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UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 
Washington, D. C. 20549 

 
FORM 10-Q 
 
☑	 	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 	
 
For the quarterly period ended September 30, 2002 
 
OR 
 
☐	 	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 	
 
Commission file number: 1-14569 

 
PLAINS ALL AMERICAN PIPELINE, L.P. 
(Exact name of registrant as specified in its charter) 
 
Delaware	    	76-0582150	
(State or other jurisdiction of
incorporation or organization)	    	(I.R.S. Employer
Identification No.)	
 
333 Clay Street, Suite 1600 
Houston, Texas 77002 
(Address of principal executive offices) 
(Zip Code) 
 
(713) 646-4100 
(Registrant’s telephone number, including area code) 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐ 
 
At November 4, 2002, there were outstanding 38,240,939 Common Units, 1,307,190 Class B Common Units and 10,029,619 Subordinated Units. 

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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES 
 
TABLE OF CONTENTS 
 
 	  	Page
	
PART I. FINANCIAL INFORMATION	  	 	
		
Item 1. CONSOLIDATED FINANCIAL STATEMENTS:	  	 	
Consolidated Balance Sheets: 	  	 	
September 30, 2002, and December 31, 2001	  	3	
Consolidated Statements of Operations: 	  	 	
For the three and nine months ended September 30, 2002 and 2001	  	4	
Consolidated Statements of Cash Flows: 	  	 	
For the nine months ended September 30, 2002 and 2001	  	5	
Consolidated Statement of Partners’ Capital: 	  	 	
For the nine months ended September 30, 2002	  	6	
Consolidated Statements of Comprehensive Income: 	  	 	
For the three and nine months ended September 30, 2002 and 2001	  	7	
Consolidated Statement of Changes in Accumulated Other Comprehensive Income: 	  	 	
For the nine months ended September 30, 2002	  	7	
Notes to Consolidated Financial Statements 	  	8	
		
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 	  	17	
		
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS	  	30	
		
Item 4. CONTROLS AND PROCEDURES	  	30	
		
PART II. OTHER INFORMATION	  	 	
		
Item 1. Legal Proceedings	  	31	
		
Item 2. Changes in Securities and Use of Proceeds 	  	31	
		
Item 3. Defaults Upon Senior Securities	  	31	
		
Item 4. Submission of Matters to a Vote of Security Holders 	  	31	
		
Item 5. Other Information 	  	31	
		
Item 6. Exhibits and Reports on Form 8-K	  	31	
		
Signatures	  	33	
		
Certification of Principal Executive Officer 	  	34	
		
Certification of Principal Financial Officer 	  	35	
 
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PART I. FINANCIAL INFORMATION 
 
Item 1. CONSOLIDATED FINANCIAL STATEMENTS 
 
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES 
 
CONSOLIDATED BALANCE SHEETS 
(in thousands, except unit data) 
 	  	September 30, 2002
	 	  	December 31, 2001
	 	
 	  	(unaudited)	 	  	 	 	
ASSETS	  	 	 	  	 	 	
CURRENT ASSETS	  	 	 	 	  	 	 	 	
Cash and cash equivalents	  	$	4,306	 	  	$	3,511	 	
Accounts receivable and other current assets	  	 	496,857	 	  	 	365,697	 	
Inventory	  	 	81,189	 	  	 	188,874	 	
 	  				  				
Total current assets	  	 	582,352	 	  	 	558,082	 	
 	  				  				
PROPERTY AND EQUIPMENT	  	 	1,012,814	 	  	 	653,050	 	
Less allowance for depreciation and amortization	  	 	(67,900	)	  	 	(48,131	)	
 	  				  				
 	  	 	944,914	 	  	 	604,919	 	
 	  				  				
OTHER ASSETS	  	 	 	 	  	 	 	 	
Pipeline linefill	  	 	51,416	 	  	 	57,367	 	
Other, net	  	 	52,808	 	  	 	40,883	 	
 	  				  				
 	  	 	104,224	 	  	 	98,250	 	
 	  				  				
 	  	$	1,631,490	 	  	$	1,261,251	 	

LIABILITIES AND PARTNERS’ CAPITAL	  	 	 	  	 	 	
		
CURRENT LIABILITIES	  	 	 	 	  	 	 	 	
Accounts payable and other current liabilities	  	$	468,988	 	  	$	386,993	 	
Due to related parties	  	 	25,580	 	  	 	13,685	 	
Short-term debt	  	 	105,577	 	  	 	101,482	 	
 	  				  				
Total current liabilities	  	 	600,145	 	  	 	502,160	 	
		
LONG-TERM LIABILITIES	  	 	 	 	  	 	 	 	
Long-term debt under credit facilities	  	 	309,453	 	  	 	354,677	 	
Senior notes, net of unamortized discount of $400	  	 	199,600	 	  	 	—  	 	
Other long-term liabilities and deferred credits	  	 	4,317	 	  	 	1,617	 	
 	  				  				
Total liabilities	  	 	1,113,515	 	  	 	858,454	 	
 	  				  				
COMMITMENTS AND CONTINGENCIES (NOTE 8)	  	 	 	 	  	 	 	 	
		
PARTNERS’ CAPITAL	  	 	 	 	  	 	 	 	
Common unitholders (38,240,939 and 31,915,939 units outstanding at September 30, 2002, and December 31, 2001, respectively)	  	 	529,488	 	  	 	408,562	 	
Class B common unitholders (1,307,190 units outstanding at each date )	  	 	18,621	 	  	 	19,534	 	
Subordinated unitholders (10,029,619 units outstanding at each date)	  	 	(45,900	)	  	 	(38,891	)	
General partner	  	 	15,766	 	  	 	13,592	 	
 	  				  				
Total partners’ capital	  	 	517,975	 	  	 	402,797	 	
 	  				  				
 	  	$	1,631,490	 	  	$	1,261,251	 	

The accompanying notes are an integral part of these consolidated financial statements. 
 
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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES 
 
CONSOLIDATED STATEMENTS OF OPERATIONS 
 
(in thousands, except per unit data) 
 
 	  	Three Months Ended September 30,
	 	  	Nine Months Ended September 30,
	 	
 	  	2002
	 	  	2001
	 	  	2002
	 	  	2001
	 	
 	  	(unaudited)	 	
REVENUES	  	$	2,344,089	 	  	$	2,191,310	 	  	$	5,874,759	 	  	$	5,298,051	 	
COST OF SALES AND OPERATIONS	  	 	2,299,823	 	  	 	2,151,666	 	  	 	5,750,398	 	  	 	5,189,288	 	
 	  				  				  				  				
Gross Margin	  	 	44,266	 	  	 	39,644	 	  	 	124,361	 	  	 	108,763	 	
 	  				  				  				  				
EXPENSES	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
General and administrative	  	 	11,512	 	  	 	10,297	 	  	 	33,389	 	  	 	34,327	 	
Depreciation and amortization	  	 	8,981	 	  	 	6,402	 	  	 	23,125	 	  	 	17,575	 	
 	  				  				  				  				
Total expenses	  	 	20,493	 	  	 	16,699	 	  	 	56,514	 	  	 	51,902	 	
 	  				  				  				  				
OPERATING INCOME	  	 	23,773	 	  	 	22,945	 	  	 	67,847	 	  	 	56,861	 	
Interest expense	  	 	(7,368	)	  	 	(7,775	)	  	 	(20,175	)	  	 	(22,482	)	
Interest and other income (expense)	  	 	(88	)	  	 	(9	)	  	 	(123	)	  	 	356	 	
 	  				  				  				  				
Income before cumulative effect of accounting change	  	 	16,317	 	  	 	15,161	 	  	 	47,549	 	  	 	34,735	 	
Cumulative effect of accounting change	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	508	 	
 	  				  				  				  				
NET INCOME	  	$	16,317	 	  	$	15,161	 	  	$	47,549	 	  	$	35,243	 	
 	  				  				  				  				
NET INCOME—LIMITED PARTNERS	  	$	15,159	 	  	$	14,536	 	  	$	44,515	 	  	$	34,019	 	
 	  				  				  				  				
NET INCOME—GENERAL PARTNER	  	$	1,158	 	  	$	625	 	  	$	3,034	 	  	$	1,224	 	
 	  				  				  				  				
BASIC AND DILUTED NET INCOME PER LIMITED PARTNER UNIT	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Income before cumulative effect of accounting change	  	$	0.33	 	  	$	0.38	 	  	$	1.01	 	  	$	0.93	 	
Cumulative effect of accounting change	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	0.01	 	
 	  				  				  				  				
Net income	  	$	0.33	 	  	$	0.38	 	  	$	1.01	 	  	$	0.94	 	
 	  				  				  				  				
WEIGHTED AVERAGE UNITS OUTSTANDING	  	 	46,027	 	  	 	38,353	 	  	 	44,188	 	  	 	36,156	 	

 
The accompanying notes are an integral part of these consolidated financial statements. 
 
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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(in thousands) 
 
 	  	Nine Months Ended September 30,
	 	
 	  	2002
	 	  	2001
	 	
 	  	(unaudited)	 	
CASH FLOWS FROM OPERATING ACTIVITIES	  	 	 	 	  	 	 	 	
Net income	  	$	47,549	 	  	$	35,243	 	
Adjustments to reconcile net income to net cash provided by operating activities:	  	 	 	 	  	 	 	 	
Depreciation and amortization	  	 	23,125	 	  	 	17,575	 	
Cumulative effect of accounting change	  	 	—  	 	  	 	(508	)	
Change in derivative fair value	  	 	2,130	 	  	 	(774	)	
Noncash compensation expense	  	 	—  	 	  	 	5,741	 	
Change in assets and liabilities, net of assets acquired and liabilities assumed:	  	 	 	 	  	 	 	 	
Accounts receivable and other current assets	  	 	(129,930	)	  	 	(189,490	)	
Inventory	  	 	104,664	 	  	 	(8,037	)	
Accounts payable and other current liabilities	  	 	67,954	 	  	 	149,408	 	
Due to related parties	  	 	11,895	 	  	 	(3,679	)	
 	  				  				
Net cash provided by operating activities	  	 	127,387	 	  	 	5,479	 	
 	  				  				
CASH FLOWS FROM INVESTING ACTIVITIES	  	 	 	 	  	 	 	 	
Cash paid in connection with acquisitions	  	 	(323,786	)	  	 	(209,264	)	
Additions to property and equipment	  	 	(27,445	)	  	 	(13,804	)	
Proceeds from sales of assets	  	 	1,390	 	  	 	1,808	 	
 	  				  				
Net cash used in investing activities	  	 	(349,841	)	  	 	(221,260	)	
 	  				  				
CASH FLOWS FROM FINANCING ACTIVITIES	  	 	 	 	  	 	 	 	
Proceeds from long-term debt	  	 	1,122,346	 	  	 	1,655,475	 	
Proceeds from short-term debt	  	 	411,350	 	  	 	258,655	 	
Principal payments of long-term debt	  	 	(1,167,659	)	  	 	(1,537,935	)	
Principal payments of short-term debt	  	 	(410,598	)	  	 	(202,555	)	
Cash paid in connection with financing arrangements	  	 	(11,721	)	  	 	(10,649	)	
Proceeds from the issuance of common units	  	 	151,671	 	  	 	106,209	 	
Proceeds from the issuance of senior unsecured notes	  	 	199,600	 	  	 	—  	 	
Distributions paid to unitholders and general partner	  	 	(71,642	)	  	 	(52,981	)	
 	  				  				
Net cash provided by financing activities	  	 	223,347	 	  	 	216,219	 	
 	  				  				
Effect of translation adjustment on cash	  	 	(98	)	  	 	—  	 	
 	  				  				
Net increase in cash and cash equivalents	  	 	795	 	  	 	438	 	
Cash and cash equivalents, beginning of period	  	 	3,511	 	  	 	3,426	 	
 	  				  				
Cash and cash equivalents, end of period	  	$	4,306	 	  	$	3,864	 	

The accompanying notes are an integral part of these consolidated financial statements. 
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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES 
 
CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL 
(in thousands) 
 
 	 	Common Units
	 	 	Class B Common Units
	 	 	Subordinated Units
	 	 	General Partner Amount
	 	 	Total Partners’ Capital Amount
	 	
 	 	Units
	 	Amount
	 	 	Units
	 	Amount
	 	 	Units
	 	Amount
	 	 			 			
 	 	(unaudited)	 	
Balance at December 31, 2001	 	31,916	 	$	408,562	 	 	1,307	 	$	19,534	 	 	10,030	 	$	(38,891	)	 	$	13,592	 	 	$	402,797	 	
Issuance of common units	 	6,325	 	 	142,013	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	 	3,033	 	 	 	145,046	 	
Distributions	 	—  	 	 	(50,267	)	 	—  	 	 	(2,059	)	 	—  	 	 	(15,797	)	 	 	(3,519	)	 	 	(71,642	)	
Accumulated other comprehensive income	 	—  	 	 	(4,030	)	 	—  	 	 	(158	)	 	—  	 	 	(1,213	)	 	 	(374	)	 	 	(5,775	)	
Net income	 	—  	 	 	33,210	 	 	—  	 	 	1,304	 	 	—  	 	 	10,001	 	 	 	3,034	 	 	 	47,549	 	
 	 		 				 		 				 		 				 				 				
Balance at September 30, 2002	 	38,241	 	$	529,488	 	 	1,307	 	$	18,621	 	 	10,030	 	$	(45,900	)	 	$	15,766	 	 	$	517,975	 	

 
 
The accompanying notes are an integral part of these consolidated financial statements. 
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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES 
 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND 
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME 
 
(in thousands) 
 
Statements of Comprehensive Income 
 
 	  	Three Months Ended September 30,
	 	  	Nine Months Ended September 30,
	 	
 	  	2002
	 	  	2001
	 	  	2002
	 	  	2001
	 	
 	  	(unaudited)	 	
Net income	  	$	16,317	 	  	$	15,161	 	  	$	47,549	 	  	$	35,243	 	
Other comprehensive income	  	 	(16,723	)	  	 	(5,398	)	  	 	(5,775	)	  	 	(11,236	)	
 	  				  				  				  				
Total comprehensive income	  	$	(406	)	  	$	9,763	 	  	$	41,774	 	  	$	24,007	 	

Statement of Changes in Accumulated Other Comprehensive Income 
 
 	  	Net Deferred Loss on Derivative Instruments
	 	  	Currency Translation Adjustments
	 	  	Total
	 	
 	  	(unaudited)	 	
Beginning balance at December 31, 2001	  	$	(4,740	)	  	$	(8,002	)	  	$	(12,742	)	
Current year activity	  	 	 	 	  	 	 	 	  	 	 	 	
Reclassification adjustments for settled contracts	  	 	3,185	 	  	 	—  	 	  	 	3,185	 	
Changes in fair value of outstanding hedge positions	  	 	(9,531	)	  	 	—  	 	  	 	(9,531	)	
Currency translation adjustment	  	 	—  	 	  	 	571	 	  	 	571	 	
 	  				  				  				
Total current year activity	  	 	(6,346	)	  	 	571	 	  	 	(5,775	)	
 	  				  				  				
Ending balance at September 30, 2002	  	$	(11,086	)	  	$	(7,431	)	  	$	(18,517	)	

 
The accompanying notes are an integral part of these consolidated financial statements. 
 
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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES 
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
 
(unaudited) 
 
Note 1—Organization and Accounting Policies 
 
We are a Delaware limited partnership formed in September of 1998. On November 23, 1998, we completed our initial public offering and the transactions whereby we became the successor to the midstream crude oil business and assets of Plains Resources Inc. and its midstream subsidiaries. The term “Partnership” herein refers to Plains All American Pipeline, L.P. and its affiliated operating partnerships. Our operations are conducted directly and indirectly through Plains Marketing, L.P., All American Pipeline, L.P. and Plains Marketing Canada, L.P. We are engaged in interstate and intrastate crude oil pipeline transportation as well as gathering, marketing, terminalling and storage of crude oil and liquefied petroleum gas (“LPG”). We own an extensive network in the United States and Canada of pipeline transportation, storage and gathering assets in key oil producing basins and at major market hubs. Our operations are conducted primarily in Texas, California, Oklahoma, Louisiana and the Canadian provinces of Alberta and Saskatchewan. 
 
The accompanying financial statements and related notes present our consolidated financial position as of September 30, 2002, and December 31, 2001, the results of our operations for the three and nine months ended September 30, 2002 and 2001, cash flows for the nine months ended September 30, 2002 and 2001, changes in partners’ capital for the nine months ended September 30, 2002, total comprehensive income for the three and nine months ended September 30, 2002 and 2001, and changes in accumulated other comprehensive income for the nine months ended September 30, 2002. The financial statements have been prepared in accordance with the instructions to interim reporting as prescribed by the Securities and Exchange Commission. All adjustments, consisting only of normal recurring adjustments, that in the opinion of management were necessary for a fair statement of the results for the interim periods, have been reflected. All significant intercompany transactions have been eliminated. Certain reclassifications are made to prior period amounts to conform to current period presentation. The results of operations for the three and nine months ended September 30, 2002, should not be taken as indicative of the results to be expected for the full year. The interim financial statements should be read in conjunction with our consolidated financial statements and notes thereto presented in our 2001 Annual Report on Form 10-K. 
 
Note 2—Derivative Instruments and Hedging Activities 
 
We utilize various derivative instruments to (i) manage our exposure to commodity price risk, (ii) engage in a controlled trading program, (iii) manage our exposure to interest rate risk and (iv) manage our exposure to currency exchange rate risk. Our risk management policies and procedures are designed to monitor interest rates, foreign exchange rates, NYMEX and over-the-counter positions, and physical volumes, grades, locations and delivery schedules to ensure that our hedging activities are implemented in accordance with such policies. We formally document all relationships between hedging instruments and hedged items, as well as our risk management objectives and strategy for undertaking the hedge. We calculate hedge effectiveness on a quarterly basis. This process includes specific identification of the hedging instrument and the hedged transaction, the nature of the risk being hedged and how the hedging instrument’s effectiveness will be assessed. Both at the inception of the hedge and on an ongoing basis, we assess whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items. 
 
Commodity Price Risk Hedging 
 
We hedge our exposure to price fluctuations with respect to crude oil and LPG in storage, and expected purchases, sales and transportation of these commodities. The derivative instruments utilized consist primarily of futures and option contracts traded on the New York Mercantile Exchange and over-the-counter transactions, including crude oil swap and option contracts entered into with financial institutions and other energy companies (see Note 6 for a discussion of the mitigation of credit risk). In accordance with Statement of Financial 
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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES 
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 
 
(unaudited) 
Accounting Standards (“SFAS”) No. 133 “Accounting for Derivative Instruments and Hedging Activities,” these derivative instruments are recognized in the balance sheet or earnings at their fair values. Changes in fair value are included in the current period for (i) derivatives characterized as fair value hedges, (ii) derivatives that do not qualify for hedge accounting and (iii) the portion of cash flow hedges that is not highly effective in offsetting changes in cash flows of hedged items. The amount included in earnings related to our commodity price risk activities for the nine months ended September 30, 2002, was a $2.1 million loss. The effective portion of changes in fair values of derivatives that qualify as cash flow hedges is recorded in Other Comprehensive Income (“OCI”). At September 30, 2002, there was a $0.4 million loss deferred in OCI related to our commodity price risk activities. The majority of our commodity price risk derivative instruments qualify for hedge accounting as cash flow hedges and thus the corresponding changes in fair value for the effective portion of the hedge are recognized in revenues or cost of sales and operations in the periods during which the underlying physical transactions occur. We have determined that our physical purchase and sale agreements qualify for the normal purchase and sale exclusion and thus are not subject to SFAS 133. 
 
Controlled Trading Program 
 
As a result of production and delivery variances associated with our lease purchase activities, from time to time we experience net unbalanced positions. In connection with managing these positions and maintaining a constant presence in the marketplace, both necessary for our core business, we engage in a controlled trading program for up to 500,000 barrels. This activity is monitored independently by our risk management function and must take place within predefined limits and authorizations. We record this activity at fair value in accordance with Emerging Issues Task Force (“EITF”) Issue No. 98-10, “Accounting for Contracts Involved in Energy Trading and Risk Management Activities” (see Note 9). EITF 98-10 requires energy trading contracts to be recorded at fair value on the balance sheet, with the changes in fair value recorded net in revenues. Although there were no open positions under this program at September 30, 2002, the realized earnings impact related to these derivatives for the nine months ended September 30, 2002, was a loss of $0.3 million. 
 
Interest Rate Risk Hedging 
 
We also utilize interest rate swaps and collars to hedge interest obligations on specific debt issuances. At September 30, 2002, we had interest rate swaps for an aggregate notional principal amount of $150.0 million. These instruments are based on LIBOR rates and provide for a LIBOR rate of 3.6% for a $100.0 million notional principal amount expiring September 2003, and a LIBOR rate of 4.3% for a $50.0 million notional principal amount expiring March 2004. Interest on the actual debt is based on LIBOR plus a margin. In anticipation of the issuance of our 7.75% senior notes due October 2012 and potential subsequent add-on thereto, in July 2002, we entered into a treasury lock on a $100 million principal amount with an effective interest rate of 4.51% and maturing on November 22, 2002. A treasury lock is a financial derivative instrument that enables the company to lock in the U.S. Treasury Note rate. In October 2002, the LIBOR swaps expiring in September 2003 and half of the treasury lock were consolidated into a $50 million LIBOR swap maturing in October 2006 at a rate of 5.05%. All of the financial instruments utilized are placed with large creditworthy financial institutions. These instruments qualify for hedge accounting as cash flow hedges in accordance with SFAS 133. The effective portion of changes in fair values of these hedges is recorded in OCI until the related hedged item impacts earnings. At September 30, 2002, there was a $10.9 million loss deferred in OCI related to our interest rate risk activities. 
 
Currency Exchange Rate Risk Hedging 
 
Since substantially all of our Canadian business is conducted in Canadian dollars (CAD), we use certain financial instruments to minimize the risks of unfavorable changes in exchange rates. At September 30, 2002, we 
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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES 
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 
 
(unaudited) 
had forward exchange contracts and forward extra option contracts that allow us to exchange $3.0 million Canadian for at least $1.9 million U. S. quarterly during 2002 and 2003 (based on a Canadian-U.S. dollar exchange rate of 1.54). At September 30, 2002, we also had a cross currency swap contract for an aggregate notional principal amount of $24.8 million, effectively converting this amount of our $99.0 million senior secured term loan (25% of the total) from U.S. dollars to $38.3 million of Canadian dollar debt (based on a Canadian-U.S. dollar exchange rate of 1.55). The terms of this contract mirror the term loan, matching the amortization schedule and final maturity in May 2006. Additionally, at September 30, 2002, $2.0 million of our long-term debt was denominated in Canadian dollars ($3.1 million CAD based on a Canadian-U.S. dollar exchange rate of 1.59). All of these financial instruments are placed with large creditworthy financial institutions. The forward exchange contracts and forward extra option contracts qualify for hedge accounting as cash flow hedges and the cross currency swaps qualify for hedge accounting as fair value hedges, both in accordance with SFAS 133. Such derivative activity resulted in a gain of $0.2 million deferred in OCI related to our currency exchange rate cash flow hedges. The earnings impact related to our currency exchange rate fair value hedges was nominal. 
 
Summary of Financial Impact 
 
The following is a summary of the financial impact of the derivative instruments and hedging activities discussed above. The September 30, 2002, balance sheet includes a $11.1 million unrealized loss in OCI, related assets of $6.3 million ($4.7 million current) and related liabilities of $18.8 million ($16.0 million current). Revenues for the nine months ended September 30, 2002, included a noncash loss of $2.1 million ($1.4 million noncash loss net of the reversal of the prior period fair value adjustment related to contracts that settled during the current period). Our hedge-related assets and liabilities are included in other current and non-current assets and liabilities in the consolidated balance sheet. 
 
As of September 30, 2002, the total amount of deferred net losses recorded in OCI are expected to be reclassified to future earnings, contemporaneously with the related physical purchase or delivery of the underlying commodity or payments of interest. During the nine months ended September 30, 2002, no amounts were reclassified to earnings from OCI in connection with forecasted transactions that were no longer considered probable of occurring. Based on the amounts deferred to OCI at September 30, 2002, a loss of $9.5 million will be reclassified to earnings in the next twelve months and the remainder by 2004. Since these amounts are based on market prices at the current period end, actual amounts to be reclassified will differ and could vary materially as a result of changes in market conditions. 
 
Note 3—Acquisitions 
 
On August 1, 2002, we acquired interests in approximately 2,000 miles of gathering and mainline crude oil pipelines and approximately 8.7 million barrels (net to our interest) of above-ground crude oil terminalling and storage assets in West Texas from Shell Pipeline Company LP and Equilon Enterprises LLC (the “Shell acquisition”). The results of operations and assets from this acquisition have been included in our consolidated financial statements and in our pipeline operations segment since that date (see Note 7). The primary assets included in the transaction are interests in the Basin Pipeline System, the Permian Basin Gathering System and the Rancho Pipeline System. These assets complement our existing asset infrastructure in West Texas and represent a transportation link to Cushing, Oklahoma, where we are a provider of storage and terminalling services. The total purchase price of $322.7 million consisted of (i) $304.0 million in cash, which was borrowed under our revolving credit facility, (ii) approximately $9.1 million related to the settlement of pre-existing accounts receivable and inventory balances and (iii) approximately $9.6 million of estimated transaction and closing costs. The entire purchase price was allocated to Property and Equipment. We are in the process of evaluating certain estimates made in the purchase price allocation; thus, the allocation is subject to refinement. 
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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES 
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 
 
(unaudited) 
 
The following unaudited pro forma data is presented to show pro forma revenues, net income and basic and diluted net income per limited partner unit for the Partnership as if the Shell acquisition had occurred on January 1, 2001 (in millions, except for per unit amounts): 
 
 	  	Nine Months Ended September 30,
	
 	  	2002
	  	2001
	
Revenues	  	$	5,900.9	  	$	5,342.5	
 	  			  			
Income before cumulative effect of accounting change	  	$	46.9	  	$	37.3	
 	  			  			
Net income	  	$	46.9	  	$	37.9	
 	  			  			
Basic and diluted income before cumulative effect of accounting change per limited partner unit	  	$	0.99	  	$	1.00	
 	  			  			
Basic and diluted net income per limited partner unit	  	$	0.99	  	$	1.01	

Note 4—Credit Facilities and Long-term Debt 
 
During September 2002, we completed the sale of $200 million of 7.75% senior notes due in October 2012. The notes were issued by Plains All American Pipeline, L.P. and a 100% owned finance subsidiary (neither of which have independent assets or operations) at a discount of $0.4 million, resulting in an effective interest rate of 7.78%. Interest payments are due on April 15 and October 15 of each year. The notes are fully and unconditionally guaranteed, jointly and severally, by all of our existing 100% owned subsidiaries, except for subsidiaries which are minor. 
 
