CRUDE OIL STORAGE SERVICES AGREEMENT

THIS CRUDE OIL STORAGE SERVICES AGREEMENT (this “Agreement”) is entered into effective as of June 1, 2012 (the “Effective Date”) by and between BKEP Pipeline, LLC, a Delaware limited liability company, (“Operator”), with offices at 201 NW 10^th Street, Oklahoma City, Oklahoma 73103, and Vitol Inc., a Delaware corporation (“Customer”), with offices at 1100 Louisiana, Houston, Texas 77002 (each referred to individually as “Party” or collectively as “Parties”).

WHEREAS, Operator is in the business of receiving, delivering and storing crude oil for third parties; and

WHEREAS, Customer desires to enter into a crude oil storage arrangement with Operator with respect to Operator's crude oil storage facilities in Cushing, Oklahoma; and

WHEREAS, Operator desires to provide storage services to Customer in accordance with the terms hereof;

NOW THEREFORE, in consideration of the premises and the respective promises, conditions, terms and agreements contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties to this Agreement agree as follows:

“Affiliate” means, with respect to any entity, any other entity controlling, controlled by or under common control with such entity, whether directly or indirectly through one or more intermediaries. As used in the preceding definition, “control” and its derivatives mean legal, beneficial, or equitable ownership, directly or indirectly, of more than fifty percent (50%) of the outstanding voting capital stock (or other ownership interest, if not a corporation) of an entity or management or operational control over such entity.

“Applicable Law” means, with respect to any Governmental Authority, (i) any law, statute, regulation, code, ordinance, license, decision, order, writ, injunction, decision, directive, judgment, policy, decree and any judicial or administrative interpretations thereof, (ii) any agreement, concession or arrangement with any other Governmental Authority and (iii) any license, permit or compliance requirement, in each case applicable to either Party or the use, occupancy, operation and maintenance of the Facility, as such laws may be amended, modified, enacted or promulgated from time to time.

“Bankrupt” means that a Party (i) is dissolved, other than pursuant to a consolidation, amalgamation or merger, (ii) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due, (iii) makes a general assignment, arrangement or composition with or for the benefit of its creditors, (iv) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditor's rights, or a petition is presented for its winding-up or liquidation, (v) has a resolution

passed for its winding-up, official management or liquidation, other than pursuant to a consolidation, amalgamation or merger, (vi) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for all or substantially all of its assets, (vii) has one or more secured parties take possession of all or substantially all of its assets, or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all of its assets, (viii) files an answer or other pleading admitting or failing to contest the allegations of a petition filed against it in any proceeding of the foregoing nature or (ix) takes any other action to authorize any of the foregoing actions.

“Barrel” means forty-two (42) net U.S. gallons, measured at 60° F.

“BS&W” means bottom sediment, water, and other residual matter generated from the storage of Customer's Crude Oil.

“Crude Oil” shall mean the crude oil/condensates of Customer that are the subject of the Storage Services hereunder.

“Customer's Representatives” has the meaning set forth in Section 13(A).

“Event of Default” has the meaning set forth in Section 16(A).

“Facility” has the meaning set forth in Section 2.

“Force Majeure” means any cause or event reasonably beyond the control of a Party, including fires, earthquakes, lightning, floods, explosions, storms, adverse weather, landslides and other acts of natural calamity or acts of God; acts of war, hostilities (whether declared or undeclared), civil commotion, embargoes, blockades, terrorism, sabotage or acts of the public enemy; any act or omission of any Governmental Authority; good faith compliance with any order, request or directive of any Governmental Authority, or any other cause reasonably beyond the control of a Party, whether similar or dissimilar to those above and whether foreseeable or unforeseeable, which, by the exercise of due diligence, such Party could not have been able to avoid or overcome. A Party's inability economically to perform its obligations under this Agreement shall not constitute an event of Force Majeure.

