IN THE UNITED STATES BANUPTCY COURT

In re: )

FOR THE DISTRICT DELAWAR

Chapter 11

) )

PACIFIC ENERGY RESOURCES LTD., el aI., i )

Debtors. )
Deadline for Objections: April

Case Nu. 09-10785(KC) (Jointly Administered)

Related Docket Nos.

18 & 19

13, 2009 at 10:00 p.m. prevailng Eastern time Hearing Date: April 5, 2009 aI3:00 p.m. prevailng Eastern time

NOTICE OF FILING OF THE EXECUTION VERSIONS OF THE EXHIBITS TO MOTION OF THE DEBTORS TO APPROVE INTERIM AND
FINAL ORDERS PURSUANT TO 11 U.S.C. SECTIONS 105,361,362,363,364,365 AND 507: (1) APPROVING SENIOR SECURED SUPERPRIORITY POSTPETITION

FINANCING; (2) AUTHORIZING USE OF CASH COLLATERA; (3) GRATING LIENS AND PROVIDING SUPERPRIORITY ADMINISTRATIVE EXPENSE STATUS; (4) GRATING ADEQUATE PROTECTION; (5) MODIFYING AUTOMATIC STAY: AND (6) SCHEDULING A FINAL HEARNG
On March 9, 2009, the above-captioned debtors and debtors in possession
(collectively, the "Debtors"), filed the Motion of

the Debtors to Approve Interim and Final

Orders Pursuant to 11 Us. C. Sections 105, 361, 362, 363, 364, 365 and 507: (1) Approving
Senior Secured Super priority Post

petition Financing; (2) Authorizing Use of Cash Collateral;

priority Administrative Expense Status;

(3) Granting Liens and Providing Super

(4) Granting Adequate Protection; (5) Modifing Automatic Stay; and (6) Scheduling a Final
Hearing (Docket No. 18) (the "DIP Motion") and Exhibits to the Motion (Docket No. 19) with
the United States Bankptcy Cour for the District of

Delaware, 824 Market Street, Wilmington,

Delaware 19801.

i The Debtors in these cases, along with the last four digits of each of the Debtors' federal tax
identification number, are: Pacific Energy Resources Ltd. (3442); Petroca1 Acquisition Corp. (6249); Pacific Energy Alaska Holdings, LLC (tax J.D. # not available); Cameros Acquisition Corp. (5866); Pacific Energy Alaska Operating LLC (7021); San Pedro Bay Pipeline Company (1234); Cameros
Energy, Inc. (9487); and Gotland Oil, Inc. (5463). The mailing address for all of

the Debtors is 111 W.

Ocean Boulevard, Suite 1240, Long Beach, CA 90802.

Attached are the

fully executed versions of

the Exhibits to the DIP Motion.

Dated: April 9, 2009

PACHULSKI STANG ZIEHL & JONES LLP

avis Jones (DE Bar No. 2436)

Ir arasch (CA Bar No. 109084)

(J

Scotta E. McFarland (DE Bar No. 4184, CA Bar No. 165391) Robert M. Saunders (CA Bar No. 226172) James E. O'Neill (DE Bar No. 4042) Kathleen P. Makowski (DE Bar No. 3648) 919 North Market Street, 1 ih Floor P.O. Box 8705 Wilmington, DE 19899-8705
Telephone: 302/652-4100

Facsimile: 310/652-4400
Email: lionesctpszilaw.com

ikharaschctpszi law .com smcfarlandctpszi law .com rsaunders(qpszi law .com i oneil0)pszi law .com

kmakowski(qpszi law. com

Counsel for Debtor and Debtor in Possession Pacific Energy Resources Ltd.

DOCS_DE:146901.

EXECUTION VERSION

SENIOR SECURED SUPER PRIORITY PRIMING DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT dated as of March 11, 2009 among PACIFIC ENERGY RESOURCES LTD., PACIFIC ENERGY ALASKA HOLDINGS, LLC, and PACIFIC ENERGY ALASKA OPERATING LLC, each as a debtor and debtor in possession and as joint and several Borrowers, CERTAIN SUBSIDIARIES, each as a debtor and debtor in possession and as Guarantors, VARIOUS LENDERS, J. ARON & COMPANY, as Lead Arranger and Syndication Agent,

J. ARON & COMPANY, as Administrative Agent

and

J. ARON & COMPANY and SILVER POINT FINANCE, LLC, as Collateral Agents $186,646,370 Senior Secured Super Priority Priming Debtor in Possession Credit Facility

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TABLE OF CONTENTS Page

SECTION 1. 1.1 1.2 1.3 1.4 SECTION 2. 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17 SECTION 3. 3.1 3.2 SECTION 4. 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11

DEFINITIONS AND INTERPRETATION .................................................... 4 Definitions.............................................................................................................. 4 Accounting Terms................................................................................................ 29 Interpretation, etc ................................................................................................. 29 Joint Preparation; Construction of Indemnities and Releases.............................. 29 LOANS .......................................................................................................... 29 Loans and Borrowing Mechanics ........................................................................ 29 Pro Rata Shares; Availability of Funds................................................................ 31 Use of Proceeds.................................................................................................... 31 Evidence of Liabilities; Register; Lenders Books and Records; Notes.............. 31 Interest on Loans.................................................................................................. 32 Reduction of Commitment................................................................................... 32 Default Interest..................................................................................................... 33 Fees ...................................................................................................................... 33 Voluntary Prepayments........................................................................................ 33 Mandatory Prepayments ...................................................................................... 33 General Provisions Regarding Payments............................................................. 34 Ratable Sharing.................................................................................................... 36 Increased Costs; Capital Adequacy ..................................................................... 36 Taxes; Withholding, etc ....................................................................................... 38 Measures to Mitigate............................................................................................ 40 Collateral Accounts.............................................................................................. 41 Joint and Several Obligations; Designated Financial Officers ............................ 44 CONDITIONS PRECEDENT ....................................................................... 46 Closing Date......................................................................................................... 46 Conditions Precedent to Each Credit Extension .................................................. 49 REPRESENTATIONS AND WARRANTIES.............................................. 50 No Default............................................................................................................ 50 Organization and Good Standing......................................................................... 50 Authorization ....................................................................................................... 50 No Conflicts or Consents ..................................................................................... 50 Enforceable Obligations....................................................................................... 51 Current Financial Statements............................................................................... 51 Other Obligations and Restrictions...................................................................... 51 Full Disclosure ..................................................................................................... 51 Litigation.............................................................................................................. 52 Labor Disputes and Acts of God.......................................................................... 52 ERISA Plans and Liabilities ................................................................................ 52 i

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TABLE OF CONTENTS (continued) Page 4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 4.20 4.21 4.22 4.23 4.24 4.25 4.26 4.27 4.28 4.29 4.30 4.31 4.32 SECTION 5. 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 5.15 5.16 5.17 5.18 5.19 5.20 Environmental and Other Laws ........................................................................... 52 Names and Places of Business............................................................................. 53 Subsidiaries .......................................................................................................... 53 Licenses................................................................................................................ 54 Government Regulation ....................................................................................... 54 Taxes .................................................................................................................... 54 No Distributions................................................................................................... 54 Title to Properties................................................................................................. 54 No Defaults .......................................................................................................... 55 Margin Stock........................................................................................................ 55 Certain Fees ......................................................................................................... 55 Leases and Contracts; Performance of Obligations ............................................. 55 Marketing Arrangements ..................................................................................... 55 Right to Receive Payment for Future Production ................................................ 56 Operation of Oil and Gas Properties.................................................................... 56 Ad Valorem and Severance Taxes; Litigation ..................................................... 57 Employment Agreements..................................................................................... 57 Capitalization ....................................................................................................... 57 Insider Interests.................................................................................................... 58 Insurance .............................................................................................................. 58 Perfection of Security Interest ............................................................................. 58 AFFIRMATIVE COVENANTS ................................................................... 58 Payment and Performance ................................................................................... 58 Books, Financial Statements and Reports............................................................ 59 Other Information and Inspections ...................................................................... 61 Notice of Material Events and Change of Name ................................................. 62 Maintenance of Properties and Professional Staff ............................................... 63 Maintenance of Existence and Qualifications...................................................... 63 Payment of Taxes, etc .......................................................................................... 63 Bonding and Insurance ........................................................................................ 64 Performance on Borrowers Behalf ..................................................................... 65 Interest.................................................................................................................. 66 Compliance with Agreements and Law............................................................... 66 Environmental Matters......................................................................................... 66 Evidence of Compliance ...................................................................................... 67 Agreement to Deliver Guaranty and Security Documents .................................. 67 Perfection and Protection of Security Interests and Liens ................................... 68 Bank Accounts; Offset......................................................................................... 68 Approved Plan of Development........................................................................... 68 Reviews................................................................................................................ 69 Investment Banker ............................................................................................... 69 Non-Consolidation............................................................................................... 69 ii

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TABLE OF CONTENTS (continued) Page 5.21 5.22 5.23 5.24 5.25 5.26 5.27 5.28 5.29 5.30 5.31 5.32 5.33 5.34 5.35 5.36 5.37 SECTION 6. 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 6.10 6.11 6.12 6.13 6.14 6.15 6.16 6.17 SECTION 7. 7.1 7.2 SECTION 8. Leases and Contracts; Performance of Obligations ............................................. 69 Representation to Continue to be True ................................................................ 70 Broker .................................................................................................................. 70 Securities Filings.................................................................................................. 70 Chief Restructuring Officer ................................................................................. 70 Consultant ............................................................................................................ 70 Adequate Protection Interest Accrual .................................................................. 71 RTP Work ............................................................................................................ 71 Confidential Offering Memorandum; Marketing Materials ................................ 71 Executory Contracts............................................................................................. 71 Operation of Alaska Properties............................................................................ 71 Stalking Horse Purchaser..................................................................................... 71 Sale Procedures Order.......................................................................................... 72 Potential Purchasers Access; Confidentiality ..................................................... 72 Reservation of Lenders Rights ........................................................................... 72 Filing of Claims, Schedules and Statement of Affairs in the Case...................... 73 Last Day to File Claims ....................................................................................... 73 NEGATIVE COVENANTS .......................................................................... 73 Indebtedness......................................................................................................... 73 Limitation on Liens and Negative Pledges; Equitable Lien ................................ 74 Hedging Contracts ............................................................................................... 75 Subsidiaries; Mergers; Capital Stock Transactions ............................................. 75 Limitation on Sales of Property ........................................................................... 75 Limitation on Dividends and Redemptions ......................................................... 76 Limitation on Investments, Capital Expenditures, and Deposit Accounts .......... 76 Transactions with Affiliates................................................................................. 77 Certain Contracts; Multiemployer ERISA Plans ................................................. 77 Minimum Production Volume ............................................................................. 77 Conduct of Business ............................................................................................ 77 Fiscal Year ........................................................................................................... 78 Budget .................................................................................................................. 78 Amendments to Organizational Documents ........................................................ 78 Material Contracts................................................................................................ 78 Prepetition Indebtedness ...................................................................................... 79 Bankruptcy Case .................................................................................................. 79 PRIORITY AND COLLATERAL SECURITY; GUARANTY ................... 79 Priority and Collateral Security ........................................................................... 80 Guaranty............................................................................................................... 82 EVENTS OF DEFAULT............................................................................... 90 iii
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TABLE OF CONTENTS (continued) Page 8.1 8.2 SECTION 9. 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 SECTION 10. 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.10 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 10.20 10.21 10.22 Events of Default ................................................................................................. 90 Remedies.............................................................................................................. 94 AGENTS........................................................................................................ 96 Appointment of Agents........................................................................................ 96 Powers and Duties................................................................................................ 97 General Immunity ................................................................................................ 97 Agents Entitled to Act as Lender ......................................................................... 98 Lenders Representations, Warranties and Acknowledgment ............................. 98 Right to Indemnity ............................................................................................... 99 Successor Agents ................................................................................................. 99 Security Documents and Guaranty .................................................................... 100 MISCELLANEOUS .................................................................................... 101 Notices ............................................................................................................... 101 Expenses ............................................................................................................ 101 Indemnity, WAIVER OF PUNITIVE DAMAGES........................................... 102 Amendments and Waivers ................................................................................. 103 Successors and Assigns; Participations ............................................................. 105 Independence of Covenants ............................................................................... 108 Survival of Representations, Warranties and Agreements; Termination........... 108 No Waiver; Remedies Cumulative .................................................................... 109 Marshalling; Payments Set Aside ...................................................................... 109 Severability ........................................................................................................ 109 Obligations Several; Independent Nature of Lenders Rights ........................... 110 Headings ............................................................................................................ 110 APPLICABLE LAW ......................................................................................... 110 CONSENT TO EXCLUSIVE JURISDICTION ............................................... 110 WAIVER OF JURY TRIAL.............................................................................. 111 Confidentiality ................................................................................................... 111 Usury Savings Clause ........................................................................................ 112 Counterparts....................................................................................................... 113 Effectiveness ...................................................................................................... 113 USA Patriot Act Notice ..................................................................................... 113 PERL ISDA Agreement..................................................................................... 113 Order .................................................................................................................. 113

iv
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APPENDICES: A B SCHEDULES: 4.7 4.9 4.10 4.11 4.12 4.13 4.14 4.17 4.18 4.19 4.20 4.22 4.23 4.24 4.25 4.26 4.28 4.29 4.30 4.31 6.1(i) A B C-1 C-2 D E F G

Commitments Notice Addresses Other Obligations and Restrictions Litigation Labor Disputes ERISA Plans and Liabilities Environmental Matters Names and Places of Business Subsidiaries of PERL Taxes Distributions Title to Properties Material Contracts Certain Fees Leases and Contracts; Performance of Obligations Sale of Production Right to Receive Payment for Future Production Operation of Oil and Gas Properties Employment Agreements Capitalization Insider Interests Insurance Chevron Indebtedness Funding Notice Note Compliance Certificate Environmental Compliance Certificate Assignment Agreement Certificate Regarding Non Bank Status Closing Date Certificate Counterpart Agreement

EXHIBITS:

vi
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SENIOR SECURED SUPER PRIORITY PRIMING DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT This SENIOR SECURED SUPER PRIORITY PRIMING DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT, dated as of March 11, 2009, is entered into by and among PACIFIC ENERGY RESOURCES LTD., a Delaware corporation, as a debtor and a debtor in possession (PERL), PACIFIC ENERGY ALASKA HOLDINGS, LLC, a Delaware limited liability company, as a debtor and a debtor in possession (PEAH), PACIFIC ENERGY ALASKA OPERATING LLC, a Delaware limited liability company, as a debtor and a debtor in possession (PEAO and, together with PERL and PEAH, Borrowers or the Borrowers), certain Subsidiaries of PERL, who are also debtors and debtors in possession, as Guarantors, the Lenders (as defined below) party hereto from time to time, J. ARON & COMPANY (J. Aron), as Lead Arranger and as Syndication Agent (in such capacities, Syndication Agent), J. ARON & COMPANY, as Administrative Agent for such Lenders (together with its permitted successor in such capacity, Administrative Agent), and J. ARON & COMPANY and SILVER POINT FINANCE, LLC, each as Collateral Agent for such Lenders. RECITALS: WHEREAS, capitalized terms used in these Recitals shall have the respective meanings set forth for such terms in Section 1.1 hereof; WHEREAS, on March 8, 2009 (the Petition Date), each of the Borrowers and the Guarantors filed a petition under Chapter 11 of the Bankruptcy Code (the Case) in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court); WHEREAS, each of the Borrowers and the Guarantors intends to continue to operate its business as debtors and debtors in possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code; WHEREAS, before the Petition Date, PERL entered into that certain Credit and Guaranty Agreement, dated as of November 30, 2006 (as amended, restated, supplemented or otherwise modified from time to time, the PERL Credit Agreement), among PERL, as borrower (in such capacity, the PERL Prepetition Borrower), certain subsidiaries of PERL, as the guarantors (the PERL Prepetition Guarantors), the lenders from time to time party thereto (the PERL Lenders), and J. Aron, as administrative agent for the PERL Lenders (in such capacity, the PERL Administrative Agent), pursuant to which the PERL Lenders extended credit to the PERL Prepetition Borrower on the terms set forth therein; WHEREAS, before the Petition Date, PEAO entered into that certain First Lien Credit Agreement, dated as of August 24, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the PEAO First Lien Credit Agreement), among PEAO, as borrower (in such capacity, the PEAO First Lien Prepetition Borrower), PEAH, the lenders from time to time party thereto (the PEAO First Lien Lenders), Silver Point Finance, LLC, as administrative agent for the PEAO First Lien Lenders (in such capacity, the PEAO First Lien Administrative Agent), and J. Aron, as documentation agent, pursuant to which the

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PEAO First Lien Lenders extended credit to the PEAO First Lien Prepetition Borrower on the terms set forth therein; WHEREAS, before the Petition Date, PEAH and PEAO entered into that certain First Lien Guarantee and Collateral Agreement, dated as of August 24, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the First Lien Guarantee), among PEAH, PEAO and Silver Point Finance, LLC, as collateral agent (in such capacity, the PEAO First Lien Collateral Agent), pursuant to which, among other things, PEAH guaranteed the obligations of the PEAO First Lien Prepetition Borrower on the terms set forth therein; WHEREAS, before the Petition Date, PEAO entered into that certain Second Lien Credit Agreement, dated as of August 24, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the PEAO Second Lien Credit Agreement and, together with the PERL Credit Agreement and the PEAO First Lien Credit Agreement, the Prepetition Credit Agreements), among PEAO, as borrower (in such capacity, the PEAO Second Lien Prepetition Borrower and, together with the PERL Prepetition Borrower and the PEAO First Lien Prepetition Borrower, the Prepetition Borrowers), PEAH, the lenders from time to time party thereto (the PEAO Second Lien Lenders and, together with the PERL Lenders and the PEAO First Lien Lenders, the Prepetition Lenders), Silver Point Finance, LLC, as administrative agent for the PEAO Second Lien Lenders (in such capacity, the PEAO Second Lien Administrative Agent), and J. Aron, as documentation agent, pursuant to which the PEAO Second Lien Lenders extended credit to the PEAO Second Lien Prepetition Borrower on the terms set forth therein; WHEREAS, before the Petition Date, PEAH and PEAO entered into that certain Second Lien Guarantee and Collateral Agreement, dated as of August 24, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the Second Lien Guarantee), among PEAH, PEAO and Silver Point Finance, LLC, as collateral agent (in such capacity, the PEAO Second Lien Collateral Agent and, together with the PERL Administrative Agent, the PEAO First Lien Administrative Agent, the PEAO First Lien Collateral Agent and the PEAO Second Lien Administrative Agent, the Prepetition Agents), pursuant to which, among other things, PEAH guaranteed the obligations of the PEAO Second Lien Prepetition Borrower on the terms set forth therein; WHEREAS, before the Petition Date, PERL and certain of its subsidiaries entered into that certain Second Lien Guaranty, dated as of August 24, 2007, as amended, restated, supplemented or otherwise modified from time to time, among PERL and certain of its subsidiaries (collectively, the PEAO Second Lien Prepetition Guarantors and, together with the PERL Prepetition Guarantors and PEAH, in its capacity as a guarantor pursuant to the First Lien Guarantee and the Second Lien Guarantee, the Prepetition Guarantors) and in favor of the Beneficiaries (as defined therein), pursuant to which the PEAO Second Lien Prepetition Guarantors guaranteed the obligations of the PEAO Second Lien Prepetition Borrower on the terms set forth therein; WHEREAS, before the Petition Date, PERL entered into that certain ISDA Master Agreement, dated as of November 30, 2006 (together with the Derivative Transaction Agreement dated as of December 19, 2008, by and between PERL and J. Aron, as hedge provider, any 2
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schedules, exhibits (including credit support documents) and amendments thereto, and all confirmations exchanged pursuant to transactions entered into in connection therewith, the PERL ISDA Agreement), between PERL and J. Aron, as hedge provider; WHEREAS, as of the Petition Date, the Prepetition Lenders under the Prepetition Credit Agreements are owed approximately $489,993,471.42 in obligations incurred directly by the Prepetition Borrowers (which amount, for the avoidance of doubt, includes all interest thereon, unpaid fees, costs and expenses in respect thereof, including, without limitation, any conversion fees, and any make-whole payments payable as a result of the prepayment thereof) (collectively, the Prepetition Lender Debt), which amount includes $44,199,560.95 in respect of obligations under the PERL Credit Agreement, $98,446,809.82 in respect of obligations under the PEAO First Lien Credit Agreement and $347,347,100.65 in respect of obligations under the PEAO Second Lien Credit Agreement (the PEAO Second Lien Prepetition Debt); WHEREAS, the Borrowers have requested that the Lenders referred to herein provide financing to the Borrowers consisting of (A) a term loan (the PERL Term Facility) in an amount equal to the outstanding principal amount of the loans (plus interest thereon, unpaid fees and expenses in respect thereof and any make-whole payments payable as a result of the prepayment thereof) of all PERL Lenders under the PERL Credit Agreement as of the Closing Date (the PERL Refunding Amount), (B) a term loan (the PEAO Term Facility) in an amount equal to the outstanding principal amount of the loans (plus interest thereon and any unpaid fees and expenses in respect thereof, including, without limitation, any conversion fees) of all PEAO First Lien Lenders under the PEAO First Lien Credit Agreement as of the Closing Date (the PEAO Refunding Amount and, together with the PERL Refunding Amount, the Refunding Amount), and (C) a revolving loan facility, with initial advances thereunder of up to $9,500,000 in the aggregate upon entry of the Interim Order (the Interim Order Amount) and additional advances thereunder of up to $34,500,000 in the aggregate upon entry of the Final Order (collectively with the Interim Order Amount, the Revolving Facility and, together with the PERL Term Facility and the PEAO Term Facility, the Facility), and advanced to the Borrowers pursuant to Sections 364(c) and (d) of the Bankruptcy Code in order to repay the PERL Refunding Amount in the case of the PERL Term Facility and the PEAO Refunding Amount in the case of the PEAO Term Facility, and to provide working capital for the Borrowers, to fund capital expenditures and for other general corporate purposes in accordance with the Budget (as defined below) in the case of the Revolving Facility; WHEREAS, the Lenders have indicated their willingness to agree to provide the Facility to the Borrowers, all on terms and conditions set forth herein and in the other Transaction Documents and in accordance with Sections 364(c) and (d) of the Bankruptcy Code, so long as: (A) such postpetition credit obligations are, subject in priority only to certain Liens and the Carve Out as hereinafter provided, (i) secured by Liens on all property, rights and interests, real and personal, tangible and intangible, of the Borrowers and the Guarantors, whether now owned or hereafter acquired, and (ii) given superpriority status as provided in the Interim Order and the Final Order, and (B) the Prepetition Lenders receive certain adequate protection for use of cash collateral, the diminution in value of the Collateral and the priming of their prepetition Liens, in 3
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each case securing the obligations of the Prepetition Borrowers and the Prepetition Guarantors in respect of the Prepetition Credit Agreements; and WHEREAS, the Borrowers and the Guarantors have agreed to provide such collateral security, superpriority claims and adequate protection subject to the approval of the Bankruptcy Court; NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows: SECTION 1. DEFINITIONS AND INTERPRETATION 1.1 Definitions. The following terms used herein, including in the preamble, recitals, exhibits and schedules hereto, shall have the following meanings: Acquisition means the purchase by PERL of the Beta Interests and Stock (as such terms are defined in the Acquisition Agreements). Acquisition Agreements means, collectively, (a) that certain Amended and Restated Purchase and Sale Agreement dated as of November 1, 2006, by and between Aera and PERL, (b) that certain Purchase and Sale Agreement dated as of November 13, 2006, by and between SWEPI and PERL and (c) that certain Purchase and Sale Agreement dated as of February 28, 2007, by and between Noble and PERL. Acquisition Documents means (a) the Acquisition Agreements, (b) the transfers, assignments and conveyances executed and delivered pursuant thereto, and (c) all other agreements, assignments, deeds, conveyances, certificates and other documents and instruments now or hereafter executed and delivered pursuant to the Acquisition Agreements or in connection with the Acquisition. Acquisition Escrow Agreement means that certain PSA Escrow Agreement dated as of November 30, 2006 by and among PERL, Aera, SWEPI, J. Aron, Silver Point, and U.S. Bank National Association, acting in its capacity as escrow agent. Adjusted Eurodollar Rate means, for any Interest Period, (i) the rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate to be the offered rate which appears on the page of the Reuters Screen LIBOR01 Page which displays an average British Bankers Association Interest Settlement Rate (such page currently being page number 3740 or 3750, as applicable) for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined by Administrative Agent as of approximately 11:00 a.m. (London, England time) on the date that is two Business Days prior to the first day of such Interest Period, or (ii) in the event the rate referenced in the preceding clause (i) does not appear on such page or service or if such page or service shall cease to be available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the offered rate on such other page or other service which displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined by Administrative Agent as of approximately 11:00 a.m. (London, England time) on the date that is two Business Days prior to the first day of such 4
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Interest Period, or (iii) in the event the rates referenced in the preceding clauses (i) and (ii) are not available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the offered quotation rate to first class banks in the London interbank market by J. Aron for deposits in Dollars (for delivery on the first day of such Interest Period) of amounts in same day funds comparable to the average principal amount of the applicable Loan of Administrative Agent (in its capacity as a Lender, during such Interest Period) with maturities comparable to such Interest Period as of approximately 11:00 a.m. (London, England time) on the date that is two Business Days prior to the first day of such Interest Period. Administrative Agent as defined in the preamble hereto. Aera means Aera Energy LLC, a California limited liability company. Affiliate means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, control (including, with correlative meanings, the terms controlling, controlled by and under common control with), as applied to any Person, means the possession, directly or indirectly, of the power (through the ownership of voting securities or by contract or otherwise) (i) to vote 10% or more of the Securities having ordinary voting power for the election of directors of such Person or (ii) to direct or cause the direction of the management and policies of that Person. Notwithstanding the foregoing, none of the Agents, the Lenders, the Lender Counterparties, nor any of their respective Affiliates, shall be considered Affiliates of any Credit Party for purposes of this Agreement. Agent means each of Syndication Agent, Administrative Agent, and each Collateral Agent. Agreed Pricing means: (i) for anticipated sales of Hydrocarbons that are fixed in a firm fixed price sales contract with an investment grade counterparty (or another counterparty approved by Administrative Agent), the fixed price or prices provided for in such sales contract during the term thereof; and (ii) for anticipated sales of Hydrocarbons that are hedged by a fixed price Hedging Contract with an investment grade counterparty, the fixed price or prices provided for in such Hedging Contract during the term thereof, as modified by any necessary adjustment specified by Administrative Agent for quality and geographical differentials; and (iii) for anticipated sales of Hydrocarbons that are hedged by a Hedging Contract with an investment grade counterparty which Hedging Contract provides for a range of prices between a floor and a ceiling, the prices provided for in subsection (iv) below, provided that during the term of such Hedging Contract such prices shall in no event be less than such floor or exceed such ceiling, as such floor and ceiling are modified by any necessary adjustment specified by Administrative Agent for quality and geographical differentials; and (iv) for anticipated sales of Hydrocarbons, if such sales are not hedged by a Hedging Contract or sales contract that is described in paragraphs (i), (ii), or (iii) above, for the 5
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date of calculation (or, if such date is not a Business Day, for the first Business Day thereafter), and with any necessary adjustment specified by Administrative Agent for quality and geographical differentials: (a) for the remainder of the current calendar year, the average NYMEX Pricing for the remaining contracts in the current calendar year; (b) for each of the succeeding four complete calendar years, the average NYMEX Pricing for the twelve months in such calendar year; and (c) for the succeeding fifth complete calendar year, and for each calendar year thereafter, the average NYMEX Pricing for the twelve months in such fifth calendar year. Agreement means this Senior Secured Super Priority Priming Debtor in Possession Credit and Guaranty Agreement, as it may be amended, supplemented or otherwise modified from time to time. Alaska Operations Report as defined in Section 5.31. Approved Plan of Development or APOD means Borrowers written plan of development with respect to budgeted Capital Expenditures (including maximum annual or other expenditures) and other development activities, each as described in the Budget or as otherwise acceptable to the Required Lenders. Assignment Agreement means an Assignment and Assumption Agreement substantially in the form of Exhibit D, with such amendments or modifications as may be approved by Administrative Agent. Authorized Officer means, as applied to any Person, any individual holding the position of chairman of the board (if an officer), chief executive officer, president or one of its vice presidents (or the equivalent thereof), manager of a limited liability company, and such Persons chief financial officer or treasurer. Avoidance Actions means avoidance actions of the Credit Parties under Chapter 5 or Section 724(a) of the Bankruptcy Code (and proceeds thereof). The term does not include an action to avoid a transfer under Section 549 of the Bankruptcy Code if the transfer was of an asset otherwise constituting Collateral. Bankruptcy Code means Title 11 of the United States Code entitled Bankruptcy from time to time in effect. Bankruptcy Court as defined in the recitals hereto. Bateman Note as defined in Section 6.1(h). Beneficiary means each Agent, each Lender and each Lender Counterparty.

6
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Beta Field means the oil and gas production unit comprising OCS leases bearing Serial Nos. OCS-P 0300, 0301 and 0306, together with the Platform Eureka, Platform Elly, Platform Ellen, all other platforms, all wells, facilities, machinery, pipelines, flowlines, lease term lines, transmission lines and all other miscellaneous equipment located on and used solely in connection with the use and operation of such OCS leases. Borrowers as defined in the preamble hereto. Broker as defined in Section 5.23. BTU means British thermal unit. Budget as defined in Section 3.1(e), which reference shall include any amendment thereto made with the consent of the Required Lenders and filed with the Bankruptcy Court. Business Day means (i) any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close and (ii) as used in the definitions of Adjusted Eurodollar Rate and Monthly Payment Date, the term Business Day shall mean any day which is a Business Day described in clause (i) and which is also a day for trading by and between banks in Dollar deposits in the London interbank market. Capital Expenditures means capital expenditures made or to be made by the Borrowers in accordance with GAAP including, without limitation, any capital expenditures planned in connection with the return to production work in accordance with Section 5.28. Capital Stock means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including, without limitation, partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing. Carneros Energy means Carneros Energy, Inc., a Delaware corporation. Carneros Purchase and Sale Agreement means that certain Purchase and Sale Agreement, dated May 15, 2008 (as amended, restated, supplemented or otherwise modified from time to time), among PERL, Carneros Energy, Gotland, Occidental of Elk Hills, Inc. and Vintage Production California LLC. Case as defined in the recitals hereto. Carve Out means, at any time of determination, (a) allowed administrative expenses payable pursuant to 28 U.S.C. 1930(a)(6) and (b) Priority Professional Expenses. Certificate re Non-Bank Status means a certificate substantially in the form of Exhibit E. 7
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Change of Control means the occurrence of any of the following events: (a) any Person or two or more Persons acting as a group (other than a Warrant Owner or an Affiliate of a Warrant Owner) shall acquire beneficial ownership (within the meaning of Rule 13d-3 (a)(c) of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and including holding proxies to vote for the election of directors other than proxies held by PERLs management or their designees to be voted in favor of Persons nominated by PERLs Board of Directors) of 25% or more of the Capital Stock of PERL entitled to vote for members of the board of directors or equivalent governing body of PERL, calculated on a fullydiluted basis (and taking into account all such securities that any Person or group has the right to acquire at any time pursuant to any option right or conversion right), (b) one-third or more of the directors of PERL shall consist of Persons not nominated by PERLs Board of Directors (not including as Board nominees any directors which the Board is obligated to nominate pursuant to shareholders agreements, voting trust arrangements or similar arrangements), (c) PERL shall cease to beneficially own and control 100% on a fully diluted basis of the economic and voting interest in the Capital Stock of PEAH and each Guarantor that is a Subsidiary of PERL, (d) PEAH shall cease to beneficially own and control 100% on a fully diluted basis of the economic and voting interest in the Capital Stock of PEAO, or (e) PEAH shall cease to beneficially own and control 50% on a fully diluted basis of the economic and voting interest in the Capital Stock of Cook Inlet Pipe Line Company. Chevron Operated Assets means all of PEAOs assets and other interests in or associated with the Trading Bay Unit, Alaska. Chevron Production Liens means unit operator liens pursuant to Section 19.5 of the Trading Bay Unit Operating Agreement, entered into as of February 27, 1967 (as has been or may be further amended, restated, supplemented or otherwise modified from time to time). Chief Restructuring Officer as defined in Section 5.25. Closing Date means the date on which the first Loans are made. Closing Date Certificate means a Closing Date Certificate substantially in the form of Exhibit F. Collateral means, collectively, all of the real, personal and mixed property (including Capital Stock) in which Liens are purported to be granted pursuant to the Security Documents and/or the Orders as security for the Obligations. Collateral Accounts means, collectively, the PERL Collateral Account and the PEAO Collateral Account. Collateral Account Agreement means all documents or agreements governing or evidencing the Collateral Accounts. Collateral Agent means, with respect to the assets of PERL and its Subsidiaries (other than the PEA Entities), J. Aron (together with its permitted successor in such capacity) and with respect to the assets of the PEA Entities, Silver Point Finance, LLC (together with its permitted successor in such capacity). 8
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Commitment means, collectively, or individually, as the context may require, a Revolving Loan Commitment, a PERL Term Loan Commitment or a PEAO Term Loan Commitment. Compliance Certificate means a Compliance Certificate substantially in the form of Exhibit C-1. Consolidated refers to the consolidation of PERL or any other Credit Party, in accordance with GAAP, with its properly consolidated subsidiaries. References herein to a Persons Consolidated financial statements, financial position, financial condition, liabilities, etc. refer to the consolidated financial statements, financial position, financial condition, liabilities, etc. of such Person and its properly consolidated subsidiaries. Consultant as defined in Section 5.26. Contractual Obligation means, as applied to any Person, any provision of any Security issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject. Contributing Guarantors as defined in Section 7.2(b). Counterpart Agreement means a Counterpart Agreement substantially in the form of Exhibit G delivered by a Credit Party pursuant to Section 5.14. Credit Date means the date of a Credit Extension. Credit Extension means the making of a Loan. Creditors Committee means the Official Unsecured Creditors Committee to be appointed by the United States Trustee in relation to the Case. Credit Party means PERL and each Subsidiary of PERL. Current Financial Statements means the preliminary, unaudited annual Consolidated financial statements of PERL for the year ended December 31, 2008. Default means an Event of Default and a condition or event that, after notice or lapse of time or both, would constitute an Event of Default. Deposit Account means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit on or like organization, other than an account evidenced by a negotiable certificate of deposit, and any other deposit account, as defined in the UCC. Direct Taxes means any severance, ad valorem, or other direct taxes on properties owned by any Credit Party or the production therefrom or the proceeds of such

9
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production; provided that federal, state, or local income or franchise taxes shall in no event be considered Direct Taxes. Distribution means (i) any dividend or other distribution made by a Credit Party on or in respect of any Capital Stock in such Credit Party, or (ii) any payment made by a Credit Party to purchase, redeem, acquire or retire any Capital Stock in such Credit Party. Dollars and the sign $ mean the lawful money of the United States of America. Effective Rate means, at any time of determination, the per annum rate equal to ten and one-half percent (10.50%) plus the greater of (a) the Adjusted Eurodollar Rate and (b) four percent (4.00%); provided that in no event shall the Effective Rate exceed the Highest Lawful Rate. Eligible Assignee means (i) any Lender or any Affiliate of any Lender, and (ii) any Related Fund or any commercial bank, insurance company, investment or mutual fund or other entity that is an accredited investor (as defined in Regulation D under the Securities Act); provided, no Credit Party nor any Affiliate of any Credit Party shall be an Eligible Assignee. Eligible Mortgaged Properties means, collectively, those Oil and Gas Properties (a) which are owned by PERL or any other Credit Party and mortgaged to the applicable Collateral Agent to secure the Obligations, (b) for which the applicable Collateral Agent has received title opinions or other title information concerning such interests in form, substance and authorship satisfactory to the applicable Collateral Agent, and (c) are free and clear of all Liens other than Permitted Liens. Engineering Report means each engineering report hereafter delivered by Borrowers pursuant to Section 5.2(e) and any other engineering report hereafter delivered by Borrowers or obtained by Administrative Agent, provided that each such report hereafter delivered must (a) separately report on Proved Producing Reserves, Proved Developed Nonproducing Reserves, Proved Undeveloped Reserves and probable reserves and separately calculate the NPV of each such category of Proved Reserves for any Credit Partys interest, (b) use Agreed Pricing and a 10% discount factor (or any other pricing assumptions to which Borrowers and Required Lenders may agree), (c) take into account Borrowers actual experiences with leasehold operating expenses and other costs in determining projected leasehold operating expenses and other costs, (d) identify and take into account any overproduced or under-produced status under gas balancing arrangements, and (e) contain information and analysis, and otherwise be in form and substance, satisfactory to Administrative Agent and the Required Lenders. Environmental Claim means any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise), by any Governmental Authority or any other Person, arising (i) pursuant to, relating to, or in connection with any actual or alleged violation of any Environmental Law; (ii) in connection with any Hazardous Material or any actual or alleged Hazardous Materials Activity; or (iii) in connection with any actual or alleged damage, injury, threat or harm to 10
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health, safety, natural resources or the environment (whether related to the air, water, surface water, oceans, seas, estuaries, groundwater, soil, animals or plants, flora or fauna, marine life, ecosystems, or any other living species and their habitat, including those that are endangered, threatened, or otherwise protected by Law). Environmental Laws means any and all past, present, current or future foreign or domestic, federal or state (or any subdivision of any of them) statutes, ordinances, orders, rules, regulations, judgments, Governmental Authorizations, or any other requirements of Governmental Authorities relating to (i) environmental matters, including those relating to air, water, surface water, groundwater, soil, or any other environmental media, any Hazardous Materials Activity, natural resources, animals or plants, flora or fauna, ecosystems, or any other living species and their habitat, including those that are endangered, threatened, or otherwise protected by Law; (ii) the generation, use, storage, transportation or disposal of Hazardous Materials; or (iii) occupational safety and health, industrial hygiene, land use or the protection of human, plant or animal health or welfare, in any manner applicable to PERL or any of its Subsidiaries or any of their respective properties. ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor thereto, together with all rules and regulations promulgated with respect thereto. ERISA Affiliate means PERL and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control that, together with PERL, are treated as a single employer under Section 414 of the Internal Revenue Code. ERISA Plan means any employee pension benefit plan subject to Title IV of ERISA maintained by any ERISA Affiliate with respect to which any Credit Party has a fixed or contingent liability. Event of Default as defined in Section 8.1. Excepted Liens means (i) Liens for taxes, assessments or other governmental charges or levies not yet delinquent or which are being contested as provided in Section 5.7 by appropriate proceedings; (ii) Liens arising in connection with workmens compensation, unemployment insurance or other social security, old age pension or public liability obligations not yet due or which are being contested as provided in Section 5.7; (iii) usual and customary Liens under operating agreements, pooling orders and unitization agreements, and mechanics and materialmens Liens, in each case with respect to obligations which are not yet due or which are being contested as provided in Section 5.7; (iv) deposits of cash or cash equivalents with the Trustee pursuant to the Trust Agreement not to exceed the amount on deposit with the Trustee as of the Petition Date plus any interest accrued on such amount after the Petition Date; (v) minor defects and irregularities in title to any Property, so long as such defects and irregularities neither (A) are Liens which secure Indebtedness or obligations nor (B) materially impair the value of such Property or the use thereof for the purposes for which such Property is held; and (vi) rights of collecting banks having rights of setoff, revocation, refund or chargeback with respect to money or instruments of any Credit Party or on deposit with or in the possession of such banks. 11
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Exchange Act means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute. Facility as defined in the recitals hereto. Final Order as defined in Section 3.2(d). First Lien Guarantee as defined in the recitals hereto. Fiscal Quarter means a three-month period ending on the last day of March, June, September, and December of any year. Fiscal Year means the fiscal year of PERL and its Subsidiaries ending on December 31 of each calendar year. Funding Guarantors as defined in Section 7.2(b). Funding Notice means a notice substantially in the form of Exhibit A. GAAP means generally accepted accounting principles consistently applied which are in effect from time to time in Canada, as set out in the CICA Handbook published by the Canadian Institute of Chartered Accountants, as amended, replaced or republished from time to time and which, in the case of PERL and its Consolidated Subsidiaries, are applied for all periods after the date hereof in a manner consistent with the manner in which such principles and practices are applied in the Current Financial Statements. If any change in any accounting principle or practice is required by the Canadian Institute of Chartered Accountants (or any such successor) in order for such principle or practice to continue as a generally accepted accounting principle or practice, all reports and financial statements required hereunder with respect to PERL or with respect to PERL and its Consolidated Subsidiaries may be prepared in accordance with such change, but all calculations and determinations to be made hereunder may be made in accordance with such change only after notice of such change is given to each Lender and Required Lenders agree to such change insofar as it affects the accounting of PERL or of PERL and its Consolidated Subsidiaries. Gotland means Gotland Oil, Inc., a Texas corporation. Governmental Authority means any federal, state, provincial, municipal, national, tribal, Indian nation, or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, a province of Canada, the United States, Canada, an Indian nation, or a foreign entity or government. Governmental Authorization means any permit, license, authorization, plan, directive, consent order or consent decree of or from any Governmental Authority. Governmental Bond as defined in the Acquisition Agreements. 12
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Guaranteed Obligations as defined in Section 7.2(a). Guarantor means PERL and each present and future Subsidiary of PERL that is a party to this Agreement on the Closing Date or that executes and delivers a Counterpart Agreement after the Closing Date pursuant to Section 5.14. Guaranty means the guaranty of each Guarantor set forth in Section 7.2. Hazardous Materials means (i) Hydrocarbons, exploration and production chemical or wastes, produced water or brine, asbestos, polychlorinated biphenyls, (ii) any hazardous or toxic substance, solid or hazardous wastes, and (iii) any substances, chemicals, or materials regulated under any Environmental Law, whether as pollutants, contaminants, chemicals, industrial, toxic or hazardous substances, solid or hazardous wastes, or otherwise. Hazardous Materials Activity means any past, current, proposed or threatened activity, event or occurrence involving any Hazardous Materials, including the use, manufacture, possession, storage, holding, presence, existence, location, Release, threatened Release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials, and any corrective action or response action with respect to any of the foregoing. Hedge Provider means J. Aron, as Lender Counterparty to the PERL ISDA Agreement, as amended pursuant to the Postpetition Hedge Amendment. Hedging Contract means (a) any agreement providing for options, swaps, floors, caps, collars, forward sales or forward purchases involving interest rates, commodities or commodity prices, equities, currencies, bonds, or indexes based on any of the foregoing, (b) any option, futures or forward contract traded on an exchange, and (c) any other derivative agreement or other similar agreement or arrangement. For the avoidance of doubt, the PERL ISDA Agreement, as amended pursuant to the Postpetition Hedge Amendment, shall constitute a Hedging Contract hereunder. Highest Lawful Rate means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to any Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow. Hydrocarbons means crude oil, natural gas or other liquid or gaseous hydrocarbons. Indebtedness of any Person means Liabilities in any of the following categories: (a) Liabilities for borrowed money,

(b) Liabilities constituting an obligation to pay the deferred purchase price of property or services, 13
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(c) (d) (e) with GAAP, (f) agreements,

Liabilities evidenced by a bond, debenture, note or similar instrument, Liabilities arising under Hedging Contracts, Liabilities constituting principal under leases capitalized in accordance Liabilities arising under conditional sales or other title retention

(g) Liabilities owing under direct or indirect guaranties of Liabilities of any other Person (other than a Subsidiary) or otherwise constituting obligations to purchase or acquire or to otherwise protect or insure a creditor against loss in respect of Liabilities of any such Person (such as obligations under working capital maintenance agreements, agreements to keep well, or agreements to purchase Liabilities, assets, goods, securities or services), but excluding endorsements in the ordinary course of business of negotiable instruments in the course of collection, (h) Liabilities (for example, repurchase agreements, mandatorily redeemable preferred stock and sale/leaseback agreements) consisting of an obligation to purchase or redeem securities or other property, if such Liabilities arise out of or in connection with the sale or issuance of the same or similar securities or property, (i) Liabilities with respect to letters of credit or applications or reimbursement agreements therefor, (j) Liabilities with respect to payments received in consideration of oil, gas, or other minerals yet to be acquired or produced at the time of payment (including obligations under any take-or-pay contract to deliver gas in return for payments already received and the undischarged balance of any production payment created by such Person or for the creation of which such Person directly or indirectly received payment), or (k) Liabilities with respect to other obligations to deliver goods or services in consideration of advance payments therefor; provided, however, that the Indebtedness of any Person shall not include Liabilities that were incurred by such Person on ordinary trade terms to vendors, suppliers, or other Persons providing goods and services for use by such Person in the ordinary course of its business, unless and until such Liabilities are outstanding more than 90 days past the incurrence thereof, or if earlier, when due in accordance with its terms. Indemnified Liabilities means, collectively, any and all liabilities, obligations, losses, damages (including natural resource damages), penalties, claims (including Environmental Claims), costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Hazardous Materials Activity), expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding 14
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commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing this indemnity), whether direct, indirect or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any Indemnitee, in any manner relating to or arising out of (i) this Agreement or the other Transaction Documents or the transactions contemplated hereby or thereby (including any grant of Collateral or Lenders agreement to make Credit Extensions or the use or intended use of the proceeds thereof, or any enforcement of any of the Transaction Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty) or any defense against allegations of misconduct by any Indemnitee); (ii) the statements contained in any commitment letter, summary of terms or proposal letters delivered by any Indemnitee to PERL or any of its Subsidiaries with respect to the transactions contemplated by this Agreement; or (iii) any Environmental Claim or any Hazardous Materials Activity relating to or arising from, directly or indirectly, any past or present activity, operation, land ownership, or practice of PERL or any of its Subsidiaries. Indemnitee as defined in Section 10.3. Ineligible Professional Expenses means any fees or expenses incurred by any Person, including the Creditors Committee, any Borrower or any Guarantor in (A) preventing, hindering or delaying the applicable Collateral Agents enforcement or realization upon any of the Collateral once an Event of Default has occurred, (B) using or seeking to use cash collateral not in compliance with the Budget and the Interim Order or the Final Order, whichever is in effect at the time of reference thereto, or selling any other Collateral, in each case without the Required Lenders consent, (C) incurring Indebtedness (other than Indebtedness permitted by Section 6.1) without the Required Lenders consent and (D) objecting to or contesting in any manner, or in raising any defenses to, the validity, extent, amount, perfection, priority or enforceability of the Prepetition Lender Debt or the Obligations or any mortgages, Liens or security interests with respect thereto or any other rights or interests of the Agents and the Lenders, or in asserting any claims or causes of action, including, without limitation, any actions under Chapter 5 of the Bankruptcy Code, against the Agents or the Lenders, provided, however, that expenses up to the amount of $50,000 in the aggregate in connection with the process of investigating or analyzing any of the foregoing items listed in clause (D) hereof prior to the filing of an objection or a lawsuit, or the commencement of a contested matter or adversary proceeding, with respect to the Prepetition Lender Debt, the Obligations, the Liens or any potential claims or causes of action against the Agents or the Lenders shall not constitute Ineligible Professional Expenses. Interest Period means (a) the period beginning on and including the Closing Date and ending on but not including the first Monthly Payment Date following the Closing Date, and (b) each subsequent one-month period from and including one Monthly Payment Date to but not including the next Monthly Payment Date. Interim Order means the order of the Bankruptcy Court in the Case authorizing and approving this Agreement on an interim basis under Section 364(c) and (d) of 15
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the Bankruptcy Code and entered at a preliminary hearing under Bankruptcy Rule 4001, in form and substance satisfactory to the Lenders and Administrative Agents counsel. The Interim Order shall, among other things, (i) have authorized the borrowing of, and the guarantees in respect of, the Loans in an amount of up to the Refunding Amount plus the Interim Order Amount and the repayment of the Refunding Amount, and granted the superpriority claim status and Liens described in Section 7.1(a), and prohibited the granting of additional Liens on the assets of the Credit Parties and their Subsidiaries, (ii) provide that such Liens are automatically perfected by the entry of the Interim Order and also grant to the Collateral Agents for the benefit of the Secured Parties relief from the automatic stay of Section 362(a) of the Bankruptcy Code to enable the Collateral Agents, if the Collateral Agents elect to do so in their discretion, to make all filings and recordings and to take all other actions considered necessary or advisable by the Collateral Agents to perfect, protect and insure the priority of their respective Liens upon the Collateral as a matter of nonbankruptcy law, (iii) find that the Lenders are extending credit to the Borrowers in good faith pursuant to Section 364(e) of the Bankruptcy Code and therefore the debt incurred and priority of Liens granted hereunder are entitled to the protections in Section 364(e) of the Bankruptcy Code, (iv) authorize the Borrowers use of the Loans in accordance with the terms of the Budget and permitted variances, (v) as adequate protection for the Borrowers use of cash collateral, for the priming of Liens securing the Prepetition Lender Debt, for subordination to the Carve Out and any diminution in value of the other collateral securing the Prepetition Lender Debt, grant the Prepetition Lenders superpriority claim status and security interests and other Liens junior to those granted to the Lenders pursuant to Section 7.1, and such secured claims will increase during the pendency of the Case by the accrual of interest at the contract rate applicable to the Prepetition Lender Debt and professional fees of the Prepetition Lenders associated with the Prepetition Lender Debt, (vi) provide for the preservation of certain challenges to the Prepetition Credit Agreements but subject to the requirement that any such challenges by any Person be commenced on or before the later of (a) the date which falls on the 75th day following the Petition Date (or if such day is not a Business Day, on the next succeeding Business Day), or (b) the date which falls on the 60th day following the formation of the Creditors Committee (or if such day is not a Business Day, on the next succeeding Business Day), and (vii) be in full force and effect. Interim Order Amount as defined in the recitals hereto. Internal Revenue Code means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter, and any successor statute. Investment means, with respect to any Person, any direct or indirect advance, loan, guarantee of Liabilities or other extension of credit or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition by such Person of any capital stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any other Person. Investment Banker as defined in Section 5.19. J. Aron as defined in the preamble hereto.

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Law means any statute, law, regulation, ordinance, rule, treaty, judgment, order, decree, permit, concession, franchise, license, agreement or other governmental restriction of the United States or Canada or any state, province or political subdivision thereof or of any foreign country or any department, province or other political subdivision thereof. Lender means each Revolving Loan Lender, each PERL Term Lender, each PEAO Term Lender, and each other Person that becomes a party hereto pursuant to an Assignment Agreement or pursuant to an instrument of accession agreement in form and substance satisfactory to the Administrative Agent. Lender Counterparty means any Lender or any Affiliate of a Lender that is a counterparty to a Hedging Contract with any Borrower or any Guarantor, and shall include, for the avoidance of doubt, the Hedge Provider. Lender Hedging Obligations means all obligations of any Borrower or any Guarantor arising from time to time under the PERL ISDA Agreement, as amended pursuant to the Postpetition Hedge Amendment. Liabilities means, as to any Person, all indebtedness, liabilities and obligations of such Person, whether matured or unmatured, liquidated or unliquidated, primary or secondary, direct or indirect, absolute, fixed or contingent, and whether or not required to be considered pursuant to GAAP. Lien means, with respect to any property or assets, any right or interest therein of a creditor to secure Liabilities owed to it or any other arrangement with such creditor which provides for the payment of such Liabilities out of such property or assets or which allows such creditor to have such Liabilities satisfied out of such property or assets prior to the general creditors of any owner thereof, including any lien, mortgage, security interest, pledge, deposit, production payment, rights of a vendor under any title retention or conditional sale agreement or lease substantially equivalent thereto, tax lien, mechanics or materialmans lien, or any other charge or encumbrance for security purposes, whether arising by Law or agreement or otherwise, but excluding any right of offset which arises without agreement in the ordinary course of business. Lien also means any filed financing statement, any registration of a pledge (such as with an issuer of uncertificated securities), or any other arrangement or action which would serve to perfect a Lien described in the preceding sentence, regardless of whether such financing statement is filed, such registration is made, or such arrangement or action is undertaken before or after such Lien exists. Loan means any Revolving Loan, any PERL Term Loan or any PEAO Term Loan. Loan Exposure means, with respect to any Lender, as of any date of determination, the outstanding principal amount of such Lenders PERL Term Loans and PEAO Term Loans plus such Lenders Revolving Loan Commitment or if the Revolving Loan Commitments have been terminated, the outstanding amount of such Lenders Revolving Loans. Margin Stock as defined in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time. 17
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Material Adverse Effect means a material adverse effect on or material adverse development with respect to (i) the business, operations, properties, assets, condition (financial or otherwise) or prospects of PERL and its Subsidiaries taken as a whole; (ii) the ability of any Borrower, individually, or the Credit Parties, taken as a whole, to fully and timely perform its or their, as the case may be, Obligations; (iii) the legality, validity, binding effect or enforceability against any Borrower, individually, or the Credit Parties, taken as a whole, of a Transaction Document to which it is, or they are, as the case may be, a party; (iv) the San Pedro Bay Pipeline or the operation thereof, or (v) the rights, remedies and benefits available to, or conferred upon, any Agent, any Lender or any Secured Party under any Transaction Document; provided that this shall exclude the commencement of the Case and events that would typically result from the commencement of the Case. Material Contract means (a) the contracts listed on Schedule 4.20 and (b) any other contract or other arrangement to which PERL or any of its Subsidiaries is a party (other than the Transaction Documents or the Prepetition Transaction Documents) for which breach, nonperformance, cancellation or failure to renew (in the case of contracts or arrangements that are, by their terms, renewable at the option of PERL or any of its Subsidiaries) could reasonably be expected to have a Material Adverse Effect. Maturity Date means the earliest to occur of (i) September 10, 2009, (ii) the effective date of the Borrowers Reorganization Plan, (iii) the date on which the Borrowers have consummated, pursuant to Section 363 of the Bankruptcy Code and a Final Order of the Bankruptcy Court, a sale or sales of all or substantially all of the Borrowers assets; provided that except as expressly permitted pursuant to clauses (a) through (d) of Section 6.5, no Credit Party may sell, transfer, lease, exchange, alienate or dispose of all or substantially all of its assets or properties, Capital Stock or other equity interests pursuant to Section 363 of the Bankruptcy Code or otherwise without the consent of the Required Lenders, and (iv) the date of termination of the Lenders obligations to make Loans or permit existing Loans to remain outstanding pursuant to Section 8.1. MMS means the United States of America, acting by and through the Minerals Management Service of the United States Department of the Interior. Monthly Payment Date means the twenty-third (23rd) day of each calendar month. Moodys means Moodys Investor Services, Inc., or its successor. Mortgage means each deed of trust or mortgage from time to time given by any Borrower or any Guarantor to secure any of the Obligations, as each may be amended, supplemented or otherwise modified from time to time. NAIC means The National Association of Insurance Commissioners, and any successor thereto. Noble means Noble Energy, Inc., a Delaware corporation. Non-US Lender as defined in Section 2.14(c). 18
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Note means a promissory note in the form of Exhibit B evidencing one or more Loans, as such note may be amended, supplemented or otherwise modified from time to time. NPV means, with respect to any Proved Reserves expected to be produced from any undivided interests in oil and gas properties, the net present value, discounted at 10% per annum, of the future net revenues expected to accrue to any Credit Partys interests in such Proved Reserves (after deducting all existing burdens) during the remaining expected economic lives of such Proved Reserves. Each calculation of such expected future net revenues shall be made in accordance with the then existing standards of the Society of Petroleum Engineers, provided that in any event (a) appropriate deductions shall be made for severance and ad valorem taxes, and for operating (including purchasing and injecting water), gathering, transportation and marketing costs required for the production and sale of such reserves, (b) the pricing assumptions and escalations used in determining the NPV for any particular reserves shall be the Agreed Pricing (or any other pricing assumptions to which Borrowers and Required Lenders may agree), and (c) deductions shall be made for capital expenditures (including plugging and abandonment costs) that are included in the Budget. NPV shall be calculated hereunder in connection with each Engineering Report, either by Borrowers, by Administrative Agent with the consent of the Required Lenders, or by the engineering firm who prepares such Engineering Report; in the event of any conflict, Administrative Agents calculation shall be conclusive and final, absent manifest error so long as it is made with the consent of the Required Lenders. NYMEX Pricing means, as of any date of determination with respect to any month: (i) for crude oil, the closing settlement price for the Light, Sweet Crude Oil futures contract for the first nearby month, and (ii) for natural gas, the closing settlement price for the Henry Hub Natural Gas futures contract for the first nearby month, in each case as published by New York Mercantile Exchange (NYMEX) on its website currently located at www.nymex.com, or any successor thereto (as such price may be corrected or revised from time to time by the NYMEX in accordance with its rules and regulations). Obligations means all obligations of every nature of each Credit Party from time to time owed to any Agent (including any former Agent), any Lender, any Lender Counterparty, J. Aron, Silver Point, or any Indemnitee under any Transaction Document (including, without limitation, the PERL ISDA Agreement, as amended pursuant to the Postpetition Hedge Amendment (including, with respect to the PERL ISDA Agreement, obligations owed thereunder to any Person who was a Lender Counterparty at any time the PERL ISDA Agreement was in effect)), whether for principal, interest, payments arising from or in connection with the PERL ISDA Agreement, as amended pursuant to the Postpetition Hedge Amendment, fees, expenses, indemnification or otherwise. Obligee Guarantor as defined in Section 7.2(g). Oil and Gas Properties means all of the following which are, at the time in question, owned by any Borrower or any of the other Credit Parties: (i) all oil, gas and/or 19
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mineral leases, oil, gas or mineral properties, mineral servitudes and/or mineral rights of any kind (including mineral fee interests, lease interests, farmout interests, overriding royalty and royalty interests, net profits interests, oil payment interests, production payment interests and other types of mineral interests), (ii) all oil and gas gathering, treating, storage, processing and handling assets, (iii) all pipelines (including the San Pedro Bay Pipeline), and (iv) all platforms, wells, wellhead equipment, pumping units, flowlines, tanks, buildings, injection facilities, saltwater disposal facilities, compression facilities, gathering systems, and other equipment. Oil Pollution Act or OPA means the Oil Pollution Act, 33 U.S.C. Section 2701 et seq., and any and all regulations, permits, orders, approval, or authorizations issued thereunder. Orders means, collectively, the Interim Order and the Final Order. Organizational Documents means (i) with respect to any corporation, its certificate or articles of incorporation or organization, as amended, and its by-laws, as amended, (ii) with respect to any limited partnership, its certificate of limited partnership, as amended, and its partnership agreement, as amended, (iii) with respect to any general partnership, its partnership agreement, as amended, and (iv) with respect to any limited liability company, its articles of organization, as amended, and its operating agreement, as amended. In the event any term or condition of this Agreement or any other Transaction Document requires any Organizational Document to be certified by a secretary of state or similar governmental official, the reference to any such Organizational Document shall only be to a document of a type customarily certified by such governmental official. Other Taxes means any and all present or future stamp, registration, recording, filing, transfer, documentary, excise or property Taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to or in connection with, any Transaction Document. OXY Indemnification Obligations means any obligations for indemnification incurred by PERL, Carneros Energy or Gotland under either the Wilmington Purchase and Sale Agreement or the Carneros Purchase and Sale Agreement. Payoff Letters means, collectively, (i) that certain letter dated as of the date hereof from the PERL Administrative Agent to the PERL Prepetition Borrower and the PERL Prepetition Guarantors and (ii) that certain letter dated as of the date hereof from the PEAO First Lien Administrative Agent to the PEAO First Lien Prepetition Borrower and PEAH. PBGC means the Pension Benefit Guaranty Corporation or any successor thereto. PEA Entities means PEAH and PEAO and any of their respective Subsidiaries. PEAH as defined in the preamble hereto. PEAO as defined in the preamble hereto.

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PEAO Collateral Account means deposit account number 6885862166 established in the name of PEAO with Wells Fargo Bank, N.A., or such other deposit account as may be established by PEAO from time to time with the prior written consent of Silver Point Finance, LLC, as Collateral Agent, which consent may be given or withheld in its sole and absolute discretion. PEAO First Lien Administrative Agent as defined in the recitals hereto. PEAO First Lien Collateral Agent as defined in the recitals hereto. PEAO First Lien Credit Agreement as defined in the recitals hereto. PEAO First Lien Lenders as defined in the recitals hereto. PEAO First Lien Prepetition Borrower as defined in the recitals hereto. PEAO Refunding Amount as defined in the recitals hereto. PEAO Second Lien Administrative Agent as defined in the recitals hereto. PEAO Second Lien Collateral Agent as defined in the recitals hereto. PEAO Second Lien Credit Agreement as defined in the recitals hereto. PEAO Second Lien Lenders as defined in the recitals hereto. PEAO Second Lien Prepetition Borrower as defined in the recitals hereto. PEAO Second Lien Prepetition Debt as defined in the recitals hereto. PEAO Second Lien Prepetition Guarantors as defined in the recitals hereto. PEAO Second Lien Pro Rata Share means, with respect to any PEAO Second Lien Lender at any time, the percentage (carried out to the ninth decimal place) of the PEAO Second Lien Prepetition Debt represented by such PEAO Second Lien Lenders Commitment, under and as defined in the PEAO Second Lien Credit Agreement. PEAO Term Facility as defined in the recitals hereto. PEAO Term Lenders means (a) at any time on or prior to the Closing Date, any Lender that has a PEAO Term Loan Commitment at such time and (b) at any time after the Closing Date, any Lender that holds PEAO Term Loans at such time. PEAO Term Loan Commitment means, as to each PEAO Term Lender, its obligation to make a PEAO Term Loan to the Borrowers pursuant to Section 2.1 in an aggregate principal amount not to exceed the amount set forth opposite such PEAO Term Lenders name on Appendix A under the caption PEAO Term Loan Commitment.

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PEAO Term Loans means an advance made by each PEAO Term Lender under the PEAO Term Facility. PEAO Term Pro Rata Share means, with respect to any PEAO Term Lender at any time, the percentage (carried out to the ninth decimal place) of the PEAO Term Facility represented by (a) on or prior to the Closing Date, such PEAO Term Lenders PEAO Term Loan Commitment at such time and (b) thereafter, the principal amount of such PEAO Term Lenders PEAO Term Loan at such time. PERL as defined in the preamble hereto. PERL Administrative Agent as defined in the recitals hereto. PERL Collateral Account means deposit account number 525-5100322 established in the name of PERL with Wells Fargo Bank, N.A., or such other deposit account as may be established by PERL from time to time with the prior written consent of J. Aron, as Collateral Agent, which consent may be given or withheld in its sole and absolute discretion. PERL Credit Agreement as defined in the recitals hereto. PERL ISDA Agreement as defined in the recitals hereto. PERL Lenders as defined in the recitals hereto. PERL Prepetition Borrower as defined in the recitals hereto. PERL Prepetition Guarantors as defined in the recitals hereto. PERL Term Facility as defined in the recitals hereto. PERL Term Lenders means (a) at any time on or prior to the Closing Date, any Lender that has a PERL Term Loan Commitment at such time and (b) at any time after the Closing Date, any Lender that holds PERL Term Loans at such time. PERL Term Loan Commitment means, as to each PERL Term Lender, its obligation to make a PERL Term Loan to the Borrowers pursuant to Section 2.1 in an aggregate principal amount not to exceed the amount set forth opposite such PERL Term Lenders name on Appendix A under the caption PERL Term Loan Commitment. PERL Term Loans means an advance made by each PERL Term Lender under the PERL Term Facility. PERL Term Pro Rata Share means, with respect to any PERL Term Lender at any time, the percentage (carried out to the ninth decimal place) of the PERL Term Facility represented by (a) on or prior to the Closing Date, such PERL Term Lenders PERL Term Loan Commitment at such time and (b) thereafter, the principal amount of such PERL Term Lenders PERL Term Loan at such time.

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Permitted Investments means Investments: (a) in open market commercial paper, maturing within 270 days after acquisition thereof, which is rated at least A-1 by S&P or P-1 by Moodys. (b) in marketable obligations, maturing within 12 months after acquisition thereof, issued or unconditionally guaranteed by the United States of America or an instrumentality or agency thereof and entitled to the full faith and credit of the United States of America. (c) in demand deposits, and time deposits (including certificates of deposit) maturing within 12 months from the date of deposit thereof, with any office of any national or state bank or trust company which is organized under the Laws of the United States of America or any state therein, which has capital, surplus and undivided profits of at least $500,000,000, and whose certificates of deposit are rated at least Aa3 by Moodys or AA- by S&P. (d) in repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (b) above entered into with any commercial bank meeting the specifications of clause (c) above. (e) in money market or other mutual funds substantially all of whose assets comprise securities of the types described in clauses (a) through (d) above. Permitted Liens means the Permitted Prior Liens and other Liens permitted by Section 6.2 or otherwise approved in writing by the Required Lenders. Permitted Prior Liens means valid, properly perfected and otherwise unavoidable Liens existing as of the Petition Date and having, as of the Petition Date, priority over the Liens securing the Prepetition Lender Debt. Person means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and Governmental Authorities. Petition Date as defined in the recitals hereto. Platform Ellen means that certain offshore oil and gas platform located in the Beta Field on federal lease bearing serial No. OCS P-0300, Offshore California. Platform Elly means that certain offshore oil and gas platform located in the Beta Field on federal lease bearing serial No. OCS P-0300, offshore California. Platform Eureka means that certain offshore oil and gas platform located in the Beta Field on federal lease bearing serial No. OCS P-0301, offshore California. Post-Default Rate as defined in Section 2.7. 23
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Postpetition Hedge Amendment means that certain Derivative Transaction Assumption and Amendment Agreement dated as of even date herewith by and between the Hedge Provider and PERL and in form and substance reasonably acceptable to the Required Lenders. Prepetition Agents as defined in the recitals hereto. Prepetition Borrowers as defined in the recitals hereto. Prepetition Credit Agreements as defined in the recitals hereto. Prepetition Guarantors as defined in the recitals hereto. Prepetition Lender Debt as defined in the recitals hereto. Prepetition Lenders as defined in the recitals hereto. Prepetition Secured Parties as defined in the Order. Prepetition Transaction Documents means, collectively, the Transaction Documents, as defined in the PERL Credit Agreement, the Loan Documents, as defined in the PEAO First Lien Credit Agreement and the Loan Documents, as defined in the PEAO Second Lien Credit Agreement. Principal Office means, for Administrative Agent, its Principal Office as set forth on Appendix B, or such other office as such Person may from time to time designate in writing to Borrowers, Administrative Agent and each Lender. Priority Professional Expenses means allowed and unpaid fees, costs and expenses of professionals retained in the Case pursuant to Sections 327, 328 and 1103 of the Bankruptcy Code consisting of any attorneys, accountants, financial advisors, and consultants retained by Borrowers or the Creditors Committee; provided, however, that (i) the term Priority Professional Expenses shall not include any Ineligible Professional Expenses and (ii) the amount of Priority Professional Expenses incurred in any period shall not exceed the Professional Expense Cap. Professional Expense Cap means, with respect to fees, costs and expenses of professionals retained in the Case pursuant to Sections 327, 328 and 1103 of the Bankruptcy Code prior to the occurrence of an Event of Default, the cumulative amounts set forth for such fees, costs and expenses in the Budget on an accrual basis, to the extent such fees, costs and expenses are actually incurred prior to an Event of Default, and from and after the occurrence of an Event of Default, $1,000,000 in the aggregate (inclusive of any holdbacks required by the Bankruptcy Court), provided, however, that from and after the occurrence of an Event of Default, all amounts expended thereafter for Priority Professional Expenses shall reduce the Professional Expense Cap dollar for dollar.