As amended in July 2002 and giving effect to the third quarter capital raising activities, our credit facilities consist of a $350.0 million senior secured letter of credit and hedged inventory facility (with current lender commitments totaling $200.0 million), and a $747.0 million senior secured revolving credit and term loan facility, each of which is secured by substantially all of our assets. The terms of our credit facilities enable us to expand the size of the letter of credit and hedged inventory facility from $200.0 million to $350.0 million without additional approval from existing lenders. The revolving credit and term loan facility consists of a $420.0 million domestic revolving facility (with a $10.0 million letter of credit sublimit), a $30.0 million Canadian revolving facility (with a $5.0 million letter of credit sublimit), a $99.0 million term loan, and a $198.0 million term B loan. 
 
The facilities have final maturities as follows: 
 
 	•	 	as to the $350.0 million senior secured letter of credit and hedged inventory facility and the aggregate $450.0 million domestic and Canadian revolver portions, in April 2005; 	
 
 	•	 	as to the $99.0 million term loan, in May 2006; and 	
 
 	•	 	as to the $198.0 million term B loan, in September 2007. 	
 
The financial covenants of these credit facilities require us to maintain: 
 
 	•	 	a current ratio (as defined) of at least 1.0 to 1.0; 	
 
 	•	 	a debt coverage ratio which will not be greater than: 5.25 to 1.0 on unsecured debt and 4.0 to 1.0 on secured debt; 	
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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES 
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 
 
(unaudited) 
 
 	•	 	an interest coverage ratio that is not less than 2.75 to 1.0; and 	
 
 	•	 	a debt to capital ratio of not greater than 0.7 to 1.0 through March 30, 2003, and 0.65 to 1.0 at any time thereafter. 	
 
The combined domestic and Canadian revolving facility had approximately $12 million outstanding at September 30, 2002. In addition, we have classified $9 million of term loan payments due in 2003 as long term due to our intent and ability to refinance those maturities using the revolving facility. 
 
For covenant compliance purposes, letters of credit and borrowings under the letter of credit and hedged inventory facility are excluded when calculating the debt coverage ratio. We are currently in compliance with the covenants contained in our credit agreements. 
 
The amended facility permits us to issue up to an aggregate $400 million of senior unsecured debt having a maturity beyond the final maturity of the existing credit facility, and provides a mechanism to reduce the amount of the domestic revolving credit facility. The foregoing description of the credit facility incorporates the reduction associated with the $200 million senior note offering completed in September 2002. Depending on the amount of additional senior indebtedness incurred, the domestic revolving credit facility will be reduced by an amount equating to 40% to 63% of any incremental indebtedness up to the aggregate $400 million limitation. 
 
Note 5—Partners’ Capital and Distributions 
 
In August 2002, we completed a public offering of 6,325,000 common units for $23.50 per unit. The offering resulted in cash proceeds of approximately $148.6 million from the sale of the units and approximately $3.0 million from our general partner’s proportionate capital contribution. Total costs associated with the offering, including underwriter fees and other expenses, were approximately $6.6 million. Net proceeds of approximately $145.0 million were used to reduce outstanding borrowings under the domestic revolving credit facility. 
 
On October 24, 2002, we declared a cash distribution of $0.5375 per unit on our outstanding common units, Class B common units and subordinated units. The distribution is payable on November 14, 2002, to unitholders of record on November 4, 2002, for the period July 1, 2002, through September 30, 2002. The total distribution to be paid is approximately $28.2 million, with approximately $21.2 million to be paid to our common unitholders, $5.4 million to be paid to our subordinated unitholders and $1.6 million to be paid to our general partner for its general partner and incentive distribution interests. The distribution is in excess of the minimum quarterly distribution specified in the Partnership Agreement. 
 
On July 23, 2002, we declared a cash distribution of $0.5375 per unit on our outstanding common units, Class B common units and subordinated units. The distribution was paid on August 14, 2002, to unitholders of record on August 5, 2002, for the period April 1, 2002, through June 30, 2002. The total distribution paid was approximately $24.6 million, with approximately $17.8 million paid to our common unitholders, $5.4 million paid to our subordinated unitholders and $1.4 million paid to our general partner for its general partner and incentive distribution interests. The distribution was in excess of the minimum quarterly distribution specified in the Partnership Agreement. 
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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES 
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 
 
(unaudited) 
 
Note 6—Recent Disruptions in Industry Credit Markets 
 
As a result of business failures, revelations of material misrepresentations and related financial restatements by several large, well-known companies in various industries over the last year, there have been significant disruptions and extreme volatility in the financial markets and credit markets. Because of the credit intensive nature of the energy industry and troubling disclosures by several large, diversified energy companies, the energy industry has been especially impacted by these developments, with the rating agencies downgrading a number of large, energy-related companies. Accordingly, in this environment we are exposed to an increased level of direct and indirect counterparty credit and performance risk. 
 
The majority of our credit extensions and therefore our accounts receivable relate to our gathering and marketing activities that can generally be described as high volume and low margin activities, in many cases involving complex exchanges of crude oil volumes. In transacting business with our counterparties, we must determine the amount, if any, of open credit lines to extend to our counterparties and the form and amount of financial performance assurances we may require. The vast majority of such accounts receivable settle monthly and any collection delays generally involve discrepancies or disputes as to the appropriate price, volume or quality of crude oil delivered or exchanged and associated billing delays. Of our $357.6 million aggregate receivables balance included in current assets at December 31, 2001, approximately $330.9 million, or 93%, were less than sixty days past the scheduled invoice date. Of our $483.7 million aggregate receivables balance included in current assets at September 30, 2002, approximately $474.0 million, or 98%, were less than sixty days past the scheduled invoice date. 
 
We have modified our credit arrangements with certain counterparties that have been adversely affected by these recent events, but a large portion of the balances more than sixty days past the invoice date, along with approximately $10.8 million of net receivables classified as long-term, are associated with an ongoing effort to bring substantially all balances to within sixty days of scheduled invoice date. In certain cases, this effort involves reconciling and resolving certain discrepancies, generally related to pricing, volumes, quality or crude oil exchange imbalances, and the majority of these receivables are related to monthly periods leading up to and immediately following the disclosure of our unauthorized trading losses in late 1999. Following that disclosure, a significant number of our suppliers and trading partners temporarily reduced or eliminated our open credit and demanded payments or withheld payments due us before disputed amounts or discrepancies associated with exchange imbalances, pricing issues and quality adjustments were reconciled in accordance with customary industry practices. Because these matters also arose in the midst of various software systems conversions and acquisition integration activities, our effort to resolve outstanding claims and discrepancies has included reprocessing and integrating historical information on numerous software platforms. We have made significant progress to date in this effort and intend to substantially complete this project by the end of 2002 and, based on the work performed to date and the scope of the remaining work to be performed, we believe these prior period balances are collectible or subject to offsets and consider our reserves adequate. However, in the event our counterparties experience an unanticipated deterioration in their credit-worthiness, any addition to existing reserves or write-offs in excess of such reserves would result in a noncash charge to earnings. We do not believe any such charge would have a material effect on our cash flow or liquidity. 
 
Note 7—Operating Segments 
 
Our operations consist of two operating segments: (1) Pipeline Operations—engages in interstate and intrastate crude oil pipeline transportation and certain related merchant activities; (2) Gathering, Marketing, Terminalling and Storage Operations—engages in purchases and resales of crude oil and LPG at various points along the distribution chain and the operation of certain terminalling and storage assets. We evaluate segment performance based on gross margin and gross profit (gross margin less general and administrative expenses). 
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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES 
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 
 
(unaudited) 
 
 	  	Pipeline
	  	Gathering, Marketing, Terminalling & Storage
	  	Total
	
 	  	(in millions) 	
Three Months Ended September 30, 2002	  	 	 	  	 	 	  	 	 	
Revenues:	  	 	 	  	 	 	  	 	 	
External customers	  	$	123.4	  	$	2,220.7	  	$	2,344.1	
Intersegment (a)	  	 	7.0	  	 	—  	  	 	7.0	
 	  			  			  			
Total revenues	  	$	130.4	  	$	2,220.7	  	$	2,351.1	
 	  			  			  			
Gross margin (b)	  	$	23.0	  	$	21.3	  	$	44.3	
General and administrative expenses (c)	  	 	3.2	  	 	8.3	  	 	11.5	
 	  			  			  			
Gross profit (d)	  	$	19.8	  	$	13.0	  	$	32.8	
 	  			  			  			
Maintenance capital	  	$	0.5	  	$	0.7	  	$	1.2	

Three Months Ended September 30, 2001	  	 	 	  	 	 	  	 	 	
Revenues:	  	 	 	  	 	 	  	 	 	
External customers	  	$	88.8	  	$	2,102.5	  	$	2,191.3	
Intersegment (a)	  	 	4.5	  	 	—  	  	 	4.5	
 	  			  			  			
Total revenues	  	$	93.3	  	$	2,102.5	  	$	2,195.8	
 	  			  			  			
Gross margin (b)	  	$	16.1	  	$	23.5	  	$	39.6	
General and administrative expenses (c)	  	 	2.9	  	 	7.4	  	 	10.3	
 	  			  			  			
Gross profit (d)	  	$	13.2	  	$	16.1	  	$	29.3	
 	  			  			  			
Maintenance capital	  	$	0.4	  	$	0.2	  	$	0.6	

Nine Months Ended September 30, 2002	  	 	 	  	 	 	  	 	 	
Revenues:	  	 	 	  	 	 	  	 	 	
External customers	  	$	320.2	  	$	5,554.6	  	$	5,874.8	
Intersegment (a)	  	 	13.9	  	 	—  	  	 	13.9	
 	  			  			  			
Total revenues	  	$	334.1	  	$	5,554.6	  	$	5,888.7	
 	  			  			  			
Gross margin (b)	  	$	60.3	  	$	64.1	  	$	124.4	
General and administrative expenses (c)	  	 	9.3	  	 	24.1	  	 	33.4	
 	  			  			  			
Gross profit (d)	  	$	51.0	  	$	40.0	  	$	91.0	
 	  			  			  			
Maintenance capital	  	$	2.7	  	$	1.3	  	$	4.0	

Nine Months Ended September 30, 2001	  	 	 	  	 	 	  	 	 	
Revenues:	  	 	 	  	 	 	  	 	 	
External customers	  	$	268.7	  	$	5,029.4	  	$	5,298.1	
Intersegment (a)	  	 	12.9	  	 	—  	  	 	12.9	
 	  			  			  			
Total revenues	  	$	281.6	  	$	5,029.4	  	$	5,311.0	
 	  			  			  			
Gross margin (b)	  	$	48.3	  	$	60.5	  	$	108.8	
General and administrative expenses (c)	  	 	8.3	  	 	20.3	  	 	28.6	
 	  			  			  			
Gross profit (d)	  	$	40.0	  	$	40.2	  	$	80.2	
 	  			  			  			
Maintenance capital	  	$	0.5	  	$	2.4	  	$	2.9	
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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES 
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 
 
(unaudited) 

(a)	 	Intersegment sales are based on published tariff rates. 	
(b)	 	Gross margin is calculated as revenues less cost of sales and operations expenses. 	
(c)	 	G&A expenses reflect direct costs attributable to each segment and an allocation of other expenses to the segments based on the business activities that exist at that time. For comparison purposes, we have reclassified G&A expenses by segment for all periods presented to conform to the refined presentation used in the third quarter of 2002. The proportional allocations by segment will continue to be based on the business activities that exist during each period. 	
(d)	 	Gross profit is calculated as gross margin less general and administrative expenses, excluding noncash compensation expense as it is not allocated to the reportable segments. 	
 
Note 8—Contingencies 
 
Export License Matter.    In our marketing and gathering activities, we import and export crude oil from and to Canada. Our exports of crude oil are licensed under two export licenses from the Bureau of Industry and Security (the “BIS”) of the U.S. Department of Commerce. We have determined that we may have exceeded the quantity of crude oil exports authorized by the licenses. Export of crude oil in excess of the authorized amounts is a violation of the Export Administration Regulations (“EAR”). On October 18, 2002, we submitted to the BIS an initial notification of voluntary disclosure. Upon completion of our internal inquiry, we will voluntarily submit additional information to the BIS. At this time, we have received no indication whether the BIS intends to charge us with a violation of the EAR or, if so, what penalties would be assessed. As a result, we cannot estimate the ultimate impact of these potential violations. 
 
Other.    A pipeline, terminal or other facilities may experience damage as a result of an accident or natural disaster. These hazards can cause personal injury and loss of life, severe damage to and destruction of property and equipment, pollution or environmental damage and suspension of operations. We maintain insurance of various types that we consider adequate to cover our operations and properties. The insurance covers all of our assets in amounts considered reasonable. The insurance policies are subject to deductibles that we consider reasonable and not excessive. Our insurance does not cover every potential risk associated with operating pipelines, terminals and other facilities including the potential loss of significant revenues. Consistent with insurance coverage generally available to the industry, our insurance policies provide limited coverage for losses or liabilities relating to pollution, with broader coverage for sudden and accidental occurrences. The events of September 11, 2001, and their overall effect on the insurance industry has had an adverse impact on availability and cost of coverage. Due to these events, insurers have excluded acts of terrorism and sabotage from our insurance policies. On certain of our key assets, we purchased a separate insurance policy for acts of terrorism and sabotage. 
 
Since the terrorist attacks, the United States Government has issued numerous warnings that energy assets (including our nation’s pipeline infrastructure) may be a future target of terrorist organizations. These developments expose our operations and assets to increased risks. Any future terrorist attacks on our facilities, those of our customers and, in some cases, those of our competitors, could have a material adverse effect on our business, whether insured or not. 
 
The occurrence of a significant event not fully insured or indemnified against, or the failure of a party to meet its indemnification obligations, could materially and adversely affect our operations and financial condition. We believe that we are adequately insured for public liability and property damage to others with respect to our operations. With respect to all of our coverage, no assurance can be given that we will be able to maintain adequate insurance in the future at rates we consider reasonable. 
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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES 
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 
 
(unaudited) 
 
We may experience future releases of crude oil into the environment from our pipeline and storage operations, or discover past releases that were previously unidentified. Although we maintain an inspection program designed to prevent and, as applicable, to detect and address such releases promptly, damages and liabilities incurred due to any such environmental releases from our assets may substantially affect our business. 
 
We, in the ordinary course of business, are a claimant and/or a defendant in various other legal proceedings. We do not believe that the outcome of these other legal proceedings, individually and in the aggregate, will have a materially adverse effect on our financial condition, results of operations or cash flows. 
 
Note 9—Recent Accounting Pronouncements 
 
In October 2002, the EITF reached consensus on certain issues in EITF Issue No. 02-03, “Recognition and Reporting of Gains and Losses on Energy Trading Contracts under Issues No. 98-10 and 00-17.” The consensus reached included i) rescinding EITF 98-10 and ii) the requirement that mark-to-market gains and losses on trading contracts (whether realized or unrealized and whether financially or physically settled) be shown net in the income statement. The EITF provided guidance that, beginning on October 25, 2002, all new contracts that would have been accounted for under EITF 98-10 should no longer be marked-to-market through earnings unless such contracts fall within the scope of SFAS 133. All of the contracts that we have accounted for under EITF 98-10 fall within the scope of SFAS 133 and therefore will continue to be marked-to-market through earnings under the provisions of that rule. Therefore, we do not believe that the adoption of this rule will have a material effect on either our financial position, results of operations or cash flows. 
 
In June 2002, the Financial Accounting Standards Board (“FASB”) issued SFAS 146 “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred rather than at the date of the exit plan. This Statement is effective for exit or disposal activities that are initiated after December 31, 2002. We do not believe that the adoption of SFAS 146 will have a material effect on either our financial position, results of operations or cash flows. 
 
In April 2002, the FASB issued SFAS 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” SFAS 145 rescinds, updates, clarifies and simplifies existing accounting pronouncements. Among other things, SFAS 145 rescinds SFAS 4, which required all gains and losses from extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. Under SFAS 145, the criteria in Accounting Principles Board No. 30 will now be used to classify those gains and losses. The adoption of this and the remaining provisions of SFAS 145 did not have a material effect on our financial position or results of operations. However, any future extinguishments of debt may impact income from continuing operations. 
 
In June 2001, the FASB issued SFAS 143 “Asset Retirement Obligations.” SFAS 143 establishes accounting requirements for retirement obligations associated with tangible long-lived assets, including (1) the time of the liability recognition, (2) initial measurement of the liability, (3) allocation of asset retirement cost to expense, (4) subsequent measurement of the liability and (5) financial statement disclosures. SFAS 143 requires that an asset retirement cost should be capitalized as part of the cost of the related long-lived asset and subsequently allocated to expense using a systematic and rational method. We will adopt the statement effective January 1, 2003, as required. The transition adjustment resulting from the adoption of SFAS 143 will be reported as a cumulative effect of a change in accounting principle. Although we are in the process of evaluating the impact of adoption, we cannot reasonably estimate the effect of the adoption of this statement on either our financial position, results of operations or cash flows at this time. 
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Item 2.	 	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 	
 
Overview 
 
We are a Delaware limited partnership formed in September of 1998. On November 23, 1998, we completed our initial public offering and the transactions whereby we became the successor to the midstream crude oil business and assets of Plains Resources Inc. and its midstream subsidiaries. Our operations are conducted directly and indirectly through Plains Marketing, L.P., All American Pipeline, L.P. and Plains Marketing Canada, L.P. We are engaged in interstate and intrastate crude oil pipeline transportation as well as gathering, marketing, terminalling and storage of crude oil and liquefied petroleum gas (“LPG”). We own an extensive network in the United States and Canada of pipeline transportation, storage and gathering assets in key oil producing basins and at major market hubs. Our operations are conducted primarily in Texas, California, Oklahoma, Louisiana and the Canadian provinces of Alberta and Saskatchewan and consist of two operating segments: (i) Pipeline Operations and (ii) Gathering, Marketing, Terminalling and Storage Operations. We evaluate segment performance based on gross margin and gross profit (gross margin less general and administrative expenses). 
 
The following acquisitions impact the comparability of the 2002 and 2001 periods as noted in the discussion below: 
 
 	•	 	On August 1, 2002, we acquired interests in approximately 2,000 miles of gathering and mainline crude oil pipelines and approximately 8.7 million barrels (net to our interest) of above-ground crude oil terminalling and storage assets in West Texas from Shell Pipeline Company LP and Equilon Enterprises LLC, (which we refer to collectively as the “Shell acquisition”). The results of operations from this acquisition have been included in our consolidated financial statements and in our pipeline operations segment since that date. The primary assets included in the transaction are interests in the Basin Pipeline System, the Permian Basin Gathering System and the Rancho Pipeline System. These assets complement our existing asset infrastructure in West Texas and represent a transportation link to Cushing, Oklahoma, where we are a provider of storage and terminalling services. The total purchase price of $322.7 million consisted of (i) $304.0 million in cash, which was borrowed under our revolving credit facility, (ii) approximately $9.1 million related to the settlement of pre-existing accounts receivable and inventory balances and (iii) approximately $9.6 million of estimated transaction and closing costs. 	
 
 	•	 	In 2001, we acquired substantially all of the Canadian crude oil pipeline, gathering, marketing, terminalling and storage assets of Murphy Oil Company Ltd. and the assets of CANPET Energy Group Inc., a Calgary-based Canadian crude oil and liquefied petroleum gas marketing company, together the “Canadian acquisitions.” The Canadian acquisitions were effective April 1, 2001, and July 1, 2001, respectively. 	
 
Results of Operations 
 
The following table reconciles our reported net income to our net income before unusual or nonrecurring items and the impact of SFAS 133: 
 
 	  	Three Months Ended September 30,
	 	  	Nine Months Ended September 30,
	 	
 	  	2002
	  	2001
	 	  	2002
	  	2001
	 	
 	  	(millions)	 	  	(millions)	 	
Reported net income	  	$	16.3	  	$	15.2	 	  	$	47.5	  	$	35.2	 	
Noncash compensation expense	  	 	—  	  	 	—  	 	  	 	—  	  	 	5.7	 	
Noncash cumulative effect of accounting change (1)	  	 	—  	  	 	—  	 	  	 	—  	  	 	(0.5	)	
Noncash SFAS 133 adjustment	  	 	0.4	  	 	(0.7	)	  	 	2.1	  	 	(0.8	)	
 	  			  				  			  				
Net income before unusual or nonrecurring items and the impact of SFAS 133	  	$	16.7	  	$	14.5	 	  	$	49.6	  	$	39.6	 	

(1)	 	Related to the adoption of SFAS 133 on January 1, 2001. 	
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For the three months ended September 30, 2002, we reported net income of $16.3 million on total revenues of $2.3 billion compared to net income for the same period in 2001 of $15.2 million on total revenues of $2.2 billion. For the nine months ended September 30, 2002, we reported net income of $47.5 million on total revenues of $5.9 billion compared to net income for the same period in 2001 of $35.2 million of total revenues of $5.3 billion. When evaluating our results, we exclude the impact of Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” resulting from (i) derivatives characterized as fair value hedges, (ii) derivatives that do not qualify for hedge accounting and (iii) the portion of cash flow hedges that is not highly effective in offsetting changes in cash flows of hedged items. The majority of these instruments serve as economic hedges which offset future physical positions not reflected in current results. Therefore, the SFAS 133 adjustment to net income is not a complete depiction of the economic substance of the transaction, as it only represents the derivative side of these transactions and does not take into account the offsetting physical position. In addition, the impact will vary from quarter to quarter based on market prices at the end of the quarter. 
 
Pipeline Operations 
 
We own and operate over 5,500 miles of gathering and mainline crude oil pipelines located throughout the United States and Canada. Our activities from pipeline operations generally consist of transporting third-party volumes of crude oil for a fee, third-party leases of pipeline capacity, barrel exchanges and buy/sell arrangements. We also use our pipelines in our merchant activities conducted under our gathering and marketing business. Tariffs and other fees on our pipeline systems vary by receipt point and delivery point. The gross margin generated by our tariff and other fee-related activities depends on the volumes transported on the pipeline and the level of the tariff and other fees charged as well as the fixed and variable costs of operating the pipeline. Gross margin from our pipeline capacity leases, barrel exchanges and buy/sell arrangements generally reflect a negotiated amount. 
 
The following table sets forth our operating results from our Pipeline Operations segment for the periods indicated: 
 
 	  	Three Months Ended September 30,
	  	Nine Months Ended September 30,
	
 	  	2002
	  	2001
	  	2002
	  	2001
	
Operating Results (in millions):	  	 	 	  	 	 	  	 	 	  	 	 	
Revenues (including intersegment)	  	$	130.4	  	$	93.3	  	$	334.1	  	$	281.6	
 	  			  			  			  			
Gross margin	  	$	23.0	  	$	16.1	  	$	60.3	  	$	48.3	
General & administrative expenses	  	 	3.2	  	 	2.9	  	 	9.3	  	 	8.3	
 	  			  			  			  			
Gross profit	  	$	19.8	  	$	13.2	  	$	51.0	  	$	40.0	
 	  			  			  			  			
Average Daily Volumes (thousands of barrels per day) (1):	  	 	 	  	 	 	  	 	 	  	 	 	
Tariff activities	  	 	 	  	 	 	  	 	 	  	 	 	
All American	  	 	68	  	 	68	  	 	65	  	 	68	
Basin	  	 	157	  	 	—  	  	 	53	  	 	—  	
Other domestic	  	 	256	  	 	139	  	 	186	  	 	148	
Canada (2)	  	 	201	  	 	191	  	 	186	  	 	118	
Margin activities	  	 	71	  	 	53	  	 	72	  	 	58	
 	  			  			  			  			
Total	  	 	753	  	 	451	  	 	562	  	 	392	

(1)	 	Total volumes transported on assets acquired during the period have been divided by the total number of days in the period to get a daily average. 	
(2)	 	2001 volume information is adjusted for consistency of comparison with 2002 presentation. 	
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Pipeline Operations for the Three Months Ended September 30, 2002 and 2001 
 
Average daily volumes on our pipelines during the third quarter of this year were approximately 753,000 barrels per day compared to 451,000 barrels per day for the prior year quarter, which was an increase of approximately 302,000 barrels per day. Approximately 298,000 barrels per day of the increase in the third quarter of 2002 resulted from the acquisition of various businesses during 2002 and late 2001, including approximately 266,000 barrels per day related to the businesses acquired in the Shell acquisition. 
 
Total revenues from our pipeline operations were approximately $130.4 million and $93.3 million for the three months ended September 30, 2002 and 2001, respectively. Excluding the revenues of $11.1 million from businesses acquired during 2002 and late 2001, revenues from our pipeline operations would have been approximately $119.3 million for the three months ended September 30, 2002. That is an increase of approximately $26.0 million over the comparable 2001 revenues. Of this increase, approximately $25.1 million relates to our merchant activities on our San Joaquin Valley gathering system. This increase was related to both increased volumes and higher average prices on our buy/sell arrangements in the 2002 period. However, this business is a margin business and although revenues and cost of sales are impacted by the absolute level of crude oil prices, there is a limited impact on gross margin. 
 
Gross margin from pipeline operations increased to approximately $23.0 million for the quarter ended September 30, 2002, from $16.1 million for the prior year quarter, an increase of $6.9 million primarily related to the acquisition of various businesses during 2002 and late 2001. 
 
General and administrative expense (“G&A”) related to pipeline operations was $3.2 million for the quarter ended September 30, 2002, compared to $2.9 million for the third quarter of 2001. The increase in 2002 is primarily due to expenses associated with our Canadian acquisitions. 
 
