CONSULTINGAND SEPARATION AGREEMENT

    This Consulting and Separation Agreement (the “Agreement”) is made and entered into effective as of the 30th day of November 2009 by and between BKEP Management, Inc. (formerly SGLP Management, Inc.), a Delaware corporation (“BKEP”), and Kevin L. Foxx (“Foxx”) (collectively, the “Parties”).  Reference is made herein to the Employment Agreement effective as of February 22, 2007 between BKEP GP Management, Inc. (formerly SemGroup Energy Partners Management, Inc.) and Foxx (the “Employment Agreement”).  Capitalized terms used herein but not otherwise defined in this Agreement shall have the meanings given such terms in the Employment Agreement.

    (a) Effective as of December 1, 2009 (the “Consultant Start Date”), Foxx has been removed from any and all officer positions he has held with BKEP, the MLP, the General Partner and any affiliates.  Such termination shall be deemed for the purposes of the Employment Agreement to be a termination without Cause under Section 6.C. of the Employment Agreement and the provisions of Sections 6.B. and 6.C. shall apply, subject to the provisions of this Agreement.  As of December 1, 2009, Foxx shall remain employed by BKEP as a Consultant for Crude Oil Operations with BKEP in accordance with the terms and conditions of this Agreement.  As of the Consultant Start Date, Foxx and BKEP agree as follows:

 

    (i) In his capacity as Consultant for Crude Oil Operations, Foxx shall perform such transitional duties in connection with operational matters of BKEP as Foxx has traditionally performed as Chief Executive Officer of BKEP, as may be directed by the Board, the President, or other appropriate officer of the General Partner;

 

    (ii) In consideration of the consulting services to be performed by him hereunder, Foxx shall receive thirty-seven thousand five hundred dollars ($37,500) per month during the period beginning on the Consultant Start Date and ending on the Separation Date (as defined in Section 1(b));

 

    (iii) Foxx shall continue to be entitled to benefits as specified in Section 4.D. of the Employment Agreement in a manner consistent with the benefits Foxx is receiving immediately prior to the Consultant Start Date, as may be modified for similarly situated executives of BKEP;

 

    (iv) Foxx shall be entitled to a payment of $270,000 in accordance with the SemGroup Energy Partners G.P., L.L.C. 2009 Executive Cash Bonus Plan (the “Cash Bonus Plan”), payable no later than December 10, 2009, and Foxx shall have no further right to additional payments under the Cash Bonus Plan;

 

    (v) Foxx shall not be entitled to any additional incentive compensation or performance bonus payments;

 

    (vi) Foxx shall remain subject to the Policy on the Prevention of Insider Trading and Misuse of Confidential Information of Semgroup Energy Partners, L.P; and

 

    (vii) The continued employment contemplated by this Agreement may be terminated by either party hereto upon 5 days written notice to the other party.

 

    (b) Effective as of February 28, 2010 (the “Separation Date”), Foxx’s employment as a Consultant for Crude Oil Operations shall terminate without the need for further action by the Parties.  Notwithstanding the foregoing, if Foxx’s employment terminates prior to the Separation Date pursuant to Section 1(a)(vii), such earlier termination date shall be considered the “Separation Date.”

 

    (c) At any time following the Consultant Start Date and prior to the Separation Date, Foxx may retrieve (or caused to be retrieved), and BKEP shall reasonably cooperate with Foxx in facilitating the retrieval of, the following items of furniture, artwork and personal belongings in Foxx’s former BKEP Tulsa and Houston offices:

 

    Houston:  sofa, coffee table, four chairs, armoire, desk, desk chair, four art pieces, work table, stools, personal pictures, desk accessories and such other office knick-knacks owned by Foxx; and

 

    Tulsa:  two chairs, work table, stools, armoire, end table, personal pictures, desk accessories and such other office knick-knacks owned by Foxx.

 

    (a) The sum of $900,000, which is an amount equal to 24 months of Foxx’s Base Salary.

 

    (b) Continued participation in all group health plans (medical, dental and vision), if any, of BKEP, until the first anniversary of the Separation Date, as if there has been no termination of employment.  Foxx’s right to continued coverage under BKEP’s group health plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) will commence after the first anniversary of the Separation Date.

    (a) Within 10 days of the Separation Date, in accordance with Section 6.A. of the Employment Agreement, Foxx shall be entitled to Foxx’s Base Salary which has accrued for services performed through the Separation Date but which has not yet been paid, less all required withholding and authorized deductions, through the Separation Date.

