, assessments, judgments, settlements
and compromises relating thereto; interest and penalties with respect thereto;
and costs and expenses, including reasonable attorneys’, accountants’ and other
experts’ fees and expenses,

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incurred in investigating, preparing for or defending against any such
proceedings or other legal matters or in asserting, preserving or enforcing an
indemnitee’s rights hereunder).

 

 

 

          (i) Distribution. “Distribution” means a distribution of cash or
property to the Members pursuant to this Agreement.

 

 

 

          (j) Distribution Percentage. “Distribution Percentage” means, with
respect to each Member as of the end of a calendar quarter, a percentage equal
to the Percentage Interest of such Member; provided, however, that if a Member
has terminated its participation in the Trading Activities pursuant to
Section 9.3, then during all periods of time during which such Member is a
Terminating Member, the Terminating Member’s Distribution Percentage shall be
equal to 15% and the Non-Terminating Member’s Distribution Percentage shall be
equal to 85%, in each case subject to Section 9.3(b)(v).

 

 

 

          (k) Governor. “Governor” means a natural person elected by the Members
to serve on the Board.

 

 

 

          (l) LLC Act. The “LLC Act” means the Minnesota Limited Liability
Company Act, as amended. All references in this Agreement to a section of the
LLC Act shall be considered also to include any subsequent amendment or
replacement of that section.

 

 

 

          (m) Members. The Members of the Company are collectively referred to
herein as the “Members” and individually as a “Member.”

 

 

 

          (n) ND Crude Oil. “ND Crude Oil” means crude oil originating from
production fields anywhere in North Dakota.

 

 

 

          (o) Operating Agreement. The “Operating Agreement” means the document
adopted by the Board relating to the operation of the Company,

 

 

 

          (p) Organizer. “Organizer” means the individual signing and filing the
Articles of Organization.

 

 

 

          (q) Percentage Interest. “Percentage Interest” of each Member shall be
a fraction, the numerator of which is the total number of Units held by such
Member on the date of determination and the denominator of which is the Total
Units as of such date.

 

 

 

          (r) Profits and Losses. “Profits” and “Losses” shall have the meaning
set forth in Appendix A.

 

 

 

          (s) Person. “Person” means any natural person, company (whether
general or limited), limited liability company, trust, estate, association,
corporation, joint venture, proprietorship, governmental agency, trust, estate,
association, custodian, nominee or any other individual or entity, whether
acting in an individual, fiduciary, representative or other capacity.

 

 

 

          (t) Risk Equivalence. “Risk Equivalence” refers to the objective of
maintaining between Members an equivalent level of risk with respect to their
respective Units (except as otherwise provided in this Agreement), all as more
specifically described in Section 10.1 below.

 

 

 

          (u) Termination Loss Amount. “Termination Loss Amount” means, with
respect to the effective date of any Trading Activities Termination, the amount,
if any, by which the

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Termination Net Value is less than the aggregate amount of all outstanding
Member Preferred Contributions by all Members as of the effective date of the
Trading Activities Termination.

 

 

 

          (v) Termination Net Value. “Termination Net Value” means, with respect
to the effective date of any Trading Activities Termination, whether positive or
negative, the amount of assets of the Company minus the amount of liabilities of
the Company (which shall include all accrued and unpaid preferred returns on
Member Preferred Contributions), in each case as of the effective date of the
Trading Activities Termination as determined by the Trading Member after
performing a mark-to-market analysis of the assets, liabilities and trading
positions of the Company as of the effective date of the Trading Activities
Termination. For the avoidance of doubt, the amount of outstanding Member
Preferred Contributions shall not be considered liabilities of the Company.

 

 

 

          (w) Total Units. “Total Units” means the aggregate outstanding Units
issued to all Members as of a given date.

 

 

 

          (x) Unit. “Unit” means the designation which the Company has
established to represent the Company Interests of the Members.

 

 

 

          (y) Unrealized Termination Profits. “Unrealized Termination Profits”
means, with respect to the date any Terminating Member resumes participation in
the Trading Activities pursuant to Section 9.3(e), the amount of any unrealized
profits with respect to assets, liabilities and trading positions of the Company
as of such date as determined by the Trading Member after performing a
mark-to-market analysis thereof as of such date.

ARTICLE 2
MEMBERS

          2.1) Members. The Members will be those Persons named in Exhibit A,
each assignee of a Company Interest who is admitted as a Member under this
Agreement, and new Members admitted pursuant to this Agreement.

ARTICLE 3
CAPITAL, SERVICES, MEMBER PREFERRED CONTRIBUTIONS AND VOTING

          3.1) Capital Accounts. The following shall apply with respect to the
Capital Accounts: A Capital Account shall be maintained for each Member and
determined in accordance with Section 2 of Appendix A. A credit balance in a
Member’s Capital Account shall not entitle such Member to demand any
Distribution from the Company, and a debit balance in a Member’s Capital Account
shall not constitute an obligation of such Member to the Company. No Capital
Account maintained for the Members by the Company shall bear interest.

          3.2) Capital Contributions. The following provisions apply with
respect to contributions to the Company

 

 

 

          (a) The capital contribution of each Member shall be the amount of
money and fair market value of any property (net of liabilities secured by such
property that the Company is considered to assume or take such property subject
to and net of any other liabilities of a Member that are assumed by the Company
in connection with the contribution of such property) contributed by a Member to
the Company.

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          (b) A Member shall not be obligated to make additional capital
contributions to the Company except as the Members may unanimously agree in
writing.

 

 

 

          (c) It is specifically intended that no creditor of the Company nor
creditor of a Member will have any right by virtue of this Section or any other
provision of this Agreement to obligate any Member to pay funds to such creditor
or to the Company.

 

 

 

          (d) Each Member has made an initial cash capital contribution of One
Hundred dollars ($100).

 

 

 

          (e) No Member shall be required or permitted to make capital
contributions of more than One Hundred dollars ($100) in the aggregate without
the unanimous written consent of all Members.

 

 

 

3.3) Services to be Performed by the Trading Member.

 

 

 

          (a) Trading Services. During the Term, one of the Members (the
“Trading Member”), which shall initially be PTS, acting itself or through one or
more of its Affiliates, shall perform and be solely responsible for purchasing,
selling, storing, transporting, marketing and transacting trades in ND Crude
Oil, and entering into related agreements and conducting related activities, on
behalf of the Company, subject to the terms contained in this Agreement (the
“Trading Activities”). All Trading Activities in ND Crude Oil involving
transportation by rail and requiring transloading shall be required to be
transloaded at the New Town, North Dakota, facility owned by DPT or its
Affiliate unless otherwise agreed upon by the Members. Trading Activities may,
without limitation, consist of physical and/or financial transactions, including
hedging or other financial arrangements not involving the actual trading of any
physical ND Crude Oil; provided, however, that such financial transactions must
be entered into for risk management purposes and must not involve the assumption
of any flat price risk. Counterparties to any individual transaction
constituting a Trading Activity may be the Company, the Trading Member or an
Affiliate of the Trading Member, as determined by the Trading Member in its sole
discretion; provided, that any and all transactions constituting Trading
Activities to which the Trading Member or an Affiliate of the Trading Member is
a counterparty shall be segregated from, and not commingled with, other
transactions and lines of business engaged in by the Trading Member and its
Affiliates. The Trading Member shall be solely responsible for employing and
compensating employees that execute transactions constituting Trading Activities
and for providing office space and necessary information technology equipment
for such employees to conduct the Trading Activities. The Trading Member shall
be obligated to use commercially reasonable efforts, in the exercise of its
reasonable judgment, to maximize the profitability to the Company of the Trading
Activities, considered in the aggregate, over the Term, it being understood that
(x) such commercially reasonable efforts shall not require the Trading Member to
take any actions prohibited by this Agreement or to make any contributions or
advances to the Company not required by this Agreement and (y) the Trading
Member shall not be in violation of its obligations hereunder in the exercise of
its judgment in connection with any individual trading transaction except as
provided in Section 7.8.

 

 

 

          (b) Charges. Commencing with the Effective Date, the Company shall pay
to the Trading Member a fee per barrel of ND Crude Oil as approved by the Board
(the “Charge”) subject to Trading Activities during such month; provided, that
from and after such time the Trading Member shall be entitled to receive a
minimum monthly Charge calculated assuming a minimum volume of five thousand
(5,000) barrels per day in Trading Activities; provided, further that in the
event the Trading Member does not engage in any Trading Activities for three

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(3) consecutive months, then such minimum monthly Charge shall be suspended
commencing in the month following such three (3) consecutive month period until
the next succeeding month in which the Trading Member engages in any Trading
Activities. The Charge for each month shall be paid to the Trading Member within
five (5) days after the end of such month. The Trading Member shall be solely
responsible for the Trading Member’s direct cost of salary, office space,
information technology equipment and related overhead incurred in its employment
of employees that execute transactions constituting Trading Activities (“Labor
Overhead”). Other than for Labor Overhead, the Company (and not the Trading
Member) shall be responsible and liable for all (i) out-of-pocket and other
costs and expenses incurred by the Company or the Trading Member or any of its
Affiliates in connection with conducting Trading Activities, including all
commissions (including commissions on physical and financial Trading
Activities), brokerage fees, insurance fees, transport fees, shrinkage fees,
inspection fees and other fees and expenses, and (ii) losses incurred by the
Company or the Trading Member or any of its Affiliates as a result of
transactions constituting Trading Activities (it being understood that
allocations of Profits and Losses to each Member will be effected in accordance
with the terms of this Agreement).

 

 

 

          (c) Rail Cars. During the term of the Company’s operations under this
Agreement, the Trading Member will continue to sublease to the Company rail cars
under the subleases identified on Exhibit B, which exhibit may be amended, from
time to time by unanimous action of the Board. Each such sublease, including the
rent payments thereunder, shall be deemed Member Transactions for purposes of
this Agreement.

 

 

 

          (d) Limitations. Unless otherwise approved by each Member, the Trading
Member’s ability to engage in Trading Activities shall be subject to the
following limitations:

 

 

 

 

 

          (i) each individual transaction shall be subject to a maximum volume
of ten thousand (10,000) barrels per day and a maximum term of twenty-four (24)
months; provided that such maximum volume may be increased to twenty thousand
(20,000) barrels per day and such maximum term may be increased to forty-eight
(48) months for any individual transaction with the approval of each Member’s
Authorized Person (defined below);

 

 

 

 

 

          (ii) the aggregate portfolio limit in respect of Trading Activities
shall be fifty thousand (50,000) barrels per day of purchases and/or sales;

 

 

 

 

 

          (iii) the maximum outright flat price volume exposure in respect of
Trading Activities at any time shall be fifty thousand (50,000) barrels, either
long or short; and

 

 

 

 

 

          (iv) all Trading Activities shall be transacted through segregated
sub-accounts reviewed by independent auditors on a quarterly basis. The Trading
Member also agrees to provide such documents and information as are reasonably
requested to allow all Members to complete quarterly financial reviews and
annual audits of all Trading Activities for their own financial reporting
purposes;

 

 

 

 

 

provided, however, the approval of any Member who has terminated its
participation in the Trading Activities pursuant to Section 9.3 shall not be
required in connection with the foregoing activities during all periods of time
during which such Member is a Terminating Member.