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Properties means, collectively, those undivided interests in oil and gas properties and interests in other real and personal property which are, at the time in question, owned by Borrowers or any of the other Credit Parties. Proposed Asset Sale(s) as defined in Section 5.2(k). Pro Rata Share means, with respect to any Lender, the PERL Term Pro Rata Share, the PEAO Term Pro Rata Share or the Revolving Facility Pro Rata Share, and with respect to any PEAO Second Lien Lender, its PEAO Second Lien Pro Rata Share. The initial Pro Rata Shares of each Lender in respect of each of the PERL Term Facility, the PEAO Term Facility and the Revolving Facility is set forth opposite the name of such Lender on Appendix A. Proved Reserves means Proved Reserves as defined in the Sections for Oil and Gas Reserves (in this paragraph, the Definitions) promulgated by the Society of Petroleum Engineers (or any generally recognized successor) as in effect at the time in question. Proved Developed Producing Reserves means Proved Reserves which are categorized as both Developed and Producing in the Definitions, Proved Developed Nonproducing Reserves means Proved Reserves which are categorized as both Developed and Nonproducing in the Definitions, and Proved Undeveloped Reserves means Proved Reserves which are categorized as Undeveloped in the Definitions, provided that the following criteria shall also apply to Proved Developed Producing Reserves: (a) no reserves shall be classified as Proved Developed Producing Reserves until a minimum of forty-five (45) days of production have occurred in at least one consecutive period of sixty (60) days following any operation, workover or capital expenditure, and (b) during such forty-five (45) days of production, the well relating to such reserves must be tested a minimum of three (3) times for at least twenty-four (24) hours of continuous duration. Refunding Amount as defined in the recitals hereto. Register as defined in Section 2.4(b). Related Fund shall mean, with respect to any Lender that is a fund or commingled investment vehicle that invests in bank loans, any other fund that invests in bank loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor. With respect to Silver Point Finance, LLC, Related Fund shall also include any swap, special purpose vehicles purchasing or acquiring security interests in collateralized loan obligations or any other vehicle through which Silver Point Finance, LLC may leverage its investments from time to time. Release means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater. Reorganization Plan means the plan or plans of reorganization in the Case that has or have been confirmed by an order of the Bankruptcy Court. 25
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Required Lenders means one or more Lenders having or holding Loan Exposure and representing sixty-six and two-thirds percent (66%) or more of the aggregate Loan Exposure of all Lenders. Required Prepetition Lenders as defined in the Order. Revolving Facility as defined in the recitals hereto. Revolving Facility Pro Rata Share means, with respect to any Revolving Lender at any time, the percentage (carried out to the ninth decimal place) of the Revolving Facility represented by such Revolving Lenders Revolving Loan Commitment at such time. If the commitment of each Revolving Lender to make Revolving Loans has been terminated pursuant to Section 8.1, or if the Revolving Loan Commitments have expired, then the Revolving Facility Pro Rata Share of each Revolving Lender shall be determined based on such Revolving Lenders Revolving Facility Pro Rata Share of the outstanding Revolving Loans at such time. Revolving Lenders means, at any time, any Lender that has a Revolving Loan Commitment or that holds Revolving Loans at such time. Revolving Loan Commitment means, as to each Revolving Lender, its obligation to make Revolving Loans to the Borrowers pursuant to Section 2.1 in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lenders name on Appendix A under the caption Revolving Loan Commitment, as such amount may be adjusted from time to time in accordance with this Agreement. Revolving Loans means an advance made by any Revolving Lender under the Revolving Facility. S&P means Standard & Poors Ratings Group, a division of The McGraw Hill Corporation, or its successor. Sale Order as defined in Section 5.33. Sale Procedures Order as defined in Section 5.33. San Pedro Bay Pipeline means the sixteen-inch (16) oil pipeline from Platform Elly to the onshore facilities. Second Lien Guarantee as defined in the recitals hereto. Secured Parties means the Persons to whom any Obligations are at any time owed. Securities means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments 26
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commonly known as securities or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing. Securities Act means the Securities Act of 1933, as amended from time to time, and any successor statute. Security Documents means all security agreements, deeds of trust, mortgages, chattel mortgages, pledges, guaranties, financing statements, continuation statements, extension agreements and other agreements or instruments now, heretofore, or hereafter delivered by any Credit Party to the applicable Collateral Agent in connection with this Agreement or any transaction contemplated hereby to secure or guarantee the payment of any part of the Obligations, Lender Hedging Obligations or the performance of any Credit Partys other duties and obligations under the Transaction Documents. Silver Point means (a) Silver Point Finance, LLC, a Delaware limited liability company, (b) Field Point I, Ltd., a Cayman corporation, (c) SPCP Group, LLC, a Delaware limited liability company, (d) SPCP Group III LLC, a Delaware limited liability company, (e) Field Point II, Ltd., a Cayman corporation, (f) Field Point IV, Ltd., a Cayman corporation, (g) SPF CDO I, Ltd., a Cayman corporation, (h) Broad Point I, B.V., a Dutch company with limited liability, (i) Field Point III, Ltd., a Cayman corporation, (j) any Related Fund of the foregoing entities, and (k) any swap vehicle (including a special purpose vehicle that is a counterparty to a swap transaction) through which any of the foregoing may leverage their investment. Stalking Horse Purchaser as defined in Section 5.2(k). Subordinated Seller Note means that certain Senior Subordinated Accreting Note, dated as of August 24, 2007, made by PERL in favor of Forest Oil Corporation in the original principal amount of $29,250,000. Subsidiary means, with respect to any Person, any corporation, association, partnership, limited liability company, joint venture, or other business or corporate entity, enterprise or organization which is directly or indirectly (through one or more intermediaries) controlled by or owned more than fifty percent (50%) by such Person. Superpriority Claim means a claim against any Borrower or any Guarantor or its respective estate in the Case which is an administrative expense claim having priority over (i) any and all allowed administrative expenses and (ii) unsecured claims now existing or hereafter arising, including, without limitation, administrative expenses of the kind specified in Section 503(b), 506(c) or 507(b) of the Bankruptcy Code. SWEPI means SWEPI LP, a Delaware limited partnership. Syndication Agent as defined in the preamble hereto. Tax means any present or future tax, levy, impost, duty, assessment, charge, fee, deduction or withholding of any nature and whatever called, by whomever; on whomever and wherever imposed, levied, collected, withheld or assessed; provided, Tax on the overall net 27
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income or income Tax of a Person shall be construed as a reference to a tax imposed by the jurisdiction in which that Person is organized or in which that Persons applicable principal office (and/or, in the case of a Lender, its lending office) is located or in which that Person (and/or, in the case of a Lender, its lending office) is deemed to be doing business on all or part of the net income, profits or gains (whether worldwide, or only insofar as such income, profits or gains are considered to arise in or to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in the case of a Lender, its applicable lending office). Tax Related Person means a Person (including a beneficial owner of an interest in a pass-through entity) whose income is realized through or determined by reference to an Agent, a Lender or participant pursuant to Section 10.5 or any Tax Related Person of any of the foregoing. Termination Event means (a) the occurrence with respect to any ERISA Plan of (i) a reportable event described in Sections 4043(c)(5) or (6) of ERISA or (ii) any other reportable event described in Section 4043(c) of ERISA other than a reportable event not subject to the provision for 30-day notice to the PBGC pursuant to a waiver by such corporation, or (b) the requirements of Section 4043(b) of ERISA apply with respect to a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of an ERISA Plan, and an event described in paragraph.(9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such ERISA Plan within the following 30 days, or (c) the withdrawal of any ERISA Affiliate from an ERISA Plan during a plan year in which it was a substantial employer as defined in Section 4001(a)(2) of ERISA, or (d) the filing of a notice of intent to terminate any ERISA Plan or the treatment of any ERISA Plan amendment as a termination under Section 4041 of ERISA, or (e) the institution of proceedings to terminate any ERISA Plan by the PBGC under Section 4042 of ERISA, or (f) any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any ERISA Plan. Transaction Document means any of this Agreement, the Notes (if any), the Security Documents, the PERL ISDA Agreement, the Postpetition Hedge Amendment, the Payoff Letters, the fee letter described in Section 2.8 and all other certificates, documents, instruments or agreements executed and delivered by a Credit Party for the benefit of any Agent, any Lender, or any Lender Counterparty in connection herewith. Trust Agreement means that certain Supplemental Bond for Decommissioning Liabilities Trust Agreement (per 30 C.F.R. 356.62), dated as of March 1, 2007, by and among U.S. Bank National Association, acting in its capacity as trustee, PERL, and the MMS. UCC means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction. Warrant Owners means (a) Goldman, Sachs & Co., (b) SPCP Group, L.L.C., and (c) SPCP Group III LLC, together with their respective successors and assigns.

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Wilmington Purchase and Sale Agreement means that certain Purchase and Sale Agreement, dated May 15, 2008, among PERL, Petrocal Acquisition Corp. and Oxy Long Beach, Inc. 1.2 Accounting Terms. Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. Financial statements and other information required to be delivered by Borrowers to Lenders pursuant to Sections 5.2(a), 5.2(b) and 5.2(c) shall be prepared in accordance with GAAP as in effect at the time of such preparation (and delivered together with the reconciliation statements provided for in Section 5.2(e), if applicable). 1.3 Interpretation, etc. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. References herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically provided. The word or is not exclusive. The use herein of the word include or including, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not noting language (such as without limitation or but not limited to or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. 1.4 Joint Preparation; Construction of Indemnities and Releases. This Agreement and the other Transaction Documents have been reviewed and negotiated by sophisticated parties with access to legal counsel and no rule of construction shall apply hereto or thereto which would require or allow any Transaction Document to be construed against any party because of its role in drafting such Transaction Document. All indemnification and release provisions of this Agreement shall be construed broadly (and not narrowly) in favor of the Persons receiving indemnification or being released. SECTION 2. LOANS 2.1 Loans and Borrowing Mechanics. (a) Revolving Loans. Subject to the terms and conditions hereof, each Revolving Lender severally agrees to make Revolving Loans to the Borrowers, in an amount equal to such Revolving Lenders Revolving Facility Pro Rata Share of any Revolving Loans requested, (i) on the Closing Date and (ii) once per week after the Closing Date to pay expenses and make disbursements as contemplated by the Budget; provided that, in each case, after giving effect to any such borrowing, the aggregate outstanding amount of the Revolving Loans (A) shall not exceed the Interim Order Amount at any time prior to entry of the Final Order, (B) shall not exceed the Revolving Facility and (C) of any Revolving Lender shall not exceed such Revolving Lenders Revolving Loan Commitment. Within the limits of each Revolving Lenders Revolving Loan Commitment, and subject to the other terms and conditions hereof, Borrowers may borrow Revolving Loans under this 29
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Section 2.1(a), prepay such Revolving Loans under Section 2.9, and reborrow such Revolving Loans under this Section 2.1(a). Notwithstanding the foregoing, (A) a portion of the Interim Order Amount in an amount equal to $550,000 shall only be made available to the Borrowers in the event of a delay or disruption due to third party actions of any scheduled receipt of oil revenues at any time prior to entry of the Final Order and (B) a portion of the Revolving Facility in an amount equal to $5,000,000 shall only be made available to the Borrowers in the event they are required pursuant to an order of the Bankruptcy Court to make any payments in respect of Indebtedness permitted pursuant to Section 6.1(j). (b) PERL Term Loans. Subject to the terms and conditions hereof, each PERL Term Lender severally agrees to make a single PERL Term Loan to the Borrowers on the Closing Date in an amount equal to such Lenders PERL Term Loan Commitment, provided that after giving effect to any such borrowing, the aggregate outstanding amount of the PERL Term Loans shall not exceed the PERL Term Facility. Any amount borrowed with respect to the PERL Term Loans under this Section 2.1(b) and subsequently repaid or prepaid may not be reborrowed. PEAO Term Loans. Subject to the terms and conditions hereof, each PEAO Term Lender severally agrees to make a single PEAO Term Loan to the Borrowers on the Closing Date in an amount equal to such Lenders PEAO Term Loan Commitment, provided that after giving effect to any such borrowing, the aggregate outstanding amount of the PEAO Term Loans shall not exceed the PEAO Term Facility. Any amount borrowed with respect to the PEAO Term Loans under this Section 2.1(c) and subsequently repaid or prepaid may not be reborrowed. General Provisions Relating to the Loans. Each Loan made pursuant to this Section shall be, to the extent applicable, subject to (i) the satisfaction or waiver of the conditions precedent set forth herein (including, without limitation, those set forth in Section 3.2) and (ii) the Administrative Agents and the Lenders receipt, at least one Business Day prior to making such Loan, of a report detailing (x) compliance with the Budget for the then-most recently ended week, and (y) the professional fees, expenses and disbursements to be paid with the proceeds of such Loan, which fees, expenses and disbursements shall be reasonable and shall be in accordance with the Budget, in an aggregate amount up to such Lenders Commitment. Subject to Section 2.10, all amounts owed hereunder with respect to the Loans, including all interest compounded into the principal outstanding amount of the Loans on or prior to the Maturity Date pursuant to Section 2.5(c), shall be paid in full no later than the Maturity Date. Funding Notice. Borrowers shall deliver to Administrative Agent a fully executed Funding Notice as of the Closing Date or not later than 12:00 p.m. (New York City time) one (1) Business Day prior to any subsequent borrowing of Loans. Promptly upon receipt by Administrative Agent of such Funding Notice, Administrative Agent shall notify each Lender of the proposed borrowing. Each 30
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(c)

(d)

(e)

Lender shall make its Loan available to Administrative Agent not later than 12:00 p.m. (New York City time) on the date specified in such Funding Notice, by wire transfer of same day funds in Dollars, at Administrative Agents Principal Office. Upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of the Loans available to Borrowers on such date by causing an amount of same day funds in Dollars equal to the proceeds of all such Loans received by Administrative Agent from Lenders to be credited to the account of Borrowers at Administrative Agents Principal Office or to such other account as may be designated in writing to Administrative Agent by Borrowers; provided that the proceeds of any Loans shall be utilized solely in accordance with the Budget or as otherwise consented to in writing by the Required Lenders (it being understood that the professional fees, expenses and disbursements being paid with the proceeds of any Loan shall be reasonable). 2.2 Pro Rata Shares. All Loans shall be made, and all participations purchased, by Lenders simultaneously and proportionately to their respective applicable Pro Rata Shares, it being understood that no Lender shall be responsible for any default by any other Lender in such other Lenders obligation to make a Loan requested hereunder or purchase a participation required hereby nor shall any Commitment of any Lender be increased or decreased as a result of a default by any other Lender in such other Lenders obligation to make a Loan requested hereunder or purchase a participation required hereby. 2.3 Use of Proceeds. The proceeds of the PERL Term Loans shall be applied exclusively to repay the PERL Refunding Amount and PEAO Term Loans shall be applied exclusively to repay the PEAO Refunding Amount, and all other Loans shall be used exclusively to provide working capital for the Borrowers in accordance with the Budget, to fund capital expenditures in accordance with the Budget, and for other general corporate purposes in accordance with the Budget. No portion of the proceeds of any Credit Extension shall be used in any manner that causes or might cause such Credit Extension or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation thereof or to violate the Exchange Act. 2.4 Evidence of Liabilities; Register; Lenders Books and Records; Notes. (a) Lenders Evidence of Liabilities. Each Lender shall maintain on its internal records an account or accounts evidencing the Liabilities of Borrowers to such Lender, including the amounts of the Loans made by it and each repayment and prepayment in respect thereof. Any such recordation shall be conclusive and binding on Borrowers, absent manifest error; provided, failure to make any such recordation, or any error in such recordation, shall not affect any Lenders Commitments or Borrowers Obligations in respect of any applicable Loans; and provided, further, in the event of any inconsistency between the Register and any Lenders records, the recordations in the Register shall govern. Register. Administrative Agent shall maintain at its Principal Office a register for the recordation of the names and addresses of Lenders and the Commitments and Loans of each Lender from time to time (the Register). The Register shall be 31
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(b)

available for inspection by Borrowers or any Lender at any reasonable time and from time to time upon reasonable prior notice. Administrative Agent shall record in the Register the Commitments and the Loans, and the interest, each repayment or prepayment thereon, and any such recordation shall be conclusive and binding on Borrowers and each Lender, absent manifest error; provided, failure to make any such recordation, or any error in such recordation, shall not affect any Lenders Commitments or Borrowers joint and several Obligations in respect of any Loan. Each Borrower hereby designates J. Aron to serve as such Borrowers agent solely for purposes of maintaining the Register as provided in this Section 2.4, and each Borrower hereby agrees that, to the extent J. Aron serves in such capacity, J. Aron and its officers, directors, employees, agents and affiliates shall constitute Indemnitees. (c) Notes. If so requested by any Lender by written notice to Borrowers (with a copy to Administrative Agent) at least two Business Days prior to the Closing Date, or at any time thereafter, Borrowers shall execute and deliver to such Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of such Lender pursuant to Section 10.5) on the Closing Date (or, if such notice is delivered after the Closing Date, promptly after Borrowers receipt of such notice) a Note or Notes to evidence such Lenders Loans. Any such Note evidencing Loans under the applicable Commitment shall be in the form of Exhibit B.

2.5

Interest on Loans. (a) Except as otherwise set forth herein, each Loan shall bear interest on the unpaid principal amount thereof at the Effective Rate from the date made through repayment thereof (whether by acceleration or otherwise). Interest payable on all Loans shall be computed on the basis of a 360-day year for the actual number of days elapsed in the period during which it accrues. In computing interest on any Loan, the date of the making of such Loan shall be included, and the date of payment of such Loan shall be excluded; provided, if a Loan is repaid on the same day on which it is made, one days interest shall be paid on that Loan. A portion of the interest on each Loan shall accrue at an annual rate equal to 4.00% and be payable in cash on each Monthly Payment Date. The remaining portion of interest on each Loan shall accrue and be compounded into the principal outstanding amount of the Loans on each Monthly Payment Date and shall thereafter be treated in all respects as part of the outstanding principal amount of the Loans.

(b)

(c)

2.6 Reduction of Commitment. Borrowers may from time to time, but not more than once during the term of this Agreement, reduce the aggregate Revolving Loan Commitment for the Revolving Loans to any lesser amount. To make any such reduction, Borrowers must send written notice to Administrative Agent of the amount of the Revolving Loan Commitment chosen by Borrowers. Any choice by Borrowers of a reduced Revolving Loan Commitment 32
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shall be effective upon receipt by Administrative Agent of such written notice and shall constitute a permanent reduction of the Revolving Loan Commitment. 2.7 Default Interest. Upon the occurrence and during the continuance of an Event of Default, the principal amount of all Loans outstanding and, to the extent permitted by applicable law, any past due interest payments on the Loans or any past due fees or other amounts owed hereunder, shall thereafter bear interest payable on demand at a rate that is 2% per annum in excess of the Effective Rate with respect to the applicable Loans (the Post-Default Rate). Payment of interest at the Post-Default Rate is not, however, a permitted alternative to timely payment, and acceptance of interest at the Post-Default Rate shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of any Agent or any Lender. 2.8 Payments of Other Amounts. Pursuant to a letter agreement dated the Closing Date among Borrowers and the Administrative Agent, each Borrower has jointly and severally promised to pay to the Administrative Agent, for the account of each Lender in accordance with its Pro Rata Shares, certain amounts at the times agreed upon, and each Borrower hereby repeats its joint and several promise to pay such amounts. 2.9 Voluntary Prepayments. (a) Borrowers, at their option, upon notice as provided below, may prepay any part of the Loans, at any time without penalty or premium, provided that: (i) any partial prepayment of a Loan must not be less than $1,000,000 in the aggregate for all Loans then outstanding (or, if less, the remaining principal amount of the Loans) and must be an integral multiple of $500,000 if in excess of that amount, each such prepayment of principal shall be accompanied by all interest accrued on such principal to the date of repayment, and Borrowers must give each Lender written notice as provided below of each prepayment under this section.

(ii) (iii)

Each such notice shall be given not less than one Business Day prior to the date fixed for such prepayment and shall specify (1) the Business Day on which such prepayment will be made and (2) the aggregate principal amount of the Loans to be prepaid. Upon the giving of such notice, the principal to be prepaid as described therein shall become due and payable on the prepayment date specified in such notice. (b) Any principal prepaid pursuant to subsection (a) of this section shall be in addition to, and not in lieu of, all payments otherwise required to be paid under the Transaction Documents at the time of such prepayment, and until the Loans have been paid in full the mandatory prepayments required under Section 2.10 shall not be reduced.

2.10

Mandatory Prepayments. 33

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(a)

If the Required Lenders shall, in their sole and absolute discretion, approve the sale of any Collateral requested by a Credit Party (other than the sale or other disposition of assets or property otherwise permitted pursuant to Section 6.5), Borrowers shall make a payment in respect of the Loans, without premium or penalty, in an aggregate amount equal to the sales proceeds received by such Credit Party net only of reasonable out-of-pocket costs of such sale paid to non-Affiliates of Borrowers. Borrowers shall make a payment in respect of the Loans, without premium or penalty, in an aggregate amount equal to the gross proceeds received by any Credit Party relating to insurance in respect of casualty to property constituting Collateral (which payment shall be made immediately upon receipt thereof). If at any time the sum of the outstanding amount of the Revolving Loans exceeds total Revolving Loan Commitments, then the Borrowers shall immediately pay the amount of such excess to the Administrative Agent for the respective accounts of the Lenders.

(b)

(c)

2.11

General Provisions Regarding Payments. (a) All payments by Borrowers of principal, interest, fees and other Obligations shall be made in Dollars in same day funds, without defense, setoff or counterclaim, free of any restriction or condition, and delivered to Administrative Agent not later than 12:00 p.m. (New York City time) on the date due at Administrative Agents Principal Office for the account of Lenders; funds received by Administrative Agent after that time on such due date shall be deemed to have been paid by Borrowers on the next succeeding Business Day. All payments in respect of the principal amount of any Loan shall include all interest accrued on such principal to the date of repayment. Administrative Agent shall promptly distribute to each Lender at such address as such Lender shall indicate in writing, such Lenders applicable Pro Rata Share of all payments and prepayments of principal and interest due hereunder, together with all other amounts due thereto, including, without limitation, all fees payable with respect thereto, to the extent received by Administrative Agent, first, to repay the Revolving Loans in accordance with the Revolving Loan Commitments set forth on Appendix A, and only after the outstanding Revolving Loans have been reduced to $0, then as follows, in each case with adjustments to the extent practicable to equalize any prior repayments not exactly in proportion: (i) with respect to any payments consisting of Collateral of PERL and its Subsidiaries or made with the proceeds of the Collateral of PERL and its Subsidiaries (other than the PEA Entities):

(b) (c)

(1) second to the PERL Term Facility, to be allocated among the PERL Term Lenders in accordance with each such PERL Term Lenders PERL Term Pro Rata Share; 34
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(2) third to the extent the PERL Term Facility has been paid in full, to the PEAO Second Lien Prepetition Debt, to be allocated among the PEAO Second Lien Lenders in accordance with each such Lenders PEAO Second Lien Pro Rata Share of the PEAO Second Lien Prepetition Debt in accordance with Section 2.12 of the PEAO Second Lien Credit Agreement; and (3) fourth to the extent the PEAO Second Lien Prepetition Debt has been paid in full, to the PEAO Term Facility, to be allocated among the PEAO Term Lenders in accordance with each such PEAO Term Lenders PEAO Term Pro Rata Share; (ii) with respect to any payments consisting of Collateral of the PEA Entities or made with the proceeds of the Collateral of the PEA Entities:

(1) second to the PEAO Term Facility, to be allocated among the PEAO Term Lenders in accordance with each such PEAO Term Lenders PEAO Term Pro Rata Share; (2) third to the extent the PEAO Term Facility has been paid in full, to the PEAO Second Lien Prepetition Debt, to be allocated among the PEAO Second Lien Lenders in accordance with each such Lenders PEAO Second Lien Pro Rata Share of the PEAO Second Lien Prepetition Debt in accordance with Section 2.12 of the PEAO Second Lien Credit Agreement; and (3) fourth to the extent the PEAO Second Lien Prepetition Debt has been paid in full, to the PERL Term Facility, to be allocated among the PERL Term Lenders in accordance with each such PERL Term Lenders PERL Term Pro Rata Share; (d) Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest or fees hereunder. Each Borrower hereby authorizes Administrative Agent to charge such Borrowers accounts with Administrative Agent in order to cause timely payment to be made to Administrative Agent of all principal, interest, fees and expenses due hereunder (subject to sufficient funds being available in its accounts for that purpose). Administrative Agent shall deem any payment by or on behalf of Borrowers hereunder that is not made in same day funds prior to 12:00 p.m. (New York City time) to be a non-conforming payment. Any such payment shall not be deemed to have been received by Administrative Agent until the later of (i) the time such funds become available funds, and (ii) the applicable next Business Day. Administrative Agent shall give prompt telephonic notice to Borrowers and each applicable Lender (confirmed in writing) if any payment is non-conforming. Any non-conforming payment may constitute or become a Default or Event of Default in accordance with the terms of Section 8.1(a). Interest shall continue to accrue 35
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(e)

(f)

on any principal as to which a non-conforming payment is made until such funds become available funds (but in no event less than the period from the date of such payment to the next succeeding applicable Business Day) at the rate determined pursuant to Section 2.7 from the date such amount was due and payable until the date such amount is paid in full. 2.12 Ratable Sharing. As used in this section, Obligation Category means the following groups of Obligations: (a) payments due and owing to Lenders under Sections 5.9, 10.2 or 10.3 hereof or under any similar sections of any other Transaction Documents, (b) interest due and payable in respect of the Loans and payment due and owing to Lenders under Section 2.5 and Section 2.7, (c) the outstanding principal amount of the Loans and (d) all other Obligations. Lenders hereby agree among themselves that if any of them shall, whether by voluntary payment, through the exercise of any right of set-off or bankers lien, by counterclaim or cross action or by the enforcement of any right under the Transaction Documents or otherwise (other than pursuant to an assignment pursuant to Section 10.5), or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a proportion of any Obligations in an Obligation Category that are then due and owing to such Lender hereunder or under the other Transaction Documents which is greater than the proportion received by any other Lender in respect of the Obligations in such Obligation Category that are then due and owing to such other Lender, then the Lender receiving such proportionately greater payment shall (a) notify Administrative Agent and each other Lender of the receipt of such payment and (b) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Obligations in such Obligation Category then due and owing to the other Lenders so that all such recoveries of Obligations in any Obligation Category shall be shared by all Lenders in proportion to the aggregate Obligations in such Obligation Category that are then due and owing to all of them; provided, if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of Borrowers or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. Each Borrower expressly consents to the foregoing arrangement and agrees that any holder of a participation so purchased may exercise any and all rights of bankers lien, set-off or counterclaim with respect to any and all monies owing by such Borrower to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder. 2.13 Increased Costs; Capital Adequacy. (a) Compensation For Increased Costs and Taxes. Subject to the provisions of Section 2.12 (which shall be controlling with respect to the matters covered thereby), in the event that any Lender shall determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or Governmental Authority, in each case that becomes effective after the date hereof, or compliance by such Lender with any 36
A/72851779.11

guideline, request or directive issued or made after the date hereof by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law): (i) subjects such Lender (or its applicable lending office) to any additional Tax (other than any Tax on the overall net income of such Lender) with respect to this Agreement or any of the other Transaction Documents or any of its obligations hereunder or thereunder or any payments to such Lender (or its applicable lending office) of principal, interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender; or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder or the London interbank market; and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Loans hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, Borrowers shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender for any such increased cost or reduction in amounts received or receivable hereunder; provided that Borrowers shall not be required to make any such payment with respect to any additional Tax described in clause (i) above more than twenty Business Days prior to the date when due of any such Tax. Such Lender shall deliver to Borrowers (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this Section 2.13 which statement shall be conclusive and binding upon all parties hereto absent manifest error. (b) Capital Adequacy Adjustment. In the event that any Lender shall have determined that the adoption, effectiveness, phase-in or applicability after the Closing Date of any law, rule or regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its applicable lending office) with any guideline, request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lenders Loans or Commitment, or participations therein or other obligations hereunder with respect to the Loans to a level below that which such Lender or such controlling corporation could have achieved but for such adoption, effectiveness, phase-in, applicability, change or compliance (taking into 37
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consideration the policies of such Lender or such controlling corporation with regard to capital adequacy), then from time to time, within five Business Days after receipt by Borrowers from such Lender of the statement referred to in the next sentence, Borrowers shall pay to such Lender such additional amount or amounts as will compensate such Lender or such controlling corporation on an after-tax basis for such reduction. Such Lender shall deliver to Borrowers (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to Lender under this Section 2.13(b), which statement shall be conclusive and binding upon all parties hereto absent manifest error. 2.14 Taxes; Withholding, etc. (a) Payments to Be Free and Clear. All sums payable by any Credit Party hereunder and under the other Transaction Documents shall (except to the extent required by law) be paid free and clear of, and without any deduction or withholding on account of, any Tax (other than a Tax on the overall net income of any Lender) imposed, levied, collected, withheld or assessed by or within the United States of America or any political subdivision in or of the United States of America or any other jurisdiction from or to which a payment is made by or on behalf of any Credit Party or by any federation or organization of which the United States of America or any such jurisdiction is a member at the time of payment. Withholding of Taxes. If any Credit Party or any other Person is required by law to make any deduction or withholding on account of any such Tax described in subsection (a) above from any sum paid or payable by any Credit Party to Administrative Agent or any Lender under any of the Transaction Documents: (i) Borrowers shall notify Administrative Agent of any such requirement or any change in any such requirement as soon as Borrowers become aware of it; (ii) Borrowers shall pay any such Tax before the date on which penalties attach thereto, such payment to be made (if the liability to pay is imposed on any Credit Party) for their own account or (if that liability is imposed on Administrative Agent or such Lender, as the case may be) on behalf of and in the name of Administrative Agent or such Lender; (iii) the sum payable by such Credit Party in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, Administrative Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made; and (iv) within thirty (30) days after paying any sum from which it is required by law to make any deduction or withholding, and within thirty (30) days after the due date of payment of any Tax which it is required by clause (ii) above to pay, Borrowers shall deliver to Administrative Agent evidence satisfactory to the other affected parties of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority; provided, no such additional amount shall be required to be paid to any Lender under clause (iii) above except to the extent that any change after the date hereof (in the case of each Lender 38
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(b)

listed on the signature pages hereof on the Closing Date) or after the effective date of the Assignment Agreement pursuant to which such Lender became a Lender (in the case of each other Lender) in any such requirement for a deduction, withholding or payment as is mentioned therein shall result in an increase in the rate of such deduction, withholding or payment from that in effect at the date hereof or at the date of such Assignment Agreement, as the case may be, in respect of payments to such Lender. (c) Other Taxes. In addition, the Credit Parties shall pay all Other Taxes to the relevant Governmental Authorities in accordance with applicable Law. The Credit Parties shall deliver to Administrative Agent official receipts or other evidence of such payment reasonably satisfactory to Administrative Agent in respect of any Taxes or Other Taxes payable hereunder promptly after payment of such Taxes or Other Taxes. Indemnification. Without duplication of its obligations under clauses (b)(iii) and (c) hereunder, the Credit Parties shall indemnify each Agent and each Lender, within ten (10) days after written demand therefor, for the full amount of any Taxes (other than any Tax on the overall net income of the Administrative Agent, any Lenders or their respective Tax Related Persons) paid or incurred by such Agent or such Lender relating to, arising out of, or in connection with any Transaction Document or any payment or transaction contemplated hereby or thereby, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority; provided, however, that the Credit Parties shall not be required to indemnify the Agents, Lenders and participants pursuant to Section 10.5 for any Taxes that would be excluded from a gross-up under Section 2.14(b) or to the extent such Taxes are covered by Sections 2.14(b) or (c). Such indemnification shall be made on an after-Tax basis, such that after all required deductions and payments of all Taxes (excluding any Tax on the overall net income of the Administrative Agent or any Lenders except for income Taxes and deductions applicable to amounts payable under this Section 2.14(d)) and payment of all reasonable expenses, the Agents or the Lenders receives and retains an amount equal to the sum it would have received and retained had it not paid or incurred or been subject to such Taxes. A certificate from the relevant Lender or Agent, setting forth in reasonable detail the basis and calculation of such Taxes shall be conclusive, absent manifest error. Evidence of Exemption From U.S. Withholding Tax. Each Lender that is not a United States Person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for U.S. federal income tax purposes (a Non-US Lender) shall deliver to Administrative Agent for transmission to Borrowers, on or prior to the Closing Date (in the case of each Lender listed on the signature pages hereof on the Closing Date) or on or prior to the date of the Assignment Agreement pursuant to which it becomes a Lender (in the case of each other Lender), and at such other times as may be necessary in the determination of Borrowers or Administrative Agent (each in the reasonable exercise of its discretion), (i) two original copies of Internal Revenue Service Form W-8BEN or 39
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(d)

(e)

W-8ECI (or any successor forms), properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by Borrowers to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Transaction Documents, or (ii) if such Lender is not a bank or other Person described in Section 881(c)(3) of the Internal Revenue Code and cannot deliver either Internal Revenue Service Form W-8BEN or W-8ECI pursuant to clause (i) above, a Certificate re Non-Bank Status together with two original copies of Internal Revenue Service Form W-8 (or any successor form), properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by Borrowers to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of interest payable under any of the Transaction Documents. Each Lender required to deliver any forms, certificates or other evidence with respect to United States federal income tax withholding matters pursuant to this Section 2.14(e) hereby agrees, from time to time after the initial delivery by such Lender of such forms, certificates or other evidence, whenever a lapse in time or change in circumstances renders such forms, certificates or other evidence obsolete or inaccurate in any material respect, that such Lender shall promptly deliver to Administrative Agent for transmission to Borrowers two new original copies of Internal Revenue Service Form W-8BEN or W-8ECI, or a Certificate re Non-Bank Status and two original copies of Internal Revenue Service Form W-8, as the case may be, properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by Borrowers to confirm or establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to payments to such Lender under the Transaction Documents. Borrowers shall not be required to pay any additional amount to any Non-US Lender under Section 2.14(b)(iii) if such Lender shall have failed to deliver the forms, certificates or other evidence referred to in the second sentence of this Section 2.14(e); provided, if such Lender shall have satisfied the requirements of the first sentence of this Section 2.14(e) on the Closing Date or on the date of the Assignment Agreement pursuant to which it became a Lender, as applicable, nothing in this last sentence of Section 2.14(e) shall relieve Borrowers of their obligation to pay any additional amounts pursuant to this Section 2.14 in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender is not subject to withholding as described herein. 2.15 Measures to Mitigate. Each Lender agrees that, as promptly as practicable after the officer of such Lender responsible for administering its Loans becomes aware of the occurrence of an event or the existence of a condition that would cause such Lender to become entitled to receive payments under Section 2.13 or 2.14, it will, to the extent not inconsistent with the 40
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internal policies of such Lender and any applicable legal or regulatory restrictions, use reasonable efforts to (a) make, fund or maintain its Credit Extensions through another office of such Lender, or (b) take such other measures as such Lender may deem reasonable, if as a result thereof the circumstances which would cause the additional amounts which would otherwise be required to be paid to such Lender pursuant to Section 2.13 or 2.14 would be materially reduced and if, as determined by such Lender in its sole discretion, the making, issuing, funding or maintaining of such Commitments or Loans through such other office or in accordance with such other measures, as the case may be, would not otherwise adversely affect such Commitments or Loans or the interests of such Lender; provided, such Lender will not be obligated to utilize such other office pursuant to this Section 2.15 unless Borrowers (i) agree to pay all incremental expenses incurred by such Lender as a result of utilizing such other office as described in clause (a) above and (ii) increase the amount payable to such Lender as provided in Section 2.14(b)(iii) and indemnifies each Credit Party as provided in Section 2.14(d) for all Taxes imposed on such Lender in excess of such Taxes relating to, arising out of, or in connection with any Transaction Document or any payment or transaction contemplated hereby or thereby in excess of such Taxes imposed on such Lender prior to the event or the existence of a condition described in this section. A certificate as to the amount of any such expenses payable by Borrowers pursuant to this Section 2.15 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender to Borrowers (with a copy to Administrative Agent) that be conclusive absent manifest error. 2.16 Collateral Accounts. (a) Establishment of Collateral Accounts: Rules for Application. (i) PERL shall maintain at its expense the PERL Collateral Account pursuant to the applicable Collateral Account Agreement. J. Aron, as Collateral Agent, shall have exclusive dominion and control over the PERL Collateral Account, and PERL shall not give any instructions with respect to the PERL Collateral Account to the administrator thereof. PEAO shall maintain at its expense the PEAO Collateral Account pursuant to the applicable Collateral Account Agreement. Silver Point Finance, LLC, as Collateral Agent, shall have exclusive dominion and control over the PEAO Collateral Account, and PEAO shall not give any instructions with respect to the PEAO Collateral Account to the administrator thereof. PERL and PEAO shall, on a daily basis, deposit or cause to be deposited into the applicable Collateral Account all cash revenues and cash receipts of the applicable Credit Parties located in any deposit account or from any other source or activity, and on Monday of each week (or if such day is not a Business Day, on the next succeeding Business Day) all good collected amounts in each Collateral Account in excess of $250,000 or such greater amount as may be determined from time to time by the Required Lenders (after accounting for outstanding checks), shall be directed by the applicable Collateral Agent to be applied to prepay the aggregate amount of principal outstanding on the Loans in accordance 41
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(ii)

(iii)

with clauses (v) and (vi) below on such day and after all such principal has been repaid in full, together with accrued and unpaid interest thereon, to the other Obligations. (iv) If at any time after receipt of the proceeds of a Loan made pursuant to Section 2.1, Borrowers shall determine that (A) Borrowers no longer intend to consummate any proposed use of funds detailed to the Administrative Agent in accordance with the Budget or (B) the funds received by Borrowers exceed the actual cost of any such proposed use (each an Over-Allocation Event), then immediately following such Over-Allocation Event, Borrowers shall transfer the amount of funds not used in accordance with the proposed use of funds from the applicable Borrowers operating account to the applicable Collateral Account. Any prepayment directed to be made by J. Aron, as Collateral Agent, with respect to funds in the PERL Collateral Account, shall be applied as follows:

(v)

(1) first, to prepay the Revolving Loans in accordance with the Revolving Loan Commitments set forth on Appendix A; (2) second, after the outstanding Revolving Loans have been reduced to $0, to the PERL Term Facility, to be allocated among the PERL Term Lenders in accordance with each such PERL Term Lenders PERL Term Pro Rata Share; (3) third to the extent the PERL Term Facility has been paid in full, to the PEAO Second Lien Prepetition Debt, to be allocated among the PEAO Second Lien Lenders in accordance with each such Lenders PEAO Second Lien Pro Rata Share of the PEAO Second Lien Prepetition Debt in accordance with Section 2.12 of the PEAO Second Lien Credit Agreement; and (4) fourth to the extent the PEAO Second Lien Prepetition Debt has been paid in full, to the PEAO Term Facility, to be allocated among the PEAO Term Lenders in accordance with each such PEAO Term Lenders PEAO Term Pro Rata Share. (vi) Any prepayment directed to be made by Silver Point Finance, LLC, as Collateral Agent, with respect to funds in the PEAO Collateral Account, shall be applied as follows:

first, to prepay the Revolving Loans in accordance with the (1) Revolving Loan Commitments set forth on Appendix A; (2) second, after the outstanding Revolving Loans have been reduced to $0, to the PEAO Term Facility, to be allocated among the PEAO Term Lenders in accordance with each such PEAO Term Lenders PEAO Term Pro Rata Share;

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(3) third to the extent the PEAO Term Facility has been paid in full, to the PEAO Second Lien Prepetition Debt, to be allocated among the PEAO Second Lien Lenders in accordance with each such Lenders PEAO Second Lien Pro Rata Share of the PEAO Second Lien Prepetition Debt in accordance with Section 2.12 of the PEAO Second Lien Credit Agreement; and
(4) fourth to the extent the PEAO Second Lien Prepetition Debt has been paid in full, to the PERL Term Facility, to be allocated among the PERL Term Lenders in accordance with each such PERL Term Lenders PERL Term Pro Rata Share.

(b)

Notice. At all times from and after the Closing Date, the Credit Parties shall send a notice, substantially in form acceptable to Collateral Agents, to all existing and/or new purchasers of Hydrocarbons produced from the Eligible Mortgaged Properties, directing them to forward all amounts payable to them directly to the applicable Collateral Account at the mailing address of the depositary bank for deposit into the applicable Collateral Account. The failure of such purchasers to comply with any such notice shall not constitute a Default hereunder by any Credit Party, provided that (i) such purchasers failure to comply with such notice is not done at the request of a Credit Party, and (ii) the applicable Credit Party (or, if applicable, its Affiliate) shall forward all amounts received from such purchaser to the applicable Collateral Account within one (1) Business Day of such Persons receipt thereof. Acknowledgments. (i) PERL hereby acknowledges that:

(c)

(1) It has granted and assigned to J. Aron, as Collateral Agent, a first priority, perfected security interest in the PERL Collateral Account, all funds therein and all proceeds thereof pursuant to the Security Documents and/or the Orders; and (2) PERL shall not be permitted to withdraw, transfer or disburse any funds from the PERL Collateral Account. (ii) PEAO hereby acknowledges that:

(1) It has granted and assigned to Silver Point Finance, LLC, as Collateral Agent, a first priority, perfected security interest in the PEAO Collateral Account, all funds therein and all proceeds thereof pursuant to the Security Documents and/or the Orders; and (2) PEAO shall not be permitted to withdraw, transfer or disburse any funds from the PEAO Collateral Account. (d) Attorney-in-fact. PERL hereby appoints J. Aron, as Collateral Agent, and PEAO hereby appoints Silver Point Finance, LLC, as Collateral Agent, its respective attorney-in-fact, with full power of substitution, to execute and file on behalf of PERL or PEAO, as applicable, any financing statement, continuation statement or 43
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instrument of further assurance to more effectively perfect, continue or confirm (i) the provisions of this Section 2.16 and of any agreement entered into by PERL or PEAO, the applicable Collateral Agent and the depositary bank administering the applicable Collateral Account and (ii) the security interest granted in the applicable Collateral Account. This power, being coupled with an interest, shall be irrevocable until all amounts due in connection with the Loans have been paid in full. 2.17 Joint and Several Obligations; Designated Financial Officers. (a) Each of the Borrowers is accepting joint and several liability hereunder and under the other Transaction Documents in consideration of the financial accommodations to be provided by the Secured Parties under this Agreement, for the mutual benefit, directly and indirectly, of each of the Borrowers and in consideration of the undertakings of each other Borrower to accept joint and several liability for the Obligations. Each of the Borrowers, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrowers with respect to the payment and performance of all of the Obligations (including, without limitation, any Obligations arising under this Section 2.17), it being the intention of the parties hereto that all of the Obligations shall be the joint and several Obligations of each of the Borrowers without preferences or distinction among them. If and to the extent that any of the Borrowers shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms thereof, then in each such event the other Borrowers will make such payment with respect to, or perform, such Obligation. The Obligations of each of the Borrowers under the provisions of this Section 2.17 constitute full recourse Obligations of each of the Borrowers enforceable against each such Person to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of this Agreement or any other circumstance whatsoever. Except as otherwise expressly provided in this Agreement, each of the Borrowers hereby waives notice of acceptance of its joint and several liability, notice of any Loans made under this Agreement, notice of any action at any time taken or omitted by the Secured Parties under or in respect of any of the Obligations, and, generally, to the extent permitted by applicable law, all demands, notices and other formalities of every kind in connection with this Agreement. Each of the Borrowers hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by 44
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(b)

(c)

(d)

(e)

the Secured Parties at any time or times in respect of any default by any of the Borrowers in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by the Secured Parties in respect of any of the Obligations, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of the Obligations or the addition, substitution or release, in whole or in part, of any of the Borrowers. Without limiting the generality of the foregoing, each of the Borrowers assents to any other action or delay in acting or failure to act on the part of the Secured Parties with respect to the failure by any of the Borrowers to comply with any of its respective Obligations, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder, which might, but for the provisions of this Section 2.17, afford grounds for terminating, discharging or relieving any of the Borrowers, in whole or in part, from any of its Obligations under this Section 2.17, it being the intention of each of the Borrowers that, so long as any of the Obligations hereunder remain unsatisfied, the Obligations of such Borrowers under this Section 2.17 shall not be discharged except by performance and then only to the extent of such performance. The joint and several liability of the Borrowers hereunder shall continue in full force and effect notwithstanding any absorption, merger, amalgamation or any other change whatsoever in the name, membership, constitution or place of formation of any of the Borrowers or the Secured Parties. (f) The provisions of this Section 2.17 are made for the benefit of the Secured Parties and their successors and assigns, and may be enforced in good faith by them from time to time against any or all of the Borrowers as often as the occasion therefor may arise and without requirement on the part of the Secured Parties first to marshal any of their claims or to exercise any of their rights against any other Borrower or to exhaust any remedies available to them against any other Borrower or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this Section 2.17 shall remain in effect until all of the Obligations shall have been paid in full or otherwise fully satisfied. If at any time, for any reason, any payment, or any part thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by the Secured Parties, the provisions of this Section 2.17 will forthwith be reinstated in effect, as though such payment had not been made. Any notice, request, waiver, consent or other action made, given or taken by any Borrower in connection with the Transaction Documents shall bind all Borrowers. The Chief Restructuring Officer acts as designated officer for all the Borrowers. Each Borrower hereby authorizes the Chief Restructuring Officer to act as agent for each Borrower and to execute and deliver on behalf of each Borrower such notices, requests, waivers, consents, certificates and other documents, and to take any and all actions required or permitted to be delivered or taken by any Borrower

(g) (h)

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hereunder, except to the extent this Agreement requires another officer of Borrowers to do so. SECTION 3. CONDITIONS PRECEDENT 3.1 Closing Date. The Closing Date shall occur on the date that the following conditions are satisfied: (a) Transaction Documents. Administrative Agent shall have received counterparts of each Transaction Document required by the Administrative Agent and the Lenders to be delivered on or before the Closing Date, originally executed and delivered by each applicable Credit Party and in such numbers as Administrative Agent or its counsel may reasonably request. Organizational Documents; Incumbency. Administrative Agent shall have received (i) copies of each Organizational Document executed and delivered by each Credit Party, as applicable, and, to the extent applicable, certified as of a recent date by the appropriate governmental official; (ii) signature and incumbency certificates of the officers of such Person executing the Transaction Documents to which it is a party; (iii) resolutions of the Board of Directors or similar governing body of each Credit Party approving and authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party or by which it or its assets may be bound, certified as of the Closing Date by its secretary or an assistant secretary as being in full force and effect without modification or amendment; (iv) a good standing certificate from the applicable Governmental Authority of each Credit Partys jurisdiction of incorporation, organization or formation and in each jurisdiction in which it owns real property Collateral, each dated a recent date prior to the Closing Date; and (v) such other documents as Administrative Agent may reasonably request. Governmental Authorizations and Consents. Each Credit Party shall have obtained all Governmental Authorizations and all consents of other Persons, in each case that are necessary or advisable to be obtained on or before the Closing Date in connection with the transactions contemplated by the Transaction Documents and each of the foregoing shall be in full force and effect and in form and substance reasonably satisfactory to Agents. All applicable waiting periods shall have expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose adverse conditions on the transactions contemplated by the Transaction Documents or the financing thereof and no action, request for stay, petition for review or rehearing, reconsideration, or appeal with respect to any of the foregoing shall be pending, and the time for any applicable agency to take action to set aside its consent on its own motion shall have expired. Validity of Liens. The Security Documents shall, upon entry of the Interim Order or the Final Order, whichever comes first, be effective to create in favor of the 46
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(b)

(c)

(d)

applicable Collateral Agent a legal, valid and enforceable first (except for Permitted Prior Liens entitled to priority under applicable law) perfected security interest in and lien upon the Collateral. All filings, recordings, deliveries of instruments and other actions necessary or desirable in the opinion of the applicable Collateral Agent to protect and preserve such security interests shall have been duly effected. Each Collateral Agent shall have received evidence thereof in form and substance satisfactory to such Collateral Agent. (e) Budget. Lenders shall have received from the Borrowers the budget (i) with respect to PERL and its Subsidiaries (other than the PEA Entities), for the period from the date hereof through the Maturity Date, and (ii) with respect to the PEA Entities, for the four-week period commencing on the Closing Date (collectively, the Budget), prepared on a weekly basis for each such period, which Budget shall also include the Approved Plan of Development (which shall include the Capital Expenditures) and shall be in form, detail and substance satisfactory to Administrative Agent and Required Lenders. Evidence of Insurance. Agents shall have received a certificate from Borrowers insurance broker or other evidence reasonably satisfactory to them that all insurance required to be maintained pursuant to Section 5.8 is in full force and effect and that the applicable Collateral Agent has been named as additional insured and loss payee thereunder as its interests may appear and to the extent required under Section 5.8. Opinions of Counsel. Agents shall have received (i) a favorable legal opinion addressed to Lenders and the Agents, dated as of the Closing Date, in form and substance reasonably satisfactory to Agents and Lenders, from Rutan & Tucker, LLP, counsel for Credit Parties, and (ii) a legal memorandum addressed to Lenders and the Agents, dated as of the Closing Date, in form and substance reasonably satisfactory to Agents and Lenders, from Pachulski Stang Ziehl & Jones LLP, counsel for Credit Parties. Closing Date Certificate. Borrowers shall have delivered to Administrative Agent an originally executed Closing Date Certificate. Environmental Compliance Certificate. Borrowers shall have delivered to Administrative Agent an environmental compliance certificate signed by the president or chief executive officer of Borrowers in the form attached hereto as Exhibit C-2. No Material Adverse Change. There shall have occurred no change in (i) the business, condition, operations, assets or prospects of PERL and its Subsidiaries (taken as a whole) since the Petition Date, (ii) the ability of any Borrower, individually, or the Credit Parties, taken as a whole, to perform its, or their, as the case may be, respective obligations under the Transaction Documents, or (iii) the ability of the Lenders to enforce the Transaction Documents and the obligations

(f)

(g)

(h) (i)

(j)

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of the Borrowers and Guarantors thereunder that would, in each case, have a Material Adverse Effect. (k) Completion of Proceedings. All partnership, corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incidental thereto not previously found acceptable by Agents and their counsel shall be reasonably satisfactory in form and substance to Agents and such counsel, and Agents and such counsel shall have received all such counterpart originals or certified copies of such documents as any Agent may reasonably request. Each Lender, by delivering its signature page to this Agreement and funding a Loan on the Closing Date, shall be deemed to have acknowledged receipt of, and consented to and approved, each Transaction Document and each other document required to be approved by any Agent, Required Lenders or Lenders, as applicable on the Closing Date. Interim Order. The Bankruptcy Court shall have entered the Interim Order, in form and substance satisfactory to the Agents and Required Lenders, and such order shall be in full force and effect and shall not have been amended, modified, stayed, or reversed. If the Interim Order is the subject of a pending appeal in any respect, none of such order, the making of the Loans, or the performance by any of the Credit Parties of any of the Obligations shall be the subject of a presently effective stay pending appeal. The Credit Parties, the Agents and the Lenders shall be entitled to rely in good faith upon the Interim Order, notwithstanding objection thereto or appeal therefrom by any interested party. The Credit Parties, the Agents and the Lenders, shall be permitted and required to perform their respective obligations in compliance with this Agreement notwithstanding any such objection or appeal unless the relevant order has been stayed by a court of competent jurisdiction. First Day Orders. The Bankruptcy Court shall have entered a first day order providing for the continuation of the Borrowers pre-petition cash management system and deposit and disbursement accounts, including lockbox accounts and deposit and disbursement accounts. All first day orders submitted to the Bankruptcy Court on or about the Petition Date shall be in form and substance reasonably satisfactory to the Agents and Required Lenders. Other Orders. All orders (if any) providing for payment of prepetition indebtedness of the Credit Parties or affecting in any way the Obligations or the Collateral submitted for entry in the Case shall be in form and substance satisfactory to the Lenders and, as entered, shall not deviate from the form thereof approved by the Lenders in any material respect which is adverse to the interests of the Lenders. Payment of the Refunding Amount. The Refunding Amount shall have been paid to the Administrative Agent for the accounts of the Lenders in accordance with such Lenders PERL Term Loan Commitment and PEAO Term Loan Commitment set forth on Appendix A. 48
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(l)

(m)

(n)

(o)

(p)

Payment of Fees. Receipt by the Administrative Agent, for the benefit of the Lenders and the Agents, of all reasonable fees and expenses payable on or prior to the Closing Date in connection with the transactions contemplated hereby. Other Documentation. Agents shall have received all documents and instruments which Agents have then reasonably requested, in addition to those described in this Section 3.1. All such additional documents and instruments shall be reasonably satisfactory to Agents in form, substance and date.

(q)

3.2 Conditions Precedent to Each Credit Extension. The obligation of each Lender to make any Loan, on any Credit Date, including the Closing Date, are subject to the satisfaction, or waiver in accordance with Section 10.4, of the following conditions precedent: (a) (b) Administrative Agent shall have received a fully executed and delivered Funding Notice; as of such Credit Date, the representations and warranties contained herein and in the other Transaction Documents shall be true and correct in all material respects on and as of that Credit Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date; as of such Credit Date, no event shall have occurred and be continuing or would result from the consummation of the applicable Credit Extension that would constitute an Event of Default or a Default; and the Interim Order shall be in full force and effect and shall not have been reversed, modified or amended in any respect, provided, that it shall be a condition to funding as provided in clauses (i) and (ii) below that the Bankruptcy Court shall have entered a final order (the Final Order) authorizing and approving this Agreement pursuant to Section 364(c) and (d) of the Bankruptcy Code and Bankruptcy Rule 4001, in form and substance satisfactory to the Required Lenders finding that the Lenders are extending credit to the Borrowers in good faith pursuant to Section 364(e) of the Bankruptcy Code and waiving the provisions of Section 506(c) of the Bankruptcy Code, and the Final Order shall be in full force and effect, and shall not have been reversed, modified or amended in any respect, prior to the earlier to occur of (i) the date which is thirty (30) days after the date hereof and (ii) the time of the making of any Loan the amount of which, when added to the principal amount of all Loans then outstanding, would exceed the aggregate amount thereof which was authorized by the Bankruptcy Court in the Interim Order for Loans. If either the Interim Order or the Final Order is the subject of a pending appeal in any respect, none of such Order, the making of the Loans or the performance by any Borrower or any Guarantor of any of its obligations under any of the Transaction Documents shall be the subject of a presently effective stay pending appeal. The Credit Parties, the Agents and the Lenders shall be entitled to rely in good faith upon the Orders notwithstanding 49
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(c)

(d)

objection thereto or appeal therefrom by any interested party. The Credit Parties, the Agents and the Lenders shall be permitted and required to perform their respective obligations in compliance with this Agreement notwithstanding any such objection or appeal unless the relevant Order has been stayed by a court of competent jurisdiction. Any Agent or Required Lenders shall be entitled, but not obligated to, request and receive, prior to the making of any Credit Extension, additional information reasonably satisfactory to the requesting party confirming the satisfaction of any of the foregoing if, in the good faith judgment of such Agent or Required Lender such request is warranted under the circumstances. The request by the Borrowers of, and the acceptance by the Borrowers of, each Credit Extension shall be deemed to be a representation and warranty by the Borrowers that the conditions specified above have been satisfied. SECTION 4. REPRESENTATIONS AND WARRANTIES In order to induce the Lenders to enter into this Agreement and to make each Credit Extension to be made thereby, each Credit Party represents and warrants to each Agent and each Lender, on the Closing Date and on each Credit Date, that the following statements are true and correct; provided that, solely with respect to each Credit Date after the Closing Date, such representations and warranties are true and correct in all material respects on and as of such Credit Date to the same extent as though made on and as of such date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date: 4.1 No Default. No event has occurred and is continuing which constitutes a Default.