 

    (b) Within 30 days of the Separation Date, in accordance with Section 4.D(2) of the Employment Agreement, all reasonable out-of-pocket expenses incurred by Foxx in the course of performance of his duties under the Employment Agreement on or before the Separation Date, provided that Foxx submits a written request (following BKEP’s standard business procedure) on or before 10 business days following the Separation Date.  If Foxx fails to timely submit a request for reimbursement, Foxx will be deemed to have waived the claim for reimbursement.  BKEP will not reimburse Foxx for expense reports submitted after 10 business days following the Separation Date.

    Except as set forth in Sections 2 and 3 above, Foxx shall not be entitled to any other salary, commission, bonuses, employee benefits (including long and short term disability, 401(k), and pension), expense reimbursement or compensation from BKEP or its affiliates after the Separation Date and all of Foxx’s rights to salary, commission, bonuses, employee benefits and other compensation hereunder which would have accrued or become payable after the Separation Date from BKEP (other than vested benefits under BKEP’s benefit plans which are payable to Foxx pursuant to the terms and conditions set forth in the applicable plan documents) shall cease upon the Separation Date, other than those expressly required under applicable law (such as COBRA).

    The Parties recognize that Foxx is an Indemnitee under the Amended and Restated Limited Liability Company Agreement of SemGroup Energy Partners G.P., L.L.C. and the First Amended and Restated Agreement of Limited Partnership of SemGroup Energy Partners, L.P., and an Indemnification Agreement between Foxx and Blueknight Energy Partners, L.P. (formerly SemGroup Energy Partners, L.P.), all dated as of July 20, 2007.  Foxx has claimed certain rights to indemnification under those agreements as the result of, inter alia, the following litigation matters:  (a) Chapter 11; Case No. 08-11525 (BLS) In Re:  SEMCRUDE, L.P., et al, Debtors; In the United States Bankruptcy Court for the District of Delaware; (b) Adversary No. 09-50189-BLS; Official Committee of Unsecured Creditors of Semcrude, L.P., et al and Bank of America, N.A., vs. Thomas L. Kivisto, Gregory C. Wallace, Westback Publishing Co., LLC, Brent Cooper, Kevin L. Foxx, Alex G. Stallings; and (c) SemGroup Energy Partners, L.P., Securities Litigation, Case No. 08-MD-01989-GKF-FHM, United States District Court for the Northern District of Oklahoma.  Nothing in this Agreement is intended to terminate or limit any of Foxx’s indemnification rights under the agreements described above, which shall remain effective subject to their terms and conditions.

    In accordance with Section 6.C. of the Employment Agreement and in consideration of the payments to be made hereunder and having acknowledged the above-stated consideration as full compensation for and on account of any and all injuries and damages which Foxx has sustained or claimed, or may be entitled to claim, Foxx, for himself, and his heirs, executors, administrators, successors and assigns, does hereby release, forever discharge and promise not to sue BKEP, BKEP GP Management, Inc. (formerly SemGroup Energy Partners Management, Inc.), Blueknight Energy Partners G.P., L.L.C. (formerly SemGroup Energy Partners, G.P., L.L.C.) and Blueknight Energy Partners, L.P. (formerly SemGroup Energy Partners, L.P.), their parents, subsidiaries, affiliates, successors and assigns, and their past and present officers, directors, partners, employees, members, managers, shareholders, agents, attorneys, accountants, insurers, heirs, administrators, executors (collectively the “Released Parties”) from any and all claims, liabilities, costs, expenses, judgments, attorney fees, actions, known and unknown, of every kind and nature whatsoever in law or equity, which Foxx had, now has, or may have against the Released Parties relating in any way to Foxx’s employment with BKEP or BKEP GP Management, Inc.or termination thereof, including but not limited to, (a) all claims for contract damages, tort damages, special, general, direct, punitive and consequential damages, compensatory damages, loss of profits, attorney fees and any and all other damages of any kind or nature; (b) all contracts, oral or written, between Foxx and any of the Released Parties except as otherwise described herein; (c) any business enterprise or proposed enterprise contemplated by any of the Released Parties, as well as (d) anything done or not done prior to and including the date of execution of this Agreement ((a)-(d), collectively, the “Released Employment Matters”).