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          (e) Authorized Person. Each Member shall designate an authorized
person (such Member’s “Authorized Person”) who shall have authority to approve
Trading Activities that would otherwise be limited without such Member’s
approval pursuant to Section 3.3(c)(i).

 

 

 

          (f) Trading Member Discretion. The Members hereby acknowledge and
agree that except to the extent provided in Section 3.3(c), the Trading Member
shall have sole discretion in conducting the Trading Activities, and that such
discretion shall include whether or not to engage in any Trading Activities, the
selection of Trading Activities to engage in, the evaluation of risks related
thereto, the timing of Trading Activities and the establishment of cash flows,
revenues and margins to be derived from Trading Activities; provided, however
that the other Member shall at all times have the right to participate in the
vetting of contractors, conduct risk assessments and audit any of the Trading
Activities.

 

 

 

          (g) Internal Controls. The Trading Member shall implement internal
controls and financial reporting procedures to (i) enable any and all
transactions constituting Trading Activities to be segregated from, and not
commingled with, other transactions and lines of business engaged in by the
Trading Member and its Affiliates and (ii) enable the Trading Activities to be
tracked and reported.

 

 

 

          (h) Summary Reports. Within the time period(s) set forth in Exhibit C,
the Trading Member shall provide to each other Member (to such Person as such
other Member shall designate) a summary report of the information set forth in
Exhibit C under the heading “Summary Reports”.

 

 

 

          (i) Financial Reports. Within twenty (20) days after the end of each
month during which any Trading Activities occur, the Trading Member shall
provide each other Member with the items required in Exhibit C under the heading
“Financial Reports”.

 

 

 

          (j) PTS Trading Activity Termination. In the event PTS terminates its
participation in the Trading Activities pursuant to Section 9.3, PTS shall
thereafter immediately cease to be the Trading Member, at which point DPM shall
become the Trading Member. If, after DPM so becomes the Trading Member, PTS
resumes its participation in the Trading Activities and DPM terminates its
participation in the Trading Activities, then PTS shall become the Trading
Member again.

 

 

 

          (k) Removal of Trading Member. Except as provided in Section 3.3(j),
PTS may not be removed as the Trading Member without the unanimous approval of
the Board.

 

 

 

3.4) [Intentionally Omitted].

 

 

          3.5) Preferred Contributions. In order to support and fund the Trading
Activities, the Members shall make preferred contributions (the “Member
Preferred Contributions”) to the Company as follows:

 

 

 

          (a) Initial Contribution. Upon formation of the Company, each Member
made an initial Member Preferred Contribution to the Company in the amount of
Ten Million dollars ($10,000,000). Each Member of the Company has provided the
cash proceeds of its respective Member Preferred Contribution.

 

 

 

          (b) Additional Contributions. Upon the written agreement of all the
Members, the Members will make such additional Member Preferred Contributions to
the Company as are agreed upon in writing by all of the Members on such terms as
they shall so agree (including such

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terms as shall be contained in an amendment to the Agreement). No Member shall
be required to make Member Preferred Contributions of more than Ten Million
dollars ($10,000,000) in the aggregate without the unanimous written consent of
all Members. Notwithstanding anything in this Agreement to the contrary, either
Member may make additional Member Preferred Contributions to the Company in
excess of Ten Million dollars ($10,000,000) without the agreement of the other
Member but only to the extent necessary to effectively conduct Trading
Activities in accordance with this Agreement; provided, that (x) such additional
Member Preferred Contributions made without the agreement of the other Member
shall not result in any adjustment to the Members’ Distribution Percentages or
to the relative amounts of distributions to be made to the Members pursuant to
Section 5.1(b)(iv) or Section 9.2(b)(v) or impact the ownership of Units by the
Members and (y) the terms of such additional Member Preferred Contributions
shall be negotiated in good faith by all the Members.

 

 

 

          (c) Preferred Returns. All Member Preferred Contributions made to the
Company shall entitle the Member who made such Member Preferred Contributions to
receive a cumulative preferred return on such Member Preferred Contributions of
5% per annum, which preferred return will be paid in cash on a quarterly basis
subject to there being cash available to be distributed therefor pursuant to
Section 5.1(b)(i). The parties acknowledge that it shall not be a default
hereunder if preferred returns on any Member Preferred Contribution are not paid
at any time if funds are not available to pay the same pursuant to
Section 5.1(b)(i) (it being understood that such preferred returns will continue
to be due and owing and will be payable when cash is next available therefor
pursuant to Section 5.1(b)(i)). Distributions of preferred returns on Member
Preferred Contributions must be made to each Member simultaneously pro rata
based on each Member’s respective proportion of outstanding Member Preferred
Contributions. Members shall begin to receive distributions in respect of their
outstanding Member Preferred Contributions on a quarterly basis promptly
following the quarter ended December 31, 2026 pursuant to Section 5.1(b)(ii).
The parties acknowledge that it shall not be a default hereunder if
distributions in respect of outstanding Member Preferred Contributions are not
paid at any time after December 31, 2026 if funds are not available to pay the
same pursuant to Section 5.1(b)(ii) (it being understood that such outstanding
Member Preferred Contributions will continue to be due and owing and will be
payable when cash is next available therefor pursuant to Section 5.1(b)(ii)).

 

 

 

          (d) Company Cash. All cash of the Company, including the proceeds of
cash capital contributions, loans and Member Preferred Contributions and cash
derived from Trading Activities, shall be deposited by the Trading Member in one
or more segregated bank accounts in the name of the Company and shall be
controlled by the Trading Member and used by the Trading Member in its sole
discretion to conduct the Trading Activities.

          3.6) Distributions In Respect Of Contributions. Upon any distribution
pursuant to this Agreement to a Member in respect of outstanding Member
Preferred Contributions (other than distributions in respect of accrued and
unpaid preferred returns thereon), the portion of such Member Preferred
Contributions in respect of which a distribution was made pursuant to this
Agreement shall cease to accrue preferred returns and shall be cancelled and no
longer outstanding for any purpose whatsoever.

          3.7) Voting Power. Each Unit shall entitle the owner of such Unit to
one vote on all matters submitted to the vote of Members. Member Preferred
Contributions shall not entitle the makers thereof to any voting rights in
respect of such Member Preferred Contributions.

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ARTICLE 4
TAX MATTERS AND ALLOCATIONS

          4.1) Tax Characterization and Returns. The Members acknowledge that
the Company will be treated as a “partnership” for federal and Minnesota state
income tax purposes. Within a reasonable time after the end of each fiscal year,
the Company shall deliver to each Person who was a Member at any time during
such fiscal year a Form K-1 and such other information, if any, with respect to
the Company as may be necessary for the preparation of such Member’s federal or
state income tax (or information) returns, including a statement showing each
Member’s share of income, gain, or loss and credits for such fiscal year for
federal or state income tax purposes.

          4.2) Accounting Decisions, Tax Elections. All decisions as to
accounting matters or tax elections shall be made by the Board. The Board may
make or revoke such elections as may be allowed pursuant to the Code, including
the election referred to in Section 754 of the Code to adjust the basis of
Company property.

          4.3) Tax Matters Partner. The Board shall designate a Member to act on
behalf of the Company as the “Tax Matters Partner” within the meaning of Section
6231(a)(7) of the Code. PTS shall be the initial Tax Matters Partner.

          4.4) Section 754 Election. Any election by the Company under
Section 754 of the Code to adjust the basis of the Company’s assets pursuant to
Section 734 and Section 743 of the Code shall be made in the discretion of the
Board. If such election is made, allocation of items of the Company’s income,
gain, loss and deductions shall otherwise be made in a manner consistent with
such allocation of basis in accordance with Section 734 and/or Section 743 of
the Code, as the case may be, notwithstanding any other provision of this
Agreement.

          4.5) Allocation of Profits and Losses. After giving effect to the
special allocations set forth in Sections 3 and 4 of Appendix A:

 

 

 

                    (a) Profits for any fiscal year of the Company, or part
thereof, shall be allocated to the Members as follows:

 

 

 

 

 

          (i) First, to the Members, in proportion to their relative share of
Losses allocated to the Members pursuant to Section 4.5(b)(vi), until the
cumulative Profits allocated to the Members pursuant to this Section 4.5(a)(i)
equals the cumulative Losses allocated to the Members pursuant to Section
4.5(b)(vi);

 

 

 

 

 

          (ii) Second, to the Terminating Member, if any, in the amount of the
Losses allocated to the Terminating Member pursuant to Section 4.5(b)(v), until
the cumulative Profits allocated to the Terminating Member pursuant to this
Section 4.5(a)(ii) equals the cumulative Losses allocated to the Terminating
Member pursuant to Section 4.5(b)(v);

 

 

 

 

 

          (iii) Third, to the Members, in proportion to their relative share of
Losses allocated to the Members pursuant to Section 4.5(b)(iv), until the
cumulative Profits allocated to the Members pursuant to this Section 4.5(a)(iii)
equals the cumulative Losses allocated to the Members pursuant to Section
4.5(b)(iv);

 

 

 

 

 

          (iv) Fourth, to the Members, in proportion to their relative share of
preferred return (taking into account only preferred returns for which Profits
have not previously been allocated under this Section 4.5(a)(iv)) accrued on
each Member’s Member

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Preferred Contributions since the date of such Member’s Member Preferred
Contributions until the amount of Profits allocated to each Member pursuant to
this Section 4.5(a)(iv) for this and all prior years (after taking into account
any allocation of Losses pursuant to Section 4.5(b)(iii)) equals the amount of
preferred return accrued on such Member’s Member Preferred Contributions since
the dates of such Member’s Member Preferred Contributions;

 

 

 

 

 

          (v) Fifth, in the event Members are entitled to receive distributions
under Section 5.1(b)(iii) in respect of Unrealized Termination Profits, an
amount equal to such Unrealized Termination Profits until the cumulative Profits
allocated pursuant to this Section 4.5(a)(v) (after taking into account any
allocation of Losses pursuant to Section 4.5(b)(ii)) equals the cumulative
distributions to which such Member is entitled to receive pursuant to Section
5.1(b)(iii); and

 

 

 

 

 

          (vi) Sixth, to the Members, in proportion to their Distribution
Percentages.

