Exhibit 10.2

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
 
 
IN RE SEMGROUP ENERGY PARTNERS, L.P.,
SECURITIES LITIGATION
 
 
CASE NO. 08-MD-1989-GKF-FHM
 
[Related to Docket No. 329]
 

 
ORDER PRELIMINARILY APPROVING SETTLEMENT
 
WHEREAS, on May 3, 2011, Lead Plaintiff Harvest Fund Advisors LLC, on behalf of
itself and the Class (as herein defined), and SemGroup Energy Partners, L.P.
(n/k/a Blueknight Energy Partners, L.P.) (“SGLP”), SemGroup Energy Partners
G.P., L.L.C. (n/k/a Blueknight Energy Partners G.P. L.L.C.) (“SGLP GP”), Thomas
L. Kivisto, Gregory C. Wallace, Kevin L. Foxx, Michael J. Brochetti, Alex G.
Stallings, Brian F. Billings, W. Anderson Bishop, A.G. Edwards & Sons, Inc.,
Bank of America Corporation, BOSC, Inc., Citigroup Global Markets Inc., Goldman,
Sachs & Co., J.P. Morgan Securities Inc. (n/k/a J.P. Morgan Securities LLC),
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Raymond James & Associates,
Incorporated, RBC Capital Markets Corporation (n/k/a RBC Capital Markets, LLC),
SMH Capital Inc. (n/k/a Sanders Morris Harris, Inc.), UBS Securities LLC,
Wachovia Capital Markets, LLC, Wachovia Corporation, Wells Fargo & Co., Richie
Opportunistic Trading Ltd., C/R SemGroup Investment Partnership, L.P., C/R
Energy Coinvestment II, L.P., and Carlyle/Riverstone Global Energy and Power
Fund II, L.P. (collectively, the “Settling Defendants” and, together with Lead
Plaintiff, the “Parties”) in the above-captioned class action (the
“Litigation”), by and through their respective counsel, entered into a
Stipulation of Settlement (the “Stipulation”) which is subject to review under
Rule 23 of the Federal Rules of Civil Procedure and which, together with the
exhibits thereto, sets forth the terms and conditions for the proposed
settlement of the claims alleged in the Corrected Consolidated Securities Class
Action Complaint for Violations of the Federal Securities Laws filed July 17,
2009 (the “Complaint”); and

WHEREAS, upon consent of the Parties, after review and consideration of the
Stipulation filed with the Court and the exhibits annexed thereto, and after due
deliberation,
IT IS HEREBY ORDERED that:
1. The Court, for purposes of this order (the “Notice Order”), adopts all
defined terms as set forth in the Stipulation.

 
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2. The Court hereby preliminarily certifies, for purposes of effectuating this
Settlement only, a class pursuant to Rule 23 of the Federal Rules of Civil
Procedure consisting of purchasers and holders of the common units of SGLP from
July 17, 2007 through and including July 17, 2008, including purchasers of SGLP
common units pursuant or traceable to the Registration Statements and
Prospectuses filed with the Securities and Exchange Commission in connection
with SGLP’s July 17, 2007 initial public offering and February 14, 2008
secondary public offering (the “Class”).  Excluded from the Class are
(i) Defendants; (ii) members of the immediate family of each Individual
Defendant; (iii) any person who was an officer or director of SGLP, SemGroup,
L.P., SGLP GP, SemGroup Holdings, L.P., or any of the Underwriter Defendants
during the Class Period; (iv) any firm, trust, corporation, officer, or other
entity in which any Defendant has or had a majority interest; and (v) the legal
representatives, agents, affiliates, heirs, successors-in-interest, or assigns
of any such excluded party.  Also excluded from the Class are those Persons who
timely and validly request exclusion from the Class pursuant to the requirements
set forth in the Notice of Pendency and Proposed Settlement of Class Action (the
“Class Notice”).
3. Pursuant to Rule 23 and for purposes of settlement only, Lead Plaintiff
Harvest Fund Advisors LLC is appointed as the Class Representative.
4. For purposes of a settlement Class only, this Court expressly, but
preliminarily, finds and concludes that the requirements of Rule 23(a) and
23(b)(3) are satisfied as: the members of the Class are so numerous that joinder
of all Class Members in the class action is impracticable; there are questions
of law and fact common to the Class which predominate over any individual
questions; the claims of Lead Plaintiff are typical of the claims of the Class;
Lead Plaintiff and its counsel have fairly and adequately represented and
protected the interests of all of the Class Members; and a class action is
superior to other available methods for the fair and efficient adjudication of
the controversy, considering: the interests of the members of the Class in
individually controlling the prosecution of the separate actions, the extent and
nature of any litigation concerning the controversy already commenced by members
of the Class, the desirability or undesirability of continuing the litigation of
these claims in this particular forum, and the difficulties likely to be
encountered in the management of the class action.

