Exhibit 10.1

 

 

COMMON UNIT
PURCHASE AGREEMENT

 

by and among

 

PACIFIC ENERGY PARTNERS, L.P.

 

and

 

THE PURCHASERS NAMED HEREIN

 

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Table of Contents

 

ARTICLE I DEFINITIONS

 

 

 

Section 1.01

Definitions

 

Section 1.02

Accounting Procedures and Interpretation

 

 

 

 

ARTICLE II AGREEMENT TO SELL AND PURCHASE

 

 

 

Section 2.01

Sale and Purchase

 

Section 2.02

Closing

 

Section 2.03

Conditions to the Closing

 

Section 2.04

Pacific Deliveries

 

Section 2.05

Purchaser Deliveries

 

Section 2.06

Price Per Unit

 

Section 2.07

Purchaser Lock-Up

 

Section 2.08

Independent Nature of Purchasers’ Obligations and Rights

 

 

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES RELATED TO PACIFIC

 

 

 

Section 3.01

Partnership Existence

 

Section 3.02

Capitalization and Valid Issuance of Purchased Units

 

Section 3.03

Pacific SEC Documents

 

Section 3.04

No Material Adverse Change

 

Section 3.05

Litigation

 

Section 3.06

No Conflicts

 

Section 3.07

Authority

 

Section 3.08

Approvals

 

Section 3.09

Offering

 

Section 3.10

MLP Status

 

Section 3.11

Investment Company Status

 

Section 3.12

Certain Fees

 

Section 3.13

No Side Agreements

 

 

 

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

 

 

 

Section 4.01

Corporate Existence

 

Section 4.02

No Conflicts

 

Section 4.03

Certain Fees

 

Section 4.04

No Side Agreements

 

Section 4.05

Unregistered Securities

 

 

 

 

ARTICLE V INDEMNIFICATION, COSTS AND EXPENSES

 

 

 

Section 5.01

Indemnification by Pacific

 

Section 5.02

Indemnification by Purchasers

 

Section 5.03

Indemnification Procedure

 

Section 5.04

Commitment Fee

 

Section 5.05

Payment of Expenses

 

 

 

 

ARTICLE VI . MISCELLANEOUS

 

 

 

Section 6.01

Pacific Lock-Up

 

 

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Section 6.02

Interpretation and Survival of Provisions

 

Section 6.03

Survival of Provisions

 

Section 6.04

No Waiver; Modifications in Writing

 

Section 6.05

Binding Effect; Assignment

 

Section 6.06

Communications

 

Section 6.07

Removal of Legend

 

Section 6.08

Entire Agreement

 

Section 6.09

Governing Law

 

Section 6.10

Execution in Counterparts

 

Section 6.11

Termination

 

 

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COMMON UNIT PURCHASE AGREEMENT

 

This COMMON UNIT PURCHASE AGREEMENT, dated as of August 8, 2005 (this
“Agreement”), is by and among PACIFIC ENERGY PARTNERS, L.P., a Delaware limited
partnership (“Pacific”) and each of the purchasers listed on Schedule 2.02
hereof (each a “Purchaser” and collectively, the “Purchasers”).

 

In consideration of the mutual covenants and agreements set forth herein and for
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereby agree as follows:

 

ARTICLE I
DEFINITIONS

 

Section 1.01                                Definitions.  As used in this
Agreement, and unless the context requires a different meaning, the following
terms have the meanings indicated:

 

“Affiliate” means, with respect to a specified Person, any other Person, whether
now in existence or hereinafter created, directly or indirectly controlling,
controlled by or under direct or indirect common control with such specified
Person.  For purposes of this definition, “control” (including, with correlative
meanings, “controlling”, “controlled by”, and “under common control with”) means
the power to direct or cause the direction of the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.

 

“Basic Documents” means, collectively, this Agreement, the Registration Rights
Agreement, and any and all other agreements or instruments executed and
delivered to the Purchasers by Pacific or any Subsidiary of Pacific hereunder or
thereunder.

 

“Business Day” means any day other than a Saturday, Sunday, or a legal holiday
for commercial banks in Long Beach, California.

 

“Closing” has the meaning specified in Section 2.02.

 

“Closing Date” has the meaning specified in Section 2.02.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Unit Price” has the meaning specified in Section 2.06.

 

“Common Units” means the common units representing limited partner interests in
Pacific.

 

“Delaware LP Act” shall have the meaning specified in Section 3.02.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations of the Commission promulgated thereunder.

 

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“GAAP” means generally accepted accounting principles in the United States of
America in effect from time to time.

 

“General Partners” means Pacific Energy GP, LP, a Delaware limited partnership
and the general partner of Pacific, and Pacific Energy Management LLC, a
Delaware limited liability company and the general partner of Pacific Energy GP,
LP

 

“Governmental Authority” means, with respect to a particular Person, the
country, state, county, city and political subdivisions in which such Person or
such Person’s Property is located or that exercises valid jurisdiction over any
such Person or such Person’s Property, and any court, agency, department,
commission, board, bureau or instrumentality of any of them that exercises valid
jurisdiction over any such Person or such Person’s Property.  Unless otherwise
specified, all references to Governmental Authority herein with respect to
Pacific means a Governmental Authority having jurisdiction over Pacific, its
Subsidiaries or any of their respective Properties.

 

“Indemnified Party” has the meaning specified in Section 5.03.

 

“Indemnifying Party” has the meaning specified in Section 5.03.

 

“Law” means any federal, state, local or foreign order, writ, injunction,
judgment, settlement, award, decree, statute, law, rule or regulation.

 

“Lien” means any lien, encumbrance, security, interest, charge or other interest
in Property securing an obligation owed to, or a claim by, a Person other than
the owner of the Property, whether such interest is based on the common law,
statute or contract, and whether such obligation or claim is fixed or
contingent, and including but not limited to the lien or security interest
arising from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes.  For the purpose of this Agreement, a Person shall be deemed to be the
owner of any Property that it has acquired or holds subject to a conditional
sale agreement, or leases under a financing lease or other arrangement pursuant
to which title to the Property has been retained by or vested in some other
Person in a transaction intended to create a financing.

 

“Lockup Date” means the date occurring 180 days after the Closing Date.

 

“NYSE” means the New York Stock Exchange, Inc.

 

“Pacific” has the meaning set forth in the introductory paragraph.

 

“Pacific Financial Statements” has the meaning specified in Section 3.03.

 

“Pacific Form S-3” has the meaning specified in Section 3.03.

 

“Pacific Material Adverse Effect” means any material and adverse effect on
(a) the assets, liabilities, financial condition, business, operations or
affairs of Pacific and its Subsidiaries taken as a whole; (b) the ability of
Pacific and its Subsidiaries taken as a whole to carry out their business as
such business is conducted as of the date hereof or to meet their

 

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obligations under the Basic Documents on a timely basis; or (c) the ability of
Pacific to consummate the transactions under any Basic Document; provided,
however, that a Pacific Material Adverse Effect shall not include any material
and adverse effect on the foregoing to the extent such material and adverse
effect results from, arises out of, or relates to (x) a general deterioration in
the economy or changes in the general state of the industries in which the
Pacific Parties operate, except to the extent that the Pacific Parties, taken as
a whole, are adversely affected in a disproportionate manner as compared to
other industry participants or (y) any change in applicable Law, or the
interpretation thereof.

 

“Pacific Parties” means Pacific, the General Partners, all of Pacific’s
Subsidiaries and each of their Affiliates.

 

“Pacific Related Parties” has the meaning specified in Section 5.02.

 

“Pacific SEC Documents” has the meaning specified in Section 3.03.

 

“Partnership Agreement” means the First Amended and Restated Agreement of
Limited Partnership of Pacific dated as of July 26, 2002, as amended.

 

“PEG” means Pacific Energy Group LLC.

 

“Permits” means, with respect to Pacific or any of its Subsidiaries, any
licenses, permits, variances, consents, authorizations, waivers, grants,
franchises, concessions, exemptions, orders, registrations and approvals of
Governmental Authorities or other Persons necessary for the ownership, leasing,
operation, occupancy and use of its Properties and the conduct of its businesses
as currently conducted.

 

“Person” means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, limited liability company, unincorporated
organization or government or any agency, instrumentality or political
subdivision thereof, or any other form of entity.

 

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

 

“Purchase Price” means, with respect to a particular Purchaser, the monetary
commitment amount equal to the product of the number of Purchased Units for such
Purchaser, multiplied by the Common Unit Price.

 

“Purchased Units” means, with respect to a particular Purchaser, the number of
Common Units set forth opposite such Purchaser’s name under the column entitled
“Purchased Units” set forth on Schedule 2.02 hereto.  In the event that Pacific
declares a unit split with respect to the Common Units and the record date for
such unit split is prior to the Closing Date, the number of Purchased Units to
be delivered to each Purchaser pursuant to this Agreement and the Common Unit
Price will be appropriately adjusted so that the Purchasers will be in the same
relative economic position as they would be if the Purchased Units would have
been issued and delivered to the Purchasers prior to the record date for any
such unit split.

 

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“Purchaser” and “Purchasers” have the respective meanings set forth in the
introductory paragraph.

 

“Purchaser Material Adverse Effect” means, with respect to a particular
Purchaser, any material and adverse effect on the ability of such Purchaser to
consummate the transactions under any Basic Document to which it is a party.

 

“Purchaser Related Parties” has the meaning specified in Section 5.01.

 

“Registration Rights Agreement” means the Registration Rights Agreement, to be
entered into at the Closing, between Pacific and the Purchasers in the form
attached hereto as Exhibit A.

 

“Representatives” of any Person means the officers, directors, employees,
agents, counsel, accountants, investment bankers and other representatives of
such Person.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations of the Commission promulgated thereunder.

 

“Subordinated Units” means the subordinated units representing subordinated
limited partner interests in Pacific.

 

“Subsidiary” means, as to any Person, any corporation or other entity of which:
(i) such Person or a Subsidiary of such Person is a general partner or manager;
or (ii) at least a majority of the outstanding equity interest having by the
terms thereof ordinary voting power to elect a majority of the board of
directors or similar governing body of such corporation or other entity
(irrespective of whether or not at the time any equity interest of any other
class or classes of such corporation or other entity shall have or might have
voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned or controlled by such Person or one or more of its
Subsidiaries.

 

“Termination Date” has the meaning set forth in Section 6.11.

 

“Valero Asset Acquisition” means the acquisition of certain pipeline and
terminal assets from Support Terminals Operating Partnership, L.P., Kaneb Pipe
Line Operating Partnership, L.P., and Shore Terminals LLC pursuant to the Valero
Purchase Agreement.

 

“Valero Purchase Agreement” means that certain Sale and Purchase Agreement,
dated as of July 1, 2005, by and among PEG, Support Terminals Operating
Partnership, L.P., Kaneb Pipe Line Operating Partnership, L.P., and Shore
Terminals LLC,.

 

Section 1.02                                Accounting Procedures and
Interpretation.  Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all determinations with respect to accounting
matters hereunder shall be made, and all Pacific Financial Statements and
certificates and reports as to financial matters required to be furnished to the
Purchasers hereunder shall be prepared, in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q
promulgated by the Commission) and in compliance as to form in all

 

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material respects with applicable accounting requirements and with the published
rules and regulations of the Commission with respect thereto.

 

ARTICLE II
AGREEMENT TO SELL AND PURCHASE

 

Section 2.01                                Sale and Purchase.  Upon the terms
and subject to the conditions hereof, Pacific hereby agrees to issue and sell to
each Purchaser, and each Purchaser hereby agrees, severally and not jointly, to
purchase from Pacific, its respective Purchased Units, and each Purchaser agrees
to pay Pacific its respective Purchase Price.  The failure of performance by any
Purchaser does not excuse performance by any other Purchaser or by Pacific.

 

Section 2.02                                Closing.  Upon the terms and subject
to the conditions hereof, the consummation of the purchase and sale of the
Purchased Units hereunder (the “Closing”) shall take place at the offices of
Vinson & Elkins L.L.P., 666 Fifth Avenue, 26th Floor, New York, New York
concurrently with the closing of the Valero Asset Acquisition (the date of such
closing, the “Closing Date”).

 

Section 2.03                                Conditions to the Closing.

 

(A)                                  MUTUAL CONDITIONS.  THE RESPECTIVE
OBLIGATIONS OF EACH PARTY TO CONSUMMATE THE PURCHASE AND ISSUANCE AND SALE OF
THE PURCHASED UNITS SHALL BE SUBJECT TO THE SATISFACTION ON OR PRIOR TO THE
CLOSING DATE OF EACH OF THE FOLLOWING CONDITIONS (ANY OR ALL OF WHICH MAY BE
WAIVED BY A PARTICULAR PARTY ON BEHALF OF ITSELF IN WRITING, IN WHOLE OR IN
PART, TO THE EXTENT PERMITTED BY APPLICABLE LAW):

 

(I)                                     NO STATUTE, RULE, ORDER, DECREE OR
REGULATION SHALL HAVE BEEN ENACTED OR PROMULGATED, AND NO ACTION SHALL HAVE BEEN
TAKEN, BY ANY GOVERNMENTAL AUTHORITY OF COMPETENT JURISDICTION THAT TEMPORARILY,
PRELIMINARILY OR PERMANENTLY RESTRAINS, PRECLUDES, ENJOINS OR OTHERWISE
PROHIBITS THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR MAKES THE
TRANSACTIONS CONTEMPLATED HEREBY ILLEGAL;

 

(II)                                  THERE SHALL NOT BE PENDING ANY SUIT,
ACTION OR PROCEEDING BY ANY GOVERNMENTAL AUTHORITY SEEKING TO RESTRAIN,
PRECLUDE, ENJOIN OR PROHIBIT THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT;
AND

 

(III)                               ALL CONDITIONS SET FORTH IN SECTION 7.1
(CONDITIONS TO PURCHASER’S OBLIGATIONS) OF THE VALERO PURCHASE AGREEMENT, SHALL
HAVE BEEN SATISFIED IN ALL MATERIAL RESPECTS OR THE FULFILLMENT OF ANY SUCH
CONDITIONS TO PEG’S OBLIGATIONS SHALL HAVE BEEN WAIVED, EXCEPT FOR THOSE
CONDITIONS WHICH, BY THEIR NATURE, WILL BE SATISFIED CONCURRENTLY WITH THE
CLOSING.

 

(B)                                 EACH PURCHASER’S CONDITIONS.  THE RESPECTIVE
OBLIGATION OF EACH PURCHASER TO CONSUMMATE THE PURCHASE OF ITS PURCHASED UNITS
SHALL BE SUBJECT TO THE SATISFACTION ON OR PRIOR TO THE CLOSING DATE OF EACH OF
THE FOLLOWING CONDITIONS (ANY OR ALL OF WHICH MAY BE WAIVED BY A PARTICULAR
PURCHASER ON BEHALF OF ITSELF IN WRITING WITH RESPECT TO ITS PURCHASED UNITS, IN
WHOLE OR IN PART, TO THE EXTENT PERMITTED BY APPLICABLE LAW):

 

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(I)                                     PACIFIC SHALL HAVE PERFORMED AND
COMPLIED WITH THE COVENANTS AND AGREEMENTS CONTAINED IN THIS AGREEMENT THAT ARE
REQUIRED TO BE PERFORMED AND COMPLIED WITH BY PACIFIC ON OR PRIOR TO THE CLOSING
DATE;

 

(II)                                  THE REPRESENTATIONS AND WARRANTIES OF
PACIFIC CONTAINED IN THIS AGREEMENT THAT ARE QUALIFIED BY MATERIALITY OR A
PACIFIC MATERIAL ADVERSE EFFECT SHALL BE TRUE AND CORRECT WHEN MADE AND AS OF
THE CLOSING DATE AND ALL OTHER REPRESENTATIONS AND WARRANTIES OF PACIFIC SHALL
BE TRUE AND CORRECT IN ALL MATERIAL RESPECTS WHEN MADE AND AS OF THE CLOSING
DATE, IN EACH CASE AS THOUGH MADE AT AND AS OF THE CLOSING DATE (EXCEPT THAT
REPRESENTATIONS MADE AS OF A SPECIFIC DATE SHALL BE REQUIRED TO BE TRUE AND
CORRECT AS OF SUCH DATE ONLY);

 

(III)                               SUCH PURCHASER SHALL HAVE RECEIVED ITS
COMMITMENT FEE AS CONTEMPLATED BY SECTION 5.04 HEREOF;

 

(IV)                              PACIFIC SHALL HAVE DELIVERED, OR CAUSED TO BE
DELIVERED, TO THE PURCHASERS AT THE CLOSING, PACIFIC’S CLOSING DELIVERIES
DESCRIBED IN SECTION 2.04; AND

 

(V)                                 SINCE THE DATE OF THIS AGREEMENT, NO PACIFIC
MATERIAL ADVERSE EFFECT SHALL HAVE OCCURRED.