 

 

 

 

          (b) Losses for any fiscal year of the Company, or part thereof, shall
be allocated to the Members as follows:

 

 

 

 

 

          (i) First, to the Members, in proportion to their relative share of
Profits allocated to the Members pursuant to Section 4.5(a)(vi), less the
cumulative distributions paid to the Members pursuant to Section 5.1(b)(iv),
until the cumulative Losses allocated to the Members pursuant to this Section
4.5(b)(i) equals the cumulative Profits allocated to the Members pursuant to
Section 4.5(a)(vi);

 

 

 

 

 

          (ii) Second, to the Members, in proportion to their relative share of
Profits allocated to the Members pursuant to Section 4.5(a)(v), less the
cumulative distributions paid to the Members pursuant to Section 5.1(b)(iii),
until the cumulative Losses allocated to the Members pursuant to this Section
4.5(b)(ii) equals the cumulative Profits allocated to the Members pursuant to
Section 4.5(a)(v);

 

 

 

 

 

          (iii) Third, to the Members, in proportion to their relative share of
Profits allocated to the Members pursuant to Section 4.5(a)(iv), less the
cumulative distributions paid to the Members pursuant to Section 5.1(b)(i),
until the cumulative Losses allocated to the Members pursuant to this Section
4.5(b)(iii) equals the cumulative Profits allocated to the Members pursuant to
Section 4.5(a)(iv);

 

 

 

 

 

          (iv) Fourth, to the Members, in proportion to their relative share of
Member Preferred Contributions, until the amount of Losses allocated to each
Member pursuant to this Section 4.5(b)(iv) for this and all prior years (after
taking into account any allocation of Profits pursuant to Section 4.5(a)(iii))
equals the amount of such Member Preferred Contributions less any amounts
distributed in respect of such Member Preferred Contributions pursuant to
Section 5.1(b)(ii), provided that in the event a Member terminates its
participation in the Trading Activities pursuant to Section 9.3, then during all
periods of time during which such Member is a Terminating Member, all of the
Losses allocated pursuant to this Section 4.5(b)(iv) shall be allocated to the
Non-Terminating Member;

 

 

 

 

 

          (v) Fifth, to the Terminating Member, if any, during all periods of
time during which such Member is a Terminating Member, until the amount of
Losses allocated to the Terminating Member pursuant to this Section 4.5(b)(v)
for this and all

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prior years (after taking into account any allocation of Profits pursuant to
Section 4.5(a)(ii)) equals the amount of such Member’s Member Preferred
Contributions less (x) any amounts distributed in respect of such Member’s
Member Preferred Contributions pursuant to Section 5.1(b)(ii) and (y) amounts
distributed to such Member pursuant to Section 5.1(b)(iii); and

 

 

 

 

 

          (vi) Sixth, to the Members, in proportion to and in accordance with
their Distribution Percentages.

 

 

 

 

Notwithstanding the foregoing, the allocation of Profits and Losses for any year
shall be adjusted as appropriate to take into account changes from time-to-time
in Distribution Percentages, including changes resulting from a Member
terminating participation in the Trading Activities pursuant to Section 9.3, so
that the cumulative amount of Profits and Losses allocated to each Member is
appropriately reflective of each Member’s Distribution Percentages and rights to
receive distributions under Section 5.1 and Article 9.

ARTICLE 5
DISTRIBUTIONS

          5.1) Distribution and Payment Provisions. The following provisions
apply with respect to the distribution and payment of items to and among the
Members:

 

 

 

 

          (a) Priority Cash Available. As soon as practicable following the end
of each calendar quarter, the Trading Member shall determine the amount of
Priority Cash Available. For purposes of this Section, “Priority Cash Available”
shall mean cash accumulated by the Company at the end of a calendar quarter in
excess of the sum of (x) until the calendar quarter ending December 31, 2026,
the aggregate amount of outstanding Member Preferred Contributions and (y) cash
necessary to:

 

 

 

 

 

          (i) pay operating expenses of the Company incurred to parties other
than Members or their respective Affiliates (the “Third Party Expenses”), the
Charges to the Trading Member pursuant to Section 3.3(b), any amounts payable to
the Trading Member pursuant to Section 7.9 and accounting fees payable to the
Trading Member pursuant to Section 7.6(c) and to fund Trading Activities, in
each case through the end of such calendar quarter, and

 

 

 

 

 

          (ii) pay the amount of cash reasonably projected by the Trading Member
(the “Reserve”) to be necessary for the payment of Third Party Expenses, the
Charges to the Trading Member pursuant to Section 3.3(b), any amounts payable to
the Trading Member pursuant to Section 7.9 and accounting fees payable to the
Trading Member pursuant to Section 7.6(c) and the funding of Trading Activities,
in each case through the end of the next calendar quarter.

 

 

 

 

The Members acknowledge and agree that the payment of Third Party Expenses, the
Charge to the Trading Member pursuant to Section 3.3(b), any amounts payable to
the Trading Member pursuant to Section 7.9 and Financial Services Fee (defined
below) payable to the Trading Member pursuant to Section 7.6(c) and the funding
of Trading Activities, in each case through the end of an applicable calendar
quarter, shall be provided for prior to the setting aside of any amounts in
respect of the Reserve. Notwithstanding the foregoing, the Company may reduce
Priority Cash Available by any amount that the Board unanimously determines is
necessary or prudent to pay any anticipated costs or extraordinary expenses for
succeeding calendar quarters.

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          (b) Priority Payments to Members. To the extent there is Priority Cash
Available, as soon as practicable following the end of each calendar quarter,
but in no event more than thirty (30) days following the end of each calendar
quarter, the Company shall make distributions to the Members as follows:

 

 

 

 

 

          (i) First, in respect of preferred returns due to Members with respect
to outstanding Member Preferred Contributions for the calendar quarter just
ended and for any prior period for which preferred returns have not been paid
thereon, on a pro rata basis to the Members based on the then outstanding amount
of accrued and unpaid preferred returns for such calendar quarter and all prior
periods due to each Member on all Member Preferred Contributions made by such
Member;

 

 

 

 

 

          (ii) Second, to the extent of any Priority Cash available after
application of clause (i) above, for all quarters commencing with the quarter
ended December 31, 2026, in respect of outstanding Member Preferred
Contributions, on a pro rata basis to the Members based on each Members’ then
outstanding Member Preferred Contributions;

 

 

 

 

 

          (iii) Third, to the extent of any Priority Cash available after
application of clauses (i) and (ii) above, in the event there are Unrealized
Termination Profits as of the date any Terminating Member resumes participation
in the Trading Activities pursuant to Section 9.3(e), 85% of such Unrealized
Termination Profits to the Non-Terminating Member and 15% of such Unrealized
Termination Profits to the Terminating Member until the aggregate amount of all
distributions pursuant to this Section 5.1(b)(iii) is equal to the amount of
such Unrealized Termination Profits; and

 

 

 

 

 

          (iv) Fourth, to the extent of any Priority Cash available after
application of clauses (i), (ii) and (iii) above, all of such Priority Cash
Available to the Members based upon their Distribution Percentages in effect on
the last day of the applicable calendar quarter with respect to which
distributions are being made pursuant to this Section 5.1(b)(iv).

 

 

 

 

 

(c) Other Distribution Matters.

 

 

 

 

 

          (i) So long as all preferred returns have been paid on all outstanding
Member Preferred Contributions for the calendar quarter just ended and for all
prior periods, all Unrealized Termination Profits have been fully paid pursuant
to Section 5.1(b)(iii) and all amounts, if any, available to be distributed
under Section 5.1(b)(iv) for the calendar quarter just ended have been
distributed, the Board after the end of any calendar quarter occurring prior to
December 31, 2026, upon unanimous consent of all Governors, may declare and pay
distributions in respect of all or any portion of outstanding Member Preferred
Contributions (but if such distributions are not made in respect of all
outstanding Member Preferred Contributions, such distributions shall be on a pro
rata basis based on each Members’ then outstanding amount of Member Preferred
Contributions).

 

 

 

 

 

          (ii) No Member shall have any right to interim Distributions except as
determined by the Board, and, except as otherwise provided in this Agreement, no
Member shall be entitled to interest on any contributions made by such Member to
the Company. No Member shall have the right to withdraw or to demand the return
or repayment of any or all of such Member’s contributions.

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          (iii) Any and all amounts payable to the Members under Section 3.3(b)
for the Charge and Section 7.6(c) for the Financial Services Fee (defined
below): (1) shall be deemed operating expenses of the Company, (2) shall not be
subject to treatment as a Member Transaction and (3) shall not offset or
otherwise adjust any distributions to such Member in respect of such Member’s
Units.

 

 

 

 

 

          (iv) The Members hereby agree to cause the Board to take such actions
as may be necessary to implement the distributions and payments described in
this Section 5.1.

 

 

 

 

          (d) Tax Burden Distributions. Notwithstanding the provisions of
subparagraphs (a) and (b) above:

 

 

 

 

 

          (i) The Company shall distribute to the Members each calendar year, to
the extent there is Priority Cash Available, the amount calculated pursuant to
Section 5.1(d)(ii) to permit the Members to pay income taxes on their respective
allocable shares of the estimated taxable income of the Company; provided, that
such estimated taxable income may be offset by any allocable loss carryforwards
of the Company in the sole discretion of the Board.

 

 

 

 

 

          (ii) Distributions in accordance with the foregoing paragraph shall be
based on the premise that all Members are subject to the maximum combined
federal and Minnesota tax rates applicable to the type of income generated by
the Company (after making appropriate provisions for cross-deductibility of
federal and state income taxes).

 

 

 

 

 

          (iii) The Board may make Distributions on a quarterly basis to
facilitate the payment of estimated taxes by the Members.

 

 

 

 

 

          (iv) Any amount distributed pursuant to this Section 5.1(d) shall, for
purposes of calculating the amount of future distributions pursuant to
Section 5.1(b)(i), Section 5.1(b)(iii), Section 5.1(b)(iv) (but not in respect
of distributions in respect of any Member Preferred Contribution) and
Section 9.2(b), be taken into account and considered to be an advance with
respect to the next distributions to which such Member is otherwise entitled
pursuant to such Sections.

 

 

 

 

          (e) In-Kind Distributions. No Member shall have the right to require
any distribution of any assets of the Company in kind. If any assets of the
Company are distributed in kind, such assets shall be distributed on the basis
of their fair market value as determined by the Board. Solely for the purpose of
maintaining Capital Accounts, the amount by which the fair market value of any
property to be distributed exceeds or is less than the adjusted basis of such
property for book purposes shall be taken into account in determining Profit or
Loss as if such property had been sold at its fair market value as determined in
good faith by the Board.

ARTICLE 6
ISSUANCE/ESTABLISHMENT OF UNITS; ADMISSION OF MEMBERS; REGISTRATION

          6.1) Issuance/Establishment of Units. Notwithstanding any provision of
this Agreement or the Operating Agreement to the contrary, the Company shall not
issue any additional Units at any time without the unanimous express written
consent of all Members at the time of such proposed issuance. Any Member may
withhold its consent to the issuance of any additional Units for any reason or
no reason whatsoever, in its sole and unilateral discretion. In connection with
the issuance of any additional Units,

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the Board shall value all nonmonetary consideration and establish a price in
money or other consideration, or a minimum price, or a general formula or method
by which the price will be determined. The Board may establish, by resolution
adopted in the manner described in the Operating Agreement, either additional
Units or one or more additional classes or series of Units, designate each such
additional class or series, and fix the relative rights and preferences of each
such additional class or series, subject to the provisions of this Agreement.
Notwithstanding any provision of this Agreement or the Operating Agreement to
the contrary, the Board shall not establish additional Units or additional
classes or series of Units, designate each such additional class or series, or
fix the relative rights and preferences of each such additional class or series
without the unanimous express written consent of all Members at the time of such
proposed issuance. Any Member may withhold its consent to such actions for any
reason or no reason whatsoever, in its sole and unilateral discretion.

 

 

 

6.2) Admission of Members.

 

 

 

          (a) Issuance or Assignment of Units. A Person shall be admitted as a
Member upon payment for any Units issued to such Person pursuant to Section 6.1
of this Agreement effective when such Person executes or otherwise evidences an
intent to be bound by this Agreement. An assignee of a Member’s Units may be
admitted as a Member upon unanimous consent of all Members at such time, but
only if such Person executes or otherwise evidences an intent to be bound by
this Agreement.

