                                                                                                ACCEPTED
                                                                                            05-18-00647-CV
                                                                                  FIFTH COURT OF APPEALS
                                                                                            DALLAS, TEXAS
                                                                                          6/4/2018 10:40 AM
                                                                                                 LISA MATZ
                                                                                                     CLERK

                                    No. ___________________

                                     In the Court of Appeals                FILED IN
                                 Fifth District of Texas at Dallas   5th COURT OF APPEALS
                                                                         DALLAS, TEXAS
                                                                     6/4/2018 10:40:22 AM
                                                                           LISA MATZ
                                                                             Clerk

                                      In re JOHN CALCE
                                            Relator



             Original Proceeding from the 44th Judicial District Court
                              Dallas County, Texas
                   Hon. Bonnie Lee Goldstein, Presiding Judge
                             Cause No. DC-16-07706



                    PETITION FOR WRIT OF MANDAMUS



    James D. Shields                                P. Michael Jung
    David A. Shields                                David N. Kitner
                                                    Jadd F. Masso
    SHIELDS LEGAL GROUP
                                                    Chase J. Potter
    16301 Quorum Drive
    Suite 250B                                      CLARK HILL STRASBURGER
    Addison, Texas 75001                            901 Main Street, Suite 6000
    (972) 788-2040                                  Dallas, Texas 75202
    (972) 788-4332 (facsimile)                      (214) 651-4300
                                                    (214) 651-4330 (facsimile)

                                      Attorneys for Relator


                                  Oral Argument Requested


9997597.7/SP/38371/0105/060118
                                 Identities of Parties and Counsel


                         Party                                Counsel

John Calce                                       P. Michael Jung
                                                 David N. Kitner
         Relator                                 Jadd F. Masso
                                                 Chase J. Potter
                                                 CLARK HILL STRASBURGER
                                                 901 Main Street, Suite 6000
                                                 Dallas, Texas 75202

                                                 James D. Shields
                                                 David A. Shields
                                                 SHIELDS LEGAL GROUP
                                                 16301 Quorum Drive
                                                 Suite 250B
                                                 Addison, Texas 75001
                                                 (972) 788-2040
                                                 (972) 788-4332 (facsimile)

Hon. Bonnie Lee Goldstein
44th Judicial District Court
600 Commerce Street
Dallas, Texas 75202

         Respondent

Centurion Logistics, LLC                         Mark E. Torian
                                                 Darren P. Nicholson
         Real Party in Interest
                                                 SAYLES WERBNER, P.C.
                                                 4400 Renaissance Tower
                                                 1201 Elm Street
                                                 Dallas, Texas 75270




9997597.7/SP/38371/0105/060118                  2
                                          Table of Contents

Identities of Parties and Counsel.............................................................. 2

Table of Contents ...................................................................................... 3

Index of Authorities................................................................................... 5

Statement of the Case ............................................................................... 9

Statement of Jurisdiction ........................................................................ 10

Introduction ............................................................................................. 11

Issue Presented ....................................................................................... 12

Statement of Facts .................................................................................. 13

Summary of the Argument ..................................................................... 18

Argument ................................................................................................. 19

I.       Standard for Mandamus Relief...................................................... 19

II.      Calce has a clear and immediate right to reimbursement and
         advancement of his defense costs. ................................................. 20

         A.        The right to advancement or reimbursement of
                   expenses and the right to indemnification are separate
                   and distinct legal concepts. ................................................... 21

         B.        Centurion Logistics cannot rely on its own allegations
                   to deny Calce’s right to advancement and
                   reimbursement of defense costs. ........................................... 26

         C.        Calce’s contractual right to advancement and
                   reimbursement is unambiguous and mandatory. ................ 29

                   1.        The terms of the Company Agreement are
                             unambiguous. ............................................................... 29




9997597.7/SP/38371/0105/060118                         3
                   2.        Section 6.2 of the Agreement requires Centurion
                             Logistics to immediately reimburse Calce the
                             expenses he pays or incurs in defending himself. ....... 30

                   3.        Calce’s reimbursable expenses include his
                             attorneys’ fees............................................................... 33

         D.        Summary judgment is the appropriate—and only
                   meaningful—mechanism for Calce to exercise his right
                   to advancement and reimbursement of defense costs. ......... 34

III.     Mandamus is warranted. ............................................................... 35

Prayer ...................................................................................................... 36

Certification ............................................................................................. 37

Certificate Of Compliance ....................................................................... 37

Certificate of Service ............................................................................... 38

Declaration Regarding Evidence ............................................................ 39

Appendix

       A. Plaintiff’s Original Petition

       B. John Calce’s First Amended Counterclaim Against Centurion
          Logistics LLC and Centurion Pecos Terminal LLC

       C. John Calce’s Amended Motion for Partial Summary Judgment
          Regarding Counterclaim Against Centurion Logistics LLC

       D. Plaintiff’s Second Amended Petition

       E. Order Denying John Calce’s Amended Motion for Partial Sum-
          mary Judgment Regarding Counterclaim Againt Centurion Lo-
          gistics LLC

       F. Tex. Bus. Orgs. Code § 8.104




9997597.7/SP/38371/0105/060118                          4
                                  Index of Authorities

CASES
Arch Ins. Co. v. U.S. Youth Soccer Ass’n,
    No. 05-12-00596-CV, 2014 WL 2941372,
    2014 Tex. App. LEXIS 5068 (Tex. App.—Dallas
    May 12, 2014, no pet.) (mem. op.) .................................................... 23

El Paso Field Servs., L.P. v. MasTec N. Am., Inc.,
    389 S.W.3d 802 (Tex. 2012) ............................................................. 29

Evans v. Davis,
   No. 14-12-01053-CV, 2013 WL 6095723,
   2013 Tex. App. LEXIS 14122 (Tex. App.—Houston
   [14th Dist.] Nov. 19, 2013, no pet.) (mem. op.) ................................ 23

Heine v. Bank of Oswego,
    144 F. Supp. 3d 1198 (D. Or. 2015) ................................................. 33

Heritage Res., Inc. v. NationsBank,
    939 S.W.2d 118 (Tex. 1996) ............................................................. 30

Homestore, Inc. v. Tafeen,
   888 A.2d 204 (Del. 2005) ............................................................ 22, 25

Huie v. DeShazo,
    922 S.W.2d 920 (Tex. 1996) ....................................................... 19, 35

In re Aguilar,
     344 S.W.3d 41 (Tex. App.—El Paso 2011,
     orig. proceeding) ....................................................................... passim

In re AIU Ins.,
     148 S.W.3d 109 (Tex. 2014) ............................................................. 20

In re Coppola,
     535 S.W.3d 506 (Tex. 2017) ............................................................. 20

In re Dickason,
     987 S.W.2d 570 (Tex. 1998) ............................................................. 20


9997597.7/SP/38371/0105/060118                   5
In re Essex Ins.,
     450 S.W.3d 524 (Tex. 2014) ....................................................... 19, 20

In re McAllen Med. Ctr., Inc.,
     275 S.W.3d 458 (Tex. 2008) ....................................................... 20, 35

In re Nationwide Ins.,
     494 S.W.3d 708 (Tex. 2016) ....................................................... 19, 35

In re Prudential Ins. Co. of Am.,
     148 S.W.3d 124 (Tex. 2004) ....................................................... 20, 35

In re State Farm Lloyds,
     520 S.W.3d 595 (Tex. 2018) ............................................................. 19

Int’l Airport Ctrs., LLC v. Citrin,
      455 F.3d 749 (7th Cir. 2006) ............................................................ 25

James River Mgmt. Co., Inc. v. Kehoe,
   674 F. Supp. 2d 745 (E.D. Va. 2009)................................................ 27

Kamen v. Kemper Fin. Servs., Inc.,
   908 F.2d 1338 (7th Cir. 1990),
   rev’d on other grounds,
   500 U.S. 90 (1991) ............................................................................ 25

Moayedi v. Interstate 35/Chisam Rd., L.P.,
   438 S.W.3d 1 (Tex. 2014) ........................................................... 29, 30

Morgan v. Grace,
   Civ. A. No. 20430, 2003 WL 22461916,
   2003 Del. Ch. LEXIS 113 (Del Ch. Oct. 29, 2003) ........................... 34

Nat’l Union Fire Ins. Co. of Pittsburgh, Penn.
    v. CBI Indus. Inc.,
    907 S.W.2d 517 (Tex. 1995) ............................................................. 30

Neurobehaviorial Assocs., P.A. v. Cypress
   Creek Hosp., Inc.,
   995 S.W.2d 326 (Tex. App.—Houston
   [1st Dist.] 1999, no pet.) ................................................................... 25


9997597.7/SP/38371/0105/060118                   6
Peterson v. Farmers Tex. Cnty. Mut. Ins. Co.,
    No. 05-15-00678-CV, 2016 WL 3448067,
    2016 Tex. App. LEXIS 6586 (Tex. App.—Dallas
    June 22, 2016, no pet.) (mem. op.) ............................................. 29, 30

PopCap Games, Inc. v. MumboJumbo, LLC,
   350 S.W.3d 699 (Tex. App.—Dallas 2011, pet. denied) ................... 29

Reddy v. Elec. Data Sys. Corp.,
   C.A. No. 19467, 2002 Del. Ch.
   LEXIS 69 (Del. Ch. June 18, 2002) ............................................ 28, 35

Sacks v. Haden,
    266 S.W.3d 447 (Tex. 2008) ............................................................. 30

Walker v. Packer,
   827 S.W.2d 833 (Tex. 1992) ............................................................. 19

STATUTES
Tex. Bus. Corp. Act art. 2.02-1 ................................................................ 24

Tex. Bus. Orgs. Code § 8.001(3)(B) ......................................................... 34

Tex. Bus. Orgs. Code § 8.104................................................................... 24

Texas Government Code Section 22.221(a) and (b)(1) ........................... 10

OTHER AUTHORITIES
Andrew J. Morrow, Jr., Appendix: Task Force Report,
   Oregon Revised Model Business Corporation Act,
   30 Willamette L. Rev. 407 (1994) .................................................... 33

Richard A. Rossman, et al., A Primer of Advancement
    of Defense Costs: The Rights and Duties of Officers
    and Corporations,
    85 U. Det. Mercy L. Rev. 29 (2007) .................................................. 22

Stephen A. Radin, “Sinners Who Find Religion”: Advancement
    of Litigation Expenses to Corporate Officials



9997597.7/SP/38371/0105/060118                  7
       Accused of Wrongdoing,
       25 Rev. Litig. 251 (2006) .................................................................. 25




9997597.7/SP/38371/0105/060118                    8
                                 Statement of the Case


Underlying Proceeding                 Suit by Centurion Logistics LLC against
                                      Relator John Calce, a manager of the
                                      LLC, and others alleging breach of fiduci-
                                      ary duty and related claims relating to a
                                      development project. (MR.1-23, 867-903.)
                                      Calce sought to require Centurion Logis-
                                      tics to reimburse his defense costs in this
                                      case as required by its Company Agree-
                                      ment. (MR.322-36.) The trial court denied
                                      Calce’s motion. (MR.904-05.)


Respondent                            Hon. Bonnie Lee Goldstein
                                      44th Judicial District Court
                                      Dallas County, Texas


Respondent’s Actions                  Refusing to enforce contractual provision
                                      requiring Centurion Logistics to reim-
                                      burse Calce’s defense-related expenses in
                                      this case as they are incurred.




9997597.7/SP/38371/0105/060118             9
                                 Statement of Jurisdiction

         This Court has jurisdiction under Texas Government Code Section

22.221(a) and (b)(1), which authorizes this Court to “issue all writs of

mandamus, agreeable to the principles of law regulating those writs,

against: (1) a judge of a district or county court in the court of appeals

district.”




9997597.7/SP/38371/0105/060118              10
                                 Introduction

         The right of a party to have defense costs advanced or reimbursed

during ongoing litigation is a right that will be lost forever if not en-

forced during the pending litigation. In re Aguilar, 344 S.W.3d 41, 55

(Tex. App.—El Paso 2011, orig. proceeding).

         In this case, Relator John Calce is entitled to reimbursement of

his defense costs paid or incurred in this case—as they are paid or in-

curred. Real Party in Interest Centurion Logistics does not contest that

Calce is an “Indemnified Person” or that this suit is a “Proceeding” for

purposes of the Company Agreement, thus triggering Centurion Logis-

tics obligation to reimburse Calce’s ongoing defense expenses.

         Calce’s right to advancement or reimbursement of his defense ex-

penses is separate and distinct from any right he may have to indemni-

fication from Centurion Logistics. Indemnification, like Calce’s potential

obligation to repay any funds advanced to him for his defense, will be

determined when this case is adjudicated on its merits.

         Mandamus is necessary to vindicate Calce’s right to advancement

of defense costs. Appellate relief will be illusory because, by that point,

Calce will have been completely deprived of the benefit of the right.


9997597.7/SP/38371/0105/060118       11
                                 Issue Presented

         Did the trial court abuse its discretion by refusing to enforce Cen-

turion Logistics’ contractual obligation to reimburse Relator John Calce

his defense costs as paid or incurred during the course of this litigation?




9997597.7/SP/38371/0105/060118         12
                                 Statement of Facts

The Parties

         Relator John Calce is a manager of Plaintiff and Real Party in In-

terest Centurion Logistics LLC. (MR.4, 338, 353, 872.)

         Centurion Logistics was formed by Calce and others to pursue a

project to purchase real property in Reeves County, Texas. (MR.4-5,

872.)

The Lawsuit

         In June 2016, Centurion Logistics brought this suit against Calce

and several other defendants relating to an alleged railway-terminal

development project. (MR.1-23.) Centurion Logistics generally claims

that Calce and the other defendants caused Centurion Logistics to lose

its interest in certain property, thus depriving it of the opportunity to

construct a railway terminal for crude oil on that property. (Id.)

         Against Calce, Centurion Logistics asserts claims for (1) breach of

fiduciary duty as a manager of the company, (2) unjust enrichment, and

(3) aiding and abetting fraudulent concealment. (MR.12-13, 15-17, 18-

19.) Centurion Logistics later amended its petition, adding claims




9997597.7/SP/38371/0105/060118          13
against Calce for theft liability, tortious interference with contract,

fraudulent inducement, and promissory estoppel. (MR.894-97.)

         Since answering in this case, Calce has incurred, and continues to

incur, significant expenses in defending against the claims that have

been brought against him. (See MR.338.)

Calce’s Right to Immediate Reimbursement of Defense Costs

         It is undisputed that Calce is a manager of Centurion Logistics.

(MR.4, 782.) Calce is, as a result, an “Indemnified Person” under Centu-

rion Logistics’ Company Agreement. (Company Agreement § 1.1,

MR.346.)

         Section 6.2 of the Company Agreement requires Centurion Logis-

tics to reimburse “Indemnified Persons,” such as Calce, for expenses

paid or incurred in defending himself in any “Proceeding”:

                   To the fullest extent permitted by applicable law,
                   and subject to Section 6.3, [Centurion Logistics]
                   indemnifies and holds harmless each Indemnified
                   Person from and against any Damages arising
                   from any Proceeding relating to the conduct of
                   [Centurion Logistics’] business or to any act or
                   omission by such Indemnified Person within the
                   scope of the Indemnified Person’s authority in the
                   course of [Centurion Logistics’] business or for
                   any misconduct or negligence on the part of any
                   other person that is an employee or agent of
                   [Centurion Logistics]. An Indemnified Person’s


9997597.7/SP/38371/0105/060118            14
                   expenses paid or incurred in defending itself
                   against any Proceeding shall be reimbursed
                   as paid or incurred. The right to indemnifica-
                   tion conferred in this Article VI is not exclusive of
                   any other right that any person may have or
                   hereafter acquire under any statute, agreement,
                   vote of Members, or otherwise.

(Company Agreement § 6.2, MR.357 (emphasis added).) Such reim-

bursement is to be made as the expenses are paid or incurred. (Id.)

         “Proceeding” is defined as “(a) any threatened, pending, or com-

pleted action or other proceeding, whether civil, criminal, administra-

tive, arbitrative, or investigative; (b) an appeal of any such proceeding,

and (c) any inquiry or investigation that could lead to any such proceed-

ing.” (Company Agreement § 1.1, MR.347.) Centurion Logistics does not

dispute that this case is a “Proceeding” as defined by the Company

Agreement. (MR.392.)

         In the event an Indemnified Person is later determined not to be

entitled to any expense-reimbursement payments made, the Indemni-

fied Person is required to repay such amounts to Centurion Logistics.

(Company Agreement § 6.3(c), MR.357-58.)




9997597.7/SP/38371/0105/060118              15
Centurion Logistics’ Refusal to Reimburse Calce’s Costs

         In August 2017, Calce requested that Centurion Logistics, pursu-

ant to Section 6.2 of the Agreement, (1) reimburse Calce the expenses

he had incurred as of July 31, 2017, plus an additional $50,000 to be

applied to future expenses as they are incurred, and (2) agree to reim-

burse Calce the additional expenses, in excess of such $50,000 ad-

vancement, that he pays or incurs in his defense of the suit as such ex-

penses are paid or incurred. (MR.388-89.).

         Calce’s requested stated: “Pursuant to Section 6.3 of the [Compa-

ny] Agreement, Mr. Calce hereby affirms that it is his good faith belief

that he has met the standard of conduct necessary for indemnification

under Section 6.3.” (MR.389.) The request also provides that “Mr. Calce

further agrees to repay any amount that is paid or reimbursed by Cen-

turion Logistics, pursuant to Section 6.2, if it is determined by a court of

competent jurisdiction that Mr. Calce did not meet the aforementioned

standard or if indemnification is otherwise determined to be prohibited

by law.” (Id.)

         Centurion Logistics denied Calce’s request for reimbursement.

(MR.391-93.) Despite denying the request, however, Centurion Logistics



9997597.7/SP/38371/0105/060118       16
conceded that Calce is an “Indemnified Person” and that this litigation

is a “Proceeding” as those terms are defined in the Company Agree-

ment. (MR.392.) To date, Centurion Logistics has not reimbursed Calce

any amount for the expenses he has paid and incurred in defending

himself against the claims brought against him in this case. (MR.338.)

Procedural Background

         Calce filed a counterclaim asserting his right to immediate reim-

bursement of his defense costs. (MR.24-172, 173-321.) To compel com-

pliance with Centurion Logistics’ reimbursement obligation, Calce filed

a motion for partial summary judgment. (MR.322-405.) By that motion,

Calce sought a declaration that Centurion Logistics is required to reim-

burse his expenses, including attorney’s fees, paid or incurred in defend-

ing himself in this case. (MR.334.) The motion also sought to require

Centurion Logistics to reimburse future expenses within 10 days of Cal-

ce’s submission of such expenses to Centurion Logistics. (Id.) On

May 21, 2018, the trial court denied Calce’s motion. (MR.904-05.)




9997597.7/SP/38371/0105/060118       17
                                 Summary of the Argument

         Centurion Logistics’ Company Agreement provides that, as a

manager, Relator John Calce is entitled to reimbursement of his costs of

defense in any “Proceeding.” Centurion Logistics admits that this case

is a “Proceeding.” As a result, Calce is contractually entitled to reim-

bursement of any expenses he pays or incurs in defending himself in

this lawsuit, including attorney’s fees, as they are paid or incurred.

         Calce’s right to reimbursement of defense costs is separate and

distinct from any right he may have to indemnification from Centurion

Logistics. Calce’s right to ongoing reimbursement of his expenses dur-

ing the course of this case is supported by the Company Agreement,

Texas case law, and the Texas Business & Organizations Code.

         The trial court’s refusal to enforce Centurion Logistics’ obligation

to advance Calce his defense costs has the effect of permanently depriv-

ing Calce of the benefit of this substantive right. By the time this case

proceeds to trial and an appeal becomes available, the issue will be

moot. Accordingly, mandamus relief is necessary. In re Aguilar, 344

S.W.3d 41, 55 (Tex. App.—El Paso 2011, orig. proceeding).




9997597.7/SP/38371/0105/060118             18
                                 Argument

I.       Standard for Mandamus Relief

         Mandamus relief is warranted to correct a clear abuse of discre-

tion when there is no adequate appellate remedy. In re State Farm

Lloyds, 520 S.W.3d 595, 604 (Tex. 2018).

         When deciding legal principles, a trial court has no discretion to

misinterpret or misapply the law. Walker v. Packer, 827 S.W.2d 833,

840 (Tex. 1992). Thus a failure to correctly analyze or apply the law

constitutes an abuse of discretion. In re Nationwide Ins., 494 S.W.3d

708, 712 (Tex. 2016). A trial court’s erroneous legal conclusion is an

abuse of discretion even if the law is unsettled. Huie v. DeShazo, 922

S.W.2d 920, 927-28 (Tex. 1996).

         Determining whether an appellate remedy is adequate involves

balancing “practical and prudential” considerations, such as the inevi-

tability of reversal, the impairment of important substantive and proce-

dural rights, the opportunity to give direction and guidance on the law

that would otherwise be lost, and the waste of judicial resources on the

proceeding. See In re Essex Ins., 450 S.W.3d 524, 528 (Tex. 2014); In re

Team Rocket, L.P., 256 S.W.3d 257, 262 (Tex. 2008); In re Prudential



9997597.7/SP/38371/0105/060118        19
Ins. Co. of Am., 148 S.W.3d 124, 136 (Tex. 2004). The adequacy of an

appeal depends on the facts of each case. In re McAllen Med. Ctr., Inc.,

275 S.W.3d 458, 469 (Tex. 2008). An appellate remedy is inadequate

when the benefits of mandamus review are outweighed by the detri-

ments. In re Coppola, 535 S.W.3d 506, 509 (Tex. 2017); In re Essex, 450

S.W.3d at 528; In re Prudential, 148 S.W.3d at 136.

         If a trial court’s refusal to grant particular relief renders the sub-

ject matter of an appeal illusory, the party seeking relief has no ade-

quate remedy by appeal. See, e.g., In re AIU Ins., 148 S.W.3d 109, 115-

17 (Tex. 2014) (granting mandamus to enforce forum-selection clause; to

do otherwise would defeat the purpose of the clause); In re Dickason,

987 S.W.2d 570, 571 (Tex. 1998) (granting mandamus to prevent retrial

because appeal after second trial would be pointless). Appeal following a

trial is inadequate if the very act of proceeding to trial would defeat the

substantive right at issue. In re McAllen Med. Ctr., 275 S.W.3d at 465.


II.      Calce has a clear and immediate right to advancement of
         his defense costs.

         Centurion Logistics’ Company Agreement requires it to reimburse

the defense expenses of “Indemnified Persons” as they are paid or in-

curred during the course of a “Proceeding.” (Company Agreement § 6.2,

9997597.7/SP/38371/0105/060118         20
MR.357.) Centurion Logistics does not dispute that Calce is an “Indem-

nified Person” and that this suit is a “Proceeding.” (MR.392.)

         By his motion, Calce sought only to establish his right to ad-

vancement of defense costs, not his right to indemnification. These

rights are often conflated, but they are distinct concepts with different

standards. At this point in the litigation, Calce does not seek to estab-

lish that he is entitled to indemnification from Centurion Logistics.

However, because Calce’s right to advancement of defense costs is clear,

and because that right will be irretrievably lost if not enforced pendente

lite, the trial court was obligated to order Centurion Logistics to reim-

burse and advance those costs.

         A.        The right to advancement of defense costs and the
                   right to indemnification are separate and distinct
                   concepts.

         To adequately demonstrate Calce’s entitlement to the relief re-

quested, it is important to contrast the difference between the right to

advancement or reimbursement of expenses, on the one hand, and the

right to indemnification for such expenses, on the other.

         “Advancement” generally refers to the right of a director or officer

of a company to receive an advance for expenses that he or she incurs in



9997597.7/SP/38371/0105/060118          21
a legal proceeding before its final disposition. Richard A. Rossman, et

al., A Primer of Advancement of Defense Costs: The Rights and Duties of

Officers and Corporations, 85 U. Det. Mercy L. Rev. 29, 53 (2007). “Alt-

hough the right to indemnification and advancement are correlative,

they are separate and distinct legal actions.” In re Aguilar, 344 S.W.3d

46 (Tex. App.—El Paso 2011, orig. proceeding) (quoting Homestore, Inc.

v. Tafeen, 888 A.2d 204, 212 (Del. 2005)). For instance, an individual ul-

timately determined ineligible for indemnification may still be entitled

to advancement of defense costs before the right to indemnification is

decided. See Rossman, 85 U. Det. Mercy L. Rev. at 53.

         These concepts were extensively analyzed in In re Aguilar, which

is strikingly similar to the present case. In that case, Aguilar and an-

other individual formed Perspectiva Group, Inc. Aguilar, 344 S.W.3d at

44. Aguilar was an officer and director of Perspectiva. Perspectiva sued

Aguilar alleging that he had breached his fiduciary duties to the com-

pany and engaged in a conspiracy. Perspectiva later added claims ac-

cusing Aguilar and his daughter of forming a company that competed

with Perspectiva, similar to the allegations made here by Centurion Lo-

gistics against Calce. As the lawsuit proceeded, Aguilar’s attorney—



9997597.7/SP/38371/0105/060118       22
pursuant to Perspectiva’s bylaws1—sent Perspectiva’s attorney a letter

requesting that Perspectiva advance Aguilar’s defense costs, including

attorneys’ fees. Id. Perspectiva, like Centurion Logistics, denied Agui-

lar’s advancement 2 request. See id. at 45. The trial court denied Agui-

lar’s motion to require Perspectiva to advance or reimburse his defense

costs. Id. The court of appeals conditionally granted Aguilar’s petition

for a writ of mandamus, directing the trial court to (1) vacate its order

denying Aguilar’s motion regarding advancement and (2) enter an order

granting the motion. Id. at 56.

         In analyzing the issue, the Aguilar court first noted that Article

2.02-1 of the Texas Business Corporation Act expressly allowed Texas

corporations to advance litigation expenses to its directors and that the


1 The advancement provision in Aguilar was contained in the company’s bylaws, ra-
ther than a contract among the parties, but the distinction makes no difference. “In
construing the bylaws, [courts] apply the rules that govern the interpretation of
contracts.” Aguilar, 344 S.W.3d at 49; see also Arch Ins. Co. v. U.S. Youth Soccer
Ass’n, No. 05-12-00596-CV, 2014 WL 2941372, 2014 Tex. App. LEXIS 5068, at *13
(Tex.     App.—Dallas      May     12,     2014,     no     pet.)   (mem.      op.);
 v. Davis, No. 14-12-01053-CV, 2013 WL 6095723, 2013 Tex. App. LEXIS 14122, at
*9 (Tex. App.—Houston [14th Dist.] Nov. 19, 2013, no pet.) (mem. op.).
2 The Aguilar case discusses “advancement” of expenses and the Centurion Logistics
Company Agreement uses the term “reimbursement” of expenses as paid or in-
curred, but in practice the concepts are the same. Both refer to the right of a party
to have defense costs paid or reimbursed by another as they are incurred, rather
than waiting until the conclusion of litigation.




9997597.7/SP/38371/0105/060118           23
applicable section of Perspectiva’s bylaws was nearly identical to the

statutory language. Id. at 45-46. Article 2.02-1 of the Business Corpora-

tion Act is now Section 8.104 of the Business Organizations Code. See

Tex. Bus. Orgs. Code § 8.104. 3 As in Aguilar, the language of Section 6.2

of Centurion Logistics’ Company Agreement is consistent with the lan-

guage of Section 8.104. Compare Company Agreement § 6.2 (MR.357)

with Tex. Bus. Orgs. Code § 8.104.

         The Aguilar court discussed the lack of Texas case law addressing

the right to advancement or reimbursement of defense costs: “There are

no Texas cases concerning advancement under the Business Corpora-

tion Act or the Business Organizations Code. But the courts of Dela-

ware have addressed advancement on numerous occasions.” Aguilar,




3The prior and current statutes are the same in all material respects. Compare Tex.
Bus. Corp. Act art. 2.02-1 with Tex. Bus. Orgs. Code § 8.104.




9997597.7/SP/38371/0105/060118          24
344 S.W.3d at 46. It is common for Texas courts to look to Delaware law

for guidance regarding unsettled/undeveloped areas of corporate law. 4

         The Delaware Supreme Court has explained that “‘[a]dvancement

is an especially important corollary to indemnification’ because it pro-

vides corporate officials with immediate interim relief from the burden

of paying for a defense.” See Aguilar, 344 S.W.3d at 46 (quoting Home-

store, Inc. v. Tafeen, 888 A.2d 204, 211 (Del. 2005)). “Although the right

to indemnification and advancement are correlative, they are separate

and distinct legal actions.” Id. (quoting Homestore, 888 A.2d at 212).

Perhaps most importantly, “[t]he right to advancement is not depend-

ent on the right to indemnification.” Id. (citing Homestore, 888 A.2d at

212) (emphasis added).



4 “Delaware has been described as ‘the Mother Court of corporate law.’” Aguilar,
344 S.W.3d at 47 (citing Kamen v. Kemper Fin. Servs., Inc., 908 F.2d 1338, 1343
(7th Cir. 1990), rev’d on other grounds, 500 U.S. 90 (1991)). “Courts throughout the
country look to Delaware for guidance on matters of corporate law.” Id. (citing Neu-
robehaviorial Assocs., P.A. v. Cypress Creek Hosp., Inc., 995 S.W.2d 326, 332 n.12
(Tex. App.—Houston [1st Dist.] 1999, no pet.) (turning to Delaware corporate law
for guidance regarding “winding-up” because there were no Texas cases addressing
the issue)). “The law of advancement, in particular, is ‘a Delaware specialty.’” Id.
(citing Int’l Airport Ctrs., LLC v. Citrin, 455 F.3d 749, 750 (7th Cir. 2006)). “To the
limited extent that there is law [regarding advancement] outside Delaware, it is the
same as the law in Delaware.” Id. (quoting Stephen A. Radin, “Sinners Who Find
Religion”: Advancement of Litigation Expenses to Corporate Officials Accused of
Wrongdoing, 25 Rev. Litig. 251, 271 (2006)).




9997597.7/SP/38371/0105/060118            25
         The distinction between advancement and indemnification is vi-

tally important to the determination of Calce’s immediate right to de-

fense costs because it demonstrates that Calce’s alleged conduct, com-

plained of by Centurion Logistics in this case, is irrelevant to his right

to immediate reimbursement of defense costs.

         B.        Centurion Logistics cannot rely on its own allegations
                   to deny Calce’s right to advancement of defense costs.

         In denying Calce’s request for reimbursement, Centurion Logistics

relied at least in part on its own allegations in this case—specifically

that Calce (1) was not acting “within the scope of [his] authority in

course of the Company’s business” and (2) was engaging in “intentional

misconduct” and a “knowing violation of law.” (MR.391-92.) These are

mere allegations for which Centurion Logistics bears the burden of

proof. Centurion Logistics may not simply assume the role of accuser

and fact-finder in denying Calce’s contractual rights. More importantly,

these allegations are irrelevant to the determination of whether Calce is

entitled to advancement and reimbursement of his defense costs.

         In Aguilar, Perspectiva similarly denied Aguilar’s request for ad-

vancement on the basis that Aguilar purportedly had unclean hands

due to his alleged breaches of fiduciary duties. See Aguilar, 344 S.W.3d


9997597.7/SP/38371/0105/060118          26
at 46. The Aguilar court explained that “[u]nder Delaware law, ad-

vancement is allowed even when the official seeking advancement is be-

ing sued by the corporation that must advance the litigation expenses”;

“Delaware case law is replete with insider trading cases in which execu-

tives’ expenses are advanced despite allegations of defrauding the cor-

poration or its stockholders of millions of dollars.” Id. at 47 (citing

James River Mgmt. Co., Inc. v. Kehoe, 674 F. Supp. 2d 745, 750 (E.D.

Va. 2009)). The Aguilar court further noted that “[a]dvancement claims

are frequently granted when, as in this case, the corporation is suing an

official for breach of fiduciary duty.” Id.

         The same situation exists here: Calce is being sued for breach of

fiduciary duty. (MR.12-13, 886-87.) As a matter of law, Centurion Logis-

tics “cannot defend against the advancement claim on the ground that it

now believes the fiduciary [Calce] to have been unfaithful because it is

in those very cases that the right to advancement attaches most

strongly.” Aguilar, 344 S.W.3d at 47 (citing Kehoe, 674 F. Supp. 2d at

750) (internal quotations omitted) (emphasis added). As the Delaware

Court of Chancery has explained, to rule otherwise would render such

protections for corporate officers largely meaningless:



9997597.7/SP/38371/0105/060118        27
                   It is not uncommon for corporate directors, offic-
                   ers, and employees to be sued for breach of the fi-
                   duciary duty of loyalty [i.e., exactly what Calce is
                   being sued for here], and to have to defend claims
                   that they took official action for the primary pur-
                   pose of diverting corporate resources to their own
                   pocketbooks . . . . Therefore, it is highly problem-
                   atic to make the advancement right of such offi-
                   cials dependent on the motivation ascribed to
                   their conduct by the suing parties. To do so would
                   be to largely vitiate the protections afforded by
                   [statutory] and contractual advancement rights.

Reddy v. Elec. Data Sys. Corp., C.A. No. 19467, 2002 Del. Ch. LEXIS 69,

at *15-16 (Del. Ch. June 18, 2002); see also Aguilar, 344 S.W.3d at 48

(rejecting proposition that “the entitlement to advancement hinges on

proof that the director did not violate his fiduciary duties”).

         Calce’s alleged conduct is irrelevant for purposes of determining

whether Calce is entitled to advancement and reimbursement of his de-

fense costs. See Aguilar, 344 S.W.3d at 48 (citing Reddy, 2002 Del. Ch.

LEXIS 69, at *28-29) (providing that any other result “would turn every

advancement case into a trial on the merits of the underlying claims of

official misconduct.”)). Rather, the determinative question is whether

the terms of the Company Agreement afford Calce the right to ad-

vancement and reimbursement of his defense costs. The answer is un-

questionably “yes.”


9997597.7/SP/38371/0105/060118             28
         C.        Calce’s contractual right to advancement and reim-
                   bursement is unambiguous and mandatory.

                   1.        The terms of the Company Agreement are unam-
                             biguous.

         The interpretation of an unambiguous contract is a question of

law for the court. See Moayedi v. Interstate 35/Chisam Rd., L.P., 438

S.W.3d 1, 7 (Tex. 2014). Likewise, “[t]he question of whether a contract

is ambiguous is one of law for the court.” Peterson v. Farmers Tex. Cnty.

Mut. Ins. Co., No. 05-15-00678-CV, 2016 WL 3448067, 2016 Tex. App.

LEXIS 6586, at *8 (Tex. App.—Dallas June 22, 2016, no pet.) (mem. op.)

(citing Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983)). A contract is

not ambiguous if, like the Company Agreement, “the contract’s lan-

guage can be given a certain or definite meaning.” Id. (citing El Paso

Field Servs., L.P. v. MasTec N. Am., Inc., 389 S.W.3d 802, 806 (Tex.

2012)). The mere fact that the “parties advance different interpretations

of a contract does not necessarily mean that the contract is ambiguous.”

PopCap Games, Inc. v. MumboJumbo, LLC, 350 S.W.3d 699, 707 (Tex.

App.—Dallas 2011, pet. denied).

         “In construing a written contract, the primary concern of the court

is to ascertain the true intentions of the parties as expressed in the in-

strument.” Moayedi, 438 S.W.3d at 7 (emphasis added). “Absent a find-

9997597.7/SP/38371/0105/060118             29
ing of ambiguity, a court must interpret the meaning and intent of a

contract from the four corners of the document without the aid of ex-

trinsic evidence.” Peterson, 2016 Tex. App. LEXIS 6586, at *9; see also

Sacks v. Haden, 266 S.W.3d 447, 450-51 (Tex. 2008) (quoting Nat’l Un-

ion Fire Ins. Co. of Pittsburgh, Penn. v. CBI Indus. Inc., 907 S.W.2d 517,

520 (Tex. 1995)) (providing that “[o]nly where a contract is ambiguous

may a court consider the parties’ interpretation and ‘admit extraneous

evidence to determine the true meaning of the instrument’”). Moreover,

“[u]nless the agreement shows the parties used a term in a technical or

different sense, the terms are given their plain, ordinary, and generally

accepted meaning.” Moayedi, 438 S.W.3d at 7 (citing Heritage Res., Inc.

v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996)). The relevant terms

of the Company Agreement are unambiguous and entitle Calce to ad-

vancement and reimbursement of his defense costs.

                   2.        Section 6.2 of the Agreement requires Centurion
                             Logistics to immediately reimburse Calce the ex-
                             penses he pays or incurs in defending himself.

         It is undisputed that Calce—as a manager of Centurion Logis-

tics—is an “Indemnified Person” under the Company Agreement.




9997597.7/SP/38371/0105/060118              30
(MR.4, 872.) It is further undisputed that this lawsuit constitutes a

“Proceeding” under the Company Agreement. (MR.347, 392, 404.)

         Section 6.2 of the Company Agreement provides that “[a]n Indem-

nified Person’s expenses paid or incurred in defending [himself] against

any Proceeding shall be reimbursed as paid or incurred.” (MR. 357

(emphasis added).) There are no qualifications or conditions to Calce’s

express right to advancement and reimbursement of defense costs. 5

         The Aguilar court—after noting that the term “shall” is generally

construed to be mandatory—held that Perspectiva had a mandatory du-

ty under the applicable section of its bylaws (which is strikingly similar




5 To the extent any preconditions exist, they have been met. Section 6.3(c) of the
Company Agreement provides that “[t]he Company [Centurion Logistics] may re-
quire, as a condition to the payment of any amounts pursuant to Section 6.2, that
the Indemnified Person provide to the Company (i) a written affirmation by the In-
demnified Person of the person’s good faith belief that the person has met the
standard of conduct necessary for indemnification under this Section 6.3; and (ii) a
written undertaking by or on behalf of the Indemnified Person to repay the amount
paid or reimbursed if the person has not met that standard or if indemnification is
otherwise prohibited by law.” (Company Agreement § 6.3(c), MR.357-58.) Calce has
already provided the prescribed written affirmation and has agreed in writing to
repay any amount that he is reimbursed by Centurion Logistics if it is ultimately
determined that he was not entitled to such payments. (MR.389.)




9997597.7/SP/38371/0105/060118          31
to the language of Section 6.2)6 to advance Aguilar’s defense costs. See

Aguilar, 344 S.W.3d at 51. Centurion Logistics is likewise required un-

der Section 6.2 of the Company Agreement to reimburse Calce the ex-

penses he pays or incurs in defending himself in this lawsuit as such

expenses are paid or incurred.

         In contrast, Calce’s right to indemnification is more limited: Calce

is only entitled to indemnification for “[d]amages arising from any Pro-

ceeding relating to the conduct of [Centurion Logistics’] business or to

any act or omission by such Indemnified Person within the scope of the

Indemnified Person’s authority in the course of [Centurion Logistics’]

business.” (Company Agreement § 6.2, MR.357.) Section 6.3 of the

Company Agreement similarly allows Centurion Logistics to avoid lia-

bility and its duty of indemnification if the Indemnified Person is found

liable for certain specified wrongs. (Id. § 6.3(a).) Such determinations,

unlike Calce’s right to advancement of defense costs during litigation,

are dependent on the ultimate resolution of claims asserted against


6 The pertinent section of Perspectiva’s bylaws provided: “Reasonable expenses in-
curred by a person who was, is, or threatened to be made a named defendant or re-
spondent in a Proceeding shall be paid or reimbursed by the Corporation.” Aguilar,
344 S.W.3d at 44.




9997597.7/SP/38371/0105/060118         32
Calce. For example, at the conclusion of this case, if it is determined

that Calce’s alleged actions did not relate to Centurion Logistics’ busi-

ness, he will not be entitled to indemnity and he may be required to re-

pay the amounts advanced to him under Section 6.2. (Id. § 6.3(c).)

         Requiring a company’s director or officer to prove their right to in-

demnification as a condition for the advancement of legal fees is imprac-

tical and imposes burdens that would often thwart the purpose of provi-

sions requiring the advancement of expenses. Heine v. Bank of Oswego,

144 F. Supp. 3d 1198, 1207 (D. Or. 2015) (citing Andrew J. Morrow, Jr.,

Appendix: Task Force Report, Oregon Revised Model Business Corpora-

tion Act, 30 Willamette L. Rev. 407, 464 (1994)).