“Governmental Authority” means any federal, state, regional, local, or municipal governmental body, agency, instrumentality, authority or entity established or controlled by a government or subdivision thereof, including any legislative, administrative or judicial body, or any person purporting to act therefore.

“Indemnified Party” has the meaning set forth in Section 15(D).

“Indemnifying Party” has the meaning set forth in Section 15(D).

“Liabilities” has the meaning set forth in Section 15(A).

“Loss Allowance” has the meaning set forth in Section 7.

“Monthly Storage Fee” has the meaning set forth in Section 4(A).

“Pump Over Fee” has the meaning set forth in Section 4(B).

“Specifications” means the specifications for the Crude Oil set forth on Exhibit A attached hereto

“Shell Capacity” has the meaning set forth in Section 2

“Storage Services” has the meaning set forth in Section 2

“Term” has the meaning set forth in Section 3

“Third Party Claim” has the meaning set forth in Section 15(D)

A.    Monthly Storage Fee. For the Term, a monthly storage fee of *** per Barrel of Shell Capacity (the “Monthly Storage”), for a total of *** per month, regardless of the actual volume of Crude Oil placed in the Facility;

B.    Pump Over Fee. A pump over fee (the “Pump over Fee”) equal to *** per Barrel of Crude Oil moved by Operator from the Facility to a third party connecting carrier. There is *** on Crude Oil moved by Operator within the Customer's Shell Capacity, but if the number of movements becomes excessive or complex in nature, at the sole discretion of the Operator, and upon prior written notice to Customer, it may be determined that *** be charged. However, at Operator's discretion, deliveries can be made out of the Facility that require comingled streams from the Customer's Shell Capacity. Such deliveries will be charged *** per Barrel. Customer is responsible for meeting all quality specifications as discussed in Section 6 below.

A.Compliance with Specifications. Customer warrants that all Crude Oil to be delivered to the Facility shall conform to the Specifications and quality specifications of the connecting carriers into and out of Cushing. Operator may impose other limitations on the Crude Oil to be delivered to the Facility in order to comply with any Applicable Laws or any rules, policies or procedures adopted by Operator, including limitations necessary or appropriate to comply with environmental permits, to protect the health and safety of the personnel operating the Facility, and to protect the integrity of

the pumps, pipes, tanks, and other equipment at the Facility.

B.Testing. Operator may sample and test Customer's Crude Oil in order to verify Customer's compliance with this Agreement. Customer will be responsible for the cost of all sampling and testing conducted by or on behalf of Operator at Customer's request. Customer will also be responsible for the cost of all sampling and testing conducted by or on behalf of Operator that reveals that Customer has delivered Crude Oil to the Facility that does not comply with the Specifications or any requirements imposed by Applicable Law. Testing conducted by or on behalf of Operator will be done in accordance with the then current ASTM procedures. Operator will provide Customer with a copy of any testing reports produced or obtained by Operator regarding Customer's Crude Oil.

    

from segregated tanks, pipes, and other equipment (i) as required for maintenance, inspections, and repairs of segregated tanks, pipes, and other equipment; and (ii) at the end of the Term. Customer will remain obligated to comply with all of the terms and conditions of this Agreement, including the payment of any Monthly Storage Fee, until all of Customer's BS&W from segregated storage is removed from the Facility.

    

    

 