 

 

 

          (b) Exhibit A. The current Members of the Company and the capital
contributions made or agreed to be made by each of them and numbers of Units
that are issued and outstanding are set forth on Exhibit A. The Board is
authorized from time to time to update Exhibit A to reflect the identity of all
Members, the capital contributions made or agreed to be made and the class and
number of each class of Units that are issued and outstanding.

 

 

 

6.3) Registration.

 

 

 

          (a) Register. The Company shall keep at its principal office a
register containing the names of the owners of outstanding Units and all
transfers of outstanding Units. References to the owner of a Unit shall mean the
Person shown as the owner of such Unit in the register, and the ownership of a
Unit shall be proved by such register. Except as otherwise specifically provided
in this Agreement, the registered owner of a Unit shall be deemed to be the
owner of such Unit and a Member for all purposes of this Agreement.

 

 

 

          (b) Certificates. Certificates evidencing the Units owned by a Member
may, but need not, be issued by the Company. Each certificate shall serve only
as evidence of ownership of the Units it identifies and shall not be assignable,
except as otherwise provided in this Agreement.

 

 

 

          (c) Registration of a Transfer. Each Unit issued under this Agreement,
whether originally or in substitution for, or upon transfer, exchange or other
issuance of a Company Interest represented by such Unit, shall be registered on
the effective date of the transfer, exchange or other issuance as determined in
good faith by the Board; provided, however, that no registration of any transfer
not made in compliance with this Agreement shall be made in the register.

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          (d) Preemptive Rights. No Member, merely because of such Member’s
status as a Member or an owner of Units, shall have any preemptive rights to
purchase any Units proposed to be sold or issued by the Company.

ARTICLE 7
MANAGEMENT AND OPERATION OF THE COMPANY

          7.1) No Authority of the Members. Except as specifically provided in
this Agreement, no Member shall have any authority in such Member’s capacity as
a Member to act for, or to assume any obligations or responsibility on behalf
of, or bind the Company or any other Member. Such authority shall be vested
solely in the Board (and, pursuant to Section 7.2(c), officers, employees and
agents of the Company) under this Agreement.

 

 

 

 

7.2) Board of Governors.

 

 

 

 

          (a) Management Vested in Board. The business and affairs of the
Company shall be managed by or under the authority of the Board, except as
otherwise specifically required by the LLC Act or this Agreement. Except as
otherwise provided in this Agreement or the Operating Agreement, the Board shall
have the sole and exclusive power to manage the Company’s business.
Notwithstanding any provision of this Agreement or the Operating Agreement to
the contrary, except as may be required under the LLC Act, each of the following
actions must be approved by the Board:

 

 

 

 

 

          (i) the sale or issuance of any Units or other securities exercisable
for, convertible into or related to the Units or which cause the Company to
incur any debt;

 

 

 

 

 

          (ii) except as otherwise provided for in Section 5.1, authorizing any
distribution and declaring or paying any other distributions;

 

 

 

 

 

          (iii) any transactions with any Member or any Affiliate of any Member
except as otherwise provided in this Agreement;

 

 

 

 

 

          (iv) any transaction or series of related transactions outside the
ordinary course of business to acquire, dispose of, encumber or transfer assets
having a value in excess of $75,000;

 

 

 

 

 

          (v) consolidations, mergers or any other extraordinary transactions;

 

 

 

 

 

          (vi) the incurrence, guarantee, assumption, repayment, voluntary
prepayment, redemption, refinancing or amendment of the terms of any
indebtedness having a balance in excess of $75,000;

 

 

 

 

 

          (vii) the entering into of finance or operating leases (other than any
credit or lease transactions involving payments that do not exceed in the
aggregate $175,000 in any year);

 

 

 

 

 

          (viii) establishing, or transferring assets or agreements to, any
subsidiaries;

 

 

 

 

 

          (ix) the liquidation, dissolution or commencement of any case,
proceeding or other action relating to bankruptcy, insolvency, reorganization or
relief of debtors or any consent to any such proceeding or other action that is
involuntary;

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          (x) the entering into, cancellation or amendment of material
agreements outside the ordinary course of business (for purposes of this clause,
material agreements shall be defined as any agreement with either a current
market value or a total remaining cost of greater than $400,000);

 

 

 

 

 

          (xi) changing the independent accountant or auditor of the Company;

 

 

 

 

 

          (xii) initiating or settling any lawsuit or other legal proceeding
outside the ordinary course of business;

 

 

 

 

 

          (xiii) investing in any third party;

 

 

 

 

 

          (xiv) engaging in any business or activity that is inconsistent from
the purpose of the Company as set forth in Section 1.4;

 

 

 

 

 

          (xv) the transfer or encumbrance of any asset for or in payment of any
individual obligation of any Member; and

 

 

 

 

 

          (xvi) making any decision, or entering into any agreement, commitment
or arrangement, to take any of the foregoing actions or which could reasonably
be foreseen as resulting in any of the foregoing actions.

 

 

 

          (b) Designation of Board Members. Each Member shall be permitted to
appoint one designee of such Member to the Board. There shall be no other
members of the Board. Any vacancy in the Board shall be filled by the action of
the Member that appointed the Board member whose Board position is vacated.

 

 

 

          (c) Delegation. The Board shall be entitled to delegate its duties as
it may deem reasonable or necessary in the conduct of the business of the
Company to one or more officers, employees, agents, or committees of the
Company, who shall each have such duties and authority as the Board shall
determine, or as may be set forth in this Agreement, the Operating Agreement or
any agreement between such person and the Company.

 

 

 

          (d) Qualification and Term of Office. Governors need not be Members or
employees of the Company. A Governor shall hold office until such person’s
successor shall have been appointed, or until the earlier death, resignation,
removal or disqualification of such Governor. A Governor may be removed only by
the Member that appointed such Governor.

 

 

 

          (e) Resignation. Any Governor may resign at any time by giving written
notice to the Company. The resignation is effective when notice is given to the
Company, unless a later date is specified in the notice, and acceptance of the
resignation shall not be necessary to make it effective.

 

 

 

          (f) Voting Power. Except as provided in the Operating Agreement, each
Governor shall have one vote on any matter submitted to the vote of the Board.

 

 

 

          (g) Acts of the Board. The Board shall take action in the manner set
forth in the Operating Agreement.

 

 

 

          (h) Standards of Conduct. A Governor shall discharge the duties of
serving on the Board in good faith, in a manner the Governor reasonably believes
to be in the best interests of

 

 

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the Company and with the care an ordinarily prudent person in a like position
would exercise under similar circumstances. A Governor shall not be liable as a
fiduciary with respect to the duties of serving on the Board.

          7.3) Officers. The Company may have one or more natural persons
exercising the functions of the offices, however designated, of Marketing
Manager and Treasurer. The Board may elect or appoint such other officers or
agents as it deems necessary for the operation and management of the Company
including, but not limited to, a Chairman of the Board, a President, one or more
Vice Presidents, and a Secretary, each of whom shall have the powers, rights,
duties and responsibilities set forth in the Operating Agreement, unless
otherwise determined by the Board. Any of the offices or functions of those
offices may be held by the same person.

          7.4) Members or Affiliates Dealing with the Company. The Company may
contract or otherwise deal with a Member or any Person who is an Affiliate of a
Member including the purchase or sale of goods or services. In any such
transaction between the Company and a Member or a Person who is an Affiliate of
a Member, the Agreement shall be approved in accordance with Section 7.2(a) of
this Agreement and Section 322B.666 of the LLC Act. Compensation for such goods
or services shall in all instances be commercially reasonable.

          7.5) Compensation for Services. Unless otherwise determined by the
Board or as provided in this Agreement, no Member or officer shall be
compensated for services to the Company. No relationships between the Company or
any Person who is an Affiliate of a Member are authorized unless the Board is
fully aware of the circumstances and, in no event, will compensation to any such
Affiliate be more than is reasonable given all of the facts and circumstances.
The Members acknowledge and agree that all compensation payable to the Trading
Member pursuant to this Agreement is reasonable.

          7.6) Operation of the Trading Activities and Conduct of the Company’s
Business.

 

 

 

          (a) Business Divisions. The Company shall conduct one category of
business activities: The purchase, sale, storage, transport and marketing of
hydrocarbons produced within North Dakota to or from refineries and other
end-users or Persons, wherever located, and the conduct of Trading Activities.

 

 

 

          (b) Credit. The Company may, at the sole discretion of the Trading
Member, establish and maintain appropriate credit facilities with a commercial
lender to accommodate its regular working capital needs.

 

 

 

          (c) Accounting, Bookkeeping, Tax and Treasury. Accounting,
bookkeeping, tax and treasury services (collectively, the “Financial Services”)
for the Company shall be performed by PTS or its Affiliates, and the reasonable
market rate of fees for the Financial Services (collectively, the “Financial
Services Fee”) shall be paid by the Company as approved by the Board on an
annual basis. If the Board fails to establish the Financial Services Fee for any
fiscal year, then the applicable Financial Services Fee for such fiscal year
shall be equal to the Financial Services Fee for the prior fiscal year plus
three percent (3%) until the establishment of the Financial Services Fee by the
Board. Any Member maintaining or possessing the books and records of the Company
will provide any other Member’s personnel and auditors, accountants, and legal
counsel access to such books and records during business hours upon reasonable
request.

 

 

 

 

 

          (i) Company shall use reasonable efforts to deliver within nineteen
(19) days after the end of each month to each Person who was a Member at any
time during such calendar month (1) monthly financial statements prepared in
accordance with U.S.

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GAAP (which financial statements, including balance sheet, income statement,
cash flow and Member’s equity, need not contain notes or a comparison to the
prior month) and (2) the financial information identified on Exhibit D, which
exhibit may be amended, from time to time by unanimous action of the Board.

 

 

 

 

 

          (ii) Company shall deliver within eighteen (18) days after the end of
each fiscal quarter to each Person who was a Member at any time during such
fiscal quarter quarterly financial statements prepared in accordance with U.S.
GAAP (which financial statements, including balance sheet, income statement,
cash flow and Member’s equity, need not contain notes or a comparison to the
prior quarter). The Company and any Member maintaining or possessing the books
and records of the Company will cooperate with any other Member in preparing
notes to such financial statements.

 

 

 

 

 

          (iii) Company shall deliver within forty-five (45) days after the end
of each fiscal year to each Person who was a Member at any time during such
fiscal year (1) annual financial statements prepared in accordance with U.S.
GAAP (which financial statements, including balance sheet, income statement,
cash flow and Member’s equity, need not contain notes or a comparison to the
prior fiscal year) and (2) the financial information identified on Exhibit D,
which exhibit may be amended, from time to time by unanimous action of the
Board. An estimate of the taxable income generated by the Company during the
applicable period will be provided upon completion. The Company and any Member
maintaining or possessing the books and records of the Company will cooperate
with any other Member in preparing notes to such financial statements.

 

 

 

 

          (d) Member Expenses. Except as specifically provided in this Agreement
to the contrary, DPM and PTS shall each be solely responsible for their
respective costs incurred in delivering and performing the services and assets
required to be contributed to the Company under this Agreement, including
travel, overhead, legal, and general and administrative expenses of the Member
or its Affiliates.