 

    Foxx understands and agrees that this release and covenant not to sue shall apply to any and all claims or liabilities arising out of or relating to Foxx’s employment with BKEP and the termination of such employment, including, but not limited to:  claims of discrimination based on age, race, color, sex (including sexual harassment), religion, national origin, marital status, parental status, veteran status, union activities, disability or any other grounds under applicable federal, state or local law, including, but not limited to, claims arising under the Age Discrimination in Employment Act of 1967, as amended; the Americans with Disabilities Act; the Fair Labor Standards Act; the Family and Medical Leave Act; and Title VII of the Civil Rights Act, as amended, the Civil Rights Act of 1991; 42 U.S.C. § 1981, the Employee Retirement Income Security Act, the Consolidated Omnibus Budget Reconciliation Act of 1985 as amended, the Rehabilitation Act of 1973, the Equal Pay Act of 1963 (EPA) as well as any claims regarding wages; benefits; vacation; sick leave; business expense reimbursements; wrongful termination; breach of the covenant of good faith and fair dealing; intentional or negligent infliction of emotional distress; retaliation; outrage; defamation; invasion of privacy; breach of contract; fraud or negligent misrepresentation; harassment; breach of duty; negligence; discrimination; claims under any employment, contract or tort laws; claims arising under any other federal law, state law, municipal law, local law, or common law; any claims arising out of any employment contract, policy or procedure; and any other claims related to or arising out of his employment or the separation of his employment with BKEP except for any claims based on the indemnification provisions of the agreements described in Section 5 above.

 

    This release does not apply to any claims for unemployment compensation or any other claims or rights which, by law, cannot be waived, including the right to file an administrative charge or participate in an administrative investigation or proceeding; provided, however that Foxx disclaims and waives any right to share or participate in any monetary award resulting from the prosecution of such charge or investigation or proceeding.

 

    Nothing in this Agreement shall be construed to release any Released Party from (i) any of the obligations set forth in this Agreement, (ii) any of the indemnification obligations described in Section 5 above, or (iii) from any and all claims, liabilities, costs, expenses, judgments, attorney fees, actions, known and unknown, of every kind and nature whatsoever in law or equity, which Foxx had, now has, or may have against the Released Parties which are not Released Employment Matters.

    Foxx expressly acknowledges that he is voluntarily, irrevocably and unconditionally releasing and forever discharging BKEP and its respective present and former parents, subsidiaries, divisions, affiliates, branches, insurers, agencies, and other offices from all rights or claims he has or may have against BKEP including, but not limited to, without limitation, all charges, claims of money, demands, rights, and causes of action arising under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), including, but not limited to, all claims of age discrimination in employment and all claims of retaliation in violation of ADEA.  Foxx further acknowledges that the consideration given for this waiver of claims under the ADEA is in addition to anything of value to which he was already entitled in the absence of this waiver.  Foxx further acknowledges:  (a) that he has been informed by this writing that he should consult with an attorney prior to executing this Agreement; (b) that he has carefully read and fully understands all of the provisions of this Agreement; (c) he is, through this Agreement, releasing BKEP from any and all claims pursuant to the ADEA through the date hereof; (d) he understands and agrees that this waiver and release does not apply to any claims that may arise under the ADEA after the date he executes this Agreement; (e) he has at least 45 days within which to consider this Agreement; and (f) he has seven days following his execution of this Agreement to revoke the Agreement (as provided in Section 17 of this Agreement); and (g) this Agreement shall not be effective until the revocation period has expired and Foxx has signed and has not revoked the Agreement.

 

    Attached as Appendix A is a list of the job titles and ages of all individuals in the same organizational unit (corporate headquarters) and same or similar job (executive officer) who are part of the November 2009 reduction in force.  Attached as Appendix B is a list of the ages of all individuals in the same organizational unit (corporate headquarters) and same or similar job (executive officer) who are being retained.

    (a) The Parties agree that all terms and provisions of Section 7.A. of the Employment Agreement related to Confidential Information shall remain in full force and effect as provided in the Employment Agreement.

 

    (b) In accordance with Section 7.B. of the Employment Agreement, Foxx agrees to deliver to BKEP (and will not keep in Foxx’s possession) specifications, drawings blueprints, sketches, materials, equipment, other documents or property, or reproductions of any aforementioned items developed by Foxx pursuant to Foxx’s employment with BKEP or otherwise belonging to BKEP, its successors or assigns.

