Document:

Exhibit 10.5
  
  Execution Copy
  
 

ADOPTION AGREEMENT

BETWEEN

BREITBURN ENERGY COMPANY L.P.

AND

BREITBURN MANAGEMENT COMPANY, LLC

   
 

TABLE OF CONTENTS

	
  ARTICLE I

  	
   

  
	
   

  	
   

  
	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Definitions

  	
  1

  
	
  Section 1.2

  	
  Construction

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
   

  	
   

  
	
  ADOPTION OF
  INCENTIVE COMPENSATION PLANS AND AGREEMENTS

  	
   

  
	
   

  	
   

  
	
  Section 2.1

  	
  Adoption of Existing BreitBurn Management Plans

  	
  3

  
	
  Section 2.2

  	
  Employment Agreements

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
   

  	
   

  	
   

  
	
  AMENDMENTS TO
  ADOPTED PLANS AND OUTSTANDING AWARDS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Adoption by BreitBurn Management

  	
  4

  
	
  Section 3.2

  	
  Amendments to Phantom Options under the Phantom
  Option Plan

  	
  4

  
	
  Section 3.3

  	
  Amendments to Founders Options under the Founders
  Plan

  	
  4

  
	
  Section 3.4

  	
  Amendments to LTIP and Jackson PTUs

  	
  5

  
	
  Section 3.5

  	
  UAR Plan

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
   

  	
   

  
	
  IRC § 409A
  COMPLIANCE

  	
   

  
	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
   

  	
   

  
	
  GENERAL
  PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  General Provisions

  	
  6

  
	
  Section 5.2

  	
  Further Action

  	
  6

  
	
  Section 5.3

  	
  Binding Effect

  	
  6

  
	
  Section 5.4

  	
  Integration

  	
  6

  
	
  Section 5.5

  	
  Creditors

  	
  7

  
	
  Section 5.6

  	
  Waiver

  	
  7

  
	
  Section 5.7

  	
  Counterparts

  	
  7

  
	
  Section 5.8

  	
  Applicable Law

  	
  7

  
	
  Section 5.9

  	
  Invalidity of Provisions

  	
  7

  
	
  Section 5.10

  	
  Amendment or Restatement

  	
  7

  

 

 ADOPTION AGREEMENT
 i

ADOPTION AGREEMENT

THIS ADOPTION AGREEMENT is entered into on, and
effective as of October 10, 2006 (the “Effective Date”), between
BreitBurn Energy Company L.P., a Delaware limited partnership (the “BreitBurn
Energy”), and BreitBurn Management Company, LLC, a Delaware limited liability
company (“BreitBurn Management,” and collectively with BreitBurn Energy, the “Parties” and each, a “Party”).

RECITALS

A.            BreitBurn
Energy currently employs certain individuals who operate its business;

B.            BreitBurn
Management has been organized to provide certain services to BreitBurn Energy
and the newly created BreitBurn Energy Partners L.P. (the “Partnership”) and to
operate the businesses of both BreitBurn Energy and the Partnership and to
fulfill other general and administrative functions relating to such businesses;

C.            BreitBurn
Management will employ the former employees of BreitBurn Energy and assume the
obligations of BreitBurn Energy to such employees; and

D.            BreitBurn
Energy has certain employee benefit plans that will be assumed by BreitBurn
Management.

NOW, THEREFORE, BreitBurn Energy and BreitBurn
Management agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1             Definitions.  The following definitions shall be for all
purposes, unless otherwise clearly indicated to the contrary, applied to the
terms used in this Agreement.

“Adopted Plans”
means the LTIP, the UAR Plan and the Founders Plan.

“Agreement” means this Adoption Agreement, as it may be
amended, supplemented or restated from time to time.

“Base Price”
shall have the meaning set forth in the Founders Plan.

“BreitBurn Energy”
is defined in the introductory paragraph.

“BreitBurn Management”
is defined in the introductory paragraph.

“Breitenbach Agreement”
is defined in Section 2.2.

“Co-CEO  Employment Agreements” is defined
in Section 2.2.

“Distributions”
shall have the meaning set forth in the Founders Plan.

“Effective Date” is defined in the introductory paragraph.

“Employment Agreements” is
defined in Section 2.2.

“Exercise Date”
shall have the meaning set forth in the Founders Plan.

“Founders Options”
is defined in Section 3.3.

“Founders Plan” is defined in Section 2.1.

“IPO Date” means the date on which the initial offering and sale of
common units in the Partnership to the public is completed.

“Jackson Agreement”  is defined in Section
2.2. 

“LTIP” is defined in Section 2.1.

“Original Jackson Agreement” is
defined in Section 2.2.

“Parties” is defined in the introductory paragraph.

“Partnership” is
defined in the introductory paragraph.

“Partnership Interest”
shall have the meaning set forth in the Founders Plan.

“Partnership Valuation”
shall have the meaning set forth in Section 6.6.1 of the Limited Partnership
Agreement of BreitBurn Energy.

“Person” means an individual or a corporation, limited
liability company, partnership, joint venture, trust, unincorporated
organization, association, government agency or political subdivision thereof
or other entity.

“Phantom Option Plan”
is defined in Section 2.2.

“Phantom Options” is defined in Section 3.2.

“PTUs” is defined in Section 3.4.

“Retained Business” is defined in Section 3.3.

“RTUs” is defined in Section 3.4.

“Transferred  Business” is defined in Section
3.3.

“UAR Plan” is
defined in Section 2.1.

“Washburn Agreement”
is defined in Section 2.2.

Other terms defined herein have the meanings so given
them.

 2
 

 

Section 1.2             Construction.  Unless the context requires otherwise: (a)
any pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa; (b) references to Articles and
Sections refer to Articles and Sections of this Agreement; (c) references to
Exhibits refer to the Exhibits attached to this Agreement, each of which is
made a part hereof for all purposes; (d) the terms “include”, “includes”, “including”
and words of like import shall be deemed to be followed by the words “without
limitation;” (e) the terms “hereof,” “herein” and “hereunder” refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
(f) references to money refer to legal currency of the United States of America.  The table of contents and headings contained
in this Agreement are for reference purposes only, and shall not affect in any
way the meaning or interpretation of this Agreement.

ARTICLE
II

ADOPTION OF INCENTIVE COMPENSATION PLANS AND AGREEMENTS

Section 2.1             Adoption
of Existing BreitBurn Management Plans.  Effective on the IPO Date, BreitBurn Energy
hereby assigns to BreitBurn Management, and BreitBurn Management hereby assumes
the obligations of BreitBurn Energy under:

(a)           The
BreitBurn Energy Company L.P. Unit Appreciation Plan for Officers and Key
Individuals (“Founders Plan”);

(b)           The
BreitBurn Energy Company L.P. Long Term Incentive Plan (“LTIP”); and

(c)           The
BreitBurn Energy Company L.P. Unit Appreciation Plan for Employees and
Consultants (“UAR Plan”).

Section 2.2             Employment
Agreements.

(a)           Effective
on the IPO Date, BreitBurn Energy hereby assigns to BreitBurn Management, and BreitBurn
Management hereby assumes the obligations of BreitBurn Energy under, the
Employment Agreement with James G. Jackson and BreitBurn Energy dated July 7,
2006 (the “Original Jackson Agreement”).

(b)           Effective
on the IPO Date, BreitBurn Management will enter into and become a party to the
following agreements:

(i)            Amended and
Restated Employment Agreement with Randall Breitenbach and certain other
parties dated October 10, 2006 (the “Breitenbach Agreement”);

(ii)           Amended and
Restated Employment Agreement with Halbert Washburn and certain other parties
dated October 10, 2006 (the “Washburn Agreement”, and collectively with the
Breitenbach Agreement, the “Co-CEO Employment Agreements”); and

 3
 

 

(iii)          Amendment dated October
10, 2006 to the Original Jackson Agreement (together with the Original Jackson
Agreement, the “Jackson Agreement”, and collectively with the Co-CEO Employment
Agreements, the “Employment Agreements”).

