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SECOND LIEN PLEDGE AND SECURITY AGREEMENT

Stock Pledge Agreement

SECOND LIEN PLEDGE AND SECURITY AGREEMENT | Document Parties: PACIFIC ENERGY RESOURCES LTD | SILVER POINT FINANCE, LLC You are currently viewing:
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PACIFIC ENERGY RESOURCES LTD | SILVER POINT FINANCE, LLC

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Title: SECOND LIEN PLEDGE AND SECURITY AGREEMENT
Governing Law: Delaware     Date: 2/12/2008

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EXHIBIT 10.66

                   SECOND LIEN PLEDGE AND SECURITY AGREEMENT

                                 August 24, 2007

                                     between

                        EACH OF THE GRANTORS PARTY HERETO

                                        and

                           SILVER POINT FINANCE, LLC,

                              as the Secured Party


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                                TABLE OF CONTENTS

<TABLE>
                                                                                          Page
                                                                                         ----
<S>                                                                                        <C>
Section 1     DEFINITIONS...............................................................    2
        1.1   General Definitions.......................................................    2
        1.2   Definitions; Interpretation...............................................    7

Section 2     GRANT OF SECURITY.........................................................    8
        2.1   Grant of Security.........................................................    8
        2.2   Certain Limited Exclusions................................................    9
        2.3   Lien Subordination..........................Error! Bookmark not defined.

Section 3     SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE..........................    9
        3.1   Security for Obligations..................................................    9
        3.2   Continuing Liability Under Collateral.....................................    9

Section 4     REPRESENTATIONS AND WARRANTIES AND COVENANTS..............................   10
        4.1   Generally.................................................................   10
        4.2   Investment Related Property; Investment Related Property Generally........   12
        4.3   Pledged Equity Interests..................................................   15
        4.4   Investment Accounts.......................................................   16
        4.5   Letter of Credit Rights...................................................   17
        4.6   Commercial Tort Claims....................................................   17

Section 5     ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS...   18
        5.1   Access; Right of Inspection...............................................   18
        5.2   Further Assurances........................................................   18
        5.3   Additional Grantors.......................................................   19

Section 6     SECURED PARTY APPOINTED ATTORNEY-IN-FACT..................................   19
        6.1   Power of Attorney.........................................................   19
        6.2   No Duty on the Part of Secured Party or Lender Parties....................   20

Section 7     REMEDIES..................................................................   21
        7.1   Generally.................................................................   21
        7.2   Application of Proceeds...................................................   22
        7.3   Sales on Credit...........................................................   23
        7.4   Deposit Accounts..........................................................   23
        7.5   Investment Related Property...............................................   23
        7.6   Intellectual Property.....................................................   23
        7.7   Cash Proceeds.............................................................   25

Section 8     AGENT.....................................................................   26

Section 9     CONTINUING SECURITY INTEREST; TRANSFER OF LOANS...........................   26
</TABLE>


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<TABLE>
<S>                                                                                        <C>
Section 10    STANDARD OF CARE; SECURED PARTY MAY PERFORM...............................   27

Section 11    MISCELLANEOUS.............................................................   27
</TABLE>

SCHEDULES:    4.1 -- General Information
             4.3 -- Investment Related Property
             4.5 -- Description of Letters of Credit
             4.6 -- Commercial Tort Claims

EXHIBITS:     A -- Pledge Supplement
             B -- Deposit Account Control Agreement


                                       ii


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                    SECOND LIEN PLEDGE AND SECURITY AGREEMENT

     This SECOND LIEN PLEDGE AND SECURITY AGREEMENT, dated as of August 24, 2007
(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 "Secured Party").

                                    RECITALS:

     WHEREAS, reference is made to (x) that certain Second Lien Credit
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 Alaska Operating LLC, a limited liability company
organized under the laws of the state of Delaware ("Alaska Operating"), Pacific
Energy Alaska Holdings, LLC, a limited liability company organized under the
laws of the state of Delaware ("Alaska Holdings") certain Subsidiaries of
Holdings, the lenders party thereto from time to time (the "Lenders"), Silver
Point Finance, LLC, as Administrative Agent, Collateral Agent, Sole Lead
Arranger and Sole Bookrunner, Syndication Agent, and Secured Party and J. Aron &
Company, as documentation agent and (y) that certain Second Lien Guaranty dated
as of August 24, 2007, (as maybe amended, modified or supplemented from time to
time) by and among Pacific Energy Resources Ltd., Petrocal Acquisition Corp. and
San Pedro Bay Pipeline Company, as Guarantors, other guarantors party thereto
from time to time and Silver Point Finance, LLC, as Administrative Agent;

     WHEREAS, subject to the terms and conditions of the Credit Agreement,
certain Grantors may enter into one or more Hedging Agreements with one or more
counterparties;

     WHEREAS, in consideration of the extensions of credit and other
accommodations of Lenders and counterparties to Hedging Agreements as set forth
in the Credit Agreement and the Hedging Agreements, respectively, each Grantor
has agreed to secure such Grantor's obligations under the Loan Documents and the
Hedging Agreements as set forth herein;