4.2 Organization and Good Standing. Each Credit Party is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization, having all powers required to carry on its business and enter into and carry out the transactions contemplated hereby. Each Credit Party is duly qualified, in good standing, and authorized to do business in all other jurisdictions within the United States and Canada wherein the character of the properties owned or held by it or the nature of the business transacted by it makes such qualification necessary. Each Credit Party has taken all actions and procedures customarily taken in order to enter, for the purpose of conducting business or owning property, each jurisdiction outside the United States, if any, wherein the character of the properties owned or held by it or the nature of the business transacted by it makes such actions and procedures desirable. 4.3 Authorization. Each Credit Party has duly taken all action necessary to authorize the execution and delivery by it of the Transaction Documents to which it is a party and to authorize the consummation of the transactions contemplated thereby and the performance of its obligations thereunder. Each Borrower is duly authorized to borrow funds hereunder. 4.4 No Conflicts or Consents. The execution and delivery by the various Credit Parties of the Transaction Documents to which each is a party, the performance by each of its obligations under such Transaction Documents, and the consummation of the transactions contemplated by 50
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the various Transaction Documents, do not and will not (a) conflict with any provision of (i) any Law, (ii) the Organizational Documents of any Credit Party, or (iii) any agreement, judgment, license, order or permit applicable to or binding upon any Credit Party, (b) result in the acceleration of any Indebtedness owed by any Credit Party, or (c) result in or require the creation of any Lien upon any assets or properties of any Credit Party, except in each case as expressly contemplated in the Transaction Documents and, except in the case of clauses (a)(iii), (b) and (c) of this Section 4.4, such conflicts, results or requirements as arise in connection with the filing, prosecution and resolution of the Case. Except for the entry of the Interim Order or the Final Order, whichever occurs first, and except as expressly contemplated in the Transaction Documents, no consent, approval, authorization or order of, and no notice to or filing with, any Governmental Authority or third party is required in connection with the execution, delivery or performance by any Credit Party of any Transaction Document or to consummate any transactions contemplated hereby or thereby. 4.5 Enforceable Obligations. This Agreement is, and the other Transaction Documents when duly executed and delivered will be, upon entry of the Interim Order or the Final Order, whichever occurs first, legal, valid and binding obligations of each Credit Party which is a party hereto or thereto, enforceable in accordance with their terms except as such enforcement may be limited by bankruptcy, insolvency or similar Laws of general application relating to the enforcement of creditors rights and by general principles of equity. 4.6 Current Financial Statements. PERL has heretofore delivered to each Lender true, correct and complete copies of the Current Financial Statements. Subject to final year-end adjustments and determination of any non-cash impairment charges, the Current Financial Statements fairly present PERLs Consolidated financial position at the date thereof and were prepared in accordance with GAAP. 4.7 Other Obligations and Restrictions. As of the date hereof, no Credit Party has any outstanding Liabilities of any kind (including obligations under farm-in agreements, other obligations to make capital expenditures, contingent obligations, tax assessments, and unusual forward or long-term commitments, but excluding statutory obligations arising in the ordinary course of business that are not individually, or in the aggregate, material to the financial condition of any Credit Party) which is, in the aggregate, material to any Credit Party or material with respect to PERLs Consolidated financial condition and not shown in the Current Financial Statements or disclosed in Schedule 4.7. As of the Closing Date, all obligations of any Credit Party to make capital expenditures to drill or otherwise develop any oil, gas or mineral properties are specified in the Budget (by well or project, describing the dollar amount of each such obligation). As of the Closing Date, except as shown in the Current Financial Statements or disclosed in Schedule 4.7, no Credit Party is subject to or restricted by any franchise, contract, deed, charter restriction, or other instrument or restriction which is materially likely to cause a Material Adverse Effect. 4.8 Full Disclosure. As of the date of delivery, no certificate, statement or other information delivered herewith or heretofore by any Credit Party to any Lender in connection with the negotiation of this Agreement or in connection with any transaction contemplated hereby contains any untrue statement of a material fact or, when taken as a whole, omits to state any material fact known to any Credit Party (other than industry-wide risks normally associated with 51
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the types of businesses conducted by the Credit Parties) necessary to make the statements contained herein or therein not misleading as of the date made or deemed made. No report, notice, document, filing, or other information delivered by any Credit Party to a securities exchange or any governmental regulatory authority contains any untrue statement of a material fact or, when taken as a whole, omits to state any material fact known to any Credit Party (other than industry-wide risks normally associated with the types of businesses conducted by the Credit Parties) necessary to make the statements contained therein not misleading as of the date made or deemed made. There is no fact known to any Credit Party (other than industry-wide risks normally associated with the types of businesses conducted by the Credit Parties) that has not been disclosed to each Lender in writing which is materially likely to cause a Material Adverse Effect. There are no statements or conclusions in any Engineering Report which are based upon or include misleading information or fail to take into account material information regarding the matters reported therein, it being understood that each Engineering Report is necessarily based upon professional opinions, estimates and projections and that no Borrower warrants that such opinions, estimates and projections will ultimately prove to have been accurate. 4.9 Litigation. Except as disclosed in the Current Financial Statements or in Schedule 4.9 and except for the Case: (a) there are no actions, suits or legal, equitable, arbitrative or administrative proceedings pending, or to the knowledge of any Credit Party threatened, against any Credit Party before any Governmental Authority (i) which could cause a Material Adverse Effect or (ii) purport to affect or pertain to this Agreement or any other Transaction Document, or any of the transactions contemplated hereby, and (b) there are no outstanding judgments, injunctions, writs, rulings or orders by any such Governmental Authority against any Credit Party or any Credit Partys stockholders, partners, directors or officers which could cause a Material Adverse Effect. 4.10 Labor Disputes and Acts of God. Except as disclosed in Schedule 4.10, neither the business nor the properties of any Credit Party has been affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought; storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance), which could cause a Material Adverse Effect. 4.11 ERISA Plans and Liabilities. All ERISA Plans in existence as of the Closing Date are listed in Schedule 4.11. Except as disclosed in the Current Financial Statements or in Schedule 4.11, no Termination Event has occurred or is reasonably expected to occur with respect to any ERISA Plan and all ERISA Affiliates are in compliance with ERISA and other applicable Laws in all material respects. No ERISA Affiliate is required to contribute to, or has any other absolute or contingent liability in respect of, any multiemployer plan as defined in Section 4001 of ERISA. Except as set forth in Schedule 4.11: (a) no accumulated funding deficiency (as defined in Section 412(a) of the Internal Revenue Code) exists with respect to any ERISA Plan, whether or not waived by the Secretary of the Treasury or his delegate, and (b) the current value of each ERISA Plans benefits does not exceed the current value of such ERISA Plans assets available for the payment of such benefits by more than $500,000. 4.12 Environmental and Other Laws. Except as disclosed in Schedule 4.12: (a) Credit Parties are conducting their businesses in material compliance with all applicable Laws, 52
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including Environmental Laws, and have been and are in compliance with all licenses and permits required under any such Laws; (b) none of the operations or properties of any Credit Party is the subject of federal, state or local investigation evaluating whether any material remedial action is needed to respond to a release of any Hazardous Materials into the environment or to the improper storage or disposal (including storage or disposal at offsite locations) of any Hazardous Materials; (c) no Credit Party (and to the best knowledge of Borrowers, no other Person) has filed any notice under any Law indicating that any Credit Party is responsible for the improper release into the environment, or the improper storage or disposal, of any material amount of any Hazardous Materials or that any material amount of any Hazardous Materials have been improperly released, or are improperly stored or disposed of, upon any property of any Credit Party; (d) no Credit Party has transported or arranged for the transportation of any Hazardous Material to any location which is (i) listed on the National Priorities List under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, listed for possible inclusion on such National Priorities List by the Environmental Protection Agency in its Comprehensive Environmental Response, Compensation and Liability Information System List, or listed on any similar state list or (ii) the subject of federal, state or local enforcement actions or other investigations which may lead to claims against any Credit Party for clean-up costs, remedial work, damages to natural resources or for personal injury claims (whether under Environmental Laws or otherwise) or any other Environmental Claims; and (e) no Credit Party otherwise has any known material contingent liability as a result of any conditional asset retirement obligations under any Environmental Laws or as a result of any Environmental Claims or in connection with the release into the environment, or the storage or disposal, of any Hazardous Materials or other Hazardous Materials Activities. Each Credit Party undertook, at the time of its acquisition of each of its material properties, all appropriate inquiry into the previous ownership and uses of the Property and any potential environmental liabilities associated therewith. Each Credit Partys liability for future plugging and abandonment costs is properly reflected in the Current Financial Statements or in the most recently delivered financial statements pursuant to Section 5.2(a) or Section 5.2(b). 4.13 Names and Places of Business. During the five years preceding the Closing Date, no Credit Party has been known by, or has used, any other trade or fictitious name, except as disclosed in Schedule 4.13. Except as otherwise indicated in Schedule 4.13, the chief executive office and principal place of business of each Credit Party are (and for the five years preceding the Closing Date have been) located at the address of such Credit Party set out in Appendix B. Except as indicated in Schedule 4.13, no Credit Party has any other office or place of business. 4.14 Subsidiaries. Schedule 4.14 correctly sets forth the ownership interest of PERL and each of its Subsidiaries in their respective Subsidiaries as of the Closing Date. PERL owns, directly or indirectly, the Capital Stock in each of its Subsidiaries which is indicated in Schedule 4.14 and PERL has no other Subsidiary or owns no other Capital Stock in any corporation or other Person. Except as set forth in Schedule 4.14, there is no existing option, warrant, call, right, commitment or other agreement to which PERL or any of its Subsidiaries is a party requiring, and there is no Capital Stock of PERL or any of its Subsidiaries outstanding which upon conversion or exchange would require, the issuance by PERL or any of its Subsidiaries of any other Capital Stock of PERL or any of its Subsidiaries or other Securities convertible into,

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exchangeable for or evidencing the right to subscribe for or purchase, any Capital Stock of PERL or any of its Subsidiaries. 4.15 Licenses. Each Credit Party possesses all licenses, permits, franchises, patents, copyrights, trademarks and trade names, and other intellectual property (or otherwise possesses the right to use such intellectual property without violation of the rights of any other Person) which are necessary to carry out its business as presently conducted and as presently proposed to be conducted hereafter, and no Credit Party is in violation in any material respect of the terms under which it possesses such intellectual property or the right to use such intellectual property. 4.16 Government Regulation. No Borrower nor any other Credit Party owing Obligations is subject to regulation under the Public Utility Holding Company Act of 2005, the Federal Power Act, the Investment Company Act of 1940 (as any of the preceding acts have been amended) or any other Law which regulates the incurring by such Person of Indebtedness, including Laws relating to common contract carriers or the sale of electricity, gas, steam, water or other public utility services. 4.17 Taxes. Each Credit Party has filed all Canadian and all United States federal income tax returns and all other material tax returns that are required to have been filed by it and have paid all taxes due pursuant to such returns or pursuant to any assessment received by any Credit Party and all other penalties or charges. The charges, accruals and revenues on the books of each Credit Party in respect of taxes and other governmental charges are, in the opinion of Borrowers, adequate. No Credit Party has given or been requested to give a waiver of the statute of limitations relating to the payment of any federal or other taxes, except as listed in Schedule 4.17. 4.18 No Distributions. Since January 1, 2006, no Borrower nor any of the other Credit Parties has directly or indirectly declared, ordered, paid or made, or set apart any sum or property for, any Distribution or agreed to do so except as permitted pursuant to Section 6.6 or as disclosed in Schedule 4.18 attached hereto. 4.19 Title to Properties. Except as set forth on Schedule 4.19, each of Credit Parties has (i) good and defensible title to (in the case of fee interests in real property and leasehold interests in Oil and Gas Properties), (ii) valid leasehold interests in (in the case of leasehold interests in other real or personal property), and (iii) good title to (in the case of all other personal property), all of their respective properties and assets purported to be subject to the Mortgages and in the most recent financial statements delivered pursuant to Section 5.2(a) or Section 5.2(b), as applicable, in each case except for assets disposed of since the date of such financial statements in the ordinary course of business or as otherwise permitted under Section 6.5. Except as set forth on Schedule 4.19, each Credit Party possesses all leases, easements, and rights of way which are necessary to operate the Oil and Gas Properties and otherwise to carry out its business as presently conducted and as presently proposed to be conducted hereafter, and no Credit Party is in violation in any material respect of the terms thereof. Except as permitted by this Agreement, all such properties and assets are free and clear of Liens. No Credit Party has granted control over any Deposit Accounts to any Person, other than the applicable Collateral Agent and the bank with which any Deposit Account is maintained. No Credit Party has any securities accounts as defined and described in the UCC. 54
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4.20 No Defaults. Except as set forth on Schedule 4.20(a), neither PERL nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any of its Contractual Obligations, and no condition exists which, with the giving of notice or the lapse of time or both, could constitute such a default, except where the consequences, direct or indirect, of such default or defaults, if any, could not reasonably be expected to have a Material Adverse Effect. Schedule 4.20(b) contains a true, correct and complete list of all the Material Contracts (other than oil and gas leases) in effect on the Closing Date, and except as described thereon, all such Material Contracts (other than oil and gas leases) are in full force and effect and no defaults currently exist thereunder, except as set forth on such Schedule. 4.21 Margin Stock. Neither PERL nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. No part of the proceeds of the Loans made to such Credit Party will be used to purchase or carry any such Margin Stock or to extend credit to others for the purpose of purchasing or carrying any such Margin Stock or for any purpose that violates, or is inconsistent with, the provisions of Regulation T, U or X of such Board of Governors. 4.22 Certain Fees. No brokers or finders fee or commission will be payable with respect hereto or any of the actions contemplated hereby, other than the fees set forth on Schedule 4.22 and other fees, in each case as approved by the Required Lenders and as set forth in the Budget. 4.23 Leases and Contracts; Performance of Obligations. The leases, deeds, and other agreements forming a part of the Oil and Gas Properties of the Credit Parties to which Proved Reserves are attributed in the Engineering Reports are in full force and effect. All rents, royalties and other payments due and payable under such leases, deeds, and other agreements have been properly and timely paid other than to the extent such could not reasonably be expected to cause the loss or forfeiture of any such Proved Reserves. Except as set forth on Schedule 4.23, no Credit Party is in default with respect to its obligations (and no Credit Party is aware of any default by any third party with respect to such third partys obligations) under any such leases, deeds, and other agreements, or under any Permitted Liens, or otherwise attendant to the ownership or operation of any part of the Oil and Gas Properties, where such default could adversely affect the ownership or operation of any Oil and Gas Properties to which any such Proved Reserves are attributed. No Credit Party is currently accounting for any royalties, or overriding royalties or other payments out of production, on a basis (other than delivery in kind) less favorable to such Credit Party than proceeds received by such Credit Party (calculated at the well) from sale of production, and no Credit Party has any liability (or alleged liability) to account for the same on any such less favorable basis. 4.24 Marketing Arrangements. Except as set forth in Schedule 4.24, no Oil and Gas Property is subject to any contractual or other arrangement (i) whereby payment for production is or can be deferred for a substantial period after the month in which such production is delivered (in the case of oil, not in excess of 60 days, and in the case of gas, not in excess of 90 days) or (ii) whereby payments are made to a Credit Party other than by checks, drafts, wire transfer advises or similar writings, instruments or communications for the immediate payment of money. Except for production sales contracts, processing agreements, transportation agreements and other agreements relating to the marketing of production that are listed in Schedule 4.24 in 55
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connection with the Oil and Gas Properties to which such contract or agreement relates: (i) no Oil and Gas Property is subject to any contractual or other arrangement for the sale, processing or transportation of production (or otherwise related to the marketing of production) which cannot be canceled on 120 days (or less) notice and (ii) all contractual or other arrangements for the sale, processing or transportation of production (or otherwise related to the marketing of production) are bona fide arms length transactions made on the best terms reasonably available with third parties not affiliated with Credit Parties. Each Credit Party is presently receiving a price for all production from (or attributable to) each Oil and Gas Property covered by a production sales contract or marketing contract listed in Schedule 4.24 that is computed in accordance with the terms of such contract, and no Credit Party is having deliveries of production from such Oil and Gas Property curtailed by any purchaser or transporter of production substantially below such propertys delivery capacity, except for curtailments caused (a) by an act or event of force majeure not reasonably within the control of and not caused by the fault or negligence of a Credit Party and which by the exercise of reasonable diligence such Credit Party is unable to prevent or overcome, and (b) by routine maintenance requirements in the ordinary course of business, except as set forth in Schedule 4.24. 4.25 Right to Receive Payment for Future Production. Except as set forth in Schedule 4.25, no Credit Party, nor any Credit Partys predecessors in title, has received prepayments (including payments for gas not taken pursuant to take or pay or other similar arrangements) for any oil, gas or other hydrocarbons produced or to be produced from any Oil and Gas Properties after the date hereof. Except as set forth in Schedule 4.25, and except for de minimus amounts of gas imbalances arising from time to time, no Oil and Gas Property is subject to any take or pay, gas imbalances or other similar arrangement (i) which can be satisfied in whole or in part by the production or transportation of gas from other properties or (ii) as a result of which production from any Oil and Gas Property may be required to be delivered to one or more third parties without payment (or without full payment) therefor as a result of payments made, or other actions taken, with respect to other properties. Except as set forth in Schedule 4.25, there is no Oil and Gas Property with respect to which any Credit Party, or any Credit Partys predecessors in title, has taken more (overproduced), or less (underproduced), gas from the lands covered thereby (or pooled or unitized therewith) than its ownership interest in such Oil and Gas Property would entitle it to take; and Schedule 4.25 accurately reflects, for each well or unit with respect to which such an imbalance is shown thereon to exist, (i) whether such Credit Party is overproduced or underproduced and (ii) the volumes (in cubic feet or BTUs) of such overproduction or underproduction and the effective date of such information. No Oil and Gas Property is subject to any regulatory refund obligation and, to the best of Credit Partys knowledge, no facts exist which might cause the same to be imposed. 4.26 Operation of Oil and Gas Properties. Except as set forth on Schedule 4.26, the Oil and Gas Properties (and all properties unitized therewith) are being (and, to the extent the same could adversely affect the ownership or operation of the Oil and Gas Properties after the date hereof, have in the past been) maintained, operated and developed in a good and workmanlike manner, in accordance with prudent industry standards and in conformity with all applicable Laws and in conformity with all oil, gas or other mineral leases and other contracts and agreements forming a part of the Oil and Gas Property and in conformity with the Permitted Liens. No Oil and Gas Property is subject to having allowable production after the date hereof reduced below the full and regular allowable (including the maximum permissible tolerance) because of any 56
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overproduction (whether or not the same was permissible at the time) prior to the date hereof and (ii) none of the wells located on the Oil and Gas Properties (or properties unitized therewith) are or will be deviated from the vertical more than the maximum permitted by applicable laws, regulations, rules and orders, and such wells are bottomed under and producing from, with the well bores wholly within, the Oil and Gas Properties (or, in the case of wells located on properties unitized therewith, such unitized properties). Except as set forth on Schedule 4.26, each Credit Party has all governmental licenses and permits necessary or appropriate to own and operate its Oil and Gas Property, and no Credit Party has received notice of any violations in respect of any such licenses or permits. 4.27 Ad Valorem and Severance Taxes; Litigation. Each Credit Party has paid and discharged all ad valorem taxes assessed against its Oil and Gas Property or any part thereof and all production, severance and other taxes assessed against, or measured by, the production or the value, or proceeds, of the production therefrom. Except as set forth on Schedule 4.9 and the Chevron Production Liens, there are no suits, actions, claims, investigations, inquiries, proceedings or demands pending (or, to any Credit Partys knowledge, threatened) which might affect the Oil and Gas Property, including any which challenge or otherwise pertain to any Credit Partys title to any Oil and Gas Property or rights to produce and sell oil and gas therefrom. 4.28 Employment Agreements. Schedule 4.28 sets forth a true, correct and complete list of all material employment agreements, agency, independent contractor and sales representative agreements, golden parachute agreements, change of control agreements and employee-related non-competition and non-solicitation agreements, in each case to which any Credit Party is a party. The Credit Parties have previously delivered true, correct and complete copies of all such agreements, including all amendments thereto. Except as set forth on Schedule 4.28, each such agreement is in writing, is a valid and binding agreement enforceable against the respective parties thereto in accordance with its terms, and no Credit Party nor any other Person that is a party to any such agreement is in breach of, or in default with respect to, any of its obligations thereunder, nor is any Credit Party aware of any facts or circumstances which might give rise to any breach or default thereunder which could reasonably be expected to have a Material Adverse Effect. 4.29 Capitalization. Schedule 4.29 sets forth a true, correct and complete description of the authorized and issued outstanding Capital Stock of each of PERLs Subsidiaries, including the holders thereof, as of the Closing Date. The Lenders have been previously provided with a true, correct and complete description of the authorized and issued outstanding Capital Stock of PERL, including the holders thereof, as of March 9, 2009. All such issued and outstanding shares of Capital Stock have been duly authorized and are validly issued, fully paid and nonassessable, and are free and clear of any Liens other than Liens granted pursuant to the Prepetition Credit Agreements or as contemplated pursuant to this Agreement and the Transaction Documents, and other restrictions (including any restrictions on the right to vote, sell or otherwise dispose of such Capital Stock other than transfer restrictions imposed by applicable state and federal securities Laws) and of any preemptive or other similar rights to subscribe for or to purchase any such Capital Stock. All issuances, sales, and repurchases by PERL and each of its Subsidiaries of shares of its Capital Stock have been effected in compliance with all applicable Laws, including applicable federal and state securities Laws. Except as set forth on Schedule 4.29, there are outstanding (i) no shares of Capital Stock or other voting securities of 57
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any such Person, (ii) no securities of any such Person convertible into or exchangeable for shares of capital stock or other voting securities of such Person, (iii) no options or other rights to acquire from any such Person, and no obligation of any such Person to issue or sell, any shares of Capital Stock or other voting securities of such Person or any securities of such Person convertible into or exchangeable for such Capital Stock or voting securities, and (iv) no equity equivalents, interests in the ownership or earnings, or other similar rights of or with respect to any such Person. There are no outstanding obligations of PERL or any of its Subsidiaries to repurchase, redeem, or otherwise acquire any of the foregoing shares, securities, options, equity equivalents, interests, or rights. 4.30 Insider Interests. Except as disclosed on Schedule 4.30, no shareholder, director, officer, employee, or Affiliate of PERL or any Subsidiary or any associate of any such shareholder, director, officer, employee, or Affiliate is, directly or indirectly, a party to any transaction involving aggregate payments in excess of $100,000 per year with PERL or any Subsidiary, including any agreement, arrangement, or understanding, written or oral, providing for the employment of, furnishing of services by, rental of real or personal property from, or otherwise requiring payments to any such shareholder, director, officer, employee, or associate. For purposes of this Section only, an associate of any shareholder, director, officer, or employee means any member of the immediate family of such shareholder, director, officer, or employee or any corporation, partnership, trust, or other entity in which such shareholder, director, officer, or employee has a substantial ownership or beneficial interest (other than an interest in a public corporation which does not exceed three percent of its outstanding securities) or is a director, officer, partner, or trustee or person holding a similar position. 4.31 Insurance. Except as set forth on Schedule 4.31, the Properties of the Credit Parties are insured with insurance companies, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the applicable Credit Party operates and in compliance with the provisions of Section 5.8. 4.32 Perfection of Security Interest. Except for matters contemplated by Section 5.15, upon the entry of the Interim Order or the Final Order, whichever occurs first, such Order shall be effective to establish and perfect the applicable Collateral Agents security interest in the Collateral. The Collateral and each Collateral Agents rights with respect to the Collateral are not subject to any setoff, claims, withholdings, or other defenses. The Credit Parties are the owners of the Collateral, free from any Lien other than Liens imposed under this Agreement and the Transaction Documents and Permitted Liens. SECTION 5. AFFIRMATIVE COVENANTS Each Credit Party covenants and agrees that so long as any Commitment is in effect and until payment in full of all Obligations, each Credit Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 5. 5.1 Payment and Performance. Borrowers will pay all amounts due under the Transaction Documents in accordance with the terms thereof and will observe, perform and comply with every covenant, term and condition expressed or implied in the Transaction Documents. 58
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Borrowers will cause each of their respective Subsidiaries to observe, perform and comply with every term, covenant and condition in any Transaction Document to which such Subsidiary is a party or is otherwise bound. 5.2 Books, Financial Statements and Reports. Borrowers, acting through or on behalf of the Credit Parties, will at all times maintain full and accurate books of account and records and a standard system of accounting, will maintain its Fiscal Year, and will furnish the following statements and reports to each Lender at Borrowers expense: (a) As soon as available, and in any event within ninety (90) days after the end of the 2008 Fiscal Year, complete Consolidated financial statements of PERL together with all notes thereto, prepared in reasonable detail in accordance with GAAP, based on an audit using generally accepted auditing standards, by Meyers Norris Penny LLP, or other independent certified public accountants selected by PERL and acceptable to Required Lenders, stating that such financial statements have been so prepared. These financial statements shall contain a Consolidated balance sheet as of the end of such Fiscal Year and Consolidated statements of earnings, of cash flows, and of changes in owners equity for such Fiscal Year, each setting forth in comparative form the corresponding figures for the preceding Fiscal Year. As soon as available, and in any event within forty-five (45) days after the end of each Fiscal Quarter, PERLs Consolidated balance sheet as of the end of such Fiscal Quarter and Consolidated statements of earnings and cash flows for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, all in reasonable detail and prepared in accordance with GAAP, subject to changes resulting from normal year-end adjustments. In addition, PERL will, together with each such set of financial statements and each set of financial statements furnished under subsection (a) of this Section, furnish a Compliance Certificate signed by the chief financial officer of PERL stating that such financial statements are accurate and complete (subject to normal year-end adjustments), stating that he has reviewed the Transaction Documents, containing calculations showing compliance (or non-compliance) at the end of such Fiscal Quarter with the requirements of Section 6.10, and stating that no Default exists at the end of such Fiscal Quarter or at the time of such certificate or specifying the nature and period of existence of any such Default. Promptly upon their becoming available, copies of all financial statements, reports, notices and proxy statements sent by any Credit Party to its stockholders and all prospectuses, registration statements, periodic reports, business acquisition reports, material change reports, press releases, and any other statements, forms and schedules filed by any Credit Party with any securities exchange, Canadian provincial securities regulatory authorities, the Securities and Exchange Commission or any similar governmental authority. If, as a result of any change in accounting principles and policies from those used in the preparation of PERLs audited Consolidated financial statements as of December 31, 2008, the Consolidated financial statements of PERL and its 59
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(b)

(c)

(d)

Subsidiaries delivered pursuant to Section 5.2(a) or 5.2(b) will differ in any material respect from the Consolidated financial statements that would have been delivered pursuant to such subsections had no such change in accounting principles and policies been made, then, together with the first delivery of such financial statements after such change, one or more statements of reconciliation for such changes in form and substance satisfactory to Administrative Agent and the Required Lenders. (e) On or before June 1, 2009, an Engineering Report or such other documentation in form and in substance satisfactory to the Required Lenders prepared as of a recent date concerning the Properties. Such Engineering Report must be prepared by Netherland, Sewell & Associates or other independent petroleum engineers chosen by Borrowers and acceptable to Required Lenders. In addition, Administrative Agent or Required Lenders may from time to time request additional Engineering Reports prepared by such independent petroleum engineers (or, in their discretion, prepared by such in-house engineering staff or audited by such independent petroleum engineers). Each Engineering Report shall distinguish (or shall be delivered together with a certificate from an appropriate officer of Borrowers which distinguishes) those Properties treated in the report which are Eligible Mortgaged Properties from those properties treated in the report which are not Eligible Mortgaged Properties. On Monday of each calendar week (or if such day is not a Business Day, the next succeeding Business Day, in each case subject to a 24-hour grace period), a weekly production and financial report in form, substance and detail acceptable to Required Lenders with respect to the Properties during such week and a Compliance Certificate signed by the chief financial officer of PERL containing calculations showing compliance (or non-compliance) at the end of the preceding calendar week with the requirements of Sections 6.10 and 6.13. As soon as available, and in any event within forty-five (45) days after the end of each Fiscal Quarter, a report (i) describing aggregate volume of production and sales attributable to production during such Fiscal Quarter from the Properties and describing the related severance taxes, leasehold operating expenses and capital costs attributable thereto and incurred during such Fiscal Quarter and (ii) describing any Properties acquired (whether by lease or otherwise) during such Fiscal Quarter and indicating whether any such Properties are leased by an Indian tribe, the Bureau of Indian Affairs, or the U.S. Bureau of Land Management to a Credit Party. With reasonable promptness, written notice of any change in the board of directors (or similar governing body) of any Borrower. Within five (5) days after the end of each calendar month, copies of all written correspondence or communication between a Credit Party and the MMS (or its successor) during such month, together with a written summary of all verbal

(f)

(g)

(h) (i)

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communication between such Persons during such month and in detail acceptable to Required Lenders. (j) Promptly after the furnishing thereof, copies of any material financial statement, report or notice furnished to or by any person pursuant to the terms of any indenture, loan or credit or other similar agreement regarding or with respect to any Indebtedness in excess of $1,000,000 not otherwise furnished to the Lenders pursuant to any other provision of this Agreement. Use commercially reasonable efforts to cause the Broker, the Investment Banker and the Chief Restructuring Officer, to (i) provide on a weekly basis, written reports, in form and substance satisfactory to the Lenders and (ii) attend, on a weekly basis, a call with the Required Lenders, in each case, discussing the progress of (x) marketing and sales efforts with respect to the proposed sale of all or substantially all of the assets and/or equity interests of PERL, PEAH or the Credit Parties (the Proposed Asset Sale(s)), including any verbal or written offers from, and the identification of, potential third party stalking horse or other purchasers (each, a Stalking Horse Purchaser) and (y) operational procedures and cost-saving initiatives of the Borrowers; provided that nothing in this Section 5.2 shall be deemed a consent, express or implied, to the consummation of any sale, transfer or any other disposition of all or substantially all of the assets, property, Capital Stock or other equity interests by any Credit Party, and the Borrowers or any other Credit Partys right to do so shall be governed by Sections 6.5 and 10.4(d). On Monday of each calendar week (or if such day is not a Business Day, the next succeeding Business Day, in each case subject to a 24-hour grace period), a report setting forth (i) the aged accounts payable by the Borrowers (including a summary of all postpetition accounts payable), separately by entity, (ii) a flash report, and (iii) a comparison of actual performance to the Budget on a cumulative basis for the period commencing on the Closing Date, each in detail acceptable to Required Lenders.

(k)

(l)

5.3 Other Information and Inspections. Each Credit Party will furnish to each Lender any information which any Agent or any Lender may from time to time request in writing concerning any covenant, provision or condition of the Transaction Documents or any matter in connection with the Credit Parties businesses and operations. Each Credit Party will permit representatives appointed by any Agent (including independent accountants, auditors, agents, attorneys, appraisers and any other Persons) to visit and inspect during normal business hours any of such Credit Partys property, including its books of account, other books and records, and any facilities or other business assets, and to make extra copies therefrom and photocopies and photographs thereof, and to write down and record any information such representatives obtain, and each Credit Party shall permit any Agent or its representatives to investigate and verify the accuracy of the information furnished to any Agent or any Lender in connection with the Transaction Documents and to discuss all such matters with its officers, employees and representatives, including, without limitation, the Chief Restructuring Officer and the Investment Banker. Borrowers authorize the Broker, the Chief Restructuring Officer and the Investment 61
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Banker to communicate directly with the Lenders regarding their efforts on behalf of the Borrowers. Notwithstanding the foregoing or anything to the contrary contained in this Agreement or any Transaction Document, information believed in good faith (after consultation with legal counsel) by any Credit Party to be covered by the work product doctrine or otherwise believed in good faith by any Credit Party to be confidential information will be shared pursuant to the terms of this Agreement or any Transaction Document with the understanding that such information will be kept confidential pursuant to the terms of Section 10.16 of this Agreement or pursuant to a separate confidentiality agreement, as applicable. 5.4 Notice of Material Events and Change of Name. Borrowers will promptly notify each Lender in writing, stating that such notice is being given pursuant to this Agreement, of: (a) (b) the occurrence of any Material Adverse Effect, the occurrence of any Event of Default or Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto, the occurrence of any Termination Event, any claim of $50,000 or more, any notice of potential liability under any Environmental Laws which might exceed such amount, or any other claim asserted against any Credit Party or with respect to any Credit Partys properties in which an adverse decision could reasonably be expected to cause a Material Adverse Effect, the filing of any suit or proceeding against any Credit Party in which an adverse decision could reasonably be expected to cause a Material Adverse Effect, the damage or destruction of any material part of the Collateral, the entering into of any new Material Contract, to the extent permitted pursuant to Section 6.15 (except that no such notices are or shall be required to be delivered with respect to Material Contracts to which (x) each of the Administrative Agent, Lenders and Hedge Provider is a party or (y) the Administrative Agent is a party and the applicable Borrower or other applicable Credit Party has authorized the Administrative Agent to provide a copy of such notice to the Lenders and the Hedge Provider), and subject to Section 6.15, the termination (other than pursuant to its terms) or amendment of any Material Contract of any Credit Party or any of their respective subsidiaries in a manner that would cause a Material Adverse Effect to or in respect of PERL and its Subsidiaries, taken as a whole (except that no such notices are or shall be required to be delivered with respect to Material Contracts to which (x) each of the Administrative Agent, Lenders and Hedge Provider is a party or (y) the Administrative Agent is a party and the applicable Borrower or other applicable Credit Party has authorized the Administrative Agent to provide a copy of such notice to the Lenders and the Hedge Provider). 62
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(c) (d)

(e) (f) (g)

(h)

Borrowers will also furnish to Administrative Agent prompt written notice of any change (i) in any Credit Partys name, (ii) in any Credit Partys identity or company structure or (iii) in any Credit Partys Federal Taxpayer Identification Number. Each Borrower agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the UCC or otherwise that are required in order for the applicable Collateral Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral and for the Collateral at all times following such change to have a valid, legal and perfected security interest as contemplated in the Security Documents. Each Borrower also agrees promptly to notify the applicable Collateral Agent if any material portion of the Collateral is damaged or destroyed. 5.5 Maintenance of Properties and Professional Staff. Each Credit Party (a) will maintain, preserve, protect, and keep all Collateral and all other property used or useful in the conduct of its business (including all wells and pipelines and all machinery, platforms, equipment and facilities of any kind now or hereafter necessary or useful in the operation of the wells described in the most recently delivered Engineering Report for the production of hydrocarbons) in good condition as would a prudent operator and in compliance with all applicable Laws and except to the extent failure to do so would not result in a Material Adverse Effect, and (b) will from time to time make all repairs, renewals, replacements, additions and improvements thereof or thereto, useful or needful to such end, to be promptly made. Each Credit Party will engage (and provide appropriate compensation and incentives to retain) all employees and all engineering and professional staff needed to prudently execute the Approved Plan of Development and in order to continue its business as an upstream oil and gas exploration and production company. 5.6 Maintenance of Existence and Qualifications. Each Credit Party will maintain and preserve its existence and its rights and franchises in full force and effect and will qualify to do business in all states or jurisdictions (a) where Collateral is located and (b) where required by applicable Law, except where the failure so to qualify will not cause a Material Adverse Effect. 5.7 Payment of Taxes, etc. Each Credit Party will (a) timely file all required tax returns; (b) timely pay all postpetition taxes, assessments, and other governmental charges or levies imposed upon it or upon its income, profits or property, and such other taxes, assessments and other governmental charges and levies as may be approved by the Bankruptcy Court; (c) within 90 days past the original invoice or billing date thereof, or, if earlier, when due in accordance with its terms, pay and discharge all postpetition Liabilities owed by it on ordinary trade terms to vendors, suppliers and other Persons providing goods and services used by it in the ordinary course of its business; (d) pay and discharge when due all other postpetition Liabilities now or hereafter owed by it, other than amounts owing to Chevron pursuant to joint interest billings and Reserved Production Payments (as defined in the Acquisition Agreements); and (e) maintain appropriate accruals and reserves for all of the foregoing in accordance with GAAP. Each Credit Party may, however, delay paying or discharging any of the foregoing so long as it is in good faith contesting the validity thereof by appropriate proceedings and has set aside on its books adequate reserves therefor. No Credit Party will, nor will it permit any of its Subsidiaries to, file or consent to the filing of any consolidated income tax return with any Person (other than Borrowers or any other Credit Party).

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5.8 Bonding and Insurance. The Credit Parties will maintain all bonds and letters of credit in lieu of bonds (as currently in effect) which they are required to maintain (by law, lease terms, or consistent with prudent industry practices) in order to carry out development and production operations on the Properties. With respect to the Collateral, the Credit Parties will maintain, with financially sound and reputable insurance companies, insurance, in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar business operating in the same or similar locations. Each Credit Party shall at all times maintain adequate insurance against its liability for injury to persons or property, in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar business operating in the same or similar locations. Each Credit Party shall be insured by insurers with a financial strength rating of A- or better by Standard & Poors or an equivalent rating from a recognized rating agency. With regard to any applicable insurance policies obtained by any Credit Party, the loss payable clauses or provisions in said insurance policy or policies insuring any of the Collateral shall be endorsed in favor of and made payable to the applicable Collateral Agent (on behalf of Lenders) as its interests may appear and such policies shall name the applicable Collateral Agent as an additional insured and provide that the insurer will endeavor to give at least 30 days prior notice of any cancellation to the applicable Collateral Agent. (To the extent that the Mortgages or any other Security Document contains other additional requirements for such endorsement, each Credit Party shall also comply with such additional requirements.) The proceeds of any casualty or other insurance policy with respect or relating to or of any condemnation of any of the Collateral shall be applied to the Loans pursuant to Section 2.10(c). Notwithstanding the foregoing provisions of this Section 5.8, all insurance carried pursuant to this Section shall provide for the following minimum coverages (which coverages may be adjusted by the Collateral Agents from time to time): (a) The Credit Parties shall maintain or cause to be maintained All Risk Property and Boiler & Machinery insurance, covering physical loss or damage to the Collateral. Such insurance shall cover all property of the Collateral. Coverage shall be written on a replacement cost basis (or on an actual cash value basis with respect to the offshore Oil and Gas Properties) and in amount acceptable to the applicable Collateral Agent, but in no event less than the replacement cost of the Collateral. The policy (i) may be subject to deductibles not to exceed $150,000 per occurrence (or (A) $250,000 per occurrence with respect to earthquakes in California and Alaska and (B) $350,000 per occurrence with respect to offshore Oil and Gas Properties) and (ii) with respect to offshore Oil and Gas Properties include loss of production income. The Credit Parties shall maintain or cause to be maintained comprehensive (or commercial) general liability insurance written on an occurrence basis and with a combined single limit of not less than $1,000,000 per occurrence (and $2,000,000 annually in the aggregate). The applicable Collateral Agent shall be named an additional insured on such policy. The Credit Parties shall maintain (i) Workers Compensation insurance with statutory limits and (ii) Employers Liability (or Maritime Employers Liability with respect to offshore Oil and Gas Properties and the operation thereof) with limits of not less than $1,000,000 including occupational disease coverage. 64
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(b)

(c)

(d)

The Credit Parties shall maintain comprehensive or business automobile liability insurance for owned (if any), non-owned and hired vehicles with combined single limits of not less than $1,000,000. With respect to onshore Oil and Gas Properties, the Credit Parties shall maintain insurance covering (i) control of well, and (ii) redrilling/extra expense, with a minimum limit of $5,000,000 per occurrence. Coverage shall include costs for making wells safe; underground control of wells, extended re-drilling and restoration costs and care, custody or control, and, shall cover wells being drilled and completed, and does not need to cover existing producing wells. A maximum deductible of $50,000 per occurrence shall be allowed. With respect to offshore Oil and Gas Properties, the Credit Parties shall maintain insurance covering (i) control of well, and (ii) redrilling/extra expense, with a minimum limit of $45,000,000 per occurrence for California Oil and Gas Properties and $75,000,000 per occurrence for Alaska Oil and Gas Properties. Coverage shall include costs for making wells safe; underground control of wells, extended re-drilling and restoration costs and care, custody or control, and, in addition to covering wells being drilled and completed, and shall also cover all existing producing wells. A maximum deductible of $500,000 per occurrence shall be allowed. The Credit Parties shall maintain directors and officers (D&O) liability insurance with combined single limits of not less than $10,000,000. The Credit Parties shall obtain and maintain or cause to be maintained insurance necessary to meet the requirements of the OPA and any other financial assurance or financial responsibility requirements required under Environmental Laws, including, but not limited to, those imposed by the MMS and the U.S. Environmental Protection Agency. Such insurance shall include a minimum limit of $25,000,000 (or $35,000,000 with respect to offshore Oil and Gas Properties) and a maximum deductible of $100,000 per occurrence. The Credit Parties shall maintain or cause to be maintained excess (or umbrella) liability insurance providing coverage in excess of the limits set forth in subparagraphs (b), (c) (ii), and (d) above. If coverage is on a claims made basis, coverage will be obtained for an extended reporting period or coverage will be maintained for three years after the expiration of the policy. The limits of the insurance set forth in subparagraphs (b), (c) (ii), and (d) above and such excess or umbrella coverage, when combined, shall not be less than $15,000,000 (or $85,000,000 with respect to offshore Oil and Gas Properties). The applicable Collateral Agent shall be named an additional insured on such policy.

(e)

(f)

(g) (h)

(i)

5.9 Performance on Borrowers Behalf. If any Credit Party fails to pay any taxes, insurance premiums, expenses, attorneys fees or other amounts it is required to pay under any Transaction Document, Administrative Agent with the consent of the Required Lenders may pay the same. Borrowers shall immediately reimburse Administrative Agent for any such payments 65
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and each amount paid by Administrative Agent shall constitute an Obligation owed hereunder which is due and payable on the date such amount is paid by Administrative Agent. 5.10 Interest. Each Borrower hereby jointly and severally promises to each Agent and Lender to pay interest at the Post-Default Rate on all Obligations (including Obligations to pay fees or to reimburse or indemnify any Agent or Lender) which Borrowers have in this Agreement jointly and severally promised to pay to such Agent or Lender and which are not paid when due. Such interest shall accrue from the date such Obligations become due until they are paid. 5.11 Compliance with Agreements and Law. Each Credit Party will perform all material postpetition or other obligations it is required by any order from the Bankruptcy Court to perform under the terms of each indenture, mortgage, deed of trust, security agreement, lease, franchise, agreement, contract or other instrument or obligation to which it is a party or by which it or any of its properties is bound. Each Credit Party will conduct its business and affairs in material compliance with all Laws applicable thereto. 5.12 Environmental Matters. (a) Each Credit Party will comply in all material respects with all Environmental Laws now or hereafter applicable to such Credit Party and shall obtain, at or prior to the time required by applicable Environmental Laws, all environmental, health and safety permits, licenses and other authorizations necessary for its operations and will maintain such authorizations in full force and effect. Each Credit Party shall promptly take any and all actions necessary to (i) cure any material violation of applicable Environmental Laws by such Credit Party or its Subsidiaries, and (ii) make an appropriate response to any Environmental Claim against such Credit Party or any of its Subsidiaries and discharge any material obligations it may have to any Person thereunder. Borrowers will promptly furnish to Administrative Agent all written notices of violation, orders, claims, citations, complaints, penalty assessments, suits or other proceedings received by PERL or any of its Subsidiaries, or of which it has notice, pending or threatened against any Credit Party, by any Governmental Authority with respect to any alleged material violation of or material noncompliance with any Environmental Laws or any permits, licenses or authorizations in connection with its ownership or use of its properties or the operation of its business. PERL will promptly furnish to Administrative Agent copies of all environmental audits and reports with respect to material environmental matters at any property of PERL or any of its Subsidiaries or which relate to any material environmental liabilities of PERL or its Subsidiaries. Borrowers will promptly furnish to Administrative Agent all requests for information, notices of claim, demand letters, and other notifications, received by PERL or any of its Subsidiaries in connection with its ownership or use of its properties or the conduct of its business, relating to potential responsibility with respect to any investigation or clean-up of Hazardous Material at any location.

(b)

(c)

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(d)

Borrowers will promptly furnish to Administrative Agent written notice describing in reasonable detail (1) any proposed acquisition of stock, assets, or property by PERL or any of its Subsidiaries that could reasonably be expected to (A) expose PERL or any of its Subsidiaries to, or result in, material Environmental Claims or (B) affect the ability of PERL or any of its Subsidiaries to maintain in full force and effect all material Governmental Authorizations required under any Environmental Laws for their respective operations and (2) any proposed action to be taken by PERL or any of its Subsidiaries to modify current operations in a manner that could reasonably be expected to subject PERL or any of its Subsidiaries to any additional material obligations or requirements under any Environmental Laws.

5.13 Evidence of Compliance. Each Credit Party will furnish to each Lender at such Credit Partys or Borrowers expense all evidence which Administrative Agent from time to time reasonably requests in writing as to the accuracy and validity of or compliance with all representations, warranties and covenants made by any Credit Party in the Transaction Documents, the satisfaction of all conditions contained therein, and all other matters pertaining thereto. 5.14 Agreement to Deliver Guaranty and Security Documents. Each Borrower agrees to have any of its Subsidiaries formed or acquired after the date hereof become a Guarantor by executing and delivering a Counterpart Agreement. In addition, each Borrower agrees to deliver and to cause each other Credit Party to deliver, to further secure the Obligations and the Lender Hedging Obligations whenever requested by the applicable Collateral Agent in its sole and absolute discretion, deeds of trust, mortgages, chattel mortgages, security agreements, financing statements and other Security Documents in form and substance satisfactory to the applicable Collateral Agent for the purpose of granting, confirming, and perfecting a first and prior liens or security interests in any real or personal property now owned or hereafter acquired by any Credit Party. Furthermore, each Borrower agrees to deliver and to cause each other Credit Party to deliver whenever requested by the applicable Collateral Agent in its sole and absolute discretion, an intercompany subordination agreement in form and substance satisfactory to the applicable Collateral Agent and the Required Lenders. Each Credit Party also agrees to deliver, whenever requested by the applicable Collateral Agent in its sole and absolute discretion, favorable title opinions or updates of title opinions from legal counsel acceptable to the applicable Collateral Agent and the Required Lenders (or customary title work acceptable to the applicable Collateral Agent and the Required Lenders) with respect to any Credit Partys properties and interests designated by the applicable Collateral Agent, based upon abstract or record examinations to dates acceptable to the applicable Collateral Agent and the Required Lenders and (a) stating that such Credit Party has good and defensible title to such properties and interests, free and clear of all Liens other than Permitted Liens, (b) confirming that such properties and interests are subject to Security Documents securing the Obligations that constitute and create legal, valid and duly perfected first priority deed of trust or mortgage liens (except for Permitted Liens entitled to priority under applicable law) in such properties and interests and assignments of and security interests in the oil and gas attributable to such properties and interests and the proceeds thereof, and (c) covering such other matters as the applicable Collateral Agent may request. Upon the applicable Collateral Agents or and the Required Lenders request, Borrowers shall deliver duly executed control agreements from each 67
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institution holding any Credit Partys Deposit Accounts pursuant to which such institution recognizes the applicable Collateral Agents Lien in such Deposit Accounts and, upon the occurrence and during the continuance of an Event of Default, agrees to transfer collected balances in all such Deposit Accounts to the applicable Collateral Agent pursuant to its instructions from time to time; provided that (a) such control agreement with respect to the applicable Collateral Account shall satisfy the provisions of Section 2.16 and (b) no such control agreement shall be required with respect to Deposit Accounts that are designated solely as (i) payroll funding accounts or (ii) royalty or joint interest owner accounts. 5.15 Perfection and Protection of Security Interests and Liens. Borrowers will from time to time upon the request of the applicable Collateral Agent, deliver, and will cause each other Credit Party from time to time to deliver, to the applicable Collateral Agent any financing statements, continuation statements, extension agreements, mortgages, legal opinions and corporate authority documentation relating thereto, and other documents, properly completed and executed (and acknowledged when required) by the Credit Parties in form and substance satisfactory to the applicable Collateral Agent, and take all such actions as may reasonably be requested by the applicable Collateral Agent, which such Collateral Agent requests for the purpose of (a) perfecting, confirming, or protecting any Liens or other rights in Collateral securing any Obligations and (b) maintaining compliance with all applicable Laws, including those of any applicable Indian tribe, the Bureau of Indian Affairs, and the U.S. Bureau of Land Management. Each Credit Party hereby authorizes the applicable Collateral Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral describing the Collateral as all assets without the signature of any Credit Party. 5.16 Bank Accounts; Offset. To secure the repayment of the Obligations and the Lender Hedging Obligations, each Credit Party hereby grants to each Lender a security interest, a lien, and a right of offset, each of which shall be in addition to all other interests, liens, and rights of any Lender at common Law, under the Transaction Documents, or otherwise, and each of which shall be upon and against (a) any and all moneys, securities or other property (and the proceeds therefrom) of such Credit Party now or hereafter held or received by or in transit to any Lender from or for the account of such Credit Party, whether for safekeeping, custody, pledge, transmission, collection or otherwise, (b) any and all deposit accounts and deposits (general or special, time or demand, provisional or final) therein of such Credit Party with any Lender, and (c) any other credits and claims of such Credit Party at any time existing against any Lender, including claims under certificates of deposit. Subject to Section 8, at any time and from time to time after the occurrence of any Default, each Lender is hereby authorized to foreclose upon, or to offset against the Obligations and the Lender Hedging Obligations owed to a Lender Counterparty then due and payable (in either case without notice to such Credit Party), any and all items hereinabove referred to. The remedies of foreclosure and offset are separate and cumulative, and either may be exercised independently of the other without regard to procedures or restrictions applicable to the other. 5.17 Approved Plan of Development. Borrowers will, and cause each other Credit Party to, (a) timely develop the Properties, and make Capital Expenditures on the Properties, solely in accordance with the Approved Plan of Development and the Budget, and (b) except to the extent regulatory approval has not yet been obtained, have each producing and injection well which is hereafter completed put into normal operation. 68
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5.18 Reviews. Borrowers will meet with Lenders from time to time as reasonably requested by Administrative Agent or Required Lenders, at the offices of Administrative Agent or at such other location as Administrative Agent and Borrowers may agree and with the Lenders electing to attend such meeting, to review all operational activities of Borrowers with respect to the Eligible Mortgaged Properties and all financial reports of the Credit Parties since the date of the prior review. Each review shall be in scope reasonably satisfactory to Administrative Agent and Required Lenders, but will include at a minimum, an update by Borrowers on the development activities made pursuant to Borrowers business plan, any requests by Borrowers that changes be made to Borrowers business plan, any cost or expense overruns or underruns, any mechanical problems incurred, and any differences in reserves or production estimates. 5.19 Investment Banker. Within thirty (30) days after the Petition Date, Borrowers shall have filed a motion or application to approve the retention of Lazard Freres & Co., LLC or another investment banking firm acceptable to the Required Lenders (the Investment Banker) experienced in bankruptcy sales to assist Borrowers to market their assets in whole or in part to potential buyers. Such engagement shall be on terms and conditions reasonably satisfactory to the Required Lenders. 5.20 Non-Consolidation. Unless otherwise consented to by Administrative Agent and Required Lenders, each Borrower will and will cause each of its Subsidiaries to: (a) maintain entity records and books of account separate from those of any other entity which is an Affiliate of such entity; (b) not commingle its funds or assets with those of any other entity which is an Affiliate of such entity; and (c) provide that its board of directors or other analogous governing body will hold all appropriate meetings (or with respect to any Subsidiary of such Borrower execute appropriate written consents) to authorize and approve such entitys actions, which meetings (or, if applicable consents) will be separate from those of other entities. 5.21 Leases and Contracts; Performance of Obligations. Except to the extent failure to do so would not result in a Material Adverse Effect, each Credit Party will maintain in full force and effect all oil, gas or mineral leases, contracts, servitudes and other agreements forming a part of any Oil and Gas Property, to the extent the same cover or otherwise relate to such Oil and Gas Property, and each Credit Party will timely perform all of its obligations thereunder. Except to the extent failure to do so would not result in a Material Adverse Effect, each Credit Party will properly and timely pay all postpetition rents, royalties and other payments due and payable under any such leases, contracts, servitudes and other agreements, or under the Permitted Liens, or otherwise attendant to its ownership or operation of any Oil and Gas Property, other than amounts owing to Chevron pursuant to joint interest billings and any Reserved Production Payments (as defined in the Acquisition Agreements) and earn-out obligations in connection with the Acquisition Agreements, unless such Credit Party is required to make such payments pursuant to an order of the Bankruptcy Court. Each Credit Party will promptly notify Administrative Agent of any claim (or any conclusion by such Credit Party) that such Credit Party is obligated to account for any royalties, or overriding royalties or other payments out of production, on a basis (other than delivery in kind) less favorable to such Credit Party than proceeds received by Credit Party (calculated at the well) from sale of production. Notwithstanding the foregoing provisions of this Section 5.21, none of the following shall constitute a breach of this Section 5.21: (a) an oil, gas or mineral lease expiring by its own terms; (b) an oil, gas or mineral lease that is terminated or released (if released or abandoned but 69
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not otherwise sold or transferred), so long as no well situated on any such lease, or located on any unit containing all or any part thereof, is capable (or is subject to being made capable through commercially feasible operations) of producing oil, gas or other hydrocarbons or minerals in commercial quantities; or (c) rejection of any executory contract as contemplated by Section 5.30. 5.22 Representation to Continue to be True. Each Credit Party will carry out its sales of production, will operate the Oil and Gas Properties, and will otherwise deal with the Oil and Gas Properties and the production, to cause the representations and warranties in Sections 4.23 through 4.26 to remain true and correct at, and as of, all times and other than as required or prohibited under this Agreement that this Agreement is in effect (and not just at, and as of, the times such representations and warranties are made). 5.23 Broker. Within thirty (30) days after the Petition Date, Borrowers shall have filed a motion or application to approve the retention of Albrecht & Associates, Inc., and any other relevant brokers from time to time (each, a Broker), and with responsibilities to include, without limitation, assisting the Borrowers to market their assets in whole or in part to potential buyers. Each such Brokers engagement shall be on terms and conditions reasonably satisfactory to the Required Lenders. 5.24 Securities Filings. Borrowers shall timely file all reports required to be filed with any Canadian provincial securities regulatory authorities or the Securities and Exchange Commission pursuant to the Exchange Act (as applicable), any other Governmental Authority or any stock exchange. 5.25 Chief Restructuring Officer. Within thirty (30) days after the Petition Date, Borrowers shall have filed a motion or application to approve the retention of Zolfo Cooper Management, LLC, led by Scott Winn, as the Chief Restructuring Officer (the Chief Restructuring Officer), such Chief Restructuring Officers engagement to be on terms and conditions reasonably satisfactory to the Required Lenders, and with responsibilities to include, without limitation, preparation for the Proposed Asset Sale, overseeing the Proposed Asset Sale, preparation of the Budget, oversight of legal and planning matters, reviewing expenditures and payments made by the Borrowers and their Subsidiaries and other oversight responsibilities reasonably requested by the Required Lenders. The Chief Restructuring Officer shall report directly to the board of directors of PERL and all other professionals of the Borrowers and Guarantors shall report directly to the Chief Restructuring Officer. 5.26 Consultant. Borrowers acknowledge and agree that Administrative Agent or its counsel may, at the direction of the Required Lenders, engage one or more professional consulting firms, which may include environmental and reserve engineering firms, reasonably satisfactory to Administrative Agent and the Required Lenders (each a Consultant), to advise and assist Administrative Agent, Administrative Agents counsel, Lenders and Lenders counsel with their on-going assessment of Credit Parties. Administrative Agent and Lenders may elect to maintain the confidentiality of any conclusions reached or reports prepared by such Consultant and may also provide that the Consultants conclusions shall be covered by the attorney/client privilege or the work product doctrine. Specifically, the Administrative Agent, the Lenders and the Consultant shall have no obligation to disclose the reports prepared by the Consultant, or the 70
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conclusions reached by the Consultant, to Borrowers or any other Credit Party. Borrowers shall reimburse Administrative Agent for any and all reasonable fees and expenses of such Consultant in accordance with Section 10.2, provided that the parties hereto agree to revise the Budget to include such fees and expenses to the extent required. 5.27 Adequate Protection Interest Accrual. Adequate protection in the aggregate amount equal to the interest on the obligations under the outstanding principal amount of the Prepetition Lender Debt (after giving effect to the transactions contemplated hereby) shall continue to accrue for the benefit of the Prepetition Lenders at the contract rate on the outstanding principal amount of the prepetition loans of the Prepetition Lenders under the Prepetition Credit Agreements. 5.28 RTP Work. Borrowers shall continue the return to production work with respect to three new Platform Eureka wells located in the Beta Field, and shall use commercially reasonable efforts to have successfully completed such work by April 15, 2009. 5.29 Confidential Offering Memorandum; Marketing Materials. Borrowers shall have caused the Investment Banker, by no later than May 15, 2009, to finalize the confidential information memorandum with respect to the proposed sale of all or substantially all of the assets and/or equity interests of PERL and shall have commenced, or caused the Investment Banker or the Broker to commence a marketing process. Borrowers shall have made available to potential interested bidders an electronic data room containing all material information relating to the Borrowers, the Guarantors and their respective Subsidiaries and Affiliates, their respective businesses, operations, financing and contractual relationships and such other matters as are reasonably requested to be provided by any such interested party (provided that the interested party executes a confidentiality and no trade agreement on commercially reasonable terms and as otherwise described in Section 5.34). Nothing in this Section 5.29 shall be deemed a consent to any sale of all or substantially all of the Collateral or all or substantially all of the assets, property, Capital Stock or other equity interests of any Credit Party, the right to sell such assets, property or equity interests being governed by Sections 6.5 and 10.4(d). 5.30 Executory Contracts. On or before May 15, 2009, Credit Parties shall have provided a list, complete in all material respects, of all executory contracts and shall consult with the Lenders regarding their plans to accept or reject any executory contract and such determination by the Credit Parties shall be subject to prior consultation with the Agents. 5.31 Operation of Alaska Properties. On or before March 28, 2009, Borrowers shall have provided the Lenders with a report (the Alaska Operations Report) of (a) their proposed course of action with respect to all operated properties in Alaska and (b) their proposed course of action with respect to all non-operated properties in Alaska, and such courses of action shall be reasonably satisfactory to the Required Lenders. Simultaneously with the delivery of the Alaska Operations Report, the Borrowers shall provide the Lenders proposed adjustments to the Budget reflecting such proposed courses of action. To the extent such proposed adjustments to the Budget are acceptable to the Required Lenders in their sole discretion, the parties hereto shall revise the Budget to reflect such adjustments. 5.32 Stalking Horse Purchaser. Borrowers agree to furnish, promptly upon receipt, to the Investment Banker, with a copy to the Lenders, any offers from potential Stalking Horse 71
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Purchasers, providing for the sale of all or substantially all of the assets of PERL, PEAH, PEAO or all of the Credit Parties. 5.33 Sale Procedures Order. Promptly following selection of an acceptable Stalking Horse Purchaser and transaction deemed advisable by the Borrowers and the Investment Banker (or, in the case deemed advisable by the Borrowers but not the Investment Banker, found to be advisable by the Bankruptcy Court), and execution of a definitive purchase agreement with the Stalking Horse Purchaser accompanied by a good faith deposit, and if no Stalking Horse Purchaser is in place by such date, in any event by June 26, 2009, Borrowers shall file one or more motions for (A) in the case of a Stalking Horse Purchaser, the approval of the sale of the applicable assets of the applicable Credit Parties to the Stalking Horse Purchaser, subject to higher or otherwise better bids and the consent of the Required Lenders, and prescribing procedures for the conduct of the sale process or (B) whether or not a Stalking Horse Purchaser is identified, the approval of the bidding procedures governing the auction for the sale of the assets of the applicable Credit Parties, it being understood that any such bidding procedures order (the Sale Procedures Order) shall provide, among other things, that approval thereof shall be conditioned upon the prior written consent thereto of the Required Lenders, such consent to be granted or withheld in their sole discretion. The Sale Procedures Order shall provide, subject to agreement by the Stalking Horse Purchaser, if any, which agreement the Borrower will use its best efforts to obtain, for a period of at least a sixty (60) days during which the Borrower and the Investment Banker may pursue higher and better offers prior to the date set for the auction. The Sale Procedures Order also shall provide, without limitation, that within three (3) Business Days after the entry of the Sale Procedures Order (the Deposit Deadline), (i) the Stalking Horse Purchaser, if any, shall make a deposit with the Borrowers in the amount prescribed in such Sale Procedures Order; (ii) on or before the Deposit Deadline, the applicable Credit Parties, on the one hand, and the Stalking Horse Purchaser, on the other hand, shall enter into a definitive purchase agreement; and (iii) on or before the Maturity Date, the applicable Credit Parties and the Stalking Horse Purchaser or such other highest and best bidder received at the auction (the Purchaser), shall consummate the sale transaction approved by an order of the Bankruptcy Court (the Sale Order); provided that the Credit Parties shall not enter into any such agreement or consummate such a transaction without the consent of the Required Lenders. 5.34 Potential Purchasers Access; Confidentiality. The Borrowers shall provide full access to documents and other information concerning the respective businesses of the Borrowers and the Guarantors to each potential bidder, subject to the delivery of a confidentiality and no trade agreement executed and delivered by such bidder to the Borrowers on commercially reasonable terms and in form and substance reasonably acceptable to Borrowers and Borrowers counsel. 5.35 Reservation of Lenders Rights. Each of the Lenders expressly reserves the right to object, through the Administrative Agent or in their own name, to the terms of any proposed sale transaction, including, without limitation, any proposed bidding procedures or the sale of some or all of the assets of the Credit Parties and the Credit Parties may not consummate such a transaction without the consent of the Required Lenders. The Investment Bankers engagement shall provide that the Investment Banker may be made available to testify.

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5.36 Filing of Claims, Schedules and Statement of Affairs in the Case. Borrowers shall file their schedules and statement of affairs with the Bankruptcy Court no later than fifty (50) days after the Petition Date. 5.37 Last Day to File Claims. Borrowers shall have obtained an order of the Bankruptcy Court setting the last day to file claims (other than those of governmental units) in the Case no later than ninety (90) days after the Petition Date. SECTION 6. NEGATIVE COVENANTS Each Credit Party covenants and agrees that, so long as any Commitment is in effect and until payment in full of all Obligations, such Credit Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 6. 6.1 Indebtedness. From and after the Petition Date, no Credit Party nor any of its Subsidiaries will in any manner incur, owe or be liable for Indebtedness except: (a) (b) (c) the Obligations. Hedging Contracts permitted under Section 6.3. unsecured intercompany Indebtedness among Borrowers and any Guarantor that is in compliance with Sections 5.14 and 6.8; provided that such Indebtedness shall be subordinated in right of payment to the Obligations pursuant to terms and conditions satisfactory to the Administrative Agent; and provided further that such intercompany Indebtedness is described in detail in, and incurred in accordance with, the Budget. purchase money Indebtedness (including capital leases) for equipment, inventory and other tangible personal property (including compressors, but excluding fixtures) in an aggregate amount not in excess of $100,000 at any time outstanding. the Prepetition Lender Debt and guaranties by the Prepetition Guarantors of such Prepetition Lender Debt. Indebtedness of PERL in respect of the Subordinated Seller Note and guaranties by the Credit Parties in respect thereof. Indebtedness incurred by any Credit Party arising from (i) the OXY Indemnification Obligations and (ii) purchase price adjustments under the Wilmington Purchase and Sale Agreement and the Carneros Purchase and Sale Agreement. that certain unsecured Indebtedness owed by PERL to Bateman & Co., one of its stockholders, pursuant to a promissory note dated February 10, 2009 in the original principal amount of $1,032,732.34 (the Bateman Note).

(d)

(e) (f) (g)

(h)

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(i)

Indebtedness set forth on Schedule 6.1(i) as of the Closing Date; provided that the balance of such Indebtedness shall not exceed $58,000,000 at any time; and provided further that such Indebtedness shall not be refinanced. Indebtedness arising under the Acquisition Agreements relating to Reserved Production Payments (as defined in the Acquisition Agreements) and earn-out obligations not to exceed an aggregate of $7,000,000 plus interest accrued in accordance with the terms of the Acquisition Agreements. Indebtedness arising from plugging, abandonment, remediation and similar obligations (including, without limitation, liabilities incurred in connection with surety bonds relating to abandonment obligations); provided that such Indebtedness shall not exceed at any time $61,100,000 in the aggregate, as recorded on the balance sheet of Borrowers in accordance with GAAP as of the Closing Date, plus accretion of interest thereafter in accordance with GAAP. prepetition trade payables outstanding more than 90 days past the incurrence thereof. insurance premium financing in an amount and on terms in form and substance acceptable to the Required Lenders.

(j)

(k)

(l) (m) 6.2

Limitation on Liens and Negative Pledges; Equitable Lien. (a) No Credit Party nor any of its Subsidiaries will create, assume or permit to exist any Lien upon any of the properties or assets which it now owns or hereafter acquires, except, to the extent not otherwise forbidden by the Security Documents the following: (i) (ii) Liens securing the Obligations. Liens that secure only Indebtedness allowed under Section 6.1(d) (plus associated interest, prepayment penalties, fees and reimbursements), provided that such Liens encumber only the personal property purchased with the proceeds of such Indebtedness (plus accessions and attachments to such purchased assets) and that the encumbered assets are not attached to any Eligible Mortgaged Properties in such a way that removal of such assets would damage any Eligible Mortgaged Property. Excepted Liens. Liens with respect to the Governmental Bonds in favor of Aera and SWEPI, as provided in the applicable Acquisition Agreement; provided that the Bankruptcy Court determines that such Liens are valid and enforceable. Liens in favor of the Prepetition Collateral Agents and Prepetition Lenders securing the Prepetition Lender Debt. 74

(iii) (iv)

(v)

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(vi)

Liens constituting Chevron Production Liens; but only if the Bankruptcy Court determines that such Liens are valid and enforceable under agreements existing as of the Petition Date.

(b)

No Credit Party nor any of its Subsidiaries shall enter into any agreement prohibiting the creation or assumption of any Lien in favor of Beneficiaries upon any of its properties or assets, whether now owned or hereafter acquired.

6.3 Hedging Contracts. Except the PERL ISDA Agreement, as amended pursuant to the Postpetition Hedge Amendment, no Credit Party will be a party to or in any manner be liable on any Hedging Contract. 6.4 Subsidiaries; Mergers; Capital Stock Transactions. (a) (b) (c) No Credit Party shall create or own any Subsidiary other than those listed in Schedule 4.14. No Credit Party nor any of its Subsidiaries will merge or consolidate with or into any other business entity. No Credit Party shall issue Capital Stock other than upon exercise of options and warrants to acquire common stock or upon the conversion of the Bateman Note into common stock.

6.5 Limitation on Sales of Property. No Credit Party will sell, transfer, lease, exchange, alienate or dispose of any of its assets or properties or any interest therein (including any stock or other equity interests in any of its Subsidiaries) except: (a) (b) (c) equipment which is worthless or obsolete or not used or usable which is replaced by equipment of equal suitability and value. personal property inventory (including oil and gas sold as produced) which is sold in the ordinary course of business on ordinary trade terms. any property or asset for fair consideration not in the aggregate in excess of $100,000 in any twelve month period, the sale of which shall not materially impair or diminish the value of the Collateral or any Credit Partys financial condition, business or operations. an oil, gas or mineral lease that is terminated or released (if released or abandoned but not otherwise sold or transferred), so long as no well situated on any such lease, or located on any unit containing all or any part thereof, is capable (or is subject to being made capable through commercially feasible operations) of producing oil, gas or other hydrocarbons or minerals in commercial quantities.

(d)

Neither PERL nor any of PERLs Subsidiaries will sell, transfer or otherwise dispose of Capital Stock of any of PERLs Subsidiaries. No Credit Party will discount, sell, pledge or assign any

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notes payable to it, accounts receivable or future income except to the extent expressly permitted under the Transaction Documents. 6.6 Limitation on Dividends and Redemptions. (a) No Credit Party will declare or make any Distribution in respect of any class of its Capital Stock, nor will any Credit Party directly or indirectly declare or make any Distribution in respect of any Capital Stock of any other Credit Party (in each case, whether such Capital Stock is now or hereafter issued, outstanding or created), or cause or permit any reduction or retirement of the Capital Stock of any Credit Party, provided that PERLs Subsidiaries (other than the PEA Entities) may make Distributions to its equity holders or to PERL. PERL shall not issue any Capital Stock other than upon exercise of options and warrants to acquire common stock or upon the conversion of the Bateman Note into common stock, and no other Credit Party shall make any such issuance except to PERL. Except as provided herein or in the Prepetition Credit Agreements, no Credit Party shall, nor shall it permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Subsidiary of PERL to (i) pay dividends or make any other Distributions on any of such Subsidiarys Capital Stock owned by PERL or any other Subsidiary of PERL, (ii) repay or prepay any Indebtedness owed by such Subsidiary to PERL or any other Subsidiary of PERL, (iii) make loans or advances to PERL or any other Subsidiary of PERL, or (iv) transfer any of its property or assets to PERL or any other Subsidiary of PERL other than restrictions on such transfer or property or assets (1) by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses, joint operating agreements, farmin/farmout agreements, joint venture agreements and similar agreements entered into in the ordinary course of business, and (2) that are or were created by virtue of any transfer of, agreement to transfer or option or right with respect to any property, assets or Capital Stock not otherwise prohibited under this Agreement.

(b)

6.7 Limitation on Investments, Capital Expenditures, and Deposit Accounts. No Credit Party will make any Investment other than (a) Permitted Investments, (b) Investments by a Credit Party in another Credit Party to the extent such Investment complies with Section 6.8, (c) normal and prudent extensions of credit to customers buying goods and services in the ordinary course of business, which extensions shall not be for longer periods than those extended by such Credit Party prior to the Petition Date, (d) obligations under Hedging Contracts that are required under this Agreement, (e) endorsements of negotiable instruments in the ordinary course of business, (f) guaranties to the extent required under this Agreement, and (g) Investments in existence on the Petition Date by PEAH in Cook Inlet Pipe Line Company, an Alaska corporation. The Credit Parties will not make capital expenditures or acquisitions of oil and gas properties other than Capital Expenditures in accordance with the Budget, and the amount of each such Capital Expenditure, calculated on a cumulative basis, shall not exceed one hundred and fifteen percent (115%) of the amount set forth in the Budget for such Capital Expenditure. No Credit Party shall open any new deposit, commodity or security account or otherwise utilize 76
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any such account other than the accounts existing on the Closing Date unless it shall have given the applicable Collateral Agent thirty (30) days prior written notice thereof and shall have taken all action deemed necessary or desirable by the applicable Collateral Agent to cause its security interest therein to be perfected with the priority required hereby. No Credit Party (other than the PEA Entities) will give control over any Deposit Account to any Person except J. Aron, as Collateral Agent, with respect to such Deposit Accounts, and the applicable bank with whom such account is maintained. The PEA Entities will not give control over any Deposit Account to any Person except Silver Point Finance, LLC, as Collateral Agent with respect to such Deposit Accounts, and the applicable bank with whom such account is maintained. 6.8 Transactions with Affiliates. No Credit Party nor any of its Subsidiaries will engage in any transaction with any other Credit Party or any of its Affiliates other than (i) for customary director or employee compensation paid to any of such Affiliates who serves as a director or employee of a Credit Party, (ii) for issuances of equity by a Credit Party to Affiliates for fair value, provided that such issuances are permitted by Section 6.6, (iii) transactions among Credit Parties (and no other Affiliates) the terms of which are no less favorable than those which would have been obtainable at the time in arms-length dealings with persons other than a Credit Party, and (iv) transactions contemplated by the agreements and instruments described in Schedule 4.30. 6.9 Certain Contracts; Multiemployer ERISA Plans. No Credit Party will enter into any take-or-pay contract or other contract or arrangement for the purchase of goods or services which obligates it to pay for such goods or service regardless of whether they are delivered or furnished to it. Except as contemplated under Section 5.30, no Credit Party will amend or permit any amendment to any material contract or lease which releases, qualifies, limits, makes contingent or otherwise materially and detrimentally affects the rights and benefits of any Lender under or acquired pursuant to any Security Documents. No ERISA Affiliate will incur any obligation to contribute to any multiemployer plan as defined in Section 4001 of ERISA. 6.10 Minimum Production Volume. Borrowers will not allow the aggregate volume of production attributable to production during a period consisting of the four most recently ended weeks, determined on Monday of each week commencing on March 16, 2009 (for the week ended March 13, 2009) through the Maturity Date, to vary from the aggregate volume of production by more than a combined aggregate of 15% for such period set forth (a) with respect to the Beta Field, in line item Barrels Produced (in the Beta section) of the Budget and (b) with respect to the operated properties in Alaska, in line item Barrels Produced (in the Alaska operated section) of the Budget; provided that, with respect to the weeks ended March 13, 2009, March 20, 2009 and March 27, 2009, the production volume shall be calculated solely with respect to the applicable week then ended and shall be within a 25% variance of the amount set forth in the Budget for such week; and provided, further, that such production levels may be adjusted with the Required Lenders consent in the event that the agreed course or courses of action set forth in Section 5.31 or Section 5.33 affects such production levels. 6.11 Conduct of Business. From and after the Closing Date, no Credit Party shall, nor shall it permit any of its Subsidiaries to, engage in any business other than (a) the businesses engaged in by such Credit Party on the Closing Date (as described in PERLs filings with the Toronto Stock

77
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Exchange and SEDAR) and similar or related businesses and (b) such other lines of business as may be consented to by Required Lenders. 6.12 Fiscal Year. No Credit Party shall, nor shall it permit any of its Subsidiaries to, change its Fiscal Year end from December 31, except that Petrocal Acquisition Corp. may change its Fiscal Year end from June 30 to December 31 (but not to any other date). 6.13 Budget. The Borrowers will not allow (x) the payment of any expenses or disbursements other than those set forth in the Budget; provided that the sum of (A) the actual weekly expenses and disbursements for any calendar-week period plus (B) any budgeted amounts from the immediately preceding calendar week not spent during such week, may exceed the expenses and disbursements budgeted for such calendar-week period set forth in the Budget as line item Total Operating Disbursements by no more than twenty percent (20%) (it being understood that such expenses and disbursements shall not include finance charges, professional fees, capital expenditures, expenses and disbursements for the purposes of this clause (x)), and (y) tested weekly, for each Measurement Period (defined below), commencing with the week ended March 13, 2009, the actual cumulative net cash flow (if positive) to be less than eighty-five percent (85%) of the cumulative net cash flow budgeted for such Measurement Period to the date of the calculation, as set forth in the Budget as line item Net Operating Cash Flow (or greater than one hundred fifteen percent (115%) if such cumulative Net Operating Cash Flow for such Measurement Period is negative) (it being understood that such net cash flow shall not include finance charges, professional fees, capital expenditures, expenses and disbursements for the purposes of this clause (y)); provided that, in the event the actual cumulative net cash flow for any Measurement Period set forth in the Budget is less than eighty-five percent (85%) of the net cash flow for such Measurement Period as set forth in the Budget as line item Rolling Cumulative Net Operating Cash Flow solely as a result of a delay in PERLs or PEAOs receipt of lift payments during such Measurement Period, the actual net cash flow shall be recalculated as of the next succeeding week and, so long as the actual cumulative net cash flow for the next such Measurement Period (as determined for such next succeeding week) is not less than eightyfive percent (85%) of the net cash flow budgeted for such Measurement Period (or greater than one hundred twelve and one-half percent (115%) if negative), the Borrowers shall be deemed to be in compliance with this clause (y) with respect to the immediately preceding week. For purposes of the above test, Measurement Period shall mean (a) for the weeks ended March 13, 2009, March 20, 2009 and March 27, 2009, the applicable week then ended (provided that the tests set forth above shall be subject to a 25%, and not a 15%, variance) and (b) for the week ended April 3, 2009 and each week thereafter, the period of four weeks then ended. 6.14 Amendments to Organizational Documents. PERL will not and will not permit any of its Subsidiaries to, enter into or permit any modification of, or waive any material right or obligation of any Person under its, Organizational Documents. 6.15 Material Contracts. Except as contemplated by Section 5.30, no Credit Party shall (a) cancel or terminate any Material Contract (or consent to or accept any cancellation or termination thereof), (b) amend or otherwise modify any Acquisition Document or give any consent, waiver or approval thereunder, or waive any breach of or default under any Acquisition Document, (c) amend or otherwise modify any other Material Contract or give any consent, waiver or approval thereunder, or waive any breach of or default under any such Material 78
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Contract or (d) enter into any new Material Contract, in each case without the Required Lenders consent. No Credit Party shall take any action (or omit to take any action) in connection with any Material Contract that would impair the value of the interests or rights of any Credit Party thereunder or that would impair the interest or rights of any Agent and/or Lenders hereunder or under any other Transaction Document. PERL shall not consent to, or otherwise authorize the transfer of, the Subordinated Seller Note to any holder other than Forest Oil Corporation without the prior written consent of the Required Lenders. 6.16 Prepetition Indebtedness. No Credit Party shall pay or discharge, or cause to be paid or discharged, any Indebtedness of such Credit Party incurred before the Petition Date other than payments: (a) (b) (c) approved by the Bankruptcy Court and in accordance with the Budget, required to be made to the Prepetition Agents and the Prepetition Lenders pursuant to the Orders, required to be made pursuant to an order of the Bankruptcy Court in the Case for adequate protection pursuant to the Bankruptcy Code on account of Permitted Liens or on account of other Liens primed pursuant to the Orders by the Liens securing the Obligations, or as required in a Reorganization Plan, on or about the effective date of the Reorganization Plan.

