Document:

Exhibit 10.11

EXCHANGE AND LOAN AGREEMENT

          THIS
EXCHANGE AND LOAN AGREEMENT (this “Agreement”) is
entered into effective as of November 1, 2011 between
                  
(“Lender”) and Dakota
Plains, Inc., a Minnesota corporation (the “Company”).

RECITALS

	
  

 	
  

 	
  

 
	
  

 	
 A.

 	
 Lender is
 the record and actual holder of certain promissory notes payable by the
 Company identified on Exhibit A (the “Old Notes”).

 
	
  

 	
  

 	
  

 
	
  

 	
 B.

 	
 The Company
 and Lender intend to extend the maturity of the Old Notes by Lender
 exchanging such Old Notes for a new promissory note payable by the Company to
 Lender.

 
	
  

 	
  

 	
  

 
	
  

 	
 C.

 	
 The Company
 and Lender desire to establish terms of a supplemental credit arrangement
 through which the Company may elect to borrow an additional amount from
 Lender.

 
	
  

 	
  

 	
  

 
	
  

 	
 NOW, THEREFORE, in consideration of the
 mutual covenants herein contained, the parties agree as follows:

 

	
  

 	
  

 	
  

 
	
  

 	
 1.

 	
 EXCHANGE.

 

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 a.

 	
 Promissory Notes.
 Upon the terms and subject to the conditions of this Agreement and in
 reliance upon the representations, warranties and agreements contained in
 this Agreement, as of November 1, 2011, the Company will issue to Lender, and
 Lender will surrender the Old Notes to the Company for a promissory note in
 substantially the form set forth on Exhibit B (the “New Note”)
 in a principal amount equal to the aggregate principal amount of the Old
 Notes as set forth on Exhibit A.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 b.

 	
 Extension Fee. In
 connection with the issuance of the New Note, Lender will receive from the
 Company, at Lender’s election (as indicated by checking the appropriate box),
 either 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 o

 	
 (i)

 	
 a cash
 payment equal to 2.0% of the aggregate principal amount of Old Notes
 exchanged by such holder (the “Cash Extension Fee”); or 

 
	
  

 
	
  

 	
  

 	
  

 	
  

 	
 o

 	
 (ii)

 	
 a number of
 shares of the Company’s common stock, par value $0.01 per share, equal to the
 Cash Extension Fee divided by $4.00.

 
	
  

 
	
  

 	
 2.

 	
 EFFECTIVENESS OF EXCHANGE. Upon acceptance of this Agreement
 by the Company, all of the Old Notes will be deemed to be exchanged for the
 New Note as of the date first set forth above and the Old Notes will
 thereupon be deemed null and void. Except for obligations created under this
 Agreement, by accepting this Agreement, Lender forever releases relieves and
 discharges the Company and its affiliates, subsidiaries, predecessors,
 successors, assigns, attorneys, partners, employees, directors, officers,
 shareholders, agents, representatives and related entities (collectively, the
 “Released
 Parties”), from any and all claims, demands, actions, cause or
 causes of action, suits debts, sums of money, controversies, damages,
 obligations, breaches and liabilities of every kind and nature, whether known
 or unknown, in law, equity or otherwise, that have existed or may exist as of
 the date of this Agreement relating to the Old Notes and all matters and
 agreements in connection therewith and related thereto.

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.

 	
 STANDBY CREDIT ARRANGEMENT. If Lender exchanges any Old Notes
 consisting of promissory notes due October 14, 2012 (“Junior
 Notes”) for the New Note, then Lender agrees to make available to
 the Company additional funds in exchange for an additional promissory note
 (the “Supplemental Note”),
 upon receipt of a request from the Company.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 a.

 	
 Period of Availability.
 The Company’s right to require that Lender lend funds to the Company in
 exchange for the Supplemental Note may be exercised on a single occasion at
 any time on or before November 1, 2012, after which date Lender’s obligation
 to provide additional funds under this Section 3 will cease.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 b.

 	
 Single Company Request.
 In order to be timely, the Company’s request must be delivered to Lender at
 least ten (10) calendar days before the date the Company intends to borrow
 the additional funds pursuant to the Supplemental Note (the “Draw Date”), and
 such request must specify (i) the aggregate amount of funds to be borrowed by
 the Company from Lender, (ii) the aggregate amount of funds to be borrowed by
 the Company from all persons who held Junior Notes on November 1, 2011
 (collectively, “Participating Holders”), and (iii) the exact date that
 will be the Draw Date. The Lender hereby agrees to deliver funds to the
 Company on the Draw Date in and amount determined in accordance with Section
 3.c. of this Agreement.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 c.

