CRUDE OIL STORAGE SERVICES AGREEMENT by Blueknight Energy Partners, L.P.

     1.

Storage Services:  Operator hereby agrees to provide to the Customer, crude oil storage services ("Storage Services") in the Operator's Cushing, Oklahoma North terminal located at 908 East Deep Rock Road in Cushing, Oklahoma (the "Facility").  During the Term (hereinafter defined) of this Agreement, Operator agrees to make two million (2,000,000) barrels of dedicated storage capacity (the "Operating Capacity") available and provide Storage Services for the storage of Customer's Crude Oil (hereinafter defined) under the terms and conditions of this Agreement.  The two million (2,000,000) barrels of dedicated storage capacity in no case will consist of any one tank having a shell capacity of less than two hundred and fifty thousand (250,000) barrels during the term. The crude oil/condensates of Customer that are the subject of the Storage Services hereunder shall have a true vapor pressure not to exceed 10.9 psia ("Crude Oil").

     2.

Term:  This Agreement shall have an initial term of twenty five (25) months commencing on the Effective Date and shall thereafter automatically renew for successive three (3) month terms until terminated by either party by delivering notice of such termination to the other party at least sixty (60) days prior to expiration of the then-current term (collectively, the "Term").

     3.

Payments:  For and during the Term, Customer shall pay Operator, for the Storage Services as follows:

 

A.

For each month of the Term, a monthly storage fee of *** per barrel of Operating Capacity (the "Monthly Storage Fee"), for a total of *** per month, regardless of the actual volume of Crude Oil placed in the Facility;

 

B.

For each month of the Term in which Operator accepts Crude Oil volumes in excess of the Operating Capacity, if any, a monthly storage fee equal to *** per barrel of actual volume placed in the Facility in excess of the Operating Capacity during said month; and

 

C.

A pump over fee equal to *** per barrel of actual volume of Crude Oil moved by Operator from the Facility to a third party connecting carrier.

  

Operator shall invoice Customer monthly for the foregoing fees, invoicing the Monthly Storage Fee in advance and the other fees in arrears.  Such fees shall be due and payable by Customer to Operator within ten (10) days after delivery of the invoice.  The Monthly Storage Fee shall be nonrefundable regardless of whether Customer ever actually uses the Storage Services.  If amounts payable by Customer to Operator under this Agreement are not paid by the due date specified herein, Customer shall pay interest on such past due amount(s) from the due date thereof until such amount(s) is paid in full at the rate equal to the lesser of the prime rate as published in the Wall Street Journal plus two percent (2%) or the maximum interest rate allowed by Applicable Laws.  For purposes of this Agreement, "Applicable Laws" means and includes any and all federal, state and local laws (including environmental laws), ordinances, orders, rules, and regulations of all governmental bodies (state, federal and municipal) applicable to or having jurisdiction over the use, occupancy, operation and maintenance of the Facility, as such laws may be amended, modified, enacted or promulgated from time to time.

     4.

Measurement:  Operator  shall keep records of receipts into and withdrawals from the Facility and the quantities of Customer's Crude Oil stored in the Facility.  The data reflected on such records shall be furnished to Customer on a monthly basis in a mutually agreeable report format. All receipts of Customer's Crude Oil into and out of the Facility shall be measured by custody transfer meters on the inlet and outlet flanges on Operator's pipelines serving the Facility. Customer may witness the custody transfer meter proving by providing written notification to Operator's Facility supervisor of its desire to have an independent inspector witness such proving.

     5.

Maintenance:  Operator shall maintain the portions of the Facility associated with the Storage Services and related services provided to Customer hereunder in proper operating condition in accordance with Applicable Laws and industry standards, including API 653 standards for tank inspection and maintenance.  Operator shall coordinate scheduled inspections or maintenance with Customer to minimize any negative impact on Customer's operations.  Notice shall be given by Operator to Customer not less than ninety (90) days before beginning any scheduled procedure making the Storage Services unavailable to Customer.  Operator shall make commercially reasonable efforts to minimize the time Storage Services are unavailable to Customer and endeavor to continue the provision of such Storage Services as quickly as reasonably possible.  If the Operating Capacity is unavailable for use by Customer hereunder for more than ten (10) consecutive days due to scheduled maintenance, then for each ten (10) consecutive day period of downtime, Customer's subsequent Monthly Storage Fee shall be reduced by an amount equal to the portion of the Monthly Storage Fee allocable to the unavailable Storage Services, which shall be based on the ratio of the amount of Storage Services unavailable during such time period to the Operating Capacity times the Monthly Storage Fee.

     6.

Title to Crude Oil; Taxes.    Title to all of Customer's Crude Oil placed in the Facility for storage hereunder shall remain in Customer.  Customer shall pay any taxes, including ad valorem taxes, assessments or charges that may be assessed against the Crude Oil stored by Customer under this Agreement.  Customer agrees to reimburse Operator for any such taxes, assessments or charges paid by Operator for the benefit of Customer or, as required by law, on behalf of Customer within thirty (30) days of Operator's written invoice therefor; provided that such invoice shall include supporting documentation showing the basis of Customer's responsibility for such taxes, assessments or charges.  Operator shall repo rt and pay all franchise and property taxes assessed against the Facility including all real and personal property associated therewith.

     7.

Shipment of Crude Oil To and From the Facility; Scheduling.  Operator shall operate the Facility in a manner that allows shipments of Crude Oil into and out of the Facility twenty-four (24) hours per day, seven (7) days per week subject to the requirements of the next paragraph.  Customer and its employees shall be subject to and abide by the rules of the Facility, and shall instruct its contractors to abide by such rules, which shall not substantially deviate from standard industry practice.  Customer will be solely responsible for any pump over fees charged by third party carriers for movements of Customer's Crude Oil to and from the Facility.

 

Customer shall provide Operator with a shipment schedule on or before the twenty-fifth (25th) day of each calendar month advising Operator as to the nominations and quantity of Crude Oil Customer expects to be delivered to and from the Facility during the following calendar month and including the approximate dates of each shipment.  Operator shall, by written notice to Customer given no later than the thirtieth (30th) day of the month in which such shipment schedule is received, confirm the shipment schedule as proposed or notify Customer of any necessary revisions to such shipment schedule.  If revisions are necessary, Customer shall then furnish Operator with a final shipment schedule.  Customer and Operator shall c oordinate deliveries and receipts of Crude Oil and each shall provide the other with such notices and information as may be necessary to assure the delivery of Crude Oil to and from the Facility in accordance with each shipment schedule.  Shipment schedules may be modified in writing by mutual agreement of the Parties from time to time, as reasonably