 
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5. Lead Counsel is authorized to act on behalf of the Class with respect to all
acts required by, or which may be undertaken pursuant to, the Stipulation or
such other acts that are reasonably necessary to consummate the proposed
Settlement set forth in the Stipulation.
6. The Court preliminarily approves:  (i) the Settlement of the Litigation as
set forth in the Stipulation, and (ii) the proposed Plan of Allocation described
in the Class Notice, subject to the right of any Class Member to challenge the
fairness, reasonableness, and adequacy of the  Settlement, the Stipulation or
the proposed Plan of Allocation, and to show cause, if any exists, why a final
judgment dismissing the Litigation based on the Stipulation should not be
ordered herein after due and adequate notice to the Class has been given in
conformity with this Order.
7. Lead Counsel is hereby authorized to retain Rust Consulting, Inc. (“Rust”) as
the Claims Administrator in connection with the Settlement to supervise and
administer the notice and claims procedures.  The Parties and their counsel
shall not be liable for any act or omission of the Claims Administrator.
8. Rust or the Escrow Agent is authorized and directed to prepare any tax
returns and any other tax reporting for or in respect of the Settlement Fund and
to pay from the Settlement Fund any Taxes owed with respect to the Settlement
Fund, and to otherwise perform all obligations with respect to Taxes and any
reporting or filings in respect thereof as contemplated by the Stipulation,
without further order of the Court.
9. Pursuant to Rule 23(e), a hearing (the “Settlement Hearing”) shall be held on
October 5, 2011, at 9:30 a.m., in the United States District Court for the
Northern District of Oklahoma, the Honorable Gregory K. Frizzell presiding, for
the following purposes:
a. to determine whether the Settlement should be approved by the Court as fair,
reasonable, adequate, and in the best interests of the Class;
b. to determine whether the Plan of Allocation for the proceeds of the
Settlement should be approved by the Court as fair and reasonable;
c. to determine whether the Judgment should be entered pursuant to the
Stipulation, inter alia, dismissing the Litigation against the Defendants with
prejudice and extinguishing and releasing all Released Claims (as defined in the
Stipulation);

 
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d. to consider Lead Counsel’s application for an award of attorneys’ fees and
the reimbursement of litigation expenses;
e. to consider Lead Plaintiff’s application for reimbursement of costs and
expenses (including lost wages) in connection with its representation of the
Class;
f. to consider whether the issuance, disposition, distribution, and sale of any
Settlement Units in connection with the Settlement is subject to exemption from
registration under Section 3(a)(10) of the Securities Act of 1933, as amended
g. to rule on such other matters as the Court may deem appropriate.
10. The Court reserves the right to reschedule the Settlement Hearing or any
adjournment thereof, including the consideration of the application for
attorneys’ fees and reimbursement of expenses or to change the location thereof,
without further notice of any kind to Class Members.
11. The Court reserves the right to approve the Settlement at or after the
Settlement Hearing with such modification as may be consented to by the Parties
to the Stipulation and without further notice to the Class.
12. The Claims Administrator shall make reasonable efforts to identify all
Persons who are members of the Class, including beneficial owners whose SGLP
common units are held by banks, brokerage firms, or other nominees.  Pursuant to
the Stipulation, SGLP is to provide to the Claims Administrator, without any
charge to Lead Plaintiff or the Class, its shareholder lists, as SGLP or its
transfer agent may possess, as appropriate for providing notice to the Class, in
a format designated by the Claims Administrator for mailings, within seven (7)
calendar days following the execution of the Stipulation.
13. Within ten (10) calendar days after the entry of this Order, the Claims
Administrator shall cause a copy of the Class Notice and the Proof of Claim and
Release form (“Proof of Claim”) to be mailed by first class mail, postage
pre-paid, to all identifiable members of the Class, at their last known address
appearing in the transfer records maintained by or on behalf of SGLP (the
“Notice Date”).