     WHEREAS, certain of the Grantors have also entered into (a) that certain
Credit and Guaranty Agreement, dated as of November 30, 2006, as amended on May
24, 2007 (as may be further amended, supplemented or otherwise modified from
time to time, the "First Lien Credit Agreement"), by and among Pacific Energy
Resources Ltd. (the "Company"), certain subsidiaries of the Company, the lenders
party thereto from time to time, J. Aron & Company, as lead arranger and
syndication agent, administrative agent and Collateral Agent (together with its
permitted successors and assigns, in such capacity, the "First Lien Collateral
Agent") and (b) that certain First Lien Pledge and Security Agreement, dated as
of November 30, 2006 (as may be amended, supplemented or otherwise modified from
time to time, the "First Lien Security Agreement"), by and between each of the
Grantors and the First Lien Collateral Agent, pursuant to which each Grantor has
granted a first priority Lien to the First Lien Collateral Agent for the benefit
of the holders of First Lien Obligations (as defined in the Intercreditor
Agreement referred to below) on the Collateral to secure such Grantor's
obligations under the Transaction Documents (as defined in the First Lien Credit
Agreement); and


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     WHEREAS, in order to set forth their respective rights and remedies with
respect to the Collateral, Company, the First Lien Collateral Agent and the
Collateral Agent have entered into an Intercreditor Agreement, dated as of the
date hereof (as may be amended, supplemented or otherwise modified from time to
time, the "Intercreditor Agreement").

     NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, each Grantor and the Secured Party
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 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.


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     "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.

     "First Lien Collateral Agent" shall have the meaning set forth in the
recitals.

     "First Lien Credit Agreement" shall have the meaning set forth in the
recitals.

     "First Lien Security Agreement" shall have the meaning set forth in the
recitals.

     "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 Secured Party 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.

     "Intercreditor Agreement" shall have the meaning set forth in the recitals.

     "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 Grantor's 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 and the counterparties to Hedging
Agreements and shall include, without limitation, all former Lenders and
counterparties to Hedging Agreements 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.


                                         4


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     "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.

     "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


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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
Grantor's 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.

     "Second Lien Guaranty" shall have the meaning set forth in the recitals.

     "Secured Obligations" shall have the meaning assigned in Section 3.1.

     "Secured Party" shall have the meaning set forth in the preamble.


                                        6


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     "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.

           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


                                        7


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     "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 hereby grants to the Secured Party
a security interest and continuing lien on all of such Grantor's 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) Accounts;

               (b) Chattel Paper;

               (c) Documents;

               (d) General Intangibles;

               (e) Goods;

               (f) Instruments;

               (g) Insurance;

               (h) Intellectual Property;

               (i) Investment Related Property;

               (j) Letter of Credit Rights;

               (k) Money;

               (l) Receivables and Receivable Records;


                                        8


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               (m) 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; and

               (o) to the extent not otherwise included above, all Proceeds,
products, accessions, rents and profits of or in respect of any of the
foregoing.

          2.2 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. It is the intention of Grantors (other than Company) and Secured
Party that this Agreement not constitute a fraudulent transfer or fraudulent
conveyance under any state or federal law that may be applied hereto. Each
Grantor (other than Company) and, by its acceptance hereof, Secured Party hereby
acknowledges and agrees that, notwithstanding any other provision of this
Agreement: (a) the indebtedness secured hereby shall be limited to the maximum
amount of indebtedness that can be incurred or secured by such Grantor without
rendering this Agreement subject to avoidance under Section 548 of the United
States Bankruptcy Code or any comparable provisions of any applicable state or
federal law, and (b) the Collateral pledged by such Grantor hereunder shall be
limited to the maximum amount of Collateral that can be pledged by such Grantor
without rendering this Agreement subject to avoidance under Section 548 of the
United States Bankruptcy Code or any comparable provisions of any applicable
state or federal law.

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 (including the
payment of 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. Section 362(a) (and
any successor provision thereof)), of all Guaranteed Obligations (as defined in
the Second Lien Guaranty) 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


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and nothing contained herein is intended or shall be a delegation of duties to
the Secured Party 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 Secured
Party 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 Secured Party 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 Secured Party 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 Generally.

               (a) Representations and Warranties. Each Grantor hereby
represents and 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 Liens permitted under Section 6.02 of the Credit
      Agreement;

                    (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;


                                       10


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                    (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 the filing of all UCC financing statements naming
     each Grantor as "debtor" and the Secured Party as "secured party" and
     describing the Collateral in the filing offices set forth opposite such
     Grantor's 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 Secured Party hereunder constitute valid and perfected Liens
     prior to all other liens (other than the Liens granted pursuant to the
     First Lien Security Agreement and the First Lien Credit Agreement (in
     accordance with the provisions of the Intercreditor Agreement), the other
     Liens permitted pursuant to Section 6.02 of the Credit Agreement which have
     priority as a matter of law and Liens permitted under Section 6.02 of the
     Credit Agreement) on all of the Collateral;

                    (vii) all actions and consents, including all filings,
     notices, registrations and recordings necessary or desirable for the
     exercise by the Secured Party 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 Secured Party and the First Lien Collateral Agent, 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 except for financing statements for
     which proper termination statements have been delivered to the Secured
     Party for filing;

                    (ix) no authorization, approval or other action by, and no
     notice to or filing with, any Governmental Authority 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 Secured Party hereunder or (ii) the
     exercise by Secured Party 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)  


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