A.Coverage. Operator will not insure the Crude Oil. If Customer desires to insure the Crude Oil while it is in storage at the Facility, Customer will bear the cost of such insurance. Each Party will obtain and maintain in full force and effect during the Term of this Agreement insurance coverages of the following types and amounts: (a) worker's compensation insurance complying with Applicable Law and employer's liability insurance with limits of $1,000,000 each accident, $1,000,000 disease each employee, and $1,000,000 disease policy limit; (b) commercial or comprehensive general liability insurance on an occurrence form with a combined single limit of $1,000,000 each occurrence, and annual aggregates of $2,000,000, for bodily injury and property damage, including coverage for blanket contractual liability, broad form property damage, personal injury liability, independent contractors, and products/completed operations, and, where applicable, the explosion, collapse, and underground exclusion will be deleted; (c) automobile liability insurance complying with Applicable Law with a combined single limit of $1,000,000 each occurrence for bodily injury and property damage to include coverage for all owned, non-owned, and hired vehicles used in the performance of this agreement; (d) excess or umbrella liability insurance with a combined single limit of $10,000,000 each occurrence, and annual aggregates of $10,000,000, for bodily injury and property damage covering excess of the required employer's liability insurance, commercial or comprehensive general liability insurance, and automobile liability insurance; and (e) sudden and accidental pollution legal liability coverage in a minimum amount of $5,000,000 per occurrence, $10,000,000 aggregate, for injury to persons or damage to property resulting from any release, spillage, leak or discharge of Crude Oil from the Facility into the ambient air, surface water, groundwater, land surface or subsurface strata. The required limits are minimum limits and will not be construed to limit the Parties' liability. Each Party will bear the cost of its respective insurance policies required above.

(i) maintain the insurance coverage's and limits required by this Section and any additional insurance and/or bonds required by law: (a) at all times during the term of this Agreement; and, (b) with respect to any coverage maintained in a “claims-made” policy, for two (2) years following the termination of this Agreement, provided that if a “claims-made” policy is maintained, the retroactive date must precede the commencement date of this Agreement;

(ii) procure the required insurance from an insurance company having and maintaining a Financial Strength Rating of “A-” or better and a Financial Size Category of “VII” or better,

as rated in the A.M. Best Key Rating Guide for Property and Casualty Insurance Companies, except that, in the case of Workers' Compensation insurance, a Party may procure insurance from the state fund of the state where the Storage Services are to be performed; and

(iii) deliver to the other Party certificates of insurance stating the types of insurance and policy limits, and further provide, or cause the issuing insurance company to provide, at least thirty (30) days advance written notice of cancellation, non-renewal, or reduction in coverage, terms, or limits to the other Party.

A.    Indemnification by Operator. Except as otherwise provided in Section 20, Operator will indemnify, defend, and hold harmless Customer, its Affiliates, and its and their respective officers, directors, members, partners, shareholders, employees and agents (“Operator Indemnified Entities”) from and against any claims, actions, judgments, liabilities, losses, costs, damages, fines, penalties and expenses (“Liabilities”) in connection with this Agreement to the extent arising from (i) the negligence or intentional wrongful acts or omissions of Operator, its Affiliates or their respective employees, agents or contractors or (ii) or the failure of Operator to comply with the terms and conditions of this Agreement. The indemnities expressed in this Agreement will survive the expiration or termination of this Agreement.

B.    Indemnification by Customer. Except as otherwise provided in Section 20, Customer will indemnify, defend, and hold harmless Operator, its Affiliates, and its and their respective partners, officers, directors, members, shareholders, employees and agents (“Customer Indemnified Entities”) from and against any Liabilities in connection with this Agreement to the extent arising from: (i) the negligence or intentional wrongful acts or omissions of Customer, its Affiliates or their respective employees, agents or contractors; or (ii) the failure of Customer to comply with the terms and conditions of this Agreement. The indemnities expressed in this Agreement will survive the expiration or termination of this Agreement.

C.Comparative Indemnity. In the event that any Liabilities are caused in whole or in part by the concurrent negligent or intentional wrongful acts or omissions of Operator, its employees, agents or contractors, and Customer, its employees, agents or contractors, then this obligation to indemnify shall be comparative and each Party shall indemnify the other to the extent that such Party's negligent or intentional wrongful acts or omissions were the cause of such Liabilities. Operator will in no event be liable for claims, losses, suits, liability and expenses arising from the loss of or damage to any Crude Oil or property of Customer except when and to the extent caused by Operator's negligent or intentional wrongful acts or omissions.

