Blueknight Energy Partners, L.P. (Form: 8-K, Received: 07/13/2018 06:04:38)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (date of earliest event reported): July 12, 2018

BLUEKNIGHT ENERGY PARTNERS, L.P.

(Exact name of Registrant as specified in its charter)



DELAWARE	001-33503	20-8536826
(State of incorporation or organization)	(Commission file number)	(I.R.S. employer identification number)



201 NW 10th, Suite 200 Oklahoma City, Oklahoma	73103
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (405) 278-6400

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Introductory Note

On July 12, 2018, Blueknight Energy Partners, L.P. (the “Partnership”) consummated the previously disclosed transactions contemplated by that certain Asset Purchase Agreement, dated as of June 29, 2018 (the “Purchase Agreement”), among BKEP Materials, L.L.C. (“BKEP Materials”), BKEP Terminalling, L.L.C. (“BKEP Terminalling”), BKEP Asphalt, L.L.C. (“BKEP Asphalt,” together with BKEP Materials and BKEP Terminalling, the “BKEP Sellers”) and Ergon Asphalt & Emulsions, Inc. (“Ergon A&E”).


Item 1.01.	Entry into a Material Definitive Agreement.

Storage, Throughput and Handling Agreement

In connection with the consummation of the Purchase Agreement, on July 12, 2018, BKEP Materials, BKEP Terminalling, BKEP Asphalt, and Ergon A&E entered into the First Amendment to Storage, Throughput and Handling Agreement (the “Amendment”), which amended that certain Storage, Throughput and Handling Agreement, dated October 5, 2016 (the “Storage, Throughput and Handling Agreement”), to reflect the removal of the asphalt terminal located in Memphis, Tennessee from inclusion thereunder.

Ominbus Agreement

In connection with the consummation of the Purchase Agreement, on July 12, 2018, Ergon A&E, the Partnership, Blueknight Energy Partners G.P., L.L.C., the general partner (the “General Partner”) of the Partnership, BKEP Terminalling, BKEP Asphalt and BKEP Materials entered into the Amended and Restated Omnibus Agreement (the “Amended Omnibus Agreement”), which amended and restated that certain Omnibus Agreement, dated as of October 5, 2016 (the “Omnibus Agreement”), pursuant to which, among other things, Ergon A&E granted the BKEP Sellers a right of first refusal with respect to the Terminal Assets (defined below) and the BKEP Sellers granted Ergon A&E a right of first refusal with respect to certain terminal facilities and real property located in Wolcott, KS, Ennis, TX, Chandler, AZ, Mt. Pleasant, TX, Pleasanton, TX, Birmingport, AL, Nashville, TN, Yellow Creek, MS, Las Vegas, NV and Fontana, CA.

Ergon A&E is an affiliate of Ergon, Inc., which indirectly owns (i) 100% of the General Partner and (ii) 27.5% of the limited partnership interests in the Partnership. Accordingly, the Conflicts Committee of the Board of Directors of the General Partner (the “Conflicts Committee”) reviewed and evaluated the Purchase Agreement, the Amendment and the Amended Omnibus Agreement for the purpose of determining whether to grant special approval of the such agreements and the transactions contemplated thereby. The Conflicts Committee retained independent legal and financial advisors to assist in evaluating the terms of such transactions. The Conflicts Committee unanimously granted approval of the Purchase Agreement, the Amendment, the Omnibus Agreement and the transactions contemplated thereby.

The foregoing descriptions of the Amendment and the Amended Omnibus Agreement are not complete and are qualified in their entirety by reference to the full text of the agreements, which are filed as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K (this “Current Report”), as well as the Storage, Throughput and Handling Agreement, a copy of which is filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed on October 5, 2016.


Item 2.01.	Completion of Acquisition or Disposition of Assets.

Under the terms of the Purchase Agreement, Ergon A&E paid $88.5 million (the $90.0 million purchase price per the Purchase Agreement reduced by customary closing adjustments, closing costs and the refund of certain pre-paid fees) in cash to the BKEP Sellers for three asphalt terminals comprised of storage tanks, real property, contracts, permits, and other assets and interests (the “Terminal Assets”) located in Lubbock and Saginaw, Texas and Memphis, Tennessee. The purchase price was based on the fair market value of the assets being sold. Unaudited pro forma condensed consolidated information of the Partnership to give effect to the sale contemplated by the Purchase Agreement is attached as Exhibit 99.1 to this Current Report and is incorporated by reference herein.