 	
 Allocation. The
 principal amount that the Company may request of Lender under this Section 3
 may not exceed the lesser of (i) $5,500,000 multiplied by the quotient
 of the aggregate principal amount of any Junior Notes exchanged by Lender for
 the New Note divided by $5,500,000, and (ii) the aggregate principal
 amount to be borrowed from all Participating Holders multiplied by the
 quotient of the aggregate principal amount of any Junior Notes exchanged by
 Lender for the New Note divided by $5,500,000.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 d.

 	
 Terms. All
 interest on the Supplemental Note will be paid monthly in arrears based upon
 eighteen (18.0%) simple annual interest. All principal amounts and accrued
 but unpaid interest under the Supplemental Note will be due and payable on
 the one-year anniversary of the Draw Date. The Company, in its sole
 discretion, may settle the Supplemental Note at any time after the Draw Date
 by payment to the holders of the Supplemental Note all principal and accrued
 but unpaid interest through the date of settlement.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 e.

 	
 Warrant Coverage. Not
 more than five (5) business days after the Draw Date (if any), the Company
 will deliver to Lender a warrant (the “Supplemental Warrant”) to purchase at the Strike Price
 (defined below) a number of shares of the Company’s common stock equal to the
 quotient of (x) 50% of the principal amount of the Supplemental Note divided
 by (y) $1.00. The Supplemental Warrant will be exercisable at any time during
 the period that is ten (10) years after the Draw Date. For purposes of this
 Section 3(d) “Strike Price” means (i) the volume-weighted average
 closing price of the Company’s common stock over the twenty (20) trading days
 after the date the Supplemental Notes are issued; or (ii) if a Public Listing
 has not occurred before the date the Supplemental Notes are issued, fair market
 value of a share of the Company’s common stock as determined in good faith by
 the Board of Directors of the Company.

 

2

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.

 	
 REPRESENTATIONS AND WARRANTIES OF LENDER.
 Lender hereby represents and warrants to the Company as of the date of this
 Agreement and as of the Draw Date (if any) as follows:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 a.

 	
 Lender is
 acquiring the New Note and any shares of the Company’s common stock issuable
 pursuant to the New Note, including but not limited to any shares received
 pursuant to Section 1.b. of this Agreement, and will acquire the Supplemental
 Note, the Supplemental Warrant, and any shares of common stock issuable
 pursuant to the Supplemental Warrant (collectively, the “Securities”), for Lender’s
 own account (and not for the account of others) for investment and not with a
 view to the distribution or resale thereof.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 b.

 	
 Lender has
 had an opportunity to ask questions of, and receive answers from, the Company
 concerning the business, management and financial affairs of the Company and
 the terms and conditions of the Exchange. Lender has had an opportunity to
 obtain any information requested by Lender regarding the Company, including
 information regarding the current financial condition of the Company, as well
 as any information requested to verify this information, to the extent
 reasonably available.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 c.

 	
 Lender has
 been advised to seek financial, legal and tax counsel concerning the
 transactions contemplated by this Agreement.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 d.

 	
 Lender is a
 sophisticated investor and an “accredited investor”, as such term is defined
 in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as
 amended (the “Securities Act”).

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 e.

 	
 Lender
 recognizes that (i) there are, or will be when issued, substantial
 restrictions on the transfer of the Securities; (ii) there is not currently a
 public market for the Securities; and (iii) accordingly, for the above and
 other reasons, Lender may not be able to liquidate an investment in the
 Securities for an indefinite period. Lender realizes that the Securities have
 not been, and may not be, registered for sale under the Securities Act or
 applicable state securities laws, and, therefore, may be sold only pursuant
 to registration under the Securities Act and state laws, or an opinion of
 counsel acceptable to the Company that such registration is not required. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 f.

 	
 Lender
 understands that the certificates representing the Securities (if any) shall
 contain a legend to the effect of (e) above.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 g.

 	
 Lender is
 the sole record and beneficial owner of the Old Notes, free and clear of any
 and all liens or restrictions on transfer.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 h.

 	
 There are no
 legal proceedings pending or, to Lender’s knowledge, threatened in writing,
 against or affecting Lender or Lender’s respective assets, at law or in
 equity, by or before any governmental authority, or by or on behalf of any
 third party, which, if adversely determined, would impair your ability to
 enter into this Agreement or consummate the transactions contemplated by this
 Agreement.