 

 

 

          7.7) Operating Agreement. The Operating Agreement may contain any
provision relating to the management and operation of the Company not
inconsistent with the LLC Act and this Agreement. In the case of any
inconsistency, this Agreement and the LLC Act will govern. The Board may amend
or repeal the Operating Agreement. Any such amendment or repeal of the Operating
Agreement shall not be deemed to be an amendment of this Agreement.

 

 

 

          7.8) Limitation of Liability.

 

 

 

 

 

          (a) No Member, Governor, officer, or other employee of the Company
shall be liable, responsible or accountable in damages or otherwise to the
Company, or to any Member, or to any other third Person for any failure to act
or for any acts performed, where such person’s failure to act or such action was
in good faith and such person believed such action or failure to act was in the
best interests of the Company. Except as expressly provided in the LLC Act, no
Member, Governor, officer or other employee of the Company shall be obligated
personally for any debts, obligations, or liabilities of the Company (whether
arising in contract, tort or otherwise) solely by reason of being a Member,
officer or employee of the Company or serving on its Board.

 

 

 

 

 

          (b) Notwithstanding anything else contained in this Agreement, in no
event will the Trading Member or its Affiliates, or any of their respective
directors, officers, and employees, nor any agents and representatives acting on
behalf of the Trading Member or its Affiliates, be liable

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for any action, error or omission in transacting any Trading Activities or
declining to transact any Trading Activities, or any defect in the transaction
of the Trading Activities, except to the extent such action, error, omission or
defect is directly attributable to the gross negligence or willful misconduct of
such Trading Member in the transaction of the Trading Activities pursuant to
this Agreement.

 

 

 

          (c) Notwithstanding any provision of this Agreement or the Operating
Agreement to the contrary, in no event will PTS or its Affiliates, or any of
their respective directors, officers, and employees, nor any agents and
representatives acting on behalf of PTS or its Affiliates, be liable for any
action, error or omission in conducting the Financial Services, except to the
extent such action, error, omission or defect is directly attributable to the
gross negligence or willful misconduct of PTS.

 

 

 

          (d) Notwithstanding anything to the contrary contained in this
Agreement and without limiting the generality of the foregoing, the Trading
Member or PTS, as the case may be, shall be excused from its respective
obligations under this Agreement, and shall have no liability for any resulting
loss or damage, in the event and to the extent that its performance is delayed
or prevented by any circumstance reasonably beyond its control, including
earthquake, fire, flood, epidemic, explosion, act of any government in its
sovereign capacity, act of God or of the public enemy, strike, walkout or other
labor dispute, riot or civil disturbance, disruption or unavailability of
storage or transportation facilities, inability to obtain production from
intended sources and production breakdowns.

 

 

 

          (e) Notwithstanding anything to the contrary contained in this
Agreement, none of the Members or any of their Affiliates will be liable for any
special, consequential, incidental or punitive damages of the Company, another
Member or any of their respective Affiliates based upon, arising out of or
relating to this Agreement, any provision of this Agreement or the breach,
performance, enforcement, validity or invalidity thereof (other than any
special, consequential, incidental or punitive damage components of claims and
awards against the Company, another Member or any of their respective Affiliates
by third parties).

 

 

 

7.9) Indemnification.

 

 

 

          (a) The Company shall indemnify such Persons, for such expenses and
liabilities, in such manner, under such circumstances, and to such extent as
permitted by Minnesota Statutes Section 322B.699.

 

 

 

          (b) Without limiting the foregoing, the Company will indemnify, defend
and hold harmless the Trading Member and its Affiliates, PTS and its Affiliates,
and each of their respective directors, officers, and employees, as well as
agents and representatives acting on behalf of the Trading Member, PTS or any of
their respective Affiliates (each such party, an “Indemnified Party”) from and
against, and pay or reimburse, as the case may be, the Indemnified Party for,
all Damages, as incurred, suffered by any such Person based upon, arising out of
or relating to the transaction of the Trading Activities, the Financial
Services, or acting as the Trading Member hereunder, as the case may be, except
to the extent such Damages are based upon, arise out of or relate to the gross
negligence or willful misconduct of the Trading Member in the transaction of
their respective activities pursuant to this Agreement.

 

 

 

          (c) The indemnification provided for in this Section 7.9 will survive
the termination of the Trading Activities, the Financial Services and this
Agreement.

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          7.10) Other Ventures. Any Member may engage in or possess any interest
in any other ventures or businesses of any nature or description, independently
or with others, including ventures or businesses which may engage in business
transactions with the Company provided such transactions with the Company are
commercially reasonable. Neither the Company nor any other Member shall have a
right by virtue of this Company to participate in any way in any such other
venture or the income or profits derived therefrom. Notwithstanding the
foregoing, each Member agrees that it will not (and it will not permit its
Affiliates to), during the period it is a Member of the Company, and for one
year thereafter, directly or indirectly, purchase, sell, store, transport or
market crude oil originating from production fields anywhere in North Dakota or
conduct any trading activities related thereto, except through the Company;
provided, however, that DPM and its Affiliates are expressly permitted to
transport any materials, including crude oil, by road.

 

 

 

ARTICLE 8

DIRECTORS AND DECISIONS OF BOARD OF GOVERNORS

 

 

 

          8.1) Number. The Board of the Company shall consist of as many natural
persons as there are Members of the Company and each Member shall have the right
to appoint one Governor.

 

 

 

          8.2) Term. A Governor designated in accordance with the provisions of
Section 8.1 shall serve for an indefinite term until such Governor’s earlier
death, resignation, or removal.

 

 

 

ARTICLE 9

RESTRICTIONS ON TRANSFER; TERMINATION

 

 

 

          9.1) Restriction on Transfer or Assignment. Upon any intended transfer
of a Member’s Units, the provisions of the Buy-Sell Agreement among the Members
and the Company (the “Buy-Sell Agreement”) shall govern the process and the
terms of disposition or transfer of such Units. No Member may transfer or assign
all or any portion of such Member’s Units (other than to an Affiliate of such
Member), in a transaction in which the Buy-Sell Agreement would be operative
unless such Member or its Affiliate also transfers or assigns to the same
transferee the same proportion of its units in Dakota Petroleum Transport
Solutions, LLC. In the absence of any such Buy-Sell Agreement, a Member may not
transfer or assign all or any portion of such Member’s Units (other than to an
Affiliate of such Member), whether by sale, gift, devise, or distribution; the
death, withdrawal, bankruptcy, divorce, separation, dissolution or termination
of such Member; or otherwise, except upon the written consent of the Board.

 

 

 

 

9.2) Term and Termination.

 

 

 

 

          (a) The Company shall exist for an initial term expiring December 31,
2026 (the “Initial Term”), and the term shall automatically extend in one-year
renewal periods (each, a “Renewal Term”) (the Initial Term and any Renewal Term
are also referred to as a “Term”) unless and until terminated as provided
herein. The Company shall dissolve, be wound up and terminated in the manner
described below:

 

 

 

 

 

          (i) By Agreement. Upon the written agreement to terminate signed by
all Members at any time during the Initial Term or a Renewal Term; or

 

 

 

 

 

          (ii) Member Notice. At the date of the completion of any Term if
written notice of termination is delivered by one Member to the other Member and
to the Company at least three (3) years prior to the end of such Term.

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          (b) Upon the occurrence of an event triggering the dissolution, wind
up or termination of the Company pursuant to Section 9.2(a), the Company shall
continue solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Members,
and no Member shall take any action with respect to the Company that is
inconsistent with the winding up of the Company’s business and affairs; provided
that all covenants contained in this Agreement and obligations provided for in
this Agreement shall continue to be fully binding upon the Members until such
time as the Company’s assets have been distributed pursuant to this
Section 9.2(b). The Trading Member shall be responsible for overseeing the
winding up and dissolution of the Company. On the sale of Company assets, any
gain or loss realized by the Company upon such sale of its assets shall be
deemed recognized and allocated to the Members in the manner set forth in
Article 5. The Trading Member shall take full account of the Company’s
liabilities and assets and shall cause the proceeds from the sale or disposition
of assets or to the extent sufficient therefor, to be applied and distributed,
to the maximum extent permitted by applicable law and notwithstanding anything
in this Agreement to the contrary, in the following order:

 

 

 

 

 

          (i) First, to creditors (including any Members and their Affiliates
who are creditors) in satisfaction of all of the Company’s debts and liabilities
other than liabilities for which reasonable provision for payment has been made;

 

 

 

 

 

          (ii) Second, to the extent of any available proceeds after application
of clause (i) above, in respect of preferred returns due to Members with respect
to outstanding Member Preferred Contributions, on a pro rata basis to the
Members based on the then outstanding amount of accrued and unpaid preferred
returns due to each Member on all Member Preferred Contributions made by such
Member;

 

 

 

 

 

          (iii) Third, to the extent of any available proceeds after application
of clauses (i) and (ii) above, in respect of outstanding Member Preferred
Contributions, on a pro rata basis to the Members based on each Members’ then
outstanding Member Preferred Contributions;

 

 

 

 

 

          (iv) Fourth, to the extent of any available proceeds after application
of clauses (i), (ii) and (iii) above, in the event there are Unrealized
Termination Profits as of the date any Terminating Member resumes participation
in the Trading Activities pursuant to Section 9.3(e), 85% of such Unrealized
Termination Profits to the Non-Terminating Member and 15% of such Unrealized
Termination Profits to the Terminating Member until the aggregate amount of all
distributions pursuant to Section 5.1(b)(iii) and this Section 9.2(b)(iv) is
equal to the amount of such Unrealized Termination Profits; and

 

 

 

 

 

          (v) Fifth, to the extent of any available proceeds after application
of clauses (i), (ii), (iii) and (iv) above, to the Members based upon their
Distribution Percentages on the last day of the most recent calendar quarter,
provided that any such proceeds that were generated after the end of such
calendar quarter shall be distributed to the Members based upon their
Distribution Percentages on the date of such distribution.

 

 

 

 

9.3) Termination of Participation in Trading Activities.

 

 

 

 

          (a) Each Member may elect to terminate its participation in the
Trading Activities (a “Trading Activities Termination”) on ninety (90) days
prior written notice to the other Member of such termination. Trading Activities
Terminations must be effective on the first day of a calendar quarter. During
all periods of time during which a Member is a Terminating Member, such

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Member shall not be required to make any Member Preferred Contributions in
accordance with Section 3.5(b).

 

 

 

 

 

(b) (i) Upon a Trading Activities Termination, the aggregate amount of
outstanding Member Preferred Contributions of the Member electing the Trading
Activities Termination (the “Terminating Member”) shall be irrevocably reduced
(but in no event to less than zero) by an amount, if any, equal to the product
(“Pro Rata Termination Loss Amount”) of (i) the Terminating Member’s
Distribution Percentage calculated immediately prior to, and without giving
effect to, the Terminating Member’s termination of its participation in the
Trading Activities pursuant to this Section 9.3 and (ii) the Termination Loss
Amount (it being understood that, except as set forth in Section 9.3(b)(iv),
such reduction shall not effect the Company’s obligation to pay any preferred
returns on the amount of the Members Preferred Contribution so reduced accrued
and unpaid up to the date of such reduction in accordance with the terms of this
Agreement).