Certain phantom options have been granted and will be
granted pursuant to the Co-CEO Employment Agreements and are referred to herein
collectively as the “Phantom Option Plan.”

ARTICLE
III

AMENDMENTS TO ADOPTED PLANS AND OUTSTANDING AWARDS

Section 3.1             Adoption
by BreitBurn Management.  Effective
on the IPO Date, BreitBurn Management shall be substituted for BreitBurn Energy
in all appropriate places in the Adopted Plans and references to the “Board of
Directors” in such Adopted Plans shall also mean, where applicable, the Board
of Directors of BreitBurn Management. 
Notwithstanding the foregoing sentence, BreitBurn Energy shall remain liable
for the full and complete performance of its duties and obligations under the
Adopted Plans.

Section 3.2             Amendments
to Phantom Options under the Phantom Option Plan.  The phantom options previously granted
pursuant to the Phantom Option Plan and outstanding on the IPO Date (the “Phantom
Options”) shall automatically and without any other action required to be taken
on the part of any of the Parties or any other Person be converted, effective on
the IPO Date, into three separate awards pursuant to the terms of the Phantom
Option Plan set forth in the Co-CEO Employment Agreements.

Section 3.3             Amendments to Founders Options under the Founders
Plan.  The options granted
pursuant to the Founders Plan and outstanding on the IPO Date (the “Founders
Options”) shall automatically and without any other action required to be taken
on the part of any of the Parties or any other Person be converted, effective
on the IPO Date, into the following three separate awards, which shall be
settled in cash:

(a)           a
phantom unit based on the difference between (i) the value of a portion of the
Base Price allocable to the operations attributable to properties of BreitBurn
Energy not transferred to the Partnership (the “Retained Business”) and
(ii) the value of a portion of one Partnership Interest plus Distributions
allocable to the Retained Business, as determined on the basis of the most
recently completed Partnership Valuation at the Exercise Date,

(b)           a
phantom unit based on the difference between (i) the value of a portion of the
Base Price allocable to the operations attributable to the properties of BreitBurn Energy
transferred to the Partnership (the “Transferred Business”) and (ii) the IPO offering price for a common
unit of the Partnership plus Distributions allocable to the Transferred Business up to the IPO
Date, and

(c)           a
phantom unit based on the difference in (i) the IPO offering price for a common
unit of the Partnership and (ii) the closing sales price for a common unit of the Partnership
on the Exercise Date as reported by such reporting service as the Board of
Directors

 4
 

 

of BreitBurn Management may choose, plus distributions on a common unit
from the IPO Date to the Exercise Date.

The general terms of the awards set forth in
paragraphs (a), (b) and (c) above shall remain unchanged from the Founders
Options, except as necessary or helpful to effectuate the conversion of such
options as provided above. No new grants shall be made under the Founders
Option Plan.

Section 3.4             Amendments
to LTIP and Jackson PTUs.

(a)           Except
as provided in Section 3.4(c) below, no change shall be made in the grants
under the LTIP outstanding on the IPO Date.

(b)           The
performance trust units covering incentive units (“PTUs”) granted under the
LTIP after the IPO Date shall be as follows:

(i)            a portion of the
grant shall be in restricted phantom units in the Partnership with the same
economic and other terms as the existing PTU awards, but which may be settled
at vesting at the option of the employee in cash or common units of the
Partnership (net of any tax withholding), and

(ii)           the remaining
portion of the grant, at the employee’s election, shall be provided (A) in PTUs
with respect to Provident Energy Trust with the same economic and other terms
as under the existing plan or (B) in restricted phantom interests in BreitBurn
Energy with the same economic and other terms as under existing PTUs (but
without a multiplier), but which upon vesting may be settled in cash or vested phantom
units in BreitBurn Energy at the employee’s option.

(c)           The
PTUs granted under the LTIP pursuant to the Jackson Agreement shall
automatically be converted on the IPO Date into two separate and equal awards,
which together shall have the same value as the PTUs prior to such conversion
on the IPO Date, as set forth in Section 3.4(b)(i) and Section 3.4(b)(ii)(B)
above.

(d)           With
respect to restricted trust units (“RTUs”) granted after the IPO Date,
employees will receive restricted phantom units in BreitBurn Energy and in the Partnership
with the same general terms as the existing RTUs.

Section 3.5             UAR
Plan.  No amendments are made
to the UAR Plan other than as provided in Section 3.1 above and no new grants
shall be made under the UAR Plan.

ARTICLE
IV

IRC § 409A COMPLIANCE

Notwithstanding
anything in the Adopted Plans or the Phantom Option Plan or the terms of any
awards granted thereunder to the contrary, BreitBurn Management shall have the
power to

 5
 

 

modify the Adopted Plans and the Phantom Option Plan and such awards as
necessary for such plans and awards to comply with Section 409A of the Internal
Revenue Code.

ARTICLE V

GENERAL PROVISIONS

Section 5.1             General
Provisions.  All notices or
other communications required or permitted under, or otherwise in connection
with, this Agreement must be in writing and must be given by depositing same in
the mail, addressed to the Person to be notified, postpaid and registered or
certified with return receipt requested or by transmitting by national
overnight courier or by transmitting by national overnight courier or by
delivering such notice in person or by facsimile to such Party.  Notice given by mail, national overnight
courier or personal delivery shall be effective upon actual receipt.  Notice given by facsimile shall be effective
upon confirmation of receipt when transmitted by facsimile if transmitted
during the recipient’s normal business hours or at the beginning of the
recipient’s next business day after receipt if not transmitted during the
recipient’s normal business hours.  All
notices to be sent to a Party pursuant to this Agreement shall be sent to or
made at the address, in each case as follows:

if to the BreitBurn Energy:

BreitBurn Energy Company L.P.

515 South Flower  Street, Suite 4800

Los Angeles, CA 90071

Attention:  Randall H. Breitenbach
                  Halbert S. Washburn

Fax:  (213) 225-5917

if to BreitBurn Management:

BreitBurn Management Company, LLC

515 South Flower  Street, Suite 4800

Los Angeles, CA 90071

Attention:  Randall J. Findlay

Fax:  (213) 225-5917

Section 5.2             Further Action.  The Parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as
may be necessary or appropriate to achieve the purposes of this Agreement.

Section 5.3             Binding
Effect.  This Agreement shall
be binding upon and inure to the benefit of the Parties hereto and their heirs,
executors, administrators, successors, legal representatives and permitted
assigns.

Section 5.4             Integration.  This Agreement constitutes the entire
Agreement among the Parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.

 6
 

 

Section 5.5             Creditors. 
None of the provisions of this Agreement shall be for the benefit of, or
shall be enforceable by, any creditor of the Partnership.

Section 5.6             Waiver. 
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach of any other covenant, duty, agreement or condition.

Section 5.7             Counterparts.  This Agreement may be executed in
counterparts, all of which together shall constitute an agreement binding on
all the Parties hereto, notwithstanding that all such Parties are not
signatories to the original or the same counterpart.  Each Party shall become bound by this
Agreement immediately upon affixing its signature hereto.

Section 5.8             Applicable Law.  This Agreement shall be construed in
accordance with and governed by the laws of the State of California, without
regard to the principles of conflicts of law.

Section 5.9             Invalidity of Provisions.  If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not be affected thereby.

Section 5.10           Amendment or Restatement.  This Agreement may be amended or restated
only by a written instrument executed by each of the Parties.

