Document:

Exhibit 10.5  

FORM OF

BREITBURN ENERGY PARTNERS L.P.

2006 LONG-TERM INCENTIVE PLAN  

        SECTION 1.    Purpose of the Plan. 

        The
BreitBurn Energy Partners L.P. 2006 Long-Term Incentive Plan (the "Plan") has been adopted by BreitBurn GP, LLC, a Delaware limited liability company (the "Company"), the
general partner of BreitBurn Energy Partners L.P., a Delaware limited partnership (the "Partnership"). The Plan is intended to promote the interests of the Partnership and the Company by providing to
Employees, Consultants and Directors incentive compensation awards based on Units to encourage superior performance. The Plan is also contemplated to enhance the ability of the Company and its
Affiliates to attract and retain the services of individuals who are essential for the growth and profitability of the Company, the Partnership and their Affiliates and to encourage them to devote
their best efforts to advancing the business of the Company, the Partnership and their Affiliates. 

        SECTION
2.    Definitions. 

        As
used in the Plan, the following terms shall have the meanings set forth below: 

        "Affiliate"
means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with,
the Person in question. As used herein, the term "control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise. 

        "Award"
means an Option, Unit Appreciation Right, Restricted Unit, Phantom Unit, an Other Unit-Based Award, or a Unit Award granted under the Plan, and includes any tandem
DERs granted with respect to a Phantom Unit. 

        "Award
Agreement" means the written or electronic agreement by which an Award shall be evidenced. 

        "Board"
means the Board of Directors of the Company. 

        "Change
of Control" means, and shall be deemed to have occurred upon one or more of the following events: 

          (i)  any
"person" or "group" within the meaning of those terms as used in Sections 13(d) and 14(d)(2) of the Exchange Act, other than an Affiliate of the Company, shall
become the beneficial owner, by way of merger, consolidation, recapitalization, reorganization or otherwise, of 50% or more of the combined voting power of the equity interests in BreitBurn Management
Company, LLC, the Company or the Partnership; 

         (ii)  the
limited partners of the Partnership approve, in one or a series of transactions, a plan of complete liquidation of the Partnership; 

        (iii)  the
sale or other disposition by either the Company or the Partnership of all or substantially all of its assets in one or more transactions to any Person other than
the Company or an Affiliate of the Company; or 

        (iv)  a
transaction resulting in a Person other than the Company or an Affiliate of the Company being the general partner of the Partnership. 

        Notwithstanding
the foregoing, with respect to an Award that is subject to Section 409A of the Internal Revenue Code of 1986, as amended, "Change of Control" shall mean a "change
of control event" as defined in the regulations and guidance issued under Section 409A. 

 

        "Committee"
means the Board, the Compensation Committee of the Board or such other committee as may be appointed by the Board to administer the Plan. 

        "Consultant"
means an individual who renders consulting services to the Company, the Partnership or an Affiliate of either. 

        "DER"
means a contingent right, granted in tandem with a specific Phantom Unit, to receive with respect to each Phantom Unit subject to the Award an amount in cash, Units and/or Phantom
Units equal in value to the distributions made by the Partnership with respect to a Unit during the period such Award is outstanding. 

        "Director"
means a member of the board of directors of the Company, the Partnership or an Affiliate who is not an Employee or a Consultant (other than in that individual's capacity as a
Director). 

        "Employee"
means an employee of the Company or an Affiliate of the Company. 

        "Exchange
Act" means the Securities Exchange Act of 1934, as amended. 

        "Fair
Market Value" means the closing sales price of a Unit on 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) as reported in The Wall Street Journal (or other
reporting service approved by the Committee). If Units are not traded on a national securities exchange or other market at the time a determination of fair market value is required to be made
hereunder, the determination of fair market value shall be made in good faith by the Committee. 

        "Option"
means an option to purchase Units granted under the Plan. 

        "Other
Unit-Based Award" means an award granted pursuant to Section 6(d) of the Plan. 

        "Participant"
means an Employee, Consultant or Director granted an Award under the Plan. 

        "Partnership
Agreement" means the Agreement of Limited Partnership of the Partnership, as it may be amended or amended and restated from time to time. 

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

        "Phantom
Unit" means a notional unit granted under the Plan that upon vesting entitles the Participant to receive a Unit or an amount of cash equal to the Fair Market Value of a Unit, as
determined by the Committee in its discretion. 

        "Restricted
Period" means the period established by the Committee with respect to an Award during which the Award remains subject to forfeiture and is either not exercisable by or
payable to the Participant, as the case may be. 

        "Restricted
Unit" means a Unit granted under the Plan that is subject to a Restricted Period. 

        "Rule 16b-3"
means Rule 16b-3 promulgated by the SEC under the Exchange Act or any successor rule or regulation thereto as in effect from time to
time. 

        "SEC"
means the Securities and Exchange Commission, or any successor thereto. 

        "UDR"
means a distribution made by the Partnership with respect to a Restricted Unit. 

        "Unit"
means a Common Unit of the Partnership. 

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        "Unit
Appreciation Right" or UAR" means a contingent right that entitles the holder to receive the excess of the Fair Market Value of a Unit on the exercise date of the UAR over the
exercise price of the UAR. 

        "Unit
Award" means a grant of a Unit that is not subject to a Restricted Period. 

        SECTION
3.    Administration. 

        The
Plan shall be administered by the Committee. A majority of the Committee shall constitute a quorum, and the acts of the members of the Committee who are present at any meeting
thereof at which a quorum is present, or acts unanimously approved by the members of the Committee in writing, shall be the acts of the Committee. Subject to the terms of the Plan and applicable law,
and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of Units to be covered by Awards; (iv) determine the terms and conditions of
any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled, exercised, canceled, or forfeited; (vi) interpret and administer the Plan and any
instrument or agreement relating to an Award made under the Plan; (vii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for
the proper administration of the Plan; and (viii) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. The
Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or an Award Agreement in such manner and to such extent as the Committee deems necessary or
appropriate. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the
sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons, including the Company, the General Partner, the Partnership, any Affiliate, any
Participant, and any beneficiary of any Award. 

        SECTION
4.    Units. 

         (a)  Limits on Units Deliverable.    Subject to adjustment as provided in Section 4(c), the number of Units
that may be delivered with respect to Awards under the Plan is 10% of the outstanding number of Common Units on the effective date of the initial public offering of Common Units. Units withheld from
an Award to either satisfy the Company's or an Affiliate's tax withholding obligations with respect to the Award or pay the exercise price of an Award shall not be considered to be Units delivered
under the Plan for this purpose. If any Award is forfeited, cancelled, exercised, paid, or otherwise terminates or expires without the actual delivery of Units pursuant to such Award (the grant of
Restricted Units is not a delivery of Units for this purpose), the Units subject to such Award shall again be available for Awards under the Plan. There shall not be any limitation on the number of
Awards that may be paid in cash. 

