Document:

Exhibit
10.1

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

BY AND AMONG

DAKOTA PLAINS HOLDINGS, INC.,

DAKOTA PLAINS TRANSLOADING, LLC,

DAKOTA PLAINS SAND, LLC,

DAKOTA PLAINS MARKETING, LLC

AND

PETROLEUM TRANSPORT SOLUTIONS, LLC

 

December 5, 2014

 

    	  

    	 

    
 

 

TABLE OF CONTENTS

	  	  	  	  	  	 	  	 	 
	  	  	  	  	  	 	 Page	 
	  	  	  	  	  	  	  
	
ARTICLE I. DEFINITIONS

	  	
2

	  
	  	
1.1

	  	
Definitions

	  	
2

	  
	  	
1.2

	  	
Certain Interpretive Matters

	  	
8

	  
	  	  	  	  	  	  	  
	
ARTICLE II. SALE AND PURCHASE OF ACQUIRED INTERESTS; OPERATIONAL OVERRIDE; DISTRIBUTIONS

	  	
9

	  
	  	
2.1

	  	
Purchase and Sale

	  	
9

	  
	  	
2.2

	  	
Closing Cash Consideration; Operational Override; Distributions

	  	
9

	  
	  	
2.3

	  	
Acknowledgement of Membership Status of PTS

	  	
14

	  
	  	
2.4

	  	
Termination of Buy-Sell Agreements

	  	
15

	  
	  	  	  	  	  	  	  
	
ARTICLE III. CLOSING AND CLOSING DELIVERIES

	  	
15

	  
	  	
3.1

	  	
The Closing

	  	
15

	  
	  	
3.2

	  	
Deliveries by PTS

	  	
15

	  
	  	
3.3

	  	
Deliveries by DAKP Parties

	  	
16

	  
	  	  	  	  	  	  	  
	
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PTS

	  	
17

	  
	  	
4.1

	  	
Due Authority

	  	
17

	  
	  	
4.2

	  	
Title

	  	
17

	  
	  	
4.3

	  	
Non-Contravention

	  	
17

	  
	  	
4.4

	  	
Brokers; Finders’ Fees

	  	
18

	  
	  	  	  	  	  	  	  
	
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE DAKP PARTIES

	  	
18

	  
	  	
5.1

	  	
Due Authority

	  	
18

	  
	  	
5.2

	  	
Non-Contravention

	  	
19

	  
	  	
5.3

	  	
Brokers; Finders’ Fees

	  	
19

	  
	  	  	  	  	  	  	  
	
ARTICLE VI. CERTAIN COVENANTS AND AGREEMENTS

	  	
20

	  
	  	
6.1

	  	
Certain Tax Matters and Tax Payments

	  	
20

	  
	  	
6.2

	  	
Collection of Payments

	  	
21

	  
	  	
6.3

	  	
Further Assurances

	  	
21

	  
	  	  	  	  	  	  	  
	
ARTICLE VII. SURVIVAL; INDEMNIFICATION

	  	
21

	  
	  	
7.1

	  	
Survival

	  	
21

	  
	  	
7.2

	  	
Indemnification

	  	
22

	  
	  	
7.3

	  	
Procedures

	  	
23

	  
	  	  	  	  	  	  	  
	
ARTICLE VIII. MISCELLANEOUS

	  	
25

	  
	  	
8.1

	  	
Notices

	  	
25

	  
	  	
8.2

	  	
Amendments and Waivers

	  	
25

	  
	  	
8.3

	  	
Expenses

	  	
26

	  
	  	
8.4

	  	
Successors and Assigns

	  	
26

	  
	  	
8.5

	  	
No Third-Party Beneficiaries

	  	
26

	  
	  	
8.6

	  	
Governing Law

	  	
26

	  
	  	
8.7

	  	
Confidentiality and Public Announcements

	  	
26

	  
	  	
8.8

	  	
Jurisdiction; WAIVER OF JURY TRIAL

	  	
27

	  
	  	
8.9

	  	
Counterparts

	  	
27

	  
	  	
8.10

	  	
Table of Contents; Headings

	  	
27

	  
	  	
8.11

	  	
Entire Agreement

	  	
28

	  
	  	
8.12

	  	
Severability

	  	
28

	  

 

    	

    	 

    
 

	  	  	  
	
SCHEDULES

	  	  	  
	
1.1(a)

	  	
True-Up Amount Calculation Example

	
2.2(b)

	  	
Operational Override Early Payment

	
2.2(c)

	  	
Distributions

	
2.2(e)

	  	
Purchase Price Allocation

	
3.2(c)

	  	
Resignations

	
3.2(d)

	  	
PTS Consents

	
3.3(g)

	  	
DAKP Consents

	
4.2

	  	
Title

	
5.3

	  	
Brokers; Finders’ Fees

	7.2(a)	  	Pre-Closing Oil Spills
	  	  	  
	
EXHIBITS

	  	  	  
	
Exhibit A

	  	
Crude Oil Services Agreement

	
Exhibit B

	  	
Credit Agreement Repayment/Release/Termination

	
Exhibit C

	  	
Credit Agreement Termination

	
Exhibit D

	  	
Guaranty and Security Agreement

	
Exhibit E

	  	
Indemnification and Release Agreement

	
Exhibit F

	  	
Marketing Non-Compete Release

	
Exhibit G

	  	
Sublease Amendments

	
Exhibit H

	  	
Transition Services Agreement

    	

    	 

    
 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

This MEMBERSHIP INTEREST PURCHASE AGREEMENT, dated December 5, 2014, is made and entered into by and among Dakota Plains Holdings, Inc., a Nevada corporation (“DAKP”); Dakota Plains Transloading, LLC, a Minnesota limited liability company (“Dakota Plains Transloading”); Dakota Plains Sand, LLC, a Minnesota limited liability company (“Dakota Plains Sand”); Dakota Plains Marketing, LLC, a Minnesota limited liability company (“Dakota Plains Marketing”); and Petroleum Transport Solutions, LLC, a Minnesota limited liability company (“PTS”).  DAKP, Dakota Plains Transloading, Dakota Plains Sand, Dakota Plains Marketing and PTS are collectively referred to herein as the “Parties” and each, individually, as a “Party”).

 

RECITALS

 

A.            WHEREAS, Dakota Plains Transloading, Dakota Plains Sand and Dakota Plains Marketing each are wholly-owned subsidiaries of DAKP;

 

B.            WHEREAS, Dakota Plains Transloading and PTS, collectively, own all of the membership interests in Dakota Petroleum Transport Solutions, LLC, a Minnesota limited liability company (“DPTS”);

 

C.            WHEREAS, Dakota Plains Transloading desires to acquire all of the membership interests in DPTS held by PTS, resulting in Dakota Plains Transloading owning 100% of the membership interests in DPTS;

 

D.            WHEREAS, Dakota Plains Sand and PTS, collectively, own all of the membership interests in DPTS Sand, LLC, a Minnesota limited liability company (“DPTS Sand”);

 

E.            WHEREAS, Dakota Plains Sand desires to acquire all of the membership interests in DPTS Sand held by PTS, resulting in Dakota Plains Sand owning 100% of the membership interests in DPTS Sand;

 

F.            WHEREAS, Dakota Plains Marketing and PTS, collectively, own all of the membership interests in DPTS Marketing, LLC, a Minnesota limited liability company (“DPTSM”); and

 

G.           WHEREAS, Dakota Plains Marketing desires to acquire all of the membership interests in DPTSM held by PTS, resulting in Dakota Plains Marketing owning 100% of the membership interests in DPTSM.

 

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants, and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Parties, and intending to be legally bound, the Parties hereby agree as follows:

 

    	  

    	 

    
 

 

ARTICLE I.

DEFINITIONS

 

1.1           Definitions. In addition to the terms defined elsewhere herein, the terms below are defined for purposes of this Agreement as follows:

 

“Accounting Practices” means accounting methods, practices, policies, procedures, classifications, judgments, estimation methodologies and standards (including asset and liability valuations, cut-off procedures, revenue recognition, accounting for long-term contracts and materiality standards).

 

“Acquired Entities” means each of DPTS, DPTS Sand and DPTSM.

 

“Acquired Interests” means all of the membership interests in DPTS, DPTS Sand and DPTSM held by PTS.

 

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with the first Person and, if such first Person is an individual, any member of the immediate family (including parents, spouse and children) of such individual and any trust whose principal beneficiary is such individual or one or more members of such individual’s immediate family and any Person who is controlled by any such member or trust. For the purposes of this Agreement, “control,” when used with respect to any Person, means the possession, directly or indirectly, of the power to (a) vote  fifty percent ( 50%) or more of the securities having ordinary voting power for the election of directors (or comparable positions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing. For the avoidance of doubt, with respect to any entity organized as a trust, any grantor, creator, trustor, settlor, maker, trustee, or beneficiary of such trust, or other Person performing a role similar to any of the foregoing with respect to such trust, is an Affiliate of such trust.  Solely for purposes of this Agreement, no Acquired Entity shall be deemed to be an Affiliate of PTS at any time or of any DAKP Party prior to the Closing.

 

“Agreement” means this Membership Interest Purchase Agreement, as the same may be amended from time to time in accordance with the terms hereof.

 

“Ancillary Agreements” means the Indemnification and Release Agreement, the Crude Oil Services Agreement, the Transition Services Agreement, the Sublease Amendment, the Marketing Non-Compete Release, the Credit Agreement Termination, the Credit Agreement Repayment/Release/Termination, the Guaranty, and all other instruments, certificates, and other agreements entered into by any DAKP Party, PTS or any Acquired Entity that is required to be delivered pursuant to this Agreement.

 

“Business Day” means a day that is not a Saturday, Sunday or a day on which commercial banking institutions located in Minneapolis, Minnesota are authorized or required to close.

 

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“Cash” means all cash (including cash in bank accounts of any of the Acquired Entities as of the Effective Time and checks and wire transfers received by any of the Acquired Entities prior to the Effective Time which were not deposited in bank accounts of any of the Acquired Entities prior to the Effective Time or which were so deposited but were not reflected as cash on deposit in any bank accounts of the Acquired Entities as of or prior to the Effective Time), cash equivalents, funds, securities, certificates of deposit, similar instruments and short term investments of any of the Acquired Entities.

 

“Crude Oil Services Agreement” means that certain Crude Oil Services Agreement attached hereto as Exhibit A.

 

“Closing” has the meaning set forth in Section 3.1.

 

“Closing Cash Consideration” has the meaning set forth in Section 2.2(a).

 

“Closing Date” has the meaning set forth in Section 3.1.

 

“Closing Statement” has the meaning set forth in Section 2.2(d)(i).

 

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

 

“Contemplated Transactions” means (i) the sale of the Acquired Interests pursuant to this Agreement; (ii) the execution and delivery of this Agreement and the Ancillary Agreements by the parties hereto and thereto, as applicable; (iii) the performance by the Parties of their respective covenants and obligations under this Agreement and the Ancillary Agreements, as applicable; and (iv) the acquisition of the Acquired Interests.

 

“Contract” means any written or oral agreement, arrangement, contract, purchase order, commitment or other legally binding contractual right or obligation.

 

“Controlling Party” has the meaning set forth in Section 7.3(c).

 

“Credit Agreement Repayment/Release/Termination” means that certain Credit Agreement Repayment/Release/Termination, by and between Dakota Plains Transloading and WFS, in the form attached hereto as Exhibit B, with respect to that certain Credit Agreement dated as of June 17, 2013, by and between Dakota Plains Transloading and WFS.

 

“Credit Agreement Termination” means that certain Credit Agreement Termination, by and between DPTSM and WFS, in the form attached hereto as Exhibit C.

 

“Dakota Plains Marketing” has the meaning set forth in the introductory paragraph.

 

“Dakota Plains Sand” has the meaning set forth in the introductory paragraph.

 

“Dakota Plains Transloading” has the meaning set forth in the introductory paragraph.

 

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“DAKP” has the meaning set forth in the introductory paragraph.

 

“DAKP Indemnified Parties” has the meaning set forth in Section 7.2(a).

 

“DAKP Parties” means DAKP, Dakota Plains Transloading, Dakota Plains Sand and Dakota Plains Marketing.

 

“DAKP’s Letter” has the meaning set forth in Section 2.2(d)(iv).

 

“Damages” has the meaning set forth in Section 7.2(a).

 

“Delivery Date” has the meaning set forth in Section 2.2(d)(i).

 

“Direct Claim” has the meaning set forth in Section 7.3(d).

 

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

 

“DPTS Sand” has the meaning set forth in the Recitals.

 

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

 

“Effective Time” means 11:59:59 P.M., Minneapolis, Minnesota time, on the Closing Date.

 

“Equity Interest” means (a) with respect to any Person that is a corporation, any and all shares, interests, participation or other equivalents (however designated and whether or not voting) of corporate stock, including the common stock of such Person, (b) with respect to any Person that is a general partnership or a limited partnership, any and all partnership interests or other equity interests of such Person, (c) with respect to any Person that is a limited liability company, any and all membership interests or other equity interests of such Person, and (d) with respect to any other Person (other than an individual), any and all equity interests of such Person.

 

“Final Closing Statement” has the meaning set forth in Section 2.2(d)(iii).

 

“Governmental Authority” means any domestic or foreign governmental or regulatory agency, authority, bureau, commission, department, official, or similar body or instrumentality thereof, or any public or private court, public or private arbitrator or tribunal, or any other public or private body administering dispute resolution.

 

“Guaranty” means that certain Guaranty and Security Agreement, in the form attached hereto as Exhibit D.

 

“Indemnification and Release Agreement” means that certain Indemnification and Release Agreement in the form attached hereto as Exhibit E.

 

“Indemnified Party” has the meaning set forth in Section 7.3(a).

 

“Indemnifying Party” has the meaning set forth in Section 7.3(a).

 

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“Intercreditor Agreement” has the meaning set forth in Section 3.2(e).

 

“Law” means any applicable federal, foreign, state, administrative, district, or local statute, civil or criminal law (including common law), rule, regulation, ordinance, code, Order, contractual obligation or Permit.

 

“Legal Proceeding” means any judicial, administrative, arbitral, or other action, suit, mediation, investigation, inquiry, demand, proceeding, arbitration, audit, or claim (including any counterclaim) by or before a Governmental Authority.

 

“Liability” means any liability or obligation of whatever kind or nature (whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due).

 

“Lien” means, with respect to any property or asset, any mortgage, deed of trust, right of first refusal, proxy, easement, option, servitude, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of such property or asset.

 

“Marketing Non-Compete Release” means that certain Marketing Non-Compete Release Agreement in the form attached hereto as Exhibit F.

 

“Non-Controlling Party” has the meaning set forth in Section 7.3(c).

 

“Notice of Disagreement” has the meaning set forth in Section 2.2(d)(iii).

 

“Operational Override” has the meaning set forth in Section 2.2(b)(i).

 

“Operational Override Early Payment” has the meaning set forth in Section 2.2(b)(iii).

 

“Operational Override Expiration Payment” has the meaning set forth in Section 2.2(b)(iii).

 

“Order” means any judgment, injunction, stipulation, award, judicial or administrative order or decree granted, made, issued or otherwise promulgated by any Governmental Authority.

 

“Ordinary Course of Business” means, with respect to any Acquired Entity, the ordinary course of business of such Acquired Entity, consistent with such Acquired Entity’s past practice and custom.

 

“Organizational Documents” means (a) the bylaws and the articles or certificate of incorporation of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate of limited partnership or certificate of formation of a limited partnership; (d) the operating agreement or limited liability company agreement and the certificate of formation or articles of organization of a limited liability company; (e) the trust agreement, 

 

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declaration of trust, trust indenture, or other constituent instrument or document of a trust (f) any charter or similar document adopted or filed in connection with the creation, formation or organization of a Person, and any operating agreement, or similar agreement of a Person; and (g) any amendment of any of the foregoing.

 

“Party” and “Parties” have the meaning set forth in the introductory paragraph.

 

“Permit” means each license, authorization, registration, permit, franchise, consent, certificate, or approval of any Governmental Authority.

 

“Person” means an individual, corporation, partnership (general or limited), limited liability company, joint venture, association, trust or other entity or organization or Governmental Authority.

 

“Physical Damage Insurance Policy” has the meaning set forth in Section 3.3(d).

 

“Pre-Closing Tax Period” has the meaning set forth in Section 6.1(b).

 

“Pioneer Terminal” has the meaning set forth in Section 2.2(b)(i).

 

“PTS” has the meaning set forth in the introductory paragraph.

 

“PTS Indemnified Parties” has the meaning set forth in Section 7.2(b).

 

“PTS’ Letter” has the meaning set forth in Section 2.2(d)(iv).

 

“Resolution Period” has the meaning set forth in Section 2.2(d)(iv).

 

“SEC” has the meaning set forth in Section 8.7.

 

“Senior Indebtedness” means the indebtedness and other obligations of Sublessee and its affiliates evidenced by the Revolving Credit and Term Loan Agreement dated as of December 5, 2014 among the DAKP Parties, the lenders from time to time party thereto and SunTrust Bank, as administrative agent (as the same may be amended, supplemented, replaced or otherwise modified from time to time).

 

“Straddle Period” has the meaning set forth in Section 6.1(b).

 

“Sublease Amendments” means those certain Amendment and Restated Railcar Sublease Agreements, by and between DPTSM and Western Petroleum Company, each in the form attached hereto as Exhibit G.

 

“Subordination Agreement” means that certain Seller Subordination Agreement dated as of the date hereof by and among WFS, PTS, World Fuel Services, Inc., Dakota Plans Transloading, Dakota Plains Sand, Dakota Plains Marketing and SunTrust Bank.

 

“Subsidiary” means, with respect to any Person, (a) any corporation, fifty percent (50%) or more of whose Equity Interests of any class or classes having by the terms thereof voting power to elect a majority of the directors of such corporation 

 

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(irrespective of whether or not at the time of determination Equity Interests of any class or classes of such corporation have or might have voting power by reason of the happening of any contingency) that is at the time owned by such Person, directly or indirectly through Subsidiaries, and (b) any partnership, limited liability company, association, joint venture, trust or other entity in which such Person, directly or indirectly through Subsidiaries, is either a general partner, has a fifty percent (50%) or greater equity interest at the time, or otherwise owns a controlling interest.

 

“Tax” means (a) any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest, penalty, addition to tax or additional amount imposed by any Taxing Authority, (b) any Liability for the payment of any amounts of any of the foregoing as a result of being a member of an affiliated, consolidated, combined or unitary group, or being a party to any agreement or arrangement whereby Liability for payment of such amounts was determined or taken into account with reference to the Liability of any other Person, or (c) any Liability for the payment of any amounts as a result of being a party to any tax-sharing agreements or with respect to the payment of any amounts of any of the foregoing as a result of any express or implied obligation to indemnify any other Person.

 

“Tax Returns” means all returns, statements, reports and forms (including estimated Tax or information returns and reports) required to be filed with any Taxing Authority by or on behalf of each Acquired Entity.

 

“Taxing Authority” means any Governmental Authority having jurisdiction over the assessment, determination, collection or other imposition of any Tax.

 

“TCV” means total calculated volume, which is the volume of crude oil, including basic sediment and water (BS&W) and free water, corrected to a temperature of sixty degrees (60 ̊) Fahrenheit.

 

“Third-Party Claim” means any Legal Proceeding made or brought by any Person who or which is not a Party to this Agreement or who or which is not an Affiliate of any Party to this Agreement.

 

“to the knowledge” (or similar reference to knowing, knowledge, or awareness) means, except as otherwise provided herein, the actual knowledge of the officers and directors of PTS.

 

“Transfer” means to sell, assign, transfer, convey, and deliver.

 

“Transition Services Agreement” means that certain Transition Services Agreement, by and between PTS and DAKP, in the form attached hereto as Exhibit H.

 

“Treasury Regulations” means the U.S. Department of Treasury regulations promulgated under the Code, as such regulations may be amended from time to time.

 

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“True-Up Amount” means an amount equal to (i) the aggregate amount of (A) Cash (after giving effect to the distributions described in Section 2.2(c)), (B) accounts receivable and other receivables, (C) prepaid fuel and other prepaid expenses, (D) other current assets, (E) long-term assets that relate to other current assets; and (F) amounts due from WFS, DAKP or their respective Affiliates, in each case set forth on the Final Closing Statement, minus (ii) the aggregate amount of (x) accounts payable, (y) accountz payable due to WFS, DAKP or their respective Affiliates and (z) other amounts due to WFS, DAKP or their respective Affiliates, in each case set forth on the Final Closing Statement.  An example of the calculation of the True-Up Amount is set forth on Schedule 1.1(a).

 

“Unaffiliated Firm” has the meaning set forth in Section 2.2(d)(iv).

 

“WFS” means World Fuel Services Corporation, a Florida corporation.

 

1.2           Certain Interpretive Matters.

 

(a)           When a reference is made in this Agreement to an Article, Section, subsection, paragraph, clause, Exhibit or Schedule, such reference shall be to an Article, Section, subsection, paragraph or clause of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. Whenever the words, “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. All terms defined in this Agreement have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. All references to “$” or dollar amounts shall be to lawful currency of the United States of America. Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. References to any Person are also to its permitted successors and assigns. Each accounting term not otherwise defined in this Agreement has the meaning assigned to it in accordance with generally accepted accounting principles.  To the extent the term “day” or “days” is used, it shall mean calendar days unless referred to as a “Business Day.” Unless specifically provided for herein, the term “or” shall not be deemed to be exclusive. The word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”. The words “will” and “will not” are expressions of command and not merely expressions of future intent or expectation.

 

(b)           The Schedules attached to this Agreement have been arranged in separately titled sections corresponding to Sections of this Agreement and each disclosure in the Schedules to this Agreement shall qualify any other Schedules to this Agreement to the 

 

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extent it is readily apparent on the face of such disclosure that such disclosure is applicable to other Schedules to this Agreement.

 

(c)          No provision of this Agreement shall be interpreted in favor of, or against, any of the Parties by reason of the extent to which any such Party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft hereof or thereof.

 

ARTICLE II.

SALE AND PURCHASE OF ACQUIRED INTERESTS; OPERATIONAL

OVERRIDE; DISTRIBUTIONS

 

2.1          Purchase and Sale. On the terms and subject to the conditions hereinafter set forth, at the Closing, (a) PTS shall Transfer, free and clear of all Liens, to Dakota Plains Transloading, and Dakota Plains Transloading shall purchase and accept from PTS, all of the membership interests in DPTS held by PTS; (b) PTS shall Transfer, free and clear of all Liens, to Dakota Plains Sand, and Dakota Plains Sand shall purchase and accept from PTS, all of the membership interests in DPTS Sand held by PTS; and (c) PTS shall Transfer, free and clear of all Liens, to Dakota Plains Marketing, and Dakota Plains Marketing shall purchase and accept from PTS, all of the membership interests in DPTSM held by PTS.