(i) The Party to be indemnified (the “Indemnified Party”) shall notify the other Party (the “Indemnifying Party”) as soon as practicable after receiving notice of any claim, demand, suit or proceeding brought against it which may give rise to the Indemnifying Party's obligations under this Agreement (such claim, demand, suit or proceeding, a “Third Party Claim”), and shall furnish to the Indemnifying Party the complete details within its knowledge. Any delay or failure by the Indemnified Party to give notice to the Indemnifying Party shall not relieve the Indemnifying Party of its obligations except to the extent, if any, that the Indemnifying Party shall have been materially prejudiced by reason of such delay or failure.

(ii) The Indemnifying Party shall have the right to assume the defense, at its own expense and by its own counsel, of any Third Party Claim; provided, however, that such counsel is reasonably acceptable to the Indemnified Party. Notwithstanding the Indemnifying Party's appointment of counsel to represent an Indemnified Party, the Indemnified Party shall have the right to employ separate counsel, and the Indemnifying Party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the Indemnifying Party to represent the Indemnified Party would present a conflict of interest or (ii) the Indemnifying Party shall not have employed counsel to represent the Indemnified Party within a reasonable time after notice of the institution of such Third Party Claim. If requested by the Indemnifying Party, the Indemnified Party agrees to reasonably cooperate with the Indemnifying Party and its counsel in contesting any claim, demand or suit that the Indemnifying Party defends, including, if appropriate, making any counterclaim or cross-complaint. All costs and expenses incurred in connection with the Indemnified Party's cooperation shall be borne by the Indemnifying Party.

(iii) No Third Party Claim may be settled or compromised (i) by the Indemnified Party without the consent of the Indemnifying Party or (ii) by the Indemnifying Party without the consent of the Indemnified Party. Notwithstanding the foregoing, an Indemnifying Party shall not be entitled to assume responsibility for and control of any judicial or administrative proceedings if such proceedings involves an Event of Default by the Indemnifying Party which shall have occurred and be continuing. The mere purchase and existence of insurance does not reduce or release either Party from any liability incurred or assumed under this Agreement.

(i)    A Party fails to pay any monies due hereunder on or before the specified due date, where such failure continues for five (5) days after receipt of written notice from Operator;

(ii)    A failure by either Party to observe and perform any other material provision or covenant of this Agreement to be observed or performed by such Party other than obligations to make any payment, where such failure continues for twenty (20) days after receipt of written notice thereof from the other Party, except that the non-defaulting Party shall agree to extend the cure period for a reasonable period of time (within its discretion) if the alleged default is not reasonably capable of cure within the twenty (20) day period and the defaulting Party proceeds diligently to cure the default; or

(iii).    Either Party becomes Bankrupt.

        

A. Force Majeure. In the event either Party hereto is rendered unable, wholly or in part, by Force Majeure, to carry out its obligations hereunder (except as set forth Below ), then by such Party giving written notice and full particulars of such Force Majeure to the other Party as soon as reasonably possible after the occurrence thereof, the obligation of the Party giving such notice, so far as it is affected by such Force Majeure, shall be suspended during the continuance of any inability so caused, but for no longer period and in no event beyond the expiration of the Term of this Agreement; and such cause shall, as far as possible, be remedied with all reasonable dispatch. Neither Party shall be liable for discoloration, contamination, loss of, damage to or destruction of any Crude Oil or property, or for any delay or nonperformance, when any of the foregoing is caused in whole or in part by an event of Force Majeure. If Customer is unable to perform as a result of Force Majeure, Customer will nevertheless be obligated to pay the Monthly Storage Fee. Force Majeure will not excuse either Party's failure to perform any release, indemnity, defense, hold harmless, or payment obligations in this Agreement.