 
	
  

 	
  

 	
  

 
	
  

 	
 5.

 	
 MISCELLANEOUS.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 a.

 	
 .No
 Assignment or Revocation; Binding Effect. Neither this Agreement,
 nor any interest herein, shall be assignable by Lender without prior written
 consent of the Company, which consent shall not be unreasonably withheld.
 Lender hereby 

 

3

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 acknowledges
 and agrees that Lender is not entitled to cancel, terminate or revoke this
 Agreement and that it shall survive the death, incapacity or bankruptcy of
 Lender. The provisions of this Agreement shall be binding upon and inure to
 the benefit of the parties hereto, and their respective heirs, legal
 representatives, successors and assigns.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 b.

 	
 Remedies. The
 Lender acknowledges that the Company may not have an adequate remedy at law
 in the event of any breach of this Agreement by the Lender and, therefore,
 the Company may be entitled, in addition to any other available remedies, to
 injunctive and/or other equitable relief to prevent or remedy a breach of
 this Agreement upon showing of sufficient proof to a court of competent
 jurisdiction properly seated to hear such matter.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 c.

 	
 Modifications.
 This Agreement may not be changed, modified, released, discharged, abandoned
 or otherwise amended, in whole or in part, except by an instrument in writing,
 signed by the Lender and the Company. No delay or failure of the Company in
 exercising any right under this Agreement will be deemed to constitute a
 waiver of such right or of any other rights. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 d.

 	
 Entire Agreement.
 This Agreement and the exhibits hereto are the entire agreement between the
 parties with respect to the subject matter hereto and thereto. This
 Agreement, including the exhibits, supersedes any previous oral or written
 communications, representations, understandings or agreements between the
 parties. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 e.

 	
 Severability. In
 the event that any paragraph or provision of this Agreement shall be held to
 be illegal or unenforceable in any jurisdiction, such paragraph or provision
 shall, as to that jurisdiction, be adjusted and reformed, if possible, in
 order to achieve the intent of the parties, and if such paragraph or
 provision cannot be adjusted and reformed, such paragraph or provision shall,
 for the purposes of that jurisdiction, be voided and severed from this
 Agreement, and the entire Agreement shall not fail on account thereof but
 shall otherwise remain in full force and effect.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 f.

 	
 Governing Law.
 This Agreement shall be governed by, subject to, and construed in accordance
 with the laws of the State of Minnesota without regard to conflict of law
 principles.

 

[Signature Page Follows]

4

          IN
WITNESS WHEREOF, the undersigned Lender has executed this Exchange and Loan
Agreement as of the date first set forth above.

	
  

 	
  

 
	
  

 	
  

 
	
  

 	
 By

 
	
  

 	
 Its

 

          IN
WITNESS WHEREOF, the Company hereby accepts this Exchange and Loan Agreement as
of the date first set forth above.

	
  

 	
  

 
	
  

 	
 DAKOTA PLAINS,
INC.

 
	
  

 	
  

 
	
  

 	
  

 
	
  

 	
 By

 
	
  

 	
 Its

 

[Signature
Page to Exchange and Loan Agreement]

Exhibit A

LENDER PROMISSORY NOTES

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Principal Amount

 	
  

 
	
 Promissory Note(s) to be Exchanged – Old Notes:

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 
	
 Promissory Note due January 31, 2012 –
 Senior Note

 	
  

 	
  

 	
 $

 	
  

 	
  

 	
  

 
	
  

 
	
 Promissory Note due October 14, 2012 –
 Junior Note

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 
	
 Promissory Note to be Issued:

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Promissory Note due March 1, 2013 – New Note

 	
  

 	
  

 	
 $Exhibit 10.12

DAKOTA PETROLEUM TRANSPORT SOLUTIONS, LLC

MEMBER CONTROL AGREEMENT

          THIS
MEMBER CONTROL AGREEMENT, (the “Agreement”) is made effective as of November 9,
2009 (the “Effective Date”), 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 are all of the
Members of the Company.

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

          C.          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 “Dakota Petroleum
Transport Solutions, LLC.” The
Company’s principal office will be 9531 West 78th Street, Eden
Prairie, Minnesota 55344, or such other place as the Board of Governors of the
Company (the “Board”) may from time to time determine. 