                   3.        Calce’s reimbursable expenses include his
                             attorneys’ fees.

         The Aguilar court rejected the argument that “reasonable expens-

es” of defense should not include attorneys’ fees. Aguilar, 344 S.W.3d at

51-52. The Aguilar court explained that to exclude attorney’s fees “ren-

ders [the provision] insignificant and practically useless” because “[t]he

purpose of advancement is to relieve corporate officials from the burden

of paying the significant on-going expenses involved in litigation” and

that “[t]he burden of litigation comes from attorney’s fees, not copying


9997597.7/SP/38371/0105/060118              33
costs.” Id. at 51-52 (internal quotations and citations omitted). This rea-

soning is equally applicable here. Moreover, Section 8.001 of the Busi-

ness Organizations Code defines the term “expenses” to include “rea-

sonable attorney’s fees.” See Tex. Bus. Orgs. Code § 8.001(3)(B). Accord-

ingly, Calce’s right to advancement of “expenses” includes the attorneys’

fees he pays or incurs in his defense of this lawsuit.

         D.        Summary judgment was the appropriate vehicle for
                   Calce to establish his right to advancement of defense
                   costs.

         The Aguilar court held that summary judgment is the appropriate

procedural vehicle to seek advancement of defense costs. See Aguilar,

344 S.W.3d at 52-53. As the court explained, “By its very nature, ad-

vancement of expenses can occur only during the course of the trial

court proceedings.” Id. at 55 (citing Morgan v. Grace, Civ. A. No. 20430,

2003 WL 22461916, 2003 Del. Ch. LEXIS 113, at *4 (Del Ch. Oct. 29,

2003) (“The value of the right to advancement is that it is granted or

denied while the underlying action is pending.”)). “It is indemnification

of expenses that occurs at the conclusion of the case.” Id. Because Calce

only seeks reimbursement of his defense costs as this case progresses,

his claim is ripe for adjudication. Indeed, the only appropriate time for



9997597.7/SP/38371/0105/060118          34
such determination is now. Calce’s advancement claim will be moot at

the conclusion of the case. See id.


III. Mandamus is necessary.

         The trial court abused its discretion by refusing to require Centu-

rion Logistics to reimburse Calce’s defenses costs as he incurs them.

The determination of Calce’s right to advancement under the unambig-

uous terms of the Company Agreement is a pure question of law. As a

result, the trial court’s error in interpreting the Company Agreement is

an abuse of discretion which mandamus may be employed to remedy. In

re Nationwide Ins., 494 S.W.3d at 712; Huie, 922 S.W.2d at 927-28.

         Calce will have no adequate remedy by appeal because, as the

Aguilar court recognized, his claim will be moot by then. Aguilar, 344

S.W.3d at 55 (citing Reddy, 2002 Del. Ch. LEXIS 69, 2002 WL 1358761

at *9). As the Texas Supreme Court has explained, the “most frequent

use . . . of mandamus relief involves cases in which the very act of pro-

ceeding to trial—regardless of the outcome—would defeat the substan-

tive right involved.” In re McAllen Med. Ctr., 275 S.W.3d at 465. In such

cases, mandamus is not only proper, it is necessary. In re Prudential,

148 S.W.3d at 138.


9997597.7/SP/38371/0105/060118        35
                                        Prayer

         For the reasons set forth above, Relator John Calce respectfully

prays:

         (1)       that the Court grant a writ of mandamus and compel the
                   trial court to (a) vacate its order denying Calce’s Amended
                   Motion for Partial Summary Judgment Regarding Counter-
                   claim Against Centurion Logistics LLC and (b) render an or-
                   der granting that motion; and

         (2)       for such other and further relief to which he may be entitled
                   at law or in equity.

                                      Respectfully submitted,

                                      /s/ Jadd F. Masso
                                      P. Michael Jung
                                      Texas Bar No. 11054600
                                      michael.jung@clarkhillstrasburger.com
                                      David N. Kitner
                                      Texas Bar No. 11541500
                                      david.kitner@clarkhillstrasburger.com
                                      Jadd F. Masso
                                      Texas Bar No. 24041411
                                      jadd.masso@clarkhillstrasburger.com
                                      Chase J. Potter
                                      Texas Bar No. 24088245
                                      chase.potter@clarkhillstrasburger.com

                                      CLARK HILL STRASBURGER
                                      901 Main Street, Suite 6000
                                      Dallas, Texas 75202
                                      (214) 651-4300
                                      (214) 651-4330 (facsimile)




9997597.7/SP/38371/0105/060118            36
                                        James D. Shields
                                        Texas Bar No. 18260400
                                        jshields@shieldslegal.com
                                        David A. Shields
                                        Texas Bar No. 24083838
                                        dshields@shieldslegal.com

                                        SHIELDS LEGAL GROUP
                                        16301 Quorum Drive, Suite 250B
                                        Addison, Texas 75001
                                        (972) 788-2040
                                        (972) 788-4332 (facsimile)

                                        Attorneys for Relator


                                       Certification

     I hereby certify that I have reviewed this petition and have con-
cluded that every factual statement made in the petition is supported
by competent evidence included in the appendix or the record.

                                        /s/ Jadd F. Masso
                                        Jadd F. Masso



                                 Certificate Of Compliance

    In accordance with Tex. R. App. P. 9.4, I hereby certify that this
document contains 4,995 words.

                                        /s/ Jadd F. Masso
                                        Jadd F. Masso




9997597.7/SP/38371/0105/060118              37
                                 Certificate of Service

     I hereby certify that this document has been served on the follow-
ing via electronic service through the eFileTexas.gov electronic filing
system on June 4, 2018:

         Mark E. Torian
         mtorian@swtriallaw.com
         Darren P. Nicholson
         dnicholson@swtriallaw.com

         Sayles Werbner, P.C.
         4400 Renaissance Tower
         1201 Elm Street
         Dallas, Texas 75270

                                      /s/ Jadd F. Masso
                                      Jadd F. Masso




9997597.7/SP/38371/0105/060118            38
                                 Declaration Regarding Evidence

STATE OF TEXAS                               §
                                             §
COUNTY OF DALLAS                             §

     My name is Chase J. Potter. My date of birth is May 12, 1986. My
address is 901 Main Street, Suite 6000, Dallas, Texas 75202.

         I hereby declare under penalty of perjury as follows:

      1.  I am over eighteen years of age and am fully competent to
make this declaration. I am an attorney licensed by the Supreme Court
of Texas and am counsel for Relator in this proceeding and the trial
court.

     2.   The factual statements contained within this declaration are
within my personal knowledge and are true and correct.

      3.    The trial court rendered its order at issue in this Petition for
Writ of Mandamus based on the papers on file in this case and the ar-
guments of the attorneys. No testimony was received at any hearing
that led to the entry of the orders.

         Executed in Dallas County, Texas, on June 4, 2018.


                                                      /s/ Chase J. Potter
                                                      Chase J. Potter
                                                      Declarant




9997597.7/SP/38371/0105/060118                   39
                                     No. ___________________

                                      In the Court of Appeals
                                  Fifth District of Texas at Dallas



                                       In re JOHN CALCE
                                             Relator




  APPENDIX TO PETITION FOR WRIT OF MANDAMUS



         Date               Document                                   Record

  A. 6/26/16                Plaintiff’s Original Petition              001-023

  B. 11/22/17               John Calce’s First Amended Counterclaim    173-185
                            Against Centurion Logistics LLC and
                            Centurion Pecos Terminal LLC (excerpt)

  C. 11/22/17               John Calce’s Amended Motion for Partial    322-393
                            Summary Judgment Regarding
                            Counterclaim Against Centurion Logistics
                            LLC

  D. 5/2/18                 Plaintiff’s Second Amended Petition        867-903

  E. 5/21/18                Order Denying John Calce’s Amended         904-905
                            Motion for Partial Summary Judgment
                            Regarding Counterclaim Against Centurion
                            Logistics LLC

  F.                        Tex. Bus. Orgs. Code § 8.104




10000281.1/SP/38371/0105/060218
                                  Declaration of Chase J. Potter

STATE OF TEXAS                                §
                                              §
COUNTY OF DALLAS                              §


     My name is Chase J. Potter. My date of birth is May 12, 1986. My
address is 901 Main Street, Suite 6000, Dallas, Texas 75202.

         I hereby declare under penalty of perjury as follows:

      1.   I am over eighteen years of age and am fully competent to
make this declaration. I am an attorney licensed by the Supreme Court
of Texas and am counsel for Relator John Calce in this case.

     2.   The factual statements contained within this instrument are
within my personal knowledge and are true and correct.

     3.    The copies of the pleadings, motions, and other documents
included in this Appendix to Petition for Writ of Mandamus are true
and correct copies of these documents as filed in the trial court.

         Executed in Dallas County, Texas, on June 4, 2018.


                                                   /s/ Chase J. Potter
                                                   Chase J. Potter
                                                   Declarant




10000281.1/SP/38371/0105/060118
                                                                                                               FILED
                                                                                                   DALLAS COUNTY
 7 CT-ATTY                                                                                     6/27/2016 11:01:53 AM
                                                                                                      FELICIA PITRE
                                                                                                    DISTRICT CLERK


                                           DC-16-07706                                        Freeney Anita
                                CAUSE NO. -

CENTURION LOGISTICS LLC,                     §               IN THE DISTRICT COURT OF
individually and derivatively on behalf of   §
CENTURION PECOS TERMINAL LLC,                §
a Texas Limited Liability Company,           §               DALLAS COUNTY, TEXAS
                                             §
                          Plaintiffs         §
                                             §
vs.                                          §
                                             §
JAMES BALLENGEE, BALLENGEE                   §
INTERESTS, LLC, JOHN CALCE,                  §
STAMPEDE TX ENERGY, LLC,                     §
CENTURION MIDSTREAM GROUP, LLC,              §
CENTURION TERMINALS, LLC                     §
                                             §
                          Defendants,        §           B-44TH
                                             §                      JUDICIAL DISTRICT
and CENTURION PECOS TERMINAL                 §
LLC, a Texas Limited Liability Company       §
                                             §
                          Nominal Defendant. §

                              PLAINTIFF’S ORIGINAL PETITION


           Plaintiff Centurion Logistics LLC (“Centurion Logistics”) files this Original Petition

individually and derivatively on behalf of Centurion Pecos Terminals LLC (“Centurion Pecos”)

against James Ballengee (“Ballengee”), Ballengee Interests, LLC (“Ballengee Interests”), John

Calce (“Calce”), Stampede TX Energy, LLC (“Stampede”), Centurion Midstream Group, LLC

(“Centurion Midstream”), and Centurion Terminals, LLC (“Centurion Terminals”), bringing

claims directly and derivatively on behalf of Centurion Pecos LLC for: breach of fiduciary duty,

aiding and abetting breaches of fiduciary duty, money had and received (unjust enrichment),

fraudulent concealment, aiding and abetting fraudulent concealment, and declaratory judgment.

Accordingly, Plaintiff would respectfully show the Court as follows:




PLAINTIFF’S ORIGINAL PETITION                                                         Page 1 of 23
307338_1

                                                                                                     MR.001
                                                   I.

                                 DISCOVERY CONTROL PLAN

           1.   Pursuant to Texas Rules of Civil Procedure 190.1-190.6, Plaintiff hereby

 designates that discovery will be conducted under Level 3. Pursuant to Rule 47 of the Texas

 Rules of Civil Procedure, at this time, Plaintiffs seek monetary relief, exclusively in the form of

 interest, costs, and attorneys’ incurred or to be incurred in excess of $1,000,000.

                                                   II.

                                              PARTIES

           2.   Plaintiff Centurion Logistics is a Texas limited liability company, with its

principal office in Dallas, Texas. Centurion Logistics is a member and manager of Centurion

Pecos.      The members of Centurion Logistics are: Marc Marrocco (“Marrocco”), Antonio

Albanese (“Albanese”), and TXC Energy LLC, an affiliate of Calce.

           3.   Nominal Defendant Centurion Pecos is a Texas limited liability company, with its

principal office in Dallas, Texas. The current member and manager of Centurion Pecos is

Centurion Logistics. Stampede was a member and manager of Centurion Pecos until June 13,

2016. Centurion Pecos may be served through service on its registered agent, John Calce, at

15851 Dallas North Parkway, Suite 650, Addison, TX 75001.

           4.   Defendant Ballengee is an individual residing in Dallas County, Texas. He may

be personally served at 3838 Oak Lawn Avenue, Suite 1150, Dallas, Texas 75219 or wherever he

may be found. Ballengee is a member and manager of Defendant Ballengee Interests.

           5.   Defendant Ballengee Interests is a Louisiana limited liability company. Ballengee

is a managing member of Ballengee Interests. Ballengee Interests may be served by serving its




PLAINTIFF’S ORIGINAL PETITION                                                           Page 2 of 23
307338_1

                                                                                                       MR.002
Texas registered agent, National Registered Agents, Inc., at 1999 Bryan St., Suite 900, Dallas,

Texas 75201.

           6.     Defendant Calce is an individual residing at 5601 Preakness Lane, Plano, TX

75093. He may be served at this residence or wherever he may be found. .

           7.     Defendant Stampede is a Texas limited liability company, with its principal place

of business in Dallas, Texas. Stampede was a manager and member of Centurion Pecos, but was

removed as a manager and member on June 13, 2016. Stampede may be served, by serving its

registered agent, Blumberg Excelsior Corporate Services, Inc., at 814 San Jacinto Boulevard,

Suite 303, Austin, TX 78701.

           8.     Defendant Centurion Midstream is a Texas limited liability company, formed on

October 20, 2015, with its principal place of business in Dallas County, Texas. Calce is the

manager of Centurion Midstream. Centurion Midstream may be served, by serving its registered

agent, John Calce, at 15851 Dallas North Parkway, Suite 650, Addison, TX 75001.

           9.     Defendant Centurion Terminals is a Texas limited liability company, with a

principal place of business in Dallas County, Texas. By information and belief, Centurion

Terminals is an entity controlled by Defendant Calce. The manager of Centurion Terminals is

58C, LLC, a Texas limited liability company, whose manager is LV III, LLC, whose manager is

Calce. 1 Centurion Terminals may be served, by serving its registered agent, John Calce, at

15851 Dallas North Parkway, Suite 650, Addison, TX 75001.




1
 The repeated use of the number 58 in these entities is evidence that they are the creation of Calce: Calce is very
proud of having lettered as an offensive lineman on a Football Championship Subdivision team, where his jersey
number was 58.

PLAINTIFF’S ORIGINAL PETITION                                                                           Page 3 of 23
307338_1

                                                                                                                       MR.003
                                                III.

                                 JURISDICTION AND VENUE

           10.   This Court has jurisdiction over this case because the amount in controversy is in

excess of the Court’s minimum jurisdictional limits. Moreover, Defendants have engaged in

sufficient conduct in the State of Texas to confer jurisdiction over them.         The Court has

jurisdiction over the subject matter of the action because a substantial portion of the events

giving rise to Plaintiffs’ claims occurred in Dallas County, Texas.

           11.   Venue is proper in Dallas County, Texas, pursuant to Texas Civil Practice and

Remedies Code Sections 15.002-15.007, because it is the county where all or a substantial part of

the events or omissions giving rise to the claims occurred as detailed in the following paragraphs.

                                                 IV.

                                     BACKGROUND FACTS

A.         Creation of Centurion Logistics and Centurion Pecos

           12.   Several years ago, Marrocco and Albanese were looking for ways to use their

expertise in real estate to invest in projects related to the booming oil and gas industry. During

their investigations, Marrocco became better acquainted with Calce, who worked in the oil and

gas industry, and whom Albanese happened to know from outside his business dealings. After

some investigation, Marrocco, Albanese and Calce decided to pursue a project to purchase real

estate and to develop a railway terminal for the shipping of crude oil. In order to pursue that

project, Marrocco, Albanese and Calce formed Centurion Logistics on September 16, 2013.

Centurion Logistics is manager-managed and its managers are Marrocco, Albanese and Calce.

Under the company agreement of Centurion Logistics, a majority of the managers are required to

take any action.



PLAINTIFF’S ORIGINAL PETITION                                                          Page 4 of 23
307338_1

                                                                                                      MR.004
           13    Calce concluded that the geology in the area surrounding Pecos, Texas made it

likely that there would be significant demand for a crude shipping terminal there. Albanese used

his connections to obtain the interest of a possible anchor tenant who might want to ship

hydraulic-fracturing sand through a terminal in that area, as a way to build Centurion Logistics’

credibility with oil companies and the railroad. Marrocco identified, and placed under contract,

an approximately 177-acre parcel in Reeves County, Texas (the “First Parcel”) to use for the

terminal, and obtained a contract for Centurion Logistics to purchase it.

           14.   In order to obtain funds to purchase the First Parcel, Calce, Marrocco and

Albanese discussed bringing an equity partner into the Pecos project to contribute cash. Calce

offered two potential investors from the oil and gas industry with whom he was acquainted.

Because Marrocco had already begun to hear rumors that Calce had a reputation for self-dealing,

Marrocco proposed that Centurion Logistics work with the investor to whom he believed Calce

had fewer ties, namely Ballengee. Additionally, Ballengee’s company was already trucking

crude oil in the vicinity. Centurion Logistics and a predecessor of Stampede (which was an

ostensibly unrelated entity Ballengee used as a conduit for his investment, in order to conceal

any activities that might appear to compete with his current business) formed Centurion Pecos,

on September 11, 2014, and Centurion Logistics assigned to Centurion Pecos the contract to

purchase the First Parcel.

           15.   Ballengee agreed to contribute cash to Centurion Pecos, in order to purchase the

First Parcel without any liens or encumbrances. Shortly before the closing of the sale of the First

Parcel, however, Ballengee announced to Centurion Logistics that he would not simply

contribute cash, as he had represented, but would require that Centurion Pecos grant a deed of

trust to Texas Capital Bank (“TCB”), to secure payment of the loan that Ballengee would use to



PLAINTIFF’S ORIGINAL PETITION                                                          Page 5 of 23
307338_1

                                                                                                      MR.005
fund his contribution. Because Centurion Logistics had no other way to fund the purchase of the

First Parcel before the required closing date, and because the seller was already threatening to

sell to another purchaser, Centurion Logistics had no choice but to grant the deed of trust

Ballengee demanded, and the proceeds of the loan by TCB to Ballengee Interests were

contributed by Ballengee, through Stampede’s predecessor, and used to purchase the First Parcel

on September 19, 2014.

           16.   Centurion Logistics has since learned that Ballengee’s purpose in having

Centurion Pecos grant a deed of trust to TCB, was to create a mechanism by which Ballengee

could cause the property to be removed from Centurion Pecos through foreclosure; Ballengee

had more than adequate cash to fund the purchase of the First Parcel without taking a loan from

TCB.

           17.   Centurion Logistics determined that the terminal project could be expanded by

acquiring an approximately 300-acre parcel adjacent to the First Parcel (the “Second Parcel”).

Marrocco obtained a contract for an entity he controlled, in order to purchase the Second Parcel.

Marrocco was increasingly concerned about Calce’s reputation for underhandedness, and, as a

condition to assigning the purchase agreement to Centurion Pecos, insisted that Centurion

Logistics and Stampede amend and restate the company agreement of Centurion Pecos, in order

to remove Calce as the sole manager of Centurion Pecos, as of November, 2014.

           18.   Under the amended and restated company agreement of Centurion Pecos,

Centurion Logistics and Stampede were the members and managers of Centurion Pecos.

Centurion Pecos is manager-managed, and, under the amended and restated company agreement,

any action requires the consent of all managers.




PLAINTIFF’S ORIGINAL PETITION                                                        Page 6 of 23
307338_1

                                                                                                    MR.006
           19.   Again, at the closing of the Second Parcel, Ballengee insisted that Centurion

Pecos grant a deed of trust to the Second Parcel to TCB to secure a loan to Ballengee, rather than

fulfilling his representation to make a contribution of cash to purchase the Second Parcel without

liens or encumbrances. Again, Ballengee’s purpose, in causing Centurion Pecos to grant a deed

of trust, was to create a mechanism to remove the Second Parcel from Centurion Pecos. The

purchase of the Second Parcel closed on August 21, 2015. The First Parcel and the Second Parcel

are collectively referred to as the “Reeves County Property”.

           20.   Again, Ballengee did not provide the funds for the Second Parcel directly to

Centurion Pecos. Rather, he funneled the funds through Stampede because his participation in

the Centurion Pecos venture was circumscribed by a non-compete agreement related to one of

his previous businesses.

           21.   Both deeds of trust, granted at the closings of the Reeves County Property,

contain a cross-collateralization clause pledging the Reeves County Property as collateral for all

obligations of Ballengee Interests to TCB, even obligations not involving Centurion Pecos.

Purportedly, Calce signed both deeds of trust in his capacity as manager of Centurion Pecos,

although he was not a manager of Centurion Pecos at the time he signed the deed of trust to the

Second Parcel, and had no other authority to sign the second deed of trust for Centurion Pecos.

B.         Defendants’ Fraudulent Scheme Unfolds

           22.   In late 2015, Calce began communicating to Marrocco that Calce and Ballengee

wanted to bring other participants into the project, and wanted Marrocco and Albanese to take a

more passive role and a reduced share of the profits. In particular, Calce expressed a desire to

force Albanese out as a manager of Centurion Logistics, and to require Albanese to sell his

membership interest in Centurion Logistics for less than its fair value. Calce threatened that if



PLAINTIFF’S ORIGINAL PETITION                                                         Page 7 of 23
307338_1

                                                                                                     MR.007
Marrocco did not cooperate in removing Albanese from Centurion Logistics, Calce and

Ballengee would conspire to exclude Marrocco from participation in the terminal project, as

well; namely by removing the Reeves County Property from Centurion Pecos through

foreclosure. Marrocco refused to participate in removing Albanese from Centurion Logistics.

Calce and Ballengee subsequently asked for a meeting with Marrocco to negotiate a fair price for

Marrocco’s interest in Centurion Logistics, but the proposal proved to be a ruse to trick

Marrocco into attending an uncalled meeting of the managers of Centurion Pecos to approve an

“assignment and assumption agreement” with Ballengee Interests. Marrocco refused to attend

the meeting.

           23.   The actions of Ballengee and Calce demonstrate a scheme to move the Reeves

County Property out of Centurion Pecos and into an entity in which Marrocco and Albanese have

no interest, in order to deprive Marrocco and Albanese of their interests in the terminal project.

In addition to his affiliation with Centurion Logistics, Calce is President of Centurion

Midstream, an entity unrelated to either Centurion Logistics or Centurion Pecos. Centurion

Midstream, or another entity affiliated with Calce, has attempted to negotiate directly with Union

Pacific Railroad (“Union Pacific”) for the establishment of rail service to the Reeves County

Property, initially holding itself out as owning or representing the owner of the property and,

after Centurion Logistics notified Union Pacific that Centurion Midstream had no affiliation with

Centurion Pecos, by telling Union Pacific that Marrocco and Centurion Logistics were no longer

involved in the project, and that Centurion Midstream would own the Reeves County Property

“within a few weeks.”      On its website, Centurion Midstream claims to own the property

purchased by Centurion Pecos and purports to be creating a terminal at Pecos, Texas. Calce, as

President of Centurion Midstream, receives a salary and other benefits.



PLAINTIFF’S ORIGINAL PETITION                                                         Page 8 of 23
307338_1

                                                                                                     MR.008
           24.   In furtherance of this scheme, Calce, Ballengee and/or Stampede have, in addition

to the deeds of trust executed at the closings of the Reeves County Property, created a number of

unauthorized and/or fraudulent documents purporting to pledge the Reeves County Property or

create obligations of Centurion Pecos. These unauthorized transactions and documents were not

only concealed from Plaintiff, but, on information and belief have been created recently and

backdated.

           25.   In a transaction unrelated to the purchase of the Reeves County Property,

Ballengee Interests granted a promissory note to TCB dated January 6, 2015 for a line of credit

in the amount of $750,000. In order to secure the note, Calce executed a deed of trust to the First

Parcel, purportedly on behalf of Centurion Pecos as its manager. The January 6, 2015 deed of

trust also contained a cross-collateralization clause pledging the First Parcel as collateral for all

obligations of Ballengee Interests to TCB, even obligations not involving Centurion Pecos.

Calce was not a manager of Centurion Pecos in January, 2015, and had no other authority to sign

the January 6, 2015 deed of trust. The proceeds of the line of credit were not used for any

purpose related to the business of Centurion Pecos. Upon information and belief, they were

largely used to fund a different terminal project in Brownsville, Texas, owned by Calce.

Centurion Logistics was unaware of the January 6, 2015 deed of trust, and only discovered it

during a record search of Reeves County conducted in May 2016.

           26.   In October, 2015, around the time Calce began expressing a desire to remove

Albanese from Centurion Logistics, and shortly after Centurion Midstream was formed,

Ballengee Interests extended the term of the note to TCB, and filed an extension of the deed of

trust on the First Parcel to secure the note. Again, that extension was signed by Calce, as

manager of Centurion Pecos, although he was not a manager of Centurion Pecos at the time, and



PLAINTIFF’S ORIGINAL PETITION                                                            Page 9 of 23
307338_1

                                                                                                        MR.009
had no other authority to act on behalf of Centurion Pecos. Centurion Logistics and Centurion

Pecos were not aware of the extension of the deed of trust on the First Parcel, and only

discovered it during a record search of Reeves County conducted in May 2016. Ballengee’s and

Calce’s purpose in extending the deed of trust was to preserve the Ballengee Interests note as a

means to remove the First Parcel from Centurion Pecos.

           27.   In April 2016, without authority to act for Centurion Pecos, Stampede and Calce

created documents that purported to obligate Centurion Pecos to assume Ballengee Interests’

obligations under the notes from Ballengee Interests to TCB used to obtain the funds contributed

to purchase the Reeves County Property, and to grant Ballengee Interests a deed of trust to

secure the assumption. Centurion Pecos was unaware of these documents or the purported

unauthorized assumption until it received a “notice of default” dated April 28, 2016 from

Ballengee Interests for its purported failure to make interest payments under the assumption

agreement. Neither Centurion Pecos nor Centurion Logistics has ever been provided with copies

of the purported assumption agreement and deed of trust.

           28.   In addition, Calce created a note, dated on or about November 15, 2015,

purporting to obligate Centurion Pecos to make payments to Centurion Terminals, another entity

controlled by Calce. Centurion Pecos first learned of this note in a demand letter dated May 27,

2016. No note of this description was ever authorized by Centurion Pecos, and neither Centurion

Logistics nor Centurion Pecos has ever seen this purported note.

           29.   Ballengee Interests and Calce also created fraudulent notes by Centurion Pecos to

Ballengee Interests, dated September 16, 2014 and August 17, 2015. Centurion Pecos first

learned of these notes in demand letters dated May 25, 2016. Neither Centurion Logistics nor

Centurion Pecos has ever seen these purported notes.



PLAINTIFF’S ORIGINAL PETITION                                                        Page 10 of 23
307338_1

                                                                                                     MR.010
           30.   In furtherance of their scheme, Defendants are now threatening to use the

unauthorized and fraudulent documents to foreclose on the Reeves County Property. Centurion

Pecos has received letters from Ballengee Interests and Centurion Terminals demanding payment

of purported obligations that Centurion Pecos never, in fact, agreed to assume.

C.         Stampede’s Violations of the Company Agreement

           31.   Section 10 of the First Amended and Restated Company Agreement of Centurion

Pecos Terminal LLC (“Company Agreement”) sets forth the conditions under which a member

may transfer its membership interest. Section 10.4 states that a transfer shall not be permitted

unless:

                 [t]he transferor and transferee have delivered to the Company any
                 documents that the Board of Managers request to confirm that the
                 transfer satisfies the requirements of this Agreement to give effect
                 to the transfer, and to confirm the transferee’s agreement to be
                 bound by this Agreement as Assignee.

           32.   Pursuant to Section 10.1(a) of the Company Agreement, “transfer” includes “a

transfer by merger or other business combination.” Stampede’s predecessor, Stampede Energy,

LLC, a Louisiana limited liability company (“Stampede Louisiana”) was a member of Centurion

Pecos at the time that the Company Agreement was adopted. On January 20, 2016, Stampede

Louisiana was converted to Stampede. Stampede then engaged in mergers with Stampede

Energy, LLC, a Delaware limited liability company on March 2, 2016, and with Centurion

Brownsville Terminal, LLC, a Texas limited liability company, on February 4, 2016.

           33.   On April 30, 2016 and again on May 4, 2016, Centurion Logistics expressly

requested that Stampede and Centurion Brownsville Terminal, LLC provide the information

required by Section 10.4 of the Company Agreement. Stampede and Centurion Brownsville

Terminal, LLC failed and refused to provide the information required by the Company

Agreement.

PLAINTIFF’S ORIGINAL PETITION                                                           Page 11 of 23
307338_1

                                                                                                        MR.011
D.         Centurion Pecos Votes to Expel Stampede as Member and Manager

           34.   In order to address Stampede’s violations of the Company Agreement, Centurion

Logistics, on behalf of Centurion Pecos, on May 31, 2016, called a meeting of managers and

members of Centurion Pecos, which was held on June 13, 2016. At the meeting, Centurion

Logistics moved to remove Stampede as a member of Centurion Pecos based on Stampede’s

prohibited transfer of its membership interest. Because the motion involved removing Stampede

as a member, Stampede was an interested manager and not eligible to vote. Centurion Logistics,

the only manager eligible to vote on the motion, voted to remove Stampede as a member.

           35.   Subsequently, a meeting of the members of Centurion Pecos met to determine

whether Stampede should be removed as a manager because it had transferred its membership

interest in a prohibited transfer and engaged in other wrongful conduct that materially affected

the business of Centurion Pecos and its members, and had also engaged in conduct that had made

it not reasonably practicable to carry on the company business with Stampede. Centurion

Logistics, the only remaining member, voted to remove Stampede as a manager of Centurion

Pecos.

                                                  V.

                                      CAUSES OF ACTION

A.         First Cause of Action: Breach of Fiduciary Duty as to Calce

           36.   Plaintiff hereby restates and incorporates by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.




PLAINTIFF’S ORIGINAL PETITION                                                           Page 12 of 23
307338_1

                                                                                                        MR.012
           37.   As a manager of Centurion Logistics, Calce had a duty of loyalty to the company.

The duty of loyalty requires Calce to act in good faith and not allow personal interests to take

precedence over the interests of Centurion Logistics.

           38.   Calce also had a duty to disclose all important information concerning any

transaction, including any matters that might influence them to act in a manner prejudicial to

Centurion Logistics.

           39.   In violation of his fiduciary duties, Calce colluded with Stampede, Ballengee and

Ballengee Interests to engage in a series of fraudulent transactions which were contrary to the

interests of Centurion Pecos and Centurion Logistics. This pattern of misconduct is intended to

further Defendants’ plan, namely, to remove the Reeves County Property from Centurion Pecos

for use in their competing development, and to deprive Centurion Logistics of its share of any

profits from the terminal project. The entire scheme is an egregious breach of Calce’s duty of

loyalty and full disclosure.

           40.   By secretly encumbering Centurion Pecos’ assets, Calce has damaged the ability

of Centurion Logistics to conduct business and impaired the value of those assets.

           41.   Calce’s breaches of fiduciary duty proximately caused Centurion Logistics to

suffered damage and Calce has obtained benefits, which Calce should be required to forfeit. The

benefits Calce should be required to forfeit also include any remuneration he has received from

Centurion Midstream.

           42.   Calce’s breaches of fiduciary duty were intentional and, accordingly, Centurion

Logistics seeks, and should recover, exemplary damages against Calce.




PLAINTIFF’S ORIGINAL PETITION                                                        Page 13 of 23
307338_1

                                                                                                     MR.013
B.         Second Cause of Action: Breach of Fiduciary Duty as to Stampede

           43.   Plaintiff hereby restates and incorporates by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.

           44,   As a manager of Centurion Pecos, Stampede owed Centurion Pecos a duty of

loyalty. Further, Stampede owed Centurion Pecos a duty of candor, including a duty to disclose

information concerning its role in any transaction that would prejudice the interests of Centurion

Pecos.

           45.   Stampede violated its fiduciary duty by covertly engaging in a pattern of

transactions designed to deprive Centurion Pecos of the Reeves County Property, as well as

Centurion Pecos’ interest in the terminal project.

           46.   By secretly encumbering Centurion Pecos’ assets, Stampede has damaged the

ability of Centurion Pecos to conduct business and has impaired the value of those assets.

           47.   Stampede’s breaches of fiduciary duty have proximately caused Centurion Pecos

to suffer damage and Stampede has obtained benefits which Stampede should be required to

forfeit.

           48.   Stampede’s breaches of fiduciary duty were intentional and, accordingly,

Centurion Pecos seeks, and should recover, exemplary damages against Stampede.

C.         Third Cause of Action: Aiding and Abetting Breach of Fiduciary Duty

           49.   Plaintiff hereby restates and incorporates by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.

           50.   Centurion Midstream and Centurion Terminals assisted with, encouraged and

participated in breaches of fiduciary duty by Calce and Stampede. As set forth above, Calce and

Stampede had fiduciary duties of loyalty to Centurion Logistics and to Centurion Pecos and



PLAINTIFF’S ORIGINAL PETITION                                                           Page 14 of 23
307338_1

                                                                                                        MR.014
fiduciary duties to disclose any transactions that would be prejudicial to the chief objectives of

Centurion Logistics and Centurion Pecos.

           51.   Centurion Logistics and Centurion Pecos were created chiefly to purchase the

Reeves County Property and to develop a railway terminal in order to transport petroleum and

petroleum products. Rather than pursue these objectives with loyalty fiduciaries owe, Calce

assisted in the creation of Centurion Midstream to thwart the efforts of Centurion Logistics and

Centurion Pecos and to compete with these companies. Based on the content of the Centurion

Midstream website, Centurion Midstream is covertly assisting Calce in his plan to take over the

Reeves County Property, and to build the railway terminal for his own benefit and for the benefit

of Centurion Midstream.

           52.   Based on its affiliation with Calce, Centurion Terminals was aware that Calce was

not authorized to undertake any obligation to Centurion Terminals on behalf of Centurion Pecos.

Nonetheless, Centurion Terminals entered into the note and has threatened to enforce it.

           53.   The breaches of fiduciary duty of Calce and Stampede, committed with the

assistance of Centurion Midstream and Centurion Terminals, proximately caused Plaintiff to

suffer actual damages in an amount exceeding the minimum jurisdiction of the Court.

           54.   As Centurion Midstream’s and Centurion Terminals’ participation in the breaches

of fiduciary duty were intentional and exemplary damages are recoverable for the breaches of

fiduciary duty, Plaintiff prays for exemplary damages against Centurion Midstream and

Centurion Terminals.

D.         Fourth Cause of Action: Money Had and Received (Unjust Enrichment)

           55.   Plaintiff hereby restates and incorporates by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.



PLAINTIFF’S ORIGINAL PETITION                                                           Page 15 of 23
307338_1

                                                                                                        MR.015
           56.   A claim for money had and received arises when the defendant obtains money or

a benefit that in equity and good conscience belongs to the plaintiff. It is an equitable doctrine

applied to prevent unjust enrichment. A cause of action for money had and received is not based

on wrongdoing but, instead, looks only to the justice of the case and inquires whether the

defendant has received money that rightfully belongs to another. A claim for money had and

received is based upon the doctrine of unjust enrichment.

           57.   Further, where a defendant obtains a benefit from the plaintiff by fraud, duress, or

taking undue advantage, the plaintiff may recover money or property under the theory of unjust

enrichment.

           58.   Ballengee and Ballengee Interests colluded with Calce to encumber property of

Centurion Pecos to secure debts of Ballengee Interests, including the notes to purchase the

Reeves County Property and the $750,000 line of credit.

           59.   Ballengee and Ballengee Interests have, therefore, been unjustly enriched by

pledges of property to secure Ballengee Interests’ debt, including the $750,000 line of credit, and

unauthorized assumption of the Ballengee Interests’ obligations to TCB. Indeed, pursuant to the

cross-collateralization clauses, the deeds of trust pledged the Reeves County Property to secure

all Ballengee Interests’ debts to TCB, not merely those related to Centurion Pecos. Defendants

Ballengee and Ballengee Interests should be required to disgorge and to turn over to Centurion

Pecos any benefits obtained through these transactions.

           60.   By information and belief, Calce has received a salary and other benefits from

Centurion Midstream, in exchange for effectuating his and Ballengee’s plan, namely, to

fraudulently obtain ownership of the Reeves County Property. This remuneration constitutes

unjust enrichment.



PLAINTIFF’S ORIGINAL PETITION                                                           Page 16 of 23
307338_1

                                                                                                        MR.016
           61.   Centurion Midstream has developed, or plans to develop, a railway terminal in

competition with the terminal planned by Centurion Pecos. In so doing, Centurion Midstream,

through its aiding and abetting of breaches of fiduciary duty, has obtained, or will obtain in the

future, money that rightfully belongs to Centurion Pecos. These funds should be disgorged and

transferred to Centurion Pecos.

           62.   Centurion Midstream has been—and will be—unjustly enriched by its

interference with Plaintiff’s efforts to secure the Reeves County Property and develop the Pecos

terminal.

           63.   In obtaining these benefits, Defendants have acted with fraud and malice.

Accordingly, Plaintiff prays that these Defendants be found liable for exemplary damages.

E.         Fourth Cause of Action: Fraudulent Concealment

           64.   Plaintiff hereby restates and incorporates by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.

           65.   Ballengee and Ballengee Interests represented to Centurion Pecos that it would

make a capital contribution by purchasing the Reeves County Property on behalf of Centurion

Pecos. At the 11th hour, Ballengee and Ballengee Interests demanded that Centurion Pecos agree

to deeds of trust on the Reeves County Property. Ballengee and Ballengee Interests did not

disclose that the purpose of this demand was to eventually force a foreclosure on the Reeves

County Property in order to cut off Centurion Pecos’ interest in the terminal project.

           66.   Centurion Pecos justifiably relied on Ballengee’s and Ballengee Interests’

professions that their purpose was to invest in, and to promote, the Centurion Pecos terminal

project.




PLAINTIFF’S ORIGINAL PETITION                                                            Page 17 of 23
307338_1

                                                                                                         MR.017
           67.   Ballengee’s and Ballengee Interests’ failure to disclose their true intentions has

injured Centurion Logistics and Centurion Pecos, in that Defendants are now attempting to use

the TCB deeds of trust, as well as false and unauthorized documents, to complete their scheme to

obtain the Reeves County Property for the competing entity, Centurion Midstream.

           68.   The wrongful fraudulent acts and omissions have proximately caused Centurion

Logistics and Centurion Pecos to suffer damages. Because Defendants’ wrongful fraudulent acts

and omissions were conducted with intent, Plaintiff seeks both actual and exemplary damages.

F.         Fifth Cause of Action: Aiding and Abetting Fraudulent Concealment

           69.   Plaintiff hereby restates and incorporates by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.

           70.   Defendants Calce and Stampede provided knowing and intentional assistance to

the fraud committed by Ballengee and Ballengee Interests. Calce and Stampede were aware of

the fraudulent scheme and Stampede allowed itself to be used as a conduit through which

Ballengee Interests made its payments for the Reeves County Property. As fiduciaries, Calce

and Stampede had a heightened duty to disclose Ballengee’s true intent, but they remained silent.

Indeed, they actively furthered the scheme through their participation in the creation of false and

unauthorized transactions and the creation of fraudulent documents.

           71.   Calce’s and Stampede’s assistance and encouragement constituted a substantial

factor in causing the fraud.      Without their participation, it is unlikely that Ballengee and

Ballengee Interests could have attempted the scheme, given the limitations imposed on

Ballengee by the non-compete agreement. Moreover, these Defendants, through a series of

threatening communications, continue to push the fraudulent plan.




PLAINTIFF’S ORIGINAL PETITION                                                           Page 18 of 23
307338_1

                                                                                                        MR.018
           72.   Calce’s and Stampede’s participation in the fraudulent scheme has proximately

caused Centurion Logistics and Centurion Pecos to suffer damages. Because these Defendants’

participation in the wrongful fraudulent scheme was conducted with knowledge and intent,

Plaintiff seeks both actual and exemplary damages.