 7

IN WITNESS WHEREOF, the Parties have executed
this Agreement on, and effective as of, the Effective Date.

	
  

  	
  BREITBURN ENERGY COMPANY L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Pro GP Corp., its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Randall J. Findlay

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Randall J. Findlay

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BREITBURN MANAGEMENT COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Halbert S. Washburn

  
	
   

  	
   

  	
  Name:

  	
  Halbert S. Washburn

  
	
   

  	
   

  	
  Title:

  	
  Co-Chief Executive OfficerExhibit 10.7

 

AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

AGREEMENT by and between PRO GP
CORP. (“BECLP GP”), BREITBURN MANAGEMENT COMPANY, LLC (“Manageco), BreitBurn
GP, LLC (the “MLP GP”), and HALBERT WASHBURN (the “Executive”), dated as of October
10, 2006 (the “Agreement”).

WHEREAS, the Executive currently
is an employee of BreitBurn Energy Company L.P. (the “Partnership”);

WHEREAS, certain assets of the
Partnership will be contributed to BreitBurn Energy Partners L.P. (the “MLP”)
and the employees of the Partnership, including the Executive, will be
transferred to Manageco, all effective upon the date of completion of the
initial public offering of common units of the MLP (the “IPO Date”); and

WHEREAS, in conjunction with the
foregoing, the parties wish to amend and restate that certain Employment
Agreement between the Executive and the Partnership dated June 15, 2004 (the “Prior
Agreement”) to provide for the employment of the Executive in the capacities
and on the terms and subject to the conditions set forth in this Agreement;

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1.             Definitions. All capitalized terms not defined
herein shall have the meanings set forth in Appendix A hereto.

2.             Employment Period. The Employer hereby agrees to
employ the Executive, and the Executive hereby agrees to remain in the employ
of the Employer, subject to the terms and conditions of this Agreement during
the period (the “Employment Period”) beginning on the date of this Agreement
and ending on December 31, 2008; provided, however, that commencing on December
31, 2008 (and each December 31 thereafter), the term of this Agreement shall
automatically be extended for one (1) additional year, unless at least ninety
(90) days prior to such date, the Employer or the Executive gives written
notice to the other party that it or he, as the case may be, does not wish to
so extend the term of this Agreement.

3.             Terms of Employment.

(a)           Position and Duties.

(i)            During the Employment Period, (A)
the Executive shall serve as Co-Chief Executive Officer of the Employer, with
the usual and customary duties of such office, and shall report to the Board or
a nominee designated by the Board, (B) except as limited by applicable law or
the Partnership Agreement, and subject to the direction of the Board or its
nominee, the Executive shall have full authority, together with the Employer’s
other Co-Chief Executive Officer, to operate the day to day business affairs of
the Employer and (C) the Executive shall be appointed to and serve as a member
of the Board.

(ii)           During the Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to

 

devote such attention and
time during normal business hours to the business and affairs of the Employer
as necessary to perform his duties under the Agreement.  During the Employment Period it shall not be
a violation of this Agreement for the Executive to (A) carry on other
non-competitive business ventures with the consent of the Board or its nominee
(not to be unreasonably withheld), (B) serve on the boards or committees of
such ventures or trade associations or civic or charitable organizations,
provided, however, the Executive may  not
serve at the same time on more than two boards or committees of “for profit”
entities unless requested to do so by the Employer, which request shall be
subject to the prior approval of the Board, (C) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (D) manage
personal investments, so long as such activities do not significantly interfere
with the performance of the Executive’s responsibilities as an employee of the
Employer in accordance with this Agreement.

(iii)          The Executive’s services shall be
performed at the headquarters of the Employer, and such location shall be in
the Greater Los Angeles metropolitan area.

(b)           Compensation.

(i)            Base Salary. During the
Employment Period, the Executive shall receive a base salary (the “Base Salary”)
at an annual rate of $275,000, as the same may be increased thereafter in the
discretion of the Board. The Base Salary shall be paid at such intervals as the
Employer pays executive salaries generally. During the Employment Period, the
Base Salary shall be reviewed by the Board annually for possible increase. Any
increase in the Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. The Base Salary shall not be
reduced after any such increase, and the term Base Salary as utilized in this
Agreement shall refer to the Base Salary as so increased.

(ii)           Annual Bonus. In addition to
the Base Salary, the Executive shall be eligible to earn, for each fiscal year
of the Employer ending during the Employment Period, an annual cash bonus of up
to one hundred percent (100%) of the Base Salary based upon performance
parameters as approved by the Board based upon the Employer’s Short Term
Incentive Plan (the “Annual Bonus”).

(iii)          Phantom Options. Effective as
of the first (1st) day of each fiscal year of the Employer during the
Employment Period, the Executive shall be granted a Phantom Option (the “Phantom
Option”) on the terms and conditions set forth in Appendix B hereto.

(iv)          Benefit Plans and Policies.
During the Employment Period, the Executive and/or the Executive’s eligible
dependents, as the case may be, shall be entitled to participate in and shall
receive all benefits, at levels suitable for executives, under the Employer’s
savings and retirement plans and policies, welfare plans and policies and fringe
benefit plans and policies (with the

 2
 

 

automobile lease
allowance not to exceed one thousand dollars ($1000) per month), which plans
and policies shall be consistent with those maintained by the Employer for
similarly situated employees, but in no event shall be inferior to the plans
and policies maintained by the Employer as of the date of this Agreement.

(v)           Expenses. During the
Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive on behalf
of or in furtherance of the business of the Employer.

(vi)          Vacation. During the Employment
Period, the Executive shall be entitled to paid vacation in accordance with the
Employer’s vacation policy, but in no event less than five (5) weeks per year.

4.             Termination of Employment.

(a)           Death or Disability. The
Executive’s employment shall terminate automatically upon the Executive’s death
during the Employment Period. If the Employer determines in good faith that the
Disability of the Executive has occurred during the Employment Period, it may
give to the Executive written notice in accordance with Section 11(b) hereof of
its intention to terminate the Executive’s employment. In such event, the
Executive’s employment with the Employer shall terminate effective on the
thirtieth (30th) day after receipt of such notice by the Executive (the “Disability
Effective Date”); provided, that within thirty (30) days after such receipt,
the Executive shall not have returned to full-time performance of the Executive’s
duties.

(b)           Cause. The Employer may
terminate the Executive’s employment during the Employment Period for Cause or
without Cause.

(c)           Good Reason. The Executive’s
employment may be terminated by the Executive during the Employment Period for
Good Reason or without Good Reason.

(d)           Notice of Termination. Any
termination by the Employer or the Executive shall be communicated by a Notice
of Termination to the other parties hereto given in accordance with Section
11(b) hereof. The failure by the Executive or the Employer to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing
of Good Reason or Cause shall not waive any right of the Executive or the
Employer, respectively, hereunder or preclude the Executive or the Employer,
respectively, from asserting such fact or circumstance in enforcing the
Executive’s or the Employer’s rights hereunder.