         (b)  Sources of Units Deliverable Under Awards.    Any Units delivered pursuant to an Award shall consist, in whole
or in part, of Units acquired in the open market, from any Affiliate, the Partnership or any other Person, or any combination of the foregoing, as determined by the Committee in its discretion. 

         (c)  Anti-dilution Adjustments.    With respect to any "equity restructuring" event that could result in
an additional compensation expense to the Company or the Partnership pursuant to the provisions of FAS 123R if adjustments to Awards with respect to such event were discretionary, the Committee
shall equitably adjust the number and type of Units covered by each outstanding Award and the terms and conditions, including the exercise price and performance criteria (if any), of such Award to
equitably reflect such restructuring event and shall adjust the number and type of Units (or other securities or property) with respect to which Awards may be granted after such event. With respect to 

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any
other similar event that would not result in a FAS 123R accounting charge if the adjustment to Awards with respect to such event were subject to discretionary action, the Committee shall
have complete discretion to adjust Awards in such manner as it deems appropriate with respect to such other event. 

         (d)  Manageco Awards.    With respect to any award granted to an individual by BreitBurn Energy Company L.P. or an
affiliate thereof prior to the effective date of this Plan, which award is pursuant to a plan or an arrangement that was assumed by BreitBurn Management Company LLC ("Manageco") on or prior to the
effective date of this Plan (an "Assumed Award"), to the extent such Assumed Award is paid or settled in Units either issued by the Partnership or with respect to which the Partnership reimburses
Manageco or the Company for the cost of obtaining such Units, then such Units shall be deemed delivered pursuant to this Plan for purposes of determining the total number of Units that may be
delivered under Plan Section 4(a). 

        SECTION
5.    Eligibility. 

        Any
Employee, Consultant or Director shall be eligible to be designated a Participant by the Committee and receive an Award under the Plan. 

        SECTION
6.    Awards. 

         (a)  Options and UARs.    The Committee shall have the authority to determine the Employees, Consultants and
Directors to whom Options and/or UARs shall be granted, the number of Units to be covered by each Option or UAR, the exercise price therefor, the Restricted Period and other conditions and limitations
applicable to the exercise of the Option or UAR, including the following terms and conditions and such additional terms and conditions, as the Committee shall determine, that are not inconsistent with
the provisions of the Plan. 

          (i)  Exercise Price.    The exercise price per Unit purchasable under an Option or subject to a UAR shall be
determined by the Committee at the time the Option or UAR is granted but may not be less than the Fair Market Value of a Unit as of the date of grant of the Option or UAR. 

         (ii)  Time and Method of Exercise.    The Committee shall determine the exercise terms and the Restricted Period
with respect to an Option or UAR grant, which may include, without limitation, a provision for accelerated vesting upon the achievement of specified performance goals or other events, and the method
or methods by which payment of the exercise price with respect to an Option may be made or deemed to have been made, which may include, without limitation, cash, check acceptable to the Company,
withholding Units from the Award, a "cashless-broker" exercise through procedures approved by the Company, or any combination of the above methods, having a Fair Market Value on the exercise date
equal to the relevant exercise price. 

        (iii)  Forfeitures.    Except as otherwise provided in the terms of the Option or UAR grant, upon termination of a
Participant's employment with or consulting services to the Company and its Affiliates or membership on the Board, whichever is applicable, for any reason during the applicable Restricted Period, all
unvested Options and UARs shall be forfeited by the Participant. The Committee may, in its discretion, waive in whole or in part such forfeiture with respect to a Participant's Options or UARs. 

         (b)  Restricted Units and Phantom Units.    The Committee shall have the authority to determine the Employees,
Consultants and Directors to whom Restricted Units and Phantom Units shall be granted, the number of Restricted Units or Phantom Units to be granted to each such Participant, the Restricted Period,
the conditions under which the Restricted Units or Phantom Units may become vested or forfeited and such other terms and conditions as the Committee may establish with respect to such Awards. 

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          (i)  DERs.    To the extent provided by the Committee, in its discretion, a grant of Phantom Units may include a
tandem DER grant, which may provide that such DERs shall be paid directly to the Participant, be credited to a bookkeeping account (with or without interest in the discretion of the Committee), be
"reinvested" in Restricted Units or additional Phantom Units and be subject to the same or different vesting restrictions as the tandem Phantom Unit Award, or be subject to such other provisions or
restrictions as determined by the Committee in its discretion. Absent a contrary provision in the grant agreement, upon a distribution with respect to a Unit, DERs equal in value to such distribution
shall be paid promptly to the Participant in cash without vesting restrictions. 

         (ii)  UDRs.    To the extent provided by the Committee, in its discretion, a grant of Restricted Units may provide
that the distributions made by the Partnership with respect to the Restricted Units shall be subject to the same forfeiture and other restrictions as the Restricted Unit and, if restricted, such
distributions shall be held, without interest, until the Restricted Unit vests or is forfeited with the UDR
being paid or forfeited at the same time, as the case may be. In addition, the Committee may provide that such distributions be used to acquire additional Restricted Units for the Participant. Such
additional Restricted Units may be subject to such vesting and other terms as the Committee may proscribe. Absent such a restriction on the UDRs in the grant agreement, UDRs shall be paid promptly to
the holder of the Restricted Unit without vesting restrictions. 

        (iii)  Forfeitures.    Except as otherwise provided in the terms of the Restricted Units or Phantom Units grant
agreement, upon termination of a Participant's employment with or consulting services to the Company and its Affiliates or membership on the Board, whichever is applicable, for any reason during the
applicable Restricted Period, all outstanding, unvested Restricted Units and Phantom Units awarded the Participant shall be automatically forfeited on such termination. The Committee may, in its
discretion, waive in whole or in part such forfeiture with respect to a Participant's Restricted Units and/or Phantom Units. 

        (iv)  Lapse of Restrictions. 

        (A)  Phantom Units.    Upon or as soon as reasonably practical following the vesting of each Phantom Unit, subject
to the provisions of Section 8(b), the Participant shall be entitled to receive from the Company one Unit or cash equal to the Fair Market Value of a Unit, as determined by the Committee in its
discretion. 

        (B)  Restricted Units.    Upon or as soon as reasonably practical following the vesting of each Restricted Unit,
subject to satisfying the tax withholding obligations of Section 8(b), the Participant shall be entitled to have the restrictions removed from his or her Unit certificate so that the
Participant then holds an unrestricted Unit. 

         (c)  Unit Awards.    Unit Awards may be granted under the Plan to such Employees, Consultants and/or Directors and
in such amounts as the Committee, in its discretion, may select. 