 

2.2          Closing Cash Consideration; Operational Override; Distributions.

 

(a)          Closing Cash Consideration.  At the Closing, upon execution and delivery by the Parties of this Agreement and the satisfaction of the other delivery obligations set forth in Sections 3.2 and 3.3, in consideration of  the Transfers by PTS contemplated in Section 2.1, DAKP shall deliver to PTS an amount in cash equal to Forty-Three Million Dollars ($43,000,000) (the “Closing Cash Consideration”).

 

(b)          Operational Override.

 

(i)            From and including the Closing Date and ending on December 31, 2026, DAKP shall pay to PTS, or an Affiliate of PTS designated by PTS, an amount equal to USD $0.225 per TCV barrel of crude oil delivered into a transloading facility located on the DAKP property in New Town, North Dakota (as the facility may be modified or expanded on such property, the “Pioneer Terminal”), up to a maximum daily average of 80,000 barrels of crude oil delivered for the applicable month or portion thereof (for a daily average maximum payment of Eighteen Thousand Dollars ($18,000) for the applicable month or portion thereof) (the “Operational Override”).

 

(ii)           The Operational Override shall be paid quarterly not later than 45 days after the end of each calendar quarter.  Not later than ten (10) Business Days after the end of each calendar month, DAKP shall provide to PTS detailed information regarding amounts owing pursuant to this Section 2.2(b) for such calendar month (unless such information is already available to PTS in connection with services being provided by PTS under the Transition Services Agreement).  Upon not less than ten (10) Business Days’ prior written notice and during normal business hours, PTS shall have reasonable access to 

 

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audit the books and records of DAKP or any other relevant entity solely to determine DAKP’s compliance with this Section 2.2(b).

 

(iii)          The aggregate amounts paid pursuant to the Operational Override shall, in no event, be less than U.S. Ten Million Dollars (US$10,000,000).  In the event that, as of December 31, 2026, DAKP has not paid U.S. Ten Million Dollars (US$10,000,000) pursuant to this Section 2.2(b), DAKP shall pay to PTS not later than January 31, 2027, an amount equal to the difference between $10,000,000 and amounts paid by DAKP pursuant to Section 2.2(b) (the “Operational Override Expiration Payment”).  DAKP may, at any time and in its sole discretion, elect to pay to PTS an amount equal to the then-present value (using a nine percent (9%) discount rate) of the maximum remaining Operational Override payments, assuming maximum volume for the period between the pre-payment date and December 31, 2026 (the “Operational Override Early Payment”) calculated as illustrated in Schedule 2.2(b).  Upon receipt by PTS and/or its designated Affiliate of either the Operational Override Expiration Payment or the Operational Override Early Payment, DAKP shall have no further obligation to pay, and PTS and its Affiliates shall have no further right to receive, the Operational Override.

 

(iv)          The DAKP Parties agree to (A) cause DPTS and any successor-in-interest to continue to conduct DPTS’ business in the Ordinary Course of Business and (B) use commercially reasonable efforts to maximize the number of barrels loaded at the Pioneer Terminal, in each case until the earlier of December 31, 2026 or receipt by PTS of the Operational Override Early Payment.

 

(v)           Subject to the terms of the Subordination Agreement, if any Event of Default (as defined in the documents governing Senior Indebtedness) occurs under the Senior Indebtedness that results in a repayment or acceleration of Senior Indebtedness, and holders of Senior Indebtedness (or an agent or trustee acting on their behalf) initiate a Senior Enforcement Action (as defined in the Subordination Agreement) as a result thereof, then the Operational Override Early Payment shall immediately become due and payable; provided that for purposes of this Section 2.2(b)(v), the Operational Override Early Payment shall be calculated assuming a maximum daily average of 60,000 barrels of crude oil delivered for the applicable month or portion thereof; provided, for the avoidance of doubt, such Operational Override Early Payment may only be paid if expressly permitted by the terms of the Subordination Agreement.

 

(c)          Distributions.  At the Closing, to be effective immediately prior to the Closing Date, the cash distributions set forth on Schedule 2.2(c) shall be made as provided for thereon; and the Parties further agree that such cash distributions shall also be treated for federal and state income tax purposes as occurring on the day before the Closing Date;

 

(d)          Closing Statement.

 

(i)            Within 60 days after the Closing Date, PTS will prepare and deliver to DAKP a statement of financial position of the Acquired Entities as of immediately prior to the Effective Time (the “Closing Statement”).  The date on which the Closing Statement is delivered to DAKP is referred to herein as the 

 

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“Delivery Date”.  DAKP will cause its employees and the employees of its Affiliates (including the Acquired Entities) to reasonably assist PTS and its agents in the preparation of the Closing Statement.  DAKP will cause PTS to be provided with access at all reasonable times and during normal business hours, following reasonable notice, to the personnel, properties, books and records of DAKP and its Affiliates (including the Acquired Entities) for such purposes.

 

(ii)           Except as set forth in this Section 2.2(d), the Closing Statement will be prepared (x) in accordance with GAAP and (y) utilizing the same Accounting Practices of the Acquired Entities as were utilized in the preparation of the most recently prepared balance sheet of the Acquired Entities prior to the Closing Date (but only to the extent such Accounting Practices are in accordance with GAAP) (it being understood that GAAP Accounting Practices will be utilized in the preparation of the Closing Statement to the extent the Accounting Practices of the Acquired Entities utilized in the most recently prepared balance sheet of the Acquired Entities prior to the Closing Date are not in accordance with GAAP or there were no corresponding Accounting Practices of the Acquired Entities utilized in the preparation of such balance sheet).  Notwithstanding anything to the contrary contained herein, (A) the Closing Statement will not reflect any adjustments which result from management decisions made on or subsequent to the Closing Date which change the operations or the manner in which the business of the Acquired Entities is conducted, and (B) the amounts set forth on the Closing Statement will not reflect any purchase accounting adjustments as a result of the acquisition of the Acquired Interests by DAKP.  The Closing Statement will be prepared based solely on information as of the Closing Date.

 

(iii)          The Closing Statement will be deemed to be the final, binding and conclusive Closing Statement (the “Final Closing Statement”) for all purposes on the 30th day after the Delivery Date unless DAKP delivers to PTS a written notice of its disagreement executed by DAKP (a “Notice of Disagreement”) prior to such date specifying in reasonable detail the nature of DAKP’s objections to the Closing Statement.  DAKP hereby waives the right to assert any objection with respect to the Closing Statement that is not asserted in a Notice of Disagreement delivered to PTS within 30 days after the Delivery Date.  During such 30 day period following delivery of the Closing Statement, PTS will cause DAKP to be provided with access at all reasonable times and during normal business hours, following reasonable notice, to the personnel, properties, books and records of PTS and its Affiliates for the purpose of evaluating the Closing Statement, as well as the work papers used to prepare and that support the Closing Statement.  If a Notice of Disagreement is delivered to PTS within such 30 day period, then the Closing Statement (as adjusted, if necessary) will be deemed to be the Final Closing Statement for all purposes on the earlier of (x) the date PTS and DAKP resolve in writing all differences they have with respect to the Closing Statement or (y) the date the disputed matters are resolved in writing by the Unaffiliated Firm.  In the event that disputed matters are resolved by the Unaffiliated Firm (as set forth below), the Final Closing Statement will consist of the applicable amounts from the Closing Statement (or amounts otherwise agreed to in writing by PTS and DAKP) 

 

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as to items that have not been submitted for resolution to the Unaffiliated Firm and the amounts determined by the Unaffiliated Firm as to items that were submitted for resolution by the Unaffiliated Firm.

 

(iv)          During the 30 day period following the delivery of a Notice of Disagreement (the “Resolution Period”), PTS and DAKP will seek in good faith to resolve any differences they may have with respect to matters specified in the Notice of Disagreement.  If, at the end of the Resolution Period, PTS and DAKP have not reached agreement on such matters, (i) PTS will have the right, within 15 days after the end of the Resolution Period, to advise DAKP in writing of PTS’ position with respect to each of DAKP’s proposed adjustments that are in dispute (“PTS’ Letter”) and (ii) DAKP will have the right, within 15 days after the end of the Resolution Period, to advise PTS in writing of DAKP’s position with respect to each of DAKP’s proposed adjustments that are in dispute (“DAKP’s Letter”).  During the Resolution Period and, if at the end thereof, PTS and DAKP have not reached agreement on all matters specified in the Notice of Disagreement, each Party shall provide the other Party and its Representatives with reasonable access, following reasonable notice, to books, records and relevant personnel relating to the preparation of the Closing Statement and the Notice of Disagreement; provided that such access shall not unreasonably interfere with the normal work duties of any such personnel.  Promptly following the end of the Resolution Period (or, if earlier, the later of (x) the date on which PTS delivers PTS’ Letter to DAKP and (y) the date on which DAKP delivers DAKP’s Letter to PTS), PTS and DAKP will jointly engage the firm of Ernst & Young (or, if a representative of Ernst & Young is unable or unwilling to act in such capacity, the firm of Deloitte & Touche) (the “Unaffiliated Firm”) to resolve the matters specified in the Notice of Disagreement that remain in dispute with respect to the Closing Statement by arbitration in accordance with the procedures set forth in this Section 2.2(d)(iv).  In connection with such engagement, DAKP and PTS will each execute, if requested by the Unaffiliated Firm, a reasonable engagement letter including customary indemnities.  Promptly after such engagement of the Unaffiliated Firm, PTS or DAKP will provide the Unaffiliated Firm with copies of this Agreement, the Closing Statement, the Notice of Disagreement, PTS’ Letter and DAKP’s Letter.  The Unaffiliated Firm will have the authority to request in writing such additional written submissions from PTS or DAKP as it deems appropriate; provided that a copy of any such submission will be provided to the other Party at the same time as it is provided to the Unaffiliated Firm.  PTS and DAKP will not make (or permit any of their Affiliates to make) any additional submission to the Unaffiliated Firm except pursuant to such a written request by the Unaffiliated Firm.  PTS and DAKP will not communicate (or permit any of their Affiliates to communicate) with the Unaffiliated Firm without providing the other Party a reasonable opportunity to participate in such communication with the Unaffiliated Firm (other than with respect to written submissions in response to the written request of the Unaffiliated Firm).  The Unaffiliated Firm will have 30 days (or such longer period as may be reasonably required by the Unaffiliated Firm) to review the documents provided to it pursuant to this Section 2.2(d)(iv).  Within such 30 day period (or such longer period as may be reasonably required by the Unaffiliated Firm), the Unaffiliated 

 

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Firm will furnish simultaneously to PTS and DAKP its written determination with respect to each of the adjustments in dispute submitted to it for resolution.  The Unaffiliated Firm will not be entitled to perform any independent investigation or discovery in connection with resolving the differences regarding the Closing Statement.  The Unaffiliated Firm’s authority will be limited to resolving disputes with respect to whether the Closing Statement was prepared in accordance with the terms of Section 2.2(d)(ii) with respect to the individual items on the Closing Statement in dispute specified in the Notice of Disagreement (it being understood that the Unaffiliated Firm will have no authority to make any adjustments to any financial statements or amounts other than amounts set forth on the Closing Statement that are in dispute).  In resolving any disputed item, the Unaffiliated Firm may not assign a value to such item greater than the greatest value for such item asserted by PTS or DAKP or less than the smallest value for such item asserted by PTS or DAKP.

 

(v)           The decision of the Unaffiliated Firm will be, for all purposes, conclusive, non-appealable, final and binding upon PTS and DAKP.  Such decision will be subject to specific performance, and judgment may also be entered thereon as an arbitration award pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1-16, in any court of competent jurisdiction (subject to Section 8.8).  The fees of the Unaffiliated Firm will be borne 50% by PTS, and fifty percent (50%) by DAKP.  Each Party will bear the fees, costs and expenses of its own accountants and all of its other expenses in connection with matters contemplated by this Section 2.2(d).

 

(vi)          Upon the Closing Statement being deemed the Final Closing Statement in accordance with Section 2.2(d):

 

 (A)          if the True-Up Amount is a positive number, DAKP will, within three (3) Business Days after the date that the Closing Statement is deemed to be the Final Closing Statement in accordance with Section 2.2(d), pay to PTS, by wire transfer of immediately available U.S. dollars to a bank account designated by PTS, an amount equal to fifty percent (50%) of the True-Up Amount; and

 

 (B)           if the True-Up Amount is a negative number, PTS will, within three (3) Business Days after the date that the Closing Statement is deemed to be the Final Closing Statement in accordance with Section 2.2(d), pay to DAKP, by wire transfer of immediately available U.S. dollars to a bank account designated by DAKP, an amount equal to fifty percent (50%) of the absolute value of the True-Up Amount.

 

(e)           Tax Characterization; Purchase Price Allocation.  The Parties acknowledge and agree that for federal income Tax purposes the sale and purchase of the Acquired Interests is described in Situation 1, of IRS Rev. Rul. 99-6, 1999-1 C.B. 432 with result that: (i) PTS is treated for federal income Tax purposes as having sold its respective 50% membership interest in each of the Acquired Entities to Dakota Plains Transloading, Dakota Plains Sand and Dakota Plains Marketing, respectively, and (ii) Dakota Plains 

 

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Transloading, Dakota Plains Sand and Dakota Plains Marketing will for federal income Tax purposes each be deemed to have purchased 50% of the assets of DPTS, DPTS Sand and DPTSM, respectively.  At the Closing, the Parties shall allocate the Closing Cash Consideration first among DPTS, DPTS Sand and DPTSM, respectively, as entities as set forth on Schedule 2.2(e), and then among 50% of the specific assets and liabilities of each of DPTS, DPTS Sand and DPTSM, respectively, under Section 1060 of the Code and the Treasury Regulations issued thereunder, as also set forth in Schedule 2.2(e).

 

(f)            PTS Receivables.  The Parties acknowledge that in PTS’s capacity as trading member of DPTSM, PTS and its Affiliates accrued certain accounts receivable in respect of which DPTSM accrued corresponding receivables from PTS or such Affiliate, which were subsequently funded by PTS or such Affiliate. PTS hereby represents and warrants to DAKP that such accounts receivable are current and, to PTS’s knowledge, collectible, and that it or its applicable Affiliate has performed its obligations in connection with such accounts receivable as of the Closing Date. To the extent that any such accounts receivable of PTS or its applicable Affiliate that are outstanding on November 30, 2014 have not been collected on or prior to January 31, 2015, then, within five (5) Business Days of the date on which on PTS notifies DAKP that such accounts receivable have not been so collected, DAKP shall pay to PTS or the applicabel Affiliate an amount equal to fifty percent (50%) of such uncollected accounts receivable; provided, however, if PTS or its applicable Affiliate receives future payments on such uncollected accounts receivable within twelve (12) months of the date on which DAKP makes a payment in respect thereof pursuant to this Section 2.2(f), then PTS or the applicable Affiliate shall, without further demand from DAKP, pay to DAKP an amount equal to fifty percent (50%) of the payments received, less any costs and expenses (including reasonable attorneys’ fees and expenses) incurred in connection with the collection or recovery of such uncollected accounts receivable.

 

2.3           Acknowledgement of Membership Status of PTS.  PTS and DAKP hereby acknowledge and agree that effective immediately following the Closing, (A) PTS shall cease to be a member and to own any membership interests, company interests, units or any other equity interest in any of the Acquired Entities; and (B) PTS shall no longer be a party to, and shall have no remaining rights, obligations or liabilities under, any of the following agreements: (i) that certain Member Control Agreement of DPTS Sand, effective as of June 1, 2014, by and among Dakota Plains Sand, PTS, and DPTS Sand, which Member Control Agreement is terminated effective as of the Closing; (ii) that certain Operating Agreement of DPTS Sand effective as of May 21, 2014; (iii) that certain Second Amended and Restated Member Control Agreement of DPTSM, effective as of December 31, 2013, by and among Dakota Plains Marketing, PTS, and DPTSM, which Member Control Agreement is terminated effective as of the Closing; (iv) that certain Operating Agreement of DPTSM, effective as of December 31, 2013; (v) that certain Second Amended and Restated Member Control Agreement of DPTS effective as of December 31, 2013, by and among Dakota Plains Transloading, PTS and DPTS, which Member Control Agreement is terminated effective as of the Closing; and (vi) that certain Amended and Restated Operating Agreement of DPTS, effective as of December 31, 2013.  Neither this Agreement nor the Ancillary Agreements shall apply to or modify in any way the rights and obligations of DAKP (and its Affiliates), PTS (and its Affiliates), DPTS or DPTSM in connection with, 

 

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relating to, or otherwise arising from the train car derailment that occurred in Lac-Mégantic, Quebec, on July 6, 2013, including but not limited to claims or causes of action such parties may have against each other or 3rd parties, all of which rights and obligations shall survive and are subject in all respects to the Indemnification and Release Agreement.   The provisions of this Agreement shall not apply to or modify in any way the rights and obligations (including the indemnity obligations) of DAKP (and its Affiliates), PTS (and its Affiliates), DPTS or DTPSM as set forth in the Indemnification and Release Agreement.

 

2.4          Termination of Buy-Sell Agreements.  Each of PTS and the DAKP Parties hereby acknowledges and agrees that effective immediately following the Closing, each of the following agreements shall terminate in accordance with Section 8 thereof (which provides for, among other things, that each such agreement shall automatically terminate in the event that one of the members becomes the owner of all of the outstanding units of the particular Acquired Entity) and be of no further force and effect, and that the applicable parties thereto shall have no remaining rights, obligations or liabilities thereunder: (i) that certain Dakota Petroleum Transport Solutions, LLC Buy-Sell Agreement, effective as of November 9, 2009, by and among Dakota Plains Transport, Inc. (predecessor in interest to Dakota Plains Transloading), PTS and DPTS, as amended by that certain Amendment to Dakota Petroleum Transport Solutions, LLC Buy-Sell Agreement, dated as of April 29, 2011; (ii) that certain DPTS Marketing LLC Buy-Sell Agreement, effective as of April 29, 2011, by and among Dakota Plains Marketing, PTS and DPTSM; and (iii) that certain DPTS Sand, LLC Buy-Sell Agreement, effective as of June 1, 2014, by and among Dakota Plains Sand, PTS and DPTS Sand.

 

ARTICLE III.

CLOSING AND CLOSING DELIVERIES

 

3.1          The Closing. The consummation of the sale and purchase of the Acquired Interests (the “Closing”) contemplated herein shall take place at the offices of McKenna Long & Aldridge LLP, located at 303 Peachtree Street, Suite 5300, Atlanta, Georgia 30308, at 10:00 a.m., Atlanta, Georgia time, on the date hereof.  NOTWITHSTANDING ANY OTHER PROVISION HEREOF, THE CLOSING WILL BE DEEMED EFFECTIVE FOR ACCOUNTING, TAX, COMPUTATIONAL AND ALL OTHER PURPOSES AS OF 11:59:59 P.M., MINNEAPOLIS, MINNESOTA TIME, ON NOVEMBER 30, 2014 (the “Closing Date”).

 

3.2          Deliveries by PTS. At the Closing, PTS shall deliver, or shall cause to be delivered:

 

(a)          (i) all of the Acquired Interests, and (ii) all such certificates, assignments, and other documents and instruments of conveyance and transfer as may be reasonably requested by any DAKP Party to effect the Transfer of such Acquired Interests;

 

(b)          a certificate executed by an officer of PTS certifying that (1) attached to such certificate are true, correct, and complete copies of the resolutions adopted by the Board of Governors and/or members of PTS, authorizing the execution, delivery and 

 

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performance by PTS of this Agreement and each Ancillary Agreement to which PTS is a party and the taking of any and all actions deemed necessary or advisable to consummate and perform the Contemplated Transactions; and (2) such resolutions are in full force and effect and have not been modified, amended, or superseded as of the Closing;

 

(c)           the resignations listed on Schedule 3.2(c);

 

(d)           evidence or copies of the consents, approvals, Orders, qualifications, or waivers required by any third party or Governmental Authority to consummate the Contemplated Transactions listed on Schedule 3.2(d);

 

(e)           evidence or copy of an intercreditor agreement, on terms and conditions reasonably acceptable to the DAKP Parties, by and between PTS and any third-party senior lender of DAKP or its Affiliates, in connection with the Guaranty and related security interest (the “Intercreditor Agreement”) duly executed by PTS;

 

(f)            each of the Ancillary Agreements required to be duly executed and delivered by PTS, WFS or their Affiliates; and

 

(g)           such other documents and instruments as any DAKP Party may reasonably require to consummate the Contemplated Transactions and the Ancillary Agreements and to comply with the terms hereof and thereof.

 

3.3           Deliveries by DAKP Parties. At the Closing, the DAKP Parties shall deliver, or shall cause to be delivered, to PTS:

 

(a)            the Closing Cash Consideration by wire transfer of immediately available funds to an account specified in writing by PTS;

 

(b)           each other Ancillary Agreement required to be duly authorized and delivered by DAKP or its Affiliates;

 

(c)           a certificate of an officer of each of the DAKP Parties, in each case certifying that (1) attached to each such certificate are true and correct copies of the resolutions adopted by the Board of Directors, managers and/or members, as applicable, of each of the DAKP Parties, authorizing the execution, delivery, and performance by each of the DAKP Parties of this Agreement and each Ancillary Agreement to which it is a party and the taking of any and all actions deemed necessary or advisable to consummate and perform the Contemplated Transactions, and (2) such resolutions are in full force and effect and have not been modified, amended, or superseded as of the Closing;

 

(d)           the Intercreditor Agreement duly executed by any relevant third-party senior lender of DAKP or its Affiliates;

 

(e)           evidence of the issuance of a physical damage insurance policy (the “Physical Damage Insurance Policy”), on terms and conditions reasonably consistent with policies previously maintained in the Ordinary Course of Business, covering those certain railcars subleased by DPTSM and naming WFS as an additional insured;

 

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(f)            evidence of third-party financing, on terms and conditions reasonably acceptable to PTS, to consummate the Contemplated Transactions;

 

(g)           evidence or copies of the consents, approvals, Orders, qualifications, or waivers required by any third party or Governmental Authority to consummate the Contemplated Transactions listed on Schedule 3.3(g); and

 

(h)           such other documents and instruments as may be reasonably required to consummate the transactions contemplated by this Agreement and the Ancillary Agreements and to comply with the terms hereof and thereof.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF PTS

 

PTS represents and warrants to the DAKP Parties as of the date hereof, as follows:

 

4.1           Due Authority.  PTS is a limited liability company validly existing and in good standing under the laws of the State of Minnesota.  The execution, delivery, and performance by PTS of this Agreement and each of the Ancillary Agreements to which  PTS is a party are within  PTS’ lawful powers and have been duly authorized by the members, managers or similar governing body of such Party, as applicable, and no other organizational or similar action or proceeding on the part of PTS is necessary to authorize this Agreement or any of the Ancillary Agreements to which  PTS is a party or the consummation of the Contemplated Transactions.  This Agreement and each of the Ancillary Agreements to which PTS is a party have been duly executed and delivered by PTS.  Assuming the due execution and delivery by the DAKP Parties of this Agreement and each Ancillary Agreement, and assuming the due execution and delivery by any third party of each Ancillary Agreement to which any such third party is a party, this Agreement and each Ancillary Agreement to which PTS is a party constitute valid and binding agreements, enforceable against PTS in accordance with their terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting enforcement of creditors’ rights generally and by general principles of equity (whether applied in a proceeding at law or in equity).