(d)

None of the Credit Parties shall file any motion with the Bankruptcy Court in accordance with Section 546(h) of the Bankruptcy Code seeking to return any goods shipped to any of the Credit Parties prior to the Petition Date, without the Required Lenders consent. 6.17 Bankruptcy Case. None of the Credit Parties shall, and none shall permit any of their respective Subsidiaries to, seek, consent or suffer to exist without the Required Lenders consent (i) any modification, stay, vacation or amendment to the Orders; (ii) a priority claim for any administrative expense or unsecured claim against any Borrower or any Guarantor (now existing or hereafter arising of any kind or nature whatsoever, including without limitation any administrative expense of the kind specified in Section 503(b), 506(c) or 507(b) of the Bankruptcy Code) equal or superior to the priority claim of the Agents and the Lenders in respect of the Obligations other than the Carve Out; (iii) any Lien on any Collateral having a priority equal or superior to the Liens in favor of the applicable Collateral Agent and the Lenders in respect of the Obligations or the Prepetition Lender Debt, except for legal, valid and enforceable Permitted Prior Liens entitled to priority under applicable law; (iv) any extension of the period of exclusivity for any Borrower or any Guarantor to file a Reorganization Plan beyond 180 days after the Petition Date without the consent of the Required Lenders; and (v) other than as provided in Section 5.33, any motion to prescribe procedures governing the conduct or approval of the sale of all or substantially all of the assets, properties or Capital Stock or other equity interests of PERL, PEAH, PEAO or all of the Credit Parties pursuant to Section 363 of the Bankruptcy Code without the prior written consent of the Required Lenders. SECTION 7. PRIORITY AND COLLATERAL SECURITY; GUARANTY. 79
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7.1

Priority and Collateral Security. (a) Superpriority Claims and Collateral Security. (i) Each of the Credit Parties hereby represents, warrants and covenants that, except as otherwise expressly provided in this paragraph, the Obligations, upon the entry of the Interim Order or the Final Order, whichever first occurs:

(1) shall at all times constitute a Superpriority Claim in the Case of the Credit Parties having priority, pursuant to Sections 364(c)(1) and 507(b) of the Bankruptcy Code (subject only to the Carve Out), over the other Superpriority Claim granted as adequate protection in respect of the Prepetition Lenders and any other claims of any entity, including without limitation any claims under Sections 105, 326, 328, 330, 331, 365, 503(a), 503(b), 506(c), 507(a), 507(b), 546(c), 546(d), 726 (to the extent permitted by law) 1113 and 1114 of the Bankruptcy Code, and shall at all times be senior to the rights of the Credit Parties, any successor trustee to the extent permitted by law, or any other creditor in the Case; (2) pursuant to Sections 361, 362, 364(c)(2), 364(c)(3) and 364(d) of the Bankruptcy Code and the Security Documents, shall at all times be secured by, and each Credit Party (other than the PEA Entities) hereby grants to J. Aron, as Collateral Agent for the benefit of itself and the other Secured Parties, and each PEA Entity hereby grants to Silver Point Finance, LLC, as Collateral Agent for the benefit of itself and the other Secured Parties, (A) a first priority perfected Lien (subject to Permitted Prior Liens) on (1) all presently owned and hereafter acquired assets of the Credit Parties and their estates wherever located, and any proceeds and products thereof, including without limitation, accounts, deposit accounts, cash, as-extracted collateral, chattel paper, investment property, letter-of-credit rights, securities accounts, commercial tort claims, investments, instruments, documents, inventory, contract rights, franchise agreements, general intangibles, intellectual property, real property, fixtures, goods, equipment and other fixed assets and proceeds and products of all of the foregoing (including insurance proceeds), (2) proceeds of Avoidance Actions solely to the extent arising under Section 549 of the Bankruptcy Code, (3) proceeds of Avoidance Actions except to the extent arising under Section 549 of the Bankruptcy Code, but only with respect to claims arising under the Revolving Facility and solely upon entry of the Final Order, (4) any rights under Section 506(c) of the Bankruptcy Code and the proceeds thereof, (5) any unencumbered assets of the Credit Parties, and (5) a pledge, for the benefit of the Secured Parties and the Agents, of one hundred percent (100%) of the Capital Stock or other equity interests of the Credit Parties (other than equity interests in PERL), and (B) a Lien on all assets of the Credit Parties securing other Indebtedness, junior only to Permitted Prior Liens. (ii) Such Superpriority Claim referred to in Section 7.1(a)(i) shall not include Avoidance Actions but shall be subject to the Carve Out. Such Lien shall not extend to Avoidance Actions and shall be subject to the Carve Out, but otherwise shall be senior in priority to the adequate protection Liens 80
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securing the Prepetition Lender Debt and all other Liens other than Permitted Liens, entitled to priority under applicable nonbankruptcy law. (iii) All amounts expended for Priority Professional Expenses from and after the occurrence of an Event of Default shall reduce the Professional Expense Cap dollar for dollar. The security interests securing the Obligations shall not be subject to Section 551 of the Bankruptcy Code (other than a security interest or lien securing the Prepetition Lender Debt).

(b)

Collateral Security Perfection. Each of the Credit Parties agrees to take all action that any Collateral Agent or the Required Lenders may reasonably request as a matter of nonbankruptcy law to perfect and protect the applicable Collateral Agents Liens for the benefit of the Secured Parties, and upon the Collateral and for such Liens to obtain the priority therefor contemplated hereby, including, without limitation, executing and delivering such documents and instruments, financing statements, providing such notices and assents of third parties, obtaining such Governmental Authorizations and providing such other instruments and documents in recordable form as any Collateral Agent or any Lender may reasonably request. Each Credit Party hereby irrevocably authorizes the applicable Collateral Agent at any time and from time to time to file in any filing office in any UCC jurisdiction any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as all assets of such Credit Party or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC of the State of Delaware or such other jurisdiction, or (ii) as being of an equal or lesser scope or with greater detail, and (b) provide any other information required by part 5 of Article 9 of the UCC of the State of Delaware or such other jurisdiction for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether such Credit Party is an organization, the type of organization and any organization identification number issued to such Credit Party and, (ii) in the case of a financing statement filed as a fixture filing, a sufficient description of real property to which the Collateral relates. Such Credit Party agrees to furnish any such information to any Collateral Agent promptly upon such Collateral Agents request. Notwithstanding the provisions of this Section 7.1(b), the Collateral Agents and the Lenders shall have the benefits of the Interim Order and the Final Order as set forth in Section 3.1(d) hereof. No Discharge; Survival of Claims. Each Borrower and each Guarantor agree that (i) the Obligations shall not be discharged by the entry of an order confirming a Reorganization Plan (and each Borrower and each Guarantor, pursuant to Section 1141(d)(4) of the Bankruptcy Code, hereby waive any such discharge), and (ii) the Superpriority Claim granted to the Collateral Agents and the Secured Parties pursuant to the Orders and the Liens granted to the Collateral Agents and the Secured Parties pursuant to the Orders and the Security Documents shall not be affected in any manner by the entry of an order confirming a Reorganization Plan, in each case unless otherwise agreed to by the Required Lenders. 81

(c)

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(d)

Guarantees. The Obligations shall be guaranteed by each Borrower and each Subsidiary (direct or indirect) of the Borrowers pursuant to the terms of the Guaranty. The Borrowers shall notify the Lenders of the acquisition or formation of any new Subsidiary prior to such acquisition or formation. The Borrowers shall, at the request of the Required Lenders, promptly, and in any event within ten (10) Business Days of such request, cause each of its Subsidiaries which is not a Guarantor to (i) execute and deliver to each of the Lenders and each Agent a guaranty which is substantially in the form of the Guaranty and which is satisfactory to the Required Lenders in all respects and (ii) execute and deliver to each of the Lenders and each Agent all other documents and instruments, including, without limitation, the items set forth in Section 5.14, corporate authority documents and legal opinions, as the Required Lenders may reasonably request in connection with the delivery of such guaranty.

7.2

Guaranty. (a) Guaranty of the Obligations. Subject to the provisions of Section 7.2(b), Guarantors jointly and severally hereby irrevocably and unconditionally guarantee to Administrative Agent for the ratable benefit of the Beneficiaries the due and punctual payment in full of all Obligations when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. 362(a)) (collectively, the Guaranteed Obligations). Contribution by Guarantors. All Guarantors desire to allocate among themselves (collectively, the Contributing Guarantors), in a fair and equitable manner, their obligations arising under this Guaranty. Accordingly, in the event any payment or distribution is made on any date by a Guarantor (a Funding Guarantor) under this Guaranty that exceeds its Fair Share as of such date, such Funding Guarantor shall be entitled to a contribution from each of the other Contributing Guarantors in the amount of such other Contributing Guarantors Fair Share Shortfall as of such date, with the result that all such contributions will cause each Contributing Guarantors Aggregate Payments to equal its Fair Share as of such date. Fair Share means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (a) the ratio of (i) the Fair Share Contribution Amount with respect to such Contributing Guarantor to (ii) the aggregate of the Fair Share Contribution Amounts with respect to all Contributing Guarantors multiplied by (b) the aggregate amount paid or distributed on or before such date by all Funding Guarantors under this Guaranty in respect of the obligations Guaranteed. Fair Share Shortfall means, with respect to a Contributing Guarantor as of any date of determination, the excess, if any, of the Fair Share of such Contributing Guarantor over the Aggregate Payments of such Contributing Guarantor. Fair Share Contribution Amount means, with respect to a Contributing Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Contributing Guarantor under this Guaranty that would not render its obligations hereunder or thereunder subject to 82

(b)

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avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any comparable applicable provisions of state law; provided, solely for purposes of calculating the Fair Share Contribution Amount with respect to any Contributing Guarantor for purposes of this Section 7.2(b), any assets or liabilities of such Contributing Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder shall not be considered as assets or liabilities of such Contributing Guarantor. Aggregate Payments means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (1) the aggregate amount of all payments and distributions made on or before such date by such Contributing Guarantor in respect of this Guaranty (including, without limitation, in respect of this Section 7.2(b)), minus (2) the aggregate amount of all payments received on or before such date by such Contributing Guarantor from the other Contributing Guarantors as contributions under this Section 7.2(b). The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Guarantor. The allocation among Contributing Guarantors of their obligations as set forth in this Section 7.2(b) shall not be construed in any way to limit the liability of any Contributing Guarantor hereunder. Each Guarantor is a third party beneficiary to the contribution agreement set forth in this Section 7.2(b). (c) Payment by Guarantors. Subject to Section 7.2(b), Guarantors hereby jointly and severally agree, in furtherance of the foregoing and not in limitation of any other right which any Beneficiary may have at law or in equity against any Guarantor by virtue hereof, that upon the failure of Borrowers to pay any of the Guaranteed Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code), Guarantors will upon demand pay, or cause to be paid, in immediately available funds, to Administrative Agent for the ratable benefit of Beneficiaries, an amount equal to the sum of the unpaid principal amount of all Guaranteed Obligations then due as aforesaid, all accrued and unpaid interest on such Guaranteed Obligations (including interest which, but for any Borrowers becoming the subject of a case under the Bankruptcy Code, would have accrued on such Guaranteed Obligations, whether or not a claim is allowed against such Borrower for such interest in the related bankruptcy case) and all other Guaranteed Obligations then owed to Beneficiaries as aforesaid. Liability of Guarantors Absolute. Each Guarantor agrees that its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment in full of the Guaranteed Obligations. In furtherance of the foregoing and without limiting the generality thereof, each Guarantor agrees as follows:

(d)

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(i)

This Guaranty is a guaranty of payment when due and not of collectability. This Guaranty is a primary obligation of each Guarantor and not merely a contract of surety; Administrative Agent may (with the consent of the Required Lenders) enforce this Guaranty upon the occurrence of an Event of Default notwithstanding the existence of any dispute between any Borrower and any Beneficiary with respect to the existence of such Event of Default; the obligations of each Guarantor hereunder are independent of the obligations of Borrowers and the obligations of any other guarantor (including any other Guarantor) of the obligations of Borrowers, and a separate action or actions may be brought and prosecuted against such Guarantor whether or not any action is brought against any Borrower or any of such other guarantors and whether or not any Borrower is joined in any such action or actions; payment by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect, modify or abridge any Guarantors liability for any portion of the Guaranteed Obligations which has not been paid. Without limiting the generality of the foregoing, if Administrative Agent is awarded a judgment in any suit brought to enforce any Guarantors covenant to pay a portion of the Guaranteed Obligations, such judgment shall not be deemed to release such Guarantor from its covenant to pay the portion of the Guaranteed Obligations that is not the subject of such suit, and such judgment shall not, except to the extent satisfied by such Guarantor, limit, affect, modify or abridge any other Guarantors liability hereunder in respect of the Guaranteed Obligations; any Beneficiary, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability hereof or giving rise to any reduction, limitation, impairment, discharge or termination of any Guarantors liability hereunder, from time to time may (A) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guaranteed Obligations; (B) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guaranteed Obligations or any agreement relating thereto, or subordinate the payment of the same to the payment of any other obligations; (C) request and accept other guaranties of the Guaranteed Obligations and take and hold security for the payment hereof or the Guaranteed Obligations; (D) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or any other obligation of any Person (including any other Guarantor) with respect to the Guaranteed 84

(ii)

(iii)

(iv)

(v)

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Obligations; (E) enforce and apply any security now or hereafter held by or for the benefit of such Beneficiary in respect hereof or the Guaranteed Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that such Beneficiary may have against any such security, in each case as such Beneficiary in its discretion may determine consistent herewith or the applicable Hedging Contract and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Guarantor against Borrowers or any security for the Guaranteed Obligations; and (F) exercise any other rights available to it under the Transaction Documents or the Hedging Contracts; and (vi) this Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than payment in full of the Guaranteed Obligations), including the occurrence of any of the following, whether or not any Guarantor shall have had notice or knowledge of any of them: (A) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Transaction Documents or the Hedging Contracts, at law, in equity or otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Guaranteed Obligations; (B) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) hereof, any of the other Transaction Documents, any of the Hedging Contracts or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guaranteed Obligations, each case whether or not in accordance with the terms hereof or such Transaction Document, such Hedging Contract or any agreement relating to such other guaranty or security; (C) the Guaranteed Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (D) the application of payments received from any source (other than payments received pursuant to the other Transaction Documents or any of the Hedging Contracts or from the proceeds of any security for the Guaranteed Obligations, except to the extent such security also serves as collateral for indebtedness other than the Guaranteed Obligations) to the payment of indebtedness other than the Guaranteed Obligations, even though any Beneficiary might have elected to apply such payment to any part or all of the Guaranteed Obligations; (E) any Beneficiarys consent to the change, reorganization or termination of the corporate structure or 85
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existence of Borrowers or any of their Subsidiaries and to any corresponding restructuring of the Guaranteed Obligations; (F) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guaranteed Obligations; (G) any defenses, setoffs or counterclaims which Borrowers may allege or assert against any Beneficiary in respect of the Guaranteed Obligations, including failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury; and (H) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of any Guarantor as an obligor in respect of the Guaranteed Obligations. (e) Waivers by Guarantors. Each Guarantor hereby waives, for the benefit of Beneficiaries: (i) any right to require any Beneficiary, as a condition of payment or performance by such Guarantor, to (A) proceed against Borrowers, any other guarantor (including any other Guarantor) of the Guaranteed Obligations or any other Person, (B) proceed against or exhaust any security held from Borrowers, any such other guarantor or any other Person, (C) proceed against or have resort to any balance of any Deposit Account or credit on the books of any Beneficiary in favor of Borrowers or any other Person, or (D) pursue any other remedy in the power of any Beneficiary whatsoever; (ii) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of Borrowers or any other Guarantor including any defense based on or arising out of the lack of validity or the unenforceability of the Guaranteed Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of Borrowers or any other Guarantor from any cause other than payment in full of the Guaranteed Obligations; (iii) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (iv) any defense based upon any Beneficiarys errors or omissions in the administration of the Guaranteed Obligations, except behavior which amounts to bad faith; (v)(A) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms hereof and any legal or equitable discharge of such Guarantors obligations hereunder, (B) the benefit of any statute of limitations affecting such Guarantors liability hereunder or the enforcement hereof, (C) any rights to set-offs, recoupments and counterclaims, and (D) promptness, diligence and any requirement that any Beneficiary protect, secure, perfect or insure any security interest or lien or any property subject thereto; (vi) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance hereof, notices of default hereunder, the Hedging Contracts or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guaranteed Obligations or any agreement related thereto, notices of any extension of credit to Borrowers and notices of any of the matters referred to in Section 7.2(d) and any right to consent to any thereof; and (vii) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms hereof. 86
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(f)

Guarantors Rights of Subrogation, Contribution, etc. Until the Guaranteed Obligations shall have been indefeasibly paid in full and the Commitments shall have terminated, each Guarantor hereby waives any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against Borrowers or any other Guarantor or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and including (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against Borrowers with respect to the Guaranteed Obligations, (b) any right to enforce, or to participate in, any claim, right or remedy that any Beneficiary now has or may hereafter have against Borrowers, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Beneficiary. In addition, until the Guaranteed Obligations shall have been indefeasibly paid in full and the Commitments shall have terminated, each Guarantor shall withhold exercise of any right of contribution such Guarantor may have against any other guarantor (including any other Guarantor) of the Guaranteed Obligations, including, without limitation, any such right of contribution as contemplated by Section 7.2(b). Each Guarantor further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Guarantor may have against Borrowers or against any collateral or security, and any rights of contribution such Guarantor may have against any such other guarantor, shall be junior and subordinate to any rights any Beneficiary may have against Borrowers, to all right, title and interest any Beneficiary may have in any such collateral or security, and to any right any Beneficiary may have against such other guarantor. If any amount shall be paid to any Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Guaranteed Obligations shall not have been finally and indefeasibly paid in full, such amount shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof. Subordination of Other Obligations. Any Indebtedness of Borrowers or any Guarantor now or hereafter held by any Guarantor (the Obligee Guarantor) is hereby subordinated in right of payment to the Guaranteed Obligations, and any such indebtedness collected or received by the Obligee Guarantor after an Event of Default has occurred and is continuing shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations but without affecting, impairing or limiting in any manner the liability of the Obligee Guarantor under any other provision hereof. 87

(g)

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(h)

Continuing Guaranty. This Guaranty is a continuing guaranty and shall remain in effect until all of the Guaranteed Obligations shall have been paid in full and the Commitments shall have terminated. Each Guarantor hereby irrevocably waives any right to revoke this Guaranty as to future transactions giving rise to any Guaranteed Obligations. Authority of Guarantors or Borrowers. It is not necessary for any Beneficiary to inquire into the capacity or powers of any Guarantor or Borrowers or the officers, directors or any agents acting or purporting to act on behalf of any of them. Financial Condition of Borrowers. Any Credit Extension may be made to Borrowers or continued from time to time, and any Hedging Contracts may be entered into from time to time, in each case without notice to or authorization from any Guarantor regardless of the financial or other condition of Borrowers at the time of any such grant or continuation or at the time such Hedging Contract is entered into, as the case may be. No Beneficiary shall have any obligation to disclose or discuss with any Guarantor its assessment, or any Guarantors assessment, of the financial condition of Borrowers. Each Guarantor acknowledges that it has adequate means to obtain information from Borrowers on a continuing basis concerning the financial condition of Borrowers and their ability to perform its obligations under the Transaction Documents and the Hedging Contracts, and each Guarantor assumes the responsibility for being and keeping informed of the financial condition of Borrowers and of all circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations. Each Guarantor hereby waives and relinquishes any duty on the part of any Beneficiary to disclose any matter, fact or thing relating to the business, operations or conditions of Borrowers now known or hereafter known by any Beneficiary. California Waivers. Guarantors hereby waive and agree not to assert or take advantage of: (i) any suretyship defenses and suretyship rights of every nature otherwise available under California law and the laws of any other state, including, without limitation, all defenses and rights arising under Sections 2787 through 2855 (the Suretyship Provisions) of the California Civil Code (the Civil Code) and any successor provisions to those Sections. Without limiting the generality of the foregoing, each Guarantor hereby acknowledges its understanding that the Suretyship Provisions provide various partial or complete defenses to the recovery by Lender from such Guarantor and/or grant such Guarantor rights the enforcement of which could reduce or eliminate entirely such Guarantors liability hereunder to Lender. Among the defenses and rights contained in the Suretyship Provisions are the following:

(i)

(j)

(k)

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(1) Section 2809 of the Civil Code, which provides, in part, that the obligation of a surety must not be either larger in amount or in other respects more burdensome than that of the principal; (2) Section 2810 of the Civil Code, which provides, in part, that a surety is not liable if for any reason other than the mere personal disability of the principal there is no liability upon the part of the principal at the time of execution of the contract, or the liability of the principal thereafter ceases; (3) Section 2819 of the Civil Code, which provides, in part, that a surety is exonerated if the creditor alters the original obligation of the principal without the consent of the surety; (4) Section 2845 of the Civil Code, which provides, in part, that a surety is exonerated to the extent that the creditor fails to proceed against the principal, or to pursue any other remedy in the creditors power which the surety cannot pursue and which would lighten the suretys burden; (5) Section 2846 of the Civil Code, which provides that a surety may compel his principal to perform the obligation when due; (6) Section 2847 of the Civil Code, which provides, in part, that if a surety satisfies the principal obligation, or any part thereof, the principal is obligated to reimburse the surety for the amounts paid by the surety; (7) Section 2848 of the Civil Code, which provides, in part, that a surety, upon satisfaction of the obligation of the principal is entitled to enforce remedies which the creditor then has against the principal; (8) Section 2849 of the Civil Code, which provides, in part, that a surety is entitled to the benefit of security held by the creditor for the performance of the principal obligation held by the creditor; (9) Section 2850 of the Civil Code, which provides, in part, that whenever the property of a surety is hypothecated with property of the principal, the surety is entitled to have the property of the principal first applied to the discharge of the obligation; and (10) Section 2822 of the Civil Code, which provides, in part, for a right to have the principal designate the portion of any obligation to be satisfied by the surety in the event that the principal provides partial satisfaction of such obligation. (ii) all rights and defenses that any Guarantor may have because Borrowers debt is secured by real property. This means among other things:

(1) Lender may collect from any Guarantor without first foreclosing on any real or personal property collateral pledged by Borrowers.

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(2) Borrowers:

If Lender forecloses on any real property collateral pledged by (A) The amount of the debt may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price. Lender may collect from any Guarantor even if Lender, by foreclosing on the real property collateral, has destroyed any right such Guarantor may have to collect from Borrowers.

(B)

This is an unconditional and irrevocable waiver of any rights and defenses any Guarantor may have because Borrowers debt is secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure. (iii) all rights and defenses arising out of an election of remedies by Lender, even though that election of remedies, such as nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed the Guarantors rights of subrogation and reimbursement against the principal by the operation of Section 580d of the Code of Civil Procedure or otherwise. This Section 7.2(k) is included solely out of an abundance of caution, and shall not be construed to mean that any of the above-referenced provisions of California law are in any way applicable to this Guaranty or to any of the Guaranteed Obligations.

(iv)

SECTION 8. EVENTS OF DEFAULT 8.1 Events of Default. If any one or more of the following conditions or events (each herein called an Event of Default) shall occur: (a) Any Credit Party fails to pay the principal component of any Obligation when due and payable, whether at a date for the payment of a fixed installment or as a contingent or other payment becomes due and payable or as a result of acceleration or otherwise, and such failure is not remedied in full within one (1) Business Day thereafter; Any Credit Party fails to pay any Obligation (other than the Obligations described in subsection (a) above) when due and payable, whether at a date for the payment of a fixed installment or as a contingent or other payment becomes due and payable or as a result of acceleration or otherwise, within two (2) Business Days after the same becomes due in the case of interest or fifteen (15) days thereafter in the case of any other Obligation;

(b)

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(c)

Any default, event, or event of default occurs under any Transaction Document which defines either such term, and the same is not remedied within the applicable period of grace (if any) provided in such Transaction Document; Any Credit Party fails to duly observe, perform or comply with any covenant, agreement or provision of Section 2.3, 2.16, 5.2 through 5.7, 5.14, 5.15, 5.25, 5.27 through 5.37 or any part of Section 6; Any Credit Party fails (other than as referred to in subsections (a), (b), (c) or (d) above) to duly observe, perform or comply with any covenant, agreement, condition or provision of any Transaction Document, and such failure remains unremedied for a period of thirty (30) days after the earlier of (i) the date on which an Authorized Officer of such Credit Party first becomes aware of such failure and (ii) the date on which notice of such failure is given by Administrative Agent or the Required Lenders to Borrowers; Any certification, representation or warranty previously, presently or hereafter made in writing by or on behalf of any Credit Party in connection with any Transaction Document shall prove to have been false or incorrect in any material respect on any date on or as of which made; Either (i) any accumulated funding deficiency (as defined in Section 412(a) of the Internal Revenue Code) in excess of $50,000 exists with respect to any ERISA Plan, whether or not waived by the Secretary of the Treasury or his delegate, or (ii) any Termination Event occurs with respect to any ERISA Plan and the then current value of such ERISA Plans benefit liabilities exceeds the then current value of such ERISA Plans assets available for the payment of such benefit liabilities by more than $50,000 (or in the case of a Termination Event involving the withdrawal of a substantial employer, the withdrawing employers proportionate share of such excess exceeds such amount); At any time after the execution and delivery thereof, (i) the Guaranty for any reason, other than the satisfaction in full of all Obligations, shall cease to be in full force and effect with respect to any Guarantor (other than in accordance with its terms) or shall be declared to be null and void or any Guarantor shall repudiate its obligations thereunder, (ii) this Agreement or any Security Document ceases to be in full force and effect (other than by reason of a release of Collateral in accordance with the terms hereof or thereof or the satisfaction in full of the Obligations in accordance with the terms hereof) or shall be declared null and void, or the applicable Collateral Agent shall not have or shall cease to have a valid and perfected Lien in any Collateral purported to be covered by the Security Documents with the priority required by the relevant Security Document, in each case for any reason other than the failure of any Agent or any other Secured Party to take any action within its control, or (iii) any Credit Party shall contest the validity or enforceability of any Transaction Document in writing or deny in writing that it has any further liability, including with respect to future advances by Lenders, under any Transaction Document to which it is a party; 91

(d)

(e)

(f)

(g)

(h)

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(i) (j)

The occurrence of any Material Adverse Effect; Any Governmental Authority prohibits the operation of any offshore Oil and Gas Property or any other material Oil and Gas Property, in each case in any material respect; any of the Credit Parties or their Subsidiaries shall (i) default in the payment when due of any principal of or interest on any postpetition Indebtedness or any event of default specified in any note, agreement, indenture or other document evidencing or securing any such Indebtedness shall occur if the effect of such event of default is to cause, or (with the giving of notice or the lapse of time or both) to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause such Indebtedness to become due, or to be prepaid in full prior to its stated maturity or to divest any of the Credit Parties of any assets, or (ii) default in the payment when due of any principal of or interest on any prepetition Indebtedness or any other event of default specified in any note, agreement, indenture or other document evidencing or securing any such Indebtedness shall occur if, by order of the Bankruptcy Court issued with respect to such prepetition Indebtedness, the default thereunder entitles the holder thereof to relief from the automatic stay of Section 362 of the Bankruptcy Code, in each case in an aggregate amount in excess of $500,000; (i) any of the Borrowers shall be enjoined from conducting any part of its business as a debtor in possession, (ii) there shall occur any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes the cessation or substantial curtailment of revenue producing activities of any of the Borrowers or their Subsidiaries (including, without limitation, any such material disruptions relating to the Cook Inlet pipeline other than any anticipated disruptions resulting from actions by the Borrowers approved by the Lenders), if any such event or circumstance could reasonably be expected to have a Material Adverse Effect, or (iii) or there shall occur any damage to, or loss, theft or destruction of, any assets of any of the Borrowers or any of their Subsidiaries, which in each such case would reasonably be expected to have a Material Adverse Effect; the Bankruptcy Court shall enter any order (i) amending, supplementing, altering, staying, vacating, rescinding or otherwise modifying the Interim Order, the Final Order or any other order with respect to the Case affecting in any material respect this Credit Agreement or the Transaction Documents, without the Required Lenders consent, (ii) appointing a Chapter 11 trustee or an examiner pursuant to Section 1104 of the Bankruptcy Code with enlarged powers relating to the operation of the business (powers beyond those set forth in Section 1106(a)(3) and (4) and 1106(b) of the Bankruptcy Code) of the Bankruptcy Code in the Case, (iii) dismissing the Case or converting the Case to a Chapter 7 case, (iv) granting relief from the automatic stay to any creditor holding or asserting a Lien or reclamation claim on the assets of any of the Credit Parties to permit such creditor to foreclose upon or to reclaim Collateral with a value in excess of $500,000 or 92

(k)

(l)

(m)

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(v) approving the sale, transfer, lease, exchange, alienation or other disposition of all or substantially all of the assets, properties or Capital Stock or other equity interests of any Credit Party pursuant to Section 363 of the Bankruptcy Code or otherwise, without the consent of the Required Lenders and the Required Prepetition Lenders, it being understood that each Prepetition Lender may consent, withhold consent, or object to such sale in its sole discretion notwithstanding the terms of any prepetition intercreditor agreement solely among the Prepetition Secured Parties; (n) (i) the Bankruptcy Court shall fail to enter the Final Order within thirty (30) days of the Petition Date with respect to those matters covered by the Interim Order, or (ii) the Borrowers shall fail to obtain entry of the Sale Procedures Order within thirty (30) days of the date on which the motion or motions requesting the entry of the Sale Procedures Order has been filed; an application shall be filed by any of the Credit Parties for the approval of any other Superpriority Claim in the Case (other than the Carve Out) which is pari passu with or senior to the claims of the Lenders against any of the Credit Parties unless after giving effect to the transactions contemplated by such application, all Obligations (whether contingent or otherwise) shall be paid in full in cash, or there shall arise any such Superpriority Claim; any of the Credit Parties shall be unable to pay its postpetition debts as they mature, other than the Chevron joint interest billings and Reserved Production Payments (as defined in the Acquisition Agreements), or shall fail to comply with any order of the Bankruptcy Court in any material respect; there shall remain undischarged for more than thirty (30) days any final postpetition judgment or execution action against any of the Credit Parties, or relief from the automatic stay of Section 362(a) of the Bankruptcy Code shall be granted to any creditor or creditors of any of the Credit Parties, in each case which would operate to divest any Credit Party of its assets in an aggregate amount in excess of $250,000; any of the Credit Parties shall file a motion in the Case (i) except as provided in the Orders, to use cash collateral of the Lenders under Section 363(c) of the Bankruptcy Code without the Required Lenders consent, (ii) to recover from any portions of the Collateral any costs or expenses of preserving or disposing of such Collateral under Section 506(c) of the Bankruptcy Code, (iii) to sell, transfer, lease, exchange, alienate or otherwise dispose of all or substantially all of the assets, properties or Capital Stock or other equity interest of any Credit Party pursuant to Section 363 of the Bankruptcy Code or otherwise without the consent of the Required Lenders and the Required Prepetition Lenders, it being understood that each Prepetition Lender may consent, withhold consent, or object to such sale in its sole discretion notwithstanding the terms of any prepetition intercreditor agreement solely among the Prepetition Secured Parties, or (iv) to take any other action or actions adverse to the Lenders or their rights and 93
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(o)

(p)

(q)

(r)

remedies hereunder or under any of the other Transaction Documents or any of the documents evidencing or creating the Secured Parties interest in any of the Collateral; (s) the failure by the Borrowers on or prior to the Maturity Date and (i) following entry of the Sale Order and approval of the Required Lenders pursuant to Section 10.4(d), to have consummated the sale of all or substantially all of the assets of PERL, PEAH, PEAO or the Credit Parties, as applicable or (ii) following entry of an order by the Bankruptcy Court approving a Reorganization Plan and approval of the Required Lenders, to have consummated such Reorganization Plan; any payment of prepetition debt (other than Prepetition Lender Debt, pre-petition Indebtedness contemplated to be paid pursuant to the Budget, and as approved by the Bankruptcy Court and in accordance with the Budget); any Governmental Authority or Union Oil Company of California or any of its Affiliates takes any action that (i) may result in a Material Adverse Effect with respect to the position of the Lenders, (ii) may result in a Material Adverse Effect with respect to the ability of the Credit Parties to perform their Obligations hereunder or (iii) may require or seek incremental bonding or other collateral requirements in excess of $5,000,000 not otherwise contemplated in the Budget; at any time that any Obligations or any Prepetition Lender Debt has not been paid in full, any incentive compensation is paid or becomes payable to the Chief Restructuring Officer unless such compensation is acceptable to the Required Lenders in their sole discretion; a Change of Control; any of the Credit Parties shall enter into any agreement to, or shall consummate any transaction to, sell, transfer, lease, exchange, alienate or otherwise dispose of all or substantially all of its assets, properties, Capital Stock or other equity interests (other than as expressly permitted pursuant to clauses (a) through (d) of Section 6.5 hereunder) pursuant to Section 363 of the Bankruptcy Code or otherwise without the consent of the Required Lenders and the Required Prepetition Lenders, it being understood that each Prepetition Lender may consent, withhold consent, or object to such sale in its sole discretion notwithstanding the terms of any prepetition intercreditor agreement solely among the Prepetition Secured Parties;

(t)

(u)

(v)

(w) (x)

THEN, at the request of (or with the consent of) Required Lenders, upon notice to Borrowers by Administrative Agent, (A) the Commitments, if any, shall immediately terminate and (B) all Obligations, including the unpaid principal amount of and accrued interest on the Loans, shall immediately become due and payable, in each case without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by each Credit Party. 8.2 Remedies. Upon the occurrence of an Event of Default, the Administrative Agent upon direction of the Required Lenders shall, provide the Credit Parties, the Creditors Committee and 94
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the United States Trustee with written notice (via email or facsimile) specifying the Event of Default and the basis therefor and informing such parties that the Agents and the Lenders intend to exercise their remedies under the Interim Order, the Final Order, the Security Documents and hereunder five (5) days after the Credit Parties receipt of such notice. During such five (5) day notice period, the Credit Parties and the Creditors Committee have the right to seek an emergency hearing before the Bankruptcy Court for the sole purpose of determining whether an Event of Default has occurred; provided that the Credit Parties shall have no right to use or seek to use cash collateral during such five-day notice period. Unless during such five-day notice period the Bankruptcy Court determines that an Event of Default has not occurred, upon the expiration of such five-day notice period, (i)(A) the Agents and the Secured Parties automatically shall have relief from the automatic stay and the Collateral Agents (with the consent of the Required Lenders) may foreclose on all or any portion of the Collateral or otherwise exercise remedies against the Collateral permitted by the Security Documents, and other nonbankruptcy law, including, without limitation, the exercise of rights of setoff and all rights and remedies of a secured party under the UCC, and (B) any right of any of the Credit Parties to use cash collateral shall cease or (ii) upon entry of the Final Order, the Administrative Agent shall upon direction of the Required Lenders, with the full cooperation of the Borrowers, and without any objection by the Borrowers, be authorized to take all actions necessary or advisable in its discretion to complete the Proposed Asset Sale commenced during the Case in accordance with Section 363 of the Bankruptcy Code. The Borrowers and Guarantors grant the Administrative Agent an irrevocable power of attorney to take all actions on their behalf to complete such sale and conveyances under and in accordance with Section 363 (but only upon entry of the Final Order) of the Bankruptcy Code and applicable orders of the Bankruptcy Court. 8.3 Distribution of Collateral Proceeds. In the event that, following the occurrence or during the continuance of any Default or Event of Default, any Agent or any Secured Party, as the case may be, receives any monies in connection with the enforcement of any the Security Documents, or otherwise with respect to the realization upon any of the Collateral, such monies shall be distributed for application as follows, in each case, to be applied first to the Obligations in respect of the Revolving Facility, and if no such Obligations in respect of the Revolving Facility are outstanding, then (A) any proceeds of Collateral of PERL and its Subsidiaries (other than the PEA Entities) shall be applied first to the PERL Term Facility, to be allocated among the PERL Term Lenders in accordance with each such PERL Term Lenders PERL Term Pro Rata Share, second to the extent the PERL Term Facility has been paid in full, to the PEAO Second Lien Prepetition Debt, to be allocated among the PEAO Second Lien Lenders in accordance with each such Lenders PEAO Second Lien Pro Rata Share of the PEAO Second Lien Prepetition Debt in accordance with Section 2.12 of the PEAO Second Lien Credit Agreement, and third to the extent the PEAO Second Lien Prepetition Debt has been paid in full, to the PEAO Term Facility, to be allocated among the PEAO Term Lenders in accordance with each such PEAO Term Lenders PEAO Term Pro Rata Share, and (B) any proceeds of Collateral of the PEA Entities shall be applied first to the PEAO Term Facility, to be allocated among the PEAO Term Lenders in accordance with each such PEAO Term Lenders PEAO Term Pro Rata Share, second to the extent the PEAO Term Facility has been paid in full, to the PEAO Second Lien Prepetition Debt, to be allocated among the PEAO Second Lien Lenders in accordance with each such Lenders PEAO Second Lien Pro Rata Share of the PEAO Second Lien Prepetition Debt in accordance with Section 2.12 of the PEAO Second Lien Credit Agreement, and third to the extent the PEAO Second Lien Prepetition Debt has been paid in full, to the PERL Term 95
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Facility, to be allocated among the PERL Term Lenders in accordance with each such PERL Term Lenders PERL Term Pro Rata Share: (a) First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to any Agent and amounts payable under Section 2.14) payable to any Agent in its capacity as such; Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to Lenders (including fees, charges and disbursements of counsel to the respective Lenders and amounts payable under Sections 2.13 and 2.14), ratably among them in proportion to the amounts described in this clause (b) payable to them; Third, to payment of accrued and unpaid interest on the Loans and the other Obligations and on the Lender Hedging Obligations, ratably among Lenders and Lender Counterparties in proportion to the respective amounts described in this clause (c) payable to them; Fourth, to payment of unpaid principal of the Loans and the other Obligations and of the Lender Hedging Obligations, ratably among Lenders and Lender Counterparties in proportion to the respective amounts described in this clause Fourth held by them; and Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Credit Parties or as otherwise required by Law.

(b)

(c)

(d)

(e)

SECTION 9. AGENTS 9.1 Appointment of Agents. J. Aron is hereby appointed Syndication Agent hereunder, and each Lender hereby authorizes Syndication Agent to act as its agent in accordance with the terms hereof and the other Transaction Documents. J. Aron is hereby appointed Administrative Agent and Collateral Agent, with respect to the assets of PERL and its Subsidiaries (other than the PEA Entities), hereunder and under the other Transaction Documents and each Secured Party hereby authorizes J. Aron, as Administrative Agent and as Collateral Agent, to act as its agent in accordance with the terms hereof and the other Transaction Documents. Silver Point Finance, LLC is hereby appointed Collateral Agent, with respect to the assets of the PEA Entities, hereunder and under the other Transaction Documents and each Secured Party hereby authorizes Silver Point Finance, LLC, as Collateral Agent, to act as its agent in accordance with the terms hereof and the other Transaction Documents. Each Agent hereby agrees to act upon the express conditions contained herein and the other Transaction Documents, as applicable. The provisions of this Section 9 are solely for the benefit of Agents and Secured Parties and no Credit Party shall have any rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties hereunder, each Agent shall act solely as an agent of Secured Parties and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for PERL or any of its Subsidiaries. Syndication Agent, without consent of or notice to any party hereto, may assign any and all of its rights or obligations 96
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hereunder to any of its Affiliates. As of the Closing Date, J. Aron, in its capacity as Syndication Agent, shall not have any obligations hereunder but shall be entitled to all benefits of this Section 9. 9.2 Powers and Duties. Each Lender irrevocably authorizes each Agent to take such action on such Lenders behalf and to exercise such powers, rights and remedies hereunder and under the other Transaction Documents as are specifically delegated or granted to such Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto. Each Agent shall have only those duties and responsibilities that are expressly specified herein and the other Transaction Documents. Each Agent may exercise such powers, rights and remedies and perform such duties by or through its agents or employees. No Agent shall have, by reason hereof or any of the other Transaction Documents, a fiduciary relationship in respect of any Lender; and nothing herein or any of the other Transaction Documents, expressed or implied, is intended to or shall be so construed as to impose upon any Agent any obligations in respect hereof or any of the other Transaction Documents except as expressly set forth herein or therein. 9.3 General Immunity. (a) No Responsibility for Certain Matters. No Agent shall be responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency hereof or any other Transaction Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by any Agent to Lenders or by or on behalf of any Credit Party to any Agent or any Lender in connection with the Transaction Documents and the transactions contemplated thereby or for the financial condition or business affairs of any Credit Party or any other Person liable for the payment of any Obligations, nor shall any Agent be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Transaction Documents or as to the use of the proceeds of the Loans or as to the existence or possible existence of any Event of Default or Default or to make any disclosures with respect to the foregoing. Anything contained herein to the contrary notwithstanding, no Agent shall have any liability arising from confirmations of the amount of outstanding Loans or the component amounts thereof. Exculpatory Provisions. No Agent nor any of its officers, partners, directors, employees or agents shall be liable to any Lender or any Credit Party for any action taken or omitted by any Agent under or in connection with any of the Transaction Documents except to the extent caused by such Agents gross negligence or willful misconduct. Each Agent shall be entitled to refrain from any act or the taking of any action (including the failure to take an action) in connection herewith or any of the other Transaction Documents or from the exercise of any power, discretion or authority vested in it hereunder or thereunder unless and until such Agent shall have received instructions in respect thereof 97
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(b)

from Required Lenders (or such other Lenders as may be required to give such instructions under Section 10.4) and, upon receipt of such instructions from Required Lenders (or such other Lenders, as the case may be), such Agent shall be entitled to act or (where so instructed) refrain from acting, or to exercise such power, discretion or authority, in accordance with such instructions. Without prejudice to the generality of the foregoing, (i) each Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and shall be entitled to rely and shall be protected in relying on opinions and judgments of attorneys (who may be attorneys for PERL and its Subsidiaries), accountants, experts and other professional advisors selected by it; and (ii) no Lender shall have any right of action whatsoever against any Agent as a result of such Agent acting or (where so instructed) refraining from acting hereunder or any of the other Transaction Documents in accordance with the instructions of Required Lenders (or such other Lenders as may be required to give such instructions under Section 10.4). 9.4 Agents Entitled to Act as Lender. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, any Agent in its individual capacity as a Lender hereunder. With respect to its participation in the Loans, each Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as if it were not performing the duties and functions delegated to it hereunder, and the term Lender shall, unless the context clearly otherwise indicates, include each Agent in its individual capacity. Any Agent and its Affiliates may accept deposits from, lend money to, own securities of, and generally engage in any kind of banking, trust, financial advisory or other business with any Credit Party or any of its Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from the Credit Parties for services in connection herewith and otherwise without having to account for the same to Lenders. 9.5 Lenders Representations, Warranties and Acknowledgment. (a) Each Lender represents and warrants that it has made its own independent investigation of the financial condition and affairs of PERL and its Subsidiaries in connection with Credit Extensions hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of PERL and its Subsidiaries. No Agent shall have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, and no Agent shall have any responsibility with respect to the accuracy of or the completeness of any information provided to Lenders. Each Lender, by delivering its signature page to this Agreement and funding its Loan on the Closing Date, shall be deemed to have acknowledged receipt of, and consented to and approved, each Transaction Document and each other document

(b)

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required to be approved by any Agent, Required Lenders or Lenders, as applicable on the Closing Date. 9.6 Right to Indemnity. Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify each Agent, to the extent that such Agent shall not have been reimbursed by any Credit Party, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Agent in exercising its powers, rights and remedies or performing its duties hereunder or under the other Transaction Documents or otherwise in its capacity as such Agent in any way relating to or arising out of this Agreement or the other Transaction Documents, INCLUDING ANY OF THE FOREGOING CAUSED, IN WHOLE OR IN PART, BY THE NEGLIGENCE OF SUCH AGENT OR IMPOSED, IN WHOLE OR IN PART, UNDER ANY LAW PROVIDING FOR STRICT LIABILITY, provided, no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agents gross negligence or willful misconduct. If any indemnity furnished to any Agent for any purpose shall, in the opinion of such Agent, be insufficient or become impaired, such Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; provided, in no event shall this sentence require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Lenders Pro Rata Share thereof; and provided, further, this sentence shall not be deemed to require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement described in the proviso in the immediately preceding sentence. 9.7 Successor Agents. (a) Administrative Agent may resign at any time by giving thirty (30) days prior written notice thereof to Lenders and Borrowers, and Administrative Agent may be removed at any time with or without cause by an instrument or concurrent instruments in writing delivered to Borrowers and Administrative Agent and signed by Required Lenders. Upon any such notice of resignation or any such removal, Required Lenders shall have the right, upon five Business Days notice to Borrowers, to appoint a successor Administrative Agent. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Administrative Agent and the retiring or removed Administrative Agent shall promptly transfer to such successor Administrative Agent all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Administrative Agent under the Transaction Documents, whereupon such retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder. Any Collateral Agent may resign at any time by giving thirty (30) days prior written notice thereof to Administrative Agent, the other Collateral Agent, 99
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(b)

Secured Parties and Borrowers, and such Collateral Agent may be removed at any time with or without cause by an instrument or concurrent instruments in writing delivered to Borrowers and such Collateral Agent and signed by Required Lenders. Upon any such notice of resignation or any such removal, Required Lenders shall have the right, upon five Business Days notice to Borrowers, to appoint a successor Collateral Agent. Upon the acceptance of any appointment as Collateral Agent hereunder by a successor Collateral Agent, that successor Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Collateral Agent and the retiring or removed Collateral Agent shall promptly (i) transfer to such successor Collateral Agent all sums, Securities and other items of Collateral held under the Security Documents, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Collateral Agent under the Transaction Documents, and (ii) execute and deliver to such successor Collateral Agent such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Collateral Agent of the security interests created under the Security Documents, whereupon such retiring or removed Collateral Agent shall be discharged from its duties and obligations hereunder. 9.8 Security Documents and Guaranty. (a) Agents under Security Documents and Guaranty. Each Secured Party hereby further authorizes Administrative Agent on behalf of and for the benefit of Secured Parties, to be the agent for and representative of Secured Parties with respect to the Guaranty. Each Secured Party hereby further authorizes each Collateral Agent on behalf of and for the benefit of Secured Parties, to be the agent for and representative of Secured Parties with respect to the Collateral and the Security Documents. Subject to Section 10.4, without further written consent or authorization from Secured Parties, the applicable Collateral Agent may execute any documents or instruments necessary to release any Lien encumbering any item of Collateral that is the subject of a sale or other disposition of assets permitted hereby or to which Required Lenders (or such other Lenders and other Persons as may be required to give such consent under Section 10.4) have otherwise consented. Subject to Section 10.4, without further written consent or authorization from Lenders, the Administrative Agent may execute any documents or instruments necessary to release any Guarantor from the Guaranty pursuant to Section 7.2(k) or with respect to which Required Lenders (or such other Lenders or other Persons as may be required to give such consent under Section 10.4) have otherwise consented. Right to Realize on Collateral and Enforce Guaranty. Anything contained in any of the Transaction Documents to the contrary notwithstanding, Borrowers, Administrative Agent, each Collateral Agent and each Lender hereby agree that (i) no Lender shall have any right individually to realize upon any of the Collateral or to enforce the Guaranty, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by the applicable 100
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(b)

Collateral Agent or the Administrative Agent (and only at the request or consent of the Required Lenders), as applicable, in each case on behalf of Lenders in accordance with the terms hereof and all powers, rights and remedies under the Security Documents may be exercised solely by the applicable Collateral Agent, and (ii) in the event of a foreclosure by the applicable Collateral Agent (which shall be only at the request or consent of the Required Lenders) on any of the Collateral pursuant to a public or private sale, any Agent or any Lender may be the purchaser of any or all of such Collateral at any such sale and the applicable Collateral Agent, as agent for and representative of Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless Required Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by such Collateral Agent at such sale. SECTION 10. MISCELLANEOUS 10.1 Notices. Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given to a Credit Party or an Agent shall be sent to such Persons address as set forth on Appendix B or in the other relevant Transaction Document, and in the case of any Lender, the address as indicated on Appendix B or otherwise indicated to Administrative Agent and Borrowers in writing. Each notice hereunder shall be in writing and may be personally served, e-mailed or sent by telefacsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of telefacsimile or e-mail confirmation, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed. 10.2 Expenses. Whether or not the transactions contemplated hereby shall be consummated, Borrowers agree jointly and severally to pay promptly (and in any event within 30 days after receipt of invoice or other demand therefor): (a) the reasonable fees, expenses and disbursements of counsel to Agents (including travel costs and expenses) in connection with the negotiation, preparation, execution and administration of the Transaction Documents and any proposed or completed consents, amendments, waivers or other modifications thereto and any other documents or matters requested by Borrowers; (b) all the actual costs and reasonable expenses of Agents for creating and perfecting Liens in favor of the applicable Collateral Agent, for the benefit of Secured Parties pursuant hereto, including filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees, and reasonable fees, expenses and disbursements of counsel to each Agent and of counsel providing any opinions that any Agent or Required Lenders may request in respect of the Collateral or the Liens created pursuant to the Security Documents; (c) all the actual costs and reasonable expenses (including the reasonable fees, expenses and disbursements of any appraisers, consultants, advisors, auditors, accountants, attorneys, and agents employed or retained by any Agent or any Secured Party and its respective counsel) in connection with the Transaction Documents and the transactions contemplated thereunder; (d) all other actual and reasonable costs and expenses incurred by each Agent and each Secured Party in connection with the negotiation, preparation and execution of the 101
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Transaction Documents and any consents, amendments, waivers or other modifications thereto and the transactions contemplated thereby; and (e) after the occurrence of a Default or an Event of Default, all costs and expenses, including costs of settlement (and also including reasonable fees, expenses and disbursements of any appraisers, consultants, advisors, auditors, accountants, attorneys, and agents), incurred by any Agent or any Lender in enforcing any Obligations of or in collecting any payments due from any Credit Party hereunder or under the other Transaction Documents by reason of such Default or Event of Default (including in connection with the sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty) or in connection with any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a work-out or pursuant to any insolvency or bankruptcy cases or proceedings; provided that, in the case of any of the foregoing, each Borrower is presented with documentation reasonably evidencing the incurrence thereof. 10.3 Indemnity, WAIVER OF PUNITIVE DAMAGES. (a) In addition to the payment of expenses pursuant to Section 10.2, whether or not the transactions contemplated hereby shall be consummated, each Credit Party agrees jointly and severally to defend (subject to Indemnitees selection of counsel), indemnify, pay and hold harmless, J. Aron, Silver Point, Lender Counterparty, each Agent, each Lender and the officers, partners, directors, trustees, employees, agents and Affiliates of Lender Counterparty, each Agent and each Lender (each, an Indemnitee), from and against any and all Indemnified Liabilities, INCLUDING ANY INDEMNIFIED LIABILITIES CAUSED, IN WHOLE OR IN PART, BY THE NEGLIGENCE OF SUCH INDEMNIFIED PARTY OR IMPOSED, IN WHOLE OR IN PART, UNDER ANY LAW PROVIDING FOR STRICT LIABILITY (IN EACH CASE WHETHER ALLEGED, ARISING OR IMPOSED IN A LEGAL PROCEEDING BROUGHT BY OR AGAINST ANY CREDIT PARTY, ANY INDEMNITEE, OR ANY OTHER PERSON, provided, no Credit Party shall have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise from the gross negligence or willful misconduct of that Indemnitee. To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this Section 10.3 may be unenforceable in whole or in part because they are violative of any law or public policy, the applicable Credit Party shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them. TO THE EXTENT PERMITTED BY APPLICABLE LAW, NO CREDIT PARTY SHALL ASSERT, AND EACH HEREBY WAIVES, ANY CLAIM AGAINST ANY LENDER COUNTERPARTY, ANY AGENT, ANY LENDER OR ANY OF THEIR AFFILIATES, DIRECTORS, EMPLOYEES, ATTORNEYS OR AGENTS, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) (WHETHER OR NOT THE CLAIM THEREFOR IS BASED 102
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(b)

ON CONTRACT, TORT OR DUTY IMPOSED BY ANY APPLICABLE LEGAL REQUIREMENT) ARISING OUT OF, IN CONNECTION WITH, ARISING OUT OF, AS A RESULT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, ANY LOAN OR THE USE OF THE PROCEEDS THEREOF OR ANY ACT OR OMISSION OR EVENT FROM TIME TO TIME OCCURRING IN CONNECTION THEREWITH, AND EACH CREDIT PARTY HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY SUCH CLAIM OR ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR EACH CREDIT PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY GIVES THIS WAIVER FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.3 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR TO ANY OF THE OTHER TRANSACTION DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. 10.4 Amendments and Waivers; Consents. (a) Required Lenders Consent; Notice to Creditors Committee. Subject to Sections 10.4(b), 10.4(c), 10.4(d) and 10.4(e), no amendment, modification, termination or waiver of any provision of the Transaction Documents, or consent to any departure by any Credit Party therefrom, shall in any event be effective without the written concurrence of the Required Lenders. In addition, any amendment, modification or supplement of or to the Transaction Documents shall require two (2) Business Days advance notice to the Creditors Committee and the United States Trustee. Affected Lenders Consent. Without the written consent of each Lender that would be affected thereby, no amendment, modification, termination, or consent shall be effective if the effect thereof would: (i) (ii) extend the scheduled final maturity of any Loan or Note; waive, reduce or postpone any scheduled repayment (but not prepayment) of principal or amend, modify, terminate or waive any provision of Section 8.1(a) or 8.1(b); 103
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(b)

(iii)

reduce the rate of interest on any Loan (other than any waiver of any increase in the interest rate applicable to any Loan pursuant to Section 2.7) or any fee payable hereunder or under the fee letter described in Section 2.8; extend the time for payment of any such interest or fees; reduce the principal amount of any Loan; amend, modify, terminate or waive any provision of this Section 10.4(b) or Section 10.4(a), 10.4(c), 10.4(d) or 10.4(e); amend the definition of Required Lenders, Pro Rata Share, PEAO Second Lien Pro Rata Share, PERL Term Pro Rata Share, PEAO Term Pro Rata Share and Revolving Facility Pro Rata Share;

(iv) (v) (vi) (vii)

(viii) release all or substantially all of the Collateral or all or substantially all of the Guarantors from the Guaranty except as expressly provided in the Transaction Documents; or (ix) consent to the assignment or transfer by any Credit Party of any of its rights and obligations under any Transaction Document.

Notwithstanding the foregoing or anything to the contrary herein, Administrative Agent shall not, without the prior consent of each individual Lender Counterparty affected thereby, execute and deliver any waiver or amendment to any Transaction Document which would (i) cause an obligation under any outstanding Hedging Contract owing to such Lender Counterparty that, prior to such waiver or amendment, constituted a Lender Hedging Obligation to cease to be a Lender Hedging Obligation or (ii) cause the priority of the Lien securing such obligation or the priority of payment with respect to such obligation in connection with the exercise of remedies under such Transaction Document to be subordinate in any manner to the Obligations (other than expense reimbursements, expenses of enforcement, indemnities, and other similar obligations owing under the Transaction Documents). (c) Other Consents. No amendment, modification, termination or waiver of any provision of the Transaction Documents, or consent to any departure by any Credit Party therefrom, shall: (i) increase any Commitment of any Lender or the aggregate Commitments of all Lenders over the amount thereof then in effect without the consent of all Lenders; provided, no amendment, modification or waiver of any condition precedent, covenant, Default or Event of Default shall be deemed to constitute an increase in any Commitment of any Lender; or amend, modify, terminate or waive any provision of Section 9 as the same applies to any Agent, or any other provision hereof as the same applies to the rights or obligations of any Agent, in each case without the consent of such Agent. 104
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(ii)

(d)

Sale of Assets. Notwithstanding anything to contrary in this Agreement or any other Transaction Document or order of the Bankruptcy Court, no Credit Party may sell, transfer, lease, exchange, alienate or otherwise dispose of all or substantially all of its assets, properties, Capital Stock or other equity interests (other than as expressly permitted pursuant to clauses (a) through (d) of Section 6.5 hereunder) pursuant to Section 363 of the Bankruptcy Code or otherwise without the consent of the Required Lenders and the Required Prepetition Lenders, it being further understood that each Prepetition Lender may consent, withhold consent, or object to such sale in its sole discretion notwithstanding the terms of any prepetition intercreditor agreement solely among the Prepetition Secured Parties. Execution of Amendments, etc. Administrative Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on any Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 10.4 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed by a Credit Party, on such Credit Party.

(e)

10.5

Successors and Assigns; Participations. (a) Generally. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Agents and Lenders. No Credit Partys rights or obligations hereunder nor any interest therein may be assigned or delegated by any Credit Party without the prior written consent of all Lenders. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, Affiliates and Indemnitees of each of the Agents and Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. Register. Borrowers, Administrative Agent and Lenders shall deem and treat the Persons listed as Lenders in the Register as the holders and owners of the corresponding Commitments and Loans listed therein for all purposes hereof, and no assignment or transfer of any such Commitment or Loan shall be effective, in each case, unless and until an Assignment Agreement effecting the assignment or transfer thereof shall have been delivered to and accepted by Administrative Agent and recorded in the Register as provided in Section 10.5(e) and the Administrative Agent shall accept and record any assignment complying with Sections 10.5(c) and 10.5(d). Prior to such recordation, all amounts owed with respect to the applicable Commitment or Loan shall be owed to the Lender listed in the Register as the owner thereof, and any request, authority or consent of any 105

(b)

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Person who, at the time of making such request or giving such authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Commitments or Loans. (c) Right to Assign. Each Lender shall have the right at any time to sell, assign or transfer all or a portion of its rights and obligations under this Agreement, including, without limitation, all or a portion of its Commitment or Loans owing to it or other Obligation (provided, however, that each such assignment shall be of a uniform, and not varying, percentage of all rights and obligations under and in respect of any Loan and any related Commitments): (i) to any Person meeting the criteria of clause (i) of the definition of the term of Eligible Assignee upon the giving of notice to Borrowers and Administrative Agent; and to any Person meeting the criteria of clause (ii) of the definition of the term of Eligible Assignee and, in the case of assignments of Loans or Commitments to any such Person (except in the case of assignments made by or to J. Aron or Silver Point), and such assigning Lender shall provide notice to the Borrowers of such assignment within a reasonable time; provided, further each such assignment pursuant to this Section 10.5(c)(ii) shall be in an aggregate amount of not less than (A) $2,000,000 (or such lesser amount as may be agreed to by Administrative Agent or as shall constitute the aggregate amount of the Commitments and Loans of the assigning Lender) with respect to the assignment of the Commitments and Loans and (B) $1,000,000 (or such lesser amount as may be agreed to by Administrative Agent or as shall constitute the aggregate amount of the Loans of the assigning Lender) with respect to the assignment of Loans.

(ii)

(d)

Mechanics. The assigning Lender and the assignee thereof shall execute and deliver to Administrative Agent an Assignment Agreement, together with (i) a processing and recordation fee of $500 in the case of assignments pursuant to Section 10.5(c)(i) or made by or to J. Aron, and $3,500, in the case of all other assignments (except that only one fee shall be payable in the case of contemporaneous assignments to Related Funds), and (ii) such forms, certificates or other evidence, if any, with respect to United States federal income tax withholding matters as the assignee under such Assignment Agreement may be required to deliver to Administrative Agent pursuant to the terms hereof. Notice of Assignment. Upon its receipt of a duly executed and completed Assignment Agreement, together with the processing and recordation fee referred to in Section 10.5(d) (and any forms, certificates or other evidence required by this Agreement in connection therewith), Administrative Agent shall record the information contained in such Assignment Agreement in the Register, shall give prompt notice thereof to Borrowers and shall maintain a copy of such Assignment Agreement. 106

(e)

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(f)

Representations and Warranties of Assignee. Each Lender, upon execution and delivery hereof or upon executing and delivering an Assignment Agreement, as the case may be, represents and warrants as of the Closing Date or as of the applicable Effective Date (as defined in the applicable Assignment Agreement) that (i) it is an Eligible Assignee; (ii) it has experience and expertise in the making of or investing in commitments or loans such as the applicable Commitments or Loans, as the case may be; and (iii) it will make or invest in, as the case may be, its Commitments or Loans for its own account in the ordinary course of its business and without a view to distribution of such Commitments or Loans within the meaning of the Securities Act or the Exchange Act or other United States or Canadian securities Laws (it being understood that, subject to the provisions of this Section 10.5, the disposition of such Commitments or Loans or any interests therein shall at all times remain within its exclusive control). Effect of Assignment. Subject to the terms and conditions of this Section 10.5, as of the Effective Date specified in the applicable Assignment Agreement: (i) the assignee thereunder shall have the rights and obligations of a Lender hereunder to the extent such rights and obligations hereunder have been assigned to it pursuant to such Assignment Agreement and shall thereafter be a party hereto and a Lender for all purposes hereof; (ii) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned thereby pursuant to such Assignment Agreement, relinquish its rights (other than any rights which survive the termination hereof under Section 10.7) and be released from its obligations hereunder (and, in the case of an Assignment Agreement covering all or the remaining portion of an assigning Lenders rights and obligations hereunder, such Lender shall cease to be a party hereto; provided, anything contained in any of the Transaction Documents to the contrary notwithstanding, such assigning Lender shall continue to be entitled to the benefit of all indemnities hereunder as specified herein with respect to matters arising out of the prior involvement of such assigning Lender as a Lender hereunder); (iii) the Commitments shall be modified to reflect the applicable Commitment of such assignee and any Commitment of such assigning Lender, if any; and (iv) if any such assignment occurs after the issuance of any Note hereunder, the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its applicable Notes to Administrative Agent for cancellation, and thereupon Borrowers shall issue and deliver new Notes, if so requested by the assignee and/or assigning Lender, to such assignee and/or to such assigning Lender, with appropriate insertions, to reflect the new Commitments and/or outstanding Loans of the assignee and/or the assigning Lender. Participations. Each Lender shall have the right at any time to sell one or more participations to any Person (other than PERL, any of its Subsidiaries or any of its Affiliates) in all or any part of its Commitments, Loans or in any other Obligation. The holder of any such participation, other than an Affiliate of the Lender granting such participation, shall not be entitled to require such Lender to take or omit to take any action hereunder except with respect to any amendment, 107

(g)

(h)

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modification or waiver that would (i) extend the final scheduled maturity of any Loan or Note or reduce the rate or extend the time of payment of interest or fees thereon (except in connection with a waiver of applicability of any post-default increase in interest rates) or reduce the principal amount thereof, or increase the amount of the participants participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of a mandatory reduction in the Revolving Loan Commitment shall not be deemed to constitute a change in the terms of such participation, and that an increase in any Commitment or Loan shall be permitted without the consent of any participant if the participants participation is not increased as a result thereof), (ii) consent to the assignment or transfer by any Credit Party of any of its rights and obligations under this Agreement or (iii) release all or substantially all of the Collateral under the Security Documents (except as expressly provided in the Transaction Documents) supporting the Loans hereunder in which such participant is participating. Each Borrower agrees that each participant shall be entitled to the benefits of Sections 2.13 and 2.14 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (c) of this Section; provided, (i) a participant shall not be entitled to receive any greater payment under Section 2.13 and 2.14 than the applicable Lender would have been entitled to receive with respect to the participation sold to such participant, unless the sale of the participation to such participant is made with Borrowers prior written consent and (ii) a participant that would be a Non-US Lender if it were a Lender shall not be entitled to the benefits of Section 2.14 unless Borrowers are notified of the participation sold to such participant and such participant agrees, for the benefit of Borrowers, to comply with Section 2.14 as though it were a Lender. (i) Certain Other Assignments. In addition to any other assignment permitted pursuant to this Section 10.5, (i) any Lender may assign and/or pledge all or any portion of its Loans, the other Obligations owed by or to such Lender, and its Notes, if any, to secure obligations of such Lender to any Person, including any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any operating circular issued by such Federal Reserve Bank; provided, no Lender, as among Borrowers and such Lender, shall be relieved of any of its obligations hereunder as a result of any such assignment and pledge, and provided, further, in no event shall the applicable Federal Reserve Bank or trustee be considered to be a Lender or be entitled to require the assigning Lender to take or omit to take any action hereunder.