 

(C)                                  PACIFIC’S CONDITIONS.  THE OBLIGATION OF
PACIFIC TO CONSUMMATE THE SALE OF THE PURCHASED UNITS TO EACH PURCHASER SHALL BE
SUBJECT TO THE SATISFACTION ON OR PRIOR TO THE CLOSING DATE OF EACH OF THE
FOLLOWING CONDITIONS WITH RESPECT TO EACH PURCHASER INDIVIDUALLY AND NOT JOINTLY
(ANY OR ALL OF WHICH MAY BE WAIVED BY PACIFIC IN WRITING, IN WHOLE OR IN PART,
TO THE EXTENT PERMITTED BY APPLICABLE LAW):

 

(I)                                     THE REPRESENTATIONS AND WARRANTIES OF
SUCH PURCHASER CONTAINED IN THIS AGREEMENT THAT ARE QUALIFIED BY MATERIALITY OR
A PURCHASER MATERIAL ADVERSE EFFECT SHALL BE TRUE AND CORRECT WHEN MADE AND AS
OF THE CLOSING DATE AND ALL OTHER REPRESENTATIONS AND WARRANTIES OF SUCH
PURCHASER SHALL BE TRUE AND CORRECT IN ALL MATERIAL RESPECTS WHEN MADE AND AS OF
THE CLOSING DATE, IN EACH CASE AS THOUGH MADE AT AND AS OF THE CLOSING DATE
(EXCEPT THAT REPRESENTATIONS OF SUCH PURCHASER MADE AS OF A SPECIFIC DATE SHALL
BE REQUIRED TO BE TRUE AND CORRECT AS OF SUCH DATE ONLY), AND

 

(II)                                  SUCH PURCHASER SHALL HAVE DELIVERED, OR
CAUSED TO BE DELIVERED, TO PACIFIC AT THE CLOSING SUCH PURCHASER’S CLOSING
DELIVERIES DESCRIBED IN SECTION 2.05.

 

Section 2.04                                Pacific Deliveries.  At the Closing,
upon the terms and subject to the conditions hereof, Pacific will deliver, or
cause to be delivered, to the Purchasers:

 

(A)                                  CERTIFICATES REPRESENTING THE PURCHASED
UNITS IN THE NAMES OF THE PURCHASERS (BEARING THE LEGEND SET FORTH IN
SECTION 4.05(E)) AND MEETING THE REQUIREMENTS OF THE PARTNERSHIP AGREEMENT, FREE
AND CLEAR OF ANY LIENS OF ANY OTHER PERSON;

 

(B)                                 COPIES OF THE CERTIFICATE OF LIMITED
PARTNERSHIP OF (I) PACIFIC AND (II) PACIFIC ENERGY GP, LP, AND OF THE
CERTIFICATE OF FORMATION OF PACIFIC ENERGY MANAGEMENT

 

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LLC, EACH CERTIFIED BY THE SECRETARY OF STATE OF THE JURISDICTION OF ITS
FORMATION AS OF A RECENT DATE;

 

(C)                                  A CERTIFICATE OF THE SECRETARY OF STATE OF
THE STATE OF DELAWARE, DATED A RECENT DATE, TO THE EFFECT THAT PACIFIC IS IN
GOOD STANDING;

 

(D)                                 A CERTIFICATE OF THE SECRETARY OR ASSISTANT
SECRETARY OF PACIFIC ENERGY MANAGEMENT LLC, ON BEHALF OF PACIFIC, CERTIFYING AS
TO (1) THE PARTNERSHIP AGREEMENT, (2) BOARD RESOLUTIONS AUTHORIZING THE
EXECUTION AND DELIVERY OF THIS AGREEMENT AND ALL OF THE AGREEMENTS AND
INSTRUMENTS TO BE EXECUTED AND DELIVERED BY PACIFIC IN CONNECTION HEREWITH, AND
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY AND (3) ITS INCUMBENT
OFFICERS AUTHORIZED TO EXECUTE AND DELIVER THIS AGREEMENT AND THE OTHER
AGREEMENTS AND INSTRUMENTS CONTEMPLATED HEREBY, SETTING FORTH THE NAME AND TITLE
AND BEARING THE SIGNATURES OF SUCH OFFICERS;

 

(E)                                  A CERTIFICATE, DATED THE CLOSING DATE AND
SIGNED BY (X) THE CHIEF EXECUTIVE OFFICER AND (Y) THE CHIEF FINANCIAL OFFICER OF
PACIFIC ENERGY MANAGEMENT LLC, IN THEIR CAPACITIES AS SUCH, STATING THAT:

 

(I)                                     PACIFIC HAS PERFORMED AND COMPLIED WITH
THE COVENANTS AND AGREEMENTS CONTAINED IN THIS AGREEMENT THAT ARE REQUIRED TO BE
PERFORMED AND COMPLIED WITH BY PACIFIC ON OR PRIOR TO THE CLOSING DATE;

 

(II)                                  THE REPRESENTATIONS AND WARRANTIES OF
PACIFIC CONTAINED IN THIS AGREEMENT THAT ARE QUALIFIED BY MATERIALITY OR PACIFIC
MATERIAL ADVERSE EFFECT WERE TRUE AND CORRECT WHEN MADE AND AS OF THE CLOSING
DATE AND ALL OTHER REPRESENTATIONS AND WARRANTIES WERE TRUE AND CORRECT IN ALL
MATERIAL RESPECTS WHEN MADE AND ARE TRUE AND CORRECT AS OF THE CLOSING DATE, IN
EACH CASE AS THOUGH MADE AT AND AS OF THE CLOSING DATE (EXCEPT THAT
REPRESENTATIONS MADE AS OF A SPECIFIC DATE SHALL BE REQUIRED TO BE TRUE AND
CORRECT AS OF SUCH DATE ONLY); AND

 

(III)                               ALL CONDITIONS SET FORTH IN SECTION 7.1
(CONDITIONS TO PURCHASER’S OBLIGATIONS) OF THE VALERO PURCHASE AGREEMENT, SHALL
HAVE BEEN SATISFIED IN ALL MATERIAL RESPECTS OR THE FULFILLMENT OF ANY SUCH
CONDITIONS TO PEG’S OBLIGATIONS SHALL HAVE BEEN WAIVED, EXCEPT FOR THOSE
CONDITIONS WHICH, BY THEIR NATURE, WILL BE SATISFIED CONCURRENTLY WITH THE
CLOSING.

 

(F)                                    AN OPINION ADDRESSED TO THE PURCHASERS
FROM LEGAL COUNSEL TO PACIFIC, DATED AS OF THE CLOSING, SUBSTANTIALLY THE FORM
ATTACHED HERETO AS EXHIBIT B; AND

 

(G)                                 THE REGISTRATION RIGHTS AGREEMENT IN
SUBSTANTIALLY THE FORM ATTACHED HERETO AS EXHIBIT A, WHICH SHALL HAVE BEEN DULY
EXECUTED BY PACIFIC.

 

Section 2.05                                Purchaser Deliveries.  At the
Closing, upon the terms and subject to the conditions hereof, each Purchaser
will deliver, or cause to be delivered, to Pacific:

 

(A)                                  PAYMENT TO PACIFIC OF THE PURCHASE PRICE
SET FORTH OPPOSITE SUCH PURCHASER’S NAME UNDER THE COLUMN ENTITLED “TOTAL
PURCHASE PRICE” ON SCHEDULE 2.02 HERETO BY WIRE TRANSFER OF IMMEDIATELY
AVAILABLE FUNDS TO THE ACCOUNT SPECIFIED ON SCHEDULE 2.06;

 

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(B)                                 A CERTIFICATE, DATED THE CLOSING DATE AND
SIGNED BY AN AUTHORIZED OFFICER OF SUCH PURCHASER, IN THEIR CAPACITY AS SUCH,
STATING THAT:

 

(I)                                     SUCH PURCHASER HAS PERFORMED AND
COMPLIED WITH THE COVENANTS AND AGREEMENTS CONTAINED IN THIS AGREEMENT WHICH ARE
REQUIRED TO BE PERFORMED AND COMPLIED WITH BY SUCH PURCHASER ON OR PRIOR TO THE
CLOSING DATE; AND

 

(II)                                  THE REPRESENTATIONS AND WARRANTIES OF SUCH
PURCHASER CONTAINED IN THIS AGREEMENT THAT ARE QUALIFIED BY MATERIALITY OR
PURCHASER MATERIAL ADVERSE EFFECT SHALL BE TRUE AND CORRECT WHEN MADE AND AS OF
THE CLOSING DATE AND ALL OTHER REPRESENTATIONS AND WARRANTIES OF SUCH PURCHASER
SHALL BE TRUE AND CORRECT IN ALL MATERIAL RESPECTS WHEN MADE AND AS OF THE
CLOSING DATE, IN EACH CASE AS THOUGH MADE AT AND AS OF THE CLOSING DATE (EXCEPT
THAT REPRESENTATIONS MADE AS OF A SPECIFIC DATE SHALL BE REQUIRED TO BE TRUE AND
CORRECT AS OF SUCH DATE ONLY).

 

(C)                                  THE REGISTRATION RIGHTS AGREEMENT IN
SUBSTANTIALLY THE FORM ATTACHED HERETO AS EXHIBIT A, WHICH SHALL HAVE BEEN DULY
EXECUTED BY SUCH PURCHASER; AND

 

(D)                                 A CROSS-RECEIPT EXECUTED BY SUCH PURCHASER
AND DELIVERED TO PACIFIC CERTIFYING THAT SUCH PURCHASER HAS RECEIVED ITS
PURCHASED UNITS AS OF THE CLOSING DATE.

 

Section 2.06                                Price Per Unit.  The amount per
Common Unit each Purchaser will pay to Pacific to purchase the Purchased Units
(the “Common Unit Price”) hereunder shall be $30.75; provided, however, that if
the Closing Date is after the record date for the distribution to unitholders
with respect to the quarter ending September 30, 2005, the Common Unit Price
shall be reduced by the amount per unit of such distribution.

 

Section 2.07                                Purchaser Lock-Up.  Each Purchaser
agrees that from and after the Closing Date through and including the Lockup
Date it will not directly or indirectly, sell, offer to sell, contract to sell,
hedge, pledge, grant an option to purchase, issue any instrument convertible or
exchangeable for or representing the right to receive, or otherwise dispose of
its Purchased Units, or enter into any derivative transaction with similar
effect as a sale of its Purchased Units, without the prior written consent of
Pacific; provided, however, any Purchaser may enter into a total return swap
transaction or similar transaction with respect to the Purchased Units purchased
by it.

 

Section 2.08                                Independent Nature of Purchasers’
Obligations and Rights.  The obligations of each Purchaser under any Basic
Document are several and not joint with the obligations of any other Purchaser,
and no Purchaser shall be responsible in any way for the performance of the
obligations of any other Purchaser under any Basic Document.  Nothing contained
herein or in any other Basic Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the Basic
Documents.  Each Purchaser shall be entitled to independently protect and
enforce its rights, including without limitation, the rights arising out of this
Agreement or out of the other

 

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Basic Documents, and it shall not be necessary for any other Purchaser to be
joined as an additional party in any proceeding for such purpose.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES RELATED TO PACIFIC

 

Pacific represents and warrants to the Purchasers as follows:

 

Section 3.01                                Partnership Existence.  Pacific
(a) is a limited partnership duly formed, validly existing and in good standing
under the laws of the State of Delaware; and (b) has all requisite power and
authority, and has all governmental licenses, authorizations, consents and
approvals necessary, to own, lease, use and operate its Properties and carry on
its business as its business is now being conducted, except where the failure to
obtain such licenses, authorizations, consents and approvals would not 
reasonably be expected to have a Pacific Material Adverse Effect.  Each of
Pacific’s Subsidiaries that is a corporation is a corporation duly incorporated,
validly existing and in good standing under the laws of the state or other
jurisdiction of its incorporation and has all requisite power and authority, and
has all governmental licenses, authorizations, consents and approvals necessary,
to own, lease, use or operate its respective Properties and carry on its
business as now being conducted, except where the failure to obtain such
licenses, authorizations, consents and approvals would not reasonably be
expected to have a Pacific Material Adverse Effect.  Each of Pacific’s
Subsidiaries that is not a corporation has been duly formed, is validly existing
and in good standing under the laws of the state or other jurisdiction of its
organization and has all requisite power and authority, and has all governmental
licenses, authorizations, consents and approvals necessary, to own, lease, use
or operate its respective Properties and carry on its business as now being
conducted, except where the failure to obtain such licenses, authorizations,
consents and approvals would not reasonably be expected to have a Pacific
Material Adverse Effect.  None of Pacific or any of its Subsidiaries are in
default in the performance, observance or fulfillment of any provision of, in
the case of Pacific, the Partnership Agreement or its Certificate of Limited
Partnership or, in the case of any Subsidiary of Pacific, its respective
certificate of incorporation, certification of formation, bylaws, limited
liability company agreement or other similar organizational documents.  Each of
Pacific and its Subsidiaries is duly qualified or licensed and in good standing
as a foreign limited partnership, limited liability company or corporation, as
applicable, and is authorized to do business in each jurisdiction in which the
ownership or leasing of its respective Properties or the character of its
respective operations makes such qualification necessary, except where the
failure to obtain such qualification, license, authorization or good standing
would not reasonably be expected to have a Pacific Material Adverse Effect.

 

Section 3.02                                Capitalization and Valid Issuance of
Purchased Units.

 

(A)                                  AS OF THE DATE OF THIS AGREEMENT, THE
ISSUED AND OUTSTANDING LIMITED PARTNER INTERESTS OF PACIFIC CONSIST OF
19,300,181 COMMON UNITS AND 10,465,000 SUBORDINATED UNITS AND THE INCENTIVE
DISTRIBUTION RIGHTS, AS DEFINED IN THE PARTNERSHIP AGREEMENT.  THE ONLY ISSUED
AND OUTSTANDING GENERAL PARTNER INTERESTS OF PACIFIC ARE THE INTERESTS OF
PACIFIC ENERGY GP, LP DESCRIBED IN THE PARTNERSHIP AGREEMENT.  ALL OUTSTANDING
COMMON UNITS, SUBORDINATED UNITS AND INCENTIVE DISTRIBUTION RIGHTS AND THE
LIMITED PARTNER INTERESTS REPRESENTED THEREBY HAVE BEEN

 

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DULY AUTHORIZED AND VALIDLY ISSUED IN ACCORDANCE WITH THE PARTNERSHIP AGREEMENT
AND ARE FULLY PAID (TO THE EXTENT REQUIRED UNDER THE PARTNERSHIP AGREEMENT) AND
NONASSESSABLE (EXCEPT AS SUCH NONASSESSABILITY MAY BE AFFECTED BY MATTERS
DESCRIBED IN SECTIONS 17-303, 17-607 AND 17-804 OF THE DELAWARE REVISED UNIFORM
LIMITED PARTNERSHIP ACT (THE “DELAWARE LP ACT”) AND OTHERWISE BY MATTERS
DESCRIBED IN PACIFIC’S REGISTRATION STATEMENT ON FORM S-3 (REGISTRATION
STATEMENT NO. 333-107609), AS AMENDED (THE “PACIFIC FORM S-3”), UNDER THE
CAPTION “DESCRIPTION OF OUR COMMON UNITS—LIMITED LIABILITY”).

 

(B)                                 PACIFIC HAS NO EQUITY COMPENSATION PLANS
THAT CONTEMPLATE THE ISSUANCE OF COMMON UNITS (OR SECURITIES CONVERTIBLE INTO OR
EXCHANGEABLE FOR COMMON UNITS) OTHER THAN THE AMENDED AND RESTATED PACIFIC
ENERGY GP, LP LONG-TERM INCENTIVE PLAN.  NO INDEBTEDNESS HAVING THE RIGHT TO
VOTE (OR CONVERTIBLE INTO OR EXCHANGEABLE FOR SECURITIES HAVING THE RIGHT TO
VOTE) ON ANY MATTERS ON WHICH PACIFIC’S UNITHOLDERS MAY VOTE ARE ISSUED OR
OUTSTANDING.  EXCEPT AS CONTEMPLATED BY THIS AGREEMENT, THERE ARE NO OUTSTANDING
OR AUTHORIZED (I) OPTIONS, WARRANTS, PREEMPTIVE RIGHTS, SUBSCRIPTIONS, CALLS, OR
OTHER RIGHTS, CONVERTIBLE SECURITIES, AGREEMENTS, CLAIMS OR COMMITMENTS OF ANY
CHARACTER OBLIGATING PACIFIC OR ANY OF ITS SUBSIDIARIES TO ISSUE, TRANSFER OR
SELL ANY PARTNERSHIP INTERESTS OR OTHER EQUITY INTEREST IN, PACIFIC OR ANY OF
ITS SUBSIDIARIES OR SECURITIES CONVERTIBLE INTO OR EXCHANGEABLE FOR SUCH
PARTNERSHIP INTERESTS OR EQUITY INTERESTS, OTHER THAN THOSE OF THE GENERAL
PARTNERS AND THEIR AFFILIATES PURSUANT TO THE PARTNERSHIP AGREEMENT AND THOSE
THAT MAY HAVE BEEN ISSUED PURSUANT TO THE AMENDED AND RESTATED PACIFIC ENERGY
GP, LP LONG-TERM INCENTIVE PLAN, (II) OBLIGATIONS OF PACIFIC OR ANY OF ITS
SUBSIDIARIES TO REPURCHASE, REDEEM OR OTHERWISE ACQUIRE ANY PARTNERSHIP
INTERESTS OR EQUITY INTERESTS OF PACIFIC OR ANY OF ITS SUBSIDIARIES OR ANY SUCH
SECURITIES OR AGREEMENTS LISTED IN CLAUSE (I) OF THIS SENTENCE OR (III) VOTING
TRUSTS OR SIMILAR AGREEMENTS TO WHICH PACIFIC OR ANY OF ITS SUBSIDIARIES IS A
PARTY WITH RESPECT TO THE VOTING OF THE EQUITY INTERESTS OF PACIFIC OR ANY OF
ITS SUBSIDIARIES.  NEITHER THE OFFERING OR SALE OF THE PURCHASED UNITS OR THE
REGISTRATION OF THE PURCHASED UNITS PURSUANT TO THE REGISTRATION RIGHTS
AGREEMENT, GIVES RISE TO ANY RIGHTS FOR OR RELATING TO THE REGISTRATION OF ANY
COMMON UNITS OR OTHER SECURITIES OF PACIFIC, OTHER THAN THOSE OF THE GENERAL
PARTNERS AND THEIR AFFILIATES PURSUANT SECTION 7.12(B) TO THE PARTNERSHIP
AGREEMENT.