G.         Sixth Cause of Action: Declaratory Judgment

           73.   Plaintiff hereby restates and incorporates by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.

           74.   A justiciable controversy exists between Centurion Pecos and Stampede regarding

the status, rights, obligations and legal relations between Centurion Pecos and Stampede in

connection with the Company Agreement. The justiciable controversy concerns the right of

members and managers of Centurion Pecos to expel Stampede as a member and manager.

           75.   Pursuant to the terms of the Company Agreement, transfer of membership

interests is prohibited unless certain conditions were met.         Among the conditions is the

obligation of the transferor and transferee to provide information to assure that the transfer

comported with the Company Agreement and the transferee agreed to be bound by the Company

Agreement. Transfer of a membership interest includes any transfer by merger or business

combination.

           76.   Stampede or its predecessor transferred of its membership interest within the

definitions of the Company Agreement through one or more of three business transactions. First,

Stampede Energy, LLC, a Louisiana limited liability company, converted to Stampede. Second,

Stampede merged with Stampede Energy, LLC, a Delaware limited liability company. Third,

Stampede divided into two entities, Stampede and Centurion Brownsville Terminal, LLC, a

Texas limited liability company.



PLAINTIFF’S ORIGINAL PETITION                                                           Page 19 of 23
307338_1

                                                                                                        MR.019
           77.   Subsequently, both the transferor and transferee companies expressly refused to

provide information about the transactions, as required by the Company Agreement, for any

transfer of a membership interest to be permitted. Centurion Pecos duly called a meeting of the

managers and members of Centurion Pecos in order to discuss Stampede’s violations and its

removal as a member and manager.

           78.   At the June 13, 2016 meeting, Centurion Logistics, as manager of Centurion

Pecos, voted to remove Stampede as a member of Centurion Pecos. As the party whose removal

was at issue, Stampede was an interested manager excluded from voting.               Accordingly,

Stampede was removed as a member of Centurion Pecos.

           79.   Following the June 13, 2016 managers meeting, a meeting of members was held

to determine whether Stampede should be removed as a manager of Centurion Pecos for cause.

Centurion Logistics, the only remaining member, voted to expel Stampede, based on its

prohibited transfer of membership interest, as well as its other misconduct, as set forth in this

Petition.

           80.   In accordance with Tex. Civ. Prac. & Rem. Code § 37.001, et seq., Plaintiff seeks

a declaratory judgment against Defendant Stampede, wherein the Court declares that following:

           (a)   The June 13, 2016 meeting was a valid meeting under the Company
                 Agreement;

           (b)   The removal of Stampede as a member of Centurion Pecos was a valid,
                 binding and enforceable action of the managers of Centurion Pecos;

           (c)   The removal of Stampede as a manager of Centurion Pecos was a valid,
                 binding and enforceable action of the members of Centurion Pecos.

           81.   In addition, there is a real and justiciable controversy between Centurion Pecos,

on the one hand, and Ballengee, Ballengee Interests, and Centurion Terminals, on the other hand,

concerning the enforceability of certain financial obligations that Defendants purport were


PLAINTIFF’S ORIGINAL PETITION                                                        Page 20 of 23
307338_1

                                                                                                     MR.020
entered into on behalf of Centurion Pecos. As set forth above, Calce, without authority to act for

Centurion Pecos, and in violation of his fiduciary duties, created documents purporting to

obligate Centurion Pecos to pay the notes that Ballengee Interests entered into with TCB and to

make other payments to Ballengee Interests. Similarly, Calce, again without the authority to act

for Centurion Pecos, and in violation of his fiduciary duties, apparently created a promissory

note in favor of Centurion Terminals, purportedly obligating Centurion Pecos to make certain

payments to Centurion Terminals.

           82.   In accordance with Tex. Civ. Prac. & Rem. Code § 37.001, et seq., Plaintiff seeks

a declaratory judgment against Defendants Ballengee, Ballengee Interests, and Centurion

Terminals, wherein the Court declares the following:

           (a)   Any assumption agreement purported to exist between Ballengee
                 Interests and Centurion Pecos is invalid, void and unenforceable;

           (b)   Any agreement that purports to create an obligation of Centurion Pecos to
                 Ballengee Interests is invalid, void and unenforceable;

           (c)   Any promissory note or other documents purported to create obligations
                 between Centurion Pecos to Centurion Terminals is invalid, void and
                 unenforceable.

           83.   In addition and cumulative of other relief sought herein, Plaintiff is entitled to

declaratory judgment concerning the status of Stampede under the Company Agreement and the

enforceability of certain financial obligations that Calce, without authority, and in violation of

his fiduciary duties, purported to create on behalf of Centurion Pecos.

                                               VI.

                               ATTORNEYS’ FEES AND COSTS

           84.   Plaintiff hereby restates and incorporates by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.



PLAINTIFF’S ORIGINAL PETITION                                                           Page 21 of 23
307338_1

                                                                                                        MR.021
           85.   As a result of Defendants’ actions, Plaintiff was forced to retain the legal counsel

of Shamoun & Norman, LLP (“S&N”) to bring this lawsuit. Plaintiff retained the services of

S&N to prosecute these claims and agreed to pay S&N its usual, customary and reasonable

attorneys’ fees. Such action and payment is necessary for the enforcement of Plaintiff’s rights.

           86.   Plaintiff seeks the recovery of attorneys’ fees and costs that it incurs in

prosecuting the above-stated claims pursuant to Chapter 37 of the Texas Civil Practice and

Remedies Code, or any other applicable law.

                                                 VII.

                                  CONDITIONS PRECEDENT

           87.   All conditions precedent to Plaintiff’s right to obtain the relief requested herein

have been performed or have occurred.

                                                VIII.

                                              PRAYER

           WHEREFORE, Plaintiff Centurion Logistics LLC, individually and on behalf of

Centurion Pecos Terminal LLC, respectfully requests that upon final trial of this cause the Court

enter judgment against James Ballengee, Ballengee Interests, LLC, John Calce, Stampede TX

Energy, LLC, Centurion Midstream Group, LLC and Centurion Terminals, LLC as follows:

           A.    Against all Defendants and in favor of Plaintiff for the amount of actual damages

sustained by Plaintiff;

           B.    Against all Defendants and in favor of Plaintiff for the disgorgement of unjust

enrichment and money had and received;

           C.    Entering a declaratory judgment concerning the status of Stampede under the

Company Agreement and the enforceability of certain financial obligations that Calce, without



PLAINTIFF’S ORIGINAL PETITION                                                           Page 22 of 23
307338_1

                                                                                                        MR.022
authority, and in violation of his fiduciary duties, purported to enter into on behalf of Centurion

Pecos;

           D.   Awarding to Plaintiff the costs and disbursements of the action, including

reasonable attorneys’ fees, accountants’ and experts’ fees, costs, and expenses; and

        E.      Granting such other and further relief as the Court deems just and proper, at law
or in equity.




                                                     Respectfully Submitted,

                                                             /s/ C. Gregory Shamoun
                                                     C. GREGORY SHAMOUN
                                                     State Bar No. 18089650
                                                     J. BLAIR NORRIS
                                                     State Bar No. 24014515
                                                     SHAMOUN & NORMAN, LLP
                                                     1755 Wittington Place, Suite 200
                                                     Dallas, Texas 75234
                                                     Phone: (214) 987-1745
                                                     Fax: (214) 521-9033
                                                     Email: g@snlegal.com
                                                     Email: bn@snlegal.com

                                                     ATTORNEYS FOR PLAINTIFF




PLAINTIFF’S ORIGINAL PETITION                                                          Page 23 of 23
307338_1

                                                                                                       MR.023
                                                                                                                 FILED
                                                                                                     DALLAS COUNTY
                                                                                                    11/22/2017 1:55 PM
                                                                                                        FELICIA PITRE
                                                                                                     DISTRICT CLERK

                                                                                             Marissa Pittman
                                        CAUSE NO. DC-16-07706

CENTURION LOGISTICS LLC,                               §      IN THE DISTRICT COURT OF
individually and derivatively on behalf of             §
CENTURION PECOS TERMINAL LLC,                          §
a Texas Limited Liability Company,                     §
                                                       §
           Plaintiffs,                                 §
                                                       §
v.                                                     §
                                                       §
JAMES BALLENGEE, BALLENGEE                             §
INTERESTS, LLC, JOHN CALCE,                            §      DALLAS COUNTY, TEXAS
STAMPEDE TX ENERGY, LLC,                               §
CENTURION MIDSTREAM GROUP,                             §
LLC, CENTURION TERMINALS, LLC                          §
                                                       §
           Defendants,                                 §
                                                       §
and CENTURION PECOS TERMINAL                           §
LLC, a Texas Limited Liability Company                 §
                                                       §
           Nominal Defendant.                          §      44th JUDICIAL DISTRICT

          DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED
             COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC AND
                      CENTURION PECOS TERMINAL LLC

           John Calce (“Counter-Plaintiff” or “Calce”) files his First Amended Counterclaim

complaining of Centurion Logistics LLC (“Centurion Logistics”) and Centurion Pecos Terminal

LLC (“Centurion Pecos”) (collectively, “Counter-Defendants”) and, in support thereof, would

respectfully show the Court as follows:

                                                 I.
                                          DISCOVERY LEVEL

           1.         Discovery in this matter is to be conducted under Texas Rule of Civil Procedure

190.4 (Level 3).




DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC                              PAGE 1
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                                                                                                        MR.173
                                                 II.
                                           MONETARY RELIEF

           2.         Calce seeks both monetary and non-monetary relief. The monetary relief sought

by Calce is, at this time, over $100,000 but not more than $200,000. But the monetary relief

sought by Calce continues to increase as he is required to incur additional expenses in defending

himself against the claims brought against him in this lawsuit.

                                                    III.
                                                  PARTIES

           3.         Plaintiff Calce is an individual residing in Collin County, Texas.

           4.         Counter-Defendant Centurion Logistics is a limited liability company organized

under the laws of the State of Texas with its principal place of business in Dallas, Dallas County,

Texas. Centurion Logistics has made an appearance in this matter.

           5.         Counter-Defendant Centurion Pecos is a limited liability company organized

under the laws of the State of Texas with its principal place of business in Dallas, Dallas County,

Texas. Centurion Pecos has made an appearance in this matter through Centurion Logistics

bringing claims against Calce and the other Defendants derivatively on behalf of Centurion

Pecos.

                                                 IV.
                                       JURISDICTION AND VENUE

           6.         This Court has jurisdiction over this matter because the amount in controversy

exceeds the minimum jurisdictional limits of this Court.

           7.         Calce asserts that Dallas County is not a proper venue for this lawsuit pursuant to

Section 15.011 of the Texas Civil Practice and Remedies Code. The bases for such assertion are

set forth in Calce’s Motion to Transfer Venue. The Motion to Transfer Venue has been denied

and is an interlocutory order.

DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC                                  PAGE 2
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                                                                                                            MR.174
                                                V.
                                       FACTUAL BACKGROUND

           8.         On June 27, 2016, Centurion Logistics, individually and derivatively on behalf of

Centurion Pecos, filed its Original Petition complaining of Calce and the other Defendants.

Centurion Logistics has brought claims against Calce for (1) breach of fiduciary duty; (2) unjust

enrichment; and (3) aiding and abetting fraudulent concealment.

           9.         Plaintiff generally claims that Calce and the other Defendants carried out a

scheme that resulted in Centurion Pecos and Centurion Logistics losing their interest in the

Reeves County Property, thereby allegedly depriving such entities of the opportunity to construct

a railway terminal for the shipping of crude oil on the Reeves County Property. 1 Among other

things, Plaintiff alleges that Calce breached the fiduciary duties that he allegedly owed Centurion

Logistics as a manager of the company. See Pl.’s Orig. Pet. ¶¶ 36 – 42. Plaintiff further claims

that Calce took various allegedly unauthorized acts on behalf of Centurion Pecos. See id. ¶ 24.

           10.        On September 20, 2016, Calce filed his Motion to Transfer Venue and Brief in

Support Thereof and, Subject Thereto, Original Answer (the “Original Answer”). Since the time

of filing his Original Answer, Calce has incurred significant expenses in defending against the

claims that have been brought against him in the lawsuit.

CALCE’S RIGHT TO INDEMNIFICATION/IMMEDIATE REIMBURSEMENT                         OF   EXPENSES   FROM
CENTURION LOGISTICS

           11.        Calce is a manager of Centurion Logistics.        Section 1.1 of the Company

Agreement of Centurion Logistics (the “Logistics Agreement”) defines an “Indemnified Person”

as follows:



1
 The term “Reeves County Property,” when used herein, should be understood to have the same meaning
as the term is used and defined in Plaintiff’s Original Petition.

DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC                                 PAGE 3
9513752.1/SP/38371/0105/112217

                                                                                                          MR.175
           “Indemnified Person” means (a) a Member or Assignee; (b) a Manager; (c) a
           Liquidator (if any); (d) any Affiliate of the Company, a Member or Assignee, a
           Manager, or a Liquidator; and (e) any governing person, officer, employee, agent,
           or owner of the Company, a Member or Assignee, a Manager, a Liquidator, or
           any Affiliate of any of the foregoing. A person is an Indemnified Person whether
           or not such person has the status required to be an Indemnified Person at the time
           any Proceeding is made or maintained as described in Article VI or at the time
           any amendment to this Agreement is proposed under Section 15.1.

See Section 1.1 of the Logistics Agreement (emphasis added). A true and correct copy of the

Logistics Agreement is attached hereto as Exhibit A. Calce, as a manager of the company, is

therefore an “Indemnified Person” under the Agreement. See id.

           12.        Section 6.2 of the Logistics Agreement is entitled “Indemnification by Company”

and provides as follows:

           To the fullest extent permitted by applicable law, and subject to Section 6.3,
           [Centurion Logistics] indemnifies and holds harmless each Indemnified Person
           from and against any Damages arising from any Proceeding relating to the
           conduct of [Centurion Logistics’] business or to any act or omission by such
           Indemnified Person within the scope of the Indemnified Person’s authority in the
           course of [Centurion Logistics’] business or for any misconduct or negligence on
           the part of any other person that is an employee or agent of [Centurion Logistics].
           An Indemnified Person’s expenses paid or incurred in defending itself against
           any Proceeding shall be reimbursed as paid or incurred. The right to
           indemnification conferred in this Article VI is not exclusive of any other right that
           any person may have or hereafter acquire under any statute, agreement, vote of
           Members, or otherwise.

See Ex. A § 6.2 (emphasis added).              Accordingly, pursuant to Section 6.2, Calce—as an

Indemnified Person—is entitled to immediate reimbursement of “expenses paid or incurred in

defending [himself] against any Proceeding.” See id.

           13.        Section 1.1 of the Agreement defines “Proceeding” as follows: “(a) any

threatened, pending, or completed action or other proceeding, whether civil, criminal,

administrative, arbitrative, or investigative; (b) an appeal of any such proceeding, and (c) any




DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC                                   PAGE 4
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                                                                                                            MR.176
inquiry or investigation that could lead to any such proceeding.” See Ex. A § 1.1. This Lawsuit

clearly constitutes a “Proceeding” under the Logistics Agreement.

           14.        Under the terms of the Logistics Agreement, Centurion Logistics is required to

reimburse Calce for any and all expenses paid or incurred by Calce in defending himself in this

lawsuit—as such expenses are paid or incurred. If it is ultimately determined that Calce is not

entitled to such payments, the Logistics Agreement expressly provides Centurion Logistics with

an appropriate remedy. See Ex. A § 6.3(c) (providing that “[a]ny payments made to or on behalf

of a person who is later determined not to be entitled to such payments shall be repaid by the

person to [Centurion Logistics].”).

CENTURION LOGISTICS’ REFUSAL TO REIMBURSE CALCE’S DEFENSE COSTS

           15.        On August 22, 2017, Calce—through his counsel—requested that Centurion

Logistics, pursuant to Section 6.2 of the Agreement, (1) reimburse Calce the full amount of

expenses that he had been invoiced as of July 31, 2017, plus an additional $50,000 to be applied

to future expenses as they are incurred; and (2) agree to reimburse Calce the additional expenses,

in excess of such $50,000 advancement, that he pays or incurs in his defense of the Lawsuit as

such expenses are paid or incurred (referred to hereinafter as the “Reimbursement Request”).

           16.        The Reimbursement Request provides that, “[p]ursuant to Section 6.3 of the

Agreement, Mr. Calce hereby affirms that it is his good faith belief that he has met the standard

of conduct necessary for indemnification under Section 6.3.” The Reimbursement Request also

provides that “Mr. Calce further agrees to repay any amount that is paid or reimbursed by

Centurion Logistics, pursuant to Section 6.2, if it is determined by a court of competent

jurisdiction that Mr. Calce did not meet the aforementioned standard or if indemnification is

otherwise determined to be prohibited by law.”


DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC                             PAGE 5
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                                                                                                       MR.177
           17.        Centurion Logistics denied Calce’s request for reimbursement.       To date,

Centurion Logistics has not reimbursed Calce any amount for the expenses he has paid and

incurred in defending himself against the claims brought against him in the Lawsuit.

CALCE’S RIGHT TO INDEMNIFICATION/IMMEDIATE REIMBURSEMENT                     OF   EXPENSES     FROM
CENTURION PECOS

           18.        When Centurion Pecos was initially formed, Calce was the sole manager of the

company. See the Company Agreement of Centurion Pecos (the “Pecos Original Agreement”),

which is dated effective September 12, 2014, a true and correct copy of which is attached hereto

as Exhibit B. Calce was also appointed as the president of Centurion Pecos. Such appointment

was effective as of September 11, 2014.

           19.        In November 2014, the First Amended and Restated Company Agreement of

Centurion Pecos (the “Pecos Amended Agreement”) was executed. A true and correct copy of

the Pecos Amended Agreement is attached hereto as Exhibit C. The First Amended and Restated

Company Agreement removed Calce as a manager of Centurion Pecos, but Calce remained the

duly appointed president of the company.

           20.        Section 1.1 of both the Pecos Original Agreement and the Pecos Amended

Agreement defines an “Indemnified Person” as follows:

           “Indemnified Person” means (a) a Member or Assignee; (b) a Manager; (c) a
           Liquidator (if any); (d) any Affiliate of the Company, a Member or Assignee, a
           Manager, or a Liquidator; and (e) any governing person, officer, employee,
           agent, or owner of the [Centurion Pecos], a Member or Assignee, a Manager, a
           Liquidator, or any Affiliate of any of the foregoing. A person is an Indemnified
           Person whether or not such person has the status required to be an Indemnified
           Person at the time any Proceeding is made or maintained as described in Article
           VI or at the time any amendment to this Agreement is proposed under Section
           15.1, provided such person had the status required to be an Indemnified Person at
           the time of the relevant actions referenced in the Proceeding.

See Ex. B § 1.1 (emphasis added); see also Ex. C § 1.1 (emphasis added).


DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC                               PAGE 6
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                                                                                                        MR.178
           21.        Moreover, Section 6.2 of both the Pecos Original Agreement and the Pecos

Amended Agreement is entitled “Indemnification by Company” and provides as follows:

           To the fullest extent permitted by applicable law and subject to Section 6.3,
           [Centurion Pecos] indemnifies and holds harmless each Indemnified Person from
           and against any Damages arising from any Proceeding relating to the conduct of
           [Centurion Pecos’] business or to any act or omission by such Indemnified
           Person, including any act or omission constituting negligence, within the scope of
           the Indemnified Person’s authority in the course of [Centurion Pecos’] business or
           for any misconduct or negligence on the part of any other person that is an
           employee or agent of [Centurion Pecos]. An Indemnified Person’s expenses
           paid or incurred in defending itself against any Proceeding shall be reimbursed
           as paid or incurred. The right to indemnification conferred in this Article VI is
           not exclusive of any other right that any person may have or hereafter acquire
           under any statute, vote of Members, or otherwise.

See Ex. B § 6.2 (emphasis added); see also Ex. C § 6.2 (emphasis added).

           22.        Like the Logistics Agreement, the terms of the Pecos Original Agreement and the

Pecos Amended Agreement require Centurion Pecos to reimburse Calce for any and all expenses

paid or incurred by Calce in defending himself in this lawsuit, as such expenses are paid or

incurred. Furthermore, also like the Logistics Agreement, both the Pecos Original Agreement

and the Pecos Amended Agreement provide Centurion Pecos with an adequate remedy if it is

ultimately determined that Calce is not entitled to such payments. See Exs. B and C § 6.3(c)

(providing that “[a]ny payments made to or on behalf of a person who is later determined not to

be entitled to such payments shall be repaid by the person to [Centurion Pecos].”).

           23.        To date, Centurion Pecos has not reimbursed Calce any amount for the expenses

that he has paid and incurred in defending himself against the claims brought against him in this

lawsuit.

           24.        The Pecos Amended Agreement identifies Centurion Logistics and Defendant

Stampede TX Energy, LLC (“Stampede”) as the only members of Centurion Pecos. Pursuant to

the Pecos Amended Agreement, Stampede is the majority-in-interest member holding a 60%

DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC                                PAGE 7
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                                                                                                         MR.179
membership interest in Centurion Pecos, and Centurion Logistics holds the remaining 40%

membership interest.

           25.        Stampede—on behalf of Centurion Pecos—has already agreed that Centurion

Pecos will reimburse Calce for the amount of expenses that he has paid or incurred (or will pay

and incur) in defending himself against the claims brought against him in this lawsuit. But

Centurion Logistics claims that Stampede was removed as a manager of Centurion Pecos on June

13, 2016. Stampede disputes the propriety of the alleged removal and does not recognize same.

Accordingly, Calce’s claim for contractual indemnification and reimbursement/advancement of

defense costs against Centurion Pecos is significantly intertwined with and dependent upon the

outcome of the competing declaratory judgment claims of Stampede and Centurion Logistics

regarding which entity has control of Centurion Pecos.

                                                  VI.
                                           CAUSES OF ACTION

                                 COUNT 1: DECLARATORY JUDGMENT

           26.        Calce restates and incorporates the allegations contained in the preceding

paragraphs.

           27.        As shown by the facts set forth above, Calce is entitled to indemnification from

Centurion Logistics and Centurion Pecos pursuant to the terms of such entities’ own company

agreements. Calce is further entitled to reimbursement of the expenses he has paid and incurred

(and those that he will pay and incur in the future), as such expenses are paid and incurred, in

defending himself against the claims brought against him in this lawsuit.

           28.        Calce therefore seeks a judicial determination that:




DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC                               PAGE 8
9513752.1/SP/38371/0105/112217

                                                                                                         MR.180
           (a)        Centurion Logistics is required to reimburse Calce the expenses, including but not

                      limited to attorneys’ fees, that he has paid or incurred to date in defending himself

                      against the claims brought against him in this lawsuit;

           (b)        Centurion Logistics is required to reimburse Calce the expenses, including but not

                      limited to attorneys’ fees, that he pays or incurs in the future in defending himself

                      against the claims brought against him in this lawsuit;

           (c)        In the unlikely event that any liability be found on the part of Calce, Centurion

                      Logistics is required to indemnify Calce and hold him harmless from any

                      damages that relate to either (i) the business of Centurion Logistics and/or (ii) any

                      alleged acts or omissions that were purportedly taken or made by Calce in his

                      capacity as a manager of Centurion Logistics (not including any damages arising

                      from any conduct set forth in Section 6.3(a)(i)-(iv) of the Logistics Agreement);

           (d)        Centurion Pecos is required to reimburse Calce the expenses, including but not

                      limited to attorneys’ fees, that he has paid or incurred to date in defending himself

                      against the claims brought against him in this lawsuit;

           (e)        Centurion Pecos is required to reimburse Calce the expenses, including but not

                      limited to attorneys’ fees, that he pays or incurs in the future in defending himself

                      against the claims brought against him in this lawsuit; and

           (f)        In the unlikely event that any liability be found on the part of Calce, Centurion

                      Pecos is required to indemnify Calce and hold him harmless from any damages

                      that relate to either (i) the business of Centurion Pecos and/or (ii) any alleged acts

                      or omissions that were purportedly taken or made by Calce in his capacity as a

                      manager of Centurion Pecos (not including any damages arising from any conduct


DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC                                     PAGE 9
9513752.1/SP/38371/0105/112217

                                                                                                               MR.181
                      set forth in Section 6.3(a)(i)-(iv) of the Pecos Original Agreement and Pecos

                      Amended Agreement).

                 COUNT 2: BREACH OF CONTRACT (CENTURION LOGISTICS)

           29.        Calce restates and incorporates the allegations contained in the preceding

paragraphs.

           30.        The Logistics Agreement constitutes a valid and enforceable contract. Centurion

Logistics breached the Logistics Agreement by failing to reimburse Calce the amount of

expenses he has paid and incurred in defending himself against the claims brought against him in

this lawsuit. Calce performed, tendered performance of, or was excused from performing any of

his obligations under the Logistics Agreement.

           31.        As a result of Centurion Logistics’ breach, Calce has suffered actual damages.

Calce is entitled to recover such damages from Centurion Logistics.

                     COUNT 3: BREACH OF CONTRACT (CENTURION PECOS)

           32.        Calce restates and incorporates the allegations contained in the preceding

paragraphs.

           33.        The Pecos Original Agreement and the Pecos Amended Agreement constitute

valid and enforceable contracts. Centurion Pecos breached the Pecos Original Agreement and

the Pecos Amended Agreement by failing to reimburse Calce the amount of expenses he has paid

and incurred in defending himself against the claims brought against him in this lawsuit. Calce

performed, tendered performance of, or was excused from performing any of his obligations

under the Pecos Original Agreement and the Pecos Amended Agreement.

           34.        As a result of Centurion Pecos’ breach, Calce has suffered actual damages. Calce

is entitled to recover such damages from Centurion Pecos.


DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC                              PAGE 10
9513752.1/SP/38371/0105/112217

                                                                                                         MR.182
                                                 VII.
                                            ATTORNEYS’ FEES

           35.        Calce restates and incorporates the allegations contained in the preceding

paragraphs.

           36.        Pursuant to Section 37.009 of the Texas Civil Practice and Remedies Code, Calce

seeks an award of his reasonable and necessary attorneys’ fees and costs incurred in prosecuting

his declaratory judgment claim and for any appeal.

           37.        Calce is further entitled to and hereby requests judgment for his reasonable and

necessary attorneys’ fees incurred in bringing this counterclaim and for any appeal pursuant to

Section 38.001 of the Texas Civil Practice and Remedies Code. Calce either has or will present

his claim to Plaintiff or to a duly authorized agent of Plaintiff in accordance with Section 38.002

of the Texas Civil Practice and Remedies Code.

                                               VIII.
                                       CONDITIONS PRECEDENT

           38.        All conditions precedent to maintaining this action have occurred and been

satisfied or have been excused or waived.

                                                     IX.
                                                   PRAYER

           Counter-Plaintiff John Calce requests that, upon final hearing, Calce have judgment

against Counter-Defendants Centurion Logistics LLC and Centurion Pecos Terminal LLC as

follows:

           1.         A declaration that Centurion Logistics is required to reimburse Calce the
                      expenses, including but not limited to attorneys’ fees, that he has paid or incurred
                      to date in defending himself against the claims brought against him in this
                      lawsuit;




DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC                                  PAGE 11
9513752.1/SP/38371/0105/112217

                                                                                                             MR.183
           2.         A declaration that Centurion Logistics is required to reimburse Calce the
                      expenses, including but not limited to attorneys’ fees, that he pays or incurs in the
                      future in defending himself against the claims brought against him in this lawsuit;

           3.         A declaration that, in the unlikely event that any liability be found on the part of
                      Calce, Centurion Logistics is required to indemnify Calce and hold him harmless
                      from any damages that relate to either (i) the business of Centurion Logistics
                      and/or (ii) any alleged acts or omissions that were purportedly taken or made by
                      Calce in his capacity as a manager of Centurion Logistics (not including any
                      damages arising from any conduct set forth in Section 6.3(a)(i)-(iv) of the
                      Logistics Agreement);

           4.         A declaration that Centurion Pecos is required to reimburse Calce the expenses,
                      including but not limited to attorneys’ fees, that he has paid or incurred to date in
                      defending himself against the claims brought against him in this lawsuit;

           5.         A declaration that Centurion Pecos is required to reimburse Calce the expenses,
                      including but not limited to attorneys’ fees, that he pays or incurs in the future in
                      defending himself against the claims brought against him in this lawsuit;

           6.         A declaration that, in the unlikely event that any liability be found on the part of
                      Calce, Centurion Pecos is required to indemnify Calce and hold him harmless
                      from any damages that relate to either (i) the business of Centurion Pecos and/or
                      (ii) any alleged acts or omissions that were purportedly taken or made by Calce in
                      his capacity as a manager of Centurion Pecos (not including any damages arising
                      from any conduct set forth in Section 6.3(a)(i)-(iv) of the Pecos Original
                      Agreement and Pecos Amended Agreement);

           7.         Judgment against Centurion Logistics for the amount of expenses, including
                      attorneys’ fees, paid or incurred by Calce in defending himself against the claims
                      brought against him in this lawsuit;

           8.         Judgment against Centurion Pecos for the amount of expenses, including
                      attorneys’ fees, paid or incurred by Calce in defending himself against the claims
                      brought against him in this lawsuit;

           9.         Judgment against Counter-Defendants for Calce’s reasonable and necessary
                      attorneys’ fees incurred in pursuing this counterclaim;

           10.        Judgment against Counter-Defendants for pre- and post-judgment interest as
                      provided by law;

           11.        Judgment against Counter-Defendants for Calce’s costs of suit; and

           12.        Such other and further relief to which Calce may be justly entitled.


DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC                                   PAGE 12
9513752.1/SP/38371/0105/112217

                                                                                                              MR.184
                                          Respectfully submitted,


                                          /s/ David N. Kitner
                                          DAVID N. KITNER
                                          State Bar No. 11541500
                                          david.kitner@strasburger.com
                                          CHASE J. POTTER
                                          State Bar No. 24088245
                                          chase.potter@strasburger.com
                                          STRASBURGER & PRICE, LLP
                                          901 Main Street, Suite 6000
                                          Dallas, TX 75202-3794
                                          (214) 651-4300
                                          (214) 651-4330 Fax

                                          ATTORNEYS FOR DEFENDANTS
                                          JOHN CALCE, CENTURION MIDSTREAM
                                          GROUP, LLC, CENTURION TERMINALS,
                                          LLC, AND STAMPEDE TX ENERGY, LLC

                                 CERTIFICATE OF SERVICE

        The undersigned counsel certifies that on the 22nd day of November, 2017, a true and
correct copy of the foregoing was forwarded to all known counsel in compliance with the Texas
Rules of Civil Procedure.

                                          /s/ Chase J. Potter
                                          Chase J. Potter




DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC                     PAGE 13
9513752.1/SP/38371/0105/112217

                                                                                                MR.185
                                                                                                                  FILED
                                                                                                      DALLAS COUNTY
                                                                                                     11/22/2017 2:31 PM
                                                                                                         FELICIA PITRE
                                                                                                      DISTRICT CLERK



                                    CAUSE NO. DC-16-07706

CENTURION LOGISTICS LLC,                            §      IN THE DISTRICT COURT OF
individually and derivatively on behalf of          §
CENTURION PECOS TERMINAL LLC,                       §
a Texas Limited Liability Company,                  §
                                                    §
           Plaintiffs,                              §
                                                    §
v.                                                  §
                                                    §
JAMES BALLENGEE, BALLENGEE                          §
INTERESTS, LLC, JOHN CALCE,                         §      DALLAS COUNTY, TEXAS
STAMPEDE TX ENERGY, LLC,                            §
CENTURION MIDSTREAM GROUP,                          §
LLC, CENTURION TERMINALS, LLC                       §
                                                    §
           Defendants,                              §
                                                    §
and CENTURION PECOS TERMINAL                        §
LLC, a Texas Limited Liability Company              §
                                                    §
           Nominal Defendant.                       §      44th JUDICIAL DISTRICT

     JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT
       REGARDING COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC

TO THE HONORABLE COURT:

           Defendant/Counter-Plaintiff John Calce (“Calce”) files this Amended Motion for

Summary Judgment regarding his Counterclaim against Plaintiff/Counter-Defendant Centurion

Logistics LLC (“Centurion Logistics”) and, in support thereof, would respectfully show the

Court as follows: 1

                                        BASIS FOR MOTION

           Calce is a manager of Centurion Logistics. Calce is therefore contractually entitled—

pursuant to Section 6.2 of the Company Agreement of Centurion Logistics (the “Agreement”)—

1
 This Motion amends and replaces Calce’s previously filed motion for partial summary judgment entitled
“John Calce’s Motion for Partial Summary Judgment Regarding Indemnification Claim Against
Centurion Logistics LLC,” which was filed on October 6, 2017.

JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC                                                   PAGE 1
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                                                                                                         MR.322
to advancement/reimbursement from the company of any expenses he pays or incurs in

defending himself in this lawsuit (as such expenses are paid or incurred). 2 Importantly, Calce’s

right to advancement/reimbursement of defense costs, which is the sole issue addressed by this

Motion, is separate and distinct from any right to indemnification.                    Calce’s right to

reimbursement is supported by the Agreement, Texas case law, and the Texas Business &

Organizations Code (the “TBOC”). For these reasons, and as more fully set forth below, Calce

is entitled—as a matter of law—to the relief requested herein. 3

                                           STATEMENT OF FACTS

The Lawsuit

           1.         On June 27, 2016, Centurion Logistics, individually and derivatively on behalf of

Centurion Pecos Terminal LLC (“Centurion Pecos”), filed its Original Petition complaining of

Calce and the other Defendants (the “Lawsuit”). See generally Pl.’s Orig. Pet. Centurion

Logistics brought claims against Calce for (1) breach of fiduciary duty; (2) unjust enrichment;

and (3) aiding and abetting fraudulent concealment. See id. ¶¶ 36 – 42, 60, 69 – 72. 4

           2.         Centurion Logistics claims that Calce and the other Defendants carried out a

scheme that resulted in Centurion Pecos and Centurion Logistics losing their interest in the




2
    A true and correct copy of the Agreement is attached hereto as Exhibit A-1.
3
  In this Motion, Calce only seeks a declaration that he is entitled to advancement/reimbursement from
Centurion Logistics for his past and future defense costs and a judgment that Centurion Logistics
breached the Agreement. Calce will move for a judgment for his actual defense costs at a later date.
4
  Centurion Logistics has sought leave to file its First Amended Petition. As of the date of this filing,
leave has not been granted. Centurion Logistics’ First Amended Petition includes the following causes of
action against Calce: (1) breach of fiduciary duty; (2) unjust enrichment; (3) aiding and abetting
fraud/fraudulent inducement; (4) violation of the Texas Theft Liability Act; (5) tortious interference with
contract; (6) fraudulent inducement; and (7) promissory estoppel. See Plaintiff’s Motion for Leave to File
Amended Petition.

JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC                                                       PAGE 2
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                                                                                                              MR.323
Reeves County Property 5, thereby allegedly depriving such entities of the opportunity to

construct a railway terminal for the shipping of crude oil from such property. See generally Pl.’s

Orig. Pet. Among other things, Plaintiff alleges that Calce breached the fiduciary duties that he

owed Centurion Logistics as a manager of the company. See id. ¶¶ 36 – 42. 6

           3.         On September 20, 2016, Calce filed his Motion to Transfer Venue and Brief in

Support Thereof and, Subject Thereto, Original Answer (the “Original Answer”). Since the

filing of his Original Answer, Calce has incurred, and continues to incur, significant expenses in

defending against the claims that have been brought against him in the Lawsuit.

Calce’s Contractual Right to Immediate Reimbursement of Defense Costs

           4.         Calce is a manager of Centurion Logistics. See Pl.’s Orig. Pet. ¶ 12. Section 1.1

of the Company Agreement of Centurion Logistics (the “Agreement”) defines an “Indemnified

Person” as follows:

           “Indemnified Person” means (a) a Member or Assignee; (b) a Manager; (c) a
           Liquidator (if any); (d) any Affiliate of the Company, a Member or Assignee, a
           Manager, or a Liquidator; and (e) any governing person, officer, employee, agent,
           or owner of the Company, a Member or Assignee, a Manager, a Liquidator, or
           any Affiliate of any of the foregoing. A person is an Indemnified Person whether
           or not such person has the status required to be an Indemnified Person at the time
           any Proceeding is made or maintained as described in Article VI or at the time
           any amendment to this Agreement is proposed under Section 15.1.

See Ex. A-1 § 1.1 (emphasis added). Calce, as a manager of the company, is therefore an

“Indemnified Person” under the Agreement. See id.

           5.         Section 6.2 of the Agreement provides as follows:




5
 The term “Reeves County Property,” when used herein, should be understood to have the same meaning
as the term is used and defined in Plaintiff’s Original Petition.
6
  Centurion Logistics makes the same allegations in the First Amended Petition that it has sought leave to
file. See Plaintiff’s Motion for Leave to File Amended Petition, Ex. A, ¶¶ 52 – 58.

JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC                                                       PAGE 3
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                                                                                                             MR.324
           To the fullest extent permitted by applicable law, and subject to Section 6.3,
           [Centurion Logistics] indemnifies and holds harmless each Indemnified Person
           from and against any Damages arising from any Proceeding relating to the
           conduct of [Centurion Logistics’] business or to any act or omission by such
           Indemnified Person within the scope of the Indemnified Person’s authority in the
           course of [Centurion Logistics’] business or for any misconduct or negligence on
           the part of any other person that is an employee or agent of [Centurion Logistics].
           An Indemnified Person’s expenses paid or incurred in defending itself against
           any Proceeding shall be reimbursed as paid or incurred. The right to
           indemnification conferred in this Article VI is not exclusive of any other right that
           any person may have or hereafter acquire under any statute, agreement, vote of
           Members, or otherwise.

See Ex. A-1 § 6.2 (emphasis added). Accordingly, pursuant to Section 6.2, Calce—as an

Indemnified Person—is entitled to immediate reimbursement of “expenses paid or incurred in

defending [himself] against any Proceeding.” See id.

           6.         Section 1.1 of the Agreement defines “Proceeding” as follows: “(a) any

threatened, pending, or completed action or other proceeding, whether civil, criminal,

administrative, arbitrative, or investigative; (b) an appeal of any such proceeding, and (c) any

inquiry or investigation that could lead to any such proceeding.” See Ex. A-1 § 1.1. This

Lawsuit clearly constitutes a “Proceeding” under the Agreement, which Plaintiff does not

dispute. See infra.

           7.         Section 6.3(c) of the Agreement provides the following remedy for Centurion

Logistics if it is ultimately determined—pursuant to a final judgment of a court of competent

jurisdiction—that Calce is not entitled to advancement/reimbursement under Section 6.2:

           Any payments made to or on behalf of a person who is later determined not to be
           entitled to such payments shall be repaid by the person to the Company. The
           Company may require as a condition to the payment of any amounts pursuant to
           Section 6.2, that the Indemnified Person provide to the Company (i) a written
           affirmation by the Indemnified Person of the person’s good faith belief that the
           person has met the standard of conduct necessary for indemnification under this
           Section 6.3; and (ii) a written undertaking by or on behalf of the Indemnified

JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC                                                       PAGE 4
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                                                                                                            MR.325
           Person to repay the amount paid or reimbursed if the person has not met that
           standard or if indemnification is otherwise prohibited by law.

See Ex. A-1 § 6.3(c) (emphasis added).

Centurion Logistics’ Refusal to Reimburse Calce’s Defense Costs

           8.         On August 22, 2017, Calce—through his counsel—requested that Centurion

Logistics, pursuant to Section 6.2 of the Agreement, (1) reimburse Calce the full amount of

expenses that he had been invoiced as of July 31, 2017, plus an additional $50,000 to be applied

to future expenses as they are incurred; and (2) agree to reimburse Calce the additional expenses,

in excess of such $50,000 advancement, that he pays or incurs in his defense of the Lawsuit as

such expenses are paid or incurred. See the August 22, 2017, letter, a true and correct copy of

which is attached hereto as Exhibit B (referred to hereinafter as the “Reimbursement Request”). 7

           9.         The Reimbursement Request provides that, “[p]ursuant to Section 6.3 of the

Agreement, Mr. Calce hereby affirms that it is his good faith belief that he has met the standard

of conduct necessary for indemnification under Section 6.3.”                See Ex. B at 2.         The

Reimbursement Request also provides that “Mr. Calce further agrees to repay any amount that is

paid or reimbursed by Centurion Logistics, pursuant to Section 6.2, if it is determined by a court

of competent jurisdiction that Mr. Calce did not meet the aforementioned standard or if

indemnification is otherwise determined to be prohibited by law.” See id.