 

 

 

 

 

          (ii) After giving effect to the reduction described in
Section 9.3(b)(i), to the extent any amount of any Member Preferred
Contributions of the Terminating Member remains outstanding, then the Member not
electing the Trading Activities Termination (the “Non-Terminating Member”) shall
have the right to elect (A) that the amount of such Member Preferred
Contributions remain in full force and effect in accordance with this Agreement
or (B) to acquire such Member Preferred Contributions and pay to the Terminating
Member an aggregate amount equal to the outstanding amount of, and any accrued
and unpaid preferred returns (but not including any accrued and unpaid preferred
returns on any amount of the Member Preferred Contributions reduced pursuant to
Section 9.3(b)(i)) on, such Member Preferred Contributions.

 

 

 

 

 

          (iii) Upon any reduction in Member Preferred Contributions pursuant to
Section 9.3(b)(i), such Member Preferred Contributions or the portion thereof in
respect of which a reduction was made pursuant to Section 9.3(b)(i) shall cease
to accrue preferred returns and shall be cancelled and no longer outstanding for
any purpose whatsoever.

 

 

 

 

 

          (iv) To the extent that the Terminating Member’s Pro Rata Termination
Loss Amount exceeds the aggregate amount of outstanding Member Preferred
Contributions of the Terminating Member (before giving effect to the reduction
described in Section 9.3(b)(i)), the aggregate amount of accrued and unpaid
preferred returns on Member Preferred Contributions owed to the Terminating
Member shall be irrevocably reduced (but in no event to less than zero) by the
amount of such excess.

 

 

 

 

 

          (v) To the extent that the Terminating Member’s Pro Rata Termination
Loss Amount exceeds the sum of (A) the aggregate amount of outstanding Member
Preferred Contributions of the Terminating Member (before giving effect to the
reduction described in Section 9.3(b)(i)) and (B) the aggregate amount of
accrued and unpaid preferred returns on Member Preferred Contributions of the
Terminating Member (before giving effect to the reduction described in
Section 9.3(b)(iv)), (x) all distributions otherwise distributable to the
Terminating Member pursuant to Section 5.1(b)(iii), Section 5.1(b)(iv),
Section 9.2(b)(iv) and Section 9.2(b)(v) shall be reduced (but in no event to
less than zero) until such time as the aggregate amount of reductions pursuant
to this Section 9.3(b)(v) is equal to such excess and (y) any amounts not
distributed to the

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

 

 

 

Terminating Member pursuant to clause (x) above shall instead be distributed to
the Non-Terminating Member.

 

 

 

          (c) Any Trading Activities Termination shall be effective for at least
six (6) months and, if longer, a period that is an integral multiple of six (6)
months. Any Profits allocated to a Terminating Member pursuant to Section 4.5(a)
and distributions payable to a Terminating Member pursuant to Section 5.1(b)(iv)
and Section 9.2(b)(v) shall be calculated for each six-month period during which
a Trading Activities Termination shall be in effect.

 

 

 

          (d) For the avoidance of doubt, during all periods of time during
which a Member is a Terminating Member, such Member shall remain subject to and
bound by Section 7.10 (and for purposes of such Section 7.10 be considered a
Member during such time).

 

 

 

          (e) A Terminating Member may elect to resume its participation in the
Trading Activities at the end of any six-month period following its applicable
Trading Activities Termination. Any such resumption of participation in the
Trading Activities must commence, and will be effective, on the first day of a
calendar quarter. Prior to any such resumption, the Terminating Member (i) must
give the Non-Terminating Member ninety (90) days’ prior written notice of its
election, (ii) shall acquire from the Non-Terminating Member one half of any
Member Preferred Contributions made to the Company by the Non-Termination Member
during such period of time when the Terminating Member was a Terminating Member
and pay to the Non-Terminating Member an aggregate amount equal to the
outstanding amount of, and any accrued and unpaid preferred returns on, such
Member Preferred Contributions being acquired and (iii) if the Non-Terminating
Member made the election described in clause (B) of Section 9.3(b)(ii), the
Terminating Member shall acquire from the Non-Terminating Member any then
outstanding Member Preferred Contributions that were acquired by the
Non-Terminating Member pursuant to clause (B) of Section 9.3(b)(ii) and pay to
the Non-Terminating Member an aggregate amount equal to the outstanding amount
of, and any accrued and unpaid preferred returns on, such Member Preferred
Contributions.

ARTICLE 10
MISCELLANEOUS PROVISIONS

          10.1) Risk Equivalence. Except as otherwise provided in this
Agreement, the Members intend that the exposure for contributed capital by the
Members shall be maintained to the greatest extent practicable on a basis that
results in equivalent financial risk for the Members (the concept of “Risk
Equivalence”). To the extent not detrimental to the viability and financial
success of the overall operations of the Company, except as otherwise provided
in this Agreement, the Members will work in good faith with each other to
accomplish and maintain Risk Equivalence through appropriate measures,
distributions or voluntary contributions to capital; provided, however, that
nothing in this Agreement shall be deemed to require additional capital
contributions by the Members.

          10.2) Arbitration. Each dispute, claim and controversy (whether
arising during or after the term of this Agreement) arising out of or relating
to this Agreement or its breach, (including but not limited to the validity of
the agreement to arbitrate and the arbitrability of any matter), shall be
settled, upon demand and written notice by any Member, the Company, their legal
representatives, successors and assigns, by an arbitrator agreed upon by the
parties. If the parties are unable to agree, the dispute will be settled by
three (3) arbitrators, one (1) of whom shall be chosen by the party making such
demand, one (1) by the other party, and the third arbitrator by the two (2) so
chosen. The party demanding arbitration shall in its demand for arbitration
notify the other party of the identity of the arbitrator chosen by it. The other
party shall, within fifteen (15) days after its receipt of such written demand
for arbitration, likewise select its

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appointee and give written notice of such selection. If the party receiving such
demand for arbitration fails to notify the other party in writing of the
identity of the arbitrator chosen by it within such fifteen (15) day period, or
if the two (2) arbitrators so selected are unable to agree on the selection of a
third arbitrator within a period of fifteen (15) days after the appointment of
the second arbitrator, any party may request that the Chief Judge of the
District Court of Hennepin County, Minnesota appoint such arbitrator(s). The
proceedings shall in all other respects be conducted in accordance with
whichever arbitration rules are selected by the arbitrator, or a majority vote
of the arbitrators, to the extent such rules are not inconsistent with the
provisions of this arbitration provision. The cost of the proceedings shall be
shared equally by the parties, provided, however, that each party shall be
solely responsible for the costs and expenses of its own legal counsel and any
experts or consultants representing or assisting such party in connection with
the proceedings. Unless otherwise agreed upon, the place of arbitration
proceedings shall be Hennepin County, Minnesota. The decision of the arbitrator,
or a majority of the three (3) arbitrators, shall be final and binding on all
parties. Except as otherwise provided in this Section 10.2, such arbitration
shall be governed by the commercial arbitration rules of the American
Arbitration Association. This Section 10.2 shall survive termination of the
Agreement. Notwithstanding the provisions of this Section 10.2, decisions to be
made hereunder by the Board shall not be subject to arbitration or contested in
any court as all of such decisions shall be final and binding on the Members and
their respective heirs, legal representatives, successors, and assigns;
provided, that the Board is acting within the scope of its authority pursuant to
the terms of this Agreement.

          10.3) Equitable Relief. Section 10.2 shall not preclude the Company,
or any Governor, Member, officer, or their legal representatives, successors and
assigns from seeking an injunction, specific performance, or other equitable
relief with respect to any dispute, claim and controversy arising out of or
relating to this Agreement or its breach.

          10.4) Notice. Any notice, demand, consent, authorization or other
communication which is required to be given under this Agreement shall be in
writing and shall be deemed to be valid and duly given if hand-delivered,
telecopied, couriered overnight, or if mailed by registered or certified mail,
return receipt requested and postage prepaid, as follows: (i) if to the Company
to the Marketing Manager at the principal office of the Company; (ii) if to a
Governor, to the Governor at the address shown on the Company’s records for such
Governor; and, (iii) if to a Member, to such Member at the address shown on the
Company’s records for such Member. Each notice, demand, request or communication
which shall be delivered, mailed or transmitted in the manner described above
shall be deemed to be received for all purposes three (3) business days after it
is deposited in the mail as provided in this Agreement or upon actual
presentation to the addressee.

          10.5) Amendment. This Agreement together with all exhibits contains
the entire understanding of the Members governing their business relationship
and the conduct of the affairs of the Company and may be amended only upon the
written agreement of all the Members. As of the Effective Date, and on a going
forward basis only, this Agreement shall replace and supersede the Original
Agreement; provided, however, that the terms of the Original Agreement shall
govern with respect to all rights, obligations and liabilities of the parties
that arise out of or relate to the period prior to the Effective Date.

          10.6) Limitation on Benefits of this Agreement. It is the explicit
intention of the Members that no Person other than the Members and the Company
is or shall be entitled to bring any action to enforce any provision of this
Agreement against any Member or the Company, and that the covenants,
undertakings and agreements set forth in this Agreement shall be solely for the
benefit of, and shall be enforceable only by, the Members (or their respective
heirs, legal representatives, successors and assigns as permitted pursuant to
this Agreement) and the Company.

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          10.7) General. Subject to any provisions contained in this Agreement
restricting assignment, this Agreement shall be binding upon and shall inure to
the benefit of the Members and their respective successors and permitted
assigns. This Agreement, the rights and obligations of the parties to this
Agreement, and any claims or disputes relating to this Agreement, shall be
governed by and construed in accordance with the laws of the State of Minnesota.
The Members agree that the Company’s assets are not and will not be suitable for
partition. The Members waive any right of partition or any right to take any
action that otherwise might be available to them for the purpose of severing
their relationship with the Company or interest in assets held by the Company
from the interest of the other Members. The representations, warranties,
indemnifications, and covenants in this Agreement shall survive the signing and
delivery of this Agreement. All pronouns and any variations shall be deemed to
refer to the masculine, feminine, neuter, singular or plural, as the identity of
the Person may require. References to “include,” “includes” and “including”
shall be deemed to be followed by the words “without limitation.” Article and
Section headings contained in this Agreement are inserted for convenience of
reference only, shall not be deemed to be a part of this Agreement for any
purpose, and shall not in any way define or affect the meaning, construction or
scope of any of the provisions contained in this Agreement. To facilitate
execution, this Agreement may be executed in as many counterparts as may be
required; and it shall not be necessary that the signatures of, or on behalf of,
each party, or that the signatures of all Persons required to bind any party,
appear on each counterpart; but it shall be sufficient that the signature of, or
on behalf of, each party, or that the signatures of the Persons required to bind
any party, appear on one or more of the counterparts. All counterparts shall
collectively constitute a single agreement. It shall not be necessary in making
proof of this Agreement to produce or account for more than a number of
counterparts containing the respective signatures of, or on behalf of, all of
the parties to this Agreement.

          10.8) Insurance. Each Member (a) shall use commercially reasonable
efforts to obtain insurance coverage with respect to such Member’s obligations
hereunder and (b) upon request of the other Member at any time and from time to
time during the Term, shall provide to such other Member evidence, reasonably
satisfactory to such other Member, of the effectiveness of such insurance
coverage.

[Signature Page Follows]

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          IN WITNESS WHEREOF, the Members have executed this Agreement on
December 31, 2013, effective as of the Effective Date.

