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Exhibit 10.1
 

EMPLOYMENT AGREEMENT
 
THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into by and between Berry
Petroleum Company, a Delaware corporation (the “Company”), and Michael Duginski,
an individual (“Executive”) (collectively the “Parties”) with respect to the
following facts:
 
A.           Executive first commenced employment with the Company in February
2002 and was appointed to the position of Executive Vice President and Chief
Operating Officer on September 1, 2007.
 
B.           The Company and Executive have entered into a Change in Control
Agreement dated August 23, 2006 (the “Prior Agreement”).
 
C.           The Company and Executive hereby desire and agree to revoke the
Prior Agreement and agree that the rights and obligations provided in this
Agreement supersede such Prior Agreement.
 
D.           The Company desires to continue to employ Executive in the position
of Executive Vice President and Chief Operating Officer on the terms and
conditions, and for the consideration hereinafter set forth, and Executive
desires to continue to be employed by the Company on such terms and conditions
and for such consideration.
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the Parties hereto do hereby agree as follows:
 
 
ARTICLE 1
 
 
EMPLOYMENT AND DUTIES
 
1.1 Employment Relationship.
 
The Company hereby agrees to employ Executive for the Term of Employment, as
defined below, to perform the duties and undertake the responsibilities for the
Company as described herein.  During the term of this Agreement, Executive shall
serve as an employee and shall hold the position of Executive Vice President and
Chief Operating Officer of the Company and shall report directly to the Chief
Executive Officer (the “CEO”).  Executive shall perform the duties of Executive
Vice President and Chief Operating Officer as prescribed in the agreed upon job
description and those additional duties as are common for similar positions in
similar industries.
 
1.2 Scope of Duties.
 
Executive shall perform diligently and use all of his best efforts during the
Term of Employment to protect, encourage, and promote the interests of the
Company.  During the Term of Employment, Executive shall also perform such other
duties consistent with the position of
 

 
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Executive Vice President and Chief Operating Officer as may be assigned to
Executive from time to time and will devote substantial time and attention to
such duties.
 
1.3 Other Activities.
 
Subject to the following sentence, Executive agrees to devote substantially all
of his business time and attention to the business of the Company.  During the
term of this Agreement, Executive shall not be precluded from devoting a limited
amount of time to outside activities, provided that:
 
1.3.1 Such activity does not interfere with Executive’s duties under this
Agreement and is not in conflict with the interests of the Company;
 
1.3.2 Executive’s obligations to the Company are not compromised; and
 
1.3.3 Executive makes a full written disclosure to the CEO of the nature,
extent, and duration of all such activities prior to beginning any such
activities, and Executive obtains the approval of the CEO prior to beginning any
such activity.
 
1.4 Passive Investments in Non-Competitive Enterprises.
 
It is expressly understood that neither Section 1.3 nor any other provision of
this Agreement shall be construed to prohibit or restrict Executive from making
any passive investment in an enterprise not competitive with the Company.  In
addition, nothing contained in this Agreement shall be construed to prohibit or
restrict Executive from engaging in any activities on his own time which are not
competitive with nor in conflict with the Company.
 
ARTICLE 2
 
COMPENSATION AND BENEFITS
 
2.1 Base Salary.
 
The Company shall pay Executive an annual base salary of Three Hundred Twenty
Thousand Dollars ($320,000) (“Base Salary”).  The Base Salary shall be payable
in semi-monthly installments or otherwise, in accordance with the normal payroll
procedures of the Company.  The Compensation Committee of the Board of Directors
of the Company, either itself or together with the other independent directors
(the subset of directors so authorized by the Board of Directors of the Company,
the “Compensation Administrator”), will consider Executive’s Base Salary on an
annual basis following the CEO’s review of Executive’s performance and
recommendation as to Executive’s Base Salary.  The annual Base Salary during the
contract term may be increased from time to time by the Compensation
Administrator.  The annual Base Salary during the contract term shall not be
decreased, except in connection with and commensurate with an across-the-board
salary reduction applicable generally to the Company’s executive level employees
as determined by the Board of Directors of the Company (the “Board”).
 
2.2 Annual Bonus.
 

 
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2.3 In addition to his Base Salary, Executive may be eligible to receive an
annual bonus (“Annual Bonus”).  The Annual Bonus target shall be established
annually by the Compensation Administrator and may range between fifty percent
(50%) and two hundred percent (200%) of Base Salary.  The Compensation
Administrator shall in its discretion determine the amount of the Annual Bonus,
which may be greater or less than target and may be determined with respect to
such factors as the Compensation Administrator deems appropriate.  Any bonus
approved by the Compensation Administrator will be payable to Executive in
accordance with the terms of the applicable bonus policy, at the same time
bonuses are paid to other executive officers.  Executive shall only be entitled
to receive any Annual Bonus if he remains employed with the Company on the date
such bonuses are paid.  Subject to the provisions of this Agreement, the
determination and payment of the Annual Bonus shall be at the sole discretion of
the Compensation Administrator.
 
2.4 Equity Awards.
 
Executive has outstanding, as of the Effective Date, certain restricted stock
units and stock options awarded pursuant to the terms of the Company’s 2005
Equity Incentive Plan (the “2005 Plan”), and its 1994 Stock Option Plan subject
to such terms as are as set forth in the applicable award agreements or as
otherwise set forth below (the “Outstanding Equity Grants”).  The Compensation
Administrator will review no less than annually the Executive’s eligibility for
further awards pursuant to the Plan, or any subsequent equity compensation plan
for which Executive is eligible, and based on such review, may in its sole
discretion grant Executive further awards.  Each such award shall contain such
terms and conditions as shall be determined by the Compensation Administrator;
provided, however, that Executive shall have the following rights with respect
to the Outstanding Equity Grants and any additional equity grants made to
Executive after the Effective Date and prior to January 1, 2009 (collectively,
the “2008 Outstanding Equity Grants”):
 
2.4.1 In the event that (i) Executive has a termination of employment due to an
Involuntary Termination Without Cause, (ii) Executive’s employment terminates
due to death or Disability, or (iii) Executive voluntarily terminates employment
for Good Reason, then all unvested portions of the 2008 Outstanding Equity
Grants shall be deemed to be fully vested upon execution and timely delivery by
Executive or the administrator of his estate, without revocation, of a full
general release of claims (excluding claims for amounts payable under this
Agreement), substantially in the form of Exhibit A attached hereto.  Delivery of
such general release shall not be considered timely, and Executive shall not be
entitled to the acceleration of vesting as set forth in this Section 2.3.1, if
not made by sixty (60) calendar days after the Termination Date.
 
2.4.2 The stock options held by Executive as 2008 Outstanding Equity Grants
shall remain exercisable upon termination of Executive’s employment for any
reason, until the earliest of (i) eight (8) months following the Termination
Date (as defined below), and (ii) the latest date on which such option could
otherwise be exercised without giving effect to a termination of service.
 

 
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2.4.3 Health and Welfare Benefits.
 
Executive shall be eligible to participate in all benefit programs (including
welfare plans, retirement plans, disability plans, leave programs and
educational reimbursement programs) provided by the Company to its employees, in
accordance with terms of the applicable plans.
 