Pipeline Operations for the Nine Months Ended September 30, 2002 and 2001 
 
Average daily volumes on our pipelines during the nine months ended September 30, 2002, were approximately 562,000 barrels per day compared to an average of 392,000 barrels per day for the prior year period, which was an increase of approximately 170,000 barrels per day. Approximately 119,000 barrels per day of the increase resulted from the acquisition of various businesses in 2002 and late 2001, including an average of approximately 89,000 barrels per day related to the businesses acquired in the Shell acquisition. The remainder of the increase was primarily related to the inclusion of the average daily volumes from the pipeline assets included in the Canadian acquisitions for all of the 2002 period compared to only six months during the 2001 period. 
 
Total revenues from our pipeline operations were approximately $334.1 million and $281.6 million for the nine months ended September 30, 2002 and 2001, respectively. Excluding revenues of approximately $12.7 million from various businesses acquired during 2002 and late 2001, revenues from our pipeline operations would have been approximately $321.4 million for the nine months ended September 30, 2002. This reflects an increase of approximately $39.8 million over the comparable 2001 revenues. Of this increase, approximately $33.3 million relates to our merchant activities on our SJV gathering system. The increase was related to both increased volumes and higher average prices on our buy/sell arrangements in the 2002 period. However, this business is a margin business and although revenues and cost of sales are impacted by the absolute level of crude oil prices, there is a limited impact on gross margin. The remainder of the increase in revenues is primarily related to the inclusion of the results of operations from the pipeline assets included in the Canadian acquisitions for all of the 2002 period compared to only six months during the 2001 period. 
 
Gross margin from pipeline operations increased to approximately $60.3 million for the nine months ended September 30, 2002, from $48.3 million for the prior year period, an increase of $12 million. The increase primarily related to the acquisition of various businesses during 2002 and late 2001 and the inclusion of the 
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results of operations from the pipeline assets included in the Canadian acquisitions for all of the 2002 period compared to only six months during the 2001 period. 
 
G&A expense related to pipeline operations was $9.3 million for the nine months ended September 30, 2002, compared to $8.3 million for the first nine months of 2001. The increase in 2002 is primarily due to expenses associated with our Canadian acquisitions which were acquired in April and July of 2001. 
 
Gathering, Marketing, Terminalling and Storage Operations 
 
Our revenues from gathering and marketing activities reflect the sale of gathered and bulk-purchased barrels plus the sale of additional barrels exchanged through buy/sell arrangements entered into to enhance the margins of the gathered and bulk-purchased crude oil. Gross margin from our gathering and marketing activities is dependent on our ability to sell crude oil at a price in excess of our aggregate cost. These operations are margin businesses, and are not directly affected by the absolute level of crude oil prices, but are affected by overall levels of supply and demand for crude oil and fluctuations in market-related indices. Accordingly, an increase or decrease in revenues is not necessarily an indication of segment performance. 
 
We own and operate approximately 21.3 million barrels of above-ground crude oil terminalling and storage facilities, including a crude oil terminalling and storage facility at Cushing, Oklahoma. Cushing, which we refer to as the Cushing Interchange, is the largest crude oil market hub in the United States and the designated delivery point for New York Mercantile Exchange, or NYMEX, crude oil futures contracts. Terminals are facilities where crude oil is transferred to or from storage or a transportation system, such as a pipeline, to another transportation system, such as trucks or another pipeline. The operation of these facilities is called “terminalling.” Gross margin from terminalling and storage activities is dependent on the throughput volumes, the volume of crude oil stored and the level of fees generated from our terminalling and storage services. We also use our storage tanks to counter cyclically balance our gathering and marketing operations and to execute different hedging strategies to stabilize margins and reduce the negative impact of crude oil market volatility. 
 
The following table sets forth our operating results from our Gathering, Marketing, Terminalling and Storage operations segment for the periods indicated: 
 
 	  	Three Months Ended September 30,
	  	Nine Months Ended September 30,
	
 	  	2002
	  	2001
	  	2002
	  	2001
	
Operating Results (in millions):	  	 	 	  	 	 	  	 	 	  	 	 	
Revenues	  	$	2,220.7	  	$	2,102.5	  	$	5,554.6	  	$	5,029.4	
 	  			  			  			  			
Gross margin	  	$	21.3	  	$	23.5	  	$	64.1	  	$	60.5	
General & administrative expenses	  	 	8.3	  	 	7.4	  	 	24.1	  	 	20.3	
 	  			  			  			  			
Gross profit	  	$	13.0	  	$	16.1	  	$	40.0	  	$	40.2	
 	  			  			  			  			
Average Daily Volumes (thousands of barrels per day) (1)(2):	  	 	 	  	 	 	  	 	 	  	 	 	
Lease gathering	  	 	408	  	 	391	  	 	406	  	 	334	
Bulk purchases	  	 	85	  	 	55	  	 	74	  	 	39	
 	  			  			  			  			
Total	  	 	493	  	 	446	  	 	480	  	 	373	
 	  			  			  			  			
Terminal throughput	  	 	123	  	 	97	  	 	92	  	 	103	
 	  			  			  			  			
Storage leased to third parties, monthly average volumes	  	 	811	  	 	2,672	  	 	1,323	  	 	2,337	

(1)	 	Total volumes attributable to acquisitions during the period have been divided by the total number of days in the period to get a daily average. 	
(2)	 	2001 volume information is adjusted for consistency of comparison with 2002 presentation. 	
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Gathering, Marketing, Terminalling and Storage Operations for the Three Months Ended September 30, 2002 and 2001 
 
For the three months ended September 30, 2002, we gathered from producers, using our assets or third-party assets, approximately 408,000 barrels of crude oil per day. In addition, we purchased in bulk, primarily at major trading locations, approximately 85,000 barrels of crude oil per day. Storage leased to third parties decreased to an average of 0.8 million barrels per day from an average of 2.7 million barrels per day in the prior year quarter as we used an increased amount of our capacity for our own account due to contango market activities in the current year period. A contango market exists when oil prices for future deliveries are higher than current prices thereby making it profitable to store crude oil for future delivery. Terminal throughput volumes averaged approximately 123,000 barrels per day and 97,000 barrels per day for the quarter ended September 30, 2002 and 2001, respectively. 
 
Revenues from our gathering, marketing, terminalling and storage operations were approximately $2.2 billion and $2.1 billion for the quarter ended September 30, 2002 and 2001, respectively. Revenues for 2002 were impacted both by increased volumes over the comparative prior year quarter as well as higher average prices. The average NYMEX price for crude oil was $28.27 per barrel and $26.78 per barrel for the third quarter of 2002 and 2001, respectively. 
 
Gross margin from gathering, marketing, terminalling and storage activities was approximately $21.3 million for the quarter ended September 30, 2002, compared to $23.5 million in the prior year quarter. Excluding the impact of the noncash fair value adjustments related to SFAS 133, gross margin for this segment would have been approximately $21.7 million for the quarter ended September 30, 2002, compared to $22.8 million in the prior year quarter. The 2002 results were negatively impacted by hurricanes Isidore and Lili that caused the temporary shut-in of oil production in the Gulf of Mexico during the third quarter. 
 
G&A related to gathering, marketing, terminalling and storage operations was $8.3 million for the quarter ended September 30, 2002, compared to $7.4 million for the third quarter of 2001. The increase in 2002 is primarily due to expenses associated with our Canadian acquisitions, partially offset by a decrease in other G&A expenses related to the domestic operations. 
 
Gathering, Marketing, Terminalling and Storage Operations for the Nine Months Ended September 30, 2002 and 2001 
 
For the nine months ended September 30, 2002, we gathered from producers, using our assets or third-party assets, approximately 406,000 barrels of crude oil per day. In addition, we purchased in bulk, primarily at major trading locations, approximately 74,000 barrels of crude oil per day. Storage leased to third parties decreased to an average of 1.3 million barrels per day from an average of 2.3 million barrels per day in the prior year period as we used an increased amount of our capacity for our own account due to contango market activities in the current year period. Terminal throughput volumes averaged approximately 92,000 barrels per day and 103,000 barrels per day for the nine months ended September 30, 2002 and 2001, respectively. 
 
Revenues from our gathering, marketing, terminalling and storage operations were approximately $5.6 billion and $5.0 billion for the nine months ended September 30, 2002 and 2001, respectively. Revenues from our Canadian operations were approximately $1.1 billion for the 2002 period, which was an increase of approximately $0.6 billion over the prior year period. The increase was partially related to the inclusion of the Canadian acquisitions for all of 2002 compared to a portion of 2001. This had the impact of increasing volumes by approximately 84,000 barrels per day. Domestic gathering volumes increased an average of approximately 22,000 barrels per day in the 2002 period from the comparable 2001 period, but the increased volumes were offset by decreased prices resulting in relatively flat revenues from our domestic operations. The average NYMEX price for crude oil was $25.39 per barrel and $27.86 per barrel for the nine months ended September 30, 2002 and 2001, respectively. 
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Gross margin from gathering, marketing, terminalling and storage activities was approximately $64.1 million for the nine months ended September 30, 2002, compared to $60.5 million in the prior year period. Excluding the impact of the noncash fair value adjustments related to SFAS 133, gross margin for this segment would have been approximately $66.2 million for the nine months ended September 30, 2002, compared to $59.7 million in the prior year period. The increase is partially related to the inclusion of the businesses acquired in the Canadian acquisitions for all of 2002 compared to the portion of 2001 subsequent to acquisition. In addition, higher domestic volumes contributed to higher gross margin in 2002. 
 
G&A expense related to gathering, marketing, terminalling and storage operations was $24.1 million for the nine months ended September 30, 2002, compared to $20.3 million for the 2001 period. The increase in 2002 is primarily due to expenses associated with our Canadian acquisitions, partially offset by a decrease in other G&A expenses related to the domestic operations. 
 
Other Expenses 
 
Depreciation and Amortization 
 
Depreciation and amortization expense was $9.0 million for the quarter ended September 30, 2002, compared to $6.4 million for the same period of 2001. Approximately $1.6 million of the increase is associated with the assets acquired in the Shell acquisition. For the nine months ended September 30, 2002, depreciation and amortization expense increased to $23.1 million, an increase of $5.5 million from the $17.6 million reported in the 2001 period. Approximately $4.0 million of the increase is attributable to our acquisitions completed in 2002, as well as those completed in 2001, but not outstanding the entire period. The remainder of the increase for both periods is related to an increase in debt issue costs related to the amendment of our credit facilities during 2002 and late 2001, the sale of the senior unsecured notes in September 2002, and the completion of various capital expansion projects. 
 
Interest Expense 
 
Interest expense decreased to $7.4 million for the quarter ended September 30, 2002, from $7.8 million for the comparative 2001 period. For the nine months ended September 30, 2002, interest expense decreased to $20.2 million from $22.5 million for the comparative 2001 period. The decreases are due to the capitalization of interest and lower interest rates somewhat offset by higher average debt balances and increased commitment fees. Interest in the amount of $0.2 million and $0.6 million for the quarter and nine months, respectively was capitalized in conjunction with the construction of our Cushing terminal expansion. The lower interest rates are due to a decrease in LIBOR and prime rates in the current year. During the third quarter of 2001, we issued $200 million of term B notes. Proceeds were used to reduce borrowings under the revolver. As such, our commitment fees on our revolver increased, as they are based on unused availability. The overall increased debt balance in 2002 is related to the Shell acquisition in August 2002. 
 
Outlook 
 
On October 29, 2002, we furnished Item 9 information in a current report on Form 8-K, containing guidance for operating and financial performance for the fourth quarter of 2002 and updated selected preliminary guidance information for 2003. 
 
Acquisition Activities.    Consistent with our acquisition strategy, we are continuously engaged in discussions with potential sellers regarding the possible purchase by us of midstream crude oil assets. Such acquisition efforts involve participation by us in processes that have been made public, involve a number of potential buyers and are commonly referred to as “auction” processes, as well as situations in which we believe we are the only party or one of a very limited number of potential buyers in negotiations with the potential seller. Since 1998, we have completed 12 acquisitions for an aggregate purchase price of $1.1 billion. We can give you no assurance that our current or future acquisition efforts will be successful or that any such acquisition will be 
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completed on terms considered favorable to us. In connection with these activities, we routinely incur third party costs, which are capitalized and deferred pending final outcome of the transaction. Deferred costs associated with successful transactions are capitalized as part of the transaction, while deferred costs associated with unsuccessful transactions are expensed at the time of such final determination. At September 30, 2002, the amount of costs deferred pending final outcome was not material. 
 
FERC Notice of Proposed Rulemaking.    On August 1, 2002, the Federal Energy Regulatory Commission (“FERC”) issued a Notice of Proposed Rulemaking that, if adopted, would amend its Uniform Systems of Accounts for oil pipeline companies with respect to participation of a FERC-Regulated subsidiary in the cash management arrangement of its non-FERC-regulated parent. Although it appears that, if adopted, the rule may affect the way in which we manage cash, we believe that the incremental costs will not be significant. 
 
Sarbanes-Oxley Act and New SEC Rules.    Several regulatory and legislative initiatives have been introduced over the past several months in response to recent events regarding accounting issues at large public companies, resulting disruptions in the capital markets and ensuing calls for action to prevent repetition of such events. We support the actions called for under these initiatives and believe these steps will ultimately be successful in accomplishing the stated objectives. However, implementation of reforms in connection with such initiatives will add to the costs of doing business for all publicly-traded entities, including the Partnership. Such costs will have an adverse impact on future income and cash flow, especially in the near term as legal, financial and consultant costs are incurred to analyze the new requirements, formalize current practices and implement required changes to ensure that we maintain compliance with these new rules. We are not able to estimate the magnitude of increase in our costs that will result from such reforms. 
 
Vesting of Unit Grants under LTIP.    In connection with our public offering in 1998, our general partner established a long-term incentive plan, which permits the grant of restricted units and unit options covering an aggregate of approximately 1.4 million units. Approximately 1.0 million restricted units (and no unit options) have been granted under the plan. A restricted unit grant entitles the grantee to receive a common unit upon the vesting of the restricted unit. Subject to additional vesting requirements, restricted units may vest in the same proportion as the conversion of our outstanding subordinated units into common units. Certain of the restricted unit grants contain additional vesting requirements tied to the Partnership achieving targeted distribution thresholds, generally $2.10, $2.30 and $2.50 per unit, in equal proportions. 
 
Under generally accepted accounting principles, we are required to recognize an expense when the financial tests for conversion of subordinated units and required distribution levels are met. The test associated with the conversion of subordinated units to common units is set forth in the Partnership Agreement and involves GAAP accounting concepts as well as complex and esoteric cash receipts and disbursement concepts that are indexed to the minimum quarterly distribution rate of $1.80 per limited partner unit. 
 
Because of this complexity, it is difficult to forecast when the vesting of these restricted units will occur. However, at the current distribution level of $2.15 per unit, assuming the subordination conversion test is met, the costs associated with the vesting of up to approximately 820,000 units would be incurred or accrued in the second half of 2003 or the first quarter of 2004. At a distribution level of $2.30 to $2.49, the number of units would be approximately 940,000. At a distribution level at or above $2.50, the number of units would be approximately 1,030,000. We are currently planning to issue units to satisfy the first 975,000 vested, and to purchase units in the open market to satisfy any vesting obligations in excess of that amount. Issuance of units would result in a non-cash compensation expense. Purchase of units would result in a cash charge to compensation expense. The amount of the charge to expense will be determined by the unit price on the date vesting occurs, multiplied by the number of units. 
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Liquidity and Capital Resources 
 
Liquidity 
 
Cash generated from operations and our credit facilities are our primary sources of liquidity. At September 30, 2002, we had a working capital deficit of approximately $17.8 million, approximately $437.5 million of availability under our revolving credit facility and $53.3 million under the letter of credit and hedged inventory facility. Usage of the credit facilities is subject to compliance with covenants. In the past, we have generally maintained a positive working capital position. During the third quarter of 2002, we reduced our working capital, primarily through the (i) collection of accounts receivable and certain prepayments and the application of those proceeds to reduce its long-term borrowings, and (ii) shifting borrowings to finance certain contango inventory and LPG purchase requirements from its long-term revolving credit facilities to its hedged inventory and letter of credit facility. The hedged inventory and letter of credit facility requires reduction in outstanding amounts at the time proceeds from the sale of the inventory are collected. Accordingly, amounts drawn under this facility are reflected as a current liability for hedged inventory expected to be sold within one year. In addition, approximately $11.3 million of the company’s net liability under SFAS 133 is reflected as current. 
 
We funded the purchase of the Shell acquisition on August 1, 2002, with funds drawn on its revolving credit facilities. Later in August, we completed a public offering of 6,325,000 common units priced at $23.50 per unit. Net proceeds from the offering, including our general partner’s proportionate capital contribution and expenses associated with the offering, were approximately $145.0 million and were used to pay down our revolving credit facilities. During September 2002, we completed the sale of $200 million of 7.75% senior notes due in October 2012, which generated net proceeds of $196.3 million that we used to pay down our revolving credit facilities. 
 
We believe that we have sufficient liquid assets, cash from operations and borrowing capacity under our credit agreements to meet our financial commitments, debt service obligations, contingencies and anticipated capital expenditures. However, we are subject to business and operational risks that could adversely effect our cash flow. A material decrease in our cash flows would likely produce a corollary adverse effect on our borrowing capacity. 
 
Recent Disruptions in Industry Credit Markets.    As a result of business failures, revelations of material misrepresentations and related financial restatements by several large, well-known companies in various industries over the last year, there have been significant disruptions and extreme volatility in the financial markets and credit markets. Because of the credit-intensive nature of the energy industry and troubling disclosures by several large, diversified energy companies, the energy industry has been especially impacted by these developments, with the rating agencies downgrading a number of large energy related companies. Accordingly, in this environment we are exposed to an increased level of direct and indirect counterparty credit and performance risk. 
 
The majority of our credit extensions and therefore our accounts receivable relate to our gathering and marketing activities that can generally be described as high volume and low margin activities, in many cases involving complex exchanges of crude oil volumes. In transacting business with our counterparties, we must determine the amount, if any, of open credit lines to extend to our counterparties and the form and amount of financial performance assurances we may require. The vast majority of such accounts receivable settle monthly and any collection delays generally involve discrepancies or disputes as to the appropriate price, volume or quality of crude oil delivered or exchanged and associated billing delays. Of our $357.6 million aggregate receivables balance included in current assets at December 31, 2001, approximately $330.9 million, or 93%, were less than sixty days past the scheduled invoice date. Of our $483.7 million aggregate receivables balance included in current assets at September 30, 2002, approximately $474.0 million, or 98%, were less than sixty days past the scheduled invoice date. 
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We have modified our credit arrangements with certain counterparties that have been adversely affected by these recent events, but a large portion of the balances more than sixty days past the invoice date, along with approximately $10.8 million of net receivables classified as long-term, are associated with an ongoing effort to bring substantially all balances to within sixty days of scheduled invoice date. In certain cases, this effort involves reconciling and resolving certain discrepancies, generally related to pricing, volumes, quality or crude oil exchange imbalances, and the majority of these receivables are related to monthly periods leading up to and immediately following the disclosure of our unauthorized trading losses in late 1999. Following that disclosure, a significant number of our suppliers and trading partners temporarily reduced or eliminated our open credit and demanded payments or withheld payments due us before disputed amounts or discrepancies associated with exchange imbalances, pricing issues and quality adjustments were reconciled in accordance with customary industry practices. Because these matters also arose in the midst of various software systems conversions and acquisition integration activities, our effort to resolve outstanding claims and discrepancies has included reprocessing and integrating historical information on numerous software platforms. We have made significant progress to date in this effort and intend to substantially complete this project by the end of 2002 and, based on the work performed to date and the scope of the remaining work to be performed, we believe these prior period balances are collectible or subject to offsets and consider our reserves adequate. However, in the event our counterparties experience an unanticipated deterioration in their credit-worthiness, any addition to existing reserves or write-offs in excess of such reserves would result in a noncash charge to earnings. We do not believe any such charge would have a material effect on our cash flow or liquidity. 
 
To date, these market disruptions have not had a material adverse impact on our activities or on obtaining open credit for our account with counterparties. We are currently rated BB+ by Standard & Poor’s and on June 27, 2002, we were placed on Credit Watch with positive implications. On September 17, 2002, Moody’s Investor Services upgraded our senior implied credit rating to Ba1, stable outlook. You should note that a rating is not a recommendation to buy, sell, or hold securities, and may be subject to revision or withdrawal at any time. 
 
Cash Flows 
 
 	  	Nine Months Ended September 30,
	 	
 	  	2002
	 	  	2001
	 	
 	  	(in millions)	 	
Cash provided by (used in):	  	 	 	 	  	 	 	 	
Operating activities	  	$	127.4	 	  	$	5.5	 	
Investing activities	  	 	(349.8	)	  	 	(221.3	)	
Financing activities	  	 	223.3	 	  	 	216.2	 	
 
Operating Activities.    Net cash provided by operating activities for the nine months ended September 30, 2002 was $127.4 million as compared to $5.5 million in the 2001 period. Approximately $15.5 million of the increase is due to an increase in earnings, adjusted for non-cash items, predominantly related to our acquisitions completed in April and July 2001 and August 2002. The remainder of the increase is due to changes in working capital items related to the following: i) the collection of accounts receivable related to prior period balances as discussed in “Recent Disruptions in Industry Credit Markets” above; ii) the collection of prepayments due to the increase in credit risk associated with certain counter-parties; and iii) the sale of hedged crude oil inventory purchased in 2001 and 2002 and the correlated changes in accounts receivable and accounts payable. In addition to the hedged inventory transactions having a positive effect on cash provided by operating activities for the nine months ended September 30, 2002, similar transactions had a negative effect on the nine months ended September 30, 2001 as the inventory was being purchased and stored; thus, resulting in an even larger variance when comparing the two periods. 
 
Investing Activities.    Net cash used in investing activities in 2002 includes the payment of $310.1 million related to the purchase of certain assets from Shell Pipeline Company as well as related transaction costs, $7.7 million for the Butte acquisition and $5.1 million for the Coast/Lantern acquisition. Investing activities also 
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includes $27.4 million of capital expenditures related to the Cushing expansion, the construction of the Marshall terminal in Canada and other capital projects. 
 
Financing Activities.    Cash provided by financing activities in 2002 consisted of approximately $351.3 million of proceeds from the issuance of common units and senior unsecured notes used primarily to fund capital projects and acquisitions and pay down outstanding balances on the revolving credit facility. In addition, $71.6 million of distributions were paid to unitholders and the general partner during the nine months ended September 30, 2002. 
 
Universal Shelf 
 
We have filed with the Securities and Exchange Commission a universal shelf registration statement that, subject to effectiveness at the time of use, allows us to issue from time to time up to an aggregate of $700 million of debt or equity securities. At September 30, 2002, we have approximately $421 million remaining under this registration statement. 
 
Credit Facilities and Long-term Debt 
 
During September 2002, we completed the sale of $200 million of 7.75% senior notes due in October 2012. The notes were issued by Plains All American Pipeline, L.P. and a 100% owned finance subsidiary (neither of which have independent assets or operations) at a discount of $0.4 million, resulting in an effective interest rate of 7.78%. Interest payments are due on April 15 and October 15 of each year. The notes are fully and unconditionally guaranteed, jointly and severally, by all of our existing 100% owned subsidiaries, except for subsidiaries which are minor. 
 
As amended in July 2002 and giving effect to the third quarter capital raising activities, our credit facilities consist of a $350.0 million senior secured letter of credit and hedged inventory facility (with current lender commitments totaling $200.0 million), and a $747.0 million senior secured revolving credit and term loan facility, each of which is secured by substantially all of our assets. The terms of our credit facilities enable us to expand the size of the letter of credit and hedged inventory facility from $200.0 million to $350.0 million without additional approval from existing lenders. The revolving credit and term loan facility consists of a $420.0 million domestic revolving facility (with a $10.0 million letter of credit sublimit), a $30.0 million Canadian revolving facility (with a $5.0 million letter of credit sublimit), a $99.0 million term loan, and a $198.0 million term B loan. 
 
The facilities have final maturities as follows: 
 
 	•	 	as to the $350.0 million senior secured letter of credit and hedged inventory facility and the aggregate $450.0 million domestic and Canadian revolver portions, in April 2005; 	
 
 	•	 	as to the $99.0 million term loan, in May 2006; and 	
 
 	•	 	as to the $198.0 million term B loan, in September 2007. 	
 
The financial covenants of these credit facilities require us to maintain: 
 
 	•	 	a current ratio (as defined) of at least 1.0 to 1.0; 	
 
 	•	 	a debt coverage ratio which will not be greater than 5.25 to 1.0 on unsecured debt and 4.0 to 1.0 on secured debt; 	
 
 	•	 	an interest coverage ratio that is not less than 2.75 to 1.0; and 	
 
 	•	 	a debt to capital ratio of not greater than 0.7 to 1.0 through March 30, 2003, and 0.65 to 1.0 at any time thereafter. 	
 
For covenant compliance purposes, letters of credit and borrowings under the letter of credit and hedged inventory facility are excluded when calculating the debt coverage ratio. We are currently in compliance with the covenants contained in our credit agreements. 
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The amended facility permits us to issue up to an aggregate $400 million of senior unsecured debt having a maturity beyond the final maturity of the existing credit facility and provides a mechanism to reduce the amount of the domestic revolving credit facility. The foregoing description of the credit facility incorporates the reduction associated with the $200 million senior note offering completed in September 2002. Depending on the amount of additional senior indebtedness incurred, the domestic revolving credit facility will be reduced by an amount equating to 40% to 63% of any incremental indebtedness, up to the aggregate $400 million limitation. 
 
The average life of our debt capitalization at September 30, was approximately 6.5 years. At the end of the third quarter we had approximately $12 million outstanding under our $450 million of revolving credit facilities that mature in 2005, approximately $297 million of senior secured term loans with final maturity dates in 2006 and 2007 and $200 million of senior notes which mature in 2012. We have classified the $9 million of term loan payments due in 2003 as long term due to our intent and ability to refinance those maturities using the revolving facility. 
 