10.6 Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists. 10.7 Survival of Representations, Warranties and Agreements; Termination.

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(a)

All representations, warranties and agreements made herein shall survive the execution and delivery hereof and the making of any Credit Extension. Notwithstanding anything herein or implied by law to the contrary, the agreements of each Credit Party set forth in Sections 2.13, 2.14, 2.15, 10.2, 10.3 and 10.20 and the agreements of Lenders set forth in Sections 2.12, 9.3, 9.6 and 10.16 shall survive the payment of the Loans and the termination hereof. At any time when no Obligations are then owing, the Borrowers may elect in a written notice delivered to Administrative Agent to terminate this Agreement. Upon the proper receipt by Administrative Agent of such a notice at such a time, then this Agreement and all Security Documents shall thereupon be terminated, except to the extent provided otherwise in Section 10.7(a) of this Agreement or in any similar provision of any Security Document that expressly provides for the survival of specified provisions thereof. At the request and expense of Borrowers, the applicable Collateral Agent shall prepare and execute all necessary instruments to reflect and effect such termination and the release of the Collateral. Each Collateral Agent is hereby authorized to execute all such instruments on behalf of all Lenders and Lender Counterparties, without the joinder of or further action by any Lender or Lender Counterparty.

(b)

10.8 No Waiver; Remedies Cumulative. No failure or delay on the part of any Agent or any Lender in the exercise of any power, right or privilege hereunder or under any other Transaction Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. The rights, powers and remedies given to each Agent and each Lender hereby are cumulative and shall be in addition to and independent of all rights, powers and remedies existing by virtue of any statute or rule of law or in any of the other Transaction Documents or any of the Hedging Contracts. Any forbearance or failure to exercise, and any delay in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy. 10.9 Marshalling; Payments Set Aside. Upon entry of the Final Order, neither any Agent nor any Lender shall be under any obligation to marshal any assets in favor of any Credit Party or any other Person or against or in payment of any or all of the Obligations. To the extent that any Credit Party makes a payment or payments to any Agent or Lenders (or to any Agent, on behalf of Lenders), or any Agent or Lenders enforce any security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or setoff had not occurred. 10.10 Severability. In case any provision in or obligation hereunder or any Note shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the 109
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remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 10.11 Obligations Several; Independent Nature of Lenders Rights. The obligations of Lenders hereunder are several and no Lender shall be responsible for the obligations or Commitment of any other Lender hereunder. Nothing contained herein or in any other Transaction Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and each Lender shall be entitled to protect and enforce its rights arising out hereof and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose. 10.12 Headings. Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect. 10.13 APPLICABLE LAW. EXCEPT TO THE EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A TRANSACTION DOCUMENT, THE TRANSACTION DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN THE NEW YORK GENERAL OBLIGATIONS LAW 5-1401 AND 5-1402) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA (INCLUDING THE BANKRUPTCY CODE). 10.14 CONSENT TO EXCLUSIVE JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY CREDIT PARTY ARISING OUT OF OR RELATING HERETO OR ANY OTHER TRANSACTION DOCUMENT, OR ANY OF THE OBLIGATIONS, SHALL BE BROUGHT IN THE BANKRUPTCY COURT OR IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH CREDIT PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (a) ACCEPTS GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (b) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (c) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE CREDIT PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 10.1; (d) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (c) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE CREDIT PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (e) AGREES AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY

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OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION. 10.15 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER TRANSACTION DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/COMPANY RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.15 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 10.16 Confidentiality. (a) Each Lender and each Agent agrees that it will take all reasonable steps to keep confidential any proprietary information regarding each Credit Party and its business identified as confidential by such Credit Party and obtained by such Lender pursuant to the requirements hereof, it being understood and agreed by such Credit Party that, in any event, a Lender may make (i) disclosures of such information to Affiliates of such Lender and to their agents and advisors (and to other persons authorized by a Lender or Agent to organize, present or disseminate such information in connection with disclosures otherwise made in accordance with this Section 10.16), (ii) disclosures of such information reasonably required by any bona fide or potential assignee, transferee or participant in connection with the contemplated assignment, transfer or participation by such Lender of any Loans or any participations therein or by any direct or indirect contractual counterparties (or the professional advisors thereto) in Hedging Contracts 111
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(provided, such counterparties and advisors are advised of and agree to be bound by the provisions of this Section 10.16), (iii) disclosure to any rating agency when required by it, provided that, prior to any disclosure, such rating agency shall undertake in writing to preserve the confidentiality of any confidential information relating to the Credit Parties received by it from any of the Agents or any Lender, and (iv) disclosures required or requested by any Governmental Authority or representative thereof or by the NAIC or pursuant to legal or judicial process; provided, unless specifically prohibited by applicable law or court order, each Lender shall make reasonable efforts to notify such Credit Party of any request by any Governmental Authority or representative thereof (other than any such request in connection with any examination of the financial condition or other routine examination of such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information. (b) Administrative Agent, Lenders, and Credit Parties shall consult with each other before issuing any press releases or otherwise making any public statements with respect to this Agreement and the transactions contemplated hereby; provided, however, that if any Credit Party has made a commercially reasonable effort to contact Administrative Agent and Lenders regarding a disclosure and has been unable to arrange the consultation referred to above prior to a public disclosure deadline established by Law or by the rules of any stock exchange where PERLs securities trade, then the public disclosure may be made without such consultation to the extent required by such Law or by such rules. No such Person shall issue any such press release or make any public statement without the agreement of the other parties, except as may be required by applicable Law or the rules of any stock exchange where PERLs securities trade.

10.17 Usury Savings Clause. Notwithstanding any other provision herein, the aggregate interest rate charged with respect to any of the Obligations, including all charges or fees in connection therewith deemed in the nature of interest under applicable law, shall not exceed the Highest Lawful Rate. If the rate of interest (determined without regard to the preceding sentence) under this Agreement at any time exceeds the Highest Lawful Rate, the outstanding amount of the Loans made hereunder shall bear interest at the Highest Lawful Rate until the total amount of interest due hereunder equals the amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect. In addition, if when the Loans made hereunder are repaid in full the total interest due hereunder (taking into account the increase provided for above) is less than the total amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect, then to the extent permitted by law, Borrowers shall pay to Administrative Agent an amount equal to the difference between the amount of interest paid and the amount of interest which would have been paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding the foregoing, it is the intention of Lenders and Borrowers to conform strictly to any applicable usury laws. Accordingly, if any Lender contracts for, charges, or receives any consideration which constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be cancelled automatically and, if previously paid, shall at such

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Lenders option be applied to the outstanding amount of the Loans made hereunder or be refunded to Borrowers. 10.18 Counterparts. This Agreement may be separately executed in any number of counterparts and by the different parties hereto in separate counterparts, all of which when so executed shall be deemed to constitute one and the same Agreement. Delivery by electronic transmission of an executed counterpart of a signature page to this Agreement shall be as effective as delivery of a manually executed counterpart hereof. 10.19 Effectiveness. This Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto and receipt by Borrowers and Administrative Agent of written or telephonic notification of such execution and authorization of delivery thereof. 10.20 USA Patriot Act Notice. Each Lender that is subject to the Act (as hereinafter defined) and Administrative Agent (for itself and not on behalf of any Lender) hereby notifies Borrowers and each other Credit Party that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the Act), it is required to obtain, verify and record information that identifies Borrowers and the other Credit Parties, which information includes the name and address of such Persons and other information that will allow such Lender or Administrative Agent, as applicable, to identify such Persons in accordance with the Act. 10.21 PERL ISDA Agreement. The PERL ISDA Agreement, as amended pursuant to the Postpetition Hedge Amendment, shall be deemed to be an assumed executory contract pursuant to the relevant provisions of Section 365 of the Bankruptcy Code, without further action of PERL, subject only to the execution by PERL and the Hedge Provider of the Postpetition Hedge Amendment, and any obligations of PERL thereunder shall accordingly be treated as having arisen subsequent to the Petition Date. PERL is authorized and has been directed to execute and enter into the Postpetition Hedge Amendment prior to or contemporaneously with the execution of the Transaction Documents. Any amendment or modification to the PERL ISDA Agreement or the Postpetition Hedge Agreement that may result in a Material Adverse Effect with respect to the position of the Lenders shall require the consent of the Required Lenders. 10.22 Order. In the event of any inconsistency between the terms and conditions of any of the Transaction Documents and the Interim Order or the Final Order, whichever is in effect at the time of reference thereto, the provisions of the Interim Order or the Final Order, as the case may be, shall govern and control. [Remainder of page intentionally left blank.]

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APPENDIX A TO SENIOR SECURED SUPER PRIORITY PRIMING DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Commitments and Pro Rata Shares

Lender

PERL Term Loan Commitment $25,725,983.30 $6,834,771.02 N/A $4,618,394.41 N/A $7,020,412.22 $44,199,560.95

PERL Term Pro Rata Share 58.204160270% 15.463436450% N/A 10.448959920% N/A 15.883443340% 100.000000000%

PEAO Term Loan Commitment $49,223,404.91 N/A $36,471,500.01 $1,216,120.00 N/A $11,535,784.91 $98,446,809.82

PEAO Term Pro Rata Share 50.000000000% N/A 37.04690896% 1.235306660% N/A 11.71778439% 100.000000000%

Revolving Loan Commitment $22,000,000.00 N/A N/A N/A $950,049.43 $21,049,950.57 $44,000,000.00

Revolving Facility Pro Rata Share 50.000000000% N/A N/A N/A 2.159203250% 47.84079675% 100.000000000%

J. Aron & Company Field Point I, Ltd Field Point III, Ltd SPF CDO I, Ltd SPCP Group III LLC SPCP Group, LLC Total:

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APPENDIX B TO SENIOR SECURED SUPER PRIORITY PRIMING DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT PACIFIC ENERGY RESOURCES LTD. PACIFIC ENERGY ALASKA HOLDINGS, LLC PACIFIC ENERGY ALASKA OPERATING LLC PETROCAL ACQUISITION CORP. SAN PEDRO BAY PIPELINE COMPANY 111 W. Ocean Blvd., Suite 1240 Long Beach, CA 90802 Attention: Chief Financial Officer Telecopier: 562-628-1526 Email: gtywoniuk@pacenergy.com (with a copy to dkatic@pacenergy.com) with a copy to: Rutan & Tucker, LLP 611 Anton Boulevard, 14th Floor Costa Mesa, CA 92626 Telecopier: 714-546-9035 Attention: Gregg Amber Email: gamber@rutan.com CARNEROS ACQUISITION CORP. CARNEROS ENERGY, INC. GOTLAND OIL, INC. 4550 California Avenue, Suite 720 Bakersfield, CA 93309 Attention: Chief Financial Officer Telecopier: 562-628-1526 Email: gtywoniuk@pacenergy.com (with a copy to dkatic@pacenergy.com) with a copy to: 111 W. Ocean Blvd., Suite 1240 Long Beach, CA 90802 Attention: Chief Financial Officer Telecopier: 562-628-1526 Email: gtywoniuk@pacenergy.com (with a copy to dkatic@pacenergy.com) and also to: Rutan & Tucker, LLP 611 Anton Boulevard, 14th Floor Costa Mesa, CA 92626 Telecopier: 714-546-9035 Attention: Gregg Amber Email: gamber@rutan.com

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J. ARON & COMPANY J. Aron & Company 85 Broad Street New York, New York 10004 Attention: Steve Bunkin Telecopier: 212-428-3675 Email: steven.bunkin@gs.com with a copy to: Goldman Sachs Specialty Lending Group 6011 Connection Drive Irving, Texas 75039 Attention: David Hull Telecopier: 972-368-5099 Email: david.hull@gsslg.com SILVER POINT FINANCE, LLC/SPCP GROUP, LLC/SPCP GROUP III LLC Operations/Administrative (Funding Notices, Borrowings, Pay-downs, Interest, Fees, Rate Settings): Silver Point Finance, LLC 2 Greenwich Plaza 1st Floor Greenwich, Connecticut 06830 Attention: Irene Wu Telecopier: 203-286-2139 Email: bladmin@silverpointcapital.com Closing (Confirms, Assignments, Original Signature Pages): Silver Point Finance, LLC 2 Greenwich Plaza 1st Floor Greenwich, Connecticut 06830 Attention: Ashley Yu Telecopier: 203-542-4550 Email: ayu@silverpointcapital.com

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APPENDIX B TO SENIOR SECURED SUPER PRIORITY PRIMING DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Syndicate and Private Level Credit (Financials, Credit Agreements, Amendments, Waivers, Compliance): Silver Point Finance, LLC 2 Greenwich Plaza 1st Floor Greenwich, Connecticut 06830 Attention: Benjamin Tecmire Telecopier: 203-542-4162 Email: creditadmin@silverpointcapital.com SPF CDO I, LTD./FIELD POINT I, LTD./FIELD POINT III, LTD. Operations/Administrative (Funding Notices, Borrowings, Pay-downs, Interest, Fees, Rate Settings): SPF CDO I, LTD. c/o The Bank of New York Mellon Corporation 525 William Penn Place, 7th Floor Pittsburgh, PA 15259 Attention: Christopher Lynch Telecopier: 713-577-5235 Email: 17135775235@Docs.LDSProd.com Closing (Confirms, Assignments, Original Signature Pages): Silver Point Finance, LLC 2 Greenwich Plaza 1st Floor Greenwich, Connecticut 06830 Attention: Ashley Yu Telecopier: 203-542-4550 Email: ayu@silverpointcapital.com Syndicate and Private Level Credit (Financials, Credit Agreements, Amendments, Waivers, Compliance): Silver Point Finance, LLC 2 Greenwich Plaza 1st Floor Greenwich, Connecticut 06830 Attention: Benjamin Tecmire Telecopier: 203-542-4162 Email: creditadmin@silverpointcapital.com

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SCHEDULE 4.7 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Other Obligations and Restrictions Pacific Energy Alaska Operating LLC has failed to pay certain joint interest billings to Chevron. Chevron has the right under the joint operating agreement to place a lien on Pacific Energy Alaska Operating LLCs share of production if its joint interest billings are not paid on time. Chevron has exercised, and continues to exercise, this right, the effect of which is to offset Pacific Energy Alaska Operating LLCs share of production to reduce the joint interest billings owed by Pacific Energy Alaska Operating LLC to Chevron.

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SCHEDULE 4.9 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Litigation Forest Oil Corporation v. Union Oil Company of California et al. Case No. 3:05-cv-00078-RRB (United States District Court for the District of Alaska) Summary In 2005, prior to Pacific Energy Resources Ltd.s acquisition of Alaska assets from Forest Oil Corporation (Forest Oil), Forest Oil brought suit against Union Oil Company of California (Union Oil) requesting an accounting, injunction and other relief under Trading Bay Unit agreements. Union Oil (now Chevron pursuant to a merger between Union Oil and Chevron) is the operator of that unit. The complaint alleges that additional sums were due to Forest Oil as a result of Union Oils conduct as unit operator. Union Oil counterclaimed for money and a lien, under the unit agreements. Prior to Pacific Energy Resources Ltd.s acquisition of the Alaska assets, Chevron added Forest Alaska Operating LLC (now Pacific Energy Alaska Operating LLC) as a party, claiming it was the appropriate party in interest because Forest Oil had transferred all of its rights under the operating agreement to what is now Pacific Energy Alaska Operating LLC. An amendment to the membership interest purchase agreement transferring Forest Alaska Operating LLC to Pacific Energy Resources Ltd. contains a provision adding this suit to Forest Oils indemnification requirements. Pacific Energy Resources Ltd. has engaged separate counsel to represent Pacific Energy Alaska Operating LLC in the case. Forest Oil remains in the case as a party plaintiff, represented by its own counsel. Forest Oil has confirmed its indemnity obligations to Pacific Energy Resources Ltd. and has agreed to pay for Pacific Energy Resources Ltd.s separate counsel. Status The court had held that all of Forest Oils claims in the litigation were transferred to Pacific Energy Alaska Operating LLC. Pacific Energy Alaska Operating LLC subsequently transferred the claims back to Forest Oil. What is not clear is whether Chevrons counterclaims originally asserted against Forest Oil were also transferred to Pacific Energy Alaska Operating LLC or whether they remain as claims against Forest Oil. The amount of Chevrons counterclaim is $13 million. Settlement discussions between Forest Oil and Chevron have indicated that Chevrons internal assessment of the value of its counterclaims is no more than $1.6 million. Forest Oil believes that the probable value is less than that amount. Any judgments on the basis of Chevrons counterclaims would be offset by the amounts of Forest Oils claims that are accepted by the court. Current settlement discussions between Forest Oil and Chevron do not contemplate that Pacific Energy Alaska Operating LLC be required to make any settlement payments. Most likely any exposure to Pacific Energy Alaska Operating LLC would be based on a lien claim rather than direct liability for monetary damages. Forest Oil is contractually obligated to satisfy any lien claim and release Pacific Energy Alaska Operating LLCs property. The likelihood of a judgment in favor of Chevron in the amount of $1.6 million or more is not likely. There is some possibility of an affirmative judgment in favor of Chevron in some amount if this

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SCHEDULE 4.9 (continued) TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT matter proceeds to trial, although it would be (a) most likely reflected as a claim of lien against Pacific Energy Alaska Operating LLCs Trading Bay Unit interest, (b) offset by any money judgment obtained by Forest Oil and (c) subject to Forest Oils indemnity obligations. A current settlement proposal would resolve all claims and counter claims through Chevrons payment to Marathon Oil Company in related but separate litigation. This payment would remove a potential liability of Chevron, Forest Oil, and Pacific Energy Alaska Operating LLC. However, this proposal may fail because Forest Oil and Marathon Oil Company are unable to agree whether this settlement would include a release by Chevron of future Trading Bay liabilities. Marathon Oil Company v. Forest Oil Corporation, Union Oil Company of California d/b/a Unocal Alaska and Chevron Corporation Case No. 3:06-cv-00102-JKS (United States District Court for the District of Alaska) Summary This lawsuit was filed on May 3, 2006 (prior to Pacific Energy Resources Ltd.s acquisition of Forest Alaska Operating LLC) in the United States District Court for the District of Alaska at Anchorage. The lawsuit involves the allocation of charges between oil production and gas production on the Steelhead Platform located in Cook Inlet, Alaska. Unocal Alaska operates the platform and both Forest Oil (now Pacific Energy Alaska Operating LLC) and Unocal Alaska utilize the platform for oil production. Marathon Oil Company (Marathon) and Unocal Alaska use the platform for gas production. Marathon alleges that Forest Oil breached its December 12, 1996 purchase and sale agreement with Forcenergy (later merged into Forest Oil) in failing to satisfy the obligation to pay reasonable and necessary expenses relating to this operation. Marathon also alleges that Forest Oil has been unjustly enriched in that, due to the problem with the allocation, Marathon was forced to pay for certain expenses which were properly the obligation of Forest Oil. Marathon asks for damages, an accounting for the operations on the platform and for declaratory relief. Forest Oil has filed an answer denying liability. An amendment to the membership interest purchase agreement transferring Forest Alaska Operating LLC to Pacific Energy Resources Ltd. contains a provision adding this suit to Forest Oils indemnification requirements. Pacific Energy Resources Ltd. has engaged separate counsel to represent Pacific Energy Alaska Operating LLC in the case. Forest Oil remains in the case as a party plaintiff, represented by its own counsel. Forest Oil has agreed to pay for Pacific Energy Resources Ltd.s separate counsel and has acknowledged certain of its indemnity obligations to Pacific Energy Resources Ltd., but disputes the extent of its indemnity obligations for the period subsequent to Pacific Energy Resources Ltd.s acquisition of Forest Oil's membership interest in Pacific Energy Alaska Operating LLC. Status The court recently ruled on certain cross motions for summary judgment and essentially the only claims which remain in the lawsuit are Marathons contractual claims against Unocal Alaska under the Unit Operating Agreement relating to fair and equitable adjustment. The court granted summary judgment to Forest Oil on all of Marathons direct contractual and equitable claims against it and Forest Oil has been dismissed from the lawsuit.
Schedule 4.9 Page 2 of 4

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SCHEDULE 4.9 (continued) TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT On January 13, 2009, Unocal Alaska filed a motion for leave to file a cross-claim against Forest Oil and Pacific Energy Alaska Operating LLC to recover under the unit operating agreement or on equitable grounds any amounts which Marathon might recover from Unocal Alaska in the lawsuit. Two days later, the court sua sponte denied Unocal Alaskas motion because of undue delay in seeking to assert the claims against Pacific Energy Alaska Operating LLC. The court also ordered Marathon to show cause why Pacific Energy Alaska Operating LLC should not be dismissed from the lawsuit on the general theory that all the claims which might be asserted against Pacific Energy Alaska Operating LLC were derivative of those against Forest Oil, which had already been dismissed. On February 6, 2009, Marathon responded, admitting that the rationale of the courts summary judgment decision mandated dismissal of Pacific Energy Alaska Operating LLC. On February 12, 2009, the court dismissed all claims against Pacific Energy Alaska Operating LLC in the lawsuit with prejudice. The remaining issues between Marathon and Unocal Alaska will likely go to trial in approximately nine months. Unocal Alaska and Marathon have begun preliminary discussions to explore settlement of this matter rather than litigating it in federal court. On February 5, 2009, Marathon made a settlement offer to Unocal Alaska, the terms of which are that those parties would agree to convert the accounting methodology for the miscellaneous cost center from the barrels of oil equivalent (BOE) method to the 50% BOE/50% well count hybrid method for 2002-2005 and agree to the hybrid method on a going forward basis from January 1, 2006. The spreadsheets supplied with the offer suggest that would result in a charge of about $680,000 to the oil WIPAs. In conversations with counsel for Unocal Alaska, he believes that Unocal Alaska would first charge that amount to Pacific Energy Alaska Operating LLC with the expectation that Pacific Energy Alaska Operating LLC would tender that claim to Forest Oil under the indemnity agreement between the Pacific Energy Alaska Operating LLC and Forest Oil. On February 20, 2009, Unocal Alaska made a counteroffer to Marathon that each of them would dismiss all claims in this lawsuit and a related lawsuit and absorb their own litigation costs. To date, however, Unocal Alaska has evidenced an unwillingness to release Pacific Energy Alaska Operating LLC and Forest Oil from claims for contribution in the referenced lawsuit. Net Revenue Share for Beta Field Pursuant to an October 20, 2008 letter from the United States Department of the Interior, Minerals Management Services (MMS), the MMS has extended the current net revenue share royalty relief arrangement applicable to leases OCS-P 0300 and 0301, Beta Field, until March 31, 2010. However, if a new net revenue share arrangement is not established by March 31, 2010, then the net revenue share will become fixed at a 25% royalty. Depending on the oil price, a 25% royalty could have a Material Adverse Effect. Chevron Opposition to Working Interest Assignments Chevron has filed a letter in opposition to approval of working interest assignments to whollyowned subsidiaries of Goldman, Sachs & Co. and Silver Point Finance LLC with the State of Alaska, Department of Natural Resources (DNR). Such assignments are pending.

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SCHEDULE 4.9 (continued) TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Corsair Unit Expansion Appeal On April 30, 2008, the DNR, Division of Oil and Gas, issued its Denial of the Application for the First Expansion of the Corsair Unit. On May 16, 2008, Pacific Energy Resources Ltd., as Operator of the Corsair Unit, submitted a Corsair Unit Expansion Appeal of Director Banks Decision and Request for Reconsideration. On December 3, 2008, the DNR issued the Commissioners Findings and Decision, affirming the DNRs decision to deny Pacific Energy Resources Ltd.s application for expansion of the Corsair Unit. Pacific Energy Resources Ltd. filed an application for rehearing of the denial in January 2009. If the rehearing is denied, Pacific Energy Resources Ltd. anticipates that it may appeal the decision to the Superior Court of the State of Alaska. If Pacific Energy Resources Ltd. loses its appeals, it is anticipated that it will forfeit its $100,000 deposit and that the Corsair Unit leases will be terminated. Corsair Unit Default Notice Heavy Lift Appeal On April 1, 2008, the DNR, Division of Oil and Gas, conditionally accepted a Corsair Unit default cure provided by Pacific Energy Resources Ltd. as Operator of the Corsair Unit. The DNRs conditional acceptance established two work commitments. The first commitment was timely satisfied by Pacific Energy Resources Ltd. The second commitment was the procurement of a signed contract for a heavy lift vessel capable of transporting the Blake 151 rig to Cook Inlet, Alaska, on or prior to July 31, 2008, which date was later extended at the request of Pacific Energy Resources Ltd. to September 29, 2008. Additional time to procure a signed contract, as well as certain lease extensions in order to make the venture economically feasible in a deteriorating financial market, were requested by Pacific Energy Resources Ltd. in a letter to the DNR dated October 31, 2008. On December 1, 2008, the DNR placed the Corsair Unit in default alleging that Pacific Energy Resources Ltd. had not complied with the terms of the Corsair Unit Plan of Exploration. Pacific Energy Resources Ltd. is in the process of preparing an administrative appeal of the DNRs decision. If the administrative appeal is not successful, Pacific Energy Resources Ltd. anticipates that it may appeal the DNRs decision to the Superior Court of the State of Alaska. If Pacific Energy Resources Ltd. loses its appeals, it is anticipated that it will forfeit its $100,000 deposit and that the Corsair Unit leases will be terminated.

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SCHEDULE 4.10 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Labor Disputes and Acts of God None.

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SCHEDULE 4.11 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT ERISA Plans and Liabilities Pacific Energy Resources Ltd. 401(k) Plan Plan 001 Pacific Energy Resources Ltd. 401(k) Plan Plan 002

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SCHEDULE 4.12 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Environmental and Other Laws It has been determined that the prior owner of Pacific Energy Alaska Operating LLCs assets failed to have in place an OSHA standard 29 CFR 1910.119 Process Safety Management plan. This violation will not result in a Material Adverse Effect. Pacific Energy Alaska Operating LLC is in the process of bringing its assets into compliance with this regulation and expects to be compliant on or before September 30, 2009.

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Schedule 4.12 Page 1 of 1

SCHEDULE 4.13 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Names and Places of Business Pacific Energy Resources Ltd. Pacific Energy Resources Ltd. does business in the State of California as Pacific Energy Resources Ltd. Which Will Do Business in California As Pacific Energy Resources North America. On November 20, 2006, Pacific Energy Resources Ltd. changed its chief executive office from 1065 West Pier E Street, Long Beach, CA 90802 to 111 West Ocean Blvd., Suite 1240, Long Beach, CA 90802. Petrocal Acquisition Corp. On November 20, 2006, Petrocal Acquisition Corp. changed its chief executive office from 1065 West Pier E Street, Long Beach, CA 90802 to 111 West Ocean Blvd., Suite 1240, Long Beach, CA 90802. San Pedro Bay Pipeline Company In November 2006, San Pedro Bay Pipeline Company changed its chief executive office from 10000 Ming Avenue, Bakersfield, CA 93311 to 111 West Ocean Blvd., Suite 1240, Long Beach, CA 90802. Pacific Energy Alaska Holdings, LLC No disclosure. Pacific Energy Alaska Operating LLC On August 24, 2007, Forest Alaska Operating LLC changed its name to Pacific Energy Alaska Operating LLC and changed its chief executive office from 707 Seventeenth Street, Suite 3600, Denver, CO 80202 to 111 West Ocean Blvd., Suite 1240, Long Beach, CA 90802. Carneros Acquisition Corp. In December 2006, Carneros Acquisition Corp. changed its chief executive office from 1717 28th Street, Bakersfield, CA 93301 to 4550 California Avenue, Suite 720, Bakersfield, CA 93309. Carneros Energy, Inc. In December 2006, Carneros Energy, Inc. changed its chief executive office from 1717 28th Street, Bakersfield, CA 93301 to 4550 California Avenue, Suite 720, Bakersfield, CA 93309. Gotland Oil, Inc. In December 2006, Gotland Oil, Inc. changed its chief executive office from 1717 28th Street, Bakersfield, CA 93301 to 4550 California Avenue, Suite 720, Bakersfield, CA 93309.

995220

Schedule 4.13 Page 1 of 1

Schedule 4.14 to Forbearance Agreement and Eighth Amendment to Credit and Guaranty Agreement Subsidiaries Ownership of Pacific Energy Resources Ltd. See Attachment 4.14 to this Schedule, which shows the fully diluted capitalization of Pacific Energy Resources Ltd. as of February 28, 2009, excluding any changes to the information presented in such Attachment that may result from (i) the exercise or termination of any options or warrants listed thereon, (ii) the issuance of options to purchase up to an additional 500,000 shares under the Pacific Energy Resources Ltd. 2006 Share Option Plan and (iii) shares issuable upon conversion of interest that may accrue from time to time under the Unsecured Convertible Promissory Note in the face amount of $1,032,732.34 dated February 10, 2009 made by Pacific Energy Resources Ltd. in favor of Bateman & Co. Ownership of Petrocal Acquisition Corp. The entire authorized capital stock of Petrocal Acquisition Corp. consists of 1,000 shares of common stock, all of which 1,000 shares are issued and outstanding and owned by Pacific Energy Resources Ltd. Ownership of Carneros Acquisition Corp. The entire authorized capital stock of Carneros Acquisition Corp. consists of 100 shares of common stock, all of which 100 shares are issued and outstanding and owned by Pacific Energy Resources Ltd. Ownership of Carneros Energy, Inc. The entire authorized capital stock of Carneros Energy, Inc. consists of 200,000 shares of common stock, of which 33,637.716 shares are issued and outstanding and owned by Carneros Acquisition Corp. Ownership of Gotland Oil, Inc. The entire authorized capital stock of Gotland Oil, Inc. consists of 500,000 shares of common stock, of which 116,773 shares are issued and outstanding and owned by Carneros Energy, Inc. Ownership of San Pedro Bay Pipeline Company The entire authorized capital stock of San Pedro Bay Pipeline Company consists of 1,000 shares of common stock, all of which 1,000 shares are issued and outstanding and owned by Pacific Energy Resources Ltd. Ownership of Pacific Energy Alaska Holdings, LLC One hundred percent of the membership interest in Pacific Energy Alaska Holdings, LLC is owned by Pacific Energy Resources Ltd. Ownership of Pacific Energy Alaska Operating LLC One hundred percent of the membership interest in Pacific Energy Alaska Operating LLC is owned by Pacific Energy Alaska Holdings, LLC. Ownership of Cook Inlet Pipe Line Company Cook Inlet Pipe Line Company has 40,000 shares of common stock issued and outstanding, of which 20,000 shares are owned by Pacific Energy Alaska Holdings, LLC.
Schedule 4.14 Page 1 of 1

995220

Attachment 4.14 to Schedule 4.14 to Forbearance Agreement and Eighth Amendment to Credit and Guaranty Agreement

Pacific Energy Resources Ltd.

Fully-Diluted Capitalization as of February 28, 2009

Common Stock Outstanding: Shares Underlying Convertible Notes: Shares Underlying Warrants: Shares Underlying Options:

205,469,225 14,147,018 88,668,814 18,861,582

995220

Attachment 4.14 Page 1 of 1

SCHEDULE 4.17 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Taxes None.

995220

Schedule 4.17 Page 1 of 1

SCHEDULE 4.18 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT No Distributions On July 30, 2008, Carneros Energy, Inc. repurchased from Laurus Master Fund, Ltd. and certain of its affiliates a warrant to purchase up 27,521 and 766/1000 shares of Carneros Energy, Inc. common stock. The purchase price paid by Carneros Energy, Inc. for repurchase of the warrant consisted of $6,387,350.49 in cash and Carneros Energy, Inc. entering into a Net Profits Agreement and a Conveyance of Net Profits Overriding Royalty Interest in favor of Laurus Master Fund, Ltd. and certain of its affiliates.

995220

Schedule 4.18 Page 1 of 1

SCHEDULE 4.19 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Title to Properties With respect to Pacific Energy Alaska Operating LLC, no representation or warranty respecting good or marketable title can be made in connection with leases ADL-47567 and ADL47562. With respect to exploration licenses, only exploration rights, and not any rights to produce or market oil and gas, have been granted thereunder. Only if and when one or more oil and gas leases have been issued will the holder(s) thereof have any rights to produce oil and gas. Due to failure to comply with DNR work obligation deadline requirements, Pacific Energy Alaska Operating LLC is appealing its rights to the Corsair leases (oil and gas leases bearing ADL Nos. 389923; 389507; 389514; 389513; 389197; 389196; 389198; and 389515) and to develop the Corsair Unit. The outcome of such appeal is pending the decision of DNR to approve or reject pending proposals to create a new unit that will contain such lease acreage. It is possible that Pacific Energy Resources Ltd. and Pacific Energy Alaska Operating LLC may obtain some future payment from the Corsair prospect pursuant to assignments of its working interests in such leases pursuant to that certain letter agreement, dated February 11, 2009, among Pacific Energy Resources Ltd., Pacific Energy Alaska Operating LLC and Escopeta Oil Company, L.L.C. regarding Farm-out of Oil and Gas Lease bearing ADL Nos. 389923; 389507; 389514; 389513; 389197; 389196; 389198; and 389515, Cook Inlet Basin, Alaska.

995220

Schedule 4.19 Page 1 of 1

SCHEDULE 4.20 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT No Defaults Schedule 4.20(a) Specified Defaults (as that term is defined in the Forbearance Agreement and Eighth Amendment to Second Lien Credit Agreement, dated as of December 19, 2008, by and among Pacific Energy Alaska Operating LLC, Pacific Energy Alaska Holdings, LLC, the other Loan Parties party thereto, certain financial institutions as Lenders and Silver Point Finance, LLC as Agent, as amended, supplemented and modified from time to time) and certain additional defaults under the Prepetition Transaction Documents occurring after December 19, 2008. The entering into of the Agreement and the other Transaction Documents, as well as the consummation of the transactions contemplated thereby, by the Credit Parties may result in certain defaults under the PEAO Second Lien Credit Agreement and the other Loan Documents (as defined in the PEAO Second Lien Credit Agreement). Defaults under Sections 5(a)(vi) of the PERL ISDA Agreement, as amended pursuant to the Postpetition Hedge Amendment, relating to defaults under the PEAO Second Lien Credit Agreement and the other Loan Documents (as defined in the PEAO Second Lien Credit Agreement) and defaults under Section 5(a)(vii) of the PERL ISDA Agreement, as amended pursuant to the Postpetition Hedge Agreement, relating to the Case or the insolvency of the Credit Parties. As of early February 2009, Pacific Energy Alaska Operating LLC has stopped delivering gas under that certain Fuel Gas Supply Agreement between Forest Oil Corporation and Union Oil Company of California dated November 25, 2002 (as assigned by Forest Oil Corporation to Pacific Energy Alaska Operating LLC). Union Oil Company of California (now Chevron) is now buying gas and billing it back to Pacific Energy Alaska Operating LLC under the joint interest billings described on Schedule 6.1. Overdue payments of royalties to MMS (approximately $528,000), DNR (approximately $263,000), to certain Lenders or certain Affiliates of Lenders related to the Credit Parties Beta Field assets (approximately $237,000), to certain Lenders or certain Affiliates of Lenders related to the Credit Parties Alaska assets (approximately $163,000), and to various other third parties (approximately $101,000). The Credit Parties owe payments to vendors that are over 30 days past due in the amount of approximately $5.3 million (excluding joint interest billings due to Chevron of an additional approximately $ $20.1 million). The filing, prosecution and resolution of the Case constitutes a breach and/or an event of default under some (and perhaps all) of the Contractual Obligations of Pacific Energy Resources Ltd. and its Subsidiaries. Schedule 4.20(b)

995220

Schedule 4.20 Page 1 of 5

SCHEDULE 4.20 (continued) TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT 1. Membership Interest Purchase Agreement dated as of May 24, 2007 by and among Forest Alaska Holding LLC, Pacific Energy Alaska Operating LLC, Forest Oil Corporation and Pacific Energy, as amended on July 31, 2007 pursuant to Amendment No. 1 to Membership Interest Purchase Agreement. 2. Asset Sale Agreement dated as of May 24, 2007 by and among Forest Oil Corporation and Pacific Energy Resources Ltd., as amended on July 31, 2007 pursuant to Amendment No. 1 to Asset Sale Agreement. 3. Share Acquisition and Registration Rights Agreement, dated July 31, 2007, between Pacific Energy Resources Ltd. and Forest Oil Corporation. 4. Senior Subordinated Accreting Note dated August 24, 2007 made by Pacific Energy Resources Ltd. in favor of Forest Alaska Holding LLC, the obligations of which are guaranteed by Pacific Energy Alaska Holdings, LLC and Pacific Energy Alaska Operating LLC. 5. Counterpart Agreement to Senior Subordinated Accreting Note dated July 30, 2008 executed by Carneros Acquisition Corp., Carneros Energy, Inc. and Gotland Oil, Inc. 6. Unsecured Convertible Promissory Note in the face amount of $1,032,732.34 dated February 10, 2009 made by Pacific Energy Resources Ltd. in favor of Bateman & Co. 7. Amended and Restated Purchase and Sale Agreement, dated November 1, 2006, between Aera Energy, LLC and Pacific Energy Resources Ltd. 8. Purchase and Sale Agreement, dated November 13, 2006, between SWEPI LP and Pacific Energy Resources Ltd. 9. Purchase and Sale Agreement, dated February 28, 2007, between Noble Energy and Pacific Energy Resources Ltd. 10. Fuel Gas Agreement Between Forcenergy Inc. and Marathon Oil Company Dated December 30, 1996 (as assigned by Forest Oil Corporation, as successor in interest to Forcenergy Inc., to Pacific Energy Alaska Operating LLC pursuant to the Asset Sales Agreement). 11. Fuel Gas Supply Agreement between Forest Oil Corporation and Union Oil Company of California dated November 25, 2002 (as assigned by Forest Oil Corporation to Pacific Energy Alaska Operating LLC pursuant to the Asset Sales Agreement). 12. Agreement Regarding Throughput Charge By and Among Forcenergy Inc., SPC LLC, as successor to Stewart Petroleum Co. and The Medema Family Trust effective June 1, 1997, dated December 9, 1999 Consent to Assignment (as assigned by Forest Oil Corporation, as successor in interest to Forcenergy Inc., to Pacific Energy Alaska Operating LLC pursuant to the Asset Sales Agreement).

995220

Schedule 4.20 Page 2 of 5

SCHEDULE 4.20 (continued) TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT 13. Agreement Regarding Throughput Charge By and Among Forcenergy Inc., Stewart Petroleum Co. and WPS Energy Services, Inc. effective January 1, 1997, dated August 26, 1997 Consent to Assignment (as assigned by Forest Oil Corporation, as successor in interest to Forcenergy Inc., to Pacific Energy Alaska Operating LLC pursuant to the Asset Sales Agreement). 14. Agreement Regarding Throughput Charge by and among Forcenergy Inc., Stewart Petroleum Co., and Midcoast Energy Resources, Inc. dated July 29, 1997 (as assigned by Forest Oil Corporation, as successor in interest to Forcenergy Inc., to Pacific Energy Alaska Operating LLC pursuant to the Asset Sales Agreement). 15. Gas Transportation and Measurement Station Usage Agreement between Forest Oil Corporation, as Shipper, and Aurora Gas, LLC, as Transporter, dated October 27, 2005 (as assigned by Forest Oil Corporation to Pacific Energy Alaska Operating LLC pursuant to the Asset Sales Agreement). 16. Asset Sales Agreement between Pacific Energy Alaska Operating LLC and Pioneer Natural Resources Alaska, Inc. dated February 14, 2007. 17. Overriding Royalty Agreement between Pacific Energy Alaska Operating LLC and Pioneer Natural Resources Alaska, Inc. dated February 16, 2007. 18. Trading Bay Field Joint Operating Agreement by and between Union Oil Company of California and Marathon Oil Company dated June 12, 1996. 19. Unocal / Forest Oil Alignment Agreement Trading Bay Field / Trading Bay Unit dated January 1, 2002 by and between Union Oil Company of California and Forest Oil Corporation (as assigned by Forest Oil Corporation to Pacific Energy Alaska Operating LLC pursuant to the Asset Sales Agreement). 20. Unit Agreement for the Development and Operation of the Trading Bay Unit Area State of Alaska dated February 6, 1967 by Union Oil Company of California, as Operator, and Standard Oil Company of California, et. al, as non-Operators, as amended and including all Ratifications and Joinders. 21. Trading Bay Facilities Agreement between Union Oil Company of California dba Unocal Alaska and Forest Oil Company dated May 1, 2002 (as assigned by Forest Oil Corporation to Pacific Energy Alaska Operating LLC pursuant to the Asset Sales Agreement). 22. Amendment No. 1: Trading Bay Facilities Agreement dated effective April 16, 2007. 23. Joint Operating Agreement for Three Mile Creek Exploration Unit, Cook Inlet, Alaska by and between Aurora Gas, LLC, as Operator, and Forest Oil Corporation, as non-Operator, dated January 1, 2004 (as assigned by Forest Oil Corporation to Pacific Energy Alaska Operating LLC pursuant to the Asset Sales Agreement).

995220

Schedule 4.20 Page 3 of 5

SCHEDULE 4.20 (continued) TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT 24. Unit Operating Agreement Trading Bay Unit, dated September 1, 1970, by and between Union Oil Company of California, as Operator, and Marathon Oil Company, et. al. as nonOperators. 25. Reservation of Production Payment attached as Attachment I to Assignment of Bill of Sale, dated effective November 1, 2006, from Area Energy LLC to Pacific Energy Resources Ltd. 26. Reservation of Production Payment attached as Attachment I to Assignment of Bill of Sale, dated effective November 1, 2006, from SWEPI LP to Pacific Energy Resources Ltd. 27. Reservation of Production Payment attached as Attachment I to Assignment of Bill of Sale, dated effective November 1, 2006, from Noble Energy, Inc. to Pacific Energy Resources Ltd. 28. Sinking Fund Trust Agreement, dated as of November 1, 2006, between Pacific Energy Resources Ltd. and Aera Energy LLC. 29. Supplemental Bond For Decommissioning Liabilities Trust Agreement, dated March 1, 2007, among U.S. Bank National Association, Pacific Energy Resources Ltd., and The United States of America acting by and through the Minerals Management Service United States Department of the Interior. 30. Pipeline Operating Agreement dated as of March 12, 2008 by and between Pacific Energy Resources Ltd. and San Pedro Bay Pipeline Company. 31. Petroleum Pipeline Transportation Agreement, dated November 1, 2006, between Pacific Energy Resources Ltd. and San Pedro Bay Pipeline Company. 32. Offshore Daywork Drilling Contract dated March 7, 2008 between Blake Offshore, LLC and Pacific Energy Alaska Operating LLC, as amended by that certain Letter Agreement dated March 13, 2008 and that certain Letter Agreement dated April 7, 2008. 33. Agreement No. PRC 5636.1 General Lease Right of Way Use by and between the State of California, acting through the SLC, and San Pedro Bay Pipeline Company, dated March 25, 2008. 34. The undertaking by San Pedro Bay Pipeline Company of a surety bond in the amount of $3,000,000 in favor of the State of California pursuant to Agreement No. PRC 5636.1 General Lease Right of Way Use by and between the State of California, acting through the SLC, and San Pedro Bay Pipeline Company. 35. Contract for Transportation of Deck Cargo (Float-On/Float-Off) dated October 31, 2008 among Pacific Energy Resources Ltd., Escopeta Oil Co. Ltd. and Offshore Heavy Transport AS, which may become a Material Contract upon the occurrence of certain events. 36. Intercompany Promissory Note, dated as of December 19, 2008, made by Pacific Energy Alaska Operating LLC in favor of Pacific Energy Resources Ltd.

995220

Schedule 4.20 Page 4 of 5

SCHEDULE 4.20 (continued) TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT 37. Letter agreement, dated December 19, 2008, between Pacific Energy Resources Ltd. and Lazard Frres & Co. LLC. 38. Services Agreement, dated as of March 4, 2009, among Pacific Energy Resources Ltd., Scott W. Winn and Zolfo Cooper Management, LLC. 39. Commission and Exclusivity Agency Agreement, dated March 4, 2009, between Albrecht & Associates, Inc. and Pacific Energy Resources Ltd. 40. Letter agreement, dated February 11, 2009, among Pacific Energy Resources Ltd., Pacific Energy Alaska Operating LLC and Escopeta Oil Company, L.L.C. regarding Farm-out of Oil and Gas Lease bearing ADL Nos. 389923; 389507; 389514; 389513; 389197; 389196; 389198; and 389515, Cook Inlet Basin, Alaska. 41. Consulting Agreement, dated December 19, 2008, between Pacific Energy Resources Ltd. and Mark A. Clemans.

995220

Schedule 4.20 Page 5 of 5

SCHEDULE 4.22 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Certain Fees Fees payable to Lazard Frres & Co. LLC pursuant to that certain letter agreement, dated December 19, 2008, between Pacific Energy Resources Ltd. and Lazard Frres & Co. LLC. Fees payable to Scott W. Winn and Zolfo Cooper Management, LLC pursuant to that certain Services Agreement, dated as of March 4, 2009, among Pacific Energy Resources Ltd., Scott W. Winn and Zolfo Cooper Management, LLC. Fees payable to Albrecht & Associates, Inc. pursuant to that certain Commission and Exclusivity Agency Agreement, dated March 4, 2009, between Albrecht & Associates, Inc. and Pacific Energy Resources Ltd. Fees payable to Mark A. Clemans pursuant to that certain Consulting Agreement, dated December 19, 2008, between Pacific Energy Resources Ltd. and Mark A. Clemans.

995220

Schedule 4.22 Page 1 of 1

SCHEDULE 4.23 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Leases and Contracts; Performance of Obligations Pacific Energy Resources Ltd. has failed to make certain production payments as required by the Reservation of Production Payments attached as Attachment I to each of the certain Assignment of Bill of Sale, dated effective November 1, 2006, from each of Area Energy LLC, SWEPI LP and Noble Energy, Inc. to Pacific Energy Resources Ltd. Pacific Energy Alaska Operating LLC has failed to pay certain joint interest billings to Chevron. Chevron has the right under the joint operating agreement to place a lien on Pacific Energy Alaska Operating LLCs share of production if its joint interest billings are not paid on time. Chevron has exercised, and continues to exercise, this right, the effect of which is to offset Pacific Energy Alaska Operating LLCs share of production to reduce the joint interest billings owed by Pacific Energy Alaska Operating LLC to Chevron. Due to failure to comply with DNR requirements, Pacific Energy Alaska Operating LLC has lost its rights to the Corsair prospect (oil and gas leases bearing ADL Nos. 389923; 389507; 389514; 389513; 389197; 389196; 389198; and 389515). It is possible that Pacific Energy Resources Ltd. and Pacific Energy Alaska Operating LLC may obtain some future payment from the Corsair prospect pursuant to that certain letter agreement, dated February 11, 2009, among Pacific Energy Resources Ltd., Pacific Energy Alaska Operating LLC and Escopeta Oil Company, L.L.C. regarding Farm-out of Oil and Gas Lease bearing ADL Nos. 389923; 389507; 389514; 389513; 389197; 389196; 389198; and 389515, Cook Inlet Basin, Alaska.

995220

Schedule 4.23 Page 1 of 1

SCHEDULE 4.24 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Marketing Arrangements Pacific Energy Alaska Operating LLC has failed to pay certain joint interest billings to Chevron. Chevron has the right under the joint operating agreement to place a lien on Pacific Energy Alaska Operating LLCs share of production if its joint interest billings are not paid on time. Chevron has exercised, and continues to exercise, this right, the effect of which is to offset Pacific Energy Alaska Operating LLCs share of production to reduce the joint interest billings owed by Pacific Energy Alaska Operating LLC to Chevron. The previous oil sales contract between Pacific Energy Alaska Operating LLC and Tesoro Refining and Marketing Company expired in December 2008. Pacific Energy Alaska Operating LLC and Tesoro Refining and Marketing Company are currently operating without a contract. Under a proposed new contract that is substantially negotiated is expect to have an initial term of one year with additional automatic extensions that may not be terminable upon 120 days (or less) notice.

995220

Schedule 4.24 Page 1 of 1

SCHEDULE 4.25 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Right to Received Payment for Future Production None.

995220

Schedule 4.25 Page 1 of 1

SCHEDULE 4.26 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Operation of Oil and Gas Properties West MacArthur River Unit well #5 is down due to tubing issue.

995220

Schedule 4.26 Page 1 of 1

SCHEDULE 4.28 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Employment Agreements Amended and Restated Executive Employment Agreement, dated as of January 1, 2008, between Pacific Energy Resources Ltd. and Darren Katic. Amended and Restated Executive Employment Agreement, dated as of January 1, 2008, between Pacific Energy Resources Ltd. and Vladimir Katic. Amended and Restated Executive Employment Agreement, dated as of November 7, 2008, between Pacific Energy Resources Ltd. and Gerald Tywoniuk. Amended and Restated Employment Agreement, dated as of November 7, 2008, between Pacific Energy Resources Ltd. and John Rainwater. Amended and Restated Employment Agreement, dated as of November 7, 2008, between Pacific Energy Resources Ltd. and Steve Liles. Employment Agreement, dated as of March 1, 2007, between Pacific Energy Resources Ltd. and Robert Pyle, as amended by First Amendment to Employment Agreement dated as of December 10, 2007. Employment Agreement, dated as of October 9, 2007, between Pacific Energy Resources Ltd. and Joseph Kilchrist.

995220

Schedule 4.28 Page 1 of 1

SCHEDULE 4.29 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Capitalization The information set forth in Schedule 4.14 is hereby incorporated by reference into this Schedule 4.29.

995220

Schedule 4.29 Page 1 of 1

SCHEDULE 4.30 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Insider Interests Unsecured Convertible Promissory Note in the face amount of $1,032,732.34 dated February 10, 2009 made by Pacific Energy Resources Ltd. in favor of Bateman & Co., if and to the extent payment comes due thereunder. Bateman & Co. is a stockholder of Pacific Energy Resources Ltd. Options and warrants held by officers, directors, employees and/or stockholders of Pacific Energy Resources Ltd. and set forth on Attachment 4.14 to Schedule 4.14 are incorporated by reference into this Schedule 4.30. Certain employees and consultants of Pacific Energy Resources Ltd. and/or its subsidiaries receive annual compensation in an amount in excess of $100,000 in the ordinary course of their respective employment or consulting arrangements. Pipeline Operating Agreement dated as of March 12, 2008 by and between Pacific Energy Resources Ltd. and San Pedro Bay Pipeline Company. Petroleum Pipeline Transportation Agreement, dated November 1, 2006, between Pacific Energy Resources Ltd. and San Pedro Bay Pipeline Company. Intercompany Operating Agreement, dated May 20, 2008, between Pacific Energy Resources Ltd. and Pacific Energy Alaska Operating LLC. Transaction Documents and Prepetition Transaction Documents. Intercompany Promissory Note, dated as of December 19, 2008, made by Pacific Energy Alaska Operating LLC in favor of Pacific Energy Resources Ltd.

995220

Schedule 4.30 Page 1 of 1

SCHEDULE 4.31 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Insurance None.

995220

Schedule 4.31 Page 1 of 1

SCHEDULE 6.1 TO SENIOR SECURED SUPER PRIORITY DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Indebtedness Schedule 6.1(i) Joint interest billings due to Chevron, the amount of which on the Closing Date equals approximately $ $20.1 million. This amount will (x) increase by the amount of subsequent joint interest billings plus interest on existing and subsequent joint interest billings and (y) decrease by the value of production taken in kind by Chevron.

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Schedule 6.1 Page 1 of 1

EXHIBIT A TO SENIOR SECURED SUPER PRIORITY PRIMING DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Funding Notice Reference is made to the Senior Secured Super Priority Priming Debtor in Possession Credit and Guaranty Agreement, dated as of March 11, 2009 (as it may be amended, supplemented or otherwise modified, the Credit Agreement; the terms used and not defined herein shall have the meaning given them in the Credit Agreement), by and among PACIFIC ENERGY RESOURCES LTD., a Delaware corporation (PERL), PACIFIC ENERGY ALASKA HOLDINGS, LLC, a Delaware limited liability company (PEAH), PACIFIC ENERGY ALASKA OPERATING LLC, a Delaware limited liability company (PEAO and, together with PERL and PEAH, the Borrowers), certain Subsidiaries of PERL, the Lenders party thereto from time to time, J. ARON & COMPANY, as Lead Arranger and Syndication Agent, J. ARON & COMPANY, as Administrative Agent (in such capacity, Administrative Agent), and J. ARON & COMPANY and SILVER POINT FINANCE, LLC, each as Collateral Agent for such Lenders. [Pursuant to Section 2.1 of the Credit Agreement, the Borrowers desire that Lenders make Revolving Loans to the Borrowers in accordance with the applicable terms and conditions of the Credit Agreement on [mm/dd], 2009 (the Credit Date) in the aggregate principal amount of $__________.][Pursuant to Section 2.1 of the Credit Agreement, the Borrowers desire that the Lenders make the PERL Term Loans in the aggregate principal amount of $__________, the PEAO Term Loans in the aggregate principal amount of $__________, and the Revolving Loans in the aggregate principal amount of $__________, in accordance with the applicable terms and conditions of the Credit Agreement on the Closing Date.]1 Borrowers hereby direct and request Administrative Agent to deduct from such Loans, and to pay on Borrowers behalf, any payments owed by Borrowers pursuant to that certain payment letter dated as of the Closing Date, among Borrowers and Administrative Agent and referenced in Section 2.8 of the Credit Agreement. Borrowers hereby certify that as of the date hereof and after giving effect to the Loans requested herein, the conditions specified in Section 3.2 of the Credit Agreement have been satisfied.

Use second option for initial Funding Notice only.

Exhibit A
A/72858658.6

This Funding Notice is delivered as of [mm/dd], 2009, pursuant to Section 2.1(e) of the Credit Agreement. BORROWERS: PACIFIC ENERGY RESOURCES LTD. By: Name: Title:

PACIFIC ENERGY ALASKA HOLDINGS, LLC By: Name: Title:

PACIFIC ENERGY ALASKA OPERATING LLC By: Name: Title:

A/72858658.6

EXHIBIT B TO SENIOR SECURED SUPER PRIORITY PRIMING DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Note $__________ [__________ __], 2009 New York, New York

FOR VALUE RECEIVED, PACIFIC ENERGY RESOURCES LTD., a Delaware corporation (PERL), PACIFIC ENERGY ALASKA HOLDINGS, LLC, a Delaware limited liability company (PEAH) and PACIFIC ENERGY ALASKA OPERATING LLC, a Delaware limited liability company (PEAO, and together with PERL and PEAH, the Borrowers), each jointly and severally promise to pay to the order of [NAME OF LENDER] (Payee) or its registered assigns, on or before the Maturity Date (as defined in the Credit Agreement referred to below), [the lesser of (a) _______________ ($__________) and (b) the aggregate unpaid principal amount of all [PERL Term Loans][PEAO Term Loans]][the principal amount of each Revolving Loan from time to time]1 made by Payee to Borrowers under the Credit Agreement referred to below. Borrowers also jointly and severally promise to pay interest on the unpaid principal amount hereof, from the date hereof until paid in full, at the rates and at the times which shall be determined in accordance with the provisions of that certain Senior Secured Super Priority Priming Debtor in Possession Credit and Guaranty Agreement, dated as of March 11, 2009 (as it may be amended, supplemented or otherwise modified, the Credit Agreement; the terms used and not defined herein shall have the meaning given them in the Credit Agreement), by and among the Borrowers, certain Subsidiaries of PERL, the Lenders party thereto from time to time, J. ARON & COMPANY, as Lead Arranger and Syndication Agent, J. ARON & COMPANY, as Administrative Agent, and J. ARON & COMPANY and SILVER POINT FINANCE, LLC, each as Collateral Agent for such Lenders. This Note is one of the Notes under the Credit Agreement and is issued pursuant to and entitled to the benefits of the Credit Agreement, to which reference is hereby made for a more complete statement of the terms and conditions under which the Loans evidenced hereby were made and are to be repaid. All payments of principal and interest in respect of this Note shall be made in lawful money of the United States of America in same day funds at the Principal Office of Administrative Agent or at such other place as shall be designated in writing by the Administrative Agent for such purpose in accordance with the terms of the Credit Agreement. Unless and until an Assignment Agreement effecting the assignment or transfer of the obligations evidenced hereby shall have been received by Administrative Agent and recorded in the Register, Borrowers, each Agent and Lenders shall be entitled to deem and treat Payee as the owner and holder of this Note and the obligations evidenced hereby. Payee hereby agrees, by its acceptance hereof, that before disposing of this Note or any part hereof it will make a notation hereon of all principal payments
1

Choose applicable option for PERL Term Loan, PEAO Term Loan or Revolving Loan.

Exhibit B
A/72858658.6

previously made hereunder and of the date to which interest hereon has been paid; provided, the failure to make a notation of any payment made on this Note shall not limit or otherwise affect the obligations of any Borrower hereunder with respect to payments of principal of or interest on this Note. This Note is subject to mandatory prepayment and to prepayment at the option of the Borrowers, each as provided in the Credit Agreement. THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE BORROWERS AND PAYEE HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN THE NEW YORK GENERAL OBLIGATIONS LAW 5-1401 AND 5-1402) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA (INCLUDING THE BANKRUPTCY CODE). The provisions of Sections 10.14 and 10.15 of the Credit Agreement are hereby incorporated by reference in all respects. Upon the occurrence of an Event of Default, the unpaid balance of the principal amount of this Note, together with all accrued and unpaid interest thereon, may become, or may be declared to be, due and payable in the manner, upon the conditions and with the effect provided in the Credit Agreement. The terms of this Note are subject to amendment only in the manner provided in the Credit Agreement. No reference herein to the Credit Agreement and no provision of this Note or the Credit Agreement shall alter or impair the joint and several obligations of any Borrower, which are absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed. Borrowers jointly and severally promise to pay all costs and expenses, including reasonable attorneys fees, all as provided in the Credit Agreement, incurred in the collection and enforcement of this Note. Borrowers and any endorsers of this Note hereby consent to renewals and extensions of time at or after the maturity hereof, without notice, and hereby waive diligence, presentment, protest, demand notice of every kind and, to the full extent permitted by law, the right to plead any statute of limitations as a defense to any demand hereunder. [Signature page follows.]

Exhibit B - Page 2
A/72858658.6

IN WITNESS WHEREOF, Borrowers have caused this Note to be duly executed and delivered by their respective officer thereunto duly authorized as of the date and at the place first written above. BORROWERS: PACIFIC ENERGY RESOURCES LTD. By: Name: Title:

PACIFIC ENERGY ALASKA HOLDINGS, LLC By: Name: Title:

PACIFIC ENERGY ALASKA OPERATING LLC By: Name: Title:

Exhibit B - Page 3
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TRANSACTIONS ON NOTE
Date Amount of Loan Made This Date Amount of Principal Outstanding Principal Notation Paid This Date Balance This Date Made By

Exhibit B - Page 4
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EXHIBIT C-1 TO SENIOR SECURED SUPER PRIORITY PRIMING DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Compliance Certificate THE UNDERSIGNED HEREBY CERTIFIES AS FOLLOWS: 1. I am the Chief Financial Officer of PACIFIC ENERGY RESOURCES LTD., a Delaware corporation (PERL). 2. I have reviewed the terms of that certain Senior Secured Super Priority Priming Debtor in Possession Credit and Guaranty Agreement, dated as of March 11, 2009 (as it may be amended, supplemented or otherwise modified, the Credit Agreement; the terms used and not defined herein shall have the meaning given them in the Credit Agreement), by and among PERL, PEAH, PEAO, certain Subsidiaries of PERL, the Lenders party thereto from time to time, J. ARON & COMPANY, as Lead Arranger and Syndication Agent, J. ARON & COMPANY, as Administrative Agent, and J. ARON & COMPANY and SILVER POINT FINANCE, LLC, each as Collateral Agent for such Lenders, and each of the other Transaction Documents (as defined in the Credit Agreement), and I have made, or have caused to be made under my supervision, a review in reasonable detail of the transactions and condition of PERL and its Subsidiaries during the accounting period covered by the attached [production and financial report] [financial statements]1. 3. The examination described in paragraph 2 above did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes an Event of Default or Default during or at the end of the accounting period covered by the attached [production and financial report or] [financial statements or] as of the date of this Compliance Certificate, except as set forth in a separate attachment, if any, to this Compliance Certificate, describing in detail, the nature of the condition or event, the period during which it has existed and the action which PERL has taken, is taking, or proposes to take with respect to each such condition or event. 4. The [production and financial report] [financial statements] and the computations attached hereto pursuant to Section 5.2(b) or 5.2(f), as applicable, are accurate and complete (subject to normal year-end adjustments) and satisfy the requirements of the Credit Agreement.

For each set of bracketed items, use the first option for Compliance Certificates to be delivered pursuant to Section 5.2(f) and the second option for Compliance Certificates to be delivered pursuant to Section 5.2(b).

Exhibit C-1
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The foregoing certifications, together with the computations set forth in the Annex A hereto and the [production and financial report][financial statements] delivered with this Compliance Certificate in support hereof, are made and delivered as of [mm/dd], 2009 pursuant to Section 5.2(b) or Section 5.2(f), as applicable, of the Credit Agreement.

PACIFIC ENERGY RESOURCES LTD. By: Name: Title: Chief Financial Officer

Exhibit C-1
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ANNEX A TO COMPLIANCE CERTIFICATE FOR THE [CALENDAR WEEK] [FISCAL [QUARTER][YEAR]] ENDING [mm/dd], 2009

[Attach Calculations]

Annex A
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EXHIBIT C-2 TO SENIOR SECURED SUPER PRIORITY PRIMING DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Environmental Compliance Certificate Reference is made to the Senior Secured Super Priority Priming Debtor in Possession Credit and Guaranty Agreement, dated as of March 11, 2009 (as it may be amended, supplemented or otherwise modified, the Credit Agreement; the terms used and not defined herein shall have the meaning given them in the Credit Agreement), by and among PACIFIC ENERGY RESOURCES LTD., a Delaware corporation (PERL), PACIFIC ENERGY ALASKA HOLDINGS, LLC, a Delaware limited liability company (PEAH), PACIFIC ENERGY ALASKA OPERATING LLC, a Delaware limited liability company (PEAO and, together with PERL and PEAH, the Borrowers), certain Subsidiaries of PERL, the Lenders party thereto from time to time, J. ARON & COMPANY, as Lead Arranger and Syndication Agent, J. ARON & COMPANY, as Administrative Agent (in such capacity, Administrative Agent), and J. ARON & COMPANY and SILVER POINT FINANCE, LLC, each as Collateral Agent for such Lenders. The undersigned, being the [President/Chief Executive Officer] of each of the Borrowers hereby certifies to Administrative Agent and Lenders as follows: 1. For the 2008 and 2009 Fiscal Year, Borrowers and the other Subsidiaries of PERL have complied and are complying with Section 5.12 of the Agreement [except as set forth in Schedule I attached hereto]; 2. To the best knowledge of the undersigned after due inquiry, Borrowers and the other Subsidiaries of PERL are, as of the date hereof, in compliance with all applicable Environmental Laws, noncompliance with which could cause a Material Adverse Effect; 3. Borrowers and the other Subsidiaries of PERL have taken (and continue to take) all necessary, advisable and required steps to minimize the generation of potentially harmful effluents; 4. Borrowers have established an ongoing program of conducting an internal audit of each operating facility of Borrowers and the other Subsidiaries of PERL to identify actual or potential environmental liabilities which could cause a Material Adverse Effect; and 5. Borrowers and the other Subsidiaries of PERL have established an ongoing program of training its employees in issues of environmental, health and safety compliance, and Borrowers and the other Subsidiaries of PERL presently have one or more individuals in charge of implementing such training program. The officer signing this instrument hereby certifies that, to the best of his knowledge after due inquiry and consultation with the operating officers of each of the Borrowers and the other Subsidiaries of PERL, the above representations, warranties, acknowledgments, and agreements of the Borrowers are true, correct and complete. [Signature page follows.] Exhibit C-2
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IN WITNESS WHEREOF, this instrument is executed as of March __, 2009. PACIFIC ENERGY RESOURCES LTD. By: Name: Title: President

PACIFIC ENERGY ALASKA HOLDINGS, LLC By: Name: Title: President

PACIFIC ENERGY ALASKA OPERATING LLC By: Name: Title: President

Exhibit C-2
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EXHIBIT D TO SENIOR SECURED SUPER PRIORITY PRIMING DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Assignment Agreement This Assignment Agreement (the Assignment) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the Assignor) and [Insert name of Assignee] (the Assignee). Capitalized terms used but not defined herein shall have the meanings given to them in the Senior Secured Super Priority Priming Debtor in Possession Credit and Guaranty Agreement identified below (as it may be amended, supplemented or otherwise modified from time to time, the Credit Agreement), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed are hereby agreed to and incorporated herein by reference and made a part of this Assignment as if set forth herein in full. For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below, (i) the interest in and to all of the Assignors rights and obligations under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of the Assignors outstanding rights and obligations under the respective facilities identified below including without limitation any guarantees included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by the Assignor to the Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as the Assigned Interest). Each such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and the Credit Agreement, without representation or warranty by the Assignor. 1. 2. 3. Assignor: Assignee: [and is an Affiliate/Related Fund[****]] Borrowers: Pacific Energy Resources Ltd. Pacific Energy Alaska Holdings, LLC Pacific Energy Alaska Operating LLC Exhibit D
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4. 5.

