Exhibit 10.1


 


 


COMMON UNIT

PURCHASE AGREEMENT




 


by and among




 


PACIFIC ENERGY PARTNERS, L.P.


 


and


 


THE PURCHASERS NAMED HEREIN


 





















 


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.


 





















 


“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


 


4





















 


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


 


10





















 


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


 


11





















 


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,


 


13





















 


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


 


14





















 


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


 


15





















 


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.


 


16





















 


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





















 


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





















 


(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





















 


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





















 


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





















 


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





















 


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





















 


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





















 


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


 


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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.


 


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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


 


10





















 


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


 


11





















 


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


 


15





















 


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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left blank.]


 


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