The information set forth under Item 1.01 and the Introductory Note of this Current Report regarding the Purchase Agreement and the transactions contemplated thereby is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits



EXHIBIT NUMBER		DESCRIPTION

2.1	—	Asset Purchase Agreement, dated July 29, 2018, by and between BKEP Materials, L.L.C., BKEP Terminalling, L.L.C., BKEP Asphalt, L.L.C., and Ergon Asphalt & Emulsions, Inc. (incorporated by reference to the Partnership’s Current Report on Form 8-K, filed on June 28, 2018).
10.1*	—	First Amendment to the Storage, Throughput and Handling Agreement, dated July 12, 2018, by and between BKEP Materials, L.L.C., BKEP Terminalling, L.L.C., BKEP Asphalt, L.L.C., and Ergon Asphalt & Emulsions, Inc.
10.2	—	Amended and Restated Omnibus Agreement, dated July 12, 2018, by and between Ergon Asphalt & Emulsions, Inc., Blueknight Energy Partners G.P., L.L.C., Blueknight Energy Partners, L.P., Blueknight Terminalling, L.L.C., BKEP Materials, L.L.C. and BKEP Asphalt, L.L.C.
99.1	—	Unaudited Pro Forma Condensed Consolidated Financial Statements.

* Application has been made to the Securities and Exchange Commission for confidential treatment of certain provisions of this exhibit. Omitted material for which confidential treatment has been requested has been separately filed with the Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



		BLUEKNIGHT ENERGY PARTNERS, L.P.

		By:	Blueknight Energy Partners G.P., L.L.C
			its General Partner

Date:	July 12, 2018	By:	/s/ Alex G. Stallings
			Alex G. Stallings
			Chief Financial Officer and Secretary

Exhibit 10.1

*** Where this marking appears throughout this Exhibit 10.1, information has been omitted pursuant to a request for confidential treatment and such information has been filed with the Securities and Exchange Commission separately.

FIRST AMENDMENT to the

STORAGE, THROUGHPUT AND HANDLING AGREEMENT

This First Amendment to Storage, Throughput and Handling Agreement (“ Amendment ”) is made and effective as of July 12, 2018 and is by and between BKEP Materials, L.L.C., a Texas limited liability company (“ BKEP Materials ”), BKEP Terminalling, L.L.C., a Texas limited liability company (“ BKEP Terminalling ”), BKEP Asphalt, L.L.C., a Texas limited liability company (“ BKEP Asphalt ” and together with BKEP Materials and BKEP Terminalling, “ Owner ”) , and Ergon Asphalt & Emulsions, Inc., a Mississippi corporation (“ Customer ”). Customer and Owner are sometimes referred to herein collectively as “ Parties .” Any term not defined in this Amendment shall have the meaning ascribed to it in the Agreement.

RECITALS

WHEREAS, Customer and Owner entered into that certain Storage, Throughput and Handling Agreement dated as of October 5, 2016 (“ Agreement ”) wherein Owner agreed to provide certain services to Customer and Customer received such services on the terms and conditions set forth in the Agreement;

WHEREAS, on the effective date of this Amendment, Owner will sell, and Customer will acquire, the terminal located in Memphis, Tennessee (the “ Terminal ”) that is included within the purview of the Agreement

WHEREAS, the Parties now desire to amend the Agreement to remove the Terminal from the purview of the Agreement, as provided in this Amendment.

NOW, THEREFORE, in consideration of the mutual promises contained in this Amendment and in the Agreement, the Parties agree as follows:


1.	Section 11.2 of the Agreement is deleted in its entirety and replaced with the following:

“11.2 Notwithstanding anything to the contrary in this Section 11 , if the cumulative amount of Extraordinary Maintenance and Repair Costs through the end of any calendar year (“ EMR Costs ”) exceeds the product of $*** and (a) the number of full years from the Commencement Date through the end of such calendar year plus (b) for any partial calendar year during the Term, a fraction with a numerator equal to the number of days of the Term during such partial calendar year and a denominator of 360 (“ EMR Estimate ”), Customer shall pay to Owner, as an additional storage and terminalling services fee ( “ Excess EMR Fee ”), an amount equal to the greater of (i) the amount by which the EMR Costs exceed the EMR Estimate, minus all prior Excess EMR Fees previously paid under this Section 11.2, or (ii) zero. If the EMR Costs are less than the EMR Estimate, Owner shall refund to Customer the lesser of (i) the amount by which the EMR Estimate exceeds EMR Costs or (ii) the amount of prior Excess EMR Fees previously paid by Customer under this Section 11.2 (but, for the avoidance of doubt, in no case shall the cumulative amounts

payable by Owner to Customer under this sentence exceed the cumulative amount of Excess EMR Fees paid by Customer to Owner).

“For example, if the Commencement Date is July 1, 2016, and the EMR Costs through the end of calendar year 2018 were $***, and Excess EMR Fees of $*** were previously paid under this Section 11.2 , then the Excess EMR Fee for 2018 would be $*** (i.e., $***- ($*** x 2.5 years) - $***). If the Commencement Date is July 1, 2016, the EMR Costs through the end of calendar year 2018 were $***, and Excess EMR Fees of $*** were previously paid under this Section 11.2 , then, for 2018, Owner would refund $*** of the Excess EMR Fees previously paid by Customer (i.e., lesser of (x) ($*** x 2.5 years) - $*** or (y) $***).”