Administrative Agent: Credit Agreement:

J. Aron & Company, as Administrative Agent under the Credit Agreement The Senior Secured Super Priority Priming Debtor in Possession Credit and Guaranty Agreement, dated as of March 11, 2009, by and among Pacific Energy Resources Ltd., a Delaware corporation (PERL), Pacific Energy Alaska Holdings, LLC, a Delaware limited liability company, Pacific Energy Alaska Operating LLC, a Delaware limited liability company, certain Subsidiaries of PERL, the Lenders party thereto from time to time, J. Aron & Company, as Lead Arranger and Syndication Agent, Administrative Agent, and J. Aron & Company and Silver Point Finance, LLC, each as Collateral Agent for such Lenders

6.

Assigned Interest: Aggregate Amount of Commitment/Loans Facility for all Lenders Assigned $__________ $__________ $__________ Amount of Commitment/Loans Assigned Percentage Assigned of Commitment/Loans $__________ $__________ $__________

[________] $__________ [________] $__________ [________] $__________

Effective Date: __________, 2009 [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.] 7. Notice and Wire Instructions: [NAME OF ASSIGNOR] Notices: [NAME OF ASSIGNEE] Notices:

Attention: Telecopier: with a copy to:

Attention: Telecopier: with a copy to:

Exhibit D - Page 2
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Attention: Telecopier: Wire Instructions:

Attention: Telecopier: Wire Instructions:

Exhibit D - Page 3
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The terms set forth in this Assignment are hereby agreed to: ASSIGNOR [NAME OF ASSIGNOR] By: Name: Title: ASSIGNEE [NAME OF ASSIGNEE] By: Name: Title:

Exhibit D - Page 4
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ANNEX 1 STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AGREEMENT 1. Representations and Warranties. 1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with any Transaction Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document delivered pursuant thereto, other than this Assignment (herein collectively the Transaction Documents), or any collateral thereunder, (iii) the financial condition of PERL, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Transaction Document or (iv) the performance or observance by the Borrowers, any of the Subsidiaries or Affiliates of PERL or any other Person of any of their respective obligations under any Transaction Document. Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Sections 5.2(a) and 5.2(b) thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and to purchase the Assigned Interest on the basis of which it has made such analysis and decision, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and to purchase the Assigned Interest, and (vii) if it is a Non US Lender, attached to the Assignment is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance Exhibit D - Page 5
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1.2

on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at that time, continue to make its own credit decisions in taking or not taking action under the Transaction Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Transaction Documents are required to be performed by it as a Lender. 2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date. General Provisions. This Assignment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment by telecopy or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Assignment. This Assignment shall be governed by, and shall be construed and enforced in accordance with, the laws of the State of New York without regard to conflict of laws principles thereof (other than the New York General Obligations Law 5-1401 and 5-1402) and any applicable laws of the United States of America (including the Bankruptcy Code).

3.

Exhibit D - Page 6
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EXHIBIT E TO SENIOR SECURED SUPER PRIORITY PRIMING DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Certificate Regarding Non Bank Status Reference is made to the Senior Secured Super Priority Priming Debtor in Possession Credit and Guaranty Agreement, dated as of March 11, 2009 (as it may be amended, supplemented or otherwise modified, the Credit Agreement; the terms used and not defined herein shall have the meaning given them in the Credit Agreement), by and among PACIFIC ENERGY RESOURCES LTD., a Delaware corporation (PERL), PACIFIC ENERGY ALASKA HOLDINGS, LLC, a Delaware limited liability company (PEAH), PACIFIC ENERGY ALASKA OPERATING LLC, a Delaware limited liability company (PEAO and, together with PERL and PEAH, the Borrowers), certain Subsidiaries of PERL, the Lenders party thereto from time to time, J. ARON & COMPANY, as Lead Arranger and Syndication Agent, J. ARON & COMPANY, as Administrative Agent (in such capacity, Administrative Agent), and J. ARON & COMPANY and SILVER POINT FINANCE, LLC, each as Collateral Agent for such Lenders. Pursuant to Section 2.14(e) of the Credit Agreement, the undersigned hereby certifies that it is not a bank or other Person described in Section 881(c)(3) of the Internal Revenue Code of 1986, as amended. [NAME OF LENDER] By: Name: Title:

Exhibit E
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EXHIBIT F TO SENIOR SECURED SUPER PRIORITY PRIMING DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Closing Date Certificate THE UNDERSIGNED HEREBY CERTIFY AS FOLLOWS: 1. We are, respectively, the [president][chief executive officer] and the chief financial officer of PACIFIC ENERGY RESOURCES LTD., a Delaware corporation (PERL), PACIFIC ENERGY ALASKA HOLDINGS, LLC, a Delaware limited liability company (PEAH), PACIFIC ENERGY ALASKA OPERATING LLC, a Delaware limited liability company (PEAO, and together with PERL and PEAH, the Borrowers). 2. We have reviewed the terms of the Senior Secured Super Priority Priming Debtor in Possession Credit and Guaranty Agreement, dated as of March 11, 2009 (the Credit Agreement; capitalized terms used but not defined herein have the meanings assigned to such terms in the Credit Agreement), by and among Borrowers, certain Subsidiaries of PERL, the Lenders party thereto from time to time, J. ARON & COMPANY, as Lead Arranger and Syndication Agent, J. ARON & COMPANY as Administrative Agent, and J. ARON & COMPANY and SILVER POINT FINANCE, LLC, each as Collateral Agent for such Lenders, and in our opinion we have made, or have caused to be made under our supervision, such examination or investigation as is necessary to enable us to express an informed opinion as to the matters referred to herein. 3. Based upon our review and examination described in paragraph 2 above, we certify, on behalf of Borrowers, that as of the date hereof: (a) as of the Closing Date, the representations and warranties contained in each of the Transaction Documents are true, correct and complete in all respects on and as of the Closing Date to the same extent as though made on and as of such date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties are true, correct and complete in all respects on and as of such earlier date; (b) as of the Closing Date, no injunction or other restraining order has been issued and no hearing to cause an injunction or other restraining order to be issued is pending or noticed with respect to any action, suit or proceeding seeking to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated by the Credit Agreement; (c) as of the Closing Date, no event has occurred and is continuing or would result from the consummation of the borrowing contemplated on the Closing Date that would constitute an Event of Default or a Default; (d) as of the Closing Date, there has been no change in (i) the business, condition, operations, assets or prospects of the Borrowers and their Subsidiaries (taken as a whole) since the Petition Date, (ii) the ability of any Borrowers or Guarantors to Exhibit F
A/72858658.6

perform their respective obligations under the Transaction Documents or (iii) the ability of the Lenders to enforce the Transaction Documents and the obligations of the Borrowers and Guarantors thereunder that would, in each case, have a Material Adverse Effect; (e) as of the Closing Date, (i) each Credit Party has obtained all Governmental Authorizations and all consents of other Persons, in each case that are necessary or advisable to be obtained on or prior to the Closing Date in connection with the transactions contemplated by the Transaction Documents, each of which is in full force and effect, (ii) all applicable waiting periods have expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose adverse conditions on the transactions contemplated by the Transaction Documents or the financing thereof, (iii) no action, request for stay, petition for review or rehearing, reconsideration, or appeal with respect to any of the foregoing is pending and (iv) the time for any applicable agency to take action to set aside its consent on its own motion has expired; and (f) attached hereto as Exhibit A is a true, correct and complete description of the authorized and issued outstanding Capital Stock of PERL and each of its Subsidiaries, including the holders thereof, as of March 9, 2009. [Signature page follows.]

Exhibit F - Page 2
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The foregoing certifications are made and delivered as of March 11, 2009.

PACIFIC ENERGY RESOURCES LTD. By: Name: Title: [President][Chief Executive Officer] By: Name: Title: Chief Financial Officer

PACIFIC ENERGY ALASKA HOLDINGS, LLC By: Name: Title: [President][Chief Executive Officer] By: Name: Title: Chief Financial Officer

PACIFIC ENERGY ALASKA OPERATING LLC By: Name: Title: [President][Chief Executive Officer] By: Name: Title: Chief Financial Officer

Exhibit F - Page 3
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Exhibit A (attach capitalization chart)

Exhibit F - Page 4
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EXHIBIT G TO SENIOR SECURED SUPER PRIORITY PRIMING DEBTOR IN POSSESSION CREDIT AND GUARANTY AGREEMENT Counterpart Agreement This COUNTERPART AGREEMENT, dated [mm/dd], 2009 (this Counterpart Agreement) is delivered pursuant to that certain Senior Secured Super Priority Priming Debtor in Possession Credit and Guaranty Agreement, dated as of March 11, 2009 (as it may be amended, supplemented or otherwise modified, the Credit Agreement; the terms used and not defined herein shall have the meaning given them in the Credit Agreement), by and among PACIFIC ENERGY RESOURCES LTD., a Delaware corporation (PERL), PACIFIC ENERGY ALASKA HOLDINGS, LLC, a Delaware limited liability company (PEAH), PACIFIC ENERGY ALASKA OPERATING LLC, a Delaware limited liability company (PEAO and, together with PERL and PEAH, the Borrowers), certain Subsidiaries of PERL, the Lenders party thereto from time to time, J. ARON & COMPANY, as Lead Arranger and Syndication Agent, J. ARON & COMPANY, as Administrative Agent (in such capacity, Administrative Agent), and J. ARON & COMPANY and SILVER POINT FINANCE, LLC, each as Collateral Agent for such Lenders. Section 1. Pursuant to Section 5.14 of the Credit Agreement, the undersigned (the Additional Guarantor) hereby: (a) agrees that this Counterpart Agreement may be attached to the Credit Agreement and that by the execution and delivery hereof, the undersigned becomes a Guarantor under the Credit Agreement and agrees to be bound by all of the terms thereof; (b) represents and warrants that each of the representations and warranties set forth in the Credit Agreement and each other Transaction Document and applicable to the undersigned is true and correct both before and after giving effect to this Counterpart Agreement, except to the extent that any such representation and warranty specifically relates to an earlier date, in which case such representation and warranty is true and correct as of such earlier date; (c) represents and warrants that no event has occurred or is continuing as of the date hereof, or will result from the transactions contemplated hereby, that would constitute an Event of Default or a Default; (d) agrees to irrevocably and unconditionally guaranty the due and punctual payment in full of all Obligations when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. 362(a)) and in accordance with Section 7.2 of the Credit Agreement; and Section 2. The undersigned agrees from time to time, upon request of Administrative Agent or the Required Lenders, to take such additional actions and to execute and deliver such additional documents and instruments as Administrative Agent or the Required Lenders may request to effect the transactions contemplated by, and to carry out the intent of, this Counterpart Exhibit G
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Agreement. Neither this Counterpart Agreement nor any term hereof may be changed, waived, discharged or terminated, except by an instrument in writing signed by the Additional Guarantor, the Borrowers and the Administrative Agent (upon the consent of the Required Lenders). Any notice or other communication herein required or permitted to be given shall be given in pursuant to Section 10.1 of the Credit Agreement, and all for purposes thereof, the notice address of the undersigned shall be the address as set forth on the signature page hereof. In case any provision in or obligation under this Counterpart Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. The provisions of Sections 10.14 and 10.15 of the Credit Agreement are hereby incorporated by reference in all respects. THIS COUNTERPART AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN THE NEW YORK GENERAL OBLIGATIONS LAW 5-1401 AND 5-1402) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA (INCLUDING THE BANKRUPTCY CODE). [Signature pages follow.]

Exhibit G - Page 2
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IN WITNESS WHEREOF, the undersigned has caused this Counterpart Agreement to be duly executed and delivered by its duly authorized officer as of the date above first written. [NAME OF SUBSIDIARY] By: Name: Title: Address for Notices:

Attention: Telecopier: with a copy to:

Attention: Telecopier:

Exhibit G - Page 3
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ACKNOWLEDGED AND ACCEPTED, as of the date above first written: J. ARON & COMPANY, as Administrative Agent By: Name: Title:

Exhibit G - Page 4
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J. ARON & COMPANY 85 Broad Street New York, New York 10044

PERSONAL AND CONFIDENTIAL March 11, 2009 Pacific Energy Resources Ltd. 111 West Ocean Blvd., Suite 1240 Long Beach, California 90802 Attention: Darren Katic, President Payment Letter Dear Mr. Katic: This is the letter (this Letter) referenced in Section 2.8 of that certain Senior Secured Super Priority Priming Debtor in Possession Credit and Guaranty Agreement, dated as of the date hereof (as it may be amended, restated, supplemented or otherwise modified from time to time, the Credit Agreement), by and among Pacific Energy Resources Ltd., a Delaware corporation (PERL), Pacific Energy Alaska Holdings, LLC, a Delaware limited liability company (PEAH), Pacific Energy Alaska Operating LLC, a Delaware limited liability company (PEAO and, together with PERL and PEAH, the Borrowers), certain Subsidiaries of PERL, as guarantors (the Guarantors), the lenders party thereto from time to time (the Lenders), J. ARON & COMPANY, as administrative agent (in such capacity, the Administrative Agent), lead arranger, syndication agent, and a collateral agent, and SILVER POINT FINANCE, LLC, as a collateral agent. Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Credit Agreement. In addition to any payments or other amounts payable by the Borrowers to the Administrative Agent and the Lenders under the terms of the Credit Agreement and the other Transaction Documents, the Borrowers jointly and severally hereby agree to pay the Administrative Agent, in each case for the account of each Lender in accordance with its Pro Rata Share, the following amounts: 1. A commitment payment (the Commitment Payment) equal to 0.75% times the actual daily amount by which the aggregate Commitments exceed the sum of the outstanding amount of all Loans. The Commitment Payment shall accrue at all times during the term of the Credit Agreement, including at any time during which one or more of the conditions in Section 3 is not met, and shall be due and payable monthly in arrears on the last Business Day of each month, commencing with the first such date to occur after the Closing Date, and on the Maturity Date. 2. A facility payment (the Facility Payment) equal to $1,000,000, which shall accrue interest at the Effective Rate for the period commencing on the date hereof through the 1
A/72858124.4

Maturity Date and shall be due and payable to the Administrative Agent on the earlier to occur of (i) the Maturity Date or (ii) the date on which the Borrowers may elect to make such Facility Payment. All fees and amounts hereunder shall be earned in full when payable, and shall be nonrefundable. Please note that this Letter is exclusively for the information of the Board of Directors (or similar governing body) and senior management, including the Chief Restructuring Officer, of the Borrowers and may not be disclosed to any third party or circulated or referred to publicly without our prior written consent except as permitted under the terms of the Credit Agreement or the Order. THIS LETTER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN THE NEW YORK GENERAL OBLIGATIONS LAW 5-1401 AND 5-1402) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA (INCLUDING THE BANKRUPTCY CODE). [Remainder of page intentionally left blank.]

2
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EXECUTION VERSION

PLEDGE AND SECURITY AGREEMENT

dated as of March 11, 2009 between EACH OF THE GRANTORS PARTY HERETO

and J. ARON & COMPANY, as the Collateral Agent

A/72858066.7

TABLE OF CONTENTS Page SECTION 1. 1.1 1.2 SECTION 2. 2.1 2.2 2.3 2.4 SECTION 3. 3.1 3.2 SECTION 4. 4.1 4.2 4.3 4.4 4.5 4.6 SECTION 5. 5.1 5.2 5.3 SECTION 6. 6.1 6.2 SECTION 7. 7.1 7.2 7.3 7.4 7.5 7.6 7.7 DEFINITIONS................................................................................................. 2 General Definitions................................................................................................ 2 Definitions; Interpretation...................................................................................... 8 GRANT OF SECURITY ................................................................................. 8 Grant of Security.................................................................................................... 8 The Order ............................................................................................................... 9 Carve-Out Amount; Other Liens ........................................................................... 9 Certain Limited Exclusions.................................................................................... 9 SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE........ 10 Security for Obligations....................................................................................... 10 Continuing Liability Under Collateral ................................................................. 10 REPRESENTATIONS AND WARRANTIES AND COVENANTS........... 10 Generally.............................................................................................................. 10 Investment Related Property; Investment Related Property Generally ............... 12 Pledged Equity Interests ...................................................................................... 14 Investment Accounts............................................................................................ 16 Letter of Credit Rights ......................................................................................... 17 Commercial Tort Claims...................................................................................... 17 ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS ............................................ 17 Access; Right of Inspection ................................................................................. 18 Further Assurances............................................................................................... 18 Additional Grantors ............................................................................................. 19 COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT................ 19 Power of Attorney................................................................................................ 19 No Duty on the Part of Collateral Agent or Lender Parties................................. 20 REMEDIES.................................................................................................... 20 Generally.............................................................................................................. 20 Application of Proceeds....................................................................................... 22 Sales on Credit ..................................................................................................... 23 Deposit Accounts ................................................................................................. 23 Investment Related Property................................................................................ 23 Intellectual Property............................................................................................. 23 Cash Proceeds ...................................................................................................... 25 i
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TABLE OF CONTENTS (continued) Page SECTION 8. SECTION 9. SECTION 10. SECTION 11. AGENT .......................................................................................................... 26 CONTINUING SECURITY INTEREST; TRANSFER OF LOANS ........... 26 STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM ....... 26 MISCELLANEOUS ...................................................................................... 27

ii
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SCHEDULES:

4.1 General Information 4.3 Investment Related Property 4.5 Description of Letters of Credit 4.6 Commercial Tort Claims A Pledge Supplement B Deposit Account Control Agreement

EXHIBITS:

iii
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PLEDGE AND SECURITY AGREEMENT This PLEDGE AND SECURITY AGREEMENT, dated as of March 11, 2009 (this Agreement), between EACH OF THE UNDERSIGNED, whether as an original signatory hereto or as an Additional Grantor (as herein defined) (each, a Grantor), and J. ARON & COMPANY, as collateral agent for the Lender Parties (as herein defined) (in such capacity, the Collateral Agent). RECITALS: WHEREAS, reference is made to (a) that certain Senior Secured Super Priority Priming Debtor in Possession Credit and Guaranty Agreement, dated as of the date hereof (as it may be amended, restated, supplemented or otherwise modified from time to time, the Credit Agreement), by and among Pacific Energy Resources Ltd., a Delaware corporation (PERL), Pacific Energy Alaska Holdings, LLC, a Delaware limited liability company (PEAH), Pacific Energy Alaska Operating LLC, a Delaware limited liability company (PEAO and, together with PERL and PEAH, the Borrowers), certain Subsidiaries of PERL, as guarantors (the Guarantors), the lenders party thereto from time to time (the Lenders), J. ARON & COMPANY, as administrative agent, lead arranger, syndication agent, and a collateral agent, and SILVER POINT FINANCE, LLC, as a collateral agent and (b) that certain ISDA Master Agreement, dated as of November 30, 2006 (together with the Derivative Transaction Agreement dated as of December 19, 2008 by and between PERL and J. Aron, as hedge provider, any schedules, exhibits (including credit support documents) and amendments thereto (including, without limitation, the Postpetition Hedge Amendment), and all confirmations exchanged pursuant to transactions entered into in connection therewith, the PERL ISDA Agreement), between PERL and J. Aron, as hedge provider (the PERL Hedge Provider); WHEREAS, on March 8, 2009 (the Petition Date), each of the Borrowers and the Guarantors filed a petition under Chapter 11 of the Bankruptcy Code (the Case) in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court); WHEREAS, each of the Borrowers and the Guarantors intends to continue to operate its business as debtors and debtors in possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code; WHEREAS, the Borrowers have requested that the Lenders provide financing to the Borrowers consisting of a debtor in possession facility in an aggregate amount up to $186,646,370 (the Facility) pursuant to Sections 364(c) and (d) of the Bankruptcy Code; WHEREAS, the Lenders have indicated their willingness to agree to extend the Facility to the Borrowers on the terms and conditions set forth in the Credit Agreement and the Order pursuant to Sections 364(c) and (d) of the Bankruptcy Code; WHEREAS, pursuant to the Credit Agreement, the Guarantors guaranteed to the Collateral Agent, the Lenders and each Lender Counterparty the payment and performance of the Obligations to the Lenders and the Collateral Agent in respect of the Transaction Documents;

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WHEREAS, it is a condition precedent to the Lenders making loans or otherwise extending credit to the Borrowers under the Credit Agreement that the Grantors execute and deliver to the Collateral Agent for the benefit of the Lender Parties a pledge and security agreement in substantially the form hereof; WHEREAS, each of the Grantors wishes to grant a security interest in favor of the Collateral Agent for the benefit of the Lender Parties as herein provided; NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, each Grantor and the Collateral Agent agree as follows: SECTION 1. DEFINITIONS 1.1 General Definitions. In this Agreement, the following terms shall have the following meanings: Account Debtor shall mean each Person who is obligated on a Receivable or any Supporting Obligation related thereto. Accounts shall mean all accounts as defined in Article 9 of the UCC. Agreement shall have the meaning set forth in the preamble. Additional Grantors shall have the meaning assigned in Section 5.3. Assigned Agreements shall mean all agreements and contracts to which such Grantor is a party as of the date hereof, or to which such Grantor becomes a party after the date hereof, including each Material Contract, as each such agreement may be amended, supplemented or otherwise modified from time to time. Cash Proceeds shall have the meaning assigned in Section 7.7. Chattel Paper shall mean all chattel paper as defined in Article 9 of the UCC, including electronic chattel paper or tangible chattel paper, as each term is defined in Article 9 of the UCC. Collateral shall have the meaning assigned in Section 2.1. Collateral Agent shall have the meaning set forth in the preamble. Collateral Records shall mean books, records, ledger cards, files, correspondence, customer lists, blueprints, technical specifications, manuals, computer software, computer printouts, tapes, disks and related data processing software and similar items that at any time evidence or contain information relating to any of the Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon.

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Collateral Support shall mean all property (real or personal) assigned, hypothecated or otherwise securing any Collateral and shall include any security agreement or other agreement granting a lien or security interest in such real or personal property. Commercial Tort Claims shall mean all commercial tort claims as defined in Article 9 of the UCC, including all commercial tort claims listed on Schedule 4.6 (as such schedule may be amended or supplemented from time to time). Commodities Accounts shall mean all commodity accounts as defined in Article 9 of the UCC. Copyright Licenses shall mean any and all agreements providing for the granting of any right in or to Copyrights (whether such Grantor is licensee or licensor thereunder). Copyrights shall mean all United States and foreign copyrights, all mask works fixed in semi-conductor chip products (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, now or hereafter in force throughout the world, all registrations and applications therefor, all rights corresponding thereto throughout the world, all extensions and renewals of any thereof, the right to sue for past, present and future infringements of any of the foregoing, and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages, and proceeds of suit. Credit Agreement shall have the meaning set forth in the recitals. Deposit Accounts (i) shall mean all deposit accounts as defined in Article 9 of the UCC and (ii) shall include, without limitation, all of the accounts listed on Schedule 4.3 under the heading Deposit Accounts (as such schedule may be amended or supplemented from time to time). Documents shall mean all documents as defined in Article 9 of the UCC. Equipment shall mean: (i) all equipment as defined in Article 9 of the UCC, (ii) all machinery, manufacturing equipment, data processing equipment, computers, office equipment, furnishings, furniture, appliances, fixtures and tools (in each case, regardless of whether characterized as equipment under the UCC) and (iii) all accessions or additions thereto, all parts thereof, whether or not at any time of determination incorporated or installed therein or attached thereto, and all replacements therefor, wherever located, now or hereafter existing, including any fixtures. General Intangibles (i) shall mean all general intangibles as defined in Article 9 of the UCC, including payment intangibles also as defined in Article 9 of the UCC and (ii) shall include, without limitation, all interest rate or currency protection or hedging arrangements, all tax refunds, all licenses, permits, concessions and authorizations, all Assigned Agreements and all Intellectual Property (in each case, regardless of whether characterized as general intangibles under the UCC).

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Goods (i) shall mean all goods as defined in Article 9 of the UCC and (ii) shall include, without limitation, all Inventory and Equipment (in each case, regardless of whether characterized as goods under the UCC). Grantors shall have the meaning set forth in the preamble. Instruments shall mean all instruments as defined in Article 9 of the UCC. Insurance shall mean: (i) all insurance policies covering any or all of the Collateral (regardless of whether the Collateral Agent is the loss payee thereof) and (ii) any key man life insurance policies. Intellectual Property shall mean, collectively, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets, and the Trade Secret Licenses. Inventory shall mean: (i) all inventory as defined in Article 9 of the UCC and (ii) all goods held for sale or lease or to be furnished under contracts of service or so leased or furnished, all raw materials, work in process, finished goods, and materials used or consumed in the manufacture, packing, shipping, advertising, selling, leasing, furnishing or production of such inventory or otherwise used or consumed in any Grantors business; all goods in which any Grantor has an interest in mass or a joint or other interest or right of any kind; and all goods which are returned to or repossessed by any Grantor, all computer programs embedded in any goods and all accessions thereto and products thereof (in each case, regardless of whether characterized as inventory under the UCC). Investment Accounts shall mean the Securities Accounts, Commodities Accounts and Deposit Accounts. Investment Related Property shall mean: (i) all investment property (as such term is defined in Article 9 of the UCC) and (ii) all of the following (regardless of whether classified as investment property under the UCC): all Pledged Equity Interests, the Investment Accounts, and certificates of deposit. Lender shall have the meaning set forth in the recitals. Lender Parties means the Lenders, the PERL Hedge Provider and the Lender Counterparties and shall include, without limitation, all former Lenders and Lender Counterparties to the extent that any Obligations owing to such Persons were incurred while such Persons were Lenders or Lender Counterparties and such Obligations have not been paid or satisfied in full. Letter of Credit Right shall mean letter-of-credit right as defined in Article 9 of the UCC. Money shall mean money as defined in the UCC.

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Order shall mean the Interim Order or the Final Order, whichever is then in effect and any other applicable order entered by the Bankruptcy Court and in form and substance satisfactory to the Required Lenders. Patent Licenses shall mean all agreements providing for the granting of any right in or to Patents (whether such Grantor is licensee or licensor thereunder). Patents shall mean all United States and foreign patents and applications for letters patent throughout the world, all reissues, divisions, continuations, continuations-in-part, extensions, renewals, and reexaminations of any of the foregoing, all rights corresponding thereto throughout the world, and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages, and proceeds of suit and the right to sue for past, present and future infringements of any of the foregoing. Payment Intangible shall have the meaning specified in Article 9 of the UCC. Pledge Supplement shall mean any supplement to this agreement in substantially the form of Exhibit A. Pledged Debt shall mean all Indebtedness owed to each Grantor issued by the obligors named thereunder, the instruments evidencing such Indebtedness, and all interest, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Indebtedness. Pledged Equity Interests shall mean all Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged Trust Interests. Pledged LLC Interests shall mean all interests in any limited liability company, including all limited liability company interests listed on Schedule 4.3 under the heading Pledged LLC Interests (as such schedule may be amended or supplemented from time to time) and the certificates, if any, representing such limited liability company interests and any interest of such Grantor on the books and records of such limited liability company or on the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such limited liability company interests. Pledged Partnership Interests shall mean all interests in any general partnership, limited partnership, limited liability partnership or other partnership, including all partnership interests listed on Schedule 4.3 under the heading Pledged Partnership Interests (as such schedule may be amended or supplemented from time to time) and the certificates, if any, representing such partnership interests and any interest of such Grantor on the books and records of such partnership or on the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such partnership interests.

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Pledged Stock shall mean all shares of capital stock owned by such Grantor, including all shares of capital stock described on Schedule 4.3 under the heading Pledged Stock (as such schedule may be amended or supplemented from time to time), and the certificates, if any, representing such shares and any interest of such Grantor in the entries on the books of the issuer of such shares or on the books of any securities intermediary pertaining to such shares, and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares. Pledged Trust Interests shall mean all interests in a Delaware statutory trust or other trust, including all trust interests listed on Schedule 4.3 under the heading Pledged Trust Interests (as such schedule may be amended or supplemented from time to time) and the certificates, if any, representing such trust interests and any interest of such Grantor on the books and records of such trust or on the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such trust interests. Proceeds shall mean: (i) all proceeds as defined in Article 9 of the UCC, (ii) payments or distributions made with respect to any Investment Related Property and (iii) whatever is receivable or received when Collateral or proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary. Receivables shall mean all rights to payment, whether or not earned by performance, for goods or other property sold, leased, licensed, assigned or otherwise disposed of, or services rendered or to be rendered, including all such rights constituting or evidenced by any Account, Chattel Paper, Instrument, General Intangible or Investment Related Property, together with all of Grantors rights, if any, in any goods or other property giving rise to such right to payment and all Collateral Support and Supporting Obligations related thereto and all Receivables Records. Receivables Records shall mean (i) all original copies of all documents, instruments or other writings or electronic records or other Records evidencing the Receivables, (ii) all books, correspondence, credit or other files, Records, ledger sheets or cards, invoices, and other papers relating to Receivables, including all tapes, cards, computer tapes, computer discs, computer runs, record keeping systems and other papers and documents relating to the Receivables, whether in the possession or under the control of Grantor or any computer bureau or agent from time to time acting for Grantor or otherwise, (iii) all evidences of the filing of financing statements and the registration of other instruments in connection therewith, and amendments, supplements or other modifications thereto, notices to other creditors or Lender Parties, and certificates, acknowledgments, or other writings, including lien search reports, from filing or other registration officers, (iv) all credit information, reports and memoranda relating thereto and (v) all other written or nonwritten forms of information related in any way to the foregoing or any Receivable. Record shall have the meaning specified in Article 9 of the UCC.

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Secured Obligations shall have the meaning assigned in Section 3.1. Securities shall mean any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as securities or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing. Securities Accounts shall mean all securities accounts as defined in Article 8 of the UCC. Supporting Obligation shall mean all supporting obligations as defined in Article 9 of the UCC. Trade Secret Licenses shall mean any and all agreements providing for the granting of any right in or to Trade Secrets (whether such Grantor is licensee or licensor thereunder). Trade Secrets shall mean all trade secrets and all other confidential or proprietary information and know-how now or hereafter owned or used in, or contemplated at any time for use in, the business of such Grantor (all of the foregoing being collectively called a Trade Secret), whether or not such Trade Secret has been reduced to a writing or other tangible form, including all documents and things embodying, incorporating, or referring in any way to such Trade Secret, the right to sue for past, present and future infringement of any Trade Secret, and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages, and proceeds of suit. Trademark Licenses shall mean any and all agreements providing for the granting of any right in or to Trademarks (whether such Grantor is licensee or licensor thereunder). Trademarks shall mean all United States, state and foreign trademarks, trade names, corporate names, company names, business names, fictitious business names, internet domain names, trade styles, service marks, certification marks, collective marks, logos, other source or business identifiers, designs and general intangibles of a like nature, all registrations and applications for any of the foregoing, all extensions or renewals of any of the foregoing, all of the goodwill of the business connected with the use of and symbolized by the foregoing, the right to sue for past, present and future infringement or dilution of any of the foregoing or for any injury to goodwill, and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages, and proceeds of suit. UCC shall mean the Uniform Commercial Code as in effect from time to time in the State of New York or, when the context implies, the Uniform Commercial Code as in effect from time to time in any other applicable jurisdiction. United States shall mean the United States of America.

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1.2 Definitions; Interpretation. All capitalized terms used herein (including the preamble and recitals hereto) and not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement or, if not defined therein, in the UCC. References to Sections, Exhibits and Schedules shall be to Sections, Exhibits and Schedules, as the case may be, of this Agreement unless otherwise specifically provided. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. The use herein of the word include or including, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not nonlimiting language (such as without limitation or but not limited to or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. If any conflict or inconsistency exists between this Agreement and the Credit Agreement, the Credit Agreement shall govern. All references herein to provisions of the UCC shall include all successor provisions under any subsequent version or amendment to any Article of the UCC. SECTION 2. GRANT OF SECURITY 2.1 Grant of Security. Each Grantor, subject to the Order, hereby grants to the Collateral Agent, for the benefit of the Secured Parties and the Agents, a security interest and continuing lien on all of such Grantors right, title and interest in, to and under all personal property of such Grantor including, but not limited to the following, in each case whether now owned or existing or hereafter acquired or arising and wherever located (all of which being hereinafter collectively referred to as the Collateral): (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Accounts; Chattel Paper; Documents; General Intangibles; Goods; Instruments; Insurance; Intellectual Property; Investment Related Property; Letter of Credit Rights;

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(k) (l) (m)

Money; Receivables and Receivable Records; Commercial Tort Claims;

(n) to the extent not otherwise included above, all Collateral Records, Collateral Support and Supporting Obligations relating to any of the foregoing; (o) to the extent not otherwise included above, all Proceeds, products, accessions, rents and profits of or in respect of any of the foregoing (including insurance proceeds); (p) proceeds of Avoidance Actions solely to the extent arising under Section 549 of the Bankruptcy Code; (q) proceeds of Avoidance Actions except to the extent arising under Section 549 of the Bankruptcy Code, but only with respect to claims arising under the Revolving Facility and solely upon entry of the Final Order; and (r) thereof. 2.2 The Order. The security interest provided for under Section 2.1 hereof has also been granted pursuant to the Order. This Agreement supplements the Order without in any way diminishing or limiting the effect of the Order or any Lien or security interest granted thereunder. 2.3 Carve-Out Amount; Other Liens. The security interest granted by the Grantors to the Collateral Agent and evidenced by this Agreement and other Security Documents shall be subject to, as to priority only and without duplication, the Carve Out, but otherwise shall be senior in priority to the adequate protection Liens securing the Prepetition Lender Debt and all other Liens entitled to priority under applicable nonbankruptcy law other than Permitted Prior Liens. 2.4 Certain Limited Exclusions. Notwithstanding anything herein to the contrary, in no event shall the security interest granted under Section 2.1 hereof attach to any lease, license, contract, property rights or agreement to which any Grantor is a party or any of its rights or interests thereunder if and for so long as the grant of such security interest shall constitute or result in (i) the abandonment, invalidation or unenforceability of any right, title or interest of any Grantor therein or (ii) in a breach or termination pursuant to the terms of, or a default under, any such lease license, contract property rights or agreement (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law (including the Bankruptcy Code) or principles of equity), provided however that such security interest shall attach immediately at such time as the condition causing such abandonment, invalidation or unenforceability shall be remedied and to the extent severable, shall attach immediately to any portion of such Lease, license, contract, property rights or agreement that does not result in any of the consequences specified in (i) or (ii) above. any rights under Section 506(c) of the Bankruptcy Code and the proceeds

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SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE 3.1 Security for Obligations. This Agreement secures, and the Collateral is collateral security for, the prompt and complete payment or performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, of all Obligations with respect to every Grantor (the Secured Obligations). 3.2 Continuing Liability Under Collateral. Notwithstanding anything herein to the contrary, (i) each Grantor shall remain liable for all obligations under the Collateral and nothing contained herein is intended or shall be a delegation of duties to the Collateral Agent or any Lender Party and (ii) each Grantor shall remain liable under each of the agreements included in the Collateral, including any agreements relating to Pledged Partnership Interests or Pledged LLC Interests, to perform all of the obligations undertaken by it thereunder all in accordance with and pursuant to the terms and provisions thereof and neither the Collateral Agent nor any Lender Party shall have any obligation or liability under any of such agreements by reason of or arising out of this Agreement or any other document related thereto nor shall the Collateral Agent nor any Lender Party have any obligation to make any inquiry as to the nature or sufficiency of any payment received by it or have any obligation to take any action to collect or enforce any rights under any agreement included in the Collateral, including any agreements relating to Pledged Partnership Interests or Pledged LLC Interests, and (iii) the exercise by the Collateral Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral. SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS 4.1 warrants that: (i) it owns the Collateral purported to be owned by it or otherwise has the rights it purports to have in each item of Collateral and, as to all Collateral whether now existing or hereafter acquired, will continue to own or have such rights in each item of the Collateral, in each case free and clear of any and all Liens, rights or claims of all other Persons other than Permitted Liens; (ii) it has indicated on Schedule 4.1(A)(as such schedule may be amended or supplemented from time to time): (w) the type of organization of such Grantor, (x) the jurisdiction of organization of such Grantor, (y) its organizational identification number and (z) the jurisdiction where the chief executive office or its sole place of business is (or the principal residence if such Grantor is a natural person), and for the one-year period preceding the date hereof has been, located. (iii) the full legal name of such Grantor is as set forth on Schedule 4.1(A) and it has not done in the last five (5) years, and does not do, business under any other name (including any trade-name or fictitious business name) except for those names set forth on Schedule 4.1(B) (as such schedule may be amended or supplemented from time to time);
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Generally. (a) Representations and Warranties. Each Grantor hereby represents and

(iv) except as provided on Schedule 4.1(C), it has not changed its name, jurisdiction of organization, chief executive office or sole place of business (or principal residence if such Grantor is a natural person) or its corporate structure in any way (e.g., by merger, consolidation, change in corporate form or otherwise) within the past five (5) years; (v) it has not within the last five (5) years become bound (whether as a result of merger or otherwise) as debtor under a security agreement entered into by another Person, which has not heretofore or contemporaneously herewith been terminated; (vi) upon entry of the Order and upon the filing of all UCC financing statements naming each Grantor as debtor and the Collateral Agent as secured party and describing the Collateral in the filing offices set forth opposite such Grantors name on Schedule 4.1(D) hereof (as such schedule may be amended or supplemented from time to time) and other filings delivered by each Grantor, upon execution of a control agreement substantively in the form of Exhibit B hereto with respect to any Deposit Account, and upon consent of the issuer with respect to Letter of Credit Rights, the security interests granted to the Collateral Agent hereunder constitute valid and perfected first priority Liens (subject in the case of priority only to Permitted Prior Liens) on all of the Collateral; (vii) all actions and consents, including the Order and all filings, notices, registrations and recordings necessary or otherwise requested by the Collateral Agent for the exercise by the Collateral Agent of the voting or other rights provided for in this Agreement or the exercise of remedies in respect of the Collateral have been made or obtained; (viii) other than the financing statements filed in favor of the Collateral Agent and financing statements filed in respect of Permitted Liens, no effective UCC financing statement, fixture filing or other instrument similar in effect under any applicable law covering all or any part of the Collateral is on file in any filing or recording office; (ix) no authorization, approval or other action by, and no notice to or filing with, any Governmental Authority, other than the Bankruptcy Court, or regulatory body is required for either (i) the pledge or grant by any Grantor of the Liens purported to be created in favor of the Collateral Agent, for the benefit of the Secured Parties and the Agents, hereunder or (ii) the exercise by Collateral Agent of any rights or remedies in respect of any Collateral (whether specifically granted or created hereunder or created or provided for by applicable law), except (A) for the filings contemplated by clause (vii) above and (B) as may be required, in connection with the disposition of any Investment Related Property, by laws generally affecting the offering and sale of Securities; (x) each Receivable (a) is and will be the legal, valid and binding obligation of the Account Debtor in respect thereof, representing an unsatisfied obligation of such Account Debtor, (b) is and will be enforceable in accordance with its terms, (c) is

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not and will not be subject to any setoffs, defenses, taxes, counterclaims (except with respect to refunds, returns and allowances in the ordinary course of business with respect to damaged merchandise) and (d) is and will be in compliance with all applicable laws, whether federal, state, local or foreign; (xi) none of the Account Debtors in respect of any Receivable is the government of the United States, any agency or instrumentality thereof, any state or municipality or any foreign sovereign; and (xii) no Receivable is evidenced by, or constitutes, an Instrument or Chattel Paper which has not been delivered to, or otherwise subjected to the control of, the Collateral Agent. (b) that: (i) except for the security interest created by this Agreement, it shall not create or suffer to exist any Lien upon or with respect to any of the Collateral, except Permitted Liens, and such Grantor shall defend the Collateral against all Persons at any time claiming any interest therein; (ii) it shall not produce, use or permit any Collateral to be used unlawfully or in violation of any provision of this Agreement or any applicable statute, regulation or ordinance or any policy of insurance covering the Collateral; (iii) it shall not take or permit any action which could impair the Collateral Agents rights in the Collateral; and (iv) it shall keep and maintain at its own cost and expense satisfactory and complete records of the Collateral. 4.2 that: (i) in the event it acquires rights in any Investment Related Property after the date hereof, it shall deliver to the Collateral Agent a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto, reflecting such new Investment Related Property and all other Investment Related Property. Notwithstanding the foregoing, it is understood and agreed that the security interest of the Collateral Agent shall attach to all Investment Related Property immediately upon any Grantors acquisition of rights therein and shall not be affected by the failure of any Grantor to deliver a supplement as required hereby; (ii) except as provided in the next sentence, in the event such Grantor receives any dividends, interest or distributions on any Investment Related Property, or any securities or other property upon the merger, consolidation, liquidation or dissolution Investment Related Property; Investment Related Property Generally. (a) Covenants and Agreements. Each Grantor hereby covenants and agrees Covenants and Agreements. Each Grantor hereby covenants and agrees

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of any issuer of any Investment Related Property, then (a) such dividends, interest or distributions and securities or other property shall be included in the definition of Collateral without further action and (b) such Grantor shall immediately take all steps, if any, necessary or advisable to ensure the validity, perfection, priority and, if applicable, control of the Collateral Agent over such Investment Related Property (including delivery thereof to the Collateral Agent) and pending any such action such Grantor shall be deemed to hold such dividends, interest, distributions, securities or other property in trust for the benefit of the Collateral Agent and shall be segregated from all other property of such Grantor. Notwithstanding the foregoing, so long as no Event of Default shall have occurred and be continuing, the Collateral Agent authorizes each Grantor to retain all ordinary cash dividends and distributions paid in the normal course of the business of the issuer and consistent with the past practice of the issuer and all scheduled payments of interest; provided that all such cash is deposited in the applicable Collateral Account in accordance with Section 2.16 of the Credit Agreement; and (iii) each Grantor consents to the grant by each other Grantor of a security interest in all Investment Related Property to the Collateral Agent. (b) Delivery and Control. Each Grantor agrees that with respect to any Investment Related Property in which it currently has rights it shall comply with the provisions of this Section on or before the Closing Date and with respect to any Investment Related Property hereafter acquired by such Grantor it shall comply with the provisions of this Section immediately upon acquiring rights therein, in each case in form and substance satisfactory to the Collateral Agent. With respect to any Investment Related Property that is represented by a certificate or that is an instrument (other than any Investment Related Property credited to a Securities Account) it shall cause such certificate or instrument to be delivered to the Collateral Agent, indorsed in blank by an effective indorsement (as defined in Section 8-107 of the UCC), regardless of whether such certificate constitutes a certificated security for purposes of the UCC. With respect to any Investment Related Property that is an uncertificated security for purposes of the UCC (other than any uncertificated securities credited to a Securities Account), it shall cause the issuer of such uncertificated security to either (i) register the Collateral Agent as the registered owner thereof on the books and records of the issuer or (ii) execute an agreement in form and substance satisfactory to the Collateral Agent, pursuant to which such issuer agrees to comply with the Collateral Agents instructions with respect to such uncertificated security without further consent by such Grantor. (c) continuing: (1) except as otherwise provided under the covenants and agreements relating to Investment Related Property in this Agreement or elsewhere herein, in the Credit Agreement or in the Order, each Grantor shall be entitled to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Investment Related Property or any part thereof for any purpose not inconsistent with the terms of this Agreement, the Credit Agreement or the Order; provided, no Grantor shall Voting and Distributions. (i) So long as no Event of Default shall have occurred and be

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exercise or refrain from exercising any such right if the Collateral Agent shall have notified such Grantor that, in the Collateral Agents reasonable judgment, such action would have a Material Adverse Effect on the value of the Investment Related Property or any part thereof; and provided further, such Grantor shall give the Collateral Agent at least five (5) Business Days prior written notice of the manner in which it intends to exercise, or the reasons for refraining from exercising, any such right; it being understood, however, that neither the voting by such Grantor of any Pledged Stock for, or such Grantors consent to, the election of directors (or similar governing body) at a regularly scheduled annual or other meeting of stockholders or with respect to incidental matters at any such meeting, nor such Grantors consent to or approval of any action otherwise permitted under this Agreement, the Credit Agreement or the Order, shall be deemed inconsistent with the terms of this Agreement, the Credit Agreement, or the Order within the meaning of this Section 4.2(c)(i)(1), and no notice of any such voting or consent need be given to the Collateral Agent; (2) to the extent the Collateral Agent is registered as the registered owner of any such Investment Related Property, the Collateral Agent shall promptly execute and deliver (or cause to be executed and delivered) to each Grantor all proxies, and other instruments as such Grantor may from time to time reasonably request for the purpose of enabling such Grantor to exercise the voting and other consensual rights when and to the extent which it is entitled to exercise pursuant to clause (1) above; and (3) Upon the occurrence and during the continuation of an Event of Default and subject to Section 8.2 of the Credit Agreement: (A) all rights of each Grantor to exercise or refrain from exercising the voting and other consensual rights which it would otherwise be entitled to exercise pursuant hereto shall cease and all such rights shall thereupon become vested in the Collateral Agent who shall thereupon have the sole right to exercise such voting and other consensual rights; and (B) in order to permit the Collateral Agent to exercise the voting and other consensual rights which it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions which it may be entitled to receive hereunder: (1) each Grantor shall promptly execute and deliver (or cause to be executed and delivered) to the Collateral Agent all proxies, dividend payment orders and other instruments as the Collateral Agent may from time to time reasonably request and (2) each Grantor acknowledges that the Collateral Agent may utilize the power of attorney set forth in Section 6. 4.3 warrants that: Pledged Equity Interests. (a) Representations and Warranties. Each Grantor hereby represents and

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(i) Schedule 4.3 (as such schedule may be amended or supplemented from time to time) sets forth under the headings Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged Trust Interests, respectively, all of the Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged Trust Interests owned by any Grantor and such Pledged Equity Interests constitute the percentage of issued and outstanding shares of stock, percentage of membership interests, percentage of partnership interests or percentage of beneficial interest of the respective issuers thereof indicated on such Schedule; (ii) except as set forth on Schedule 4.3, it has not acquired any equity interests of another entity or substantially all the assets of another entity within the past five (5) years; (iii) it is the record and beneficial owner of the Pledged Equity Interests free of all Liens, rights or claims of other Persons other than Permitted Liens and there are no outstanding warrants, options or other rights to purchase, or shareholder, voting trust or similar agreements outstanding with respect to, or property that is convertible into, or that requires the issuance or sale of, any Pledged Equity Interests; (iv) without limiting any other provision hereof, subject to the entry by the Bankruptcy Court of the Order, no consent of any Person, including any other general or limited partner, any other member of a limited liability company, any other shareholder or any other trust beneficiary is necessary or desirable in connection with the creation, perfection or first priority status (subject to Permitted Prior Liens) of the security interest of the Collateral Agent in any Pledged Equity Interests or the exercise by the Collateral Agent of the voting or other rights provided for in this Agreement or the exercise of remedies in respect thereof; and (v) none of the Pledged LLC Interests nor Pledged Partnership Interests are or represent interests in issuers that are: (a) registered as investment companies, (b) dealt in or traded on securities exchanges or markets or (c) have opted to be treated as securities under the uniform commercial code of any jurisdiction; (b) that: (i) without the prior written consent of the Required Lenders, it shall not vote to enable or take any other action to: (a) amend or terminate any partnership agreement, limited liability company agreement, certificate of incorporation, by-laws or other organizational documents in any way that materially changes the rights of such Grantor with respect to any Investment Related Property or adversely affects the validity, perfection or priority of the Collateral Agents security interest, (b) permit any issuer of any Pledged Equity Interest to issue any additional stock, partnership interests, limited liability company interests or other equity interests of any nature or to issue securities convertible into or granting the right of purchase or exchange for any stock or other equity interest of any nature of such issuer, (c) other than as permitted under the Credit Agreement, permit any issuer of any Pledged Equity Interest to dispose of all or a Covenants and Agreements. Each Grantor hereby covenants and agrees

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material portion of their assets, (d) waive any default under or breach of any terms of organizational document relating to the issuer of any Pledged Equity Interest or the terms of any Pledged Debt, or (e) cause any issuer of any Pledged Partnership Interests or Pledged LLC Interests which are not securities (for purposes of the UCC) on the date hereof to elect or otherwise take any action to cause such Pledged Partnership Interests or Pledged LLC Interests to be treated as securities for purposes of the UCC; provided, however, notwithstanding the foregoing, if any issuer of any Pledged Partnership Interests or Pledged LLC Interests takes any such action in violation of the foregoing in this clause (e), such Grantor shall promptly notify the Collateral Agent in writing of any such election or action and, in such event, shall take all steps necessary or advisable to establish the Collateral Agents control thereof; (ii) it shall comply with all of its obligations under any partnership agreement or limited liability company agreement relating to Pledged Partnership Interests or Pledged LLC Interests and shall enforce all of its rights with respect to any Investment Related Property; (iii) each Grantor consents to the grant by each other Grantor of a security interest in all Investment Related Property to the Collateral Agent and, without limiting the foregoing, consents to the transfer of any Pledged Partnership Interest and any Pledged LLC Interest to the Collateral Agent or its nominee following an Event of Default in accordance with the Order and Section 8.2 of the Credit Agreement and to the substitution of the Collateral Agent or its nominee as a partner in any partnership or as a member in any limited liability company with all the rights and powers related thereto; and (iv) it shall notify the Collateral Agent of any default under any Pledged Debt that has caused, either in any case or in the aggregate, a Material Adverse Effect. 4.4 that: (i) With respect to any Investment Related Property consisting of Securities Accounts or Securities Entitlements, it shall cause the securities intermediary maintaining such Securities Account or Securities Entitlement to enter into an agreement substantially in form and substance satisfactory to the Collateral Agent pursuant to which it shall agree to comply with the Collateral Agents entitlement orders without further consent by such Grantor. With respect to any Investment Related Property that is a Deposit Account, it shall cause the depositary institution maintaining such account to enter into an agreement substantively in the form of Exhibit B hereto (or such other form satisfactory to the Collateral Agent), pursuant to which the Collateral Agent shall have both sole dominion and control over such Deposit Account (within the meaning of the common law) and control (within the meaning of Section 9-104 of the UCC) over such Deposit Account. Investment Accounts. (a) Covenants and Agreements. Each Grantor hereby covenants and agrees

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(ii) In addition to the foregoing, if any issuer of any Investment Related Property is located in a jurisdiction outside of the United States, each Grantor shall take such additional actions, including causing the issuer to register the pledge on its books and records or making such filings or recordings, in each case as may be necessary or advisable, under the laws of such issuers jurisdiction to insure the validity, perfection and priority of the security interest of the Collateral Agent. Upon the occurrence of an Event of Default, subject to Section 8.2 of the Credit Agreement and the Order, the Collateral Agent shall have the right (upon the request or consent of the Required Lenders), without notice to any Grantor, to transfer all or any portion of the Investment Related Property to its name or the name of its nominee or agent. In addition, the Collateral Agent shall have the right (upon the request or consent of the Required Lenders) at any time, without notice to any Grantor, to exchange any certificates or instruments representing any Investment Related Property for certificates or instruments of smaller or larger denominations. 4.5 warrants that: (i) all material letters of credit to which such Grantor has rights are listed on Schedule 4.5 (as such schedule may be amended or supplemented from time to time) hereto; and (ii) it has obtained the consent of each issuer of any material letter of credit to the assignment of the proceeds of the letter of credit to the Collateral Agent. (b) Covenants and Agreements. Each Grantor hereby covenants and agrees that with respect to any material letter of credit hereafter arising it shall obtain the consent of the issuer thereof to the assignment of the proceeds of the letter of credit to the Collateral Agent and shall deliver to the Collateral Agent a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto. 4.6 Commercial Tort Claims. Letter of Credit Rights. (a) Representations and Warranties. Each Grantor hereby represents and

(a) Representations and Warranties. Each Grantor hereby represents and warrants that Schedule 4.6 (as such schedule may be amended or supplemented from time to time) sets forth all Commercial Tort Claims of each Grantor; and (b) Covenants and Agreements. Each Grantor hereby covenants and agrees that with respect to any Commercial Tort Claim hereafter arising it shall deliver to the Collateral Agent a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto, identifying such new Commercial Tort Claims. SECTION 5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS

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5.1 Access; Right of Inspection. The Collateral Agent shall at all times have full and free access during normal business hours to all the books, correspondence and records of each Grantor, and the Collateral Agent and its representatives may examine the same, take extracts therefrom and make photocopies thereof, and each Grantor agrees to render to the Collateral Agent, at such Grantors cost and expense, such clerical and other assistance as may be reasonably requested with regard thereto. The Collateral Agent and its representatives shall at all times also have the right to enter any premises of each Grantor and inspect any property of each Grantor where any of the Collateral of such Grantor granted pursuant to this Agreement is located for the purpose of inspecting the same, observing its use or otherwise protecting its interests therein. 5.2 Further Assurances.

(a) Each Grantor agrees that from time to time, at the expense of such Grantor, it shall promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Collateral Agent may reasonably request, in order to maintain the creation of and/or maintain the validity, perfection or priority of and protect any security interest granted or purported to be granted hereby or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each Grantor shall: (i) file such financing or continuation statements, or amendments thereto, and execute and deliver such other agreements, instruments, endorsements, powers of attorney or notices, as may be necessary or desirable, or as the Collateral Agent may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby; (ii) take all actions necessary to ensure the recordation of appropriate evidence of the liens and security interest granted hereunder in the Intellectual Property with any intellectual property registry in which said Intellectual Property is registered or in which an application for registration is pending, including the United States Patent and Trademark Office, the United States Copyright Office, the various Secretaries of State, and the foreign counterparts on any of the foregoing; (iii) at any reasonable time, upon request by the Collateral Agent, assemble the Collateral and allow inspection of the Collateral by the Collateral Agent, or persons designated by the Collateral Agent; and (iv) at the Collateral Agents request, appear in and defend any action or proceeding that may affect such Grantors title to or the Collateral Agents security interest in all or any part of the Collateral. (b) Each Grantor hereby authorizes the Collateral Agent to file a Record or Records, including financing or continuation statements, and amendments thereto, in any jurisdictions and with any filing offices as the Collateral Agent may determine, in its sole discretion, are necessary or advisable to perfect the security interest granted to the Collateral Agent herein. Such financing statements may describe the Collateral in the same manner as

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described herein or may contain an indication or description of collateral that describes such property in any other manner as the Collateral Agent may determine, in its sole discretion, is necessary, advisable or prudent to ensure the perfection of the security interest in the Collateral granted to the Collateral Agent herein, including describing such property as all assets or all personal property, whether now owned or hereafter acquired, or words of similar meaning. Each Grantor shall furnish to the Collateral Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Collateral Agent may reasonably request, all in reasonable detail. 5.3 Additional Grantors. From time to time subsequent to the date hereof, additional Persons may become parties hereto as additional Grantors (each, an Additional Grantor), by executing a Pledge Supplement. Upon delivery of any such Pledge Supplement to the Collateral Agent, notice of which is hereby waived by Grantors, each Additional Grantor shall be a Grantor and shall be as fully a party hereto as if Additional Grantor were an original signatory hereto. Each Grantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Grantor hereunder, nor by any election of Collateral Agent not to cause any Subsidiary of Company to become an Additional Grantor hereunder. This Agreement shall be fully effective as to any Grantor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Grantor hereunder. SECTION 6. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT 6.1 Power of Attorney. Each Grantor hereby irrevocably appoints the Collateral Agent (such appointment being coupled with an interest) as such Grantors attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor, the Collateral Agent or otherwise, from time to time in the Collateral Agents discretion to take any action and to execute any instrument that the Collateral Agent may deem reasonably necessary or advisable to accomplish the purposes of this Agreement (it being understood that the Collateral Agent may not take any actions pursuant to this Section 6.1 without the consent or request of the Required Lenders), including the following, in each case subject to Section 8.2 of the Credit Agreement and the Order: (a) upon the occurrence and during the continuance of any Event of Default, to obtain and adjust insurance required to be maintained by such Grantor or paid to the Collateral Agent pursuant to the Credit Agreement; (b) upon the occurrence and during the continuance of any Event of Default, to ask for, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral; (c) upon the occurrence and during the continuance of any Event of Default, to receive, endorse and collect any drafts or other instruments, documents and chattel paper in connection with clause (b) above; (d) upon the occurrence and during the continuance of any Event of Default, to file any claims or take any action or institute any proceedings that the Collateral Agent may

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deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Collateral Agent with respect to any of the Collateral; (e) debtor; (f) to prepare, sign, and file for recordation in any intellectual property registry, appropriate evidence of the lien and security interest granted herein in the Intellectual Property in the name of such Grantor as assignor; (g) to take or cause to be taken all actions necessary to perform or comply or cause performance or compliance with the terms of this Agreement, including access to pay or discharge taxes or Liens (other than Permitted Liens) levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by the Collateral Agent in its sole discretion, any such payments made by the Collateral Agent to become obligations of such Grantor to the Collateral Agent, due and payable immediately without demand; (h) upon the occurrence and during the continuance of any Event of Default, subject to the Credit Agreement and the Order, generally to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Collateral Agent were the absolute owner thereof for all purposes, and to do, at the Collateral Agents option and such Grantors expense, at any time or from time to time, all acts and things that the Collateral Agent deems reasonably necessary to realize upon the Collateral and the Collateral Agents security interest therein in order to effect the intent of this Agreement, all as fully and effectively as such Grantor might do; and (i) to do, at the Collateral Agents option and such Grantors expense, at any time or from time to time, all acts and things that the Collateral Agent deems reasonably necessary to protect and preserve the Collateral and the Collateral Agents security interest therein in order to effect the intent of this Agreement, all as fully and effectively as such Grantor might do. 6.2 No Duty on the Part of Collateral Agent or Lender Parties. The powers conferred on the Collateral Agent hereunder are solely to protect the interests of the Lender Parties in the Collateral and shall not impose any duty upon the Collateral Agent or any Lender Party to exercise any such powers. The Collateral Agent and the Lender Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct. SECTION 7. REMEDIES 7.1 Generally. to prepare and file any UCC financing statements against such Grantor as

(a) If any Event of Default shall have occurred and be continuing, subject to Section 8.2 of the Credit Agreement and the Order, the Collateral Agent, upon the request or

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consent of the Required Lenders, shall exercise in respect of the Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it at law or in equity, all the rights and remedies of the Collateral Agent on default under the UCC (whether or not the UCC applies to the affected Collateral) to collect, enforce or satisfy any Secured Obligations then owing, whether by acceleration or otherwise, and also may pursue any of the following separately, successively or simultaneously: (i) require any Grantor to, and each Grantor hereby agrees that it shall at its expense and promptly upon request of the Collateral Agent forthwith, assemble all or part of the Collateral as directed by the Collateral Agent and make it available to the Collateral Agent at a place to be designated by the Collateral Agent that is reasonably convenient to both parties; (ii) enter onto the property where any Collateral is located and take possession thereof with or without judicial process; (iii) prior to the disposition of the Collateral, store, process, repair or recondition the Collateral or otherwise prepare the Collateral for disposition in any manner to the extent the Collateral Agent deems appropriate; and (iv) without notice except as specified below or under the UCC, sell, assign, lease, license (on an exclusive or nonexclusive basis) or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agents offices or elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as the Collateral Agent may deem commercially reasonable. (b) The Collateral Agent or any Lender Party may be the purchaser of any or all of the Collateral at any public or private (to the extent to portion of the Collateral being privately sold is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations) sale in accordance with the UCC and the Collateral Agent, as collateral agent for and representative of the Lender Parties, shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such sale made in accordance with the UCC, to use and apply any of the Secured Obligations as a credit on account of the purchase price for any Collateral payable by the Collateral Agent at such sale. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Grantor agrees that it would not be commercially unreasonable for the Collateral Agent to dispose of the Collateral or

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any portion thereof by using Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets. Each Grantor hereby waives any claims against the Collateral Agent arising by reason of the fact that the price at which any Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if the Collateral Agent accepts the first offer received and does not offer such Collateral to more than one offeree. If the proceeds of any sale or other disposition of the Collateral are insufficient to pay all the Secured Obligations, Grantors shall be liable for the deficiency and the fees of any attorneys employed by the Collateral Agent to collect such deficiency. Each Grantor further agrees that a breach of any of the covenants contained in this Section will cause irreparable injury to the Collateral Agent, that the Collateral Agent has no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no default has occurred giving rise to the Secured Obligations becoming due and payable prior to their stated maturities. Nothing in this Section shall in any way alter the rights of the Collateral Agent hereunder. (c) The Collateral Agent or any purchaser at a foreclosure sale from the Collateral Agent or similar Person, shall have the right to cause all rights and obligations of any Grantor under or in respect of all executory contracts and agreements to which any Grantor is a party and which constitute part of the Collateral to be assumed or rejected pursuant to 365(a) of the Bankruptcy Code as the Collateral Agent or such Person may direct (except to the extent that such obligations were theretofore duly rejected by such Grantor), and to cause such rights or obligations to be assigned to the Collateral Agent or to such Person pursuant to 365(f) of the Bankruptcy Code (assuming that adequate assurance of future performance is given). To the fullest extent permitted by law, each of the Grantors agrees that the Collateral Agent and such other Persons shall have the right to effect such assumption, rejection or assignment, all as the Collateral Agent or such Persons may direct without further action by any Grantor. Each of the Grantors hereby agrees to take all such action as the Collateral Agent and such other Persons may reasonably request to effect any such assumption, rejection or assignment (including but not limited to, in the case of assumption, the Collateral Agent reserving its rights under Section 6 hereof to cure any defaults and provide adequate assurance of future performance to the extent that any Grantor refuses or otherwise fails to do so). In addition to the rights and remedies described hereunder, the Collateral Agent shall have the rights and remedies set forth in Section 8 of the Credit Agreement. (d) The Collateral Agent may sell the Collateral without giving any warranties as to the Collateral. The Collateral Agent may specifically disclaim or modify any warranties of title or the like. This procedure will not be considered to adversely effect the commercial reasonableness of any sale of the Collateral. (e) Collateral. 7.2 Application of Proceeds. Except as expressly provided elsewhere in this Agreement, all proceeds received by the Collateral Agent in respect of any sale, any collection The Collateral Agent shall have no obligation to marshall any of the

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from, or other realization upon all or any part of the Collateral shall be distributed by the Collateral Agent to the Administrative Agent to be applied in accordance with Section 8.3 of the Credit Agreement. 7.3 Sales on Credit. If Collateral Agent sells any of the Collateral upon credit, Grantor will be credited only with payments actually made by purchaser and received by Collateral Agent and applied to indebtedness of the purchaser. In the event the purchaser fails to pay for the Collateral, Collateral Agent may, upon the request or consent of the Required Lenders, resell the Collateral and Grantor shall be credited with proceeds of the sale. 7.4 Deposit Accounts. Subject to Section 8.2 of the Credit Agreement and the Order, if any Event of Default shall have occurred and be continuing, the Collateral Agent may apply the balance from any Deposit Account or instruct the bank at which any Deposit Account is maintained to pay the balance of any Deposit Account to or for the benefit of the Collateral Agent. 7.5 Investment Related Property. Each Grantor recognizes that, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws, the Collateral Agent may be compelled, with respect to any sale of all or any part of the Investment Related Property conducted without prior registration or qualification of such Investment Related Property under the Securities Act and/or such state securities laws, to limit purchasers to those who will agree, among other things, to acquire the Investment Related Property for their own account, for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges that any such private sale may be at prices and on terms less favorable than those obtainable through a public sale without such restrictions (including a public offering made pursuant to a registration statement under the Securities Act) and, notwithstanding such circumstances, each Grantor agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner and that the Collateral Agent shall have no obligation to engage in public sales and no obligation to delay the sale of any Investment Related Property for the period of time necessary to permit the issuer thereof to register it for a form of public sale requiring registration under the Securities Act or under applicable state securities laws, even if such issuer would, or should, agree to so register it. If the Collateral Agent determines to exercise its right to sell any or all of the Investment Related Property, upon written request, each Grantor shall and shall cause each issuer of any Pledged Stock to be sold hereunder, each partnership and each limited liability company from time to time to furnish to the Collateral Agent all such information as the Collateral Agent may request in order to determine the number and nature of interest, shares or other instruments included in the Investment Related Property which may be sold by the Collateral Agent in exempt transactions under the Securities Act and the rules and regulations of the Securities and Exchange Commission thereunder, as the same are from time to time in effect. 7.6 Intellectual Property.

