exh10-1.htm


    Exhibit
10.1

    TERM
SHEET

     

    March
6, 2009

    
 

        This term
sheet (“Term
Sheet”) summarizes the principal terms of a settlement agreement (the
“Settlement”)
between SemGroup, L.P. (“SemGroup”) and
certain of its affiliates and SemGroup Energy Partners, L.P. (“SGLP”) and certain of
its affiliates.  SemGroup and SGLP intend for this Term Sheet to be
legally binding and to create legally enforceable obligations between the
parties hereto with respect to the Settlement, subject to the approval of the
Bankruptcy Court (as defined below).  SemGroup and SGLP agree to
negotiate and execute definitive documentation with respect to the Settlement as
soon as practicably possible, which will supersede this Term Sheet when so
executed.  The agreements and acknowledgements contained herein will
become effective upon approval by the Bankruptcy Court and the satisfaction of
the conditions set forth in Section 17 of this Term Sheet.  Certain
defined terms used in this Term Sheet are set forth below.

    


        “Bankruptcy Cases”
means (i) the chapter 11 cases commenced by SemGroup and certain of its direct
and indirect subsidiaries (other than SemGroup Holdings) on July 22, 2008,
jointly administered under Case No. 08-11525 (BLS) and (ii) the chapter 11 case
commenced by SemGroup Holdings on October 22, 2008 under Case No. 08-12504
(BLS).

    


        “Bankruptcy Code”
means title 11 of the United States Code, as amended.

    


        “Bankruptcy Court”
means the United States Bankruptcy Court for the District of Delaware or any
other court having jurisdiction over the Bankruptcy Cases from time to
time.

    


        “Crude Barrels” means
the tank bottoms and line fill barrels associated with SGLP’s crude oil business
as determined by the SemGroup Parties, and agreed to by the SGLP Parties, in
accordance with normal industry practice.

    


        “Dropdown Agreements”
mean, collectively, (i) the Contribution, Conveyance, Assignment and Assumption
Agreement, dated as of May 23, 2007, by and among SemCrude, SemGroup,
SemOperating, SemPipe GP and SGEP, (ii) the Closing Contribution, Conveyance,
Assignment and Assumption Agreement, dated as of July 20, 2007, by and among
SGLP, SGLP GP, SGLP Operating, SemGroup Holdings, SemCrude and SemGroup, (iii)
the Purchase and Sale Agreement, dated as of January 14, 2008, by and between
SemMaterials and SGLP Operating, (iv) the Contribution Agreement, dated as of
January 28, 2008, by and among SemMaterials, KC Asphalt and SMEP, (v) the
Purchase and Sale Agreement, dated as of May 12, 2008, by and between SemCrude
and SGEP, (vi) the Contribution Agreement, dated as of May 30, 2008, by and
between SemCrude and SGLP Crude Storage and (vii) the Purchase and Sale
Agreement, dated as of May 20, 2008, by and between SemCrude and
SGEP.

    


        “Dropdowns” mean the
following transfers from SemGroup or its affiliates to SGLP or its affiliates:
(i) the contribution of certain crude oil assets on July 20, 2007; (ii) the sale
of liquid asphalt assets on February 20, 2008; (iii) the sale of the Eagle North
Pipeline System on May 12, 2008; and (iv) the sale of additional crude oil
assets on May 30, 2008.

    


        “Eaglwing” means
Eaglwing, L.P., a wholly-owned subsidiary of SemGroup.

    


        “HSR Act” means the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder.

    


        “KC Asphalt” means
K.C. Asphalt, L.L.C., a wholly-owned subsidiary of SemGroup.

    


        “Omnibus Agreement”
means the Amended and Restated Omnibus Agreement dated as of February 20, 2008
(as amended from time to time), by and among SemGroup, SemManagement,
SemMaterials, SGLP, SGLP GP and SMEP.

    


        “SemCrude” means
SemCrude, L.P., a wholly-owned subsidiary of SemGroup.

    


        “SemGroup Holdings”
means SemGroup Holdings, L.P., a wholly-owned subsidiary of
SemGroup.

    


        “SemGroup Parties”
means SemGroup and each of its direct and indirect subsidiaries, other than SGLP
GP, SGLP and each of its direct and indirect subsidiaries.  For
purposes of this agreement, no SGLP Party shall be considered an affiliate of
any SemGroup Party.

    


        “SemManagement” means
SemManagement, L.L.C., a wholly-owned subsidiary of SemGroup.

    


        “SemMaterials” means
SemMaterials, L.P., a wholly-owned subsidiary of SemGroup.

    


               “SemOperating” means
SemOperating G.P., L.L.C., a wholly-owned subsidiary of SemGroup.

    


        “SemPipe GP” means
SemPipe G.P., L.L.C., a wholly-owned subsidiary of SGLP.

    


        “September Order”
means the agreed order approved by the Bankruptcy Court on September 8, 2008
with respect to SGLP’s motion seeking adequate protection and modification of
the stay filed on August 15, 2008.

    


        “SGEP” means SemGroup
Energy Partners, L.L.C., a wholly-owned subsidiary of SGLP.

    


        “SGLP Parties” means
SGLP GP, SGLP and each of its direct and indirect subsidiaries.  For
purposes of this Agreement, no SemGroup Party shall be considered an affiliate
of any SGLP Party.

    


               “SGLP Crude Storage”
means SemGroup Crude Storage, L.L.C., a wholly-owned subsidiary of
SGLP.