 

 

 

 

DPTS MARKETING LLC

 

 

 

 

 

      /s/ Carlos R. Cuervo

 

 

By Carlos R. Cuervo

 

 

Its Marketing Manager

 

 

 

 

 

DAKOTA PLAINS MARKETING, LLC

 

 

 

 

 

      /s/ Gabriel G. Claypool

 

 

By Gabriel G. Claypool

 

 

Its Chief Executive Officer

 

 

 

 

 

PETROLEUM TRANSPORT SOLUTIONS, LLC

 

 

 

 

 

      /s/ Ronald Crowell

 

 

By Ronald Crowell

 

 

Its Sr. Vice President-Finance

 

 

 

 

 

Signature Page to DPTS Marketing LLC

 

 

Second Amended and Restated Member Control Agreement

 

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

Exhibit A
to
Second Amended and Restated Member Control Agreement
of
DPTS Marketing LLC

Current as of December 31, 2013

 

 

 

 

 

 

 

 

Member

 

Units

 

Capital
Contribution

 

Member Preferred
Contribution

 

 

 

 

 

 

 

Dakota Plains Marketing, LLC

 

1,000

 

$100

 

$10,000,000

294 Grove Lane East, Wayzata, MN 55391

 

 

 

 

 

 

 

 

 

 

 

 

 

Petroleum Transport Solutions, LLC

 

1,000

 

$100

 

$10,000,000

605 North Highway 169, Suite 1100, Plymouth, MN 55441

 

 

 

 

 

 

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Exhibit B
to
Second Amended and Restated Member Control Agreement
of
DPTS Marketing LLC

Member Transactions

 

 

 

A.

Rail Car Leasing.

 

 

 

 

The Member Transaction Pricing shall be pursuant to the terms and provisions set
forth in the following rail car sublease agreements:

 

 

 

 

1.

Railcar Sublease Agreement made as of June 1, 2012, by and between Western
Petroleum Company and DPTS Marketing LLC with respect to that certain Master
Railcar Lease and certain schedules thereto with CIT Group/Equipment Financing,
Inc.

 

 

 

 

2.

Railcar Sublease Agreement made as of June 1, 2012, by and between Western
Petroleum Company and DPTS Marketing LLC with respect to that certain Car
Leasing Agreement and certain riders thereto with General Electric Railcar
Services Corporation

 

 

 

 

3.

Railcar Sublease Agreement made as of June 1, 2012, by and between Western
Petroleum Company and DPTS Marketing LLC with respect to that certain Railroad
Car Lease with Progressive Rail Inc.

 

 

 

 

4.

Railcar Sublease Agreement made as of June 1, 2012, by and between Western
Petroleum Company and DPTS Marketing LLC with respect to that certain Railroad
Car Lease and certain riders thereto with Trinity Industries Leasing Corporation

 

 

 

 

5.

Railcar Sublease Agreement made as of June 1, 2012, by and between Western
Petroleum Company and DPTS Marketing LLC with respect to that certain Rail Car
Lease Agreement and certain riders thereto with UTLX International, a division
of Union Tank Car Company

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Exhibit C
to
Second Amended and Restated Member Control Agreement
of
DPTS Marketing LLC

Summary Reports

 

 

1.

Such performance metrics as determined by the Board.

 

 

Financial Reports

 

 

1.

GAAP Financial Statements

2.

Bank Statements

3.

Trial Balance

4.

Account Reconciliations that tie directly to the financial statements

 

 

 

 

 

 

 

 

•

Balance Sheet

 

 

 

i.

 

Cash

 

 

 

ii.

 

A/R – Aging report, detail by customer, and intercompany activity

 

 

 

iii.

 

A/P – Aging report, detail by vendor, and intercompany activity

 

 

•

Income Statement

 

 

 

i.

 

Revenue – Formulaic pricing and volume by customer

 

 

 

ii.

 

Railcar Leasing – Number of cars and price per car

 

 

 

iii.

 

Trucking Fees – Number of barrels trucked and accrual analysis

 

 

 

iv.

 

COS Crude Oil – Formulaic pricing and volume by producer/vendor

 

 

 

v.

 

Freight – Accrual analysis

 

 

 

vi.

 

G&A Expense – Detail supporting overhead allocation

 

 

•

Cash Flow Statement

 

 

•

Member’s Capital

 

 

5.

NewEdge Statements

6.

Monthly Volume Summary/Roll Forward

7.

Financial Statement Variance Analysis

8.

Producer & Customer Contracts/Agreements that support the monthly activities

9.

General Ledger Detail

10.

Such other information as determined by the Board.

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APPENDIX A

TAX DEFINITIONS, CAPITAL ACCOUNTS
AND SPECIAL ALLOCATIONS

          1. Tax Definitions.

          “Adjusted Capital Account Deficit” means the deficit balance (if any)
in a Member’s Capital Account as of the end of any taxable year of the Company,
after:

               (a) crediting to such Capital Account any amount which such
Member is obligated to restore pursuant to this Agreement or is deemed obligated
to restore pursuant to the minimum gain chargeback provisions of Treas. Reg.
§ 1.704-2(f) and (g), and

               (b) charging to such Capital Account any adjustments, allocations
or distributions described in the qualified income offset provisions of Treas.
Reg. § 1.704-1(b)(2)(ii) which are required to be charged to such Capital
Account pursuant to this Agreement.

          “Company Minimum Gain” means the amount determined in accordance with
the principles of Treas. Reg. § 1.704-2(d) and 1.704-2(g).

          “Contributed Assets” has the meaning set forth in Section 4(a) below.

          “Depreciation” means, for each taxable year of the Company or other
period, an amount equal to the depreciation allowable with respect to an asset
for such taxable year or other period; provided, however, that if the Gross
Asset Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such taxable year or other period, Depreciation
shall be an amount that bears the same ratio to such beginning Gross Asset Value
as the federal income tax depreciation with respect to such asset for such
taxable year or other period bears to such beginning adjusted tax basis; and
provided further, that if the federal income tax depreciation for such taxable
year or other period is zero, Depreciation shall be determined with reference to
such beginning Gross Asset Value using any reasonable method selected by the
Members.

          “Gross Asset Value” shall be determined as follows:

               (a) the initial Gross Asset Value of any asset contributed by a
Member to the Company subsequent to the date hereof shall be the fair market
value of such asset, as agreed to by the Board;

               (b) the Gross Asset Value of all Company assets shall be adjusted
to equal their respective fair market values (taking Section 7701(g) of the Code
into account) as determined by the Board as of the following times: (i) the
acquisition of an additional interest in the Company by any new or existing
Member in exchange for more than a de minimis Capital Contribution or in
connection with the performance of services; (ii) the distribution by the
Company to a Member of more than a de minimis amount of Company assets as
consideration for an interest in the Company, but only if, in the case of either
(i) or (ii), the Board reasonably determines that such adjustment is necessary
or appropriate to reflect the relative economic interests of the Members in the
Company, (iii) the liquidation of the Company within the meaning of Treas. Reg.
§ 1.704-1(b)(ii)(g) and/or (iv) the forfeiture by a defaulting Member of its
interest in the Company;

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               (c) the Gross Asset Value of any Company asset distributed to any
Member shall be the fair market value (taking Section 7701(g) of the Code into
account) of such asset on the date of distribution as determined by the
distributee and the Board;

               (d) the Gross Asset Values of Company assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such Company
assets pursuant to Section 732(d), Section 734(b) or Section 743(b) of the Code,
but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Treas. Reg. § 1.704-l(b)(2)(iv)(m) and
1.704-1(b)(2)(iv)(f); provided, however, that Gross Asset Values shall not be
adjusted pursuant to this subsection (d) to the extent that the Board 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 (d);

               (e) if the Gross Asset Value of any Company asset has been
determined or adjusted pursuant to subsection (a), (b), (c) or (d), such Gross
Asset Value shall thereafter be adjusted by the Depreciation that would be taken
into account with respect to such asset for purposes of computing gains or
losses from the disposition of such asset; and

               (f) Gross Asset Value of any Company asset that was not
contributed by a Member means the adjusted basis of such Company asset for
federal income tax purposes.

          “Profits” and “Losses” shall mean, for each taxable year of the
Company or other period, an amount equal to the Company’s taxable income or
loss, as the case may be, for such taxable year or period, determined in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss and deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:

               (a) any income of the Company that is exempt from federal income
tax and not otherwise taken into account in computing Profits or Losses pursuant
to this subparagraph shall be added to such taxable income or loss;

               (b) any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code
expenditures pursuant to Treas. Reg. § 1.704-l(b)(2)(iv)(i), and not otherwise
taken into account in computing Profits or Losses pursuant to this definition
shall be subtracted from such taxable income or loss. For purposes of this
Agreement, any deduction for a loss on a sale or exchange of Company property
that is disallowed to the Company under Section 267(a)(1) or Section 707(b) of
the Code shall be treated as a Section 705(a)(2)(B) of the Code expenditure.

               (c) in the event the Gross Asset Value of any Company asset is
adjusted pursuant to subparagraph (b) or (c) of the definition thereof, the
amount of such adjustment shall be taken into account as gain or loss from the
disposition of such asset for purposes of computing Profits or Losses;

               (d) gain or loss resulting from the disposition of any Company
asset with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the asset
disposed of, notwithstanding that the adjusted tax basis of such asset differs
from its Gross Asset Value;

               (e) in lieu of the Depreciation taken into account in computing
such taxable income or loss, there shall be taken into account Depreciation for
such taxable year of the Company or other period, computed in accordance with
the definition thereof;

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               (f) to the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to Section 734(b) of the Code is required, pursuant to
Treas. Reg. § 1.704-l(b)(2)(iv)(m)(4), to be taken into account in determining
Capital Accounts as a result of a distribution other than in liquidation of a
Member’s interest in the Company, 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 such basis) from the disposition of such asset and
shall be taken into account for purposes of computing Profits or Losses; and

               (g) notwithstanding any other provision of this definition, any
items which are specially allocated pursuant to Section 3 below shall not be
taken into account in computing Profits and Losses.

          “Regulations” or “Treas. Reg.” shall mean a regulation issued by the
United States Treasury Department and relating to matters arising under the
Code.

          “Regulatory Allocations” has the meaning set forth in Section 3(h)
below.

          “Member Nonrecourse Debt” has the same meaning as the term “partner
nonrecourse debt” set forth in Treas. Reg. § 1.704-2(b)(4).

          “Member Nonrecourse Debt Minimum Gain” means an amount, with respect
to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with the provisions of Treas. Reg. § 1.704-2(i)(3)
relating to “partner nonrecourse debt minimum gain”.

          “Member Nonrecourse Deductions” has the same meaning as the term
“partner nonrecourse deductions” set forth in Treas. Reg. § 1.704-2(i)(1) and
1.704-2(i)(2).

          “Nonrecourse Deductions” has the meaning set forth in Treas. Reg. §
1.704-2(b)(1).

