Exhibit 10.19

BLUEKNIGHT ENERGY PARTNERS G.P., L.L.C.
LONG-TERM INCENTIVE PLAN

EMPLOYEE PHANTOM UNIT AGREEMENT
 
This Phantom Unit Agreement (“Agreement”) between Blueknight Energy Partners
G.P., L.L.C. (the “Company”) and ______________ (the “Participant”), regarding
an award (“Award”) of ________________ Phantom Units (as defined in the
Blueknight Energy Partners G.P., L.L.C. Long-Term Incentive Plan (the “Plan”))
granted to the Participant on __________________ (the “Grant Date”), such number
of Phantom Units subject to adjustment as provided in the Plan, and further
subject to the following terms and conditions:
 
1. Relationship to Plan.  This Award is subject to all of the terms, conditions
and provisions of the Plan and administrative interpretations thereunder, if
any, which have been adopted by the Committee thereunder and are in effect on
the date hereof.  Except as otherwise provided herein, capitalized terms shall
have the same meanings ascribed to them under the Plan.
 
2. Definitions.
 
“Cause” means (i) conviction of the Participant by a court of competent
jurisdiction of any felony or a crime involving moral turpitude; (ii) the
Participant’s willful and intentional failure or willful and intentional refusal
to follow reasonable and lawful instructions of the Board; (iii) the
Participant’s material breach or default in the performance of his obligations
under this Agreement; or (iv) the Participant’s act of misappropriation,
embezzlement, intentional fraud or similar conduct involving the Company or any
of its Affiliates.

“Disability” means the Participant either (i) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months or (ii) the Participant
is, by reason of any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a
period of not less than three months under an accident and health plan covering
employees of the Company or any entity that would be considered a single
“service recipient” with the Company pursuant to Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”).
 
“Retirement” means the Participant’s employment with the Company and all its
Affiliates terminates (other than due to death, Disability or Cause) on or after
he attains age 57 with at least five years of service with the Company or its
Affiliates.
 
3. Vesting Schedule; Settlement.
 
(a) All of the Phantom Units subject to this Award shall vest and the Restricted
Period with respect to such Phantom Units shall end on January 1, 2014 (the
“Vesting Date”).  The Participant must be continuously employed with the Company
or any of its Affiliates from the Grant Date through the Vesting Date in order
for the Award to become vested with respect to the Phantom Units on such date.
 

 
 
 
 
 

(b) Notwithstanding any provision in the Plan to the contrary, (i) the
occurrence of a Change of Control shall have no effect on the vesting of the
Phantom Units and (ii) following the occurrence of a Change of Control, the
Phantom Units shall continue to vest in accordance with this Agreement.
 
(c) Within 60 days following vesting with respect to a Phantom Unit, the
Participant shall be entitled to receive a Common Unit.  Common Units will be
evidenced, at the sole option and in the sole discretion of the Committee,
either (i) in book-entry form in the Participant’s name in the Common Unit
register of the Partnership maintained by the Partnership’s transfer agent or
(ii) a unit certificate issued in the Participant’s name.  Upon delivery of a
Common Unit in respect of a Phantom Unit, such Phantom Unit shall cease to be
outstanding in the Participant’s notional account described below in Section 5.
 
4. Forfeiture of Award.
 
(a) If the Participant’s employment with the Company and all Affiliates is
terminated by Participant’s employer without Cause (and, for the avoidance of
doubt, not due to Retirement), or by reason of death or Disability, all unvested
Phantom Units shall immediately vest and the Restricted Period shall terminate
as of the date of the Participant’s termination.
 
(b) If the Participant’s employment with the Company and all Affiliates is
terminated due to Retirement, the unvested Phantom Units shall not be forfeited
and shall instead continue to vest and be payable in accordance with this
Agreement as if the Participant had remained continuously employed by the
Company or an Affiliate.
 
(c) If the Participant’s employment with the Company and all Affiliates
terminates for any reason not described in Section 4(a) or 4(b), all unvested
Phantom Units shall be immediately forfeited as of the date of the Participant’s
termination.
 
5. Distribution Equivalent Rights.  During the Restricted Period, the Award of
Phantom Units hereunder shall be evidenced by entry in a bookkeeping account and
shall include a tandem Distribution Equivalent Right with respect to the Phantom
Units.  Distribution Equivalent Rights shall only be paid with respect to
ordinary quarterly cash distributions and shall not be paid with respect to any
special, make-up or extraordinary distributions, in each case as determined by
the Committee in its sole discretion.  Notwithstanding the foregoing, no
Distribution Equivalent Rights shall be paid in excess of the Minimum Quarterly
Distributions (as defined in the Partnership Agreement) during the one year
period following the Grant Date.  Pursuant to the Distribution Equivalent Right,
within 45 days following the end of each fiscal quarter for which a cash
distribution is made with respect to Common Units, the Participant shall be
entitled to receive a cash payment with respect to each Phantom Unit then
outstanding equal to the cash distribution made by the Partnership with respect
to each Common Unit.
 