         (d)  Other Unit-Based Awards.    Other Unit-Based Awards may be granted under the Plan to
such Employees, Consultants and/or Directors as the Committee, in its discretion, may select. An Other Unit-Based Award shall be an award denominated or payable in, valued in or otherwise
based on or related to Units, in whole or in part. The Committee shall determine the terms and conditions of any such Other Unit-Based Award. Upon vesting, an Other Unit-Based
Award may be paid in cash, Common Units (including Restricted Units) or any combination thereof as provided in the Award Agreement. 

         (e)  General. 

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          (i)  Awards May Be Granted Separately or Together.    Awards may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution for any other Award granted under the Plan or any award granted under any other plan of the Company or any Affiliate. Awards granted
in addition to or in tandem with other Awards or awards granted under any other plan of the Company or any Affiliate may be granted either at the same time as or at a different time from the grant of
such other Awards or awards. 

         (ii)  Limits on Transfer of Awards. 

        (A)  Except
as provided in Paragraph (C) below, each Option and Unit Appreciation Right shall be exercisable only by the Participant during the Participant's lifetime,
or by the person to whom the Participant's rights shall pass by will or the laws of descent and distribution. 

        (B)  Except
as provided in Paragraph (C) below, no Award and no right under any such Award may be assigned, alienated, pledged, attached, sold or otherwise transferred
or encumbered by a Participant and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company, the Partnership or
any Affiliate. 

        (C)  To
the extent specifically provided by the Committee with respect to an Option or Unit Appreciation Right, an Option or Unit Appreciation Right may be transferred by a
Participant without consideration to immediate family members or related family trusts, limited partnerships or similar entities or on such terms and conditions as the Committee may from time to time
establish. 

        (iii)  Term of Awards.    The term of each Award shall be for such period as may be determined by the Committee. 

        (iv)  Unit Certificates.    All certificates for Units or other securities of the Partnership delivered under the
Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations,
and other requirements of the SEC, any stock exchange upon which such Units or other securities are then listed, and any applicable federal or state laws, and the Committee may cause a legend or
legends to be inscribed on any such certificates to make appropriate reference to such restrictions. 

         (v)  Consideration for Grants.    Awards may be granted for such consideration, including services, as the Committee
shall determine. 

        (vi)  Delivery of Units or other Securities and Payment by Participant of Consideration. Notwithstanding anything in the Plan
or any grant agreement to the contrary, delivery of Units pursuant to the exercise or vesting of an Award may be deferred for any period during which, in the good faith determination of the Committee,
the Company is not reasonably able to obtain Units to deliver pursuant to such Award without violating applicable law or the applicable rules or regulations of any governmental agency or authority or
securities exchange. No Units or other securities shall be delivered pursuant to any Award until payment in full of any amount required to be paid pursuant to the Plan or the applicable Award grant
agreement (including, without limitation, any exercise price or tax withholding) is received by the Company. 

        SECTION
7.    Amendment and Termination. 

        Except
to the extent prohibited by applicable law: 

         (a)  Amendments to the Plan.    Except as required by the rules of the principal securities exchange on which the
Units are traded and subject to Section 7(b) below, the Board or the Committee may 

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amend,
alter, suspend, discontinue, or terminate the Plan in any manner, including increasing the number of Units available for Awards under the Plan, without the consent of any partner, Participant,
other holder or beneficiary of an Award, or any other Person. 

         (b)  Amendments to Awards.    Subject to Section 7(a), the Committee may waive any conditions or rights
under, amend any terms of, or alter any Award theretofore granted, provided no change, other than pursuant to Section 7(c), in any Award shall materially reduce the rights or benefits of a
Participant with respect to an Award without the consent of such Participant. 

         (c)  Actions Upon the Occurrence of Certain Events.    Upon the occurrence of a Change of Control, any change in
applicable law or regulation affecting the Plan or Awards thereunder, or any change in accounting principles affecting the financial statements of the Partnership, the Committee, in its sole
discretion, without the consent of any Participant or holder of the Award, and on such terms and conditions as it deems appropriate, may take any one or more of the following actions in order to
prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or an outstanding Award: 

        (A)  provide
for either (i) the termination of any Award in exchange for an amount of cash, if any, equal to the amount that would have been attained upon the exercise
of such Award or realization of the Participant's rights (and, for the avoidance of doubt, if as of the date of the occurrence of such transaction or event the Committee determines in good faith that
no amount would have been attained upon the exercise of such Award or realization of the Participant's rights, then such Award may be terminated by the Company without payment) or (ii) the
replacement of such Award with other rights or property selected by the Committee in its sole discretion; 

        (B)  provide
that such Award be assumed by the successor or survivor entity, or a parent or subsidiary thereof, or be exchanged for similar options, rights or awards covering
the equity of the successor or survivor, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of equity interests and prices; 

        (C)  make
adjustments in the number and type of Units (or other securities or property) subject to outstanding Awards, and in the number and kind of outstanding Awards or in
the terms and conditions of (including the exercise price), and the vesting and performance criteria included in, outstanding Awards, or both; 

        (D)  provide
that such Award shall be exercisable or payable, notwithstanding anything to the contrary in the Plan or the applicable Award Agreement; and 

        (E)  provide
that the Award cannot be exercised or become payable after such event, i.e., shall terminate upon such event. 

Notwithstanding
the foregoing, with respect to an above event that is an "equity restructuring" event that would be subject to a compensation expense pursuant FAS 123R, the provisions in
Section 4c shall control to the extent they are in conflict with the discretionary provisions of this Section 7. 

        SECTION
8.    General Provisions. 

         (a)  No Rights to Award.    No Person shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Participants. The terms and conditions of Awards need not be the same with respect to each recipient. 

         (b)  Tax Withholding.    Unless other arrangements have been made that are acceptable to the Company, the Company or
any Affiliate is authorized to withhold from any Award, from any payment due or transfer made under any Award or from any compensation or other amount owing to a 

7

 

Participant
the amount (in cash, Units, Units that would otherwise be issued pursuant to such Award or other property) of any applicable taxes payable in respect of the grant of an Award, its
exercise, the lapse of restrictions thereon, or any payment or transfer under an Award or under the Plan 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. 

         (c)  No Right to Employment or Services.    The grant of an Award shall not be construed as giving a Participant the
right to be retained in the employ of the Company or any Affiliate, continue consulting services or to remain on the Board, as applicable. Furthermore, the Company or an Affiliate may at any time
dismiss a Participant from employment or consulting free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan, any Award agreement or other agreement. 

         (d)  Governing Law.    The validity, construction, and effect of the Plan and any rules and regulations relating to
the Plan shall be determined in accordance with the laws of the State of Delaware without regard to its conflicts of laws principles. 