 
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14. Pursuant to the Class Notice, each nominee shall either: (i) send the Class
Notice and Proof of Claim to Class Members for which they act as nominee by
first class mail within ten (10) calendar days after the nominee receives the
Class Notice; or (ii) send a list of the names and addresses of such beneficial
owners to the Claims Administrator within ten (10) calendar days after the
nominee receives the Class Notice and, in the event of the latter, the Claims
Administrator shall send by first class mail the Class Notice and Proof of Claim
to all Class Members who are on the list received from the nominee.  The Claims
Administrator shall, if requested, reimburse banks, brokerage houses, or other
nominees for their reasonable out-of-pocket expenses incurred in providing
notice to beneficial owners who are Class Members, which expenses would not have
been incurred except for the sending of such notice, subject to further order of
this Court with respect to any dispute concerning such compensation.  Lead
Counsel shall file with the Court and serve upon counsel for the Defendants no
later than seven (7) calendar days prior to the Settlement Hearing an affidavit
or declaration describing the efforts taken to comply with this Order and
stating that the mailings have been completed in accordance with the terms of
this Order.
15. Within ten (10) calendar days of the Notice Date, Lead Counsel shall publish
the Summary Notice, substantially in the form of Exhibit A-3 to the Stipulation,
once in Investor’s Business Daily and once over PR Newswire.  Lead Counsel shall
file with the Court and serve upon counsel for the Defendants no later than
seven (7) calendar days prior to the Settlement Hearing an affidavit or
declaration stating that the Summary Notice has been published in accordance
with the terms of this Order.
16. The form and content of the Class Notice, the Proof of Claim, and the
Summary Notice, attached to the Stipulation as Exhibits A-1, A-2, and A-3,
respectively, and the method set forth herein of notifying the Class of the
Settlement and its terms and conditions, meet the requirements of Rule 23 of the
Federal Rules of Civil Procedure, Section 27(a)(7) of the Securities Act of
1933, 15 U.S.C. § 77z-1(a)(7), as amended by the Private Securities Litigation
Reform Act of 1995 (the “PSLRA”), Section 21D(a)(7) of the Securities Exchange
Act of 1934, 15 U.S.C. § 78u-4(a)(7), as amended by the PSLRA, and due process,
constitute the best notice practicable under the circumstances, and shall
constitute due and sufficient notice to all Persons entitled thereto.

 
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17. The Court recognizes and acknowledges that a determination of fairness at
the Settlement Hearing will include the findings necessary to exempt the
distribution of common units by Blueknight Energy Partners, L.P. from
registration pursuant to Section 3(a)(10) of the Securities Act of 1933, 15
U.S.C. Section 77(c)(a)(10), and that the common units portion of the Settlement
Fund will be been transferred into an account controlled by the Escrow Agent,
without registration and compliance with the prospectus delivery requirements of
the securities laws.
18. Any member of the Class who wishes to object to the Settlement must, at
least twenty-one (21) calendar days prior to the Settlement Hearing, file with
the Court and serve on counsel (listed below) a written statement of objection
to the Settlement, the Plan of Allocation, the application for attorneys’ fees
and reimbursement of expenses, and/or the application for reimbursement of costs
and expenses (including lost wages) to Lead Plaintiff.  Any member of the Class
who timely objects to the Settlement, the Plan of Allocation, the application
for attorneys’ fees and reimbursement of expenses, and/or the application for
reimbursement of costs and expenses to Lead Plaintiff, or who otherwise wishes
to be heard, may appear in person or by his, her, or its attorney, at his, her,
or its own expense, at the Settlement Hearing and present evidence or argument
that may be proper or relevant; provided, however, that no Person other than the
Parties and their counsel shall be heard, and no papers, briefs, pleadings, or
other documents submitted by any Person shall be considered by the Court, unless
within twenty-one (21) calendar days prior to the Settlement Hearing, such
Person files with the Court and serves upon counsel listed below:  (1) a
statement of such Person’s objections to any matters before the Court concerning
this Settlement; (2) the grounds therefor or the reasons that such Person
desires to appear and be heard, as well as all documents or writings such Person
desires the Court to consider; (3) whether that Person intends to present any
witnesses; and (4) proof of the Person’s membership in the Class, which proof
shall include the Person’s purchase(s) of SGLP common units during the Class
Period and any sales thereof, including the dates, the number of common units
and price(s) paid and received for each such purchase and sale.  Such filings
shall be served upon the Court and the following counsel:

 
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Lead Counsel for Lead Plaintiff and the Class:
Ramzi Abadou, Esq.
BARROWAY TOPAZ KESSLER
   MELTZER & CHECK, LLP
580 California Street, Suite 1750
San Francisco, CA 94104
 
Designated Counsel for Defendants:
 
Michael W. Youtt, Esq.
KING & SPALDING LLP
1100 Louisiana, Suite 4000
Houston, TX 77002-5214

19. Any Person falling within the definition of the Class may, upon request, be
excluded from the Class.  Any such Person must submit to the Claims
Administrator a request for exclusion (“Request for Exclusion”) at least
twenty-one (21) calendar days prior to the date of the Settlement Hearing.  A
Request for Exclusion must state:  (1) the name, address, and telephone number
of the Person requesting exclusion; (2) the Person’s purchase(s) of SGLP common
units during the Class Period and any sales thereof, including the dates, the
number of common units and price(s) paid and received for each such purchase and
sale; and (3) that the Person wishes to be excluded from the Class.  All Persons
who submit valid and timely Requests for Exclusion in the manner set forth in
this paragraph and the Notice shall have no rights under the Stipulation and
shall not share in the distribution of the Net Settlement Fund.

 
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20. Any Class Member who wishes to participate in the Net Settlement Fund must
timely submit a valid Proof of Claim to the Claims Administrator, at the Post
Office Box indicated in the Class Notice, postmarked not later than one hundred
and twenty (120) calendar days following the Notice Date.  Such deadline may be
extended further by Court order.  A Proof of Claim shall be deemed to have been
submitted when postmarked, if mailed by first class, or registered or certified
mail, postage prepaid, addressed in accordance with the instructions given in
the Proof of Claim.  All other Proofs of Claim shall be deemed to have been
submitted at the time they are actually received by the Claims
Administrator.  To be valid, a Proof of Claim must: (i) be completed in a manner
that permits the Claims Administrator to determine the eligibility of the claim
as set forth in the Proof of Claim; (ii) include the release by the claimant of
all Released Persons as set forth in the Stipulation; and (iii) be signed with
an affirmation that the information is true and correct.  As part of the Proof
of Claim, each Class Member shall submit to the jurisdiction of the Court with
respect to the claim submitted, and shall (subject to the effectuation of the
Settlement reflected in the Stipulation) agree and enter into the release as
provided in the Stipulation.  All Class Members who do not submit a valid and
timely Proof of Claim shall be barred forever from receiving any payments from
the Net Settlement Fund, but will, in all other respects, be subject to and
bound by the provisions of the Stipulation and the Judgment, if entered, whether
favorable or unfavorable and whether or not they submit a Proof of Claim, unless
such Persons request exclusion from the Class in a timely and proper manner, as
provided herein.
21. If this Settlement, including any amendment made in accordance with the
Stipulation, is not approved by the Court or shall not become effective for any
reason whatsoever, the Settlement (including any modification thereof) made with
the consent of the Parties as provided for in the Stipulation, and any actions
taken or to be taken in connection therewith (including this Order and any
judgment entered herein), shall be terminated and shall become void and of no
further force and effect except as set forth in the Stipulation.