          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 acquisition, construction
and operation of a petroleum transloading facility in New Town, North Dakota
(the “Transloading Facility”); (b) the marketing of hydrocarbons produced
within North Dakota to refineries and other end-users, wherever located; and
(c) any other lawful activities as the Board of Governors may determine from
time to time.

- 1 -

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

 
	
  

 	
  

 
	
  

 	
          (b)          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. 

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           (d)          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.

 
	
  

 	
  

 
	
  

 	
           (e)          Company.
 The “Company” means Dakota Petroleum Transport Solutions, LLC, a Minnesota
 limited liability company, formed upon the filing of the Articles of
 Organization with the Secretary of State of Minnesota.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           (i)          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.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           (k)          Net
 Profits and Net Losses. “Net Profits” and “Net Losses” means, with respect
 to any period, the income and loss of the Company for such period as
 determined in accordance with the accounting method followed by the Company
 for book purposes, including income exempt from tax and described in Code
 Section 705(a)(1)(B) and treating as deductions items described in Code
 Section 705(a)(2)(B).

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           (n)          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.

 
	
  

 	
  

 
	
  

 	
           (o)          Person. “Person”
 means any natural person, company (whether general or limited), limited
 liability company, trust, estate, association, corporation, joint venture,
 proprietorship, governmental 

 

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 agency,
 trust, estate, association, custodian, nominee or any other individual or
 entity, whether acting in an individual, fiduciary, representative or other
 capacity.

 
	
  

 	
  

 
	
  

 	
           (p)          Risk
 Equivalence. “Risk Equivalence” refers to the objective of maintaining
 between Members an equivalent level of risk with respect to their respective
 Member Interests, all as more specifically described in Section 10.1 below.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 

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, AND VOTING

          3.1)          Capital
Accounts. The following shall apply with respect to the Capital Accounts:

	
  

 	
  

 
	
  

 	
           (a)          A
 Capital Account shall be maintained for each Member. Each Member’s Capital
 Account shall consist of such Member’s initial contribution to the Company
 and shall be (i) increased by such Member’s additional capital
 contributions, if any; (ii) decreased by such Member’s share of
 Distributions from the Company, if any; and (iii) otherwise adjusted in
 accordance with Article 5. 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.

 
	
  

 	
  

 
	
  

 	
           (b)          
 General Compliance With Section 704(b). The maintenance of the Capital
 Accounts for the Members shall comply with Section 704(b) of the Code and the
 applicable Treasury Regulations. If the Board determines that the maintenance
 of such Capital Accounts needs to be modified to comply with Section 704(b)
 of the Code and the applicable Treasury Regulations, the Board may,
 notwithstanding any other provision of this Agreement, change the method of
 maintaining such Capital Accounts and if rendered necessary as a result of
 such change, amend this Agreement without notice to the other Members to
 reflect any such changes; provided, however, that any such changes shall not
 materially alter the economic agreement of the Members.

 
	
  

 	
  

 
	
           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.

 
	
  

 	
  

 
	
  

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

 

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           (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 another Member to pay funds to such creditor or
 to the Company.

 
	
  

 	
  

 	
  

 
	
           3.3)          Services
 to be Performed by Members.

 
	
  

 
	
  

 	
           
 (a)           DPT.
 During the term of the Company’s operations under this Agreement, DPT shall
 perform and be responsible for the following actions and services to be
 provided to the Company as part of DPT’s Member contribution.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (i)          At
 its sole cost, DPT shall acquire the real property necessary for the
 operation of the Transloading Facility, and for rail spur service between the
 Transloading Facility and the available trunk rail line.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (ii)          At
 its sole cost, DPT shall provide funds to acquire equipment and materials, to
 pay contractors, to acquire permits and to assemble and erect the
 Transloading Facility to its operational condition.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (iii)          DPT,
 as owner of the Transloading Facility, shall lease the Transloading Facility
 to the Company at a rent payment described in the Member Transaction
 description attached hereto as Exhibit B. The Company shall use the
 Transloading Facility pursuant to and consistent with the terms of such
 lease, and neither PTS nor the Company shall have any claim to any interest
 in the Real Property or any equipment, materials or improvements on the Real
 Property, other than as specifically set forth in such lease. No interest in
 the Transloading Facilty shall be considered to have been conveyed to the
 Company or to PTS by virtue of this Agreement.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (iv)          DPT,
 as owner of certain equipment to be utilized for the operation of the
 Transloading Facility (the “Equipment”), will lease the Equipment to the Company
 at a rent payment described in the Member Transaction description attached
 hereto as Exhibit B. The Company shall use the Equipment pursuant to and
 consistent with the terms of such lease, and neither PTS nor the Company
 shall have any claim to any interest in the Equipment, other than as
 specifically set forth in such lease. No interest in the Equipment shall be
 considered to have been conveyed to the Company or to PTS by virtue of this
 Agreement