2.5 Equipment, Supplies and Services.
 
The Company shall provide Executive with equipment, supplies, and professional
and administrative support services that, in the judgment of the Company, are
reasonably necessary for Executive to efficiently perform the duties required
hereunder.
 
2.6 Tax Liability.
 
Subject to the Company’s obligations in Sections 3.7.8 and 3.9, Executive shall
take full and complete responsibility for, and shall hold the Company harmless
from, any and all tax liability relating to his receipt of benefits, including
but not limited to, withholding, social security, SUI/SDI, federal, state or
local taxes, and any interest or penalties incurred in connection with receipt
of such benefits.
 
ARTICLE 3
 
TERM AND TERMINATION OF EMPLOYMENT
 
3.1 Term of Employment.
 
As used in this Agreement, the phrase “Term of Employment” shall mean the period
commencing with the Effective Date (as defined herein) of this Agreement and
ending on the third anniversary of the Effective Date.  The Term of Employment
shall be extended for additional one-year periods if neither Executive nor the
Company has notified the other in writing as least six (6) months prior to the
end of the then Term of Employment, as extended at such time, that the Term of
Employment shall not be extended or further extended, as the case may be, for
any additional one-year period; provided, however, that if a Change in Control
occurs during the Term of Employment, the Term of Employment shall be
automatically extended to the date which is two (2) years after the date on
which the Change in Control occurs.   The Term of Employment may end prior to
the Expiration Date pursuant to Section 3.2, Section 3.3, Section 3.4, Section
3.5 or Section 3.6.
 
3.2 Death and Disability.
 
Executive’s employment under this Agreement shall terminate automatically upon
Executive’s death.  Additionally, the Company may terminate Executive’s
employment under this Agreement, in compliance with all state and federal
workers’ compensation, disability, and family and medical leave laws, if
Executive is absent from work or is unable to discharge the essential functions
of Executive’s position, with or without reasonable accommodation, due to legal,
physical or mental incapacity for a period of at least sixty (60) days (whether
or not consecutive) in any three hundred and sixty-five (365) consecutive day
period (a “Disability”).
 

 
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The Company’s Right to Terminate For Cause.
 
The Company may terminate Executive’s employment under this Agreement at any
time for Cause.  For purposes of this Agreement, the term “Cause” shall mean as
reasonably determined by the Board:  (i) the commission by Executive of any
criminal act which results in an arrest or indictment except misdemeanors
involving the operation of a motor vehicle; (ii) Executive’s conduct that
results in or is reasonably likely to result in material harm to the business or
reputation of the Company and, if capable of cure, Executive has not cured such
conduct within sixty (60) days following receipt of written notice by the
Company; (iii) Executive’s material violation of any contract or agreement
between Executive and the Company, including but not limited to this Agreement,
or any policy of the Company applicable to Executive; (iv) Executive knowingly
and deliberately acting in a manner contrary to express lawful and reasonable
limitations or instructions imposed on Executive, (v) Executive’s failure to
perform his duties and responsibilities with the Company (other than any failure
due to physical or mental incapacity) after a demand for performance is
delivered to him by the Company which specifically identifies the manner in
which the Company believes he has not performed his duties, or (vi) Executive’s
violation of any Company policy applicable at the time of the events, acts or
omissions at issue.  A failure or refusal by the Company to exercise its right
to terminate Executive’s employment under this Agreement as a result of the
existence of Cause or any other factor shall not constitute nor be construed as
a waiver of its right to terminate Executive’s employment under this Agreement
at a later time for such Cause or other factor under this Section, or without
Cause under Section 3.4.
 
3.3 The Company’s Right to Terminate Without Cause.
 
The Company may terminate Executive’s employment under this Agreement at will,
at any time during the Term of Employment, without Cause (an “Involuntary
Termination Without Cause”).  In the event that the Company exercises its right
to terminate Executive’s employment in an Involuntary Termination Without Cause,
then Executive will be entitled to receive Base Salary and benefits earned up to
and including the date of termination of Executive’s employment (the
“Termination Date”) and will be entitled to the following:
 
3.3.1 Cash in the amount of one and one-half (1.5) times the Base Salary in
effect on the Termination Date, payable in one lump sum upon the Severance
Payment Date (as defined below).
 
3.3.2 Cash in the amount of one and one-half (1.5) times the average Annual
Bonus, if any, paid to Executive for the prior two (2) fiscal years (which
amount Executive agrees will be paid in lieu of any Annual Bonus for the fiscal
year in which termination occurs), payable upon the Severance Payment Date.
 
3.3.3 Cash in the amount of one and one-half (1.5) times the maximum annual
Company matching contribution to the Company’s 401(k) plan that would otherwise
be made to Executive’s account for the plan year in which termination occurs,
calculated without regard to Executive’s contribution or limits imposed under
the Internal Revenue Code of 1986, as amended (the “Code”), payable upon the
Severance Payment Date.
 

 
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3.3.4  Cash in the amount of eighteen (18) times Executive’s monthly car
allowance amount in effect (if any) on the Termination Date, payable on the
Severance Payment Date.
 
3.3.5 If Executive elects to continue to participate in the Company’s standard
medical and dental benefits in accordance with the health care continuation
provisions of Section 4980B(f) of the Code (“COBRA”), then the Company will
continue to pay a portion of the cost thereof equal to the portion paid by the
Company prior to the Termination Date for up to eighteen (18) months following
the Termination Date, if: (1) Executive provides written notice of such election
to Company within the time prescribed in the “COBRA Notice”; and (2) Executive
pays the Company monthly an amount equal to Executive’s contribution for such
benefits as was in effect at the Termination Date, if any.  The benefit set
forth in this Section 3.4.5 shall cease upon Executive becoming eligible for
reasonably comparable medical and dental benefits through a successor employer.
 
3.3.6 The Company will continue Executive’s term life insurance coverage at the
level in effect on the Termination Date, or obtain similar coverage at the
Company’s expense, for a period of eighteen (18) months following the
Termination Date, provided that if Executive is a “specified employee” within
the meaning of section 409A(a)(2)(b)(i) of the Code, Executive must, prior to
the due date for such premium costs, pay to the Company or to the life insurance
carrier, as applicable, all premium costs which are due prior to the date
occurring six (6) months after the Termination Date, and, on such date, the
Company will reimburse Executive for all costs so paid; and provided further
that if the premiums of such life insurance coverage are increased for any
reason, Executive shall pay the amount of such increase in premiums.
 
3.3.7 All unvested stock options and restricted stock units awarded as the 2008
Outstanding Equity Grants held by Executive on the Termination Date shall be
deemed to be fully vested upon the effectiveness, without further right of
revocation, of the release described in the last paragraph of this Section
3.4.  Executive shall be responsible and shall make appropriate provisions for
any withholding taxes associated with such accelerated vesting in accordance
with the applicable award agreement.  Any such award shall settle in accordance
with the terms of its award agreement giving effect to the accelerated vesting;
provided, however, that any restricted stock unit vesting pursuant to this
Section 3.4.7 will be settled not later than the Severance Payment Date.
 
