Exhibit 10.16

 
August 19, 2008
 
Mr. James Griffin
 
Via Hand Delivery
 
 
Re:
Retention Agreement

 
Dear James:
 
    As SemGroup Energy Partners Management, Inc. (the “Company”) and SemGroup
Energy Partners G.P., L.L.C. (“SGGP”) believe it is in the best interests of the
Company, SGGP and SemGroup Energy Partners, L.P. (“SGLP”) to encourage you to
remain in the employ of the Company, the Company hereby agrees, and SGGP and
SGLP guarantee, as of the date set forth above (the “Effective Date”), to
provide you retention payments totaling up to $180,000, which is equivalent to
1.2 times your current annual base salary, (your “Retention Opportunity”),
subject to the terms and conditions more fully set forth below in this letter
agreement (this “Agreement”).
 
1. Retention Payments.
 
                (a) If you remain employed until October 30, 2008 (the “First
Retention Date”), you will be paid a lump sum retention payment equal to
$45,000, which is 25% of your Retention Opportunity, within 30 days following
the First Retention Date.
 
                (b) If you remain employed until July 31, 2009 (the “Final
Retention Date”), you will be paid an additional lump sum retention payment
equal to $135,000, which is 75% of your Retention Opportunity, within 30 days
following the Final Retention Date.
 
                (c) If your employment is (1) terminated by the Company other
than for Cause prior to the Final Retention Date or (2) voluntarily terminated
by you for Good Reason, then you will be paid a lump sum retention payment equal
to your Retention Opportunity, reduced by the amount of any payment you may have
already received under Section 1(a) above, within 30 days following the date of
your termination.   For purposes of this Agreement, “Cause” means termination of
employment by the Company due to failure to perform your duties in good faith,
misconduct which violates a written company policy, breach of this Agreement,
gross negligence, dishonesty, or intentional acts detrimental or destructive to
the Company or its affiliates, employees or property.  For purposes of this
Agreement, “Good Reason” means (i) a material reduction in the your base salary,
(ii) a material diminution of your duties, authority or responsibilities as in
effect immediately prior to such diminution or (iii) the relocation of the your
principal work location to a location more than 50 miles from its current
location.  In order to be eligible for payment on account of a Good Reason
termination, you must: (i) provide written notice to the Company within 90 days
following the first event or condition which gives rise to your claim of Good
Reason under this section; (ii) provide the Company 30 days from the date of
such notice in which to “cure” such event or condition and (iii) actually
terminate employment within 30 days following the expiration of the cure period
described above.
 
                (d) For the avoidance of doubt, if you voluntarily terminate
your employment other than for Good Reason or are fired for Cause prior to the
First Retention Date or the Final Retention Date, the payments otherwise payable
on any date following the date of your termination will be forfeited.  For
purposes of this Agreement, employment with the Company or any affiliate shall
be considered employment with the Company.
 
2. Confidentiality.  The Company has provided and will continue to provide you
with Confidential Information regarding the Company and the Company’s business
and has agreed to make certain payments pursuant to Section 1 hereof.  In return
for this and the other consideration provided under this Agreement, you agree
that you will not disclose or make available to any other person or entity, or
use for your own personal gain, any Confidential Information, except for such
disclosures as required (i) by law or legal process, (ii) in the performance of
your obligations hereunder, (iii) in connection with the enforcement of your
rights under this Agreement, or (iv) in connection with the defense or
settlement of any claim, suit or action brought against you by the Company or
any other party; provided, however, that if disclosure of Confidential
Information is required pursuant to (i) or (iv) above, you shall give prompt
written notice to the Company of such requirement, disclose no more information
than is so required, and cooperate with any attempts by the Company to obtain a
protective order or similar treatment.  For purposes of this Agreement,
“Confidential Information” shall mean any and all information, data and
knowledge that has been created, discovered, developed or otherwise become known
to the Company or in which property rights have been assigned or otherwise
conveyed to the Company, which information, data or knowledge has commercial
value in the business in which the Company is engaged, except such information,
data or knowledge as is or becomes known to the public without violation of the
terms of this Agreement.  By way of illustration, but not limitation,
Confidential Information includes business trade secrets, secrets concerning the
Company’s plans and strategies, nonpublic information concerning pending
investigations, disputes or litigation involving the Company, market information
pertaining to the Company or its operations, material market opportunities,
technical trade secrets, processes, formulas, know-how, improvements,
discoveries, developments, designs, inventions, techniques, marketing plans,
manuals, records of research, reports, memoranda, computer software, strategies,
forecasts, new products, unpublished financial statements or parts thereof,
budgets or other financial information, projections, licenses, prices, costs,
and employee, customer information, customer lists and supplier lists or parts
thereof.  The Company and you agree to use all reasonable means to insure that
this Agreement is kept confidential, except for disclosures required by law.
 