    


        “SGLP GP” means
SemGroup Energy Partners G.P., L.L.C., the general partner of SGLP.

    


        “SGLP Operating” means
SemGroup Energy Partners Operating, L.L.C., a wholly-owned subsidiary of
SGLP.

    


        “SMEP” means
SemMaterials Energy Partners, L.L.C., a wholly-owned subsidiary of
SGLP.

    


        “Terminal Access and Use
Agreement” means the Terminal Access and Use Agreement dated as of
January 28, 2008 (as amended from time to time), by and among SemMaterials, KC
Asphalt and SMEP.

    


        “Terminalling and Storage
Agreement” means the Terminalling and Storage Agreement dated as of
February 20, 2008 (as amended from time to time), by and between SemMaterials
and SMEP.

    


        “Throughput Agreement”
means the Throughput Agreement, dated as of July 20, 2007 (as amended from time
to time), by and among SGLP, SGEP, SemCrude, SemGroup and Eaglwing.

     

    
      	
              Item

            	
              Details

            
	
              1. SGLP
      Kansas Tankage

            	
              · SemCrude
      owns the pipelines in Kansas and Northern Oklahoma reflected on Schedule 1 hereto (the “Kansas Pipeline”).  SGLP owns
      storage tanks, related equipment and associated easement and leasehold
      land rights that are connected to, adjacent to, or otherwise contiguous
      with SemCrude’s Kansas Pipeline (“KS Crude
      Transferred Assets”).  SGLP hereby agrees to transfer the
      KS Crude Transferred Assets (with the exception of the truck unloading
      equipment and related assets) to SemCrude free and clear of any liens,
      claims or encumbrances.  For clarification, (i) the KS Crude
      Transferred Assets will not include any storage tanks, related equipment
      and associated easement and leasehold land rights owned by the SGLP
      Parties at Cushing and (ii) after such transfer, SGLP’s only assets
      related to the Kansas Pipeline will consist of the truck unloading
      equipment and related assets.

               

              · SGLP
      will have access to the KS Crude Transferred Assets as reasonably
      necessary to perform transportation services.

               

              · All
      environmental, regulatory, and operating permits for the KS Crude
      Transferred Assets will be transferred to SemCrude to the extent permitted
      by law.  If a transfer is not permitted by law SGLP will work in
      good faith with SemCrude to have the permits issued to SemCrude or its
      affiliate by the applicable agency.

               

            
	
              2. Rejected
      Contracts

            	
              · The
      following contracts will be rejected by the SemGroup Parties in the
      Bankruptcy Cases: (i) the Terminalling and Storage Agreement, (ii) the
      Throughput Agreement, (iii) the Omnibus Agreement and (iv) any guaranty
      executed by SemGroup in favor of SMEP, SGLP or its affiliates with respect
      to the foregoing contracts (collectively, the “Rejected Contracts”).  The
      parties will negotiate a new throughput agreement and a new shared
      services agreement as described below.

               

              · Except
      as provided in the following paragraphs, (i) the SemGroup Parties, on
      behalf of themselves and their respective bankruptcy estates, hereby
      release the SGLP Parties from all claims in the Bankruptcy Cases in
      connection with any of the Rejected Contracts, including any claims under
      chapter 5 of the Bankruptcy Code for payments made under the Rejected
      Contracts, and (ii) the SGLP Parties hereby release the SemGroup Parties
      and their respective bankruptcy estates from all claims in the Bankruptcy
      Cases in connection with any of the Rejected Contracts, including for
      rejection damages.  Notwithstanding the foregoing, the SemGroup
      Parties will be responsible for all amounts owing to the SGLP Parties
      under the Rejected Contracts (as modified by the terms in Section 13 of
      this Term Sheet), and the SGLP Parties will be responsible for all amounts
      owing to the SemGroup Parties under each Rejected Contract for periods up
      to the date that such contract is rejected.  Such amounts may be
      netted in accordance with the September Order.

               

              · SGLP,
      SMEP, SemMaterials, KC Asphalt and SemGroup hereby agree that SMEP will
      have a claim against SemMaterials, KC Asphalt and guarantor SemGroup in
      the amount of $35 million as a result of the rejection of the Terminalling
      and Storage Agreement.  Such claim shall be allowed as a general
      unsecured claim in the Bankruptcy Cases of SemMaterials, KC Asphalt and
      SemGroup.

               

              · SGLP,
      SGEP, SemCrude, Eaglwing and SemGroup hereby agree that SGLP and its
      affiliates will have a claim against SemCrude, Eaglwing and SemGroup in
      the amount of $20 million as a result of the rejection of the Throughput
      Agreement.  Such claim shall be allowed as a general unsecured
      claim in the Bankruptcy Cases of SemCrude, Eaglwing and
      SemGroup.

               

              · SGLP,
      SMEP and SGEP hereby agree to release all claims against (i) the Existing
      Asphalt Inventory (as defined below) and any proceeds thereof and (ii) the
      crude inventory of SemGroup or its affiliates located in pipelines or
      storage tanks of SGLP or its affiliates and any proceeds
      thereof.

               

              · SGLP
      and SemGroup will use commercially reasonable efforts to identify any
      additional contracts that should be rejected.