 

(C)                                  THE COMMON UNITS BEING PURCHASED BY THE
PURCHASERS HEREUNDER AND THE LIMITED PARTNER INTERESTS REPRESENTED THEREBY, WILL
BE DULY AUTHORIZED BY PACIFIC PURSUANT TO THE PARTNERSHIP AGREEMENT PRIOR TO THE
CLOSING AND, WHEN ISSUED AND DELIVERED TO THE PURCHASERS AGAINST PAYMENT
THEREFOR IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, WILL BE VALIDLY ISSUED,
FULLY PAID (TO THE EXTENT REQUIRED BY THE PARTNERSHIP AGREEMENT) AND
NONASSESSABLE (EXCEPT AS SUCH NONASSESSABILITY MAY BE AFFECTED BY MATTERS
DESCRIBED IN SECTIONS 17-303, 17-607 AND 17-804 OF THE DELAWARE LP ACT) AND WILL
BE FREE OF ANY AND ALL LIENS AND RESTRICTIONS ON TRANSFER, OTHER THAN
RESTRICTIONS ON TRANSFER UNDER THE PARTNERSHIP AGREEMENT OR THIS AGREEMENT AND
UNDER APPLICABLE STATE AND FEDERAL SECURITIES LAWS AND OTHER THAN SUCH LIENS AS
ARE CREATED BY THE PURCHASERS.

 

(D)                                 THE COMMON UNITS ARE LISTED FOR TRADING ON
THE NYSE.  PRIOR TO THE CLOSING, THE PURCHASED UNITS WILL HAVE BEEN APPROVED FOR
LISTING ON THE NYSE.

 

Section 3.03                                Pacific SEC Documents.  Pacific’s
forms, registration statements, reports, schedules and statements required to be
filed by it under the Exchange Act or the Securities Act (all such documents,
collectively the “Pacific SEC Documents”) have been filed with the

 

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Commission on a timely basis.  Except as set forth in Schedule 3.03, the Pacific
SEC Documents, including, without limitation, any audited or unaudited financial
statements and any notes thereto or schedules included therein (the “Pacific
Financial Statements”), at the time filed (or in the case of registration
statements, solely on the dates of effectiveness) (except to the extent
corrected by a subsequently filed Pacific SEC Document filed prior to the date
hereof) (a) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be,
(c) complied as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission with
respect thereto, (d) were prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q
of the Commission), and (e) fairly present (subject in the case of unaudited
statements to normal and recurring audit adjustments) in all material respects
the consolidated financial position as of the dates thereof and the consolidated
results of its operations and cash flows for the periods then ended.  KPMG LLP
is an independent registered public accounting firm with respect to Pacific and
the General Partners and has not resigned or been dismissed as independent
registered public accountants of Pacific as a result of or in connection with
any disagreement with Pacific on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedures.

 

Section 3.04                                No Material Adverse Change.  Except
as set forth in or contemplated by the Pacific SEC Documents filed with the
Commission on or prior to the date hereof, since the date of Pacific’s most
recent Form 10-K filing with the Commission, there has been no (a) change,
event, occurrence, effect, fact, circumstance or condition that has had or would
reasonably be expected to have a Pacific Material Adverse Effect,
(b) acquisition or disposition of any material asset by Pacific or any of its
Subsidiaries or any contract or arrangement therefor, otherwise than for fair
value in the ordinary course of business or as disclosed in the Pacific SEC
Documents, (c) material change in Pacific’s accounting principles, practices or
methods or (d) incurrence of material indebtedness for borrowed money other than
in accordance with Schedule 3.04.

 

Section 3.05                                Litigation.  There is no action,
suit, or proceeding pending (including any investigation, litigation or inquiry)
or, to Pacific’s knowledge, threatened against any of the Pacific Parties or any
of their respective officers, directors or Properties that questions the
validity of this Agreement or the Registration Rights Agreement or the right of
Pacific to enter into this Agreement or the Registration Rights Agreement or to
consummate the transactions contemplated hereby and thereby.  Except as set
forth in the Pacific SEC Documents there is no action, suit, or proceeding
pending (including any investigation, litigation or inquiry) or, to Pacific’s
knowledge, threatened against any of the Pacific Parties or any of their
respective officers, directors or Properties that would reasonably be expected
to result in a Pacific Material Adverse Effect.

 

Section 3.06                                No Conflicts.  The execution,
delivery and performance by Pacific and its subsidiaries of the Basic Documents,
the Valero Purchase Agreement and all other agreements and instruments to be
executed and delivered by Pacific in connection hereto or thereto, and

 

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compliance by Pacific with the terms and provisions hereof and thereof, and the
issuance and sale by Pacific of the Purchased Units, do not and will not
(a) violate any provision of any Law or Permit having applicability to Pacific
or any of its Subsidiaries or any of their respective Properties, (b) conflict
with or result in a violation or breach of any provision of the Certificate of
Limited Partnership or other organizational documents of Pacific, or the
Partnership Agreement, or any organizational documents of any of Pacific’s
Subsidiaries, (c)  constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under any indenture, mortgage, deed of trust, loan agreement lease
or other agreement or instrument to which Pacific or any of its Subsidiaries is
a party or by which Pacific or any of its Subsidiaries or any of their
respective Properties may be bound, or (d) result in or require the creation or
imposition of any Lien upon or with respect to any of the Properties now owned
or hereafter acquired by Pacific or any of its Subsidiaries; with the exception
of the conflicts stated in clause (b) of this Section 3.06, except where such
conflict, violation, default, breach, termination, cancellation, failure to
receive consent or approval, or acceleration with respect to the foregoing
provisions of this Section 3.06 would not, individually or in the aggregate,
reasonably be expected to have a Pacific Material Adverse Effect.

 

Section 3.07                                Authority.  Pacific has all
necessary partnership power and authority to execute, deliver and perform its
obligations under the Basic Documents and the Valero Purchase Agreement; and the
execution, delivery and performance by Pacific of the Basic Documents and the
Valero Purchase Agreement have been duly authorized by all necessary action on
its part; and the Basic Documents and the Valero Purchase Agreement constitute
the legal, valid and binding obligations of Pacific, enforceable in accordance
with their terms, except as such enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer and similar laws affecting creditors’ rights
generally or by general principles of equity.  No approval from the holders of
the Common Units is required in connection with Pacific’s issuance and sale of
the Purchased Units to the Purchasers.

 

Section 3.08                                Approvals.  Except for the approvals
required by the Commission in connection with Pacific’s obligations under the
Registration Rights Agreement, no authorization, consent, approval, waiver,
license, qualification or written exemption from, nor any filing, declaration,
qualification or registration with, any Governmental Authority or any other
Person is required in connection with the execution, delivery or performance by
Pacific of any of the Basic Documents, except (i) for such authorizations,
consents, approvals, waivers, licenses, qualifications or written exemptions
required under federal or state securities laws or (ii) where the failure to
receive such authorization, consent, approval, waiver, license, qualification or
written exemption from, or to make such filing, declaration, qualification or
registration would not, individually or in the aggregate, reasonably be expected
to have a Pacific Material Adverse Effect.

 

Section 3.09                                Offering.  Assuming the accuracy of
the representations and warranties of each Purchaser contained in this
Agreement, the sale and issuance of the Purchased Units to the Purchasers
pursuant to this Agreement is exempt from the registration requirements of the
Securities Act and neither Pacific nor any authorized agent acting on its behalf
has taken or will take any action hereafter that would cause the loss of such
exemption.

 

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Section 3.10                                MLP Status.  Pacific has, for each
taxable year beginning after December 31, 2003, during which Pacific was in
existence, met the gross income requirements of Section 7704(c)(2) of the
Internal Revenue Code of 1986, as amended.

 

Section 3.11                                Investment Company Status.  Pacific
is not an “investment company” within the meaning of the Investment Company Act
of 1940, as amended.

 

Section 3.12                                Certain Fees.  Except for the fees
payable by Pacific to the Purchasers hereunder and fees payable to Lehman
Brothers, no fees or commissions are or will be payable by Pacific to brokers,
finders, or investment bankers with respect to the sale of any of the Purchased
Units or the consummation of the transaction contemplated by this Agreement. 
Pacific agrees that it will indemnify and hold harmless each Purchaser from and
against any and all claims, demands, or liabilities for broker’s, finder’s,
placement, or other similar fees or commissions incurred by Pacific or alleged
to have been incurred by Pacific in connection with the sale of Purchased Units
or the consummation of the transactions contemplated by this Agreement.

 

Section 3.13                                No Side Agreements.  There are no
agreements by, among or between Pacific or any of its Affiliates, on the one
hand, and any Purchaser or any of its respective Affiliates, on the other hand,
with respect to the transactions contemplated hereby nor promises or inducements
for future transactions between or among any of such parties.

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

 

Each Purchaser, severally and not jointly, represents and warrants to Pacific
that:

 

Section 4.01                                Corporate Existence.  Such Purchaser
(a) is duly formed, legally existing and in good standing under the laws of its
jurisdiction of organization; and (b) has all requisite power and authority, and
has all governmental licenses, authorizations, consents and approvals necessary,
to own, lease, use and operate its Properties and carry on its business as its
business is now being conducted, except where the failure to obtain such
licenses, authorizations, consents and approvals would not have or would not
reasonably be expected to have a Purchaser Material Adverse Effect.  Such
Purchaser is not in default in the performance, observance or fulfillment of any
provision of its organizational documents, except where such default would not
have or would not reasonably be expected to have a Purchaser Material Adverse
Effect.

 

Section 4.02                                No Conflicts.  The execution,
delivery and performance by such Purchaser of this Agreement, the Registration
Rights Agreement and all other agreements and instruments to be executed and
delivered by such Purchaser pursuant hereto or thereto or in connection with the
transactions contemplated by this Agreement, the Registration Rights Agreement
or any such other agreements and instruments, and compliance by such Purchaser
with the terms and provisions hereof and thereof, and the purchase of such
Purchaser’s Purchased Units by such Purchaser do not and will not (a) violate
any provision of any Law or Permit having applicability to such Purchaser or any
of its Properties, (b) conflict with or result in a violation or breach of any
provision of the organizational documents of such Purchaser or (c) constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination,

 

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cancellation or acceleration) under any contract, agreement, instrument,
obligation, note, bond, mortgage, license, loan or credit agreement to which
such Purchaser is a party or by which such Purchaser or any of its Properties
may be bound; with the exception of the conflicts stated in clause (b) of this
Section 4.02, except where such conflict, violation, default, breach,
termination, cancellation, failure to receive consent or approval, or
acceleration with respect to the foregoing provisions of this Section 4.02 would
not, individually or in the aggregate, be reasonably likely to have a Purchaser
Material Adverse Effect.

 

Section 4.03                                Certain Fees.  No fees or
commissions are or will be payable by such Purchaser to brokers, finders, or
investment bankers with respect to the purchase of any of its Purchased Units or
the consummation of the transaction contemplated by this Agreement.  Such
Purchaser agrees that it will indemnify and hold harmless Pacific from and
against any and all claims, demands, or liabilities for broker’s, finder’s,
placement, or other similar fees or commissions incurred by such Purchaser or
alleged to have been incurred by such Purchaser in connection with the purchase
of such Purchaser’s Purchased Units or the consummation of the transactions
contemplated by this Agreement.

 

Section 4.04                                No Side Agreements.  There are no
other agreements by, among or between such Purchaser and any of its Affiliates,
on the one hand, and Pacific or any of its Affiliates, on the other hand, with
respect to the transactions contemplated hereby nor promises or inducements for
future transactions between or among any of such parties.

 

Section 4.05                                Unregistered Securities.

 

(A)                                  INVESTMENT.  ITS PURCHASED UNITS ARE BEING
ACQUIRED FOR ITS OWN ACCOUNT, NOT AS A NOMINEE OR AGENT, AND WITH NO INTENTION
OF DISTRIBUTING ITS PURCHASED UNITS OR ANY PART THEREOF, AND SUCH PURCHASER HAS
NO PRESENT INTENTION OF SELLING OR OTHERWISE DISTRIBUTING THE SAME IN ANY
TRANSACTION IN VIOLATION OF THE SECURITIES LAWS OF THE UNITED STATES OF AMERICA
OR ANY STATE, WITHOUT PREJUDICE, HOWEVER, TO SUCH PURCHASER’S RIGHT AT ALL TIMES
TO SELL OR OTHERWISE DISPOSE OF ALL OR ANY PART OF ITS PURCHASED UNITS UNDER A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS OR UNDER AN EXEMPTION FROM SUCH REGISTRATION AVAILABLE THEREUNDER
(INCLUDING, WITHOUT LIMITATION, IF AVAILABLE, RULE 144 PROMULGATED THEREUNDER). 
IF SUCH PURCHASER SHOULD IN THE FUTURE DECIDE TO DISPOSE OF ANY OF ITS PURCHASED
UNITS, SUCH PURCHASER UNDERSTANDS AND AGREES (A) THAT IT MAY DO SO ONLY (I) IN
COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAW, AS THEN
IN EFFECT, OR (II) IN THE MANNER CONTEMPLATED BY ANY REGISTRATION STATEMENT
PURSUANT TO WHICH SUCH SECURITIES ARE BEING OFFERED, AND (B) THAT STOP-TRANSFER
INSTRUCTIONS TO THAT EFFECT WILL BE IN EFFECT WITH RESPECT TO SUCH SECURITIES. 
NOTWITHSTANDING THE FOREGOING, A PURCHASER MAY ENTER INTO A DERIVATIVE
TRANSACTION WITH RESPECT TO ITS PURCHASED UNITS WITH A THIRD PARTY PROVIDED THAT
SUCH TRANSACTION IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT.

 

(B)                                 NATURE OF PURCHASER.  SUCH PURCHASER
REPRESENTS AND WARRANTS TO PACIFIC THAT, (A) IT IS AN “ACCREDITED INVESTOR”
WITHIN THE MEANING OF RULE 501 OF REGULATION D PROMULGATED BY THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO THE SECURITIES ACT AND (B) BY REASON OF ITS
BUSINESS AND FINANCIAL EXPERIENCE IT HAS SUCH KNOWLEDGE, SOPHISTICATION AND
EXPERIENCE IN MAKING SIMILAR INVESTMENTS AND IN BUSINESS AND FINANCIAL MATTERS
GENERALLY SO AS TO BE CAPABLE OF EVALUATING THE MERITS AND RISKS OF THE
PROSPECTIVE INVESTMENT IN THE PURCHASED

 

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UNITS, IS ABLE TO BEAR THE ECONOMIC RISK OF SUCH INVESTMENT AND, AT THE PRESENT
TIME, WOULD BE ABLE TO AFFORD A COMPLETE LOSS OF SUCH INVESTMENT.

 

(C)                                  RECEIPT OF INFORMATION; AUTHORIZATION. 
SUCH PURCHASER ACKNOWLEDGES THAT IT HAS (A) HAD ACCESS TO PACIFIC’S PERIODIC
FILINGS WITH THE COMMISSION, INCLUDING PACIFIC’S ANNUAL REPORT ON FORM 10-K,
QUARTERLY REPORTS ON FORM 10-Q, AND CURRENT REPORTS ON FORM 8-K, AND (B) BEEN
PROVIDED A REASONABLE OPPORTUNITY TO ASK QUESTIONS OF AND RECEIVE ANSWERS FROM
REPRESENTATIVES OF PACIFIC REGARDING SUCH MATTERS.

 

(D)                                 RESTRICTED SECURITIES.  SUCH PURCHASER
UNDERSTANDS THAT THE PURCHASED UNITS IT IS PURCHASING ARE CHARACTERIZED AS
“RESTRICTED SECURITIES” UNDER THE FEDERAL SECURITIES LAWS INASMUCH AS THEY ARE
BEING ACQUIRED FROM PACIFIC IN A TRANSACTION NOT INVOLVING A PUBLIC OFFERING AND
THAT UNDER SUCH LAWS AND APPLICABLE REGULATIONS SUCH SECURITIES MAY BE RESOLD
WITHOUT REGISTRATION UNDER THE SECURITIES ACT ONLY IN CERTAIN LIMITED
CIRCUMSTANCES.  IN THIS CONNECTION, SUCH PURCHASER REPRESENTS THAT IT IS
KNOWLEDGEABLE WITH RESPECT TO RULE 144 OF THE COMMISSION PROMULGATED UNDER THE
SECURITIES ACT.

 

(E)                                  LEGEND.  IT IS UNDERSTOOD THAT THE
CERTIFICATES EVIDENCING THE PURCHASED UNITS WILL BEAR THE FOLLOWING LEGEND: 
“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.”

 

ARTICLE V
INDEMNIFICATION, COSTS AND EXPENSES

 

Section 5.01                                Indemnification by Pacific.  Pacific
agrees to indemnify each Purchaser and its Representatives (collectively, the
“Purchaser Related Parties”) from, and hold each of them harmless against, any
and all actions, suits, proceedings (including any investigations, litigation or
inquiries), demands, and causes of action, and, in connection therewith, and
promptly upon demand, pay or reimburse each of them for all reasonable costs,
losses, liabilities, damages, or expenses of any kind or nature whatsoever,
including, without limitation, the reasonable fees and disbursements of counsel
and all other reasonable expenses incurred in connection with investigating,
defending or preparing to defend any such matter that may be incurred by them or
asserted against or involve any of them as a result of, arising out of, or in
any way related to the breach of any of the representations, warranties or
covenants of Pacific contained herein, provided such claim for indemnification
relating to a breach of a representation or warranty is made prior to the
expiration of such representation or warranty.