5.             Obligations of the Employer upon
Termination.

(a)           Good Reason; Other Than for Cause,
Death or Disability. If, during the Employment Period, the Employer shall
terminate the Executive’s employment without Cause (other than as a consequence
of death or Disability, which shall have the effects set forth in Section 5(c)
below), or the Executive shall terminate employment for Good Reason:

 3
 

 

(i)            The Executive shall be paid, in a
single lump sum payment within thirty (30) days after the Date of Termination,
the aggregate amount of (A) the Executive’s earned but unpaid Base Salary and
accrued but unpaid vacation pay, if any, through the Date of Termination, any
Annual Bonus required to be paid to the Executive pursuant to Section 3(b)(ii)
hereof for any fiscal year that ends on or before the Date of Termination and
payment with respect to Phantom Options required to be paid to the Executive
pursuant to Section 3(b)(iii) hereof for any fiscal year that ends on or before
the Date of Termination to the extent not previously paid (the “Accrued
Obligations”), plus (B) the present value (using the prime rate of the Employer’s
banker at such time) of all employee benefits referred to in Section 3(b)(iv)
hereof, other than group medical, drug and dental benefits, as referred to in
Section 5(a)(ii) hereof (which would have been available to the Executive for a
period of twenty-four (24) months from the Date of Termination), plus (C) two
(2) times the sum of (X) the Executive’s Base Salary as in effect immediately
prior to the Date of Termination and (Y) the average of his Annual Bonuses for
the two (2) years immediately preceding the Date of Termination;

(ii)           For a period of two (2) years
following the Date of Termination, the Executive and/or the Executive’s
eligible dependents shall continue to be provided with medical, prescription
and dental benefits at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies if the
Executive’s employment had not been terminated. 
Notwithstanding the foregoing, the Executive shall cease to receive such
medical, prescription and dental benefits on the date the Executive is eligible
to receive such benefits under another employer-provided group plan. Such
health benefits shall be provided to the Executive in a manner that neither the
coverage nor the benefits are includible in the Executive’s taxable gross
income.  If the Employer is unable to
provide such coverage or benefits to the Executive on that basis, then the
Employer shall pay the Executive such additional amounts as necessary to make
the Executive “whole” on a net after-tax basis for the receipt of such coverage
or benefits;

(iii)          The Executive’s Phantom Options shall
vest as of the Date of Termination and shall be payable as set forth in
Appendix B hereto; and

(iv)          To the extent not theretofore paid or
provided, the Employer shall timely pay or provide to the Executive any accrued
benefits and other amounts or benefits required to be paid or provided or which
the Executive is eligible to receive prior to the Date of Termination under any
plan, program, policy or practice or contract or agreement of the Employer and
its affiliates according to their terms (such other amounts and benefits shall
be hereinafter referred to as the “Other Benefits”).

(b)           Cause; Other than for Good Reason.
If the Executive’s employment shall be terminated by the Employer for Cause or
by the Executive other than for Good Reason during the Employment Period, the
Employer shall pay to the Executive the Accrued

 4
 

 

Obligations in cash
within thirty (30) days after the Date of Termination and shall provide any
Other Benefits which have accrued during the Employment Period.

(c)           Death or Disability. If the
Executive’s employment is terminated by reason of the Executive’s death or
Disability during the Employment Period:

(i)            The Accrued Obligations shall be
paid to the Executive’s estate or beneficiaries or to the Executive, as
applicable, in cash within thirty (30) days of the Date of Termination;

(ii)           At the time when annual bonuses are
paid to other peer executives of the Employer for the fiscal year in which the
Date of Termination occurs, the Executive’s estate or beneficiaries or the
Executive, as applicable, shall be paid an amount equal to the product of (A)
the amount of the Annual Bonus to which the Executive would have been entitled,
if the Executive’s employment had not been terminated, and (B) a fraction, the
numerator of which shall be the number of days in such fiscal year through the
Date of Termination and the denominator of which shall be 365, to the extent
not theretofore paid;

(iii)          The Executive’s Phantom Options shall
vest as of the Date of Termination and shall be payable as set forth in
Appendix B hereto; and

(iv)          The Other Benefits shall be paid or
provided to the Executive’s estate or beneficiaries or to the Executive, as
applicable, on a timely basis; and

(v)           Through the remainder of the
Employment Period, or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Executive and/or the
Executive’s eligible dependents shall continue to be provided with medical,
prescription and dental benefits as if the Executive’s employment had not been
terminated.  Such health benefits shall
be provided to the eligible dependents in a manner that neither the coverage
nor the benefits are includible in the eligible dependent’s taxable gross
income.  If the Employer is unable to
provide such coverage or benefits to the eligible dependent on that basis, then
the Employer shall pay the eligible dependent such additional amounts as
necessary to make the eligible dependent “whole” on a net after-tax basis for
the receipt of such coverage or benefits;

6.             Non-exclusivity of Rights. Nothing in this
Agreement shall prevent or limit the Executive’s continuing or future
participation in any plan, program, policy or practice provided by the Employer
(other than policies relating to severance payments or obligations on
termination of employment for any reason) and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Employer. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Employer at or subsequent to the Date of Termination shall
be payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.

 5
 

 

7.             Full Settlement. The Employer’s obligation to
make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Employer may have
against the Executive or others. In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement,
and, except as provided in Section 5(a)(ii) hereof, such amounts shall not be
reduced whether or not the Executive obtains other employment.

8.             Executive’s Covenants.

(a)           The Executive shall hold in a
fiduciary capacity for the benefit of the Employer all secret or confidential
information, knowledge or data relating to the Employer, and its respective
businesses, which shall have been obtained by the Executive during the
Executive’s employment by the Employer and which shall not be or become public
knowledge (other than by acts by the Executive or representatives of the Executive
in violation of this Agreement). After termination of the Executive’s
employment with the Employer, the Executive shall not, directly or indirectly,
without the prior written consent of the Employer or as may otherwise be
required by law or legal process, use for his own benefit such information,
knowledge or data, or communicate or divulge any such information, knowledge or
data to anyone other than the Employer and those designated by it; provided,
that if the Executive receives actual notice that the Executive is or may be
required by law or legal process to communicate or divulge any such
information, knowledge or data, the Executive shall promptly so notify the
Employer.

(b)           While employed by the Employer and
for a period of two (2) years following the Date of Termination, regardless of
the reason for the termination, the Executive shall not, without the prior
consent of the Employer (which consent shall not be unreasonably withheld),
directly or indirectly (i) solicit, induce, or encourage any employee of the
Employer who is employed at any time within six (6) months of the time of
termination to terminate his or her employment with the Employer or (ii) hire
any such employee within six (6) months after that employee’s termination of
employment with the Employer.

(c)           While employed by the Employer and
for a period of two (2) years following the Date of Termination, regardless of
the reason for the termination, the Executive shall not, without the prior
consent of the Employer, be employed by, provide consultative service to (with
or without pay), own, manage, operate, join, control, participate in, or be
connected with (as a stockholder, partner, or otherwise), any business,
individual, partner, firm, corporation, or other entity that is a Competitor of
the Employer; provided, however, that the “beneficial ownership” by the
Executive, either individually or as a member of a “group,” as such terms are
used in Rule 13d of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended, of not more than two percent (2%) of the
voting stock of any publicly held corporation shall not be a violation of this
Agreement.

 6
 

 

(d)           In no event shall an asserted
violation of the provisions of this Section 8 constitute a basis for deferring
or withholding any amounts otherwise payable to the Executive under this
Agreement. However, in recognition of the facts that irreparable injury will
result to the Employer in the event of a breach by the Executive of his
obligations under Sections 8(a), 8(b) and 8(c) above, that monetary damages for
such breach would not be readily calculable, and that the Employer would not
have an adequate remedy at law therefor, the Executive acknowledges, consents
and agrees that in the event of such breach, or the threat thereof, the
Employer shall be entitled, in addition to any other legal remedies and damages
available, to specific performance thereof and to temporary and permanent
injunctive relief (without the necessity of posting a bond) to restrain the
violation or threatened violation of such obligations by the Executive.

(e)           Upon the termination of Executive’s
employment with the Employer for any reason, Executive shall immediately return
and deliver to the Employer any and all papers, books, records, documents, memoranda
and manuals, e-mail, electronic or magnetic 
recordings or data, including all copies thereof, belonging to the
Employer or relating to its business, in Executive’s possession, whether
prepared by Executive or others. If at any time after the Employment Period,
Executive determines that he has any secret or confidential information in his
possession or control, Executive shall immediately return to the Employer all
such information, including all copies and portions thereof.