           10.        Centurion Logistics denied Calce’s request for reimbursement.       See letter of

September 5, 2017, a true and correct copy of which is attached hereto as Exhibit C (referred to

hereinafter as the “Reimbursement Denial”). Despite denying the request, Centurion Logistics

conceded that Calce is an “Indemnified Person” and that this litigation is a “Proceeding” as those


7
 The Agreement was attached as Exhibit A to the Reimbursement Request. The Agreement has been
omitted as an attachment to the Reimbursement Request since it is attached as Exhibit A-1 to this Motion.

JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC                                                      PAGE 5
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                                                                                                            MR.326
terms are defined in the Agreement. See Ex. C at 2. To date, Centurion Logistics has not

reimbursed Calce any amount for the expenses he has paid and incurred in defending himself

against the claims brought against him in the Lawsuit. See the Declaration of John Calce, a true

and correct copy of which is attached hereto as Exhibit A, ¶ 4.

                                   ARGUMENT AND AUTHORITIES

           This Motion only addresses Calce’s right to advancement/reimbursement of defense

costs—not his right to indemnification. These rights are often improperly conflated, but they are

distinct concepts with completely different standards. Calce does not contend that he is entitled

to indemnification—as a matter of law—from Centurion Logistics at this point in the litigation.

However, his right to advancement/reimbursement of defense costs is clear and appropriate for

determination at the summary judgment stage. In order to adequately demonstrate Calce’s

entitlement to the relief requested herein, it is important to first contrast the difference between

the right to advancement/reimbursement and the right to indemnification. These concepts are

extensively analyzed in In re Aguilar, 344 S.W.3d 41 (Tex. App.—El Paso 2011, orig.

proceeding) (referred to herein as “Aguilar”).

A.         The right to advancement/reimbursement of expenses and the right to
           indemnification are separate and distinct legal concepts.

           Aguilar is strikingly similar to the present case. Aguilar and another individual formed

Perspectiva Group, Inc. (“Perspectiva”). See Aguilar, 344 S.W.3d at 44. Aguilar was an officer

and director of Perspectiva. See id. Perspectiva filed suit against Aguilar and certain Perspectiva

employees alleging that Aguilar had breached his fiduciary duties to the company and engaged in

a conspiracy. See id. Perspectiva later filed a second suit against Aguilar and others, which was

eventually consolidated with the first suit into one cause, accusing Aguilar and his daughter of

forming a company that competed with Perspectiva (similar to the allegations in the current

JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC                                                 PAGE 6
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                                                                                                       MR.327
case). See id. During the pendency of the consolidated lawsuit, Aguilar’s attorney—pursuant to

Perspectiva’s bylaws—sent Perspectiva’s attorney a letter requesting that Perspectiva advance

Aguilar’s defense costs, including attorneys’ fees (which is exactly what Calce has requested

here).             See           id.   Perspectiva—like   Centurion    Logistics—denied     Aguilar’s

advancement/reimbursement request. See id. at 45. The trial court denied Aguilar’s motion

requesting advancement/reimbursement of defense costs.                See id.   The appellate court

conditionally granted Aguilar’s petition for a writ of mandamus and provided that the writ would

issue if the trial court refused to (1) vacate its order denying Aguilar’s motion regarding

advancement; and (2) enter an order granting the motion. See id. at 56.

           In analyzing the issue, the Aguilar appellate court first stated that Article 2.02-1 of the

Texas Business Corporation Act expressly allowed Texas corporations to advance litigation

expenses to its directors. See id. at 45. The Aguilar court further noted that the applicable

section of Perspectiva’s bylaws was nearly identical to the statutory language regarding

advancement/reimbursement of expenses. See id. at 45 – 46. Article 2.02-1 of the Texas

Business Corporation Act is the predecessor to Section 8.104 of the TBOC. See TEX. BUS.

ORGS. CODE § 8.104. 8 Similarly, here, Section 6.2 is consistent with the statutory language set

forth in Section 8.104 of the TBOC. See Ex. A-1 § 6.2; see also TEX. BUS. ORGS. CODE § 8.104.

           The Aguilar court next turned to the lack of Texas case law addressing the right to

advancement/reimbursement of defense costs: “There are no Texas cases concerning

advancement under the Business Corporation Act or the Business Organizations Code. But the

courts of Delaware have addressed advancement on numerous occasions.” Aguilar, 344 S.W.3d

at 46.       It is common for Texas courts to look to Delaware law for guidance regarding

8
 The prior and current statutes are essentially the same in all material respects. Compare TEX. BUS.
CORP. ACT ART. 2.02-1 with TEX. BUS. ORGS. CODE § 8.104.

JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC                                                   PAGE 7
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                                                                                                         MR.328
unsettled/undeveloped areas of corporate law. 9 The Delaware Supreme Court has explained that

“‘[a]dvancement is an especially important corollary to indemnification’ because it provides

corporate officials with immediate interim relief from the burden of paying for a defense.” See

Aguilar, 344 S.W.3d at 46 (quoting Homestore, Inc. v. Tafeen, 888 A.2d 204, 211 (Del. Supr.

2005)).       “Although the right to indemnification and advancement are correlative, they are

separate and distinct legal actions.” Id. (quoting Homestore, 888 A.2d at 212). Perhaps most

importantly, “[t]he right to advancement is not dependent on the right to indemnification.” Id.

(citing Homestore, 888 A.2d at 212) (emphasis added). This concept is vitally important to the

determination of this Motion, because it demonstrates that Calce’s alleged conduct is completely

irrelevant to his right to immediate advancement/reimbursement of his defense costs.

B.         Centurion Logistics cannot rely on its own allegations to deny Calce’s right to
           advancement/reimbursement of defense costs.

           The Reimbursement Denial states that Centurion Logistics denied Calce’s request for

reimbursement/advancement, at least in part, on the basis of Centurion Logistics’ allegations in

the Lawsuit—specifically that Calce (1) was not acting “within the scope of [his] authority in

course of the Company’s business”; and (2) was engaging in “intentional misconduct” and a

“knowing violation of law.” See Ex. C. These are mere allegations for which Centurion

Logistics has the burden of proof. Centurion Logistics does not get to assume the role of accuser

9
  “Delaware has been described as ‘the Mother Court of corporate law.’” Aguilar, 344 S.W.3d at 47
(citing Kamen v. Kemper Fin. Servs., Inc., 908 F.2d 1338, 1343 (7th Cir. 1990), rev’d on other grounds,
500 U.S. 90 (1991)). “Courts throughout the country look to Delaware for guidance on matters of
corporate law.” Id. (citing Neurobehaviorial Assocs., P.A. v. Cypress Creek Hosp., Inc., 995 S.W.2d 326,
332 n. 12 (Tex. App.—Houston [1st Dist.] 1999, no pet.) (turning to Delaware corporate law for guidance
regarding “winding-up” because there was no Texas cases addressing the issue)). “The law of
advancement, in particular, is ‘a Delaware specialty.’” Id. (citing Int’l Airport Ctrs., LLC v. Citrin, 455
F.3d 749, 750 (7th Cir. 2006)). “To the limited extent that there is law [regarding advancement] outside
Delaware, it is the same as the law in Delaware.” Id. (quoting Stephen A. Radin, “Sinners Who Find
Religion”: Advancement of Litigation Expenses to Corporate Officials Accused of Wrongdoing, 25 Rev.
Litig. 251, 271 (2006)).

JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC                                                       PAGE 8
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                                                                                                              MR.329
and fact-finder.           More importantly, these allegations are irrelevant to the determination of

whether Calce is entitled to advancement/reimbursement of his defense costs.

           In Aguilar, Perspectiva similarly denied Aguilar’s request for advancement on the basis

that Aguilar purportedly had unclean hands due to the alleged breaches of his fiduciary duties.

See Aguilar, 344 S.W.3d at 46.               The Aguilar court stated that “[u]nder Delaware law,

advancement is allowed even when the official seeking advancement is being sued by the

corporation that must advance the litigation expenses” as “Delaware case law is replete with

insider trading cases in which executives’ expenses are advanced despite allegations of

defrauding the corporation or its stockholders of millions of dollars.” Id. at 47 (citing James

River Mgmt. Co., Inc. v. Kehoe, 674 F. Supp. 2d 745, 750 (E.D. Va. 2009)). The Aguilar court

further provided that “[a]dvancement claims are frequently granted when, as in this case, the

corporation is suing an official for breach of fiduciary duty.” Id. That is the exact situation

here—i.e., Calce is being sued for breach of fiduciary duty. See Pl.’s Orig. Pet. ¶¶ 36 – 42. “The

corporation [Centurion Logistics] cannot defend against the advancement claim on the ground

that it now believes the fiduciary [Calce] to have been unfaithful because it is in those very cases

that the right to advancement attaches most strongly.” Id. (citing Kehoe, 674 F. Supp. 2d at

750) (internal quotations omitted) (emphasis added). The Delaware Court of Chancery perhaps

put it best stating:

           It is not uncommon for corporate directors, officers, and employees to be sued for
           breach of the fiduciary duty of loyalty [exactly what Calce is being sued for here],
           and to have to defend claims that they took official action for the primary purpose
           of diverting corporate resources to their own pocketbooks . . . . Therefore, it is
           highly problematic to make the advancement right of such officials dependent on
           the motivation ascribed to their conduct by the suing parties. To do so would be
           to largely vitiate the protections afforded by [statutory] and contractual
           advancement rights.



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                                                                                                           MR.330
Reddy v. Elec. Data Sys. Corp., No. CIV.A.19467, 2002 Del. Ch. LEXIS 69, at *15 – 16 (Del.

Ch. June 18, 2002); see also Aguilar, 344 S.W.3d at 48 (expressly rejecting proposition that “the

entitlement to advancement hinges on proof that the director did not violate his fiduciary

duties.”).

           Calce’s alleged conduct is completely irrelevant for purposes of this Motion and the

determination of whether Calce is entitled to advancement/reimbursement of his defense costs.

See Aguilar, 344 S.W.3d at 48 (citing Reddy, 2002 Del. Ch. LEXIS 69, at *28 – 29) (providing

that any other result “would turn every advancement case into a trial on the merits of the

underlying claims of official misconduct.”)). Rather, the determinative question is whether the

terms of the Agreement afford Calce the right to advancement/reimbursement of his defense

costs. The answer is unquestionably yes.

C.         Calce’s contractual right to advancement/reimbursement is unambiguous and
           mandatory.

           1.         The terms of the Agreement are unambiguous and its interpretation is a
                      question of law for the Court.

           The interpretation of an unambiguous contract is a question of law for the court. See

Moayedi v. Interstate 35/Chisam Rd., L.P., 438 S.W.3d 1, 7 (Tex. 2014) (citing MCI Telecomms.

Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 650 (Tex. 1999)). Likewise, “[t]he question of

whether a contract is ambiguous is one of law for the court.” Peterson v. Farmers Tex. Cnty.

Mut. Ins. Co., No. 05-15-00678-CV, 2016 Tex. App. LEXIS 6586, at *8 (Tex. App.—Dallas

June 22, 2016, no pet.) (mem. op.) (citing Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983)). A

contract is not ambiguous if, like the Agreement here, “the contract’s language can be given a

certain or definite meaning.” Id. (citing El Paso Field Servs., L.P. v. MasTec N. Am., Inc., 389

S.W.3d 802, 806 (Tex. 2012)). The mere fact that the “parties advance different interpretations


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                                                                                                    MR.331
of a contract does not necessarily mean that the contract is ambiguous.” PopCap Games, Inc. v.

MumboJumbo, LLC, 350 S.W.3d 699, 707 (Tex. App.—Dallas 2011, pet. denied).

           “In construing a written contract, the primary concern of the court is to ascertain the true

intentions of the parties as expressed in the instrument.” Moayedi, 438 S.W.3d at 7 (emphasis

added). “Absent a finding of ambiguity, a court must interpret the meaning and intent of a

contract from the four corners of the document without the aid of extrinsic evidence.” Peterson,

2016 Tex. App. LEXIS 6586, at *9; see also Sacks v. Haden, 266 S.W.3d 447, 450-51 (Tex.

2008) (quoting Nat’l Union Fire Ins. Co. of Pittsburgh, Penn. v. CBI Indus. Inc., 907 S.W.2d

517, 520 (Tex. 1995)) (providing that “[o]nly where a contract is ambiguous may a court

consider the parties’ interpretation and ‘admit extraneous evidence to determine the true meaning

of the instrument’”). Moreover, “[u]nless the agreement shows the parties used a term in a

technical or different sense, the terms are given their plain, ordinary, and generally accepted

meaning.” Moayedi, 438 S.W.3d at 7 (citing Heritage Res., Inc. v. NationsBank, 939 S.W.2d

118, 121 (Tex. 1996)). The relevant terms of the Agreement are unambiguous and entitle Calce

to indemnification.

           2.         Section 6.2 of the Agreement clearly requires Centurion Logistics to
                      immediately reimburse Calce the expenses he pays or incurs in defending
                      himself in the Lawsuit.

           It is undisputed that Calce—as a manager of Centurion Logistics—is an “Indemnified

Person” under the Agreement. See Pl.’s Orig. Pet. ¶ 12; see also Ex. A-1 § 1.1; Ex. C at 2. It is

further undisputed that the Lawsuit constitutes a “Proceeding” as defined in Section 1.1 of the

Agreement. See Ex. A-1 § 1.1; see also Ex. C at 2. Section 6.2 of the Agreement provides that

“[a]n Indemnified Person’s [e.g., Calce] expenses paid or incurred in defending [himself] against

any Proceeding [e.g., this Lawsuit] shall be reimbursed as paid or incurred.” See Ex. A-1 § 6.2


JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC                                                   PAGE 11
9516179.1/SP/38371/0105/112217

                                                                                                          MR.332
(emphasis added). There are no qualifications and/or conditions to Calce’s express right to

advancement/reimbursement of defense costs. 10

           The Aguilar court—after noting that the term “shall” is generally construed to be

mandatory—held that Perspectiva had a mandatory duty, under the applicable section of its

bylaws (which is strikingly similar to the language of Section 6.2), to advance Aguilar’s defense

costs. See Aguilar, 344 S.W.3d at 51. 11 Similarly, Centurion Logistics is required, pursuant to

Section 6.2 of the Agreement, to reimburse Calce the expenses he pays or incurs in defending

himself in the Lawsuit—as such expenses are paid or incurred.

           3.         Calce’s reimbursable expenses include his attorneys’ fees.

           The Aguilar court expressly rejected Perspectiva’s argument that the undefined term

“reasonable expenses” does not include attorneys’ fees. See Aguilar, 344 S.W.3d at 51 – 52. In

support of its holding, the Aguilar court stated that “Perspectiva’s interpretation renders [the

relevant section of Perspectiva’s bylaws] insignificant and practically useless.” Id. at 51. The

Aguilar court further provided that “[t]he purpose of advancement is to relieve corporate officials

from the burden of paying the significant on-going expenses involved in litigation” and that

“[t]he burden of litigation comes from attorney’s fees, not copying costs.” Id. at 51 – 52

(internal quotations and citations omitted). This reasoning is equally applicable here. Moreover,


10
   Section 6.3(c) of the Agreement does provide that “[t]he Company [Centurion Logistics] may require,
as a condition to the payment of any amounts pursuant to Section 6.2, that the Indemnified Person provide
to the Company (i) a written affirmation by the Indemnified Person of the person’s good faith belief that
the person has met the standard of conduct necessary for indemnification under this Section 6.3; and (ii) a
written undertaking by or on behalf of the Indemnified Person to repay the amount paid or reimbursed if
the person has not met that standard or if indemnification is otherwise prohibited by law.” See Ex. A-1 §
6.3. Calce has already agreed in writing to repay any amount that he is reimbursed by Centurion
Logistics if it is ultimately determined that he was not entitled to such payments. See Ex. B at 2.
11
  The pertinent section of Perspectiva’s bylaws provided as follows: “[r]easonable expenses incurred by a
person who was, is, or threatened to be made a named defendant or respondent in a Proceeding shall be
paid or reimbursed by the Corporation . . . .” See Aguilar, 344 S.W.3d at 44.

JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC                                                      PAGE 12
9516179.1/SP/38371/0105/112217

                                                                                                              MR.333
Section 8.001 of the TBOC defines the term “expenses” to include “reasonable attorney’s fees.”

See TEX. BUS. ORGS. CODE § 8.001(3)(B).                    It is therefore clear that Calce’s right to

advancement/reimbursement of “expenses” includes the attorneys’ fees he pays or incurs in his

defense of this Lawsuit.

D.         Summary Judgment is the appropriate—and only meaningful—mechanism for
           Calce to exercise his right to advancement/reimbursement of defense costs.

           The Aguilar court made clear that a summary judgment motion is an appropriate

procedural vehicle for seeking advancement/reimbursement of defense costs. See Aguilar, 344

S.W.3d at 52 – 53. More importantly, the Aguilar court stated that “[b]y its very nature,

advancement of expenses can occur only during the course of the trial court proceedings.” Id. at

55 (citing Morgan v. Grace, No. Civ.A. 20430, 2003 Del. Ch. LEXIS 113, at *4 (Del Ch. Oct.

29, 2003) (providing that “[t]he value of the right to advancement is that it is granted or denied

while the underlying action is pending.”)). “It is indemnification of expenses that occurs at the

conclusion of the case.” Id. Therefore, Calce’s right to advancement/reimbursement of defense

costs is ripe.             The only appropriate time for such determination is now.                Calce’s

advancement/reimbursement claim will be effectively moot at the conclusion of the case. See id.

                                                 CONCLUSION

           For these reasons, Calce requests that the Court grant his Motion for Partial Summary

Judgment against Centurion Logistics and enter the following judgment:

           a)         A declaration that Centurion Logistics is required to reimburse Calce the
                      expenses, including but not limited to attorneys’ fees, that he has paid or incurred
                      to date in defending himself against the claims brought against him in the
                      Lawsuit;

           b)         A declaration that Centurion Logistics is required to reimburse Calce the
                      expenses, including but not limited to attorneys’ fees, that he pays or incurs in the
                      future in defending himself against the claims brought against him in the Lawsuit
                      within ten (10) days of Calce submitting such expenses to Centurion Logistics;

JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC                                                       PAGE 13
9516179.1/SP/38371/0105/112217

                                                                                                              MR.334
           c)         Judgment that Centurion Logistics breached the Agreement by failing to
                      reimburse Calce the amount of expenses, including but not limited to attorneys’
                      fees, that he has paid or incurred to date in defending himself against the claims
                      brought against him in the Lawsuit; 12 and

           d)         Such other and further relief to which Calce may be justly entitled.


                                                    Respectfully submitted,


                                                    /s/ David N. Kitner
                                                    DAVID N. KITNER
                                                    State Bar No. 11541500
                                                    david.kitner@strasburger.com
                                                    CHASE J. POTTER
                                                    State Bar No. 24088245
                                                    chase.potter@strasburger.com
                                                    STRASBURGER & PRICE, LLP
                                                    901 Main Street, Suite 6000
                                                    Dallas, TX 75202-3794
                                                    (214) 651-4300
                                                    (214) 651-4330 Fax

                                                    ATTORNEYS FOR JOHN CALCE,
                                                    CENTURION MIDSTREAM GROUP, LLC,
                                                    CENTURION TERMINALS, LLC, AND
                                                    STAMPEDE TX ENERGY, LLC




12
   Calce’s First Amended Counterclaim against Centurion Logistics—like his Original Counterclaim—
includes claims for declaratory relief and breach of contract. See Calce’s First Am. Counterclaim. For
the reasons set forth herein, Calce is entitled to summary judgment on his breach of contract claim, in
addition to his claim for declaratory relief. To succeed on a breach of contract claim, a plaintiff must
show: “(1) a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the
contract by the defendant; and (4) damages sustained by the plaintiff as a result of the breach.” Marquis
Acquisitions, Inc. v. Steadfast Ins. Co., 409 S.W.3d 808, 813 – 814 (Tex. App.—Dallas 2013, no pet.).
The arguments set forth above and summary judgment evidence conclusively establish all such elements
as a matter of law: (1) the Agreement is a valid contract; (2) Calce submitted his written undertaking
(without even being requested to do so by Centurion Logistics); (3) Centurion Logistics breached Section
6.2 of the Agreement by denying Calce’s request for advancement/reimbursement of defense costs; and
(4) Calce has suffered and continues to suffer the harm of significant, unreimbursed defense costs.

JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC                                                    PAGE 14
9516179.1/SP/38371/0105/112217

                                                                                                            MR.335
                                 CERTIFICATE OF SERVICE

        The undersigned counsel certifies that on the 22nd day of November, 2017, a true and
correct copy of the foregoing was forwarded to all known counsel in compliance with the Texas
Rules of Civil Procedure.

                                          /s/ Chase J. Potter
                                          Chase J. Potter




JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC                                         PAGE 15
9516179.1/SP/38371/0105/112217

                                                                                                MR.336
EXHIBIT A




            MR.337
                                       CAUSE NO. DC-16-07706

CENTURION LOGISTICS LLC,                              §      IN THE DISTRICT COURT OF
individually and derivatively on behalf of            §
CENTURION PECOS TERMINAL LLC,                         §
a Texas Limited Liability Company,                    §
                                                      §
          Plaintiffs,                                 §
                                                      §
v.                                                    §
                                                      §
JAMES BALLENGEE, BALLENGEE                            §
INTERESTS, LLC, JOHN CALCE,                           §      DALLAS COUNTY, TEXAS
STAMPEDE TX ENERGY, LLC,                              §
CENTURION MIDSTREAM GROUP,                            §
LLC, CENTURION TERMINALS, LLC                         §
                                                      §
          Defendants,                                 §
                                                      §
and CENTURION PECOS TERMINAL                          §
LLC, a Texas Limited Liability Company                §
                                                      §
          Nominal Defendant.                          §      44th JUDICIAL DISTRICT

                                  DECLARATION OF JOHN CALCE

          1.         My name is John Calce. I have personal knowledge of every statement made

herein, and they are all true and correct.

          2.         I am a manager of Centurion Logistics LLC (“Centurion Logistics”). I have been

a manager of Centurion Logistics since the date the company was formed.

          3.         Attached hereto as Exhibit A-1 is a true and correct copy of the Company

Agreement of Centurion Logistics.

          4.         To date, Centurion Logistics has not reimbursed me any amount for the expenses

that I have paid or incurred in defending myself against the claims that have been brought against

me in the above-entitled lawsuit.




DECLARATION OF JOHN CALCE                                                                   PAGE 1
9389432.1/SP/38371/0105/100517

                                                                                                      MR.338
Dallas




         MR.339
EXHIBIT A-1




              MR.340
                       COMPANY AGREEMENT

                                   OF

                        Centurion Logistics LLC

                    a Texas Limited Liability Company

                       Effective September 16, 20 B




THE MEMBEnSlllP INTERESTS REPRESENTED BY THIS AGREEMENT HAVE
NOT BEEN REGISTERED lJNDF,R ANY SECURITU:s LAWS AND MAY NOT BE
SOLD,   PLEDGED   OR    OTHRIHVISE  TRANSEi'muu;:o  ABSENT   SlJCH
IU:GISTRATION OR AN EXEMPTION THEREFROM.         THE TRANSFER OF
MF.MBF:RSHIP INTERESTS IS FURTHER RESTRICTED BY ARTICLI( X OF THIS
AGREF:MENT.



                                                        I 1508~~'2 2/1 2120 14

                                                                                 MR.341
                                                     TABLE OF CONTENTS

                                                                                                                                              Page

1\llTICljl·~ 1 DEFl'N l'flONS .................................................................,......................................... t
     1.1.             J)etined Tcrn1s ......................................................................................................... I
      1.1.            LJsage ....................................................................................................................... 4

ARTICLE JI ORGANlZATIONAL MATTERS ...................................................................... 5
  2.1.     Forn1ation .. .............................................................................................................. 5
  2.2.     Na1ne ....................................................................................................................... 5
  2.3.     Registered Office and Agent; Principal Office ....................................................... 5
  2.4.     ·1·crn1 ....................................................... ... ,............................................................. 5
  2.5.      Purposes ............................................................................................... .................... 5
  2.6.     Po\vcrs ..................................................................................................................... 5
  2. 7.    Co1npany Property ................................................................................................... 5
  2.8.     lnitial IV1cn1bers ....................................................................................................... 6
  2.9      Options to Acquire Additional Units ....................................................................... 6
  2.10     Consent of lvf anagers ............................................................................................... 6
  2.1 l.   Status of Managers and Members ....... .................................................................... 6
  2.12.     Unit C:crtificatcs ...................................................................................................... 6
  2.13.    No State Law Partnership .............................. .......................................................... 6

ARTICLE III CAPITAL CONTRIBUTIONS; CAt•tTAL ACCOUNTS .............................. 6
  3.1 .    Initial Capital Contributions .................................................................................... 6
  3.2.     Additional Capital Contributions ............................................................................ 6
     3.3.             Capital Accounts ........... .............. ................................................................... ..... .... 7
     3.4.             No Right to Return of or Interest on Capital Account ............................................ 7
     3.5.             Ivlen1bcr Loans ........................................... .............................................................. 7
     3.6.             I\1etnber Notes ......................................................................................................... 7

ARTICLE IV ALJ,OCATIONS AND DISTRIBUTIONS ....................................................... 8
  4. 1.   A!location of Profit or Loss ..................................................................................... 8
  4.2.    Distributions of Distributable Cash ......................................................................... 8
  4.3.    \Vithholding ............................................................................................................. 8
  4.4.    Limitation on Distributions ..................................................................................... 8
  4.5.    No Right to Partition or Distribtttions in Kind ........................................................ 9

ARTICLE V 1'i·l1\NAG 1~1\lf EN,.r .................................................................................................... 9
  5. I.   Management and Control of Company Business ................................... ................. 9
  5.2.    Delegation of Authority ........................................................................................ . l 0
  5.3.    Limitations on Manager Authority ........................................................................ l 0
  5.4.    Reliance ................................................................................................................. 10
  5.5.    Compens,\tion and Expenses of Members and Managers ..................................... I0
  5.6.    Standards of Manager and Member Conduct ........................................................ I0
CO\IP.\'\\ A<au:nn::-.r OF Cl:\Tl IUO:'\             L0<;1sncs LLC
                                                                      P.\(;E i


                                                                                                                                                         MR.342
     5. 7.           Resignation, Removal, an<l Replacement of Manager ........................................... l I

ARTICLE VI LIABILITY AND INDF:MNIFICATION ....................................................... 13
  6. l.   Limitation of Liability ....... ,................................................................................... 13
  6.2.    [ndcmnification by Company ................................................................................ 13
  6.3.    Conduct Not Protcctl:!d .......... ................................................................................ 13
  6.4.    Insurance ....................................................................... ........................................ 14
  6.5.    Survival ................................................................................................................. 14

ARl'ICLE VII BOOKS AND RECORDS; REPORl'S .......................................................... l4
  7. l.    Maintenance of and Access to Books and Records ............................................... 14
  7.2.     Fiscal Year ............................................................................................................. 14
  7.3 .    Financial and Operating Reports .......................... ................................................. 14
  7.4.     Tax Reports ........................................................................................................... 15
  7.5.     Transmission of Communications ......................................................................... l 5

Al{rl ~ I (:LE   VI II   '1~1\X   l\i1A T'l~l·~RS ......................................... ,. ,.................................................. 15
     8.1 .           ·rax Classification ... .................................... ............ ...................................... ......... 15
     8.2.            Co1npa11y Returns ................................................................................................. , 15
     8.3.            Tax Elections .................................................................................... .................. .,. 15
     8.4.            Consistent Reporting ............................................................................................. 16
     8.5.            Tax Proceedings ...................................... ............................................................. . 16
     8.6.            Information and Documents to Company ............................................................. 16

ARTICLE IX MEETINGS ANO VOTING OF MEMUERS ................................................. 17
  9. l .  i\:1cetings .................................................... ............... ............................................. 17
     9.2.            Voting .................................................................. .... ........................ ...................... 17

ARTICLI<: X TRANSFER OF MEMBERSlllP l.NTERESTS............................................... 17
   I0.1 .   Li1nitation on Transfers ......................................................................................... 17
   l 0.2.   Permitted Transfer of Membership Interest .......................................................... 18
  10.3.     Conditions to Permitted Transfers of Membership Interests ................................. 19
   10.4.    Effective Date; Distributions................................................................................. 19
   l 0.5.   Transferor's Obligations .................................... .................... ................................ 20
   10.6.    Assignee· s Rights and Obligations ...................... .................................................. 20
   l 0.7.   Effect and Consequences of Prohibited Transfor .......................................... ........ 20
   l 0.8.   Agreements of Spouse; Sole Management Community Property ......................... 21

AnTICLE XI ADMISSION OF NF.W MEMBERS ............................................................... 21
  11 .1.  Substituted N'le1nbcrs ................... ... ....................................................................... 21
  11.2.   Additional \1ernbers .................................................... ........ ............................ ...... 22

ARTICLE XII WITHDRAWAL OR l~l(iVlOVAl, OF MEMBERS ..................................... 22
  12. l.   \Vithdrawal of Members ........................................................................................ 22
  12.2.   Removal of Members ............................................................................................ 23
C 0 .\11'.\,, )' AGllH.m ::-.;r OF CL\ H IUO'i Lm;1sncs LLC
                                                                     P.\CE   ii

                                                                                                                                                         MR.343
     12.3.           Optio1wl Redemption of Membership lnterest ........................ ., ............................ 24
     12.4.           Status of Fonner tvkmber. ........ ., ......................... ......... ......................................... 24

ARTICLE XIII WINDING UP AND TEl~MINATION ......................................................... i.t
  13.1.   Events Requiring Winding Up .............................................................................. 24
  13 .2.  \Vin cling Up Procedures ........................................................................................ 24
  l 3.3.  Continuation Without Winding Up ....................................................................... 25
  l 3.4.  Liquidation of Assets and Application and Distribution of P1·occeds ................... 25
  13.5.   Certificate ofTermination ..................................................................................... 26
  13.6.    Rcinstaten1cnt ........................................................................................................ 26

Alt.TICLF'" XI\' \'A l.jlJ1\TION ................................................... ,. ................................................ 26
     14.I.    rairValue of Company Property .......................................................................... 26
     14.2.    Fair Value of Membership Interest ....................................................................... 27

ARTl(:LF. XV {;l(NF.RAI . . 1•I<OVISIONS ................................................................................. 28
  15.1.     1\n1end1ncnts........................................................................................................... 28
  15.2.     Notice .................................................................................................................... 28
  15.3.     Governing Law; Consent to Jurisdiction ............................................................... 29
  15.4.     Waiver ................................................................................................................... 29
  15.5.     Entire 1\grcc1ncnt ................................................................................................... 29
  15.6.     Successors and ;\ssigns ......................................................................................... 29
  15.7.     ·rhird-Parties .......................................................................................................... 29
  15.8.     Scverability ............................................................................................................. 29
  15.9.     C'onstruction .......................................................................................................... 29
  15.lO.    i.:xecution of 1\grccn1ent ........................................................................................ 30
     15.11.          Further i\ssurances ................................................................................................ 30
     15.12.          Po\vcr of 1\ttorney ................................................................................................. 30

EXHIBl'f A MEMBEHS' CONTIUBUTIONS AND Pli:RCENTAGE                                                           INTEl~ESTS ......... 32

EXHllllT B SPOUSAL .JOINDER AND CONSENT ............................................................... l

APPENDIX A PRINClPLES OF ALLOCATION ............................................................... A-l
  A.I     lntroduction ......................................................................................................... 1\-l
  1\.2    Definitions ........................................................................................................... ,4.-1
  1\.3    (~apital Accounts ....................................... , ......................................................... 1\-4
     A.4             Allocations ot'Nct Profit and Net Loss ............................................................... 1\-5
     A.5             ·rax 1\llocatio.ns ................................................................................................... A-8




C0\11'.\:'\\   Ac1u:nus1 OF CE:\ lllUO' LOGISTICS LLC
                                                                  r.\<a: iii
                                                                                                                          11:'08~8.\   2 ~/121201-1

                                                                                                                                                      MR.344
                                     COMPANY AGREEMENT
                                                    OF
                                  CENTURION LOGISTICS LLC

        This agreement ("AgreemenC) is entered into effective as of September 18, 2013 (the
··Effective Date"), by the perso11s identified on the signature page(s) hereof.

                                               RECITALS

       A.      The Company was formed pursuant to a Certific<tte of formation filed with the
Secretary of State of the State ofTexas effective as of September 16. 2013.

      13.    The parties desire to provide for the regulation and management of the affairs of
the Company according to this Agreement and the Code.

       NOW, THEREFORE, the parties agree as follows:

                                             ARTICLE I
                                             DEFINITIONS

        1, 1.   Defined Terms.

       The following definitions and the definitions set forth in Appendix A to this Agreement.
apply to the terms used in this Agreement for all purposes.

       ''Additional Capital Contribution" means the sum of cash and the Fair Value of any
property contributed to the Company with respect to a Membership Interest as pennitted under
this Agreement, but does not .include an Initial Capital Contribution.

       ·'Additional Member" means a person who acquires a Membership Interest from tl1e
Company in exchar1ge for a Capital Contributi011 and is admitted to the Company as a Member
pursuant to Section 11.2 after the Effective Date .

       ..Affiliate" means a person \Vho directly or indirectly controls, is controlled by. or is
under common control with the person in question.

        ·'Agreement'' means this Agreement, as it may be amended, supplemented or restated
fron1 time to time .

       ..Assignee" means a person to whom a Membership Interest has been transferred by a
Member or Assignee in a Permitted Transfer, or in a Prohibited Transfer that the Company is
required by law to recognize, but who has not become a Membet·.

       ..Capital Contribution" means the. sum of the Initial Capital Contribution and Additional
Capital ContrLbutions. if any , with respect to a Membership Interest.


CO:\lP\'.\\ AGRt:DU:'.\T 01.- Cr.~HRIO'.\ LOGISTICS LLC                                   EXHJBITA
                                                                                 l 13Ul!-18v2 2! l2i21Jl-I

                                                                                                             MR.345
     ''Certificate of Formation'' me~ns the certificate of f9rmation filed with respect to the
Company as provided in Section 2.1, as such certificate may be corrected, amended, or restated .

      ..Certificate of Membership Interest" means a certificate representing each Member's
Meinbership Interest in a form approved by the Managers.

       "'Code;· means the Texas Business Organizations Code, as amended from time to time,
and any successor law.

       "Companv" means the limited liability company forrued pursuant to the Certificate of
Formation.

        "Control" means the possession) directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person. vvhether through ownership of voting
secmities, by contract. or otherwise.

       "Damages:• means any expense or loss (including any court. costs, judgment, or
settlement payment, penalty, fine, tax, and reasonable attorney's fees or other dispute resolution
costs) paid or incurred in connection with or as a consequence of any Proceeding, net of any
insurance or other recoveries received by the Indemnified Paity with tespect to the foregoing.

        '~Distributable Cash" means the cash and cash equivalents held by the Company
(determined in accordance with its accounting policies fol' reporting cash flows), less any amount
of such cash that the Managers determine should be retained for the reasonable current and
future needs of the Company business.

       ··Effective Date'' means the effective date of this Agreement as set forth             111   the
introduction to this Agreement.

        "Fair Value" means. with respect to an asset. its Fair Value determined according to
Article XIV.

     ''Formation Date" means the effective date of the original Certificate of Formation of the
Company.

        "Indemnified Person" means (a) a Member or Assig11ee; (b) a Manager, (c) a Liquidator
(if any); (d) any Affiliate of the Company. a Member or Assignee. a Manager. or a Liquidator;
and (e) any governing person, officer, employee, agent. or ovvner of the Company, a Member or
Assignee, a Manager, a Liquidator, or any Affiliate of any of the foregoing. A person is an
Indemnified Person whether or not such person lrns the status required to be an Indemnified
Person at the time any Proceeding is made or maintained as described in Article VI or at the time
any amendme11t to this Agreement is proposed under Section 15. L

        "'Index Rate'' means the rate specified in section 302.002 of the Texas Finance Code.



C0:\11'.-\~Y AGRF:F.:m:\"l Of o::--:n·Rro:\ LOGISTICS LLC                                 ExnmH A
                                                                                    11508J8v2 2/12i2014
                                                                                                          MR.346
       "lniiial Capital Contribution·· means the sum of any cash and the Fail' Value of any
property contributed to the Comp:.my by a Meinber with n~spect to a Membership Interest in
connection with the original issuance of the Membership Interest by the Company as set forth on
Exhibit A or determined pmsmmt lo Section 11.2.



       ··1. R.~~" means the Internal Revenue Code. of l 986. as amended, or any successor thereto.

       ··Liquidator" is defined in Section l 3.2(b).

        " Manager'' means the person designated as manager of the Company in the Certificate or
Fonnutiot1, any person who becomes a Manager hereunder, including a replacement Manager,
and tbe Members when they arc acting pursuant to Seetio11 5.7(e), in each case in such person·s
capacity ns Manager m'ld for the period that such person has such capacity . .. Managers·· means all
pcrso11s that arc designated as a Manager, collectively.

       ·'Mandatory Distribution" means any distribmio111hai a Member is entitled to receive and
as to which the Member has attained the status of a creditor under Section l 01 .207 of the Code.

      "Member'' means any person identiticd as a member on Exhibit A. and any other person
who becomes a member of the Company pursuant to this Agreement who has not cca'.:ied to be a
Member. "Members·· means all persons thal arc Members, collectively.

       "Member Notes" is delined in Section 3.6.

        "Membership lntcrcsf' tneans a Member's or Assignee·s economic interest in the
Company. The term includes the Member's or Assignee's right to receive allocatio11s or profits
and losses c.md distributions as described in Article IV, and other rights and obligations under this
Agreement or the Code of an Assignee who has not been admitted as a Member. but does not
include any right to participate in management or any otht:!r right reserved under this Agreemcnl
or the Code exclusively to a Memher .

        .. Percentage Interest .. means. as to any Member or Assignee. the Membership Interest of
the Member or Assignee expressed as a pcrcemage. which percentage shall be determined from
time to time by dividing the number of Units held hy such Member or i\ssignee by the l.J nits hi...~td
by all Members and Assignees.

       .. Permitted Transfer.. means any transfer of a    Membcr~hip    Jntcrest that is described in
Section I0.2 .

       .. Proceeding" means (a) any thn:atencd. pending. or completed action or other
prncecding. whether civil. criminaL administrative, arbitrative, or investigative: (b) an appeal ot'
any such proceeding: and (c) an inquiry or investigation that could lead to any sw.:h prcceeding.



                                                                                                F:\llllU'I' A
                                                                                       I 1 ~08-1:\\2   2 ' 121~0[-I


                                                                                                                      MR.347
       ··Prohibited Transfer" means any lrnnsfcr of a Membership Interest that is not a Permit led
Transfer.

        ""Requisite.     Perccnta~e"         means one or more Members owning more than seventy five.
pt:n.:ent (75.0%) of tht: Pen.::cntHge Interests owned by nil Members entitled to vote on the
particular issue.

       ··substituted Member" means a person \vho is admitted as a tvleinber to the Company
pursuant ;o Section I I. l with respect to the transfer of an existing Mcmbershi p Intcrest.

        ··Units~·   means units of Membership Interest in the Company.

         l.2.       Usag~.


         In this Agreement. unless a clear contrary intention appears:

        (a)         the singular number includes the plural number and vice versa:

       (b)     reference to any person inclt1dcs such person's successors and assigns but, if
applicable, only if such successors and assigns arc not prohibited by this Agreement, and
rcforencc to a p~rson in a particular capacity excludes such person in any other capacity or
individually;

        (c)         reference to any gender includes the .other gender and the neuter;

      (d)    reference to any agreement or other document means such agreement or other
document as amended or modi tied and in effect from timl:! to time;

        ( c)    reference to nny statute, regulation. or other legal require1ncnt means SllCh legal
requirement as amended. modified., codified. replaced, or reenacted. in whole or in part. and in
effect from time to time. including mies and regulations promulgated thereunder. and reference
to any section or other provision of any legal requirement tne11ns that provision of such legal
!'equiremcnt from time lo time in effect and constituting the substantive mncndmc111,
moditicn'.ion. enc.Ii Ii cation. rcplnccment. or reenactment or such section <W other provision:

         (t)  ..hereunder," .. hereof," "hereto ... and words of similar impol't refer to this
Agreement as a whole nnd not to any particular Article. Section. or other provision hercot:

        (g)    .. including" (and witJ1 correlative meaning ··include .. ) means          includit~g    withot1t
limiting the generality of any description preceding such term:

         (h)        .. or"' is   u.s~d   in the inclusive sense of ··and/or"':

         (i)        with    r~spect to the determination of any period of tiirn:. ··from .. rncm1s ··from and
including.'· and ··10 ..    means ..to but excluding··~ t1nd


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       (j)     references to agreements or other docwnents refer as well to all addenda, exhibits,
schedules, or amendments thereto.