    Foxx shall not, directly or indirectly, make or cause to be made and shall use his best commercial efforts to cause the officers, directors, employee, agents and representatives of any entity or person controlled by Foxx not to make or cause to be made, any disparaging, denigrating, derogatory or other negative, misleading or false statements orally or in writing to any person or entity, including members of the investment community, press, and customers, competitors and advisors to BKEP, about BKEP, its shareholders, subsidiaries or affiliates, their respective officers or members of their boards of directors, or the business strategy or plans, policies, practices or operations of BKEP, its shareholders, subsidiaries or affiliates; provided, however, that nothing in this Agreement shall apply to or restrict in any way the communication of information by Foxx to any state or federal law enforcement agency or require notice to BKEP thereof.

 

    BKEP agrees to use its best commercial efforts to prevent its officers, directors, managers, supervisors, employees, agents and representatives from making any disparaging, denigrating, derogatory or other negative, misleading or false statements orally or in writing to any person or entity, including members of the investment community, press, and customers, competitors and advisors to BKEP regarding Foxx; provided, however, that nothing in this Agreement shall apply to or restrict in any way the communication of information by BKEP to any state or federal law enforcement agency or require notice to Foxx thereof.

    (a) Foxx acknowledges that in the course of his employment with BKEP, Foxx has gained knowledge and experience and/or was a witness to events and circumstances that may arise in or relate to BKEP’s defense or prosecution of current or subsequent proceedings.  During the term of Foxx’s employment as a Consultant for Crude Oil Operations, Foxx agrees to cooperate fully with BKEP’s reasonable request as a witness and/or consultant in defending or prosecuting claims of all kinds, including but not limited to, any litigation, administrative actions or arbitrations.

 

    (b) BKEP acknowledges that Foxx may actively seek employment with (or other association with) third parties during the term of his employment as a Consultant for Crude Oil Operations, some of whom may be in direct competition with the business of BKEP, provided that (i) Foxx may not use or disclose Confidential Information in violation of Section 8(a) of this Agreement and (ii) if Foxx accepts employment with a third party that competes with BKEP, Foxx will be required to resign from BKEP immediately.

 

    (c) Notwithstanding the Arbitration Provision set forth in Section 11 of this Agreement, the Parties agree that either party may resort to Oklahoma state courts having equity jurisdiction in and for Tulsa County, Oklahoma and the United States District Court for the Northern District of Oklahoma, to enforce this Section 10 of the Agreement by injunctive relief.  The Parties agree that this promise is a material inducement to each party entering into this Agreement.  Additionally, the Parties agree that either party may enforce this promise without posting a bond and without giving notice to the maximum extent permitted by law.

    Any dispute arising out of or relating to this Agreement, including the breach, termination or validity thereof, shall be finally resolved by arbitration in accordance with the CPR Institute for Dispute Resolution Rules for Non-Administered Arbitration in effect on the date of this Agreement by a single arbitrator selected in accordance with the CPR Rules.  The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16, and judgment on the award rendered by the arbitrator may be entered by any court having jurisdiction thereof.  The place of arbitration shall be in Tulsa, Oklahoma.  The arbitrator’s decision must be based on the provisions of this Agreement and the relevant facts, and the arbitrator’s reasoned decision and award shall be binding on the Parties.  Nothing herein is or shall be deemed to preclude BKEP’s resort to the injunctive relief prescribed in this Agreement, including any injunctive relief implemented by the arbitrator pursuant to this Section 11.  The Parties will each bear their own attorneys’ fees and costs in connection with any dispute.

    The provisions of this Agreement are contractual and not merely recitals and are intended to resolve disputed claims.  No party hereto admits liability of any kind and no portion of this Agreement shall be construed as an admission of liability.

    Foxx and BKEP represent, recognizing that the truth of the following representation is a material consideration upon which this Agreement is based, that they have not heretofore assigned or transferred, or purported to assign or transfer, to any person or entity, any claim or any portion thereof, or interest therein relating to any claims being released by any party to this Agreement, and that they are unaware of any other entity having any interest in such claims, and agree to indemnify and hold the other party harmless from and against any and all claims, based on or arising out of any such third-party interest in, or assignment or transfer, or purported assignment or transfer of, any claims, or any portion thereof or interest therein.