               2. Capital Accounts.

               (a) Except as provided in this Section 2, the Capital Account of
each Member shall be (i) increased by (A) the amount of cash and the Gross Asset
Value of any property contributed to the Company by such Member (net of
liabilities secured by the property or to which the property is subject that the
Company is considered to assume or take subject to pursuant to Section 752 of
the Code), and (B) Profits and any other items of income and gain allocated to
such Member, (ii) decreased by (A) the amount of cash and the Gross Asset Value
of any property distributed to such Member (net of liabilities secured by the
property or to which the property is subject that such Member is considered to
assume or take subject to pursuant to Section 752 of the Code) and (B) the
Losses and any other items of deduction and loss allocated to such Member, and
(iii) otherwise maintained in accordance with Treas. Reg. § 1.704-1(b)(2)(iv) in
order for the allocation of Profits and Losses to have “substantial economic
effect” in accordance with Treas. Reg. § 1.704-1(b)(2).

               (b) For purposes of this Section 2, (i) an assumption of a
Member’s unsecured liability by the Company shall be treated as a distribution
of money to that Member and (ii) an assumption of the Company’s unsecured
liability by a Member shall be treated as a cash contribution to the Company by
that Member.

               (c) In the event of a contribution of money or other property to
the Company (other than a contribution made ratably by all existing Members), an
issuance of an interest in the Company in connection with the performance of
services or the forfeiture by a Member of its interest in the Company, then the
Capital Accounts for the Members shall be adjusted in respect of the
hypothetical “book” gain or

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loss that would have been realized by the Company if all Company assets had been
sold for their Gross Asset Values in a cash sale.

               (d) In the event that Company assets other than money are
distributed to a Member in liquidation of the Company, or in the event that
assets of the Company other than money are distributed to a Member in kind, in
order to reflect unrealized gain or loss, Capital Accounts for the Members shall
be adjusted in respect of the hypothetical “book” gain or loss that would have
been realized by the Company if the distributed assets had been sold for their
Gross Asset Values in a cash sale. In the event of the liquidation of a Member’s
Shares, in order to reflect unrealized gain or loss, Capital Accounts for the
Members shall be adjusted in respect of the hypothetical “book” gain or loss
that would have been realized by the Company if all Company assets had been sold
for their Gross Asset Values in a cash sale.

               (e) If Company property is reflected on the books of the Company
at a book value that differs from the adjusted tax basis of such property, the
Members’ Capital Accounts shall be adjusted in accordance with Treas. Reg. §
1.704-1(b)(2)(iv)(g) for allocations of depreciation, depletion, amortization,
and gain or loss, as computed for book purposes, with respect to such property.

               (f) Upon any transfer of all or part of an interest in the
Company, as permitted by this Agreement, the Capital Account (or portion
thereof) of the transferor that is attributable to the transferred interest (or
portion thereof) shall carry over to the transferee.

               (g) The foregoing provisions of this Section 2 and the other
provisions of this Agreement relating to the maintenance of Capital Accounts are
intended to comply with Treas. Reg. § 1.704-1 and 1.704-2 and shall be
interpreted and applied in a manner consistent with such Regulations and any
amendment or successor provision thereto. The Board shall cause appropriate
modifications to be made if unanticipated events might otherwise cause this
Agreement not to comply with such Regulations, so long as such modifications do
not cause a material change in the relative economic benefit of the Members
under this Agreement.

               3. Special Tax Allocations. The following special allocations
shall be made in the following order:

               (a) Minimum Gain Chargeback. Subject to the exceptions set forth
in Treas. Reg. § 1.704-2(f), if there is a net decrease in Company Minimum Gain
during a taxable year of the Company, each Member shall be specially allocated
items of income and gain for such taxable year (and, if necessary, for
subsequent years) in an amount equal to such Member’s share of the net decrease
in Company Minimum Gain during such taxable year (which share of such net
decrease shall be determined under Treas. Reg. § 1.704-2(g)(2)). It is intended
that this Section 3(a) shall constitute a “minimum gain chargeback” as provided
by Treas. Reg. § 1.704-2(f) and shall be interpreted consistently therewith.

               (b) Member Nonrecourse Debt Minimum Gain Chargeback. Subject to
the exceptions contained in Treas. Reg. § 1.704-2(i)(4), if there is a net
decrease in Member Nonrecourse Debt Minimum Gain during a taxable year of the
Company, any Member with a share of such Member Nonrecourse Debt Minimum Gain
(determined in accordance with Treas. Reg. § 1.704-2(i)(5)) as of the beginning
of such taxable year shall be specially allocated items of income and gain for
such taxable year (and, if necessary, for subsequent years) in an amount equal
to such Member’s share of the net decrease in Member Nonrecourse Debt Minimum
Gain (which share of such net decrease shall be determined under Treas. Reg. §
1.704-2(i)(4) and 1.704-2(j)(2)). It is intended that this Section 3(b) shall
constitute a “partner nonrecourse debt minimum gain chargeback” as provided by
Treas. Reg. § 1.704-2(i)(4) and shall be interpreted consistently therewith.

               (c) Qualified Income Offset. In the event any Member unexpectedly
receives any adjustments, allocations, or distributions described in Treas. Reg.
§ 1.704-l(b)(2)(ii)(d)(4), 1.704-l(b)(2)(ii)(d)(5), or 1.704-l(b)(2)(ii)(d)(6)
(modified as appropriate, by Treas. Reg. § 1.704-2(g)(1) and

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1.704-2(i)(5)), items of Company income and gain for such taxable year shall be
specially allocated to the Member in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, any Adjusted Capital
Account Deficit of the Member as quickly as possible, provided that an
allocation pursuant to this Section 3(c) shall be made if and only to the extent
that the Member would have an Adjusted Capital Account Deficit after all other
allocations have been tentatively made as if this Section 3(c) were not in this
Appendix A.

               (d) Gross Income Allocations. To the extent required by the
Regulations, in the event a Member has a deficit balance in its Capital Account
at the end of any taxable year of the Company in excess of the sum of (A) the
amount such Member is required to restore pursuant to the provisions of this
Agreement, if any, and (B) the amount such Member is deemed obligated to restore
pursuant to Treas. Reg. § 1.704-2(g) and 1.704-2(i)(5), such Member shall be
specially allocated items of Company income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to this
Section 3(d) shall be made if and only to the extent that such Member would have
an Adjusted Capital Account Deficit after all other allocations have been
tentatively made as if this Section 3(d) were not in this Appendix A.

               (e) Nonrecourse Deductions. Any Nonrecourse Deductions shall be
allocated to the Members in the same manner as Losses are allocated pursuant to
Section 4.5 of this Agreement.

               (f) Member Nonrecourse Deductions. Any Member Nonrecourse
Deductions shall be allocated to the Member that bears the economic risk of loss
for the Member Nonrecourse Debt to which such deductions relate as provided in
Treas. Reg. § 1.704-2(i)(1). If more than one Member bears the economic risk of
loss, such deduction shall be allocated between or among such Members in
accordance with the ratios in which such Members share such economic risk of
loss.

               (g) Certain Section 754 Adjustments. To the extent any adjustment
to the adjusted tax basis of any Company asset pursuant to Section 732(d),
Section 734(b) or Section 743(b) of the Code is required, pursuant to Treas.
Reg. § 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts as the result of a distribution to a Member in complete liquidation of
its interest in the Company, the amount of such adjustment to Capital Accounts
shall be treated as an item of gain (if the adjustment increases such basis) and
an item of loss (if the adjustment decreases such basis) and such gain or loss
shall be specially allocated to the Members in accordance with their interests
in the Company as determined under Treas. Reg. § 1.704-1(b)(3) in the event
Treas. Reg. § 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such
distribution was made in the event Treas. Reg. § 1.704-l(b)(2)(iv)(m)(4)
applies.

               (h) Limit on Loss Allocations. Notwithstanding the provisions of
Section 4.5 of this Agreement or any other provision of this Agreement to the
contrary, Losses (or items thereof) shall not be allocated to a Member if such
allocation would cause or increase a Member’s Adjusted Capital Account Deficit
and shall be reallocated to the other Members in proportion to their
Distribution Percentage, subject to the limitations of this Section 3(h).

               (i) Curative Allocations. The allocations under Sections 3(a)
through (h) above (such allocations, the “Regulatory Allocations”) are intended
to comply with certain requirements of the Regulations. It is the intent of the
Members and the Company that, to the extent possible, all Regulatory Allocations
shall be offset either with other Regulatory Allocations or with special
allocations of other items of income, gain, loss or deduction pursuant to this
Agreement. Therefore, notwithstanding any other provision of this Agreement to
the contrary (other than the Regulatory Allocations), the Company shall make
such offsetting special allocations of income, gain, loss or deduction in
whatever manner the Board determines appropriate so that, after such offsetting
allocations are made, each Member’s Capital Account

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balance is, to the extent possible, equal to the Capital Account balance such
Member would have had if the Regulatory Allocations were not part of the
Agreement and all items were allocated pursuant to Section 4.5 of the Agreement.
For purposes of this Section 3(i), future Regulatory Allocations under Sections
3(a) through (h) that are likely to offset other Regulatory Allocations
previously made shall be taken into account.

               4. Tax Allocations: Code Section 704(c).

               (a) For federal, state and local income tax purposes only, with
respect to any assets contributed by a Member to the Company (“Contributed
Assets”) which have a Gross Asset Value on the date of their contribution which
differs from the Member’s adjusted basis therefore as of the date of
contribution, the allocation of Depreciation and gain or loss with respect to
such Contributed Assets shall be determined in accordance with the provisions of
Section 704(c) of the Code and the Regulations promulgated thereunder using the
method described under Treas. Reg. § 1.704-1(b)(iv)(2)(f). For purposes of this
Agreement, an asset shall be deemed a Contributed Asset if it has a basis
determined, in whole or in part, by reference to the basis of a Contributed
Asset (including an asset previously deemed to be a Contributed Asset pursuant
to this sentence).

               (b) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to subparagraph (b) of the definition thereof, subsequent
allocations of income, gain, loss and deduction with respect to such asset shall
take account of any variation between the adjusted basis of such asset for
federal income tax purposes and its Gross Asset Value in the same manner as
under Section 704(c) of the Code and Treas. § 1.704-1(b)(iv)(2)(f).

               (c) Allocations pursuant to this Section 4 are solely for
purposes of federal, state, and local taxes and shall not affect, or in any way
be taken into account in computing any Member’s Capital Account or share of
Profits, Losses, other items, or distributions pursuant to any provision of this
Agreement.

               5. Allocations in the Event of Transfer. If all or any portion of
any Units are transferred to a substitute Member during any taxable year of the
Company, Profits, Losses, each item thereof and all other items attributable to
such Units for such period shall be divided and allocated between the transferor
and transferee by applying any method which satisfies Code Section 706(d). The
Tax Matters Member may revise, alter, or otherwise modify, without the consent
of the other Members, the method of allocation as necessary to comply with Code
Section 706 and Treasury Regulations or rulings promulgated thereunder.

               6. Profits Interest Safe Harbor. The Tax Matters Member is
authorized to amend this Agreement, without the consent of the other Members, to
comply with any safe harbor finalized by the United States Department of the
Treasury or the Internal Revenue Service relating to the tax treatment of a
transfer of an interest in the Company for services. For example, this Section 6
shall apply to any safe harbor finalized by Internal Revenue Service notice or
Regulations as successor to the proposed safe harbor described in Internal
Revenue Service Notice 2005-43, 2005-1 C.B. 1221. In the event any such safe
harbor is finalized and elected by the Company, all Members agree to comply with
all the requirements of such safe harbor and any amendments to this Agreement
that the Tax Matters Member effects pursuant to this Section 6.

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