BLUEKNIGHT ENERGY PARTNERS G.P., L.L.C.
CONFLICTS COMMITTEE CHARTER
Revised: May 5, 2010
The Conflicts Committee (the “Committee”) is appointed by the Board of Directors (the “Board”) of Blueknight Energy Partners G.P., L.L.C. (the “Company”) to carry out the duties as set forth in the Second Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) of Blueknight Energy Partners, L.P. (the “Partnership”) as well as other duties delegated by the Board that relate to conflicts of interests between the Company and its Affiliates, on the one hand and the Partnership, any Group Member or any Partner, on the other hand. The Committee shall also advise the Board on actions to be taken by the Company and the Partnership or matters related to the Company and the Partnership upon request of the Board.
The Committee shall be composed entirely of two or more directors, each of whom (a) is not a security holder, officer or employee of the Company, (b) is not an officer, director or employee of any Affiliate of the Company, (c) is not a holder of any ownership interest in the Partnership Group other than the Common Units and (d) meets the independence standards required of directors who serve on an audit committee of a board of directors established by the Securities Exchange Act and the rules and regulations of the Commission thereunder and by the National Securities Exchange on which the Common Units are listed or admitted to trading.
The members of the Committee shall be appointed by the Board on the recommendation of the independent directors thereon. Committee members may be replaced by the Board. The Board shall appoint one member of the Committee as Chair of the Committee.
Capitalized terms used herein but not otherwise defined shall have the meanings given such terms in the Partnership Agreement.
The Committee shall meet at such times and with such frequency as it determines to be necessary or appropriate, or as meetings may be called by the Chair of the Committee, any two members of the Committee or the Chairman of the Board, if any. The Committee may invite members of management or others to attend meetings and/or to furnish pertinent information. The Committee shall also meet in executive session.
Committee Authority and Responsibilities
The Committee shall act on an informed basis, in good faith, and in the honest belief that any action taken by the Committee is in the best interests of the Partnership. In the Committee's determination of what is "fair and reasonable" to the Partnership and in connection with the Committee's resolution of any conflict of interest, the Committee may take into account the totality of the relationships between the parties involved (including other transactions that may be particularly favorable or advantageous to the Partnership) and any factors the Committee determines, in its sole discretion, to be relevant, reasonable or appropriate under the circumstances.
The Committee's specific responsibilities are as follows:
- For purposes of determining Operating Expenditures under the Partnership Agreement, where capital expenditures consist of both Maintenance Capital Expenditures and Expansion Capital Expenditures, the Committee shall determine whether it concurs with the Company’s allocation between the portion consisting of Maintenance Capital Expenditures and Expansion Capital Expenditures.
- If the holder of Incentive Distribution Rights elects to receive other Partnership Securities pursuant to Section 5.11(d) of the Partnership Agreement, the Committee shall determine whether to approve the terms of such Partnership Securities (as approved by the Company).
- The Company may seek approval by the Committee, pursuant to Section 7.9 of the Partnership Agreement, of any resolution of a conflict of interest between the Company or any of its Affiliates, on the one hand, and the Partnership, any Group Member or any Partner, on the other hand.
- If the Company has been requested to register Partnership Securities pursuant to Section 7.12(a) or 7.12(b) of the Partnership Agreement, the Committee may determine in its good faith judgment whether (i) the requested registration, or (ii) the offering under, or the use of any prospectus forming a part of, the shelf registration statement, as applicable, would be materially detrimental to the Partnership and its Partners because such registration would (x) materially interfere with a significant acquisition, reorganization or other similar transaction involving the Partnership, (y) require premature disclosure of material information that the Partnership has a bona fide business purpose for preserving as confidential or (z) render the Partnership unable to comply with requirements under applicable securities laws.
- In accordance with Section 13.1(g) of the Partnership Agreement, if the Company determines that it is necessary or appropriate to amend any provisions of the Partnership Agreement to modify the Incentive Distribution Rights made in connection with the issuance of Partnership Securities pursuant to Section 5.6 of the Partnership Agreement, a majority of the Committee, acting in good faith, must approve such modifications and the related issuance of Partnership Securities.
- The Committee may form and delegate authority to subcommittees when appropriate.
- The Committee shall report to the Board its decisions and determinations and keep records of its meetings.
- The Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.
- The Committee shall annually review its own performance.
The Committee shall have the resources and authority appropriate to discharge its duties and responsibilities, including the authority to select, retain, terminate and approve the fees and other retention terms of outside legal counsel, accounting or other advisors to assist or advise the Committee, as it deems necessary to carry out its duties, without seeking approval of the Board or management. The Committee shall have authority to obtain from the Partnership, and shall receive appropriate funding, as determined by the Committee, from the Partnership, for payment or compensation to outside legal, accounting and other advisors employed by it and administrative expenses incurred by it.