 

Section 5.02                                Indemnification by Purchasers.  Each
Purchaser agrees, severally and not jointly, to indemnify Pacific, the General
Partners and their respective Representatives (collectively, the “Pacific
Related Parties”) from, and hold each of them harmless against, any and all
actions, suits, proceedings (including any investigations, litigation or
inquiries), demands, and causes of action, and, in connection therewith, and
promptly upon demand, pay or reimburse each of them for all reasonable costs,
losses, liabilities, damages, or expenses of any kind or

 

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nature whatsoever, including, without limitation, the reasonable fees and
disbursements of counsel and all other reasonable expenses incurred in
connection with investigating, defending or preparing to defend any such matter
that may be incurred by them or asserted against or involve any of them as a
result of, arising out of, or in any way related to the breach of any of the
representations, warranties or covenants of such Purchaser contained herein,
provided such claim for indemnification relating to a breach of the
representations and warranties is made prior to the expiration of such
representations and warranties.

 

Section 5.03                                Indemnification Procedure.  Promptly
after any Pacific Related Party or Purchaser Related Party (hereinafter, the
“Indemnified Party”) has received notice of any indemnifiable claim hereunder,
or the commencement of any action, suit or proceeding by a third person, which
the Indemnified Party believes in good faith is an indemnifiable claim under
this Agreement, the Indemnified Party shall give the indemnitor hereunder (the
“Indemnifying Party”) written notice of such claim or the commencement of such
action, suit or proceeding, but failure to so notify the Indemnifying Party will
not relieve the Indemnifying Party from any liability it may have to such
Indemnified Party hereunder except to the extent that the Indemnifying Party is
materially prejudiced by such failure. Such notice shall state the nature and
the basis of such claim to the extent then known.  The Indemnifying Party shall
have the right to defend and settle, at its own expense and by its own counsel,
any such matter as long as the Indemnifying Party pursues the same diligently
and in good faith. If the Indemnifying Party undertakes to defend or settle, it
shall promptly notify the Indemnified Party of its intention to do so, and the
Indemnified Party shall cooperate with the Indemnifying Party and its counsel in
all commercially reasonable respects in the defense thereof and the settlement
thereof. Such cooperation shall include, but shall not be limited to, furnishing
the Indemnifying Party with any books, records and other information reasonably
requested by the Indemnifying Party and in the Indemnified Party’s possession or
control.  Such cooperation of the Indemnified Party shall be at the cost of the
Indemnifying Party.  After the Indemnifying Party has notified the Indemnified
Party of its intention to undertake to defend or settle any such asserted
liability, and for so long as the Indemnifying Party diligently pursues such
defense, the Indemnifying Party shall not be liable for any additional legal
expenses incurred by the Indemnified Party in connection with any defense or
settlement of such asserted liability; provided, however, that the Indemnified
Party shall be entitled (i) at its expense, to participate in the defense of
such asserted liability and the negotiations of the settlement thereof and
(ii) if (A) the Indemnifying Party has failed to assume the defense and employ
counsel or (B) if the defendants in any such action include both the Indemnified
Party and the Indemnifying Party and counsel to the Indemnified Party shall have
concluded that there may be reasonable defenses available to the Indemnified
Party that are different from or in addition to those available to the
Indemnifying Party or if the interests of the Indemnified Party reasonably may
be deemed to conflict with the interests of the Indemnifying Party, then the
Indemnified Party shall have the right to select a separate counsel and to
assume such legal defense and otherwise to participate in the defense of such
action, with the expenses and fees of such separate counsel (including any local
counsel) and other expenses related to such participation to be reimbursed by
the Indemnifying Party as incurred.  Notwithstanding any other provision of this
Agreement, the Indemnifying Party shall not settle any indemnified claim without
the consent of the Indemnified Party, unless the settlement thereof imposes no
liability or obligation on, and includes a complete release from liability of,
and does not include any admission of wrongdoing or illegal conduct by, the
Indemnified Party.

 

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Section 5.04                                Commitment Fee.  Pacific hereby
agrees to pay each Purchaser on the date hereof a commitment fee equal to 1% of
such Purchaser’s respective Purchase Price by wire transfer of immediately
available funds to the account specified for such Purchaser on Schedule 5.04. 
Once paid, the commitment fees or any part thereof shall not be refundable under
any circumstances, regardless of whether the transactions contemplated hereby
are consummated.

 

Section 5.05                                Payment of Expenses.  Pacific hereby
agrees to reimburse the Purchasers, upon demand, for up to $30,000, in the
aggregate, of their reasonable out-of-pocket expenses (including travel expenses
and reasonable fees, charges and disbursements of Andrews Kurth LLP) incurred in
connection with transactions contemplated by the Basic Documents or the
administration, amendment, modification or waiver thereof.

 

ARTICLE VI.
MISCELLANEOUS

 

Section 6.01                                Pacific Lock-Up.  Except as provided
in this Agreement, from and after the date hereof through and including the date
90 days after the Closing Date, Pacific will not, and will not permit any other
Pacific Parties to, issue, offer, sell, contract to sell or otherwise dispose of
or hedge any Common Units or any securities substantially similar to,
convertible into or exercisable or exchangeable for Common Units, or grant any
options or warrants to purchase any Common Units or any such securities;
provided, however, the foregoing restriction shall not apply to (i) sales of up
to 5,500,000 Common Units or (ii) transactions pursuant to the Amended and
Restated Pacific Energy GP, LP Long-Term Incentive Plan.  The provisions of this
Section 6.01 may be waived in writing by the holders of at least a majority of
the Purchased Units.

 

Section 6.02                                Interpretation and Survival of
Provisions.  Article, Section, Schedule, and Exhibit references are to this
Agreement, unless otherwise specified. All references to instruments, documents,
contracts, and agreements are references to such instruments, documents,
contracts, and agreements as the same may be amended, supplemented, and
otherwise modified from time to time, unless otherwise specified. The word
“including” shall mean “including but not limited to.” Whenever any party has an
obligation under the Basic Documents, the expense of complying with that
obligation shall be an expense of such party unless otherwise specified.
Whenever any determination, consent, or approval is to be made or given by any
Purchaser, such action shall be in such Purchaser’s sole discretion unless
otherwise specified in this Agreement.  If any provision in the Basic Documents
is held to be illegal, invalid, not binding, or unenforceable, such provision
shall be fully severable and the Basic Documents shall be construed and enforced
as if such illegal, invalid, not binding, or unenforceable provision had never
comprised a part of the Basic Documents, and the remaining provisions shall
remain in full force and effect.

 

Section 6.03                                Survival of Provisions.  The
representations and warranties set forth in sections 3.01, 3.02, 3.06, 3.07,
3.08, 3.09, 3.12, 3.13, 4.03, 4.04 and 4.05 hereunder shall survive the
execution and delivery of this Agreement indefinitely, and the other
representations and warranties set forth herein shall survive for a period of
twelve (12) months following the Closing Date regardless of any investigation
made by or on behalf of Pacific or any Purchaser.  The covenants made in this
Agreement or any other Basic Document shall survive the Closing of the

 

17

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transactions described herein and remain operative and in full force and effect
regardless of acceptance of any of the Purchased Units and payment therefor and
repayment, conversion, exercise or repurchase thereof.  All indemnification
obligations of Pacific and the Purchasers and the provisions of Article V shall
remain operative and in full force and effect regardless of any purported
general termination of this Agreement.

 

Section 6.04                                No Waiver; Modifications in Writing.

 

(A)                                  DELAY.  NO FAILURE OR DELAY ON THE PART OF
ANY PARTY IN EXERCISING ANY RIGHT, POWER, OR REMEDY HEREUNDER SHALL OPERATE AS A
WAIVER THEREOF, NOR SHALL ANY SINGLE OR PARTIAL EXERCISE OF ANY SUCH RIGHT,
POWER, OR REMEDY PRECLUDE ANY OTHER OR FURTHER EXERCISE THEREOF OR THE EXERCISE
OF ANY RIGHT, POWER, OR REMEDY. THE REMEDIES PROVIDED FOR HEREIN ARE CUMULATIVE
AND ARE NOT EXCLUSIVE OF ANY REMEDIES THAT MAY BE AVAILABLE TO A PARTY AT LAW OR
IN EQUITY OR OTHERWISE.

 

(B)                                 SPECIFIC WAIVER.  EXCEPT AS OTHERWISE
PROVIDED HEREIN, NO AMENDMENT, WAIVER, CONSENT, MODIFICATION, OR TERMINATION OF
ANY PROVISION OF THIS AGREEMENT OR ANY OTHER BASIC DOCUMENT SHALL BE EFFECTIVE
UNLESS SIGNED BY EACH OF THE PARTIES HERETO OR THERETO AFFECTED BY SUCH
AMENDMENT, WAIVER, CONSENT, MODIFICATION, OR TERMINATION.  ANY AMENDMENT,
SUPPLEMENT OR MODIFICATION OF OR TO ANY PROVISION OF THIS AGREEMENT OR ANY OTHER
BASIC DOCUMENT, ANY WAIVER OF ANY PROVISION OF THIS AGREEMENT OR ANY OTHER BASIC
DOCUMENT, AND ANY CONSENT TO ANY DEPARTURE BY PACIFIC FROM THE TERMS OF ANY
PROVISION OF THIS AGREEMENT OR ANY OTHER BASIC DOCUMENT SHALL BE EFFECTIVE ONLY
IN THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH MADE OR GIVEN.
EXCEPT WHERE NOTICE IS SPECIFICALLY REQUIRED BY THIS AGREEMENT, NO NOTICE TO OR
DEMAND ON PACIFIC IN ANY CASE SHALL ENTITLE PACIFIC TO ANY OTHER OR FURTHER
NOTICE OR DEMAND IN SIMILAR OR OTHER CIRCUMSTANCES.

 

Section 6.05                                Binding Effect; Assignment.

 

(A)                                  BINDING EFFECT.  THIS AGREEMENT SHALL BE
BINDING UPON PACIFIC, THE PURCHASERS, AND THEIR RESPECTIVE SUCCESSORS AND
PERMITTED ASSIGNS. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THIS
AGREEMENT SHALL NOT BE CONSTRUED SO AS TO CONFER ANY RIGHT OR BENEFIT UPON ANY
PERSON OTHER THAN THE PARTIES TO THIS AGREEMENT AND THEIR RESPECTIVE SUCCESSORS
AND PERMITTED ASSIGNS.

 

(B)                                 ASSIGNMENT OF PURCHASED UNITS.  ALL OR ANY
PORTION OF PURCHASED UNITS PURCHASED PURSUANT TO THIS AGREEMENT MAY BE SOLD,
ASSIGNED OR PLEDGED BY EACH PURCHASER, SUBJECT TO COMPLIANCE WITH APPLICABLE
SECURITIES LAWS, SECTION 2.07 HEREIN AND THE REGISTRATION RIGHTS AGREEMENT.

 

(C)                                  ASSIGNMENT.  NO PORTION OF THE RIGHTS AND
OBLIGATIONS OF EACH PURCHASER UNDER THIS AGREEMENT MAY BE TRANSFERRED BY SUCH
PURCHASER WITHOUT THE WRITTEN CONSENT OF PACIFIC.  NOTWITHSTANDING THE
FOREGOING, EACH PURCHASER MAY ASSIGN ALL OR ANY PORTION OF ITS RIGHTS UNDER THIS
AGREEMENT TO AN AFFILIATE OF SUCH PURCHASER.

 

Section 6.06                                Communications.  All notices and
demands provided for hereunder shall be in writing and shall be given by
registered or certified mail, return receipt requested, telecopy, air courier
guaranteeing overnight delivery or personal delivery to the following addresses:

 

18

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(A)                                  IF TO ANY PURCHASER:

 

To the respective address listed on Schedule 6.06 hereof

 

with a copy to:

 

Andrews Kurth LLP

600 Travis

Suite 4200

Houston, Texas 77002

Attention:  William Cooper

Facsimile:  713.220.4285

 

(B)                                 IF TO PACIFIC:

 

Pacific Energy Partners, L.P.

5900 Cherry Avenue

Long Beach, CA 90805-4408

Attention: Lynn T. Wood

Facsimile: 562.728.2823

 

with a copy to:

 

Vinson & Elkins L.L.P.

666 Fifth Avenue, 26th Floor

New York, NY 10103

Attention: Alan Baden

Facsimile: 212-237-0100

 

or to such other address as Pacific or such Purchaser may designate in writing.
All notices and communications shall be deemed to have been duly given: at the
time delivered by hand, if personally delivered; upon actual receipt if sent by
certified mail, return receipt requested, or regular mail, if mailed; when
receipt acknowledged, if sent via facsimile; and upon actual receipt when
delivered to an air courier guaranteeing overnight delivery.

 

Section 6.07                                Removal of Legend.  Each Purchaser
may request Pacific to remove the legend described in Section 4.05(e) from the
certificates evidencing the Purchased Units by submitting to Pacific such
certificates, together with an opinion of counsel to the effect that such legend
is no longer required under the Securities Act or applicable state laws, as the
case may be; provided, however, that no such opinion shall be required in the
event a Purchaser is effecting a sale of such Purchased Units pursuant to Rule
144 or an effective registration statement.

 

Section 6.08                                Entire Agreement.  This Agreement,
the other Basic Documents and the other agreements and documents referred to
herein are intended by the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein. There are no restrictions, promises, warranties or
undertakings, other than

 

19

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those set forth or referred to herein or therein with respect to the rights
granted by Pacific or any of its Affiliates or the Purchasers or any of their
Affiliates set forth herein or therein.  This Agreement, the other Basic
Documents and the other agreements and documents referred to herein supersede
all prior agreements and understandings between the parties with respect to such
subject matter.

 

Section 6.09                                Governing Law.  This Agreement will
be construed in accordance with and governed by the laws of the State of New
York.

 

Section 6.10                                Execution in Counterparts.  This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which counterparts, when so executed
and delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.

 

Section 6.11                                Termination.

 

(A)                                  NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, THIS AGREEMENT WILL AUTOMATICALLY TERMINATE IF THE CLOSING SHALL NOT
HAVE OCCURRED ON OR BEFORE JANUARY 15, 2006 (THE “TERMINATION DATE”), UNLESS (I)
THE VALERO ASSET ACQUISITION SHALL HAVE CLOSED PRIOR TO THE TERMINATION DATE OR
(II) THE TERM HEREOF IS EXTENDED BY AGREEMENT OF THE PARTIES HERETO.  THIS
AGREEMENT MAY BE TERMINATED BY PACIFIC IF IT OR VALERO ELECTS NOT TO CONSUMMATE
THE VALERO ACQUISITION.

 

(B)                                 IN THE EVENT OF THE TERMINATION OF THIS
AGREEMENT AS PROVIDED IN SECTION 6.11(A), THIS AGREEMENT SHALL FORTHWITH BECOME
NULL AND VOID AS BETWEEN ANY PURCHASER OR PURCHASERS NOT AGREEING TO EXTEND THE
TERM HEREOF AND THERE SHALL BE NO LIABILITY ON THE PART OF ANY SUCH PARTIES
AMONG THEMSELVES, EXCEPT WITH RESPECT TO ARTICLE V OF THIS AGREEMENT, THIS
SECTION 6.11 AND EXCEPT WITH RESPECT TO THE REQUIREMENT TO COMPLY WITH ANY
CONFIDENTIALITY AGREEMENT IN FAVOR OF PACIFIC, PROVIDED THAT NOTHING HEREIN
SHALL RELIEVE ANY SUCH PARTY FROM ANY LIABILITY OR OBLIGATION WITH RESPECT TO
ANY WILLFUL BREACH OF THIS AGREEMENT.  FOR THE AVOIDANCE OF DOUBT, NO
TERMINATION AS AGAINST ONE OR MORE INDIVIDUAL PURCHASERS PURSUANT TO
SECTION 6.11(A) SHALL SERVE TO TERMINATE THIS AGREEMENT AS AMONG ANY PURCHASER
AGREEING TO EXTEND THE TERM HEREOF WITH PACIFIC.  IN THE EVENT OF THE
TERMINATION OF THIS AGREEMENT BY PACIFIC OR TERMINATION OF THIS AGREEMENT AS
PROVIDED IN SECTION 6.11(A) IN CIRCUMSTANCES WHERE PACIFIC DOES NOT AGREE TO
EXTEND OF THE TERM HEREOF, THIS AGREEMENT SHALL FORTHWITH BECOME NULL AND VOID
AND THERE SHALL BE NO LIABILITY OR OBLIGATION ON THE PART OF ANY PARTY HERETO OR
THEIR RESPECTIVE REPRESENTATIVES, EXCEPT WITH RESPECT TO ARTICLE V OF THIS
AGREEMENT, THIS SECTION 6.11 AND EXCEPT WITH RESPECT TO THE REQUIREMENT TO
COMPLY WITH ANY CONFIDENTIALITY AGREEMENT IN FAVOR OF PACIFIC, PROVIDED THAT
NOTHING HEREIN SHALL RELIEVE ANY PARTY FROM ANY LIABILITY OR OBLIGATION WITH
RESPECT TO ANY WILLFUL BREACH OF THIS AGREEMENT.

 

[The remainder of this page is intentionally left blank.]

 

20

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IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of
the date first above written.

 

 

 

PACIFIC ENERGY PARTNERS, L.P.

 

 

 

 

 

By:

Pacific Energy GP, LP,

 

 

its General Partner

 

 

 

By:

Pacific Energy Management LLC,

 

 

 

its General Partner

 

 

 

 

 

By:

/s/ Irvin Toole, Jr.

 

 

Name:

Irvin Toole, Jr.