 

4.2           Title.  The outstanding Equity Interests in each Acquired Entity owned by PTS, as of the Closing, are as set forth on Schedule 4.2.  The Equity Interests set forth on Schedule 4.2 (a) represent all of the issued and outstanding Equity Interests in the Acquired Entities owned by PTS, and (b) are free and clear of all Liens.

 

4.3           Non-Contravention.  Neither the execution, delivery, or performance by PTS of this Agreement and each Ancillary Agreement to which  PTS is a party, nor the consummation and performance of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time or both):

 

(a)           contravene, conflict with, or result in a violation of (A) the Organizational Documents of PTS or (B) any resolution adopted by the managers or members of PTS;

 

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(b)           contravene, conflict with or result in a violation of, or, to the knowledge of PTS, give any Governmental Authority or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under any Law or any Order to which PTS  may be subject;

 

(c)           contravene, conflict with, or result in a violation of any of the terms or requirements of, or, to the knowledge of PTS, give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any Permit that is held by PTS or that otherwise relates to the business of PTS;

 

(d)           require any filing with, consent or approval of, or the giving of any notice to, any Person;

 

(e)           result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default under, or give rise to any right of termination, cancellation, or acceleration of any right or obligation of PTS, or to a loss of any benefit to which PTS is entitled under any Contract binding upon PTS; or

 

(f)            result in the creation or imposition of any Lien on any assets or properties of PTS, or on the Acquired Interests.

 

4.4           Brokers; Finders’ Fees. There is no investment banker, broker, finder, or other intermediary that has been retained by or is authorized to act on behalf of PTS, or any of its Affiliates who might be entitled to any fee, commission, or other amount in connection with the Contemplated Transactions, this Agreement, or any of the Ancillary Agreements.

 

ARTICLE V.

REPRESENTATIONS AND WARRANTIES OF THE DAKP PARTIES

 

DAKP, Dakota Plains Transloading, Dakota Plains Sand and Dakota Plains Marketing represent and warrant to PTS as of the date hereof, as follows:

 

5.1           Due Authority. DAKP is a Nevada corporation validly existing and in good standing under the laws of the State of Nevada.  DAKP has all corporate power required to carry on its business as now conducted.  Dakota Plains Transloading is a Minnesota limited liability company, validly existing and in good standing under the laws of the State of Minnesota.  Dakota Plains Sand is a Minnesota limited liability company, validly existing and in good standing under the laws of the State of Minnesota.  Dakota Plains Marketing is a Minnesota limited liability company, validly existing and in good standing under the laws of the State of Minnesota.  Each of Dakota Plains Transloading, Dakota Plains Sand and Dakota Plains Marketing has all limited liability company power required to carry on its business as now conducted.  The execution, delivery, and performance by each DAKP Party of this Agreement and each of the Ancillary Agreements to which it is a party are within its power and have been duly authorized, and no other company action is necessary to authorize this Agreement or any of the Ancillary Agreements to which it is a party.  This Agreement and each of the Ancillary Agreements to which a DAKP Party is a party has been duly executed and delivered by such entity. Assuming the due execution and delivery 

 

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by PTS and the Acquired Entities of this Agreement and each of the Ancillary Agreements to which such entity is a party, this Agreement and each such Ancillary Agreement constitute valid and binding agreements of each DAKP Party, enforceable against each such entity in accordance with their terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting enforcement of creditors’ rights generally and by general principles of equity (whether applied in a proceeding at law or in equity).

 

5.2           Non-Contravention.  Neither the execution, delivery, or performance by the DAKP Parties of this Agreement and each Ancillary Agreement to which such DAKP Party is a party, nor the consummation and performance of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time or both):

 

(a)           contravene, conflict with, or result in a violation of (A) the Organizational Documents of any DAKP Party or (B) any resolution adopted by the managers or members of any DAKP Party;

 

(b)           contravene, conflict with or result in a violation of, or, to the knowledge of any DAKP Party, give any Governmental Authority or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under any Law or any Order to which any DAKP Party may be subject;

 

(c)           contravene, conflict with, or result in a violation of any of the terms or requirements of, or, to the knowledge of any DAKP Party, give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any Permit that is held by any DAKP Party, or that otherwise relates to the business of the DAKP Parties;

 

(d)           require any filing with, consent or approval of, or the giving of any notice to, any Person;

 

(e)           result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default under, or give rise to any right of termination, cancellation, or acceleration of any right or obligation of any DAKP Party, or to a loss of any benefit to which any DAKP Party is entitled under any Contract binding upon any DAKP Party; or

 

(f)           
result in the creation or imposition of any Lien on any assets or properties of any DAKP Party.

 

5.3           Brokers; Finders’ Fees. Except as disclosed on Schedule 5.3, there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of any DAKP Party who might be entitled to any fee, commission, or other amount in connection with the Contemplated Transactions, this Agreement or any of the Ancillary Agreements.  DAKP acknowledges and agrees that all fees, commissions, and other amounts disclosed on Schedule 5.3 shall be exclusively borne and paid by DAKP.

 

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ARTICLE VI.

CERTAIN COVENANTS AND AGREEMENTS

 

6.1           Certain Tax Matters and Tax Payments.

 

(a)           Termination of the Acquired Entities for Tax Purposes.  The Parties acknowledge that as a result of consummating the transactions contemplated by this Agreement, including without limitation, the Transfer by PTS of the Acquired Interests to the DAKP Parties, the Acquired Entities shall be constructively terminated for federal and state income tax purposes pursuant to Section 708(b)(1)(B) of the Code as of the Closing Date, and as a result thereof, the taxable year of each of the Acquired Entities shall close on the Closing Date.  As of the Closing Date, the taxable year of the Acquired Entities shall close in accordance with Treasury Regulation Section 1.708-1(b)(3)(i). If not already in effect, at DAKP’s election, PTS shall cause to be filed an election in accordance with Section 754 of the Code for the taxable period ending on the Closing Date in accordance with Treasury Regulation Section 1.708-1(b)(5).

 

(b)           Tax Returns.  PTS shall cause to be prepared and timely filed any Tax Returns required to be filed by the Acquired Entities for any taxable period ending on or prior to the Closing Date (such period, the “Pre-Closing Tax Period”) and any taxable period of the Acquired Entities that includes (but does not end on) the Closing Date (such period, the “Straddle Period”), including without limitation, federal and state partnership Tax Returns of the Acquired Entities. All such returns shall be prepared in a manner consistent with the past practice of the Acquired Entities, unless otherwise required by applicable Law.

 

(c)            Straddle Period Allocations.  In the case of any Straddle Period, (i) any Taxes of the Acquired Entities which are imposed at the entity level and which are measured by income, profits or receipts (e.g., income Taxes) allocable to the Pre-Closing Tax Period will be determined based on an interim closing of the books as if such taxable period ended on the date immediately preceding the Closing Date, and (ii) with respect to the non-income Taxes which are imposed at the entity level and which are instead imposed on a periodic basis such as ad valorem personal property taxes, real estate ad valorem taxes and are measured by the level of any item (other than sales, use, value added or withholding Taxes or Taxes based on or measured by income, profits or receipts), the portion allocable to the Pre-Closing Tax Period shall be the product of such Taxes for the entire applicable taxable period, multiplied by a fraction, the numerator of which is the number of calendar days in the period ending on the date immediately preceding the Closing Date, and the denominator of which is the number of calendar days in the entire applicable taxable period.

 

(d)           PTS Pre-Closing Tax Period Payment Obligations.  PTS shall be responsible for 50% of any Taxes imposed on the Acquired Entities at the entity level for a Pre-Closing Tax Period or the portion of the Straddle Period allocated to the Pre-Closing Period, and PTS shall cause its 50% amount of such Taxes to be paid to DAKP in cash within five (5) Business Days after DAKP receives a signed copy of such Pre-Closing Tax Period Tax Return or each Straddle Period Tax Return filed on behalf of each of the Acquired Entities by PTS.

 

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(e)          Cooperation.  DAKP and PTS shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Tax Returns and any audit, litigation or other Legal Proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other Party’s request) the provision of records and information reasonably relevant to any such audit, litigation, or other Legal Proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. DAKP and PTS agree (A) to retain all books and records with respect to Tax matters pertinent to the Acquired Entities relating to any taxable period beginning before the Closing Date until expiration of the statute of limitations (and, to the extent notified by DAKP and PTS, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any Taxing Authority, and (B) to give the other party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other party so requests, PTS or DAKP, as the case may be, shall allow the other party to take possession of such books and records.

 

6.2          Collection of Payments. Following the Closing, (a) PTS shall promptly, and in any event not later than seven (7) days following receipt, forward to DAKP any payments received by PTS on behalf of the Acquired Entities, and any such checks, drafts, or other instruments payable to PTS shall, when so delivered, bear all endorsements required to effectuate the transfer of the same to DAKP and (b) PTS shall promptly forward to DAKP any mail or other communications received by PTS  on behalf of the Acquired Entities.

 

6.3          Further Assurances. From time to time, as and when requested by any Party, the other Party will execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further actions, as the requesting Party may reasonably deem necessary or desirable to consummate the Contemplated Transactions.

 

ARTICLE VII.

SURVIVAL; INDEMNIFICATION

 

7.1          Survival.

 

(a)          The representations and warranties of the Parties contained in Articles IV and V of this Agreement will survive the Closing for a period of thirty-six (36) months after Closing, and the obligations of each Party to indemnify and hold harmless the applicable Persons in respect of the representations and warranties of the Parties pursuant to Sections 7.2(a)(i) and 7.2(b)(i) shall terminate on the date that is thirty-six (36) months after Closing.  The obligations of each Party to indemnify and hold harmless the applicable Person pursuant to Sections 7.2(a)(ii) and 7.2(b)(ii) shall terminate upon expiration of all applicable statutes of limitation (giving effect to any extensions thereof).  The obligations of PTS to indemnify and hold harmless the applicable Persons pursuant to Section 7.2(a)(iii) shall terminate on the date that is thirty-six (36) months after Closing.

 

    	21

 

    	 

    
 

 

(b)           Notwithstanding Section 7.1(a), any indemnity may be sought under this Agreement pursuant to Section 7.2 if, prior to the applicable dates set forth in Section 7.1(a), a good faith, written notice setting forth the facts giving rise to such indemnity shall have been given to the Party against whom such indemnity may be sought; provided, however, that the applicable indemnity shall survive only with respect to the particular facts identified in such written notice.

 

7.2           Indemnification. Subject to the limitations hereinafter set forth:

 

(a)           PTS agrees to indemnify and hold harmless the DAKP Parties and each of their respective officers, managers, directors, employees, Affiliates, members, partners, stockholders, and agents and the successors to and assigns of the foregoing (and their respective officers, managers, directors, employees, Affiliates, members, partners, stockholders, agents and successors and assigns) (collectively, the “DAKP Indemnified Parties”) from and against any and all claims, allegations, complaints, petitions, demands, suits, actions, Legal Proceedings, assessments, adjustments, judgments, environmental remediation costs, damages, fines, and all reasonable, documented, out-of-pocket costs, fees, and expenses incurred in respect of Third-Party Claims or claims between or among the Parties (all of the foregoing items being collectively referred to as “Damages”) incurred or suffered by any DAKP Indemnified Party as a result of or arising out of (i) any breach of warranty or representation made in this Agreement by PTS, (ii) any breach of a covenant or agreement, made or to be performed by PTS pursuant to this Agreement; or (iii) the operation of the Acquired Entities, including the Pioneer Terminal, prior to the Closing Date.  Notwithstanding the immediately preceding sentence, solely with respect to PTS’ indemnification obligations in subpart (iii) of this Section 7.2(a), (A) PTS shall be required to provide indemnification only for fifty percent (50%) of such Damages up to a maximum of Twenty One Million, Five Hundred Thousand Dollars ($21,500,000) and (B) in no event will PTS be required to indemnify any DAKP Indemnified Party pursuant to subpart (iii) of this Section 7.2(a) in respect of any matter subject to the Indemnification and Release Agreement.  The Parties acknowledge and agree that for purposes of the indemnity set forth in clause (iii) above, the oil spills set forth on Schedule 7.2(a) occurred prior to the Closing Date and any oil spills not set forth on Schedule 7.2(a) shall not be deemed to have occurred prior to the Closing Date.  Anything contained in this Agreement to the contrary notwithstanding, PTS will have no obligation to indemnify any DAKP Indemnified Party with respect to any matter if a provision or reserve was made in the Final Closing Statement with respect to such matter.

 

(b)          DAKP agrees to indemnify and hold harmless PTS and its  officers, managers, directors, employees, Affiliates, members, partners, stockholders and agents and the successors and assigns to the foregoing (and their respective officers, managers, directors, employees, Affiliates, members, partners, stockholders, agents, and successors and assigns) (collectively, the “PTS Indemnified Parties”) from and against any and all Damages incurred or suffered by any PTS Indemnified Party as a result of or arising out of (i) any breach of warranty or representation made by a DAKP Party in this Agreement; (ii) any breach of a covenant or agreement made or to be performed by a DAKP Party pursuant to this Agreement; or (iii) the operation of DPTS and DPTS Sand, including the Pioneer Terminal, prior to the Closing Date.  Notwithstanding the immediately preceding 

 

    	22

 

    	 

    
 

 

sentence, solely with respect to DAKP’s indemnification obligations in subpart (iii) of this Section 7.2(b), (A) DAKP shall be required to provide indemnification only for fifty percent (50%) of such Damages up to a maximum of Twenty One Million, Five Hundred Thousand Dollars ($21,500,000); and (B) in no event will DAKP be required to indemnify any DAKP Indemnified Party pursuant to subpart (iii) of this Section 7.2(b) in respect of any matter subject to the Indemnification and Release Agreement.

 

(c)           For avoidance of doubt, the provisions of this Section 7.2 shall not apply to or modify in any way the obligations (including the indemnity obligations) of any of the parties set forth in the Indemnification and Release Agreement.

 

(d)           For the avoidance of doubt, no Party shall be entitled to seek indemnification hereunder or otherwise with respect to Damages resulting from the payment of a claim for indemnification to the other Party.

 

7.3           Procedures.

 

(a)           If any DAKP Indemnified Party or any PTS Indemnified Party (an “Indemnified Party”) receives notice of the assertion or commencement of any Third-Party Claim against or involving such Indemnified Party with respect to which the Person against whom or from which such indemnification is being sought (an “Indemnifying Party”) is obligated to provide indemnification under this Agreement, the Indemnified Party shall give such Indemnifying Party prompt written notice thereof; provided that failure to give such notice shall not affect the rights or obligations of any Indemnified Party except and only to the extent that, as a result of such failure, an Indemnifying Party can demonstrate actual loss or prejudice as a result of such failure.  Except as provided for in the immediately following sentence, the Indemnifying Party shall have the right to control the defense of any Third-Party Claim, and the Indemnified Party shall have the right to participate in the defense of any Third-Party Claim at such Indemnified Party’s sole expense and by such Indemnified Party’s own counsel (which will be reasonably satisfactory to the Indemnifying Party).  Notwithstanding the immediately preceding sentence, (i) in the case of a Third-Party Claim with respect to which PTS is obligated to provide indemnification under Section 7.2(a)(iii), at DAKP’s election, DAKP or another DAKP Indemnified Party shall have the right to control the defense of such Third-Party Claim, and PTS shall have the right to participate in such defense at PTS’ sole expense and by PTS’ own counsel (which will be reasonably satisfactory to the DAKP), (ii) in the case of a Third-Party Claim with respect to which DAKP is obligated to provide indemnification under Section 7.2(b)(iii), at PTS’s election, PTS or another PTS Indemnified Party shall have the right to control the defense of such Third-Party Claim, and DAKP shall have the right to participate in such defense at DAKP’s sole expense and by DAKP’s own counsel (which will be reasonably satisfactory to the PTS), and (iii) in the case of a Third-Party Claim with respect to which both PTS is obligated to provide indemnification under Section 7.2(a)(iii) and DAKP is obligated to provided indemnification under Section 7.2(b)(iii), the Parties shall mutually agree on the control of the defense of such Third-Party Claim.

 

    	23

 

    	 

    
 

 

(b)           Without the prior written consent of the Indemnified Party (which shall not be unreasonably withheld, conditioned, or delayed), the Indemnifying Party shall not enter into any settlement of any Third-Party Claim which would lead to any Liability or create any financial or other obligation on the part of the Indemnified Party for which the Indemnified Party is not entitled to indemnification hereunder, or which provides for injunctive or other non-monetary relief applicable to the Indemnified Party, or which does not include an unconditional release of all Indemnified Parties. If a firm offer is made to settle a Third-Party Claim without leading to Liability or the creation of a financial or other obligation on the part of the Indemnified Party for which the Indemnified Party is not entitled to indemnification hereunder and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to the Indemnified Party to that effect. If the Indemnified Party fails to consent to such firm offer within ten (10) days after its receipt of such notice, then the Indemnified Party may continue to contest or defend such Third-Party Claim and, in such event, the maximum Liability of the Indemnifying Party as to such Third-Party Claim shall not exceed the amount of such settlement offer. Without the prior written consent of the Indemnifying Party (such consent not to be unreasonably withheld, conditioned, or delayed), the Indemnified Party shall not enter into any settlement of any Third Party claim subject to indemnification hereunder.

 

(c)           The party not controlling the defense of a Third-Party Claim and its Affiliates (collectively, the “Non-Controlling Party”) shall provide the party controlling the defense of such Third-Party Claim (the “Controlling Party”)  with reasonable access during normal business hours to books, records, and employees of the Non-Controlling Party reasonably necessary in connection with the Controlling Party’s defense of any Third-Party Claim that is the subject of a claim for indemnification by an Indemnified Party hereunder; provided, however, that in no event will any Non-Controlling Party be required to provide the Controlling Party with any documentation or other materials that will, as determined in good faith by the applicable Non-Controlling Party, adversely affect the attorney-client or other privilege of such Non-Controlling Party; provided further that, prior to denying any such access due to a determination that such access will adversely affect an attorney-client or other privilege, the Non-Controlling Party will negotiate in good faith with the Controlling Party a joint defense or other agreement to provide for such access while maintaining any such privilege.

 

(d)           Any claim by an Indemnified Party on account of Damages which does not result from a Third-Party Claim (a “Direct Claim”) shall be asserted by giving the Indemnifying Party reasonably prompt written notice thereof; provided that failure to give such notice shall not affect the rights or obligations of any Indemnified Party except and only to the extent that, as a result of such failure, an Indemnifying Party can demonstrate actual loss or prejudice as a result of such failure.  The Indemnifying Party shall have a period of twenty (20) days from the date of receipt of such notice within which to respond in writing to such Direct Claim. If the Indemnifying Party does not so respond within such twenty (20) day period, the Indemnifying Party shall be deemed to have conclusively accepted all Liabilities reflected in such claim, and the Indemnified Party shall thereupon be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.  Any disputes pursuant to this Section 7.3(d) shall be resolved pursuant to Section 8.8.

 

    	24

 

    	 

    
 

 

ARTICLE VIII.

MISCELLANEOUS

 

8.1          Notices. All notices and other communications required or permitted hereunder will be in writing and, unless otherwise provided in this Agreement, will be deemed to have been duly given when delivered in person or two (2) Business Days after having been dispatched by a nationally recognized overnight courier service to the appropriate Party at the address specified below:

 

(a)          If to DAKP, Dakota Plains Transloading, Dakota Plains Sand, or Dakota Plains Marketing, to:

 

Dakota Plains Holdings, Inc.

294 Grove Lane East

Wayzata, MN 55391

Attention:     General Counsel

with a copy (which shall not constitute notice) to:

 

McKenna Long & Aldridge LLP

303 Peachtree Street

Suite 5300

Atlanta, GA 30308

Attention:     David Brown

 

(b)          If to PTS to:

 

c/o World Fuel Services

9800 N.W. 41st Street

Miami, Florida 33178

Attention: General Counsel

 

with a copy (which shall not constitute notice) to:

Chadbourne & Parke LLP

1301 Avenue of the Americas

New York, NY 10019

Attention:  Marc A. Alpert

or to such other address or addresses as any such Party may from time to time designate as to itself by like notice.

 

8.2          Amendments and Waivers.

 

(a)          Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed PTS and each DAKP Party.

 

    	25

 

    	 

    
 

 

(b)        
  No failure or delay by any Party in exercising any right, power, or privilege hereunder will operate as a waiver
thereof nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any
other right, power, or privilege. The rights and remedies herein provided will be cumulative and not exclusive of any rights
or remedies hereunder, under any Ancillary Agreement, or at law or in equity; accordingly, no exercise of any right or remedy
shall be construed as an election of remedies by any Party.

 

8.3           Expenses. DAKP, Dakota Plains Transloading, Dakota Plains Sand and Dakota Plains Marketing, on the one hand, and PTS, on the other hand, have paid or shall pay their respective expenses incurred in connection with the preparation, negotiation, execution, and performance of this Agreement and the Ancillary Agreements, including the fees of any broker, finder, financial advisor, investment banker, legal advisor, accountant, or similar person engaged by any such entity.

 

8.4           Successors and Assigns. The provisions of this Agreement will be binding upon and inure to the benefit of the Parties and their respective permitted successors and assigns.

 

8.5           No Third-Party Beneficiaries. Except as expressly provided hereunder in Article VII, this Agreement is for the sole benefit of the Parties and their permitted successors and assigns, and nothing herein expressed or implied will give or be construed to give to any Person, other than the Parties and such permitted successors and assigns, any legal or equitable rights hereunder.

 

8.6           Governing Law. This Agreement will be governed by, and construed in accordance with, the laws of the State of Minnesota, regardless of the Laws that might otherwise govern under principles of conflict of laws thereof.

 

8.7           Confidentiality and Public Announcements. PTS shall, and shall cause its advisors to, obtain the approval of DAKP, and the DAKP Parties shall, and shall cause their advisors to, obtain the approval of PTS, before divulging the terms of this transaction and/or issuing any press releases or otherwise making any public statements with respect to any confidential or proprietary aspect of this transaction.  Such approval shall not be unreasonably withheld, conditioned, or delayed. Notwithstanding anything set forth in this Agreement to the contrary, the Parties understand and acknowledge that PTS’s indirect parent, WFS, and DAKP will have to satisfy certain regulatory requirements and make certain disclosures in order to maintain compliance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, as such, the Parties hereby approve and consent to the disclosure of this transaction and all future items relating to the Acquired Entities for such purposes, and nothing in this Agreement shall prohibit WFS or DAKP or their Affiliates from disclosing this transaction and all future items relating to the acquired business for the purposes set forth above or to (i) the SEC, (ii) WFS’s or DAKP’s shareholders, or (iii) WFS’s or DAKP’s auditors, attorneys, or accountants for such purposes; provided, however, in connection with any such disclosure, the Party making such disclosure shall provide the other Party with a reasonable opportunity to review and comment on such disclosure.