               

            
	
              3. Terminal
      Access and Use Agreement

            	
              · If
      SemMaterials and its affiliates sell liquid asphalt assets pursuant to a
      Third-Party PSA (as defined below), then the Terminal Access Agreement
      will be assumed by SemMaterials and KC Asphalt and assigned to the
      purchaser of the Asphalt Transferred Assets.  SGLP hereby agrees
      that no payments, including cure payments, or assurances of future
      performance will be required in connection with such assumption and
      assignment.

               

              · If
      SemMaterials and its affiliates transfer the Asphalt Transferred Assets
      (as defined below) to SGLP or one of its affiliates, then SemMaterials and
      KC Asphalt will reject the Terminal Access Agreement in the Bankruptcy
      Cases.  SGLP, SemGroup and their respective affiliates who are
      party to the Terminal Access Agreement will waive any claims in the
      Bankruptcy Cases in connection with the Terminal Access Agreement,
      including for rejection damages.

               

            
	
              4. New
      Contracts

            	
              · SGLP
      and SemCrude hereby agree to negotiate in good faith a shared services
      agreement (the “Shared Services
      Agreement”) pursuant to which SemCrude will provide operational
      employees to perform certain specific tasks for SGLP, at amounts and for
      such periods as to be agreed by the parties.

               

              · SGLP
      and SemCrude hereby agree to negotiate in good faith an agreement
      regarding the use of the SCADA system (the “SCADA Agreement”) pursuant to which
      SemCrude will provide operational services with respect to the SCADA
      system for a period of five years with two optional renewal periods of
      five years each at SGLP’s option.  The SCADA Agreement will
      provide, among other things, that (i) SGLP will reimburse SemCrude for its
      proportional share of any operational costs (excluding maintenance and
      capital expenditures) and third party usage fees related to the SCADA
      system and (ii) a purchaser (if any) of SemGroup’s or its affiliates’
      crude oil assets shall assume the obligations under the SCADA Agreement to
      provide services to SGLP.

               

              · SGLP
      and SemCrude will agree to negotiate in good faith a new throughput
      agreement (the “New Throughput
      Agreement”) pursuant to which SGLP will provide to SemCrude the
      following services: (i) pipeline gathering and transportation services,
      (ii) truck gathering and transportation services and (iii) terminalling
      and storage services at Cushing.  The New Throughput Agreement
      will provide that SemCrude will be charged at market terms for such
      services and will require no minimum usage.

               

              · SGLP
      and SemCrude will agree to negotiate in good faith an office sublease
      agreement pursuant to which SemCrude will sublease space and related
      equipment, each at market rates, for its employees in the Oklahoma City
      operations building and the Cushing Interchange operations
      building.

               

              · The
      above contracts will be subject to approval by the Bankruptcy
      Court.

               

            
	
              5. Tank
      Bottoms and Line Fill

            	
              · Upon
      either the SGLP Closing Date or the PSA Closing Date, 355,000 Crude
      Barrels owned by SemCrude (the “Transferred
      Barrels”) will be transferred to SGLP free and clear of all liens,
      claims and encumbrances.   Any liens on the Transferred
      Barrels in favor of creditors of SemGroup and its affiliates will be
      replaced by liens on the KS Crude Transferred Assets in favor of such
      creditors.

               

              · Any
      Crude Barrels not transferred to SGLP pursuant to the paragraph above will
      be delivered to SemCrude at its direction pursuant to the New Throughput
      Agreement within 60 days after either the SGLP Closing Date or the PSA
      Closing Date, as applicable.

               

            
	
              6. Netting
      of Pre-Petition Claims

            	
              · SGLP
      and SemGroup hereby agree that all amounts owing to SemGroup and its
      affiliates under the Omnibus Agreement prior to July 22, 2008 shall be
      netted against amounts owed to SGLP and its affiliates under the
      Terminalling and Storage Agreement and the Throughput Agreement prior to
      July 22, 2008.  Any positive balance owing as of the date hereof
      after such netting of pre-bankruptcy account balances shall be waived,
      regardless of whether the balance is owing to SGLP or
      SemGroup.

               

            
	
              7. SemCrude
      Employees

            	
              · SemCrude
      and SGLP hereby agree to negotiate in good faith regarding which
      operational and corporate employees SGLP crude operations will offer
      employment to, which employment will be effective as soon as
      practical.

               

            
	
              8. Dropdown
      Issues

            	
              · Schedule
      2 to this Term Sheet sets forth the agreed-upon list of issues related to
      the Dropdowns.  SemGroup and its affiliates hereby agree to take
      all actions necessary to effect the transfer of the items identified as
      the SemGroup Outstanding Items on Schedule 2 to SGLP and its affiliates,
      free and clear of any liens, claims or encumbrances.  SGLP and
      its affiliates hereby agree to take all actions necessary to effect the
      transfer of items identified as the SGLP Outstanding Items on Schedule 2
      to SemGroup and its affiliates, free and clear of any liens, claims or
      encumbrances.

               

              · The
      SemGroup Parties, on behalf of themselves and their respective bankruptcy
      estates, hereby release the SGLP Parties from all claims (including any
      claims under chapter 5 of the Bankruptcy Code) relating to any transfer of
      assets (collectively, the “SGLP Dropdown
      Assets”), by the SemGroup Parties pursuant to or in connection with
      the Dropdown Agreements, including the SemGroup Outstanding Items, and the
      ownership of the SGLP Dropdown Assets by the SGLP Parties.  The
      SGLP Parties hereby release the SemGroup Parties and their respective
      bankruptcy estates from all claims relating to any transfer of assets
      (collectively, the “SemGroup Dropdown
      Assets”), by the SGLP Parties pursuant to or in connection with the
      Dropdown Agreements, including the SGLP Outstanding Items, and the
      ownership of the SemGroup Dropdown Assets by the SemGroup
      Parties.