    This Agreement shall be governed by and construed in accordance with the laws of the State of Oklahoma (except that no effect shall be given to any conflicts of law principles thereof that would require the application of the laws of another jurisdiction).

    All notices and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by registered or certified mail (return receipt requested and with postage prepaid thereon) or by facsimile transmission to the respective parties at the following addresses (or at such other address as either party shall have previously furnished to the other in accordance with the terms of this Section):

       Tulsa, Oklahoma 74136

       Attention:  Chairman of the Board

    Foxx acknowledges and agrees that: (i) he has had reasonable and sufficient time to read and review this Agreement and that he has, in fact, read and reviewed this Agreement; (ii) that he has the right to consult with legal counsel regarding this Agreement and is encouraged to consult with legal counsel with regard to this Agreement; (iii) that he has had (or has had the opportunity to take) 45 calendar days to discuss the Agreement with a lawyer of his choice before signing it and, if he signs before the end of that period, he does so of his own free will and with the full knowledge that he could have taken the full period; (iv) that he is entering into this Agreement freely and voluntarily and not as a result of any coercion, duress or undue influence; (v) that he is not relying upon any oral representations made to him regarding the subject matter of this Agreement; (vi) that by this Agreement he is receiving consideration in addition to that which he was already entitled; and (vii) that he has received all information he requires from BKEP in order to make a knowing and voluntary release and waiver as provided in Sections 6 and 7 above.

    Foxx acknowledges and agrees that he has seven days from the date of the execution of this Agreement within which to rescind or revoke this Agreement by providing notice in writing to BKEP.  Foxx further understands that the Agreement will have no force and effect until the end of that seventh day (the “Waiver Effective Date”), and that, he will receive the payments and benefits identified in Section 2 above following BKEP’s receipt of the Agreement as executed by Foxx if the Agreement is not revoked prior to the Waiver Effective Date.  If Foxx revokes the Agreement pursuant to this Section 17, this Agreement shall be deemed null and void.

    All payments made by BKEP under this Agreement will be subject to applicable federal, state and local taxes, and withholdings required for the same, which taxes will be the responsibility of Foxx.

    This Agreement constitutes the entire agreement and understanding among the Parties and replaces, cancels and supersedes any prior agreements and understandings relating to the subject matter hereof including, without limitation, the Employment Agreement, except as expressly provided herein, and all prior representations, agreements, understandings and undertakings among the parties hereto with respect to the subject matter hereof are merged herein.  The Parties agree that this Agreement is the entire agreement between the parties relating to the subject matter hereof, and that there is no agreement, representation or other inducement for the execution of this Agreement other than the consideration recited herein.

    Should any provision of this Agreement be found to be invalid or unenforceable, the remaining provisions of this Agreement shall be deemed to be in full force and effect to the fullest extent permitted by law.  Any waiver of any term or provision of this Agreement shall not be deemed a continuing waiver and shall not prevent the Parties’ enforcement of such provision in the future.

    The Parties agree that the contents of this Agreement, including but not limited to its financial terms, are and will be kept strictly confidential by the Parties.  By executing this Agreement, each Party agrees and represents that it has maintained and will maintain the confidential nature of the agreement and has not and will not disclose its terms to any third party, except to (a) such party’s legal counsel, tax advisors and immediate family members who agree to keep it confidential; (b) as required by law in which case such party shall notify the other party in writing in advance of such disclosure; and (c) as necessary to enforce this Agreement.  Notwithstanding the foregoing, the Parties agree that this Agreement may be filed with the Securities and Exchange Commission as an exhibit to any appropriate securities filing, as determined by BKEP in its discretion.

    Each payment under this Agreement, including each payment in a series of installment payments, is intended to be a separate payment for purposes of Treas. Reg. §1.409A-2(b), and is intended to be: (i) exempt from Section 409A of the Internal Revenue Code of 1986, the regulations and other binding guidance promulgated thereunder (“Section 409A”), including, but not limited to, by compliance with the short-term deferral exemption as specified in Treas. Reg. § 1.409A-1(b)(4), or (ii) in compliance with Section 409A, including, but not limited to, being paid pursuant to a fixed schedule or specified date pursuant to Treas. Reg. § 1.409A-3(a) and the provisions of this Agreement will be administered, interpreted and construed accordingly.

    This Agreement shall be binding on and inure to the benefit of each of the parties hereto, as well as their respective successors, assigns, heirs, executors and administrators.