2.	Section 3(a) of Attachment A shall be amended to remove the column titled “Memphis, TN Terminal” and to revise the Total column as follows:



	Nashville, TN	Birmingport, AL	Yellow Creek, MS	Pleasanton, TX	Mount Pleasant, TX	Ennis, TX	Chandler, AZ	Wolcott, KS	Total
Storage Fee	$***	$***	$***	$***	$***	$***	$***	$***	$***
Minimum Capacity Commitment	***	***	***	***	***	***	***	***	***
Per Barrel Storage Fee	$***	$***	$***	$***	$***	$***	$***	$***	$***


3.	Section 7 of Attachment A shall be amended to remove any reference to Memphis, TN from the definition of “Facilities.”


4.	Attachment B shall be amended to remove the Memphis, TN facility and all products listed thereunder.


5.	Attachment D shall be amended to remove the Memphis, TN facility and all tanks listed thereunder.


6.	All other terms and conditions of the Agreement not modified, changed, or amended by this Amendment are hereby ratified and shall remain in full force and effect as set forth in the Agreement.

[Signatures on next page.]

IN WITNESS WHEREOF, the Parties have executed this Amendment as evidenced by the signatures of their respective duly authorized officers below.



BKEP TERMINALLING, L.L.C.					BKEP TERMINALLING, L.L.C.


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

BKEP ASPHALT, L.L.C.					ERGON ASPHALT & EMULSIONS,
					INC.


By:	/s/ Alex G. Stallings				By:	/s/ J. Baxter Burns
Name:			Alex G. Stallings	Alex G. Stallings	Name:			J. Baxter Burns
Title:		Chief Financial Officer and Secretary			Title:		President

Exhibit 10.2

AMENDED AND RESTATED OMNIBUS AGREEMENT

This Amended and Restated Omnibus Agreement (“ Agreement ”) is entered into on, and effective as of, July 12, 2018, among Ergon Asphalt & Emulsions, Inc., a Mississippi corporation (“ Ergon ”), Blueknight Energy Partners G.P., L.L.C., a Delaware limited partnership (the “ General Partner ”), Blueknight Energy Partners, L.P., a Delaware limited partnership (the “ Partnership ”), BKEP Terminalling, L.L.C., a Texas limited liability company (“ Holdings ”), BKEP Asphalt, L.L.C., a Texas limited liability company (“ BKEP Asphalt” ), and BKEP Materials, L.L.C., a Texas limited liability company ( “BKEP Materials ”). The General Partner, the Partnership, Holdings, BKEP Asphalt, and BKEP Materials may be referred to collectively as “ BKEP .”

RECITALS

The Parties desire by their execution of this restated Agreement to amend and supersede the original Omnibus Agreement dated October 5, 2016 (“ Original Agreement ”), and to evidence their understanding, as more fully set forth in Article 2 , with respect to Ergon’s and BKEP’s respective rights of first refusal with respect to the ROFR Assets (as defined herein).

In consideration of the premises and the covenants, conditions, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE 1

Definitions

1.1 Definitions . As used in this Agreement (including the Recitals, which are incorporated herein for all purposes) the following terms shall have the meanings set forth below:

“ Affiliate ” is defined in the Partnership Agreement.

“ Agreement ” is defined in the introductory paragraph to this Agreement.

“ BKEP Asphalt ” is defined in the introductory paragraph to this Agreement.

“ BKEP Materials ” is defined in the introductory paragraph to this Agreement.

“ Business Day ” means each calendar day other than a Saturday, Sunday or a day that is an official holiday in the State of Oklahoma.

“ Closing Date ” is defined in the Contribution Agreement.

“ Contribution Agreement ” means the Contribution Agreement dated as of July 19, 2016, by and among BKEP Terminal Holding, L.L.C., Ergon, Ergon Terminaling, Inc., Ergon Asphalt Holdings, LLC and the Partnership.

“ Ergon ” is defined in the introductory paragraph to this Agreement.

“ General Partner ” is defined in the introductory paragraph to this Agreement.

“ Governmental Authority ” means any instrumentality, subdivision, court, administrative agency, commission, official or other authority of the United States, Native American Indian Tribe, province, prefect, municipality, locality or other government or political subdivision thereof, or any quasi-governmental or private body exercising any administrative, executive, judicial, legislative, police, regulatory, taxing, importing or other governmental or quasi-governmental authority.

“ GP Change of Control ” means any of the following events: (i) Ergon and Affiliates cease to be the direct or indirect beneficial owner of 50% or more of the combined voting power of the equity interests in the general partner of the Partnership; or (ii) the sale or other disposition by the General Partner of all or substantially all of the assets of the General Partner in one or more transactions to any person other than Ergon and its Affiliates.

“ Group Member ” is defined in the Partnership Agreement.

“ Holdings ” is defined in the introductory paragraph to this Agreement.

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“ Limited Partner ” is defined in the Partnership Agreement.

“ Original Agreement ” is defined in the Recitals.

“ Partnership ” is defined in the introductory paragraph to this Agreement.