Except as set forth herein or in Section 3.7, no additional benefits will be
earned by Executive following the Termination Date.  Notwithstanding anything in
this Agreement to the contrary, the Company’s obligation to provide the benefits
set forth in this Section 3.4 is expressly conditioned upon Executive’s
execution and timely delivery, without revocation, of a full general release of
claims (excluding claims for amounts payable under this Agreement),
substantially in the form of Exhibit A, attached hereto.  Delivery of such
general release shall not be considered timely, and Executive’s entitlement to
the benefits set forth in this Section 3.4 shall be extinguished, if not made by
sixty (60) calendar days after the Termination Date.
 

 
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Resignation by Executive for Good Reason.
 
Executive may terminate Executive’s employment under this Agreement at will, at
any time during the Term of Employment, for Good Reason.  In the event that
Executive exercises his right to terminate Executive’s employment under this
Agreement for Good Reason, Executive shall be entitled to all of the benefits
specified in Section 3.4 and its subsections, subject to all of the terms
thereof including, without limitation, the requirements in the last paragraph
thereof.  For purposes of this Agreement, the term “Good Reason” shall include
any of the following that occur without the consent of Executive:  (i) reduction
in the Base Salary which is not permitted pursuant to Section 2.1; (ii) the
Company’s refusal to allow Executive to participate in its benefit programs
(including welfare plans, retirement plans, disability plans and leave programs)
provided by the Company to its employees, in accordance with terms of the
applicable plans; (iii) a significant reduction of Executive’s duties, title,
position or responsibilities that is effected without Executive’s written
consent; or (iv) at any time within two (2) years after the occurrence of a
Change in Control, a required relocation of Executive's residence of more than
35 miles from the location of Executive's residence immediately before such
Change in Control.  Notwithstanding the foregoing, Executive must provide the
Company with advance written notice of the Company’s conduct giving rise to Good
Reason within thirty (30) days following the occurrence of such conduct and not
less than thirty (30) days prior to the proposed date of such resignation for
Good Reason (the “Cure Period”) and during the Cure Period, the Company may
attempt to rescind or correct the matter giving rise to Good Reason.  Only if
such notice is given and the Company does not rescind or correct the matter
giving rise to Good Reason during the Cure Period may Executive terminate his
employment for Good Reason.  Such termination must occur no later than six (6)
months after the date of the initial existence of any one or more of the
circumstances that first gave rise to Good Reason.
 
3.4 Resignation by Executive.
 
Executive may terminate Executive’s employment under this Agreement at will, at
any time during the Term of Employment, for any reason or no reason.  In the
event Executive resigns for any reason other than Good Reason, the Company shall
pay Executive only the compensation and benefits earned by Executive as of the
Termination Date, and no additional compensation or sums shall be owed to
Executive.  Executive agrees and acknowledges that the Annual Bonus will be
based on the Company’s and Executive’s overall performance for the entire fiscal
year and is payable only if Executive remains employed with the Company on the
date the Annual Bonus is paid, and no portion of such bonus will be deemed
earned unless Executive remains employed by the Company for the entire fiscal
year covered by the Annual Bonus and through the date of payment.
 
3.5 Change in Control.
 
In the event of a Change in Control (as defined below) and the occurrence of any
one of the following events within two (2) years after such Change in
Control:  (i) Involuntary Termination Without Cause, or (ii) Executive’s
resignation of his employment for Good Reason, then Executive will be entitled
to the following benefits, in addition to all amounts and benefits to which
Executive shall be entitled as a result of his employment up to and including
the Termination Date:
 

 
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Cash in the amount of two and one-half (2.5) times the Base Salary in effect on
the Termination Date, payable in one lump sum upon the Severance Payment Date.
 
3.5.1 Cash in the amount of two and one-half (2.5) times the highest Annual
Bonus, if any, paid to Executive over the prior two (2) fiscal years (which
amount Executive agrees will be paid in lieu of any Annual Bonus for the fiscal
year in which termination occurs), payable upon the Severance Payment Date.
 
3.5.2 Cash in the amount of two and one-half (2.5) times the maximum annual
Company matching contribution to the Company’s 401(k) plan that would otherwise
be made to Executive’s account for the plan year in which termination occurs,
calculated without regard to Executive’s contribution or limits imposed under
the Code, payable upon the Severance Payment Date.
 
3.5.3 Cash in the amount of thirty (30) times Executive’s monthly car allowance
amount in effect (if any) on the Termination Date, payable on the Severance
Payment Date.
 
3.5.4 If Executive elects to continue to participate in Company’s standard
medical and dental benefits through COBRA, the Company will continue to pay its
portion of the cost thereof until December 31 of the second calendar year
following the year in which the Termination Date occurs, if:  (1) Executive
provides written notice of such election to the Company within the time
prescribed in the “COBRA Notice”; and (2) Executive pays the Company monthly an
amount equal to Executive’s contribution for such benefits as was in effect at
the Termination Date, if any.  The benefit sets forth in this Section 3.7.5
shall cease upon Executive becoming eligible for reasonably comparable medical
and dental benefits through a successor employer.
 
3.5.5 The Company will continue Executive’s term life insurance coverage at the
level in effect on the Termination Date, or obtain similar coverage at the
Company’s expense, for a period of thirty (30) months following the Termination
Date, provided that if Executive is a “specified employee” within the meaning of
section 409A(a)(2)(b)(i) of the Code, Executive must, prior to the due date for
such premium costs, pay to the Company or to the life insurance carrier, as
applicable, all premium costs which are due prior to the date occurring six (6)
months after the Termination Date, and, on such date, the Company will reimburse
Executive for all costs so paid; and provided further that if the premiums of
such life insurance coverage are increased for any reason, such coverage shall
be reduced to the level required to maintain the same premium rates as in effect
on the Termination Date.
 
3.5.6 All unvested stock options and restricted stock units of the Company held
by Executive on the Termination Date shall be deemed to be fully vested upon the
effectiveness, without further right of revocation, of the release described in
the last paragraph of this Section 3.7.  Executive shall be responsible and
shall make appropriate provisions for any withholding taxes associated with such
accelerated vesting in accordance with the applicable award agreement.  Any such
award shall settle in accordance with the terms of its award agreement, giving
effect to the accelerated
 

 
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3.5.7 vesting; provided, however, that any restricted stock unit will be settled
not later than the Severance Payment Date.
 
3.5.8 Cash in the amount and payable at the time determined as set forth in
Section 3.9 regarding parachute payments under Section 280G of the Code.
 
The benefits set forth in this Section 3.7 are in lieu of any benefits that
would otherwise be available to Executive under Section 3.4 or Section 3.5, and
no additional benefits will be earned by Executive following the Termination
Date.  Notwithstanding anything in this Agreement to the contrary, the Company’s
obligation to provide the benefits set forth in this Section 3.7 is expressly
conditioned upon Executive’s execution and timely delivery, without revocation,
of a full general release of claims (excluding claims for amounts payable under
this Agreement), substantially in the form of Exhibit A attached
hereto.  Delivery of such general release shall not be considered timely, and
Executive’s entitlement to the benefits set forth in this Section 3.7 shall be
extinguished, if not made by sixty (60) calendar days after the Termination
Date.
 
