BREITBURN ENERGY PARTNERS, LP 2006 LONG-TERM INCENTIVE PLAN CONVERTIBLE PHANTOM UNIT AGREEMENT

Number of CPUs : [_____]

Grant Date : [_____]

Vesting of CPUs : The CPUs shall vest and the number of CUEs underlying such CPUs shall be determined in accordance with Section 3 below (if any) on the earliest to occur of (i) the first date on which the Partnership pays a quarterly per Unit distribution, other than any extraordinary non-recurring distribution (each, a “ Quarterly Distribution ”), that, when added to the aggregate per Unit Quarterly Distributions paid by the Partnership for the three immediately preceding full calendar quarters, equals or exceeds $3.10 per Unit (such date, the “ Performance Vesting Date ”), (ii) an applicable accelerated vesting date set forth in Section 4 below, and (iii) January 1, 2013, in each case subject to the Participant’s continued employment with the Employer through any such date (any such date, a “ Vesting Date ”). For vesting purposes, except as expressly provided in Section 3(b) below, any per Unit distribution that is announced after an applicable Vesting Date, but prior to the payment of Units underlying the vesting CPU, shall be disregarded for purposes of determining the Unit conversion level applicable to such CPU.

Separation from Service : In the event of the Participant’s Separation from Service prior to January 1, 2013, the vesting and termination of the CPUs shall be governed in accordance with the provisions of Section 4 below.

Payment of CPUs : Vested CPUs shall be paid to the Participant in the form of Units as set forth in Section 5 below, subject to Section 18 below.

PDRs : Each CPU granted under this Agreement shall be issued in tandem with a corresponding PDR, which shall entitle the Participant to receive payments determined by reference to per Unit distributions in accordance with Section 2 of this Agreement.

1.   Grant of CPUs . The Partnership hereby grants to the Participant, as of the Grant Date, an award of [________] CPUs, subject to all of the terms and conditions contained in this Agreement and the Plan.

2.   Grant of Tandem PDR .

a.   General . Each CPU granted hereunder is hereby granted in tandem with a corresponding PDR, which PDR shall remain outstanding from the Grant Date until the earlier to occur of a Payment Date (as defined below) or the forfeiture of the CPU to which such PDR corresponds. Pursuant to each PDR, the Participant shall be entitled to receive, no later than sixty days after the end of each calendar quarter through which the PDR remains outstanding, payment in an amount equal to the product of (i) the aggregate per Unit distributions paid by the Partnership in respect of such quarter (including any extraordinary non-recurring distributions paid during a quarter), if any, times (ii) the number of common unit equivalents (“ CUEs ”) underlying the relevant CPU during such quarter (as determined in accordance with Section 2(b) below), payable in the same form as distributions paid to the holders of Units. PDRs shall not entitle the Participant to any payments relating to distributions occurring after the earlier to occur of the applicable Payment Date or the Participant’s forfeiture of the CPU to which such PDR relates in accordance herewith.

b.   Determination of CUEs Underlying CPUs for PDR Purposes . For purposes of determining the payments, if any, in respect of PDRs for a given calendar quarter under Section 2(a) above, the number of CUEs underlying a CPU shall equal the number of CUEs listed on the CUE Conversion Table (attached as Exhibit B hereto (the “ CUE Conversion Table ”)) for the corresponding dollar value (in the column entitled “Target Distribution Level”) attained by multiplying the applicable Quarterly Distribution by four.

c.   Separate Payments . The PDRs and any amounts that may become payable in respect thereof shall be treated separately from the CPUs and the rights arising in connection therewith for purposes of the designation of time and form of payments required by Code Section 409A.

3.   Conversion of Vested CPUs to Units .

a.   General . CPUs that vest in accordance with this Agreement shall represent the right to receive payment, in accordance with Section 5 below, in the form of a number of Units equal to (i) the product of (A) the number of CPUs so vested, times (B) the number of CUEs underlying such CPUs on the applicable Vesting Date (as determined in accordance with Section 3(b) below), minus (ii) the applicable number of PDR Equalization Units (as defined below), if any (such number of Units, the “ Resultant Units ”). Unless and until a CPU vests, the Participant will have no right to payment of Units in respect of any such CPU. Prior to actual payment in respect of any vested CPU, such CPU will represent an unsecured obligation of the Partnership, payable (if at all) only from the general assets of the Partnership.

b.   Determination of CUEs Underlying CPUs at Vesting . The number of CUEs underlying each CPU at vesting shall equal:

Except with respect to a fourth quarter 2012 Quarterly Distribution in the case of CPUs vesting on January 1, 2013, which Quarterly Distribution is announced after January 1, 2013, under no circumstances shall any Quarterly Distribution that is announced after the applicable Vesting Date be taken into consideration in determining the number of CUEs underlying any CPUs at vesting.

c.   PDR Equalization Units . For purposes of this Agreement, “ PDR Equalization Units ” means a number of Units equal to the quotient obtained by dividing (i) the dollar value of the difference of (A) the actual aggregate amount paid in respect of all PDRs from the Grant Date through the Payment Date (the “ Actual PDR Payments ”), minus (B) the aggregate amount that would have been paid during the period from the Grant Date through the Payment Date in respect of the PDRs had they originally been granted in tandem with that number of CPUs equal to the aggregate number of CUEs underlying the CPUs as of the applicable Vesting Date (the “ Notional PDR Payments ”), by (ii) the Fair Market Value of a Unit on the Vesting Date. If the dollar value of the Actual PDR Payments does not exceed the dollar value of the Notional PDR Payments with respect to any vesting CPU, then the PDR Equalization Units shall equal zero with respect to such CPU.