 

Title:

President and Chief Executive Officer

 

[Common Unit Purchase Agreement]

 

--------------------------------------------------------------------------------

 

 

TORTOISE ENERGY INFRASTRUCTURE
CORPORATION

 

 

 

 

 

By:

/s/ David J. Shulte

 

 

 

Name:

David J. Schulte

 

Title:

CEO/President

 

 

 

 

 

 

TORTOISE ENERGY CAPITAL
CORPORATION

 

 

 

 

 

By:

/s/ David J. Shulte

 

 

 

Name:

David J. Schulte

 

Title:

CEO/President

 

[Common Unit Purchase Agreement]

 

--------------------------------------------------------------------------------

 

 

STRUCTURED FINANCE AMERICAS LLC

 

 

 

 

 

By:

 

/s/ Richard Kennedy

 

 

 

Name:

Richard Kennedy

 

Title:

 

 

 

 

 

 

 

 

 

 

 

By:

 

/s/ John Cipriani

 

 

 

Name:

John Cipriani

 

Title:

 

 

 

[Common Unit Purchase Agreement]

 

--------------------------------------------------------------------------------

 

 

The Cushing Fund, LP

 

 

 

 

 

By:

/s/ Jerry Swank

 

 

 

Name:

Jerry Swank

 

Title:

General Partner

 

 

[Common Unit Purchase Agreement]

 

--------------------------------------------------------------------------------

 

 

STROME MLP FUND, LP

 

 

 

By:

Strome Investment Management, LP, its
general partner

 

 

 

 

 

By:

/s/ Michael Achterberg

 

 

 

Name:

Michael Achterberg

 

Title:

Chief Financial Officer

 

 

[Common Unit Purchase Agreement]

 

--------------------------------------------------------------------------------

 

 

KAYNE ANDERSON ENERGY TOTAL
RETURN FUND, INC.

 

 

 

 

 

By:

/s/ Kevin S. McCarthy

 

 

 

Name:

Kevin S. McCarthy

 

Title:

President and Chief Executive Officer

 

 

[Common Unit Purchase Agreement]

 

--------------------------------------------------------------------------------

 

 

FIDUCIARY/CLAYMORE MLP
OPPORTUNITY FUND

 

 

 

 

 

By:

/s/ James J. Cunnane, Jr.

 

 

 

Name:

James J. Cunnane, Jr.

 

Title:

Managing Director and Senior Portfolio
Manager

 

 

[Common Unit Purchase Agreement]

 

--------------------------------------------------------------------------------

 

 

ENERGY INCOME AND GROWTH FUND

 

 

 

 

 

By:

/s/ Jim Bowen

 

 

 

Name:

Jim Bowen

 

Title:

President

 

 

[Common Unit Purchase Agreement]

 

--------------------------------------------------------------------------------

 

Schedule 2.02

 

Purchaser

 

Purchased Units
(subject to adjustment
as provided in the
definition of
“Purchased Units”)

 

Total Purchase
Price (prior to
any adjustment
set forth in
Section 2.06)

 

 

 

 

 

 

 

Tortoise Energy Capital Corporation

 

1,584,800

 

$

48,732,600

 

 

 

 

 

 

 

Tortoise Energy Infrastructure Corporation

 

325,200

 

$

9,999,900

 

 

 

 

 

 

 

Kayne Anderson Energy Total Return Fund, Inc.

 

1,000,000

 

$

30,750,000

 

 

 

 

 

 

 

Structured Finance Americas LLC

 

690,000

 

$

21,217,500

 

 

 

 

 

 

 

Fiduciary/Claymore MLP Opportunity Fund

 

413,700

 

$

12,721,275

 

 

 

 

 

 

 

Energy Income and Growth Fund

 

81,300

 

$

2,499,975

 

 

 

 

 

 

 

The Cushing Fund, LP

 

165,000

 

$

5,073,750

 

 

 

 

 

 

 

Strome MLP Fund, LP

 

40,000

 

$

1,230,000

 

 

 

 

 

 

 

Total

 

4,300,000

 

$

132,225,000

 

 

[Common Unit Purchase Agreement]

 

--------------------------------------------------------------------------------

 

Exhibit A – Form of Registration Rights Agreement

 

See Attached

 

--------------------------------------------------------------------------------

 

Exhibit A

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is entered into as of
August       , 2005, by and among Pacific Energy Partners, L.P., a Delaware
limited partnership (the “Partnership”), each of the parties set forth on
Exhibit A hereto (each, a “Purchaser”) and, solely with respect to the
provisions of 2.2(c), Pacific Energy GP, LP.  Capitalized terms used herein
without definition shall have the meanings given to them in the Purchase
Agreement (as hereinafter defined).

 

RECITALS

 

This Agreement is made in connection with the Closing of the issuance and sale
of 4,300,000 Common Units (the “Purchased Units”), pursuant to the Common Unit
Purchase Agreement (the “Purchase Agreement”), dated as of August      , 2005,
by and among the Partnership and the Purchasers named therein.  Pursuant to
Section 2.04(g) of the Purchase Agreement, the Partnership has agreed to provide
the registration and other rights set forth in this Agreement for the benefit of
the Purchasers. In consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each party hereto, the parties
hereby agree as follows:

 

ARTICLE VII.
DEFINITIONS

 

Section 7.01                                Definitions.  Capitalized terms used
herein without definition shall have the meanings given to them in the Purchase
Agreement.  The terms set forth below are used herein as so defined:

 

“Affiliate” means, with respect to a specified Person, any other Person, whether
now in existence or hereinafter created, directly or indirectly controlling,
controlled by or under direct or indirect common control with such specified
Person.  For purposes of this definition, “control” (including, with correlative
meanings, “controlling”, “controlled by”, and “under common control with”) means
the power to direct or cause the direction of the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.

 

“Agreement” has the meaning set forth in the introductory paragraph of this
Agreement.

 

“Business Day” means any day other than a Saturday, Sunday, or a legal holiday
for commercial banks in Long Beach, California.

 

“Closing” shall have the meaning set forth in the Purchase Agreement.

 

“Closing Date” shall have the meaning set forth in the Purchase Agreement.

 

“Commission” means the United States Securities and Exchange Commission.

 

--------------------------------------------------------------------------------

 

“Common Units” means the common units representing limited partner interests in
the Partnership, including the Purchased Units.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.

 

“Holder” means (i) each Purchaser and (ii) any Person to whom rights hereunder
are transferred or assigned pursuant to Section 2.11 of this Agreement.

 

“Included Registrable Securities” has the meaning set forth in Section 2.2(a) of
this Agreement.

 

“Lock-up Period” has the meaning set forth in Section 2.7.

 

“Losses” has the meaning set forth in Section 2.9(a) of this Agreement.

 

“Managing Underwriter” means, with respect to any Underwritten Offering, the
book-running lead manager or managers of such Underwritten Offering.

 

“Market Value” means with respect to Common Units, the closing price on the New
York Stock Exchange, or other principal exchange or quotation service where the
Common Units are listed, on the last trading day preceding the date of
determination.

 

“Offering Notice” has the meaning set forth in Section 2.2(a) of this Agreement.

 

“Opt Out Notice” has the meaning set forth in Section 2.2(b) of this Agreement.

 

“Partnership” has the meaning set forth in the introductory paragraph of this
Agreement.

 

“Person” means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, limited liability company, unincorporated
organization, government or any agency, instrumentality or political subdivision
thereof, or any other form of entity.

 

“Piggyback Inclusion Notice” has the meaning set forth in Section 2.2(a) of this
Agreement.

 

“Piggyback Offering” has the meaning set forth in Section 2.2(c) of this
Agreement.

 

“Purchase Agreement” has the meaning set froth in the Recitals of this
Agreement.

 

“Purchased Units” shall have the meaning set forth in the Recitals of this
Agreement.

 

“Purchaser” has the meaning set forth in the introductory paragraph of this
Agreement.

 

“Registrable Securities” means the Purchased Units.

 

“Registration Expenses” has the meaning set forth in Section 2.8(a) of this
Agreement.

 

2

--------------------------------------------------------------------------------

 

“Registration Inclusion Notice” has the meaning set forth in Section 2.1 of this
Agreement.

 

“Required Out Notice” has the meaning set forth in Section 2.2(b) of this
Agreement.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.

 

“Selling Expenses” has the meaning set forth in Section 2.8(a) of this
Agreement.

 

“Selling Holder” has the meaning set forth in Section 2.2(c) of this Agreement.

 

“Shelf Registration Statement” has the meaning set forth in Section 2.1(a) of
this Agreement.

 

“Termination Date” has the meaning set forth in Section 3.12.

 

“Underwritten Offering” means an offering (including an offering pursuant to the
Shelf Registration Statement) in which Common Units are sold to an underwriter
on a firm commitment basis for reoffering to the public or an offering that is a
“bought deal” with one or more investment banks.

 

Section 7.02                                Registrable Securities.   Any
Registrable Security will cease to be a Registrable Security when (a) a
registration statement covering such Registrable Security becomes or is declared
effective by the Commission and such Registrable Security has been sold or
disposed of pursuant to such effective registration statement; (b) such
Registrable Security has been disposed of pursuant to any section of Rule 144
(or any similar provision then in force under the Securities Act); (c) such
Registrable Security is held by the Partnership or one of its subsidiaries; or
(d) such Registrable Security has been sold in a private transaction in which
the transferor’s rights under this Agreement are not assigned to the transferee
of such securities.

 

ARTICLE VIII.
REGISTRATION AND PIGGYBACK RIGHTS

 

Section 8.01                                Shelf Registration Statement.

 

(A)                                  AS SOON AS PRACTICABLE FOLLOWING THE
CLOSING, BUT IN ANY EVENT WITHIN 90 DAYS OF THE CLOSING, THE PARTNERSHIP SHALL
PREPARE AND FILE A SHELF REGISTRATION STATEMENT (INCLUDING INFORMATION DEEMED TO
BE A PART OF AND INCLUDED IN THE REGISTRATION STATEMENT, THE “SHELF REGISTRATION
STATEMENT”) PROVIDING FOR THE RESALE FROM TIME TO TIME, AS PERMITTED BY RULE 415
OF THE SECURITIES ACT (OR ANY SIMILAR PROVISION THEN IN FORCE UNDER THE
SECURITIES ACT), BY EACH HOLDER (AS OF THE DATE OF SUCH FILING), OF ALL OF EACH
SUCH HOLDER’S REGISTRABLE SECURITIES.  THE PARTNERSHIP SHALL USE ITS
COMMERCIALLY REASONABLE EFFORTS TO CAUSE SUCH SHELF REGISTRATION STATEMENT TO
BECOME EFFECTIVE NO LATER THAN 180 DAYS FROM THE CLOSING DATE.  SUCH SHELF
REGISTRATION STATEMENT (INCLUDING THE DOCUMENTS INCORPORATED THEREIN BY
REFERENCE), WHEN IT BECOMES EFFECTIVE, WILL COMPLY AS TO FORM WITH ALL
APPLICABLE REQUIREMENTS OF THE SECURITIES ACT AND THE EXCHANGE ACT AND WILL NOT
CONTAIN AN UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE

 

3

--------------------------------------------------------------------------------

 

A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE
STATEMENTS THEREIN NOT MISLEADING (AND, IN THE CASE OF THE PROSPECTUS CONTAINED
IN SUCH SHELF REGISTRATION STATEMENT, IN THE LIGHT OF THE CIRCUMSTANCES UNDER
WHICH A STATEMENT IS MADE).  IF THE SHELF REGISTRATION STATEMENT DOES NOT BECOME
EFFECTIVE OR IS NOT DECLARED EFFECTIVE BY THE COMMISSION WITHIN 210 DAYS AFTER
THE CLOSING DATE, THEN EACH PURCHASER SHALL BE ENTITLED TO A PAYMENT, AS
LIQUIDATED DAMAGES AND NOT AS A PENALTY, OF 0.25% OF SUCH PURCHASER’S RESPECTIVE
PURCHASE PRICE PER 30-DAY PERIOD FOR THE FIRST SIXTY (60) DAYS FOLLOWING THE
210TH DAY AFTER CLOSING, WITH SUCH PAYMENT AMOUNT INCREASING BY AN ADDITIONAL
0.25% OF SUCH PURCHASER’S RESPECTIVE PURCHASE PRICE PER 30-DAY PERIOD FOR EACH
SUBSEQUENT 60 DAYS, UP TO A MAXIMUM OF 1.0% OF SUCH PURCHASER’S RESPECTIVE
PURCHASE PRICE PER 30-DAY PERIOD (THE “LIQUIDATED DAMAGES”), UNTIL SUCH TIME AS
THE SHELF REGISTRATION STATEMENT BECOMES EFFECTIVE OR THERE ARE NO LONGER ANY
REGISTRABLE SECURITIES OUTSTANDING.  LIQUIDATED DAMAGES FOR ANY PERIOD OF LESS
THAN 30-DAYS SHALL BE PRORATED BY MULTIPLYING THE TOTAL LIQUIDATED DAMAGES TO BE
PAID IN A FULL 30-DAY PERIOD BY A FRACTION, THE NUMERATOR OF WHICH IS THE NUMBER
OF DAYS FOR WHICH LIQUIDATED DAMAGES ARE OWED, AND THE DENOMINATOR OF WHICH IS
30.  THE LIQUIDATED DAMAGES SHALL BE PAID TO EACH PURCHASER IN CASH WITHIN TEN
(10) BUSINESS DAYS OF THE END OF EACH SUCH 30-DAY PERIOD. THE PURCHASERS’ RIGHTS
(AND ANY TRANSFEREE’S RIGHTS PURSUANT TO SECTION 2.11) UNDER THIS SECTION 2.1
SHALL TERMINATE WHEN SUCH REGISTRABLE SECURITIES BECOME ELIGIBLE FOR RESALE
UNDER RULE 144(K) (OR ANY SIMILAR PROVISION THEN IN FORCE UNDER THE SECURITIES
ACT).

 

(B)                                 SUSPENSION RIGHTS.  THE PARTNERSHIP WILL USE
ITS COMMERCIALLY REASONABLE EFFORTS TO CAUSE SUCH SHELF REGISTRATION STATEMENT
TO REMAIN CONTINUOUSLY EFFECTIVE UNDER THE SECURITIES ACT UNTIL THE TERMINATION
DATE (AS HEREINAFTER DEFINED); PROVIDED, THAT THE PARTNERSHIP MAY, UPON WRITTEN
NOTICE TO EACH HOLDER, SUSPEND EACH SUCH HOLDER’S USE OF ANY PROSPECTUS THAT IS
A PART OF THE SHELF REGISTRATION STATEMENT (IN WHICH EVENT EACH HOLDER SHALL
DISCONTINUE SALES OF THE REGISTRABLE SECURITIES PURSUANT TO THE SHELF
REGISTRATION STATEMENT) IF (I) THE PARTNERSHIP IS PURSUING AN ACQUISITION,
MERGER, REORGANIZATION, DISPOSITION OR OTHER SIMILAR TRANSACTION AND THE
PARTNERSHIP DETERMINES IN GOOD FAITH THAT THE PARTNERSHIP’S ABILITY TO PURSUE OR
CONSUMMATE SUCH A TRANSACTION WOULD BE MATERIALLY ADVERSELY AFFECTED BY ANY
REQUIRED DISCLOSURE OF SUCH TRANSACTION IN THE SHELF REGISTRATION STATEMENT OR
(II) THE PARTNERSHIP HAS EXPERIENCED SOME OTHER MATERIAL NON-PUBLIC EVENT THE
DISCLOSURE OF WHICH AT SUCH TIME, IN THE GOOD FAITH JUDGMENT OF THE PARTNERSHIP,
WOULD MATERIALLY ADVERSELY AFFECT THE PARTNERSHIP; PROVIDED, FURTHER, IN NO
EVENT SHALL THE PURCHASERS BE SUSPENDED FOR A PERIOD EXCEEDING AN AGGREGATE OF
90 DAYS IN ANY 365 DAY PERIOD.  UPON DISCLOSURE OF SUCH INFORMATION OR THE
TERMINATION OF THE CONDITION DESCRIBED ABOVE, THE PARTNERSHIP SHALL PROVIDE
PROMPT NOTICE TO EACH HOLDER, AND SHALL PROMPTLY TERMINATE ANY SUSPENSION OF
SALES IT HAS PUT INTO EFFECT AND SHALL TAKE SUCH OTHER ACTIONS TO PERMIT
REGISTERED SALES OF REGISTRABLE SECURITIES AS CONTEMPLATED IN THIS AGREEMENT.

 

Section 8.02                                Piggyback Rights.

