Exhibit 10.17

BreitBurn Energy Partners L.P.
2006 Long-Term Incentive Plan

Performance Unit-Based Award Agreement

Grantee:

 

 

Grant Date:

 

(the “Grant Date”)

 

This Performance Unit-Based Award Agreement, dated as of                  , 2007
(this “Agreement”), is between BreitBurn GP, LLC (the “Company”), as the general
partner of BreitBurn Energy Partners L.P., a Delaware limited partnership (the
“Partnership”), and                  , an Employee of the Company or its
Affiliates (the “Grantee”).  Certain capitalized terms used herein are defined
in Appendix A hereto.  Capitalized terms used in this Agreement but not
otherwise defined herein or in Appendix A shall have the meanings ascribed to
such terms in the Plan, unless the context requires otherwise.

WHEREAS, the Company maintains the BreitBurn Energy Partners L.P. 2006 Long-Term
Incentive Plan (the “Plan”), the terms of which are hereby incorporated by
reference and made a part of this Agreement;

WHEREAS, the Plan provides for the issuance of Other Unit-Based Awards which are
denominated, payable or valued in Units, or are otherwise based on or related to
Units, in whole or in part; and

WHEREAS, the Committee, appointed to administer the Plan, has determined that it
would be to the advantage and in the best interest of the Company and the
Partnership to issue the Other Unit-Based Award provided for herein (the
“Performance Unit-Based Award”) to the Grantee as an inducement to enter into or
remain in the service of the Company, the Partnership or their Affiliates, and
as an incentive for increased efforts during such service.

NOW, THEREFORE, in consideration of the mutual covenants herein contained and
for other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:

1.                                       Grant of Award.  The Company hereby
grants to the Grantee a Performance Unit-Based Award of                 notional
units (the “Performance Units”) under the Plan on the terms and conditions set
forth herein.  The Performance Unit-Based Award represents a potential payment
in cash or Units that may become vested and payable on the terms and conditions
set forth in this Agreement, subject to the Grantee’s continued Service.  The
Performance Unit-Based Award shall not represent actual Units or other equity
securities of the Company or the Partnership, and unless and until the
Performance Unit-Based Award has become vested and payable and the Grantee has
elected to receive payment with respect thereto in Units, the Performance
Unit-Based Award shall not represent any right to receive actual Units or equity
securities of the Company or the Partnership.  In the event of any conflict
between the terms of this Agreement and the Plan, which is incorporated herein
by reference as a part of this Agreement, the terms of the Plan shall control.

 

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2.                                       Vesting.  Subject to the Grantee’s
continued Service, the Performance Unit-Based Award shall vest in full with
respect to 100% of the Performance Units subject thereto on [insert date that is
the third anniversary of January 1 of the year in which the grant is made] (the
“Scheduled Vesting Date”); provided, however, that in the event of a Change of
Control prior to the Scheduled Vesting Date, the Performance Unit-Based Award
shall vest in full with respect to 100% of the outstanding Performance Units
subject thereto immediately prior to the consummation of the Change of Control.

3.                                       Payment.  As of the date on which the
Performance Unit-Based Award (or any portion thereof) vests (the “Vesting
Date”), the vested portion of the Performance Unit-Based Award shall represent
the right to receive payment, in accordance with this Section 3, of either (i)
an amount in cash equal to the Fair Market Value on the Vesting Date multiplied
by the number of vested Performance Units subject to the Performance Unit-Based
Award (as adjusted pursuant to Section 3(b) below), or (ii) at the election of
the Grantee made at least 60 days prior to the Vesting Date, a number of Units
equal to the number of vested Performance Units subject to the Performance
Unit-Based Award as of the Vesting Date (as adjusted pursuant to Section 3(b)
below).  The Payment Date with respect to the Performance Unit-Based Award shall
be on or as soon as practicable after the Vesting Date, but in no event later
than 60 days following the Vesting Date.  Notwithstanding the foregoing:

(a)                                  Change of Control.  In the event of a
Change of Control prior to the Scheduled Vesting Date, (i) the Fair Market Value
for purposes of calculating the amount of the cash payment described above in
this Section 3 with respect to any outstanding Performance Units that have not
previously vested shall be the price per Unit paid or payable by the acquiror in
such Change of Control transaction, and (ii) the Payment Date in respect of any
outstanding vested Performance Units that have not yet been paid as of such time
shall be the earlier of (1) the Scheduled Vesting Date, and (2) immediately
prior to the consummation of the Change of Control; and

(b)                                 Adjustment of Number of Performance Units. 
Immediately prior to the Payment Date, the number of Performance Units upon
which the amount of the Performance Unit-Based Award is based shall be adjusted
by multiplying the number of vested Performance Units by (1) the Adjustment
Ratio in effect as of the tenth trading day preceding such Payment Date and (2)
the Payout Multiplier applicable to the Performance Unit-Based Award.

Notwithstanding any other provision of this Agreement, but subject to the
applicable requirements of any regulatory authority, the Committee hereby
reserves the right to make any additional adjustments to the amounts payable
pursuant to the Performance Unit-Based Award if, in the sole discretion of the
Committee, such adjustments are appropriate in the circumstances having regard
to the principal purposes of the Plan and this Agreement.  Unless and until the
Performance Unit-Based Award vests, the Grantee will have no right to payment
with respect thereto.  Prior to actual payment with respect to any vested
portion of the Performance Unit-Based Award, the Performance Unit-Based Award
will represent an unsecured obligation of the Company, payable (if at all) only
from the general assets of the Company.

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4.                                       Termination of Relationship as a
Service Provider.  The following provisions shall apply in the event of a
termination of the Grantee’s Service:

(a)                                  Cause.  In the event of a termination of
the Grantee’s Service as a result of a termination by the Company for Cause,
effective as of the date of termination (the “Termination Date”), the
Performance Unit-Based Award and all Performance Units shall be terminated and
all rights to receive amounts with respect thereto shall be forfeited by the
Grantee without the payment of any consideration therefor.

(b)                                 Non-Cause Termination.  In the event of a
termination of the Grantee’s Service by reason of a termination by the Company
other than for Cause and other than by reason of the Grantee’s Disability, then,
effective as of the Termination Date and notwithstanding any other severance
entitlements or entitlement to notice or compensation in lieu thereof, the
Performance Unit-Based Award shall thereupon vest with respect to a pro rata
number of Performance Units equal to the total number of Performance Units
subject to the Performance Unit-Based Award multiplied by a fraction, the
numerator of which is equal to the number of days in the period commencing on
January 1 of the year in which the Performance Unit-Based Award was granted, and
ending on the Termination Date, and the denominator of which is equal to 1095. 
Subject to the foregoing, in the event of such a termination, the Performance
Unit-Based Award and all Performance Units shall, to the extent not vested as of
the Termination Date, be terminated as of the Termination Date, and all rights
to receive amounts with respect thereto shall thereupon be forfeited by the
Grantee without the payment of any consideration therefor.

(c)                                  Voluntary Resignation.  In the event of a
termination of the Grantee’s Service by the Grantee for any reason other than
the Grantee’s Disability or death, effective as of the Termination Date, the
Performance Unit-Based Award and all Performance Units shall be terminated and
all rights to receive amounts with respect thereto shall be forfeited by the
Grantee without the payment of any consideration therefor.

(d)                                 Death or Disability.  In the event of a
termination of the Grantee’s Service as a result of the Grantee’s death or
Disability, the Performance Unit-Based Award shall thereupon vest in full with
respect to 100% of the Performance Units subject thereto.

(e)                                  Forfeiture of Unvested Award.  No portion
of the Performance Unit-Based Award which is not vested as of the date of the
Grantee’s termination of Service shall thereafter become vested or payable.

For purposes of this Agreement, all questions regarding whether the Grantee has
incurred a termination of Service shall be determined by the Committee in its
sole discretion, and such determination shall be binding and conclusive on all
interested parties.

5.                                       Withholding of Taxes.  To  the  extent
that a payment under this Agreement results in the receipt of compensation by
the Grantee with respect to which the Company or an Affiliate has a tax
withholding obligation pursuant to applicable law, the Company or any Affiliate
is authorized to withhold from any payment with respect to the Performance
Unit-Based Award or from any compensation or other amount owing to the Grantee
the amount (in cash, Units, Units that would otherwise be issued pursuant to the
Performance Unit-Based Award or other property) any applicable taxes payable in
respect of the Performance Unit-Based Award or any payment with respect thereto
and to take such other action as may be necessary in the opinion of the Company
to satisfy its withholding obligations for the payment of such taxes.