         (e)  Severability.    If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal,
or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Compensation Committee, such provision shall be
construed or deemed amended to conform to the applicable law or, if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan
or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect. 

          (f)  Other Laws.    The Committee may refuse to issue or transfer any Units or other consideration under an Award
if, in its sole discretion, it determines that the issuance or transfer of such Units or such other consideration might violate any applicable law or regulation, the rules of the principal securities
exchange on which the Units are then traded, or entitle the Partnership or an Affiliate to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the Company by a
Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary. 

         (g)  No Trust or Fund Created.    Neither the Plan nor any Award shall create or be construed to create a trust or
separate fund of any kind or a fiduciary relationship between the Company or any participating Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to
receive payments from the Company or any participating Affiliate pursuant to an Award, such right shall be no greater than the right of any general unsecured creditor of the Company or any
participating Affiliate. 

         (h)  No Fractional Units.    No fractional Units shall be issued or delivered pursuant to the Plan or any Award, and
the Committee shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Units or whether such fractional Units or any rights thereto
shall be canceled, terminated, or otherwise eliminated. 

          (i)  Headings.    Headings are given to the Sections and subsections of the Plan solely as a convenience to
facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. 

          (j)  Facility Payment.    Any amounts payable hereunder to any person under legal disability or who, in the
judgment of the Committee, is unable to manage properly his financial affairs, may be paid to the legal representative of such person, or may be applied for the benefit of such person in any manner
that the Committee may select, and the Company shall be relieved of any further liability for payment of such amounts. 

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         (k)  Participation by Affiliates.    In making Awards to Employees employed by an entity other than the Company, the
Committee shall be acting on behalf of the Affiliate, and to the extent the Partnership has an obligation to reimburse the Company for compensation paid for services rendered for the benefit of the
Partnership, such payments or reimbursement payments may be made by the Partnership directly to the Affiliate, and, if made to the Company, shall be received by the Company as agent for the Affiliate. 

          (l)  Gender and Number.    Words in the masculine gender shall include the feminine gender, the plural shall
include the singular and the singular shall include the plural. 

        (m)  Compliance with Section 409A.    Nothing in the Plan or any Award Agreement shall operate or be
construed to cause the Plan or an Award to fail to comply with the requirements of Section 409A of the Internal Revenue Code. The applicable provisions of Section 409A and the
regulations thereunder are hereby incorporated by reference and shall control over any Plan or Award Agreement provision in conflict therewith. 

        SECTION
9.    Term of the Plan. 

        The
Plan shall be effective on the date of the initial public offering of Units and shall continue until the earliest of (i) the date terminated by the Board, (ii) all
Units available under the Plan have been paid to Participants, or (iii) the 10th anniversary of the date the Plan is approved by the general partner of the Partnership. However, any Award
granted prior to such termination, and the authority of the Board or the Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award or to waive any conditions or rights under
such Award, shall extend beyond such termination date. 

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Exhibit 10.6  

 
 

BREITBURN ENERGY COMPANY L.P.    
    
    UNIT APPRECIATION PLAN
  FOR OFFICERS AND KEY INDIVIDUALS    
    

 
  ARTICLE ONE    
    
    GENERAL PROVISIONS    
    

I.     PURPOSE OF THE PLAN  

        This Unit Appreciation Plan for Officers and Key Individuals is intended to (i) promote the interests of the Company by providing eligible persons in the
employ or service of the Company (or any Parent or Subsidiary) with the opportunity to receive compensation based on the growth, development and financial success of the Company, and
(ii) attract and retain individuals whose abilities, experience and judgment may reasonably be expected to contribute to the growth, development and financial success of the Company. 

        Capitalized
terms herein shall have the meanings assigned to such terms in the attached Appendix. 

II.    ADMINISTRATION OF THE PLAN  

        A.    Plan Administrator.    The Plan shall be administered by the Board. However, any or all administrative functions
otherwise exercisable by the Board may be delegated to the Committee. Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the
Board at any time. The Board may also at any time terminate the functions of the Committee and assume any or all powers and authority previously delegated to the Committee. 

        B.    Authority of the Plan Administrator.    The Plan Administrator shall have full authority to determine
(i) which eligible persons are to receive Awards granted under the Plan, (ii) the time or times when those Awards are to be made, (iii) the number of Phantom Units to be covered
by each such Award, (iv) the schedule (if any) setting forth the time or times when, or event or events upon the occurrence of which, each Award under the Plan, or portion thereof, will vest
and become exercisable, and (v) all other terms and conditions which are to apply to one or more Awards under the Plan, provided that such terms
and conditions are not inconsistent with the Plan. 

        C.    Interpretation of the Plan; Decisions of the Plan Administrator.    The Plan Administrator shall have full
discretionary power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the Plan and to make such
determinations under, and issue such interpretations of, the Plan and any Awards thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator shall be final and binding on all
parties who have an interest in the Plan or any Award thereunder. 

III.  ELIGIBILITY  

        Present and future officers, key Employees, and non-employee directors of the Company (or any Parent or Subsidiary, whether now existing or
subsequently established) shall be eligible to participate in the Plan. 

IV.    PHANTOM UNITS SUBJECT TO THE PLAN  

        A.    Units Reserved.    The maximum aggregate number of Phantom Units upon which Awards may be granted over the term
of the Plan shall not exceed Two Million Two Hundred Thousand (2,200,000), subject to adjustment under Section IV.B of this Article One. The Phantom Units reserved for grant under the Plan
shall only be available for grant on one occasion and shall not return to the Plan and 

 

become
available for subsequent grants in the event one or more of such Awards terminates or expires prior to being exercised in full. 

        B.    Adjustments.    Should any change be made to the Partnership Interests by reason of any subdivision,
consolidation, reclassification, reorganization (including a conversion to a limited liability company or corporation) or other similar change affecting the outstanding Partnership Interests as a
class without the Company's receipt of consideration, the Plan Administrator shall make appropriate and equitable adjustments to: (i) the maximum number of Phantom Units upon which Awards may
be granted under the Plan, (ii) the type and/or class of securities or interests underlying the Phantom Units upon which Awards may be granted under the Plan, (iii) the number of Phantom
Units, the type and/or class of securities or interests underlying the Phantom Units and the Base Price per Phantom Unit in effect under the Unit Appreciation Rights of each outstanding Award under
the Plan, and (iv) the aggregate amount of Distributions per Phantom Unit to be paid upon exercise of the Unit Appreciation Rights of each outstanding Award under the Plan. Such adjustments to
the outstanding Awards are to be effected in a manner which shall preclude the enlargement or dilution of rights and benefits under those Awards, as determined by the Plan Administrator. The
adjustments determined by the Plan Administrator shall be final, binding and conclusive. 