 

(A)                                  PARTICIPATION.  IF, AT ANY TIME DURING THE
PERIOD BEGINNING ON THE CLOSING DATE AND ENDING ON THE TERMINATION DATE, THE
PARTNERSHIP PROPOSES TO FILE (I) A PROSPECTUS SUPPLEMENT TO AN EFFECTIVE SHELF
REGISTRATION STATEMENT, INCLUDING THE SHELF REGISTRATION STATEMENT, OR (II) A
REGISTRATION STATEMENT, OTHER THAN A SHELF REGISTRATION STATEMENT, IN EITHER
CASE, FOR THE SALE OF COMMON UNITS TO THE PUBLIC IN AN UNDERWRITTEN OFFERING FOR
THE ACCOUNT OF THE PARTNERSHIP AND/OR ANOTHER PERSON, THEN, AS SOON AS
PRACTICABLE BUT NOT LESS THAN THREE (3) BUSINESS DAYS PRIOR TO THE FILING OF (X)
ANY PRELIMINARY PROSPECTUS SUPPLEMENT RELATING TO SUCH

 

4

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UNDERWRITTEN OFFERING PURSUANT TO RULE 424(B), (Y) THE PROSPECTUS SUPPLEMENT
RELATING TO SUCH UNDERWRITTEN OFFERING PURSUANT TO RULE 424(B) (IF NO
PRELIMINARY PROSPECTUS SUPPLEMENT IS USED) OR (Z) SUCH REGISTRATION STATEMENT,
AS THE CASE MAY BE, THE PARTNERSHIP SHALL PROVIDE WRITTEN NOTICE (AN “OFFERING
NOTICE”) OF SUCH PROPOSED UNDERWRITTEN OFFERING TO EACH HOLDER.  THE OFFERING
NOTICE SHALL OFFER EACH HOLDER THE OPPORTUNITY TO INCLUDE ALL OR A PORTION OF
SUCH HOLDER’S REGISTRABLE SECURITIES IN SUCH UNDERWRITTEN OFFERING.  UPON
RECEIPT OF SUCH OFFERING NOTICE, EACH HOLDER THAT OWNED, OR ANY TWO OR MORE
HOLDERS THAT ARE AFFILIATES THAT TOGETHER OWNED, DIRECTLY OR INDIRECTLY,
REGISTRABLE SECURITIES HAVING AN AGGREGATE MARKET VALUE IN EXCESS OF $15 MILLION
AS OF THE CLOSING DATE MAY ELECT TO INCLUDE ALL OR A PORTION OF ITS, OR THEIR,
REGISTRABLE SECURITIES IN SUCH PROPOSED UNDERWRITTEN OFFERING BY DELIVERING
WRITTEN NOTICE (A “PIGGYBACK INCLUSION NOTICE”) SPECIFYING THE NUMBER OF SUCH
REGISTRABLE SECURITIES (THE “INCLUDED REGISTRABLE SECURITIES”) TO THE
PARTNERSHIP AND CERTIFYING THAT SUCH HOLDER (AND, IF APPLICABLE, ITS AFFILIATES)
HOLD REGISTRABLE SECURITIES WITH THE REQUISITE AGGREGATE MARKET VALUE WITHIN ONE
(1) BUSINESS DAY AFTER RECEIPT OF SUCH OFFERING NOTICE. ANY HOLDER THAT DOES NOT
DELIVER A PIGGYBACK INCLUSION NOTICE TO THE PARTNERSHIP WITHIN SUCH SPECIFIED
TIME SHALL HAVE NO FURTHER RIGHT TO PARTICIPATE IN SUCH UNDERWRITTEN OFFERING. 
IF, AT ANY TIME AFTER DELIVERING OFFERING NOTICES TO THE HOLDERS AND PRIOR TO
THE CLOSING OF SUCH UNDERWRITTEN OFFERING, THE PARTNERSHIP SHALL DETERMINE FOR
ANY REASON NOT TO UNDERTAKE OR TO DELAY SUCH UNDERWRITTEN OFFERING, THE
PARTNERSHIP MAY, AT ITS ELECTION, GIVE WRITTEN NOTICE OF SUCH DETERMINATION TO
EACH HOLDER AND SHALL BE RELIEVED OF ITS OBLIGATION TO SELL ANY INCLUDED
REGISTRABLE SECURITIES IN CONNECTION THEREWITH; PROVIDED, HOWEVER, IN THE CASE
OF A TERMINATION OF SUCH UNDERWRITTEN OFFERING OR A DELAY LASTING MORE THAN
THIRTY (30) DAYS FROM THE DATE OF NOTICE OF SUCH DELAY, THE PARTNERSHIP SHALL
PROVIDE EACH HOLDER WITH ANOTHER OFFERING NOTICE PURSUANT TO THE ABOVE
PROVISIONS OF THIS SECTION 2.2(A) PRIOR TO UNDERTAKING SUCH DELAYED UNDERWRITTEN
OFFERING OR ANY SUBSEQUENT UNDERWRITTEN OFFERING.  EACH HOLDER SHALL HAVE THE
RIGHT TO WITHDRAW ITS REQUEST FOR INCLUSION OF ITS INCLUDED REGISTRABLE
SECURITIES IN AN UNDERWRITTEN OFFERING BY GIVING WRITTEN NOTICE TO THE
PARTNERSHIP OF SUCH WITHDRAWAL AT ANY TIME UP TO AND INCLUDING THE TIME OF
PRICING OF SUCH UNDERWRITTEN OFFERING.

 

(B)                                 OPT OUT AND REQUIRED OUT NOTICES. AT ANY
TIME AFTER THE MARKET VALUE OF THE REGISTRABLE SECURITIES OWNED BY A HOLDER,
DIRECTLY OR INDIRECTLY, IS $5 MILLION OR LESS, SUCH HOLDER MAY DELIVER WRITTEN
NOTICE (AN “OPT OUT NOTICE”) TO THE PARTNERSHIP INSTRUCTING THE PARTNERSHIP NOT
TO DELIVER ANY OFFERING NOTICES TO SUCH HOLDER.  IF UPON RECEIPT OF AN OFFERING
NOTICE FROM THE PARTNERSHIP PURSUANT TO SECTION 2.2(A), A HOLDER OWNS
REGISTRABLE SECURITIES WITH A MARKET VALUE OF $5 MILLION OR LESS, SUCH HOLDER
SHALL PROMPTLY DELIVER WRITTEN NOTICE (A “REQUIRED OUT NOTICE”) THEREOF TO THE
PARTNERSHIP; PROVIDED, IN THE CASE OF A HOLDER WITH AFFILIATES THAT ARE ALSO
HOLDERS, SUCH HOLDER SHALL ONLY BE REQUIRED TO DELIVER A REQUIRED OUT NOTICE TO
THE PARTNERSHIP IF THE AGGREGATE MARKET VALUE OF REGISTRABLE SECURITIES OWNED BY
SUCH HOLDER AND ALL AFFILIATES THAT ARE HOLDERS IS $5 MILLION OR LESS.  AFTER
RECEIPT OF AN OPT OUT NOTICE OR A REQUIRED OUT NOTICE FROM A HOLDER, THE
PARTNERSHIP SHALL HAVE NO FURTHER OBLIGATION UNDER SECTION 2.2(A) TO DELIVER AN
OFFERING NOTICE TO SUCH HOLDER AND SUCH HOLDER SHALL HAVE NO FURTHER RIGHTS
UNDER SECTION 2.2(A) TO HAVE ANY REGISTRABLE SECURITIES INCLUDED IN ANY
UNDERWRITTEN OFFERINGS.

 

(C)                                  PRIORITY IN A PIGGYBACK OFFERING.  IF THE
MANAGING UNDERWRITER OF ANY PROPOSED UNDERWRITTEN OFFERING INVOLVING INCLUDED
REGISTRABLE SECURITIES (A “PIGGYBACK OFFERING”) ADVISES THE PARTNERSHIP THAT THE
TOTAL AMOUNT OF COMMON UNITS THAT THE HOLDERS AND

 

5

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ANY OTHER PERSONS, INCLUDING THE GENERAL PARTNERS AND THEIR AFFILIATES PURSUANT
TO SECTION 7.12(B) OF THE PARTNERSHIP AGREEMENT (EACH, A “SELLING HOLDER”)
INTEND TO INCLUDE IN SUCH PIGGYBACK OFFERING EXCEEDS THE NUMBER THAT CAN BE SOLD
IN SUCH OFFERING WITHOUT BEING LIKELY TO HAVE AN ADVERSE EFFECT ON THE PRICE,
TIMING OR DISTRIBUTION OF THE COMMON UNITS OFFERED OR THE MARKET FOR THE COMMON
UNITS, THEN THE COMMON UNITS TO BE INCLUDED IN SUCH UNDERWRITTEN OFFERING SHALL
INCLUDE THE GREATEST NUMBER OF COMMON UNITS THAT SUCH MANAGING UNDERWRITER
ADVISES THE PARTNERSHIP CAN BE SOLD WITHOUT HAVING SUCH ADVERSE EFFECT, WITH
SUCH NUMBER TO BE ALLOCATED (I) FIRST, ALL COMMON UNITS THAT THE PARTNERSHIP
PROPOSES TO SELL AND (II) SECOND, IF THERE REMAINS AVAILABILITY FOR ADDITIONAL
COMMON UNITS TO BE INCLUDED IN SUCH PIGGYBACK OFFERING, PRO RATA AMONG THE
SELLING HOLDERS AND ANY OTHER PERSONS WHO HAVE BEEN OR ARE GRANTED REGISTRATION
RIGHTS ON OR AFTER THE DATE OF THIS AGREEMENT (“OTHER HOLDERS”) WHO HAVE
REQUESTED PARTICIPATION IN THE PIGGYBACK OFFERING (BASED, FOR EACH SUCH SELLING
HOLDER OR OTHER HOLDER, ON THE PERCENTAGE DERIVED BY DIVIDING (A) THE NUMBER OF
COMMON UNITS PROPOSED TO BE SOLD BY SUCH SELLING HOLDER OR SUCH OTHER HOLDER IN
SUCH UNDERWRITTEN OFFERING BY (B) THE AGGREGATE NUMBER OF COMMON UNITS PROPOSED
TO BE SOLD BY ALL SELLING HOLDERS AND OTHER HOLDERS IN THE PIGGYBACK OFFERING.

 

Section 8.03                                Underwritten Offering. In the event
that a Selling Holder (together with any Affiliate that is a Selling Holder)
elects to dispose of Registrable Securities under the Shelf Registration
Statement pursuant to an Underwritten Offering of at least fifteen million
dollars ($15,000,000) of Common Units, the Partnership shall, at the request of
such Selling Holder, enter into an underwriting agreement in customary form with
the Managing Underwriter or Underwriters, which shall include, among other
provisions, indemnities to the effect and to the extent provided in Section 2.8,
and shall take all such other reasonable actions as are requested by the
Managing Underwriter in order to expedite or facilitate the disposition of the
Registrable Securities; provided, however, that the Partnership management will
not be required to participate in a roadshow or similar marketing effort unless
the Underwritten Offering is of at least forty million dollars ($40,000,000) of
Common Units.

 

Section 8.04                                Underwriting Procedures. In
connection with any Piggyback Offering or other Underwritten Offering under this
Agreement, the Partnership shall be entitled to select the Managing
Underwriter.  In connection with a Piggyback Offering, each participating Holder
and the Partnership shall be obligated to enter into an underwriting agreement
that contains such representations, covenants, indemnities and other rights and
obligations as are customary in underwriting agreements for firm commitment
offerings of securities.  No Holder may participate in a Piggyback Offering
unless it agrees to sell its Registrable Securities on the basis provided in
such underwriting agreement and completes and executes all questionnaires,
powers of attorney, indemnities and other documents reasonably required under
the terms of such underwriting agreement.  Each such Holder may, at its option,
require that any or all of the representations and warranties by, and the other
agreements on the part of, the Partnership, to the extent customarily made by
issuers in secondary Underwritten Offerings, to and for the benefit of such
underwriters also be made to and for such Holder’s benefit and that any or all
of the conditions precedent to the obligations of such underwriters under such
underwriting agreement also be conditions precedent to its obligations. No
Holder shall be required to make any representations or warranties to or
agreements with the Partnership or the underwriters other than representations,
warranties or agreements regarding such Holder itself and its ownership of the
Included Registrable Securities and its intended method of distribution and any
other

 

6

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representation required by law.  If any such Holder disapproves of the terms of
an underwriting agreement, such Holder may elect to withdraw therefrom by notice
to the Partnership and the Managing Underwriter; provided, however, that such
withdrawal must be made no later than the time of pricing of such Piggyback
Offering to be effective.  No such withdrawal or abandonment by a Holder shall
affect the Partnership’s obligation to pay Registration Expenses.

 

Section 8.05                                General Procedures.  In connection
with its obligations herein, the Partnership will, as expeditiously as possible:

 

(A)                                  PREPARE AND FILE WITH THE COMMISSION SUCH
AMENDMENTS AND SUPPLEMENTS TO THE SHELF REGISTRATION STATEMENT AND THE
PROSPECTUS USED IN CONNECTION THEREWITH AS MAY BE NECESSARY TO KEEP THE SHELF
REGISTRATION STATEMENT EFFECTIVE UNTIL THE TERMINATION DATE AND AS MAY BE
NECESSARY TO COMPLY WITH THE PROVISIONS OF THE SECURITIES ACT WITH RESPECT TO
THE DISPOSITION OF ALL REGISTRABLE SECURITIES COVERED BY THE SHELF REGISTRATION
STATEMENT;

 

(B)                                 FURNISH TO EACH HOLDER (I) AS FAR IN ADVANCE
AS REASONABLY PRACTICABLE BEFORE FILING THE SHELF REGISTRATION STATEMENT OR ANY
OTHER REGISTRATION STATEMENT CONTEMPLATED BY THIS AGREEMENT OR ANY SUPPLEMENT OR
AMENDMENT THERETO, UPON REQUEST, COPIES OF REASONABLY COMPLETE DRAFTS OF ALL
SUCH DOCUMENTS PROPOSED TO BE FILED (INCLUDING EXHIBITS AND EACH DOCUMENT
INCORPORATED BY REFERENCE THEREIN TO THE EXTENT THEN REQUIRED BY THE RULES AND
REGULATIONS OF THE COMMISSION, TO THE EXTENT NOT OTHERWISE PUBLICLY AVAILABLE IN
PACIFIC’S FILINGS WITH THE COMMISSION), AND PROVIDE EACH HOLDER THE OPPORTUNITY
TO OBJECT TO ANY INFORMATION PERTAINING TO SUCH HOLDER AND ITS PLAN OF
DISTRIBUTION THAT IS CONTAINED THEREIN AND MAKE THE CORRECTIONS REASONABLY
REQUESTED BY SUCH HOLDER WITH RESPECT TO SUCH INFORMATION PRIOR TO FILING THE
SHELF REGISTRATION STATEMENT OR SUCH OTHER REGISTRATION STATEMENT OR SUPPLEMENT
OR AMENDMENT THERETO, AND (II) SUCH NUMBER OF COPIES OF THE SHELF REGISTRATION
STATEMENT OR SUCH OTHER REGISTRATION STATEMENT AND THE PROSPECTUS INCLUDED
THEREIN AND ANY SUPPLEMENTS AND AMENDMENTS THERETO AS EACH SUCH HOLDER MAY
REASONABLY REQUEST IN ORDER TO FACILITATE THE PUBLIC SALE OR OTHER DISPOSITION
OF THE REGISTRABLE SECURITIES COVERED BY SUCH SHELF REGISTRATION STATEMENT OR
OTHER REGISTRATION STATEMENT;

 

(C)                                  IF APPLICABLE, USE ITS COMMERCIALLY
REASONABLE EFFORTS TO REGISTER OR QUALIFY THE REGISTRABLE SECURITIES COVERED BY
THE SHELF REGISTRATION STATEMENT OR ANY OTHER REGISTRATION STATEMENT
CONTEMPLATED BY THIS AGREEMENT UNDER THE SECURITIES OR BLUE SKY LAWS OF SUCH
JURISDICTIONS AS EACH HOLDER AND THE MANAGING UNDERWRITER, IF APPLICABLE, SHALL
REASONABLY REQUEST, PROVIDED THAT THE PARTNERSHIP WILL NOT BE REQUIRED TO
QUALIFY GENERALLY TO TRANSACT BUSINESS IN ANY JURISDICTION WHERE IT IS NOT THEN
REQUIRED TO SO QUALIFY OR TO TAKE ANY ACTION THAT WOULD SUBJECT IT TO GENERAL
SERVICE OF PROCESS IN ANY SUCH JURISDICTION WHERE IT IS NOT THEN SO SUBJECT;

 

(D)                                 PROMPTLY NOTIFY EACH HOLDER AND EACH
UNDERWRITER AT ANY TIME WHEN A PROSPECTUS IS REQUIRED TO BE DELIVERED UNDER THE
SECURITIES ACT, OF (I) THE FILING OF THE SHELF REGISTRATION STATEMENT OR ANY
OTHER REGISTRATION STATEMENT CONTEMPLATED BY THIS AGREEMENT OR ANY PROSPECTUS OR
PROSPECTUS SUPPLEMENT TO BE USED IN CONNECTION THEREWITH THAT RELATES TO
REGISTRABLE SECURITIES, OR ANY AMENDMENT OR SUPPLEMENT THERETO, AND, WITH
RESPECT TO SUCH SHELF REGISTRATION STATEMENT OR ANY OTHER REGISTRATION STATEMENT
OR ANY POST-EFFECTIVE AMENDMENT THERETO, WHEN THE SAME HAS BECOME EFFECTIVE AND
(II) ANY WRITTEN COMMENTS FROM THE

 

7

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COMMISSION WITH RESPECT TO ANY FILING REFERRED TO IN CLAUSE (I) AND ANY WRITTEN
REQUEST BY THE COMMISSION FOR AMENDMENTS OR SUPPLEMENTS TO THE SHELF
REGISTRATION STATEMENT OR ANY OTHER REGISTRATION STATEMENT OR ANY PROSPECTUS OR
PROSPECTUS SUPPLEMENT THERETO;

 

