Exhibit 10.16


SUPPLEMENTAL AGREEMENT 


TO


DAKOTA PETROLEUM TRANSPORT SOLUTIONS, LLC 


MEMBER CONTROL AGREEMENT 


AND


DAKOTA PETROLEUM TRANSPORT SOLUTIONS, LLC


LEASE AGREEMENT


          THIS
SUPPLEMENTAL AGREEMENT (the “Supplement”) is entered into September 30, 2010
and made effective as of July 22, 2010 by and between Dakota Plains Transport,
Inc., a Nevada corporation (“DPT”), Petroleum Transport Solutions, LLC, a
Minnesota limited liability company (“PTS”) and Dakota Petroleum Transport
Solutions, LLC, a Minnesota limited liability company (the “Company”). 


RECITALS


          A.          DPT
and PTS constitute all of the members of the Company, and the parties have each
executed that certain Dakota Petroleum Transport Solutions, LLC Member Control
Agreement dated effective November 9, 2009 (the “Agreement”). Capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in the
Agreement. 


          B.          The
Company has also entered into that certain Lease Agreement dated as of the
November 4, 2010 (the “Facility Lease”) covering the Company’s lease of certain
real property and improvements comprising the Company’s Transloading Facility
in New Town, North Dakota. 


          C.          The
parties have identified the need for additional site improvements and
additional equipment in order to expand and enhance the operations of the
Company’s Transloading Facility. 


          D.          The
proposed site improvements involve expanding the existing railroad tracks,
installing certain electrical equipment and making other physical improvements
agreed to by DPT and PTS at the Transloading Facility (the “Site
Improvements”). 


          E.          As
of August 1, 2010, DPT was entitled to receive $172,450.44 in connection with
Member Transaction Payments and PTS was entitled to receive $143,228.09 in
connection with Member Transaction Payments (collectively, the “Accrued Member
Transaction Payments”). 


          F.           The parties desire to supplement the
Agreement and Facility Lease by providing for the acquisition and economic
treatment of the anticipated site improvements and new equipment. 


AGREEMENTS


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


ARTICLE 1

SUPPLEMENT TO CONSTITUTE AMENDMENT


          1.1)          Amendment.
This Supplement shall constitute a written amendment to the Agreement as
contemplated by Section 10.5 thereof and the Facility Lease as contemplated by
Section 26 thereof. If there is any conflict between the provisions of this
Supplement on the one hand, and the Agreement or the Facility Lease on the
other, the provisions of this Supplement shall govern. Except as amended
hereby, all provisions of the Agreement and the Facility Lease shall continue
in full force and effect. Capitalized terms not otherwise defined herein shall
have the meaning ascribed to them in the Agreement or the Facility Lease, as
the case may be. 





ARTICLE 2

SITE IMPROVEMENTS AND NEW EQUIPMENT


          2.1)          Nature
and Purpose. As further provided herein, the Company shall obtain access to
the Site Improvements and certain additional transloading equipment and related
personal property (the “New Equipment”) as necessary to carry out and fulfill
certain transloading contracts entered into or to be entered into by the
Company with third parties. 


          2.2)          Site
Improvements. The nature, scope and composition of the Site Improvements
are set forth on the documentation attached hereto as Exhibit A. 


          2.3)          New
Equipment. The nature, scope and composition of the New Equipment are set
forth on the documentation attached hereto as Exhibit B. 


ARTICLE 3 

ACQUISITION, OWNERSHIP AND LEASES


          3.1)          Site
Improvements. DPT and PTS shall work together to cause the Site
Improvements to be made to the real estate on which the Transloading Facility
is located. As the current owner and lessor to the Company of the real estate
constituting the Transloading Facility, DPT will provide funds for the Site
Improvements, and such Site Improvements shall become subject to the existing Facility
Lease. 


	
 

	
 


	
 

	
          3.1.1)          DPT
will pay all costs of the Site Improvements, which are currently estimated to
be $1,173,911.93. DPT will provide a final accounting of the actual costs of
the Site Improvements as soon as practicable following completion of all such
improvements, the aggregate amount of which, for purposes of this Supplement,
shall constitute the “Improvement Costs” and be calculated as shown on
Exhibit A. 


	
 

	
 


	
 

	
          3.1.2)          All
such Site Improvements shall be the sole property of DPT, though subject to
the terms and provisions of the Facility Lease. 