3.6 Definition of Change in Control.
 
For purposes of this Agreement, a “Change in Control” of the Company shall mean
and shall be deemed to have occurred if and when any one of the following four
events occurs:  (i) within the meaning of Section 13(d) of the Securities
Exchange Act of 1934 (the “Exchange Act”), any person or group becomes a
beneficial owner, directly or indirectly, of securities of the Company
representing 35% or more of the combined voting power of the Company’s then
outstanding securities, without the prior approval of the Company; (ii) an
election of Directors not in accord with the recommendations of the majority of
the Directors who were in office prior to the pending election; (iii) the
stockholders of the Company approve an agreement to merge or consolidate, or
otherwise reorganize, with or into one or more entities which are not
subsidiaries, as a result of which less than 50% of the outstanding securities
of the surviving or resulting entity are, or are to be, owned by former
stockholders of the Company (excluding from the term “former stockholders” a
stockholder who is, or as a result of the transaction in question, becomes an
“affiliate,” as that term is used in the Exchange Act and the rules promulgated
thereunder, of any party to such merger, consolidated or reorganization); or
(iv) the stockholders of the Company approve the sale of substantially all of
the Company’s business and/or assets (in one transaction or a series of related
transactions) to a person or entity which is not a subsidiary.
 
3.7 280G Reimbursement.
 
In the event any of the benefits provided for in this Agreement or any other
benefits approved at any time by the Compensation Administrator and otherwise
payable to Executive constitute “parachute payments” within the meaning of
Section 280G of the Code, and will be subject to the excise tax imposed by
Section 4999 of the Code, then the Company shall pay Executive (A) a cash
payment equal to such excise tax, and (B) an additional cash payment equal to
the excise tax and federal and state income and employment taxes arising from
the payments made by the Company to Executive pursuant to this sentence, payable
upon the Severance Payment Date.  For purposes of part (B) of the preceding
sentence, federal and state income taxes shall be assumed to be at the highest
applicable rates for ordinary income as of the Termination Date.
 

 
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The determination of Executive’s excise tax liability and the amount required to
be paid to Executive by the Company under this Section 3.9 shall be made in
writing by a national accounting firm chosen by the Company (the
“Accountants”).  For purposes of making the calculations required by this
Section 3.9, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code.  The Company and Executive must furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section 3.9.  The Company shall bear all costs
the Accountants may reasonably incur in connection with any calculations
contemplated by this Section 3.9.  The Accountants’ written determination
pursuant to this Section 3.9 shall be conclusive and binding on the Parties.
 
3.8 Obligation Upon Termination for Cause or Termination by Executive Without
Good Reason.
 
If Executive’s employment under this Agreement is terminated for Cause under
Section 3.3 or due to resignation without Good Reason under Section 3.6 above,
then neither Executive nor Executive’s estate shall be entitled to receive any
compensation, benefits, or other remedies under or in relation to this Agreement
or otherwise, other than the payment of Executive’s Base Salary and benefits
earned up to the Termination Date, except as otherwise specifically provided.
 
3.9 Obligation Upon Termination for Death or Disability.
 
If Executive’s employment under this Agreement is terminated under Section 3.2
above, then all unvested stock options and restricted stock units of the Company
held by Executive on the Termination Date shall immediately be deemed to be
fully vested.  Executive or the administrator of Executive’s estate shall be
responsible and shall make appropriate provisions for any withholding taxes
associated with such accelerated vesting in accordance with the applicable award
agreement.  Such award shall settle in accordance with the applicable award
agreement, giving effect to the accelerated vesting.  Notwithstanding anything
in this Section 3.11 to the contrary, the Company’s obligation to provide the
benefits set forth in this Section 3.11 is expressly conditioned upon execution
and timely delivery by Executive or the administrator of Executive’s estate,
without further right of revocation, of a full general release of claims
(excluding claims for amounts payable under this Agreement), substantially in
the form of Exhibit A attached hereto.  Delivery of such general release shall
not be considered timely, and Executive’s entitlement to the benefits set forth
in this Section 3.11 shall be extinguished, if not made by sixty (60) calendar
days after the date of death or disability.
 
3.10 Severance Payment Date.
 
The Severance Payment Date shall be the date that is the later of thirty (30)
days following the Termination Date or ten (10) days following the execution of
the full general release of claims, substantially in the form of Exhibit A
attached hereto.
 

 
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INDEMNITY
 
The Company and Executive entered into an Indemnification Agreement in February
2002, which remains in full force and effect.
 
Executive agrees to fully indemnify and hold the Company harmless from and
against any and all liability, loss, damage, claim or cause(s) of action
(whether or not well-founded) which may result, directly or indirectly, from any
actions of Executive which are not within the course and scope of Executive’s
employment as authorized or required hereunder.
 
ARTICLE 4
 
MISCELLANEOUS
 
4.1 Confidential Information; Prohibited Misappropriation.
 
Executive hereby recognizes and acknowledges that during the course of his
employment by the Company, the Company has disclosed and will furnish, disclose,
or make available to Executive confidential and proprietary information related
to the Company’s business including, without limitation, business records,
personnel information, financial information, ideas, processes, inventions, and
devices and other technical or related documentation, whether or not patentable
or entitled to trademark (the “Confidential Information”), that such
Confidential Information has been developed and will be developed through the
expenditure by the Company of substantial time and money and that all such
Confidential Information, except to the extent it is in the public domain, shall
constitute valuable, special and unique assets of the Company and trade secrets
protected under applicable law.  Executive further agrees to use such
Confidential Information only for the purpose of carrying out his duties with
the Company and agrees that he will not, for a period of two (2) years after his
last day of employment with the Company, misappropriate for himself or others or
disclose to any third party, either directly or indirectly, any Confidential
Information.  It is expressly understood that Executive shall not be in breach
of this Section 5.1 for any disclosure he is required to make by virtue of a
final unappealable order by a court of competent jurisdiction.  It is further
expressly agreed that Executive shall return to the Company at the time of
termination of employment and not retain any property belonging to the Company,
including, without limitation, any and all originals and copies of documents
referencing or containing any Confidential Information.
 
4.2 Prohibited Solicitation:  Employees.
 
During the term of his employment and for one and one-half years (1.5) after
termination of employment for any reason, Executive agrees not to directly or
indirectly encourage or solicit any individual to leave the Company’s employ for
any reason or interfere in any other manner, except with respect to disciplinary
or other employment actions Executive may undertake in Executive’s role as a
supervisor, with the employment relationship at the time existing between the
Company and its current or prospective employees.
 

 
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Prohibited Solicitation:  Third Parties.
 
During the term of his employment and for one and one-half years (1.5) after
termination of employment for any reason, Executive agrees not to directly or
indirectly induce or attempt to induce any member, payor, contractor, supplier,
distributor, licensee or other affiliate of the Company to cease its
relationship with the Company or in any way interfere with the existing
relationship between any such member, payor, contractor, supplier, distributor,
licensee or other affiliate and the Company.  After employment, Executive agrees
not to use Confidential Information to directly or indirectly induce or attempt
to induce any member, payor, contractor, supplier, distributor, licensee or
other affiliate of the Company to cease its relationship with the Company or in
any way interfere with the existing relationship between any such member, payor,
contractor, supplier, distributor, licensee or other affiliate and the Company.
 