 
 

ARTICLE TWO    
    
    UNIT APPRECIATION RIGHTS    
    

I.     TERMS AND CONDITION  

        The Plan Administrator shall have full discretionary power and authority, exercisable in its sole discretion, to grant Unit Appreciation Rights in accordance with
this Article Two to officers, key Employees, and non-employee directors of the Company (or any Parent or Subsidiary, whether now existing or subsequently established), subject to the terms
and conditions of the Plan and such other terms and conditions as the Plan Administrator may determine to be appropriate, provided that such other terms
and conditions are not inconsistent with the terms of the Plan: 

        A.    Number of Unit Appreciation Rights.    The number of Unit Appreciation Rights subject to each Award shall be
determined by the Plan Administrator at the time of grant. 

        B.    Base Price.    The Base Price in effect for each Unit Appreciation Right shall be determined by the Plan
Administrator in its sole discretion at the time of grant. The Base Price may be less than, equal to or greater than the Value per Phantom Unit on the grant date; provided,
however, that in no event shall the Base Price be less than the Value per Phantom Unit on the grant date to such an extent that the Participant will be deemed to be in
constructive receipt of income as a result of the grant (or vesting) of such Unit Appreciation Right. 

        C.    Vesting.    The terms and conditions upon which a Participant will vest in the Unit Appreciation Rights subject
to an Award granted under the Plan shall be determined by the Plan Administrator at the time of grant and may be based on the attainment of designated performance goals or the satisfaction of
specified Service requirements. The Plan Administrator shall have the discretionary authority to vest a Participant in any or all Unit Appreciation Rights subject his or her outstanding Awards as to
which the designated performance goals or Service requirements have not been attained or satisfied. 

        D.    Exercise.    

        1.     The
Unit Appreciation Rights of an Award granted under the Plan shall become exercisable in accordance with the vesting schedule established by the Plan Administrator for
the Award. Upon exercise of a Unit Appreciation Right, the Participant (or other holder) shall be 

2

 

entitled
to receive a cash distribution in respect of such Unit Appreciation Right from the Company in an amount equal to the sum of: 

        (i)    the
Value of a Phantom Unit (determined as of the Exercise Date), plus

        (ii)   the
Distributions with respect to the Partnership Interest underlying a Phantom Unit, less

        (iii)  the
Base Price for such Unit Appreciation Right. 

        2.     The
aggregate exercise proceeds with respect to the exercise of Unit Appreciation Rights, less such amount as may be necessary to satisfy all applicable income and
employment tax withholding requirements, shall be paid to the Participant (or other holder) within the ten (10)-day period following the Exercise Date. 

        E.    Effect of Termination of Service.    

        1.     The
following provisions shall govern the exercise of any Unit Appreciation Rights that are subject to an outstanding Award at the time of the Participant's cessation of
Service: 

        (i)    Any
Unit Appreciation Rights that are subject to an Award outstanding at the time of the Participant's cessation of Service, to the extent then vested and exercisable,
shall remain exercisable for such period of time thereafter as shall be determined by the Plan Administrator and set forth in the documents evidencing the Award, but no such Award shall be exercisable
after the expiration of the Award's maximum term. 

        (ii)   Any
Unit Appreciation Rights that are subject to an Award outstanding at the time of the Participant's death may, to the extent vested and exercisable at that time, be
subsequently exercised by the personal representative of the Participant's estate or by the person or persons to whom the Award is transferred pursuant to the Participant's will or the laws of
inheritance. 

        (iii)  Should
the Participant's Service be terminated for Misconduct or should the Participant otherwise engage in Misconduct while holding one or more outstanding Awards
granted under the Plan, then all of those Awards (including without limitation any vested and exercisable Unit Appreciation Rights thereunder) shall immediately terminate unexercised and cease to be
outstanding. 

        (iv)  Upon
the expiration of the applicable post-Service exercise period or (if earlier) upon the expiration of the maximum Award term, the Award shall terminate
and cease to be outstanding for the vested Unit Appreciation Rights which have not been exercised. The Award shall, immediately upon the Participant's cessation of Service, terminate and cease to be
outstanding with respect to any and all Unit Appreciation Rights which are not vested and exercisable at that time. 

        2.     The
Plan Administrator shall have complete discretion, exercisable either at the time an Award is granted or at any time while the Award remains outstanding, to: 

        (i)    extend
the period of time for which the Award is to remain exercisable following the Participant's cessation of Service from the limited exercise period otherwise in
effect for that Award to such greater period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration of the Award's maximum term, and/or 

        (ii)   permit
the Award to be exercised, during the applicable post-Service exercise period, not only with respect to the number of Unit Appreciation Rights vested
and exercisable at the time of the Participant's cessation of Service, but also with respect to one or more additional Unit Appreciation Rights in which the Participant would have vested and become
exercisable had the Participant continued in Service. 

3

 

        F.    Rights of Ownership.    At no time shall the Participant have any rights of ownership with respect to any
Partnership Interests by reason of the grant or settlement of an Award, including, without limitation, any rights to receive distributions or to vote such Partnership Interests. 

        G.    Limited Transferability.    Awards granted under the Plan shall not be assignable or transferable other than by
will or by the laws of inheritance following the Participant's death and may be exercised, during the life of the Participant, only by the Participant or his or her guardian or legal representative.
The terms applicable to any portion of an Award transferred in accordance with the Participant's will or by the laws of inheritance following the Participant's death shall be the same as those in
effect for the Award immediately prior to such transfer and shall be set forth in such documents issued to the transferee as the Plan Administrator may deem appropriate. 

        H.    Maximum Term.    In no event may any Award granted under the Plan have a maximum term in excess of ten
(10) years measured from the grant date. 

II.    CHANGE IN CONTROL  

        Unless otherwise provided by the Plan Administrator at the time of grant, each outstanding Award granted under the Plan shall automatically vest and become
exercisable in full immediately prior to the effective date of a Change in Control. In addition, the Plan Administrator may, in connection with a Change in Control and in its sole discretion, declare
that all outstanding Awards under the Plan will be exercised in full immediately prior to the consummation of such Change in Control and thereafter terminate and cease to be outstanding. In the event
the outstanding Awards are to be assumed in connection with a BreitBurn Change in Control or otherwise continued in effect, the Phantom Unit
underlying each such Unit Appreciation Right shall be appropriately and equitably adjusted (if necessary) immediately after such BreitBurn Change in Control so as to be based on the number and class
of securities into which each outstanding Partnership Interest is converted in connection with such BreitBurn Change in Control. In addition, appropriate and equitable adjustments to reflect a
BreitBurn Change in Control shall also be made to the Base Price and aggregate Distributions payable per Phantom Unit in effect under each outstanding Unit Appreciation Right;  provided the aggregate
Base Price and the aggregate amount of Distributions payable for each Award shall remain the same. 