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (v)          DPT
 shall assist the Company through DPT’s contacts with producers, marketers and
 transporters of hydrocarbons in North Dakota, to purchase hydrocarbons for
 transfer to and transloading through the Transloading Facility, and marketing
 such hydrocarbons to refiners and other end-users.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
           (b)          PTS.
 During the term of the Company’s operations under this Agreement, PTS shall
 perform and be responsible for the following actions and services to be
 provided to the Company as part of PTS’s Member contribution.

 
	
  

 	
  

 
	
  

 	
  

 	
           (i)          PTS
 shall provide, make available, sublease to the Company, or otherwise arrange
 for direct lease by the Company, of rail cars sufficient to service the
 Transloading Facility at a throughput volume of 10,000 barrels per day.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (ii)          PTS
 may satisfy its obligations to provide rail cars as described in (i) above by
 subleasing rail cars to the Company. In that event, the rent payments for the
 rail cars shall be as described in the Member Transaction description
 attached hereto as Exhibit B.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (iii)          PTS
 shall coordinate and manage on a day to day basis, either directly or through
 services contracted by the Company with third parties, the operation of the
 Transloading Facility, including contracting for truck transport of
 hydrocarbons from the producers’ locations to the Transloading Facility and
 managing all accounting and bookkeeping functions in connection with the
 operation of the Transloading Facility. A monthly accounting fee agreed upon
 by the 

 

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 Members
 in the manner set forth in Exhibit C shall be paid to PTS for staff time
 provided by PTS for bookkeeping and accounting functions as contemplated by
 Section 7.6(f) of this Agreement.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (iv)          PTS
 shall assist the Company through PTS’s contacts with marketers, transporters,
 refiners and other end-users to market hydrocarbons produced in North Dakota
 and purchased by the Company for transloading through the Transloading
 Facility, and marketing such hydrocarbons to refiners and other end-users.

 
	
  

 	
  

 	
  

 
	
           3.4)          Authorized
 Units. 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.

 
	
  

 	
  

 	
  

 	
  

 
	
           3.5)          Voting
 Power. Each Unit shall entitle the owner of such Unit to one vote on all
 matters submitted to the vote of Members.

 

ARTICLE 4

TAX MATTERS

          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 ninety (90) days 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. 

          4.4)          Tax
Allocations. In accordance with Section 704(c) of the Code and the
Treasury Regulations promulgated thereunder, income, gain, loss and deduction
with respect to any property contributed to the capital of the Company shall,
solely for tax purposes, be allocated among the Members so as to take account
of any variation between the adjusted basis of such property to the Company for
federal income tax purposes and its fair market value as of the date of
contribution. In the event any Company asset is adjusted as a result of a
revaluation pursuant to Treasury Regulations § 1.704-1(b)(2)(f),
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 fair market value as of the date
of such revaluation in the same manner as under Section 704(c) of the Code
and the Treasury Regulations promulgated thereunder. Any election or other
decision relating to such allocations shall be made by the Board in any manner
that reasonably reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 4.5 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 income,
profits, gains, losses, expenses, deductions, credits or other items or
distributions pursuant to any provision of this Agreement.

          4.5)          Book-up
of Capital Accounts. Unless the Board shall determine otherwise, the gross
asset values of all the Company’s assets shall be adjusted to equal their
respective gross fair market values, as determined by the 

- 5 -

Board
(and the Capital Accounts of the Members shall be adjusted accordingly), as of
the following times: (a) the
acquisition of an additional Unit by any new or existing Member in exchange for
more than a de minimis capital contribution; (b) the distribution
by the Company to a Member of more than a de minimis amount of
assets of the Company as consideration for Units; or (c) upon the acquisition
of Units by a new or existing Member, provided, however, that adjustments shall
be made only if the Board reasonably determines that such adjustments are
necessary or appropriate to reflect the relative economic interests of the
Members in the Company.