“ Partnership Agreement ” means the Fourth Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of September 14, 2011, as the same may be amended from time to time.

“ Partnership Group ” is defined in the Partnership Agreement.

“ Party ” means a signatory to this Agreement, and “Parties” means all of the signatories to this Agreement.

“ Permitted Transferee ” an Affiliate of any Group Member to whom any ROFR Asset is Transferred and who agrees in writing that such ROFR Asset remains subject to the provisions of Section 2.2 and assumes the obligations under Section 2.2 with respect to such ROFR Asset.

“ Person ” means an individual or a corporation, firm, limited liability company, partnership, joint venture, trust, unincorporated organization, association, government agency or political subdivision thereof or other entity.

“ ROFR Assets ” means the assets described on Exhibit A attached hereto.

“ ROFR Asset Owner ” means BKEP Asphalt, BKEP Materials, Holdings, or Ergon, as applicable, and each Permitted Transferee of a ROFR Asset.

“ ROFR Period ” means the period commencing on the date of this Agreement and terminating on December 31, 2018.

“ ROFR Right ” is defined in Section 2.2 .

“ ROFR Right Owner ” means, with respect to a specific ROFR Asset, the Person identified as such on Exhibit B .

“ Term ROFR Exercise Notice ” is defined in Section 2.2(a) .

“ Term ROFR Notice ” is defined in Section 2.2(a) .

“ Term ROFR Period ” is defined in Section 2.2(a) .

“ Transfer ” means to, directly or indirectly, sell, assign, lease, convey, transfer or otherwise dispose of, whether in one or a series of transactions.

1.2 Rules of Construction . Unless expressly provided for elsewhere in this Agreement, this Agreement shall be interpreted in accordance with the following provisions:

(a) If a word or phrase is defined, its other grammatical forms have a corresponding meaning.

(b) The headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

(c) A reference to any Party to this Agreement or another agreement or document includes the Party’s successors and assigns.

(d) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, subsection and schedule references are to this Agreement unless otherwise specified.

(e) The words “including,” “include,” “includes” and all variations thereof shall mean “including without limitation.”

(f) The word “or” shall have the inclusive meaning represented by the phrase “and/or.”

(g) The words “shall” and “will” have equal force and effect.

(h) The schedule identified in this Agreement are incorporated herein by reference and made a part of this Agreement.

ARTICLE 2

Right of First Refusal

2.1 Reserved .

2.2 Right of First Refusal to Purchase Certain ROFR Assets . If any ROFR Asset Owner proposes or intends to sell any ROFR Asset to a third party (other than a Permitted Transferee) then the ROFR Right Owner shall have the right to purchase the ROFR Assets (the " ROFR Right ") on the following terms and conditions:

(a) If any ROFR Asset Owner executes a contract or letter of intent to sell the ROFR Assets to such third party such ROFR Asset Owner shall provide the ROFR Right Owner with written notice setting forth the ROFR Assets, the proposed sale price and other material terms and conditions upon which such ROFR Asset Owner intends to sell the ROFR Assets to a third party (the " Term ROFR Notice "). Within 30 days after it receives the Term ROFR Notice (the " Term ROFR Period "), the ROFR Right Owner may deliver written notice (the " Term ROFR Exercise Notice ") to such ROFR Asset Owner that the ROFR Right Owner is exercising its ROFR Right and will purchase the ROFR Assets for the price and upon the terms and conditions contained in the Term ROFR Notice. If the ROFR Right Owner does not deliver the Term ROFR Exercise Notice to such ROFR Asset Owner during the Term ROFR Period, then such ROFR Asset Owner shall thereafter be free to sell the ROFR Assets to such third party substantially on the terms and conditions contained in the Term ROFR Notice or pursuant to higher or more favorable terms and conditions.

(b) Notwithstanding anything to the contrary contained herein, the ROFR Right shall not apply to any mortgage of the ROFR Asset or any portion thereof to secure the repayment of borrowings by the ROFR Asset Owner or any of its Affiliates. A foreclosure sale by such lender shall not be a sale to which the ROFR Right shall be applicable, and upon any such foreclosure sale the ROFR Right shall terminate automatically and be of no further force or effect notwithstanding the existence of, or any term contained in, any non-disturbance agreement from such ROFR Asset Owner’s lenders. In clarification of the foregoing, after any such foreclosure sale, the ROFR Right shall never apply. In the event of a foreclosure sale, to the extent that such ROFR Asset Owner receives notice thereof, such ROFR Asset Owner shall provide Ergon notice of such sale, including the date, time and place of sale, if known by such ROFR Asset Owner; such notice to be provided by such ROFR Asset Owner within five Business Days following such ROFR Asset Owner ‘s receipt of such information, if any. As used herein, "foreclosure sale" shall include a conveyance in lieu of foreclosure. It is the intention of the Parties that the ROFR Right be subordinate to any mortgage presently encumbering the ROFR Assets.