III.  INITIAL PUBLIC OFFERING  

        During the 30-day period commencing with the date on which an Initial Public Offering is consummated, the Plan Administrator shall have the
discretionary authority, exercisable with or without the consent of the affected Participants, to cancel one or more outstanding Awards under the Plan in exchange for one or more options to acquire
publicly traded securities of the Company; provided, that such option satisfies the following conditions at the time such option is granted: 

        (i)    the
excess (if any) of (A) the fair market value of the securities subject to the option over (B) the aggregate exercise price payable with respect to such
securities equals or exceeds the excess (if any) of (X) the sum of (1) the value of the Phantom Units underlying the cancelled portion of the Award, plus (2) the aggregate
Distributions (if any), with respect to the portion of the Determination Period ending on the grant date of the options, with respect to the Unit Appreciation Rights underlying the cancelled portion
of the Award, over (Y) the aggregate Base Price with respect to such Unit Appreciation Rights; 

        (ii)   the
ratio of the per share exercise price to the fair market value of the security subject to the option is not less than the ratio of the Base Price of the cancelled
Award to the sum of (A) the Value of a Phantom Unit, plus (B) the aggregate Distributions, with respect to the portion of the Determination Period ending on the grant date of the
options, with respect to a Unit Appreciation Right underlying the cancelled portion of the Award; 

4

 

        (iii)  the
option vests and becomes exercisable not later than in accordance with the vesting schedule applicable to the cancelled Award; and 

        (iv)  the
maximum term of the option is not less than the maximum remaining term of the Award at the time of cancellation. 

        The
Plan Administrator shall have the sole responsibility for determining whether an option satisfies the conditions under this Section III of Article Two and any determination
made by the Plan Administrator shall be final, binding and conclusive. In considering whether an option satisfies the conditions under this Section III, the Plan Administrator may, but need
not, consider whether dividend equivalent rights (or other similar rights) will be granted in connection with the replacement options. 

 
 

ARTICLE THREE    
    
    MISCELLANEOUS    
    

I.     EFFECTIVE DATE AND TERM OF PLAN  

        The Plan shall become effective November 3, 2004. The Plan Administrator may grant Awards under the Plan at any time after the effective date of the Plan
and before the date fixed herein for termination of the Plan. 

II.    AMENDMENT, MODIFICATION OR TERMINATION OF THE PLAN  

        A.    Amendment/Modification.    The Board shall have complete and exclusive discretionary power and authority to
amend or modify the Plan in any and all respects and from time to time. Except as otherwise provided in Section II.B of this Article Three, no such amendment or modification shall adversely
affect the rights of a Participant with respect to the vested portion of any Award at the time outstanding under the Plan, unless the Participant consents to such amendment or modification in writing. 

        B.    Savings Clause.    Notwithstanding anything to the contrary in the Plan or any Award Agreement relating to an
outstanding Award, if and to the extent the Board shall determine that the terms of any Award may result in the failure of the such Award to comply with the requirements of Section 409A of
the Code, or any applicable regulations or guidance promulgated by the Secretary of the Treasury in connection therewith, the Board shall have authority to take such action to amend, modify, cancel or
terminate the Plan or any Award as it deems necessary or advisable, including without limitation: 

        1.     Any
amendment or modification of the Plan or any Award to conform the Plan or such Award to the requirements of Section 409A of the Code or any regulations or
other guidance thereunder (including, without limitation, any amendment or modification of the terms of any Award regarding vesting, exercise, or the timing or form of payment). 

        2.     Any
cancellation or termination of any unvested Award, or portion thereof, without any payment to the Participant holding such Award. 

        3.     Any
cancellation or termination of any vested Award, or portion thereof, with immediate payment to the Participant holding such Award of the amount otherwise payable upon
the immediate exercise of any such Award, or vested portion thereof, by such Participant. 

        Any
such amendment, modification, cancellation, or termination of the Plan or any Award may adversely affect the rights of a Participant with respect to such Award without the
Participant's consent. 

        C.    Termination.    The Plan shall terminate on November 2, 2014. Notwithstanding the foregoing, the Board
may terminate the Plan at any time prior to November 2, 2014 upon such terms and 

5

 

conditions
as the Board deems appropriate or advisable. Except as otherwise provided in Section II.B of this Article Three, in no event shall any termination of the Plan adversely affect the
rights of a Participant with respect to the vested portion of any Award at the time outstanding under the Plan without the Participant's express written consent. Accordingly, except as otherwise
provided in Section II.B of this Article Three, the vested portion of all Awards outstanding upon the termination of the Plan shall continue in force and effect in accordance with the
provisions of the Plan and the Award Agreements. 

III.  WITHHOLDING  

        The Company's obligations arising from the exercise of any Award granted under the Plan shall be subject to the satisfaction of all applicable income and
employment tax withholding requirements. 

IV.    NATURE OF RIGHTS  

        The obligations of the Company under the Plan shall be unsecured and unfunded obligations, and any rights of a Participant under the Plan shall be no greater than
that of an unsecured general creditor of the Company and no Participant shall have any right, title or interest in the assets of the Company, the General Partner or Provident. 

V.     COMPLIANCE WITH LAWS  

        The Plan, the granting and vesting of Awards under the Plan and the issuance and the payment of money under the Plan or under Awards granted hereunder are subject
to compliance with all applicable federal and state laws, rules and regulations (including but not limited to state and federal securities law) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Any Awards granted under the Plan shall be subject to such restrictions,
and the person or persons acquiring such Awards shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure
compliance with all applicable legal requirements. To the extent permitted by applicable law, the Plan and Awards granted hereunder shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations. 

VI.   NO EMPLOYMENT OR SERVICE RIGHTS  

        Nothing in the Plan shall confer upon the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict
in any way the rights of the Company (or any Parent or Subsidiary employing or retaining such person) or of the Participant, which rights are hereby expressly reserved by each, to terminate such
person's Service at any time for any reason, with or without cause. 

VII. EFFECT OF PLAN UPON COMPENSATION PLANS  

        The adoption of the Plan shall not affect any other compensation or incentive plans in effect for the Company or any Parent or Subsidiary. Nothing in the Plan
shall be construed to limit the right of the Company (i) to establish any other forms of incentives or compensation for Employees, consultants or independent advisors of the Company or any
Parent or Subsidiary, or (ii) to grant or assume options or other rights or awards otherwise than under the Plan in connection with any proper business purpose including but not by way of
limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation,
partnership, limited liability company, firm or association. 

6

 

VIII. TITLES  

        Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan. 