               

              · The
      parties hereby agree to negotiate in good faith documentation related to
      the facilities at Cushing, Oklahoma, which may include (i) shared
      services/utilities agreement, (ii) ingress/egress/access agreement, (iii)
      fire protection agreement, (iv) product containment agreement, (v)
      reasonable easements for existing and contemplated pipelines (including
      use of additional line rights), etc.

               

              · SemCrude
      hereby acknowledges that SGLP owns the Cushing Interchange operations
      building and the Oklahoma City operations building.

               

              · SGLP
      and its affiliates will transfer the ownership rights, if any, they have
      in the SCADA system, including the software and hardware associated with
      such system, to SemGroup or its affiliates.

               

            
	
              9. White
      Cliffs Issues

            	
              · Schedule
      3 to this Term Sheet sets forth the agreed-upon list of issues related to
      SemCrude’s White Cliffs pipeline.  SGLP hereby agrees to take
      all actions necessary to effect the transfer of items listed on Schedule 3
      to White Cliffs Pipeline, L.L.C., free of any liens, claims or
      encumbrances.

               

            
	
              10. Bankruptcy
      Court Approval

            	
              · Promptly
      after the execution of this Term Sheet, SemGroup and its affiliates will
      file one or more motions with the Bankruptcy Court seeking approval of
      such matters.

               

            
	
              11. License

            	
              · SGLP
      and its affiliates shall have a non-exclusive, worldwide right and license
      (the “License Agreement”) to use the
      names SemGroup and SemMaterials and the “Triple S Shield” logo for a
      transition period, which shall end no later than December 31,
      2009.  If, by December 31, 2009, SemGroup and its affiliates
      determine that they no longer need SemGroup and/or SemMaterials and/or the
      “Triple S Shield” logo as their principal trade names or logos, they agree
      to negotiate in good faith a trademark assignment agreement to transfer
      such names or logo, as applicable, to SGLP at no
      cost.  SemGroup, SemMaterials and their affiliates shall waive
      any and all claims for infringement or otherwise relating to SGLP’s and
      its affiliates’ use of such names and logo prior to the effective date of
      the License Agreement.

               

            
	
              12. Mutual
      Cooperation

            	
              · SGLP
      and SemGroup hereby agree to use all commercially reasonable efforts to
      take, or cause their respective affiliates to take, all actions to
      consummate the transactions contemplated by this Term Sheet.

               

            
	
              13. Additional
      Provisions

            	
              · SemMaterials
      hereby agrees to transfer to SGLP or one of its affiliates, free of all
      liens, claims and encumbrances, all of SemMaterials’ and its affiliates’
      assets that are connected to, adjacent to, or otherwise contiguous with
      SGLP’s or its affiliates’ liquid asphalt cement facilities, including,
      without limitation, all asphalt cement and residual fuel oil storage
      tanks, related equipment and associated easement and leasehold land rights
      (collectively, the “Asphalt Transferred
      Assets”), at 10:00 a.m. Eastern time, Tuesday, March 31, 2009
      (which may be extended by mutual agreement of SGLP and SemGroup, the
      “SGLP Closing Date”); provided, however, if (i) SemMaterials and its
      affiliates execute a definitive purchase and sale agreement (a “Third-Party PSA”) with a third-party
      purchaser relating to all or substantially all of SemMaterials’ and its
      affiliates’ U.S. asphalt assets or business, in each case as a going
      concern, and all conditions to closing such sale (other than HSR approval)
      have occurred on or before 4:00 p.m. eastern time, Monday, March 30, 2009
      (which may be extended by mutual agreement of SGLP and SemGroup, the
      “PSA Closing Date”) and (ii) as part
      of such third-party sale transaction, SGLP and such third-party purchaser
      have executed definitive agreements for the sale or use of SGLP’s asphalt
      storage and related assets on or before the PSA Closing Date, then the
      Asphalt Transferred Assets shall be transferred to such third-party
      purchaser pursuant to the Third-Party PSA.  For clarification,
      the Asphalt Transferred Assets shall solely consist of fixed assets (i.e.
      PP&E) and shall not include any prepaid expenses, accounts receivable
      or Existing Asphalt Inventory (as defined below).

               

              · For
      the period from March 1, 2009 through the earlier of (i) the PSA Closing
      Date and (ii) March 31, 2009, the following waivers will apply: (a) SGLP
      and its affiliates hereby waive amounts due by SemMaterials and its
      affiliates under the Terminalling and Storage Agreement in connection with
      the storage of asphalt, (b) SemGroup and its affiliates hereby waive the
      administrative fee due by SGLP and its affiliates under the Omnibus
      Agreement and (c) SemGroup and its affiliates hereby waive the charges for
      operational services related solely to SemMaterials due by SGLP and its
      affiliates under the Omnibus Agreement.

               

              The following provisions in
      this Section 13 shall only apply in the event that SemMaterials and its
      affiliates transfer the Asphalt Transferred Assets to SGLP or one of its
      subsidiaries.