4.3 No Competition.
 
During the term of his employment and for one year (1) after termination of
employment for any reason, Executive shall not, without the prior written
consent of the Board or a duly authorized committee thereof, directly or
indirectly, own, enter into, engage in, operate, manage, control, participate
in, advise, assist, finance, be employed by or render services to or consult
with, or have a financial or other interest in, any business that competes with
the Company (or any segment thereof), or take any preliminary steps to do any of
the foregoing; provided, however, that anything above to the contrary
notwithstanding, Executive may own, as a passive investor, securities of any
publicly-traded entity, so long as Executive’s holdings in any one such entity
do not in the aggregate constitute more than one percent (1%) of the voting
stock of such entity, and securities of any non-publicly traded entity, so long
as Executive’s holdings in any one such entity do not in the aggregate
constitute more than five percent (5%) of the voting stock of such entity.
 
4.4 Recourse for Breach of Restrictive Covenants.
 
Executive acknowledges that monetary damages may not be sufficient to compensate
the Company for any economic loss which may be incurred by reason of Executive’s
breach of the foregoing restrictive covenants.  Accordingly, in the event of any
such breach, the Company is relieved from paying any remaining payments or
providing any remaining benefits required under this Agreement, it may pursue
any remedies available at law, and it will be entitled to obtain equitable
relief in the form of an injunction precluding Executive from continuing to
engage in such breach.  Such relief may be sought as provided in Section 5.9.
 
4.5 Consideration.
 
Executive acknowledges that the restrictions placed upon him by Sections 5.1,
5.2, 5.3 and 5.4 are reasonable, given the nature of his position, and that
there is sufficient consideration promised him pursuant to this Agreement to
support these restrictions.
 

 
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Survival of Restrictive Covenants.
 
The restrictions of Sections 5.1, 5.2 and the specified portion of 5.3 shall
survive Executive’s last day of employment by the Company and shall be in
addition to any restrictions imposed upon Executive by statute or at common law.
 
4.6 Applicability.
 
Sections 5.1 (except as to personnel information), 5.2, and 5.3 shall not apply
should the Company cease to exist altogether.
 
4.7 Dispute Resolution.
 
Except as the Parties may otherwise agree in writing, all claims, demands,
causes of action or controversies - past, present or future - that Executive may
have against the Company, its officers, directors, employees, independent
contractors or agents past, present or future - or that the Company may have
against Executive, shall be resolved by final and binding arbitration pursuant
to the provisions of Exhibit B hereto.  PLEASE READ CAREFULLY.  BY SIGNING THIS
AGREEMENT, YOU ARE GIVING UP YOUR RIGHT TO FILE A LAWSUIT IN A COURT OF LAW AND
TO HAVE YOUR CASE HEARD BY A JUDGE AND/OR JURY.
 
4.8 Amendment and Modifications.
 
This Agreement and the February 2002 Indemnification Agreement referenced in
Article 4 of this Agreement contain a complete statement of all rights and
obligations between the Parties with respect to Executive’s employment by the
Company.  This Agreement supersedes all prior and existing negotiations and
agreements, including, but not limited to, the Prior Agreement, between the
Parties concerning Executive’s employment and can only be changed or modified
pursuant to a written instrument duly executed by each of the Parties hereto.
 
4.9 Severability.
 
If any provision of this Agreement or any portion thereof is declared invalid,
illegal or incapable of being enforced by an arbitrator or any Court of
competent jurisdiction, the remainder of such provisions and all of the
remaining provisions of this Agreement shall continue in full force and
effect.  Without limiting the generality of the foregoing, in the event that any
provision of this Agreement stating that an alternative amount is due in lieu of
an Annual Bonus for a partial fiscal year, or that no Annual Bonus is due for a
partial fiscal year, is found not to be enforceable by an arbitrator or any
Court of competent jurisdiction, the Company and Executive agree that the earned
bonus for any partial fiscal year shall be presumed to be twenty-five percent
(25%) of Base Salary, prorated for the number of days during the year for which
Executive was employed by the Company, absent clear and convincing evidence that
Executive would have had a legally enforceable right to a higher bonus
(excluding the effect of proration) if he had remained employed for the entire
year.
 
4.10 Withholdings.
 
All amounts payable hereunder shall be subject to such withholdings as may be
required by law.
 

 
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Successors and Assigns.
 
This Agreement shall inure to the benefit of the successors and assigns of the
Company.  Except as expressly provided in this Agreement, Executive may neither
sell, transfer, assign, nor pledge any of Executive’s rights or interests
pursuant to this Agreement.  The Company may sell, transfer or assign this
Agreement or any of the Company’s rights under this Agreement in connection with
any transaction involving the sale, assignment or transfer of the stock or
assets of the Company, or a merger or other reorganization involving the Company
(whether or not the Company is the surviving entity in such transaction), or any
transaction involving a Change in Control.
 
4.11 Copyright, Publication and Use of Data.
 
All work developed by Executive under this Agreement shall be the sole and
exclusive property of the Company.  Executive shall not have the right to use,
distribute or otherwise disseminate such work without the express written
permission of the Company.
 
4.12 Notices.
 
Whenever notice is to be served hereunder, service shall be made personally, by
facsimile transmission, by overnight courier or by registered or certified mail,
return receipt requested.  All postage and other delivery charges shall be
prepaid by the party sending the notice.  Notice shall be effective only upon
receipt by the Party being served, except notice shall be deemed received
seventy two (72) hours after posting by the United States Post Office, by any
method described above.  Confirmation of receipt of any facsimile sent must be
received in order to presume that the transmission was received.  All notices
shall be sent to the addresses described below unless changed by written notice
pursuant to the terms of this Section.
 
If to the Company:
Berry Petroleum Company
1999 Broadway, Suite 3700
Denver, CO 80202
Facsimile No. – 303-999-4400
Attn: Robert F. Heinemann, President and Chief Executive Officer
Copy to (which shall not constitute notice):
Laura K. McAvoy, Esq.
Musick Peeler & Garrett LLP
2801 Townsgate Road, Suite 200
Westlake Village, CA 91361
Facsimile No. - 805-418-3101
If to Executive:
Michael Duginski
[ADDRESS]
[or current address as listed in the Company’s records.]

 
4.13 
 

 
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4.14 Waiver.
 
No waiver of any term, provision or condition of this Agreement, whether by
conduct or otherwise, in anyone or more instances, shall be deemed to be or be
construed as a further or continuing waiver of any such term, provision or
condition or as a waiver of any other term, provision or condition of this
Agreement.
 
4.15 Counterparts.
 
This Agreement may be executed in one or more counterparts, each of which shall
constitute an original instrument and all of which together shall constitute the
same instrument.
 