                                          ARTICLE II
                                    ORGANIZATIONAL MATTERS

         2. l.
             Formation. The Company was formed pursuant to the Certificate of Formation of
the Company filed with the Texas Secretary of State effective as of the Formation Date.

        2.2. Name. The Company's name is as set forth in the Certification of Formation.
The Managers may change the Company name at any time without the approval of any Member
by filing a Certificate of Amendment. The Managers shall provide notice of the change to all
Members. The Company's business may be conducted under its name and/or any other name or
names deemed advisable by the Managers. The Managers shall cause to be executed and filed of
record all assumed or fictitious name certificates required by law.

         2.3.      Registered Office and Agent; Principal Office.

       (a)    The street address of the initial registered office of the Company 'in Texas and the
name of the initial registered agent of the Company are as set forth in the Certificate of
Formation. The Managers may change the Company's registered office or registered agent at.
any time by filing a Change of Registered Agent and/or Registered Office as provided in the
Code. The Managers shall provide 11otke oJ the change to all Members.

       (b)     The address of the principal ot1ice of the Company in the United States where
records are to be kept or made available under Section 101.501 of the Code shall be as
determined by the Managers. The Managers may change the Company's principal office in the
United Slates at any time upon notice to the Members. The Company shall keep at its registered
office and make available to a Member oll reasonable request the street address of the
Company· s principal office in the United States.

       2.4. Tenn. The Company will exist perpetually and will continue until terminated in
accordance with Artiele XHI.

       2.5.. Purposes. The purposes of the Company are to engage in any activities that are
permitted under applicable laws.

       2.6, Powers. Subject to any limitations in this Agreement. the Company may exercise
the power to do any and all acts reasonably related to its purposes.

         2.7.      Company Prope11y.

        (a)    All Company property shall be owned in the name of the Company and not in the
name of any Member. No Member or Assignee will have any interest in such Company property
solely by reason of the Member's status as a Member.


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        (b)      The Managers shall deposit or invest all funds of the Company in an account or
acc<:runts in the name of the Company. No funds other than the ft.mds of the Company may be
deposited therein. The funds in such accounts shall be used exclusively for the business of the
Company (including distributions to the Members) and may be withdravn1 only by persons
approved by the Managers.

        2.8. lnitial Member~. In connection with the formation of the Company, the persons
executing this Agreement as of the Effective Date (.. Initial Members'') arc admitted to the
Company as Members. The number of Units held by each of the Initial Members '~s of the
hffcctivc Date arc set forth next to the Initial Members' names on Exhibit .. A.''

        2.9    Consent of Mell)hcrs. Each person executing this Agreement consents to the
admission as members in the Company all of the Initial Members and all other persons who are
Members es of the date such person executes this Agreement and further consents to the issuance
of additional Units as provided in Section 2.9.

      1. l 0. Status of Managers and tvlcmbcrs. Except as otherwise provided by this
Agreement, the Managers have the status, rights. and obligations of a manager in a limited
liability company as set forth in the Code, and em:h Member has th1.: status. rights, and
obligations of a member ill a limited liabiHty company as set forth in the Code.

         2. l l . Unit Certificates. Each Member's Units may be represented by a Unit Certi licate.
If Unit Certificates are issllcd. each Unit Certificate shall be numbered and registered in the
records of the Company as they arc issued, and signed by any of the Managers. The holder of
any Unit Certificate shall promptly notify the Company of any loss or destruction of the
certi licate, and the Managers shall cause a replacement certificate to be issued to the holder upon
receipt or satisfactory evidence of the loss, destruction, or mutilation or the certificate and
satisfaction of other reasonable conditions.

        2.12. ~o State Law Partnl!rship. The Membets intend that the Company is not a
partnership or joint venture, and that no Manager or Member is a partner or n joinl venturer of
any other Manager or Member for ~ny purposes other than income tax. purposes. No provision
of this Agteement may be construed to suggest othervvise.

                                                ARTICLE III
                      CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS

         J_J.     Initial Capital Contributions. En.ch Member· s lnit'ial Capital Contribution is set
forth nn Fxhihit A.

       3.2.    Additional Capital Contributions. A Member ls not required lo make Additional
Capital Contributions to the Company. !\o Member has the right or is permitted to make
Additional Capital Contributions unless (a) all or the Managers and a Requisite Percentage
approves such Additional Capital Contribution alter notice to all Members of (i) the amount or
the Additional Capital Contribulion to be made and (ii) other material information relevant to the

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proposed Additional Capital Contribution, and (b) aH Members are afforded an opportunity to
participate in the Additional Capital Contribution in accordance with their relative Percentt'lge
Interests.

        3.3. Capital Accounts. The Company shall establish a separate Capital Account for
each Member and Assignee. The Capital Accounts shall be maintained according to the
provisions of A_ppendix A.

        3.4. No Right to Return of or Interest on Capital Account. No Member may demand
or rece.ive the return of its Capital Contribution or any portion of its Capital Ac~mmt, except as
provided ln this Agreement and the Code. The Managers do not have any personal liability for
the repayment of any Capi.tal Contributions of any Member. No interest will accrue or be paid
with respect to the Capital Contributions or Capital Account of any Member.

        3.5. Member Loans. Subject to the approval of all of the Managers, the Company may
borrow money from one or more Members to the extent the Managers deem appropriate to the
conduct of the Company business on terms that comply with the requirements of Section 5.6(c)
(relating to related party transactions). The amount of any loan made to the Company by a
Member will not constilute a Capital ContribtJtion or otherwise affect such Member's Capital
Account or Membership Interest.

         3.6. Member Notes. 111 connection with the execution of this Agreement, the
Company expects to issue promissory notes to ·certain Members in connection with assets that
the Members have transferred to the Company or expenses that the Members have incurred on
behalf of the Company (''Member Notes"). For federal income tax purposes, the Members
intend that each Member Note be characterized as a pteferred membership interest (equity) in the
Company, that a holder's rigbt to any interest or original issue discount on the Member Note be
characterized as a r~ght to a distributive share of Company inc.ome and not as a guaranteed
payment under l.R.C. Section 707(c), and that all payments with respect to the Member Note be
characterized as a distribution with respect to a membership interest. Allocations of profit 01· loss
and tax items as provided in Section 4.1 and Section A.5 of Appendix A shall be adjusted as
necessary, as detenr1ined by the Managers, to reflect the preferred membership interest deemed
to be held by the holders of the Member Notes. For this purpose, the Members intend that 011ly
net profit or net loss, and only net taxable ·income or loss (rather than items thereof). for any
allocation pedod will be allocated with respect to the Member Notes. For example, if there is net
taxable income for the period from the issue date of the Member Notes through the end of2009,
it is intended that such net taxable income will be allocated to the Member Notes ho1ders to the
extent of any aecrued interest or original issue discount on the Member Notes, and if there is a
net taxable loss for such period, it is intended that such net taxable loss will be allocated first to
the Members to the extent of their Capital Contributions and then to the holders of the Member
Notes.




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                                              ARTICLE IV
                                ALLOCATIONS AND OISTRIBUTIONS

       4.1. ~Hocation of Profit or Loss. Subject to Scction_.~Q. Company profits and losses
sh&ll be allocated among the Members and Assignees in <~ccordance with the prov'.sions of
Appendix A or as is determined by the ~i{anagcrs. The Members are aware of the income tax
consequ~nces of the alloc~nions.

        4.2.         Distributions of Distributable Cash.

        (a)     Except as otherwise provided in Section 4.3 (rdating to \vl111holding). Section 4.4
(relating to limitations on distributions), or Section 13.4 (relating to liquidating distributions}\
any Distributablt! Cash shall be distributed not latt!r than the 30'11 day after the end of eacl1 fiscal
qtiarter to the Members and Assignees according to their Percentage Interests unless otherwise
detennine<l by the Managers, The Managers may provide for a record date \vith respect to
distributions.

       {b)           To the extent it may lawfully do so. the Co1npany shall make distributions to
Members and Assignees in accorda11ce with Section 4.2(a) and Section l 3.4(a)(ii.i) at such times
and in such amounts as the Managers determine is sufficient to enable Members and Assignees
to make payments of tax due (including any applicable interest and penalties) with respect to
their allocable shares of the Company's taxable inc.ome. Unless the Managers determine
otherwise. the taxes due for each Member and Assignee shall be calculated by assuming th..n the
Member err Assignee is ~n individual taxed ~H the highest tax qtte applicable to the type of
income involved.

        4.3.   Withh9lding. The Company shall \Vithhold from distributions. or pay on behalf of
a Mcmbe1       Assignee, all amounts that the Managers determine the Company is required to
               Ol'
\Vithhold or pay on behalf of such person (including fodert'll and state income tax withholding).
All amounts so withheld from distributions are deemed to have hcen distributed to the person
otherwise entitled to receive the amount so withheld. To tl~c extent an amount is paid by the
Company on behalf of a Member or Assignee but not \Vithhe.ld from a distribution, the arnount
pnid constitutes a loan to such Member or Assignee. Si1ch loan hears interest at the Index Rate
and is repayable on demand or. at the election of the Managers. is repayable out of distributions
to whicb such Member nr Assignee \vould otherwise be entitled.

        4.4.         Limitation on Distributions.

          (a)    The Company may not nrnkt: a distribution to a Member or Assignee if it would
rcn<.lt!r the Company in!-iolvent. determined in accordance with Section I0 l.206 of' the Code. A
Member or 1\ssigncc \.vl10 receives a distribution in violation of Section I01.206 of the Code is
not required to n:turn the <listrihution except as required in Section I01.206 of the Code.

       (b}     The l\.1embers shall look solely to the assets of the Company for any distributions,
including liquidating distributions. If the assets of the Company remaining after the payment or

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discharge, or lhe provision tbr payment or discharge. of the Company liabilities are insufficient
to makl.! any distributions. no Member has any recourse againsl lhe separate assets of any other
\!ember.

        4.5.     No Right to Partilion or Distributions in Kind. No Member has any right. and
waives any right that it might otherwise have, to cause any Company properly to he partitioned
and/or di-;.tributed in kind. Except as provided in Section lJ.4(d) (relating to liquidating
distributions), the Company may not make any distributions in k.ind.

                                        ARTICLE V
                                       MANAGF:Mf,NT

       5. l.   Management and Control of Company Business.

       (a)     Su~ject   to the limitations set forth in this Agrcl.!ment. the Managers have
exclusive authority to manage and wmluct the Company's businc::;s. The Mmmgers shall do all
things appropriate to carry out the Compnny's purpose. Exccrt as otherwise provided in this
Agreement, all actions that the Managers may lake and all determinations that the Managers may
make pursuant to this Agreement nrny be taken and mttde in the absolute discretion of the
Managers.

        (b)      The initial Managers of the Company are: John Calce. Antonio Albanese. and
Marc Marrocco. Each Manager will serve as a Manager until his successor is appointed pursuant
to Section 5. 7( t).

         (c)    The Members may not take part in the management or control      or
                                                                                the Company
busi11ess or bind the Company in their capacity 'is Members. i\ Member may have the status of a
Manager or governing person of a Manager or the Company and may possess and exercise the
pc)\vers and attthority associated with such status.

        (d)     Meetings of the Managers. shall be held from time to time as determined by the
Manages. Managers may participate in_any meeting by means or video or audio conferencing or
similar communications equipment whereby all Managers can hear each other. No notice of a.ny
meeting of the Managers is required to be given. At all meetings of Managers. the presence of a
majority ·o f the Managers shall be necessary and sufficient to constitute a quorum for the
transaction of business unless a greater number is required by this Agreement law or the
Certificate of formation. Each Manager will have one vote. Except as otherwise provided in
this Agreement. the act of a majority of the Managers present at a meeting at which a quorum is
pr('sent shall be the act of the Managers. If a quorum shal I not be prc!oient at any meeting or
Managers, the Managers present may adjourn the meeting from time to time. \Vilhout notice
other than announcement at the meeting, until a quorum shall be ~wcsenl.

        (e')  Any action reqt1irt:d by the Code to be takc:n at any annual or special meeting of
Managers. or any action \vhich may be tnken nt any annual or special meeting of Managers. may
be taken without a meeting. without prior notice. nnd without a vote. if a consent or consents in

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writing, setting forth the action so taken, shall be signed by Managers having not fewer than the
minimum numbet of votes required to approve such action under the Code, the Certificate or this
Agreement. A facsimile or similar reproduction of a writing signed by a Manager, shall be
regarded as signed by the Managers for purposes of this Section 5.1 (e).

         5.2.     Delegation of Authority,

       (a)     The Managers may cause the Company to hire employees and agents, and may
delegate to such persons any of its authority hereunder, as the Managers deems appropriate for
the conduct of the Company's business.

        (b)     The Managers may appoint officers of the Company as the Managers deem
appropriate. The onicers may be appointed for such terms and may exercise such powers and
authority and perform such duties as determined by the Managers. An officer need not be a
Member of the Company. Any two or more offices may be held by the same person. Any
officer elected or appointed by the Managers may be removed, with or without cause, at any time
by the Managers. Each officer will hold office until his successor is chosen and is qualified in
his stead, or tmtil his death. resignation. or removal from office. Any vacancy in an office
because of death, resignation, removal, or otherwise may be filled by a person appointed by the
Managers. An officer has the same fiduciary duties as a Manager as described in Section 5.-6.

        5.3.   Reliance, Persons dealing with the Company may rely conclusively on the
authority of the Managers as set f011h in this Agreement. Every document executed by a
Manager with respect to any business or prope1iy of the Company is conclusive evidence in
favor of any pel'Sot1 relying on the docl!ment that (a) at the time of the execution and delivery of
the document this Agreement was effective, (b) the document was executed in accordance with
this Agreement and is binding upon the Company, and (c) the Manager was authorized to
execute and deliver the document on behalf of the Cornpany.

        5.4. Compensation and Expenses of Members and Managers. Members and Managers
arc not entitled to any salary, fee, or other remuneration (other than distributions with respect to
the Member's Membership (nterest) for providing property or services or other consideration to
or for the benefit of the Company in their capacity as a Member or Manager, except that the
Managers are entitled to reimbursement from the Company for reasonable out-of-pocket
expenses paid or· incurred on behalf of the Company. The Company shall pay all out-of-pocket
costs incurred in organizing the Company. This Section 5.5 does not limit or enlarge the
Manager's or a Member's rights to liability protection or indemnification under Article VI. and
does not limit the Company' s ability to enter into transactions with Members in their capacities
other than as MembeJs in accordance \-Vith Section 5.6{c).

         5.5.      Standards of Manager and Member Conduct.

      (a)     In General. Each Manager shall manage and condl1ct the Company's business in
good faith and in a manne1· the Manager reasonably believes to be in the Company's best


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lnkrest. f\ ·Manager docs not violate its obligations under this Section 5.6(aJ or the Code unless
the Manager engages in conduct described in Section 6 . 3(~ (relating to improper conduct) .

        (b}      Outside Activities of Managers and Members. Each Manager shall devote to the
Company'~      affairs only such timt:. and rcsomccs as the Managers deem necessary for the conduct
and wind'ing up of the Corn puny business. The Managers and Members or their Assignees may
engage in or have an interest in other btlsincss ventures of every nature and description,
independently or \Vltb others, including the ownership and operntion of businesses similar lo or
in competition with. directly or indirectly, the Company. Neither the Company nor a11y Member
or Assignee has. so lcly as a result of such person's interest in the Company. any right to acquire
any rights in or to uny such other business venture or to the income 01· profits derived from any
such other business venture.

          {c)     Related Party 'TnrnsQctions. Except as otherwise provided in this Agreement lhc
Managers, wh1.:n acting on behalf of the Coinpany, may purchase property from. sdl prnpcrty to,
or otherwise deal \Vith any Manager, Member. or Assignee, acting on its own behalf. or any
i\ffili.ate of any Manager, Me1nber, or Assignee, but any such tnmsaction shall be on terms that
are no less favorable to the Company than if I he tnmsaction had been entered into with an
independent third party. No provision of this Agreement requires disclosure of any t1·ansaction
lo, and approval of the transaction hy. any disinterested governing persons of the Company or
the Members as provided in Section l 01 .255 of the Code.

        5.6.      Resignation. Removal, nnd Replacement of Mmmger.

        (a)      Resignation. ;\ Manager may resign as miinagcr or the Compm1y only upon
notice to all Members. If lhcrc is no resignation date specified in the notice, ()r if the specified
date is earlier than 90 days following the date tht! notice is given 10 lvlc111bcrs (""notice date"), ihe
Manager's resignation is effective on the 90111 day following the notice date. If the specified
resignation date is later than 180 days after the notice date, the Manugcr's resignation is cffl:clivc
on the 180'11 day following the notice date. ;\Manager is deemed to have resigned as manager of
the C01npany upon the fo.110\ving events:

                {i)    any event specified in Section 153.l55(a)(4) or Section 153. l55(n)(5) of
       the Code (relating to bankruptcy or insolvency protecdings with respect to a genera!
       partner). applied as i r the Mannger were a general partner;

                  (ii)if the M.anag,cr is an individual, the Manager· s death. the appointment of a
       guardian or general conservator for the Manager. 0r a judicial detcnuination that tltt:
       Manager is incnpnble of perfonning the Manager ·s duties under the Agreement: or

               (iii)   if the Manager is an entity, the termination     or the Manager's existence or
       sw;pension of lhc Manager· s right to do business.




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        (b)     Removal for Cause. A Manager may be removed as manager of the Company
only upon the affinnative vote of a Requisite Percentage if there is cause for removal as specified
in Section 5. 7Cc) and the Company has received a written opinion of counsel that:

                (i)     cause for removal as specified in Section 5 .7(c) exists; and

               (ii)     the removal of the Manager is not prohibited under any loan agreements,
       contracts, or other applicable legal requirements.

       (c)    Definition of Cause.         Cause for removal exists only if one or more of the
following conditions has occurred:

                (i)     there has been a change in Control of the Manager;

                (i [)  a final judgment of a court of competent jurisdiction has been entered that
       the Manager's removal is necessary to comply 1,vith any requirements, conditions, or
       guidelines contained in any opinion, directive, order, ruling, or regulation of any federal or
       state agency or judicial authority or contained in any federal or state slatute.

      (d)     Status of Fonner Manager. A Manager who has resigned in violation of this
Agreement or who has been removed has the status of an Assignee with respect to any
Membership lllterest held by the former Manager.

       (e)     [ntcrim Management. During the period that the Members may elect a
replacement Manager as provided in Section 5.7(t) and prior to such election (or an election to
wind up the Company). the Members may by vote of a Requisite Percentage appoint an interim
manager having authority to manage and conduct the Company's business as the Manager as
provided herein. If an interim Manager is not appointed. the authority to manage and conduct
the Company's business is vested in the Members who may act by vote of a Requisite
Percentage. and who may by vote of a Requisite Percentage appoint a committee of one or more
persons to exercise the authority of the Manager until such time as a replacement Manager is
elected or the Company commences winding up. The. Members shall file any required
amendments to this Agreement or the Certificate of Formation to reflect the resignation or
removal of the former Manager and the appointment of the interim Manager or the conversion of
the Company to a member-managed Jimited liability company, and all Members approve any
such amendments.

        (t)     Election of Replacement Manager. ff a Manager dies. is disabled. resigns, or is
removed as the manager of the Company, within 90 days follo\ving such death, disablement,
resignation or removal a Requisite Percentage may elect a replacement Manager of the Company
effective as of the date of the former Manager's death. disablement, resignation. or removal. The
Managers shall file any reqt1ired amendments to this Agreement to reflect the death. disablement,
resignation, or removal of the former Manager and the election of the replacement Manager.



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                                           ARTICLE VI
                             LIABILITY AND INDEMNIFICATION

        6. L     Limitation of Liability. No Member or Manager is Hable for any debts.
obligations, or liabilities of the Company. Subject to Sectio116.3, an Indemnified Person is not
liable to the Company or any other Indemnified Person for any Damages arising from any
Proceeding relating to the conduct of the Company's business or relating to any act or omission
by the Indemnified Person within the scope of the Indemnified Person·s authority in the course
of the Company· s business, including any breach of any fiduciary duties, or for any misconduct
or 11eglige11cc on the part of any other person who is an employee or agent of the Company.

        6.2.   Indemnification by Company. To the fullest extent permitted by applicable law,
and subject to Section 6.3, the Company indemnifies and holds harmless each Indemnified
Person from and against any Damages arising from any Proceeding relating to the conduct of the
Company's business or to any act or omission by such Indemnified Person within the scope of
the Indemnified Person's authortty in the course of the Company's business or for any
misconduct or negligence on the part of any other person that is an employee m· agent of the
Company. An Indemnified Person· s expenses paid or incurred in defending itself against any
Proceeding shall be reimbursed as paid or incurred. The rtght to indemnification {!Onferred in
this Article VI is not exclusive of any other right. that any person may have or hereafter acquire
under any statute, agreement, vote of Members, or otherwise:

       6.3.     Conduct Not Protected.

       (a)      This Article VI does not operate to limit liability or to indemnify a person to the
extent the person is found liable pursuant to a final judgment of a cout1 of compet~nt jurisdiction
for:

                (i)   an act or omission that. involves gross negligence, intentional misconduct,
       or a knowing violation of law;

                (ii)  a transfer or attempted transfer of all or a portipn of a Membership Interest
       in a Prohibited Transfer, a Manager's resignation in violation of Section 5.7(a). or a
       Member ceasing to be a Member in violation of Sectio11 12. l(a);

              (iii)   a willful or reckless material breach of this Agreement or any other
       agreement relating to the Company's bi1sin.ess; or

                (iv)    an act or omissiott for which indemnification is prohibited by law.

        (b)   No provision of this Agreement reqltires the Company to pay or incur any amount
for which indemnification is not permitted under this Article VI.

        (c)    Any payments made to or on behalf of a person who is later determined not to be
entitled to such payments shall be repaid by the person to tl1e Company. The Company may

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require, as a condition to the payment of any amounts pursuant to Section 6.2, that the
Indemnified Person provide to the Company (i) a written anirmation by the Indemnified Person
of the perso11 ·s good faith belief that the person has met the standard of conduct necessary for
it1demnification under this Section 6.3: and (ii) a written undertaking by or on behalf of the
Indemnified Person to repay lhe amount paid or reimbursed if the person has not met that
standard or if indemnification is otherwise prohibited by law·.

         6.4.    Insurance. The Company may maintain insurance to protect any person against
a11.y expense, liability, or loss, \Vhether or not the Company would have the power to indemnify
sllch person against such expense, liability, or loss under the Code.

       6.5. Survival. The indemnities provided for in this Agreement survive the transfer of
an Indemnified Perso11·s Membership lnterest, the termination of the person's status as a
Member or other status giving rise to classification as an Indemnified Person, and the
termination of this Agreement and the Company.

                                                ARTICLE VII
                                  BOOKS AND RECORDS; REPORTS

       7.1. Maintenance of and Access to Books and Records. The Company shall maintain
such books and records regarding the Compa11is business and properlies as is reasonable.
including all books and records required undel' the Code. Each Member shall have access thereto
during ordinary business hours to the. extent and u11de1· the conditions provided in the Code.

        7.2. Fiscal Year. The Company shall adopt the calendar year as its fiscal year for
financial and tax accounting purposes.

        7.3.     Financial and Operating Rep011s. As soon as practicable after the end of each
fiscal year, but in any event not later than 90 days after the end of the fiscal year, the Managers
shall deliver to each Member an annual report containing the following:

        (a)    a Company balance sheet as of the end of such fiscal year, and Company
statcmenls of income, cash flows. and changes in Members' equity for such fiscal year. each in
reasonable detail and prepared according to United States generally accepted accounting
principles;

       (b)     a general description of the Company's activities during such fiscal year and
business plans for the succeeding year: and

        (c)    a statement of changes in the Member~s Capital Account (showing the balance in
t,he Member's Capital Account as of the beginning of the fiscal year, contributions or
distributions during the year, allocations of profits and losses during the year. any other
adjustments to the Capital Account balances during the year, and the balance in the Capital
Account as of the end of the year).


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         7.4.      Tax Reports.

       (a)     Not later than the date (including extensions) for filing the Company's tax return
with the Internal Revenue Service (Form 1065). the Managers shall deliver to each person who
was a Member or Assignee at any tirne during the period covered by the return all information
necessary forthe preparation of such person's United States federul income tax returns, including
a Form 1065 Schedule K~ 1 (if applicable).

       (b)     Upon the written request of any Member or Assignee. the Managers shall deliver
to such person information necessary for the preparation of any tax returns that must be filed by
such person, including information necessary for estimating and paying estimated taxes.

       7.5. Trat1smissio11 of Communications. Each person who holds a Membership Interest
on behalf ot: or for the benefit of. another person or persons shall be responsible for conveying
any report. notice. or other communication received concerning the Company's affairs to such
other person or persons.

                                           ARTICLE VIII
                                            TAX.MATTERS

        8. t _ Tax Classification. The Members intend th~t the Company be classified as a
partnership for federal i11come tax purposes. The. Managers shall take all actions as are or may
be reasonably necessary or appropriate to ensure the Company is so classified .(including the
filing of elections or tax returns). No Manager, officer, or Member shall take at1y action
inconsistent with the classification of the Company as a partnership for federal income tax
purposes.

        8.2. Company Returns. The Managers shall cause the Company to ftle such tax
returns as may be required by law.

         8.3 .      Tax Electior\s.

        (a)     General. Except as otherwise provided in this Agreement, the Managers shall
cause the Company to timely make or revoke all elections, and take all tax reporting positions.
necessary or desirable for the Company and to maximize the tax benefits to the Members. No
election shall be made to have the Company excluded from the application of any provision of
Subchapter K of the l.R.C. or any equivalent tax provision in any other tax jurisdiction.

         (b) Section 754 Election. The Company shall make the election referred to in l.R.C.
Section 754 upon the request of any Member in connection with a transfer of the Member's
Membership Interest.

       (c)     Safe Harbor Election for Compensatmy Membership Interests. If Proposed
Treaswy Regulation 1.83-J(l) is adopted as a temporary or final regulatio11. the Company shall
make the .safe harbor election described in such regulations, and the Company and each Member

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(including any person to whom an interest in the Company is transferred in connection with the
performance of services) shall comply with all requirements of the safe harbor with respect to all
Membership lntet·ests transferred in connection with the performance of services while the
election remains effective. The Managers shall prepare, execute, and file any required
documentution to cause the election to be effective. The Managers may terminate the safe harbor
election at any time if it determines in good faith that it is il1 the best interests of the Company
and the Members to do so.

       8.4. Consistent Reporting. Each Member shall, on the Member' s tax returns, treat
each partnership item (as defined in I.R.C. Section 623I(a)(3}) in a manner consistent with the
treatment of the item on the Company's return in all respects, including the amount, timing, and
character of the item, No Member shall file a request for an administrative adjustment of
partnership items under LR.C. Section 6227(a) if such request would cause the Metr1be(s
treatment of the item to be inconsistent with the treatme11t of the item on the Company's return.

        8.5.     Tax Proceedings.

        (a)    Tile Managers shall be the Company's tax matters partner as defined in l.R.C.
Section .6231, and sball take such actions as are required to be designated the tax matters partner
under applicable Treasury Regulations. The tax. matters parfner shall represent the Company in
connection with all examinations of the Company's tax returns by tax authorities, including
administrative a11d judicial proceedings to contest any proposed adjustments. Subject to Section
8.S(c), the tax matters partner has the exclusive right to conduct Proceedings relating to
Company taxes and to determine whether the Company (either on its own be ha If or on behalf of
the Members) will c:ontest or continue to contest any tax deficiencies assessed or proposed to be
assessed by any taxing authority. The tax matters partner shall keep the Members informed on a
timely basis of all materia\ developments with respect to any SlLCh Proceeding. Each Member
shall cooperate with the tax matters partner and do or refrain from doing all things reasonably
requested by the tax matters partner with respect to the conduct of any Company lax Proceeding.

         (b)    The tax matters partner may not bind any other Member to a settlement agreement
relating to taxes without obtaining the written concui:rence of such Member.

        (c)     Any deficiency for taxes imposed on a Member (including penalties, additions to
tax or interest imposed with respec~ to such taxes) shall be paid by such Member and. if paid or
l'equired to be paid by the Company, is recoverable from such Member pursuant to Section 4.3 or
by other legal means.

       (d)     This Section 8.5 anq Section 8.6 survive the termination of the Company and the
termination of any Member's interest in the Company and remain binding for a period of time
necessary to resolve all tax. matters with applicable taxing authorities.

       8.6.    Information and Documents to Company. Each Member shall timely provide to
the Company all information and d0ctnnents that such Member ls required to provide by
applicable tax requirements, and sh'all also provide to the Company upon request such additional

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information and documents as the Managers may reasonably request in connection with the
Company's compliance with applicable tax requirements or filing of any permitted tax elections.

                                      ARTICLE IX
                            MEETINGS AND VOTING OF MEMBERS

       9.1_     Meetings.

        (a)     Meetings of the Members may be called at any time by the Managers or by one or
more Members holding at least 75.0% of the Percentage Interest held by Members. Meetings
shall be held at the Company's principal place of business or at such other reasonable place set
forth in the notice of the meeting.

       (b)     Any action that may be taken at a Members' meeting may be taken without
holding a meeting if Mernbers having at least the Requisite Percentage interest that would be
necessary to take the action at a meeting. in which each Member e111itled to vote on the action is
present and votes. sign a written consent or consents stating the action taken.

        (c)    Except as otherwise provided in this Agreement, meeting notices and procedures.
including procedures for obtaining written consents in lieu of a rneeting, shall be in conformity
with Chapters 6 and lOl(H) of the Code. Sections 101.353 through 101.356 of the Code
(relating to quorum and minimum voting requirements) shall not apply to the extent such
provisions are inconsistent with this Agreement. The Managers are solely responsible for
convening and conducting meetings of the Members. conducting the solicitation of consents,
determining the validity and effect of responses to any solicitation of consents, and determining
other matters regarding meetings, voting, and consents.

        (d)      Notice of the results of any vote taken at a meeting, or the results of any
solicitation of consents in lieu of a meeting, shall be given to. the Members not later than with the
delivery of the next following report of financial information gi vcn pursuant to Section.7 .3.

       9.2.   Voting. A Member may vote at a meeting in person. or by a proxy executed in
writing by the Member and received by the Managers prior to the time when the votes of
Members are to be counted. The provisions of the Code pertaining to fhe validity and use of
proxies by shareholders of a corporation govern the validity and use of proxies given by
Members. Only Members of record on the date of the meeting (or if the vote is conducted
without a meeting then on the date of the notice soliciting the Member consents) may vote.

                                    ARTICLE X
                         TRANSFER OF MEMBERSHIP INTERESTS

        IO. l . Limitation on Transfers.
        (a)   The term "transfer," when ttsed in reference to a transfer of a Membership
Interest, means an assignment (whether vo1untai'ily, involuntarily. or by operation of law and

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whether or not effective under this Agreement) of all or any port Lon of a Member' s or Assignee's
Membership Interest, or any ·interest therein, to another person, and includes a sale, assignment,
conveyance, gift, exchange, or other disposition, a transfer by merger or other business
combination. a transfer pursuant to bankruptcy, insolvency, incapacity, or death , and any pledge,
hypothecalion, or other encumbrance. A redemption of a Member's or Assignee's Membership
Interest pursuant to Section 12.3 is not a transfer of the Membership Interest. A transfer does not
include a transfer of a community property or other interest in a Membership Interest from a
former spouse of a Member to the Member pursuant to the death of the former spouse or in
connection with the termination of the marital relationship,

        (b)    .No Member may transfer all or any portion of its Membership Interest unless the
transfer is a Permitted Transfer. A transfer of a Membership Interest that is not a Permitted
Transfer is a Prohibited Transfer.

         (c)     A change of Control of any Member constitutes a transfer of the Membership
lnterest. heJd by such Member.

         10.2.   Permitted Transfer of Membership Interest.

        (a)     A transfer of a Membership lntei:est is a Permitted Transfer only if the· transfer
satisfies the conditions set forth in Section 10.3 and is described i11 one of more of the t~>llowing
paragraphs of this Section:

                 (i)      the transfer is approved by all of the Managers:

              (ii)     if the Member is a corporation, the transfer is to a member of the
        Member's affiliated group (as defined in l.R.C. Section I S04(a)) ~

                {iii) if the Member is a trustee of one or more employee benefit plans. the
       transfer is to a co-trustee or a successor trustee to such plans; or

               (iv)    if the Member is an individual, the transfer is to the Member's estate,
       testamentary trust. or legal representative as a result of the Member's death or
       adjudication of incapacity in managing its person or affairs, or the transfer is to a member
       of the Member's family, directly or in trust.

       (b)    Upon a Permitted Transfer by a Member of all of its Membership Interest. the
Member ceases to be a Member as of the effective date of the transfer determined accqrding to
Section 10.4.

       (c)     For purposes of Section 10.2(a)(iv), a Member's family means the iV[ember"s
spouse (excluding a former spouse), children, grandchildren, parents. and grnndparents. A
person's legally adopted child is treated as his child.




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         l0.3. Conditions to Permitted Transfers of Membership Interests. Without limiting the
Managers ' authority to withhold approval for the transfer of a Membership Interest. a transfer
shall not be a Permitted Transfer unless the Managers determine that all of the following
condit.ions are satisfied:

        (a)     The transfer complies with all applicable laws, including any applicable secmities
laws.

       (b)     The transfer will not cause the Company to be treated as other than a partt1ershlp
for United States federal income tax purposes.

       (c)   The transfor will not cause the Company to be subject to regulation under the
Investment Company Act of 1940, as amended.

        (d)    The transfer will not cause any assets of the Company to be deemed "plan assets"
undel' the employee Retirement Income Security Act of 1974.

       (e)     The transfer will not result in a termination of the Company ander I.R.C , Section
708, unless the Managers determine that such termination will not have an adverse impact on the
Members.

        (t)    The transfer will not cause the application of the tax-exempt use property rules of
l.R.C. Sections l68(g)(l )(B) and l68(h) to the Company ot its Members. unless the Managers
determine that such rules will not have an adverse impact on the Membe1·s.

       (g)    The transferor and transferee have delivered to the Company any documents that
the Managers request to confirm that the transfer satisfies the requirements of this Agreement, to
give effect to the transfer, and to confirm the transferee's agreement to be bound by this
Agreement as an Assignee.

      (h)      It requested by the Managers, the Company has received a transfer fee in an
amount determined by the Managers to be sufficient to reimburse the Company for the estimated
expenses likely to be incurred by the Company in connection with such transfer.

        10.4.   Effective Date; Distributions.

        (a)      A Permitted Transfer of a Membership Interest is effective as of the first day of
the calendar month following the calendar month during ' vhich the Managers receive notice of
such transfer (in such form and manner as the Managers tnay require) unless the Managers
determine that the transfer should be effective as of an earlier or later date (for example, on any
date the transfer is etlective as a matter of state law. or where the notice of transte1· specifies that
the transfer is to be effective on a future date).




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        (b)     Distributions with respect to a transferred Membership Interest that are made
before the effective date of the transfer shall be paid to the transferor, and distributions made
after such date shaH be paid to the Assignee.

        (c)     Effective as of the effective date of a transfer of a Membership Interest. the
lvlanagers shall amend Exhibit A to reflect the reduction in the transferor's Percentage Interest
and to reflect the Assignee·s Percentage Interest.

        (d)    Neither the Company nor the Managers have any liability for making allocations
and distributions to the Members determined in accordance with this Section l 0.4, whether ol'
not the Company or the Managers have knowledge of any transfer of any Membership Interest.

       10.5. Transfcror·s Obligations. The transferor of a Membership Interest who ceases to
be a Member continues to be obligated with respect to its Membership Interest or its status as a
former Member as provided In the Code and applicable law.

         10.6.    Assignee·s Rights and Obligations.

        Unless an Assignee becomes a Member pursuant to Article Xl, such Assignee shall not
be entitled to any of the rights granted to a Member, other tha11 the rights to receive allocations of
profits and losses and distributions as if such Assignee were a Member, to transfer the
Assignee's Membership Interest (subject to the conditions of this Article X), and to receive
reports and information as specified in Aiticle VII. An Assignee of a Membership Interest shall
succeed to the Capital Contribution of the transferor to the extent of the Membership Interest
transferred. An Assignee is bound by this Agreement ii:respcctive of whether the Assignee has
signed or otherwise adopted this Agreement. An Assignee's Membership Interest may be
redeemed at the option of the Managers as provided in Sectio1112.J..

         10.7. Effect and Consequences of Prohibited Transfer.

       (a)     Except as otherwise required by law. the Company and the Managers shall treat a
Prohibited Transfer as void and shall recognize the transferor as continuing to be the owner of
the Membership Interest purported to be transferred. If the Company ·is required by law to
recognize a Prohibited Transfer. the transferee shall be treated as an Assignee with respect to the
Membership 1nterest transferred and may not be treated as a Member with respect to the
Membership Interest transforred unless admitted as a Me1nber iu accordance with Article XI.

         (b)      The Company may remove the transferor and Assignee with respect to a
Prohibited Transfer as provided in Article XII.

         (c)     The transferor and transferee with respect to a Prohibited Transfer shall be jointly
and severally liable to the Company for. and shall indemnify and hold the Company harmless
against, any expense. liability, or loss incurred by the Company (including reasonable legal fees
and expenses) as a result of such 1ransfer. their removal and liquidation of their Membership
lntei-ests (if applicable). and the efforts to enforce the indemnity granted in this Section lO. 7(c}.

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       I 0.8.     Agreements of Spouse; Sole Management Community Property.

       (a)    Execution of Spousal .loinder and Consent. The spouse of each Member shall
execute and deltver to the Comp1my a Spo~usal Joinder and Consent in the form of Exhibit B.

       ( b)       Agreements of Spouse. The spouse of each Member agrees that:

                  (i)    this Agreement is entirely fair, just and equitable and in his or her best
      interest;

               (ii)   the covenants made in this Agreement are binding on such spouse
      individually and that such spouse is bound by this Agreement. including insofar as any
      interest such spouse may have now or hereafter in any Membership Interest by reason of
      the community property laws of the State of Texas or any other state, or otherwise;

               (iii)   whenever. pui'stmnt to the terms of this Agreement, such Member does, or
      is required to, in any manner transfer, pledge, or encumber his or her Membership
      Interest, or any interest in such Membership Interest, to the Company 01· any other person,
      such transfer, pledge, or encumbrance shall include the community property interest. if
      any, of such spouse in such Membership Interest so transferred, pledged, or encmnbercd:
      and
              (iv)    in the event of the death of such spouse, any interest such spouse may
      have now or hereafter in any Membership Interest which constitutes community property
      should pass to such Member and, accordingly, such spouse shall will and bequeath such
      spouse's entire community property interest, if any, in such Membership Interest to such
      Member.
       (c)     Sole Management Community Property. Each Member who is a natural person
and his or her spouse agree that such Member's Membership Interest, whether presently mvned
or hereafter acquired. is, if such Membership Interest is community property. community
property subject to the sole management. control, and disposition of such Member.

                                       ARTICLE XI
                                ADMISSION OF NEW MEMBERS

       11.1. Substituted Members. An Assignee of a Membership Interest shall be admitted as
a Substituted Member with respect to such Membership Intel'est on the date on which all of the
following conditions are satisfied:

       (a)        The Managers have approved in \\>Titing the admission of the Substituted Member.

       {b)        The Assignee has delivered to the Company any agreements and other docutnents
that the Managers request to confinn such Assignee as a Member in the Company and such
Assignee·s agreement to be bound by this Agreement as a Member.