4.   Separation from Service . If the Participant experiences a Separation from Service from the Employer prior to the vesting or termination of the CPUs, the following provisions shall control the vesting and forfeiture of the CPUs in connection with and following such Separation from Service:

a.   Good Reason; Other than for Cause, Death or Disability . If, during the Employment Period, the Participant incurs a Separation from Service by reason of a termination by the Employer without Cause (other than as a consequence of the Participant’s death or Disability), or by reason of a termination by the Participant for Good Reason, then, to the extent not previously vested or forfeited, the CPUs shall vest and the number of CUEs underlying such CPUs shall be determined as of the date of such Separation from Service on a pro rata basis in accordance with Sections 3(a) and 3(b)(iii) above, and any CPUs that do not so vest and convert into Units shall automatically be cancelled and forfeited as of the date of such Separation from Service.

b.   Death or Disability . If, during the Employment Period, the Participant incurs a Separation from Service due to the Participant’s death or Disability, then, to the extent not previously vested or forfeited, the CPUs shall vest and the number of CUEs underlying such CPUs shall be determined as of the date of such Separation from Service on a pro rata basis in accordance with Sections 3(a) and 3(b)(iii) above (and, in the case of the Participant’s death, paid to Participant’s estate), and any CPUs that do not so vest and convert into Units shall be cancelled and forfeited as of the date of such Separation from Service.

c.   Non-renewal . If the Participant incurs a Separation from Service because the Employer or the Participant elects not to renew the Employment Period in accordance with Section 2 of the Employment Agreement and, in the case of an Employer non-renewal, at the time of such non-renewal, the Participant was willing and able to continue providing services in accordance with the terms and conditions of the Employment Agreement (in any case, a   “ Non-Renewal ”), then, to the extent not previously vested or forfeited, the CPUs shall vest and the number of CUEs underlying such CPUs shall be determined as of the date of such Separation from Service on a pro rata basis in accordance with Sections 3(a) and 3(b)(iii) above, provided , that the vesting and conversion described in this Section 4(c) shall only occur if, following notice of such Non-Renewal, the Participant does not voluntarily terminate his employment (other than upon death or Disability) before the end of the Employment Period, as determined without regard to any extension of the Employment Period that might otherwise occur following the date of such Separation from Service in accordance with the second sentence of Section 2 of the Employment Agreement. Any CPUs that do not vest and convert into Units in accordance with this Section 4(c) upon a Non-Renewal shall automatically be cancelled and forfeited as of the date of such Separation from Service.

d.   Cause; Resignation Other than for Good Reason . If the Participant’s employment with the Employer is terminated by the Employer for Cause or by the Participant without Good Reason (and other than due to the Participant’s death or Disability), then, to the extent not previously vested, all CPUs subject to this Agreement shall be forfeited as of the date of Separation from Service.

5.   Payment of CPUs; Issuance of Units . CPUs that vest shall be paid to the Participant in the form of Units in a lump-sum amount determined in accordance with Section 3 above during the sixty-day period following the applicable Vesting Date (the date on which Units are transferred to the Participant, the “ Payment Date ”).  All CPUs shall be canceled and terminated upon such payment, and the Participant shall have no further right or interest in respect thereof. 

6.   Forfeiture and Termination of CPUs .

a.   Termination of Employment . Without limiting the foregoing, in the event of the Participant’s termination of employment for any reason, (i) the CPUs, to the extent not vested as of the date of such termination of employment, and any corresponding PDRs (other than with respect to amounts owing but not paid under such PDRs prior to such termination of employment, if any), shall thereupon automatically and without further action be cancelled and forfeited by the Participant, and the Participant shall have no further right or interest in or with respect to such unvested CPUs and corresponding PDRs (other than with respect to amounts owing but not paid under such PDRs prior to such termination of employment, if any), and (ii) no portion of the CPUs which are unvested as of the date of such termination of employment shall thereafter become vested.

b.   Failure to Achieve Minimum Performance . In the event that, as of January 1, 2013 or any earlier Vesting Date, the number of Resultant Units is less than or equal to zero, the CPUs and any corresponding PDRs shall thereupon automatically and without further action be cancelled and forfeited by the Participant, and the Participant shall have no further right or interest in such CPUs or any corresponding PDRs or with respect to either of the foregoing (other than with respect to amounts owing but not paid under such PDRs prior to such date, if any).

7.   Tax Withholding . The Company and/or its Affiliates shall have the authority and the right to deduct or withhold, or to require the Participant to remit to the Company and/or its Affiliates, an amount su