(E)                                  IMMEDIATELY NOTIFY EACH HOLDER AND EACH
UNDERWRITER AT ANY TIME WHEN A PROSPECTUS IS REQUIRED TO BE DELIVERED UNDER THE
SECURITIES ACT, OF (I) THE HAPPENING OF ANY EVENT AS A RESULT OF WHICH THE
PROSPECTUS OR PROSPECTUS SUPPLEMENT CONTAINED IN THE SHELF REGISTRATION
STATEMENT OR ANY OTHER REGISTRATION STATEMENT CONTEMPLATED BY THIS AGREEMENT
THAT RELATES TO REGISTRABLE SECURITIES, AS THEN IN EFFECT, INCLUDES AN UNTRUE
STATEMENT OF A MATERIAL FACT OR OMITS TO STATE ANY MATERIAL FACT REQUIRED TO BE
STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS THEREIN NOT MISLEADING (IN
THE CASE OF THE PROSPECTUS CONTAINED THEREIN, IN THE LIGHT OF THE CIRCUMSTANCES
UNDER WHICH A STATEMENT IS MADE), (II) THE ISSUANCE OR THREAT OF ISSUANCE BY THE
COMMISSION OF ANY STOP ORDER SUSPENDING THE EFFECTIVENESS OF THE SHELF
REGISTRATION STATEMENT OR ANY OTHER REGISTRATION STATEMENT CONTEMPLATED BY THIS
AGREEMENT THAT RELATES TO REGISTRABLE SECURITIES, OR THE INITIATION OF ANY
PROCEEDINGS FOR THAT PURPOSE OR (III) THE RECEIPT BY THE PARTNERSHIP OF ANY
NOTIFICATION WITH RESPECT TO THE SUSPENSION OF THE QUALIFICATION OF ANY
REGISTRABLE SECURITIES FOR SALE UNDER THE APPLICABLE SECURITIES OR BLUE SKY LAWS
OF ANY JURISDICTION.  FOLLOWING THE PROVISION OF SUCH NOTICE, THE PARTNERSHIP
AGREES TO AS PROMPTLY AS PRACTICABLE AMEND OR SUPPLEMENT THE PROSPECTUS OR
PROSPECTUS SUPPLEMENT OR TAKE OTHER APPROPRIATE ACTION SO THAT THE PROSPECTUS OR
PROSPECTUS SUPPLEMENT DOES NOT INCLUDE AN UNTRUE STATEMENT OF A MATERIAL FACT OR
OMIT TO STATE A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE
THE STATEMENTS THEREIN NOT MISLEADING IN THE LIGHT OF THE CIRCUMSTANCES THEN
EXISTING AND TO TAKE SUCH OTHER REASONABLE ACTION AS IS NECESSARY TO REMOVE A
STOP ORDER, SUSPENSION, THREAT THEREOF OR PROCEEDINGS RELATED THERETO;

 

(F)                                    UPON REQUEST AND SUBJECT TO APPROPRIATE
CONFIDENTIALITY OBLIGATIONS, FURNISH TO EACH SELLING HOLDER COPIES OF ANY AND
ALL TRANSMITTAL LETTERS OR OTHER CORRESPONDENCE WITH THE COMMISSION OR ANY OTHER
GOVERNMENTAL AGENCY OR SELF-REGULATORY BODY OR OTHER BODY HAVING JURISDICTION
(INCLUDING ANY DOMESTIC OR FOREIGN SECURITIES EXCHANGE) RELATING TO SUCH
OFFERING OF REGISTRABLE SECURITIES;

 

(G)                                 IN THE CASE OF AN UNDERWRITTEN OFFERING IN
WHICH A SELLING HOLDER IS SELLING PURCHASED UNITS, FURNISH UPON REQUEST OF SUCH
SELLING HOLDER, (I) AN OPINION OF COUNSEL FOR THE PARTNERSHIP DATED THE DATE OF
THE CLOSING UNDER THE UNDERWRITING AGREEMENT, AND (II) A “COMFORT” LETTER, DATED
THE EFFECTIVE DATE OF THE APPLICABLE REGISTRATION STATEMENT OR THE DATE OF ANY
AMENDMENT OR SUPPLEMENT THERETO AND A LETTER OF LIKE KIND DATED THE DATE OF THE
CLOSING UNDER THE UNDERWRITING AGREEMENT, IN EACH CASE, SIGNED BY THE
INDEPENDENT PUBLIC ACCOUNTANTS WHO HAVE CERTIFIED THE PARTNERSHIP’S FINANCIAL
STATEMENTS INCLUDED OR INCORPORATED BY REFERENCE INTO THE APPLICABLE
REGISTRATION STATEMENT, AND EACH OF THE OPINION AND THE “COMFORT” LETTER SHALL
BE IN CUSTOMARY FORM AND COVERING SUBSTANTIALLY THE SAME MATTERS WITH RESPECT TO
SUCH REGISTRATION STATEMENT (AND THE PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT
INCLUDED THEREIN) AS ARE CUSTOMARILY COVERED IN OPINIONS OF ISSUER’S COUNSEL AND
IN ACCOUNTANTS’ LETTERS DELIVERED TO THE UNDERWRITERS IN UNDERWRITTEN OFFERINGS
OF SECURITIES AND SUCH OTHER MATTERS AS SUCH UNDERWRITERS MAY REASONABLY
REQUEST;

 

(H)                                 OTHERWISE USE ITS COMMERCIALLY REASONABLE
EFFORTS TO COMPLY WITH ALL APPLICABLE RULES AND REGULATIONS OF THE COMMISSION,
AND MAKE AVAILABLE TO ITS SECURITY HOLDERS, AS

 

8

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SOON AS REASONABLY PRACTICABLE, AN EARNINGS STATEMENT COVERING THE PERIOD OF AT
LEAST 12 MONTHS, BUT NOT MORE THAN 18 MONTHS, BEGINNING WITH THE FIRST FULL
CALENDAR MONTH AFTER THE EFFECTIVE DATE OF THE SHELF REGISTRATION STATEMENT OR
SUCH OTHER REGISTRATION STATEMENT, WHICH EARNINGS STATEMENT SHALL SATISFY THE
PROVISIONS OF SECTION 11(A) OF THE SECURITIES ACT AND RULE 158 PROMULGATED
THEREUNDER;

 

(I)                                     MAKE AVAILABLE TO THE APPROPRIATE
REPRESENTATIVES OF (I) THE MANAGING UNDERWRITER SUCH INFORMATION AND THE
PARTNERSHIP PERSONNEL AS IS REASONABLE AND CUSTOMARY TO ENABLE THE UNDERWRITERS
TO ESTABLISH A DUE DILIGENCE DEFENSE UNDER THE SECURITIES ACT AND (II) EACH
HOLDER SUCH INFORMATION, IF ANY, AS SUCH HOLDER MAY REASONABLY REQUEST; PROVIDED
THAT THE PARTNERSHIP NEED NOT DISCLOSE ANY INFORMATION TO ANY SUCH
REPRESENTATIVE UNLESS AND UNTIL SUCH REPRESENTATIVE HAS ENTERED INTO A
CONFIDENTIALITY AGREEMENT WITH THE PARTNERSHIP;

 

(J)                                     CAUSE ALL REGISTRABLE SECURITIES
REGISTERED PURSUANT TO THIS AGREEMENT TO BE LISTED ON THE NEW YORK STOCK
EXCHANGE OR SUCH OTHER SECURITIES EXCHANGE(S) OR NATIONALLY RECOGNIZED QUOTATION
SYSTEM(S) ON WHICH SIMILAR SECURITIES ISSUED BY THE PARTNERSHIP ARE THEN LISTED;

 

(K)                                  USE ITS COMMERCIALLY REASONABLE EFFORTS TO
CAUSE THE REGISTRABLE SECURITIES TO BE REGISTERED WITH OR APPROVED BY SUCH OTHER
GOVERNMENTAL AGENCIES OR AUTHORITIES AS MAY BE NECESSARY BY VIRTUE OF THE
BUSINESS AND OPERATIONS OF THE PARTNERSHIP TO ENABLE EACH HOLDER TO CONSUMMATE
THE DISPOSITION OF ITS REGISTRABLE SECURITIES;

 

(L)                                     PROVIDE A TRANSFER AGENT AND REGISTRAR
FOR ALL REGISTRABLE SECURITIES COVERED BY THE SHELF REGISTRATION STATEMENT OR
SUCH OTHER REGISTRATION STATEMENT NOT LATER THAN THE EFFECTIVE DATE THEREOF; AND

 

(M)                               ENTER INTO CUSTOMARY AGREEMENTS AND TAKE SUCH
OTHER ACTIONS AS ARE REASONABLY REQUESTED BY EACH HOLDER OR THE UNDERWRITERS, IF
ANY, IN ORDER TO EXPEDITE OR FACILITATE THE DISPOSITION OF EACH HOLDER’S
REGISTRABLE SECURITIES.

 

Each Holder, upon receipt of notice from the Partnership of the happening of any
event of the kind described in subsection (e) of this Section 2.5, shall
forthwith discontinue disposition of Registrable Securities until such Holder’s
receipt of the copies of the supplemented or amended prospectus contemplated by
subsection (e) of this Section 2.5 or until it is advised in writing by the
Partnership that the use of the prospectus may be resumed, and has received
copies of any additional or supplemental filings incorporated by reference in
the prospectus, and, if so directed by the Partnership, each Holder will, or
will request the Managing Underwriter, if any, to deliver to the Partnership (at
the Partnership’s expense) all copies in their possession or control, other than
permanent file copies then in each such Holder’s possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.

 

Section 8.06                                Cooperation by the Holder.  The
Partnership shall have no obligation to include any Holder’s Registrable
Securities in the Shelf Registration Statement or in a Piggyback Offering if
such Holder has failed to timely furnish such information that, in the opinion
of counsel to the Partnership, is reasonably required in order for the Shelf
Registration Statement or prospectus supplement, as applicable, to comply with
the Securities Act.

 

9

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Section 8.07                                Lock-up of Registrable
Securities.  For the period beginning on the date that the Shelf Registration
Statement becomes effective and ending on the Termination Date, each Holder
agrees not to effect any public sale or distribution of the Registrable
Securities during the thirty (30) calendar day period (the “Lock-up Period”)
beginning on the date of the pricing of an Underwritten Offering; provided, that
the duration of the foregoing Lock-up Period shall be no longer than the
duration of the shortest restriction generally imposed by the underwriters on
the officers or directors or any other unitholder of the Partnership on whom a
restriction is imposed; provided, further, that the foregoing restrictions shall
not apply (i) to the sale or distribution of Registrable Securities in such
Underwritten Offering pursuant to an election under Section 2.2(a), (ii) in the
case of an Underwritten Offering in which a Holder elected to sell Included
Registrable Securities pursuant to Section 2.2(a) but was not able to include
any of such Included Registrable Securities as a result of the application of
priority provisions contained in Section 2.2(c), (iii) to a Holder that has
delivered an Opt Out Notice or a Required Out Notice to the Company pursuant to
Section 2.2(b), or (iv) to a Holder that is not otherewise entitled to
participate in such Underwritten Offering pursuant to the provisions of
Section 2.2(a).

 

Section 8.08                                Expenses.

 

(A)                                  DEFINITIONS.  “REGISTRATION EXPENSES” MEANS
ALL EXPENSES INCIDENT TO THE PARTNERSHIP’S PERFORMANCE UNDER OR COMPLIANCE WITH
THIS AGREEMENT TO EFFECT THE REGISTRATION OF REGISTRABLE SECURITIES PURSUANT TO
THIS AGREEMENT, AND THE DISPOSITION OF SUCH SECURITIES, INCLUDING, WITHOUT
LIMITATION, ALL REGISTRATION AND FILING FEES OF THE COMMISSION, ALL NEW YORK
STOCK EXCHANGE LISTING OR OTHER SECURITIES EXCHANGE OR QUOTATION SERVICE LISTING
FEES, ALL REGISTRATION, FILING, QUALIFICATION AND OTHER FEES AND EXPENSES OF
COMPLYING WITH SECURITIES OR BLUE SKY LAWS, ALL FEES OF THE NATIONAL ASSOCIATION
OF SECURITIES DEALERS, INC., ALL TRANSFER TAXES AND FEES OF TRANSFER AGENTS AND
REGISTRARS, ALL MESSENGER AND DELIVERY EXPENSES, ALL WORD PROCESSING,
DUPLICATING AND PRINTING EXPENSES, THE FEES AND DISBURSEMENTS OF COUNSEL AND
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE PARTNERSHIP, INCLUDING THE EXPENSES OF
ANY SPECIAL AUDITS OR “COMFORT” LETTERS REQUIRED BY OR INCIDENT TO SUCH
PERFORMANCE AND COMPLIANCE. THE PARTNERSHIP SHALL NOT BE RESPONSIBLE FOR ANY
“SELLING EXPENSES,” WHICH MEANS ALL UNDERWRITING FEES, DISCOUNTS AND SELLING
COMMISSIONS ALLOCABLE TO THE SALE OF THE REGISTRABLE SECURITIES.

 

(B)                                 PAYMENT OF EXPENSES.  THE PARTNERSHIP SHALL
PAY ALL REASONABLE REGISTRATION EXPENSES IN CONNECTION WITH THE PREPARATION AND
FILING OF THE SHELF REGISTRATION STATEMENT AND ANY PIGGYBACK OFFERING, WHETHER
OR NOT ANY SALE IS MADE BY A HOLDER PURSUANT TO THE PIGGYBACK OFFERING;
PROVIDED, THAT, EXCEPT AS OTHERWISE PROVIDED IN SECTION 2.9 HEREOF, THE
PARTNERSHIP SHALL NOT BE RESPONSIBLE FOR LEGAL FEES INCURRED BY ANY HOLDER IN
CONNECTION WITH SUCH HOLDER’S EXERCISE OF ITS RIGHTS HEREUNDER.  EACH HOLDER
SHALL PAY ALL SELLING EXPENSES AND ALL OTHER EXPENSES (OTHER THAN REGISTRATION
EXPENSES) IN CONNECTION WITH ANY SALE OF ITS REGISTRABLE SECURITIES HEREUNDER.

 

Section 8.09                                Indemnification.

 

(A)                                  BY THE PARTNERSHIP.  IN THE EVENT OF A
REGISTRATION OF ANY REGISTRABLE SECURITIES UNDER THE SECURITIES ACT PURSUANT TO
THIS AGREEMENT, THE PARTNERSHIP WILL INDEMNIFY AND HOLD HARMLESS EACH HOLDER,
ITS DIRECTORS AND OFFICERS, AND EACH UNDERWRITER, PURSUANT TO THE

 

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APPLICABLE UNDERWRITING AGREEMENT WITH SUCH UNDERWRITER, OF REGISTRABLE
SECURITIES AND EACH PERSON, IF ANY, WHO CONTROLS EACH SUCH HOLDER OR UNDERWRITER
WITHIN THE MEANING OF THE SECURITIES ACT OR THE EXCHANGE ACT, AGAINST ANY
LOSSES, CLAIMS, DAMAGES, EXPENSES OR LIABILITIES (INCLUDING REASONABLE
ATTORNEYS’ FEES AND EXPENSES) (COLLECTIVELY, “LOSSES”), JOINT OR SEVERAL, TO
WHICH SUCH HOLDER OR UNDERWRITER OR CONTROLLING PERSON MAY BECOME SUBJECT UNDER
THE SECURITIES ACT, THE EXCHANGE ACT OR OTHERWISE, INSOFAR AS SUCH LOSSES (OR
ACTIONS OR PROCEEDINGS, WHETHER COMMENCED OR THREATENED, IN RESPECT THEREOF)
ARISE OUT OF OR ARE BASED UPON ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT
OF ANY MATERIAL FACT CONTAINED IN THE SHELF REGISTRATION STATEMENT, ANY
PRELIMINARY PROSPECTUS SUPPLEMENT OR PROSPECTUS SUPPLEMENT THERETO, OR ANY
AMENDMENT OR SUPPLEMENT THEREOF OR ANY OTHER REGISTRATION STATEMENT CONTEMPLATED
BY THIS AGREEMENT, ANY PRELIMINARY PROSPECTUS OR FINAL PROSPECTUS CONTAINED
THEREIN, OR ANY AMENDMENT OR SUPPLEMENT THEREOF, OR ARISE OUT OF OR ARE BASED
UPON THE OMISSION OR ALLEGED OMISSION TO STATE THEREIN A MATERIAL FACT REQUIRED
TO BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS THEREIN (IN THE CASE OF
A PROSPECTUS, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE) NOT
MISLEADING, AND WILL REIMBURSE SUCH HOLDER, ITS DIRECTORS AND OFFICERS, EACH
SUCH UNDERWRITER AND EACH SUCH CONTROLLING PERSON FOR ANY LEGAL OR OTHER
EXPENSES REASONABLY INCURRED BY THEM IN CONNECTION WITH INVESTIGATING OR
DEFENDING ANY SUCH LOSS OR ACTIONS OR PROCEEDINGS AS SUCH EXPENSES ARE INCURRED;
PROVIDED, HOWEVER, THAT THE PARTNERSHIP WILL NOT BE LIABLE IN ANY SUCH CASE IF
AND TO THE EXTENT THAT ANY SUCH LOSS ARISES OUT OF OR IS BASED UPON AN UNTRUE
STATEMENT OR ALLEGED UNTRUE STATEMENT OR OMISSION OR ALLEGED OMISSION SO MADE IN
CONFORMITY WITH INFORMATION FURNISHED BY SUCH HOLDER, SUCH UNDERWRITER OR SUCH
CONTROLLING PERSON IN WRITING SPECIFICALLY FOR USE IN THE SHELF REGISTRATION
STATEMENT, PROSPECTUS SUPPLEMENT THERETO OR SUCH OTHER REGISTRATION STATEMENT OR
PROSPECTUS, AS APPLICABLE.  SUCH INDEMNITY SHALL REMAIN IN FULL FORCE AND EFFECT
REGARDLESS OF ANY INVESTIGATION MADE BY OR ON BEHALF OF SUCH HOLDER OR ANY SUCH
DIRECTOR, OFFICER OR CONTROLLING PERSON, AND SHALL SURVIVE THE TRANSFER OF SUCH
SECURITIES BY SUCH HOLDER

 

(B)                                 BY EACH HOLDER.  EACH HOLDER, SEVERALLY AND
NOT JOINTLY, AGREES TO INDEMNIFY AND HOLD HARMLESS THE PARTNERSHIP, ITS
DIRECTORS AND OFFICERS, AND EACH PERSON, IF ANY, WHO CONTROLS THE PARTNERSHIP
WITHIN THE MEANING OF THE SECURITIES ACT OR OF THE EXCHANGE ACT TO THE SAME
EXTENT AS THE FOREGOING INDEMNITY FROM THE PARTNERSHIP TO THE HOLDERS, BUT ONLY
WITH RESPECT TO INFORMATION REGARDING SUCH HOLDER FURNISHED IN WRITING BY OR ON
BEHALF OF SUCH HOLDER EXPRESSLY FOR INCLUSION IN THE SHELF REGISTRATION
STATEMENT OR PROSPECTUS SUPPLEMENT RELATING TO THE REGISTRABLE SECURITIES, OR
ANY AMENDMENT OR SUPPLEMENT THERETO; PROVIDED, HOWEVER, THAT THE LIABILITY OF
EACH HOLDER SHALL NOT BE GREATER IN AMOUNT THAN THE DOLLAR AMOUNT OF THE
PROCEEDS (NET OF SELLING EXPENSES) RECEIVED BY SUCH HOLDER FROM THE SALE OF THE
REGISTRABLE SECURITIES GIVING RISE TO SUCH INDEMNIFICATION.