IX.   SEVERABILITY  

        Whenever possible, each provision in the Plan and in every Award Agreement will be interpreted in such manner as to be effective and valid under applicable law
but if any provision of this Plan or any Award Agreement made thereunder will be held to be prohibited by or invalid under applicable law, then (i) such provision will be deemed amended to, and
to have contained from the outset such language will be necessary to, accomplish the objectives of the provision as originally written to the fullest extent permitted by law and (ii) all other
provisions of the Plan and every Award Agreement will remain in full force and effect. 

X.    GOVERNING LAW  

        The Plan and any agreements pertaining to awards granted hereunder shall be governed by and construed in accordance with the laws of the State of California,
without regard to that State's conflict-of-laws rules. 

[Remainder
of page intentionally left blank.] 

7

 

XI.   ADOPTION  

        IN WITNESS WHEREOF, the Pro GP Corp., acting in its capacity as General Partner, has caused the Company to adopt this Plan effective immediately, as indicated by
the signature of its duly authorized officer this            day of November, 2004. 

	 	 	BREITBURN ENERGY COMPANY L.P.
	

 	
 	

By:	
PRO GP CORP.
	 	 	Its:	General Partner
	

 	
 	

 	

By:	

 
	 	 	 	 	

	 	 	 	Name:	Randall J. Findlay
	 	 	 	Title:	President

8

  

 
 

APPENDIX TO THE
  BREITBURN ENERGY COMPANY L.P.
  UNIT APPRECIATION PLAN
  FOR OFFICERS AND KEY INDIVIDUALS    
    

        The following definitions shall be in effect under the Plan: 

        A.    Award shall mean a grant of Unit Appreciation Rights under the Plan. 

        B.    Award Agreement shall mean an agreement entered into between the Company and the Participant evidencing the terms of an
Award, as the same may be amended from time to time. 

        C.    Base Price shall mean the amount (in U.S. dollars) per Phantom Unit determined by the Plan Administrator at the time of
grant of the Award in accordance with the terms and conditions of Section I.B of Article Two. 

        D.    Board shall mean the Board of Directors of the General Partner. 

        E.    BreitBurn Change in Control shall mean a change in ownership or control of the Company effected through any of the
following transactions: 

        (i)    the
sale, transfer or other disposition of all or substantially all of the assets of the Company; or 

        (ii)   the
acquisition, directly or indirectly by any person or related group of persons (other than the Company or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Company), of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of more than fifty percent (50%) of the
Company's securities outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction
involves a direct issuance from the Company or the acquisition of outstanding securities held by one or more of the Company's existing partners. 

        In
no event, however, will a BreitBurn Change in Control be deemed to occur upon (1) a reorganization or conversion of the Company as or to a corporation, limited liability
company or other form of entity if the holders of the Company's securities or interests remain substantially the same following such reorganization or conversion or (2) an Initial Public
Offering. 

        F.     Change in Control shall mean the occurrence of one or more of the following: 

        (i)    a
BreitBurn Change in Control; 

        (ii)   a
Provident Change in Control; or 

        (iii)  a
General Partner Change in Control. 

        G.    Code shall mean the Internal Revenue Code of 1986, as amended from time to time. 

        H.    Committee shall mean a committee of one (1) or more members of the Board appointed by the Board to exercise one or
more administrative functions under the Plan. 

        I.     Company shall mean BreitBurn Energy Company L.P., a Delaware limited partnership, and any successor entity to all or
substantially all of the assets or voting capital of BreitBurn Energy Company L.P. which shall by appropriate action adopt the Plan. 

        J.     Determination Period with respect to any Unit Appreciation Right exercised shall mean the period commencing on
(i) the date specified by the Plan Administrator with respect to such Unit Appreciation Right and set forth in the documents evidencing the Award (the "Determination Period Commencement Date")
to (ii) either (a) the date of the Company's most recently completed "Partnership Valuation" (as defined in Section 6.6.1 of the Limited Partnership Agreement) preceding the
Exercise Date of such Unit Appreciation Right, if the Value of the Phantom Units with respect to 

A-1

 

which
the Unit Appreciation Rights are being exercised is based on such valuation, (b) the last business day preceding the Exercise Date of such Unit Appreciation Right for which a closing
selling price of the Partnership Interests is quoted, if the Partnership Interests are listed on an Exchange, (c) the last business day preceding the Exercise Date of such Unit Appreciation
Right for which the closing representative bid and asked prices for the Partnership Interests are quoted, if the Partnership Interests are traded on the Nasdaq National Market, or (d) the date
of the consummation of a Change in Control, if the Unit Appreciation Right is being exercised immediately prior to and contingent upon the consummation of such Change in Control. 

        K.    Distributions shall mean the aggregate amount of distributions (as converted, if necessary, into U.S. Dollars on the basis
of the Exchange Rate) of profits and capital made by the Company in respect of a Partnership Interest during the Determination Period with respect to a Unit Appreciation Right of an Award. In the
event any such distribution is made in property, the value of such property shall be determined by the Board in good faith. 

        L.    Employee shall mean any officer or other employee (as defined in accordance with Section 3401(c) of the Code) of
the Company, or of any Parent or Subsidiary (whether now existing or subsequently established). 

        M.   Exchange shall mean either the American Stock Exchange, the New York Stock Exchange or the Toronto Stock Exchange. 

        N.    Exchange Rate shall mean the rate at which any relevant currency is converted into U.S. Dollars, as reported on the
relevant date in The Wall Street Journal.

        O.    Exercise Date means the date on which the Participant elects to surrender one or more Unit Appreciation Rights. 

        P.     General Partner shall mean the general partner of the Company, Pro GP Corp., a Delaware corporation. 

        Q.    General Partner Change in Control shall mean a change in ownership or control of the General Partner effected through any
of the following transactions: 

        (i)    the
sale, transfer or other disposition of all or substantially all of the assets of the General Partner; or 

        (ii)   the
acquisition, directly or indirectly by any person or related group of persons (other than the General Partner or a person that directly or indirectly controls, is
controlled by, or is under common control with, the General Partner), of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of more than fifty percent (50%) of
the total combined voting power of the General Partner's securities outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction
involves a direct issuance from the General Partner or the acquisition of outstanding securities held by one or more of the General Partner's existing stockholders. 

        In
no event, however, will a General Partner Change in Control be deemed to occur upon (1) an incorporation of the General Partner (or other change in the corporate form of the
General Partner) or (2) the occurrence of any reorganization or combination involving the General Partner following which Provident retains one hundred percent (100%) director or indirect
beneficial ownership of the General Partner. 

        R.    Initial Public Offering shall mean the initial sale of the Company's capital securities pursuant to an effective
registration statement filed by the Company pursuant to the 1933 Act. 