(c) Notwithstanding anything to the contrary contained herein, the ROFR Right with respect to the facilities located at Fontana, CA and Las Vegas, NV shall expire and be of no further effect as of the expiration of the ROFR Period.

ARTICLE 3

Miscellaneous


3.1	Choice of Law; Venue .

(a) This Agreement shall be subject to and governed by the laws of the State of Oklahoma, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state.

(b) The Parties agree that any dispute, controversy, or claim arising out of or relating to this Agreement shall be settled exclusively in Tulsa, Oklahoma.

3.2 Notice . All notices or requests or consents provided for by, or permitted to be given pursuant to, this Agreement must be in writing and must be given by United States mail, addressed to the Person to be notified, postpaid, and registered or certified with return receipt requested or by delivering such notice in person or by facsimile or email to such Party. Notice given by personal delivery or mail shall be effective upon actual receipt. Notice given by facsimile or email shall be effective upon transmission (return receipt requested) if sent during the recipient’s normal business hours or at the beginning of the recipient’s next Business Day after transmission if not sent during the recipient’s normal business hours. All notices to be sent to a Party pursuant to this Agreement shall be sent to or made at the address set forth below or at such other address as such Party may stipulate to the other Parties in the manner provided in this Section 3.2 .

If to Ergon:

Ergon Asphalt & Emulsions, Inc.

P.O. Box 1639,

Jackson, MS 39215-1639

Attention: J. Baxter Burns, President

Facsimile: (601) 933-3363

Email: baxter.burns@ergon.com

If to any Group Member:

Blueknight Energy Partners, L.P. Attn: Jeff Speer

6060 American Plaza, Suite 600

Tulsa, OK 74135

Phone No: (918) 237-4033

Facsimile: (918) 237-4000

Email: jspeer@bkep.com

3.3 Entire Agreement . This Agreement constitutes the entire agreement of the Parties relating to the matters contained herein, superseding all prior contracts or agreements including but not limited to the Original Agreement, whether oral or written, relating to the matters contained herein.

3.4 Termination of Agreement . This Agreement, other than the provisions set forth in Article 3 hereof, may be terminated (a) by the written agreement of all of the Parties or (b) by Ergon or the Partnership immediately upon a GP Change of Control by written notice given to the other Parties to this Agreement; provided that the ROFR Rights as set forth in Article 2 shall survive the termination of this Agreement as provided in this Section 3.4 unless and until terminated by the mutual written agreement of the Parties.

3.5 Amendment or Modification . This Agreement may be amended or modified from time to time only by the written agreement of all the Parties. Each such instrument shall be reduced to writing and shall be designated on its face an “Amendment” or an “Addendum” to this Agreement.

3.6 Assignment . No Party shall have the right to assign (whether directly or indirectly, by operation or law or otherwise) its rights or obligations under this Agreement without the consent of the other Parties; provided, however, that the Partnership Group may make a collateral assignment of this Agreement solely to secure financing for the Partnership Group.

3.7 Counterparts . This Agreement may be executed in any number of counterparts with the same effect as if all Parties had signed the same document and shall be construed together and shall constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile transmission or in portable document format (.pdf) shall be effective as delivery of a manually executed counterpart hereof.

3.8 Severability . If any provision of this Agreement shall be held invalid or unenforceable by a court or regulatory body of competent jurisdiction, the remainder of this Agreement shall remain in full force and effect.

3.9 Further Assurances . In connection with this Agreement and all transactions contemplated by this Agreement, each Party hereto agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions.

3.10 Rights of Limited Partners and Third parties . The provisions of this Agreement are enforceable solely by the Parties to this Agreement, and no Limited Partner, other interest holder of the Partnership or other third party shall have the right, separate and apart from the Partnership, to enforce any provision of this Agreement or to compel any Party to this Agreement to comply with the terms of this Agreement.

[ Remainder of page intentionally left blank . ]

IN WITNESS WHEREOF, each of the undersigned has executed this Agreement on, and effective as of, the date first written above.



ERGON ASPHALT & EMULSIONS, INC.

By:	/s/ J. Baxter Burns
		J. Baxter Burns
		President



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

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

BLUEKNIGHT ENERGY PARTNERS, L.P.

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

BKEP TERMINALLING, L.L.C.

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

BKEP ASPHALT, L.L.C.

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

BKEP MATERIALS, L.L.C.

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

EXHIBIT A

ROFR Assets

Set forth below is a list of each ROFR Asset and the corresponding ROFR Asset Owner.