(a) Anything contained herein to the contrary notwithstanding, upon the occurrence and during the continuation of an Event of Default, and subject to Section 8.2 of the Credit Agreement and the Order:

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(i) the Collateral Agent shall have the right (but not the obligation) to bring suit or otherwise commence any action or proceeding in the name of any Grantor, the Collateral Agent or otherwise, in the Collateral Agents sole discretion, to enforce any Intellectual Property, in which event such Grantor shall, at the request of the Collateral Agent, do any and all lawful acts and execute any and all documents required by the Collateral Agent in aid of such enforcement and such Grantor shall promptly, upon demand, reimburse and indemnify the Collateral Agent as provided in Section 10.3 of the Credit Agreement in connection with the exercise of its rights under this Section, and, to the extent that the Collateral Agent shall elect not to bring suit to enforce any Intellectual Property as provided in this Section, each Grantor agrees to use all reasonable measures, whether by action, suit, proceeding or otherwise, to prevent the infringement of any of the Intellectual Property by others and for that purpose agrees to diligently maintain any action, suit or proceeding against any Person so infringing as shall be necessary to prevent such infringement; (ii) upon written demand from the Collateral Agent, each Grantor shall grant, assign, convey or otherwise transfer to the Collateral Agent an absolute assignment of all of such Grantors right, title and interest in and to the Intellectual Property and shall execute and deliver to the Collateral Agent such documents as are necessary or appropriate to carry out the intent and purposes of this Agreement; (iii) each Grantor agrees that such an assignment and/or recording shall be applied to reduce the Secured Obligations outstanding only to the extent that the Collateral Agent (or any Lender Party) receives Cash Proceeds in respect of the sale of, or other realization upon, the Intellectual Property; (iv) within five (5) Business Days after written notice from the Collateral Agent, each Grantor shall make available to the Collateral Agent, to the extent within such Grantors power and authority, such personnel in such Grantors employ on the date of such Event of Default as the Collateral Agent may reasonably designate, by name, title or job responsibility, to permit such Grantor to continue, directly or indirectly, to produce, advertise and sell the products and services sold or delivered by such Grantor under or in connection with the Trademarks, Trademark Licenses, such persons to be available to perform their prior functions on the Collateral Agents behalf and to be compensated by the Collateral Agent at such Grantors expense on a per diem, pro-rata basis consistent with the salary and benefit structure applicable to each as of the date of such Event of Default; and (v) the Collateral Agent shall have the right to notify, or require each Grantor to notify, any obligors with respect to amounts due or to become due to such Grantor in respect of the Intellectual Property, of the existence of the security interest created herein, to direct such obligors to make payment of all such amounts directly to the Collateral Agent, and, upon such notification and at the expense of such Grantor, to enforce collection of any such amounts and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done;

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(1) all amounts and proceeds (including checks and other instruments) received by Grantor in respect of amounts due to such Grantor in respect of the Collateral or any portion thereof shall be received in trust for the benefit of the Collateral Agent hereunder, shall be segregated from other funds of such Grantor and shall be forthwith paid over or delivered to the Collateral Agent in the same form as so received (with any necessary endorsement) to be held as cash Collateral and applied as provided by Section 7.7 hereof; and (2) Grantor shall not adjust, settle or compromise the amount or payment of any such amount or release wholly or partly any obligor with respect thereto or allow any credit or discount thereon. (b) If (i) an Event of Default shall have occurred and, by reason of cure, waiver, modification, amendment or otherwise, no longer be continuing, (ii) no other Event of Default shall have occurred and be continuing, (iii) an assignment or other transfer to the Collateral Agent of any rights, title and interests in and to the Intellectual Property shall have been previously made and shall have become absolute and effective, and (iv) the Secured Obligations shall not have become immediately due and payable, upon the written request of any Grantor, the Collateral Agent shall promptly execute and deliver to such Grantor, at such Grantors sole cost and expense, such assignments or other transfer as may be necessary to reassign to such Grantor any such rights, title and interests as may have been assigned to the Collateral Agent as aforesaid, subject to any disposition thereof that may have been made by the Collateral Agent; provided, after giving effect to such reassignment, the Collateral Agents security interest granted pursuant hereto, as well as all other rights and remedies of the Collateral Agent granted hereunder, shall continue to be in full force and effect; and provided further, the rights, title and interests so reassigned shall be free and clear of any Liens granted by or on behalf of the Collateral Agent and the Lender Parties. (c) Solely for the purpose of enabling the Collateral Agent to exercise rights and remedies under this Section 7.6 and at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Collateral Agent, to the extent it has the right to do so, an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to such Grantor), subject, in the case of Trademarks, to sufficient rights to quality control and inspection in favor of such Grantor to avoid the risk of invalidation of said Trademarks, to use, operate under, license, or sublicense any Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located. 7.7 Cash Proceeds. All proceeds of any Collateral received by any Grantor consisting of cash, checks and other near-cash items (collectively, Cash Proceeds) shall be held by such Grantor in trust for the Collateral Agent and in accordance with Section 2.16 of the Credit Agreement, and shall be applied and paid as provided in Section 2.16 of the Credit Agreement. Any Cash Proceeds received by the Collateral Agent (whether from a Grantor or otherwise): (i) if no Event of Default shall have occurred and be continuing, shall be applied and paid as provided in Sections 2.9 and 2.10 of the Credit Agreement and (ii) if an Event of Default shall have occurred and be continuing, may, in the sole discretion of the Required Lenders, (A) be held by the Collateral Agent for the ratable benefit of the Lender Parties, as collateral security

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for the Secured Obligations (whether matured or unmatured) and/or (B) then or at any time thereafter may be applied by the Collateral Agent against the Secured Obligations then due and owing. SECTION 8. AGENT The Collateral Agent has been appointed to act as collateral agent hereunder by Lenders and, by their acceptance of the benefits hereof, the other Lender Parties. The Collateral Agent shall be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking any action (including the release or substitution of Collateral), solely in accordance with this Agreement, the Credit Agreement and the Order. In furtherance of the foregoing provisions of this Section, each Lender Party, by its acceptance of the benefits hereof, agrees that it shall have no right individually to realize upon any of the Collateral hereunder, it being understood and agreed by such Lender Party that all rights and remedies hereunder may be exercised solely by the Collateral Agent (upon the request or consent of the Required Lenders) for the benefit of Lenders and Lender Counterparties in accordance with the terms of this Section. SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS This Agreement shall create a continuing security interest in the Collateral and shall remain in full force and effect until the payment in full of all Secured Obligations, the cancellation or termination of the Commitments, be binding upon each Grantor, its successors and assigns, and inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent and its successors, transferees and assigns. Without limiting the generality of the foregoing, but subject to the terms of the Credit Agreement, any Lender may assign or otherwise transfer any Loans held by it to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to Lenders herein or otherwise. Upon the payment in full of all Secured Obligations, the cancellation or termination of the Commitments, the security interest granted hereby shall terminate hereunder and of record and all rights to the Collateral shall revert to Grantors. Upon any such termination the Collateral Agent shall, at Grantors expense, execute and deliver to Grantors such documents as Grantors shall reasonably request to evidence such termination. SECTION 10. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM Except for the exercise of reasonable care in the custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Collateral Agent accords its own property. Neither the Collateral Agent nor any of its directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or otherwise. If any Grantor fails to perform any agreement contained herein, the Collateral Agent may itself perform, or

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cause performance of, such agreement, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by each Grantor under Section 10.2 of the Credit Agreement. SECTION 11. MISCELLANEOUS Any notice required or permitted to be given under this Agreement shall be given in accordance with Section 10.1 of the Credit Agreement. No failure or delay on the part of the Collateral Agent in the exercise of any power, right or privilege hereunder or under any other Transaction Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. All rights and remedies existing under this Agreement and the other Transaction Documents are cumulative to, and not exclusive of, any rights or remedies otherwise available. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists. This Agreement shall be binding upon and inure to the benefit of the Collateral Agent and Grantors and their respective successors and assigns (including any debtor in possession on behalf of any Grantor). No Grantor shall, without the prior written consent of the Required Lenders given in accordance with the Credit Agreement, assign any right, duty or obligation hereunder. This Agreement and the other Transaction Documents embody the entire agreement and understanding between Grantors and the Collateral Agent and supersede all prior agreements and understandings between such parties relating to the subject matter hereof and thereof. Accordingly, the Transaction Documents may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties. This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. Notwithstanding anything herein to the contrary, the Collateral Agent shall not take any actions with respect to the Collateral without the written consent or request of the Required Lenders. In the event of any inconsistency between the terms and conditions of this Agreement and the and the Credit Agreement, the provisions of the Credit Agreement shall govern and control. In the event of any inconsistency between the terms and conditions of this Agreement and the Order, the provisions of the Order shall govern and control. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN THE NEW YORK GENERAL OBLIGATIONS LAW 5-1401 AND 5-1402) AND ANY

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APPLICABLE LAWS OF THE UNITED STATES OF AMERICA (INCLUDING THE BANKRUPTCY CODE). [Remainder of page intentionally left blank.]

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SCHEDULE 4.1 TO PLEDGE AND SECURITY AGREEMENT

GENERAL INFORMATION (A) Full Legal Name, Type of Organization, Jurisdiction of Organization, Chief Executive Office/Sole Place of Business and Organizational Identification Number of each Grantor: Type of Organization Corporation Jurisdiction of Organization Delaware Organization I.D.# 3794132

Full Legal Name Pacific Energy Resources Ltd. Petrocal Acquisition Corp. San Pedro Bay Pipeline Company Carneros Acquisition Corp. Carneros Energy, Inc. Gotland Oil, Inc.

Chief Executive Office 111 West Ocean Blvd., Suite 1240, Long Beach, CA 90802 111 West Ocean Blvd., Suite 1240, Long Beach, CA 90802 111 West Ocean Blvd., Suite 1240, Long Beach, CA 90802 4550 California Avenue, Suite 720, Bakersfield, CA 93309 4550 California Avenue, Suite 720, Bakersfield, CA 93309 4550 California Avenue, Suite 720, Bakersfield, CA 93309

Corporation

Delaware

3781355

Corporation

California

C1848132

Corporation

Delaware

4167090

Corporation

Delaware

3389076

Corporation

Texas

113679400

(B)

Other Names (including any Trade-Name or Fictitious Business Name) under which each Grantor has conducted business for the past five (5) years: See disclosures under (C) below.

(C)

Changes in Name, Jurisdiction of Organization, Chief Executive Office and Corporate Structure within past five (5) years:

Pacific Energy Resources Ltd. Pacific Energy Resources Ltd. shall do business in the State of California as Pacific Energy Resources Ltd. Which Will Do Business in California As Pacific Energy Resources North America.

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On November 20, 2006, Pacific Energy Resources Ltd. changed its chief executive office from 1065 West Pier E Street, Long Beach, CA 90802 to 111 West Ocean Blvd., Suite 1240, Long Beach, CA 90802. Petrocal Acquisition Corp. On November 20, 2006, Petrocal Acquisition Corp. changed its chief executive office from 1065 West Pier E Street, Long Beach, CA 90802 to 111 West Ocean Blvd., Suite 1240, Long Beach, CA 90802. San Pedro Bay Pipeline Company In November 2006, San Pedro Bay Pipeline Company changed its chief executive office from 10000 Ming Avenue, Bakersfield, CA 93311 to 111 West Ocean Blvd., Suite 1240, Long Beach, CA 90802. Carneros Acquisition Corp. In December 2006, Carneros Acquisition Corp. changed its chief executive office from 1717 28th Street, Bakersfield, CA 93301 to 4550 California Avenue, Suite 720, Bakersfield, CA 93309. Carneros Energy, Inc. In December 2006, Carneros Energy, Inc. changed its chief executive office from 1717 28th Street, Bakersfield, CA 93301 to 4550 California Avenue, Suite 720, Bakersfield, CA 93309. Gotland Oil, Inc. In December 2006, Gotland Oil, Inc. changed its chief executive office from 1717 28th Street, Bakersfield, CA 93301 to 4550 California Avenue, Suite 720, Bakersfield, CA 93309. (D) Filing Offices: Name of Grantor Pacific Energy Resources Ltd. Filing Jurisdiction(s) Delaware Secretary of State; Los Angeles County, California and Orange County, California for as extracted collateral and fixtures Delaware Secretary of State California Secretary of State; Los Angeles County, California and Orange County, California for as extracted collateral and fixtures Delaware Secretary of State Delaware Secretary of State Texas Secretary of State

Petrocal Acquisition Corp. San Pedro Bay Pipeline Company

Carneros Acquisition Corp. Carneros Energy, Inc. Gotland Oil, Inc.

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SCHEDULE 4.3 TO PLEDGE AND SECURITY AGREEMENT INVESTMENT RELATED PROPERTY Pledged Stock:
Class of Stock cmn Stock Cert. No. 2 No. of Pledged Shares 1000 % of Outstanding Stock of the Stock Issuer 100%

Grantor Pacific Energy Resources Ltd. Pacific Energy Resources Ltd. Pacific Energy Resources Ltd. Carneros Acquisition Corp. Carneros Energy, Inc.

Stock Issuer Petrocal Acquisition Corp. San Pedro Bay Pipeline Company Carneros Acquisition Corp. Carneros Energy, Inc. Gotland Oil, Inc.

Certif. (Y/N) Y

Par Value

cmn

1000

100%

cmn

100

100%

cmn cmn

Y Y

54 30

$0.01 $1.00

33,637.716 116,773

100% 100%

Pledged LLC Interests:

Grantor Pacific Energy Resources Ltd. Issuer Pacific Energy Alaska Holdings, LLC Type of Interest common Certif. (Y/N) Y Cert. No. 1 % of Interest 100%

Pledged Partnership Interests: None. Pledged Trust Interests: None. Securities Accounts: None. Commodities Accounts: None. Deposit Accounts:
Grantor Pacific Energy Resources Ltd. Pacific Energy Resources Ltd. Pacific Energy Resources Ltd. Pacific Energy Resources Ltd. Pacific Energy Resources Ltd. Pacific Energy Resources Ltd. Pacific Energy Resources Ltd. Name of Depository Bank Wells Fargo Bank, National Association Wells Fargo Bank, National Association Wells Fargo Bank, National Association Wells Fargo Bank, National Association Wells Fargo Bank, National Association Wells Fargo Bank, National Association Wells Fargo Bank, National Association Account Number 6885862554 8045825125 3292165846 6122401331 6029106382 1181319938 3393165919 Account Name demand deposit account savings deposit account demand deposit account savings deposit account demand deposit account certificate of deposit account flexible spending account

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SCHEDULE 4.5 TO PLEDGE AND SECURITY AGREEMENT LETTER OF CREDIT RIGHTS Name of Grantor None. Description of Letters of Credit

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SCHEDULE 4.6 TO PLEDGE AND SECURITY AGREEMENT COMMERCIAL TORT CLAIMS Name None. Commercial Tort Claims

Exhibit A
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EXHIBIT A TO PLEDGE AND SECURITY AGREEMENT PLEDGE SUPPLEMENT This PLEDGE SUPPLEMENT, dated [mm/dd], 2009, is delivered pursuant to the Pledge and Security Agreement, dated as of March 11, 2009 (as it may be from time to time amended, restated, modified or supplemented, the Security Agreement), by and among PACIFIC ENERGY RESOURCES LTD., a Delaware corporation, the other Grantors named therein, and J. ARON & COMPANY, as the Collateral Agent. Capitalized terms used herein not otherwise defined herein shall have the meanings ascribed thereto in the Security Agreement. Grantor hereby confirms the grant to the Collateral Agent set forth in the Security Agreement of, and does hereby grant to the Collateral Agent, a security interest in all of Grantors right, title and interest in and to all Collateral to secure the Secured Obligations, in each case whether now or hereafter existing or in which Grantor now has or hereafter acquires an interest and wherever the same may be located. All such Collateral shall be deemed to be part of the Collateral and hereafter subject to each of the terms and conditions of the Security Agreement. Grantor represents and warrants that the attached Supplements to Schedules accurately and completely set forth all additional information required pursuant to the Security Agreement and hereby agrees that such Supplements to Schedules shall constitute part of the Schedules to the Security Agreement. The undersigned hereby (i) agrees that this Pledge Supplement may be attached to the Security Agreement and (ii) agrees that the undersigned will comply with all the terms and conditions of the Security Agreement as if it were an original signatory thereto. IN WITNESS WHEREOF, Grantor has caused this Pledge Supplement to be duly executed and delivered by its duly authorized officer as of [mm/dd], 2009. [ADDITIONAL GRANTOR]

By:____________________________ Name: Title:

Exhibit A
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SUPPLEMENT TO SCHEDULE 4.1 TO PLEDGE AND SECURITY AGREEMENT GENERAL INFORMATION (A) Full Legal Name, Type of Organization, Jurisdiction of Organization, Chief Executive Office/Sole Place of Business and Organizational Identification Number of Additional Grantor: Jurisdiction Type of of Organization Organization [________] [________] Organization I.D.# [________]

Full Legal Name [________]

Chief Executive Office [________]

(B)

Other Names (including any Trade-Name or Fictitious Business Name) under which Additional Grantor has conducted business for the past five (5) years:

[_________] (C) Changes in Name, Jurisdiction of Organization, Chief Executive Office and Corporate Structure within past five (5) years:

[_________] (D) Filing Offices: Name of Additional Grantor [_________] Filing Jurisdiction(s) [_________]

Exhibit A
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EXHIBIT B TO PLEDGE AND SECURITY AGREEMENT [attach Deposit Account Control Agreement]

Exhibit B
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EXECUTION VERSION

PLEDGE AND SECURITY AGREEMENT

dated as of March 11, 2009 between EACH OF THE GRANTORS PARTY HERETO

and SILVER POINT FINANCE, LLC, as the Collateral Agent

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TABLE OF CONTENTS Page

SECTION 1. 1.1 1.2 SECTION 2. 2.1 2.2 2.3 2.4 SECTION 3. 3.1 3.2 SECTION 4. 4.1 4.2 4.3 4.4 4.5 4.6 SECTION 5. 5.1 5.2 5.3 SECTION 6. 6.1 6.2 SECTION 7. 7.1 7.2 7.3 7.4 7.5 7.6 7.7

DEFINITIONS ................................................................................................. 2 General Definitions ................................................................................................ 2 Definitions; Interpretation ...................................................................................... 7 GRANT OF SECURITY ................................................................................. 8 Grant of Security .................................................................................................... 8 The Order ............................................................................................................... 9 Carve-Out Amount; Other Liens ........................................................................... 9 Certain Limited Exclusions.................................................................................... 9 SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE .......... 9 Security for Obligations ......................................................................................... 9 Continuing Liability Under Collateral ................................................................. 10 REPRESENTATIONS AND WARRANTIES AND COVENANTS ........... 10 Generally .............................................................................................................. 10 Investment Related Property; Investment Related Property Generally ............... 12 Pledged Equity Interests ...................................................................................... 14 Investment Accounts ............................................................................................ 16 Letter of Credit Rights ......................................................................................... 17 Commercial Tort Claims...................................................................................... 17 ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS ............................................ 17 Access; Right of Inspection ................................................................................. 17 Further Assurances............................................................................................... 18 Additional Grantors ............................................................................................. 18 COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT ................ 19 Power of Attorney ................................................................................................ 19 No Duty on the Part of Collateral Agent or Lender Parties ................................. 20 REMEDIES.................................................................................................... 20 Generally .............................................................................................................. 20 Application of Proceeds ....................................................................................... 22 Sales on Credit ..................................................................................................... 22 Deposit Accounts ................................................................................................. 23 Investment Related Property ................................................................................ 23 Intellectual Property ............................................................................................. 23 Cash Proceeds ...................................................................................................... 25 i

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TABLE OF CONTENTS (continued) Page SECTION 8. SECTION 9. SECTION 10. SECTION 11. AGENT .......................................................................................................... 25 CONTINUING SECURITY INTEREST; TRANSFER OF LOANS ........... 26 STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM ....... 26 MISCELLANEOUS ...................................................................................... 26

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SCHEDULES:

4.1 General Information 4.3 Investment Related Property 4.5 Description of Letters of Credit 4.6 Commercial Tort Claims A Pledge Supplement B Deposit Account Control Agreement

EXHIBITS:

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PLEDGE AND SECURITY AGREEMENT This PLEDGE AND SECURITY AGREEMENT, dated as of March 11, 2009 (this Agreement), between EACH OF THE UNDERSIGNED, whether as an original signatory hereto or as an Additional Grantor (as herein defined) (each, a Grantor), and SILVER POINT FINANCE, LLC, as collateral agent for the Lender Parties (as herein defined) (in such capacity, the Collateral Agent). RECITALS: WHEREAS, reference is made to that certain Senior Secured Super Priority Priming Debtor in Possession Credit and Guaranty Agreement, dated as of the date hereof (as it may be amended, restated, supplemented or otherwise modified from time to time, the Credit Agreement), by and among Pacific Energy Resources Ltd., a Delaware corporation (PERL), Pacific Energy Alaska Holdings, LLC, a Delaware limited liability company (PEAH), Pacific Energy Alaska Operating LLC, a Delaware limited liability company (PEAO and, together with PERL and PEAH, the Borrowers), certain Subsidiaries of PERL, as guarantors (the Guarantors), the lenders party thereto from time to time (the Lenders), J. ARON & COMPANY, as administrative agent, lead arranger, syndication agent, and a collateral agent, and SILVER POINT FINANCE, LLC, as a collateral agent; WHEREAS, on March 8, 2009 (the Petition Date), each of the Borrowers and the Guarantors filed a petition under Chapter 11 of the Bankruptcy Code (the Case) in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court); WHEREAS, each of the Borrowers and the Guarantors intends to continue to operate its business as debtors and debtors in possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code; WHEREAS, the Borrowers have requested that the Lenders provide financing to the Borrowers consisting of a debtor in possession facility in an aggregate amount up to $186,646,370 (the Facility) pursuant to Sections 364(c) and (d) of the Bankruptcy Code; WHEREAS, the Lenders have indicated their willingness to agree to extend the Facility to the Borrowers on the terms and conditions set forth in the Credit Agreement and the Order pursuant to Sections 364(c) and (d) of the Bankruptcy Code; WHEREAS, pursuant to the Credit Agreement, the Guarantors guaranteed to the Collateral Agent and the Lenders the payment and performance of the Obligations to the Lenders and the Collateral Agent in respect of the Transaction Documents; WHEREAS, it is a condition precedent to the Lenders making loans or otherwise extending credit to the Borrowers under the Credit Agreement that the Grantors execute and deliver to the Collateral Agent for the benefit of the Lender Parties a pledge and security agreement in substantially the form hereof; WHEREAS, each of the Grantors wishes to grant a security interest in favor of the Collateral Agent for the benefit of the Lender Parties as herein provided;

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NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, each Grantor and the Collateral Agent agree as follows: SECTION 1. DEFINITIONS 1.1 General Definitions. In this Agreement, the following terms shall have the following meanings: Account Debtor shall mean each Person who is obligated on a Receivable or any Supporting Obligation related thereto. Accounts shall mean all accounts as defined in Article 9 of the UCC. Agreement shall have the meaning set forth in the preamble. Additional Grantors shall have the meaning assigned in Section 5.3. Assigned Agreements shall mean all agreements and contracts to which such Grantor is a party as of the date hereof, or to which such Grantor becomes a party after the date hereof, including each Material Contract, as each such agreement may be amended, supplemented or otherwise modified from time to time. Cash Proceeds shall have the meaning assigned in Section 7.7. Chattel Paper shall mean all chattel paper as defined in Article 9 of the UCC, including electronic chattel paper or tangible chattel paper, as each term is defined in Article 9 of the UCC. Collateral shall have the meaning assigned in Section 2.1. Collateral Agent shall have the meaning set forth in the preamble. Collateral Records shall mean books, records, ledger cards, files, correspondence, customer lists, blueprints, technical specifications, manuals, computer software, computer printouts, tapes, disks and related data processing software and similar items that at any time evidence or contain information relating to any of the Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon. Collateral Support shall mean all property (real or personal) assigned, hypothecated or otherwise securing any Collateral and shall include any security agreement or other agreement granting a lien or security interest in such real or personal property. Commercial Tort Claims shall mean all commercial tort claims as defined in Article 9 of the UCC, including all commercial tort claims listed on Schedule 4.6 (as such schedule may be amended or supplemented from time to time). Commodities Accounts shall mean all commodity accounts as defined in Article 9 of the UCC. 2
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Copyright Licenses shall mean any and all agreements providing for the granting of any right in or to Copyrights (whether such Grantor is licensee or licensor thereunder). Copyrights shall mean all United States and foreign copyrights, all mask works fixed in semi-conductor chip products (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, now or hereafter in force throughout the world, all registrations and applications therefor, all rights corresponding thereto throughout the world, all extensions and renewals of any thereof, the right to sue for past, present and future infringements of any of the foregoing, and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages, and proceeds of suit. Credit Agreement shall have the meaning set forth in the recitals. Deposit Accounts (i) shall mean all deposit accounts as defined in Article 9 of the UCC and (ii) shall include, without limitation, all of the accounts listed on Schedule 4.3 under the heading Deposit Accounts (as such schedule may be amended or supplemented from time to time). Documents shall mean all documents as defined in Article 9 of the UCC. Equipment shall mean: (i) all equipment as defined in Article 9 of the UCC, (ii) all machinery, manufacturing equipment, data processing equipment, computers, office equipment, furnishings, furniture, appliances, fixtures and tools (in each case, regardless of whether characterized as equipment under the UCC) and (iii) all accessions or additions thereto, all parts thereof, whether or not at any time of determination incorporated or installed therein or attached thereto, and all replacements therefor, wherever located, now or hereafter existing, including any fixtures. General Intangibles (i) shall mean all general intangibles as defined in Article 9 of the UCC, including payment intangibles also as defined in Article 9 of the UCC and (ii) shall include, without limitation, all interest rate or currency protection or hedging arrangements, all tax refunds, all licenses, permits, concessions and authorizations, all Assigned Agreements and all Intellectual Property (in each case, regardless of whether characterized as general intangibles under the UCC). Goods (i) shall mean all goods as defined in Article 9 of the UCC and (ii) shall include, without limitation, all Inventory and Equipment (in each case, regardless of whether characterized as goods under the UCC). Grantors shall have the meaning set forth in the preamble. Instruments shall mean all instruments as defined in Article 9 of the UCC. Insurance shall mean: (i) all insurance policies covering any or all of the Collateral (regardless of whether the Collateral Agent is the loss payee thereof) and (ii) any key man life insurance policies.

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Intellectual Property shall mean, collectively, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets, and the Trade Secret Licenses. Inventory shall mean: (i) all inventory as defined in Article 9 of the UCC and (ii) all goods held for sale or lease or to be furnished under contracts of service or so leased or furnished, all raw materials, work in process, finished goods, and materials used or consumed in the manufacture, packing, shipping, advertising, selling, leasing, furnishing or production of such inventory or otherwise used or consumed in any Grantors business; all goods in which any Grantor has an interest in mass or a joint or other interest or right of any kind; and all goods which are returned to or repossessed by any Grantor, all computer programs embedded in any goods and all accessions thereto and products thereof (in each case, regardless of whether characterized as inventory under the UCC). Investment Accounts shall mean the Securities Accounts, Commodities Accounts and Deposit Accounts. Investment Related Property shall mean: (i) all investment property (as such term is defined in Article 9 of the UCC) and (ii) all of the following (regardless of whether classified as investment property under the UCC): all Pledged Equity Interests, the Investment Accounts, and certificates of deposit. Lender shall have the meaning set forth in the recitals. Lender Parties means the Lenders, the PERL Hedge Provider and the Lender Counterparties and shall include, without limitation, all former Lenders and Lender Counterparties to the extent that any Obligations owing to such Persons were incurred while such Persons were Lenders or Lender Counterparties and such Obligations have not been paid or satisfied in full. Letter of Credit Right shall mean letter-of-credit right as defined in Article 9 of the UCC. Money shall mean money as defined in the UCC. Order shall mean the Interim Order or the Final Order, whichever is then in effect and any other applicable order entered by the Bankruptcy Court and in form and substance satisfactory to the Required Lenders. Patent Licenses shall mean all agreements providing for the granting of any right in or to Patents (whether such Grantor is licensee or licensor thereunder). Patents shall mean all United States and foreign patents and applications for letters patent throughout the world, all reissues, divisions, continuations, continuations-in-part, extensions, renewals, and reexaminations of any of the foregoing, all rights corresponding thereto throughout the world, and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages, and proceeds of suit and the right to sue for past, present and future infringements of any of the foregoing. 4
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Payment Intangible shall have the meaning specified in Article 9 of the UCC. Pledge Supplement shall mean any supplement to this agreement in substantially the form of Exhibit A. Pledged Debt shall mean all Indebtedness owed to each Grantor issued by the obligors named thereunder, the instruments evidencing such Indebtedness, and all interest, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Indebtedness. Pledged Equity Interests shall mean all Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged Trust Interests. Pledged LLC Interests shall mean all interests in any limited liability company, including all limited liability company interests listed on Schedule 4.3 under the heading Pledged LLC Interests (as such schedule may be amended or supplemented from time to time) and the certificates, if any, representing such limited liability company interests and any interest of such Grantor on the books and records of such limited liability company or on the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such limited liability company interests. Pledged Partnership Interests shall mean all interests in any general partnership, limited partnership, limited liability partnership or other partnership, including all partnership interests listed on Schedule 4.3 under the heading Pledged Partnership Interests (as such schedule may be amended or supplemented from time to time) and the certificates, if any, representing such partnership interests and any interest of such Grantor on the books and records of such partnership or on the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such partnership interests. Pledged Stock shall mean all shares of capital stock owned by such Grantor, including all shares of capital stock described on Schedule 4.3 under the heading Pledged Stock (as such schedule may be amended or supplemented from time to time), and the certificates, if any, representing such shares and any interest of such Grantor in the entries on the books of the issuer of such shares or on the books of any securities intermediary pertaining to such shares, and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares. Pledged Trust Interests shall mean all interests in a Delaware statutory trust or other trust, including all trust interests listed on Schedule 4.3 under the heading Pledged Trust Interests (as such schedule may be amended or supplemented from time to time) and the certificates, if any, representing such trust interests and any interest of such Grantor on the books and records of such trust or on the books and records of any securities intermediary pertaining to 5
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such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such trust interests. Proceeds shall mean: (i) all proceeds as defined in Article 9 of the UCC, (ii) payments or distributions made with respect to any Investment Related Property and (iii) whatever is receivable or received when Collateral or proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary. Receivables shall mean all rights to payment, whether or not earned by performance, for goods or other property sold, leased, licensed, assigned or otherwise disposed of, or services rendered or to be rendered, including all such rights constituting or evidenced by any Account, Chattel Paper, Instrument, General Intangible or Investment Related Property, together with all of Grantors rights, if any, in any goods or other property giving rise to such right to payment and all Collateral Support and Supporting Obligations related thereto and all Receivables Records. Receivables Records shall mean (i) all original copies of all documents, instruments or other writings or electronic records or other Records evidencing the Receivables, (ii) all books, correspondence, credit or other files, Records, ledger sheets or cards, invoices, and other papers relating to Receivables, including all tapes, cards, computer tapes, computer discs, computer runs, record keeping systems and other papers and documents relating to the Receivables, whether in the possession or under the control of Grantor or any computer bureau or agent from time to time acting for Grantor or otherwise, (iii) all evidences of the filing of financing statements and the registration of other instruments in connection therewith, and amendments, supplements or other modifications thereto, notices to other creditors or Lender Parties, and certificates, acknowledgments, or other writings, including lien search reports, from filing or other registration officers, (iv) all credit information, reports and memoranda relating thereto and (v) all other written or nonwritten forms of information related in any way to the foregoing or any Receivable. Record shall have the meaning specified in Article 9 of the UCC. Secured Obligations shall have the meaning assigned in Section 3.1. Securities shall mean any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as securities or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing. Securities Accounts shall mean all securities accounts as defined in Article 8 of the UCC. Supporting Obligation shall mean all supporting obligations as defined in Article 9 of the UCC. 6
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Trade Secret Licenses shall mean any and all agreements providing for the granting of any right in or to Trade Secrets (whether such Grantor is licensee or licensor thereunder). Trade Secrets shall mean all trade secrets and all other confidential or proprietary information and know-how now or hereafter owned or used in, or contemplated at any time for use in, the business of such Grantor (all of the foregoing being collectively called a Trade Secret), whether or not such Trade Secret has been reduced to a writing or other tangible form, including all documents and things embodying, incorporating, or referring in any way to such Trade Secret, the right to sue for past, present and future infringement of any Trade Secret, and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages, and proceeds of suit. Trademark Licenses shall mean any and all agreements providing for the granting of any right in or to Trademarks (whether such Grantor is licensee or licensor thereunder). Trademarks shall mean all United States, state and foreign trademarks, trade names, corporate names, company names, business names, fictitious business names, internet domain names, trade styles, service marks, certification marks, collective marks, logos, other source or business identifiers, designs and general intangibles of a like nature, all registrations and applications for any of the foregoing, all extensions or renewals of any of the foregoing, all of the goodwill of the business connected with the use of and symbolized by the foregoing, the right to sue for past, present and future infringement or dilution of any of the foregoing or for any injury to goodwill, and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages, and proceeds of suit. UCC shall mean the Uniform Commercial Code as in effect from time to time in the State of New York or, when the context implies, the Uniform Commercial Code as in effect from time to time in any other applicable jurisdiction. United States shall mean the United States of America. 1.2 Definitions; Interpretation. All capitalized terms used herein (including the preamble and recitals hereto) and not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement or, if not defined therein, in the UCC. References to Sections, Exhibits and Schedules shall be to Sections, Exhibits and Schedules, as the case may be, of this Agreement unless otherwise specifically provided. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. The use herein of the word include or including, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not nonlimiting language (such as without limitation or but not limited to or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. If any conflict or inconsistency exists between this Agreement and the Credit Agreement, the Credit Agreement shall govern. All references herein to provisions of the 7
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UCC shall include all successor provisions under any subsequent version or amendment to any Article of the UCC. SECTION 2. GRANT OF SECURITY 2.1 Grant of Security. Each Grantor, subject to the Order, hereby grants to the Collateral Agent, for the benefit of the Secured Parties and the Agents, a security interest and continuing lien on all of such Grantors right, title and interest in, to and under all personal property of such Grantor including, but not limited to the following, in each case whether now owned or existing or hereafter acquired or arising and wherever located (all of which being hereinafter collectively referred to as the Collateral): (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) Accounts; Chattel Paper; Documents; General Intangibles; Goods; Instruments; Insurance; Intellectual Property; Investment Related Property; Letter of Credit Rights; Money; Receivables and Receivable Records; Commercial Tort Claims;

(n) to the extent not otherwise included above, all Collateral Records, Collateral Support and Supporting Obligations relating to any of the foregoing; (o) to the extent not otherwise included above, all Proceeds, products, accessions, rents and profits of or in respect of any of the foregoing (including insurance proceeds); (p) proceeds of Avoidance Actions solely to the extent arising under Section 549 of the Bankruptcy Code;

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(q) proceeds of Avoidance Actions except to the extent arising under Section 549 of the Bankruptcy Code, but only with respect to claims arising under the Revolving Facility and solely upon entry of the Final Order; and (r) thereof. 2.2 The Order. The security interest provided for under Section 2.1 hereof has also been granted pursuant to the Order. This Agreement supplements the Order without in any way diminishing or limiting the effect of the Order or any Lien or security interest granted thereunder. 2.3 Carve-Out Amount; Other Liens. The security interest granted by the Grantors to the Collateral Agent and evidenced by this Agreement and other Security Documents shall be subject to, as to priority only and without duplication, the Carve Out, but otherwise shall be senior in priority to the adequate protection Liens securing the Prepetition Lender Debt and all other Liens entitled to priority under applicable nonbankruptcy law other than Permitted Prior Liens. 2.4 Certain Limited Exclusions. Notwithstanding anything herein to the contrary, in no event shall the security interest granted under Section 2.1 hereof attach to any lease, license, contract, property rights or agreement to which any Grantor is a party or any of its rights or interests thereunder if and for so long as the grant of such security interest shall constitute or result in (i) the abandonment, invalidation or unenforceability of any right, title or interest of any Grantor therein or (ii) in a breach or termination pursuant to the terms of, or a default under, any such lease license, contract property rights or agreement (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law (including the Bankruptcy Code) or principles of equity), provided however that such security interest shall attach immediately at such time as the condition causing such abandonment, invalidation or unenforceability shall be remedied and to the extent severable, shall attach immediately to any portion of such lease, license, contract, property rights or agreement that does not result in any of the consequences specified in (i) or (ii) above. SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE 3.1 Security for Obligations. This Agreement secures, and the Collateral is collateral security for, the prompt and complete payment or performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, of all Obligations with respect to every Grantor (the Secured Obligations). 3.2 Continuing Liability Under Collateral. Notwithstanding anything herein to the contrary, (i) each Grantor shall remain liable for all obligations under the Collateral and nothing contained herein is intended or shall be a delegation of duties to the Collateral Agent or any Lender Party and (ii) each Grantor shall remain liable under each of the agreements included in the Collateral, including any agreements relating to Pledged Partnership Interests or Pledged LLC Interests, to perform all of the obligations undertaken by it thereunder all in accordance with and pursuant to the terms and provisions thereof and neither the Collateral Agent nor any 9
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any rights under Section 506(c) of the Bankruptcy Code and the proceeds

Lender Party shall have any obligation or liability under any of such agreements by reason of or arising out of this Agreement or any other document related thereto nor shall the Collateral Agent nor any Lender Party have any obligation to make any inquiry as to the nature or sufficiency of any payment received by it or have any obligation to take any action to collect or enforce any rights under any agreement included in the Collateral, including any agreements relating to Pledged Partnership Interests or Pledged LLC Interests, and (iii) the exercise by the Collateral Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral. SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS 4.1 warrants that: (i) it owns the Collateral purported to be owned by it or otherwise has the rights it purports to have in each item of Collateral and, as to all Collateral whether now existing or hereafter acquired, will continue to own or have such rights in each item of the Collateral, in each case free and clear of any and all Liens, rights or claims of all other Persons other than Permitted Liens; (ii) it has indicated on Schedule 4.1(A) (as such schedule may be amended or supplemented from time to time): (w) the type of organization of such Grantor, (x) the jurisdiction of organization of such Grantor, (y) its organizational identification number and (z) the jurisdiction where the chief executive office or its sole place of business is (or the principal residence if such Grantor is a natural person), and for the one-year period preceding the date hereof has been, located. (iii) the full legal name of such Grantor is as set forth on Schedule 4.1(A) and it has not done in the last five (5) years, and does not do, business under any other name (including any trade-name or fictitious business name) except for those names set forth on Schedule 4.1(B) (as such schedule may be amended or supplemented from time to time); (iv) except as provided on Schedule 4.1(C), it has not changed its name, jurisdiction of organization, chief executive office or sole place of business (or principal residence if such Grantor is a natural person) or its corporate structure in any way (e.g., by merger, consolidation, change in corporate form or otherwise) within the past five (5) years; (v) it has not within the last five (5) years become bound (whether as a result of merger or otherwise) as debtor under a security agreement entered into by another Person, which has not heretofore or contemporaneously herewith been terminated; (vi) upon entry of the Order and upon the filing of all UCC financing statements naming each Grantor as debtor and the Collateral Agent as secured party 10
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Generally. (a) Representations and Warranties. Each Grantor hereby represents and

and describing the Collateral in the filing offices set forth opposite such Grantors name on Schedule 4.1(D) hereof (as such schedule may be amended or supplemented from time to time) and other filings delivered by each Grantor, upon execution of a control agreement substantively in the form of Exhibit B hereto with respect to any Deposit Account, and upon consent of the issuer with respect to Letter of Credit Rights, the security interests granted to the Collateral Agent hereunder constitute valid and perfected first priority Liens (subject in the case of priority only to Permitted Prior Liens) on all of the Collateral; (vii) all actions and consents, including the Order and all filings, notices, registrations and recordings necessary or otherwise requested by the Collateral Agent for the exercise by the Collateral Agent of the voting or other rights provided for in this Agreement or the exercise of remedies in respect of the Collateral have been made or obtained; (viii) other than the financing statements filed in favor of the Collateral Agent and financing statements filed in respect of Permitted Liens, no effective UCC financing statement, fixture filing or other instrument similar in effect under any applicable law covering all or any part of the Collateral is on file in any filing or recording office; (ix) no authorization, approval or other action by, and no notice to or filing with, any Governmental Authority, other than the Bankruptcy Court, or regulatory body is required for either (i) the pledge or grant by any Grantor of the Liens purported to be created in favor of the Collateral Agent, for the benefit of the Secured Parties and the Agents, hereunder or (ii) the exercise by Collateral Agent of any rights or remedies in respect of any Collateral (whether specifically granted or created hereunder or created or provided for by applicable law), except (A) for the filings contemplated by clause (vii) above and (B) as may be required, in connection with the disposition of any Investment Related Property, by laws generally affecting the offering and sale of Securities; (x) each Receivable (a) is and will be the legal, valid and binding obligation of the Account Debtor in respect thereof, representing an unsatisfied obligation of such Account Debtor, (b) is and will be enforceable in accordance with its terms, (c) is not and will not be subject to any setoffs, defenses, taxes, counterclaims (except with respect to refunds, returns and allowances in the ordinary course of business with respect to damaged merchandise) and (d) is and will be in compliance with all applicable laws, whether federal, state, local or foreign; (xi) none of the Account Debtors in respect of any Receivable is the government of the United States, any agency or instrumentality thereof, any state or municipality or any foreign sovereign; and (xii) no Receivable is evidenced by, or constitutes, an Instrument or Chattel Paper which has not been delivered to, or otherwise subjected to the control of, the Collateral Agent.

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(b) that:

Covenants and Agreements. Each Grantor hereby covenants and agrees

(i) except for the security interest created by this Agreement, it shall not create or suffer to exist any Lien upon or with respect to any of the Collateral, except Permitted Liens, and such Grantor shall defend the Collateral against all Persons at any time claiming any interest therein; (ii) it shall not produce, use or permit any Collateral to be used unlawfully or in violation of any provision of this Agreement or any applicable statute, regulation or ordinance or any policy of insurance covering the Collateral; (iii) it shall not take or permit any action which could impair the Collateral Agents rights in the Collateral; and (iv) it shall keep and maintain at its own cost and expense satisfactory and complete records of the Collateral. 4.2 that: (i) in the event it acquires rights in any Investment Related Property after the date hereof, it shall deliver to the Collateral Agent a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto, reflecting such new Investment Related Property and all other Investment Related Property. Notwithstanding the foregoing, it is understood and agreed that the security interest of the Collateral Agent shall attach to all Investment Related Property immediately upon any Grantors acquisition of rights therein and shall not be affected by the failure of any Grantor to deliver a supplement as required hereby; (ii) except as provided in the next sentence, in the event such Grantor receives any dividends, interest or distributions on any Investment Related Property, or any securities or other property upon the merger, consolidation, liquidation or dissolution of any issuer of any Investment Related Property, then (a) such dividends, interest or distributions and securities or other property shall be included in the definition of Collateral without further action and (b) such Grantor shall immediately take all steps, if any, necessary or advisable to ensure the validity, perfection, priority and, if applicable, control of the Collateral Agent over such Investment Related Property (including delivery thereof to the Collateral Agent) and pending any such action such Grantor shall be deemed to hold such dividends, interest, distributions, securities or other property in trust for the benefit of the Collateral Agent and shall be segregated from all other property of such Grantor. Notwithstanding the foregoing, so long as no Event of Default shall have occurred and be continuing, the Collateral Agent authorizes each Grantor to retain all ordinary cash dividends and distributions paid in the normal course of the business of the issuer and consistent with the past practice of the issuer and all scheduled payments of 12
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Investment Related Property; Investment Related Property Generally. (a) Covenants and Agreements. Each Grantor hereby covenants and agrees

interest; provided that all such cash is deposited in the applicable Collateral Account in accordance with Section 2.16 of the Credit Agreement; and (iii) each Grantor consents to the grant by each other Grantor of a security interest in all Investment Related Property to the Collateral Agent. (b) Delivery and Control. Each Grantor agrees that with respect to any Investment Related Property in which it currently has rights it shall comply with the provisions of this Section on or before the Closing Date and with respect to any Investment Related Property hereafter acquired by such Grantor it shall comply with the provisions of this Section immediately upon acquiring rights therein, in each case in form and substance satisfactory to the Collateral Agent. With respect to any Investment Related Property that is represented by a certificate or that is an instrument (other than any Investment Related Property credited to a Securities Account) it shall cause such certificate or instrument to be delivered to the Collateral Agent, indorsed in blank by an effective indorsement (as defined in Section 8-107 of the UCC), regardless of whether such certificate constitutes a certificated security for purposes of the UCC. With respect to any Investment Related Property that is an uncertificated security for purposes of the UCC (other than any uncertificated securities credited to a Securities Account), it shall cause the issuer of such uncertificated security to either (i) register the Collateral Agent as the registered owner thereof on the books and records of the issuer or (ii) execute an agreement in form and substance satisfactory to the Collateral Agent, pursuant to which such issuer agrees to comply with the Collateral Agents instructions with respect to such uncertificated security without further consent by such Grantor. (c) continuing: (1) except as otherwise provided under the covenants and agreements relating to Investment Related Property in this Agreement or elsewhere herein, in the Credit Agreement or in the Order, each Grantor shall be entitled to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Investment Related Property or any part thereof for any purpose not inconsistent with the terms of this Agreement, the Credit Agreement or the Order; provided, no Grantor shall exercise or refrain from exercising any such right if the Collateral Agent shall have notified such Grantor that, in the Collateral Agents reasonable judgment, such action would have a Material Adverse Effect on the value of the Investment Related Property or any part thereof; and provided further, such Grantor shall give the Collateral Agent at least five (5) Business Days prior written notice of the manner in which it intends to exercise, or the reasons for refraining from exercising, any such right; it being understood, however, that neither the voting by such Grantor of any Pledged Stock for, or such Grantors consent to, the election of directors (or similar governing body) at a regularly scheduled annual or other meeting of stockholders or with respect to incidental matters at any such meeting, nor such Grantors consent to or approval of any action otherwise permitted under this Agreement, the Credit Agreement or the Order, shall be deemed inconsistent with the terms of this Agreement, the Credit Agreement, or the 13
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Voting and Distributions. (i) So long as no Event of Default shall have occurred and be

Order within the meaning of this Section 4.2(c)(i)(1), and no notice of any such voting or consent need be given to the Collateral Agent; (2) to the extent the Collateral Agent is registered as the registered owner of any such Investment Related Property, the Collateral Agent shall promptly execute and deliver (or cause to be executed and delivered) to each Grantor all proxies, and other instruments as such Grantor may from time to time reasonably request for the purpose of enabling such Grantor to exercise the voting and other consensual rights when and to the extent which it is entitled to exercise pursuant to clause (1) above; and (3) Upon the occurrence and during the continuation of an Event of Default and subject to Section 8.2 of the Credit Agreement: (A) all rights of each Grantor to exercise or refrain from exercising the voting and other consensual rights which it would otherwise be entitled to exercise pursuant hereto shall cease and all such rights shall thereupon become vested in the Collateral Agent who shall thereupon have the sole right to exercise such voting and other consensual rights; and (B) in order to permit the Collateral Agent to exercise the voting and other consensual rights which it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions which it may be entitled to receive hereunder: (1) each Grantor shall promptly execute and deliver (or cause to be executed and delivered) to the Collateral Agent all proxies, dividend payment orders and other instruments as the Collateral Agent may from time to time reasonably request and (2) each Grantor acknowledges that the Collateral Agent may utilize the power of attorney set forth in Section 6. 4.3 warrants that: (i) Schedule 4.3 (as such schedule may be amended or supplemented from time to time) sets forth under the headings Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged Trust Interests, respectively, all of the Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged Trust Interests owned by any Grantor and such Pledged Equity Interests constitute the percentage of issued and outstanding shares of stock, percentage of membership interests, percentage of partnership interests or percentage of beneficial interest of the respective issuers thereof indicated on such Schedule; (ii) except as set forth on Schedule 4.3, it has not acquired any equity interests of another entity or substantially all the assets of another entity within the past five (5) years; 14
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Pledged Equity Interests. (a) Representations and Warranties. Each Grantor hereby represents and

(iii) it is the record and beneficial owner of the Pledged Equity Interests free of all Liens, rights or claims of other Persons other than Permitted Liens and there are no outstanding warrants, options or other rights to purchase, or shareholder, voting trust or similar agreements outstanding with respect to, or property that is convertible into, or that requires the issuance or sale of, any Pledged Equity Interests; (iv) without limiting any other provision hereof, subject to the entry by the Bankruptcy Court of the Order, no consent of any Person, including any other general or limited partner, any other member of a limited liability company, any other shareholder or any other trust beneficiary is necessary or desirable in connection with the creation, perfection or first priority status (subject to Permitted Prior Liens) of the security interest of the Collateral Agent in any Pledged Equity Interests or the exercise by the Collateral Agent of the voting or other rights provided for in this Agreement or the exercise of remedies in respect thereof; and (v) none of the Pledged LLC Interests nor Pledged Partnership Interests are or represent interests in issuers that are: (a) registered as investment companies, (b) dealt in or traded on securities exchanges or markets or (c) have opted to be treated as securities under the uniform commercial code of any jurisdiction; (b) that: (i) without the prior written consent of the Required Lenders, it shall not vote to enable or take any other action to: (a) amend or terminate any partnership agreement, limited liability company agreement, certificate of incorporation, by-laws or other organizational documents in any way that materially changes the rights of such Grantor with respect to any Investment Related Property or adversely affects the validity, perfection or priority of the Collateral Agents security interest, (b) permit any issuer of any Pledged Equity Interest to issue any additional stock, partnership interests, limited liability company interests or other equity interests of any nature or to issue securities convertible into or granting the right of purchase or exchange for any stock or other equity interest of any nature of such issuer, (c) other than as permitted under the Credit Agreement, permit any issuer of any Pledged Equity Interest to dispose of all or a material portion of their assets, (d) waive any default under or breach of any terms of organizational document relating to the issuer of any Pledged Equity Interest or the terms of any Pledged Debt, or (e) cause any issuer of any Pledged Partnership Interests or Pledged LLC Interests which are not securities (for purposes of the UCC) on the date hereof to elect or otherwise take any action to cause such Pledged Partnership Interests or Pledged LLC Interests to be treated as securities for purposes of the UCC; provided, however, notwithstanding the foregoing, if any issuer of any Pledged Partnership Interests or Pledged LLC Interests takes any such action in violation of the foregoing in this clause (e), such Grantor shall promptly notify the Collateral Agent in writing of any such election or action and, in such event, shall take all steps necessary or advisable to establish the Collateral Agents control thereof; Covenants and Agreements. Each Grantor hereby covenants and agrees

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(ii) it shall comply with all of its obligations under any partnership agreement or limited liability company agreement relating to Pledged Partnership Interests or Pledged LLC Interests and shall enforce all of its rights with respect to any Investment Related Property; (iii) each Grantor consents to the grant by each other Grantor of a security interest in all Investment Related Property to the Collateral Agent and, without limiting the foregoing, consents to the transfer of any Pledged Partnership Interest and any Pledged LLC Interest to the Collateral Agent or its nominee following an Event of Default in accordance with the Order and Section 8.2 of the Credit Agreement and to the substitution of the Collateral Agent or its nominee as a partner in any partnership or as a member in any limited liability company with all the rights and powers related thereto; and (iv) it shall notify the Collateral Agent of any default under any Pledged Debt that has caused, either in any case or in the aggregate, a Material Adverse Effect. 4.4 that: (i) With respect to any Investment Related Property consisting of Securities Accounts or Securities Entitlements, it shall cause the securities intermediary maintaining such Securities Account or Securities Entitlement to enter into an agreement substantially in form and substance satisfactory to the Collateral Agent pursuant to which it shall agree to comply with the Collateral Agents entitlement orders without further consent by such Grantor. With respect to any Investment Related Property that is a Deposit Account, it shall cause the depositary institution maintaining such account to enter into an agreement substantively in the form of Exhibit B hereto (or such other form satisfactory to the Collateral Agent), pursuant to which the Collateral Agent shall have both sole dominion and control over such Deposit Account (within the meaning of the common law) and control (within the meaning of Section 9-104 of the UCC) over such Deposit Account. (ii) In addition to the foregoing, if any issuer of any Investment Related Property is located in a jurisdiction outside of the United States, each Grantor shall take such additional actions, including causing the issuer to register the pledge on its books and records or making such filings or recordings, in each case as may be necessary or advisable, under the laws of such issuers jurisdiction to insure the validity, perfection and priority of the security interest of the Collateral Agent. Upon the occurrence of an Event of Default, subject to Section 8.2 of the Credit Agreement and the Order, the Collateral Agent shall have the right (upon the request or consent of the Required Lenders), without notice to any Grantor, to transfer all or any portion of the Investment Related Property to its name or the name of its nominee or agent. In addition, the Collateral Agent shall have the right (upon the request or consent of the Required 16
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Investment Accounts. (a) Covenants and Agreements. Each Grantor hereby covenants and agrees

Lenders) at any time, without notice to any Grantor, to exchange any certificates or instruments representing any Investment Related Property for certificates or instruments of smaller or larger denominations. 4.5 warrants that: (i) all material letters of credit to which such Grantor has rights are listed on Schedule 4.5 (as such schedule may be amended or supplemented from time to time) hereto; and (ii) it has obtained the consent of each issuer of any material letter of credit to the assignment of the proceeds of the letter of credit to the Collateral Agent. (b) Covenants and Agreements. Each Grantor hereby covenants and agrees that with respect to any material letter of credit hereafter arising it shall obtain the consent of the issuer thereof to the assignment of the proceeds of the letter of credit to the Collateral Agent and shall deliver to the Collateral Agent a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto. 4.6 Commercial Tort Claims. Letter of Credit Rights. (a) Representations and Warranties. Each Grantor hereby represents and

(a) Representations and Warranties. Each Grantor hereby represents and warrants that Schedule 4.6 (as such schedule may be amended or supplemented from time to time) sets forth all Commercial Tort Claims of each Grantor; and (b) Covenants and Agreements. Each Grantor hereby covenants and agrees that with respect to any Commercial Tort Claim hereafter arising it shall deliver to the Collateral Agent a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto, identifying such new Commercial Tort Claims. SECTION 5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS 5.1 Access; Right of Inspection. The Collateral Agent shall at all times have full and free access during normal business hours to all the books, correspondence and records of each Grantor, and the Collateral Agent and its representatives may examine the same, take extracts therefrom and make photocopies thereof, and each Grantor agrees to render to the Collateral Agent, at such Grantors cost and expense, such clerical and other assistance as may be reasonably requested with regard thereto. The Collateral Agent and its representatives shall at all times also have the right to enter any premises of each Grantor and inspect any property of each Grantor where any of the Collateral of such Grantor granted pursuant to this Agreement is located for the purpose of inspecting the same, observing its use or otherwise protecting its interests therein.

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5.2

Further Assurances.

(a) Each Grantor agrees that from time to time, at the expense of such Grantor, it shall promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Collateral Agent may reasonably request, in order to maintain the creation of and/or maintain the validity, perfection or priority of and protect any security interest granted or purported to be granted hereby or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each Grantor shall: (i) file such financing or continuation statements, or amendments thereto, and execute and deliver such other agreements, instruments, endorsements, powers of attorney or notices, as may be necessary or desirable, or as the Collateral Agent may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby; (ii) take all actions necessary to ensure the recordation of appropriate evidence of the liens and security interest granted hereunder in the Intellectual Property with any intellectual property registry in which said Intellectual Property is registered or in which an application for registration is pending, including the United States Patent and Trademark Office, the United States Copyright Office, the various Secretaries of State, and the foreign counterparts on any of the foregoing; (iii) at any reasonable time, upon request by the Collateral Agent, assemble the Collateral and allow inspection of the Collateral by the Collateral Agent, or persons designated by the Collateral Agent; and (iv) at the Collateral Agents request, appear in and defend any action or proceeding that may affect such Grantors title to or the Collateral Agents security interest in all or any part of the Collateral. (b) Each Grantor hereby authorizes the Collateral Agent to file a Record or Records, including financing or continuation statements, and amendments thereto, in any jurisdictions and with any filing offices as the Collateral Agent may determine, in its sole discretion, are necessary or advisable to perfect the security interest granted to the Collateral Agent herein. Such financing statements may describe the Collateral in the same manner as described herein or may contain an indication or description of collateral that describes such property in any other manner as the Collateral Agent may determine, in its sole discretion, is necessary, advisable or prudent to ensure the perfection of the security interest in the Collateral granted to the Collateral Agent herein, including describing such property as all assets or all personal property, whether now owned or hereafter acquired or words of similar meaning. Each Grantor shall furnish to the Collateral Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Collateral Agent may reasonably request, all in reasonable detail. 5.3 Additional Grantors. From time to time subsequent to the date hereof, additional Persons may become parties hereto as additional Grantors (each, an Additional 18
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Grantor), by executing a Pledge Supplement. Upon delivery of any such Pledge Supplement to the Collateral Agent, notice of which is hereby waived by Grantors, each Additional Grantor shall be a Grantor and shall be as fully a party hereto as if Additional Grantor were an original signatory hereto. Each Grantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Grantor hereunder, nor by any election of Collateral Agent not to cause any Subsidiary of Company to become an Additional Grantor hereunder. This Agreement shall be fully effective as to any Grantor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Grantor hereunder. SECTION 6. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT 6.1 Power of Attorney. Each Grantor hereby irrevocably appoints the Collateral Agent (such appointment being coupled with an interest) as such Grantors attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor, the Collateral Agent or otherwise, from time to time in the Collateral Agents discretion to take any action and to execute any instrument that the Collateral Agent may deem reasonably necessary or advisable to accomplish the purposes of this Agreement (it being understood that the Collateral Agent may not take any actions pursuant to this Section 6.1 without the consent or request of the Required Lenders), including the following, in each case subject to Section 8.2 of the Credit Agreement and the Order: (a) upon the occurrence and during the continuance of any Event of Default, to obtain and adjust insurance required to be maintained by such Grantor or paid to the Collateral Agent pursuant to the Credit Agreement; (b) upon the occurrence and during the continuance of any Event of Default, to ask for, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral; (c) upon the occurrence and during the continuance of any Event of Default, to receive, endorse and collect any drafts or other instruments, documents and chattel paper in connection with clause (b) above; (d) upon the occurrence and during the continuance of any Event of Default, to file any claims or take any action or institute any proceedings that the Collateral Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Collateral Agent with respect to any of the Collateral; (e) debtor; (f) to prepare, sign, and file for recordation in any intellectual property registry, appropriate evidence of the lien and security interest granted herein in the Intellectual Property in the name of such Grantor as assignor; (g) to take or cause to be taken all actions necessary to perform or comply or cause performance or compliance with the terms of this Agreement, including access to pay or 19
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to prepare and file any UCC financing statements against such Grantor as

discharge taxes or Liens (other than Permitted Liens) levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by the Collateral Agent in its sole discretion, any such payments made by the Collateral Agent to become obligations of such Grantor to the Collateral Agent, due and payable immediately without demand; (h) upon the occurrence and during the continuance of any Event of Default, subject to the Credit Agreement and the Order, generally to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Collateral Agent were the absolute owner thereof for all purposes, and to do, at the Collateral Agents option and such Grantors expense, at any time or from time to time, all acts and things that the Collateral Agent deems reasonably necessary to realize upon the Collateral and the Collateral Agents security interest therein in order to effect the intent of this Agreement, all as fully and effectively as such Grantor might do; and (i) to do, at the Collateral Agents option and such Grantors expense, at any time or from time to time, all acts and things that the Collateral Agent deems reasonably necessary to protect and preserve the Collateral and the Collateral Agents security interest therein in order to effect the intent of this Agreement, all as fully and effectively as such Grantor might do. 6.2 No Duty on the Part of Collateral Agent or Lender Parties. The powers conferred on the Collateral Agent hereunder are solely to protect the interests of the Lender Parties in the Collateral and shall not impose any duty upon the Collateral Agent or any Lender Party to exercise any such powers. The Collateral Agent and the Lender Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct. SECTION 7. REMEDIES 7.1 Generally.

(a) If any Event of Default shall have occurred and be continuing, subject to Section 8.2 of the Credit Agreement and the Order, the Collateral Agent, upon the request or consent of the Required Lenders, shall exercise in respect of the Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it at law or in equity, all the rights and remedies of the Collateral Agent on default under the UCC (whether or not the UCC applies to the affected Collateral) to collect, enforce or satisfy any Secured Obligations then owing, whether by acceleration or otherwise, and also may pursue any of the following separately, successively or simultaneously: (i) require any Grantor to, and each Grantor hereby agrees that it shall at its expense and promptly upon request of the Collateral Agent forthwith, assemble all or part of the Collateral as directed by the Collateral Agent and make it available to the

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Collateral Agent at a place to be designated by the Collateral Agent that is reasonably convenient to both parties; (ii) enter onto the property where any Collateral is located and take possession thereof with or without judicial process; (iii) prior to the disposition of the Collateral, store, process, repair or recondition the Collateral or otherwise prepare the Collateral for disposition in any manner to the extent the Collateral Agent deems appropriate; and (iv) without notice except as specified below or under the UCC, sell, assign, lease, license (on an exclusive or nonexclusive basis) or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agents offices or elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as the Collateral Agent may deem commercially reasonable. (b) The Collateral Agent or any Lender Party may be the purchaser of any or all of the Collateral at any public or private (to the extent to portion of the Collateral being privately sold is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations) sale in accordance with the UCC and the Collateral Agent, as collateral agent for and representative of the Lender Parties, shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such sale made in accordance with the UCC, to use and apply any of the Secured Obligations as a credit on account of the purchase price for any Collateral payable by the Collateral Agent at such sale. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Grantor agrees that it would not be commercially unreasonable for the Collateral Agent to dispose of the Collateral or any portion thereof by using Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets. Each Grantor hereby waives any claims against the Collateral Agent arising by reason of the fact that the price at which any Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if the Collateral Agent accepts the first offer received and does not offer such Collateral to more than one offeree. If the proceeds of any sale or other disposition of the Collateral are insufficient to pay all the Secured Obligations, Grantors shall be liable for the deficiency and the fees of any attorneys employed by the Collateral Agent to collect such deficiency. Each Grantor further agrees that a breach of any of the covenants contained in this Section will cause irreparable 21
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injury to the Collateral Agent, that the Collateral Agent has no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no default has occurred giving rise to the Secured Obligations becoming due and payable prior to their stated maturities. Nothing in this Section shall in any way alter the rights of the Collateral Agent hereunder. (c) The Collateral Agent or any purchaser at a foreclosure sale from the Collateral Agent or similar Person, shall have the right to cause all rights and obligations of any Grantor under or in respect of all executory contracts and agreements to which any Grantor is a party and which constitute part of the Collateral to be assumed or rejected pursuant to 365(a) of the Bankruptcy Code as the Collateral Agent or such Person may direct (except to the extent that such obligations were theretofore duly rejected by such Grantor), and to cause such rights or obligations to be assigned to the Collateral Agent or to such Person pursuant to 365(f) of the Bankruptcy Code (assuming that adequate assurance of future performance is given). To the fullest extent permitted by law, each of the Grantors agrees that the Collateral Agent and such other Persons shall have the right to effect such assumption, rejection or assignment, all as the Collateral Agent or such Persons may direct without further action by any Grantor. Each of the Grantors hereby agrees to take all such action as the Collateral Agent and such other Persons may reasonably request to effect any such assumption, rejection or assignment (including but not limited to, in the case of assumption, the Collateral Agent reserving its rights under Section 6 hereof to cure any defaults and provide adequate assurance of future performance to the extent that any Grantor refuses or otherwise fails to do so). In addition to the rights and remedies described hereunder, the Collateral Agent shall have the rights and remedies set forth in Section 8 of the Credit Agreement. (d) The Collateral Agent may sell the Collateral without giving any warranties as to the Collateral. The Collateral Agent may specifically disclaim or modify any warranties of title or the like. This procedure will not be considered to adversely effect the commercial reasonableness of any sale of the Collateral. (e) Collateral. 7.2 Application of Proceeds. Except as expressly provided elsewhere in this Agreement, all proceeds received by the Collateral Agent in respect of any sale, any collection from, or other realization upon all or any part of the Collateral shall be distributed by the Collateral Agent to the Administrative Agent to be applied in accordance with Section 8.3 of the Credit Agreement. 7.3 Sales on Credit. If Collateral Agent sells any of the Collateral upon credit, Grantor will be credited only with payments actually made by purchaser and received by Collateral Agent and applied to indebtedness of the purchaser. In the event the purchaser fails to pay for the Collateral, Collateral Agent may, upon the request or consent of the Required Lenders, resell the Collateral and Grantor shall be credited with proceeds of the sale. The Collateral Agent shall have no obligation to marshall any of the

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7.4 Deposit Accounts. Subject to Section 8.2 of the Credit Agreement and the Order, if any Event of Default shall have occurred and be continuing, the Collateral Agent may apply the balance from any Deposit Account or instruct the bank at which any Deposit Account is maintained to pay the balance of any Deposit Account to or for the benefit of the Collateral Agent. 7.5 Investment Related Property. Each Grantor recognizes that, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws, the Collateral Agent may be compelled, with respect to any sale of all or any part of the Investment Related Property conducted without prior registration or qualification of such Investment Related Property under the Securities Act and/or such state securities laws, to limit purchasers to those who will agree, among other things, to acquire the Investment Related Property for their own account, for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges that any such private sale may be at prices and on terms less favorable than those obtainable through a public sale without such restrictions (including a public offering made pursuant to a registration statement under the Securities Act) and, notwithstanding such circumstances, each Grantor agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner and that the Collateral Agent shall have no obligation to engage in public sales and no obligation to delay the sale of any Investment Related Property for the period of time necessary to permit the issuer thereof to register it for a form of public sale requiring registration under the Securities Act or under applicable state securities laws, even if such issuer would, or should, agree to so register it. If the Collateral Agent determines to exercise its right to sell any or all of the Investment Related Property, upon written request, each Grantor shall and shall cause each issuer of any Pledged Stock to be sold hereunder, each partnership and each limited liability company from time to time to furnish to the Collateral Agent all such information as the Collateral Agent may request in order to determine the number and nature of interest, shares or other instruments included in the Investment Related Property which may be sold by the Collateral Agent in exempt transactions under the Securities Act and the rules and regulations of the Securities and Exchange Commission thereunder, as the same are from time to time in effect. 7.6 Intellectual Property.