9.             Successors.

(a)           This Agreement is personal to the
Executive and without the prior written consent of the Employer shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable
by the Executive’s legal representatives.

(b)           This Agreement shall inure to the
benefit of and be binding upon the Employer and its successors and assigns.

(c)           The Employer shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Employer to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Employer would be required to perform it
if no such succession had taken place. As used in this Agreement, “Employer”
shall mean the Employer as defined in this Agreement and any successor to its
business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law or otherwise.

10.           Indemnification and Directors’ and
Officers’ Insurance.

(a)           During the Employment Period and
thereafter, the Employer shall indemnify the Executive to the fullest extent
permitted under law from and against any expenses (including but not limited to
attorneys’ fees, expenses of investigation and preparation and fees and
disbursements of the Executive’s accountants or other experts),

 7
 

 

judgments, fines,
penalties and amounts paid in settlement actually and reasonably incurred by
the Executive in connection with any proceeding in which the Executive was or
is made party or was or is involved (for example, as a witness) by reason of
the fact the Executive was or is employed by the Employer. Such indemnification
shall continue as to the Executive during the Employment Period and for at
least six (6) years from the Date of Termination with respect to acts or
omissions which occurred prior to his cessation of employment with the Employer
and shall inure to the benefit of the Executive’s heirs, executors and
administrators. The Employer shall advance to the Executive all costs and
expenses incurred by him in connection with any proceeding covered by this
provision within twenty (20) calendar days after receipt by the Employer of a
written request for such advance. Such request shall include an undertaking by
the Executive to repay the amount of such advance if it shall ultimately be
determined that he is not entitled to be indemnified against such costs and
expenses.

(b)           The Employer agrees to maintain
directors’ and officers’ liability insurance policies covering the Executive
which shall provide him with coverage that is at least as favorable to the
Executive as the coverage that Provident provides to its directors and officers
from time to time. Such insurance coverage shall continue as to the Executive
even if he has ceased to be a director, member, employee or agent of the
Employer with respect to acts or omissions which occurred prior to his
cessation of employment with the Employer. Insurance contemplated under this
Section 10(b) shall inure to the benefit of the Executive’s heirs, executors
and administrators.

11.           Miscellaneous.

(a)           This Agreement shall be governed by
and construed in accordance with the laws of the State of California, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.

(b)           All notices and other communications
hereunder shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

If to the
Executive:   at the
Executive’s most recent address on the records of the Employer; and

If to the Employer:

	
  Before the IPO Date:

  	
   

  	
  After the IPO Date:

  
	
   

  	
   

  	
   

  
	
  BreitBurn Energy Company L.P.

  Attn.:
  Randall Findlay

  515
  South Flower Street, Suite 4800

  Los Angeles, CA 90071

  	
  or

  	
  BreitBurn Management Company LLC

  Attn.:
  Randall Findlay

  515
  South Flower Street, Suite 4800

  Los Angeles, CA 90071

  

 

 8
 

 

 

with a copy to:

	
  Before the IPO Date:

  	
   

  	
  After the IPO Date:

  
	
   

  	
   

  	
   

  
	
  BreitBurn Energy Company L.P.

  c/o Provident Energy Trust

  Suite 700

  112-4th Avenue SW

  Calgary, AB T20 OH3

  Attn: 
  Randall Findlay

  Thomas Buchanan

  	
   

  or

  	
  BreitBurn Management Company LLC

  c/o Provident Energy Trust

  Suite 700

  112-4th Avenue SW

  Calgary, AB T20 OH3

  Attn: 
  Randall Findlay

  Thomas Buchanan

  
	
   

  	
   

  	
   

  
	
  Macleod
  Dixon LLP

  Attn.:
  Thomas Hirst, Q.C.

  3700
  Canterra Tower

  400
  3rd Avenue SW

  Calgary, AB T2P 4H2

  	
   

   

  or

  	
  Macleod
  Dixon LLP

  Attn.:
  Thomas Hirst, Q.C.

  3700
  Canterra Tower

  400
  3rd Avenue SW

  Calgary, AB T2P 4H2

  

 

or to such other address
as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received
by the addressee.

(c)           The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.

(d)           The Employer may withhold from any
amounts payable under this Agreement such federal, state, local or foreign
taxes as shall be required to be withheld pursuant to any applicable law or
regulation.

(e)           The Executive’s or the Employer’s
failure to insist upon strict compliance with any provision of this Agreement
or the failure to assert any right the Executive or the Employer may have
hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 4(c) hereof, shall not
be deemed to be a waiver of such provision or right or any other provision or
right of this Agreement.

(f)            This Agreement, including the
Appendices hereto, constitutes the entire agreement of the parties with respect
to the subject matter hereof and is intended to supersede and replace the Prior
Agreement and any other prior employment or severance agreements or
arrangements between the Executive, on the one hand, and BECLP GP, the
Partnership, the MLP GP and Manageco, on the other.

(g)           The Executive represents that he has
not, either individually or as a representative or member of a class, filed or
caused to be filed any complaints, charges or lawsuits against the Partnership
or the Employer with any governmental agency, court, arbitrator or mediator
with respect to his employment by the Partnership or the Employer

 9
 

 

and releases any such
claims he may have against the Partnership or the Employer as of the date of
this Agreement.

(h)           Notwithstanding anything in this
Agreement to the contrary, it is intended that all items of compensation provided
for under this Agreement, including Attachment B, shall be paid to the
Executive within the time period required to qualify as a “short-term deferral”
that is exempt from the additional tax under Section 409A of the Internal
Revenue Code (“Code”); provided, however, if the Executive is a “specified
employee,” as defined in Code Section 409A with respect to the Employer or an
affiliate, payments pursuant to this Agreement shall be paid on the date which
is six months after the date of the Executive’s “separation from service,” as
defined in Code Section 409A and the regulations thereunder, or, if earlier,
the date of the Executive’s death in a lump sum.  In the event that any payment hereunder would
subject the Executive to the additional tax provided under Section 409A, the
parties shall take all reasonable actions, including amendments hereto, for
such payment either to comply with the requirements of Section 409A or to be
exempt therefrom.  If the Executive,
nonetheless, becomes subject to the additional tax under Section 409A with
respect to any payment hereunder, the Employer shall pay the Executive an
additional lump sum cash amount such that after such additional lump sum the
Executive is in the same net after-tax position he would have been in had no
payments under this Agreement subjected him to the additional tax under Section
409A.

(i)            During the Employment Period
beginning on and following the IPO Date, the parties agree that the Executive
shall serve as the Co-Chief Executive Officer of BECLP GP, the MLP GP and
Manageco and also as a member of the Boards of Directors of each of such
entities.  The parties intend for the
provisions of this Agreement to be construed as necessary to effectuate this
intent, including when appropriate as if it were a separate agreement with each
Employer.  However, nothing herein shall
operate or be construed as providing the Executive with a duplication of
compensation from the Employers.  The
Boards of Directors of BECLP GP, the MLP GP and Manageco shall use their best
efforts to resolve any ambiguities or conflicts as to their respective
obligations to the Executive under this Agreement and the cost of the Executive’s
compensation (other than the Phantom Options) and benefits shall be shared by
them on the basis of his estimated time devoted to the business of each or on
such other basis as the Employers may mutually agree.

(j)            This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original but which together shall constitute one and the same instrument.

[Signature page follows]

 10
 

 

IN WITNESS WHEREOF, the parties
have executed this Agreement, effective for all purposes as of the day and year
first above written.