ROFR Asset	ROFR Asset Owner
Wolcott, KS Asphalt Terminal	BKEP Terminalling, L.L.C.
Ennis, TX Asphalt Terminal	BKEP Terminalling, L.L.C.
Chandler, AZ Asphalt/Emulsion Terminal	BKEP Terminalling, L.L.C.
Mt. Pleasant, TX Emulsion Terminal	BKEP Terminalling, L.L.C.
Pleasanton, TX Emulsion Terminal	BKEP Terminalling, L.L.C.
Birmingport, AL Asphalt/Polymer/Emulsion Terminal	BKEP Terminalling, L.L.C.
Memphis, TN Asphalt/Polymer/Emulsion Terminal	Ergon Asphalt & Emulsions, Inc.
Nashville, TN Asphalt/Polymer Terminal	BKEP Terminalling, L.L.C.
Yellow Creek, MS Asphalt Terminal	BKEP Terminalling, L.L.C.
Fontana, CA Asphalt/Emulsion Terminal	BKEP Materials, L.L.C.
Las Vegas, NV Asphalt/Emulsion/Polymer Terminal	BKEP Materials, L.L.C. and BKEP Asphalt, L.L.C.
Saginaw, TX Asphalt Terminal	Ergon Asphalt & Emulsions, Inc.
Lubbock, TX Asphalt Terminal	Ergon Asphalt & Emulsions, Inc.

EXHIBIT B

ROFR Right Owner

Set forth below is a list of each ROFR Asset and the corresponding ROFR Asset Owner.



ROFR Asset	ROFR Right Owner
Fontana, CA Asphalt/Emulsion Terminal	Ergon Asphalt & Emulsions, Inc.
Ennis, TX Asphalt Terminal	BKEP Terminalling, L.L.C.
Las Vegas, NV Asphalt/Emulsion/Polymer Terminal	Ergon Asphalt & Emulsions, Inc.
Mt. Pleasant, TX Emulsion Terminal	BKEP Terminalling, L.L.C.
Wolcott, KS Asphalt Terminal	Ergon Asphalt & Emulsions, Inc.
Birmingport, AL Asphalt/Polymer/Emulsion Terminal	BKEP Terminalling, L.L.C.
Ennis, TX Asphalt Terminal	Ergon Asphalt & Emulsions, Inc.
Nashville, TN Asphalt/Polymer Terminal	BKEP Terminalling, L.L.C.
Chandler, AZ Asphalt/Emulsion Terminal	Ergon Asphalt & Emulsions, Inc.
Fontana, CA Asphalt/Emulsion Terminal	BKEP Materials, L.L.C.
Mt. Pleasant, TX Emulsion Terminal	Ergon Asphalt & Emulsions, Inc.
Saginaw, TX Asphalt Terminal	Ergon Asphalt & Emulsions, Inc.
Pleasanton, TX Emulsion Terminal	Ergon Asphalt & Emulsions, Inc.
Birmingport, AL Asphalt/Polymer/Emulsion Terminal	Ergon Asphalt & Emulsions, Inc.
Nashville, TN Asphalt/Polymer Terminal	Ergon Asphalt & Emulsions, Inc.
Yellow Creek, MS Asphalt Terminal	Ergon Asphalt & Emulsions, Inc.
Memphis, TN Asphalt/Polymer/Emulsion Terminal	BKEP Materials, L.L.C. & BKEP Asphalt, L.L.C.
Saginaw, TX Asphalt Terminal	BKEP Materials, L.L.C. & BKEP Asphalt, L.L.C.
Lubbock, TX Asphalt Terminal	BKEP Materials, L.L.C. & BKEP Asphalt, L.L.C.

Exhibit 99.1

Blueknight Energy Partners, L.P.

Unaudited Pro Forma Condensed Consolidated Financial Statements

Introduction

On June 29, 2018, Blueknight Energy Partners, L.P. (“the Partnership”) entered into a definitive agreement (the “Asphalt Terminals Agreement”) to sell certain asphalt terminals, storage tanks and related real property, contracts, permits, assets and other interests located in Lubbock and Saginaw, Texas and Memphis, Tennessee properties (the “Divestiture”) to Ergon Asphalt & Emulsion, Inc. (“Ergon A&E”) for a purchase price of $90.0 million, subject to customary adjustments. The Partnership closed the Divestiture on July 12, 2018. The Divestiture does not qualify as discontinued operations as it does not represent a strategic shift that will have a major effect on the Partnership’s operations or financial results.

Ergon A&E is an affiliate of Ergon, Inc. (“Ergon”), which indirectly owns (i) 100% of the General Partner and (ii) 27.5% of the limited partnership interests in the Partnership. Accordingly, the Conflicts Committee of the Board of Directors of the General Partner (the “Conflicts Committee”) reviewed and approved the Asphalt Terminals Agreement in accordance with the Partnership’s procedures for approval of related party transactions and the provisions of the partnership agreement.

The unaudited pro forma condensed consolidated financial data of the Partnership was derived from historical condensed consolidated financial statements. The unaudited pro forma condensed consolidated balance sheet assumes the Divestiture occurred on March 31, 2018. The unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2018 and the year ended December 31, 2017 give effect to the Divestiture as if it occurred as of January 1, 2017. The following unaudited pro forma condensed consolidated financial information should be read in conjunction with the Partnership’s historical financial statements and accompanying notes.