4.16 Authority.
 
The individuals signing below represent that each has full authority to enter
this Agreement and that each Party hereto will be bound by the respective
signatories.
 
4.17 Section 409.
 
This Agreement is intended to comply with Section 409A of the Code and
accompanying Treasury regulations and guidance (“Section 409A”) and any
ambiguous provision will be construed in a manner that is compliant with or
exempt from the application of Section 409A.
 
Notwithstanding any provision in this Agreement to the contrary, if the payment
of any compensation or benefit hereunder (including, without limitation, any
severance benefit) would be subject to additional taxes and interest under
Section 409A because the timing of such payment is not delayed as provided in
Section 409A(a)(2)(B) of the Code, then any such payment or benefit Executive
would otherwise be entitled to during the first six months following the
Termination Date shall be accumulated and paid or provided, as applicable, on
the date that is one day (or if such date does not fall on a business day of the
Company, the next following business day of the Company) after the earlier of
(i) the date of Executive’s death, (ii) six months after the Termination Date,
or (iii) such earlier date upon which such amount can be paid or provided under
Section 409A without being subject to such additional taxes and interest.
 
4.18 Captions and Construction.
 
The captions used herein as headings of the various sections hereof are for
convenience only, and the Parties agree that such captions are not to be
construed to be part of this Agreement or to be used in determining or
construing the intent, context or meaning of this Agreement.  The Parties
further agree that no term of this Agreement shall be construed against any
party because of such party’s role or input in drafting this Agreement.
 
4.19 Governing Law.
 
This Agreement shall be deemed to have been executed and delivered within the
State of Colorado, and the rights and obligations of the Parties hereunder shall
be construed and enforced
 

 
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in accordance with, and governed by, the laws of the State of Colorado without
regard to its conflicts of law principles.
 

 
IN WITNESS WHEREOF this Agreement, the Parties to this Agreement have executed
this Agreement to be effective as of ___________  ___, 2008 (“Effective Date”).
 
BERRY PETROLEUM COMPANY
 

 
 
By:  _______________________________

 
   Robert F. Heinemann

 
       President and Chief Executive Officer

Date:  ____________, 2008
 
EXECUTIVE
 
__________________________________
 
Michael Duginski
 
Date:  ____________, 2008

 
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EXHIBIT A
 
GENERAL RELEASE OF CLAIMS
 
This General Release (“Release”) is entered into as of this _____ day of
__________, 20_____, by and between Berry Petroleum Corporation (the “Company”),
and Michael Duginski, an employee of the Company (“Executive”) (collectively,
the “Parties”).
 
RECITALS
 
WHEREAS, Executive and the Company are parties to an Employment Agreement (the
“Agreement”) dated ___________ ___, 2008, governing the terms and conditions
applicable if Executive’s employment is terminated for various reasons;
 
WHEREAS, pursuant to the terms of the Agreement, the Company has agreed to
provide Executive certain benefits and payments under the terms and conditions
specified therein, provided that Executive has executed and not revoked a
general release of claims in favor of the Company;
 
WHEREAS, Executive’s employment with the Company is being terminated effective
_____________; and
 
WHEREAS, the Parties wish to terminate their relationship amicably and to
resolve, fully and finally, all actual and potential claims and disputes
relating to Executive’s employment with and termination from the Company and all
other relationships between Executive and the Company, up to and including the
date of execution of this Release.
 
NOW, THEREFORE, in consideration of these Recitals and the promises and mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are expressly acknowledged, the Parties,
intending to be legally bound, agree as follows:
 
AGREEMENT
 
Termination of Employment.  Executive’s employment with the Company shall
terminate on _________________ (the “Termination Date”).
 
Severance Benefits.  Pursuant to the terms of the Agreement, and in
consideration of Executive’s release of claims and the other covenants and
agreements contained herein and therein, and provided that Executive has signed
this Release and delivered it to the Company and has not exercised any
revocation rights as provided in Section 6 below, the Company shall provide the
severance benefits described in Section 3.4 or Section 3.7, as applicable, of
the Agreement (the “Benefits”) in the time and manner provided therein;
provided, however, that the Company’s obligations shall be excused if Executive
breaches any of the provisions of this Agreement including, without limitation,
Sections 7, 8 and 9 hereof.  Executive acknowledges and agrees that the Benefits
constitute consideration beyond that which, but for the mutual covenants set
forth in this Release and the covenants contained in the Agreement, the
 

 
17

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Company otherwise would not be obligated to provide, nor would Executive
otherwise be entitled to receive.
 
Effective Date.  Provided that it has not been revoked pursuant to Section 6
hereof, this Release will become effective on the eighth (8th) day after the
date of its execution by Executive (the “Effective Date”).
 
Effect of Revocation.  Executive acknowledges and agrees that, in the event that
Executive revokes this Release pursuant to Section 6 hereof, Executive shall
have no right to receive the Benefits.
 
General Release.
 
(a)           In consideration of the Benefits and the Company’s other covenants
contained herein and in the Agreement, Executive hereby forever releases and
discharges the Company and its parent, subsidiary(ies), related and/or
affiliated companies (“Affiliates”) and each of its and their past and present
officers, directors, managers, employees, agents, attorneys and insurers, and
each of its and their respective successors and assigns (collectively, the
“Released Parties”) from any and all claims, charges, complaints, liens,
demands, causes of action, obligations, damages and liabilities, known or
unknown, suspected or unsuspected, that Executive had, now has, or may hereafter
claim to have against the Released Parties, arising out of or relating in any
way to Executive’s hiring by, employment with, or separation from the Company,
from the beginning of time through the date Executive executes this Release (the
“Released Claims”).  This release specifically extends to, without limitation,
claims for wrongful termination, breach of an express or implied contract,
breach of the covenant of good faith and fair dealing, breach of fiduciary duty,
fraud, misrepresentation, defamation, slander, infliction of emotional distress,
disability, loss of future earnings, and claims under (all as amended from time
to time) federal law and the laws of any state including, but not limited to,
the United States Constitution, and applicable state and federal statutes and
regulations, including, but not limited to, the Civil Rights Act of 1964, the
Fair Labor Standards Act, the National Labor Relations Act, the Labor-Management
Relations Act, the Worker Retraining and Notification Act of 1988, the
Rehabilitation Act of 1973, as amended, the Americans With Disabilities Act, the
Employee Retirement Income Security Act of 1974, the Age Discrimination in
Employment Act of 1967, and the Sarbanes-Oxley Act, the Colorado
Anti-Discrimination Act, the California Constitution, the California Fair
Employment and Housing Act, the California Labor Code, California Civil Code and
the California Business and Professions Code, each to the extent applicable.
 
(b)           Executive acknowledges and agrees that it is his intention to
forever bar every claim described in Section 5(a) herein, whether known or
unknown to the Executive at this time or discovered later.  Executive
understands and acknowledges that there are laws which may invalidate releases
of claims which are unknown to the releasing party.  Executive hereby expressly
waives any protection to which he may otherwise be entitled hereunder by virtue
of any such law.  In particular, and not by way of limitation, Executive
represents and acknowledges that he is familiar with Section 1542 of the
California Civil Code, which provides:
 
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.
 