	
   

  	
  Executive

  
	
   

  	
   

  
	
   

  	
  /s/ Halbert
  Washburn

  	
   

  
	
   

  	
  Halbert Washburn

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Pro GP
  Corp.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Randall J.
  Findlay

  	
   

  
	
   

  	
   

  	
  Name: Randall J.
  Findlay

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BreitBurn
  Management Company, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Randall H.
  Breitenbach

  	
   

  
	
   

  	
   

  	
  Name: Randall H.
  Breitenbach

  
	
   

  	
   

  	
  Title: Co-Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BreitBurn
  GP, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Randall H.
  Breitenbach

  	
   

  
	
   

  	
   

  	
  Name: Randall H.
  Breitenbach

  
	
   

  	
   

  	
  Title: Co-Chief
  Executive Officer

  
					

 

 11

APPENDIX A

 

“Board” means (i) prior to the IPO Date, the Board of
Directors of Pro GP Corp. and (ii) on or after the IPO Date, the Board of
Directors of Pro GP Corp., BreitBurn GP, LLC or BreitBurn Management Company,
LLC, as the context requires.

“Cause” means the following:

(i) the willful and continued failure of the Executive
to perform substantially the Executive’s duties with the Employer (as described
in Section 3(a) hereof) (other than any such failure resulting from incapacity
due to physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board which specifically
identifies the manner in which the Board believes that the Executive has not
substantially performed the Executive’s duties and the Executive is given a
reasonable opportunity of not more than ten (10) business days to cure any such
failure to substantially perform;

(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct, in each case which is materially and demonstrably
injurious to the Employer; or

(iii) (A) any act of fraud, or material embezzlement
or material theft by the Executive, in each case, in connection with the
Executive’s duties hereunder or in the course of the Executive’s employment
hereunder or (B) the Executive’s admission in any court, or conviction, or plea
of nolo contendere, of a felony involving moral turpitude, fraud, or material
embezzlement, material theft or material misrepresentation, in each case,
against or affecting the Employer.

For purposes of this provision, no act or failure to
act, on the part of (he Executive, shall be considered “willful” unless it is
done, or omitted to be done, by the Executive in bad faith or without
reasonable belief that the Executive’s action or omission was in the best
interests of the Employer. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board or based upon the
advice of counsel for the Employer shall be conclusively presumed to be done,
or omitted to be done, by the Executive in good faith and in the best interests
of the Employer. The cessation of employment of the Executive shall not be
deemed to be for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of the
Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel for the Executive, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in clauses (i), (ii) and (iii) above, and
specifying the particulars thereof in detail; provided, that if the Executive
is a member of the Board, the Executive shall not vote on such resolution nor
shall the Executive be counted.

 A-1
 

“Change in Control” means
any of the following:

(i)            with
respect to Provident Energy Trust (“Provident”), the acquisition and exercise,
or either of them, of de facto control or the acquisition of the power to
exercise de facto control over twenty percent (20%) of the issued and
outstanding securities which carry the right to vote for directors of Provident
or Provident Energy Ltd. by any person, firm or corporation or group which did
not, as of the date hereof, exercise or have power to exercise such control
over Provident or Provident Energy Ltd.;

(ii)           with
respect to the Employer, a transaction which results in (a) the sale or other
disposition of all or substantially all of the assets of the Employer or (b)
persons who are not stockholders (or members) of the Employer before the
transaction acquiring stock (or membership interests) of the Employer holding
more than fifty percent (50%) of the voting power of the Employer’s stock (or
membership interests) in the Employer, but excluding with respect to Pro GP
Corp. in the case of either (a) or (b), any sale or transaction that is related
to a sale or transaction under (iii) (a) (i) or (ii) below; or

(iii)          with
respect to the MLP or the Partnership, (a) the sale or other disposition in one
or more transactions of all or substantially all of the assets of either the
MLP or the Partnership, but excluding (i) any sale or transaction that is
between the MLP and the Partnership and (ii) any sale or transaction by the
Partnership that relates to Subject Assets (as defined in the Omnibus
Agreement) that were offered to the MLP in accordance with the right of first
offer provisions of Article III of the Omnibus Agreement but were not purchased
by the MLP, or (b) BreitBurn GP, LLC or Pro GP Corp. ceasing to be the general
partner of the MLP or the Partnership, respectively, except, in the case of the
Partnership, where such results from a sale or transaction described in either
(iii) (a) (i) or (ii) above.

“Competitor” means any person, trade or business which
is engaged in the business of producing oil and/or gas on properties on which
the Partnership or, after the IPO Date, the MLP or the Partnership, produces
oil and/or gas or on properties within two miles of the Partnership’s or the
MLP’s properties or which, as of the Date of
Termination, the Partnership or, after the IPO Date, the MLP or the
Partnership, has identified and is then still actively evaluating as step-out
or development opportunities.

“Date of Termination” means (i) if the Executive’s
employment is terminated by the Employer for Cause, or by the Executive for
Good Reason, the date of receipt of the Notice of Termination or any later date
specified therein (which date shall not be more than thirty (30) days after the
giving of such notice), as the case may be, (ii) if the Executive’s employment
is terminated by the Employer other than for Cause or Disability, the date on
which the Employer notifies the Executive of such termination and (iii) if the
Executive’s employment is terminated by reason of death or Disability, the date
of the death of the Executive or the Disability Effective Date, as the case may
be.

“Disability” means the absence of the Executive from
the Executive’s duties with the  Employer
on a full-time basis for ninety (90) consecutive days or on a total of 180 days
in any twelve (12) month period, in either case as a result of incapacity due
to mental or physical illness

 A-2
 

which is determined to be
total and permanent by a physician selected by the Employer or its insurers and
acceptable to the Executive or the Executive’s legal representative (such
acceptance not to be unreasonably withheld).

“Employer” means (i) prior to the IPO Date, Pro GP
Corp. and (ii) on and after the IPO Date, Pro GP Corp., the MLP GP or Manageco,
as the context requires.

“Good Reason” means, in the absence of a written
consent of the Executive, the following:

(i) the assignment to the Executive of any material
duties inconsistent in any respect with the Executive’s title of Co-Chief
Executive Officer and reporting requirements, position (including status and
offices), authority, material duties or responsibilities as contemplated by
Section 3(a) hereof, or any other action by the Employer which results in a
diminution in such title, reporting requirements, position, authority, material
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Employer promptly after receipt of notice thereof given by the
Executive;

(ii)           any
material breach by the Employer of any material provisions of this Agreement;

(iii)          the
Employer’s requiring the Executive to be based at any office or location other
than as provided in Section 3(a)(iii) hereof;

(iv)          any
purported termination by the Employer of the Executive’s employment otherwise
than as expressly permitted by this Agreement;

(v)           any
failure by the Employer to comply with and satisfy Section 9(c) hereof;

(vi)          any
failure to elect the Executive to the Board or the removal of the Executive
from the Board for any reason other than Cause, death, his voluntary
resignation, or Disability;

(vii)         a
Change in Control, as defined above; or

(viii)        Provident’s
direct or indirect acquisition of any interest in, or operation of, any
upstream oil and gas producing properties or assets located in the United
States other than through the Partnership or, on and after the IPO Date, other
than through the MLP or the Partnership, unless (i) prior to such acquisition
the Executive consents in writing to such acquisition or (ii) such acquisition
includes midstream or downstream assets and the fair market value of any
upstream oil and gas producing properties or assets located in the United
States (as determined in good faith by Provident) constitutes less than the
fair market value of the midstream or downstream assets (as determined in good
faith by the Provident).

 A-3
 

“Notice of Termination” means a written notice which
(i) indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated and (iii) if the Date of
Termination is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than thirty (30) days after the
giving of such notice).