6. Rights as Unitholder; Delivery of Common Units.  Until delivery of Common
Units as described in Section 3(c), the Participant shall have no rights as a
unitholder as a result of the grant of Phantom Units hereunder.  The Company
shall not be obligated to deliver any Common Units if counsel to the Company
determines that such sale or delivery would violate any applicable law or any
rule or regulations of any governmental authority or any rule or regulation of,
or agreement of the Company with, any securities exchange or association upon
which the Common Units are listed or quoted.  The Company shall in no event be
obligated to take any affirmative action in order to cause the delivery of
Common Units to comply with any such law, rule, regulations or agreement.
 

 
 
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7. Assignment of Award.  The Participant’s rights under this Agreement and the
Plan are personal; no assignment or transfer of the Participant’s rights under
and interest in this Award may be made by the Participant other than by will, by
beneficiary designation, by the laws of descent and distribution or by a
qualified domestic relations order.
 
8. Withholding.  No certificates representing Common Units hereunder shall be
delivered to or in respect of a Participant unless the amount of all federal,
state and other governmental withholding tax requirements imposed upon the
Company with respect to the issuance of such Common Units has been remitted to
the Company or unless provisions to pay such withholding requirements have been
made to the satisfaction of the Committee.  The Committee may make such
provisions as it may deem appropriate for the withholding of any taxes which it
determines is required in connection with this Award.  The Participant may pay
all or any portion of the taxes required to be withheld by the Company or paid
by the Participant in connection with the vesting of all or any portion of this
Award by delivering cash, or, with the Committee’s approval, by electing to have
the Company withhold Common Units, or by delivering previously owned Common
Units, having a Fair Market Value equal to the amount required to be withheld or
paid.  The Participant may only request the withholding of Common Units having a
Fair Market Value equal to the statutory minimum withholding amount.  The
Participant must make the foregoing election on or before the date that the
amount of tax to be withheld is determined.
 
9. No Employment Guaranteed.  No provision of this Agreement shall confer any
right upon the Participant to continued employment with the Company or any
Affiliate.
 
10. Governing Law.  This Agreement shall be governed by, construed, and enforced
in accordance with the laws of the State of Delaware.
 
11. Amendment.  This Agreement cannot be modified, altered or amended, except by
an agreement, in writing, signed by both the Company and the Participant.
 
12. Section 409A
 
(a) The Phantom Units granted pursuant to this Agreement are intended to comply
with or be exempt from Code Section 409A, and ambiguous provisions hereof, if
any, shall be construed and interpreted in a manner consistent with such
intent.  No payment, benefit or consideration shall be substituted for the
Phantom Units if such action would result in the imposition of taxes under Code
Section 409A.  Notwithstanding anything in this Agreement to the contrary, if
any Plan provision or this Agreement results in the imposition of an additional
tax under Code Section 409A, that Plan provision or provision of this Agreement
shall be reformed, to the extent permissible under Code Section 409A, to avoid
imposition of the additional tax, and no such action shall be deemed to
adversely affect the Participant’s rights to the Phantom Units.
 
(b) Notwithstanding any provision of the Agreement to the contrary, if the
Participant is identified by the Company as a “specified employee” within the
meaning of Code Section 409A(a)(2)(B)(i) on the date on which the Participant
has a “separation from service” (other than due to death) within the meaning of
Treasury Regulation § 1.409A-1(h), the Phantom Units payable or settled on
account of a separation from service that are deferred compensation subject to
Code Section 409A shall be paid or settled on the earliest of (i) the first
business day following the expiration of six months from the Participant’s
separation from service, (ii) the date of the Participant’s death, or (iii) such
earlier date as complies with the requirements of Code Section 409A.
 
(c) For all purposes of this Agreement, the Participant shall be considered to
have terminated employment with the Company and its Affiliates when the
Participant incurs a “separation from service” with the Company within the
meaning of Treasury Regulation § 1.409A-1(h).
 
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BLUEKNIGHT ENERGY PARTNERS G.P., L.L.C.
         
Date:
   
By:
       
Name:
       
Title:
           
     The Participant hereby accepts the foregoing Agreement, subject to the
terms and provisions of the Plan and administrative interpretations thereof
referred to above.
                 
PARTICIPANT:
         
Date:
               
[Name]

 
 
 
 
 
 
 
 
 
 
 
Signature Page to Phantom Unit Agreement