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 sufficient to satisfy all applicable federal, state and local taxes (including the Participant’s employment tax obligations) required by law to be withheld with respect to any taxable event arising in connection with the CPUs and/or the PDRs. To the extent that such obligation arises at the time that the CPUs are paid to the Participant in Units, the Company and/or its Affiliates may withhold Units otherwise issuable in respect of such CPUs having a Fair Market Value equal to the sums required to be withheld in satisfaction of the foregoing requirements. Notwithstanding any other provision of the Plan or this Agreement, the number of Units which may be so withheld in order to satisfy the Participant’s income and payroll tax liabilities with respect to the issuance, vesting or payment of the CPUs shall be limited to the number of Units which have a Fair Market Value on the date of withholding equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for income and payroll tax purposes that are applicable to such supplemental taxable income.

8. Rights as Unit Holder. Neither the Participant nor any person claiming under or through the Participant shall have any of the rights or privileges of a holder of Units in respect of any Units that may become deliverable hereunder unless and until certificates representing such Units shall have been issued or recorded in book entry form on the records of the Partnership or its transfer agents or registrars, and delivered in certificate or book entry form to the Participant or any person claiming under or through the Participant.

9. Non-Transferability. Except as otherwise provided in this Section 9, (i) neither the CPUs nor the PDRs may be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution, and (ii) neither the CPUs, PDRs nor any interest or right therein shall be liable for the debts, contracts or engagements of the Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence. Notwithstanding the foregoing, subject to applicable law, the CPUs and PDRs may be transferred to an estate planning trust that constitutes a “family member” of the Participant within the meaning of the instructions to Form S-8 under the Securities Act, subject to the following terms and conditions: (i) any CPUs or PDRs so transferred shall not be further assignable or transferable by the transferee other than by will or the laws of descent and distribution; (ii) any CPUs or PDRs so transferred shall continue to be subject to all the terms and conditions of the CPUs and PDRs as applicable to the original Participant (other than the ability to further transfer the CPUs and PDRs); and (iii) the Participant and the transferee shall execute any and all documents requested by the Committee, including, without limitation documents to (A) confirm the status of the transferee as a permitted transferee, (B) satisfy any requirements for an exemption for the transfer under applicable federal, state and foreign securities laws, and (C) evidence the transfer.

10. Distribution of Units. The Units issued pursuant to this Agreement shall be held in book entry form and no certificates shall be issued therefor; provided, that certificates may be issued representing such Units at the request of the Participant and in accordance with the Partnership’s governing documents, as amended and supplemented from time to time. Notwithstanding anything herein to the contrary, (a) no payment shall be made under this Agreement in the form of Units unless such Units issuable upon such payment are then registered under the Securities Act of 1933, as amended (the “Securities Act”) or, if such Units are not then so registered, the Company has determined that such payment and issuance would be exempt from the registration requirements of the Securities Act, and (b) the Partnership shall not be required to issue or deliver any Units (whether in certificated or book-entry form) pursuant to this Agreement unless (i) such issuance and delivery are in compliance with all applicable laws and regulations and, if applicable, the requirements of any exchange on which the Units are listed or traded, and (ii) any consent or approval of any governmental or regulatory authority necessary as a condition to such issuance and delivery to the Participant (or his or her estate) has been obtained. Any certificates delivered pursuant to this Agreement shall be subject to any stop-transfer orders and other restrictions as the Company deems necessary or advisable to comply with federal, state, or local securities or other laws, rules and regulations and the rules of any national securities exchange or automated quotation system on which the Units are listed, quoted, or traded. The Company