Executive hereby waives and relinquishes any rights and/or benefits which he has
or may have under California Civil Code Section 1542 or any similar applicable
law of Colorado or any other state.
 
(c)           Executive hereby represents that no claim, complaint, charge or
other action of any kind on Executive’s behalf is pending against any of the
Released Parties.  Executive further represents and hereby agrees that Executive
shall not institute a claim, complaint, charge or other action of any kind with
any governmental agency or court against any of the Released Parties concerning
any of the released claims.  Executive further agrees not to aid or assist any
other person in pursuing any claim, charge or action against the Released
Parties unless compelled to do so by law or court order.
 
Review and Revocation Period.  Executive acknowledges that the Company has
advised Executive that Executive may consult with an attorney of Executive’s own
choosing (and at Executive’s expense) prior to signing this Release and that
Executive has been given at least twenty-one (21) days during which to consider
the provisions of this Release, although Executive may sign and return it
sooner.  Executive further acknowledges that Executive has been advised by the
Company that after executing this Release, Executive will have seven (7) days to
revoke this Release, and that this Release shall not become effective or
enforceable until such seven (7) day revocation period has expired.  Executive
acknowledges and agrees that if Executive wishes to revoke this Release,
Executive must do so in writing, and that such revocation must be signed by
Executive and received by the Chairman of the Board of the Company (or the
Chairman of the Compensation Committee) no later than 5:00 p.m. Mountain Time on
the seventh (7th) day after Executive has executed this Release.  Executive
acknowledges and agrees that, in the event that Executive revokes this Release,
Executive will have no right to receive any benefits hereunder, including the
Benefits.  Executive represents that Executive has read this Release and
understands its terms and enters into this Release freely, voluntarily and
without coercion.
 
Confidentiality and Non-Solicitation.  Executive reaffirms his commitments in
Sections 5.1, 5.2 and 5.3 of the Agreement.
 
Cooperation in Litigation.  At the Company’s reasonable request, Executive shall
use his good faith efforts to cooperate with the Company, its Affiliates, and
each of its and their respective attorneys or other legal representatives
(“Attorneys”) in connection with any claim, litigation or judicial or arbitral
proceeding which is material to the Company and is now pending or may
hereinafter be brought against the Released Parties by any third party;
provided, that, Executive’s cooperation is essential to the Company’s
case.  Executive’s duty of cooperation shall include, but not be limited to (a)
meeting with the Company’s and/or its Affiliates’ Attorneys by telephone or in
person at mutually convenient times and places in order to state truthfully
Executive’s knowledge of matters at issue and recollection of events; (b)
appearing at the Company’s, its Affiliates’ and/or their Attorneys’ request
(and, to the extent possible, at a time convenient to Executive that does not
conflict with the needs or requirements of Executive’s then-current employer) as
a witness at depositions or trials, without necessity of a subpoena, in order to
state truthfully Executive’s knowledge of matters at issue; and (c) signing at
the Company’s, its Affiliates’ and/or their Attorneys’ request declarations or
affidavits that truthfully state matters of which Executive has knowledge.  The
Company shall reimburse Executive for the reasonable expenses incurred by him in
the course of his cooperation hereunder and shall pay to Executive per diem
compensation in an amount equal to the daily prorate portion of the Executive’s
base salary immediately prior to the Termination Date.  The obligations set
forth in this Section 8 shall survive any termination or revocation of this
Release.
 
Non-Admission of Liability.  Nothing in this Release shall be construed as an
admission of liability by Executive or the Released Parties; rather, Executive
and the Released Parties are resolving all matters arising out of the employer
employee relationship between Executive and the Company and all other
relationships between Executive and the Released Parties.
 
Binding Effect.  This Release shall be binding upon the Parties and their
respective heirs, administrators, representatives, executors, successors and
assigns, and shall inure to the benefit of the Parties and their respective
heirs, administrators, representatives, executors, successors and assigns.
 
Governing Law.  This Release shall be governed by and construed and enforced in
accordance with the laws of the State of Colorado applicable to agreements
negotiated, entered into and wholly to be performed therein.
 
Severability.  Each of the respective rights and obligations of the Parties
hereunder shall be deemed independent and may be enforced independently
irrespective of any of the other rights and obligations set forth herein.  In
the event any provision of this Release should be held illegal or invalid, such
illegality or invalidity shall not affect in any way other provisions hereof,
all of which shall continue, nevertheless, in full force and effect.
 
Counterparts.  This Release may be signed in counterparts and each counterpart
shall be deemed to be an original but together all such counterparts shall be
deemed a single agreement.
 
Entire Agreement:  Modification.  This Release constitutes the entire
understanding between the Parties with respect to the subject matter hereof and
may not be modified without the express written consent of both Parties.  This
Release supersedes all prior written and/or oral and all contemporaneous oral
agreements, understandings and negotiations regarding its subject matter.  This
Release may not be modified or canceled in any manner except by a writing signed
by both Parties.
 
Acceptance.  Executive may confirm his acceptance of the terms and conditions of
this Release by signing and returning two (2) original copies of this Release to
the Company’s Chief Executive Officer, no later than 5:00 p.m. Mountain Time
twenty-one (21) days after Executive’s receipt of notice of termination.
 
EXECUTIVE ACKNOWLEDGES AND REPRESENTS THAT EXECUTIVE HAS FULLY AND CAREFULLY
READ THIS RELEASE PRIOR TO SIGNING IT AND UNDERSTANDS ITS TERMS.  EXECUTIVE
FURTHER ACKNOWLEDGES AND AGREES THAT EXECUTIVE HAS BEEN, OR HAS HAD THE
OPPORTUNITY TO BE, ADVISED BY INDEPENDENT LEGAL COUNSEL OF EXECUTIVE’S OWN
CHOICE AS TO THE LEGAL EFFECT AND MEANING OF EACH OF THE TERMS AND CONDITIONS OF
THIS RELEASE, AND IS ENTERING INTO THIS RELEASE FREELY AND VOLUNTARILY AND NOT
IN RELIANCE ON ANY PROMISES OR REPRESENTATIONS OTHER THAN AS SET FORTH IN THIS
RELEASE.
 
IN WITNESS WHEREOF, the Parties have executed this Release as of the day and
year set forth above.
 
Michael Duginski
 
Berry Petroleum Corporation
 
By:                                                               
Its:                                                               

 
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EXHIBIT B
 
ARBITRATION
 
The provisions of this Exhibit B are incorporated into and made a part of the
Employment Agreement dated ___________ ___, 2008 (the “Agreement”) by and
between Berry Petroleum Corporation (the “Company”) and Michael Duginski
(“Executive”).  Capitalized terms used and not defined herein have the same
meaning as set forth in the Agreement.
 
(a)           Waiver of Right to Trial.  The Company and Executive (the
“parties”) understand that they are waiving any right they may have to file a
lawsuit or other civil action or proceeding against each other, and are
voluntarily waiving any right they may have to resolve disputes between the
parties through trial by judge or jury.  Any and all claims or disputes arising
out of or relating to the employment relationship and/or the termination of the
employment relationship between the parties that are not resolved by their
mutual agreement shall be resolved exclusively by confidential, final and
binding arbitration.  The parties have the right to be represented by counsel in
any arbitration proceeding commenced pursuant to the Agreement.
 