Term loan payments are as follows (in millions): 
 
Calendar Year
	  	Payment
	
2003	  	$	9.0	
2004	  	 	10.0	
2005	  	 	10.0	
2006	  	 	78.0	
2007	  	 	190.0	
 	  			
Total	  	$	297.0	

We manage our exposure to increasing interest rates. Based on September 30, 2002, debt balances, floating rate indexes at the end of October 2002, our credit spread under our credit facilities and the combination of our fixed rate debt and current interest rate hedges, the average interest rate was approximately 6.2%, excluding non-use and facilities fees, which will vary based on usage and outstanding balance. Based on current amounts outstanding, we estimate these fees will average approximately $2.2 million per year. We have locked-in interest rates (excluding the credit spread under the credit facilities) for approximately 60% of our total debt for the next year, 50% for the next four years and 40% for the next ten years. 
 
Contingencies 
 
Export License Matter.    In our marketing and gathering activities, we import and export crude oil from and to Canada. Our exports of crude oil are licensed under two export licenses from the Bureau of Industry and Security (the “BIS”) of the U.S. Department of Commerce. We have determined that we may have exceeded the quantity of crude oil exports authorized by the licenses. Export of crude oil in excess of the authorized amounts is a violation of the Export Administration Regulations (“EAR”). On October 18, 2002, we submitted to the BIS an initial notification of voluntary disclosure. Upon completion of our internal inquiry, we will voluntarily submit additional information to the BIS. At this time, we have received no indication whether the BIS intends to charge us with a violation of the EAR or, if so, what penalties would be assessed. As a result, we cannot estimate the ultimate impact of these potential violations. 
 
Pipeline and Storage Regulation.    We are subject to the U.S. Department of Transportation’s (the “DOT’s”) pipeline integrity rules, which require continual assessment of pipeline segments that could affect “high consequence areas.” Our compliance costs will vary from year to year based on the assessment priority placed on particular line segments. Based on currently available information, we estimate that such costs will average approximately $2.5 million per year in 2003 and 2004. Such amounts incorporate approximately $1 million per year associated with assets acquired in the Shell acquisition. We will continue to refine our estimates as data from initial assessments is collected. 
27 

Table of Contents
 
The DOT has adopted API 653 as the standard for the inspection, repair, alteration and reconstruction of existing crude oil storage tanks subject to DOT jurisdiction (approximately 72% of our 21.3 million barrels). API 653 requires regularly scheduled inspection and repair of tanks remaining in service. Full compliance is required by 2009. We have commenced our compliance activities under the standard and, based on currently available information, we estimate that we will spend approximately $3 million per year in 2003 and 2004 in connection with these activities. Such amounts incorporate costs associated with assets acquired in the Shell acquisition. We will continue to refine our estimates as data from initial assessments is collected. 
 
Other.    A pipeline, terminal or other facilities may experience damage as a result of an accident or natural disaster. These hazards can cause personal injury and loss of life, severe damage to and destruction of property and equipment, pollution or environmental damage and suspension of operations. We maintain insurance of various types that we consider adequate to cover our operations and properties. The insurance covers all of our assets in amounts considered reasonable. The insurance policies are subject to deductibles that we consider reasonable and not excessive. Our insurance does not cover every potential risk associated with operating pipelines, terminals and other facilities, including the potential loss of significant revenues. Consistent with insurance coverage generally available to the industry, our insurance policies provide limited coverage for losses or liabilities relating to pollution, with broader coverage for sudden and accidental occurrences. The events of September 11, 2001, and their overall effect on the insurance industry has had adverse impact on availability and cost of coverage. Due to these events, insurers have excluded acts of terrorism and sabotage from our insurance policies. On certain of our key assets, we purchased a separate insurance policy for acts of terrorism and sabotage. 
 
Since the terrorist attacks, the United States Government has issued numerous warnings that energy assets (including our nation’s pipeline infrastructure) may be a future target of terrorist organizations. These developments expose our operations and assets to increased risks. Any future terrorist attacks on our facilities, those of our customers and, in some cases, those of our competitors, could have a material adverse effect on our business whether insured or not. 
 
The occurrence of a significant event not fully insured or indemnified against, or the failure of a party to meet its indemnification obligations, could materially and adversely affect our operations and financial condition. We believe that we are adequately insured for public liability and property damage to others with respect to our operations. With respect to all of our coverage, no assurance can be given that we will be able to maintain adequate insurance in the future at rates we consider reasonable. 
 
We may experience future releases of crude oil into the environment from our pipeline and storage operations, or discover past releases that were previously unidentified. Although we maintain an inspection program designed to prevent and, as applicable, to detect and address such releases promptly, damages and liabilities incurred due to any such environmental releases from our assets may substantially affect our business. 
 
Recent Accounting Pronouncements 
 
In October 2002, the Emerging Issues Task Force (“EITF”) reached consensus on certain issues in EITF Issue No. 02-03, “Recognition and Reporting of Gains and Losses on Energy Trading Contracts under Issues No. 98-10 and 00-17.” The consensus reached included i) rescinding EITF 98-10 and ii) the requirement that mark-to-market gains and losses on trading contracts (whether realized or unrealized and whether financially or physically settled) be shown net in the income statement. The EITF provided guidance that, beginning on October 25, 2002, all new contracts that would have been accounted for under EITF 98-10 should no longer be marked-to-market through earnings unless such contracts fall within the scope of SFAS 133. All of the contracts that we have accounted for under EITF 98-10 fall within the scope of SFAS 133 and therefore will continue to be marked-to-market through earnings under the provisions of that rule. Therefore, we do not believe that the adoption of this rule will have a material effect on either our financial position, results of operations or cash flows. 
28 

Table of Contents
 
In June 2002, the Financial Accounting Standards Board (“FASB”) issued SFAS 146 “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the obligation is incurred rather than at the date of the exit plan. This Statement is effective for exit or disposal activities that are initiated after December 31, 2002. We do not believe that the adoption of SFAS 146 will have a material effect on either our financial position, results of operations or cash flows. 
 
In April 2002, the FASB issued SFAS 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” SFAS No. 145 rescinds, updates, clarifies and simplifies existing accounting pronouncements. Among other things, SFAS No. 145 rescinds SFAS No. 4, which required all gains and losses from extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. Under SFAS No. 145, the criteria in Accounting Principles Board No. 30 will now be used to classify those gains and losses. The adoption of this and the remaining provisions of SFAS 145 did not have a material effect on our financial position or results of operations. However, any future extinguishments of debt may impact income from continuing operations. 
 
In June 2001, the FASB issued SFAS 143 “Asset Retirement Obligations.” SFAS 143 establishes accounting requirements for retirement obligations associated with tangible long-lived assets, including (1) the time of the liability recognition, (2) initial measurement of the liability, (3) allocation of asset retirement cost to expense, (4) subsequent measurement of the liability and (5) financial statement disclosures. SFAS 143 requires that an asset retirement cost should be capitalized as part of the cost of the related long-lived asset and subsequently allocated to expense using a systematic and rational method. We will adopt the statement effective January 1, 2003, as required. The transition adjustment resulting from the adoption of SFAS 143 will be reported as a cumulative effect of a change in accounting principle. Although we are in the process of evaluating the impact of adoption, we cannot reasonably estimate the effect of the adoption of this statement on either our financial position, results of operations or cash flows at this time. 
 
Forward-Looking Statements and Associated Risks 
 
All statements, other than statements of historical fact, included in this report are forward-looking statements, including, but not limited to, statements identified by the words “anticipate,” “believe,” “estimate,” “expect,” “plan,” “intend” and “forecast,” and similar expressions and statements regarding our business strategy, plans and objectives for future operations. These statements reflect our current views with respect to future events, based on what we believe are reasonable assumptions. Certain factors could cause actual results to differ materially from results anticipated in the forward-looking statements. These factors include, but are not limited to: 
 
 	•	 	abrupt or severe production declines or production interruptions in outer continental shelf production located offshore California and transported on the All American Pipeline; 	
 
 	•	 	declines in volumes shipped on the Basin Pipeline and our other pipelines by third party shippers; 	
 
 	•	 	the availability of adequate supplies of and demand for crude oil in the areas in which we operate; 	
 
 	•	 	the effects of competition; 	
 
 	•	 	the success of our risk management activities; 	
 
 	•	 	the impact of crude oil price fluctuations; 	
 
 	•	 	the availability (or lack thereof) of acquisition or combination opportunities; 	
 
 	•	 	successful integration and future performance of acquired assets; 	
 
 	•	 	continued creditworthiness of, and performance by, counterparties; 	
 
 	•	 	successful third party drilling efforts and completion of announced oil-sands projects; 	
29 

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 	•	 	our levels of indebtedness and our ability to receive credit on satisfactory terms; 	
 
 	•	 	shortages or cost increases of power supplies, materials or labor; 	
 
 	•	 	weather interference with business operations or project construction; 	
 
 	•	 	the impact of current and future laws and governmental regulations; 	
 
 	•	 	the currency exchange rate of the Canadian dollar; 	
 
 	•	 	environmental liabilities that are not covered by an indemnity or insurance; 	
 
 	•	 	fluctuations in the debt and equity markets; and 	
 
 	•	 	general economic, market or business conditions. 	
 
Other factors described herein, such as the recent disruption in industry credit markets discussed in Liquidity and Capital Resources and in Note 6 to the financial statements or factors that are unknown or unpredictable, could also have a material adverse effect on future results. Except as required by applicable securities laws, we do not intend to update these forward-looking statements and information. 
 
Item 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS 
 
The information required herein is included in Note 2 of the Notes to the Consolidated Financial Statements. 
 
Item 4.    CONTROLS AND PROCEDURES 
 
Under Exchange Act Rule 13a-15, which became effective August 29, 2002, we are required to maintain “disclosure controls and procedures,” as defined in Exchange Act Rule 13a-14(c). As a result of the rule, we have formalized our disclosure practices into a written “disclosure controls and procedures,” which we refer to as our “DCP.” The purpose of our DCP is to ensure that (i) information is recorded, processed, summarized and reported in time to allow for timely disclosure of such information in accordance with the securities laws and SEC regulations and (ii) information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow for timely decisions regarding required disclosure. Our DCP is incremental to our system of internal accounting controls designed to comply with the requirements of Section 13(b)(2) of the Exchange Act. 
 
Exchange Act Rule 13a-15 also requires an evaluation of the effectiveness of the design and operation of our DCP, within the 90-day period prior to filing any 10-Q or 10-K, under the supervision and with the participation of our management, including our Chief Executive Office and Chief Financial Officer. Management (including our Chief Executive Officer and Chief Financial Officer) has evaluated the effectiveness of the design and operation of our DCP within the last 90 days, and have found our DCP to be effective in producing the timely recording, processing, summarization and reporting of information, and in accumulation and communication of information to management to allow for timely decisions with regard to required disclosure. 
 
In addition to the information concerning our DCP, we are required to discuss significant changes in our internal controls. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the last date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. 
 
We have recently commenced an effort to consolidate our internal auditing activities into a centralized function, and have hired a director of internal auditing to oversee that function. As we complete the consolidation of these activities over the next several months, we will make any additional enhancements to our controls and procedures that are deemed appropriate. 
30 

Table of Contents
PART II. OTHER INFORMATION 
 
Item 1.    LEGAL PROCEEDINGS 
 
Export License Matter.    In our marketing and gathering activities, we import and export crude oil from and to Canada. Our exports of crude oil are licensed under two export licenses from the Bureau of Industry and Security (the “BIS”) of the U.S. Department of Commerce. We have determined that we may have exceeded the quantity of crude oil exports authorized by the licenses. Export of crude oil in excess of the authorized amounts is a violation of the Export Administration Regulations (“EAR”). On October 18, 2002, we submitted to the BIS an initial notification of voluntary disclosure. Upon completion of our internal inquiry, we will voluntarily submit additional information to the BIS. At this time, we have received no indication whether the BIS intends to charge us with a violation of the EAR or, if so, what penalties would be assessed. As a result, we cannot estimate the ultimate impact of these potential violations. 
 
Other.    We, in the ordinary course of business, are a claimant and/or a defendant in various other legal proceedings. We do not believe that the outcome of these other legal proceedings, individually and in the aggregate, will have a materially adverse effect on our financial condition, results of operations or cash flows. 
 
Item 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS 
 
None 
 
Item. 3.    DEFAULTS UPON SENIOR SECURITIES 
 
None 
 
Item 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 
 
None 
 
Item 5.    OTHER INFORMATION 
 
None 
 
Item 6.    EXHIBITS AND REPORTS ON FORM 8-K 
 
A.    Exhibits 

4.1	  	Indenture dated as of September 25, 2002.	
		
4.2	  	First Supplemental Indenture dated as of September 25, 2002.	
		
4.3	  	Registration Rights Agreement dated September 25, 2002.	
		
99.1	  	Certification of Chief Executive Officer of Plains All American Pipeline, L.P. pursuant to 18 U.S.C. Section 1350.	
		
99.2	  	Certification of Chief Financial Officer of Plains All American Pipeline, L.P. pursuant to 18 U.S.C. Section 1350.	
 
B.    Reports on Form 8-K. 
 
A current report on Form 8-K was filed on November 8, 2002, including as an exhibit the balance sheet of Plains AAP, L.P. as of June 30, 2002. 
 
A current report on Form 8-KA was furnished on November 5, 2002, to correct certain information in the October 29, 2002, 8-K. 
 
A current report on Form 8-K was furnished on October 29, 2002, in connection with disclosure of fourth quarter estimates and earnings guidance. 
31 

Table of Contents
 
A current report on Form 8-K was filed on August 21, 2002, including as an exhibit an underwriting agreement with Goldman, Sachs & Co., Lehman Brothers Inc., Salomon Smith Barney Inc., UBS Warburg LLC, A.G. Edwards & Sons, Inc. and Wachovia Securities, Inc. in connection with the sale by the Partnership of 5,500,000 common units of the Partnership. 
 
A current report on Form 8-K was filed on August 15, 2002, including as exhibits consents of PricewaterhouseCoopers LLP. 
 
A current report on Form 8-K was filed on August 9, 2002, in connection with the certification by the Chief Executive Officer and the Chief Financial Officer pursuant to SEC Order 4-460. 
 
A current report on Form 8-K was filed on August 9, 2002, in connection with the acquisition of assets from Shell Pipeline Company LP and Equilon Enterprises LLC. 
 
A current report on Form 8-K was furnished on July 24, 2002, in connection with disclosure of third quarter estimates and earnings guidance. 
32 

Table of Contents
SIGNATURES 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned and thereunto duly authorized. 
 
PLAINS ALL AMERICAN PIPELINE, L.P. 
	
By:    PLAINS AAP, L.P., its general partner 
	
By:    PLAINS ALL AMERICAN GP LLC, 
          its general partner 
 
Date:    November 11, 2002 
By:    /s/    PHILLIP D. KRAMER 
                                                                                         
Phillip D. Kramer, Executive Vice President and Chief Financial Officer 
(Principal Financial and Accounting Officer) 
 
Date:    November 11, 2002 
By:    /s/    GREG L. ARMSTRONG 
                                                                                         
Greg L. Armstrong, Chairman of the Board, Chief Executive Officer and Director of Plains 
All American GP LLC (Principal Executive 
    Officer) 
33 

Table of Contents
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER 
 
PLAINS ALL AMERICAN PIPELINE, L.P. 
 
I, Greg L. Armstrong, certify that: 
 
 	1.	 	I have reviewed this quarterly report on Form 10-Q of Plains All American Pipeline, L.P.; 	
 
 	2.	 	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 	
 
 	3.	 	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 	
 
 	4.	 	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: 	
 
 	a)	 	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; 	
 
 	b)	 	evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and 	
 
 	c)	 	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 	
 
 	5.	 	The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): 	
 
 	a)	 	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and 	
 
 	b)	 	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 	
 
 	6.	 	The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. 	
 
Date: November 11, 2002 
 
/s/    GREG L. ARMSTRONG 
                                                                                                          
Greg L. Armstrong 
Chief Executive Officer 
34 

Table of Contents
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER 
 
PLAINS ALL AMERICAN PIPELINE, L.P. 
 
I, Phillip D. Kramer, certify that: 
 
 	1.	 	I have reviewed this quarterly report on Form 10-Q of Plains All American Pipeline, L.P.; 	
 
 	2.	 	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 	
 
 	3.	 	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 	
 
 	4.	 	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: 	
 
 	a)	 	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; 	
 
 	b)	 	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and 	
 
 	c)	 	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 	
 
 	5.	 	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): 	
 
 	a)	 	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and 	
 
 	b)	 	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and 	
 
 	6.	 	The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. 	
 
Date: November 11, 2002 
 
/s/    PHILLIP D. KRAMER 
                                                                                                          
Phillip D. Kramer 
Chief Financial Officer 
35 

                                   EXHIBIT 4.1

                       PLAINS ALL AMERICAN PIPELINE, L.P.,

                                PAA FINANCE CORP.

                                       and

                       WACHOVIA BANK, NATIONAL ASSOCIATION

                                   as Trustee

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

                                    INDENTURE

                         Dated as of September 25, 2002

                                 DEBT SECURITIES

                                   (UNLIMITED)

                                TABLE OF CONTENTS

ARTICLE I Definitions                                                          2

SECTION 1.01.     Certain Terms Defined                                        2
SECTION 1.02.     Other Definitions                                            9
SECTION 1.03.     Incorporation by Reference of Trust Indenture Act            9
SECTION 1.04.     Rules of Construction                                        9

ARTICLE II Debt Securities                                                    10

SECTION 2.01.     Forms Generally                                             10
SECTION 2.02.     Form of Trustee's Certificate of Authentication             10
SECTION 2.03.     Principal Amount; Issuable in Series                        10
SECTION 2.04.     Execution of Debt Securities                                13
SECTION 2.05.     Authentication and Delivery of Debt Securities              14
SECTION 2.06.     Denomination of Debt Securities                             15
SECTION 2.07.     General Provisions for Registration of Transfer and
                  Exchange                                                    15
SECTION 2.08.     Temporary Debt Securities                                   16
SECTION 2.09.     Mutilated, Destroyed, Lost or Stolen Debt Securities        17
SECTION 2.10.     Cancellation of Surrendered Debt Securities                 18
SECTION 2.11.     Provisions of the Indenture and Debt Securities for the
                  Sole Benefit of the Parties and the Holders                 18
SECTION 2.12.     Payment of Interest; Rights Preserved                       18
SECTION 2.13.     Securities Denominated in Foreign Currencies                18
SECTION 2.14.     Wire Transfers                                              19
SECTION 2.15.     Securities Issuable in the Form of a Global Security        19
SECTION 2.16.     Medium Term Securities                                      21
SECTION 2.17.     Defaulted Interest                                          22
SECTION 2.18.     Judgments                                                   23
SECTION 2.19.     CUSIP Numbers                                               23

ARTICLE III Redemption of Debt Securities                                     24

SECTION 3.01.     Applicability of Article                                    24
SECTION 3.02.     Notice of Redemption; Selection of Debt Securities          24
SECTION 3.03.     Payment of Debt Securities Called for Redemption            25
SECTION 3.04.     Mandatory and Optional Sinking Funds                        26
SECTION 3.05.     Redemption of Debt Securities for Sinking Fund              26

ARTICLE IV Particular Covenants of the Issuers                                28

SECTION 4.01.     Payment of Principal of, and Premium, If Any, and Interest
                  on, Debt Securities                                         28
SECTION 4.02.     Maintenance of Offices or Agencies for Registration of
                  Transfer, Exchange and Payment of Debt Securities           28
SECTION 4.03.     Appointment to Fill a Vacancy in the Office of Trustee      29
SECTION 4.04.     Duties of Paying Agents, etc.                               29
SECTION 4.05.     Statement by Officers as to Default                         30
SECTION 4.06.     Further Instruments and Acts                                30
SECTION 4.07.     Corporate, Partnership or Limited Liability Company
                  Existence                                                   31

                                       i

SECTION 4.08.     Maintenance of Properties                                   31
SECTION 4.09.     Payment of Taxes and Other Claims                           31
SECTION 4.10.     Calculation of Original Issue Discount                      32
SECTION 4.11.     Stay, Extension and Usury Laws                              32

ARTICLE V Holders' Lists and Reports by the Issuers and the Trustee           32

SECTION 5.01.     Issuers to Furnish Trustee Information as to Names and
                  Addresses of Holders; Preservation of Information           32
SECTION 5.02.     Communications to Holders; Meetings of Holders              33
SECTION 5.03.     Reports by Issuers                                          33
SECTION 5.04.     Reports by Trustee                                          34
SECTION 5.05.     Record Dates for Action by Holders                          34

ARTICLE VI Remedies of the Trustee and Holders in Event of Default            35

SECTION 6.01.     Events of Default                                           35
SECTION 6.02.     Collection of Indebtedness by Trustee, etc.                 36
SECTION 6.03.     Application of Moneys Collected by Trustee                  37
SECTION 6.04.     Limitation on Suits by Holders                              38
SECTION 6.05.     Remedies Cumulative; Delay or Omission in Exercise of
                  Rights Not a Waiver of Default                              39
SECTION 6.06.     Rights of Holders of Majority in Principal Amount of Debt
                  Securities to Direct Trustee and to Waive Default           39
SECTION 6.07.     Trustee to Give Notice of Defaults Known to It, but
                  May Withhold Such Notice in Certain Circumstances           40
SECTION 6.08.     Requirement of an Undertaking To Pay Costs in Certain
                  Suits under the Indenture or Against the Trustee            40

ARTICLE VII Concerning the Trustee                                            41

SECTION 7.01.     Certain Duties and Responsibilities                         41
SECTION 7.02.     Certain Rights of Trustee                                   42
SECTION 7.03.     Trustee Not Liable for Recitals in Indenture or in Debt
                  Securities                                                  43
SECTION 7.04.     Trustee, Paying Agent or Registrar May Own Debt Securities  44
SECTION 7.05.     Moneys Received by Trustee to Be Held in Trust              44
SECTION 7.06.     Compensation and Reimbursement                              44
SECTION 7.07.     Right of Trustee to Rely on an Officers' Certificate
                  Where No Other Evidence Specifically Prescribed             45
SECTION 7.08.     Separate Trustee; Replacement of Trustee                    45
SECTION 7.09.     Successor Trustee by Merger                                 46
SECTION 7.10.     Eligibility; Disqualification                               47
SECTION 7.11.     Preferential Collection of Claims Against Issuers           47
SECTION 7.12.     Compliance with Tax Laws                                    47

ARTICLE VIII Concerning the Holders                                           47

SECTION 8.01.     Evidence of Action by Holders                               47
SECTION 8.02.     Proof of Execution of Instruments and of Holding of
                  Debt Securities                                             48
SECTION 8.03.     Who May Be Deemed Owner of Debt Securities                  48
SECTION 8.04.     Instruments Executed by Holders Bind Future Holders         48

                                       ii

ARTICLE IX Amendment, Supplement and Waiver                                   49

SECTION 9.01.     Without Consent of Holders of Debt Securities               49
SECTION 9.02.     With Consent of Holders of Debt Securities                  50
SECTION 9.03.     Effect of Supplemental Indentures                           51
SECTION 9.04.     Debt Securities May Bear Notation of Changes by
                  Supplemental Indentures                                     52

ARTICLE X Consolidation, Merger, Sale or Conveyance                           52

SECTION 10.01.    Consolidations and Mergers of the Issuers                   52
SECTION 10.02.    Rights and Duties of Successor Company                      53

ARTICLE XI Satisfaction and Discharge of Indenture; Unclaimed Moneys          53

SECTION 11.01.    Satisfaction and Discharge; Application of Trust Money      53
SECTION 11.02.    Repayment to Issuers                                        55
SECTION 11.03.    Indemnity for U.S. Government Obligations                   55
SECTION 11.04.    Reinstatement                                               55

ARTICLE XII Miscellaneous Provisions                                          55

SECTION 12.01.    Successors and Assigns of Issuers Bound by Indenture        55
SECTION 12.02.    Acts of Board, Committee or Officer of Successor
                  Company Valid                                               55
SECTION 12.03.    Required Notices or Demands                                 55
SECTION 12.04.    Indenture and Debt Securities to Be Construed in
                  Accordance with the Laws of the State of New York           56
SECTION 12.05.    Officers' Certificate and Opinion of Counsel to Be
                  Furnished upon Application or Demand by the Issuers         56
SECTION 12.06.    Payments Due on Legal Holidays                              57
SECTION 12.07.    Provisions Required by Trust Indenture Act to Control       57
SECTION 12.08.    Computation of Interest on Debt Securities                  57
SECTION 12.09.    Rules by Trustee, Paying Agent and Registrar                57
SECTION 12.10.    No Recourse Against Others                                  57
SECTION 12.11.    Severability                                                58
SECTION 12.12.    Effect of Headings                                          58
SECTION 12.13.    Indenture May Be Executed in Counterparts                   58

                                       iii

                         RECONCILIATION AND TIE BETWEEN
                    TRUST INDENTURE ACT OF 1939 AND INDENTURE

  Trust Indenture                                         Indenture
    Act Section                                            Section
  ---------------                                         ---------
ss.310(a)(1)                                              4.03, 7.10
      (a)(2)                                              7.10
      (b)                                                 7.08, 7.10
ss.311(a)                                                 7.11
      (b)                                                 7.11
ss.312(c)                                                 5.02
ss.313(a)                                                 5.04
      (b)                                                 5.04
      (c)                                                 5.04
ss.314(a)                                                 5.03
      (a)(4)                                              5.03, 4.05
      (c)(1)                                              12.05
      (c)(2)                                              12.05
      (d)                                                 not applicable
      (e)                                                 12.05
ss.315(a)                                                 7.01, 7.02
      (b)                                                 6.07
      (c)                                                 6.02
      (d)                                                 7.01
      (e)                                                 6.08
ss.316(a)(1)(A)                                           6.06
      (a)(1)(B)                                           6.01, 6.06
      (b)                                                 6.04
      (c)                                                 6.02, 6.03
ss.317(a)(1)                                              6.02
      (a)(2)                                              6.02
      (b)                                                 7.05
ss.318(a)                                                 1.03, 12.07

          NOTE: THIS RECONCILIATION AND TIE SHALL NOT, FOR ANY PURPOSE,
                    BE DEEMED TO BE A PART OF THE INDENTURE.

                                       iv

     INDENTURE dated as of September 25, 2002, among PLAINS ALL AMERICAN
PIPELINE, L.P., a Delaware limited partnership (the "Partnership"), PAA FINANCE
CORP., a Delaware corporation ("PAA Finance" and, together with the Partnership,
the "Issuers"), and WACHOVIA BANK, NATIONAL ASSOCIATION (the "Trustee").