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       \C)      lf requested by the Managers. the Company has received an admission kc in an
amount determined by the Managers to be sufficient to reimburse the Company for the estimated
expenses likely to be incmrc<l by the Compuny in connection with the admission ufthc Assignee
as a Substituted Member.

          I 1.1. _6dditional tvJembers.

         (a)     fn Gcnerill. The Managers may cause the Company to admil a pcnon as an
Additional Member and issue Additional Units to such Additional Member upon satisfaction of
all of the following conditions.

              (i)   /\ Requisite Percentage has approved the admission of the Additional
      Member alter notice to all Members of (i) the Initial Capital Contriblltion to be made by
      the proposed Additional Member, {ii) the effect of tl1e admission on each Partner's
      Percentage Interest. and (iii) other material information relevant to the proposed
      admission.

                (ii)   ·1 he admission of the proposed Additional Member satisfies the applicable
      CZ.H)ditions of Section I 0.3.

             (iii)    The proposed Additional Member has delivered to the Company any
      agreements and other docul11ents that the Managers request to confirm the person as a
      Member it.l the Company and the person' s agreement to be bound by this Agreement ns a
      Member.

                                           ARTICLE XII
                         WlTUDRAWAL OR lU~MOVAL Of MEMBERS

          12, l . Withdrawal of Members.

          (a)    No Mcmber may withdraw from the Company 01· otherwise ccuse to be & Member
except upon the following events:

                 (i)     receipt by the Co1npany of a notice of such Member's withdrawal from the
      Company;

              (ii)       a transfer   or all or the    Member's Membership Interest m a Permitted
      Transfer: 01·

                 (iii)   re111oval of the \ilember as a Member as provided in thi.s Agreement.

          (b)    A Member shall be deemed        t()   withdraw from the Company upon the follO\ving
events:

                 (i)     an event speci lied in Sectio11 12. I{a);


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               (ii)     an event specified in Section l53. l55(a)(4) or Section l53.155(a}(S) of the
       Code (relating to bankruptcy or insolvency proceedings with respect to a general partner),
       applied as if the Member were a general partner;

                (iii) if a Member is an individual, the Member's death, the appointment of a
        guardian or general conservator for the Member, or a judicial determination that the
        Member is incapable of performing the Member's duties under this Agreement; or

                 (iv)    if the Member is an entity, an event requiring the Member"s winding up or
        callsing the termination of the Member' s existence or suspension of the Member' s rigbt to
        do business.

       (c)    If a Member ceases to be a Member in violation of Section 12. l(a), the Company
may recover damages from the former Member for breach of this Agreement.

         12.2. Removal of Members.

      (a)    A Member may be removed as a Member by the unanimous written consent of the
Managers under the following circumstances:

                  (i) the Member has transferred or attempted to transfer all or any portion of
        its Membership Interest in a Prohibited Transfer:

                  (ii)  in the case of any Member who is also a Manager or an Affiliate of a
        Manager, the Member or its Atliliate has ceased to be a Manager in violation of Section
        5.7(a) or has been removed as a Manager in accordance with Section 5. 7(b):

                 (iii)   the Managers determine, in their so1c discretion, that it is m the best
        interest of the Company to remoye a Member;

               (iv)     the Member has materially breached the terms of this Agreement or an.y
        other material agreement with the Company~ or

                (v)     the Managers determine that removal is necessary to comply with any
        requirements, conditions, or guidelines contained io any opinion, directive, order, ruling,
        or regulation of any United States federal or state agency ot· judic.ial authority or contained
        in any United States federal or state statute.

         (b)   If the Managet·s propose to remove a Member pursuant to this Section 12.2, the
Managers shall notity the Member in writing of the proposed removal. and if applicable shall
provide such Member a reasonable opportunity to cure the event giving rise to removal. The
removal of the Member is effective at such time as determined by the Managers in accordance
with applicable law and taking into account the Member's oppo1tunity to cure the event giving
rise to removal.



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         12.3. Optional Redemption of Membership Interest. Sltbject to Section 4.4 (relating to
limitations on distributions). the Managers, or. if there is no Manager. a Requisite Percentage,
may cause the Company to redeem the Membership lnterest of an Assignee by paying the
Assignee the Fair Value of its Membership interest as of the redemption date or the actual value
of the Members Capital Account. Interest will accrue at the Index Rate on the amoum owed
under this Section l2.3 from the 301" day after the redemption date to the date the payment is
made. The redempti_on date shall be fixed by the Managers in accordance witl1 the principles of
Section l 0.4. Except as otherwise required by the l.R.C., amounts paid in redemption of an
Assignee's Membership Interest shall be treated as made in exchange for the interest of the
Assignee in Company property pursuant to LR.C, Secti0n 736(b)( 1), including the interest of
such Assignee in Company goodwill.

        12.4. Status of Fonner Member. A Member who witlldraws or has been ren1oved from
the Company or otherwise ceases to be n Member has the status or an Assignee with respect to
any Membership fnterest held by such former Member. Except as provided in Section 12.3
(relating to optional redemption of a Member's Membership lnterest) or Article XIII {relating to
winding up and termination), such former Member is not entitled to receive any payments wider
Section 101.205 of the Code.

                                           ARTICL'E XIII
                               WINDING UP AND TERMINATION

       13.1. Events Requiring Winding Up. The Company shall commence winding up
procedures in accordance with this Agreement and the Code upon the first to occur of any of the
following events:

        (a)     a Requisite Percentage vote to wind up and ter111inate the Company;

        (b)     a decree by a court requiring the winding up of the Company;

        (c)     the termination of membership of the last remaining Member: or

       (d)   the resignation or removal of all Managers if the Members foil to elect a
replacement Manager as provided in Section 5.70).

        13.2.   Winding Up Procedures.

        (a)     On the occurrence of an event requiring windil1g up of the Company, unless there
is an action to continue the Company without wfoding up in accordance with Section 13.3, the
Managers (or other Liquidator as provided below) shall. as soon as reasonably practicable. wiiid
llp the Company's business and affairs (including disposing of the Company's assets and
applying the proceeds as provided in Section 13.4) and ter111i11ate the Company in accOl'dance
with this Agreement and the Code. The Company shall ·cease to carry on its business (except to
the extent necessary to wind up its business), collect and seJI its property to the extent the


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prnperty is not to be transferred or distributed In kind, and perfom1 any otl1er act require~! to wind
up its business and affairs.

        (b)     If the Managers have wrongfully caused the winding up of the Company or if
there is do Manager, (i) n Requisite Percentage may vote to elect a person or persons to
accomplish the winding up of the Company. or (ii) if the Members fail to elect a person to
accomplish winding up the Company, then any Member or Assigttee may petition a court to
wind up the Company as provided in Section l l.054 of the Code. The person or persons
winding up the Company, whether the Managers or an elected or court appointed person or
persons, is referred to in this Agreement as the :'Liquidator,"

        (c)    The Liquidator may determine the time, manner. and terms of any sale or sales of
Company property pursuant to such winding up. The Liquidator (if not the Managers) is entitlt!d
to receive reasonable compensation for its services; may exercise all of the powers conJetTed
upon the Managers under this Agreement to the extent necessary or desirable in the good faith
judgment of the Liquidator to perfonn its duties; and with respect to acts taken or omitted while
acting in such capacity on behalf of the Company, is entitled to the limitation of liability and
indemnification rights set forth. in Article VI.

        (d)    The Liquidator shall provide quarterly r.eport"S to U.1e Members and Assignees
during the winding up procedure showing the assets and liabilities of the Company, providing
i11formation and documents required by the Members and Assignees to comply with their tax
reporting obligations, and such other informatio11 as the Liquidator deems appropriate. Within a
reasonable time after completing the winding up, the Liquidator shall give each Member and
Assignee a final statement setting forth the assets, liabilities, and reserves of the Company as of
the date of completion of winding up.

         13.3.    Continuation Without Winding Up.

       (a)       If there is a decision to wind up and terminate the Company as described in
Section 13. l {a), the Company may be continued as provided in Section I01.552 of the Code.

        (b)     If there is a termination of the continued membership of the last remaining
Member as described in Section 13.Hc}, then prior to completion of the winding up process but
nol later 1han 90 days after the event of termination. the Managers may continue the Company by
admitting one or more Members effective as of the occmTence of the event of termination. Any
Assignee whose Percentage Interest would be diminished by reason of the admission of an
Additional Member under the circumstances described fo thi's Section l3.3(b) must approve the
admission of tJ1e Additional Member.

         13.4. Liquidation of Assets and Application and Distribution of Proceeds.

        (a)    In General. On winding up the Company, the Liquidator shall dispose of the
Company's properties and apply and distribute the proceeds. or transfer the Company properties.
in the following order of priority:

CmlPA'.\"\' AGREE.:.\11::7\T 01' Cr:'\TlHIO.' i Lo<;1STICS LLC                                E.xnmLT A
                                                                                       11508-i8v2 2!12i20i ~

                                                                                                               MR.369
              (i}      to creditors (including Members who are creditors) in accordance with
      their relative rights and priorities to satisfy the liabilities of the .Company, Including
      expenses associated with the winding up and tem1ination of the Company, but excluding
      any Company liability for any unpaid Mandatory Distributions;

                (ii)   to Members, Assignees, and former Members to satisfy the Company 's
      liability for any unpaid Mandatory Distributions; and

              (iii)   to Members and Assignees as provided in Section 4.2.

     (b)    No Member Deficit Restoration Obligation. No Member is liable to the
Company, to another Member, or to a third party, for the repayment of any deficit in the
Mcmber·s Capital Account, except as provided in Section 101.206 of the Code.

        (c)     Reserves. fn the discretion of the Liquidator. a pro rata portion of the
distributions that would otherwise be made pursuant to Sectio11 13.4(a){H} and {iii) may be
withheld to provide a reasonable reserve for Company liabilities (contingent or otherwise) and
future expenses, including a reasonable reserve for any claims for indemnification under Article
Vl and tb.r any future expenses associated with any tax audit or other Proceeding that is pending
or may anse.

       (d)     Payrnents and Distributions to Membel'S in Kind. The Liquidator may 11ot make
any payments or distributions to Members or Assignees pursuant to Section IJ.4(a)(iil or (iii)
other than in cash unless all Members and Assignees receiving the property approve the transfer
in kind. The Liquidator shall determine the Fair Market Value of any propet1y transferred to
Members or Assignees in kind according to the valuation procedures set forth in Article XIV.

         (e)    Character of Liquidating Distributions. Except as otherwise required by the
I.R.C .. amounts paid to Members pursuant to this Section 13.4 shall be treated .as made in
exchange for the interest of the Member in Company property pursuant to I.R.C. Section
736(b)(1 )~ including the interest of such Member in Company goodwill.

      13.5. Certificnte of Termination. The Liquidator shall file a Certificate of Termination
ofa Domestic Entity on the completion of the winding up of the Company.

       13 .6. Reinstatement. If the Company is terminated, it may be reinstated in the manner
provided in the Code.

                                       ARTICLE XIV
                                        VALUATION

       14. L fair Value of Company Prope11y. The Fair Value of property contributed to the
Company by a Member as part of such Member's Initial Capital Contribution is the amount of
such Member's Initial Capital Contribution, as set forth on Exhibit A. minus the amount of any
cash contributed 10 the Company as part of such Member's Initial Capital Contdbution. In all

                                                                                         Exurnrr A
                                                                                  I ISOfH8v2 2i l2!20H
                                                                                                         MR.370
other cases. the Fair Value of an asset as of any date is its fair 1narket value as determined by the
Managers in good faith using any reasonable valuation method. If any affected Member does not
agree with the valuation set by the Managers. the Fair Value shall be determined using
procedures similar to those set forth in Section 14.2, and the cost of any such determination shall
be borne entirely by the affocted Member unless the Managers or a majority in interest of all
Members other than the affected Member approves an alternative allocation of such costs.

        14.2. Fair Value of Membership Interest.

        (a)    For purposes of any redemption of a Membership Interest pursuant to Section
12.3. the Fair Value of the Membership Interest is its fair market value as determined by the
Managers (or, if there are no Ma11agers, by the Liquidator) in good faith based on the net
proceeds that would be received with respect to the Membership Interest in a winding i1p of the
Company. taking into account all expenses associated with such winding up and any damages or
other amounts recoverable by the Company from the Assignee or with respect to the Assignee's
Membership lnterest. In connection with the payment in redemption of the Membership Interest,
the Ma11agers or Liquidator shall provide a notice to the Assignee setting forth the Fair Value of
the Membership Interest, including information relevant to the determination of such Fnir Value.

        (b)     If the Assignee does not agree with the Fair Value oflhe Membership Interest as
determined by the Managers or Liquidator, the Member may submit to the Company a notice of
objection within 30 days of the Member's receipt of the valuation notice. Within 15 days
following receipt of the Assignee's notice of objection, the Company shall appoint a qualified
appraiser, and inform the Assignee of the name and business address of the appraiser. The
appraiser shall determine the Fair Value of the Membership Interest in accordance with the
principles of Section l4.2(a). The appraiser shall give the Assignee and the Managers an
opportunity to meet with him prior to completing his appraisal. Except as provided in Section
 l4.2(c). the appraiser's determination of the Fair Value of the asset(s) in dispute shall be made
within 30 days of his appointment (or such longer period as is reasonably required to complete
the appraisal), and is final and binding 011 all concerned, absent manifest error.

        (c)·   If the Assignee does not approve the appraiser selected by the Company, within
15 days following notification of such selection pursuant to Section 14.2(b) the Assignee may
appoint a qualified appraiser of the Assignee's choice, and inform the Company in writing of the
name and business address of the appraiser. In such event. the appraisers appointed by the
Company and the Assignee shall appoint a third qualified appraiser. Each of the three appraisers
shall determine the Fair Value of the Membership Interest i11 accordance with the principles of
Section l4.2(a}. The average of the two valuations that 1tre closest to each other shall be
determined to be the Fair Value of the Membership Interest and such determination shall be final
and binding on all concerned, absent manifest error.

        (d)      The cost of each appraisal shall be shared equally by the Company and the
Assignee.



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                                                                                                                MR.371
       (e)     The Company shall pay the Assignee any excess of (i) the recomputed Fair Value
of the Membership Interest over (ii) the sum of any amount previously paid to the Assignee in
redemption of his Membership lnterest plus any costs charged to the Assignee as provided in
paragraph (d). The Assignee shall pay the Company any excess of (i) the sum of any amou11t
previously paid to the Assignee in redemption of his Membership f nkrest plus any costs charged
to the Assignee as provided in paragraph (d), over (ii) the recomputed Fair Value of the
Membership Interest.

       (t)      Interest shall be paid at the Index Rate on any amount determined under Section
14.2(e) for the period from the J0111 day after the redemption date to the date the amom1t is paid.

                                         ARTICLE XV
                                      GENERAL PROVISIONS

        15.l.    Amendments.

       (a)      In General. Subject to the following exceptions and limitations set forth in
Section 15. l (b). this Agreement may be amended only with the approval of a Requisited
Percentage.

        (b)    Exceptions and Limitations. The Managers may amend Exhibit A from time to
time to reflect the admission and withdrawal of Members, and changes to any Member's
Percentage fnterest. in accordance with this Agre~ment. The Managers may use the power of
attorney granted in Section 15.12 to make non-substantive amendments that do not adversely
impact the rights or obligations of any Manager 01' Member. No amendment of the Agreement
may adversely affect any Member's rights or obligations under this Agreement (determined
without taking into account the right of other Members to amend the Agreement) without the
adversely affected Member's approval. No amendment of Article VI (relating to liability and
indemnification) may adversely affect the rights or obligations of any Indemnified Person
without the Indemnified PeISon's approval. No amendment of this Agreement may change the
requirements under this Agreement for approving any action withmlt the approV.al of the
Members holding an aggregate Percentage lnterest required to approve the action.

        15 .2.   Notice. Any notice, report, or other communication required or permitted to be
made to any person by this Agreement shaH be in writing and is deemed given when
(a) delivered to the person by hand, (b) the third business day after delivery to the United States
Postal Service (or other desigt1atcd delivery service as defined in l.R.C. Section 7502(t)). postage
prepaid, in an envelope properly addressed to the person at the person's address set forth in the
Company's records as of the date of delivery. or (c) successfully transmitted by facsimile or
electronic message to the facsimile phone mnnber or e-mail address (as applicable) set forth in
the Company's records as of the date of transmission. Any communication to the Managers or
the Company may be delivered to the Company's registered office designated pursuant to
Section 2.3.



CmlP.\'.'i\" AGREDIE'.'iT Of CEYl'l'RIO:'\ LOGISTKS LLC                                      E\:lllBIT A
                                                                                     l l508.\8\2 '.l!l.'!!2014
                                                                                                                 MR.372
         15.3. Governfog Law; Consent to Jurisdiction. This Agreement is governed by and
shall be construed under the laws of the State of Texas without regard to legal requfrements that
would require the application of the law of any other jurisdiction. Any Proceeding arising out of
or relating to this Agreement 01· the Company's activities or properties may be brought in the
state courts of the County \Vhere the Company's principal oft'ice is located, or, if it has or can
acquire jurisdiction, in the United States District Court for the District in which the Company· s
principal office is located. Each Member and Assignee irrevocably submits to the exclusive
jurisdiction of each such coun i11 any such Proceeding, waives any objection it may no\v or
hereafter have to venue or to cottvenience of forum, agrees that all claims in respect of the
Proceeding shall be heard and determined only in any such court and agrees 11ot to bring any
such Proceeding in any other court. The Company or any Member or Assignee may file a copy
of this Agreement with any court as written evidence of the agreement between the parties
irrevocably to waive any objections to venue or to convenience of forum. Process in any
Proceeding referred to in the second sentence of this sectio11 may be served on any party
anywhere in the world.

        15.4. Waiver. Any failure by a party io insist upon the strict performance of any
covenant or condition of this Agreement, or to exercise any right or remedy upon a breach of any
Sllch covenant or condition, does not constitute walver of any such covenant or condition or any
breach thereof.

        15.5. Entire Agreement. This Agreement supersedes all prior agreements, whether
written or oral, between the parties with respect to its subject matter aitd constitutes a complete
and exclusive statement of the agreement between the parties with respect to its snbject !natter.

       15.6. Successors and Assigns. No Member or Assignee nray assign any of its rights or
delegate any of its obligations under this Agreement except as expressly permitted in this
Agreement.

        15.7. Third-Parties. Other than as provided in Section 5.4 (relating to reliance on
authority of the Managers), Section 3.6 (relating to Member Notes), Section I 1.2(b} (relating to
the Cotham/Merritt Note Equity Kicker), and Article Vl (relating to rights of Indemnified
Persons), none of the provisions of this Agreement are for the benefit of or enforceable by any
creditors of the Company or other persons not a party to this Agreement, except such benefits as
inure to a successor or permitted assign in accordance with Section 15.6.

        15.8. Severability. lf any provision of this Agreement is held invalid or unenforceable
by any court of competent jurisdiction, the other provisions of this Agreement will remain in full
force and effect. Any provision of this Agreement held invalid or unenforceable only in part or
degree will remain in full force and effect to the extent not held invalid or unenforceable.

       15.9. Construction. The language in this Agreement is to be construed according to its
fair meaning and is not to be strictly construed for or against any party. Nothing in this
Agreernent is to be construed as authorizing or requiring any action that ls prohibited by the


CO.\IPA'.'iY AGRF.t:m:'.;T 01" CE;\;Tl'IUO'.'i LOGISTIC'S LLC                              EXlllBIT A
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Code or other applicable la\.v, or as prohibiting any action that is required by the Code or other
applicable law.

        l5 , lO. Execlltion of Agreement. This Agreement may be executed in counterpa11s, each
of which will be deemed to be an original copy of this Agreement. and all of which together
constitute one agreement. Any signature to this Agreement evidenced by a facsimile
transmission of such signature shall be binding on the parties to the same extent as if such
signature were an original.

        l.5.1 L. Further Assurances. The parties shall execute and deliver all documents, provide
all information, and 'take or refrain from taking action as may be necessary or appropriate to
achieve the purposes of this Agreement.

          15.12. Power of Attornev.

         (a)     Each Member appoints the Managers and the Liquidator severally with foll power
of substittttion. as the true and la\vful attorney-in-fact for such Memb~r, and in the name, place,
ai1<l stead of such Member, to execute, certify, acknowledge, swear to, file, publish, and record:


                 (i)     any certificate or 0ther document that may be required to be filed by the
        Company or the Members in order to qualify the Company to do business in any
        jurisdiction. except that no such filing shall include a consent by any Member to service of
        process in any jurisdiction without the Member's approval;

                (ii)   any amendment to the Certificate of Formation. to this Agreement. or to
        any other agreement or document as required or permitted by this Agreement;

                (iii)   any certificate of termination and other documents that may be required to
        effectuate the termination of the Company pursuant to the provisions of this Agreement:
        and

               (iv)     any document reqt1ired of the Company to carry out the actions that the
         Managers are atLthorized to take under this Agreement.

       (b)      The foi·egoing appointment of the Managers and Liquidator as a Member's
attorney-in-fact does not grant such attorney-in-fact any power or authority to approve, consent.
or agree to the substantive terms of any agreement or other document on behalf of such Member.

        (c)   The power of attorney granted pursuant to this Section 15.12 (i) is a special power
of attorney coupled with an interest and is irrevocable. and (ii) survives the withdrawal or
removal of a Membet' or the assignment of its Membership Interest.

                     IThis Page Intentionally Left Blank. Signature Page Follows.]




CO:\! P.'\ '\ \' /\GIU.: nn:'."T OF Ct:\ n IUO'.'.' LOG ISTIC:S LLC                         Exnrnrr A
                                                                                     1150S~8 v2 2/1 21201~

                                                                                                             MR.374
         Executed as of the Effective Date set lorth above, by and among the persons signing
below.

MEMBERS:




                                                  Marc Marrocco, an individual




                                                  Antonio Albanese. an individual




                                                                                        Exm n1 r A
                                                                                 11508-18\2 2112 201-l
                                                                                                         MR.375
                                EXHIBlT A

                      EffcctiYe a8 of Scptcmhct 18, 2013



                                 Numbcl' of
MEMBF.l~   NAME AND ADDRESS                        Initial CatJital Contribution
                                   tJ nits

TXC Enngy LLC
560 l Preakness Ln                  300                      $300.00
Plano. Texas 75093


Mal'c Marrocco
3602 Binkley Ave                    300                      $300.00
Dallas. Texas 75205


Antonio Albanese
6605 Gentle Wind Ln
                                    JOO                      $3()0.00
Dallas, Texas 75248




                                                                                f.XlllHIT A
                                                                        ! 1.508.1\d 2 1 12 '21Jl~
                                                                                                    MR.376
                                         COMPANY AGREEMENT
                                                 OF
                                       CENTURION LOGlSTlCS LLC

                                                     EXHIBIT B

                                   SPOUSAL JOJNDER AND CONSENT

I ACKNOWLEDGE (i) THAT 1 HAVE READ THE FOREGOING COMPANY AGREEMENT
OF CENTURION LOGISTICS LLC (THE "AGREEMENT"), (ii) FULLY UNDERSTAND ITS
CONTENTS, AND (iii) I HAVE BEEN GIVEN THE OPPORTUNITY TO ASK QUESTIONS
AND TO SEEK AND OBTAIN THE ADVICE OF LEGAL COUNSEL CONCERNING MY
RIGHTS, AND THE LIMITATIONS ON THOSE RIGHTS, THAT ARE CONTAINED IN
THE AGREEMENT. I agree to be bound by all of the tem1s of the Agreement, including,
without limitation, the provisions of Section 10.8, 1 am aware that. by the provisions of lhe
Agreement, my spouse agrees to hold his or her Membership Interest (as such term is defined in
the Agreement) .including any portion of such Membership Interest comprising my community
property, subject to the specific restrictions on the transfer of such Membership Interests set forth
in the Agreement. l agree that I wi II not make any transfer of: 01· otherwise deal with, such
Membership Interest or my community property interest therein, if any, during my lifetime
except as expressly permitted by the Agreement. As provided in Section L0.8 of the Agreement,
l agree that, in the event of my death, any Membership Interest that constitutes my community
property should pass to my spouse, and L agree to will and bequeath my entire community
property interest, if any. in such Membership Interest to my spouse.



                                                         Signature:--------------

                                                         Printed N a m e : - - - - - - - - - - - - -

                                                         Date: - - - - - , - - - - - - - - - - - -




CMIP..\~' r   AGRH'.\I E:'\T Of C.::'\Tl'IUO:'li LOGISTICS LLC                                  E'XlllBIT B
                                                                                        l 15084!\\2 2i l 212014
                                                                                                                  MR.377
                                      COMPANY AGREEMENT
                                              OF
                                    CENTURION LOGISTICS LLC

                                                APPENDIX A

                                   PRINCIPLES OF ALLOCATION

         A. l   Introduction. This Appendix sets forth principles under which items of income,
gai·n. loss, deduction and credit shall be allocated among the Members. This Appendix also
provides for the dctel'mination and maintemmce or Capital Accounts, generally in accordance
with Treasury Rcgulati()ns promulgated under I.R.C. Section 704(b). for purposes of determining
such allocations. For purposes of this Appendix, an Assig.nee shall be treated in the same
mamwr as a Member.

        A.2     Definitions. Capitalized terms used in this Appendix have the meanings set forth
below· or in the Agreement.

      '"Adjusted Capital Account Deficit" means any deficit balance in a Mcmbet's Capital
J\ccmmr as of the end of a taxable year, after giving effect to the rollowing adjustments:

                 (i)   Credit to the Capital Account any amounts the Member is obligated to
        restore pursuant to the Agreement or is deemed to be obligakd to restore. pursu~nl to
        (a) Treasury Regulations Section l.704-l(b)(2)(ii)(c) (relating to ohligatio~1s to pay
        part11cr promissory notes and other obligations to make contributions to the Company), or
        (b) the penultimate sentences of TreMury Regulations Sections l.704-2(g)( I) (relating to
        partnership minimum gain) and \ .704-2(i)(5) (rchtting to partner nonrccoursc debt
        minimum gain); and

               (ii)    Debit Lo such Capital Account the items described in Trca.smy Regulations
        Sections 1,704-l(b)(2)(ii)(d)(4), ') .704-1 (b)(2)(ii)(d)(5 ). and 1.704-1 (b)(2)(ii)(d)(6).

The for1.:going definition is intended to comply with Treasury Regulations Section 1.704-
l(b)(2)(ii)(d) and shall be interpreted consistently therewith.

        "Capital Account'. has the meaning set forth in Section 1\.3.

        "Dcnreciatio11'' means. for each taxable year. an amount equal to the depreciation,
mnol'\ization. or other cost recovery deduction allowable with respect to an asset for st~eh taxable
year. except that if the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such taxable year, l)eprcciation is an amount which
bears the same ratio to such beginning Gross Asset Value as the federal illcome tax depreciation.
amortization. or other cost recovery deduction for such ta'.'{ablc year bears to such beginning
adjusted tax basis. 1f the adjusted basis for federal income tax purposes of an a:;set at the


CO'.\IP.\" \' Acau:ou:"IT CH O X ll'IUO;\ }.oc;isn< 'S LLC
                                                    PA<it: A· I

                                                                                                       MR.378
beginning of such taxable year is zero, Depreciation shall be determit1ed with reference to such
beginning Gross Asset Value using any reasonable method selected by the Managers.

       "Gross Asset Value" means an asset's adjusted basis for federal income tax purposes,
except as follows;

                (i)  The initial Gross Asset Value of an asset contributed by a Member to the
        Company is the gross Fair Value of such asset, as determined by the contributing
        Member and the Managers and as set fonh on Exhibit A.

                (ii)    The Gross Asset Values of Company assets shall be adjusted to equal their
        respective gross Fair Values (taking l.R.C. § 770l(g) into account), as determined by the
        Managers, as. of che following ti1nes: (A) the acquisition of an additional interest i·n the
        Company by any new or existing i\tfember in exchange for more than a de minimis
        Capital Contribution; (B) the distribution by the Company to a Member of more than a de
        minimis amount of property as consideration for an interest in the Company~ (C) the
        liquidation of the Company wHhin the meaning of Treasury Regulations Section 1.704~
        l(b)(2)(ii)(g)~ and (D) in connection with the grant of an interest in the Company (other
        than a de minimis interest) as consideration for the provision of services to or for the
        benefit of the Company by a Member acting in a member capacity or in anticipation of
        being a Member. Adjustments pursuant to clauses (A). (B) and (C) above are required
        only if the Managers determine that such adjustments are necessa1·y to accurately reflect
        the relative economic interests of the Members in the Company.

                (iii)  The Gross Asset Value of a Company asset distributed to a Member shall
        be adjusted to equal the gross Fair Value (taking l.R.C. § 7701(g) into account} of such
        asset on the date of distribution as detennined by the distributee and the Managers.

               (iv)     The Gross Asset Values of Company assets shall be increased (or
        decreased) to reflect any adjustrnents to the adjusted basis of such assets pursuant to
        l.R.C. Section 734(b) or I.R.C. Section 743(b), but on\y to the extent that such
        adjustments are taken into account in determining Capital Accounts pursuant to Treasury
        Regulations Section l.704- l(b)(2)(iv)(m). Gross Asset Values shall not be .adjusted
        pursuant to this paragraph (iv) to the extent that an adjustment is required pursuant to
        paragraph (ii).

If the Gross Asset Value of an asset has been determined or adjusted pursuant to
subparagraphs (i), (ii) or (iv) of this definition, the assef s Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect to such asset for purposes of
computing Net Prnfit and Net Loss.

       "Net Profit" and "Net Loss" mean, for each taxable year ·or other relevant period. an
amount equal to the Company's taxable income or loss for such taxable year or other relevant
period. determined in accordance with l.R.C. Section 703(a) (for this purpose. all items of

CO.\IPA;\\. AGRl:DlE.'iT OF Cf.~Tl ' RlO." LOGISTICS LLC
                                                  P.\Gt: A-2
                                                                                     1150848v2 21121201~
                                                                                                           MR.379
income, gain, loss. or d~duction rcq ui red to be stated separately pHrsuant to f. R. C. Section
703(a)( I) shall be included in taxable incorne or loss). with the follmving m.ljllstments:

                    (i)       Any income or the Company that is exempt from federal incom0 tax and
         11ol otherwise taken illtO accuu111 in l'.urnputing Ntt Profit or Nd Loss :-;hall be added to
         such taxable income or loss.

                (ii)   Any expenditures of the Company described in l.R.C. Section
         705(a)(2)(B) or treated as I.R.C. Section 705(a)(2)(8) expenditures pursuant to Treasury
         Regulations Section 1.704-l(b)(2)(iv)(i), and not othenvise taken inlo account in
         computing Net Profit or Net I.oss. shall be s11btracted from such taxable income or loss.

                (iii)   If the Gross Asset Value of any Company asset is adjusted pursuant to
         subparagraph (ii). or (iii) or the Section A.2 definition of Gross Asset Value. the amount
         of such adjustment shall be taken into account as gain or loss from disposition of the asset
          for purposes     or computing Net Profit and Net I,oss.
                  (iv)   Gain or loss resulting from any disposition or Company property with
         rc;;;pect to which gain or loss Ls recognized for federal income tax pmposcs J:;hall b~
         computed by reference to the Gross Asset Value of the property disposed of (unreduced
         h1 any liabilities attributable thereto), notwithstanding that the adjusted tax basis of such
         property differs from its Gross Asset Value.

                 (v}     ln lieu of the depreciation, amortization. and other cost recovery
          deductions taken into account in computing such taxable income or loss, thcr~ shall be
          taken into account Depreciation compukd in acconfoncc with the definition of
          Depreciation in Section A.2.

                  (vi)     To the extent an adjustment to the adjusted iax basis or any Company
          asset pursuant to LR.C. Section 734(b) is required pursuant to Treasury Regulations
          Section l.704-1 (b)(1)(iv)(m)( ./) to be taken into acconnt in determining Capital Accounts
          as a reslllt of a distribution <>ther than in liquidation of a Member's Membership interest.
          the amount of such adjustment shall be treated as an item of gain (if the adjustment
          increases the basis of the asset) or loss (if the adjustment decreases the basis of1he asset)
          frum the disposition of the asset and shall he taken into account for purposes or
          computing r-..;et Profit or Net Loss.

        "'Nonrecourse Deductions'' has the mea11ing set forth in Tr~usury Regulations Section
I. 704-?(b)( l) and shall be determined according to the provisions of lre(lsttry Regulations
Section 1. 704-2( c ).

          '"Nonrecourse Liabilitv·· has the meaning set forlh in Treasury Regulations Section I .704-
2(b)(3).



C0'.\11' ..\:\Y AGIH:E:m :\ T OF Cl·:\ n 'RI(>:'• UHi ISTI( ·s LLC
                                                               P.\GI: A·3

                                                                                                          MR.380
          '"Partner i'<onrecoursc Debt" has the meaning set forth in Treasury Regulations Section
1.704-2(b)(4).

       .. Partner Nonrccourse Debt Minimum Gain.. has the rneanmg set forth in Treasury
Reguhitions Section l .704-2(i)(2) and shall he dct<.:rmincd in accordance with rreasury
Regulations Section I .704-2(i)(3),

       .. Partqer No11rccourse . Deductions·' has the meaning set forth in Treasury Regulations
Section l.. 704-2(i)( 1) and shall be determined in accordance with Trcasmy Regulations Section
l.704-2(i)(2).

       ·'Partnership Minimum Gain" has the meaning set forth in Treasury Regulations Section
1.704-2(b)(2) and shall be determined in accordance with Treasury Regulations Section l .704-
2(d).

        t\.3   Capital Accounts. The Company shall determine and maintain Capital Accounts.
··Capital Account" means an account of each Member detenni ned and maintained throtiglloul the
full tern~ or the Company in accordance vvith the capital m:co11nti11g rules of Treasury
Regulations Section 1.704-1 (b)(2)(iv). Without limiting the generality of the foregoing, the
following rules apply:

        (n)     The Capital Account of each Member shall be credited with (i} an amount equal
to such i\!kmber"s Capital Contributions and the Fair Value of property .contributed (if permitted
hereunder) to the Company by such Member, (ii) such Mcmber·s share of the Company's Net
Profit, and (iii) the amount of any Company liabilities assu1ned by such ~vkmber or that arc
secured hy property distributed to such Member.

       (b)    The Capital Account of each Member shall be debited by (i) the amount of cash
and the Fair Value of property distributed to such Member. (ii) such Member's share of the
Company·s Net Loss. and (iii) the amoutll of riny liabilities of such Member assun:ed by the
Company or that are secured by any property contributed by such Ml'rnber to the Company.

        (c)      Upon the transfer by ti Member of all or part of an inlercst in the Company arter
the Effoctive Date, the Capital Account of the transferor t'.iat is attributable to the trnnstt!rred
interest carries over to the transferee and the Capital Accounts of the Members shall be adjusted
to the extent providt..:"d in Treasury Regulations Section 1.704- l (h)(2 )(iv)( m).

         {d)    In determining the amount of any liability for pttrposes of Sections A.3.1(a) and
A.3 . 1(b). LR.C. Section 752(c) and any other applicahle provisions of the l.R.C. and the
Treasury Regulations shall be taken into account.

        ( e)   Except as othcnvise required by Treasury Regulations Se<.:tion 1.704-1 (b }(2)( iv),
adjustment to Capitnl Accounts in respect of Company incorne, gain. loss. deduction. and 1. R.C.
Section 705(a)(2J(B) e:\pcnditures (01· items thereof) shall he made with reference to the federal
tax treatment of such items (and, in the case of book items, with reference to the federal tax
CO~H'. \~\· i\(;lu:i:,\H'.,\ 'l' OF   Cnn IUO'i LOGJSTl(S LLC
                                                          PMa: A-4

                                                                                                       MR.381
treatment of the corresponding tax items) at the Company level, without regard to any mandatory
or elective tax tieatment of su.ch items at the Member level.

        (t)    The provisions of this Appendix and of the Agreement relating to the maitltenance
of Capital Accounts are intended to comply with Treasury Regulations Section 1. 704-1 (b)(2)(iv),
and shall be interpreted and applied in a manner consistent ~1th such Treasury Regulations. 1f
the Managers determine that it is prudent to modify the manner in which the Capital Accounts,
or any debits or credits thereto (induding debits or credits relating to liabilities that are secured
by contributions or distributed property or that are assumed by the Company or any Member),
are computed in order to comply with such Treasury Regulations, the Managers may make such
modification if it is not likely to have a material effect on the amounts distribute,d or to be
distributed to any tvtember pursuant to the Agreement. The Managers shall make any
adjustments that are necessary or appropriate (i) to maintai11 equality between the Capital
Accounts of the Members and the amount of Company capital reflected 011 the Company's
balance sheet, as <:omputed for book purposes, in accordance with Treasury Regulations Section
l.704-l(b)(2)(iv)(g). and {ii) if unanticipated events (for example, the acquisition by the
Company of oil or gas properties) might otherwise cause this Agreement not to comply with
Treasury Regulations Section 1..704-l(b).

        (g)    The provisions of the proposed Treasury Regulations published on January 22,
2003 (68 Fed. Reg. 2930), as they may subsequently be modified or adopted as temporary ol'
final Treasury Regulations. shall apply with respect to any noncompensatory options issued by
the Company.

        A.4      Allocations of Net Profit and Net Loss

        A.4. l In General. Subject to Section 3.6. Company Net P1 ofit and Net Loss shall be
                                                                        1


allocated to the Members as follows;,

       (a)     Net Profit. Net Profit for any period (excluding tax items allocated pursuant to
Sections A.4.2 and A.4.3) shall be allocated as follows:

               (i)      First. Net Profit shall be allocated to the Members to the extent of and in
        proportion to the excess, if any, of (i) the cumulative Net Loss allocated pursuant to
        Section A.4.1(b) for all prior periods, over (ii) the cumulative Net Profit allocated
        pursuant to this Section A4. l (a) for all prior periods.

                 (ii)  Second. any remaining Net Profit shall be allocated to the Members pro
        rata in accordance with their respective Percentage rntercsts.

       (b)     Net Loss. Net Loss for any period (excluding tax items allocated          pursu~nt   to
Sections A.4.2 and A.4J) shall be allocated as follows:

                 (i)    Net Loss shall be allocated to the Members pro rata in accordance with
        their respective Percentage Interests, subject to the limitation in Section A.4.1(b)(ii).
CO.\IP.\.\\' AGRrn.\tf::\T OF CE\Tl RIO;\' LOGISTIC-, LLC
                                                   PAGE     A·5
                                                                                                         MR.382
                 (ii) No Member may receive an allocation of Net Loss that \vould cause the
        Membe1· to have an Adjusted Capital Account Deficit at the end of the taxable year. Net
        Loss not allocated to a Member pursuant to this subparagraph (ii) shall be allocated to
        other Members according to their relative positive Capital Account balances (calculated
        taking into account the adjustments described in the definition of Adjusted Capital
        Account Deficit).

       A.4.2 Regulatory Allocations. The following special allocations shall be applied in the
order in which they are listed. Such ordering is intended to comply with the ordering rules in
Treasury Regulations Section 1.704-2(i) and shall be applied consistently therewith.

        (a)      Minimum Gain Chargeback. Except as otherwise provided in Treasury
Regulations Section l.704-2(f), notwithstanding anything to the contrary in this Section A.4. if
there is a t1et decrease in Partnership Minimum Gain during any taxable year. each Member shall
be allocated items of income and gain for that taxable year (and, if necessary. subsequent taxable
years) equal to that Member's share of the net decrease in Partnership Minimum Gain,
determined in accordance with Treasury Regulations Section 1.704·2(g)(2). This Section
A.4.2(a) is intended to comply with the minimum gain chargcback requirement in Treasury
Regulations Section 1. 704· 2(t) and shall be interpreted consistently therewith, including that no
chargeback shall be required to the extent the requirements for requesting a waiver described in
Treasury Regulations Section l.704-2(f){4) arc met or the requirements for any other exception
prescribed by or pursuant to Treasury Regulations Section l. 704-2(t) are met.