(b)           Claims Subject to Arbitration.  Except as the parties may
otherwise agree in writing, all claims, demands, causes of action or
controversies - past, present or future - that Executive may have against the
Company, its officers, directors, employees, independent contractors or agents -
past, present or future - or that the Company may have against Executive
(collectively the “Claims”) shall be resolved by final and binding
arbitration.  The Claims include but are not limited to any claims or disputes
in connection with:  (1) the recruiting and hiring process; (2) the employment
relationship between the parties; (3) the termination of the employment
relationship; (4) any contracts between the parties; or (5) any and all Claims
arising under any federal, state or local law or regulation, including, but not
limited to, those relating to employment, compensation, wages, stock options,
benefits (except where an employee benefit or pension plan specifies that its
claims procedure shall culminate in a dispute resolution procedure different
from this one), discrimination, harassment, wrongful termination, wrongful
demotion, breach of contract, breach of the implied covenant of good faith and
fair dealing, interference with contract or prospective economic advantage,
intentional or negligent infliction of emotional distress, violation of public
policy, retaliation, fraud, promissory estoppel, defamation, unfair business
practices, invasion of privacy, negligence, assault or battery.  (The Claims for
discrimination and harassment include but are not limited to those based on
race, color, sex, sexual orientation, religion, national origin, ancestry,
citizenship, age, marital status, registered domestic partner status, physical
disability, pregnancy, mental disability, medical condition, veteran status, and
any claims arising under the Colorado Anti-Discrimination Act, the California
Fair Employment and Housing Act, the California Family Rights Act, the Age
Discrimination in Employment Act, the Americans with Disabilities Act, the Equal
Pay Act, the Civil Rights Act, the Family and Medical Leave Act, the Employee
Retirement Income Security Act of 1974, Title VII of the Civil Rights Act of
1964 as amended, and any other local, state, federal or common law concerning
employment or employment discrimination or harassment.)
 
This Exhibit B does not affect Executive’s right to seek administrative relief
from the United States Equal Employment Opportunity Commission or the California
Department of Fair Employment and Housing.  Further, this Exhibit B does not
cover claims Executive may have for workers’ compensation, state disability
benefits, unemployment compensation benefits or disputes covered by a collective
bargaining agreement.
 
(c)           The Arbitration Process.  Either Executive or the Company may
commence the arbitration process by filing a written demand for arbitration with
the American Arbitration Association (“AAA”), and sending a copy by personal
delivery or certified mail to the other party.  If the Company initiates
arbitration, it will send the notice to Executive’s last known home address as
reflected in the Company’s personnel records.  If Executive initiates
arbitration, Executive will send notice to the Chairman of the Board of the
Company (or the Chairman of the Compensation Committee).  Demands for
arbitration must be made within the applicable statute of limitations.
 
Any arbitration between the parties shall be conducted pursuant to the AAA
procedures for the arbitration of employment disputes that are in effect at the
time of the commencement of arbitration, except as otherwise agreed in writing
by the parties.  The arbitration shall be conducted in the County of Denver,
Colorado, unless the parties mutually agree to conduct the arbitration
elsewhere.  The arbitration shall be conducted by a neutral Arbitrator (the
“Arbitrator”) selected by mutual agreement of the parties, or if no mutual
agreement can be reached, selected from a list of arbitrators provided by AAA,
as specified in the AAA’s procedures.  The parties will cooperate in scheduling
the arbitration proceedings.  Absent a subsequent contrary written agreement
between the parties, the arbitration hearing shall be scheduled for a date that
is within 180 days after the commencement of the arbitration.  As for discovery,
the parties will comply with any discovery required by Colorado law.  Should a
non-party witness refuse to comply with a subpoena issued by the Arbitrator and
the Arbitrator is unable to enforce compliance with the subpoena, the parties
agree to submit the subpoena to a court of competent jurisdiction for
enforcement of the subpoena.
 
The Arbitrator shall apply the applicable substantive law, and the applicable
law of remedies, for the State of Colorado, or federal law, or both.  The
Arbitrator is without jurisdiction to apply any different substantive law or law
of remedies.  The Arbitrator is authorized to award any remedies allowed by
applicable law.  The Arbitrator cannot modify any of the provisions of the
Agreement.  The Arbitrator shall issue a written and signed statement of the
basis of its decision, including findings of fact and conclusions of law.  The
statement and award, if any, shall be based on the terms of the Agreement, the
findings of fact and the statutory and decisional case law applicable to this
dispute.  Proceedings to confirm, correct or vacate an award or decision
rendered by the Arbitrator will be controlled by and conducted in conformity
with applicable state law.  The arbitration shall be final and binding upon the
parties, except as provided in this Exhibit B.  Neither the parties nor the
Arbitrator may disclose the existence, content, or results of any arbitration
without the prior written consent of both parties.
 
(d)           Arbitration Fees, Costs and Awards.  If Executive initiates
arbitration against the Company, Executive must pay a filing fee to AAA equal to
the current filing fee in the appropriate court had Executive’s claim been
brought there, and the Company shall bear the remaining costs of the arbitration
forum, including Arbitrator fees.  If the Company initiates arbitration against
Executive, the Company shall bear the entire cost of the arbitration forum,
including Arbitrator fees.  (Such costs do not include costs of attorneys,
discovery, expert witnesses, or other costs which Executive would have been
required to bear had the matter been filed in a court.) The Arbitrator may award
attorneys’ fees and costs to the prevailing party as authorized by law.  If
there is any dispute as to whether the Company or Executive is the prevailing
party, the Arbitrator will decide that issue.  Any postponement or cancellation
fee imposed by the arbitration service will be paid by the party requesting the
postponement or cancellation, unless the Arbitrator determines that such fee
would cause undue hardship on the party.  At the conclusion of the arbitration,
each party agrees to promptly pay any arbitration award imposed against that
party.
 
(e)           Failure To Use Arbitration Process.  Should either party pursue
any dispute subject to this Exhibit B by any method other than set forth herein,
the responding party shall be entitled to recover from the initiating party all
damages, costs, expenses and attorneys’ fees incurred as a result of appearing
in, dismissing, staying or litigating such action.
 
(f)           Complete Agreement.  This Exhibit B is the complete agreement of
the parties on the subject of arbitration of claims or disputes.  This Exhibit B
supersedes any prior or contemporaneous oral or written understanding on the
subject.  No party is relying on any representations, oral or written, on the
subject of the effect, enforceability or meaning of this Exhibit B, except as
specifically set forth in this Exhibit B.
 
PLEASE READ CAREFULLY.  BY SIGNING THE AGREEMENT, YOU ARE GIVING UP YOUR RIGHT
TO FILE A LAWSUIT IN A COURT OF LAW AND TO HAVE YOUR CASE HEARD BY A JUDGE
AND/OR JURY.
 

 
Michael Duginski
 
Berry Petroleum Corporation
 
By:                                                               
Its:                                                               

 

 
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