                                   WITNESSETH:

     WHEREAS, Plains All American GP LLC, a Delaware limited liability company
(the "Managing General Partner"), as general partner of Plains AAP, L.P., a
Delaware limited partnership (the "General Partner") and the general partner of
the Partnership, and PAA Finance have duly authorized the execution and delivery
of the Indenture to provide for the issuance from time to time of their
debentures, notes, bonds or other evidences of indebtedness to be issued in one
or more series in an unlimited aggregate principal amount (herein called the
"Debt Securities"), as in the Indenture provided.

     WHEREAS, all things necessary to make the Indenture a valid agreement of
the Issuers, in accordance with its terms, have been done.

     NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for good and valuable consideration, the sufficiency of which
is hereby acknowledged, the Issuers and the Trustee hereby agree with each
other, for the equal and proportionate benefit of the respective Holders from
time to time of the Debt Securities or any series thereof, as follows:

                                   ARTICLE I

                                   Definitions

     SECTION 1.01. Certain Terms Defined. The terms defined in this Section 1.01
(except as herein otherwise expressly provided or unless the context otherwise
requires) for all purposes of the Indenture and of any Indenture supplemental
hereto shall have the respective meanings specified in this Section 1.01. All
other terms used in the Indenture which are defined in the Trust Indenture Act
or which are by reference therein defined in the Securities Act (except as
herein otherwise expressly provided or unless the context otherwise requires),
shall have the meanings assigned to such terms in the Trust Indenture Act and in
the Securities Act as in force as of the date of original execution of the
Indenture.

     "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.

     "Board of Directors" means (a) with respect to the Partnership, the board
of directors of the Managing General Partner, and (b) with respect to PAA
Finance, its board of directors, or, in each case, with respect to any
determination or resolution required or permitted to be made hereunder, any duly
authorized committee or subcommittee of such board.

     "Board Resolution" means a copy of a resolution certified by the
appropriate person to have been duly adopted by the Board of Directors of the
Managing General Partner and/or PAA Finance, as the case may be, and to be in
full force and effect on the date of such certification.

     "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in Houston, Texas, the Borough
of Manhattan, the City of New York, New York, or the city in which the Corporate
Trust Office of the Trustee is located, are authorized or obligated by law or
executive order to close.

     "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.

     "Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of the Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.

     "Corporate Trust Office of the Trustee" means the principal corporate trust
office of the Trustee, at which at any particular time its corporate trust
business shall be administered, which office at the date of execution of the
Indenture is located at 58478 San Felipe, Suite 1050, Houston, Texas, 77057,
Attention: Corporate Trust Group.

     "Currency" means Dollars or Foreign Currency.

     "Debt Security" or "Debt Securities" has the meaning stated in the first
recital of the Indenture and more particularly means any debt security or debt
securities, as the case may be, of any series authenticated and delivered under
the Indenture.

     "Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.

     "Depositary" means, unless otherwise specified by the Issuers pursuant to
either Section 2.03 or 2.15, with respect to registered Debt Securities of any
series issuable or issued in whole or in part in the form of one or more Global
Securities, The Depository Trust Company, New York, New York, or any successor
thereto registered as a clearing agency under the Exchange Act or other
applicable statute or regulations.

     "Dollar" or "$" means such currency of the United States as at the time of
payment is legal tender for the payment of public and private debts.

     "Dollar Equivalent" means, with respect to any monetary amount in a Foreign
Currency, at any time for the determination thereof, the amount of Dollars
obtained by converting such Foreign Currency involved in such computation into
Dollars at the spot rate for the purchase of Dollars with the applicable Foreign
Currency as quoted by Citibank, N.A. (unless another comparable financial
institution is designated by the Issuers) in New York, New York at approximately
11:00 a.m. (New York time) on the date two business days prior to such
determination.

                                       3

     "Equity Interests" means:

          (1) in the case of a corporation, corporate stock;

          (2) in the case of an association or a business entity, any and all
     shares, interests, participations, rights or other equivalents (however
     designated) of corporate stock;

          (3) in the case of a partnership or limited liability company,
     partnership or membership interests (whether general or limited);

          (4) any other interest or participation that confers on a Person the
     right to receive a share of the profits and losses of, or distributions of
     assets of, the issuing Person; and

          (5) all warrants, options or other rights to acquire any of the
     interests described in clauses (1) through (4) above (but excluding any
     debt security that is convertible into, or exchangeable for, any of the
     interests described in clauses (1) through (4) above).

     "Event of Default" has the meaning specified in Section 6.01.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute.

     "Floating Rate Security" means a Debt Security that provides for the
payment of interest at a variable rate determined periodically by reference to
an interest rate index specified pursuant to Section 2.03.

     "Foreign Currency" means a currency issued or adopted by the government of
any country other than the United States or a composite currency the value of
which is determined by reference to the values of the currencies of any group of
countries.

     "GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect from time to time.

     "General Partner" means Plains AAP, L.P., a Delaware limited partnership,
and its successors and permitted assigns as general partner of the Partnership.

     "Global Security" means with respect to any series of Debt Securities
issued hereunder, a Debt Security that is executed by the Issuers and
authenticated and delivered by the Trustee to the Depositary or pursuant to the
Depositary's instruction, all in accordance with the Indenture, or the
applicable Board Resolution of each of the Issuers and set forth in an Officers'
Certificate, which shall be registered in the name of the Depositary or its
nominee and which shall represent, and shall be denominated in an amount equal
to the aggregate principal amount of, all the Outstanding Debt Securities of
such series or any portion thereof, in either case having

                                       4

the same terms, including, without limitation, the same original issue date,
date or dates on which principal is due and interest rate or method of
determining interest.

     "Holder," "Holder of Debt Securities" or other similar terms mean, with
respect to a Registered Security, the Registered Holder.

     "Indenture" means this instrument as originally executed, or, if amended or
supplemented as herein provided, as so amended or supplemented, and shall
include the form and terms of particular series of Debt Securities as
contemplated hereunder, whether or not a supplemental Indenture is entered into
with respect thereto.

     "Issuer Order" means a written order of the Issuers, signed by the Chairman
of the Board of Directors, Chief Executive Officer, President or any Vice
President of each of the Managing General Partner and PAA Finance and by the
Treasurer, Secretary, any Assistant Treasurer or any Assistant Secretary of each
of the Managing General Partner and PAA Finance.

     "Issuers" means the Partnership and PAA Finance, and, subject to the
provisions of Article X, shall also include their successors and permitted
assigns.

     "Lien" means, with respect to any asset, any mortgage, lien (statutory or
otherwise), pledge, charge, security interest, hypothecation, assignment for
security, claim, preference, priority or encumbrance of any kind in respect of
such asset, whether or not filed, recorded or otherwise perfected under
applicable law, including any conditional sale or other title retention
agreement or any lease in the nature thereof, any option or other agreement to
grant a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statute) of
any jurisdiction, other than a precautionary financing statement respecting a
lease not intended as a security agreement.

     "Managing General Partner" means Plains All American GP LLC, a Delaware
limited liability company, and its successors and permitted assigns as the
general partner of the General Partner or as the business entity with the
ultimate authority to manage the business and operations of the Partnership.

     "Officers' Certificate" means a certificate signed by the Chairman of the
Board of Directors, Chief Executive Officer, President or any Vice President of
each of the Managing General Partner and PAA Finance and by the Treasurer,
Secretary, any Assistant Treasurer or any Assistant Secretary of each of the
Managing General Partner and PAA Finance. Each such certificate shall include
the statements provided for in Section 12.05, if applicable.

     "Opinion of Counsel" means an opinion in writing signed by legal counsel
for the Issuers (which counsel may be an employee of the Issuers or outside
counsel for the Issuers). Each such opinion shall include the statements
provided for in Section 12.05, if applicable.

     "Original Issue Discount Debt Security" means any Debt Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration or acceleration of the maturity thereof pursuant to
Section 6.01.

                                       5

     "Outstanding" when used with respect to any series of Debt Securities,
means, as of the date of determination, all Debt Securities of that series
theretofore authenticated and delivered under the Indenture, except:

          (1) Debt Securities of that series theretofore canceled by the Trustee
     or delivered to the Trustee for cancellation;

          (2) Debt Securities of that series for whose payment or redemption
     money in the necessary amount has been theretofore deposited with the
     Trustee or any paying agent (other than the Partnership or PAA Finance) in
     trust or set aside and segregated in trust by the Issuers (if either of the
     Issuers shall act as its own paying agent) for the holders of such Debt
     Securities; provided, that, if such Debt Securities are to be redeemed,
     notice of such redemption has been duly given pursuant to the Indenture or
     provision therefor satisfactory to the Trustee has been made; and

          (3) Debt Securities of that series which have been paid pursuant to
     Section 2.09 or in exchange for or in lieu of which other Debt Securities
     have been authenticated and delivered pursuant to the Indenture, other than
     any such Debt Securities in respect of which there shall have been
     presented to the Trustee proof satisfactory to it that such Debt Securities
     are held by a bona fide purchaser in whose hands such Debt Securities are
     valid obligations of the Issuers;

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Debt Securities of any series have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Debt Securities owned by the Issuers or any other obligor upon the Debt
Securities or any Subsidiary of the Issuers or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Debt Securities which
a Responsible Officer of the Trustee actually knows to be so owned shall be so
disregarded. Debt Securities so owned which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Debt Securities and
that the pledgee is not one of the Issuers or any other obligor upon the Debt
Securities or a Subsidiary of the Issuers or of such other obligor. In
determining whether the Holders of the requisite principal amount of outstanding
Debt Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, the principal amount of an Original Issue
Discount Debt Security that shall be deemed to be Outstanding for such purposes
shall be the amount of the principal thereof that would be due and payable as of
the date of such determination upon a declaration of acceleration of the
maturity thereof pursuant to Section 6.01. In determining whether the Holders of
the requisite principal amount of the Outstanding Debt Securities of any series
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, the principal amount of a Debt Security denominated in one or
more Foreign Currencies or currency units that shall be deemed to be Outstanding
for such purposes shall be the Dollar Equivalent, determined in the manner
provided as contemplated by Section 2.03 on the date of original issuance of
such Debt Security, of the principal amount (or, in the case of any Original
Issue Discount Security, the Dollar Equivalent on the date of original

                                       6

issuance of such Security of the amount determined as provided in the preceding
sentence above) of such Debt Security.

     "PAA Finance" means PAA Finance Corp., a Delaware corporation, and, subject
to the provisions of Article X, shall also include its successors and assigns.

     "Partnership" means Plains All American Pipeline, L.P., a Delaware limited
partnership, and, subject to the provisions of Article X, shall also include its
successors and assigns.

     "Person" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

     "Place of Payment" means, when used with respect to the Debt Securities of
any series, the place or places where the principal of, and premium, if any, and
interest on, the Debt Securities of that series are payable as specified
pursuant to Section 2.03.

     "Registered Holder" means the Person in whose name a Registered Security is
registered in the Debt Security Register (as defined in Section 2.07(a)).

     "Registered Security" means any Debt Security registered as to principal
and interest in the Debt Security Register (as defined in Section 2.07(a)).

     "Registrar" has the meaning set forth in Section 2.07(a).

     "Responsible Officer" when used with respect to the Trustee, means any
officer within the Corporate Trust Office of the Trustee or any other officer of
the Trustee performing functions similar to those performed by the persons who
at the time shall be such officers, and any other officer of the Trustee to whom
corporate trust matters are referred because of his knowledge of and familiarity
with the particular subject, having responsibility for the administration of the
trust created hereby.

     "Securities Act" means the Securities Act of 1933, as amended, or any
successor statute.

     "Stated Maturity" means, at any time, with respect to any installment of
interest or principal on any series of Debt Securities or other indebtedness,
the date on which such payment of interest or principal was scheduled to be paid
in the original documentation governing such indebtedness or such later date as
such documentation shall provide at that time, and shall not include any
contingent obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment thereof.

     "Subsidiary" means, with respect to any Person:

          (1) any corporation, association or other business entity of which
     more than 50% of the Voting Stock is at the time owned or controlled,
     directly or indirectly, by such Person or one or more of the other
     Subsidiaries of that Person (or a combination thereof); and

                                       7

          (2) any partnership (whether general or limited) or limited liability
     company (a) the sole general partner or the managing general partner or
     managing member of which is such Person or a Subsidiary of such Person, or
     (b) if there are more than a single general partner or member, either (i)
     the only general partners or managing members of which are such Person
     and/or one or more Subsidiaries of such Person (or any combination thereof)
     or (ii) such Person owns or controls, directly or indirectly, a majority of
     the outstanding general partner interests, member interests or other Voting
     Stock of such partnership or limited liability company, respectively.

     "Trust Indenture Act" (except as herein otherwise expressly provided) means
the Trust Indenture Act of 1939 as in force at the date of the Indenture as
originally executed and, to the extent required by law, as amended, or any
successor statute.

     "Trustee" initially means Wachovia Bank, National Association, and any
other Person or Persons appointed as such from time to time pursuant to Section
7.08, and, subject to the provisions of Article VII, includes its or their
successors and assigns. If at any time there is more than one such Person,
"Trustee" as used with respect to the Debt Securities of any series shall mean
the Trustee with respect to the Debt Securities of that series.

     "United States" means the United States of America (including the States
and the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction.

     "U.S. Government Obligations" means securities that are (i) direct
obligations of the United States for the payment of which its full faith and
credit is pledged; (ii) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States, which, in either case, under clause (i) or (ii) above, are not
callable or redeemable at the option of the issuer thereof; or (iii) depository
receipts issued by a bank or trust company as custodian with respect to any such
U.S. Government Obligations or a specific payment of interest on or principal of
any such U.S. Government Obligation held by such custodian for the account of
the holder of a depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation evidenced by such
depository receipt.

     "Voting Stock" of any Person as of any date means the Equity Interests of
such Person pursuant to which the holders thereof have the general voting power
under ordinary circumstances to elect at least a majority of the board of
directors, managers, general partners or trustees of any Person (regardless of
whether, at the time, Equity Interests of any other class or classes shall have,
or might have, voting power by reason of the occurrence of any contingency) or,
with respect to a partnership (whether general or limited), any general partner
interest in such partnership.

     "Yield to Maturity" means the yield to maturity calculated at the time of
issuance of a series of Debt Securities, or, if applicable, at the most recent
redetermination of interest on such series and calculated in accordance with
accepted financial practice.

                                       8

     SECTION 1.02. Other Definitions.

Term                                           Section in which Defined
- ----                                           ------------------------
"Debt Security Register"                                 2.07

"Defaulted Interest"                                     2.17

"Designated Currency"                                    2.18

"mandatory sinking fund payment"                         3.04

"optional sinking fund payment"                          3.04

"Successor Company"                                      10.01

     SECTION 1.03. Incorporation by Reference of Trust Indenture Act. The
Indenture is subject to the mandatory provisions of the Trust Indenture Act
which are incorporated by reference in and made a part of the Indenture. The
following Trust Indenture Act terms have the following meanings:

          "indenture securities" means the Debt Securities,

          "indenture security holder" means a Holder,

          "indenture to be qualified" means the Indenture,

          "indenture trustee" or "institutional trustee" means the Trustee, and

          "obligor" on the indenture securities means the Issuers and any other
     obligor on the Debt Securities.

     All other Trust Indenture Act terms used in the Indenture that are defined
by the Trust Indenture Act, reference to another statute or defined by rules of
the Commission have the meanings assigned to them by such definitions.

     SECTION 1.04. Rules of Construction. Unless the context otherwise requires:

          (1) a term has the meaning assigned to it;

          (2) an accounting term not otherwise defined has the meaning assigned
     to it in accordance with GAAP;

          (3) "or" is not exclusive;

                                       9

          (4) "including" means including without limitation; and

          (5) words in the singular include the plural and words in the plural
     include the singular.

                                   ARTICLE II

                                 Debt Securities

     SECTION 2.01. Forms Generally. The Debt Securities of each series shall be
in substantially the form established without the approval of any Holder by or
pursuant to a Board Resolution of each of the Issuers or in one or more
Indentures supplemental hereto, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
the Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as the Issuers
may deem appropriate (and, if not contained in a supplemental Indenture entered
into in accordance with Article IX, as are not prohibited by the provisions of
the Indenture) or as may be required or appropriate to comply with any law or
with any rules made pursuant thereto or with any rules of any securities
exchange on which such series of Debt Securities may be listed, or to conform to
general usage, or as may, consistently herewith, be determined by the officers
executing such Debt Securities as evidenced by their execution of the Debt
Securities.

     The definitive Debt Securities of each series shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Debt Securities,
as evidenced by their execution of such Debt Securities.

     SECTION 2.02. Form of Trustee's Certificate of Authentication. The
Trustee's Certificate of Authentication on all Debt Securities authenticated by
the Trustee shall be in substantially the following form:

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

     This is one of the Debt Securities of the series designated therein
referred to in the within-mentioned Indenture.

                                   -------------------------------------------,
                                   as Trustee

                                   By
                                      ----------------------------------------
                                                Authorized Signatory

                                   Dated:
                                         -------------------------------------

     SECTION 2.03. Principal Amount; Issuable in Series.

                                       10

The aggregate principal amount of Debt Securities which may be issued, executed,
authenticated, delivered and outstanding under the Indenture is unlimited.

     The Debt Securities may be issued in one or more series. There shall be
established, without the approval of any Holders, in or pursuant to a Board
Resolution of each of the Issuers and set forth in an Officers' Certificate of
each of the Issuers, or established in one or more Indentures supplemental
hereto, prior to the issuance of Debt Securities of any series any or all of the
following:

          (1) the title of the Debt Securities of the series (which shall
     distinguish the Debt Securities of the series from all other Debt
     Securities);

          (2) any limit upon the aggregate principal amount of the Debt
     Securities of the series which may be authenticated and delivered under the
     Indenture (except for Debt Securities authenticated and delivered upon
     registration of transfer of, or in exchange for, or in lieu of, other Debt
     Securities of the series pursuant to this Article II);

          (3) the date or dates on which the principal and premium, if any, of
     the Debt Securities of the series are payable;

          (4) the rate or rates (which may be fixed or variable) at which the
     Debt Securities of the series shall bear interest, if any, or the method of
     determining such rate or rates, the date or dates from which such interest
     shall accrue, the interest payment dates on which such interest shall be
     payable, or the method by which such date will be determined, and in the
     case of Registered Securities, the record dates for the determination of
     Holders thereof to whom such interest is payable; and the basis upon which
     interest will be calculated if other than that of a 360-day year of twelve
     thirty-day months;

          (5) the Place or Places of Payment, if any, in addition to or instead
     of the Corporate Trust Office of the Trustee where the principal of, and
     interest on, Debt Securities of the series shall be payable;

          (6) the price or prices at which, the period or periods within which
     and the terms and conditions upon which Debt Securities of the series may
     be redeemed, in whole or in part, at the option of the Issuers or
     otherwise;

          (7) the obligation, if any, of the Issuers to redeem, purchase or
     repay Debt Securities of the series pursuant to any sinking fund or
     analogous provisions or at the option of a Holder thereof, and the price or
     prices at which and the period or periods within which and the terms and
     conditions upon which Debt Securities of the series shall be redeemed,
     purchased or repaid, in whole or in part, pursuant to such obligations;

          (8) the terms, if any, upon which the Debt Securities of the series
     may be convertible into or exchanged for Equity Interests, other Debt
     Securities or other securities of any kind of the Partnership, PAA Finance
     or any other obligor or issuer and the terms and conditions upon which such
     conversion or exchange shall be effected,

                                       11

     including the initial conversion or exchange price or rate, the conversion
     or exchange period and any other provision in addition to or in lieu of
     those described herein;

          (9) if other than denominations of $1,000 and any integral multiple
     thereof, the denominations in which Debt Securities of the series shall be
     issuable;

          (10) if the amount of principal of or any premium or interest on Debt
     Securities of the series may be determined with reference to an index or
     pursuant to a formula, the manner in which such amounts will be determined;

          (11) if the principal amount payable at the Stated Maturity of Debt
     Securities of the series will not be determinable as of any one or more
     dates prior to such Stated Maturity, the amount which will be deemed to be
     such principal amount as of any such date for any purpose, including the
     principal amount thereof which will be due and payable upon any maturity
     other than the Stated Maturity or which will be deemed to be Outstanding as
     of any such date (or, in any such case, the manner in which such deemed
     principal amount is to be determined); and the manner of determining the
     equivalent thereof in the currency of the United States of America for
     purposes of the definition of Dollar Equivalent;

          (12) any changes or additions to Article XI;

          (13) if other than Dollars, the coin or Currency or Currencies or
     units of two or more Currencies in which payment of the principal of and
     premium, if any, and interest on, Debt Securities of the series shall be
     payable;

          (14) if other than the principal amount thereof, the portion of the
     principal amount of Debt Securities of the series which shall be payable
     upon declaration of acceleration of the maturity thereof pursuant to
     Section 6.01 or provable in bankruptcy pursuant to Section 6.02;

          (15) the terms, if any, of the transfer, mortgage, pledge or
     assignment as security for the Debt Securities of the series of any
     properties, assets, moneys, proceeds, securities or other collateral,
     including whether certain provisions of the Trust Indenture Act are
     applicable and any corresponding changes to provisions of the Indenture as
     currently in effect;

          (16) any addition to or change in the Events of Default with respect
     to the Debt Securities of the series and any change in the right of the
     Trustee or the Holders to declare the principal of and interest on, such
     Debt Securities due and payable;

          (17) if the Debt Securities of the series shall be issued in whole or
     in part in the form of a Global Security or Securities, the terms and
     conditions, if any, upon which such Global Security or Securities may be
     exchanged in whole or in part for other individual Debt Securities in
     definitive registered form; and the Depositary for such Global Security or
     Securities and the form of any legend or legends to be borne by any such
     Global Security or Securities in addition to or in lieu of the legend
     referred to in Section 2.15;

                                       12

          (18) any trustees, authenticating or paying agents, transfer agents or
     registrars;

          (19) the applicability of, and any addition to or change in the
     covenants and definitions currently set forth in the Indenture or in the
     terms currently set forth in Article X, including conditioning any merger,
     conveyance, transfer or lease permitted by Article X upon the satisfaction
     of an indebtedness coverage standard by the Issuers and any Successor
     Company (as defined in Article X);

          (20) the terms, if any, of any guarantee of the payment of principal
     of, and premium, if any, and interest on, Debt Securities of the series and
     any corresponding changes to the provisions of the Indenture as currently
     in effect;

          (21) with regard to Debt Securities of the series that do not bear
     interest, the dates for certain required reports to the Trustee;

          (22) any other terms of the Debt Securities of the series (which terms
     shall not be prohibited by the provisions of the Indenture); and

          (23) applicable CUSIP Numbers.

     All Debt Securities of any one series appertaining thereto shall be
substantially identical except as to denomination and except as may otherwise be
provided in or pursuant to such Board Resolutions and as set forth in such
Officers' Certificates or in any such Indenture supplemental hereto.

     SECTION 2.04. Execution of Debt Securities. The Debt Securities shall be
signed on behalf of the Partnership by the Chairman of the Board of Directors,
the Chief Executive Officer, President or a Vice President of the Managing
General Partner, and shall be signed on behalf of PAA Finance by its Chairman of
the Board of Directors, its Chief Executive Officer, President or a Vice
President. Such signatures upon the Debt Securities may be the manual or
facsimile signatures of the present or any future such authorized officers and
may be imprinted or otherwise reproduced on the Debt Securities. The seals of
the Issuers, if any, may be in the form of a facsimile thereof and may be
impressed, affixed, imprinted or otherwise reproduced on the Debt Securities.

     Only such Debt Securities as shall bear thereon a certificate of
authentication substantially in the form hereinbefore recited, signed manually
by the Trustee, shall be entitled to the benefits of the Indenture or be valid
or obligatory for any purpose. Such certificate by the Trustee upon any Debt
Security executed by the Issuers shall be conclusive evidence that the Debt
Security so authenticated has been duly authenticated and delivered hereunder.

     In case any officer of either of the Managing General Partner or PAA
Finance who shall have signed any of the Debt Securities shall cease to be such
officer before the Debt Securities so signed shall have been authenticated and
delivered by the Trustee, or disposed of by the Issuers, such Debt Securities
nevertheless may be authenticated and delivered or disposed of as though the
Person who signed such Debt Securities had not ceased to be such officer of the
Managing General Partner or PAA Finance; and any Debt Security may be signed on
behalf of

                                       13

the Issuers by such Persons as, at the actual date of the execution of such Debt
Security, shall be the proper officers of the Managing General Partner or PAA
Finance, as applicable, although at the date of such Debt Security or of the
execution of the Indenture any such Person was not such officer.

     SECTION 2.05. Authentication and Delivery of Debt Securities. At any time
and from time to time after the execution and delivery of the Indenture, the
Issuers may deliver Debt Securities of any series executed by the Issuers to the
Trustee for authentication, and the Trustee shall thereupon authenticate and
deliver said Debt Securities to or upon an Issuer Order. The Debt Securities
shall be dated the date of their authentication. In authenticating such Debt
Securities and accepting the additional responsibilities under the Indenture in
relation to such Debt Securities, the Trustee shall be entitled to receive, and
(subject to Section 7.01) shall be fully protected in relying upon:

          (1) a copy of any Board Resolution of each of the Issuers, certified
     by the Secretary or Assistant Secretary of each of the Issuers, authorizing
     the terms of issuance of any series of Debt Securities;

          (2) an executed supplemental Indenture, if any;

          (3) an Officers' Certificate; and

          (4) an Opinion of Counsel prepared in accordance with Section 12.05
     substantially to the effect that:

               (a) the form of such Debt Securities has been established by or
          pursuant to a Board Resolution of each of the Issuers or by a
          supplemental Indenture as permitted by Section 2.01 in conformity with
          the provisions of the Indenture;

               (b) the terms of such Debt Securities have been established by or
          pursuant to a Board Resolution of each of the Issuers or by a
          supplemental Indenture as permitted by Section 2.03 in conformity with
          the provisions of the Indenture; and

               (c) such Debt Securities, when authenticated and delivered by the
          Trustee and issued by the Issuers in the manner and subject to any
          conditions specified in such Opinion of Counsel, will constitute valid
          and legally binding obligations of the Issuers, enforceable in
          accordance with their terms except as (i) the enforceability thereof
          may be limited by bankruptcy, insolvency or similar laws affecting the
          enforcement of creditors' rights generally and (ii) rights of
          acceleration and the availability of equitable remedies may be limited
          by equitable principles of general applicability.