        S.     Limited Partnership Agreement shall mean the Limited Partnership Agreement of BreitBurn Energy Company L.P., a Delaware
Limited Partnership, dated as of June 15, 2004, as amended from time to time. 

A-2

 

        T.     Misconduct of a Participant shall mean (i) the commission of any act of fraud, embezzlement or dishonesty by the
Participant that has a material adverse impact on the Company (or any Parent or Subsidiary), (ii) any unauthorized use or disclosure by such Participant of confidential information or trade
secrets of the Company (or any Parent or Subsidiary), (iii) any willful and continued failure by the Participant to substantially perform his or her duties with the Company or any Parent or
Subsidiary (other than any such failure resulting from the Participant's incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the
Participant by the Board, which demand specifically identifies the manner in which the Board believes that the Participant has not substantially performed such duties, or (iv) any willful and
continued failure by the Participant to substantially follow and comply with the specific and lawful directives of the Board, as reasonably determined by the Board (other than any such failure
resulting from the Participant's incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Participant by the Board, which demand
specifically identifies the manner in which the Board believes that the Participant has not substantially performed such directives. The foregoing definition shall not in any way preclude or restrict
the right of the Company (or any Parent or Subsidiary) to discharge or dismiss any Participant or other person in the service of the Company (or any Parent or Subsidiary) for any or no reason. 

        U.    1934 Act shall mean the Securities Exchange Act of 1934, as amended from time to time. 

        V.     1933 Act shall mean the Securities Act of 1933, as amended from time to time. 

        W.    Parent shall mean any entity (other than the Company) in an unbroken chain of entities ending with the Company;  provided each entity in the unbroken chain (other
than the Company) owns, at the time of the determination, securities possessing fifty percent (50%) or
more of the total combined voting power of all classes of securities in one of the other entities in such chain. 

        X.    Participant shall mean any person who receives an Award under the Plan. 

        Y.    Partnership Interest shall mean a "partnership interest" in the Company, as such term is used in the Limited Partnership
Agreement. On June 15, 2004, there were One Hundred Million (100,000,000) Partnership Interests outstanding. 

        Z.    Phantom Unit shall mean one hypothetical Partnership Interest, used solely for record keeping purposes to determine the
right of a Participant to receive a distribution pursuant to an Award. A Phantom Unit shall not be a "partnership interest" or any right, title or interest in a "partnership interest." 

        AA.   Plan shall mean the Company's Unit Appreciation Plan for Officers and Key Individuals, as set forth in this
document. 

        BB.    Plan Administrator shall mean either the Board or the Committee acting in its capacity as administrator of
the Plan. 

        CC.   Provident shall mean Provident Energy Trust, a trust organized under the laws of Alberta, Canada. 

        DD.   Provident Change in Control shall mean the occurrence of any of the following: 

        (i)    the
consummation of any transaction in which Provident is merged into or amalgamated with any other entity; 

        (ii)   the
sale, transfer or other disposition of all or substantially all of the assets of Provident; or 

        (iii)  the
commencement of a take-over bid (as defined in the Securities Act (Alberta)) which is not exempt from the take-over bid requirements of the
Securities Act (Alberta) for the Trust Units. 

A-3

 

        EE.   Service shall mean the performance of services for the Company (or any Parent or Subsidiary, whether now
existing or subsequently established) by a person in the capacity of an Employee, consultant, independent advisor or non-employee director, except to the extent otherwise specifically
provided in the documents evidencing the Award. No Service credit shall be given for vesting purposes for any period a Participant is on a leave of absence, unless otherwise required by law or
expressly authorized by the Plan Administrator. 

        FF.     Subsidiary shall mean any entity (other than the Company) in an unbroken chain of entities beginning with
the Company; provided each entity (other than the last entity) in the unbroken chain beneficially holds, at the time of the determination, securities or
interests representing a controlling interest of the total combined voting power of all classes of securities or interests in one of the other entities in such chain. 

        GG.   Trust Units shall mean the publicly traded units of Provident or such other securities to which a holder of
Trust Units may become entitled by reason of any subdivisions, consolidations or reclassifications of the Trust Units. 

        HH.   Unit Appreciation Right shall mean a right entitling the Participant, upon exercise of such right on or
following vesting, to the excess, if any, of the Value of a Phantom Unit on the Exercise Date, over the Base Price. 

        II.      Underwriting Agreement shall mean the agreement between the Company and the underwriter or underwriters
managing the Initial Public Offering. 

        JJ.     Value per Phantom Unit on any relevant date shall be determined in accordance with the following
provisions: 

        (i)    Until
such time as the Partnership Interests are listed on an Exchange or traded on the Nasdaq National Market, the Value of a Phantom Unit shall be equal to the value
of one Partnership Interest, as determined on the basis of the most recently completed "Partnership Valuation" (calculated in accordance with Section 6.6 of the Limited Partnership Agreement). 

        (ii)   If
the Partnership Interests are at the time listed on any Exchange, then the Value shall be the closing selling price per Partnership Interest on the last preceding
date for which such quotation exists, as such price is reported by the Exchange determined by the Plan Administrator to be the primary market for the Partnership Interests and officially quoted in the
composite tape of transactions on such exchange. If the closing selling price is reported in a currency other than U.S. Dollars, the Value shall be equal to such closing selling price as converted
into U.S. Dollars on the basis of the Exchange Rate. 

        (iii)  If
the Partnership Interests are at the time traded on the Nasdaq National Market, then the Value shall be the mean between the closing representative bid and asked
prices for the Partnership Interests on the last preceding date for which such quotations exists, as reported by the National Association of Securities Dealers on the Nasdaq National Market. 

        (iv)  If
an Award is exercised immediately prior to and contingent upon the consummation of a BreitBurn Change in Control, then the Value of a Phantom Unit shall be equal to
the aggregate amount of cash (as converted, if necessary, into U.S. Dollars on the basis of the Exchange Rate) and property (valued by the Board in good faith) received in exchange for a Partnership
Interest in connection with the BreitBurn Change in Control. 

        (v)   If
an Award is exercised on the date of the Initial Public Offering, then the Value of a Phantom Unit shall be equal to the price at which a Partnership Interest is sold
in the Initial Public Offering pursuant to the Underwriting Agreement. 

A-4

QuickLinks

BREITBURN ENERGY COMPANY L.P. UNIT APPRECIATION PLAN FOR OFFICERS AND KEY INDIVIDUALS

ARTICLE ONE GENERAL PROVISIONS

ARTICLE TWO UNIT APPRECIATION RIGHTS

ARTICLE THREE MISCELLANEOUS

APPENDIX TO THE BREITBURN ENERGY COMPANY L.P. UNIT APPRECIATION PLAN FOR OFFICERS AND KEY INDIVIDUALS

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