ARTICLE 5

ALLOCATIONS AND DISTRIBUTIONS

          5.1)          Allocation
Provisions. The following provisions apply with respect to the allocation
of such items among the Members:

	
  

 	
  

 	
  

 	
  

 
	
  

 	
           (a)          Allocation
 of Net Profits and Net Losses. At the end of each fiscal quarter, the Net
 Profits and Net Losses for such fiscal quarter shall be allocated pro rata to
 the Members based on the number of Units which are issued and outstanding and
 shall be credited or debited to the Capital Accounts of the Members.

 
	
  

 	
  

 
	
  

 	
           (b)          Section 706(d).
 In the event of any changes in Percentage Interests in the Company during a
 fiscal year, then for purposes of this Article 5, the Board shall take
 into account the requirements of Section 706(d) of the Code and may
 select any method of determining the varying Percentage Interest of the
 Member during the year which satisfies Section 706(d) of the Code.

 
	
  

 	
  

 
	
  

 	
           (c)          Section 754.
 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.

 
	
  

 	
  

 
	
  

 	
           5.2)          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. 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 cash necessary to pay operating expenses of the Company
 incurred to parties other than Members or their respective affiliates (the
 “Third Party Expenses”) (i) through the end of such calendar quarter and (ii)
 through the end of the first calendar month of the next calendar quarter.

 
	
  

 	
  

 
	
  

 	
           (b)          Priority
 Payments to Members. As soon as practicable following the end of each
 calendar quarter the Company shall determine the amount of Priority Cash
 Available. To the extent of Priority Cash Available, the amounts due to
 Members with respect to Member Transactions (as defined below) (the “Member
 Transaction Payments”) for the calendar quarter just ended shall be paid by
 the Company. If the Priority Cash Available is insufficient to satisfy the
 obligations of the Company for the calendar quarter’s Member Transactions,
 the amounts of Priority Cash Available from time to time shall be paid one
 half to each Member until the obligation to a Member is satisfied, and the
 balance, if any, to satisfy any remaining such obligations to the other
 Member.

 
	
  

 	
  

 
	
  

 	
           (c)          
 Member Transactions. The sublease by the Company of rail cars from
 PTS, or the provision of rail cars to the Company by PTS without formal
 sublease arrangement, shall each constitute a Member Transaction as to PTS.
 The lease of the Transloading Facility and the Equipment by the Company from
 DPT shall constitute a Member Transaction with respect to DPT. The
 obligations of the Company to the respective Members for Member Transactions
 shall be the amount determined under the formulations set forth in Exhibit
 B.

 

- 6 -

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)          Operating
 Distributions. 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (i)          At
 the end of each calendar quarter, the Board shall identify the amount of
 Priority Cash remaining after all Third Party Expenses and all Member
 Transaction Payments described above in this Section 5.2 (relating to such
 calendar quarter and the first calendar month of the next succeeding calendar
 quarter) have been made. The Company shall make a pro rata distribution of
 one-half (1/2) of such amount (the “Required Distribution”) to the Members
 based upon the average number of Units owned by each Member each calendar day
 during such calendar quarter. Notwithstanding the foregoing, the Company may
 reduce the Required Distribution by any amount that the Board unanimously
 determines is necessary or prudent to pay any capital improvements or other
 extraordinary expenses for the succeeding calendar quarters. 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (ii)          The
 Board, at the end of any calendar quarter upon unanimous consent of all
 Governors, may declare and pay any Distributions in addition to the Required
 Distribution provided that it has first set aside or satisfied all Third
 Party Expenses and Member Transaction Payments required to be made with
 respect to such calendar quarter end as described in this Section 5.2.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (iii)          Any
 Distributions from the Company as may be authorized from time to time by the
 Board, shall be made, at the time such Distributions are authorized by the
 Board, to the Members in such amounts as may be determined by the Board on a
 pro rata basis. No Member shall have any right to interim Distributions
 except as determined by the Board, and 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.

 
	
  

 	
  

 	
  

 
	
  

 	
           (e)          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
 cash is reasonably available without any borrowing by the Company, and taking
 into account the reasonable working capital needs of the Company, the amount
 calculated pursuant to this Section 5.2(b)(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 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)          To
 the extent distributions are made in reliance upon the authority of this
 Section 5.2(e), such distributions shall reduce the amount of the Required
 Distributions described in Section 5.2(d)

 
	
  

 	
  

 	
  

 
	
  

 	
           (f)          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
 Net Profit or Net Loss as if such property had been sold at its fair market
 value as determined in good faith by the Board.