         (b)     Partner Nonrecourse Debt Minimum Gain Chargeback. Except as otherwise
provided in Treasmy Regulations Section l.704-2(i)(4), notwithstanding anything to the contrary
in this Section, if there is a net decrease in Partner Nonrecourse Debt Minimum Gain during a
taxable year, then, in addition to the amounts, if any, allocated pursuant to paragraph 4.2(a), any
Member with a share of that Partner Nonrecourse Debt Minimum Gain (determined in
accordance with Treasmy Regulations Section 1.704-2(i)(5)) as of the beginning of the taxable
year shall be allocated items of Company income and gain for that taxable year (and, if
necessary, for subsequent taxable years) equal to that Member~s share of the net decrease in the
Partner Nonrecourse Debt Minimum Gain, determined in accordance with Treasury Regulations
Section L704-2(i)(4). This Section A.4.2(b) is intended to comply with the chargeback of
partner nonrecourse debt minimum gain required by Treasury Regulations Section l.704·2(i)(4)
and shall be interpreted consistently there\.vith, including that llO chargeback shall be required to
the extent the reqt1irc111ents for any exceptions provided in Treasury Regulation Section 1.704-
2(i)( 4) are met.

        (c)     Qualified Income Offset. If any Member une~pectedly receives any adjustment.
allocation. or distribution described in Treasury Regulations Sections 1. 704-1 (b)(2)(ii)( d)( 4). (5 ),
or (6). items of Company income and gain shall be speciaHy allocated to such Member in an
amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations.
the Adjusted Capital Account Deficit of such Member as quickly as possible. An allocation
pursuant to the foregoing sentence shall be made only to the extent that such Member would

CO.\IPA.\Y AGRF.£.\ lE!'\T OF Cl':,'\Tl'IUO.'~ LOGISTICS LLC
                                                      P \GT:: A-6

                                                                                                            MR.383
have an Adjusted Capital Account Deficit after all other allocations provided for in Section A.4
have been tentatively made as if this Section A.4.2(c) were not in this Appendix. This. allocation
is intended to constitute a "qualifie.d income offset" within the meanfog of Treasury Regulations
Section l. 704- l (b)(2)(ii)(d)(3) and shall be construed in accordance with the requirements
thereof.

        (d)    Gross lncome Allocation. In the event. a Member has an Adjusted Capital
Account Deficit at the end of any taxable year, eacb such Member shall be specially allocated
items of Company income and gain in the amount of such Adjusted Capital Account Deticit as
quickly as possible; provided that an allocation p1.11·suant lo this clause shall be made only if and
to the extent that the Member would have an Adjusted Capital Account Deficit after all other
allocations provided for in this Section A.4 have been made as if this Section A.4.2(d} were not
in this Appendix.

        (e)   Nonrecourse Deductions. Nonrecourse Deductions for any taxable year shall be
allocated among the Members in accordance with their Percentage Interests.

        (f)     Partner Nonrecourse Deductions. Partner Nonrecomse Deductions for any
taxable year shall be specially al located to the Member who bears the economic risk ol' toss with
respect to the Partner Notu-ecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Treasury Regulations Section l.704-2(i)(I ).

       (g)    Basis Adjustments. To the extent an adjustment to the adjusted tax basis or any
Company asset pursuant to I.R.C. Section T34(b) or I.R.C. Section 743(b) is required under
Treasury Regulations Section 1.704-1 (b)(2)(iv)(m) to be taken into account. in determining
Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis) and such gain or loss shall be specially allocated to the Members in a
manner consistent with the manner in which their Capital Accounts are required to be adjusted
pmsuant to such Section of the Treasury Regulations.

        A.4.3 Curative Allocations. The allocations set fcmh in Section A.4.2 hereof (the
''Regulatory Allocations") are intended to comply with certain requirements of the Treasury
Regulations. The Members intend that, to the extent possible, all Regulatory Allocations shall be
offset either with other Regulatory Allocations or with special allocations of other items of
Company income, gain. loss. or deduction pursuant to this Section A.4.3. Therefore.
 notwithstanding any other provisious of this S~ction A.4 (other than the Regulatory Allocations),
the Managers shall make such offsetting special allocations of Company income, gain, loss, or
deduction in whatever manner the Managers determine appropriate so that, after such offsetting
allocations are made, each Member's Capital Account balance is, to the extent possible, equa\ to
the Capital Account balance such Member woutd have had if the Regulatmy Allocations were
 not part of the Agreement and all Company items were allocated pursuant to Section A.4.1. ln
exercising their discretion under this Section A.4.3. the Managers shall take into account fhture
 Regulatory Allocations under Sections A.4.2(a) and A.4.2(b) that, although not yet made. are

CmtP;\'.\'Y AGRt:t:\IE.YI' Of Ct:.Yl'l'IUO.'i l..OGISTICS LLC
                                                       r . \<ltA-7
                                                                                                        MR.384
likely to offset other Regulatory Allocations previOlisly rnade under Sections A.4.2(e) and
A.4.2(t).

       A.4.4 Other Allocation Rules

        (a)   Net Profit, Net Loss. and other items shall be allocated to the Members pursuant
to this Appendix A as of the last day of eac11 taxable year, and at such times as the Gross Asset
Values of Company Property are adjusted pursuant to subparagrap11 (ii) of the definition of Gross
Asset Value.

       (b)      If during any taxable year any Member's Percentage Interest changes. each
Member's share of Net Profit, Net Loss. and other items for such taxable year shall be
determined according to their varying interests and I.R.C. Section 706(d). using any conventions
permitted by law and selected by the Managers.

       (c)    All allocations pursuant to this Appendix shall, except as otherwise provided in
this Agreement. be divided among the Members in proportion to the Percentage Interests hefd by
each.

        (d)     For purposes of determining a Member's share of Company ·~excess nonrccourse
liabilities" within the meaning of 'freasury Regulations Section l.752-3(a)(3), the Members'
shares of Company profits shall be deemed to be in prop_ortion to their respective Percentage
Interests.

        (e)     To the extent permitted by Treasrny Regulations Section l.704-2(h)(3), the
Managers may treat any distribution of the proceeds of a Nonrecourse Liability or a Partner
Nonrecourse Debt (that would othenvise be allocable to an increase in Partnership Minimum
Gain) as a distribution that is not allocable 10 an increase in Partnership Minimum Gain to the
extent the distribution does not cause or increase an Adjusted Capital Account Deficit foT any
Member.

        A.5     Tax Allocations

        (a)   In General. Except as otherwise provided in this Section A.5, each item of
income, gain, loss, and deduction of the Company for federal income tax purposes shall be
allocated among the Members in the sarne manner as such items are allocated for book purposes
under the Agreement and this Appendix.

        (b)    Contributed or Revalued Property. ln accordance with LR.C. Section 704(c} and
the related Treasury Regulations. income. gain, loss, and deduction with respect to any property
contributed to the capital of the Company shall, solely for tax purposes, be allocated among the
Members so as to take account of any variation between the adjusted basis of such property lo
the Company for federal income tax purposes and its Gross Asset Value. Tf the Gross Asset
Value of any Company asset is adjusted pursuant to subparagraph (ii) of the definition of Gross
Asset Value in Section A.2 hereof: subsequent allocations of income, gain, Joss, and deductions
CmIPAN\' AGRU;,w ::q m' Ct:;,, Tl 'IUO.'i LOGIS'fl(S LLC
                                                  P,\Gt. ,\-8
                                                                                   I 150848v.12/12i:?O J4
                                                                                                            MR.385
with respect to such nsse1 shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and its Gross Asset Value in the same manner as under
I.R.C. Section 704(c) and the related Treasury Regulations. Any elections or othei: decisions
relating to allocations piH"suant to th[s Section A .S shall be made by the Managers itt any manner
that reasonably retlects the purpose and intention of this Appendix and the Agreement.

        (c)      Credits. Except as otherwise required by Treasury Regulations Section I.704-
J(b)(4)(ii). iten1s of tax credit and tax credit recapture shall be allocated among the: Members in
accordance with their Percentage lnterests.

       {d)       Effect of Tax Allocations. Allocations pursnant to this Section are solely for
purposes of lJ .S. federaL state. and local taxes and shall not affect any 1Vkmbcr'5 Capital
Accmlnt or share of Net Profit. Net I.oss, or other items or distributions pursuant to any
provision 1,)f this Appendix and the Agreement.




CmwA   '''°   A<:ttf:L \H.'-'.'Ttw Cl"'   n ·n10:\ Loc;ism s LLC
                                                           P \GE A-'1

                                                                                                      MR.386
EXHIBIT B




            MR.387
August 22, 2017
                                                                   CHASE J. POTTER
                                                                   Direct Phone: 214.651.2026
                                                                   Direct Fax: 214.659.4145
                                                                   chase.potter@strasburger.com


Via Email Only: bkn@snlegal.com

Brian K. Norman
Shamoun & Norman, LLP
1800 Valley View Lane, Suite 200
Farmers Branch, Texas 75234

RE:      Cause No. DC-16-07706; Centurion Logistics LLC, individually and derivatively on
         behalf of Centurion Pecos Terminal LLC v. James Ballengee, et al. in the 44th Judicial
         District Court of Dallas County (the “Lawsuit”).

Dear Mr. Norman:

       As you know, we represent John Calce in the Lawsuit. Mr. Calce has been named as a
defendant in the Lawsuit by Centurion Logistics LLC (“Centurion Logistics”). Mr. Calce is a
manager of Centurion Logistics and, therefore, is entitled to indemnification from Centurion
Logistics pursuant to Section 6.2 of the Company Agreement of Centurion Logistics (the
“Agreement”). A true and correct copy of the Agreement is attached hereto as Exhibit A.

        The Agreement specifically provides that Centurion Logistics “indemnifies and holds
harmless each Indemnified Person from and against any Damages arising from any Proceeding
relating to the conduct of [Centurion Logistics’] business or to any act or omission by such
Indemnified Person within the scope of the Indemnified Person’s authority in the course of
[Centurion Logistics’] business . . . .” See Ex. A § 6.2. The Agreement further provides that
“[a]n Indemnified Person’s expenses paid or incurred in defending itself against any Proceeding
shall be reimbursed as paid or incurred.” See id.

        Mr. Calce is an Indemnified Person under the Agreement. See Ex. A § 1.1. Moreover,
the Lawsuit constitutes a Proceeding under the Agreement. See id. Centurion Logistics is
therefore required to reimburse Mr. Calce the expenses he pays or incurs in defending himself in
the Lawsuit, including attorneys’ fees, as such expenses are paid or incurred.

        As of July 31, 2017, Mr. Calce had been billed a total of $114,440.99 in expenses related
to his defense of the Lawsuit. Mr. Calce hereby demands that, on or before August 28, 2017,
Centurion Logistics (1) reimburse him the full amount of expenses that he has been invoiced
($114,440.99) plus an additional $50,000 that will be applied to future expenses as they are
incurred; and (2) agree to reimburse Mr. Calce the additional expenses, in excess of the

9253092.2/SP/38371/0105/082217




                                                                                                    MR.388
additional $50,000 referenced above, that he pays or incurs in his defense of the Lawsuit as such
expenses are paid or incurred.

        Pursuant to Section 6.3 of the Agreement, Mr. Calce hereby affirms that it is his good
faith belief that he has met the standard of conduct necessary for indemnification under Section
6.3. Mr. Calce further agrees to repay any amount that is paid or reimbursed by Centurion
Logistics, pursuant to Section 6.2, if it is determined by a court of competent jurisdiction that Mr.
Calce did not meet the aforementioned standard or if indemnification is otherwise determined to
be prohibited by law.

         If you would like to discuss this matter further, please do not hesitate to contact me.

                                                       Sincerely,




                                                       Chase J. Potter




9253092.2/SP/38371/0105/082217




                                                                                                        MR.389
EXHIBIT C




            MR.390
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                                                                                                              MR.393
                                                                                                             FILED
                                                                                                 DALLAS COUNTY
                                                                                                  5/2/2018 9:24 PM
                                                                                                    FELICIA PITRE
                                                                                                 DISTRICT CLERK



                                CAUSE NO. DC-16-07706

CENTURION LOGISTICS LLC,                     §           IN THE DISTRICT COURT OF
individually and derivatively on behalf of   §
CENTURION PECOS TERMINAL LLC,                §
a Texas Limited Liability Company; and       §
MARC MARROCCO and ANTONIO                    §
ALBANESE, individually and derivatively      §
on behalf of CENTURION LOGISTICS, LLC        §
                                             §
                          Plaintiffs         §
                                             §
vs.                                          §           DALLAS COUNTY, TEXAS
                                             §
JAMES BALLENGEE; BALLENGEE                   §
INTERESTS, LLC; JOHN CALCE,                  §
CHRIS A. MOTT; TOM RAMSEY,                   §
STAMPEDE TX ENERGY, LLC;                     §
CENTURION MIDSTREAM GROUP, LLC;              §
CENTURION TERMINALS, LLC;                    §
CENTURION BROWNSVILLE                        §
TERMINAL, LLC; JAMES HOCK; VISPI             §
JILLA; and JUPITERMLP, LLC                   §
                                             §
                          Defendants,        §
                                             §           B-44th JUDICIAL DISTRICT
and CENTURION PECOS TERMINAL                 §
LLC, a Texas Limited Liability Company       §
                                             §
                          Nominal Defendant. §

                    PLAINTIFF’S SECOND AMENDED PETITION


      Plaintiffs Centurion Logistics LLC (“Centurion Logistics”) individually and derivatively

on behalf of Centurion Pecos Terminal LLC (“Centurion Pecos”); and Marc Marrocco and

Antonio Albanese, individually and derivatively on behalf of Centurion Logistics, file this

Second Amended Petition against James Ballengee (“Ballengee”), Ballengee Interests, LLC

(“Ballengee Interests”), John Calce (“Calce”), Chris A. Mott (“Mott”), Stampede TX Energy,

LLC (“Stampede”), Tom Ramsey (“Ramsey”), Centurion Midstream Group, LLC (“Centurion

Midstream”), Centurion Terminals, LLC (“Centurion Terminals”), Centurion Brownsville

PLAINTIFFS’ SECOND AMENDED PETITION                                                  Page 1

                                                                                                 MR.867
Terminal, LLC (“Centurion Brownsville”), James Hock (“Hock”), Vispi Jilla (“Jilla”), and

JupiterMLP, LLC (“JupiterMLP”), bringing claims directly and derivatively on behalf of

Centurion Pecos and directly and derivatively on behalf of Centurion Logistics for: breach of

fiduciary duty, aiding and abetting breaches of fiduciary duty, money had and received (unjust

enrichment), fraudulent concealment, aiding and abetting fraudulent concealment, violation of

the Theft Liability Act, Tex. Civ. Code §§ 134.001-134.005, tortious interference with contract,

fraudulent inducement, promissory estoppel, declaratory judgment and fraudulent transfer.

Accordingly, Plaintiffs would respectfully show the Court as follows:

                                            I.
                                 DISCOVERY CONTROL PLAN

        1.     Pursuant to Texas Rules of Civil Procedure 190.1-190.6, Plaintiffs hereby

designate that discovery will be conducted under Level 3. Pursuant to Rule 47 of the Texas

Rules of Civil Procedure, at this time, Plaintiffs seeks monetary relief in excess of $1,000,000.

                                                II.
                                              PARTIES

        2.     Plaintiff Centurion Logistics is a Texas limited liability company, with its

principal office in Dallas, Texas. Centurion Logistics is the sole member and the sole manager

of Centurion Pecos. The members of Centurion Logistics are: Marc Marrocco (“Marrocco”),

Antonio Albanese (“Albanese”), and TXC Energy LLC (“TXC Energy”), an affiliate of Calce.

        3.     Nominal Defendant Centurion Pecos is a Texas limited liability company, with its

principal office in Dallas, Texas. The current member and manager of Centurion Pecos is

Centurion Logistics. Stampede was a member and manager of Centurion Pecos until June 13,

2016.

        4.     Plaintiff Marrocco is an individual residing in Dallas County, Texas.



PLAINTIFFS’ SECOND AMENDED PETITION                                                        Page 2

                                                                                                      MR.868
       5.      Plaintiff Albanese is an individual residing in Dallas County, Texas.

       6.      Defendant Ballengee is an individual residing in Dallas County, Texas.

Ballengee has already entered an appearance in this matter. Ballengee is a member and manager

of Defendant Ballengee Interests. Ballengee has already entered an appearance in this matter.

       7.      Defendant Ballengee Interests is a Louisiana limited liability company. Ballengee

is a managing member of Ballengee Interests.        Ballengee Interests has already entered an

appearance in this matter.

       8.      Defendant Calce is an individual residing at 5601 Preakness Lane, Plano, TX

75093. Calce has already entered an appearance in this matter.

       9.      Defendant Stampede is a Texas limited liability company, with its principal place

of business in Dallas, Texas. Stampede was a manager and member of Centurion Pecos, but was

removed as a manager and member on June 13, 2016. Mott is the managing member of

Stampede. Stampede has already entered an appearance in this matter.

       10.     Defendant Mott is an individual residing at 631 Milam Street, Shreveport

Louisiana 71101. Mott (as detailed below), engages in business in Texas, but does not maintain

a regular place of business in the State or a designated agent for service of process. Hence, the

Texas Secretary of State is an agent for service of process for Mott, and service of process can be

made pursuant to Texas Civil Practice and Remedies Code § 17.044.

       11.     Defendant Ramsey resides in the Houston, Texas area. He may be served at his

residence or wherever he may be found. Ramsey is the Chief Executive Officer of Centurion

Midstream, Centurion Terminals, and JupiterMLP. Ramsey has already entered an appearance in

this matter.




PLAINTIFFS’ SECOND AMENDED PETITION                                                       Page 3

                                                                                                      MR.869
       12.     Defendant Centurion Midstream is a Texas limited liability company, formed on

October 20, 2015, with its principal place of business in Dallas, Texas. Calce is the manager of

Centurion Midstream. Centurion Midstream has already entered an appearance in this matter.

       13.     Defendant Centurion Terminals is a Texas limited liability company, with a

principal place of business in Dallas, Texas. On information and belief, Centurion Terminals is

an entity controlled by Defendant Calce. The manager of Centurion Terminals is 58C, LLC, a

Texas limited liability company, whose manager is LV III, LLC, whose manager is Calce.

Centurion Terminals has already entered an appearance in this matter.

       14.     Defendant Centurion Brownsville is a Texas limited liability company, with its

principal place of business in Dallas, TX. The manager of Centurion Brownsville is Centurion

Terminals. Centurion Brownsville may be served by serving its registered agent, John Calce, at

15851 Dallas North Parkway, Suite 650, Addison, Texas 75001. Centurion Brownsville has

already entered an appearance in this matter.

       15.     Defendant Hock resides in the Houston, Texas area. He may be served at his

residence or wherever he may be found. Hock is the former President of Stampede Louisiana

and Stampede. Hock has already entered an appearance in this matter.

       16.     Defendant Jilla is an individual residing at 5719 Twin Brooks, Drive, Dallas,

Texas 75252. He may be served at his residence or wherever he may be found. Jilla is the

former designated representative of Stampede Louisiana and Stampede. Jilla has already entered

an appearance in this matter.

       17.     Defendant JupiterMLP is a Delaware limited liability company, with its principal

place of business in Dallas, Texas. Jupiter MLP may be served by serving its registered agent,




PLAINTIFFS’ SECOND AMENDED PETITION                                                    Page 4

                                                                                                   MR.870
Capitol Services, Inc., 1675 S. State Street, Suite B, Delaware 19901. JupiterMLP has already

entered an appearance in this matter.

                                          III.
                                JURISDICTION AND VENUE

       18.     This Court has jurisdiction over this case because the amount in controversy is in

excess of the Court’s minimum jurisdictional limits. Moreover, Defendants have engaged in

sufficient conduct in the State of Texas to confer jurisdiction over them.         The Court has

jurisdiction over the subject matter of the action because a substantial portion of the events

giving rise to Plaintiffs’ claims occurred in Dallas County, Texas.

       19.     Venue is proper in Dallas County, Texas, pursuant to Texas Civil Practice and

Remedies Code Sections 15.002-15.007, because it is the county where all or a substantial part of

the events or omissions giving rise to the claims occurred as detailed in the following paragraphs.

                                            IV.
                                        BACKGROUND

       20.     Who can you trust? Apparently, when large potential profits are at issue, trust

and honesty are in short supply. Here, a project to create a rail terminal in Pecos, Texas to

service the oil and gas industry became the lynchpin of a grand scheme to steal the ideas, capital,

business and opportunities of Centurion Logistics and Centurion Pecos, by any means necessary.

Moreover, Defendants, by means of fraudulent activity and use of corrupt insiders, stole and

fraudulently utilized Centurion Pecos’ looted assets to pursue a much-expanded grand scheme –

creating a complex project stretching at least from the oilfields of West Texas all the way to the

Port of Brownsville, while cutting Centurion Logistics and Centurion Pecos out of the entire

operation.




PLAINTIFFS’ SECOND AMENDED PETITION                                                       Page 5

                                                                                                      MR.871
A.     Creation of Centurion Logistics and Centurion Pecos

       21.     Several years ago, Marrocco and Albanese were looking for ways to use their

expertise in real estate to invest in projects related to the booming oil and gas industry. During

their investigations, Marrocco became better acquainted with Calce, who worked in the oil and

gas industry, and whom Albanese happened to know from outside his business dealings. After

some investigation, Marrocco, Albanese and Calce decided to pursue a project to purchase real

estate and to develop a railway terminal for the shipping of crude oil and related materials. In

order to pursue that project, Marrocco, Albanese and Calce formed Centurion Logistics on

September 16, 2013. Centurion Logistics is manager-managed and its managers are Marrocco,

Albanese and Calce. Under the company agreement of Centurion Logistics, a majority of the

managers are required to take any action.

       22.     Initially, the Centurion Logistics managers utilized their skills to the benefit of the

company. Albanese used his connections to obtain the interest of a possible anchor tenant who

might want to ship hydraulic-fracturing sand through a terminal in that area, as a way to build

Centurion Logistics’ credibility with oil companies and the railroad. Marrocco identified, and

placed under contract, an approximately 177-acre parcel in Reeves County, Texas (the “First

Parcel”) to use for the terminal, and obtained a contract for Centurion Logistics to purchase it.

       23.     In order to obtain funds to purchase the First Parcel, Calce, Marrocco and

Albanese discussed bringing an equity partner into the Pecos project to contribute cash. Calce

offered two potential investors from the oil and gas industry with whom he was acquainted.

Because Marrocco had already begun to hear rumors that Calce had a reputation for self-dealing,

Marrocco proposed that Centurion Logistics work with the investor to whom he believed Calce

had fewer ties, namely Ballengee. Additionally, Ballengee was already involved with a company



PLAINTIFFS’ SECOND AMENDED PETITION                                                          Page 6

                                                                                                         MR.872
that was trucking crude oil in the vicinity, Bridger Logistics. Ballengee agreed to contribute cash

to the project, in order to purchase the First Parcel without any liens or encumbrances. However,

unbeknownst to Marrocco and Albanese, Ballengee was in the process of selling his interest in

Bridger Logistics and would then be subject to a non-compete agreement, which would not allow

his personal involvement with this type of endeavor. Therefore, in order to conceal his activities,

Ballengee insisted on using an ostensibly unrelated entity, CAM Oil and Natural Gas, LLC

(“CAM”) as the funnel for his cash contributions. This came as a surprise to Marrocco and

Albanese, who had believed that Ballengee would use Bridger Logistics as the entity for his cash

contributions. Hence, Centurion Logistics and CAM formed Centurion Pecos, on September 12,

2014, with Calce as the sole manager, and Centurion Logistics assigned the contract to purchase

the First Parcel to Centurion Pecos on September 15, 2014.

       24.     Shortly before the closing of the sale of the First Parcel, Ballengee announced to

Centurion Logistics and (and Marrocco and Albanese) that he would not simply contribute cash

(through CAM), as he had represented, even though he had more than adequate cash to fund the

purchase of the First Parcel. Instead, Ballengee announced that he would use his existing line of

credit at Texas Capital Bank (“TCB”). Then, less than 48 hours before the closing of the First

Parcel purchase, Ballengee informed Marrocco and Albanese that TCB was requiring a deed of

trust on the property to secure the extension of credit to Ballengee. Because of the last-minute

nature of this announcement, Centurion Logistics (and Centurion Pecos) had no other way to

fund the purchase of the First Parcel before the required closing date, it being too late to look for

other funding sources. Moreover, there was a real risk that Centurion Logistics (and Centurion

Pecos) would lose the ability to purchase the First Parcel, since the seller was already threatening

to sell to another purchaser. Having no other choice, Centurion Pecos acceded to Ballinger’s



PLAINTIFFS’ SECOND AMENDED PETITION                                                         Page 7

                                                                                                        MR.873
demands and granted the deed of trust to TCB. The proceeds of the loan by TCB to Ballengee

Interests were then contributed by Ballengee, through CAM Oil and Natural Gas, and used to

purchase the First Parcel on September 19, 2014.

       25.    What Centurion Logistics, Marrocco and Albanese did not know at that time, was

that Calce and Ballengee had a plan to create a mechanism by which they could cause control of

the property to be involuntarily removed from Centurion Pecos through foreclosure, with the first

step of the plan being to force Centurion Pecos to grant the deed of trust to TCB, thereby

encumbering the First Parcel.

       26.    Centurion Logistics next determined that the terminal project could be expanded

by acquiring an approximately 300-acre parcel adjacent to the First Parcel (the “Second Parcel”).

Marrocco obtained a contract for an entity he controlled, in order to purchase the Second Parcel.

Marrocco was increasingly concerned about Calce’s reputation for underhandedness, and, as a

condition to assigning the purchase agreement to Centurion Pecos, insisted that the company

agreement of Centurion Pecos be amended in order to remove Calce as the sole manager of

Centurion Pecos, as of November 2014. By this time, unbeknownst to Marrocco or Albanese,

Ballengee had sold his interest in Bridger Logistics, and had become subject to a non-compete

agreement which would prohibit his involvement in Centurion Pecos. Since CAM was too

closely associated with Ballengee, and its continued participation in Centurion Pecos could cause

Bridger Logistics to discover Ballengee’s violation of his non-compete agreement, Ballengee or

Calce caused CAM Oil and Natural Gas to be removed as a member of Centurion Pecos, and be

replaced by Stampede Energy, LLC (“Stampede Louisiana” – a predecessor Stampede TX

Energy, LLC), a company unlikely to be identified by Bridger Logistics as being associated with

Ballengee.



PLAINTIFFS’ SECOND AMENDED PETITION                                                     Page 8

                                                                                                    MR.874
       27.     Under the amended and restated company agreement of Centurion Pecos,

Centurion Logistics and Stampede Louisiana were the members and managers of Centurion

Pecos. Centurion Pecos is manager-managed, and, under the amended and restated company

agreement, any action requires the consent of all managers.

       28.     At the closing of the Second Parcel, Ballengee again insisted that rather than

fulfilling his representation to contribute his cash to fund the purchase of the Second Parcel free

of any liens or encumbrances, he would instead take out another loan from TCB. Once again,

Ballengee insisted that Centurion Pecos grant a deed of trust to the Second Parcel to TCB to

secure this second loan. As with Ballengee’s First Parcel scam, his pattern here was part of his

plan to create a mechanism to remove control of the Second Parcel from Centurion Pecos

through foreclosure, making sure it was encumbered by the deed of trust. The purchase of the

Second Parcel closed on August 21, 2015.          The First Parcel and the Second Parcel are

collectively referred to as the “Reeves County Property.”

       29.     As with the purchase of the First Parcel, Ballengee did not provide the funds for

the Second Parcel directly to Centurion Pecos. Rather, he funneled the funds through Stampede

Louisiana because his participation in the Centurion Pecos venture was circumscribed by his

non-compete.

       30.     Both deeds of trust, granted at the closings of the Reeves County Property,

contain a cross-collateralization clause pledging the Reeves County Property as collateral for all

obligations of Ballengee Interests to TCB, even obligations not involving Centurion Pecos.

Calce signed both deeds of trust, purportedly in his capacity as manager of Centurion Pecos,

although he was no longer a manager of Centurion Pecos at the time he signed the deed of trust




PLAINTIFFS’ SECOND AMENDED PETITION                                                       Page 9

                                                                                                      MR.875
to the Second Parcel, and had no other authority to sign the second deed of trust for Centurion

Pecos.

B.       Calce and Ballengee Hatch Their Grand Scheme

         31.   While Centurion Pecos was purchasing the parcels for the Pecos railroad terminal,

Calce and Ballengee realized that the Pecos terminal idea was an incredible idea, and could be

the nexus of an extremely profitable and much more extensive project. They began using the

planned Pecos terminal (and its assets) as the focus point of a connection to the Port of

Brownsville. This would involve building a terminal at the Port of Brownsville, along with

storage facilities and fractioning towers for processing condensate. They realized that the Pecos

terminal in Reeves County was the key to a huge money-making opportunity, but first, they

needed absolute control over Centurion Pecos and its Reeves County Property. Since Calce and

Ballengee had already set up a way to steal Centurion Pecos’ assets, they realized that they had

the opportunity to cut Marrocco, Albanese and Centurion Logistics (and Centurion Pecos)

completely out of this opportunity if they chose. To conceal activities related to this incredible

opportunity from Marrocco and Albanese, Calce created a new entity, Centurion Terminals (and

designated himself manager) on August 27, 2015. By September 11, 2015, Centurion Terminals

was breaking ground on a Brownsville terminal.

C.       Defendants’ Fraudulent Scheme Begins to Unfold

         32.   As Calce and Ballengee’s grand scheme began to progress in late 2015, Calce

began communicating to Marrocco that Calce and Ballengee wanted to bring other participants

into the project, and wanted Marrocco and Albanese to take a more passive role and a reduced

share of the profits. Calce then had a private meeting with Marrocco, expressing his desire to

force Albanese out as a manager of Centurion Logistics, and to require Albanese to sell his



PLAINTIFFS’ SECOND AMENDED PETITION                                                     Page 10

                                                                                                     MR.876
membership interest in Centurion Logistics for less than its fair value. Calce claimed that the

Pecos terminal was just a small part of an overall project that Ballengee was putting together.

Calce threatened that if Marrocco did not cooperate in removing Albanese from Centurion

Logistics and agree to turn over the Pecos terminal project to Calce and Ballengee for a very

small percentage of the “new” project, Calce and Ballengee would exclude Marrocco from

participation in the entire project, including the Pecos terminal. Calce told Marrocco that they

could do this by removing the Reeves County Property from Centurion Pecos through the

foreclosure scheme Ballengee and Calce had set up during the two purchases constituting the

Reeves County Property. However, if Calce could get Albanese out, his plans could go forward

unhindered, since without Albanese, Marrocco could not outvote Calce, and would have no way

to stop Calce and Ballengee from taking complete control of the Reeves County Property –

without the necessity of foreclosure. Although Marrocco agreed to consider taking a smaller

percentage in the grand scheme, he refused to participate in removing Albanese from Centurion

Logistics.

       33.     Ballengee subsequently met with Marrocco and Albanese, again trying to induce

them into agreeing to take a small percentage of the much larger project, and agreeing that it was

Centurion Logistics that had the original idea. At that meeting, Marrocco informed Ballengee

that Calce had threatened to foreclose on the Reeves County Property and take it from Centurion

Pecos if Marrocco did not agree to cut Albanese out. Ballengee then indicated that they were

willing to buy Marrocco and Albanese out if they did not agree to trade control of the Pecos

terminal for a very small piece of the larger project.

       34.     Calce and Ballengee then demanded a meeting with Marrocco to negotiate a fair

price for Marrocco’s interest in Centurion Logistics. However, this proposal was actually a ruse



PLAINTIFFS’ SECOND AMENDED PETITION                                                     Page 11

                                                                                                     MR.877
to trick Marrocco into attending an uncalled meeting of the managers of Centurion Pecos to

approve an “assignment and assumption agreement,” handing the Reeves County Property over

to Ballengee Interests. Marrocco refused to attend the meeting.

       35.     Before Marrocco could give an answer as to whether he and Albanese were

willing to agree to a significantly reduced percentage of the “new” opportunity or to take a buy-

out of their interest, Calce and Ballengee decided to go forward with the “new” opportunity and

began to execute on their plan to strip Centurion Pecos of its assets.

       36.     The actions of Ballengee and Calce were a part of their grand scheme to move the

Reeves County Property out of Centurion Pecos and into an entity in which Marrocco and

Albanese have no interest, depriving Marrocco and Albanese of their entire interests in the

terminal project. To these ends, Calce and Ballengee began negotiating with Union Pacific to

establish rail service to the Reeves County Property through Centurion Midstream, an entity

unrelated to Centurion Logistics or Centurion Pecos – an entity with Calce as President and

Ramsey as CEO. Centurion Midstream represented to Union Pacific that it was the owner of the

Reeves County Property.       After Centurion Logistics notified Union Pacific that Centurion

Midstream had no affiliation with Centurion Pecos, Calce, Ballengee and Ramsey told Union

Pacific that Marrocco and Centurion Logistics were no longer involved in the project, and that

Centurion Midstream would own the Reeves County Property “within a few weeks.” On its

website at this time, Centurion Midstream claimed to own the property purchased by Centurion

Pecos and purported to be creating a terminal at Pecos, Texas.

       37.     In furtherance of this grand scheme, Calce, Ballengee and/or Mott and Stampede

(or its predecessor, Stampede Louisiana), created a number of unauthorized and/or fraudulent

documents purporting to pledge the Reeves County Property or create unauthorized obligations



PLAINTIFFS’ SECOND AMENDED PETITION                                                    Page 12

                                                                                                    MR.878
of Centurion Pecos. These unauthorized transactions and documents were not only concealed

from Plaintiffs, but, on information and belief, were actually backdated.

       38.     As noted above, the grand scheme to cut Marrocco, Albanese, Centurion Logistics

and Centurion Pecos out of the “new” opportunity went far beyond just the Reeves County

Property, and had begun months before. In a transaction unrelated to the purchase of the Reeves

County Property, Ballengee Interests granted a promissory note to TCB dated January 6, 2015

for a line of credit in the amount of $750,000. Unbeknownst to Marrocco and Albanese, in order

to secure the Ballengee Interests line of credit, Calce executed a deed of trust to the First Parcel,

purportedly on behalf of Centurion Pecos as its manager – this was at a time when Calce was no

longer a manager of Centurion Pecos. The January 6, 2015 deed of trust also contained a cross-

collateralization clause pledging the First Parcel as collateral for all obligations of Ballengee

Interests to TCB, even obligations not involving Centurion Pecos. The proceeds of the line of

credit were not used for any purpose related to the business of Centurion Pecos. Rather, Calce,

Ballengee and Ramsey used the proceeds from the unauthorized loan and deed of trust to fund

other projects, including the Brownsville terminal. That is, the $750,000 was either spent

directly on other projects, or allowed Defendants to divert other resources to those projects.

Centurion Logistics was unaware of the January 6, 2015 deed of trust, and only discovered it

during a record search of Reeves County conducted in May 2016.

       39.     On October 30, 2015, after Calce had openly expressed the desire to remove

Albanese from Centurion Logistics, and shortly after Centurion Midstream was formed,

Ballengee Interests extended the term of the First Parcel note to TCB, and filed an extension of

the deed of trust on the First Parcel to secure that note. Again, that extension was surreptitiously

signed by Calce, as “manager of Centurion Pecos,” although he was not a manager of Centurion



PLAINTIFFS’ SECOND AMENDED PETITION                                                        Page 13

                                                                                                        MR.879
Pecos at the time, and had no other authority to act on behalf of Centurion Pecos. Again,

Marrocco, Albanese, Centurion Logistics and Centurion Pecos were not aware of the extension

of the deed of trust on the First Parcel, and only discovered it during a record search of Reeves

County conducted in May 2016. Ballengee’s and Calce’s purpose in extending the deed of trust

was to support their grand scheme and their fraudulent efforts to preserve the Ballengee Interests

note as a means of removing the First Parcel from Centurion Pecos.

              40.            In April 2016, without authority to act for Centurion Pecos, Stampede1 and Calce

forged documents that purported to obligate Centurion Pecos to assume Ballengee Interests’

obligations under the notes Ballengee Interests owed TCB (which had been used to obtain the

funds contributed to purchase the Reeves County Property), and to grant Ballengee Interests a

deed of trust to secure the assumption. Marrocco, Albanese, Centurion Logistics and Centurion

Pecos were unaware of these documents or the unauthorized assumption until Centurion Pecos

received a “notice of default” dated April 28, 2016 from Ballengee Interests for its purported

failure to make interest payments under the assumption agreement. Neither Centurion Pecos,

Centurion Logistics, Marrocco nor Albanese were provided with copies of the purported

assumption agreement and deed of trust until after the Original Petition was filed in this matter.

              41.            In addition, Calce and Ramsey created a note, dated on or about November 15,

2015, purporting to obligate Centurion Pecos to make payments to Centurion Terminals, which

was controlled by Calce and Ramsey. Centurion Pecos first learned of this note in a demand

letter dated May 27, 2016. No note of this description was ever authorized by Centurion Pecos,

and to date, neither Centurion Pecos, Centurion Logistics, Marrocco nor Albanese have ever seen

this purported note.



1
    By this time, Stampede Louisiana had become Stampede, as detailed in Section F, below.

PLAINTIFFS’ SECOND AMENDED PETITION                                                                Page 14

                                                                                                                MR.880
       42.    Ballengee Interests and Calce also created fraudulent notes ostensibly by

Centurion Pecos to Ballengee Interests, dated September 16, 2014 and August 17, 2015.

Centurion Pecos first learned of these notes in demand letters dated May 25, 2016. Again,

neither Centurion Pecos, Centurion Logistics, Marrocco nor Albanese had ever seen these

purported notes until after the filing of the Original Petition.    When Centurion Logistics

originally agreed to providing the Reeves County Property as collateral for the Ballengee Loans,

it did not realize that such could be parlayed into circumstances that would obligate Centurion

Pecos (as opposed to Ballengee) to repay the purchase price.

       43.    In furtherance of their grand scheme and their fraudulent plans, Defendants

threatened to use the unauthorized, forged and fraudulent documents to foreclose on the Reeves

County Property. Centurion Pecos received letters from Ballengee Interests and Centurion

Terminals demanding payment of purported obligations that Centurion Pecos never, in fact,

agreed to assume.

D.     The Grand Scheme Begins to Come Together: Calce “Transfers” the Reeves
       County Property to Ballengee Interests

       44.    On May 26, 2016, Calce signed Special Warranty Deeds purporting to transfer

both parcels of the Reeves County Property to Ballengee Interests. However, those purported

transfers were legally invalid, as they were done without the authorization of Centurion Pecos.

According to documents executed by Calce and Ballengee, the purported transfer of the Reeves

County Property was made because Centurion Pecos was unable to make payments under the

unauthorized financial obligations fraudulently entered into by Calce and Ballengee.        The

transfer of the Reeves County Property was an invalid and illegitimate transaction, fraudulently

made as a part of the grand scheme of cutting Marrocco and Albanese out of the Pecos terminal

project, and excluding them from additional opportunities (as explained below).


PLAINTIFFS’ SECOND AMENDED PETITION                                                   Page 15

                                                                                                   MR.881
E.     Calce, Ballengee and Ramsey Expand the Grand Scheme Using Centurion
       Pecos Funds and Property

       45.     As set forth above, Calce fraudulently granted a deed of trust in Centurion Pecos’

name to TCB to procure a $750,000 loan to Ballengee Interests – a transaction made without

any authorization from Centurion Pecos. Calce, Ballengee and Ramsey, together with their

related entity Defendants, used this $750,000 as seed capital to fund and expand their grand

scheme by constructing other projects in Reeves County, Texas and in Brownsville, Texas. The

$750,000 was either spent directly on these projects or the influx of the $750,000 allowed

Defendants to use other resources on these projects.

       46.     For example, Centurion Midstream and Centurion Terminals used these funds to

begin constructing their own railway terminal next door to the site of the original proposed

Centurion Pecos terminal. Calce, Ballengee and Ramsey also used the funds as seed capital to

begin construction of the related railway terminal and refinery in Brownsville, Texas.

Eventually, the grand scheme involved every aspect from West Texas to the Gulf Coast,

gathering and transporting crude oil from the Delaware Basin, through the Pecos Terminal, and

then on to Brownsville, where it would be stored, processed, and blended, and subsequently be

sold or exported.

       47.     In a further attempt to conceal their fraudulent scheme, Defendants created

JupiterMLP (with Tom Ramsey as CEO, in addition to his CEO duties for Centurion Midstream

and Centurion Terminals), and transferred some or all of these projects to that entity.