 

    	26

 

    	 

    
 

 

8.8           Jurisdiction; WAIVER OF JURY TRIAL.

 

(a)          Each Party hereby irrevocably and unconditionally submits to the exclusive jurisdiction of the federal and state courts in Hennepin County, in the State of Minnesota for the purposes of any action, proceeding or other dispute arising out of or relating to this Agreement or any Ancillary Agreement, any provision hereof or thereof or the breach, performance, enforcement, validity or invalidity hereof or thereof.  Each Party agrees that service of any process, summons, notice or document hand delivered or sent by U.S. registered mail to such Party’s address set forth in Section 8.1 will be effective service of process upon such Party for any action, proceeding or dispute brought against it in such court with respect to any matters to which it has submitted to jurisdiction as set forth above.  Each Party irrevocably and unconditionally waives any objection to the laying of venue of any action, proceeding or dispute arising out of or relating to this Agreement or any Ancillary Agreement, any provision hereof or thereof or the breach, performance, enforcement, validity or invalidity hereof or thereof in the federal and state courts in Hennepin County, in the State of Minnesota, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, proceeding or dispute brought in any such court has been brought in an inconvenient forum.

 

(b)           TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, THE PARTIES HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION WHATSOEVER BETWEEN OR AMONG THEM RELATING TO THIS AGREEMENT AND THAT SUCH ACTIONS WILL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

 

8.9           Counterparts. This Agreement may be executed and delivered (including by facsimile or Portable Document Format (pdf) transmission) in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties. Facsimile or pdf transmission of any signed original document or retransmission of any signed facsimile or pdf transmission shall be deemed the same as delivery of an original. At the request of any Party, the other Parties shall confirm facsimile or pdf transmission by signing a duplicate original document.

 

8.10         Table of Contents; Headings. The table of contents and headings in this Agreement are for convenience of reference only and shall not control or affect the meaning or construction of any provisions hereof.

 

    	27

 

    	 

    
 

 

8.11         Entire Agreement. This Agreement (including the Schedules and Exhibits hereto) and the Ancillary Agreements constitute the entire agreement among the Parties with respect to the subject matter of this Agreement. This Agreement (including the Schedules and Exhibits hereto) and the Ancillary Agreements supersede all prior agreements and understandings, both oral and written, between the Parties with respect to the subject matter of this Agreement (including that certain Letter Agreement, dated October 31, 2014, by and between PTS and DAKP).

 

8.12         Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but, if any provision or portion of any provision of this Agreement is held to be invalid, illegal, or unenforceable in any respect under any applicable Law, such invalidity, illegality or unenforceability shall not affect the validity, legality, or enforceability of any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed, and enforced in such jurisdiction in such manner as will effect as nearly as lawfully possible the purposes and intent of such invalid, illegal, or unenforceable provision.

 

[Signature page follows.]

 

    	28

 

    	 

    
 

 

The Parties hereto have caused this Membership Interest Purchase Agreement to be duly executed as of the day and year first above written.

	 	 	 
	 	DAKOTA PLAINS HOLDINGS, INC.,
	 	a Nevada corporation
	 	 	 
	 	By:	/s/ Gabriel C. Claypool
	 	
Name:                           

	     Gabriel C. Claypool
	 	
Title:                          

	     President and Chief Operating Officer
	 	 	 
	 	
DAKOTA PLAINS TRANSLOADING, LLC,

	 	
a Minnesota limited liability company

	 	 	 
	 	
By:                          

	/s/ Gabriel C. Claypool
	 	
Name:                          

	     Gabriel C. Claypool
	 	
Title:                          

	     President, Chief Executive Officer and Secretary
	 	 	 
	 	
DAKOTA PLAINS SAND, LLC,

	 	
a Minnesota limited liability company

	 	 	 
	 	
By:                          

	/s/ Gabriel C. Claypool
	 	
Name:                          

	     Gabriel C. Claypool
	 	
Title:                          

	     President, Chief Executive Officer and Secretary
	 	 	 
	 	
DAKOTA PLAINS MARKETING, LLC,

	 	
a Minnesota limited liability company

	 	 	 
	 	
By:                          

	/s/ Gabriel C. Claypool
	 	
Name:                          

	     Gabriel C. Claypool
	 	
Title:                          

	     President, Chief Executive Officer and Secretary
	 	 	 
	 	
PETROLEUM TRANSPORT SOLUTIONS, LLC,

	 	
a Minnesota limited liability company

	 	 	 
	 	
By:                          

	/s/ Ronald Crowell
	 	
Name:                          

	     Ronald Crowell
	 	
Title:                          

	     Sr. Vice President - FinanceExhibit 10.2

 

SELLER GUARANTY AND SECURITY AGREEMENT

 

dated as of December 5, 2014

 

made by

 

DAKOTA PLAINS HOLDINGS, INC.

DAKOTA PLAINS TRANSLOADING, LLC,

DAKOTA PLAINS SAND, LLC and

DAKOTA PLAINS MARKETING, LLC

 

as Grantors

 

and

 

THE OTHER GRANTORS FROM TIME TO TIME PARTY HERETO

 

in favor of

 

WORLD FUEL SERVICES CORPORATION,

as Security Agent

 

    	 

    	 

    
 

 

TABLE OF CONTENTS

	 	  	  	  
	ARTICLE I DEFINITIONS	
2

	 	  	  	  
	 	
Section 1.1

	
Definitions

	
2

	 	
Section 1.2

	
Other Definitional Provisions; References

	
6

	 	 	 	 
	ARTICLE II GUARANTEE	
6

	 	 
	 	
Section 2.1

	
Guarantee

	
6

	 	
Section 2.2

	
Payments

	
8

	 	  	  	  
	ARTICLE III GRANT OF SECURITY INTEREST	
8

	 	  	  
	 	
Section 3.1

	
Grant of Security Interest

	
8

	 	
Section 3.2

	
Second Priority Nature of Liens, Subordination Agreement

	
9

	 	
Section 3.3

	
Transfer of Pledged Securities

	
9

	 	
Section 3.4

	
Grantors Remain Liable under Accounts, Chattel Paper and Payment Intangibles

	
9

	 	  	  	  
	ARTICLE IV ACKNOWLEDGMENTS, WAIVERS AND CONSENTS	
10

	 	  	  
	 	
Section 4.1

	
Acknowledgments, Waivers and Consents

	
10

	 	
Section 4.2

	
No Subrogation, Contribution or Reimbursement

	
12

	 	  	  	  
	ARTICLE V REPRESENTATIONS AND WARRANTIES	
12

	 	  	  
	 	
Section 5.1

	
Confirmation of Representations in Purchase Agreement

	
12

	 	
Section 5.2

	
Benefit to the Guarantors

	
13

	 	
Section 5.3

	
Pledged Securities; Promissory Notes

	
13

	 	
Section 5.4

	
Second Priority Liens

	
13

	 	
Section 5.5

	
Legal Name, Organizational Status, Chief Executive Office

	
13

	 	
Section 5.6

	
Prior Names, Prior Chief Executive Offices

	
13

	 	
Section 5.7

	
Goods

	
13

	 	
Section 5.8

	
Chattel Paper

	
13

	 	
Section 5.9

	
Truth of Information

	
13

	 	
Section 5.10

	
Accounts

	
14

	 	
Section 5.11

	
Governmental Obligors

	
14

	 	
Section 5.12

	
Copyrights, Patents and Trademarks

	
14

	 	
Section 5.13

	
Vehicles

	
14

	 	
Section 5.14

	
Commercial Tort Claims

	
14

	 	
Section 5.15

	
Letter-of-Credit Rights

	
14

	 	  	  	  
	ARTICLE VI COVENANTS	
14

	 	  	  
	 	
Section 6.1

	
General Covenant

	
14

	 	
Section 6.2

	
Maintenance of Perfected Security Interest; Further Documentation

	
14

	 	
Section 6.3

	
Maintenance of Records

	
15

	 	
Section 6.4

	
Right of Inspection

	
16

	 	
Section 6.5

	
Further Identification of Collateral

	
16

	 	
Section 6.6

	
Changes in Names, Locations

	
16

	 	
Section 6.7

	
Compliance with Contractual Obligations

	
16

 

    	i

 

    	 

    
 

 

	  	
Section 6.8

	
Limitations on Dispositions of Collateral

	
16

	  	
Section 6.9

	
Pledged Securities

	
16

	  	
Section 6.10

	
Limitations on Modifications, Waivers, Extensions of Agreements Giving Rise to Accounts

	
18

	  	
Section 6.11

	
Analysis of Accounts

	
18

	  	
Section 6.12

	
Instruments and Tangible Chattel Paper

	
18

	  	
Section 6.13

	
Copyrights, Patents and Trademarks

	
18

	  	
Section 6.14

	
Vehicles

	
19

	  	
Section 6.15

	
Commercial Tort Claims

	
19

	  	
Section 6.16

	
Post Closing Matters

	
20

	  	  	  	  
	
ARTICLE VII REMEDIAL PROVISIONS

	
20

	  	  
	  	
Section 7.1

	
Pledged Securities

	
20

	  	
Section 7.2

	
Collections on Accounts

	
21

	  	
Section 7.3

	
Proceeds

	
22

	  	
Section 7.4

	
UCC and Other Remedies

	
22

	  	
Section 7.5

	
Private Sales of Pledged Securities

	
23

	  	
Section 7.6

	
Waiver; Deficiency

	
24

	  	
Section 7.7

	
Non-Judicial Enforcement

	
24

	  	
Section 7.8

	
Subordination Agreement

	
24

	  	  	  
	
ARTICLE VIII SECURITY AGENT

	
24

	  	  
	  	
Section 8.1

	
Security Agent’s Appointment as Attorney-in-Fact

	
24

	  	
Section 8.2

	
Duty of the Security Agent

	
25

	  	
Section 8.3

	
Filing of Financing Statements

	
26

	  	
Section 8.4

	
Appointment of Security Agent; Authority of Security Agent

	
26

	  	  	  
	
ARTICLE IX SUBORDINATION OF INDEBTEDNESS

	
27

	  	  
	  	
Section 9.1

	
Subordination of All Guarantor Claims

	
27

	  	
Section 9.2

	
Claims in Bankruptcy

	
27

	  	
Section 9.3

	
Payments Held in Trust

	
27

	  	
Section 9.4

	
Liens Subordinate

	
27

	  	
Section 9.5

	
Notation of Records

	
27

	  	
Section 9.6

	
Subordination Agreement

	
28

	  	  	  
	
ARTICLE X MISCELLANEOUS

	
28

	  	  
	  	
Section 10.1

	
Waiver

	
28

	  	
Section 10.2

	
Notices

	
28

	  	
Section 10.3

	
Payment of Expenses, Indemnities

	
28

	  	
Section 10.4

	
Amendments in Writing

	
29

	  	
Section 10.5

	
Successors and Assigns

	
29

	  	
Section 10.6

	
Severability

	
29

	  	
Section 10.7

	
Counterparts

	
29

	  	
Section 10.8

	
Survival

	
29

	  	
Section 10.9

	
Captions

	
29

	  	
Section 10.10

	
No Oral Agreements

	
29

	  	
Section 10.11

	
Governing Law; Submission to Jurisdiction

	
30

 

    	ii

 

    	 

    
 

 

	 	Section 10.12 	
WAIVER OF JURY TRIAL

	
30

	 	Section 10.13 	
Acknowledgments

	
30

	 	Section 10.14 	
Additional Grantors

	
31

	 	Section 10.15	
Set-Off

	
31

	 	Section 10.16 	
Releases

	
31

	 	Section 10.17 	
Reinstatement

	
32

	 	Section 10.18 	
Acceptance

	
32

 

    	iii

 

    	 

    
 

 

Schedules

 

	 	
Schedule 1

	
-

	Notice Addresses

	 	Schedule 2	
-

	Pledged Securities and Promissory Notes

	 	Schedule 3	
-

	Filings and Other Actions Required to Perfect Security Interests

	
  

	
Schedule 4

	
-

	
Legal Name, Organizational Status, Chief Executive Office

	
  

	
Schedule 5

	
-

	
Prior Names and Prior Chief Executive Offices

	 	Schedule 6	
-

	Patents and Patent Licenses

	 	Schedule 7	
-

	Trademarks and Trademark Licenses

	 	Schedule 8	
-

	Copyrights and Copyright Licenses

	 	Schedule 9	
-

	Vehicles

	 	Schedule 10	
-

	Commercial Tort Claims

	 	Schedule 11	
-

	Letter-of-Credit Rights

           

Annexes

                       

	 	
Annex I

	
-

	
Form of Joinder Agreement

	 	Annex II	
-

	Form of Intellectual Property Security Agreement

	 	Annex III	
-

	Form of Acknowledgment and Consent

 

    	iv

 

    	 

    
 

 

THIS DOCUMENT AND THE GRANTORS’ OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SELLER SUBORDINATION AGREEMENT (THE “SUBORDINATION AGREEMENT”), DATED AS OF DECEMBER 5, 2014, BY AND AMONG (I) WORLD FUEL SERVICES CORPORATION, A FLORIDA CORPORATION, PETROLEUM TRANSPORT SOLUTIONS, LLC, A MINNESOTA LIMITED LIABILITY COMPANY, WORLD FUEL SERVICES, INC., A TEXAS CORPORATION, AND WESTERN PETROLEUM COMPANY, A MINNESOTA CORPORATION, (II) DAKOTA PLAINS TRANSLOADING, LLC, A MINNESOTA LIMITED LIABILITY COMPANY, DAKOTA PLAINS SAND, LLC, A MINNESOTA LIMITED LIABILITY COMPANY, AND DAKOTA PLAINS MARKETING, LLC, A MINNESOTA LIMITED LIABILITY COMPANY, (III)
 THE GUARANTORS PARTY THERETO AND (IV) SUNTRUST BANK, A GEORGIA BANKING CORPORATION; AND EACH PARTY TO THIS DOCUMENT, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.

 

SELLER GUARANTY AND SECURITY AGREEMENT

 

THIS
SELLER GUARANTY AND SECURITY AGREEMENT, dated as of December 5, 2014 is made by DAKOTA PLAINS TRANSLOADING, LLC, a Minnesota
limited liability company (“Dakota Plains Transloading”), DAKOTA PLAINS SAND, LLC, a Minnesota limited liability
company (“Dakota Plains Sand”) and DAKOTA PLAINS MARKETING, LLC, a Minnesota limited liability company (“Dakota
Plains Marketing”), DAKOTA PLAINS HOLDINGS, INC., a Nevada corporation (“Holdings”), and certain
Subsidiaries of Holdings identified on the signature pages hereto as “Guarantors” (together with the Dakota Plains
Transloading, Dakota Plains Sand, Dakota Plains Marketing, Holdings and any other Subsidiary of Holdings that becomes a party
hereto from time to time on or after the date hereof, each, a “Grantor” and, collectively, the “Grantors”),
in favor of WORLD FUEL SERVICES CORPORATION, a Florida corporation, as security agent (in such capacity, the “Security
Agent”) for and on behalf of World Fuel Services Corporation (“WFSC”), Petroleum Transport Solutions,
LLC, a Minnesota limited liability company (“PTS”), World Fuel Services, Inc., a Texas corporation (“WFSI”),
and Western Petroleum Company, a Minnesota corporation (“Western” and together with WFSC, PTS and WFSI, the
“Secured Parties”).

 

W I T N E S S E T H:

 

WHEREAS, Holdings, Dakota Plains Transloading, Dakota Plains Sand and Dakota Plains Marketing are entering into that certain Membership Interest Purchase Agreement, dated as of the date hereof with PTS (as amended, restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”); and

 

WHEREAS, it is a condition precedent to the Closing (as defined in the Purchase Agreement) that the Grantors are required to enter into this Agreement, pursuant to which the Grantors shall guaranty the following obligations (collectively, the “Obligations”): (i) the obligations of Holdings under and pursuant to Section 2.2(b) of the Purchase Agreement and otherwise in respect of the Operational Override (as defined in the Purchase Agreement), (ii) the obligations of Ho
ldings under and pursuant to the Indemnification and Release Agreement (as defined in the Purchase Agreement), and (iii) the obligations of DPTS Marketing, LLC (“DPTSM”) under the Railcar Sublease, and the Grantors shall grant Liens on their personal property to secure the Obligations;

 

    	 

    	 

    
 

 

WHEREAS, in connection with the Closing, Dakota Plains Transloading, Dakota Plains Marketing and Dakota Plains Sand have entered into the Senior Credit Agreement (as defined in the Subordination Agreement defined below) with SunTrust Bank, as administrative agent (the “Administrative Agent”) and certain lenders;

 

WHEREAS, the Secured Parties have agreed to certain intercreditor and other provisions with the Administrative Agent pursuant to the Subordination Agreement;

 

NOW, THEREFORE, in consideration of the premises and to induce the Secured Parties to enter into the Purchase Agreement and related documentation, each Grantor hereby agrees with the Security Agent and Secured Parties, as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1     Definitions.

 

(a)    Each term defined above shall have the meaning set forth above for all purposes of this Agreement. Unless otherwise defined herein, terms defined in the Purchase Agreement and used herein shall have the meanings assigned to such terms in the Purchase Agreement, and the terms “Account Debtor”, “Account”, “Chattel Paper”, “Commercial Tort Claim”, “Deposit Account”, “Document”, “Electronic Chattel Paper”, “Equipment”, “Financial Asset”, “Fixture”, “General Intangible”, “Goods”, “Instrument”, “Inventory”, “Investment Property”, “Letter-of-Credit Right”, “Payment Intangible”, “Proceeds”, “Securi
ties Account”, “Security”, “Supporting Obligation”, and “Tangible Chattel Paper” shall have the meanings assigned to such terms in the UCC as in effect on the date hereof.

 

(b)    The following terms shall have the following meanings:

 

“Agreement” shall mean this Seller Guaranty and Security Agreement, as amended, restated, supplemented or otherwise modified from time to time.

 

“Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in Atlanta, Georgia are authorized or required by law to close.

 

“Capital Stock” shall mean all shares, options, warrants, general or limited partnership interests, membership interests or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity whether voting or nonvoting, including common stock, preferred stock or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended).

 

“Collateral” shall have the meaning set forth in Section 3.1.

 

“Copyright Licenses” shall mean any and all present and future agreements providing for the granting of any right in or to Copyrights (whether the applicable Grantor is licensee or licensor thereunder), including any thereof referred to in Schedule 8.

 

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 “Copyrights” shall mean, collectively, with respect to each Grantor, all copyrights, whether registered or unregistered, owned by or assigned to such Grantor and all registrations and applications for the foregoing (whether by statutory or common law, whether established or registered in the United States, any State thereof, or any other country or any political subdivision thereof and, in each case, whether owned by or licensed to such Grantor), and all goodwill associated therewith, now existi
ng or hereafter adopted or acquired, together with any and all (i) rights and privileges arising under applicable law with respect to such Grantor’s use of any copyrights, (ii) reissues, continuations, extensions and renewals thereof and amendments thereto, (iii) income, fees, royalties, damages and payments now and hereafter due and/or payable thereunder and with respect thereto, including damages, claims and payments for past, present or future infringements thereof, (iv) rights corresponding thereto throughout the world and (v) rights to sue for past, present or future infringements thereof, including any thereof referred to in Schedule 8.

 

 “Event of Default” shall mean failure to pay or perform any of the Obligations when and as the same shall become due.

 

“Excluded Property” shall mean (i) any voting Capital Stock in excess of 65% of the issued and outstanding voting Capital Stock of any Foreign Subsidiary (ii) any intent-to-use U.S. trademark application for which an amendment to allege use or statement of use has not been filed and accepted by the U.S. Patent and Trademark Office and that would otherwise be deemed invalidated, cancelled or abandoned due to the grant of a Lien thereon (provided that each intent-to-use application shall be considered Collateral immediately and automatically upon such filing and acceptance) and (iii) any rights or interes
t in any contract, lease, permit, license, charter or license agreement covering real or personal property of any Grantor if under the terms of such contract, lease, permit, license, charter or license agreement, or applicable law with respect thereto in existence on the date hereof, the grant of a security interest or lien therein is prohibited as a matter of law or under the terms of such contract, lease, permit, license, charter or license agreement and such prohibition has not been waived or the consent of the other party to such contract, lease, permit, license, charter or license agreement has not been obtained after the exercise by the Secured Parties of commercially reasonable efforts to do so (provided, that the foregoing exclusions of this clause (iii) shall in no way be construed (A) to apply to the extent that any described prohibition is unenforceable under Section 9-406, 9-407, 9-408,
 or 9-409 of the UCC or other applicable law, (B) to limit, impair, or otherwise affect the Secured Parties’ continuing security interests in and liens upon any rights or interests of any Grantor in or to (x) monies due or to become due under any described contract, lease, permit, license, charter or license agreement (including any Accounts), or (y) any proceeds from the sale, license, lease, or other dispositions of any such contract, lease, permit, license, charter or license agreement, or (C) to apply to the extent that any consent or waiver has been obtained that would permit the security interest of lien notwithstanding the prohibition); provided that “Excluded Property” shall not include any proceeds, products, substitutions or replacements of Excluded Property (unless such proceeds, products, substitutions or replacements would otherwise constitute Excluded Property).

 

“Foreign Subsidiary” shall mean each Subsidiary of Holdings that is organized under the laws of a jurisdiction other than one of the fifty states of the United States or the District of Columbia

 

“GAAP” shall mean generally accepted accounting principles in the United States applied on a consistent basis.

 

“Governmental Authority” shall mean the government of the United States, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

 

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“Guaranteed Obligations” shall have the meaning set forth in Section 2.1(a).

 

“Guarantors” shall mean, collectively, each Grantor.

 

“Issuers” shall mean, collectively, each issuer of a Pledged Security.

 

“Lien” shall mean any mortgage, pledge, security inter­est, lien (statutory or otherwise), charge, encumbrance, hypothecation, assignment, deposit arrangement, or other arrangement having the practical effect of any of the foregoing or any preference, priority or other security agree­ment or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having the same economic effect as any of the foregoing).

 

“Monetary Obligation” shall mean a monetary obligation secured by Goods or owed under a lease of Goods and includes a monetary obligation with respect to software used in Goods.

 

“Note” shall mean an instrument that evidences a promise to pay a Monetary Obligation and any other instrument within the description of “promissory note” as defined in Article 9 of the UCC.

 

“Patent Licenses” shall mean any and all present and future agreements providing for the granting of any right in or to Patents (whether the applicable Grantor is licensee or licensor thereunder), including any thereof referred to in Schedule 6.