     Such Opinion of Counsel need express no opinion as to whether a court in
the United States would render a money judgment in a Currency other than
Dollars.

                                       14

     The Trustee shall have the right to decline to authenticate and deliver any
Debt Securities under this Section 2.05 if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken or if the Trustee
in good faith by its board of directors or trustees, executive committee or a
trust committee of directors, trustees or vice presidents shall determine that
such action would expose the Trustee to personal liability to existing Holders.

     The Trustee may appoint an authenticating agent reasonably acceptable to
the Issuers to authenticate Debt Securities of any series. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Debt
Securities whenever the Trustee may do so. Each reference in the Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, paying agent or agent
for service of notices and demands.

     SECTION 2.06. Denomination of Debt Securities. Unless otherwise provided in
the form of Debt Security for any series, the Debt Securities of each series
shall be issuable only as Registered Securities in such denominations as shall
be specified or contemplated by Section 2.03. In the absence of any such
specification with respect to the Debt Securities of any series, the Debt
Securities of such series shall be issuable in denominations of $1,000 and any
integral multiple thereof.

     SECTION 2.07. General Provisions for Registration of Transfer and Exchange.
(a) The Issuers shall keep or cause to be kept a register for each series of
Registered Securities issued hereunder (hereinafter collectively referred to as
the "Debt Security Register"), in which, subject to such reasonable regulations
as they may prescribe, the Issuers shall provide for the registration of
Registered Securities and the transfer of Registered Securities as in this
Article II provided. At all reasonable times the Debt Security Register shall be
open for inspection by the Trustee. Subject to Section 2.15, upon due
presentment for registration of transfer of any Registered Security at any
office or agency to be maintained by the Issuers in accordance with the
provisions of Section 4.02, the Issuers shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or transferees a new
Registered Security or Registered Securities of authorized denominations for a
like aggregate principal amount.

     Unless and until otherwise determined by a Board Resolution of each of the
Issuers, the register of the Issuers for the purpose of registration, exchange
or registration of transfer of the Registered Securities shall be kept at the
Corporate Trust Office of the Trustee and, for this purpose, the Trustee shall
be designated "Registrar". No prior notice to the Holders of Debt Securities is
required to effect the designation of a substitute Registrar by the Issuers.

     Registered Securities of any series (other than a Global Security) may be
exchanged for a like aggregate principal amount of Registered Securities of the
same series of other authorized denominations. Subject to Section 2.15,
Registered Securities to be exchanged shall be surrendered at the office or
agency to be maintained by the Issuers as provided in Section 4.02, and the
Issuers shall execute and the Trustee shall authenticate and deliver in exchange
therefor the Registered Security or Registered Securities that the Holder making
the exchange shall be entitled to receive.

                                       15

     (b) All Registered Securities presented or surrendered for registration of
transfer, exchange or payment shall (if so required by the Issuers, the Trustee
or the Registrar) be duly endorsed or be accompanied by a written instrument or
instruments of transfer, in form satisfactory to the Issuers, the Trustee and
the Registrar, duly executed by the Registered Holder or his attorney duly
authorized in writing.

     All Debt Securities issued in exchange for or upon transfer of Debt
Securities shall be the legal, valid and binding obligations of the Issuers,
evidencing the same debt, and entitled to the same benefits under the Indenture
as the Debt Securities surrendered for such exchange or transfer.

     No service charge shall be made for any exchange or registration of
transfer of Debt Securities (except as provided by Section 2.09), but the
Issuers may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto, other than those
expressly provided in the Indenture to be made at the Issuers' own expense or
without expense or without charge to the Holders.

     The Issuers shall not be required (a) to issue, register the transfer of or
exchange any Debt Securities (i) for a period of 15 days next preceding any
selection for redemption or repurchase of Debt Securities of such series or (ii)
between a record date and the next succeeding interest payment date, or (b) to
register the transfer of or exchange any Debt Securities selected, called or
being called for redemption or repurchase (except, in the case of Debt
Securities to be redeemed or repurchased in part, the portion not to be redeemed
or repurchased).

     Specific procedures for registration of transfer and exchange of any series
of Debt Securities may be set forth in the applicable supplemental Indenture for
such Debt Securities.

     SECTION 2.08. Temporary Debt Securities. Pending the preparation of
definitive Debt Securities of any series, the Issuers may execute and the
Trustee shall authenticate and deliver temporary Debt Securities (printed,
lithographed, photocopied, typewritten or otherwise produced) of any authorized
denomination, and substantially in the form of the definitive Debt Securities in
lieu of which they are issued, and with such omissions, insertions and
variations as may be appropriate for temporary Debt Securities, all as may be
determined by the Issuers with the concurrence of the Trustee. Temporary Debt
Securities may contain such reference to any provisions of the Indenture as may
be appropriate. Every temporary Debt Security shall be executed by the Issuers
and be authenticated by the Trustee upon the same conditions and in
substantially the same manner, and with like effect, as the definitive Debt
Securities.

     If temporary Debt Securities of any series are issued, the Issuers will
cause definitive Debt Securities of such series to be prepared without
unreasonable delay. After the preparation of definitive Debt Securities of such
series, the temporary Debt Securities of such series shall be exchangeable for
definitive Debt Securities of such series upon surrender of the temporary Debt
Securities of such series at the office or agency of the Issuers at a Place of
Payment for such series, without charge to the Holder thereof, except as
provided in Section 2.07 in connection with a transfer, and upon surrender for
cancellation of any one or more temporary

                                       16

Debt Securities of any series, the Issuers shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Debt Securities of the same series of authorized denominations and of
like tenor. Until so exchanged, temporary Debt Securities of any series shall in
all respects be entitled to the same benefits under the Indenture as definitive
Debt Securities of such series, except as otherwise specified as contemplated by
Section 2.03(17) with respect to the payment of interest on Global Securities in
temporary form.

     Upon any exchange of a portion of a temporary Global Security for a
definitive Global Security or for the individual Debt Securities represented
thereby pursuant to Section 2.07 or this Section 2.08, the temporary Global
Security shall be endorsed by the Trustee to reflect the reduction of the
principal amount evidenced thereby, whereupon the principal amount of such
temporary Global Security shall be reduced for all purposes by the amount so
exchanged and endorsed.

     SECTION 2.09. Mutilated, Destroyed, Lost or Stolen Debt Securities. If (i)
any mutilated Debt Security is surrendered to the Trustee at the Corporate Trust
Office of the Trustee (in the case of Registered Securities) or (ii) the Issuers
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Debt Security, and there is delivered to the Issuers and the
Trustee such security or indemnity as may be required by them to save each of
them and any paying agent harmless, and neither the Issuers nor the Trustee
receives written notice that such Debt Security has been acquired by a bona fide
purchaser, then the Issuers shall execute and, upon an Issuer Order, the Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Debt Security, a new Debt Security of the
same series of like tenor, form, terms and principal amount, bearing a number
not contemporaneously Outstanding. Upon the issuance of any substituted Debt
Security, the Issuers may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses connected therewith. In case any Debt Security which has matured
or is about to mature or which has been called for redemption shall become
mutilated or be destroyed, lost or stolen, the Issuers may, instead of issuing a
substituted Debt Security, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated Debt Security) if the
applicant for such payment shall furnish the Issuers and the Trustee with such
security or indemnity as either may require to save it harmless from all risk,
however remote, and, in case of destruction, loss or theft, evidence to the
satisfaction of the Issuers and the Trustee of the destruction, loss or theft of
such Debt Security and of the ownership thereof.

     Every substituted Debt Security of any series issued pursuant to the
provisions of this Section 2.09 by virtue of the fact that any Debt Security is
destroyed, lost or stolen shall constitute an original additional contractual
obligation of the Issuers, whether or not the destroyed, lost or stolen Debt
Security shall be found at any time, and shall be entitled to all the benefits
of the Indenture equally and proportionately with any and all other Debt
Securities of that series duly issued hereunder. All Debt Securities shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Debt Securities, and shall preclude any and all other rights or
remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with

                                       17

respect to the replacement or payment of negotiable instruments or other
securities without their surrender, in each case to the fullest extent permitted
by law.

     SECTION 2.10. Cancellation of Surrendered Debt Securities. All Debt
Securities surrendered for payment, redemption, registration of transfer or
exchange shall, if surrendered to the Issuers or any paying agent or a
Registrar, be delivered to the Trustee for cancellation by it, or if surrendered
to the Trustee, shall be canceled by it, and no Debt Securities shall be issued
in lieu thereof except as expressly permitted by any of the provisions of the
Indenture. All canceled Debt Securities held by the Trustee shall be disposed of
by the Trustee in its customary manner. On request of the Issuers, the Trustee
shall deliver to the Issuers canceled Debt Securities held by the Trustee. If
the Issuers shall acquire any of the Debt Securities, however, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented thereby unless and until the same are delivered or surrendered to
the Trustee for cancellation. The Issuers may not issue new Debt Securities to
replace Debt Securities it has redeemed, paid or delivered to the Trustee for
cancellation.

     SECTION 2.11. Provisions of the Indenture and Debt Securities for the Sole
Benefit of the Parties and the Holders. Nothing in the Indenture or in the Debt
Securities, expressed or implied, shall give or be construed to give to any
Person, other than the parties hereto, the Holders or any Registrar or paying
agent, any legal or equitable right, remedy or claim under or in respect of the
Indenture, or under any covenant, condition or provision herein contained, all
its covenants, conditions and provisions being for the sole benefit of the
parties hereto, the Holders and any Registrar and paying agents.

     SECTION 2.12. Payment of Interest; Rights Preserved. (a) Interest on any
Registered Security that is payable and is punctually paid or duly provided for
on any interest payment date shall be paid to the Person in whose name such
Registered Security is registered at the close of business on the regular record
date for such interest notwithstanding the cancellation of such Registered
Security upon any transfer or exchange subsequent to the regular record date.
Payment of interest on Registered Securities shall be made at the Corporate
Trust Office of the Trustee (except as otherwise specified pursuant to Section
2.03), or at the option of the Issuers, by check mailed to the address of the
Person entitled thereto as such address shall appear in the Debt Security
Register or, if provided pursuant to Section 2.03 and in accordance with
arrangements satisfactory to the Trustee, at the option of the Registered Holder
by wire transfer to an account designated by the Registered Holder.

     (b) Subject to the foregoing provisions of this Section 2.12 and Section
2.17, each Debt Security of a particular series delivered under the Indenture
upon registration of transfer of or in exchange for or in lieu of any other Debt
Security of the same series shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Debt Security.

     SECTION 2.13. Securities Denominated in Foreign Currencies.

                                       18

(a) Except as otherwise specified pursuant to Section 2.03 for Registered
Securities of any series, payment of the principal of, and premium, if any, and
interest on, Registered Securities of such series will be made in Dollars.

     (b) For the purposes of calculating the principal amount of Debt Securities
of any series denominated in a Foreign Currency or in units of two or more
Foreign Currencies for any purpose under the Indenture, the principal amount of
such Debt Securities at any time Outstanding shall be deemed to be the Dollar
Equivalent of such principal amount as of the date of any such calculation.

     In the event any Foreign Currency or currencies or units of two or more
Currencies in which any payment with respect to any series of Debt Securities
may be made ceases to be a freely convertible Currency on United States Currency
markets, for any date thereafter on which payment of principal of, or premium,
if any, or interest on, the Debt Securities of a series is due, the Issuers
shall select the Currency of payment for use on such date, all as provided in
the Debt Securities of such series. In such event, the Issuers shall, as
provided in the Debt Securities of such series, notify the Trustee of the
Currency which they have selected to constitute the funds necessary to meet the
Issuers' obligations or such payment date and of the amount of such Currency to
be paid. Such amount shall be determined as provided in the Debt Securities of
such series. The payment to the Trustee with respect to such payment date shall
be made by the Issuers solely in the Currency so selected.

     SECTION 2.14. Wire Transfers. Notwithstanding any other provision to the
contrary in the Indenture, the Issuers may make any payment of monies required
to be deposited with the Trustee on account of principal of, or premium, if any,
or interest on, the Debt Securities (whether pursuant to optional or mandatory
redemption payments, interest payments or otherwise) by wire transfer of
immediately available funds to an account designated by the Trustee on or before
the date such moneys are to be paid to the Holders of the Debt Securities in
accordance with the terms hereof.

     SECTION 2.15. Securities Issuable in the Form of a Global Security. (a) If
the Issuers shall establish pursuant to Sections 2.01 and 2.03 that the Debt
Securities of a particular series are to be issued in whole or in part in the
form of one or more Global Securities, then the Issuers shall execute and the
Trustee or its agent shall, in accordance with Section 2.05, authenticate and
deliver, such Global Security or Securities, which (i) shall represent, and
shall be denominated in an amount equal to the aggregate principal amount of,
the Outstanding Debt Securities of such series to be represented by such Global
Security or Securities, or such portion thereof as the Issuers shall specify in
an Officers' Certificate, (ii) shall be registered in the name of the Depositary
for such Global Security or securities or its nominee, (iii) shall be delivered
by the Trustee or its agent to the Depositary or pursuant to the Depositary's
instruction and (iv) shall bear a legend substantially to the following effect:
"Unless and until it is exchanged in whole or in part for the individual Debt
Securities represented hereby, this Global Security may not be transferred
except as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or

                                       19

any such nominee to a successor Depositary or a nominee of such successor
Depositary", or such other legend as may then be required by the Depositary for
such Global Security or Securities.

     (b) Notwithstanding any other provision of this Section 2.15 or of Section
2.07 to the contrary, and subject to the provisions of paragraph (c) below,
unless the terms of a Global Security expressly permit such Global Security to
be exchanged in whole or in part for definitive Debt Securities in registered
form, a Global Security may be transferred, in whole but not in part and in the
manner provided in Section 2.07, only by the Depositary to a nominee of the
Depositary for such Global Security, or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary, or by the Depositary or a
nominee of the Depositary to a successor Depositary for such Global Security
selected or approved by the Issuers, or to a nominee of such successor
Depositary.

     (c) (i) If at any time the Depositary for a Global Security or Securities
notifies the Issuers that it is unwilling or unable to continue as Depositary
for such Global Security or Securities or if at any time the Depositary for the
Debt Securities for such series shall no longer be eligible or in good standing
under the Exchange Act or other applicable statute, rule or regulation, the
Issuers shall appoint a successor Depositary with respect to such Global
Security or Securities. If a successor Depositary for such Global Security or
Securities is not appointed by the Issuers within 90 days after the Issuers
receive such notice or become aware of such ineligibility, the Issuers shall
execute, and the Trustee or its agent, upon receipt of an Issuer Order for the
authentication and delivery of such individual Debt Securities of such series in
exchange for such Global Security, will authenticate and deliver, individual
Debt Securities of such series of like tenor and terms in definitive form in an
aggregate principal amount equal to the principal amount of the Global Security
in exchange for such Global Security or Securities.

     (ii) The Issuers may at any time and in their sole discretion determine
that the Debt Securities of any series or portion thereof issued or issuable in
the form of one or more Global Securities shall no longer be represented by such
Global Security or Securities. In such event the Issuers will execute, and the
Trustee, upon receipt of an Issuer Order for the authentication and delivery of
individual Debt Securities of such series in exchange in whole or in part for
such Global Security, will authenticate and deliver individual Debt Securities
of such series of like tenor and terms in definitive form in an aggregate
principal amount equal to the principal amount of such series or portion thereof
in exchange for such Global Security or Securities.

     (iii) If specified by the Issuers pursuant to Sections 2.01 and 2.03 with
respect to Debt Securities issued or issuable in the form of a Global Security,
the Depositary for such Global Security may surrender such Global Security in
exchange in whole or in part for individual Debt Securities of such series of
like tenor and terms in definitive form on such terms as are acceptable to the
Issuers, the Trustee and such Depositary. Thereupon the Issuers shall execute,
and the Trustee or its agent upon receipt of an Issuer Order for the
authentication and delivery of definitive Debt Securities of such series shall
authenticate and deliver, without service charge, (1) to each Person specified
by such Depositary a new Debt Security or Securities of the same series of like
tenor and terms and of any authorized denomination as requested by such Person
in aggregate principal amount equal to and in exchange for such Person's
beneficial interest in the Global Security, and (2) to such Depositary a new
Global Security of like tenor

                                       20

and terms and in an authorized denomination equal to the difference, if any,
between the principal amount of the surrendered Global Security and the
aggregate principal amount of Debt Securities delivered to Holders thereof,
unless the Global Security being exchanged is endorsed by the Trustee or other
custodian to reflect a reduction of such aggregate principal amount, in which
case no new Global Security shall be authenticated and delivered.

     (iv) In any exchange provided for in any of the preceding three paragraphs,
the Issuers will execute and the Trustee or its agent will authenticate and
deliver individual Debt Securities. Upon the exchange of the entire principal
amount of a Global Security for individual Debt Securities, such Global Security
shall be canceled by the Trustee or its agent. Except as provided in the
preceding paragraph, Registered Securities issued in exchange for a Global
Security pursuant to this Section 2.15 shall be registered in such names and in
such authorized denominations as the Depositary for such Global Security,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee or the Registrar. The Trustee or the Registrar shall
deliver such Registered Securities to the Persons in whose names such Registered
Securities are so registered.

     (v) Payments in respect of the principal of and interest on any Debt
Securities registered in the name of the Depositary or its nominee will be
payable to the Depositary or such nominee in its capacity as the registered
owner of such Global Security. The Issuers and the Trustee may treat the Person
in whose name the Debt Securities, including the Global Security, are registered
as the owner thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. None of the Issuers, the Trustee, any Registrar,
the paying agent or any agent of the Issuers or the Trustee will have any
responsibility or liability for (a) any aspect of the records relating to or
payments made on account of the beneficial ownership interests of the Global
Security by the Depositary or its nominee or any of the Depositary's direct or
indirect participants, or for maintaining, supervising or reviewing any records
of the Depositary, its nominee or any of the Depositary's direct or indirect
participants relating to the beneficial ownership interests of the Global
Security, (b) the payments to the beneficial owners of the Global Security of
amounts paid to the Depositary or its nominee, or (c) any other matter relating
to the actions and practices of the Depositary, its nominee or any of the
Depositary's direct or indirect participants. None of the Issuers, the Trustee
or any such agent will be liable for any delay by the Depositary, its nominee,
or any of the Depositary's direct or indirect participants in identifying the
beneficial owners of the Debt Securities, and the Issuers and the Trustee may
conclusively rely on, and will be protected in relying on, instructions from the
Depositary or its nominee for all purposes (including with respect to the
registration and delivery, and the respective principal amounts, of the Debt
Securities to be issued).

     SECTION 2.16. Medium Term Securities. Notwithstanding any contrary
provision herein, if all Debt Securities of a series are not to be originally
issued at one time, it shall not be necessary for the Issuers to deliver to the
Trustee an Officers' Certificate, a Board Resolution, a supplemental Indenture,
an Opinion of Counsel or a written order or any other document otherwise
required pursuant to Section 2.01, 2.03, 2.05 or 12.05 at or prior to the time
of authentication of each Debt Security of such series if such documents are
delivered to the Trustee or its agent at or prior to the authentication upon
original issuance of the first such Debt Security of such series to be issued;
provided, that any subsequent

                                       21

request by the Issuers to the Trustee to authenticate Debt Securities of such
series upon original issuance shall constitute a representation and warranty by
the Issuers that, as of the date of such request, the statements made in the
Officers' Certificate delivered pursuant to Section 2.05 or 12.05 shall be true
and correct as if made on such date and that the Opinion of Counsel delivered at
or prior to such time of authentication of an original issuance of Debt
Securities shall specifically state that it shall relate to all subsequent
issuances of Debt Securities of such series that are identical to the Debt
Securities issued in the first issuance of Debt Securities of such series.

     An Issuer Order delivered by the Issuers to the Trustee in the
circumstances set forth in the preceding paragraph may provide that Debt
Securities which are the subject thereof will be authenticated and delivered by
the Trustee or its agent on original issue from time to time upon the written
order of Persons designated in such written order and that such Persons are
authorized to determine, consistent with the Officers' Certificates,
supplemental Indenture or the applicable Board Resolutions relating to such
written order, such terms and conditions of such Debt Securities as are
specified in such Officers' Certificates, supplemental Indenture or such Board
Resolutions.

     SECTION 2.17. Defaulted Interest. Any interest on any Debt Security of a
particular series which is payable, but is not punctually paid or duly provided
for, on the dates and in the manner provided in the Debt Securities of such
series and in the Indenture (herein called "Defaulted Interest") shall forthwith
cease to be payable to the Registered Holder thereof on the relevant record date
by virtue of having been such Registered Holder, and such Defaulted Interest may
be paid by the Issuers, at their election in each case, as provided in clause
(i) or (ii) below:

          (i) The Issuers may elect to make payment of any Defaulted Interest to
     the Persons in whose names the Registered Securities of such series are
     registered at the close of business on a special record date for the
     payment of such Defaulted Interest, which shall be fixed in the following
     manner: The Issuers shall notify the Trustee in writing of the amount of
     Defaulted Interest proposed to be paid on each such Registered Security of
     such series and the date of the proposed payment, and at the same time the
     Issuers shall deposit with the Trustee an amount of money equal to the
     aggregate amount proposed to be paid in respect of such Defaulted Interest
     or shall make arrangements satisfactory to the Trustee for such deposit
     prior to the date of the proposed payment, such money when deposited to be
     held in trust for the benefit of the Persons entitled to such Defaulted
     Interest as in this clause provided. Thereupon the Trustee shall fix a
     special record date for the payment of such Defaulted Interest which shall
     be not more than 15 days and not less than 10 days prior to the date of the
     proposed payment and not less than 10 days after the receipt by the Trustee
     of the notice of the proposed payment. The Trustee shall promptly notify
     the Issuers of such special record date and, in the name and at the expense
     of the Issuers, shall cause notice of the proposed payment of such
     Defaulted Interest and the special record date therefor to be mailed, first
     class postage prepaid, to each Holder thereof at its address as it appears
     in the Debt Security Register, not less than 10 days prior to such special
     record date. Notice of the proposed payment of such Defaulted Interest and
     the special record date therefor having been so mailed,

                                       22

     such Defaulted Interest shall be paid to the Persons in whose names the
     Registered Securities of such series are registered at the close of
     business on such special record date.

          (ii) The Issuers may make payment of any Defaulted Interest on the
     Registered Securities of such series in any other lawful manner not
     inconsistent with the requirements of any securities exchange on which the
     Registered Securities of such series may be listed, and upon such notice as
     may be required by such exchange, if, after notice given by the Issuers to
     the Trustee of the proposed payment pursuant to this clause, such manner of
     payment shall be deemed practicable by the Trustee.

     SECTION 2.18. Judgments. The Issuers may provide pursuant to Section 2.03
for Debt Securities of any series that (a) the obligation, if any, of the
Issuers to pay the principal of, and premium, if any, and interest on, the Debt
Securities of any series in a Foreign Currency or Dollars (the "Designated
Currency") as may be specified pursuant to Section 2.03 is of the essence and
agrees that, to the fullest extent possible under applicable law, judgments in
respect of Debt Securities of such series shall be given in the Designated
Currency; (b) the obligation of the Issuers to make payments in the Designated
Currency of the principal of, and premium, if any, and interest on, such Debt
Securities shall, notwithstanding any payment in any other Currency (whether
pursuant to a judgment or otherwise), be discharged only to the extent of the
amount in the Designated Currency that the Holder receiving such payment may, in
accordance with normal banking procedures, purchase with the sum paid in such
other Currency (after any premium and cost exchange) on the business day in the
country of issue of the Designated Currency or in the international banking
community (in the case of a composite currency) immediately following the day on
which such Holder receives such payment; (c) if the amount in the Designated
Currency that may be so purchased for any reason falls short of the amount
originally due, the Issuers shall pay such additional amounts as may be
necessary to compensate for such shortfall; and (d) any obligation of the
Issuers not discharged by such payment shall be due as a separate and
independent obligation and, until discharged as provided herein, shall continue
in full force and effect.

     SECTION 2.19. CUSIP Numbers. The Issuers in issuing the Debt Securities may
use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Debt Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Debt Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
The Issuers will promptly notify the Trustee of any change in the "CUSIP"
numbers.

                                       23

                                  ARTICLE III

                          Redemption of Debt Securities

     SECTION 3.01. Applicability of Article. The provisions of this Article
shall be applicable to the Debt Securities of any series which are redeemable
before their Stated Maturity except as otherwise specified as contemplated by
Section 2.03 for Debt Securities of such series.

     SECTION 3.02. Notice of Redemption; Selection of Debt Securities. In case
the Issuers shall desire to exercise the right to redeem all or, as the case may
be, any part of the Debt Securities of any series in accordance with their
terms, a Board Resolution of each Issuer or a supplemental Indenture, the
Issuers shall fix a date for redemption and shall give notice of such redemption
at least 30 and not more than 60 days prior to the date fixed for redemption to
the Holders of Debt Securities of such series so to be redeemed as a whole or in
part, in the manner provided in Section 12.03. The notice may not be
conditional. The notice if given in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice. In any case, failure to give such notice or any defect in
the notice to the Holder of any Debt Security of a series designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Debt Security of such series.

     Each such notice of redemption shall specify the amount of Debt Securities
of any series to be redeemed, the date fixed for redemption, the calculation of
the redemption price at which Debt Securities of such series are to be redeemed
(but not the redemption price itself if it is not then determinable), the Place
or Places of Payment that payment will be made upon presentation and surrender
of such Debt Securities, that any interest accrued to the date fixed for
redemption will be paid as specified in said notice, that the redemption is for
a sinking fund payment (if applicable), that on and after said date any interest
thereon or on the portions thereof to be redeemed will cease to accrue, that in
the case of Original Issue Discount Securities original issue discount accrued
after the date fixed for redemption will cease to accrue, the terms of the Debt
Securities of that series pursuant to which the Debt Securities of that series
are being redeemed and that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on the
Debt Securities of that series. If less than all the Debt Securities of a series
are to be redeemed the notice of redemption shall specify the CUSIP numbers of
the Debt Securities of that series to be redeemed. In case any Debt Security of
a series is to be redeemed in part only, the notice of redemption shall state
the portion of the principal amount thereof to be redeemed and shall state that
on and after the date fixed for redemption, upon surrender of such Debt
Security, a new Debt Security or Debt Securities of that series will be issued
in principal amount equal to the unredeemed portion thereof.