 
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22. All proceedings in the Litigation, other than such proceedings as may be
necessary to carry out the terms and conditions of the Settlement, are hereby
stayed and suspended until further order of this Court.  Pending final
determination whether the Settlement should be approved, Lead Plaintiff and all
members of the Class are barred and enjoined from commencing, prosecuting,
continuing, or asserting any action with regards to any of the Released Claims
against the Released Persons as defined in the Stipulation.
23. The contents of the Settlement Fund held by the Escrow Agent shall be deemed
and considered to be in custodia legis of the Court, and shall remain subject to
the jurisdiction of the Court, until such time as the contents of those funds
shall be distributed pursuant to the Stipulation and/or further order(s) of the
Court.
24. The Stipulation, whether or not consummated, and any negotiations,
discussions, or proceedings in connection herewith shall not be:
(a)           offered or received against any Defendant as evidence of or
construed as or deemed to be evidence of any presumption, concession, or
admission by any Defendant of the truth of any fact alleged by the Lead
Plaintiff or Class Members or the validity of any claim that has been or could
have been asserted in the Litigation or in any litigation, or the deficiency of
any defense that has been or could have been asserted in the Litigation or in
any litigation, or of any liability, negligence, fault, or wrongdoing of the
Defendants;
(b)           offered or received against any Defendant as evidence of a
presumption, concession, admission of any fault, misrepresentation, or omission
with respect to any statement or written document approved or made by any
Defendant, or against Lead Plaintiff and each Class Member as evidence of any
infirmity in the claims of Lead Plaintiff and the Class;
(c)           offered or received against any Defendant, the Lead Plaintiff, any
member of the Class, or any other Person as evidence of a presumption,
concession, or admission of any liability, negligence, fault, or wrongdoing, or
in any way referred to for any other reason as against any of the parties to the
Stipulation, in any other civil, criminal, or administrative action or
proceeding, other than such proceedings as may be necessary to effectuate the
provisions of this Stipulation; provided, however, that if this Stipulation is
approved by the Court, the Defendants and their Related Parties may refer to it
to effectuate the release granted them hereunder;

 
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(d)           construed against the Defendants, Lead Plaintiff, or the Class as
an admission or concession that the consideration to be given hereunder
represents the amount which could be or would have been recovered after trial.
25. All motions and papers in support of the Settlement and Plan of Allocation,
any application by Lead Counsel for an award of attorneys’ fees and
reimbursement of expenses and any application by Lead Plaintiff for
reimbursement of costs and expenses (including lost wages) in connection with
its representation of the Class, shall be filed and served no later than
twenty-one (21) calendar days before the date scheduled for the Settlement
Hearing, and all reply briefs in support of said motions shall be filed and
served no later than seven (7) calendar days prior to the Settlement Hearing.
26. The Court authorizes payment out of the Settlement Fund of notice and
administration expenses in accordance with the Stipulation.
27. The Court further retains jurisdiction over this Litigation to consider all
further matters arising out of or connected with the Settlement reflected in the
Stipulation, including enforcement of the releases provided for in the
Stipulation.
28. The passage of title and ownership of the Settlement Fund to the Escrow
Agent in accordance with the terms of the Stipulation is approved.  No Person
that is not a Class Member shall have any right to any portion of, or in the
distribution of, the Net Settlement Fund unless otherwise ordered by the Court
or otherwise provided in the Stipulation.
29. The Court finds that the CAFA Notice fully complies with the Class Action
Fairness Act of 2005, 28 U.S.C. § 1711 et seq., and no supplement to the CAFA
Notice is required.
30. The Court may, for good cause, extend any of the deadlines set forth in this
Order without further notice to Class Members.

 
SIGNED this 9th day of June, 2011.
         
/s/ Gregory K. Frizzell
     
THE HONORABLE GREGORY K. FRIZZELL
   
UNITED STATES DISTRICT JUDGE

 

 
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