              · The
      Asphalt Transferred Assets will not include any of SemMaterials’ or its
      affiliates’ asphalt cement, residual fuel oil or other product or
      inventory that is currently stored in the Asphalt Transferred Assets or in
      SGLP’s or its affiliates’ liquid asphalt cement facilities (the “Existing Asphalt
      Inventory”).  SemMaterials and its affiliates shall use
      commercially reasonable efforts to consolidate the Existing Asphalt
      Inventory such that the commercially reasonable minimum number of tanks at
      each terminal shall be used to store the Existing Asphalt
      Inventory.  All Existing Asphalt Inventory shall be delivered
      out of or otherwise removed from the Asphalt Transferred Assets or SGLP’s
      liquid asphalt cement facilities no later than October 31,
      2009.

               

              · SemMaterials
      and its affiliates will have access to the Asphalt Transferred Assets as
      necessary to facilitate the further processing, sale, delivery and/or
      removal of the Existing Asphalt Inventory; provided, that SemMaterials and its
      affiliates shall be responsible for all costs, including, without
      limitation, all fuel and power costs for tanks containing Existing Asphalt
      Inventory, incurred with such further processing, sale, delivery and/or
      removal; provided, that SemMaterials
      shall not be responsible for any of SGLP’s overhead costs.  Any
      such costs will be prorated for the portion of the month or other time
      period the Asphalt Transferred Assets are used by SemMaterials and its
      affiliates to process, sell, deliver and/or remove the Existing Asphalt
      Inventory.

               

              · All
      environmental, regulatory, and operating permits for the Asphalt
      Transferred Assets will be transferred to SGLP and its affiliates to the
      extent permitted by law.  If a transfer is not permitted by law
      SemMaterials and its affiliates will work in good faith with SGLP to have
      the permits issued to SGLP or its affiliate by the applicable
      agency.

               

              · SemMaterials
      and its affiliates will pay a monthly storage service fee equal to $0.565
      per barrel multiplied by the total shell capacity in barrels for each tank
      where SemMaterials and its affiliates has Existing Asphalt Inventory for
      any portion of such month for the period commencing on the SGLP Closing
      Date and continuing until all of the Existing Asphalt Inventory is
      delivered out of or otherwise removed from the Asphalt Transferred Assets
      or SGLP’s or its affiliates’ liquid asphalt cement
facilities.

               

              · SemMaterials
      and its affiliates will pay a throughput fee of $9.25 per ton for each ton
      of Existing Asphalt Inventory that is delivered out of or otherwise
      removed from the Asphalt Transferred Assets or SGLP’s or its affiliates’
      liquid asphalt cement facilities after the SGLP Closing
      Date.  There will be no throughput fee for transfers of Existing
      Asphalt Inventory between tanks at the same or different
      locations.

               

              · All
      utilities associated with the sites will be transferred to SGLP, and SGLP
      will assume responsibility for utility services provided on and after the
      SGLP Closing Date.  Prior to such transfer, utility services
      will continue to be reimbursed under the Omnibus Agreement.  The
      parties hereby agree to negotiate in good faith regarding deposits and
      letters of credit relating to such utilities to (i) facilitate the
      transfer of such utilities to SGLP without any disruption of service of
      such utilities after the transfer date and (ii) minimize the liquidity
      impact of such transfer to SGLP, including by agreeing to a transition
      period of up to six months for deposits or letters of credit (the
      aggregate of which is not expected to exceed $3,000,000).

               

              · SemGroup
      and its affiliates shall be responsible for all obligations related to the
      ownership or operation of the Asphalt Transferred Assets on or prior to
      the SGLP Closing Date.  SGLP and its affiliates will be
      responsible for all obligations related to the ownership or operation of
      the Asphalt Transferred Assets after the SGLP Closing Date.

               

              · SemMaterials
      will retain all intellectual property except as otherwise provided in the
      License Agreement and the last paragraph of this section.

               

              · SGLP
      and its affiliates will have the option to have any of SemMaterials’ and
      its affiliates’ existing or potential subleases, storage agreements or
      leases with third parties relating to the Asphalt Transferred Assets
      transferred to SGLP and its affiliates; provided that SemMaterials will
      retain the agreements as long as needed and SGLP will be responsible for
      any cure payments required in connection with the assignment and
      assumption of such contracts.

               

              · If
      SGLP or any of its affiliates sells any of the Asphalt Transferred Assets
      within 9 months following the SGLP Closing Date, then SGLP will pay
      SemMaterials 20% of the net proceeds received from each such
      sale.

               

              · SGLP
      will have the option of hiring, without any fees, any of the employees
      that are associated with the operation or management of the Asphalt
      Transferred Assets or SGLP’s and its affiliates’ liquid asphalt cement
      facilities.

               

              · SemMaterials
      and its affiliates will initially retain the asphalt front-office systems
      and related software licenses (i.e., SolArc Right Angle IV, PACE and BOL
      Manager systems) (the “SemMaterials
      Software”).  To the extent the SemMaterials Software is
      transferable and no longer needed by SemMaterials and its affiliates, SGLP
      will have the option of purchasing the SemMaterials Software at no cost;
      provided that SGLP will reimburse
      SemMaterials and its affiliates for any prepaid maintenance, licensing or
      other costs related to the SemMaterials Software.