 

“Patents” shall mean, collectively, with respect to each Grantor, all letters patent issued or assigned to, and all patent applications and registrations made by, such Grantor (whether established or registered or recorded in the United States, any State thereof or any other country or any political subdivision thereof and, in each case, whether owned by or licensed to such Grantor), and all goodwill associated therewith, now existing or hereafter adopted or acquired, together with any and all (i) rights and privileges arising under applicable law with respect to such Grantor’s use of any patents, (ii) inventions and improvements described and claimed therein, (iii) reissues, divisions, continuations, renew
als, extensions and continuations-in-part thereof and amendments thereto, and rights to obtain any of the foregoing, (iv) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable thereunder and with respect thereto including damages and payments for past, present or future infringements thereof, (v) rights corresponding thereto throughout the world and (vi) rights to sue for past, present or future infringements thereof, including any thereof referred to in Schedule 6.

 

“Person” shall mean any individual, partnership, firm, corporation, association, joint venture, limited liability company, trust or other entity, or any Governmental Authority.

 

“Pledged Certificated Stock” shall mean all certificated securities and any other Capital Stock or Stock Equivalent of any Person, other than Excluded Property, evidenced by a certificate, instrument or other similar document, in each case now owned or at any time hereafter acquired by any Grantor, and any dividend or distribution of cash, instruments or other property made on, in respect of or in exchange for the foregoing from time to time, including in each case those interests set forth on Schedule 2.

 

“Pledged Securities” shall mean, collectively, all Pledged Certificated Stock and all Pledged Uncertificated Stock.

 

“Pledged Uncertificated Stock” shall mean any Capital Stock or Stock Equivalent of any Person, other than Pledged Certificated Stock and Excluded Property, in each case now owned or at any time hereafter acquired by any Grantor, including all right, title and interest of any Grantor as a limited or general partner in any partnership or as a member of any limited liability company not constituting 

 

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Pledged Certificated Stock, all right, title and interest of any Grantor in, to and under any organizational document of any partnership or limited liability company to which it is a party, and any dividend or distribution of cash, instruments or other property made on, in respect of or in exchange for the foregoing from time to time, including in each case those interests set forth on Schedule 2.

 

“Railcar Sublease” shall mean collectively the five Amended and Restated Railcar Sublease Agreements between Western and DPTS Marketing, LLC, as amended by the Sublease Amendment and as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“Secured Obligations” shall have the meaning set forth in Section 3.1.

 

 “Securities Act” shall mean the Securities Act of 1933, as amended and in effect from time to time.

 

“Senior Credit Agreement” shall have the meaning assigned to such term in the Subordination Agreement.

 

“Senior Debt Documents” shall have the meaning assigned to such term in the Subordination Agreement.

 

“Stock Equivalents” shall mean all securities convertible into or exchangeable for Capital Stock or any other Stock Equivalent and all warrants, options or other rights to purchase, subscribe for or otherwise acquire any Capital Stock or any other Stock Equivalent, whether or not presently convertible, exchangeable or exercisable.

 

“Subsidiary” shall mean, with respect to any Person (the “parent”) at any date, any corporation, partnership, joint venture, limited liability company, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, partnership, joint venture, limited liability company, association or other entity (i) of which securities or other ownership interests representing more than 50% of the equit
y or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (ii) that is, as of such date, otherwise controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. Unless otherwise indicated, all references to “Subsidiary” hereunder shall mean a Subsidiary of Holdings.

 

“Trademark Licenses” shall mean any and all present and future agreements providing for the granting of any right in or to Trademarks (whether the applicable Grantor is licensee or licensor thereunder), including any thereof referred to in Schedule 7.

 

“Trademarks” shall mean, collectively, with respect to each Grantor, all trademarks, service marks, slogans, logos, certification marks, trade dress, uniform resource locations (URL’s), domain names, corporate names, trade names and other source or business identifiers, whether registered or unregistered, owned by or assigned to such Grantor and all registrations and applications for the foregoing (whether by statutory or common law, whether established or registered in the United States, any St
ate thereof, or any other country or any political subdivision thereof and, in each case, whether owned by or licensed to such Grantor), and all goodwill associated therewith, now existing or hereafter adopted or acquired, together with any and all (i) rights and privileges arising under applicable law with respect to such Grantor’s use of any trademarks, (ii) reissues, continuations, extensions and renewals thereof and amendments thereto, (iii) income, fees, royalties, damages and payments now and hereafter due and/or 

 

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payable thereunder and with respect thereto, including damages, claims and payments for past, present or future infringements thereof, (iv) rights corresponding thereto throughout the world and (v) rights to sue for past, present or future infringements thereof, including any thereof referred to in Schedule 7.

 

“Underlying Documents” shall mean, collectively, the Purchase Agreement, the Indemnification and Release Agreement and the Railcar Sublease.

 

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York.

 

“Vehicles” shall mean all vehicles covered by a certificate of title law of any state and, in any event, shall include the vehicles listed on Schedule 9 and all tires and other appurtenances to any of the foregoing.

 

Section 1.2     Other Definitional Provisions; References. The definition of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word
“shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits, Schedules and Annexes shall, unless otherwise stated, be construed to refer to Articles and Sections of, and Exhibits, Schedules and Annexes to, this Agreement and (e) the words “asset” and “property” shall be constr
ued to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant part thereof.

 

ARTICLE II

 

GUARANTEE

 

Section 2.1     Guarantee.

 

(a)    Each Guarantor unconditionally guarantees, jointly with the other Guarantors and severally, as a primary obligor and not merely as a surety, the due and punctual payment of all Obligations (collectively the “Guaranteed Obligations”). Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice to or further assent from such Guarantor and that such Guarantor will remain bound upon its guarantee notwithstanding any extension or renewal of any Guaranteed Obligations.

 

(b)    Each Guarantor further agrees that its guarantee constitutes a guarantee of payment when due and not of collection, and waives any right to require that any resort be had by the Security Agent or any Secured Party to any of the security held for payment of the Guaranteed Obligations or to any balance of any deposit account or credit on the books of the Security Agent or any Secured Party in favor of Holdings or any other Guarantor.

 

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(c)    It is the intent of each Guarantor, the Security Agent and each Secured Party that the maximum obligations of the Guarantors hereunder shall be, but not in excess of:

 

 (i)           in a case or proceeding commenced by or against any Guarantor under the provisions of Title 11 of the United States Code, 11 U.S.C. §§101 et seq., as amended and in effect from time to time (the “Bankruptcy Code”), on or within one year from the date on which any of the Guaranteed Obligations are incurred, the maximum amount which would not otherwise cause the Guaranteed Obligations (or any other obligations
of such Guarantor owed to the Security Agent or any Secured Party) to be avoidable or unenforceable against such Guarantor under (i) Section 548 of the Bankruptcy Code or (ii) any state fraudulent transfer or fraudulent conveyance act or statute applied in any such case or proceeding by virtue of Section 544 of the Bankruptcy Code; or

 

 (ii)          in a case or proceeding commenced by or against any Guarantor under the Bankruptcy Code subsequent to one year from the date on which any of the Guaranteed Obligations are incurred, the maximum amount which would not otherwise cause the Guaranteed Obligations (or any other obligations of such Guarantor to the Security Agent or any Secured Party) to be avoidable or unenforceable against such Guarantor under any state fraudulent transfer or fraudulent conveyance act or statute applied in any such case or proceeding by virtue of Section 544 of the Bankruptcy Code; or

 

 (iii)         in a case or proceeding commenced by or against any Guarantor under any law, statute or regulation other than the Bankruptcy Code (including any other bankruptcy, reorganization, arrangement, moratorium, readjustment of debt, dissolution, liquidation or similar debtor relief laws), the maximum amount which would not otherwise cause the Guaranteed Obligations (or any other obligations of such Guarantor to the Security Agent or any Secured Party) to be avoidable or unenforceable against such Guarantor under such law, statute or regulation, including any state fraudulent transfer or fraudulent conveyance act or statute applied in any such case or proceeding.

 

The substantive laws under which the possible avoidance or unenforceability of the Guaranteed Obligations (or any other obligations of such Guarantor to the Security Agent or any Secured Party) as may be determined in any case or proceeding shall hereinafter be referred to as the “Avoidance Provisions”. To the extent set forth in clauses (i), (ii) and (iii) of this subsection, but only to the extent that the Guaranteed Obligations would otherwise be subject to avoidance or found unenforceable under the Avoidance Provisions, if any Guarantor is not deemed to have receive
d valuable consideration, fair value or reasonably equivalent value for the Guaranteed Obligations, or if the Guaranteed Obligations would render such Guarantor insolvent, or leave such Guarantor with an unreasonably small capital to conduct its business, or cause such Guarantor to have incurred debts (or to have intended to have incurred debts) beyond its ability to pay such debts as they mature, in each case as of the time any of the Guaranteed Obligations are deemed to have been incurred under the Avoidance Provisions and after giving effect to the contribution by such Guarantor, the maximum Guaranteed Obligations for which such Guarantor shall be liable hereunder shall be reduced to that amount which, after giving effect thereto, would not cause the Guaranteed Obligations (or any other obligations of such Guarantor to the Security Agent or any Secured Party), as so reduced, to be subject to avoidance or unenforceability under the Avoidance Provisions.

 

This subsection is intended solely to preserve the rights of the Security Agent and the Secured Parties hereunder to the maximum extent that would not cause the Guaranteed Obligations of such Guarantor to be subject to avoidance or unenforceability under the Avoidance Provisions, and neither the Grantors nor any other Person shall have any right or claim under this subsection as against the 

 

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Security Agent or any Secured Party that would not otherwise be available to such Person under the Avoidance Provisions.

 

(d)    Each Guarantor agrees that if the maturity of any of the Guaranteed Obligations is accelerated by bankruptcy or otherwise, such maturity shall also be deemed accelerated for the purpose of this guarantee without demand or notice to such Guarantor. The guarantee contained in this Article shall remain in full force and effect until all Guaranteed Obligations are irrevocably satisfied in full.

 

Section 2.2     Payments. Each Guarantor hereby agrees and guarantees that payments hereunder will be paid to the Security Agent without set-off or counterclaim in U.S. dollars to the account of the Security Agent specified by it in writing to Holdings.

 

ARTICLE III

 

GRANT OF SECURITY INTEREST

 

Section 3.1     Grant of Security Interest. Each Grantor hereby pledges, assigns and transfers to the Security Agent, and grants to the Security Agent, for the ratable benefit of the Secured Parties, a security interest in, all of the following property now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest and whether now existing or hereafter coming into existence (collectively, the “Collateral”), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations (collectively, the “Secured Obligations”):

 

(a)    
all Accounts and Chattel Paper;

 

(b)    
all Copyrights and Copyright Licenses;

 

(c)     all Commercial Tort Claims;

 

(d)    
all contracts;

 

(e)     all Deposit Accounts;

 

(f)     
all Documents;

 

(g)    
all General Intangibles;

 

(h)    
all Goods (including all Inventory, all Equipment and all Fixtures);

 

(i)      all Instruments;

 

(j)      all Investment Property;

 

(k)     all Letter-of-Credit Rights;

 

(l)      all Notes and all intercompany obligations between the Loan Parties;

 

(m)    all Patents and Patent Licenses;

 

(n)    
all Pledged Securities;

 

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(o)    all Trademarks and Trademark Licenses;

 

(p)    all Vehicles;

 

(q)    all books and records, Supporting Obligations and related letters of credit or other claims and causes of action, in each case to the extent pertaining to the Collateral; and

 

(r)     to the extent not otherwise included, substitutions, replacements, accessions, products and other Proceeds (including insurance proceeds, licenses, royalties, income, payments, claims, damages and proceeds of suit) of any or all of the foregoing and all collateral security, guarantees and other Supporting Obligations given with respect to any of the foregoing;

 

provided that, notwithstanding the foregoing, no Lien or security interest is hereby granted on any Excluded Property, and, to the extent that any Collateral later becomes Excluded Property, the Lien granted hereunder will automatically be deemed to have been released; provided, further, that if and when any property shall cease to be Excluded Property, a Lien on and security interest in such property shall automatically be deemed granted therein.

 

Section 3.2     Second Priority Nature of Liens, Subordination Agreement.

 

Notwithstanding anything herein or in any of the Underlying Documents to the contrary, the lien and security interest granted to the Security Agent pursuant to this Agreement and the exercise of any right or remedy by it hereunder are subject to the provisions of the Subordination Agreement. This document and the Grantors’ obligations evidenced hereby are subordinate in the manner and to the extent set forth in the Subordination Agreement.

 

Section 3.3     Transfer of Pledged Securities Subject to the terms of the Subordination Agreement, all certificates and instruments representing or evidencing the Pledged Certificated Stock shall be delivered to and held by the Security Agent or a Person designated by the Security Agent and, in the case of an instrument or certificate in registered form, shall be duly indorsed to the Security Agent or in blank by an effective endorsement (whether on the certificate or instrument or on a separate writing), and accompanied by any
 required transfer tax stamps to effect the pledge of the Pledged Securities to the Security Agent. Notwithstanding the preceding sentence, all Pledged Certificated Stock must be delivered or transferred in such manner, and each Grantor shall take all such further action as may be requested by the Security Agent, as to permit the Security Agent to be a “protected purchaser” to the extent of its security interest as provided in Section 8-303 of the UCC.

 

(b)    Notwithstanding anything herein to the contrary, the delivery of any Collateral or any certificates, titles, Instruments, Chattel Paper or Documents evidencing or in connection with such Collateral to the Administrative Agent under and in accordance with the Senior Debt Documents, the granting of “control” (as defined in the UCC) over Collateral and/or the assignment of any Collateral to the Administrative Agent under and in accordance with Senior Debt Documents, shall constitute compliance by the Grantors with the provisions of this Agreement which require delivery, possession, control and/or assignment of certain types of Collateral until such time as Payment in Full (as defined in the Subordination Agreement) has occurred.

 

Section 3.4    Grantors Remain Liable under Accounts, Chattel Paper and Payment Intangibles. Anything herein to the contrary notwithstanding, each Grantor shall remain liable under each of the Accounts, Chattel Paper and Payment Intangibles to observe and perform all of the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to each such Account, Chattel Paper or Payment Intangible. Neither the Security 

 

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Agent nor any Secured Party shall have any obligation or liability under any Account, Chattel Paper or Payment Intangible (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Security Agent or any Secured Party of any payment relating to such Account, Chattel Paper or Payment Intangible pursuant hereto, nor shall the Security Agent or any Secured Party be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any Account, Chattel Paper or Payment Intangible (or any agreement giving rise thereto) to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any Account, Chattel Paper or Payment Intangible (or any agreement giving rise
 thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

 

ARTICLE IV

 

ACKNOWLEDGMENTS, WAIVERS AND CONSENTS

 

Section 4.1     Acknowledgments, Waivers and Consents. Each Guarantor acknowledges and agrees that the obligations undertaken by it under this Agreement involve the guarantee of, and each Grantor acknowledges and agrees that the obligations undertaken by it under this Agreement involve the provision of collateral security for, obligations of Persons other than such Grantor and that such Grantor’s guarantee and provision o
f collateral security for the Secured Obligations are absolute, irrevocable and unconditional under any and all circumstances. In full recognition and furtherance of the foregoing, each Grantor understands and agrees, to the fullest extent permitted under applicable law, that each Grantor shall remain obligated hereunder (including with respect to each Guarantor the guarantee made by it herein and, with respect to each Grantor, the collateral security provided by such Grantor herein), and the enforceability and effectiveness of this Agreement and the liability of such Grantor, and the rights, remedies, powers and privileges of the Security Agent and the Secured Parties under this Agreement and the Underlying Documents, shall not be affected, limited, reduced, discharged or terminated in any way:

 

 (i)           notwithstanding that, without any reservation of rights against any Grantor and without notice to or further assent by any Grantor, (A) any demand for payment of any of the Secured Obligations made by the Security Agent or any Secured Party may be rescinded by the Security Agent or such Secured Party and any of the Secured Obligations continued; (B) the Secured Obligations, the liability of any other Person upon or for any part thereof or any collateral security or guarantee therefor or right of offset with respect thereto may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by, or any indulgence or forbearance in respect thereof granted by the Security Agent or any Secu
red Party; (C) the Underlying Documents and all other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part; (D) any Guarantor or any other Person may from time to time accept or enter into new or additional agreements, security documents, guarantees or other instruments in addition to, in exchange for or relative to any of the Underlying Documents, all or any part of the Secured Obligations or any collateral now or in the future serving as security for the Secured Obligations; (E) any collateral security, guarantee or right of offset at any time held by the Security Agent or any Secured Party for the payment of the Secured Obligations may be sold, exchanged, waived, surrendered or released; and (F) any other event shall occur which constitutes a defense or release of sureties generally; and

 

 (ii)          regardless of, and each Grantor hereby expressly waives to the fullest extent permitted by law any defense now or in the future arising by reason of, (A) the illegality, invalidity or unenforceability of any of the Underlying Documents, any of the Secured 

 

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Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Security Agent or any Secured Party; (B) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by any Grantor or any other Person against the Security Agent or any Secured Party; (C) the insolvency, bankruptcy arrangement, reorganization, adjustment, composition, liquidation, disability, dissolution or lack of power of any Grantor or any other Person at any time liable for the payment of all or part of the Secured Obligations or the failure of the Security Agent or any Secured Party to file or enforce a claim in bankruptcy or other proceeding with respect to any Person, or any sale, lease or trans
fer of any or all of the assets of any Grantor, or any changes in the shareholders of any Grantor; (D) the fact that any collateral or Lien contemplated or intended to be given, created or granted as security for the repayment of the Secured Obligations shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other Lien, it being recognized and agreed by each of the Grantors that it is not entering into this Agreement in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectability or value of any of the collateral for the Secured Obligations; (E) any failure of the Security Agent or any Secured Party to marshal assets in favor of any Grantor or any other Person, to exhaust any collateral for all or any part of the Secured Obligations, to pursue or exhaust any right, remedy, power or privilege it may have against any Grantor or any other Person or to take any action whatsoever to mitigate or reduce any Grantor’s liability u
nder this Agreement or any of the Underlying Documents; (F) any law which provides that the obligation of a surety or guarantor must neither be larger in amount nor in other respects more burdensome than that of the principal or which reduces a surety’s or guarantor’s obligation in proportion to the principal obligation; (G) the possibility that the Secured Obligations may at any time and from time to time exceed the aggregate liability of such Grantor under this Agreement; or (H) any other circumstance or act whatsoever, including any action or omission of the type described in subsection (a)(i) of this Section (with or without notice to or knowledge of any Grantor), which constitutes, or might be construed to constitute, an equitable or legal discharge or defense of Holdings or DPTSM for the Obligations, or of such Guarantor under the guarantee contained in Article II, or with respect
 to the collateral security provided by such Grantor herein, or which might be available to a surety or guarantor, in bankruptcy or in any other instance.

 

(b)    Each Grantor hereby waives to the extent permitted by law (i) except as expressly provided otherwise in the Underlying Documents, all notices to such Grantor, or to any other Person, including notices of the acceptance of this Agreement, the guarantee contained in Article II or the provision of collateral security provided herein, or the creation, renewal, extension, modification or accrual of any Secured Obligations, or notice of or proof of reliance by the Security Agent or any Secured Party upon the guarantee contained in Article II or upon the collateral security provided herein, or of default in the payment or performance of any of the Secured Obligations owed to the Security Agent or any Secured Party and enforcement of any right or remedy with respect thereto, or notice of any other matters relating thereto; the Secured Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in Article II and the collateral security provided herein and no notice of creation of the Secured Obligations or any extension of credit already or hereafter contracted by or extended to Holdings or DPTSM need be given to any Grantor, and all dealings among the Grantors, on the one hand, and the Security Agent and the Secured Parties, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in Article II and on the collateral security provided herein; (ii) diligence and demand of payment, presentment, protest, dishonor and notice of dishonor; (iii) any statute of limitations affecting any Grantor’s liability hereunder or the enforcement thereof; (iv) all rights of revocation with respect to the Secured Obligations, the guarantee contained in Article II and the provision of collateral security herein; and (v) all principles or 

 

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provisions of law which conflict with the terms of this Agreement and which can, as a matter of law, be waived.

 

(c)    When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Grantor, the Security Agent or any other Secured Party may, but shall be under no obligation to, join or make a similar demand on or otherwise pursue or exhaust such rights and remedies as it may have against any Grantor or any other Person or against any collateral security or guarantee for the Secured Obligations or any right of offset with respect thereto, and any failure by the Security Agent or any Secured Party to make any such demand, to pursue such other rights or remedies or to collect any payments from Holdings, DPTSM, any other Grantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of Holdings, DPTSM, any othe
r Grantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Grantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Security Agent or any Secured Party against any Grantor. For the purposes hereof, “demand” shall include the commencement and continuance of any legal proceedings. Neither the Security Agent nor any Secured Party shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Secured Obligations or for the guarantee contained in Article II or any property subject thereto.

 

Section 4.2     No Subrogation, Contribution or Reimbursement. Until all Secured Obligations are irrevocably satisfied in full, notwithstanding any payment made by any Grantor hereunder or any set-off or application of funds of any Grantor by the Security Agent or any Secured Party, no Grantor shall be entitled to be subrogated to any of the rights of the Security Agent or any Secured Party against Holdings, DPTSM or any other Grantor or any collateral security or guarantee or right of offset held by the Security Agent or any Secured
 Party for the payment of the Secured Obligations, nor shall any Grantor seek or be entitled to seek any indemnity, exoneration, participation, contribution or reimbursement from any other Grantor in respect of payments made by such Grantor hereunder, and each Grantor hereby expressly waives, releases and agrees not to exercise any or all such rights of subrogation, reimbursement, indemnity and contribution. Each Grantor further agrees that to the extent that such waiver and release set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement, indemnity and contribution such Grantor may have against any other Grantor or against any collateral or security or guarantee or right of offset held by the Security Agent or any Secured Party shall be junior and subordinate to any rights the Security Agent and the Secured Parties may have against such Grantor and to all right, title and interest the Security Agent and the Secured Parties
 may have in such collateral or security or guarantee or right of offset. The Security Agent, for the benefit of the Secured Parties, may use, sell or dispose of any item of collateral or security as it sees fit without regard to any subrogation rights any Grantor may have, and upon any disposition or sale, any rights of subrogation any Grantor may have shall terminate.

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES

 

To induce the Secured Parties to enter into the Purchase Agreement and related documentation, each Grantor represents and warrants to the Security Agent and each Secured Party as follows:

 

Section 5.1     Confirmation of Representations in Purchase Agreement. Each Grantor represents and warrants to the Security Agent and each Secured Party that the representations and 

 

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warranties set forth in Article V of the Purchase Agreement as they relate to such Grantor are true and correct in all material respects (without duplication of any materiality qualifier therein).