3. Withholding of Taxes.  The Company may withhold from any benefits payable
under this agreement all federal, state, city or other taxes as may be required
pursuant to any law or governmental regulation or ruling.
 
4. No Right to Continued Employment.  Nothing in this agreement shall give you
any rights to (or impose any obligations for) continued employment by the
Company or any affiliate or subsidiary thereof or successor thereto, nor shall
it give such entities any rights (or impose any obligations) with respect to
continued performance of duties by you.
 
5. Duty of Loyalty.  You represent, warrant, confirm and agree that, so long as
you are employed by the Company and in the scope of your employment,
notwithstanding any agreement or understanding with any person or entity, you
shall at all times act, in your good faith judgment, solely in interest of the
Company, SGGP and SGLP (collectively with the Company and SGGP, the “SGLP
Group”), and that you have no duties to SemGroup L.P. or to any entity other
than the SGLP Group, notwithstanding that any such other person or entity may
make payment to you (including for services rendered to the SGLP Group).  The
foregoing notwithstanding, the mere fact that you voluntarily terminate your
employment with the Company and accept employment elsewhere shall not be deemed
a violation of this duty of loyalty so long as you do not breach the
confidentiality provisions of this Agreement.
 
6. Offset of Retention Payments.  If, after the First Retention Date or the
Final Retention Date, the Company determines in good faith that (i) you owe any
undisputed amounts to the Company or any affiliate, (ii) the Company or any
affiliate has a colorable legal claim or cause of action against you or (iii) a
third party has a colorable legal claim or cause of action against the Company
or any affiliate relating to actions you have taken, the Company, in its sole
discretion, may offset any retention payments due to you under Section 1 against
the amount of any obligation or liability (i) you may have to the Company or any
affiliate or (ii) that your actions may have caused the Company or any affiliate
to incur.
 
7. No Assignment; Successors.  Your right to receive payments or benefits
hereunder shall not be assignable or transferable, whether by pledge, creation
of a security interest or otherwise, whether voluntary, involuntary, by
operation of law or otherwise, other than a transfer by will or by the laws of
descent or distribution, and in the event of any attempted assignment or
transfer contrary to this Section 7 the Company shall have no liability to pay
any amount so attempted to be assigned or transferred.  This agreement shall
inure to the benefit of and be enforceable by your personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
 
This agreement shall be binding upon and inure to the benefit of the Company and
SGGP and their respective successors and assigns, including, without limitation,
any company into or with which the Company or SGGP may merge or consolidate by
operation of law or otherwise.
 
8. Entire Agreement.  This agreement represents the entire agreement between you
and the Company with respect to the subject matter hereof, and supersedes and is
in full substitution for any and all prior agreements or understandings, whether
oral or written, relating to the subject matter hereof.
 
9. Modification of Agreement.  Any modification of this agreement shall be
binding only if evidenced in writing and signed by you and an authorized
representative of the Company.
 
10. Applicable 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).  The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect.
 
11. Severability.  If a court of competent jurisdiction determines that any
provision of this agreement is invalid or unenforceable, then the invalidity or
unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this agreement and all other provisions
shall remain in full force and effect.
 
 
If you agree to the terms of this letter agreement, please sign and date below.

 
 
Yours very truly,

 

 
SEMGROUP ENERGY PARTNERS MANAGEMENT, INC.
 

By: /s/ Kevin L. Foxx_____________________
President

 
SEMGROUP ENERGY PARTNERS G.P., L.L.C.

By: /s/ Alex G. Stallings____________, Manager
 

 
SEMGROUP ENERGY PARTNERS, L.P.
 
By SEMGROUP ENERGY PARTNERS G.P., L.L.C., its General Partner
 
By: /s/ Alex G. Stallings____________, Manager
 

 

 

 
Accepted and Agreed to By:
 
/s/ James R. Griffin ________________
James R. Griffin
 
8/20/08_________________________
Execution Date