               

            
	
              14. Confidentiality

            	
              · SemGroup
      and SGLP acknowledge that they have executed a confidentiality agreement
      dated as of October 14, 2008 and a confidentiality agreement dated as of
      December 9, 2008 (the “Confidentiality
      Agreements”) and that this Term Sheet constitutes Confidential
      Information (as defined in the Confidentiality
      Agreements).  SemGroup and SGLP hereby consent to the filing of
      the Term Sheet with the Bankruptcy Court (as defined below) and agree that
      subsequent discussions regarding the terms of the Settlement shall
      continue to constitute Confidential Information and to be governed by the
      terms of the Confidentiality Agreements.  SemGroup and SGLP
      hereby consent to disclosure of the terms of the Settlement to their
      respective lenders and to SemGroup’s disclosure to its creditors and their
      advisors.

               

            
	
              15. Governing
      Law

            	
              · This
      Term Sheet and all actions that may arise with respect thereto (whether in
      tort, contract or otherwise) shall be governed and construed in accordance
      with the laws of the State of New York without regard to conflict of laws
      principles that would result in the application of the laws of another
      state.

               

            
	
              16. Jurisdiction

            	
              · During
      the pendency of the Bankruptcy Cases, the Bankruptcy Court shall retain
      exclusive jurisdiction to enforce the terms of this Term Sheet and to
      decide any claims or disputes which may arise or result from, or be
      connected with, this Term Sheet or any breach or default hereunder, and
      any and all actions, suits or proceedings arising out of or related to the
      foregoing shall be filed and maintained only in the Bankruptcy
      Court.

               

            
	
              17. Conditions
      to Effectiveness

            	
              · As
      a condition to each party’s agreements, obligations and acknowledgements
      under this Term Sheet, SGLP and its subsidiaries that are guarantors under
      SGLP’s credit agreement (i) shall have received consent from their lenders
      relating to the transactions contemplated by this Term Sheet, including,
      without limitation, the transfer of the KS Crude Transferred Assets to
      SemCrude and (ii) shall have received a waiver of all defaults or events
      of default under such credit agreement.

               

            
	
              18. Counterparts

            	
              · This
      Term Sheet may be executed in any number of counterparts, each of which
      shall be deemed an original, but such counterparts shall together
      constitute one and the same Term Sheet.

               

            
	
              19. Releases

            	
              · The
      SemGroup Parties and the SGLP Parties hereby acknowledge and agree that
      the compromise and settlement described in this Term Sheet, including the
      releases (the “Specified Released
      Claims”), relate solely to the items and claims expressly described
      herein.  This Settlement is not intended to, nor shall have the
      effect of, releasing any rights or obligations of any parties with respect
      to any claims other than the Specified Released Claims, including any
      claims other than Specified Released Claims that are predicated on facts
      described in the examiner’s report in the Bankruptcy Cases. This
      Settlement is not intended to, nor shall have the effect of, releasing any
      claims against individuals.

               

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    Agreed to
as of the date first written above:

    


    


    SEMGROUP,
L.P.

    


    By:
SemGroup G.P., L.L.C., its general partner

    


    


    By: /s/ Terrence
Ronan                                                      

    Name:
Terrence Ronan

    Title:   President
& CEO

    


    


    SEMMANAGEMENT,
L.L.C.

    


    


    By: /s/ Terrence
Ronan                                                      

    Name:
Terrence Ronan

    Title:   President
& CEO

    


    


    SEMOPERATING
G.P., L.L.C.

    


    


    By: /s/ Terrence
Ronan                                                      

    Name:
Terrence Ronan

    Title:   President
& CEO

    


    


    SEMMATERIALS,
L.P.

    


    By:
SemOperating G.P., L.L.C., its general partner

    


    


    By: /s/ Terrence
Ronan                                                      

    Name:
Terrence Ronan

    Title:   President
& CEO

    


    


    K.C.
ASPHALT, L.L.C.

    


    


    By: /s/ Terrence
Ronan                                                      

    Name:
Terrence Ronan

    Title:   President
& CEO

    


    



    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    


    SEMCRUDE,
L.P.

    


    By:
SemOperating G.P., L.L.C., its general partner

    


    


    By: /s/ Terrence
Ronan                                                      

    Name:
Terrence Ronan

    Title:   President
& CEO

    


    


    EAGLWING,
L.P.

    


    By:
SemOperating G.P., L.L.C., its general partner

    


    


    By: /s/ Terrence
Ronan                                                      

    Name:
Terrence Ronan

    Title:   President
& CEO


    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    


    SEMGROUP
HOLDINGS, L.P.

    


    By:
SemGroup Holdings G.P., L.L.C., its general partner

    


    By: /s/ Terrence
Ronan                                                      

    Name:
Terrence Ronan

    Title:   President
& CEO

    



    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    


    SEMGROUP
ENERGY PARTNERS, L.P.

    


    By:
SemGroup Energy Partners G.P., L.L.C., its general partner

    


    


    By:/s/ Michael J.
Brochetti                                                      

    Name:
Michael J. Brochetti

    Title:   Chief
Financial Officer

    


    


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

    


    


    By:/s/ Michael J.
Brochetti                                                      

    Name:
Michael J. Brochetti

    Title:   Chief
Financial Officer

    


    


    SEMGROUP
ENERGY PARTNERS OPERATING, L.L.C.

    


    


    By:/s/ Michael J.
Brochetti                                                      

    Name:
Michael J. Brochetti

    Title:   Chief
Financial Officer

    


    


    SEMGROUP
ENERGY PARTNERS, L.L.C.

    


    


    By:/s/ Michael J.
Brochetti                                                      

    Name:
Michael J. Brochetti

    Title:   Chief
Financial Officer

    


    


    SEMGROUP
CRUDE STORAGE, L.L.C.