 

(C)                                  NOTICE.  PROMPTLY AFTER RECEIPT BY AN
INDEMNIFIED PARTY HEREUNDER OF NOTICE OF THE COMMENCEMENT OF ANY ACTION, SUCH
INDEMNIFIED PARTY SHALL, IF A CLAIM IN RESPECT THEREOF IS TO BE MADE AGAINST THE
INDEMNIFYING PARTY HEREUNDER, NOTIFY THE INDEMNIFYING PARTY IN WRITING THEREOF,
BUT THE OMISSION SO TO NOTIFY THE INDEMNIFYING PARTY SHALL NOT RELIEVE IT FROM
ANY LIABILITY THAT IT MAY HAVE TO ANY INDEMNIFIED PARTY OTHER THAN UNDER THIS
SECTION 2.9.  IN ANY ACTION BROUGHT AGAINST ANY INDEMNIFIED PARTY, IT SHALL
NOTIFY THE INDEMNIFYING PARTY OF THE COMMENCEMENT THEREOF.  THE INDEMNIFYING
PARTY SHALL BE ENTITLED TO PARTICIPATE IN AND, TO THE EXTENT IT SHALL WISH, TO
ASSUME AND UNDERTAKE THE DEFENSE THEREOF WITH COUNSEL REASONABLY SATISFACTORY TO
SUCH INDEMNIFIED PARTY AND, AFTER NOTICE FROM THE INDEMNIFYING PARTY TO SUCH
INDEMNIFIED PARTY OF ITS ELECTION SO TO ASSUME AND UNDERTAKE THE DEFENSE
THEREOF, THE

 

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INDEMNIFYING PARTY SHALL NOT BE LIABLE TO SUCH INDEMNIFIED PARTY UNDER THIS
SECTION 2.9 FOR ANY LEGAL EXPENSES SUBSEQUENTLY INCURRED BY SUCH INDEMNIFIED
PARTY IN CONNECTION WITH THE DEFENSE THEREOF OTHER THAN REASONABLE COSTS OF
INVESTIGATION AND OF LIAISON WITH COUNSEL SO SELECTED; PROVIDED, HOWEVER, THAT,
(I) IF THE INDEMNIFYING PARTY HAS FAILED TO ASSUME THE DEFENSE AND EMPLOY
COUNSEL OR (II) IF THE DEFENDANTS IN ANY SUCH ACTION INCLUDE BOTH THE
INDEMNIFIED PARTY AND THE INDEMNIFYING PARTY AND COUNSEL TO THE INDEMNIFIED
PARTY SHALL HAVE CONCLUDED THAT THERE MAY BE REASONABLE DEFENSES AVAILABLE TO
THE INDEMNIFIED PARTY THAT ARE DIFFERENT FROM OR ADDITIONAL TO THOSE AVAILABLE
TO THE INDEMNIFYING PARTY, OR IF THE INTERESTS OF THE INDEMNIFIED PARTY
REASONABLY MAY BE DEEMED TO CONFLICT WITH THE INTERESTS OF THE INDEMNIFYING
PARTY, THEN THE INDEMNIFIED PARTY SHALL HAVE THE RIGHT TO SELECT A SEPARATE
COUNSEL AND TO ASSUME SUCH LEGAL DEFENSE AND OTHERWISE TO PARTICIPATE IN THE
DEFENSE OF SUCH ACTION, WITH THE REASONABLE EXPENSES AND FEES OF ONE SUCH
SEPARATE COUNSEL (PLUS ONE LOCAL COUNSEL IF NECESSARY) AND OTHER REASONABLE
EXPENSES RELATED TO SUCH PARTICIPATION TO BE REIMBURSED BY THE INDEMNIFYING
PARTY AS INCURRED.  NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NO
INDEMNIFIED PARTY SHALL SETTLE ANY ACTION BROUGHT AGAINST IT WITH RESPECT TO
WHICH IT IS ENTITLED TO INDEMNIFICATION HEREUNDER WITHOUT THE CONSENT OF THE
INDEMNIFYING PARTY, UNLESS THE SETTLEMENT THEREOF IMPOSES NO LIABILITY OR
OBLIGATION ON, AND INCLUDES A COMPLETE AND UNCONDITIONAL RELEASE FROM ALL
LIABILITY OF, THE INDEMNIFYING PARTY.

 

(D)                                 CONTRIBUTION.  IF THE INDEMNIFICATION
PROVIDED FOR IN THIS SECTION 2.9 IS HELD BY A COURT OR GOVERNMENT AGENCY OF
COMPETENT JURISDICTION TO BE UNAVAILABLE TO THE PARTNERSHIP OR ANY HOLDER OR IS
INSUFFICIENT TO HOLD THEM HARMLESS IN RESPECT OF ANY LOSSES, THEN EACH SUCH
INDEMNIFYING PARTY, IN LIEU OF INDEMNIFYING SUCH INDEMNIFIED PARTY, SHALL
CONTRIBUTE TO THE AMOUNT PAID OR PAYABLE BY SUCH INDEMNIFIED PARTY AS A RESULT
OF SUCH LOSSES IN SUCH PROPORTION AS IS APPROPRIATE TO REFLECT THE RELATIVE
FAULT OF THE INDEMNIFYING PARTY ON THE ONE HAND AND OF SUCH INDEMNIFIED PARTY ON
THE OTHER IN CONNECTION WITH THE STATEMENTS OR OMISSIONS THAT RESULTED IN SUCH
LOSSES, AS WELL AS ANY OTHER RELEVANT EQUITABLE CONSIDERATIONS; PROVIDED,
HOWEVER, THAT IN NO EVENT SHALL SUCH HOLDER BE REQUIRED TO CONTRIBUTE AN
AGGREGATE AMOUNT IN EXCESS OF THE DOLLAR AMOUNT OF PROCEEDS (NET OF SELLING
EXPENSES) RECEIVED BY SUCH HOLDER FROM THE SALE OF REGISTRABLE SECURITIES GIVING
RISE TO SUCH INDEMNIFICATION.  THE RELATIVE FAULT OF THE PARTNERSHIP ON THE ONE
HAND AND SUCH HOLDER (OR OTHER INDEMNIFIED PARTY) ON THE OTHER SHALL BE
DETERMINED BY REFERENCE TO, AMONG OTHER THINGS, WHETHER THE UNTRUE OR ALLEGED
UNTRUE STATEMENT OF A MATERIAL FACT OR THE OMISSION OR ALLEGED OMISSION TO STATE
A MATERIAL FACT HAS BEEN MADE BY, OR RELATES TO, INFORMATION SUPPLIED BY SUCH
PARTY, AND THE PARTIES’ RELATIVE INTENT, KNOWLEDGE, ACCESS TO INFORMATION AND
OPPORTUNITY TO CORRECT OR PREVENT SUCH STATEMENT OR OMISSION.  THE PARTIES
HERETO AGREE THAT IT WOULD NOT BE JUST AND EQUITABLE IF CONTRIBUTIONS PURSUANT
TO THIS PARAGRAPH WERE TO BE DETERMINED BY PRO RATA ALLOCATION OR BY ANY OTHER
METHOD OF ALLOCATION THAT DOES NOT TAKE ACCOUNT OF THE EQUITABLE CONSIDERATIONS
REFERRED TO IN THE FIRST SENTENCE OF THIS PARAGRAPH.  THE AMOUNT PAID BY AN
INDEMNIFIED PARTY AS A RESULT OF THE LOSSES REFERRED TO IN THE FIRST SENTENCE OF
THIS PARAGRAPH SHALL BE DEEMED TO INCLUDE ANY LEGAL AND OTHER EXPENSES
REASONABLY INCURRED BY SUCH INDEMNIFIED PARTY IN CONNECTION WITH INVESTIGATING
OR DEFENDING ANY LOSS THAT IS THE SUBJECT OF THIS PARAGRAPH. NO PERSON GUILTY OF
FRAUDULENT MISREPRESENTATION (WITHIN THE MEANING OF SECTION 11(F) OF THE
SECURITIES ACT) SHALL BE ENTITLED TO CONTRIBUTION FROM ANY PERSON WHO IS NOT
GUILTY OF SUCH FRAUDULENT MISREPRESENTATION.

 

(E)                                  CONFLICTS.  TO THE EXTENT THAT ANY HOLDER
SHALL ENTER INTO AN UNDERWRITING OR SIMILAR AGREEMENT THAT CONTAINS PROVISIONS
THAT CONFLICT WITH ANY PROVISION OF SECTION 2.9

 

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HEREOF, AS BETWEEN THE PARTNERSHIP AND SUCH HOLDER, THE PROVISIONS CONTAINED IN
SECTION 2.9 HEREOF SHALL CONTROL.

 

(F)                                    OTHER INDEMNIFICATION.  THE PROVISIONS OF
THIS SECTION 2.9 SHALL BE IN ADDITION TO ANY OTHER RIGHTS TO INDEMNIFICATION OR
CONTRIBUTION THAT AN INDEMNIFIED PARTY MAY HAVE PURSUANT TO LAW, EQUITY,
CONTRACT OR OTHERWISE.

 

Section 8.10                                Rule 144 Reporting.  With a view to
making available the benefits of certain rules and regulations of the Commission
that may permit the sale of the Registrable Securities to the public without
registration, the Partnership agrees to use its commercially reasonable efforts
to:

 

(A)                                  MAKE AND KEEP PUBLIC INFORMATION REGARDING
THE PARTNERSHIP AVAILABLE, AS THOSE TERMS ARE UNDERSTOOD AND DEFINED IN RULE 144
OF THE SECURITIES ACT, AT ALL TIMES FROM AND AFTER THE DATE HEREOF;

 

(B)                                 FILE WITH THE COMMISSION IN A TIMELY MANNER
ALL REPORTS AND OTHER DOCUMENTS REQUIRED OF THE PARTNERSHIP UNDER THE SECURITIES
ACT AND THE EXCHANGE ACT AT ALL TIMES FROM AND AFTER THE DATE HEREOF; AND

 

(C)                                  FURNISH TO EACH HOLDER FORTHWITH UPON
REQUEST A COPY OF THE MOST RECENT ANNUAL OR QUARTERLY REPORT OF THE PARTNERSHIP,
AND SUCH OTHER REPORTS AND DOCUMENTS SO FILED AS SUCH HOLDER MAY REASONABLY
REQUEST IN AVAILING ITSELF OF ANY RULE OR REGULATION OF THE COMMISSION ALLOWING
SUCH HOLDER TO SELL ANY SUCH SECURITIES WITHOUT REGISTRATION.

 

Section 8.11                                Transfer or Assignment of
Registration Rights.  The rights granted under this Agreement may be transferred
or assigned by each Holder to one or more Persons, concurrently with the
transfer of Registrable Securities by such Holder to any such Person, (a) if
such Person is an Affiliate of such transferring Holder or (b) if such Person,
together with any Affiliates of such Person, acquires Registrable Securities
from such Holder having an aggregate Market Value in excess of $20 million as of
the date of such transfer or assignment and, in each case, (x) the Partnership
is given written notice prior to any such transfer or assignment, stating the
name and address of each such Person to which such rights are transferred and
identifying the Registrable Securities with respect to which such rights are
being transferred or assigned, and (y) each such Person assumes in writing the
obligations of a Holder under this Agreement.

 

Section 8.12                                Limitation on Subsequent
Registration Rights. From and after the date hereof, the Partnership shall not,
without the prior written consent of the Holders of a majority of the
outstanding Registrable Securities, enter into any agreement with any current or
future holder of any equity securities of the Partnership that would allow such
current or future holder to require the Partnership to include securities in any
registration statement filed by the Partnership on a basis that is superior in
any way to the piggyback rights granted to the Holders hereunder.

 

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ARTICLE IX.
MISCELLANEOUS

 

Section 9.01                                Communications.  All notices and
other communications provided for or permitted hereunder shall be made in
writing by facsimile, courier service or personal delivery:

 

(A)                                  IF TO THE PURCHASERS:

 

to the respective addresses set forth on Schedule 6.06 of the Purchase Agreement

 

with a copy to:

 

Andrews Kurth LLP

600 Travis, Suite 4200

Houston, Texas 77002

Attention:

Facsimile:

 

(B)                                 IF TO SUBSEQUENT HOLDERS OF REGISTRABLE
SECURITIES, TO SUCH HOLDER AT THE ADDRESS PROVIDED PURSUANT TO SECTION 2.11
ABOVE; AND

 

(C)                                  IF TO THE PARTNERSHIP:

 

Pacific Energy Partners, L.P.

5900 Cherry Avenue

Long Beach, CA 90805-4408

Attention: Lynn T. Wood

Facsimile: 562.728.2823

 

with a copy to:

 

Vinson & Elkins L.L.P.

666 Fifth Avenue, 26th Floor

New York, NY 10103

Attention: Alan Baden

Facsimile: 212-237-0100

 

All such notices and communications shall be deemed to have been received at the
time delivered by hand, if personally delivered; when receipt acknowledged, if
sent via facsimile or sent via Internet electronic mail; and when actually
received, if sent by any other means.

 

Section 9.02                                Successor and Assigns; Assignment of
Rights.  This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties, including subsequent Holders of
Registrable Securities to the extent permitted herein. All or any portion of the
rights and obligations of a Holder under this Agreement may only be transferred
or assigned by such Holder in accordance with Section 2.11 hereof.

 

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Section 9.03                                Recapitalization, Exchanges, etc.
Affecting the Common Units.  The provisions of this Agreement shall apply to the
full extent set forth herein with respect to any and all units of the
Partnership or any successor or assign of the Partnership (whether by merger,
consolidation, sale of assets or otherwise) that may be issued in respect of, in
exchange for or in substitution of, the Registrable Securities, and shall be
appropriately adjusted for combinations, recapitalizations and the like
occurring after the date of this Agreement.

 

Section 9.04                                Aggregation of Registrable
Securities.  All Registrable Securities held or acquired by Persons who are
Affiliates of one another shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.  In addition,
all Registrable Securities held or acquired by Fiduciary / Claymore MLP
Opportunity Fund and its Affiliates, on the one hand, and Energy Income and
Growth Fund and its Affiliates, on the other hand, shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.

 

Section 9.05                                Specific Performance.  Damages in
the event of breach of this Agreement by a party hereto may be difficult, if not
impossible, to ascertain, and it is therefore agreed that each such Person, in
addition to and without limiting any other remedy or right it may have, will
have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach, and enforcing specifically
the terms and provisions hereof, and each of the parties hereto hereby waives
any and all defenses it may have on the ground of lack of jurisdiction or
competence of the court to grant such an injunction or other equitable relief. 
The existence of this right will not preclude any such Person from pursuing any
other rights and remedies at law or in equity that such Person may have.

 

Section 9.06                                Counterparts.  This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.

 

Section 9.07                                Headings.  The headings in this
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof.

 

Section 9.08                                Governing Law.  This Agreement shall
be governed by, and construed in accordance with, the laws of the State of New
York.

 

Section 9.09                                Severability of Provisions.  Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting or impairing the validity or enforceability of
such provision in any other jurisdiction.

 

Section 9.10                                Entire Agreement.  This Agreement
and the Purchase Agreement are intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein or therein.  There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein or
therein with respect to the rights

 

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granted by the Partnership set forth herein or therein.  This Agreement and the
Purchase Agreement supersede all prior agreements and understandings between the
parties with respect to such subject matter.

 

Section 9.11                                Amendment. This Agreement may be
amended only by means of a written amendment signed by the Partnership and the
Holders of a majority of the then outstanding Registrable Securities; provided,
however, that no such amendment shall materially and adversely affect the rights
of any Holder hereunder without the consent of such Holder.

 

Section 9.12                                No Presumption. In the event any
claim is made by a party relating to any conflict, omission, or ambiguity in
this Agreement, no presumption or burden of proof or persuasion shall be implied
by virtue of the fact that this Agreement was prepared by or at the request of a
particular party or its counsel.

 

Section 9.13                                Termination.  The obligations of the
Purchasers and Pacific pursuant to Sections 2.1, 2.2 and 2.3 of this Agreement
shall terminate and be of no further force or effect immediately following the
earliest to occur of: (i) the date as of which all Registrable Securities have
ceased to be Registrable Securities in accordance with Section 1.2 or (ii) the
date two years from the Closing Date (such date, the “Termination Date”);
provided, that termination of Section 2.1 pursuant to this Section 3.13 shall in
no way prejudice the right of the Purchasers to receive Liquidated Damages that
have accrued prior to the Termination Date but which have not been paid.

 

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