 

- 7 -

ARTICLE 6

ISSUANCE OF UNITS; ADMISSION OF MEMBERS; REGISTRATION

          6.1)          Issuance
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, 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.

          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 in
 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)          Schedule
 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 Schedule A. The Board is authorized from time to
 time to update Schedule 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 or entity
 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.

 
	
  

 	
  

 
	
  

 	
           (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.

 
	
  

 	
  

 
	
  

 	
           (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 

- 8 -

responsibility on behalf of,
or bind the Company or any other Member. Such authority shall be vested solely
in the Board 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, the Board shall have the sole and exclusive power to manage
 the Company’s business.

 
	
  

 	
  

 
	
  

 	
           (b)          Designation
 of Board Members. Each Member shall be permitted to appoint one designee
 of such Member to the Board of Governors. 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.

 
	
  

 	
  

 
	
  

 	
           (b)          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.

 
	
  

 	
  

 
	
  

 	
           (c)          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. 

 
	
  

 	
  

 
	
  

 	
           (d)          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.

 
	
  

 	
  

 
	
  

 	
           (e)          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.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           (g)          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 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 shall have one or more natural persons exercising the functions of
the offices, however designated, of Chief 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 affiliated with 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 related to a Member, the Agreement
shall be approved in accordance with 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, no Member or
officer shall be compensated for services to the Company. No relationships
between the Company or any person or entity affiliated with a Member are
authorized unless the Board is fully aware of the circumstances and, in no
event, will 

- 9 -

compensation
to any such affiliated person or entity be more than is reasonable given all of
the facts and circumstances.

          7.6)          Operation
of the Transloading Facility and Conduct of the Company’s Business.

	
  

 	
  

 	
  

 
	
  

 	
           (a)          Business
 Divisions. The Company shall conduct two categories of business
 activities:

 
	
  

 	
  

 
	
  

 	
  

 	
           (i)          The
 operation of the Transloading Facility for transloading petroleum and similar
 products from transport trucks to rail cars, either for its own account or
 for third parties.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (ii)          The
 purchase of hydrocarbons produced in North Dakota and the marketing thereof
 to refineries or other end users.

 
	
  

 	
  

 	
  

 
	
  

 	
           (b)          Credit.
 The Company will establish and maintain appropriate credit facilities with a
 commercial lender to accommodate its regular working capital needs.

 
	
  

 	
  

 
	
  

 	
           (c)          Labor
 and Contracts. The Company shall contract for labor needed in the
 operation and site management of the Transloading Facility and for truck
 transport (to the extent it is for the Company’s account) of petroleum
 products from producers to the Transloading Facility, and the Company shall
 be responsible for all such costs.

 
	
  

 	
  

 
	
  

 	
           (e)          Operating
 Expenses. The Company shall pay all expenses directly related to the
 operation of the Transloading Facility including but not limited to
 utilities, real estate taxes, sales taxes, maintenance, insurance, labor
 costs and Member Transaction costs. No operating distributions (as defined in
 Section 5.2(d)) shall be made by the Company until all operating expenses
 have been paid or are properly accrued for, and all payments with respect to
 member Transactions for the immediately preceding calendar quarter have been
 paid.

 
	
  

 	
  

 
	
  

 	
           (f)          Accounting
 and Bookkeeping. Accounting and bookkeeping services for the Company
 shall be performed by PTS or its affiliated company, and the reasonable
 market rate of fees for such services shall be paid by the Company as set
 forth in Exhibit C. Payment of such accounting and bookkeeping fees shall be
 deemed operating expenses of the Company and shall not be subject to
 treatment as a Member Transaction under the provisions of Section 5.2 (b) or
 (c).

 
	
  

 	
  

 
	
  

 	
           (g)          Member
 Expenses. Except as specifically provided in this Agreement to the
 contrary, DPT 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.

 

          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. 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 or
officer of the Company or serving on its Board of Governors.

          7.9)          Indemnification.
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.

- 10 -

          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, without limitation, 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, during the period it is a
Member of the Company, and for one year thereafter, directly or indirectly:

	
  

 	
  

 
	
  

 	
           (a)          purchase,
 sell, or market crude oil or natural gas originating from production fields
 anywhere in North Dakota, except through the Company, or

 
	
  

 	
  

 
	
  

 	
           (b)          participate
 as owner, investor, manager or consultant in any hydrocarbon transloading
 facility anywhere in North Dakota, except through the Company.

