Exhibit 10.2
 

 
CONSULTING AND 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 Michael J. Brochetti (“Brochetti”) (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 Brochetti (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.
 
1.  
Modification of Employment Terms; Termination of Employment.

 
    (a) Effective as of December 1, 2009 (the “Consultant Start Date”),
Brochetti 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, Brochetti shall remain employed by BKEP as a
Treasury and Corporate Development Consultant with BKEP in accordance with the
terms and conditions of this Agreement.  As of the Consultant Start Date,
Brochetti and BKEP agree as follows:
 
    (i) In his capacity as Treasury and Corporate Development Consultant,
Brochetti shall perform such transitional duties in connection with operational
matters of BKEP as Brochetti has traditionally performed as Executive Vice
President-Corporate Development and Treasurer 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, Brochetti shall receive twenty-five thousand dollars ($25,000) per
month during the period beginning on the Consultant Start Date and ending on the
Separation Date (as defined in Section 1(b));
 
    (iii) Brochetti shall continue to be entitled to benefits as specified in
Section 4.D. of the Employment Agreement in a manner consistent with the
benefits Brochetti is receiving immediately prior to the Consultant Start Date,
as may be modified for similarly situated executives of BKEP;
 
    (iv) Brochetti shall be entitled to a payment of $180,000 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 Brochetti shall
have no further right to additional payments under the Cash Bonus Plan;
 
    (v) Brochetti shall not be entitled to any additional incentive compensation
or performance bonus payments;
 
    (vi) Brochetti 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”), Brochetti’s
employment as a Treasury and Corporate Development Consultant shall terminate
without the need for further action by the Parties.  Notwithstanding the
foregoing, if Brochetti’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, Brochetti may retrieve (or caused to be retrieved), and BKEP
shall reasonably cooperate with Brochetti in facilitating the retrieval of items
owned by Brochetti in Brochetti’s former BKEP offices.
 
2.  
Separation Benefits.

 
    In accordance with Section 6.C. of the Employment Agreement and in
consideration of Brochetti’s execution (without revocation) of this Agreement
and his release of claims as provided in this Agreement, BKEP agrees to provide
Brochetti with the following payments and benefits, less all required
withholding and other authorized deductions, on the next day following the
Waiver Effective Date (as defined in Section 17):
 
    (a) The sum of $600,000, which is an amount equal to 24 months of
Brochetti’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.  Brochetti’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.
 
3.  
Payment of Accrued Benefits and Reimbursements Through Separation Date.

 
    (a) Within 10 days of the Separation Date, in accordance with Section 6.A.
of the Employment Agreement, Brochetti shall be entitled to Brochetti’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
Brochetti in the course of performance of his duties under the Employment
Agreement on or before the Separation Date, provided that Brochetti submits a
written request (following BKEP’s standard business procedure) on or before 10
business days following the Separation Date.  If Brochetti fails to timely
submit a request for reimbursement, Brochetti will be deemed to have waived the
claim for reimbursement.  BKEP will not reimburse Brochetti for expense reports
submitted after 10 business days following the Separation Date.
 

 
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4.  
No Other Compensation.

 
    Except as set forth in Sections 2 and 3 above, Brochetti 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
Brochetti’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 Brochetti 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).
 
5.  
Indemnification.

 
    The Parties recognize that Brochetti 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
Brochetti and Blueknight Energy Partners, L.P. (formerly SemGroup Energy
Partners, L.P.), all dated as of July 20, 2007.  Brochetti 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 Brochetti’s indemnification rights
under the agreements described above, which shall remain effective subject to
their terms and conditions.
 
6.  
General Release.

 
    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 Brochetti has sustained or claimed, or may be
entitled to claim, Brochetti, 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 Brochetti had, now has, or may have against
the Released Parties relating in any way to Brochetti’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 Brochetti 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”).
 

 
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    Brochetti 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
Brochetti’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.
 
    In addition, Brochetti agrees not to cause or encourage any legal proceeding
related to the Released Employment Matters to be maintained or instituted
against any of the Released Parties.
 
    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 Brochetti 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
Brochetti had, now has, or may have against the Released Parties which are not
Released Employment Matters.
 

 
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7.  
Acknowledgement of Waiver of Claims under ADEA.

 
    Brochetti 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.  Brochetti 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.  Brochetti 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 Brochetti 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.
 
8.  
Return of Confidential Information and Equipment.

 
    (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, Brochetti
agrees to deliver to BKEP (and will not keep in Brochetti’s possession)
specifications, drawings blueprints, sketches, materials, equipment, other
documents or property, or reproductions of any aforementioned items developed by
Brochetti pursuant to Brochetti’s employment with BKEP or otherwise belonging to
BKEP, its successors or assigns.
 
9.  
Non-Disparagement.

 
    Brochetti 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
Brochetti 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 Brochetti to any state or federal
law enforcement agency or require notice to BKEP thereof.
 

 
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    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 Brochetti; 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 Brochetti
thereof.
 
10.  
Cooperation Agreement; Acknowledgement of Brochetti Seeking New Employment.

 
    (a) Brochetti acknowledges that in the course of his employment with BKEP,
Brochetti 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 Brochetti’s employment as
a Treasury and Corporate Development Consultant, Brochetti 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 Brochetti may actively seek employment with (or
other association with) third parties during the term of his employment as a
Treasury and Corporate Development Consultant, some of whom may be in direct
competition with the business of BKEP, provided that (i) Brochetti may not use
or disclose Confidential Information in violation of Section 8(a) of this
Agreement and (ii) if Brochetti accepts employment with a third party that
competes with BKEP, Brochetti 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.
 
11.  
Arbitration.

 
    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.
 

 
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12.  
Resolution of Claims.

 
    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.
 
13.  
No Assignment of Claims.

 
    Brochetti 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.
 
14.  
Governing Law.

 
    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).
 
15.  
Notice.

 
    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):
 
    if to BKEP:
 
       BKEP Management, Inc.
       Two Warren Place
        6120 South Yale Avenue, Suite 500
       Tulsa, Oklahoma 74136
       Attention:  Chairman of the Board
 
    if to Brochetti:
 
       Michael J. Brochetti
       4608 E 109th Place
       Tulsa, OK 74137
 
 
 
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16.  
Sufficient Time to Review.

 
    Brochetti 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.
 
17.  
Revocation/Payment.

 
    Brochetti 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.  Brochetti 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 Brochetti if the Agreement is not revoked prior to the Waiver
Effective Date.  If Brochetti revokes the Agreement pursuant to this Section 17,
this Agreement shall be deemed null and void.
 
18.  
Taxes.

 
    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 Brochetti.
 
19.  
Entire Agreement; Severability.

 
    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.
 

 
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20.  
Confidentiality.

 
    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.
 
21.  
Section 409A.

 
    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.
 
22.  
Binding Effect.

 
    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.
 
BROCHETTI AFFIRMS THAT HE HAS CONSULTED WITH HIS ATTORNEY OR HAS HAD AN
OPPORTUNITY TO DO SO PRIOR TO SIGNING THIS AGREEMENT AND THAT HE IS EXECUTING
THE AGREEMENT VOLUNTARILY AND WITH FULL UNDERSTANDING OF ITS CONSEQUENCES.

[Signature page follows]

 
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement effective as of the date first written above.

BKEP Management, Inc.

By:           /s/ Alex G. Stallings______________
Name: Alex G. Stallings
Title:   Chief Financial Officer

 
Brochetti:

/s/ Michael J. Brochetti___________
Michael J. Brochetti

 
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