 

Section 5.2     Benefit to the Guarantors. As of the Closing Date, the Guarantors are members of an affiliated group of companies that includes each Guarantor and are engaged in related businesses. The guaranty and surety obligations of each Guarantor pursuant to this Agreement reasonably may be expected to benefit, directly or indirectly, such Guarantor; and each Guarantor has determined that this Agreement is necessary and convenient to the conduct, promotion and attainment of the business of such Guarantor.

 

Section 5.3     Pledged Securities; Promissory Notes. Schedule 2 correctly sets forth (a) all duly authorized, issued and outstanding Capital Stock of each Guarantor and each other Person that is beneficially owned by each Grantor and (b) all promissory notes held by each Grantor and all intercompany notes between the Grantors, in each case as of the Closing Date.

 

Section 5.4     Second Priority Liens. The Liens and security interests granted pursuant to this Agreement (a) upon completion of the filings and other actions set forth on Schedule 3 (which, in the case of all filings and other documents referred to on said Schedule have been delivered to the Security Agent in completed and duly executed form (other than fixture filings, which will be so delivered on or prior to December 2
4, 2014)) will constitute valid perfected Liens on, and security interests in, all of the Collateral in favor of the Security Agent, for the ratable benefit of the Secured Parties, as collateral security for such Grantor’s obligations, enforceable in accordance with the terms hereof against all creditors of such Grantor and any Persons purporting to purchase any Collateral from such Grantor and (b) are prior to all other Liens on the Collateral in existence on the Closing Date, except for Liens securing the obligations under the Senior Debt Documents, Liens expressly permitted under Section 7.2 of the Senior Credit Agreement and Liens that have priority over the Liens on the Collateral by operation of law.

 

Section 5.5     Legal Name, Organizational Status, Chief Executive Office. On the Closing Date, the correct legal name of such Grantor, such Grantor’s jurisdiction of organization, organizational identification number, federal (and, if applicable, state) taxpayer identification number and the location of such Grantor’s chief executive office or sole place of business are specified on Schedule 4.

 

Section 5.6     Prior Names, Prior Chief Executive Offices. Schedule 5 correctly sets forth (a) all names and trade names that such Grantor has used in the last five years and (b) the chief executive office of such Grantor over the last five years (if different from that which is set forth in Section 5.5).

 

Section 5.7     Goods. No portion of the Collateral constituting Goods with an aggregate value of $100,000 or more is at any time in the possession of a bailee that has issued a negotiable or non-negotiable document covering such Collateral.

 

Section 5.8     Chattel Paper. No Collateral constituting Chattel Paper or Instruments contains any statement therein to the effect that such Collateral has been assigned to an identified party other than the Administrative Agent and the Security Agent, and the grant of a security interest in such Collateral in favor of the Administrative Agent and the Security Agent does not violate the rights of any other Person as a secured party.

 

Section 5.9     Truth of Information. All information with respect to the Collateral set forth in any schedule, certificate or other writing at any time heretofore or hereafter furnished by such Grantor to the Security Agent or any Secured Party, and all other written information heretofore or hereafter 

 

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furnished by such Grantor to the Security Agent or any Secured Party, is and will be true and correct in all material respects as of the date furnished.

 

Section 5.10     Accounts. The amount represented by such Grantor to the Security Agent and the Secured Parties from time to time as owing by each Account Debtor or by all Account Debtors in respect of the Accounts, Chattel Paper and Payment Intangibles will at such time be the correct amount actually owing by such Account Debtor or Account Debtors thereunder. The place where each Grantor keeps its records concerning the Accounts, C
hattel Paper and Payment Intangibles comprising a portion of the Collateral is 294 Grove Lane East, Wayzata, MN 55391.

 

Section 5.11     Governmental Obligors. None of the Account Debtors on such Grantor’s Accounts, Chattel Paper or Payment Intangibles is a Governmental Authority, except to the extent such Accounts, Chattel Paper or Payment Intangibles have an aggregate value of less than $50,000.

 

Section 5.12     Copyrights, Patents and Trademarks. Schedule 6 correctly sets forth all Patents and Patent Licenses owned by such Grantor in its own name as of the Closing Date. Schedule 7 correctly sets forth all Trademarks and Trademark Licenses owned by such Grantor in its own name as of the Closing Date. Schedule 8 correctly sets forth all Copyrights and Copyright Licenses owned by such Grantor in its own name as of the Closing Date. To the best of each such Grantor’s knowledge, each Patent and Trademark is valid, subsisting, unexpired and enforceable and has not been abandoned. Except as set forth in any such Schedule, none of such Patents, Trademarks and Copyrights is the subject of any licensing or franchise agreement. No holding, decision or judgment has been rendered by any Governmental Authority which would limit, cancel or question the validity of any Patent, Trademark or Copyright. No action or proceeding is pending (i) seeking to limit, cancel or question the validity of any Patent, Trademark or Copyright, or (ii) which, if adversely determined, would have a material adverse effect on the value of any Patent, Trademark or Copyright.

 

Section 5.13     Vehicles. All Vehicles owned by such Grantor as of the Closing Date that are not encumbered by Liens expressly permitted under Section 7.2 of the Senior Credit Agreement are set forth on Schedule 9.

 

Section 5.14     Commercial Tort Claims. Schedule 10 correctly sets forth all Commercial Tort Claims of such Grantor in existence as of the Closing Date.

 

Section 5.15     Letter-of-Credit Rights. Schedule 11 correctly sets forth all letters of credit under which such Grantor is named as the beneficiary in existence as of the Closing Date.

 

ARTICLE VI

 

COVENANTS

 

Each Grantor covenants and agrees with the Security Agent and each Secured Party, from and after the date of this Agreement until the Secured Obligations shall have been paid in full:

 

Section 6.1       General Covenant. In the case of each Guarantor, such Guarantor shall take, or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Event of Default is caused by the failure to take such action or to refrain from taking such action by such Guarantor or any of its Subsidiaries.

 

Section 6.2       Maintenance of Perfected Security Interest; Further Documentation.

 

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(a)    Such Grantor shall maintain the security interest created by this Agreement as a perfected security interest having at least the priority described in Section 5.4 and shall defend such security interest against the claims and demands of all Persons whomsoever, except with respect to Liens expressly permitted under Section 7.2 of the Senior Credit Agreement.

 

(b)    At any time and from time to time, upon the request of the Security Agent or any Secured Party, and at the sole expense of such Grantor, such Grantor will promptly and duly give, execute, deliver, indorse, file or record any and all financing statements, continuation statements, amendments, notices (including notifications to financial institutions and any other Person), contracts, agreements, assignments, certificates, stock powers or other instruments, obtain any and all governmental approvals and consents and take or cause to be taken any and all steps or acts that may be necessary or advisable or as the Security Agent may reasonably request to create, perfect, establish the priority of, or to preserve the validity, perfection or priority of, the Liens granted by this Agreement or to enable the Security A
gent or any Secured Party to enforce its rights, remedies, powers and privileges under this Agreement with respect to such Liens or to otherwise obtain or preserve the full benefits of this Agreement and the rights, powers and privileges herein granted.

 

(c)     Without limiting the obligations of the Grantors under subsection (b) of this Section, (i) upon the request of the Security Agent or any Secured Party, such Grantor shall take or cause to be taken all actions (other than any actions required to be taken by the Security Agent) requested by the Security Agent to cause the Security Agent to (A) have “control” (within the meaning of Sections 9-104, 9-105, 9-106, and 9-107 of the UCC) over any Collateral constituting Deposit Accounts, Electronic Chattel Paper, Investment Property (including the Pledged Securities), or Letter-of-Credit Rights, including executing and delivering any agreements, in form and substance reasonably satisfactory to the Security Agent, with securities intermediaries, issuers or other Persons in order to establish “
control”, and each Grantor shall promptly notify the Security Agent and the Secured Parties of such Grantor’s acquisition of any such Collateral, and (B) be a “protected purchaser” (as defined in Section 8-303 of the UCC); (ii) with respect to Collateral other than certificated securities and Goods covered by a document in the possession of a Person other than such Grantor or the Security Agent, such Grantor shall obtain written acknowledgment that such Person holds possession for the benefit of the Security Agent; and (iii) with respect to any Collateral constituting Goods that are in the possession of a bailee, such Grantor shall provide prompt notice to the Security Agent and the Secured Parties of any such Collateral then in the possession of such bailee, and such Grantor shall take or cause to be taken all actions (other than any actions required to be taken by the Security Agent) necessary or reasonably requested by the Security Agent to cause the Security Agent to have a perfec
ted security interest in such Collateral under applicable law.

 

(d)    Subject to the terms of the Subordination Agreement, this Section and the obligations imposed on each Grantor by this Section shall be interpreted as broadly as possible in favor of the Security Agent and the Secured Parties in order to effectuate the purpose and intent of this Agreement.

 

Section 6.3     Maintenance of Records. Such Grantor will keep and maintain at its own cost and expense satisfactory and complete records of the Collateral, including a record of all payments received and all credits granted with respect to the Accounts comprising any part of the Collateral. For further security, the Security Agent, for the ratable benefit of the Secured Parties, shall have a security interest in all of such Grantor’s books and records pertaining to the Collateral.

 

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Section 6.4     Right of Inspection. Upon request (with reasonable notice, unless an Event of Default has occurred and is continuing), the Security Agent and the Secured Parties and their respective representatives shall at all reasonable times have full and free access during normal business hours to all the books, correspondence and records of such Grantor, and the Security Agent and the Secured Parties and their respective representatives may examine the same, take extracts therefrom and make photocopies thereof and shall upon req
uest (with reasonable notice, unless an Event of Default has occurred and is continuing), at all reasonable times during normal business hours also have the right to enter into and upon any premises where any of the Collateral (including, without limitation, Inventory or Equipment) is located for the purpose of inspecting the same, observing its use or otherwise protecting its interests therein, and such Grantor agrees to render to the Security Agent and the Secured Parties and their respective representatives, at such Grantor’s sole cost and expense, such clerical and other assistance as may be reasonably requested with regard to any of the foregoing.

 

Section 6.5     Further Identification of Collateral. Such Grantor will furnish to the Security Agent and the Secured Parties from time to time, at such Grantor’s sole cost and expense, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Security Agent may reasonably request, all in reasonable detail.

 

Section 6.6     Changes in Names, Locations. Such Grantor recognizes that financing statements pertaining to the Collateral have been or may be filed where such Grantor is organized. Without limitation of any other covenant herein, such Grantor will not cause or permit (i) any change to be made in its legal name, identity or corporate, limited liability company, or limited partnership structure or (ii) any change to (A) the ide
ntity of any warehouseman, common carrier, other third party transporter, bailee or any agent or processor in possession or control of any Collateral or (B) such Grantor’s jurisdiction of organization, unless such Grantor shall have first (1) notified the Security Agent and the Secured Parties of such change at least 30 days (or such shorter period as the Security Agent may agree) prior to the date of such change, and (2) taken all action reasonably requested by the Security Agent or any Secured Party for the purpose of maintaining the perfection and priority of the Security Agent’s security interests under this Agreement. In any notice furnished pursuant to this Section, such Grantor will expressly state in a conspicuous manner that the notice is required by this Agreement and contains facts that may require additional filings of financing statements or other notices for the purposes of continuing perfection of the Security Agent’s security interest in the Collateral.

 

Section 6.7     Compliance with Contractual Obligations. Such Grantor will perform and comply in all material respects with all of its contractual obligations relating to the Collateral.

 

Section 6.8     Limitations on Dispositions of Collateral. Neither the Security Agent nor any Secured Party authorizes the Grantors to, and each Grantor agrees not to, sell, transfer, lease or otherwise dispose of any of the Collateral, or attempt, offer or contract to do so, except to the extent expressly permitted by the Senior Credit Agreement.

 

Section 6.9     Pledged Securities.

 

(a)    If such Grantor shall become entitled to receive or shall receive any stock certificate or other instrument (including any certificate or instrument representing a dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate or instrument issued in connection with any reorganization), option or rights in respect of the Capital Stock or other equity interests of any nature of any Issuer, whether in addition to, in substitution of, as a conversion of, or in exchange for, any shares (or such other interests) of the Pledged Securities, or otherwise in respect thereof, except as otherwise provided herein or in the Senior Credit Agreement, such Grantor shall accept the same as the agent of the Security Agent and the Secured Parties, hold the same in 

 

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trust for the Security Agent and the Secured Parties and deliver the same forthwith to the Security Agent in the exact form received, duly indorsed by such Grantor to the Security Agent, if required, together with an undated stock power or other equivalent instrument of transfer reasonably acceptable to the Security Agent covering such certificate or instrument duly executed in blank by such Grantor and with, if the Security Agent so requests, signature guaranteed, to be held by the Security Agent, subject to the terms hereof, as additional collateral security for the Secured Obligations.

 

(b)    Without the prior written consent of the Security Agent, such Grantor will not (i) unless otherwise permitted hereby or under the Senior Credit Agreement, vote to enable, or take any other action to permit, any Issuer to issue any Capital Stock or other equity interests of any nature or to issue any other securities or interests convertible into or granting the right to purchase or exchange for any Capital Stock or other equity interests of any nature of any Issuer, (ii) sell, assign, transfer, exchange or otherwise dispose of, or grant any option with respect to, the Pledged Securities or Proceeds thereof (except pursuant to a transaction expressly permitted by the Senior Credit Agreement), (iii) create, incur or permit to exist any Lien (except for Liens expressly permitted under Section 7.2 of the Senior
Credit Agreement) or option in favor of, or any claim of any Person with respect to, any of the Pledged Securities or Proceeds thereof, or any interest therein, except for the security interests created by this Agreement or (iv) enter into any agreement or undertaking restricting the right or ability of such Grantor or the Security Agent to sell, assign or transfer any of the Pledged Securities or Proceeds thereof.

 

(c)    In the case of each Grantor which is an Issuer, and each other Issuer that executes the Acknowledgment and Consent in the form of Annex III (which the applicable Grantor shall use its commercially reasonable efforts to obtain from each such other Issuer), such Issuer agrees that (i) it will be bound by the terms of this Agreement relating to the Pledged Securities issued by it and will comply with such terms insofar as such terms are applicable to it, (ii) it will notify the Security Agent promptly in writing of the occurrence of any of the events described in subsection (a) of this Section with respect to the Pledged Securities issued by it and (iii) the terms of Section 7.1(c) and Section 7.5 shall apply to it, mutatis mutandis, with respect to all actions that may be required of it pursuant to Section 7.1(c) or Section 7.5 with respect to the Pledged Securities issued by it.

 

(d)    Such Grantor shall furnish to the Security Agent such powers and other equivalent instruments of transfer as may be required by the Security Agent to assure the transferability of and the perfection of the security interest in the Pledged Securities when and as often as may be reasonably requested by the Security Agent.

 

(e)     The Pledged Securities will constitute not less than 100% of the Capital Stock or other equity interests of the Issuer thereof owned by any Grantor, except Pledged Securities of any Foreign Subsidiary shall be limited to not more than 65% of the voting Capital Stock and 100% of the non-voting Capital Stock of such Foreign Subsidiary.

 

(f)     Such Grantor shall not, without executing and delivering, or causing to be executed and delivered, to the Security Agent such agreements, documents and instruments as the Security Agent may reasonably require, issue or acquire any Capital Stock or hold any Pledged Security that consists of an interest in a partnership or a limited liability company which (i) is dealt in or traded on a securities exchange or in a securities market, (ii) by its terms expressly provides that it is a Security governed by Article 8 of the UCC, (iii) is held in a Securities Account or (iv) constitutes a Security or a Financial Asset.

 

(g)    Notwithstanding anything herein to the contrary, the delivery of any Collateral or any certificates, titles, Instruments, Chattel Paper or Documents evidencing or in connection with such Collateral to the Administrative Agent under and in accordance with the Senior Debt Documents, the 

 

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granting of “control” (as defined in the UCC) over Collateral and/or the assignment of any Collateral to the Administrative Agent under and in accordance with Senior Debt Documents, shall constitute compliance by the Grantors with the provisions of this Agreement which require delivery, possession, control and/or assignment of certain types of Collateral until such time as Payment in Full (as defined in the Subordination Agreement) has occurred.

 

Section 6.10   Limitations on Modifications, Waivers, Extensions of Agreements Giving Rise to Accounts. Such Grantor will not (i) amend, modify, terminate or waive any provision of any Chattel Paper, Instrument or any agreement giving rise to an Account or Payment Intangible comprising a portion of the Collateral, or (ii) fail to exercise promptly and diligently each and every right which it may have under any Chattel Paper, Instrument and each agreement giving rise to an Account or Payment Intangible comprising a portion of the Collateral (ot
her than any right of termination), in each case except where such action or failure to act, individually or in the aggregate, could not reasonably be expected to have a material adverse effect on the financial condition of Holdings and its Subsidiaries taken as a whole.

 

Section 6.11   Analysis of Accounts. The Security Agent shall have the right at any time and from time to time upon reasonable prior notice to make test verifications of the Accounts, Chattel Paper and Payment Intangibles comprising a portion of the Collateral in any manner and through any medium that it reasonably considers advisable, and each Grantor, at such Grantor’s sole cost and expense, shall furnish all such assistance and infor
mation as the Security Agent may require in connection therewith. At any time and from time to time, upon the Security Agent’s request and at the expense of each Grantor, such Grantor shall furnish to the Security Agent reports showing reconciliations, aging and test verifications of, and trial balances for, the Accounts, Chattel Paper and Payment Intangibles comprising a portion of the Collateral, and all original and other documents evidencing, and relating to, the agreements and transactions which gave rise to the Accounts, Chattel Paper and Payment Intangibles comprising a portion of the Collateral, including all original orders, invoices and shipping receipts; provided, the Security Agent shall only make one such request per calendar year unless an Event of Default has occurred and is continuing.

 

Section 6.12   Instruments and Tangible Chattel Paper. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument or Tangible Chattel Paper and the value of such Instruments and Tangible Chattel Paper in the aggregate is $100,000 or more, each such Instrument or Tangible Chattel Paper, shall be delivered to the Security Agent as soon as practicable, duly endorsed in a manner satisfactory to the Security Agent to be held as Collateral pursuant to this Agreement.

 

Section 6.13   Copyrights, Patents and Trademarks.

 

(a)     Such Grantor (either itself or through licensees) will, except with respect to any Trademark that such Grantor shall reasonably determine is immaterial, (i)maintain such Trademark in full force and effect, free from any claim of abandonment for non-use, (ii) employ such Trademark with the appropriate notice of registration, and (iii) not (and not knowingly permit any licensee or sublicensee thereof to) do any act, or knowingly omit to do any act, whereby any Trademark becomes invalidated.

 

(b)    Such Grantor will not, except with respect to any Patent that such Grantor shall reasonably determine is immaterial, do any act, or knowingly omit to do any act, whereby any Patent becomes abandoned or dedicated.

 

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(c)     Such Grantor will not, except with respect to any Copyright that such Grantor shall reasonably determine is immaterial, do any act, or knowingly omit to do any act, whereby any Copyright becomes abandoned or dedicated.

 

(d)    Such Grantor will notify the Security Agent and the Secured Parties immediately if it knows, or has reason to know, that any application or registration relating to any Copyright, Patent or Trademark may become abandoned or dedicated, or of any adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court or tribunal in any country) regarding such Grantor’s ownership of any Copyright, Patent or Trademark or its right to register the same or to keep and maintain the same.

 

(e)     Whenever a Grantor, either by itself or through any agent, employee, licensee or designee, shall file an application for the registration of any Copyright, Patent or Trademark with the United States Copyright Office, the United States Patent and Trademark Office or any similar office or agency in any other country or any political subdivision thereof, such Grantor shall report such filing to the Security Agent and the Secured Parties within ten (10) Business Days after the last day of the fiscal quarter in which such filing occurs. Upon request of the Security Agent, such Grantor shall execute and deliver an Intellectual Property Security Agreement substantially in the form of Annex II, and a
ny and all other agreements, instruments, documents, and papers as the Security Agent may request to evidence the Security Agent’s security interest in any Copyright, Patent or Trademark and the goodwill and General Intangibles of such Grantor relating thereto or represented thereby, and, upon the occurrence and during the continuance of an Event of Default, such Grantor hereby constitutes the Security Agent its attorney-in-fact to execute and file all such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; such power being coupled with an interest is irrevocable until the Secured Obligations are paid in full.

 

(f)     Such Grantor will take all reasonable and necessary steps, including, without limitation, in any proceeding before the United States Copyright Office, the United States Patent and Trademark Office, or any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of the Copyrights, Patents and Trademarks, including, without limitation, filing of applications for renewal, affidavits of use and affidavits of incontestability.

 

(g)    In the event that any Copyright, Patent or Trademark included in the Collateral is infringed, misappropriated or diluted by a third party, such Grantor shall promptly notify the Security Agent and the Secured Parties after it learns thereof and shall, unless such Grantor shall reasonably determine that such Copyright, Patent or Trademark is immaterial to such Grantor which determination such Grantor shall promptly report to the Security Agent and the Secured Parties, and take such actions as such Grantor shall reasonably deem appropriate under the circumstances to protect such Copyright, Patent or Trademark.

 

Section 6.14   Vehicles. Such Grantor shall take all actions requested by the Security Agent to perfect the Security Agent’s security interest in all Vehicles that are not encumbered by Liens expressly permitted under Section 7.2 of the Senior Credit Agreement.

 

Section 6.15   Commercial Tort Claims. If such Grantor shall at any time hold or acquire a Commercial Tort Claim that satisfies the requirements of the following sentence, such Grantor shall, within 30 days after such Commercial Tort Claim satisfies such requirements, notify the Security Agent and the Secured Parties in a writing signed by such Grantor containing a brief description thereof, and granting to the Security Agent in such writing (for the ratable benefit of the Secured Parties) a security 

 

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interest therein and in the Proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Security Agent. The provisions of the preceding sentence shall apply only to a Commercial Tort Claim that satisfies the following requirements: (i) the monetary value claimed by or payable to the relevant Grantor in connection with such Commercial Tort Claim shall exceed $100,000, and (ii) either (A) such Grantor shall have filed a law suit or counterclaim or otherwise commenced legal proceedings (including arbitration proceedings) against the Person against whom such Commercial Tort Claim is made, or (B) such Grantor and the Person against whom such Commercial Tort Claim is asserted shall have entered into a settlement agreement with respect to such Commercial Tort Claim.
 In addition, to the extent that the existence of any Commercial Tort Claim held or acquired by any Grantor is disclosed by such Grantor in any public filing with the Securities Exchange Commission or any successor thereto or analogous Governmental Authority, or to the extent that the existence of any such Commercial Tort Claim is disclosed in any press release issued by any Grantor, then, upon the request of the Security Agent, the relevant Grantor shall, within 30 days after such request is made, transmit to the Security Agent and the Secured Parties a writing signed by such Grantor containing a brief description of such Commercial Tort Claim and granting to the Security Agent in such writing (for the ratable benefit of the Secured Parties) a security interest therein and in the Proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Security Agent. For the avoidance of doubt, this Section is specifically subject to the terms of t
he Subordination Agreement.