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6.                                       Limitations Upon Transfer.  All rights
under this Agreement shall belong to the Grantee alone and may not be
transferred, assigned, pledged, or hypothecated by the Grantee in any way
(whether by operation of law or otherwise), other than by will or the laws of
descent and distribution and shall not be subject to execution, attachment, or
similar process.  Upon any attempt by the Grantee to transfer, assign, pledge,
hypothecate, or otherwise dispose of such rights contrary to the provisions in
this Agreement or the Plan, or upon the levy of any attachment or similar
process upon such rights, such rights shall immediately become null and void.

7.                                       Grantee Acknowledgement.  The Grantee
hereby acknowledges that, notwithstanding anything in the Plan or this Agreement
to the contrary, the Company shall not be required to issue or deliver any Units
hereunder if, in the good faith determination of the Committee, the Company is
not reasonably able to deliver such Units without violating applicable law or
the applicable rules or regulations of any governmental agency or authority or
securities exchange.

8.                                       No Right to Continued Service; No
Rights as Unitholder.  Nothing in the Plan or this Agreement shall confer upon
the Grantee any right to continue as an Employee, Consultant or Director or
shall interfere with or restrict in any way the rights of the Company, the
Partnership or any Affiliate thereof, which are expressly reserved, to discharge
the Grantee at any time for any reason whatsoever, with or without Cause, except
to the extent expressly provided otherwise in a written agreement between the
Company and the Grantee.  Neither the Grantee nor any person claiming under or
through the Grantee will have any of the rights or privileges of a Unitholder
with respect to the Performance Unit-Based Award or the Performance Units unless
and until certificates representing such Units shall have been issued, recorded
on the records of the Company or its transfer agents or registrars, and
delivered to the Grantee or any person claiming under or through the Grantee.

9.                                       Code Section 409A.  Neither the
Performance Unit-Based Award nor any amounts payable hereunder are intended to
constitute or provide for “nonqualified deferred compensation” within the
meaning of Section 409A of the Code (“Section 409A”).  However, notwithstanding
any other provision of the Plan or this Agreement, if at any time the Committee
determines that the Performance Unit-Based Award or any amounts payable
hereunder may be subject to Section 409A, the Committee shall have the right, in
its sole discretion, to adopt such amendments to the Plan or this Agreement or
adopt other policies and procedures (including amendments, policies and
procedures with retroactive effect), or take any other actions, as the Committee
determines are necessary or appropriate either for the Performance Unit-Based
Award and any amounts payable hereunder to be exempt from the application of
Section 409A or to comply with the requirements of Section 409A.

10.                                 Binding Effect.  This Agreement shall be
binding upon and inure to the benefit of any successor or successors of the
Company or the Partnership and upon any person lawfully claiming under the
Grantee.

11.                                 Entire Agreement.  This Agreement
constitutes the entire agreement of the parties with regard to the subject
matter hereof, and contains all the covenants, promises, representations,
warranties and agreements between the parties with respect to the Performance
Unit-Based Award granted hereby.  Without limiting the scope of the preceding
sentence, all prior understandings and agreements, if any, among the parties
hereto relating to the subject matter hereof are hereby null and void and of no
further force and effect.

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12.                                 Modifications.  Except as provided below,
any modification of this Agreement shall be effective only if it is in writing
and signed by both the Grantee and an authorized individual on behalf of the
Company.

13.                                 Governing Law.  This grant shall be governed
by, and construed in accordance with, the laws of the State of Delaware, without
regard to conflicts of laws principles thereof.

[Signature page follows]

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IN WITNESS WHEREOF the parties have executed and delivered this Agreement
effective as of the date first written above.

BREITBURN GP, LLC

 

GRANTEE

By:

 

 

 

 

Name:

 

[Name]

Title:

 

 

 

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APPENDIX A

DEFINITIONS

For purposes of this Agreement, the following terms shall have the meanings
specified below unless the context clearly indicates otherwise.