     At least 60 days before the redemption date, unless the Trustee consents to
a shorter period, the Issuers shall give written notice to the Trustee of the
redemption date, the principal amount of Debt Securities to be redeemed and the
series and terms of the Debt Securities pursuant to which such redemption will
occur. Such notice shall be accompanied by

                                       24

an Officers' Certificate and an Opinion of Counsel to the effect that such
redemption will comply with the conditions herein. If fewer than all the Debt
Securities of a series are to be redeemed, the record date relating to such
redemption shall be selected by the Issuers and given to the Trustee, which
record date shall be not less than 15 days after the date of notice to the
Trustee.

     No later than 11:00 a.m., New York City time, on the redemption date for
any Debt Securities, the Issuers shall deposit with the Trustee or with a paying
agent (or, if the Partnership or PAA Finance is acting as its own paying agent,
segregate and hold in trust) an amount of money in the Currency in which such
Debt Securities are denominated (except as provided pursuant to Section 2.03)
sufficient to pay the redemption price of such Debt Securities or any portions
thereof that are to be redeemed on that date.

     If less than all the Debt Securities of like tenor and terms of a series
are to be redeemed (other than pursuant to mandatory sinking fund redemptions),
the Trustee shall select the Debt Securities of that series or portions thereof
(in multiples of $1,000) to be redeemed (i) if such Debt Securities are listed
on an exchange, in compliance with the requirements of the principal national
securities exchange on which such Debt Securities are listed, or (ii) if such
Debt Securities are not listed on an exchange or such exchange has no selection
requirements, on a pro rata basis, by lot or by such other method as in its sole
discretion the Trustee shall deem appropriate and fair. In any case where more
than one Debt Security of such series is registered in the same name, the
Trustee in its discretion may treat the aggregate principal amount so registered
as if it were represented by one Debt Security of such series. The Trustee shall
promptly notify the Issuers in writing of the Debt Securities selected for
redemption and, in the case of any Debt Securities selected for partial
redemption, the principal amount thereof to be redeemed. If any Debt Security
called for redemption shall not be so paid upon surrender thereof on such
redemption date, the principal, premium, if any, and interest shall bear
interest until paid from the redemption date at the rate borne by the Debt
Securities of that series. If less than all the Debt Securities of unlike tenor
and terms of a series are to be redeemed, the particular Debt Securities to be
redeemed shall be selected by the Issuers. Provisions of the Indenture that
apply to Debt Securities called for redemption also apply to portions of Debt
Securities called for redemption.

     SECTION 3.03. Payment of Debt Securities Called for Redemption. If notice
of redemption has been given as provided in Section 3.02, the Debt Securities or
portions of Debt Securities of the series with respect to which such notice has
been given shall become due and payable on the date and at the Place or Places
of Payment stated in such notice at the applicable redemption price, together
with any interest accrued to the date fixed for redemption, and on and after
said date (unless the Issuers shall default in the payment of such Debt
Securities at the applicable redemption price, together with any interest
accrued to said date) any interest on the Debt Securities or portions of Debt
Securities of any series so called for redemption shall cease to accrue and any
original issue discount in the case of Original Issue Discount Securities shall
cease to accrue. On presentation and surrender of such Debt Securities at the
Place or Places of Payment in said notice specified, the said Debt Securities or
the specified portions thereof shall be paid and redeemed by the Issuers at the
applicable redemption price, together with any interest accrued thereon to the
date fixed for redemption.

                                       25

     Any Debt Security that is to be redeemed only in part shall be surrendered
at the Corporate Trust Office of the Trustee or such other office or agency of
the Issuers as is specified pursuant to Section 2.03, if the Issuers, the
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Issuers, the Registrar and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing, and the Issuers shall execute, and the Trustee shall authenticate
and deliver to the Holder of such Debt Security without service charge, a new
Debt Security or Debt Securities of the same series, of like tenor and form, of
any authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Debt Security so surrendered; except that if a Global Security is so
surrendered, the Issuers shall execute, and the Trustee shall authenticate and
deliver to the Depositary for such Global Security, without service charge, a
new Global Security in a denomination equal to and in exchange for the
unredeemed portion of the principal of the Global Security so surrendered. In
the case of a Debt Security providing appropriate space for such notation, at
the option of the Holder thereof, the Trustee, in lieu of delivering a new Debt
Security or Debt Securities as aforesaid, may make a notation on such Debt
Security of the payment of the redeemed portion thereof.

     SECTION 3.04. Mandatory and Optional Sinking Funds. The minimum amount of
any sinking fund payment provided for by the terms of Debt Securities of any
series, a Board Resolution of each Issuer or a supplemental Indenture is herein
referred to as a "mandatory sinking fund payment", and any payment in excess of
such minimum amount provided for by the terms of Debt Securities of any series,
a Board Resolution of each Issuer or a supplemental Indenture is herein referred
to as an "optional sinking fund payment."

     In lieu of making all or any part of any mandatory sinking fund payment
with respect to any Debt Securities of a series in cash, the Issuers may at
their option (a) deliver to the Trustee Debt Securities of that series
theretofore purchased or otherwise acquired by the Issuers or (b) receive credit
for the principal amount of Debt Securities of that series which have been
redeemed either at the election of the Issuers pursuant to the terms of such
Debt Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Debt Securities, Board Resolution of each
Issuer or supplemental Indenture; provided, that such Debt Securities have not
been previously so credited. Such Debt Securities shall be received and credited
for such purpose by the Trustee at the redemption price specified in such Debt
Securities, the applicable Board Resolution of each Issuer or supplemental
Indenture for redemption through operation of the sinking fund and the amount of
such mandatory sinking fund payment shall be reduced accordingly.

     SECTION 3.05. Redemption of Debt Securities for Sinking Fund. Not less than
60 days prior to each sinking fund payment date for any series of Debt
Securities, the Issuers will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, any Board Resolution or supplemental
Indenture, the portion thereof, if any, which is to be satisfied by payment of
cash in the Currency in which the Debt Securities of such series are denominated
(except as provided pursuant to Section 2.03) and the portion thereof, if any,
which is to be

                                       26

satisfied by delivering and crediting Debt Securities of that series pursuant to
this Section 3.05 (which Debt Securities, if not previously redeemed, will
accompany such certificate) and whether the Issuers intend to exercise their
right to make any permitted optional sinking fund payment with respect to such
series. Such certificate shall also state that no Event of Default has occurred
and is continuing with respect to such series. Such certificate shall be
irrevocable and upon its delivery the Issuers shall be obligated to make the
cash payment or payments therein referred to, if any, on or before the next
succeeding sinking fund payment date. Failure of the Issuers to deliver such
certificate (or to deliver the Debt Securities specified in this paragraph)
shall not constitute a Default, but such failure shall require that the sinking
fund payment due on the next succeeding sinking fund payment date for that
series shall be paid entirely in cash and shall be sufficient to redeem the
principal amount of such Debt Securities subject to a mandatory sinking fund
payment without the option to deliver or credit Debt Securities as provided in
this Section 3.05 and without the right to make any optional sinking fund
payment, if any, with respect to such series.

     Any sinking fund payment or payments (mandatory or optional) made in cash
plus any unused balance of any preceding sinking fund payments made in cash
which shall equal or exceed $100,000 (or a lesser sum if the Issuers shall so
request) with respect to the Debt Securities of any particular series shall be
applied by the Trustee on the sinking fund payment date on which such payment is
made (or, if such payment is made before a sinking fund payment date, on the
sinking fund payment date following the date of such payment) to the redemption
of such Debt Securities at the redemption price specified in such Debt
Securities, the applicable Board Resolution or supplemental Indenture for
operation of the sinking fund together with any accrued interest to the date
fixed for redemption. Any sinking fund moneys not so applied or allocated by the
Trustee to the redemption of Debt Securities shall be added to the next cash
sinking fund payment received by the Trustee for such series and, together with
such payment, shall be applied in accordance with the provisions of this Section
3.05. Any and all sinking fund moneys with respect to the Debt Securities of any
particular series held by the Trustee on the last sinking fund payment date with
respect to Debt Securities of such series and not held for the payment or
redemption of particular Debt Securities shall be applied by the Trustee,
together with other moneys, if necessary, to be deposited sufficient for the
purpose, to the payment of the principal of the Debt Securities of that series
at its Stated Maturity.

     The Trustee shall select the Debt Securities to be redeemed upon such
sinking fund payment date in the manner specified in the last paragraph of
Section 3.02 and the Issuers shall cause notice of the redemption thereof to be
given in the manner provided in Section 3.02 except that the notice of
redemption shall also state that the Debt Securities are being redeemed by
operation of the sinking fund. Such notice having been duly given, the
redemption of such Debt Securities shall be made upon the terms and in the
manner stated in Section 3.03.

     At least one business day before each sinking fund payment date, the
Issuers shall pay to the Trustee (or, if the Partnership or PAA Finance is
acting as its own paying agent, the Partnership or PAA Finance shall segregate
and hold in trust) in cash a sum in the Currency in which the Debt Securities of
such series are denominated (except as provided pursuant to Section 2.03) equal
to any interest accrued to the date fixed for redemption of Debt Securities or
portions thereof to be redeemed on such sinking fund payment date pursuant to
this Section 3.05.

                                       27

     The Trustee shall not redeem any Debt Securities of a series with sinking
fund moneys or mail any notice of redemption of such Debt Securities by
operation of the sinking fund for such series during the continuance of a
Default in payment of interest on such Debt Securities or of any Event of
Default known to the Trustee (other than an Event of Default occurring as a
consequence of this paragraph) with respect to such Debt Securities, except that
if the notice of redemption of any such Debt Securities shall theretofore have
been mailed in accordance with the provisions hereof, the Trustee shall redeem
such Debt Securities if cash sufficient for that purpose shall be deposited with
the Trustee for that purpose in accordance with the terms of this Article III.
Except as aforesaid, any moneys in the sinking fund for such series at the time
when any such Default or Event of Default shall occur and any moneys thereafter
paid into such sinking fund shall, during the continuance of such Default or
Event of Default, be held as security for the payment of such Debt Securities;
provided, however, that in case such Default or Event of Default shall have been
cured or waived as provided herein, such moneys shall thereafter be applied on
the next sinking fund payment date for such Debt Securities on which such moneys
may be applied pursuant to the provisions of this Section 3.05.

                                   ARTICLE IV

                       Particular Covenants of the Issuers

     SECTION 4.01. Payment of Principal of, and Premium, If Any, and Interest
on, Debt Securities. The Issuers, for the benefit of each series of Debt
Securities, will duly and punctually pay or cause to be paid the principal of,
and premium, if any, and interest on, each of the Debt Securities at the place,
at the respective times and in the manner provided herein and in the Debt
Securities. Each installment of interest on the Debt Securities may at the
Issuers' option be paid by mailing checks for such interest payable to the
Person entitled thereto to the address of such Person as it appears on the Debt
Security Register maintained pursuant to Section 2.07(a).

     Principal, premium and interest in respect of Debt Securities of any series
shall be considered paid on the date due if no later than 11:00 a.m., New York
City time, on such date the Trustee or any paying agent holds in accordance with
the Indenture money sufficient to pay in the Currency in which the Debt
Securities of such series are denominated (except as provided pursuant to
Section 2.03) all principal, premium and interest then due.

     The Issuers shall pay interest on overdue principal at the rate specified
therefor in the Debt Securities and they shall pay interest on overdue
installments of interest at the same rate to the extent lawful.

     SECTION 4.02. Maintenance of Offices or Agencies for Registration of
Transfer, Exchange and Payment of Debt Securities. The Issuers will maintain in
each Place of Payment for any series of Debt Securities, an office or agency
where Debt Securities of such series may be presented or surrendered for
payment, where Debt Securities of such series may be surrendered for transfer or
exchange and where notices and demands to or upon the Issuers in respect of the
Debt Securities of such series and

                                       28

the Indenture may be served. The Issuers will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Issuers shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Issuers hereby appoint the
Trustee as their agent to receive all presentations, surrenders, notices and
demands.

     The Issuers may also from time to time designate different or additional
offices or agencies to be maintained for such purposes (in or outside of such
Place of Payment), and may from time to time rescind any such designation;
provided, however, that no such designation or rescission shall in any manner
relieve the Issuers of their obligations described in the preceding paragraph.
The Issuers will give prompt written notice to the Trustee of any such
additional designation or rescission of designation and any change in the
location of any such different or additional office or agency.

     SECTION 4.03. Appointment to Fill a Vacancy in the Office of Trustee. The
Issuers, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 7.08, a Trustee, so that there
shall at all times be a Trustee hereunder with respect to each series of Debt
Securities.

     SECTION 4.04. Duties of Paying Agents, etc. (a) The Issuers shall cause
each paying agent, if any, other than the Trustee, to execute and deliver to the
Trustee an instrument in which such agent shall agree with the Trustee, subject
to the provisions of this Section 4.04,

          (i) that it will hold all sums held by it as such agent for the
     payment of the principal of, and premium, if any, or interest on, the Debt
     Securities of any series (whether such sums have been paid to it by the
     Issuers or by any other obligor on the Debt Securities of such series) in
     trust for the benefit of the Holders of the Debt Securities of such series;

          (ii) that it will give the Trustee notice of any failure by the
     Issuers (or by any other obligor on the Debt Securities of such series) to
     make any payment of the principal of and premium, if any, or interest on,
     the Debt Securities of such series when the same shall be due and payable;
     and

          (iii) that it will at any time during the continuance of an Event of
     Default, upon the written request of the Trustee, forthwith pay to the
     Trustee all sums so held by it as such agent.

     (b) If either of the Issuers or any of their respective Subsidiaries shall
act as its own paying agent, it will, on or before 11:00 a.m., New York City
time, on each due date of the principal of, and premium, if any, or interest on,
the Debt Securities if any, of any series, set aside, segregate and hold in
trust for the benefit of the Holders of the Debt Securities of such series a sum
sufficient to pay such principal, premium, if any, or interest so becoming due.
The Issuers will promptly notify the Trustee of any failure by the Issuers or
its Subsidiaries to take

                                       29

such action or the failure by any other obligor on such Debt Securities to make
any payment of the principal of, and premium, if any, or interest on, such Debt
Securities when the same shall be due and payable.

     (c) Anything in this Section 4.04 to the contrary notwithstanding, either
of the Issuers may, at any time, for the purpose of obtaining a satisfaction and
discharge of the Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by it or any paying agent, as required by
this Section 4.04, such sums to be held by the Trustee upon the same terms as
those upon which such sums were held by the Issuers or such paying agent.

     (d) Whenever the Issuers shall have one or more paying agents with respect
to any series of Debt Securities, they will, prior to 11:00 a.m., New York City
time, on each due date of the principal of, and premium, if any, or interest on,
any Debt Securities of such series, deposit with any such paying agent a sum
sufficient to pay the principal, premium or interest so becoming due, such sum
to be held in trust for the benefit of the Persons entitled thereto, and (unless
any such paying agent is the Trustee) the Issuers will promptly notify the
Trustee of their action or failure so to act.

     (e) Anything in this Section 4.04 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 4.04 is subject to
the provisions of Section 11.02.

     (f) Unless and until otherwise determined by the Issuers in Board
Resolutions or pursuant to a supplemental Indenture, the Trustee will act as
paying agent under the Indenture. The Issuers may designate a substitute paying
agent without prior notice to the Holders of Debt Securities.

     SECTION 4.05. Statement by Officers as to Default. The Issuers will deliver
to the Trustee, on or before a date not more than four months after the end of
each fiscal year of the Issuers (currently ending on December 31 of each year)
ending after the date hereof, an Officers' Certificate stating, as to each
officer signing such certificate, one of whom shall be the principal executive,
financial or accounting officer of each Issuer (for purposes of compliance with
Section 314(a)(4) of the Trust Indenture Act), that (i) in the course of his
performance of his duties as an officer of the Managing General Partner or PAA
Finance, as applicable, he would normally have knowledge of any Default, (ii)
whether or not to the best of his knowledge any Default occurred during such
year and (iii) if to the best of his knowledge the Partnership or PAA Finance,
as applicable, is in Default, specifying all such Defaults and what action the
Partnership or PAA Finance, as applicable, is taking or proposes to take with
respect thereto.

     SECTION 4.06. Further Instruments and Acts. The Issuers will, upon request
of the Trustee, execute and deliver such further instruments and do such further
acts as may reasonably be necessary or proper to carry out more effectually the
purposes of the Indenture.

                                       30

     SECTION 4.07. Corporate, Partnership or Limited Liability Company
Existence. Subject to Article X, the Issuers shall do or cause to be done all
things necessary to preserve and keep in full force and effect the corporate,
partnership, limited liability company or unlimited liability company existence
and related rights and franchises (charges and statutory) of the Partnership and
each of its Subsidiaries; provided, however, that the Partnership shall not be
required to preserve any such right or franchise for the corporate, partnership,
limited liability company or unlimited liability company existence of any such
Subsidiary if the Managing General Partner shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Partnership
and its Subsidiaries as a whole and that the loss thereof would not reasonably
be expected to have a material adverse effect on the ability of the Issuers or
any obligor on the Debt Securities of any series to perform their obligations
hereunder; and provided, further, however, that the foregoing shall not prohibit
a sale, transfer or conveyance of a Subsidiary of the Partnership or any of its
assets in compliance with the terms of the Indenture.

     SECTION 4.08. Maintenance of Properties. The Partnership shall cause all
material properties owned by the Partnership or any of its Subsidiaries or used
or held for use in the conduct of its business or the business of any of its
Subsidiaries to be maintained and kept in good condition, repair and working
order (ordinary wear and tear excepted) and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the reasonable
judgment of the Partnership may be consistent with sound business practice and
necessary so that the business carried on in connection therewith may be
properly conducted at all times; provided, however, that nothing in this Section
shall prevent the Partnership from discontinuing the maintenance of any of such
properties if such discontinuance is, in the reasonable judgment of the Managing
General Partner, desirable in the conduct of its business or the business of any
of its Subsidiaries and not reasonably expected to have a material adverse
effect on the ability of the Issuers or any obligor on the Debt Securities of
any series to perform their obligations hereunder.

     SECTION 4.09. Payment of Taxes and Other Claims. The Partnership shall pay
or discharge or cause to be paid or discharged, on or before the date the same
shall become due and payable, (a) all taxes, assessments and governmental
charges levied or imposed upon the Partnership or any of its Subsidiaries or
otherwise assessed or upon the income, profits or property of the Partnership or
any of its Subsidiaries if failure to pay or discharge the same could reasonably
be expected to have a material adverse effect on the ability of the Issuers or
any obligor on the Debt Securities of any series to perform their obligations
hereunder and (b) all lawful claims for labor, materials and supplies, which, if
unpaid, would by law become a Lien upon the property of the Partnership or any
of its Subsidiaries, except for any Lien permitted to be incurred under the
terms of the Indenture, if failure to pay or discharge the same could reasonably
be expected to have a material adverse effect on the ability of the Issuers or
any obligor on the Debt Securities of any series to perform their obligations
hereunder; provided, however, that the Partnership shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim whose amount, applicability or

                                       31

validity is being contested in good faith by appropriate proceedings properly
instituted and diligently conducted and in respect of which appropriate reserves
(in the good faith judgment of the Managing General Partner) are being
maintained in accordance with GAAP.

     SECTION 4.10. Calculation of Original Issue Discount. The Issuers shall
file with the Trustee promptly at the end of each calendar year (i) a written
notice specifying the amount of original issue discount (including daily rates
and accrual periods) accrued on Outstanding Original Issue Discount Debt
Securities as of the end of such year and (ii) such other specific information
relating to such original issue discount as may then be relevant under the Code.

     SECTION 4.11. Stay, Extension and Usury Laws. Each of the Issuers covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of the
Indenture; and each of the Issuers hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.

                                   ARTICLE V

                           Holders' Lists and Reports
                         by the Issuers and the Trustee

     SECTION 5.01. Issuers to Furnish Trustee Information as to Names and
Addresses of Holders; Preservation of Information. The Issuers covenant and
agree that they will furnish or cause to be furnished to the Trustee with
respect to the Registered Securities of each series:

          (a) not more than 15 days after each record date with respect to the
     payment of interest, if any, a list, in such form as the Trustee may
     reasonably require, of the names and addresses of the Registered Holders as
     of such record date, and

          (b) at such other times as the Trustee may request in writing, within
     30 days after the receipt by the Issuers of any such request, a list as of
     a date not more than 15 days prior to the time such list is furnished;

provided, however, that so long as the Trustee shall be the Registrar, such
lists shall not be required to be furnished.

     The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders (1)
contained in the most recent list

                                       32

furnished to it as provided in this Section 5.01 or (2) received by it in the
capacity of paying agent or Registrar (if so acting) hereunder.

     The Trustee may destroy any list furnished to it as provided in this
Section 5.01 upon receipt of a new list so furnished.

     SECTION 5.02. Communications to Holders; Meetings of Holders. (a) Holders
may communicate pursuant to Section 312(b) of the Trust Indenture Act with other
Holders with respect to their rights under the Indenture or the Debt Securities.
The Issuers, the Trustee, the Registrar and anyone else shall have the
protection of Section 312(c) of the Trust Indenture Act.

     (b) A meeting of the Holders of Debt Securities of any or all series may be
called at any time and from time to time pursuant to this Section 5.02 to make,
give or take any request, demand, authorization, direction, notice, consent,
waiver or other action provided herein to be made, given or taken by Holders of
Debt Securities of such series.

     (c) The Trustee may at any time call a meeting of Holders of Debt
Securities of any series for any purpose specified herein to be held at such
time and at such place in Houston, Texas, in The Borough of Manhattan, The City
of New York or in any other location, as the Trustee shall determine. Notice of
every meeting of Holders of any series, setting forth the time and the place of
such meeting and in general terms the action proposed to be taken at such
meeting, shall be given not less than 20 nor more than 180 days prior to the
date fixed for the meeting.

     (d) In case at any time the Issuers, pursuant to Board Resolutions, or the
Holders of at least 10% in aggregate principal amount of the outstanding Debt
Securities of any series, shall have requested the Trustee for any such series
to call a meeting of the Holders of Debt Securities of such series for any
purpose specified herein, by written request setting forth in reasonable detail
the action proposed to be taken at the meeting, and the Trustee shall not have
made the first publication of the notice of such meeting within 30 days after
receipt of such request or shall not thereafter proceed to cause the meeting to
be held as provided herein, then the Issuers or the Holders of such series in
the amount specified above, as the case may be, may determine the time and the
place in Houston, Texas, in The Borough of Manhattan, The City of New York, or
in any other location, for such meeting and may call such meeting for such
purposes by giving notice thereof as provided in paragraph (c) of this Section
5.02.

     SECTION 5.03. Reports by Issuers. (a) Notwithstanding that the Partnership
may not be required to remain subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act, the Partnership shall file with the Commission
and provide to the Trustee and the Holders of Debt Securities the annual reports
and the information, documents and other reports that are specified in Sections
13 and 15(d) of the Exchange Act, and, with respect to the annual consolidated
financial statements only, a report thereon by the Issuers' independent
auditors; provided, however, that the Partnership shall not be so obligated to
file such information, documents and reports with the Commission if the

                                       33

Commission does not permit such filings. The Issuers shall comply with the other
provisions of Section 314(a) of the Trust Indenture Act.

     (b) The Issuers covenant and agree, and any obligor hereunder shall
covenant and agree, to file with the Trustee and the Commission, in accordance
with the rules and regulations prescribed from time to time by said Commission,
such additional information, documents, and reports with respect to compliance
by the Issuers or such obligor, as the case may be, with the conditions and
covenants provided for in the Indenture as may be required from time to time by
such rules and regulations.

     (c) Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute notice of any information contained therein or determinable from
information contained therein, including the Issuers' compliance with any of
their covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers' Certificates).

     SECTION 5.04. Reports by Trustee. The Trustee shall transmit to Holders
such reports concerning the Trustee and its actions under the Indenture as may
be required pursuant to the Trust Indenture Act at the time and in the manner
provided pursuant thereto.

     Reports pursuant to this Section 5.04 shall be transmitted by mail:

          (1) to all Registered Holders, as the names and addresses of such
     Holders appear in the Debt Security Register; and

          (2) except in the cases of reports under Section 313(b)(2) of the
     Trust Indenture Act, to each holder of a Debt Security of any series whose
     name and address appear in the information preserved at the time by the
     Trustee in accordance with Section 5.02.

     A copy of each report at the time of its mailing to Holders shall be filed
with the Commission and each stock exchange (if any) on which the Debt
Securities of any series are listed. The Issuers agree to notify promptly the
Trustee whenever the Debt Securities of any series become listed on any stock
exchange and of any delisting thereof.

     SECTION 5.05. Record Dates for Action by Holders. If the Issuers shall
solicit from the Holders of Debt Securities of any series any action (including
the making of any demand or request, the giving of any direction, notice,
consent or waiver or the taking of any other action), the Issuers may, at their
option, by Board Resolutions, fix in advance a record date for the determination
of Holders of Debt Securities entitled to take such action, but the Issuers
shall have no obligation to do so. Any such record date shall be fixed at the
Issuers' discretion. If such a record date is fixed, such action may be sought
or given before or after the record date, but only the Holders of Debt
Securities of record at the close of business on such record date shall be
deemed to be Holders of Debt Securities for the purpose of determining whether
Holders of the requisite proportion of Debt Securities of such series

                                       34

Outstanding have authorized or agreed or consented to such action, and for that
purpose the Debt Securities of such series Outstanding shall be computed as of
such record date.