 

Section 6.16   Post Closing Matters.

 

(a)     Each Grantor agrees to deliver to the Security Agent substantially contemporaneously with its delivery to the Administrative Agent pursuant to Section 5.15 of the Senior Credit Agreement (i) mortgages covering all real estate owned by such Grantor in favor of the Security Agent; provided, that such mortgages shall be subject to the terms of the Subordination Agreement but otherwise substantially in the same form as the mortgages delivered to the Administrative Agent pursuant to Section 5.15 of the Senior Credit Agreement and (ii) title insurance policies with respect to all real estate owned by such Grantor.

 

(b)    Upon the request of the Security Agent, each Grantor agrees to deliver to the Security Agent all other documents, agreements and instruments relating to the Collateral delivered to the Administrative Agent pursuant to Section 5.15 of the Senior Credit Agreement and to the extent requested, such document, agreement or instrument shall be (i) made in favor of the Security Agent in substantially the same form as delivered to the Administrative Agent but subject to the terms of the Subordination Agreement and (ii) delivered to the Security Agent substantially contemporaneously with such Grantor’s delivery of such document, agreement or instrument to the Administrative Age
nt pursuant to Section 5.15 of the Senior Credit Agreement.

 

ARTICLE VII

 

REMEDIAL PROVISIONS

 

Section 7.1     Pledged Securities.

 

(a)    Unless an Event of Default shall have occurred and be continuing and the Security Agent shall have given notice to the relevant Grantor of its intent to exercise its corresponding rights pursuant to subsection (b) of this Section, each Grantor shall be permitted to receive all cash dividends paid in respect of the Pledged Securities paid in the normal course of business of the relevant Issuer, to the extent permitted in the Senior Credit Agreement, and to exercise all voting and corporate rights with respect to the Pledged Securities.

 

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(b)    If an Event of Default shall occur and be continuing, then at any time in the discretion of the Security Agent, without notice but subject to the terms of the Subordination Agreement, (i) the Security Agent shall have the right to receive any and all cash dividends, payments or other Proceeds paid in respect of the Pledged Securities and make application thereof to the Obligations, and (ii) any or all of the Pledged Securities shall be registered in the name of the Security Agent or its nominee, and the Security Agent or its nominee may thereafter exercise (x) all voting, corporate and other rights pertaining to such Pledged Securities at any meeting of shareholders (or other equivalent body) of the relevant Issuer or Issuers or otherwise and (y) any and all rights of conversion, exchange and subscription an
d any other rights, privileges or options pertaining to such Pledged Securities as if it were the absolute owner thereof (including the right to exchange at its discretion any and all of the Pledged Securities upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the organizational structure of any Issuer, or upon the exercise by any Grantor or the Security Agent of any right, privilege or option pertaining to such Pledged Securities, and in connection therewith, the right to deposit and deliver any and all of the Pledged Securities with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Security Agent may determine), all without liability except to account for property actually received by it, but the Security Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing.

 

(c)     Each Grantor hereby authorizes and instructs each Issuer of any Pledged Securities pledged by such Grantor hereunder (and each Issuer party hereto hereby agrees) to (i) comply with any instruction received by it from the Security Agent in writing (x) after an Event of Default has occurred and is continuing and (y) that is otherwise in accordance with the terms of this Agreement and the Subordination Agreement, without any other or further instructions from such Grantor, and each Grantor agrees that each Issuer shall be fully protected in so complying, and (ii) unless otherwise expressly permitted hereby, pay any dividends or other payments with respect to the Pledged Securities directly to the Security Agent.

 

(d)    After the occurrence and during the continuation of an Event of Default, if the Issuer of any Pledged Securities is the subject of bankruptcy, insolvency, receivership, custodianship or other proceedings under the supervision of any Governmental Authority, then all rights of the Grantor in respect thereof to exercise the voting and other consensual rights which such Grantor would otherwise be entitled to exercise with respect to the Pledged Securities issued by such Issuer shall cease, and all such rights shall thereupon, subject to the terms of the Subordination Agreement, become vested in the Security Agent who shall thereupon have the sole right to exercise such voting and other consensual rights, but the Security Agent shall have no duty to exercise any such voting or other consensual rights and shall no
t be responsible for any failure to do so or delay in so doing.

 

Section 7.2     Collections on Accounts. The Security Agent hereby authorizes each Grantor to collect upon the Accounts, Instruments, Chattel Paper and Payment Intangibles subject to the Security Agent’s direction and control, and the Security Agent may, subject to the terms of the Subordination Agreement, curtail or terminate said authority at any time after the occurrence and during the continuance of an Event of Default. Su
bject to the terms of the Subordination Agreement, upon the request of the Security Agent, at any time after the occurrence and during the continuance of an Event of Default each Grantor shall notify the applicable Account Debtors that the applicable Accounts, Chattel Paper and Payment Intangibles have been assigned to the Security Agent for the ratable benefit of the Secured Parties and that payments in respect thereof shall be made directly to the Security Agent. Upon the occurrence and during the continuance of an Event of Default, the Security Agent may in its own name or in the name of others communicate with the applicable Account Debtors to verify with them to its satisfaction the existence, amount and terms of any applicable Accounts, Chattel Paper or Payment Intangibles.

 

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Section 7.3     Proceeds. Subject to the terms of the Subordination Agreement, if required by the Security Agent at any time after the occurrence and during the continuance of an Event of Default, any payments of Accounts, Instruments, Chattel Paper and Payment Intangibles comprising a portion of the Collateral, when collected or received by each Grantor, and any other cash or non-cash Proceeds received by each Grantor upon the sale or other disposition of any Collateral, shall be forthwith (and, in any event, within two (2) Business
 Days) deposited by such Grantor in the exact form received, duly indorsed by such Grantor to the Security Agent in a special collateral account maintained by the Security Agent subject to withdrawal by the Security Agent only, as hereinafter provided, and, until so turned over, shall be held by such Grantor in trust for the Security Agent for the ratable benefit of the Secured Parties segregated from other funds of any such Grantor. Each deposit of any such Proceeds shall be accompanied by a report identifying in detail the nature and source of the payments included in the deposit. All Proceeds of the Collateral (including Proceeds constituting collections of Accounts, Chattel Paper, Instruments or Payment Intangibles comprising a portion of the Collateral) while held by the Security Agent (or by any Grantor in trust for the Security Agent for the ratable benefit of the Secured Parties) shall continue to be collateral security for all of the Secured Obligations and shall not constitute payment thereof until
 applied as hereinafter provided. At such intervals as may be agreed upon by each Grantor and the Security Agent, or, if an Event of Default shall have occurred and be continuing, at any time at the Security Agent’s election (subject to the terms of the Subordination Agreement), the Security Agent shall apply all or any part of the funds or Proceeds on deposit in said special collateral account on account of the Secured Obligations, and any part of such funds or Proceeds which the Security Agent elects not so to apply and deems not required as collateral security for the Secured Obligations shall be paid over from time to time by the Security Agent to each Grantor or to whomsoever may be lawfully entitled to receive the same.

 

Section 7.4     UCC and Other Remedies.

 

(a)    If an Event of Default shall occur and be continuing, the Security Agent, on behalf of the Secured Parties, may, subject to the terms of the Subordination Agreement, exercise in its discretion, in addition to all other rights, remedies, powers and privileges granted to it in this Agreement, and in any other instrument or agreement securing, evidencing or relating to the Secured Obligations, all rights, remedies, powers and privileges of a secured party under the UCC (regardless of whether the UCC is in effect in the jurisdiction where such rights, remedies, powers or privileges are asserted) or any other applicable law or otherwise available at law or equity. Without limiting the generality of the foregoing, the Security Agent, without demand of performance or other demand, presentment, protest, advertisemen
t or notice of any kind (except any notice required by law referred to below) to or upon any Grantor or any other Person (all and each of which demands, presentments, protests, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of the Security Agent or any Secured Party or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Security Agent or any Secured Party shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any su
ch private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Grantor, which right or equity is hereby waived and released. If an Event of Default shall occur and be continuing, each Grantor further agrees, at the request of the Security Agent (subject to the terms of the Subordination Agreement), to assemble the Collateral and make it available to the Security Agent at places which the Security Agent shall reasonably select, whether at such Grantor’s premises or elsewhere. Any such sale or transfer by the Security Agent either to itself or to any other Person shall be absolutely free from any claim of right by any Grantor, including any equity or right of redemption, stay or appraisal 

 

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which such Grantor has or may have under any rule of law, regulation or statute now existing or hereafter adopted. Upon any such sale or transfer, the Security Agent shall have the right to deliver, assign and transfer to the purchaser or transferee thereof the Collateral so sold or transferred. The Security Agent shall apply the net proceeds of any action taken by it pursuant to this Section, after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Security Agent and the Secured Parties hereunder, including, reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Obligations, and only after such application and after the paymen
t by the Security Agent of any other amount required by any provision of law, including Section 9-615 of the UCC, need the Security Agent account for the surplus, if any, to any Grantor. To the extent permitted by applicable law, each Grantor waives all claims, damages and demands it may acquire against the Security Agent or any Secured Party arising out of the exercise by it of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition.

 

(b)    In the event that the Security Agent elects not to sell the Collateral, the Security Agent retains its rights to dispose of or utilize the Collateral or any part or parts thereof in any manner authorized or permitted by law or in equity and to apply the proceeds of the same towards payment of the Secured Obligations. Each and every method of disposition of the Collateral described in this Agreement shall constitute disposition in a commercially reasonable manner. The Security Agent may appoint any Person as agent to perform any act or acts necessary or incident to any sale or transfer of the Collateral.

 

Section 7.5     Private Sales of Pledged Securities. Each Grantor recognizes that the Security Agent may be unable to effect a public sale of any or all the Pledged Securities, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to th
e distribution or resale thereof. Each Grantor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Security Agent shall be under no obligation to delay a sale of any of the Pledged Securities for the period of time necessary to permit the Issuer thereof to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if such Issuer would agree to do so. Each Grantor agrees to use its reasonable best efforts to do or cause to be done all such other acts as may reasonably be necessary to make such sale or sales of all or any portion of the Pledged Securities pursuant to this Section valid and binding and in compliance with any and all other applicable law. Each Grantor further agrees that a breach of any of the covenants con
tained in this Section will cause irreparable injury to the Security Agent and the Secured Parties, that the Security Agent and the Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants.

 

(b)    Notwithstanding anything herein to the contrary, the delivery of any Collateral or any certificates, titles, Instruments, Chattel Paper or Documents evidencing or in connection with such Collateral to the Administrative Agent under and in accordance with the Senior Debt Documents, the granting of “control” (as defined in the UCC) over Collateral and/or the assignment of any Collateral to the Administrative Agent under and in accordance with Senior Debt Documents, shall constitute compliance by the Grantors with the provisions of this Agreement which require delivery, possession, control and/or assignment of certain types of Collateral until such time as Payment in Full (as defined in the Subordination Agreement) has occurred.

 

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Section 7.6     Waiver; Deficiency. Each Grantor waives and agrees not to assert any rights or privileges which it may acquire under the UCC or any other applicable law. Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay its Obligations or Guaranteed Obligations, as the case may be, and the fees and disbursements of any attorneys employed by the Security Agent or any Secured Party to collect such deficiency.

 

Section 7.7     Non-Judicial Enforcement. The Security Agent may enforce its rights hereunder without prior judicial process or judicial hearing, and, to the extent permitted by law, each Grantor expressly waives any and all legal rights which might otherwise require the Security Agent to enforce its rights by judicial process.

 

Section 7.8     Subordination Agreement.

 

 For the avoidance of doubt, Article VII is specifically subject to the terms of the Subordination Agreement.

 

ARTICLE VIII

 

SECURITY AGENT

 

Section 8.1     Security Agent’s Appointment as Attorney-in-Fact.

 

(a)    Each Grantor hereby irrevocably constitutes and appoints the Security Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take any and all reasonably appropriate action and to execute any and all documents and instruments which may be reasonably necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, each Grantor hereby gives the Security Agent the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the following:

 

 (i)           pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof;

 

 (ii)          execute, in connection with any sale provided for in Section 7.4 or Section 7.5, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and

 

 (iii)         (A) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Security Agent or as the Security Agent shall direct; (B) take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Account, Instrument, General Intangible, Chattel Paper or Payment Intangible or with respect to any other Collateral, and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Security Agent for the purpose of collecting any or all such moneys due under any Account, Instrument or General Intangible or with respect to any other Collateral whenev
er payable; (C) ask or demand for, collect, and receive payment of and receipt for any and all moneys, claims and other amounts due or to become due at any time in 

 

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respect of or arising out of any Collateral; (D) sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (E) receive, change the address for delivery, open and dispose of mail addressed to any Grantor, and execute, assign and indorse negotiable and other instruments for the payment of money, documents of title or other evidences of payment, shipment or storage for any form of Collateral on behalf of and in the name of any Grantor; (F) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (G) d
efend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (H) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Security Agent may deem appropriate; (I) assign any Patent or Trademark (along with the goodwill of the business to which any such Trademark pertains) throughout the world for such term or terms, on such conditions, and in such manner as the Security Agent shall in its sole discretion determine; and (J) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Security Agent were the absolute owner thereof for all purposes, and do, at the Security Agent’s option and such Grantor’s expense, at any time, or from time to time, all acts and things which the Security Agent deems necessary to protect, preserve or realize upon the Collateral and the Security Agent’s an
d the Secured Parties’ security interests therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do.

 

Anything in this subsection to the contrary notwithstanding, the Security Agent agrees, subject to the terms of the Subordination Agreement, that it will not exercise any rights under the power of attorney provided for in this subsection unless Event of Default shall have occurred and be continuing. The Security Agent shall give the relevant Grantor notice of any action taken pursuant to this subsection when reasonably practicable; provided that the Security Agent shall have no liability for the failure to provide any such notice.

 

(b)    If any Grantor fails to perform or comply with any of its agreements contained herein within the applicable grace periods, the Security Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement.

 

(c)    The expenses of the Security Agent incurred in connection with actions undertaken as provided in this Section, together with interest thereon at the rate of 2% per annum from the date of payment by the Security Agent to the date reimbursed by the relevant Grantor, shall be payable by such Grantor to the Security Agent on demand.

 

(d)    Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof and in compliance herewith. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released.

 

Section 8.2     Duty of the Security Agent. The sole duty of the Security Agent with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the UCC or otherwise, shall be to deal with it in the same manner as the Security Agent deals with similar property for its own account, and the Security Agent shall be deemed to have exercised reasonable care in the cus
tody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which comparable secured parties accord comparable collateral. Neither the Security Agent, any Secured Party nor any of their respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay 

 

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in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. The powers conferred on the Security Agent and the Secured Parties hereunder are solely to protect their interests in the Collateral and shall not impose any duty upon the Security Agent or the Secured Parties to exercise any such powers. The Security Agent and the Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct as de
termined by a court of competent jurisdiction in a final and non-appealable judgment. To the fullest extent permitted by applicable law, the Security Agent shall be under no duty whatsoever to make or give any presentment, notice of dishonor, protest, demand for performance, notice of non-performance, notice of intent to accelerate, notice of acceleration, or other notice or demand in connection with any Collateral, or to take any steps necessary to preserve any rights against any Grantor or other Person or ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not it has or is deemed to have knowledge of such matters. Each Grantor, to the extent permitted by applicable law, waives any right of marshaling in respect of any and all Collateral, and waives any right to require the Security Agent or any Secured Party to proceed against any Grantor or other Person, exhaust any Collateral or enforce any other remedy w
hich the Security Agent or any Secured Party now has or may hereafter have against any Grantor or other Person.

 

Section 8.3     Filing of Financing Statements. Pursuant to the UCC and any other applicable law, each Grantor authorizes the Security Agent, its counsel or its representative, at any time and from time to time, to file or record financing statements, continuation statements, amendments thereto and other filing or recording documents or instruments with respect to the Collateral without the signature of such Grantor in such form and in such offices as the Security Agent reasonably determines appropriate to perfect the security intere
sts of the Security Agent under this Agreement. Additionally, each Grantor authorizes the Security Agent, its counsel or its representative, at any time and from time to time, to file or record such financing statements that describe the collateral covered thereby as “all assets of the Grantor”, “all personal property of the Grantor” or words of similar effect. A photographic or other reproduction of this Agreement shall be sufficient as a financing statement or other filing or recording document or instrument for filing or recording in any jurisdiction.

 

Section 8.4     Appointment of Security Agent; Authority of Security Agent.

 

Each Secured Party hereby appoints and authorizes the Security Agent to act as the Security Agent hereunder and the Security Agent hereby accepts such appointment. The Security Agent is hereby authorized by the Secured Parties to execute, deliver and perform this Agreement and each Secured Party agrees to be bound by all of the agreements of the Security Agent contained herein. Each Grantor acknowledges that the rights and responsibilities of the Security Agent under this Agreement with respect to any action taken by the Security Agent or the exercise or non-exercise by the Security Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between the Security Agent and the other Secured Parties, be governed by such other agreements with re
spect thereto as may exist from time to time among them, but, as between the Security Agent and the Grantors, the Security Agent shall be conclusively presumed to be acting as agent for the Secured Parties with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority.

 

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ARTICLE IX

 

SUBORDINATION OF INDEBTEDNESS

 

Section 9.1     Subordination of All Guarantor Claims. As used herein, the term “Guarantor Claims” shall mean all debts and obligations of any Grantor to any Grantor, whether such debts and obligations now exist or are hereafter incurred or arise, or whether the obligation of the debtor thereon be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or obligations be evidenced by note, contract, open account, or otherwise, and irrespective of the Person o
r Persons in whose favor such debts or obligations may, at their inception, have been or may hereafter be created, or the manner in which they have been or may hereafter be acquired. After the occurrence and during the continuation of an Event of Default, no Grantor shall receive or collect, directly or indirectly, from any obligor in respect thereof any amount upon the Guarantor Claims.

 

Section 9.2     Claims in Bankruptcy. In the event of receivership, bankruptcy, reorganization, arrangement, debtor’s relief or other insolvency proceedings involving any Grantor, the Security Agent on behalf of the Secured Parties shall have the right to prove their claim in any proceeding, so as to establish their rights hereunder and receive directly from the receiver, trustee or other court custodian dividends and payments which would otherwise be payable upon Guarantor Claims. Each Grantor hereby assigns such dividends and
 payments to the Security Agent for the ratable benefit of the Secured Parties for application against the Secured Obligations. Should the Security Agent or any Secured Party receive, for application upon the Secured Obligations, any such dividend or payment which is otherwise payable to any Grantor, and which, as between such Grantor, shall constitute a credit upon the Guarantor Claims, then upon payment in full of the Secured Obligations, the intended recipient shall become subrogated to the rights of the Security Agent and the Secured Parties to the extent that such payments to the Security Agent and the Secured Parties on the Guarantor Claims have contributed toward the liquidation of the Secured Obligations, and such subrogation shall be with respect to that proportion of the Secured Obligations which would have been unpaid if the Security Agent and the Secured Parties had not received dividends or payments upon the Guarantor Claims.

 

Section 9.3     Payments Held in Trust. In the event that, notwithstanding Section 9.1 and Section 9.2, any Grantor should receive any funds, payments, claims or distributions which are prohibited by such Sections, then it agrees (a) to hold in trust for the Security Agent and the Secured Parties an amount equal to the amount of all funds, payments, claims or distributions so received, and (b) that it shall have absolutely no dominion over the amount of such funds, payments, claims or distributions except to pay them promptly to the Security Agent, for the ratable benefit of the Secured Parties; and each Grantor covenants promptly to pay the same to the Security Agent.

 

Section 9.4     Liens Subordinate. Each Grantor agrees that, until the Secured Obligations are paid in full, any Liens securing payment of the Guarantor Claims shall be and remain inferior and subordinate to any Liens securing payment of the Secured Obligations, regardless of whether such encumbrances in favor of such Grantor, the Security Agent or any Secured Party presently exist or are hereafter created or attach. Without th
e prior written consent of the Security Agent, no Grantor, during the period in which any of the Secured Obligations are outstanding, shall (a) exercise or enforce any creditor’s right it may have against any debtor in respect of the Guarantor Claims, or (b) foreclose, repossess, sequester or otherwise take steps or institute any action or proceeding (judicial or otherwise, including the commencement of or joinder in any liquidation, bankruptcy, rearrangement, debtor’s relief or insolvency proceeding) to enforce any Lien held by it.

 

Section 9.5     Notation of Records. Upon the request of the Security Agent, all promissory notes and all accounts receivable ledgers or other evidence of the Guarantor Claims accepted by or held 

 

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by any Grantor shall contain a specific written notice thereon that the indebtedness evidenced thereby is subordinated under the terms of this Agreement.

 

Section 9.6       Subordination Agreement.

 

 For the avoidance of doubt, Article IX is specifically subject to the terms of the Subordination Agreement.

 

ARTICLE X

 

MISCELLANEOUS

 

Section 10.1     Waiver. No failure on the part of the Security Agent or any Secured Party to exercise and no delay in exercising, and no course of dealing with respect to, any right, remedy, power or privilege hereunder or any document executed in connection herewith shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under any of such documents preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges provided herein are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. The exercise by the Security Agent of any one or more of the rights, powers and remedies herein shall not be construed as a waiver of any other rights, powers and remedies, including any rights of set-off.

 

Section 10.2     Notices. All notices and other communications provided for herein shall be given in the manner and subject to the terms of Section 8.1 of the Purchase Agreement; provided that any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at its notice address set forth on Schedule 1.

 

Section 10.3     Payment of Expenses, Indemnities.

 

(a)      Each Grantor agrees to pay or promptly reimburse the Security Agent and each other Secured Party for all advances, charges, costs and expenses (including all costs and expenses of holding, preparing for sale and selling, collecting or otherwise realizing upon the Collateral and all attorneys’ fees, legal expenses and court costs) incurred by the Security Agent or any Secured Party in connection with the exercise of its respective rights and remedies hereunder, including any advances, charges, costs and expenses that may be incurred in any effort to enforce any of the provisions of this Agreement or any obligation of any Grantor in respect of the Collateral or in connection with (i) the preservation of the Lien of, or the rights of the Security Agent or any Secured Party under, this Agreemen
t, (ii) any actual or attempted sale, lease, disposition, exchange, collection, compromise, settlement or other realization in respect of, or care of, the Collateral, including all such costs and expenses incurred in any bankruptcy, reorganization, workout or other similar proceeding, or (iii) collecting against such Grantor under the guarantee contained in Article II or otherwise enforcing or preserving any rights under this Agreement and the other documents executed in connection herewith to which such Grantor is a party.

 

(b)      Each Grantor agrees to pay, and to save the Security Agent and each Secured Party harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including court costs and attorneys’ fees and any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to 

 

    	28

 

    	 

    
 

 

any of the Collateral or in connection with any of the transactions contemplated by this Agreement) incurred because of, incident to, or with respect to the Collateral (including any exercise of rights or remedies in connection therewith) or the execution, delivery, enforcement, performance or administration of this Agreement.