“Partnership Agreement” means the Partnership
Agreement of BreitBurn Energy Company, L.P. and, on and after the IPO Date, the
LLC Agreement of Manageco, the Partnership Agreement of the MLP or the
Partnership Agreement of the Partnership, as the context requires.

“Omnibus Agreement” means the Omnibus Agreement
effective as of October 10, 2006, by and among Provident, Pro GP Corp, the
Partnership, the MLP GP and the MLP.

 A-4

APPENDIX B

 

Phantom
Options

A.            Pre-IPO
Date Grants.

1.             Pursuant to Section 3(b)(iii) of the Employment Agreement
by and between Pro GP Corp. (the “BECLP GP”), BreitBurn Management Company, LLC
(the “Manageco”), BreitBurn GP, LLC (the “MLP GP”) and Halbert Washburn (the “Executive”),
dated as of October 10, 2006 (the “Agreement”), the Partnership shall grant
Phantom Options to the Executive on the following terms and conditions. All
capitalized terms not defined herein shall have the meanings set forth in the
Agreement.

2.             Effective as of the first (1st) day of each fiscal year
of the Partnership (currently the calendar year) after the date of the
Agreement and during the Employment Period (the “Grant Date”), BECLP GP shall
cause the Partnership to grant a Phantom Option to the Executive with respect
to one Phantom Unit, as defined below.

3.             A “Phantom Unit” shall mean a hypothetical, nonexistent
unit of Partnership Interests (as defined in the Partnership Agreement) equal
to the lesser of (a) a Percentage Interest (as defined in the Partnership
Agreement) equal to one and one-half percent (1.5%) of the total outstanding
Partnership Interests as of the Grant Date or (b) a Percentage Interest that
has a value equal to fifteen million dollars ($15,000,000) as of the Grant Date
determined on the basis of the Partnership Valuation (defined in Section 6.6.1
of the Partnership Agreement) for the year prior to the Grant Date for each
grant.

4.             Each Phantom Option shall represent the right to a
receive a payment (the “Phantom Option Payment”) equal to the difference
between (a) sum of (i) the Value of the Phantom Unit (as defined below) as of
the Determination Date (as defined below) and (ii) the amount of distributions
of cash or property (valued by the Board at fair market value and in good
faith) made by the Partnership to its partners during the period (the “Option
Period”) beginning on the Grant Date and ending on the Determination Date that
the Executive would have been entitled to receive during the Option Period if
he had actually owned the Partnership Interests represented by the Phantom Unit
during the entire Option Period, and (b) one hundred and eight percent (108%)
of the Value of the Phantom Unit as of the Grant Date. In no event shall the
amount of a Phantom Option Payment be a negative number or in any way affect
the amount of the Executive’s compensation under the Agreement or any
subsequent Phantom Option granted hereunder.

5.             The “Value of the Phantom Unit” as of any date shall be
equal to the value, determined on the basis of the Partnership Valuation as of
that date, of the Partnership Interests underlying the Phantom Unit as set
forth in paragraph 3 above.

6.             The “Determination Date” with respect to a Phantom
Option shall be the last day of the Partnership’s fiscal year (currently,
December 31), except in the event of the termination of the Executive’s
employment with the Employer prior to the end of the Partnership’s fiscal year,
in which case the Determination Date shall be the Date of Termination.

 B-1
 

7.             The Phantom Option Payment shall be made in cash, unless
the Board of Directors of Pro GP Corp. determines that it should be paid in
freely tradable publicly held trust units of Provident. The Phantom Option
Payment shall be made to the Executive, or to his beneficiaries, heirs or
estate in the event of his death, as soon as practicable, but in no event more
than sixty (60) days after the Determination Date.

8.             Subject to Section 9 below, the Executive shall acquire
a vested and non-forfeitable interest in the Phantom Option as of the last day
of the Partnership’s fiscal year if the Executive is employed by the Employer
on such day.

9.             In the event of the termination of the Executive’s
employment by the Employer without Cause, by the Executive for Good Reason, or
by reason of the Executive’s death or Disability, (a) the Executive shall
acquire a vested and non-forfeitable interest in the Phantom Option as of the
Date of Termination, (b) the Option Period shall end on the Date of Termination
and (c) the Phantom Option Payment shall be made as soon as practicable, but in
no event more than sixty (60) days after the Date of Termination. In the event
of the termination of the Executive’s employment by the Employer for Cause or
by the Executive without Good Reason, the Executive shall forfeit the Phantom
Option as of the Date of Termination and the Employer shall have no further
obligations to the Executive with respect to such Phantom Option.

10.           Upon the Employer’s payment of the
Phantom Option Payment with respect to a Phantom Option, such Phantom Option
shall automatically terminate and be of no further force or effect.

11.           The Employer shall withhold all
applicable income taxes and employment taxes from the Phantom Option Payment as
may be required by law.

12.           The Phantom Option, or any interest
in it, shall not be assignable by the Executive and shall not be subject to
attachment, lien, levy or other creditors’ rights under state or Federal law.
The Phantom Option Payments shall be payable by the Employer from its general
assets or pursuant to such other means as the Employer deems appropriate, and
the Executive shall not be entitled to look to any source for payment of such
benefits other than the general assets of the Employer.

13.           Effective on the IPO Date, the
Executive’s outstanding Phantom Option for the 2006 fiscal year of the Employer
shall be converted automatically into the following three separate Phantom
Option awards:  (1) a Phantom Unit
representing a 1.5% Partnership Interest with respect to the operations for the
2006 fiscal year attributable to the properties of the Partnership not
transferred to BreitBurn Energy Partners L.P. (the “Retained Business”) (the “First
Option”), (2) a Phantom Unit representing a 1.5% Partnership Interest with
respect to the operations attributable to the properties of the Partnership
transferred to BreitBurn Energy Partners L.P. (the “Transferred Business”) (the
“Second Option”) for the 2006 fiscal period ending on the IPO Date, and (3) a
Phantom Unit representing a 1.5% Partnership Interest in the MLP for the period
beginning on the IPO Date and ending on December 31, 2006.  The value of the First Option shall be
determined as set forth in paragraph 4 above on the basis of the Partnership
Valuation for 2006 for the Retained Business; the value of the Second Option
shall be determined as set forth in paragraph 4 above on the basis of the
Partnership Valuation for the

 B-2
 

Transferred Business for the period beginning January
1, 2006 and ending on the IPO Date, based on the January 1, 2006 Partnership
Valuation for the Transferred Business and the IPO offering price for a MLP
unit; and the value of the Third Option shall be determined as set forth in
paragraph 4 above based on the value of a MLP unit for the period beginning on
the IPO Date and ending December 31, 2006.

Except for these changes, the Phantom Options shall
continue with the same terms as before the IPO except that the Phantom Options
may be further modified as necessary or helpful to effectuate the intent of the
parties to reflect the conversion of the Phantom Option into three separate
Phantom Options as described above on the IPO Date.

B.            Post-IPO
Date Grants.

1.             Pursuant to Section 3(b)(iii) of the Agreement, the
Employer shall grant or cause the grant of Phantom Options (as defined below)
to the Executive on the following terms and conditions.

2.             Effective as of the first (1st) day of each fiscal year
of the Employer (currently the calendar year) after the IPO Date and during the
Employment Period (the “Grant Date”), (i) Pro GP Corp. shall grant or cause the
grant to the Executive of one Partnership Phantom Unit and (ii) Manageco shall
grant or cause the grant to the Executive of one MLP Phantom Unit, as such
terms are defined below.