JupiterMLP continues pursuit of this grand scheme to this day.

       48.     While Defendants used the wrongfully-obtained funds to commence and pursue

these projects, Centurion Logistics and Centurion Pecos have not only been defrauded of their

assets and excluded from participation in the original project, but have also been deprived of the


PLAINTIFFS’ SECOND AMENDED PETITION                                                     Page 16

                                                                                                     MR.882
lucrative business opportunity to participate in the broader Brownsville terminal, storage, and

refining project and the profits flowing therefrom – even though it was Centurion Logistics and

Centurion Pecos’ own assets that helped fund and construct these additional projects. In other

words the Defendants formulated and executed this fraudulent method of financing the broader

project for a huge payoff, using Centurion Logistics and Centurion Pecos as the source of

financing and funds since they had the only hard asset, the Reeves County Property), all the

while cutting them off from any participation or profits therefrom.

F.        Stampede Violates the Company Agreement

          49.   Section 10 of the First Amended and Restated Company Agreement of Centurion

Pecos Terminal LLC (“Company Agreement”) sets forth the conditions under which a member

may transfer its membership interest. Section 10.4 states that a transfer shall not be permitted

unless:

                [t]he transferor and transferee have delivered to the Company
                [Centurion Pecos] any documents that the Board of Managers
                request to confirm that the transfer satisfies the requirements of
                this Agreement to give effect to the transfer, and to confirm the
                transferee’s agreement to be bound by this Agreement as Assignee.

          50.   Pursuant to Section 10.1(a) of the Company Agreement, “transfer” includes “a

transfer by merger or other business combination.” Stampede Louisiana (a Louisiana limited

liability company) was a member of Centurion Pecos at the time that the Company Agreement

was adopted, and was bound thereby. On January 20, 2016, Stampede Louisiana was converted

to Stampede. Stampede then engaged in a series of mergers, first with Centurion Brownsville

Terminal, LLC, a Texas limited liability company, on February 4, 2016, and then with Stampede

Energy, LLC, a Delaware limited liability company on March 2, 2016.

          51.   On April 30, 2016 and again on May 4, 2016, Centurion Logistics expressly

requested that Stampede and Centurion Brownsville provide the information required by Section

PLAINTIFFS’ SECOND AMENDED PETITION                                                   Page 17

                                                                                                   MR.883
10.4 of the Company Agreement. Stampede, at Mott’s direction, and Centurion Brownsville

failed and refused to provide the information required by the Company Agreement.

G.       Centurion Pecos Expels Stampede as Member and Manager

         52.   In response to Stampede’s blatant violations of the Company Agreement,

Centurion Logistics, on behalf of Centurion Pecos, on May 31, 2016, called a meeting of

managers and members of Centurion Pecos, which was held on June 13, 2016. At the meeting,

Centurion Logistics moved to remove Stampede as a member of Centurion Pecos based on

Stampede’s prohibited transfers of its membership interest and refusal to provide related and

required information. Because the motion involved removing Stampede as a member, Stampede

was an interested manager and not eligible to vote. Centurion Logistics, the only manager

eligible to vote on the motion, voted to remove Stampede as a member. This left Centurion

Logistics as the sole member of Centurion Pecos.

         53.   Subsequently, the remaining member of Centurion Pecos called a meeting to

determine whether Stampede should be removed as a manager because it had transferred its

membership interest in a prohibited transfer and engaged in other wrongful conduct that

materially affected the business of Centurion Pecos and its members, and had also engaged in

conduct that had made it not reasonably practicable to carry on the company business with

Stampede. Centurion Logistics, the only remaining member, voted to remove Stampede as a

manager of Centurion Pecos. This left Centurion Logistics as the sole manager of Centurion

Pecos.

                                    V.
                  THE CENTURION PECOS COMPANY AGREEMENT

         54.   Article X of the Company Agreement for Centurion Pecos provides for removal

of a Member under certain conditions, including when a Member makes a “Prohibited Transfer”


PLAINTIFFS’ SECOND AMENDED PETITION                                                Page 18

                                                                                                MR.884
of all or any part of its Membership Interest. Article I of the Company Agreement provides that

the Board of Managers is comprised of Centurion Logistics and “Stampede”, and further defines

“Stampede” as “Stampede Energy, LLC, a Louisiana limited liability company.” Although the

Company Agreement does not specify what Managers are eligible to vote on removal of a

Member that violates the Company Agreement, allowing a designated Manager to be a voting

member of the Board for purposes of determining whether it should be removed as a Member for

violations of the Company Agreement would lead to an absurd result, and render large portions

of the Company Agreement superfluous and meaningless, specifically including all of Article X,

all references to a “Permitted Transfer” or a “Prohibited Transfer”, and the provisions of Article

12 regarding removal of a Member.

       55.     Article V of the Company Agreement provides for removal of a Manager under

certain conditions, including when the Manager has (1) engaged in wrongful conduct described

in Section 6.3(a) that adversely and materially affected the Company business of the Members,

and (2) engaged in conduct relating to Company business that has made it not reasonably

practicable to carry on the Company business with the Manager.           Although the Company

Agreement does not specify whether a Manager which is subject to removal pursuant the terms

of the Company Agreement has a right to vote concerning its own removal, allowing a

designated Manager to be a voting member of the Board for purposes of determining whether it

should be removed as a Manager for engaging in such wrongful conduct (including any act or

omission that involves gross negligence, intentional misconduct or knowing violation of law,

transfer or attempted transfer of all or a portion of a Membership Interest in a Prohibited

Transfer, of a willful or reckless breach of the Company Agreement) would lead to an absurd




PLAINTIFFS’ SECOND AMENDED PETITION                                                     Page 19

                                                                                                     MR.885
result, and render large portions of the Company Agreement superfluous and meaningless,

specifically including, but not limited to, all of Section 5.2(b), 5.5 and 5.9(a).

       56.     To the extent that the Company Agreement does not specifically provide for the

ineligibility of a Manager to vote on removal of a Member, the Company Agreement is vague

and ambiguous. Moreover, a fair reading of the Company Agreement demonstrates that the real

intention of the parties thereto was to actually have an effective method to remove Members and

the only way to effectuate such an intention is to imply a covenant that a Member is ineligible to

participate as a Manager for purposes of voting as to whether to remove itself as a Member.

       57.     To the extent that the Company Agreement does not specifically provide for the

ineligibility of a Manager to vote on his own removal for cause, the Company Agreement is

vague and ambiguous. Moreover, a fair reading of the Company Agreement demonstrates that

the real intention of the parties thereto was to actually have an effective method to remove

Managers and the only way to effectuate such an intention is to imply a covenant that a Manager

is ineligible to participate as a Manager for purposes of voting as to whether to remove itself as a

Manager.

                                             VI.
                                      CAUSES OF ACTION

A.     First Cause of Action: Breach of Fiduciary Duty as to Calce

       58.     Plaintiffs hereby restate and incorporate by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.

       59.     As a manager of Centurion Logistics, Calce had a duty of loyalty to the company.

The duty of loyalty requires Calce to act in good faith and not allow personal interests to take

precedence over the interests of Centurion Logistics.




PLAINTIFFS’ SECOND AMENDED PETITION                                                       Page 20

                                                                                                       MR.886
       60.     Calce also had a duty to disclose all important information concerning any

transaction, including any matters that might influence him to act in a manner prejudicial to

Centurion Logistics.

       61.     In violation of his fiduciary duties, Calce colluded with the other Defendants to

engage in a series of fraudulent transactions which were contrary to the interests of Centurion

Logistics and Centurion Pecos. This pattern of misconduct is intended to further Defendants’

grand scheme, namely, to remove the Reeves County Property from Centurion Pecos and pursue

a competing development as well as use the resources of Centurion Pecos and Centurion

Logistics to deprive Centurion Logistics of its share of any profits from the Pecos terminal

project and other projects funded through Centurion Pecos assets. The entire scheme is an

egregious breach of Calce’s duty of loyalty and full disclosure.

       62.     By secretly encumbering Centurion Pecos’ assets and misusing the company’s

assets, Calce has damaged the ability of Centurion Logistics to conduct business and impaired

the value of those assets.

       63.     Calce’s breaches of fiduciary duty proximately caused Centurion Logistics (and

Marrocco and Albanese) to suffer damage and Calce has obtained benefits, which Calce should

be required to forfeit.      The benefits Calce should be required to forfeit also include any

remuneration he has received from Defendants Centurion Midstream, Centurion Terminals,

Centurion Brownsville and JupiterMLP.

       64.     Calce’s breaches of fiduciary duty were intentional and, accordingly, Centurion

Logistics, Marrocco and Albanese seek, and should recover, exemplary damages against Calce.




PLAINTIFFS’ SECOND AMENDED PETITION                                                   Page 21

                                                                                                   MR.887
B.         Second Cause of Action: Breach of Fiduciary Duty as to Stampede

           65.   Plaintiffs hereby restate and incorporate by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.

           66.   As a manager of Centurion Pecos, Stampede owed Centurion Pecos a duty of

loyalty. Further, Stampede owed Centurion Pecos a duty of candor, including a duty to disclose

information concerning its role in any transaction that would prejudice the interests of Centurion

Pecos.

           67.   Stampede violated its fiduciary duty by covertly engaging in a pattern of

transactions designed to deprive Centurion Pecos of the Reeves County Property, as well as

Centurion Pecos’ interest in the terminal project. Stampede has also breached its fiduciary duty

by using Centurion Pecos’ resources and assets, without authorization, to develop other projects,

while excluding Centurion Pecos from any share in the profits of those projects.

           68.   By secretly encumbering Centurion Pecos’ assets and misusing Centurion Pecos’

assets, Stampede has damaged the ability of Centurion Pecos to conduct business, impaired the

value of those assets, and deprived the company of returns which should rightfully belong to the

company.

           69.   Stampede’s breaches of fiduciary duty have proximately caused Centurion Pecos

to suffer damage and Stampede has obtained benefits which Stampede should be required to

forfeit.

           70.   Stampede’s breaches of fiduciary duty were intentional and, accordingly,

Centurion Pecos seeks, and should recover, exemplary damages against Stampede.

C.         Third Cause of Action: Aiding and Abetting Breach of Fiduciary Duty




PLAINTIFFS’ SECOND AMENDED PETITION                                                       Page 22

                                                                                                       MR.888
       71.     Plaintiffs hereby restate and incorporate by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.

       72.     Ballengee, Ballengee Interests, Mott, Hock, Jilla, Ramsey, Centurion Midstream,

Centurion Terminals, Centurion Brownsville, and Jupiter MLP assisted with, encouraged and

participated in breaches of fiduciary duty by Calce and Stampede. As set forth above, Calce and

Stampede had fiduciary duties of loyalty to Centurion Logistics and to Centurion Pecos and

fiduciary duties to disclose any transactions that would be prejudicial to the chief objectives of

Centurion Logistics and Centurion Pecos.

       73.     Ballengee, Ballengee Interests, Mott, Hock and Jilla assisted Calce and Stampede

to breach their fiduciary duties by participating in the creation of false debt, attempting to strip

Centurion Pecos of its chief asset, the Reeves County Property, and using Centurion Pecos’

assets to procure funds for other projects in Reeves County and Brownsville.

       74.     Centurion Logistics and Centurion Pecos were created chiefly to purchase the

Reeves County Property and to develop a railway terminal in order to transport petroleum and

petroleum products. Rather than pursue these objectives with loyalty fiduciaries owe, Calce,

with Ramsey, assisted in the creation of Centurion Midstream, Centurion Terminals, Centurion

Brownsville, and JupiterMLP to thwart the efforts of Centurion Logistics and Centurion Pecos

and to compete with Centurion Logistics and Centurion Pecos.

       75.     Based on the content of the Centurion Midstream and JupiterMLP websites,

Centurion Midstream and JupiterMLP covertly assisted Calce in his plan to take over the Reeves

County Property, and to build a railway terminal and other projects for his own benefit and for

the benefit of Centurion Midstream and JupiterMLP.




PLAINTIFFS’ SECOND AMENDED PETITION                                                       Page 23

                                                                                                       MR.889
       76.     Based on its affiliation with Calce, Centurion Terminals was aware that Calce was

not authorized to undertake any obligation to Centurion Terminals on behalf of Centurion Pecos.

Nonetheless, Centurion Terminals entered into the note and threatened to enforce it.

       77.     Centurion Brownsville accepted the ill-gotten proceeds of Calce’s breach and has

used the $750,000 to construct a railway terminal and refinery in Brownsville, Texas without the

participation of Centurion Logistics or Centurion Pecos.

       78.     The breaches of fiduciary duty of Calce and Stampede, committed with the

assistance of Ballengee, Ballengee Interests, Mott, Hock, Jilla, Ramsey, Centurion Midstream,

Centurion Terminals, Centurion Brownsville, and JupiterMLP, proximately caused Plaintiffs to

suffer actual damages in an amount exceeding the minimum jurisdiction of the Court.

       79.     As Defendants’ participation in the breaches of fiduciary duty were intentional

and exemplary damages are recoverable for the breaches of fiduciary duty, Plaintiffs pray for

exemplary damages against Ballengee, Ballengee Interests, Mott, Hock, Jilla, Ramsey, Centurion

Midstream, Centurion Terminals, Centurion Brownsville and JupiterMLP.

D.     Fourth Cause of Action: Money Had and Received (Unjust Enrichment)

       80.     Plaintiffs hereby restate and incorporate by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.

       81.     A claim for money had and received arises when the defendant obtains money or

a benefit that in equity and good conscience belongs to the plaintiff. It is an equitable doctrine

applied to prevent unjust enrichment. A cause of action for money had and received is not based

on wrongdoing but, instead, looks only to the justice of the case and inquires whether the

defendant has received money that rightfully belongs to another. A claim for money had and

received is based upon the doctrine of unjust enrichment.



PLAINTIFFS’ SECOND AMENDED PETITION                                                     Page 24

                                                                                                     MR.890
       82.     Further, where a defendant obtains a benefit from the plaintiff by fraud, duress, or

taking undue advantage, the plaintiff may recover money or property under the theory of unjust

enrichment.

       83.     Ballengee and Ballengee Interests colluded with Calce to encumber property of

Centurion Pecos to secure debts of Ballengee Interests, including the notes to purchase the

Reeves County Property and the $750,000 line of credit. These proceeds have been used by

Centurion Midstream, JupiterMLP and Centurion Brownsville to develop a competing railway

terminal in Reeves County, Texas, as well as a terminal and refinery in Brownsville, Texas.

       84.     Ballengee and Ballengee Interests have, therefore, been unjustly enriched by

pledges of property to secure Ballengee Interests’ debt, including the $750,000 line of credit, and

unauthorized assumption of the Ballengee Interests’ obligations to TCB. Indeed, pursuant to the

cross-collateralization clauses, the deeds of trust pledged the Reeves County Property to secure

all Ballengee Interests’ debts to TCB, not merely those related to Centurion Pecos. Defendants

Ballengee and Ballengee Interests should be required to disgorge and to turn over to Centurion

Pecos any benefits obtained through these transactions.

       85.     Centurion Midstream, JupiterMLP and Centurion Brownsville have been unjustly

enriched through the use of the proceeds of the unauthorized loan obtained by Calce and

Ballengee. These entities should be required to disgorge the $750,000 as well as a share of the

profits from the projects that the funds were used to develop.

       86.     On information and belief, Calce and Ramsey have received a salary and other

benefits from Centurion Midstream, Centurion Terminals, Centurion Brownsville, and

JupiterMLP, in exchange for effectuating Calce’s and Ballengee’s plan, namely, to fraudulently




PLAINTIFFS’ SECOND AMENDED PETITION                                                      Page 25

                                                                                                      MR.891
obtain ownership of the Reeves County Property and use the assets of Centurion Pecos to fund

projects for the benefit of Defendants. This remuneration constitutes unjust enrichment.

       87.     In obtaining these benefits, Defendants have acted with fraud and malice.

Accordingly, Plaintiffs pray that these Defendants be found liable for exemplary damages.

E.     Fifth Cause of Action: Fraud/Fraudulent Inducement

       88.     Plaintiffs hereby restate and incorporate by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.

       89.     Ballengee and Ballengee Interests represented to Centurion Pecos that they would

make a capital contribution by purchasing the Reeves County Property on behalf of Centurion

Pecos. At the 11th hour, Ballengee and Ballengee Interests demanded that Centurion Pecos

agree to deeds of trust on the Reeves County Property to secure large loans to Ballengee and

Ballengee Interests. Ballengee and Ballengee Interests did not disclose that the purpose of this

demand was to eventually surreptitiously shift the payment obligations on those loans to

Centurion Pecos and cause a default on the loans so as to ultimately transfer of the Reeves

County Property from Centurion Pecos to Ballengee Interests, and to use the Reeves County

Property to fund other projects in Reeves County and Brownsville, including development of a

competing railway terminal in Reeves County, Texas, and a terminal and refinery in

Brownsville, Texas.

       90.     Centurion Pecos justifiably relied on Ballengee’s and Ballengee Interests’

professions that their purpose was to invest in, and to promote, the Centurion Pecos Terminal

project.

       91.     Ballengee’s and Ballengee Interests’ actions have injured Centurion Logistics

(and Marrocco and Albanese) and Centurion Pecos, in that Defendants used the TCB loans and



PLAINTIFFS’ SECOND AMENDED PETITION                                                      Page 26

                                                                                                     MR.892
deeds of trust, as well as unauthorized and fraudulently executed documents, to complete their

grand scheme to obtain the Reeves County Property for a competing entity, Centurion Midstream

and/or JupiterMLP, and to use the equity in the property to fund other projects from which

Centurion Logistics and Centurion Pecos were excluded.

       92.     The wrongful fraudulent acts and omissions have proximately caused Plaintiffs to

suffer damages. Because Defendants’ wrongful fraudulent acts and omissions were conducted

with intent, Plaintiffs seek both actual and exemplary damages.

F.     Sixth Cause of Action: Aiding and Abetting Fraud/Fraudulent Inducement

       93.      Plaintiffs hereby restate and incorporate by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.

       94.     Defendants Calce, Ramsey, Mott, Hock, Jilla, Stampede, Centurion Midstream,

Centurion Terminals, Centurion Brownsville, and JupiterMLP provided knowing and intentional

assistance to the fraud committed by Ballengee and Ballengee Interests. Calce and Stampede,

including its managing member, Mott, its President, Hock, and its designated representative Jilla,

were aware of the fraudulent scheme and Stampede allowed itself to be used as a conduit through

which Ballengee Interests made its payments for the Reeves County Property. As fiduciaries,

Calce and Stampede, including Mott, had a heightened duty to disclose Ballengee’s true intent,

but they remained silent. Indeed, they actively furthered the scheme through their participation

in the creation of false and unauthorized transactions and the creation of fraudulent documents.

       95.     Calce’s and Stampede’s assistance and encouragement constituted a substantial

factor in causing the fraud.     Without their participation, it is unlikely that Ballengee and

Ballengee Interests could have attempted the scheme, given the limitations imposed on




PLAINTIFFS’ SECOND AMENDED PETITION                                                      Page 27

                                                                                                      MR.893
Ballengee by the non-compete agreement.          Moreover, these Defendants furthered the plan

through a series of threatening communications.

       96.     Centurion Midstream, Centurion Terminals, Centurion Brownsville, and

JupiterMLP were aware of the fraud and provided knowing assistance by accepting funds that

were the product of the fraud, using them to construct other projects in Reeves County and

Brownsville from which Centurion Logistics and Centurion Pecos were excluded.

       97.     These other Defendants’ participation in the fraudulent scheme has proximately

caused Plaintiffs to suffer damages. Because these Defendants’ participation in the wrongful

fraudulent scheme was conducted with knowledge and intent, Plaintiffs seek both actual and

exemplary damages.

G.     Seventh Cause of Acton: Texas Theft Liability Act, Tex. Civ. Prac. &Rem. Code
                               §§134.001-134.005

       98.     Plaintiffs hereby restate and incorporate by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.

       99.     Defendants Calce, Ballengee, and Ballengee Interests have unlawfully

appropriated the Reeves County Property through the unauthorized transfer of the property from

Centurion Pecos to Ballengee Interests.

       100.    Centurion Pecos has suffered actual damages from Defendants’ appropriation,

which not only deprived Centurion Pecos of the Reeves County Property, but prevented

Centurion Pecos from developing a railway terminal on that property.

       101.    In addition, Ballengee and Ballengee Interests stole and appropriated the

$750,000 obtained from the loan made possible by the unauthorized use of the Reeves County

Property as collateral. These funds rightfully belonged to Centurion Pecos.




PLAINTIFFS’ SECOND AMENDED PETITION                                                     Page 28

                                                                                                     MR.894
       102.    Plaintiffs seek, and should recover, actual damages, including lost profits, as well

as exemplary damages for Defendants’ violations of the Texas Theft Liability Act.

H.     Eighth Cause of Action: Tortious Interference with Contract

       103.    Plaintiffs hereby restate and incorporate by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.

       104.    Pursuant to the company agreement of Centurion Pecos, Centurion Logistics had

a valid and enforceable contract with Stampede. With knowledge of this contract, Defendants,

other than Stampede, willfully and intentionally interfered with the performance of the contract.

       105.    Pursuant to the company agreement of Centurion Logistics, Centurion Logistics

was comprised of a valid and enforceable agreement between Marrocco, Albanese and TXC

Energy. With knowledge of this contract, Defendants willfully and intentionally interfered with

the performance of the contract.

       106.    The purpose of Centurion Pecos and Centurion Logistics was to purchase the

Reeves County Property and build the Centurion Pecos railway terminal on the property. By

interfering with the performance of the company agreements of Centurion Pecos and Centurion

Logistics, Defendants prevented the development of the railway terminal.

       107.    Plaintiffs seek, and should recover, actual damages, including lost profits, as well

as exemplary damages for Defendants’ tortious interference with contract.

I.     Ninth Cause of Action: Fraudulent Inducement

       108.    Plaintiffs hereby restate and incorporate by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.

       109.    Calce, Ballengee and Ballengee Interests represented to Centurion Pecos that they

would cooperate with Centurion Pecos to develop the Centurion Pecos terminal.               Calce,



PLAINTIFFS’ SECOND AMENDED PETITION                                                      Page 29

                                                                                                      MR.895
Ballengee and Ballengee Interests further represented to Centurion Pecos that Ballengee Interests

would provide funds to purchase the Reeves County Property free and clear of any liens or

encumbrances. Centurion Pecos relied on these representations when it negotiated to purchase

the Reeves County Property and entered into the contract to purchase the Reeves County

Property.

       110.    Calce, Ballengee and Ballengee Interests were aware that the representations

made to Centurion Pecos were false.

       111.    Based on the false representations by Calce, Ballengee and Ballengee Interests,

Centurion Pecos was also induced to grant TCB deeds of trust on the Reeves County Property.

Calce, Ballengee and Ballengee Interests also falsely represented that Centurion Pecos would

receive remuneration from projects developed through the deeds of trust placed on the Reeves

County Property.     Moreover, neither Centurion Pecos, Centurion Logistics, Marrocco nor

Albanese were aware that Centurion Pecos was ultimately going to be responsible to pay the

Ballengee loans secured by the Reeves County Property, since it was represented that the

property was only collateral for Ballengee’s obligation to pay the loans.

       112.    Centurion Pecos has been damaged by the fraudulent inducement because

Defendants have used the loans and deeds of trust to interfere with Centurion Pecos’ ownership

of the Reeves County Property and prevent the development of the Centurion Pecos terminal.

Centurion Pecos has also been damaged because it has been denied its share of profits from the

projects developed through loans secured by deeds of trust on the Reeves County Property.

       113.    Defendants’ fraudulent inducement has proximately caused Plaintiffs to suffer

actual damages. Furthermore, Plaintiffs seek, and should recover, exemplary damages.




PLAINTIFFS’ SECOND AMENDED PETITION                                                    Page 30

                                                                                                    MR.896
J.     Tenth Cause of Action: Promissory Estoppel

       114.    Plaintiffs hereby restate and incorporate by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.

       115.    Calce, Ballengee and Ballengee Interests promised Centurion Pecos that they

intended to cooperate with Centurion Pecos to develop the Centurion Pecos terminal. Centurion

Pecos reasonably, foreseeably, substantially and detrimentally relied on Defendants promises

when they purchased the Reeves County Property and agreed to place deeds of trust on the

Reeves County Property.

       116.    Calce, Ballengee and Ballengee Interests also promised Centurion Pecos that they

would share with Centurion Pecos the profits from any projects that were developed through

proceeds obtained by placing deeds of trust on the Reeves County Property, including, but not

limited to, the Centurion Pecos terminal. Centurion Pecos reasonably, foreseeably, substantially

and detrimentally relied on Defendants’ promises when it agreed to place deeds of trust on the

Reeves County Property.

       117.    To avoid injustice, Defendants should be required to fulfill the promises upon

which Centurion Pecos relied and restore Centurion Pecos to the position it was in before it

altered its position in reliance on Defendants’ promises.

K.     Eleventh Cause of Action: Declaratory Judgment

       118.    Plaintiffs hereby restate and incorporate by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.

       119.    A justiciable controversy exists between Centurion Pecos and Stampede regarding

the status, rights, obligations and legal relations between Centurion Pecos and Stampede in




PLAINTIFFS’ SECOND AMENDED PETITION                                                     Page 31

                                                                                                     MR.897
connection with the Company Agreement. The justiciable controversy concerns the right of

members and managers of Centurion Pecos to expel Stampede as a member and manager.

       120.    Pursuant to the terms of the Company Agreement, transfer of membership

interests is prohibited unless certain conditions were met.     Among the conditions is the

obligation of the transferor and transferee to provide information to assure that the transfer

comported with the Company Agreement and the transferee agreed to be bound by the Company

Agreement. Transfer of a membership interest includes any transfer by merger or business

combination.

       121.    Stampede or its predecessor transferred its membership interest within the

definitions of the Company Agreement through one or more of three business transactions. First,

Stampede Energy, LLC, a Louisiana limited liability company, converted to Stampede. Second,

Stampede merged with Stampede Energy, LLC, a Delaware limited liability company. Third,

Stampede divided into two entities, Stampede and Centurion Brownsville.

       122.    Subsequently, both the transferor and transferee companies expressly refused to

provide information about the transactions, as required by the Company Agreement, for any

transfer of a membership interest to be permitted. Centurion Pecos duly called a meeting of the

managers and members of Centurion Pecos in order to discuss Stampede’s violations and its

removal as a member and manager.

       123.    At the June 13, 2016 meeting, Centurion Logistics, as manager of Centurion

Pecos, voted to remove Stampede as a member of Centurion Pecos. As the party whose removal

was at issue, Stampede was an interested manager excluded from voting.            Accordingly,

Stampede was removed as a member of Centurion Pecos.




PLAINTIFFS’ SECOND AMENDED PETITION                                                  Page 32

                                                                                                  MR.898
        124.   Following the June 13, 2016 managers meeting, a meeting of members was held

to determine whether Stampede should be removed as a manager of Centurion Pecos for cause.

Centurion Logistics, the only remaining member, voted to expel Stampede, based on its

prohibited transfer of membership interest, as well as its other misconduct, as set forth in this

Petition.

        125.   In accordance with Tex. Civ. Prac. & Rem. Code § 37.001, et seq., Plaintiffs

seeks a declaratory judgment against Defendant Stampede, wherein the Court declares that

following:

        (a)    The June 13, 2016 meeting was a valid meeting under the Company
               Agreement;

        (b)    The removal of Stampede as a member of Centurion Pecos was a valid,
               binding and enforceable action of the managers of Centurion Pecos;

        (c)    The removal of Stampede as a manager of Centurion Pecos was a valid,
               binding and enforceable action of the members of Centurion Pecos.

        126.   In addition, there is a real and justiciable controversy between Centurion Pecos,

on the one hand, and Ballengee, Ballengee Interests, and Centurion Terminals, on the other hand,

concerning the enforceability of certain financial obligations that Defendants purport were

entered into on behalf of Centurion Pecos. As set forth above, Calce, without authority to act for

Centurion Pecos, and in violation of his fiduciary duties, created documents purporting to

obligate Centurion Pecos to pay the notes that Ballengee Interests entered into with TCB and to

make other payments to Ballengee Interests. Similarly, Calce, again without the authority to act

for Centurion Pecos, and in violation of his fiduciary duties, apparently created a promissory

note in favor of Centurion Terminals, purportedly obligating Centurion Pecos to make certain

payments to Centurion Terminals.




PLAINTIFFS’ SECOND AMENDED PETITION                                                     Page 33

                                                                                                     MR.899
       127.    In accordance with Tex. Civ. Prac. & Rem. Code § 37.001, et seq., Plaintiffs seek

a declaratory judgment against Defendants Ballengee, Ballengee Interests, and Centurion

Terminals, wherein the Court declares the following:

       (a)     Any assumption agreement purported to exist between Ballengee
               Interests and Centurion Pecos is invalid, void and unenforceable;

       (b)     Any agreement that purports to create a financial obligation of Centurion
               Pecos to Ballengee Interests is invalid, void and unenforceable; and

       (c)     Any promissory note purported to create financial obligations between
               Centurion Pecos and Centurion Terminals is invalid, void and
               unenforceable.

       128.    In addition and cumulative of other relief sought herein, Plaintiffs are entitled to

declaratory judgment concerning the status of Stampede under the Company Agreement and the

enforceability of certain financial obligations that Calce, without authority, and in violation of

his fiduciary duties, purported to create on behalf of Centurion Pecos.

L.     Twelfth Cause of Action: Fraudulent Transfer

       129.    Plaintiffs hereby restate and incorporate by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.

       130.    Defendants made transfers of assets, property or business interests that were once

held by Centurion Midstream and Centurion Terminals.

       131.    The transfers were made to an insider, subsidiary or affiliate of Centurion

Midstream and Centurion Terminals, including, but not limited to JupiterMLP.

       132.    The individuals and/or entities that were/are in control of Centurion Midstream

and Centurion Terminals retained control over the assets, property or business interests that were

transferred from Centurion Midstream and Centurion Terminals to the insiders/affiliates

(including JupiterMLP), and concealed the transfers.



PLAINTIFFS’ SECOND AMENDED PETITION                                                      Page 34

                                                                                                      MR.900
        133.   Prior to the transfers, Centurion Midstream and Centurion Terminals were already

involved in litigation with the Plaintiffs, who were seeking significant damages from Centurion

Midstream and Centurion Terminals. Prior to the transfers, Centurion Midstream and Centurion

Terminals had significant assets that could have been used to satisfy any judgments against them.

However, as a result of the transfers, and on information and belief, Centurion Midstream and

Centurion Terminals no longer have sufficient assets to satisfy any judgments rendered against

them.

        134.   While this litigation was pending, the individuals and/or entities that were/are in

control of Centurion Midstream and Centurion Terminals undertook a pattern and course of

conduct to divest Centurion Midstream and Centurion Terminals of their assets, property and

business interests so as to make any judgment against them uncollectible.             Based upon

information and belief, the transfers were completed with inadequate consideration.

        135.   The transfers were completed with either actual or constructive intent to hinder,

delay or defraud any judgment creditors of Centurion Midstream and Centurion Terminals.

        136.   Hence, this Court should deem the transfers fraudulent. Because Defendants’

participation in the fraudulent transfer scheme was conducted with knowledge, intent and malice,

the transfers should be set aside, and Plaintiffs be awarded both actual and exemplary damages.

                                        VII.
                               ATTORNEYS’ FEES AND COSTS

        137.   Plaintiffs hereby restate and incorporate by reference the allegations contained in

the foregoing paragraphs as if fully set forth herein.

        138.   As a result of Defendants’ actions, Plaintiffs were forced to retain the legal

counsel of Shamoun & Norman, LLP (“S&N”) to bring this lawsuit. Plaintiffs retained the

services of S&N to prosecute these claims and agreed to pay S&N its usual, customary and


PLAINTIFFS’ SECOND AMENDED PETITION                                                     Page 35

                                                                                                     MR.901
reasonable attorneys’ fees.    Such action and payment is necessary for the enforcement of

Plaintiffs’ rights.

        139.    Plaintiffs seek the recovery of attorneys’ fees and costs that they incur in

prosecuting the above-stated claims pursuant to Chapter 37 of the Texas Civil Practice and

Remedies Code, or any other applicable law.

                                         VIII.
                                 CONDITIONS PRECEDENT

        140.    All conditions precedent to Plaintiffs’ right to obtain the relief requested herein

has been performed or has occurred.

                                              IX.
                                            PRAYER

        WHEREFORE, Plaintiffs Centurion Logistics LLC, individually and on behalf of

Centurion Pecos Terminal LLC, and Marc Marrocco and Antonio Albanese, individually and

derivatively on behalf of Centurion Logistics, respectfully request that upon final trial of this

cause the Court enter judgment against James Ballengee, Ballengee Interests, LLC, John Calce,

Chris A. Mott, Stampede TX Energy, LLC, Tom Ramsey, Centurion Midstream Group, LLC,

Centurion Terminals, LLC, Centurion Brownsville, LLC, and JupiterMLP, LLC as follows:

        A.      Against all Defendants and in favor of Plaintiffs for the amount of actual damages

sustained by Plaintiffs;

        B.      Against all Defendants and in favor of Plaintiffs for the disgorgement of unjust

enrichment and money had and received;

        C.      Against all Defendants and in favor of Plaintiffs for exemplary damages;

        D.      Entering a declaratory judgment concerning the status of Stampede under the

Company Agreement and the enforceability of certain financial obligations that Calce, without



PLAINTIFFS’ SECOND AMENDED PETITION                                                      Page 36

                                                                                                      MR.902
authority, and in violation of his fiduciary duties, purported to enter into on behalf of Centurion

Pecos;

         E.     Awarding to Plaintiffs the costs and disbursements of the action, including

reasonable attorneys’ fees, accountants’ and experts’ fees, costs, and expenses; and

        F.      Granting such other and further relief as the Court deems just and proper, at law
or in equity.

                                                     Respectfully submitted,

                                                     SAYLES WERBNER, P.C.

                                                     /s/ Mark E. Torian_____________
                                                     Mark E. Torian
                                                     State Bar No. 24028051
                                                     mtorian@swtriallaw.com
                                                     Darren P. Nicholson
                                                     State Bar No. 24032789
                                                     dnicholson@swtriallaw.com
                                                     4400 Renaissance Tower
                                                     1201 Elm Street
                                                     Dallas, Texas 75270
                                                     Telephone: (214) 939-8700
                                                     Facsimile: (214) 939-8787

                                                     ATTORNEYS FOR PLAINTIFF
                                                     CENTURION LOGISTICS LLC
                                                     INDIVIDUALLY AND DERIVATIVELY
                                                     ON BEHALF OF CENTURION PECOS
                                                     TERMINAL LLC

                                CERTIFICATE OF SERVICE

       This is to certify that a true and correct copy of the above and foregoing document has
been served upon the counsel of record on May 2, 2018 in accordance with the Texas Rules of
Civil Procedure.

                                                     /s/ Mark E. Torian
                                                     Mark E. Torian




PLAINTIFFS’ SECOND AMENDED PETITION                                                      Page 37

                                                                                                      MR.903
                                  CAUSE NO. DC.16..07706

CENTURION LOGISTICS LLC,                           §       IN THE DISTRICT COURT OF
individually and derivatively on behalf of         §
CENTURION PECOS TERMINAL LLC,                      §
a Texas limited liability company,                 §
                                                   §
       Plaintiff,                                  §
                                                   §
vs.                                                §       DALLAS COUNTY, TEXAS
                                                   §
JAMES BALLENGEE, BALLENGEE                         §
INTERESTS, LLC; JOHN CA;LCE;                       §
CHRIS A. MOTT; TOM RAMSEY;                         §
STAMPEDE TX ENERGY, LLC,                           §
CENTURION MIDSTREAM GROUP LLC;                     §
CENTURION TERMINALS, LLC;                          §
CENTURION BROWNSVILLE                              §
TERMINAL, LLC; JAMES HOCK;                         §
JUPITERMLP, LLC                                    §
                                                   §
       Defendants,                                 §
                                                   §       B-44tb JUDICIAL DISTRICT
and CENTURION PECOS TERMINAL                       §
LLC, a Texas limited liability company             §
                                                   §
       .Nominal Defendant.                         §

      ORDER DENYING JOHN CALCE'S AMENDED MOTION FOR PARTIAL,
           SUMMARY JUDGMENT REGARDING COUNTERCLAIM
                 AGAINST CENTURION LOGISTICS LLC

       Before the Court is John Calce 's Amended Motion for Partial Summary Judgment

Regarding Counterclaim Against Centurion Logistics LLC (the "Amended Motion'') filed by

Defendant John Calce, ("Defendant") to w11ich Plaintiff Centurion Logistics, LLC ("Centurion

Logistics") filed Plaintiff's Response lo John Calce 's Amended Motion for Partial Summary

Judgment Regarding Counterclaim Against Centurion Logistics LLC (the ''Response") in

response thereto. Having considered the Amended Motion, the Response, and arguments of

counsel, the Court finds that the Amended Motion should be DENIED.



Order Denying John Calce 's Amended Motion for Partial Summary Judgment
Regarding Counterclaim Against Centµrion Logistics LLC                                Pagel

                                                                                               MR.904
       IT rs THEREFORE ORDERED that John Calce 's Amended Motion for Partial Summary

Judgment Regarding Counterclaim Against Centurion Logistics LLC is hereby DENTED.

       SIGNED this 2'..l!ctay of~ 2oail"




Order Denying John Calce 's Amended Motion for Partial Summary Judgment
Regarding Counterclaim Against Centurion Logisrics LLC                              Page 2


                                                                                             MR.905
                            Tex. Business Organizations Code § 8.104
           This document is current through the 2017 Regular Session and 1st C.S., 85th Legislature

Texas Statutes & Codes Annotated by LexisNexis® > Business Organizations Code > Title 1 General
Provisions (Chs. 1 — 12) > Chapter 8 Indemnification and Insurance (Subchs. A — D) > Subchapter C
Permissive Indemnification and Advancement of Expenses (§§ 8.101 — 8.150)


Sec. 8.104. Advancement of Expenses to Present Governing Persons or Delegates.

   (a) An enterprise may pay or reimburse reasonable expenses incurred by a present governing person or
   delegate who was, is, or is threatened to be made a respondent in a proceeding in advance of the final
   disposition of the proceeding without making the determinations required under Section 8.101(a) after the
   enterprise receives:
           (1) a written affirmation by the person of the person’s good faith belief that the person has met
           the standard of conduct necessary for indemnification under this chapter; and
           (2) a written undertaking by or on behalf of the person to repay the amount paid or reimbursed if
           the final determination is that the person has not met that standard or that indemnification is
           prohibited by Section 8.102.
   (b) A provision in the governing documents of the enterprise, a resolution of the owners, members, or
   governing authority, or an agreement that requires the payment or reimbursement permitted under this
   section authorizes that payment or reimbursement after the enterprise receives an affirmation and
   undertaking described by Subsection (a).
   (c) The written undertaking required by Subsection (a)(2) must be an unlimited general obligation of the
   person but need not be secured and may be accepted by the enterprise without regard to the person’s
   ability to make repayment.
   (d) With respect to a limited partnership, a vote of a majority-in-interest of the limited partners in a vote
   that excludes the interest held by each general partner who is not disinterested and independent
   constitutes an authorization under Subsection (b). For purposes of this subsection, “majority-in-interest”
   means, with respect to limited partners, limited partners who own more than 50 percent of the current
   percentage or other interest in the profits of the partnership that is owned by all of the limited partners.

History

Enacted by Acts 2003, 78th Leg., ch. 182 (H.B. 1156), § 1, effective January 1, 2006; am. Acts 2005, 79th
Leg., ch. 64 (H.B. 1319), §§ 23, 24, effective January 1, 2006; am. Acts 2007, 80th Leg., ch. 688 (H.B. 1737), §
42, effective September 1, 2007; am. Acts 2011, 82nd Leg., ch. 139 (S.B. 748), § 6, effective September 1,
2011.
                                           Tex. Business Organizations Code § 8.104


Texas Statutes & Codes Annotated by LexisNexis®
Copyright © 2018 Matthew Bender & Company, Inc.
a member of the LexisNexis Group. All rights reserved.


  End of Document




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