 

(c)      All amounts for which any Grantor is liable pursuant to this Section shall be due and payable by such Grantor to the Security Agent or any Secured Party upon demand.

 

Section 10.4     Amendments in Writing. None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in a writing signed by each of the parties hereto.

 

Section 10.5     Successors and Assigns. This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure to the benefit of the Security Agent, the Secured Parties and their successors and assigns; provided that no Grantor may assign, transfer or delegate any of its rights or Secured Obligations under this Agreement without the prior written consent of the Security Agent.

 

Section 10.6     Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

 

Section 10.7     Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart. Delivery of an executed counterpart to this Agreement by facsimile transmission or by electronic mail in pdf format shall be as effective as delivery of a manually executed c
ounterpart hereof.

 

Section 10.8     Survival. The obligations of the parties under Section 10.3 shall survive the repayment of the Secured Obligations and the termination of this Agreement. To the extent that any payments on the Secured Obligations or proceeds of any Collateral are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver or other Perso
n under any bankruptcy law, common law or equitable cause, then, to such extent, the Secured Obligations so satisfied shall be revived and continue as if such payment or proceeds had not been received and the Security Agent’s Liens, security interests, rights, powers and remedies under this Agreement and any other documents executed in connection herewith shall continue in full force and effect. In such event, each applicable document shall be automatically reinstated and each Grantor shall take such action as may be reasonably requested the Security Agent or any Secured Party to effect such reinstatement.

 

Section 10.9     Captions. Captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.

 

Section 10.10  No Oral Agreements. This Agreement embodies the entire agreement and understanding between the parties and supersede all other agreements and understandings between such parties relating to the subject matter hereof. This Agreement represents the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties.

 

    	29

 

    	 

    
 

 

Section 10.11   Governing Law; Submission to Jurisdiction.

 

(a)      This Agreement and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby and thereby shall be construed in accordance with and be governed by the law of the State of New York.

 

(b)      Each Grantor hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the United States District Court for the Southern District of New York, and of the Supreme Court of the State of New York sitting in New York county, and of any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such District Court or such New York state court or, to the extent permi
tted by applicable law, such appellate court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Security Agent or any Secured Party may otherwise have to bring any action or proceeding relating to this Agreement against the Grantors or their properties in the courts of any jurisdiction.

 

(c)      Each Grantor irrevocably and unconditionally waives any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding described in subsection (b) of this Section and brought in any court referred to in subsection (b) of this Section. Each of the parties hereto irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(d)      Each party to this Agreement irrevocably consents to the service of process in the manner provided for notices in Section 10.2. Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by law.

 

Section 10.12   WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEE
K TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section 10.13   Acknowledgments.

 

(a)       Each Grantor hereby acknowledges that:

 

(i)        it has been advised by counsel in the negotiation, execution and delivery of this Agreement;

 

    	30

 

    	 

    
 

 

(ii)       neither the Security Agent nor any Secured Party has any fiduciary relationship with or duty to any Grantor arising out of or in connection with this Agreement, and the relationship between the Grantors, on the one hand, and the Security Agent and the Secured Parties, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

 

(iii)      no joint venture is created hereby or otherwise exists by virtue of the transactions contemplated hereby among the Security Parties and the Grantors.

 

(b)      Each of the parties hereto specifically agrees that it has a duty to read this Agreement and agrees that it is charged with notice and knowledge of the terms of this Agreement; that it has in fact read this Agreement and is fully informed and has full notice and knowledge of the terms, conditions and effects of this Agreement; that it has been represented by independent legal counsel of its choice throughout the negotiations preceding its execution of this Agreement; and has received the advice of its attorney in entering into this Agreement; and that it recognizes that certain of the terms of this Agreement result in one party assuming the liability inherent in some aspects of the transaction and relieving the other party of its responsibility for such liability. Each Grantor agrees and covenant
s that it will not contest the validity or enforceability of any exculpatory provision of this Agreement on the basis that such Grantor had no notice or knowledge of such provision or that the provision is not “conspicuous”.

 

(c)      Each Grantor warrants and agrees that each of the waivers and consents set forth in this Agreement are made voluntarily and unconditionally after consultation with outside legal counsel and with full knowledge of their significance and consequences, with the understanding that events giving rise to any defense or right waived may diminish, destroy or otherwise adversely affect rights which such Grantor otherwise may have against any other Grantor, the Security Agent, any Secured Party or any other Person or against any Collateral. If, notwithstanding the intent of the parties that the terms of this Agreement shall control in any and all circumstances, any such waivers or consents are determined to be unenforceable under applicable law, such waivers and consents shall be effective to the maximum e
xtent permitted by law.

 

Section 10.14   Additional Grantors. Each Person that is required to become a party to any Senior Debt Document pursuant to Section 5.12 of the Senior Credit Agreement and is not a signatory hereto shall become a Grantor for all purposes of this Agreement upon execution and delivery by such Person of a Joinder Agreement in the form of Annex I.

 

Section 10.15   Set-Off. Each Grantor agrees that, in addition to (and without limitation of) any right of set-off, bankers’ lien or counterclaim any Secured Party may otherwise have, each Secured Party shall have the right and be entitled, at its option, to offset (i) balances held by it or by any of its affiliates for account of any Grantor or any of its Subsidiaries at any of its offices, in dollars or in any other currency, and (ii) Obligations then due and payable to such Secured Party (or any affiliate of such Secured Party), which
 are not paid when due, in which case it shall promptly notify the Grantor thereof; provided that such Secured Party’s failure to give such notice shall not affect the validity thereof.

 

Section 10.16   ReleasesRelease Upon Payment in Full. Upon the complete payment in full of all Secured Obligations, the Security Agent, at the written request and expense of the Grantors, will promptly release, reassign and transfer the Collateral to the Grantors, without recourse, representation, warranty or other assurance of any kind, and declare this Agreement to be of no further force or effect. The grant of the security interest hereunder and all of the rights, powers and remedies in connection herewith shall remain in full force and effect until the Security Agent has (i) retransferred and delivered all of the Collateral in its possession to the Grantors, and (ii) executed a written release or termination 

 

    	31

 

    	 

    
 

 

statement and reassigned to the Grantors without recourse or warranty any remaining Collateral and all rights conveyed hereby.

 

(b)       Further Assurances. If any of the Collateral shall be sold, transferred or otherwise disposed of by any Grantor in a transaction permitted by the Senior Credit Agreement, then the Security Agent, at the request and sole expense of such Grantor, shall promptly execute and deliver to such Grantor all releases or other documents reasonably necessary for the release of the Liens created hereby on such Collateral of such Grantor, made without recourse, representation, warranty or other assurance of any kind; provided that in the case of any sale, transfer or disposition other than in connection with an exercise of remedies under the Senior Debt Documents during the continuance of an “Event of Default” under the Senior Credit Agreement, (i) the purchaser or transferee of such Collateral agrees to assume the Secured Obligations of the relevant Grantor and (ii) either such purchaser’s or transferee’s creditworthiness is satisfactory to the Security Agent or such purchaser or transferee pledges its assets to secure the Obligations in a manner satisfactory to the Security Agent. At the request and sole expense of any Grantor, such Grantor shall be released from its obligations hereunder in the event that all the Capital Stock of such Grantor shall be sold, transferred or otherwise disposed of in a transaction expressly permitted by the
Senior Credit Agreement; provided that the applicable Grantor shall have delivered to the Security Agent, at least 10 Business Days prior to the date of the proposed release, a written request for release identifying the relevant Grantor and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification stating that such transaction is in compliance with the Senior Credit Agreement and other Senior Debt Documents.

 

(c)       Retention in Satisfaction. Except as may be expressly applicable pursuant to Section 9-620 of the UCC, no action taken or omission to act by the Security Agent or any Secured Party hereunder, including any exercise of voting or consensual rights or any other action taken or inaction, shall be deemed to constitute a retention of the Collateral in satisfaction of the Secured Obligations or otherwise to be in full satisfaction of the Secured Obligations, and the Secured Obligations shall remain in full force and effect, until the Security Agent and the Secured Parties shall have applied payments (including collections from Collateral) towards the Secured Obligations in the full amoun
t then outstanding or until such subsequent time as is provided in subsection (a) of this Section.

 

Section 10.17   Reinstatement. The obligations of each Grantor under this Agreement (including with respect to the guarantee contained in Article II and the provision of collateral herein) shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Security Agent or any Secured Party upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of any Grantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, any Grantor or any substantial part of its property, or otherwise, all as though such payments had not been made.

 

Section 10.18   Acceptance. Each Grantor hereby expressly waives notice of acceptance of this Agreement, acceptance on the part of the Security Agent and the Secured Parties being conclusively presumed by their request for this Agreement and delivery of the same to the Security Agent.

 

    	32

 

    	 

    
 

 

IN WITNESS WHEREOF, the parties hereto have caused this Seller Guaranty and Security Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

	 	 	 	 
	 	
DAKOTA PLAINS TRANSLOADING, LLC

	 
	 	 	 	 
	 	
By: 

	/s/ Gabriel C. Claypool	 
	 	 	Name: Gabriel C. Claypool	 
	 	 	Title: President, Chief Executive Officer and Secretary	 

	 	 	 	 
	 	

DAKOTA PLAINS SAND, LLC

	 
	 	 	 	 
	 	
By: 

	/s/ Gabriel C. Claypool	 
	 	 	Name: Gabriel C. Claypool	 
	 	 	Title: President, Chief Executive Officer and Secretary	 

	 	 	 	 
	 	

DAKOTA PLAINS MARKETING, LLC

	 
	 	 	 	 
	 	
By: 

	/s/ Gabriel C. Claypool	 
	 	 	Name: Gabriel C. Claypool	 
	 	 	Title: President, Chief Executive Officer and Secretary	 

	 	 	 	 
	 	

DAKOTA PLAINS HOLDINGS, INC.

	 
	 	 	 	 
	 	
By: 

	/s/ Gabriel C. Claypool	 
	 	 	Name: Gabriel C. Claypool	 
	 	 	Title: President and Chief Operating Officer	 

 

Signature Page to

Seller Guaranty and Security Agreement

 

    	 

    	 

    
 

Acknowledged and Agreed to as of the date hereof:

	 	 	 	 
	WORLD FUEL SERVICES CORPORATION, as Security Agent and as Secured Party

	 	 	 
	
By: 

	/s/ Ira M. Birns	 	 
	 	Name: Ira M. Birns	 
	 	Title: Executive Vice President and CFO

	 	 	 	 
	

PETROLEUM TRANSPORT SOLUTIONS, LLC, as Secured Party

	 
	 	 	 
	
By: 

	/s/ Ronald Crowell	 	 
	 	Name: Ronald Crowell	 
	 	Title: SVP - Finance

	 	 	 	 
	

WORLD FUEL SERVICES, INC., as Secured Party

	 
	 	 	 
	
By: 

	/s/ Ronald Crowell	 	 
	 	Name: Ronald Crowell	 
	 	Title: SVP - Finance

	 	 	 	 
	

WESTERN PETROLEUM COMPANY, as Secured Party

	 
	 	 	 
	
By: 

	/s/ Ronald Crowell	 	 
	 	Name: Ronald Crowell	 
	 	Title: SVP - Finance

 

Signature Page to

Seller Guaranty and Security Agreement 

 

    	 

    	 

    
 

 

ANNEX I

 

Form of Joinder Agreement

 

THIS JOINDER AGREEMENT, dated as of [_____] (this “Joinder Agreement”), is made by [NAME OF NEW SUBSIDIARY], a [state of incorporation] [corporation] (the “Additional Grantor”), in favor of WORLD FUEL SERVICES CORPORATION, as security agent (the “Security Agent”). All capitalized terms not defined herein shall have the meanings assigned to them in the Guaranty and Security Agreement (as defined below).

 

WHEREAS, DAKOTA PLAINS TRANSLOADING, LLC, a Minnesota limited liability company (‘Dakota Plains Transloading”), DAKOTA PLAINS SAND, LLC, a Minnesota limited liability company (“Dakota Plains Sand”), DAKOTA PLAINS MARKETING, LLC, a Minnesota limited liability company (“Dakota Plains Marketing”) and DAKOTA
PLAINS HOLDINGS, INC., a Nevada corporation (“Holdings”) have entered that certain Membership Interest Purchase Agreement, dated as of the date hereof, with PTS (as amended, restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”);

 

WHEREAS, in connection with the Purchase Agreement, Dakota Plains Transloading, Dakota Plains Sand, Dakota Plains Marketing, Holdings and certain of their Subsidiaries have entered into the Seller Guaranty and Security Agreement, dated as of December 5, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Guaranty and Security Agreement”), in favor of the Security Agent; and

 

WHEREAS, the Guaranty and Security Agreement requires the Additional Grantor to become a party to the Guaranty and Security Agreement; and

 

WHEREAS, the Additional Grantor has agreed to execute and deliver this Joinder Agreement in order to become a party to the Guaranty and Security Agreement;

 

NOW, THEREFORE, it is agreed:

 

Section 1          Guaranty and Security Agreement. By executing and delivering this Joinder Agreement, the Additional Grantor, as provided in Section 10.14 of the Guaranty and Security Agreement, hereby becomes a party to the Guaranty and Security Agreement as a Grantor thereunder with the same force and effect as if originally named therein as a Grantor and, without limiting the generality of the foregoing, her
eby expressly assumes all obligations and liabilities of a Grantor thereunder and expressly grants to the Security Agent, for the ratable benefit of the Secured Parties, a security interest in all Collateral now owned or at any time hereafter acquired by such Additional Grantor to secure all of such Additional Grantor’s obligations and liabilities thereunder. The information set forth in Schedule A hereto is hereby added to the information set forth in Schedules 1 through 11 to the Guaranty and Security Agreement. The Additional Grantor hereby represents and warrants that each of the representations and warranties contained in Article V of the Guaranty and Security Agreement is true and correct on and as of the date hereof (after giving effect to this Joinder Agreement) as if made on and as of such date.

 

Section 2         Governing Law. THIS JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

    	  

    	 

    
 

 

IN WITNESS WHEREOF, the undersigned has caused this Joinder Agreement to be duly executed and delivered as of the date first above written.

	 	 	 	 
	 	

[NAME OF ADDITIONAL GRANTOR]

	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	Name:	 
	 	 	Title:

 

Acknowledged and Agreed to as of the date hereof:

	 	 	 	 
	

WORLD FUEL SERVICES CORPORATION, as Security Agent

	 
	 	 	 
	
By: 

	 	 	 
	 	Name:	 
	 	Title:

 

    	Annex I

 

    	 

    
 

 

SCHEDULE A

 

Supplement to Schedules of

Guaranty and Security Agreement

 

    	Annex I

 

    	 

    
 

ANNEX II

 

Form of Intellectual Property Security Agreement

 

THIS [COPYRIGHT][PATENT][TRADEMARK] SECURITY AGREEMENT, dated as of [_____] (this “Security Agreement”), is made by [NAME OF GRANTOR], a [state of incorporation] [corporation] (the “Grantor”), in favor of WORLD FUEL SERVICES CORPORATION, as security agent (the “Security Agent”). All capitalized terms not defined herein shall have the meanings assigned to them in the Guaranty and Security Agreement (as defined below).

 

WHEREAS, DAKOTA PLAINS TRANSLOADING, LLC, a Minnesota limited liability company (‘Dakota Plains Transloading”), DAKOTA PLAINS SAND, LLC, a Minnesota limited liability company (“Dakota Plains Sand”), DAKOTA PLAINS MARKETING, LLC, a Minnesota limited liability company (“Dakota Plains Marketing”) and DAKOTA PLAINS HOLDINGS, INC., a Nevada corporation (“Holdings”) have entered that certain Membership Interest Purchase Agreement, dated as of the date hereof, with PTS (as amended, restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”);

 

WHEREAS, in connection with the Purchase Agreement, Dakota Plains Transloading, Dakota Plains Sand, Dakota Plains Marketing, Holdings and certain of their Subsidiaries, including the Grantor, have entered into the Seller Guaranty and Security Agreement, dated as of December 5, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Guaranty and Security Agreement”), in favor of the Security Agent; and

 

WHEREAS, the Guaranty and Security Agreement requires the Grantor to execute and deliver this Security Agreement;

 

NOW, THEREFORE, in consideration of the premises the Grantor hereby agrees as follows:

 

Section 1          Defined Terms. Capitalized terms used herein without definition are used as defined in the Guaranty and Security Agreement.

 

Section 2         Grant of Security Interest in [Copyright][Patent][Trademark] Collateral. The Grantor, as collateral security for the prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations of the Grantor, hereby pledges, assigns and transfers to the Security Agent for the ratable benefit of the Secured Parties and grants to the Securi
ty Agent for the ratable benefit of the Secured Parties a security interest in, all of its right, title and interest in, to and under the following Collateral (the “[Copyright][Patent][Trademark] Collateral”):

 

[(i)           all of its Copyrights and all Copyright Licenses providing for the grant by or to the Grantor of any right under any Copyright, including, those referred to on Schedule I hereto;

 

(ii)            all renewals, reversions and extensions of the foregoing; and

 

(iii)           all income, royalties, proceeds and liabilities at any time due or payable or asserted under and with respect to any of the foregoing, including, all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation, dilution, violation or other impairment thereof.]

 

    	  

    	 

    
 

 

[(i)           all of its Patents and all Patent Licenses providing for the grant by or to the Grantor of any right under any Patent, including those referred to on Schedule I hereto;

 

(ii)            all reissues, reexaminations, continuations, continuations-in-part, divisions, renewals and extensions of the foregoing; and

 

(iii)           all income, royalties, proceeds and liabilities at any time due or payable or asserted under and with respect to any of the foregoing, including all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation, dilution, violation or other impairment thereof.]

 

[(i)           all of its Trademarks and all Trademark Licenses providing for the grant by or to the Grantor of any right under any Trademark, including those referred to on Schedule I hereto;

 

(ii)           all renewals and extensions of the foregoing;

 

(iii)          all goodwill of the business connected with the use of, and symbolized by, each such Trademark; and

 

(iv)          all income, royalties, proceeds and liabilities at any time due or payable or asserted under and with respect to any of the foregoing, including all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation, dilution, violation or other impairment thereof.]

 

Section 3          Guaranty and Security Agreement. The security interest granted pursuant to this Security Agreement is granted in conjunction with the security interest granted to the Security Agent pursuant to the Guaranty and Security Agreement, and the Grantor hereby acknowledges and agrees that the rights and remedies of the Security Agent with respect to the security interest in the [Copyright][Patent][Tra
demark] Collateral made and granted hereby are more fully set forth in the Guaranty and Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. In the event of any conflict or inconsistency between this Security Agreement and the Guaranty and Security Agreement (or any portion hereof or thereof), the terms of the Guaranty and Security Agreement shall prevail.

 

Section 4          Representation and Warranty. Schedule I correctly sets forth all applied for and federally registered [Copyrights and exclusive Copyright Licenses][Patents][Trademarks] owned by such Grantor in its own name as of the date hereof.

 

Section 5          Grantor Remains Liable. The Grantor hereby agrees that, anything herein to the contrary notwithstanding, the Grantor shall assume full and complete responsibility for the prosecution, defense, enforcement or any other necessary or desirable actions in connection with its [Copyrights][Patents][Trademarks] and [Copyright][Patent][Trademark] Licenses subject to a security interest hereunder.

 

Section 6          Counterparts. This Security Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart.<
/div>

 

    	Annex II

 

    	 

    
 

 

Section 7          Governing Law. This Security Agreement and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.

 

    	Annex II

 

    	 

    
 

 

           IN WITNESS WHEREOF, the Grantor has caused this [Copyright][Patent][Trademark] Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

	 	 	 	 
	 	

[NAME OF GRANTOR]

	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	Name:	 
	 	 	Title:

 

Acknowledged and Agreed to as of the date hereof:

	 	 	 	 
	

WORLD FUEL SERVICES CORPORATION, as Security Agent

	 
	 	 	 
	
By: 

	 	 	 
	 	Name:	 
	 	Title:

 

    	Annex II

 

    	 

    
 

ACKNOWLEDGMENT OF GRANTOR

	 	 	 	 
	State of	 	)
	 	 	)               ss.
	County of	 	)

 

On this ___ day of ____________, 20__ before me personally appeared ____________________, proved to me on the basis of satisfactory evidence to be the person who executed the foregoing instrument on behalf of ____________________, who being by me duly sworn did depose and say that he is an authorized officer of said company, that the said instrument was signed on behalf of said company as authorized by its Board of Directors and that he acknowledged said instrument to be the free act and deed of said company.

 

	 	 	 
	 	
Notary Public

	 

 

    	Annex II

 

    	 

    
 

 

SCHEDULE I

 

[Copyrights and Copyright Licenses][Patents][Trademarks]

 

I.           REGISTERED [COPYRIGHTS][PATENTS][TRADEMARKS]

 

[Include registration number and date]

 

II.          [COPYRIGHT][PATENT][TRADEMARK] APPLICATIONS

 

[Include application number and date]

 

[III.       EXCLUSIVE COPYRIGHT LICENSES]

 

[Include complete legal description of agreement (name of agreement, parties and date)]

 

    	Annex II

 

    	 

    
 

ANNEX III

 

Form of Acknowledgment and Consent

 

The undersigned hereby acknowledges receipt of a copy of the Seller Guaranty and Security Agreement, dated as of December 5, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Agreement”), made by DAKOTA PLAINS TRANSLOADING, LLC, a Minnesota limited liability company, DAKOTA PLAINS SAND, LLC, a Minnesota limited liability company and DAKOTA PLAINS MARKETING, LLC, a Minnesota limited liability company, DAKOTA PLAINS HOLDINGS, INC., a Nevada c
orporation, and the other Grantors parties thereto for the benefit of WORLD FUEL SERVICES CORPORATION, as security agent (the “Security Agent”). The undersigned agrees for the benefit of the Security Agent and the Secured Parties defined therein as follows:

 

1.           The undersigned will be bound by the terms of the Agreement relating to the Pledged Securities issued by the undersigned and will comply with such terms insofar as such terms are applicable to the undersigned.

 

2.           The undersigned will notify the Security Agent promptly in writing of the occurrence of any of the events described in Section 6.9(a) of the Agreement with respect to the Pledged Securities issued by the undersigned.

 

3.           The terms of Sections 7.1(c) and 7.5 of the Agreement shall apply to it, mutatis mutandis, with respect to all actions that may be required of it pursuant to Sections 7.1(c) or 7.5 of the Agreement with respect to the Pledged Securities issued by the undersigned.

	 	 	 	 
	 	

[NAME OF ISSUER]

	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 
	 	
Address for Notices:

	 
	 	
[_____]

	 
	 	
[_____]

	 
	 	
Attention: [_____]

	 
	 	
Telecopy Number: [_____]

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