    


    


    By:/s/ Michael J.
Brochetti                                                      

    Name:
Michael J. Brochetti

    Title:   Chief
Financial Officer

    


    



    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    


    SEMPIPE
G.P., L.L.C.

    


    


    By:/s/ Michael J.
Brochetti                                                      

    Name:
Michael J. Brochetti

    Title:   Chief
Financial Officer

    


    


    SEMMATERIALS
ENERGY PARTNERS, L.L.C.

    


    


    By:/s/ Michael J.
Brochetti                                                      

    Name:
Michael J. Brochetti

    Title:   Chief
Financial Officer

    


    


    


    



    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    


    


    


    SCHEDULE
1

    


    KANSAS
PIPELINE

    


    


    



    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    


    SCHEDULE
2

    


    DROPDOWN
ITEMS

    


    SemGroup
Outstanding Items

     

    Dropdown
#1

     

    
      	
              •

            	
              The
      following items in Oklahoma remain
outstanding:

            


    

    
      	
               
      

            	
              o

            	
              Willow
      Glen, Alfalfa County, Oklahoma. [This item may be removed if it is
      included in the KS  Crude Transferred
  Assets.]

            


    

    
      	
               
      

            	
              o

            	
              El
      Reno Truck Station, Canadian County,
Oklahoma.

            


    

    
      	
               
      

            	
              o

            	
              Goldsby
      Truck Station, Cleveland County,
Oklahoma.

            


    

    
      	
               
      

            	
              o

            	
              West
      Ponca Station, Kay County, Oklahoma.   [This item may
      be removed if it is included in the KS  Crude Transferred
      Assets.]

            


    

    
      	
               
      

            	
              o

            	
              See
      Station, Noble County, Oklahoma.   [This item may be
      removed if it is included in the KS  Crude Transferred
      Assets.]

            


    

    
      	
               
      

            	
              o

            	
              Oklahoma
      City Truck Station, Oklahoma County,
Oklahoma.

            


    

    
      	
               
      

            	
              o

            	
              Clack
      LACT, Texas County, Oklahoma.

            


    

    
      	
               
      

            	
              o

            	
              Hooker
      LACT, Texas County, Oklahoma.

            


    

    


    
      	
              •

            	
              The
      following items in Texas remain
outstanding:

            


    

    
      	
               
      

            	
              o

            	
              Pampa
      Yard, Gray County, Texas.

            


    

    
      	
               
      

            	
              o

            	
              Spearman
      Yard, Hansford County, Texas.

            


    

    
      	
               
      

            	
              o

            	
              Canadian
      Yard, Hemphill County, Texas.

            


    

    
      	
               
      

            	
              o

            	
              Hawkins
      Station, Wood County, Texas.

            


    

    
      	
               
      

            	
              o

            	
              Taylor
      Station, Wood County, Texas.

            


    

    
      	
               
      

            	
              o

            	
              Hawley
      Truck Station, Jones County, Texas.

            


    

    
      	
               
      

            	
              o

            	
              Merkel
      Station, Taylor County, Texas.

            


    

    
      	
               
      

            	
              o

            	
              Hawkins
      Station TM Lease Property, Wood County,
Texas.

            


    

    
      	
               
      

            	
              o

            	
              Pioneer
      tank batteries, Potter County,
Texas.

            


    

    
      	
               
      

            	
              o

            	
              Midland
      Truck Station, Midland County,
Texas.

            


    

    
      	
               
      

            	
              o

            	
              Forbes
      Truck Parking, Winkler County,
Texas.

            


    

    
      	
               
      

            	
              o

            	
              Taylor,
      Wood County, Texas.

            


    

    
      	
               
      

            	
              o

            	
              Barnham
      Truck Parking, Dawson County,
Texas.

            


    

    
      	
               
      

            	
              o

            	
              Midland
      Yard, Midland County, Texas.

            


    

    
      	
               
      

            	
              o

            	
              Haley
      Station, Winkler County, Texas.

            


    

    


    
      	
              •

            	
              The
      following items in Kansas remain outstanding: [Some or all of these items
      may be removed if they are included in the KS  Crude Transferred
      Assets.]

            


    

    
      	
               
      

            	
              o

            	
              Heinson
      SWD, Meade County, Kansas.

            


    

    
      	
               
      

            	
              o

            	
              Craver
      SWD, Morton County, Kansas.

            


    

    
      	
               
      

            	
              o

            	
              Susank
      Station, Butler County, Kansas.

            


    

    
      	
               
      

            	
              o

            	
              Stafford
      Office, Stafford County, Kansas.

            


    

    


    
      	
              •

            	
              The
      following item in New Mexico remains
  outstanding:

            


    

    
      	
               
      

            	
              o

            	
              Baby
      #1, Eddy County, New
Mexico.

            


    


    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    

     

    Dropdown
#2

     

    
      	
              •

            	
              The
      following items remain outstanding:

            


    

    
      	
               
      

            	
              o

            	
              Railroad
      consents and consents of lessors.

            


    

    
      	
               
      

            	
              o

            	
              El
      Dorado, Kansas.

            


    

    
      	
               
      

            	
              o

            	
              SemMaterials
      does not have a fully executed copy of Spokane WA
  lease.