 

ARTICLE 8.

DIRECTORS AND DECISIONS OF BOARD OF GOVERNORS

          8.1)          Number.
The Board of Governors of the Company shall consist of at least as many natural
persons as there are Members of the Company. Such number shall not be increased
unless all of the Members of the Company agree in writing to increase the
number of Governors. 

          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
Membership Interest, the provisions of any Buy-Sell Agreement among the members
and the Company shall govern the process and the terms of disposition or
transfer of such Membership Interest. In the absence of any such Buy-Sell
Agreement, a Member may not transfer or assign all or any portion of such
Member’s Membership Interest, 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. The Company shall exist for an initial term expiring
December 31, 2013 (the “Initial Term”), and the term shall automatically extend
in two-year renewal periods (each, a “Renewal Term”) (the Initial Term and any
Renewal Term is 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:

	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           (b)          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 90 days prior to the end of such Term.

 

ARTICLE 10.

MISCELLANEOUS PROVISIONS

          10.1)          Risk
Equivalence. 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, 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; 

- 11 -

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 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 Chief 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.

          10.6          Limitation
on Benefits of this Agreement. It is the explicit intention of the Members
that no person or entity 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.

- 12 -

          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 or entity
may require. 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.

[SIGNATURE PAGE FOLLOWS]

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

	
  

 	
  

 
	
  

 	
 DAKOTA
 PETROLEUM TRANSPORT

 
	
  

 	
 SOLUTIONS,
 LLC

 
	
  

 	
  

 
	
  

 	
 /s/
 William Ash Emison

 
	
  

 	
 By William Ash Emison

 
	
  

 	
 Its Chief Manager

 
	
  

 	
  

 
	
  

 	
 DAKOTA PLAINS TRANSPORT,
 INC.

 
	
  

 	
  

 
	
  

 	
 /s/ James R. Sankovitz

 
	
  

 	
 By James R. Sankovitz

 
	
  

 	
 Its General Counsel and
 Secretary

 
	
  

 	
  

 
	
  

 	
 PETROLEUM TRANSPORT
 SOLUTIONS, LLC

 
	
  

 	
  

 
	
  

 	
 /s/
 William Ash Emison

 
	
  

 	
 By William Ash Emison

 
	
  

 	
 Its Chief Manager

 

- 13 -

Exhibit A

To

Member Control Agreement

Of

Dakota Petroleum Transport Solutions

	
  

 	
  

 	
  

 	
  

 
	
 Member

 	
  

 	
  

 	
 Units

 
	
  

 	
  

 	
  

 
	
 Dakota Plains Transport,
 Inc.

 	
  

 	
 1,000

 
	
  

 	
  

 	
  

 
	
 Petroleum Transport
 Solutions, LLC

 	
  

 	
 1,000

 

- 14 - 

Exhibit B

To

Member Control Agreement

Of

Dakota Petroleum Transport Solutions

Member Transaction Pricing

	
  

 	
  

 
	
 A.

 	
 Rail
 Car Leasing.

 
	
  

 	
  

 
	
  

 	
 The
 Member Transaction Pricing shall be pursuant to the terms and provisions set
 forth in that certain Rail Car Sublease Agreement dated November 9, 2009 to
 be agreed upon between the Members.

 
	
  

 	
  

 
	
 B.

 	
 Transloading
 Facility Rental.

 
	
  

 	
  

 
	
  

 	
 The
 Member Transaction Pricing shall be pursuant to the terms and provisions set
 forth in that certain Lease Agreement dated November 9, 2009 to be agreed
 upon between the Members.

 

- 15 -

Exhibit C

To

Member Control Agreement

Of

Dakota Petroleum Transport Solutions

Accounting Fees

Accounting Fees

The
General Accounting Fees are exclusive of the Throughput Accounting Fees and, as
such, shall be paid by the Company in addition to the Throughput Accounting
Fees.

Throughput Accounting Fees

Accounting
fees relating to the Company’s accounting books and records and accounting for
all operations relating to the transloading facility on the Premises (the
“Throughput Accounting Fees”) shall be charged at the flat rate of $2,800 per
month for any calendar month commencing December 2009.

General Accounting

Accounting fees relating to any and all other operations of the Company
(“General Accounting Fees”) shall be charged at a rate equal to $0.0225 per
barrel for every barrel of crude oil successfully marketed by the Company.

- 16 -

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