	
 

	
 


	
 

	
          3.1.3)          During
the term of the Facility Lease, the Company shall be solely responsible for
any and all costs and expenses required to perform all maintenance and repair
of the Site Improvements, as well as the previously constructed rail service
improvements. 


	
 

	
 


	
 

	
          3.1.4)          DPT
shall not be entitled to any Additional Rent under Section 2(b) of the
Facility Lease by virtue of its payment of the Improvement Costs. 




          3.2)          New
Equipment. PTS shall pay all costs for the acquisition of four (4) new
state of the art transloaders identical to those identified on Exhibit B (the
“New Transloaders”), and PTS hereby represents and warrants that such costs are
currently estimated to total $526,410.00. PTS shall provide DPT a copy of the
Bill of Sale and a copy of a receipt evidencing the amount and payment for the
New Transloaders from Lease Plan U.S.A. to Safe Rock LLC as soon as practicable
following the acquisition thereof. The aggregate amount shown on the Bill of
Sale and the receipt will constitute the “Transloader Costs.” 


	
 

	
 


	
 

	
          3.2.1)          The
New Transloaders shall be the sole property of PTS, though subject to the
Company’s lease from PTS for a rent payment of $1.00 per month during the
term of the Agreement. 


	
 

	
 


	
 

	
          3.2.2)          The
New Transloaders shall be delivered to the Company’s facility in new Town,
North Dakota, and shall be used only for transloading activities of the
Company unless otherwise agreed in writing by the parties. During the term of
the Agreement, the New Transloaders shall not be removed from the
Transloading Facility without prior written notice to DPT and without DPT’s express
written consent, which consent may be withheld for any reason or no reason
whatsoever in DPT’s sole and unilateral discretion. 




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          3.2.3)          During
the term of the Agreement, the Company shall be responsible for all maintenance
associated with the New Transloaders, which maintenance costs are currently
estimated at $3,000 per year. The Company will not be required to expend
Company funds to “rebuild” the New Transloaders at any time. 




          3.3)          Documentation.
DPT and PTS will each produce and deliver to the Company and to each other
invoices and other reasonably requested documentation demonstrating the payment
or other satisfaction of the Improvement Costs and the Transloader Costs. 


          3.4)          Excess
Contribution by DPT. In order to render fair and equitable the additional
expenditures by the parties relating to the Site Improvements and New
Equipment, the parties agree that the following provisions shall apply
notwithstanding any provisions of the Agreement or the Facility Lease to the
contrary: 


	
 

	
 


	
 

	
          3.4.1)          DPT
shall be forever irrevocably relieved and discharged of its previous
obligation to pay PTS the amount of One Hundred Ninety-Eight Thousand Seven
Hundred Sixty Seven Dollars and Twenty-Two Cents ($198,767.22) originally
attributable to the existing transloader (the “Original Transloader”) as set
forth on Exhibit C to the Facility Lease. The Original Transloader shall
remain the property of PTS. The Monthly Base Rent due to DPT under the
Facility Lease will continue to be Nineteen Thousand One Hundred Sixty-One
Dollars and Sixteen Cents ($19,161.16) per month and will not be adjusted as
a result of the provisions hereof. 


	
 

	
 


	
 

	
          3.4.2)          Commencing
August 1, 2010, the following provisions relating to distributions shall
apply: 







	
 

	
 

	
 


	
 

	
 

	
          A)          The
Priority Cash Available for the Company (as defined in Section 5.2(a) of the
Agreement) shall be calculated on a monthly basis (rather than on a quarterly
basis as provided by Section 5.2(a) of the Agreement) and shall consist of
all cash accumulated by the Company at the end of each calendar month in
excess of the cash necessary to pay Third Party Expenses (i) through the end
of such calendar month and (ii) through the end of the next calendar month. 


	
 

	
 

	
 


	
 

	
 

	
          B)          Until
the DPT Reimbursement (as defined in this Subsection 3.4.2 B)) has been
satisfied, all of the Priority Cash Available shall be distributed as
follows, and such payments shall be in lieu of the payment and distribution
provisions of Section 5.2(b) and (d) of the Agreement: 







	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
          i)          On
or before October 8, 2010, DPT shall be entitled to receive a distribution in
the amount of $98,871.91 (the “DPT True-Up Amount”) as payment of past-due
Member Transaction Payments owed to DPT pursuant to the Agreement. After
payment of the DPT True-Up Amount, the Accrued Member Transaction Payments
shall be adjusted such that DPT shall be entitled to receive $73,578.53 in connection
with past due, unpaid Member Transaction Payments and PTS shall remain
entitled to receive $143,228.09 in connection with past due, unpaid Member
Transaction Payments. 