(a)                                  “Adjustment Ratio” means the ratio used to
adjust the Performance Units with respect to which the amount to be paid on the
applicable Payment Date(s) under the Performance Unit-Based Award is determined
in accordance with the terms of the Agreement.  The Adjustment Ratio shall
initially be equal to one, and shall be cumulatively adjusted thereafter by
increasing the Adjustment Ratio on each Distribution Payment Date by an amount,
rounded to the nearest five decimal places, equal to a fraction having as its
numerator the Distribution, expressed as an amount per Unit, paid on that
Distribution Payment Date, and having as its denominator the Fair Market Value
on the Distribution Payment Date.

(b)                                 “Cause” shall mean “Cause” as defined in the
Grantee’s employment agreement with the Company if such an agreement exists and
contains a definition of Cause, or, if no such agreement exists or such
agreement does not contain a definition of Cause, then “Cause” shall mean (i)
the Grantee’s unauthorized use or disclosure of confidential information or
trade secrets of the Company or its Affiliates or any other material breach of a
written agreement between the Grantee and the Company or its Affiliates,
including without limitation a material breach of any employment or
confidentiality agreement; (ii) the Grantee’s commission of a felony or
commission of any other crime involving dishonesty or moral turpitude under the
laws of the United States or any state thereof; (iii) the Grantee’s gross
negligence or willful misconduct or the Grantee’s willful or repeated failure or
refusal to substantially perform assigned duties; (iv) any act of fraud,
embezzlement, misappropriation or dishonesty committed by the Grantee against
the Company or its Affiliates; or (v) any acts, omissions or statements by the
Grantee which the Company reasonably determines to be detrimental or damaging to
the reputation, operations, prospects or business relations of the Company or
its Affiliates.

(c)                                  “Code” shall mean the U.S. Internal Revenue
Code of 1986, as amended, and the regulations promulgated thereunder.

(d)                                 “Disability” means that the Grantee is
receiving benefits under any long-term disability plan of the Company or any
Affiliate.

(e)                                  “Distribution” means a distribution paid by
the Partnership with respect to the Units, expressed as an amount per Unit.

(f)                                    “Distribution Payment Date” means any
date that a Distribution is distributed to Unitholders.

(g)                                 “Exchange” means the principal national
securities exchange or other market in which trading in Units occurs on the
applicable date (or, if there is no trading in the Units on such date, on the
next preceding date on which there was trading).

(h)                                 “Payment Date” means the date or time at
which amounts payable with respect to the Performance Unit-Based Award shall be
paid to the Grantee in accordance with Section 3 of the Agreement.

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(i)                                     “Payout Multiplier” means, at any time,
the number obtained by subtracting one from the product of (x) 0.04 and (y) the
Percentile Rank in effect at such time; provided, however, that:

(i)                                     in the event that such Percentile Rank
is less than the 35, the Payout Multiplier shall be zero; and

(ii)                                  in the event that such Percentile Rank is
greater than 75, the Payout Multiplier shall be two.

(j)                                     “Peer Comparison Group” means,
generally, organizations with which the Partnership competes for employees in
the United States petroleum industry, including upstream or midstream companies
whose attributes can be considered comparable to the Partnership and which shall
be determined from time to time by the Committee.

(k)                                  “Percentile Rank” means, at any time when
used to determine the Payout Multiplier applicable in adjusting the amount
payable pursuant to the Performance Unit-Based Award, the percentile rank,
expressed as a whole number, of Total Unitholder Return relative to returns
calculated on a similar basis on units, shares or other equity securities of the
oil and gas companies included in the Peer Comparison Group, over the period
commencing on the January 1st of the year in which the Performance Unit-Based
Award was granted, and ending as of the date of the most recently filed or
available financial reports of such companies immediately preceding the Vesting
Date.

(l)                                     “Service” shall mean service as an
Employee, Director, or Consultant.

(m)                               “Total Unitholder Return” means, with respect
to any period, the total return to Unitholders on the Units, calculated using
cumulative Distributions on a reinvested basis and the change in the trading
price of the Units on the Exchange over such period.

(n)                                 “Unitholder” means a holder of Units.

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