The pro forma adjustments are based on the best information available and assumptions that management believes are factually supportable and reasonable; however, such adjustments are subject to change. In addition, such adjustments are estimates. The unaudited pro forma condensed consolidated financial information is for illustrative and informational purposes only and is not intended to reflect what the Partnership’s consolidated financial position and results of operations would have been had the Divestiture occurred on the dates indicated and is not necessarily indicative of the Partnership’s future consolidated financial position and results of operations.

The pro forma adjustments remove the Divestiture’s consolidated assets, liabilities and results of operations and also give effect to adjustments to reflect the cash proceeds from the Divestiture. The Partnership expects to use the cash proceeds to repay outstanding borrowings under its revolving credit facility.

BLUEKNIGHT ENERGY PARTNERS, L.P. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET MARCH 31, 2018 (in thousands, except unit data)

	Historical			Pro Forma Adjustments for Activity of Disposed Assets				Pro Forma Adjusted for Activity of Disposed Assets			Pro Forma Adjustments for Proceeds used toward Debt Repayment				Unaudited Pro Forma Balance Sheet
ASSETS
Current assets:
Cash and cash equivalents	$	2,081		$	88,538		(a)	$	90,619		$	(88,538	)	(d)	$	2,081
Other current assets	22,990			(53		)	(c)	22,937			(4		)	(e)	22,933
Total current assets	25,071			88,485				113,556			(88,542		)		25,014
Property, plant and equipment, net	304,416			(16,972		)	(a)	287,444			—				287,444
Other long-term assets	32,104			(5		)	(c)	32,099			—				32,099
Total assets	$	361,591		$	71,508			$	433,099		$	(88,542	)		$	344,557
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities	$	25,506		$	124		(c)	$	25,630		$	—			$	25,630
Long-term liabilities	4,638			—				4,638			—				4,638
Long-term debt	334,592			—				334,592			(88,538		)	(d)	246,054
Commitments and contingencies
Partners’ capital:
Common unitholders (40,158,342 and 40,321,442 units issued and outstanding)	446,471			(179		)	(b), (c)	446,292			(4		)	(e)	446,288
Preferred Units (35,125,202 units issued and outstanding)	253,923			—				253,923			—				253,923
General partner interest (1.6% interest with 1,225,409 general partner units outstanding)	(703,539		)	71,563			(a), (b), (c)	(631,976		)	—				(631,976		)
Total partners’ capital	(3,145		)	71,384				68,239			(4		)		68,235
Total liabilities and partners’ capital	$	361,591		$	71,508			$	433,099		$	(88,542	)		$	344,557

BLUEKNIGHT ENERGY PARTNERS, L.P. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2018 (in thousands, except unit data)

	Historical			Pro Forma Adjustments for Activity of Disposed Assets				Pro Forma Adjusted for Activity of Disposed Assets			Pro Forma Adjustments for Proceeds used toward Debt Repayment			Unaudited Pro Forma Statement of Operations
Service revenue:
Third-party revenue	$	17,318		$	—		(f)	$	17,318		$	—		$	17,318
Related-party revenue	6,321			(2,508		)	(f)	3,813			—			3,813
Lease revenue:
Third-party revenue	9,804			—				9,804			—			9,804
Related-party revenue	7,703			(2,499		)	(f)	5,204			—			5,204
Product sales revenue:
Third-party revenue	3,514			—				3,514			—			3,514
Total revenue	44,660			(5,007		)		39,653			—			39,653
Costs and expenses:
Operating expense	31,135			(3,163		)	(f)	27,972			—			27,972
Cost of product sales	2,637			—				2,637			—			2,637
General and administrative expense	4,221			(3		)	(f)	4,218			—			4,218
Asset impairment expense	616			—				616			—			616
Total costs and expenses	38,609			(3,166		)		35,443			—			35,443
Loss on sale of assets	(236		)	—				(236		)	—			(236		)
Operating income(loss)	5,815			(1,841		)		3,974			—			3,974
Other income (expenses):
Gain on sale of unconsolidated affiliate	2,225			—				2,225			—			2,225
Interest expense, net	(3,569		)	—				(3,569		)	1,140		(h)	(2,429		)
Income(loss) before income taxes	4,471			(1,841		)		2,630			1,140			3,770
Provision for income taxes	29			(13		)	(g)	16			4		(i)	20
Net income(loss)	$	4,442		$	(1,828	)		$	2,614		$	1,136		$	3,750

Allocation of net income(loss) for calculation of earnings per unit:
General partner interest in net income(loss)	$	231		$	(30	)		$	201		$	19		$	220
Preferred interest in net income	$	6,278		$	—			$	6,278		$	—		$	6,278
Net income (loss) available to limited partners	$	(2,067	)	$	(1,798	)		$	(3,865	)	$	1,117		$	(2,748	)

Basic and diluted net income(loss) per common unit	$	(0.05	)	$	(0.04	)		$	(0.09	)	$	0.02		$	(0.07	)

Weighted average common units outstanding - basic and diluted	40,289			—				40,289			—			40,289