    

B.     Abatement In the event that all or any substantial part of the Facility is destroyed by fire or other casualty or is rendered partially or wholly unusable by a Force Majeure event, the Monthly Storage Fee hereunder, or a fair and just proportion thereof according to the nature and extent of the damage sustained in loss of use of the Shell Capacity for Storage Services hereunder, shall at the time of such injury abate, without extending the Term of this Agreement, until said Storage shall have been fully restored. If such damage to the Facility causes fifty percent (50%) or more of the Shell Capacity for Storage Services to be unusable, then either Party shall have the option to terminate this Agreement, exercisable by notice to the other Party within thirty (30) days after the date of the casualty. If this Agreement is not so terminated within such time period, then Operator shall be deemed to have agreed to repair and restore the Facility and/or provide reasonable replacement Shell Capacity within the Facility. The length of time that Operator shall have to make such repairs hereunder shall in no event exceed a period of six (6) months from the date of casualty. If Operator fails to complete such repairs within said six (6) month period, Customer shall have the option (i) to terminate this Agreement as of the date of such casualty by giving written notice to Operator not later than thirty (30) days after said six (6) month period or (ii) to exercise any and all rights necessary to cause Operator to complete such repairs.

OF OR IN ANY WAY CONNECTED WITH THE PERFORMANCE, THE SUSPENSION OF PERFORMANCE, THE FAILURE TO PERFORM, OR THE TERMINATION OF THIS AGREEMENT.

 

A. Legal Requirements. Each Party represents, warrants and covenants that during the Term of this Agreement, it shall perform its obligations hereunder in accordance with all Applicable Laws. Customer will provide Operator with a material safety data sheet in the form required by Applicable Laws prior to delivering Crude Oil to the Facility. If Operator is required by any Applicable Laws enacted on or after the Effective Date to incur any new or increased expense to perform the Storage Services, Operator shall provide Customer with notice of such new or increased expense, which notice shall specify Customer's pro rata share of such new or increased expense and the effective date of compliance. Prior to such effective date of compliance, Customer will elect whether to pay its pro rata share thereof by notice to Operator. If Customer elects not to pay its pro rata share of such expense, Operator may terminate this Agreement upon notice to Customer.

B. Rules and Policies. Customer shall comply, and will cause Customer's Representatives to comply, with (i) all signs, rules, policies and procedures posted at the Facility and (ii) all rules, policies and procedures of Operator furnished to Customer. Operator may adopt and enforce such rules, policies and procedures as it deems necessary or appropriate in connection with environmental, health and safety standards. Customer's failure to comply with any such rules, policies or procedures will constitute a material breach of this Agreement. Operator reserves the right from time to time to alter, amend, supplement, modify or revoke its rules, policies and procedures.

C. Release In the event of any spill or discharge of Crude Oil or other hazardous substance reportable under Applicable Laws occurring at the Facility, Operator shall take all steps (if any) required under Applicable Laws including undertaking measures to prevent or mitigate resulting pollution damage. Operator shall notify Customer within twenty-four (24) hours of any such clean-up or remediation operations, and shall perform such operations in accordance with Applicable Laws or as may be directed by and Governmental Authority.

If to Operator to:

If to Customer to:

1100 Louisiana

Suite 5500

this Agreement is given by Operator, Customer shall (i) be the sole contact for Operator under this Agreement, (ii) continue to pay all sums due under this Agreement on behalf of itself and its partial assignee or sublessee regardless of whether Customer's partial assignee pays amounts due to Customer, and (iii) be solely responsible for collecting all sums due to Customer from its partial assignee or sublessee as a result of such partial assignment. Any attempted assignment in violation of this Section 23 shall be null and void ab initio.

if such federal court declines to exercise or does not have jurisdiction, in any Oklahoma State Court in Tulsa County, Oklahoma (without recourse to arbitration unless both Parties agree in writing), and to service of process by certified mail, delivered to the Party at the address indicated above. Each Party hereby irrevocably waives, to the fullest extent permitted by Applicable Law, any objection to personal jurisdiction, whether on grounds of venue, residence or domicile.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed effective as of the Effective Date.

By: /s/ Mike Cockrell                

President and COO

Vitol Inc., a Delaware corporation

By: /s/ Chris Brown                

Crude Trader