3.             (i) A “Partnership Phantom Unit” shall mean a
hypothetical, nonexistent unit of Partnership Interests (as defined in the
Partnership Agreement) equal to the lesser of (a) a Percentage Interest (as
defined in the Partnership Agreement) equal to one and one-half percent (1.5%)
of the total outstanding Partnership Interests as of the Grant Date or (b) a
Percentage Interest that has a value equal to the Applicable Dollar Amount (as
defined below) as of the Grant Date, determined on the basis of the Partnership
Valuation (defined in Section 6.6.1 of the Partnership Agreement) for the Grant
Date for each grant;

(ii)           A “MLP
Phantom Unit” shall mean a hypothetical, nonexistent unit of MLP Partnership
Interests (as defined in the MLP Partnership Agreement) equal to the lesser of
(a) a Percentage Interest (as defined in the MLP Partnership Agreement) equal
to one and one-half percent (1.5%) of the total outstanding MLP Partnership
Interests as of the Grant Date or (b) a Percentage Interest that has a value
equal to the Applicable Dollar Amount as of the Grant Date, determined on the
basis of the value of the MLP Units on the Grant Date for each grant.

(iii)          If
the sum of the Partnership Valuation and the MLP value on the Grant Date (the “Combined
Value”) exceeds $1 billion, then the Applicable Dollar Amounts with respect to
a Partnership Phantom Unit and a MLP Phantom Unit shall be determined as
follows: (i) the Partnership Applicable Dollar Amount shall be equal to the
product of $15 million and the Partnership fraction, where the numerator is the
Partnership Valuation and the denominator is the Combined Value, and (ii) the
MLP Applicable Dollar Amount shall be equal to the product of $15 million and
the MLP fraction, where the numerator is the MLP value and the denominator is
the Combined Value.  If the Combined
Value on the Grant Date does not exceed $1 billion, then the Applicable Dollar
Amount for the Partnership and the MLP shall be equal to the value of the

 B-3
 

one and one-half percent
(1.5%) Percentage Interest applicable for the Partnership and the MLP,
respectively, on such Grant Date.

As used herein, the Partnership Agreement and the MLP
Partnership Agreement shall mean the partnership agreement for the Partnership
and the MLP, respectively.  A “Phantom
Unit” shall mean either a Partnership Phantom Unit, a MLP Phantom Unit or both,
as the context requires.

4.             Subject to paragraph 6 below, each Phantom Unit shall
represent the right to a receive a payment (the “Phantom Unit Payment”) equal
to the difference between (a) the sum of (i) the Value of the Phantom Unit (as
defined below) as of the Determination Date (as defined below) and (ii) the
amount of distributions of cash or property (with respect to a property
distribution, valued by the Board of Directors of the general partner of the
Partnership or the MLP GP at fair market value and in good faith) made by the
Partnership or the MLP, as the case may be, to its partners during the period
(the “Option Period”) beginning on the Grant Date and ending on the
Determination Date that the Executive would have been entitled to receive
during the Option Period if he had actually owned the Partnership Interests
represented by the Phantom Unit during the entire Option Period, and (b) one
hundred and eight percent (108%) of the Value of the Phantom Unit as of the
Grant Date. Except as provided in paragraph 6 below with respect to the MLP
carry over amount, in no event shall the amount of a Phantom Unit Payment be a
negative number or in any way affect the amount of the Executive’s compensation
under the Agreement or any subsequent Phantom Option granted hereunder.

5.             The “Value of the Phantom Unit” as of any date (i) with
respect to a Partnership Phantom Unit, shall be equal to the value, determined
on the basis of the Partnership Valuation as of that date (but using the market
value of any MLP units owned by the Partnership), of the Partnership Interests
underlying the Phantom Unit as set forth in paragraph 3 above, and (ii) with
respect to a MLP Phantom Unit, shall be equal to the value of the Partnership
Interests underlying the Phantom Unit as set forth in paragraph 3 above based
upon the closing sales price of a MLP Unit on the Determination Date as
reported by such reporting service as the Board may choose.

6.             If for any year a MLP Phantom Unit Payment is made
pursuant to paragraph 4 that is greater than the payment that would have been
made based on the combined results for the Partnership Phantom Unit and a MLP
Phantom Unit with respect to such year, if the Phantom Unit Payment were
instead determined on a combined basis rather than on a separate basis for the
Partnership and the MLP, then the amount of the MLP Phantom Unit Payment paid
for such year in excess of what would have been paid for such year if the
payment were determined on a combined basis shall be carried forward to
subsequent years and shall be applied as an offset against any Partnership
Phantom Unit Payment in any such subsequent years that is otherwise payable,
until such MLP carry forward amount has been fully used as an offset to any
such Partnership Phantom Unit Payments. 
No Partnership Phantom Unit Payment shall be made unless there is no MLP
carry forward amount for such year or such MLP carry forward amount is first
fully applied as an offset in such year.

7.             The “Determination Date” with respect to a Phantom
Option shall be the last day of the Partnership’s or the MLP’s (as the case may
be) fiscal year (currently, December 31),

 B-4
 

except in the event of the termination of the
Executive’s employment with the Employer prior to the end of the Partnership’s
or the MLP’s (as the case may be) fiscal year, in which case the Determination
Date shall be the Date of Termination.

8.             The Phantom Unit Payment shall be made in cash; however,
with respect to a MLP Phantom Unit Payment the Executive may elect to receive
such MLP Phantom Unit Payment all in freely tradeable MLP Units, in cash or in
any combination thereof, and with respect to a Partnership Phantom Unit Payment
the Executive may elect to receive such Partnership Phantom Unit Payment all in
“restricted” phantom Partnership Units (notional units representing a
corresponding partnership interest in the Partnership) with such restrictions
concerning payments and transfers as may be applicable to similar phantom
awards under other long-term incentive plans of the Employer, in cash or in any
combination thereof.  The Phantom Unit
Payment shall be made to the Executive, or to his beneficiaries, heirs or
estate in the event of his death, as soon as practicable, but in no event more
than sixty (60) days after the Determination Date.

9.             Subject to Section 10 below, the Executive shall acquire
a vested and non-forfeitable interest in the Phantom Option as of the last day
of the Partnership’s or the MLP’s (as the case may be) fiscal year if the
Executive is employed by the Employer on such day.

10.           In the event of the termination of
the Executive’s employment by the Employer without Cause, by the Executive for
Good Reason, or by reason of the Executive’s death or Disability, (a) the
Executive shall acquire a vested and non-forfeitable interest in the Phantom
Option as of the Date of Termination, (b) the Option Period shall end on the
Date of Termination and (c) the Phantom Unit Payment shall be made as soon as
practicable, but in no event more than sixty (60) days after the Date of
Termination. In the event of the termination of the Executive’s employment with
the Employer by the Employer for Cause or by the Executive without Good Reason,
the Executive shall forfeit the Phantom Option as of the Date of Termination
and the Employer, the Partnership and the MLP shall have no further obligations
to the Executive with respect to such Phantom Option.

11.           Upon payment of the Phantom Unit
Payment with respect to a Phantom Option, such Phantom Option shall
automatically terminate and be of no further force or effect.

12.           The Employer shall withhold or shall
cause to be withheld all applicable income taxes and employment taxes from the
Phantom Unit Payment as may be required by law.

13.           The Phantom Option, or any interest
in it, shall not be assignable by the Executive and shall not be subject to
attachment, lien, levy or other creditors’ rights under state or Federal law.
The Phantom Unit Payments shall be payable from the general assets of the
Employer, the MLP or the Partnership, as the case may be, or pursuant to such
other means as they deem appropriate, and the Executive shall not be entitled
to look to any source for payment of such benefits other than the general
assets of the Employer, the MLP or the Partnership, as the case may be.

 B-5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}]]