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
          ii)          Following
payment of the “DPT True-up Amount”, on a monthly basis within fifteen (15)
days following the end of each calendar month, to the extent of the remaining
Priority Cash Available, distributions shall be made seventy-five percent
(75%) to DPT and twenty-five percent (25%) to PTS until such time as DPT
shall have been repaid through such distributions an amount equal to (a) the
excess of the Improvement Costs over the Transloader Costs (the “Excess
Contribution”)(currently estimated to be $647,501.93) plus (b) interest on
the Excess Contribution calculated at a rate of seven percent (7%) per annum
from August 1, 2010 until paid. The Excess Contribution and applicable
interest is collectively referred to herein as the “DPT Reimbursement”. The
first payment to be made pursuant to this Subsection 3.4.2 B) ii) shall be
made on October 15, 2010 out of Priority Cash Available for the months of
August 2010 and September 2010. Any Member Transaction Payment remaining
unsatisfied after payments described in this Subsection 3.4.2 B) shall become
Suspended Member Transaction Payments payable only as described in Section
3.4.2 C) below. 




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          C)          No
Member Transaction Payments or Suspended Member Transaction Payments shall be
paid by the Company until such time as the Company has repaid the entire DPT
Reimbursement. Once the Company has repaid the entire DPT Reimbursement, the
Priority Cash Available for the Company shall continue to be calculated on a
monthly basis as provided by Section 3.4.2 A) above and shall be distributed
on a monthly basis within fifteen (15) days following the end of each
calendar month in the order of priority described in this Subsection 3.4.2
C). To the extent of Priority Cash Available, the Member Transaction Payments
for the calendar month just ended, plus any Suspended Member Transaction
Payments shall be paid by the Company. If the Priority Cash Available is
insufficient to satisfy all the obligations of the Company for the amounts
described in the preceding sentence, the Priority Cash Available shall be
paid one half to each Member until the obligation to one Member is fully
satisfied, and the balance, if any, to satisfy any remaining such obligations
to the other Member. Any remaining unpaid obligations for such month under
this subsection shall be treated as “Suspended Member Transaction Payments”
and shall be taken into account in determining the following month’s
payments. 


	
 

	
 

	
 


	
 

	
 

	
          D)          The
terms and provisions of Subsections 3.4.2 B) and 3.4.2 C) shall cease to
apply and the existing provisions of the Agreement shall apply at such time
as the Company has repaid the entire DPT Reimbursement and all Suspended
Member Transaction Payments have been made. 




ARTICLE 4 

MISCELLANEOUS


          4.1)          No
Payment with Respect to Guarantee. Western Petroleum Company (the sole member
of PTS) (“Western”) has agreed to guarantee certain performance obligations of
the Company to UET in connection with the transloading agreement entered into
between the Company and UET. Neither PTS nor Western will be entitled to any
compensation or preferential payments as consideration for Western entering
into such guarantee. 


[SIGNATURE PAGE FOLLOWS]


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          IN WITNESS
WHEREOF, the Members have executed this Agreement effective as of the date first
above written. 


	
 

	
 


	
 

	
Dakota
Plains Transport, Inc.


	
 

	
 


	
 

	
By /s/ James
R. Reger


	
 

	
Its Chief Executive Officer


	
 

	
 


	
 

	
Petroleum
Transport Solutions, LLC


	
 

	
 


	
 

	
By /s/
William A. Emison


	
 

	
Its President


	
 

	
 


	
 

	
Dakota
Petroleum Transport Solutions, LLC


	
 

	
 


	
 

	
By /s/ William
A. Emison


	
 

	
Its Chief Manager, CEO & Secretary




SIGNATURE PAGE TO 

SUPPLEMENTAL AGREEMENT TO

DAKOTA PETROLEUM TRANSPORT SOLUTIONS, LLC 

MEMBER CONTROL AGREEMENT


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EXHIBIT B


New Equipment