BLUEKNIGHT ENERGY PARTNERS, L.P. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2017 (in thousands, except unit data)

	Historical			Pro Forma Adjustments for Activity of Disposed Assets				Pro Forma Adjusted for Activity of Disposed Assets			Pro Forma Adjustments for Proceeds used toward Debt Repayment			Unaudited Pro Forma Statement of Operations
Service revenue:
Third-party revenue	$	113,772		$	(148	)	(f)	$	113,624		$	—		$	113,624
Related-party revenue	56,688			(20,263		)	(f)	36,425			—			36,425
Product sales revenue:
Third-party revenue	11,479			—				11,479			—			11,479
Total revenue	181,939			(20,411		)		161,528			—			161,528
Costs and expenses:
Operating expense	123,805			(13,943		)	(f)	109,862			—			109,862
Cost of product sales	8,807			—				8,807			—			8,807
General and administrative expense	17,112			(16		)	(f)	17,096			—			17,096
Asset impairment expense	2,400			—				2,400			—			2,400
Total costs and expenses	152,124			(13,959		)		138,165			—			138,165
Loss on sale of assets	(975		)	27			(f)	(948		)	—			(948		)
Operating income	28,840			(6,425		)		22,415			—			22,415
Other income (expenses):
Equity earnings in unconsolidated affiliate	61			—				61			—			61
Gain on sale of unconsolidated affiliate	5,337			—				5,337			—			5,337
Interest expense, net	(14,027		)	—				(14,027		)	4,560		(h)	(9,467		)
Income(loss) before income taxes	20,211			(6,425		)		13,786			4,560			18,346
Provision for income taxes	166			84			(g)	250			13		(i)	263
Net income(loss)	$	20,045		$	(6,509	)		$	13,536		$	4,547		$	18,083

Allocation of net income(loss) for calculation of earnings per unit:
General partner interest in net income(loss)	$	944		$	(112	)		$	832		$	75		$	907
Preferred interest in net income	$	25,115		$	—			$	25,115		$	—		$	25,115
Net income(loss) available to limited partners	$	(6,014	)	$	(6,397	)		$	(12,411	)	$	4,472		$	(7,939	)

Basic and diluted net income(loss) per common unit	$	(0.15	)	$	(0.17	)		$	(0.32	)	$	0.12		$	(0.20	)

Weighted average common units outstanding - basic and diluted	38,342			—				38,342			—			38,342

Blueknight Energy Partners, L.P.

Notes to the Condensed Consolidated Financial Statements

1. Basis of Presentation

The unaudited pro forma condensed consolidated financial statements give effect to the pro forma adjustments necessary to reflect the Divestiture as if it had occurred as of January 1, 2017, in the unaudited pro forma statements of operations for the three months ended March 31, 2018 and the year ended December 31, 2017, and on March 31, 2018, in the unaudited pro forma balance sheet. The Partnership agreed to sell the asphalt terminal properties for $90.0 million and incurred closing adjustments of $1.5 million to arrive at closing consideration of $88.5 million in cash, subject to customary post-closing adjustments.

The Partnership’s sale of the three asphalt terminals to Ergon A&E was accounted for as a transaction among entities under common control. As a result, the Partnership recorded the consideration received in excess of historical cost as a deemed contribution from the Partnership’s general partner.

2. Pro Forma Adjustments

The unaudited pro forma condensed consolidated financial statements reflect the following adjustments:

Balance Sheet

“Historical” represents the historical condensed consolidated balance sheet of the Partnership as of March 31, 2018.


(a)	Pro forma adjustment to remove the assets and liabilities sold in the Divestiture. The purchase price of $90.0 million was reduced by closing adjustments of $1.5 million through the balance sheet date.


(b)	Pro forma adjustment to reflect the impact of the change in valuation allowance recorded against the Partnership’s deferred tax assets due to the removal of the assets and liabilities sold in the Divestiture.


(c)	Pro forma adjustment to reflect the change in the tax provision associated with the assets and liabilities sold in the Divestiture.


(d)	Pro forma adjustment to reflect the cash proceeds from the Divestiture, which are assumed to be used toward the repayment of long-term debt.


(e)	Pro forma adjustment to reflect the impact of the change in the tax provision due to the repayment of long-term debt using the proceeds received from the assets and liabilities sold in the Divestiture.

Statement of Operations

“Historical” represents the historical condensed consolidated statements of operations of the Partnership for the three months ended March 31, 2018, and for the year ended December 31, 2017.


(f)	Pro forma adjustment to eliminate revenues and expenses of the assets sold in the Divestiture from the Partnership’s consolidated statements of operations.

(g) Pro forma adjustment to reflect the change in the tax provision associated with the assets and liabilities sold in the Divestiture.


(h)	Pro forma adjustment to reflect the reduction in interest expense as a result of the repayment of long-term debt with the proceeds from the Divestiture.


(i)	Pro forma adjustment to reflect the change in the tax provision associated with the repayment of long-term debt with the proceeds from the Divestiture.