(a) Anything contained herein to the contrary notwithstanding, upon the occurrence and during the continuation of an Event of Default, and subject to Section 8.2 of the Credit Agreement and the Order: (i) the Collateral Agent shall have the right (but not the obligation) to bring suit or otherwise commence any action or proceeding in the name of any Grantor, the Collateral Agent or otherwise, in the Collateral Agents sole discretion, to enforce any Intellectual Property, in which event such Grantor shall, at the request of the Collateral Agent, do any and all lawful acts and execute any and all documents required by the Collateral Agent in aid of such enforcement and such Grantor shall promptly, upon demand, reimburse and indemnify the Collateral Agent as provided in Section 10.3 of the Credit Agreement in connection with the exercise of its rights under this Section, and, to the extent that the Collateral Agent shall elect not to bring suit to enforce any Intellectual Property as provided in this Section, each Grantor agrees to use all reasonable measures, 23
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whether by action, suit, proceeding or otherwise, to prevent the infringement of any of the Intellectual Property by others and for that purpose agrees to diligently maintain any action, suit or proceeding against any Person so infringing as shall be necessary to prevent such infringement; (ii) upon written demand from the Collateral Agent, each Grantor shall grant, assign, convey or otherwise transfer to the Collateral Agent an absolute assignment of all of such Grantors right, title and interest in and to the Intellectual Property and shall execute and deliver to the Collateral Agent such documents as are necessary or appropriate to carry out the intent and purposes of this Agreement; (iii) each Grantor agrees that such an assignment and/or recording shall be applied to reduce the Secured Obligations outstanding only to the extent that the Collateral Agent (or any Lender Party) receives Cash Proceeds in respect of the sale of, or other realization upon, the Intellectual Property; (iv) within five (5) Business Days after written notice from the Collateral Agent, each Grantor shall make available to the Collateral Agent, to the extent within such Grantors power and authority, such personnel in such Grantors employ on the date of such Event of Default as the Collateral Agent may reasonably designate, by name, title or job responsibility, to permit such Grantor to continue, directly or indirectly, to produce, advertise and sell the products and services sold or delivered by such Grantor under or in connection with the Trademarks, Trademark Licenses, such persons to be available to perform their prior functions on the Collateral Agents behalf and to be compensated by the Collateral Agent at such Grantors expense on a per diem, pro-rata basis consistent with the salary and benefit structure applicable to each as of the date of such Event of Default; and (v) the Collateral Agent shall have the right to notify, or require each Grantor to notify, any obligors with respect to amounts due or to become due to such Grantor in respect of the Intellectual Property, of the existence of the security interest created herein, to direct such obligors to make payment of all such amounts directly to the Collateral Agent, and, upon such notification and at the expense of such Grantor, to enforce collection of any such amounts and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done; (1) all amounts and proceeds (including checks and other instruments) received by Grantor in respect of amounts due to such Grantor in respect of the Collateral or any portion thereof shall be received in trust for the benefit of the Collateral Agent hereunder, shall be segregated from other funds of such Grantor and shall be forthwith paid over or delivered to the Collateral Agent in the same form as so received (with any necessary endorsement) to be held as cash Collateral and applied as provided by Section 7.7 hereof; and

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(2) Grantor shall not adjust, settle or compromise the amount or payment of any such amount or release wholly or partly any obligor with respect thereto or allow any credit or discount thereon. (b) If (i) an Event of Default shall have occurred and, by reason of cure, waiver, modification, amendment or otherwise, no longer be continuing, (ii) no other Event of Default shall have occurred and be continuing, (iii) an assignment or other transfer to the Collateral Agent of any rights, title and interests in and to the Intellectual Property shall have been previously made and shall have become absolute and effective, and (iv) the Secured Obligations shall not have become immediately due and payable, upon the written request of any Grantor, the Collateral Agent shall promptly execute and deliver to such Grantor, at such Grantors sole cost and expense, such assignments or other transfer as may be necessary to reassign to such Grantor any such rights, title and interests as may have been assigned to the Collateral Agent as aforesaid, subject to any disposition thereof that may have been made by the Collateral Agent; provided, after giving effect to such reassignment, the Collateral Agents security interest granted pursuant hereto, as well as all other rights and remedies of the Collateral Agent granted hereunder, shall continue to be in full force and effect; and provided further, the rights, title and interests so reassigned shall be free and clear of any Liens granted by or on behalf of the Collateral Agent and the Lender Parties. (c) Solely for the purpose of enabling the Collateral Agent to exercise rights and remedies under this Section 7.6 and at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Collateral Agent, to the extent it has the right to do so, an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to such Grantor), subject, in the case of Trademarks, to sufficient rights to quality control and inspection in favor of such Grantor to avoid the risk of invalidation of said Trademarks, to use, operate under, license, or sublicense any Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located. 7.7 Cash Proceeds. All proceeds of any Collateral received by any Grantor consisting of cash, checks and other near-cash items (collectively, Cash Proceeds) shall be held by such Grantor in trust for the Collateral Agent and in accordance with Section 2.16 of the Credit Agreement, and shall be applied and paid as provided in Section 2.16 of the Credit Agreement. Any Cash Proceeds received by the Collateral Agent (whether from a Grantor or otherwise): (i) if no Event of Default shall have occurred and be continuing, shall be applied and paid as provided in Sections 2.9 and 2.10 of the Credit Agreement and (ii) if an Event of Default shall have occurred and be continuing, may, in the sole discretion of the Required Lenders, (A) be held by the Collateral Agent for the ratable benefit of the Lender Parties, as collateral security for the Secured Obligations (whether matured or unmatured) and/or (B) then or at any time thereafter may be applied by the Collateral Agent against the Secured Obligations then due and owing. SECTION 8. AGENT The Collateral Agent has been appointed to act as collateral agent hereunder by Lenders and, by their acceptance of the benefits hereof, the other Lender Parties. The Collateral Agent 25
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shall be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking any action (including the release or substitution of Collateral), solely in accordance with this Agreement, the Credit Agreement and the Order. In furtherance of the foregoing provisions of this Section, each Lender Party, by its acceptance of the benefits hereof, agrees that it shall have no right individually to realize upon any of the Collateral hereunder, it being understood and agreed by such Lender Party that all rights and remedies hereunder may be exercised solely by the Collateral Agent (upon the request or consent of the Required Lenders) for the benefit of Lenders in accordance with the terms of this Section. SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS This Agreement shall create a continuing security interest in the Collateral and shall remain in full force and effect until the payment in full of all Secured Obligations, the cancellation or termination of the Commitments, be binding upon each Grantor, its successors and assigns, and inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent and its successors, transferees and assigns. Without limiting the generality of the foregoing, but subject to the terms of the Credit Agreement, any Lender may assign or otherwise transfer any Loans held by it to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to Lenders herein or otherwise. Upon the payment in full of all Secured Obligations, the cancellation or termination of the Commitments, the security interest granted hereby shall terminate hereunder and of record and all rights to the Collateral shall revert to Grantors. Upon any such termination the Collateral Agent shall, at Grantors expense, execute and deliver to Grantors such documents as Grantors shall reasonably request to evidence such termination. SECTION 10. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM Except for the exercise of reasonable care in the custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Collateral Agent accords its own property. Neither the Collateral Agent nor any of its directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or otherwise. If any Grantor fails to perform any agreement contained herein, the Collateral Agent may itself perform, or cause performance of, such agreement, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by each Grantor under Section 10.2 of the Credit Agreement. SECTION 11. MISCELLANEOUS Any notice required or permitted to be given under this Agreement shall be given in accordance with Section 10.1 of the Credit Agreement. No failure or delay on the part of the 26
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Collateral Agent in the exercise of any power, right or privilege hereunder or under any other Transaction Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. All rights and remedies existing under this Agreement and the other Transaction Documents are cumulative to, and not exclusive of, any rights or remedies otherwise available. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists. This Agreement shall be binding upon and inure to the benefit of the Collateral Agent and Grantors and their respective successors and assigns (including any debtor in possession on behalf of any Grantor). No Grantor shall, without the prior written consent of the Required Lenders given in accordance with the Credit Agreement, assign any right, duty or obligation hereunder. This Agreement and the other Transaction Documents embody the entire agreement and understanding between Grantors and the Collateral Agent and supersede all prior agreements and understandings between such parties relating to the subject matter hereof and thereof. Accordingly, the Transaction Documents may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties. This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. Notwithstanding anything herein to the contrary, the Collateral Agent shall not take any actions with respect to the Collateral without the written consent or request of the Required Lenders. In the event of any inconsistency between the terms and conditions of this Agreement and the Credit Agreement, the provisions of the Credit Agreement shall govern and control. In the event of any inconsistency between the terms and conditions of this Agreement and the Order, the provisions of the Order shall govern and control. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN THE NEW YORK GENERAL OBLIGATIONS LAW 5-1401 AND 5-1402) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA (INCLUDING THE BANKRUPTCY CODE). [Remainder of page intentionally left blank.]

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SCHEDULE 4.1 TO PLEDGE AND SECURITY AGREEMENT

GENERAL INFORMATION (A) Full Legal Name, Type of Organization, Jurisdiction of Organization, Chief Executive Office/Sole Place of Business and Organizational Identification Number of each Grantor: Type of Organization Limited Liability Company Limited Liability Company Jurisdiction of Organization Delaware Organization I.D.# 4378226

Full Legal Name Pacific Energy Alaska Holdings, LLC Pacific Energy Alaska Operating LLC (B)

Chief Executive Office 111 West Ocean Blvd., Suite 1240, Long Beach, CA 90802 111 West Ocean Blvd., Suite 1240, Long Beach, CA 90802

Delaware

4213787

Other Names (including any Trade-Name or Fictitious Business Name) under which each Grantor has conducted business for the past five (5) years: See disclosures under (C) below.

(C)

Changes in Name, Jurisdiction of Organization, Chief Executive Office and Corporate Structure within past five (5) years: Pacific Energy Alaska Holdings, LLC: None. Pacific Energy Alaska Operating LLC: On August 24, 2007, Forest Alaska Operating LLC changed its name to Pacific Energy Alaska Operating LLC and changed its chief executive office from 707 Seventeenth Street, Suite 3600, Denver, CO 80202 to 111 West Ocean Blvd., Suite 1240, Long Beach, CA 90802.

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(D)

Filing Offices: Name of Grantor Pacific Energy Alaska Holdings, LLC Pacific Energy Alaska Operating LLC Filing Jurisdiction(s) Delaware Secretary of State Delaware Secretary of State; the following Alaska Recording Districts for as extracted collateral and fixtures: UCC Central File, Anchorage, Barrow, Chitina, Homer, Kenai, Palmer and Talkeetna

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SCHEDULE 4.3 TO PLEDGE AND SECURITY AGREEMENT INVESTMENT RELATED PROPERTY Pledged Stock:
Class of Stock common Stock Cert. No. 34 No. of Pledged Shares 20,000 % of Outstanding Stock of the Stock Issuer 50%

Grantor Pacific Energy Alaska Holdings, LLC

Stock Issuer Cook Inlet Pipe Line Company

Certif. (Y/N) Y

Par Value

Pledged LLC Interests:

Grantor Pacific Energy Alaska Holdings, LLC Issuer Pacific Energy Alaska Operating LLC Type of Interest common Certif. (Y/N) Y Cert. No. 1 % of Interest 100%

Pledged Partnership Interests: None. Pledged Trust Interests: None. Securities Accounts: None. Commodities Accounts: None. Deposit Account
Grantor Pacific Energy Alaska Operating LLC Pacific Energy Alaska Operating LLC Name of Depository Bank Wells Fargo Bank, National Association Wells Fargo Bank, National Association Account Number 6885862166 6885862190 Account Name demand deposit account demand deposit account

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SCHEDULE 4.5 TO PLEDGE AND SECURITY AGREEMENT LETTER OF CREDIT RIGHTS Name of Grantor None Description of Letters of Credit

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SCHEDULE 4.6 TO PLEDGE AND SECURITY AGREEMENT COMMERCIAL TORT CLAIMS Name None Commercial Tort Claims

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EXHIBIT A TO PLEDGE AND SECURITY AGREEMENT PLEDGE SUPPLEMENT This PLEDGE SUPPLEMENT, dated [mm/dd], 2009, is delivered pursuant to the Pledge and Security Agreement, dated as of March 11, 2009 (as it may be from time to time amended, restated, modified or supplemented, the Security Agreement), by and among PACIFIC ENERGY ALASKA OPERATING LLC, a Delaware limited liability company, PACIFIC ENERGY ALASKA HOLDINGS, LLC, a Delaware limited liability company, and SILVER POINT FINANCE, LLC, as the Collateral Agent. Capitalized terms used herein not otherwise defined herein shall have the meanings ascribed thereto in the Security Agreement. Grantor hereby confirms the grant to the Collateral Agent set forth in the Security Agreement of, and does hereby grant to the Collateral Agent, a security interest in all of Grantors right, title and interest in and to all Collateral to secure the Secured Obligations, in each case whether now or hereafter existing or in which Grantor now has or hereafter acquires an interest and wherever the same may be located. All such Collateral shall be deemed to be part of the Collateral and hereafter subject to each of the terms and conditions of the Security Agreement. Grantor represents and warrants that the attached Supplements to Schedules accurately and completely set forth all additional information required pursuant to the Security Agreement and hereby agrees that such Supplements to Schedules shall constitute part of the Schedules to the Security Agreement. The undersigned hereby (i) agrees that this Pledge Supplement may be attached to the Security Agreement and (ii) agrees that the undersigned will comply with all the terms and conditions of the Security Agreement as if it were an original signatory thereto. IN WITNESS WHEREOF, Grantor has caused this Pledge Supplement to be duly executed and delivered by its duly authorized officer as of [mm/dd], 2009. [ADDITIONAL GRANTOR]

By:____________________________ Name: Title:

Exhibit A
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SUPPLEMENT TO SCHEDULE 4.1 TO PLEDGE AND SECURITY AGREEMENT GENERAL INFORMATION (A) Full Legal Name, Type of Organization, Jurisdiction of Organization, Chief Executive Office/Sole Place of Business and Organizational Identification Number of Additional Grantor: Jurisdiction of Organization [________]

Full Legal Name [________]

Type of Organization [________]

Chief Executive Office [________]

Organization I.D.# [________]

(B)

Other Names (including any Trade-Name or Fictitious Business Name) under which Additional Grantor has conducted business for the past five (5) years:

[_________] (C) Changes in Name, Jurisdiction of Organization, Chief Executive Office and Corporate Structure within past five (5) years:

[_________] (D) Filing Offices: Name of Additional Grantor [_________] Filing Jurisdiction(s) [_________]

Exhibit A
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EXHIBIT B TO PLEDGE AND SECURITY AGREEMENT [attach Deposit Account Control Agreement]

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AMENDED AND RESTATED DEPOSIT ACCOUNT CONTROL AGREEMENT THIS AMENDED AND RESTATED DEPOSIT ACCOUNT CONTROL AGREEMENT (this Agreement) is entered into as of March ___, 2009, by and among the following parties: PARTIES: SILVER POINT FINANCE, LLC, in its capacity as collateral agent (First Lien Creditor) SILVER POINT FINANCE, LLC, in its capacity as second lien administrative agent and collateral agent (Second Lien Creditor and, together with the First Lien Creditor, the Creditors) PACIFIC ENERGY ALASKA OPERATING LLC (Customer) WELLS FARGO BANK, NATIONAL ASSOCIATION (Depository) BACKGROUND: Pursuant to that certain (i) Pledge and Security Agreement, dated as of March [__], 2009, among the Customer, each of the other grantors party thereto and the First Lien Creditor, and (ii) Second Lien Guarantee and Collateral Agreement, dated as of August 24, 2007, among the Customer and each of the other grantors party thereto and the Second Lien Creditor, Customer has granted to First Lien Creditor, a first lien security interest and to Second Lien Creditor, a second lien security interest in all deposit accounts maintained by Customer with Depository and in all funds now in, or hereafter deposited into, those accounts, including any interest earned thereon. The parties are entering into this Agreement to perfect the first lien and second lien security interests of each respective Creditor in those accounts. This Agreement amends, restates and supersedes in its entirety that certain Deposit Account Control Agreement, dated as of September 28, 2007, among the Creditors, the Customer and the Depository regarding account numbers 6885862166 and 6885862190. NOW, THEREFORE, in consideration of their mutual covenants and promises, the parties agree as follows:
AGREEMENT:

1.

The Account. Depository represents and warrants to the Creditors that:

(a) Customer maintains deposit account numbers 6885862166 and 6885862190 (demand deposit accounts) (said accounts and, if either is a certificate of deposit or other time deposit, any renewal thereof shall be referred to collectively, as the Account). (b) As of the date of this Agreement Depository does not know of any claim to or interest in the Account, except for claims and interests of the parties hereto. 2. Control of Account by Creditors Customers Rights in Account.

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(a) Depository will comply with instructions (Orders) originated by the First Lien Creditor for the disposition of funds in the Account without further consent from Customer and without regard to any inconsistent or conflicting Orders given to Depository by Customer or the Second Lien Creditor. If at any time Depository shall receive any Order originated by the Second Lien Creditor directing the disposition of funds in the Account, Depository shall comply with such Order without further consent by Customer or any other person; provided that, prior to receipt by Depository of a Notice of Termination of First Lien Obligations (Notice of Termination of First Lien Obligations) sent by the First Lien Creditor, Depository shall not comply with Orders originated by the Second Lien Creditor without the written consent of the First Lien Creditor. Depository shall have a reasonable period of time to comply with any Order. (b) The provisions of the paragraph checked below shall apply (only one of the paragraphs below should be checked, and if none or both of them are checked, then the provisions of the first paragraph titled Account Not Restricted Immediately shall apply): X Account Not Restricted Immediately. Notwithstanding the provisions of Section 2(a) hereof, unless and until the First Lien Creditor (or following (i) the written consent of the First Lien Creditor or (ii) the receipt by Depository of a Notice of Termination of First Lien Obligations sent by the First Lien Creditor, the Second Lien Creditor) delivers to Depository an Order directing Depository not to act on Customers Orders, Depository may continue to comply with Orders originated by Customer, including Orders for the withdrawal of funds from the Account, the payment of interest earned on the Account and the renewal or closing of the Account. ___ Account Restricted Immediately. Except as provided in this Agreement or as otherwise agreed to by the First Lien Creditor (or following (i) the written consent of the First Lien Creditor or (ii) the receipt by Depository of a Notice of Termination of First Lien Obligations sent by the First Lien Creditor, the Second Lien Creditor) in writing, as of and after the date of this Agreement Customer may not make debits to or withdrawals from the Account and shall have no access to the Account, and the applicable Creditor shall have exclusive access to the Account. If the Account is a certificate of deposit or other time deposit, then at the expiration of its term, unless Depository has received an Order to the contrary from the First Lien Creditor (or following (i) the written consent of the First Lien Creditor or (ii) the receipt by Depository of a Notice of Termination of First Lien Obligations sent by the First Lien Creditor, the Second Lien Creditor), the Account shall be renewed for a term which is equal to the immediately preceding term. (c) The First Lien Creditor and the Second Lien Creditor shall deliver to Depository such documentation as Depository may from time to time reasonably request to evidence the authority of those partners, officers, employees or agents whom each Creditor may designate to give Orders.

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(d) Unless otherwise agreed in writing between Depository and the First Lien Creditor (or following (i) the written consent of the First Lien Creditor or (ii) the receipt by Depository of a Notice of Termination of First Lien Obligations sent by the First Lien Creditor, the Second Lien Creditor), Depository will transfer funds from the Account to the applicable Creditor in response to an Order from the First Lien Creditor (or following (i) the written consent of the First Lien Creditor or (ii) the receipt by Depository of a Notice of Termination of First Lien Obligations sent by the First Lien Creditor, the Second Lien Creditor) in accordance with this Agreement on a Banking Day (a day on which Depository is open to conduct its regular banking business, other than a Saturday, Sunday or public holiday), if Depository receives the Order on such Banking Day before the deadline established by Depository from time to time for such transfer requests, and the amount requested to be transferred does not exceed the collected and available balance in the Account at the beginning of such Banking Day as determined by Depository after deducting the amount of all Returned Items (as defined in Section 3(a) hereof). (e) Unless otherwise agreed in writing between Depository and the First Lien Creditor (or following (i) the written consent of the First Lien Creditor or (ii) the receipt by Depository of a Notice of Termination of First Lien Obligations sent by the First Lien Creditor, the Second Lien Creditor), transfers of funds from the Account to the applicable Creditor shall be made using the Fedwire system unless for any reason the Fedwire system is unavailable, in which case Depository will determine the funds transfer system to be used in making such transfer and the means by which such transfer will be made. The First Lien Creditor (or following (i) the written consent of the First Lien Creditor or (ii) the receipt by Depository of a Notice of Termination of First Lien Obligations sent by the First Lien Creditor, the Second Lien Creditor) shall provide Depository with such information as Depository may require to make such transfer, including the name and routing number of the applicable Creditors bank and the account number of the applicable Creditors account at such bank to which the funds are to be transferred. Customer, the First Lien Creditor and the Second Lien Creditor understand that a funds transfer by Depository may be delayed or not made if the transfer would cause Depository to violate any applicable law or regulation. 3. Priority of Creditors Security Interest; Rights Reserved by Depository.

(a) All of Depositorys present and future rights against the Account are subordinate to the First Lien Creditors and the Second Lien Creditors security interests therein; provided however, that the Creditors agree that nothing herein subordinates or waives, and that Depository expressly reserves, all of Depositorys present and future rights (whether described as rights of setoff, bankers lien, chargeback or otherwise, and whether available to Depository under law or any other agreement between Depository and Customer concerning the Account, or otherwise) with respect to: (i) any item deposited to the Account and returned unpaid, whether for insufficient funds or for any other reason, and without regard to the timeliness of such return or the occurrence or timeliness of any drawees notice of non-payment; (ii) any item subject to a claim against Depository of breach of transfer or presentment warranty under the Uniform Commercial Code, as adopted in the applicable state; (iii) any automated clearing house (ACH) entry credited to the Account and returned unpaid or subject to an adjustment entry under applicable clearing house rules, whether for insufficient funds or for any other reason, and without regard to the timeliness of such return or adjustment; (iv) any credit to the Account from a merchant card transaction, against which a contractual demand for chargeback has been made;

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(v) any credit to the Account made in error; and (vi) Depositorys usual and customary charges for services rendered in connection with the Account. Items, entries, and transactions described in clauses (i) through (v) of this paragraph are hereinafter collectively referred to as Returned Items. (b) Except as otherwise required by law, Depository will not agree with any third party to comply with Orders originated by such third party; provided that if Depository is required by law to agree with such third party, Depository will provide the Creditors notice unless prohibited by law. As of the date hereof, Depository agrees that there is no agreement between Depository and any third party (other than Creditors) in which Depository agrees to comply with Orders originated by any third party (other than Creditors) with respect to the Account. 4. Returned Item Amounts. Customer and Creditors understand and agree that Depository will collect the amount of each Returned Item by debiting the Account. Customer shall pay the amount of each Returned Item immediately upon demand to the extent there are not sufficient funds in the Account to cover such amount on the day of the debit. Each of the Creditors agrees to pay the amount of each Returned Item within twenty (20) days after demand, without setoff or counterclaim, to the extent that (i) the Returned Item Amounts are not paid in full by Company within ten (10) days after demand on Customer by Depository, and (ii) such Creditor has received proceeds from the corresponding Returned Items; provided however, that if Depository is stayed from making such demand upon Customer as a result of a bankruptcy or similar proceeding, then Depository shall be deemed to have made such demand upon Customer at the commencement of such proceeding. Depository agrees that any demand upon such Creditor for payment of such amount shall be made within one hundred twenty (120) days after termination of this Agreement. 5. Statements; Notices of Adverse Claims. Depository will send copies of all statements for the Account simultaneously to Customer and Creditors. Depository may disclose to Creditors such other information concerning the Account as Creditors may from time to time request; provided however, that Depository shall have no duty or obligation to comply with any such request. Except as otherwise required by law, Depository will use reasonable efforts promptly to notify Creditors and Customer if Depository receives a notice that any other person claims that it has a property interest in the Account. Customer and Creditors shall have thirty (30) days after receipt of a statement of the Account to notify Depository of an error in such statement. Depositorys liability for any such error is limited in accordance with Section 6 hereof. 6. Depositorys Responsibility.

(a) Except for permitting a withdrawal in violation of Section 2 hereof, Depository will not be liable to Creditors for complying with Orders from Customer that are received by Depository before Depository receives and has a reasonable opportunity to act on a contrary Order from the First Lien Creditor or the Second Lien Creditor. (b) Depository will not be liable to Customer for complying with Orders originated by the First Lien Creditor or the Second Lien Creditor, even if Customer notifies

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Depository that the applicable Creditor is not legally entitled to issue Orders, unless Depository takes the action after it is served with an injunction, restraining order, or other legal process enjoining it from doing so, issued by a court of competent jurisdiction, and has had a reasonable opportunity to act on the injunction, restraining order or other legal process. (c) This Agreement does not create any obligation of Depository except for those expressly set forth herein. In particular, Depository need not investigate whether any Creditor is entitled under such Creditors agreements with Customer to give Orders. Depository may rely on any and all notices and communications it believes are given by the appropriate party. (d) Depository will not have any liability to Customer, First Lien Creditor or Second Lien Creditor for claims, losses, liabilities or damages resulting from any failure to comply with Orders or delay in complying with Orders if such failure or delay is due to circumstances beyond Depositorys reasonable control. (e) Depository will not have any liability to Customer, First Lien Creditor or Second Lien Creditor for claims, losses, liabilities or damages suffered or incurred by Customer or Creditors as a result of or in connection with this Agreement except to the extent such losses, liabilities and damages directly result from Depositorys gross negligence or willful misconduct. (f) In no event will Depository have any liability to Customer, First Lien Creditor or Second Lien Creditor in connection herewith for any consequential, special, punitive or indirect loss or damage whether or not any claim for such damages is based on tort or contract or Depository knew or should have known the likelihood of such damages in any circumstances. 7. Indemnity.

(a) Customer will indemnify Depository, its officers, directors, employees, and agents against claims, demands, losses, liabilities, damages, costs and expenses (including reasonable attorneys fees and disbursements and the reasonable estimate of the allocated costs and expenses of Depositorys in-house legal counsel and staff) arising out of this Agreement or Depository following any Order or other instruction or request of Customer, First Lien Creditor or Second Lien Creditor in connection with this Agreement, except to the extent the claims, liabilities, costs and expenses are caused by Depositorys gross negligence or willful misconduct. (b) Each Creditor will indemnify Depository, its officers, directors, employees, and agents against claims, demands, losses, liabilities, damages, costs and expenses (including reasonable attorneys fees and disbursements and the reasonable estimate of the allocated costs and expenses of Depositorys in-house legal counsel and staff), arising out of Depository following any Order or other instruction or request of such Creditor in connection with this Agreement, except to the extent the claims, liabilities, costs and expenses are caused by Depositorys gross negligence or willful misconduct. The First Lien Creditor or Second Lien Creditor, as applicable, will pay such amount as may be due to Depository under this indemnity within twenty (20) days of demand on such Creditor by Depository to the extent such amount has not been paid in full by Customer within fifteen (15) days after demand on Customer by Depository; provided however, that if Depository is stayed from making such demand upon

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Customer as a result of a bankruptcy or similar proceeding, then Depository shall be deemed to have made such demand upon Customer at the commencement of such proceeding. The indemnification obligations hereunder of each Creditor shall terminate one hundred twenty (120) days after termination of this Agreement except with respect to claims made by Depository in writing to the applicable Creditor prior to expiration of such one hundred twenty (120) day period. No Creditor shall have any indemnification obligations hereunder as a result of any action or inaction on the part of the other Creditor. 8. Termination; Survival.

(a) Each Creditor may terminate this Agreement by notice to Depository and Customer; provided that this Agreement shall remain effective as to the non-terminating Creditor, Depository and Customer. Depository may terminate this Agreement on thirty (30) days notice to Creditors and Customer; provided however that this Agreement may be terminated with five (5) days notice from Depository to Creditors and Customer should Creditors fail to make any payment when due from Creditors to Depository hereunder. (b) This Agreement shall terminate upon Depositorys receipt of written notice from each Creditor expressly stating that each Creditor no longer claims any security interest in the Account. (c) Sections 4, Returned Item Amounts, 6, Responsibility, and 7, Indemnity, will survive termination of this Agreement. Depositorys

9. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. The Account shall be governed by and construed in accordance with the laws of the State of California; provided, that for purposes of the Uniform Commercial Code in effect in the State of New York, the banks jurisdiction shall be deemed to be New York. Depository may not change the law governing the Account without Creditors express written consent, which consent shall not be unreasonably withheld. 10. Entire Agreement. This Agreement is the entire agreement and supersedes and replaces any prior agreements and contemporaneous oral agreements of the parties concerning its subject matter, including, without limitation, that certain Deposit Account Control Agreement dated as of November 30, 2006, among all of the parties hereto other than Silver Point Finance, LLC, and applicable to the Account. 11. Amendments; Waivers. This Agreement may be amended or modified only in writing signed by all parties hereto, and no waiver of any right under this Agreement will be binding unless it is in writing and signed by the party to be charged. 12. Severability. To the extent a provision of this Agreement is unenforceable, this Agreement will be construed as if the unenforceable provision were omitted. 13. Other Agreements. As long as this Agreement remains in effect, transactions involving the Account shall be subject, except to the extent inconsistent herewith, to the provisions of such deposit account agreements, disclosures, and fee schedules as are in effect from time to time with respect to the Account.
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14. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of Depository, Creditors and Customer and their respective heirs, executors, administrators, legal representatives, successors and assigns. 15. Notices. All Orders, notices, requests and demands which any party is required or may desire to give to any other party under any provision of this Agreement must be in writing (unless otherwise specifically provided) and delivered to each party at the address or facsimile number set forth below its signature, or to such other address or facsimile number as any party may designate by written notice to all other parties. Each such notice, request or demand shall be effective on receipt. The delivery of any Order to Depository shall be effective only if in writing, signed by the First Lien Creditor or the Second Lien Creditor, as applicable, and delivered to each of the addresses of Depository set forth below, addressed to the attention of Account Control Agreement Demands, by certified mail, return receipt requested, or by traceable hand delivery. Electronic or facsimile delivery, or any other non-conforming Order, shall not be binding upon Depository, although Depository may in its sole discretion accept and act on Orders conveyed in any manner, including orally, if believed to be authorized. 16. Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, and all of which shall constitute but one and the same instrument.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above:
LOAN NUMBER:

DEPOSITORY: WELLS FARGO BANK, NATIONAL ASSOCIATION By: Name: Title:

Silver Point Finance, LLC, as First Lien Creditor By: Name: Title: Address: 2 Greenwich Plaza Greenwich, Connecticut 06830 Attn: Alex Carrington Facsimile: (203) 286-2139

Pacific Energy Alaska Operating LLC, as Customer By: Name: Title: Address: 111 West Ocean Blvd. Suite 1240 Long Beach, CA 90802 Facsimile: (562) 436-8474 Telephone: (562) 436-6566

Silver Point Finance, LLC, as Second Lien Creditor By: Name: Title: Address: 2 Greenwich Plaza Greenwich, Connecticut 06830 Attn: Alex Carrington Facsimile: (203) 286-2139

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Please send any notice regarding this agreement to all of the following addresses/attention Franciscus Wiryawan Business Relationship Manager MAC A0103-056 5th Floor 525 Market Street San Francisco, CA 94105

Bri Kennerson Vice President Business Banking Manager MAC A0103-056 5th Floor 525 Market Street San Francisco, CA 94105

Bruno Ceccarelli Senior Vice President & Division Manager MAC A0103-056 5th Floor 525 Market Street San Francisco, CA 94105 Jeffrey Eugley Vice President Regional Service Manager MAC A0103-056 5th Floor 525 Market Street San Francisco, CA 94105

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EXECUTION VERSION DERIVATIVE TRANSACTION ASSUMPTION AND AMENDMENT AGREEMENT between PACIFIC ENERGY RESOURCES LTD. and J. ARON & COMPANY This Derivative Transaction Assumption and Amendment Agreement (this Agreement) is made and entered into as of March 11, 2009, by and between PACIFIC ENERGY RESOURCES LTD., a Delaware corporation and debtor and debtor in possession (PERL) and J. ARON & COMPANY (J. Aron and, together with PERL, the Parties). The Parties have entered into transactions on the Confirmations for which are attached as Annex A hereto (the Transactions) under the ISDA Master Agreement dated as of November 30, 2006 (the Master Agreement) and the Derivative Transaction Agreement dated December 19, 2008 (the Derivative Transaction Agreement). On March 8, 2009, PERL and its subsidiaries filed a petition under Chapter 11 of the Bankruptcy Code (the Case) in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court) and continues to operate its business as a debtor and debtor in possession pursuant to Section 1107 and 1108 of the Bankruptcy Code. On March 8, 2009, PERL filed a motion with the Bankruptcy Court to approve certain postpetition financing, and in connection therewith, to assume the Transactions, treat the Transactions as postpetition hedging transactions, and approve certain amendments to the Master Agreement as previously modified by the Derivative Transaction Agreement. By Order dated March 10, 2009, the Bankruptcy Court approved such motion, and authorized the assumption and amendments contemplated herein. The Parties hereby agree that the Transactions are hereby assumed by PERL, and shall be deemed to be postpetition Transactions on the same terms as previously in effect, subject to the amendments to the Master Agreement contained herein. The Master Agreement, as previously modified by the Derivative Transaction Agreement, is hereby amended as follows: 1. All references herein to the Senior Credit Agreement shall be deemed to be references to the Senior Secured Super Priority Priming Debtor in Possession Credit and Guaranty Agreement, dated as of March 11, 2009, among PERL, Pacific Energy Alaska Holdings, LLC, Pacific Energy Alaska Operating LLC, certain subsidiary guarantors, various lenders, J. Aron & Company, as Administrative Agent, and J. Aron & Company and Silver Point Finance LLC, as Collateral Agents. The following additional Additional Termination Events will apply, with PERL as the Affected Party:

2.

A/72865021.5

(vi) the Bankruptcy Court shall enter any order (i) amending, supplementing, altering, staying, vacating, rescinding or otherwise modifying the Order or any other order with respect to the Case affecting in any material respect the Transactions or the Master Agreement without the consent of J. Aron, (ii) appointing a Chapter 11 trustee or examiner pursuant to Section 1104 of the Bankruptcy Code with enlarged powers relating to the operation of the business (powers beyond those set forth in Section 1106(a)(3) and (4) and 1106(b) of the Bankruptcy Code) of the Bankruptcy Code in the Case, (iii) dismissing the Case or converting the Case to a Chapter 7 case or (iv) granting relief from the automatic stay to any creditor holding or asserting a Lien or reclamation claim on the assets of any of the debtors to permit such creditor to foreclose upon or to reclaim Collateral with a value in excess of $500,000; (vii) the Bankruptcy Court shall fail to enter a Final Order within thirty (30) days of the Petition Date with respect to those matters covered by the Order and ratifying and confirming the treatment of the Transactions under the Order; 3. Notwithstanding anything to the contrary in the Master Agreement or the Derivative Transaction Agreement, unless an Additional Termination Event set forth in clause (vi) or (vii) above has occurred and is continuing, the Case shall not constitute an Event of Default or Potential Event of Default for purposes of Section 5(a)(vi), 5(a)(vii), 2(a)(iii) or 3(b) of the Master Agreement or a pending or threatened litigation, action, suit or proceeding for purposes of Section 3(c) of the Master Agreement and shall not entitle J. Aron to (a) suspend payments pursuant to Section 2(a)(iii) of the Master Agreement (which right remains waived pursuant to the Derivative Transaction Agreement) or (b) declare an Early Termination Date. Notwithstanding anything to the contrary in the Master Agreement or the Derivative Transaction Agreement, no Event of Default under the PEAO Second Lien Credit Agreement (as defined in the Senior Credit Agreement) or the Loan Documents (as defined in the PEAO Second Lien Credit Agreement) constitutes or will constitute an Event of Default under Section 5(a)(vi) of the Master Agreement.

4.

PERL represents to J. Aron that: 1. PERL is in continuing possession of its property and is operating and managing its business, as debtor in possession, pursuant to Sections 1107 and 1108 of the Bankruptcy Code. This Agreement and all Transactions hereunder are, and will be, entered into pursuant to the Order, which Order has not been revoked, reversed, stayed or modified, and each Transaction hereunder is covered by said Order.

2.

J. Arons right to terminate, net and set-off obligations under the proposed transactions, including its right to apply collateral, will not be stayed, avoided, or otherwise limited by Bankruptcy Code Sections 105, 362(a) or 549, or any other provisions of the Bankruptcy Code. A/72865021.5 2

3.

Each Party acknowledges that it has voluntarily agreed to enter into this Agreement. Each Party represents and warrants to the other that the delivery by it of this Agreement and the transactions contemplated hereby are not prohibited by, and do not violate any provision or result in the breach of, or acceleration of the performance required by the terms of (i) any law or governmental order applicable to it, or (ii) its articles of incorporation, by-laws, articles of organization, operating agreement, or organizational documents as applicable, or any material contract, note, bond, mortgage indenture license or agreement to which it is a party or is bound or by which any of its assets is bound. Each Party further represents to the other that it has all of the necessary power and authority under its respective articles of incorporation, by-laws, articles of organization, operating agreement or organizational documents, under the laws of its state of domestic jurisdiction and other applicable laws to execute, deliver and perform this Agreement. The execution, delivery and performance of this Agreement by it have been duly authorized by all necessary partnership, corporate or limited liability company action. Subject to the Order, each obligation of this Agreement is a valid and binding obligation of each such Party, enforceable against each such Party in accordance with its terms. The obligations of each of J. Aron and PERL pursuant to this Agreement shall be subject to the Master Agreement, as amended hereby. Capitalized terms used but not defined herein shall have the meanings given such terms in the Master Agreement.

[Remainder of Page Intentionally Left Blank. Signature Page to Follow.]

A/72865021.5

Annex A [Confirmations for the Transactions]

A/72865021.2

APAPAP02107807-12894ATATAT To: PACIFIC ENERGY RESOURCES LTD. Attention: GERRY TYWONIUK Broker: SALES DEPARTMENT Attention: SIMON COLLIER From: J. Aron & Company The purpose of this confirmation letter (this "Confirmation") is to confirm the terms and conditions of the following transaction (the "Transaction") entered into on the Trade Date and Effective as of the Effective Date specified below between J. Aron & Company ("Aron") and PACIFIC ENERGY RESOURCES LTD. (Counterparty) (each, a Party and collectively, the Parties). This Confirmation is being provided pursuant to and in accordance with the ISDA Master Agreement and Schedule to the ISDA Master Agreement dated as of November 30, 2006 (including the other documents annexed thereto or incorporated therein, the "Master Agreement") between Aron and Counterparty and constitutes part of and is subject to the terms and provisions of such Master Agreement. This Confirmation constitutes a Confirmation within the meaning of the Master Agreement that supplements, forms part of and is subject to the Master Agreement. Terms used but not defined herein shall have the meanings ascribed to them in the Master Agreement. We are pleased to confirm the following Transaction between you and J. Aron & Company. Contract Reference Number: 912298699 1 1 Trade Date: 19 Dec 2008 Commodity Type: Midway Sunset Crude Oil Total Quantity: Fixed Price Payer: Monthly Floating Price Calculation Payer: Effective Date: Termination Date: Determination Period(s): 834,092.00 U.S. Barrel(s) PACIFIC ENERGY RESOURCES LTD. J. Aron & Company

01 Dec 2008 31 Jul 2012 44 Monthly Period(s) commencing with the Effective Date and ending on the Termination Date Quantity (U.S. Barrel(s)) 23,087.00 22,868.00 22,650.00 22,434.00 22,221.00 22,010.00 21,801.00 1 Fixed Price USD 30.00 per U.S. Barrel USD 43.50 per U.S. Barrel USD 43.50 per U.S. Barrel USD 43.50 per U.S. Barrel USD 43.50 per U.S. Barrel USD 43.50 per U.S. Barrel USD 43.50 per U.S. Barrel

Effective Date 01 Dec 2008 02 Jan 2009 02 Feb 2009 02 Mar 2009 01 Apr 2009 01 May 2009 01 Jun 2009

Termination Date 31 Dec 2008 30 Jan 2009 27 Feb 2009 31 Mar 2009 30 Apr 2009 29 May 2009 30 Jun 2009

01 Jul 2009 03 Aug 2009 01 Sep 2009 01 Oct 2009 02 Nov 2009 01 Dec 2009 04 Jan 2010 01 Feb 2010 01 Mar 2010 01 Apr 2010 03 May 2010 01 Jun 2010 01 Jul 2010 02 Aug 2010 01 Sep 2010 01 Oct 2010 01 Nov 2010 01 Dec 2010 03 Jan 2011 01 Feb 2011 01 Mar 2011 01 Apr 2011 02 May 2011 01 Jun 2011 01 Jul 2011 01 Aug 2011 01 Sep 2011 03 Oct 2011 01 Nov 2011 01 Dec 2011 03 Jan 2012 01 Feb 2012 01 Mar 2012 02 Apr 2012 01 May 2012 01 Jun 2012 02 Jul 2012

31 Jul 2009 31 Aug 2009 30 Sep 2009 30 Oct 2009 30 Nov 2009 31 Dec 2009 29 Jan 2010 26 Feb 2010 31 Mar 2010 30 Apr 2010 28 May 2010 30 Jun 2010 30 Jul 2010 31 Aug 2010 30 Sep 2010 29 Oct 2010 30 Nov 2010 31 Dec 2010 31 Jan 2011 28 Feb 2011 31 Mar 2011 29 Apr 2011 31 May 2011 30 Jun 2011 29 Jul 2011 31 Aug 2011 30 Sep 2011 31 Oct 2011 30 Nov 2011 30 Dec 2011 31 Jan 2012 29 Feb 2012 30 Mar 2012 30 Apr 2012 31 May 2012 29 Jun 2012 31 Jul 2012

21,592.00 21,389.00 21,186.00 20,985.00 20,786.00 20,590.00 20,394.00 20,202.00 20,010.00 19,821.00 19,633.00 19,448.00 19,263.00 19,082.00 18,903.00 18,723.00 18,548.00 18,373.00 18,200.00 18,029.00 17,859.00 17,690.00 17,525.00 17,360.00 17,198.00 17,036.00 16,876.00 16,718.00 16,562.00 16,407.00 16,254.00 16,102.00 15,950.00 15,802.00 15,654.00 15,508.00 15,363.00

USD 43.50 per U.S. Barrel USD 43.50 per U.S. Barrel USD 43.50 per U.S. Barrel USD 43.50 per U.S. Barrel USD 43.50 per U.S. Barrel USD 43.50 per U.S. Barrel USD 53.25 per U.S. Barrel USD 53.25 per U.S. Barrel USD 53.25 per U.S. Barrel USD 53.25 per U.S. Barrel USD 53.25 per U.S. Barrel USD 53.25 per U.S. Barrel USD 53.25 per U.S. Barrel USD 53.25 per U.S. Barrel USD 53.25 per U.S. Barrel USD 53.25 per U.S. Barrel USD 53.25 per U.S. Barrel USD 53.25 per U.S. Barrel USD 57.10 per U.S. Barrel USD 57.10 per U.S. Barrel USD 57.10 per U.S. Barrel USD 57.10 per U.S. Barrel USD 57.10 per U.S. Barrel USD 57.10 per U.S. Barrel USD 57.10 per U.S. Barrel USD 57.10 per U.S. Barrel USD 57.10 per U.S. Barrel USD 57.10 per U.S. Barrel USD 57.10 per U.S. Barrel USD 57.10 per U.S. Barrel USD 56.9 per U.S. Barrel USD 56.9 per U.S. Barrel USD 56.9 per U.S. Barrel USD 56.9 per U.S. Barrel USD 56.9 per U.S. Barrel USD 56.9 per U.S. Barrel USD 56.9 per U.S. Barrel

Floating Price (A):

For each Business Day on which the New York Mercantile Exchange (NYMEX) is open, the daily posted price for Midway Sunset published on Chevrons website:
http://crudemarketing.chevron.com/posted_pricing_daily_california.as p under the heading Crude Oil Marketing under the table

heading California, as such reference source may be changed from time to time (through website or otherwise). Floating Price (B): For each Business Day on which the New York Mercantile Exchange (NYMEX) is open, the daily posted price for Midway-Sunset published on Mobils website:
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http://www.exxonmobil.com/CrdBltn/ under the heading Crude Oil

Price Bulletin Summary, under the section heading California, as such reference source may be changed from time to time (through website or otherwise). Floating Price (C): For each Business Day on which the New York Mercantile Exchange (NYMEX) is open, the daily posted price for Midway-Sunset published on Unions website: http://wh.conocophillips.com/buy/postings/union76.asp under the heading Union 76 Crude Oil Prices, as such reference source may be changed from time to time (through website or otherwise). For each Business Day on which the New York Mercantile Exchange (NYMEX) is open, the daily posted price for Midway Sunset published on Shells website: http://apps.coralenergy.com/stusco/ under the heading California, as such reference source may be changed from time to time (through website or otherwise). For each Business Day on which the New York Mercantile Exchange (NYMEX) is open, the arithmetic average of the prices referenced in the Floating Price (A), (B), (C), and (D); provided, that subject to B. in OTHER TERMS below, if one or more but less than all Floating Prices is suspended or interrupted in the relevant publication for any reason such Daily Floating Price shall be calculated by reference to the Floating Prices which are published on such Business Day. For each Determination Period, the arithmetic average of the Daily Floating Price Calculation.

Floating Price (D):

Daily Floating Price Calculation:

Monthly Floating Price Calculation:

If, with respect to each Determination Period, the Fixed Price exceeds the Monthly Floating Price Calculation, the Fixed Price Payer shall pay Monthly Floating Price Calculation Payer the difference between the two such amounts multiplied by the Quantity, and if the Monthly Floating Price Calculation exceeds the Fixed Price, the Monthly Floating Price Calculation Payer shall pay the Fixed Price Payer the difference between the two such amounts multiplied by the Quantity. If the Monthly Floating Price Calculation is equal to the Fixed Price, then no payment shall be made. OTHER TERMS For this purpose, the terms Floating Price (A), Floating Price (B), Floating Price (C) and Floating Price (D) are referred to collectively herein as the Floating Prices. A. The Daily and Monthly Floating Price Calculations shall be determined with reference to the applicable Floating Prices; provided, however, that on any day which is a Business Day on which the New York Mercantile Exchange (NYMEX) is open and for which none of the relevant quotations appear in the publications referred to above, the Floating Prices for such
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day shall be determined with reference to the nearest preceding day for which any one (or more) of the relevant quotations for such Floating Prices are published. B. In the event that the quotations referred to above in relation to one or more Floating Prices is suspended or interrupted in the relevant publication for any reason for three (3) or more consecutive Business Days on which the New York Mercantile Exchange (NYMEX) is open, then the Parties shall use commercially reasonable efforts to adjust the Daily and Monthly Floating Price Calculation formulas and/or the inputs to such formulas on a temporary basis in such manner as to fairly reflect the assumptions underlying the formulas or similar assumptions and to preserve the economic substance of the Transaction reflected herein at the time such Transaction was entered into. For the avoidance of doubt, this provision B. shall apply only in the event that such suspension or interruption affects the same quotation in relation to one or more Floating Prices for three (3) or more consecutive Business Days on which the New York Mercantile Exchange (NYMEX) is open. C. In the event that for any Determination Period the publication of one or more Floating Prices used herein in connection with the determination of the Daily and Monthly Floating Price Calculations is corrected or updated on or before three (3) Business Days after the Settlement Date for the applicable Determination Period, then such corrected or updated quotation shall be used for purposes of determining the applicable Daily and Floating Price Calculations. D. If at any time prior to the Termination Date, a Party determines in its reasonable discretion that there has occurred a material change to the crude oil specifications, a posting location, the number of posting parties or another similar event, then the Parties shall use commercially reasonable efforts to adjust the Daily and Monthly Floating Price Calculation formulas and/or the inputs to such formulas in such manner as to fairly reflect the assumptions underlying the formulas or similar assumptions and to preserve the economic substance of the Transaction reflected herein at the time such Transaction was entered into. For the sake of good order, please note that the terms of this transaction shall be agreed solely between the parties and that any brokers confirmation telex referencing the details of this transaction is for informational purposes only. Settlement Date(s): Payment Date(s): The last trading day of each Determination Period 5 New York Business Day(s) after each Settlement Date via wire transfer of Federal Funds

For the sake of good order, please note that the terms of this transaction shall be agreed solely between the parties and that any brokers confirmation telex referencing the details of this transaction is for informational purposes only.

Please confirm that the foregoing correctly sets forth the terms of our agreement with respect to this Transaction (Transaction Reference No.: 912298699 1 1) by signing this Confirmation via facsimile to the attention of Commodity Operations at: New York: 1-212-493-9846 (J. Aron & Company) London: 44-207-774-2135 (Goldman Sachs International)
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Singapore: 65-6889-3515

(J. Aron & Company (Singapore) Pte.)

Regards, J. Aron & Company Signed on behalf of J. Aron & Company By:

Kathy Benini Vice President J. Aron & Company

Signed on behalf of PACIFIC ENERGY RESOURCES LTD.

By: ____________________________________________

Name:

Title:

APAPAP02107807-12894ATATAT

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DERIVATIVE TRANSACTION TERMINATION AGREEMENT between PACIFIC ENERGY ALASKA OPERATING LLC and J. ARON & COMPANY This Derivative Transaction Termination Agreement (this Derivative Transaction Agreement) is made and entered into as of March 6, 2009, by and between PACIFIC ENERGY ALASKA OPERATING LLC (PEA) and J. ARON & COMPANY (J. Aron and, together with PEA, the Parties). The Parties have entered into transactions the Confirmations for which are attached hereto as Annex A hereto (the Existing Transactions) under the ISDA Master Agreement dated as of August 27, 2007 (the Master Agreement). The Parties wish to terminate the Existing Transactions. Pursuant to this Derivative Transaction Agreement, the Parties hereby agree to terminate and settle the Existing Transactions. Such termination shall be effective as of March 6, 2009 (the Termination Date). The termination and settlement of the Existing Transactions shall give rise to an obligation to pay an amount owing from J. Aron to PEA (the Unwind Amount), and the parties hereto acknowledge and agree that the amount set forth on Annex B hereto accurately reflects such Unwind Amount. As a result of the Events of Default existing under and as defined in that certain First Lien Credit Agreement, dated as of August 24, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the PEA First Lien Credit Agreement), among PEA, as borrower, Pacific Energy Alaska Holdings, LLC, J. Aron and the other lenders from time to time party thereto (each individually, a Lender and collectively, the Lenders), Silver Point Finance, LLC, as administrative agent for the Lenders, and J. Aron, as documentation agent, including, without limitation, the failure by PEA to pay all amounts due thereunder at maturity, the Unwind Amount (which constitutes a portion of the collateral security to the obligations under the PEA First Lien Credit Agreement) shall, simultaneously with the termination of the Existing Transactions, be setoff by J. Aron against PEAs Obligations (as defined in the PEA First Lien Credit Agreement) to J. Aron, in its capacity as a Lender, under the PEA First Lien Credit Agreement. As provided in Section 2.17 of the PEA First Lien Credit Agreement, J. Aron will then share such setoff with the other Lenders party thereto. The parties have executed this Derivative Transaction Agreement by their duly authorized officers effective as of the date hereof. Upon discharge of the Unwind Amount as described above (which amount, for the avoidance of doubt, includes any amounts previously invoiced by J. Aron in connection with the February contract settlement), the Parties shall release and discharge each other and their respective officers, directors, employees, agents, successor, assigns and credit support provider from all its obligations, cause of action, loss, cost, expense, liability, damage, claim or demand whatsoever in law or in equity under or related solely to the Existing Transactions. It is expressly understood and agreed that the termination contemplated herein shall not affect, impair or otherwise modify

A/72865094.3

the respective rights, obligations and liabilities of the parties for any other transactions between the Parties all of which shall remain unchanged and in full force and effect. Each Party acknowledges that it has voluntarily agreed to enter into this Derivative Transaction Agreement. Each Party represents and warrants to the other that the delivery by it of this Derivative Transaction Agreement and the transactions contemplated hereby are not prohibited by, and do not violate any provision or result in the breach of, or acceleration of the performance required by the terms of (i) any law or governmental order applicable to it, or (ii) its articles of incorporation, by-laws, articles of organization, operating agreement, or organizational documents as applicable, or any material contract, note, bond, mortgage indenture license or agreement to which it is a party or is bound or by which any of its assets is bound. Each Party further represents to the other that it has all of the necessary power and authority under its respective articles of incorporation, by-laws, articles of organization, operating agreement or organizational documents, under the laws of its state of domestic jurisdiction and other applicable laws to execute, deliver and perform this Derivative Transaction Agreement. The execution, delivery and performance of this Derivative Transaction Agreement by it have been duly authorized by all necessary partnership, corporate or limited liability company action. Each obligation of this Derivative Transaction Agreement is a valid and binding obligation of each such Party, enforceable against each such Party in accordance with its terms. The terms of this Derivative Transaction Agreement shall be kept in confidence by the parties except in order to comply with any applicable law, regulation or requirement of applicable Canadian securities regulatory authorities and of the Toronto Stock Exchange or any exchange, transporter, control area or independent system operator rule or in connection with any court or regulatory proceeding or request; provided, however, each Party shall, to the extent practicable, use reasonable efforts to prevent or limit the disclosure. The obligations of each of J. Aron and PEA pursuant to this Derivative Transaction Agreement shall be subject to the Master Agreement. Capitalized terms used but not defined herein shall have the meanings given such terms in the Master Agreement. [Remainder of Page Intentionally Left Blank. Signature Page to Follow.]

A/72865094.3

Annex A [Confirmations for the Existing Transactions]

A/72865094.3

APAPAP02109341-21468ATATAT This Transaction (defined below) has been executed in conjunction with the termination of J. Aron Contract Reference Number 900157389 1 1 (the Original Transaction) originally entered into on 27 Aug 2007 between Pacific Energy Resources Ltd. and J. Aron & Company (as such Original Transaction was subsequently novated by Pacific Energy Resources Ltd. to Pacific Energy Alaska Operating, LLC pursuant to that certain Novation Agreement dated as of August 28, 2007 by and among J. Aron & Company, as Remaining Party, Pacific Energy Resources Ltd., as Transferor and Pacific Energy Alaska Operating, LLC, as Transferee). Upon your acceptance of the terms of this Confirmation (defined below), all rights and liabilities under the Original Transaction shall be automatically terminated without further action and neither party shall have further rights, liabilities, duties or obligations thereunder. To: PACIFIC ENERGY ALASKA OPERATING, LLC (Counterparty) Attention: GERRY TYWONIUK Attention: SIMON COLLIER From: J. Aron & Company (Aron) The purpose of this confirmation letter (this "Confirmation") is to confirm the terms and conditions of the following transaction (the "Transaction") entered into on the Trade Date and Effective as of the Effective Date specified below between Aron and Counterparty (each, a Party and collectively, the Parties). This Confirmation is being provided pursuant to and in accordance with the ISDA Master Agreement and Schedule to the ISDA Master Agreement dated as of August 27, 2007 (including the other documents annexed thereto or incorporated therein, the "Master Agreement") between Aron and Counterparty and constitutes part of and is subject to the terms and provisions of such Master Agreement. This Confirmation constitutes a Confirmation within the meaning of the Master Agreement that supplements, forms part of and is subject to the Master Agreement. Terms used but not defined herein shall have the meanings ascribed to them in the Master Agreement. We are pleased to confirm the following Transaction between Counterparty and Aron. Contract Reference Number: Trade Date: Trade Type: Option Style: Settlement: Exercise: Transaction Time: 912295663 1 1 19 Dec 2008 Put Asian Cash Settled in USD Automatic This is available upon request.

Commodity Type: Total Quantity: Option Buyer: Option Seller Effective Date: Termination Date: Determination Period(s):

Nymex West Texas Intermediate Crude Oil 989,481.00 U.S. Barrel(s) Counterparty Aron 01 Dec 2008 31 Dec 2009 13 Monthly Period(s) commencing with the Effective Date and ending on the Termination Date The last Trading Day of each Determination Period 5 New York Business Day(s) after each Expiration Date via wire transfer of Federal Funds

Expiration Date: Payment Date(s):

Start Date 01 Dec 2008 01 Jan 2009 01 Feb 2009 01 Mar 2009 01 Apr 2009 01 May 2009 01 Jun 2009 01 Jul 2009 01 Aug 2009 01 Sep 2009 01 Oct 2009 01 Nov 2009 01 Dec 2009 Floating Price:

End Date 31 Dec 2008 31 Jan 2009 28 Feb 2009 31 Mar 2009 30 Apr 2009 31 May 2009 30 Jun 2009 31 Jul 2009 31 Aug 2009 30 Sep 2009 31 Oct 2009 30 Nov 2009 31 Dec 2009

Quantity per month (U.S. Barrel(s)) 81,482.00 80,536.00 79,609.00 78,692.00 77,790.00 76,902.00 76,024.00 75,158.00 74,308.00 73,471.00 72,650.00 71,830.00 71,029.00

Strike Price USD 68.16 per U.S. Barrel USD 67.21 per U.S. Barrel USD 67.21 per U.S. Barrel USD 67.21 per U.S. Barrel USD 67.21 per U.S. Barrel USD 67.21 per U.S. Barrel USD 67.21 per U.S. Barrel USD 67.21 per U.S. Barrel USD 67.21 per U.S. Barrel USD 67.21 per U.S. Barrel USD 67.21 per U.S. Barrel USD 67.21 per U.S. Barrel USD 67.21 per U.S. Barrel

For each Determination Period, the average of the closing settlement price(s) on the New York Mercantile Exchange for the Nearby Light Crude Futures Contract (referenced below)

Nearby Contract:

First

Payment Calculation (Put): If for a Determination Period the Strike Price exceeds the Floating Price, the Option Seller shall pay the Option Buyer an amount equal to the product of: I) The difference between the Strike Price and the Floating Price, and
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II) The Quantity for a Determination Period. If the Strike Price is equal to or less than the Floating Price, no payment shall be made. For the sake of good order, please note that the terms of this Transaction shall be agreed solely between the parties. Please confirm that the foregoing correctly sets forth the terms of our agreement with respect to this transaction (Contract Reference Number: 912295663 1 1) by signing this confirmation in the space provided below and immediately returning a copy of the executed confirmation via facsimile to the attention of Commodity Operations at: New York: 1-212-493-9846 (J. Aron & Company) London: 44-207-774-2135 (Goldman Sachs International) Singapore: 65-6889-3515 (J. Aron & Company (Singapore) Pte.) Regards, J. Aron & Company Signed on behalf of J. Aron & Company By:

Kathy Benini Vice President J. Aron & Company

Signed on behalf of PACIFIC ENERGY ALASKA OPERATING LLC

By: ________________________

Name:

Title: APAPAP02109341-21468ATATAT

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Annex B The Unwind Amount is $15,932,520.

A/72865094.3

J. ARON & COMPANY 85 Broad Street New York, NY 10004 March 11, 2009 Pacific Energy Resources Ltd., Petrocal Acquisition Corp., San Pedro Bay Pipeline Company, Carneros Acquisition Corp., Carneros Energy, Inc., and Gotland Oil, Inc. 111 West Ocean Boulevard Suite 1240 Long Beach, CA 90802 Attention: Darren Katic, President

Re:

Payout Arrangements

Ladies and Gentlemen: We refer to (a) the Credit and Guaranty Agreement, dated as of November 30, 2006 (as amended and in effect on the date hereof, the Credit Agreement), by and among (i) Pacific Energy Resources Ltd., a Delaware corporation (the Borrower), (ii) certain Subsidiaries of the Borrower signatory thereto as Guarantors (the Guarantors, and together with Borrower, the Credit Parties), (iii) the Lenders from time to time party thereto (the Lenders), (iv) J. Aron & Company, as Lead Arranger and Syndication Agent, and (v) J. Aron & Company as Administrative Agent (in such capacity, the Agent) for itself and the other Lenders and (b) the Forbearance Agreement and Eighth Amendment to Credit and Guaranty Agreement, dated as of December 19, 2008 (as amended, the Forbearance Agreement), by and among the Borrower, the Guarantors, the Lenders and J. Aron & Company, individually as a Lender, as Administrative Agent for the Lenders and as Hedge Provider (as defined therein). We also refer to the Interim Order for In re: Pacific Energy Resources Ltd., et al., at Case No. 09-10785 (1) approving senior secured superpriority postpetition financing, (2) authorizing use of cash collateral, (3) granting liens and providing superpriority administrative expense status, (4) granting adequate protection, (5) modifying automatic stay, and (6) scheduling a final hearing. All capitalized terms used herein without definition shall have the respective meanings assigned to such terms in the Credit Agreement. The Borrower has advised the Agent that it intends to repay all amounts (unless otherwise provided herein) outstanding under the Credit Agreement (including the outstanding principal amount of the loans, interest thereon, unpaid fees and expenses in respect thereof, and any makewhole payments payable as a result of the prepayment thereof (the Premium)) and has requested that the Agent provide it with appropriate pay-off figures for the such amounts owing by the Borrower to the Agent and the Lenders under the Credit Agreement. The pay-off figures for the Borrower as of March 8, 2009 (the Petition Date) under the Credit Agreement are as follows (collectively, together with any additional interest accruing, any additional make-whole payments, or legal fees and expenses incurred after the Petition Date and prior to the Pay-Off Date (as defined below), the Pay-Off Amount):

A/72858027.8

Principal: Interest: Premium: Total

$39,115,065.02 $1,265,964.80 $3,818,531.13 $44,199,560.95

From and after the Petition Date and until the Pay-Off Date (as defined below), (i) interest shall continue to accrue on the unpaid principal amount of the Loans and (ii) the Premium shall be recalculated, to the extent necessary. The Borrower further agrees to pay all reasonable legal fees and expenses incurred by counsel to the Agent in connection with this letter and the termination of the Credit Agreement and the other Transaction Documents, including those amounts which are billed after the Petition Date in the ordinary course of business following presentation of invoices therefor. The Agent shall provide the Borrower with a revised figure for the amount of interest, and a revised figure for the Premium, if applicable, to be paid as part of the Pay-Off Amount plus any additional legal fees and expenses incurred since the Petition Date and to be paid as part of the Pay-Off Amount. The Borrower and the Agent on behalf of the Lenders acknowledge and agree that, upon the Agents receipt of payment in full in cash of the Pay-Off Amount, including any additional interest accruing after the Petition Date, on or prior to 1:00 p.m. (New York time) on the date of payment (the time of the Agents receipt of such payment being hereinafter referred to as the PayOff Date), then (i) all indebtedness and Obligations (other than any Lender Hedging Obligations) of the Borrower to the Agent and the Lenders under or in respect of the Credit Agreement and the other Transaction Documents (including, without limitation, the obligations under the Forbearance Agreement), shall be deemed to be and shall be paid and discharged in full, and the Credit Agreement and all Commitments of the Agent and any Lender to lend thereunder shall be deemed to be terminated, provided, however, that nothing contained herein shall be deemed to terminate or otherwise impair those expense reimbursement, indemnification or other provisions of the Credit Agreement and the other Transaction Documents, which by their express terms survive the repayment of the Loans. Borrower and each Guarantor, on behalf of themselves and their respective agents, representatives, officers, directors, advisors, employees, subsidiaries, affiliates, successors and assigns (collectively, the Releasors), hereby forever agree and covenant not to sue or prosecute against the Agent, Lenders and Lender Counterparty and their respective affiliates, subsidiaries, shareholders and controlling persons (within the meaning of the federal securities laws), and their respective successors and assigns and each and all of the officers, directors, partners, employees, agents, attorneys and other representatives of each of the foregoing in their respective capacities as such (collectively, the Releasees), and hereby forever waive, release and discharge, to the fullest extent permitted by law, each Releasee from any and all claims (including, without limitation, crossclaims, counterclaims, rights of set-off and recoupment), actions, causes of action, suits, debts, accounts, interests, liens, promises, warranties, damages and consequential damages, demands, agreements, bonds, bills, specialties, covenants, controversies, variances, trespasses, judgments, executions, costs or expenses whatsoever (collectively, the Claims) that such Releasor now has or hereafter may have, of whatsoever nature and kind, whether known or unknown, whether now existing or hereafter arising, whether arising at law or in equity, against the Releasees, based in whole or in part on facts, whether or not now known, existing on or before the Petition Date, that relate to, arise out of or otherwise are in connection with: (i) any or all of the Transaction Documents or any Hedging Contract or transactions contemplated thereby or any

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3 actions or omissions in connection therewith or (ii) any aspect of the dealings or relationships between or among the Borrower and the Guarantors, on the one hand, and any or all of the Agent, Lenders or any Lender Counterparty, on the other hand, relating to any or all of the documents, transactions, actions or omissions referenced in clause (i) hereof. The receipt by the Borrower or any Guarantor of any Loans or other financial accommodations made by any Lender under the Credit Agreement on or after the date hereof shall constitute a ratification, adoption, and confirmation by such party of the foregoing general release of all Claims against the Releasees which are based in whole or in part on facts, whether or not now known or unknown, existing on or prior to the date of receipt of any such Loans or other financial accommodations. Borrower and each Guarantor has consulted with, and has been represented by, legal counsel and expressly disclaims any reliance on any representations, acts or omissions by any of the Releasees (other than the terms and conditions expressly set forth in the Credit Agreement) and hereby agrees and acknowledges that the validity and effectiveness of the releases set forth above do not depend in any way on any such representations, acts and/or omissions or the accuracy, completeness or validity the Credit Agreement (other than the terms and conditions expressly set forth therein). THIS LETTER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN THE NEW YORK GENERAL OBLIGATIONS LAW 5-1401 AND 5-1402) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA (INCLUDING THE BANKRUPTCY CODE). [Remainder of page intentionally left blank.]

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