            


    

    
      	
               
      

            	
              o

            	
              13
      of the Bank of America releases, retained easements or leasehold rights,
      deeds, assignments of leases, and related transfer documents and new
      Wachovia deeds of trust were filed of record post-petition covering the
      following properties:

            


    

    
      	
               ̈  

            	
              El
      Dorado, Butler County, KS

            


    

    
      	
               ̈  

            	
              Grand
      Island, Hall County, NE

            


    

    
      	
               ̈  

            	
              Ardmore,
      Carter County, OK

            


    

    
      	
               ̈  

            	
              Catoosa
      EM, Rogers County, OK

            


    

    
      	
               ̈  

            	
              Catoosa
      Port 33, Rogers County, OK

            


    

    
      	
               ̈  

            	
              Lawton,
      Comanche County, OK

            


    

    
      	
               ̈  

            	
              Muskogee,
      Muskogee County, OK

            


    

    
      	
               ̈  

            	
              Port
      of Catoosa (Frontier), Rogers County,
OK

            


    

    
      	
               ̈  

            	
              Memphis
      EM, Shelby County, TN

            


    

    
      	
               ̈  

            	
              Lubbock,
      Lubbock County, TX

            


    

    
      	
               ̈  

            	
              Saginaw,
      Tarrant County, TX

            


    

    
      	
               ̈  

            	
              Hillyard,
      Spokane County, WA

            


    

    
      	
               ̈  

            	
              Pasco,
      Franklin County, WA

            


    

    
      	
               
      

            	
              o

            	
              14
      of the Bank of America releases, retained easements or leasehold rights,
      deeds, assignments of leases, and related transfer documents and new
      Wachovia deeds of trust were filed of record more than 30 days after the
      closing date and Title Policies were issued covering the following
      properties:

            


    

    
      	
               ̈  

            	
              Denver,
      Adams County, CO (lease site)

            


    

    
      	
               ̈  

            	
              Dodge
      City, Ford County, KS

            


    

    
      	
               ̈  

            	
              Halstead,
      Harvey County, KS

            


    

    
      	
               ̈  

            	
              Salina,
      Saline County, KS

            


    

    
      	
               ̈  

            	
              Bay
      City, Bay County, MI

            


    

    
      	
               ̈  

            	
              St.
      Louis, MO

            


    

    
      	
               ̈  

            	
              Parsons,
      Decatur County, TN

            


    

    
      	
               ̈  

            	
              North
      Salt Lake City, Davis County, UT

            


    

    
      	
               ̈  

            	
              Denver,
      Adams County, CO (fee site)

            


    

    
      	
               ̈  

            	
              Pekin,
      Peoria County, IL

            


    

    
      	
               ̈  

            	
              Sedalia,
      Pettis County, MO

            


    

    
      	
               ̈  

            	
              Glouchester
      City, Camden County, NJ

            


    

    
      	
               ̈  

            	
              Memphis,
      Shelby County, TN

            


    

    
      	
               ̈  

            	
              Newport
      News, VA

            


    


    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    

     

    Dropdown
#3

     

    3 of the
recorded Assignments were re-recorded after the bankruptcy filing
date.

     

    Dropdown
#4

     

    Partial
Release, Special Warranty Deed and Deed of Trust were filed after the bankruptcy
filing date.

     


    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    


    


    SGLP
Outstanding Items

     

    


    Dropdown
#1

     

    
      	
              •

            	
              The
      following items in Oklahoma remain
outstanding:

            


    

    
      	
               
      

            	
              o

            	
              Statewide:
      SGLP has not granted easements for the SemCrude pipelines running through
      SGLP’s land, including regarding ingress and egress at
      Cushing.  [Some of this item may be removed if it is included in
      the KS Crude Transferred Assets.]

            


    

    
      	
               
      

            	
              o

            	
              Fiske
      Pump Station, Kay County, Oklahoma was erroneously transferred to SGLP so
      SGLP needs to transfer it back to
SemCrude.

            


    

    


    
      	
              •

            	
              The
      following items in Kansas remain
outstanding:

            


    

    
      	
               
      

            	
              o

            	
              Statewide:
      SGLP has not granted easements for the SemCrude pipelines running through
      SGLP’s land.  [This item may be removed if it is included in the
      KS Crude Transferred Assets.]

            


    

    
      	
               
      

            	
              o

            	
              Statewide.  SGLP
      has not transferred the ground bed easements that were erroneously granted
      to it by third party landowners to SemCrude.  [This item may be
      removed if it is included in the KS Crude Transferred
    Assets.]

            


    

    


    Dropdown
#2

     

    8 of the
fee properties transferred to SGLP had appurtenant leases that were to be
assigned to SGLP with SemCrude receiving a Retained Leasehold Interest Agreement
re: each lease.  We need to determine whether or not (i) each Retained
Leasehold Interest Agreement was executed, (ii) each Assignment and Assumption
of Lease was executed and (iii) consents of Lessor’s were obtained, where
required.

    


    


    Dropdown
#3

     

    None.

    


    Dropdown
#4

     

    None.

     

    


    



    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    


    SCHEDULE
3

     

    White
Cliffs Outstanding Issues

     

    
      	
              ·  

            	
              Cunningham,
      KS.  SGLP has not granted lease rights for White Cliffs
      pipeline, pump station and equipment on SGLP’s land.  [This item
      may be removed if it is included in the KS  Crude Transferred
      Assets.]

            


    

    


    
      	
              ·  

            	
              Cushing,
      OK.  SGLP has not granted easement rights for White Cliffs
      pipeline and connection on SGLP’s
land.