                                   ARTICLE VI

             Remedies of the Trustee and Holders in Event of Default

     SECTION 6.01. Events of Default. If any one or more of the following shall
have occurred and be continuing with respect to Debt Securities of any series
(each of the following, an "Event of Default"):

          (a) the Issuers Default for a period of 60 days in the payment when
     due of interest on any Debt Securities of that series; or

          (b) the Issuers default in the payment when due of principal of or
     premium, if any, on any Debt Securities of that series at maturity, upon
     redemption or otherwise; or

          (c) default in the payment of any sinking fund payment with respect to
     any Debt Securities of that series as and when the same shall become due
     and payable; or

          (d) failure on the part of the Issuers to comply with Article X; or

          (e) failure by the Issuers for 30 days after notice to comply to duly
     observe or perform any other of the covenants or agreements on the part of
     the Issuers in the Debt Securities of that series in any Board Resolution
     authorizing the issuance of that series of Debt Securities, in the
     Indenture with respect to such series or in any supplemental Indenture with
     respect to such series (other than a covenant a default in the performance
     of which is elsewhere in this Section 6.01 specifically dealt with); or

          (f) pursuant to or within the meaning of Bankruptcy Law, an Issuer
     commences a voluntary case, consents to the entry of an order for relief
     against it in an involuntary case, consents to the appointment of a
     custodian of it or for all or substantially all of its property, makes a
     general assignment for the benefit of its creditors, or generally is not
     paying its debts as they become due; or

          (g) (i) a court of competent jurisdiction enters an order or decree
     under any Bankruptcy Law that is for relief against an Issuer in an
     involuntary case, appoints a custodian of an Issuer, or orders the
     liquidation of an Issuer and (ii) such order or decree remains unstayed and
     in effect for 60 consecutive days; or

          (h) any other Event of Default provided under the terms of the Debt
     Securities of that series;

then and in each and every case that an Event of Default with respect to Debt
Securities of that series at the time outstanding occurs and is continuing,
either the Trustee or the Holders of at least 25% in aggregate principal amount
of the Debt Securities of that series, may declare the principal of (or, if the
Debt Securities of that series are Original Issue Discount Debt Securities,

                                       35

such portion of the principal amount as may be specified in the terms of that
series) and interest on all the Debt Securities of that series to be due and
payable immediately.

     The Holders of a majority in principal amount of the Debt Securities of a
particular series by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
already rendered and if all existing Events of Default have been cured or waived
except nonpayment of principal or interest that has become due solely because of
acceleration. Upon any such rescission, the parties hereto shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the parties hereto shall continue as though no proceeding
had been taken.

     In case the Trustee or any Holder shall have proceeded to enforce any right
under the Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee or such Holder, then and in
every such case the parties hereto shall be restored respectively to their
several positions and rights hereunder, and all rights, remedies and powers of
the parties hereto shall continue as though no such proceeding had been taken.

     The foregoing Events of Default shall constitute Events of Default whatever
the reason for any such Event of Default and whether it is voluntary or
involuntary or is effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body.

     The Issuers shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any event which with the giving of notice and the lapse of time would become an
Event of Default under clause (c), (d), (e), (f), (g) or (h), its status and
what action the Issuers are taking or propose to take with respect thereto.

     SECTION 6.02. Collection of Indebtedness by Trustee, etc. If an Event of
Default occurs and is continuing, the Trustee, in its own name and as trustee of
an express trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and unpaid
or enforce the performance of any provision of the Debt Securities of the
affected series or the Indenture, and may prosecute any such action or
proceedings to judgment or final decree, and may enforce any such judgment or
final decree against the Issuers or any other obligor upon the Debt Securities
of such series (and collect in the manner provided by law out of the property of
the Issuers or any other obligor upon the Debt Securities of such series
wherever situated the moneys adjudged or decreed to be payable).

     In case there shall be pending proceedings for the bankruptcy or for the
reorganization of either of the Issuers or any other obligor upon the Debt
Securities of any series under Title 11 of the United States Code or any other
Federal or State bankruptcy, insolvency or similar law, or in case a receiver,
trustee or other similar official shall have been appointed for its property, or
in case of any other similar judicial proceedings relative to either of the
Issuers or any other obligor upon the Debt Securities of any series, its
creditors or its property, the Trustee, irrespective of whether the principal of
Debt Securities of any series shall then be due and

                                       36

payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand pursuant to the provisions of
this Section 6.02, shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount of principal, premium, if any, and interest (or, if the Debt Securities
of such series are Original Issue Discount Debt Securities, such portion of the
principal amount as may be specified in the terms of such series) owing and
unpaid in respect of the Debt Securities of such series, and to file such other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for reasonable compensation to the Trustee,
its agents, attorneys and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Trustee except as a result
of its negligence or bad faith) and of the Holders thereof allowed in any such
judicial proceedings relative to either of the Issuers, or any other obligor
upon the Debt Securities of such series, its creditors or its property, and to
collect and receive any moneys or other property payable or deliverable on any
such claims, and to distribute all amounts received with respect to the claims
of such Holders and of the Trustee on their behalf, and any receiver, assignee
or trustee in bankruptcy or reorganization is hereby authorized by each of such
Holders to make payments to the Trustee, and, in the event that the Trustee
shall consent to the making of payments directly to such Holders, to pay to the
Trustee such amount as shall be sufficient to cover reasonable compensation to
the Trustee, its agents, attorneys and counsel, and all other reasonable
expenses and liabilities incurred, and all advances made, by the Trustee except
as a result of its negligence or bad faith.

     All rights of action and of asserting claims under the Indenture, or under
any of the Debt Securities, of any series, may be enforced by the Trustee
without the possession of any such Debt Securities or the production thereof in
any trial or other proceedings relative thereto, and any such action or
proceedings instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment (except for any
amounts payable to the Trustee pursuant to Section 7.06) shall be for the
ratable benefit of the Holders of all the Debt Securities in respect of which
such action was taken.

     In case of an Event of Default hereunder the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by the Indenture by such
appropriate judicial proceedings as the Trustee shall deem necessary to protect
and enforce any of such rights, either at law or in equity or in bankruptcy or
otherwise, whether for the specific enforcement of any covenant or agreement
contained in the Indenture or in aid of the exercise of any power granted in the
Indenture, or to enforce any other legal or equitable right vested in the
Trustee by the Indenture or by law.

     SECTION 6.03. Application of Moneys Collected by Trustee. Any moneys or
other property collected by the Trustee pursuant to Section 6.02 with respect to
Debt Securities of any series shall be applied, in the order following, at the
date or dates fixed by the Trustee for the distribution of such moneys or other
property, upon presentation of the several Debt Securities of such series in
respect of which moneys or other property have been collected, and the notation
thereon of the payment, if only partially paid, and upon surrender thereof if
fully paid:

                                       37

          First: To the payment of all money due the Trustee pursuant to Section
     7.06;

          Second: In case the principal of the Outstanding Debt Securities in
     respect of which such moneys have been collected shall not have become due,
     to the payment of interest on the Debt Securities of such series in the
     order of the maturity of the installments of such interest, with interest
     (to the extent that such interest has been collected by the Trustee) upon
     the overdue installments of interest at the rate or Yield to Maturity (in
     the case of Original Issue Discount Debt Securities) specified in the Debt
     Securities of such series, such payments to be made ratably to the Persons
     entitled thereto, without discrimination or preference;

          Third: In case the principal of the Outstanding Debt Securities in
     respect of which such moneys have been collected shall have become due, by
     declaration or otherwise, to the payment of the whole amount then owing and
     unpaid upon the Debt Securities of such series for principal and premium,
     if any, and interest, with interest on the overdue principal and premium,
     if any, and (to the extent that such interest has been collected by the
     Trustee) upon overdue installments of interest at the rate or Yield to
     Maturity (in the case of Original Issue Discount Debt Securities) specified
     in the Debt Securities of such series; and, in case such moneys shall be
     insufficient to pay in full the whole amount so due and unpaid upon the
     Debt Securities of such series, then to the payment of such principal and
     premium, if any, and interest, without preference or priority of principal
     and premium, if any, over interest, or of interest over principal and
     premium, if any, or of any installment of interest over any other
     installment of interest, or of any Debt Security of such series over any
     Debt Security of such series, ratably to the aggregate of such principal
     and premium, if any, and interest; and

          Fourth: The remainder, if any, shall be paid to the Issuers, their
     successors or assigns, or as a court of competent jurisdiction may direct.

     The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.03. At least 15 days before such record date,
the Issuers shall mail to each Holder and the Trustee a notice that states the
record date, the payment date and amount to be paid.

     SECTION 6.04. Limitation on Suits by Holders. No Holder of any Debt
Security of any series shall have any right by virtue or by availing of any
provision of the Indenture to institute any action or proceeding at law or in
equity or in bankruptcy or otherwise, upon or under or with respect to the
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless such Holder previously shall have given to the Trustee
written notice of an Event of Default with respect to Debt Securities of that
same series and of the continuance thereof and unless the Holders of not less
than 25% in aggregate principal amount of the Outstanding Debt Securities of
that series shall have made written request upon the Trustee to institute such
action or proceedings in respect of such Event of Default in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer

                                       38

of indemnity shall have failed to institute any such action or proceedings and
no direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 6.06; it being understood and intended, and being
expressly covenanted by the Holder of every Debt Security with every other
Holder and the Trustee, that no one or more Holders shall have any right in any
manner whatever by virtue or by availing of any provision of the Indenture to
affect, disturb or prejudice the rights of any Holders, or to obtain or seek to
obtain priority over or preference to any other such Holder, or to enforce any
right under the Indenture, except in the manner herein provided and for the
equal, ratable and common benefit of all such Holders. For the protection and
enforcement of the provisions of this Section 6.04, each and every Holder and
the Trustee shall be entitled to such relief as can be given either at law or in
equity.

     Notwithstanding any other provision in the Indenture, however, the right of
any Holder of any Debt Security to receive payment of the principal of, and
premium, if any, and (subject to Section 2.12) interest on, such Debt Security
on or after the respective due dates expressed in such Debt Security, and to
institute suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or effected without the consent of such
Holder.

     SECTION 6.05. Remedies Cumulative; Delay or Omission in Exercise of Rights
Not a Waiver of Default. All powers and remedies given by this Article VI to the
Trustee or to the Holders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any thereof or of any other powers and remedies
available to the Trustee or the Holders, by judicial proceedings or otherwise,
to enforce the performance or observance of the covenants and agreements
contained in the Indenture, and no delay or omission of the Trustee or of any
Holder to exercise any right or power accruing upon any Default occurring and
continuing as aforesaid, shall impair any such right or power, or shall be
construed to be a waiver of any such Default or an acquiescence therein; and,
subject to the provisions of Section 6.04, every power and remedy given by this
Article VI or by law to the Trustee or to the Holders may be exercised from time
to time, and as often as shall be deemed expedient, by the Trustee or by the
Holders.

     SECTION 6.06. Rights of Holders of Majority in Principal Amount of Debt
Securities to Direct Trustee and to Waive Default. The Holders of a majority in
aggregate principal amount of the Debt Securities of any series at the time
Outstanding shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Debt Securities
of such series; provided, however, that such direction shall not be otherwise
than in accordance with law and the provisions of the Indenture, and that
subject to the provisions of Section 7.01, the Trustee shall have the right to
decline to follow any such direction if the Trustee being advised by counsel
shall determine that the action so directed may not lawfully be taken, or if the
Trustee shall by a Responsible Officer or officers determine that the action so
directed would involve it in personal liability or would be prejudicial to
Holders of Debt Securities of such series not taking part in such direction; and
provided further, however, that nothing in the Indenture contained shall impair
the right of the Trustee to take any action deemed proper by the Trustee and
which is not inconsistent with such direction

                                       39

by such Holders. Prior to the acceleration of the maturity of the Debt
Securities of any series, as provided in Section 6.01, the Holders of a majority
in aggregate principal amount of the Debt Securities of that series at the time
Outstanding by notice to the Trustee may on behalf of the Holders of all the
Debt Securities of that series waive any past Default or Event of Default and
its consequences for that series specified in the terms thereof as contemplated
by Section 2.03, except (i) a continuing Default or an Event of Default in the
payment of the principal of, and premium, if any, or interest on, any of the
Debt Securities and (ii) a Default in respect of a provision that under Section
9.02 cannot be amended, supplemented or waived without the consent of each
Holder affected thereby. In case of any such waiver, such Default shall cease to
exist, any Event of Default arising therefrom shall be deemed to have been cured
for every purpose of the Indenture, and the Issuers, the Trustee and the Holders
of the Debt Securities of that series shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other Default or impair any right consequent thereon.

     SECTION 6.07. Trustee to Give Notice of Defaults Known to It, but May
Withhold Such Notice in Certain Circumstances. The Trustee shall, within 90 days
after the occurrence of a Default known to it with respect to a series of Debt
Securities give to the Holders thereof, in the manner provided in Section 12.03,
notice of all Defaults with respect to such series known to the Trustee, unless
such Defaults shall have been cured or waived before the giving of such notice;
provided that, except in the case of Default in the payment of the principal of,
or premium, if any, or interest on, any of the Debt Securities of such series or
in the making of any sinking fund payment with respect to the Debt Securities of
such series, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, an executive committee of the board of directors
or trust committee of Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interests of the Holders
thereof.

     SECTION 6.08. Requirement of an Undertaking To Pay Costs in Certain Suits
under the Indenture or Against the Trustee. All parties to the Indenture agree,
and each Holder of any Debt Security by his acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under the Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit in the manner and to the extent provided in the Trust Indenture Act, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section 6.08 shall not
apply to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than ten percent in
principal amount of the Outstanding Debt Securities of that series or to any
suit instituted by any Holder for the enforcement of the payment of the
principal of, or premium, if any, or interest on, any Debt Security on or after
the due date for such payment expressed in such Debt Security.

                                       40

                                  ARTICLE VII

                             Concerning the Trustee

     SECTION 7.01. Certain Duties and Responsibilities. The Trustee, prior to
the occurrence of an Event of Default and after the curing or waiving of all
Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in the Indenture. In case an
Event of Default has occurred (which has not been cured or waived), the Trustee
shall exercise such of the rights and powers vested in it by the Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his own affairs.

     No provision of the Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act,
or its own willful misconduct, except that:

          (a) this subsection shall not be construed to limit the effect of the
     first paragraph of this Section 7.01;

          (b) prior to the occurrence of an Event of Default with respect to the
     Debt Securities of a series and after the curing or waiving of all Events
     of Default with respect to such series which may have occurred:

               (1) the duties and obligations of the Trustee with respect to
          Debt Securities of any series shall be determined solely by the
          express provisions of the Indenture, and the Trustee shall not be
          liable except for the performance of such duties and obligations with
          respect to such series as are specifically set forth in the Indenture,
          and no implied covenants or obligations with respect to such series
          shall be read into the Indenture against the Trustee; and

               (2) in the absence of bad faith on the part of the Trustee, the
          Trustee may conclusively rely, as to the truth of the statements and
          the correctness of the opinions expressed therein, upon any
          certificates or opinions furnished to the Trustee and conforming to
          the requirements of the Indenture; but in the case of any such
          certificates or opinions which by any provision hereof are
          specifically required to be furnished to the Trustee, the Trustee
          shall be under a duty to examine the same to determine whether or not
          they conform to the requirements of the Indenture;

          (c) the Trustee shall not be liable for an error of judgment made in
     good faith by a Responsible Officer, unless it shall be proved that the
     Trustee was negligent in ascertaining the pertinent facts; and

          (d) the Trustee shall not be liable with respect to any action taken
     or omitted to be taken by it with respect to Debt Securities of any series
     in good faith in accordance with the direction of the Holders of not less
     than a majority in aggregate principal amount of the Outstanding Debt
     Securities of that series relating to the time, method and place of

                                       41

     conducting any proceeding for any remedy available to the Trustee, or
     exercising any trust or power conferred upon the Trustee, under the
     Indenture with respect to Debt Securities of such series.

     None of the provisions of the Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any personal financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.

     Whether or not therein expressly so provided, every provision of the
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.

     SECTION 7.02. Certain Rights of Trustee. Except as otherwise provided in
Section 7.01:

          (a) the Trustee may conclusively rely and shall be fully protected in
     acting or refraining from acting upon any resolution, certificate,
     statement, instrument, opinion, report, notice, request, direction,
     consent, order, bond, debenture, note or other paper or document (whether
     in its original or facsimile form) believed by it to be genuine and to have
     been signed or presented by the proper party or parties;

          (b) any request, direction, order or demand of the Issuers mentioned
     herein shall be sufficiently evidenced by an Issuer Order (unless other
     evidence in respect thereof be herein specifically prescribed); and any
     Board Resolution may be evidenced to the Trustee by a copy thereof
     certified by the Secretary or an Assistant Secretary of each of the
     Managing General Partner and PAA Finance;

          (c) the Trustee may consult with counsel of its own selection, and the
     advice of such counsel or any Opinion of Counsel shall be full and complete
     authorization and protection in respect of any action taken or suffered or
     omitted by it hereunder in good faith and in accordance with such advice or
     Opinion of Counsel;

          (d) the Trustee shall be under no obligation to exercise any of the
     rights or powers vested in it by the Indenture at the request, order or
     direction of any of the Holders of Debt Securities of any series pursuant
     to the provisions of the Indenture, unless such Holders shall have offered
     to the Trustee security or indemnity reasonably satisfactory to it against
     the costs, expenses and liabilities which may be incurred therein or
     thereby;

          (e) the Trustee shall not be liable for any action taken or omitted by
     it in good faith and reasonably believed by it to be authorized or within
     the discretion or rights or powers conferred upon it by the Indenture;

          (f) prior to the occurrence of an Event of Default known to the
     Trustee and after the curing of all Events of Default which may have
     occurred, the Trustee shall not

                                       42

     be bound to make any investigation into the facts or matters stated in any
     resolution, certificate, statement, instrument, opinion, report, notice,
     request, direction, consent, order, approval or other paper or document,
     unless requested in writing to do so by the Holders of a majority in
     aggregate principal amount of the then outstanding Debt Securities of a
     series affected by such matter; provided, however, that if the payment
     within a reasonable time to the Trustee of the costs, expenses or
     liabilities likely to be incurred by it in the making of such investigation
     is not, in the opinion of the Trustee, reasonably assured to the Trustee by
     the security afforded to it by the terms of the Indenture, the Trustee may
     require indemnity reasonably satisfactory to it against such costs,
     expenses or liabilities as a condition to so proceeding; the Trustee shall
     be entitled to examine the books, records and premises of the Issuers
     during ordinary business hours and for any purpose relevant to the
     Indenture, personally or by an agent or attorney at the sole cost of the
     Issuers and shall incur no liability or additional liability of any kind by
     reason of such inquiry or investigation;

          (g) the Trustee may execute any of the trusts or powers hereunder or
     perform any duties hereunder either directly or by or through agents or
     attorneys and the Trustee shall not be responsible for any misconduct or
     negligence on the part of any agent or attorney appointed by it with due
     care hereunder;

          (h) if any property other than cash shall at any time be subject to a
     Lien in favor of the Holders, the Trustee, if and to the extent authorized
     by a receivership or bankruptcy court of competent jurisdiction or by the
     supplemental instrument subjecting such property to such Lien, shall be
     entitled to make advances for the purpose of preserving such property or of
     discharging tax Liens or other prior Liens or encumbrances thereon; and

          (i) the Trustee shall not be deemed to have notice of any Default or
     Event of Default unless a Responsible Officer of the Trustee has actual
     knowledge thereof or unless written notice of any event which is in fact
     such a Default is received by the Trustee at the Corporate Trust Office of
     the Trustee, and such notice references the Debt Securities and the
     Indenture; and

          (j) the rights, privileges, protections, immunities and benefits given
     to the Trustee, including, without limitation, its right to be indemnified,
     are extended to, and shall be enforceable by, the Trustee in each of its
     capacities hereunder, and to each agent, custodian and other Person
     employed by the Trustee to act hereunder.

     SECTION 7.03. Trustee Not Liable for Recitals in Indenture or in Debt
Securities. The recitals contained herein and in the Debt Securities (except the
Trustee's certificate of authentication) shall be taken as the statements of the
Issuers, and the Trustee assumes no responsibility for the correctness of the
same. The Trustee makes no representations as to the validity or sufficiency of
the Indenture or of the Debt Securities of any series, except that the Trustee
represents that it is duly authorized to execute and deliver the Indenture,
authenticate the Debt Securities and perform its obligations hereunder, and that
the statements made by it or to be

                                       43

made by it in a Statement of Eligibility and Qualification on Form T-1 supplied
to the Issuers are true and accurate. The Trustee shall not be accountable for
the use or application by the Issuers of any of the Debt Securities or of the
proceeds thereof.

     SECTION 7.04. Trustee, Paying Agent or Registrar May Own Debt Securities.
The Trustee or any paying agent or Registrar, in its individual or any other
capacity, may become the owner or pledgee of Debt Securities and subject to the
provisions of the Trust Indenture Act relating to conflicts of interest and
preferential claims may otherwise deal with the Issuers with the same rights it
would have if it were not Trustee, paying agent or Registrar; provided, however,
that if the Trustee acquires any such conflicting interest and an Event of
Default or Default has occurred and is continuing, the Trustee must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
as trustee or resign.

     SECTION 7.05. Moneys Received by Trustee to Be Held in Trust. Subject to
the provisions of Section 11.02, all moneys received by the Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received, but need not be segregated from other funds except to the
extent required by law. The Trustee shall be under no liability for interest on
any moneys received by it hereunder. So long as no Event of Default of which the
Trustee has notice shall have occurred and be continuing, all interest allowed
on any such moneys shall be paid from time to time to the Issuers upon an Issuer
Order.

     SECTION 7.06. Compensation and Reimbursement. The Issuers covenant and
agree to pay in Dollars to the Trustee from time to time, and the Trustee shall
be entitled to, reasonable compensation for all services rendered by it
hereunder (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and, except as otherwise
expressly provided herein, the Issuers will pay or reimburse in Dollars the
Trustee upon its request for all expenses, disbursements and advances incurred
or made by the Trustee in accordance with any of the provisions of the Indenture
(including the reasonable compensation and the expenses and disbursements of its
agents, attorneys and counsel and of all Persons not regularly in its employ)
except any such expense, disbursement or advances as may arise from its
negligence or bad faith. The Issuers also covenant to fully indemnify in Dollars
the Trustee and any predecessor Trustee for, and to hold it harmless against,
any and all loss, liability, claim, damage or expense incurred without
negligence or willful misconduct on the part of the Trustee, arising out of or
in connection with the acceptance or administration of this trust or trusts
hereunder, including the costs and expenses of defending itself against any
claim of liability in connection with the exercise or performance of any of its
powers or duties hereunder. The obligations of the Issuers under this Section
7.06 to compensate and indemnify the Trustee and to pay or reimburse the Trustee
for expenses, disbursements and advances shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of the
Indenture. The Issuers and the Holders agree that such additional indebtedness
shall be secured by a Lien prior to that of the Debt Securities upon all
property and funds held or collected by the Trustee, as such, except funds held
in trust for the payment of principal of, and premium, if any, or interest on,
particular Debt Securities.

                                       44

     When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any bankruptcy, insolvency, reorganization or other similar
law.

     SECTION 7.07. Right of Trustee to Rely on an Officers' Certificate Where No
Other Evidence Specifically Prescribed. Except as otherwise provided in Section
7.01, whenever in the administration of the provisions of the Indenture the
Trustee shall deem it necessary or desirable that a matter be proved or
established prior to taking or suffering or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or bad faith on the part of the
Trustee, be deemed to be conclusively proved and established by an Officers'
Certificate delivered to the Trustee and such certificate, in the absence of
negligence or bad faith on the part of the Trustee, shall be full warrant to the
Trustee for any action taken, suffered or omitted by it under the provisions of
the Indenture upon the faith thereof.

     SECTION 7.08. Separate Trustee; Replacement of Trustee. The Issuers may,
but need not, appoint a separate Trustee for any one or more series of Debt
Securities. The Trustee may resign with respect to one or more or all series of
Debt Securities at any time by giving notice to the Issuers. The Holders of a
majority in principal amount of the Debt Securities of a particular series may
remove the Trustee for such series and only such series by so notifying the
Trustee and may appoint a successor Trustee. The Issuers shall remove the
Trustee if:

          (1) the Trustee fails to comply with Section 7.10;

          (2) the Trustee is adjudged bankrupt or insolvent;

          (3) a receiver or other public officer takes charge of the Trustee or
     its property; or

          (4) the Trustee otherwise becomes incapable of acting.

     If the Trustee resigns, is removed by the Issuers or by the Holders of a
majority in principal amount of the Debt Securities of a particular series and
such Holders do not reasonably promptly appoint a successor Trustee, or if a
vacancy exists in the office of Trustee for any reason (the Trustee in such
event being referred to herein as the retiring Trustee), the Issuers shall
promptly appoint a successor Trustee. No resignation or removal of the Trustee
and no appointment of a successor Trustee shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of this Section 7.08.

     A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Issuers. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under the Indenture. The
successor Trustee shall mail a notice of its succession to

                                       45

Holders of Debt Securities of each applicable series. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor Trustee,
subject to the Lien provided for in Section 7.06.

     If a successor Trustee does not take office within 60 days after the
retiring Trustee gives notice of resignation or is removed, the retiring Trustee
or the Holders of 25% in principal amount of the Debt Securities of any
applicable series may petition any court of competent jurisdiction for the
appointment of a successor Trustee for the Debt Securities of such series.

     If the Trustee fails to comply with Section 7.10, any Holder of Debt
Securities of any applicable series may petition at the expense of the Issuers
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee for the Debt Securities of such series.

     Notwithstanding the replacement of the Trustee pursuant to this Section
7.08, the Issuers' obligations under Section 7.06 shall continue for the benefit
of the retiring Trustee.

     In the case of the appointment hereunder of a separate or successor Trustee
with respect to the Debt Securities of one or more series, the Issuers, any
retiring Trustee and each successor or separate Trustee with respect to the Debt
Securities of any applicable series shall execute and deliver an Indenture
supplemental hereto (1) which shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and duties
of any retiring Trustee with respect to the Debt Securities of any series as to
which any such retiring Trustee is not retiring shall continue to be vested in
such retiring Trustee and (2) that shall add to or change any of the provisions
of the Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one trustee, it being
understood that nothing herein or in such supplemental Indenture shall
constitute such Trustees co-trustees of the same trust and that each such
separate, retiring or successor Trustee shall be Trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee.

     SECTION 7.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all of its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking
association shall be the successor Trustee hereunder, provided that such Person
shall be otherwise qualified under Section 310(b) of the Trust Indenture Act and
eligible under this Article VII, without the execution or filing of any paper or
any further act on the part of any of the parties hereto. As soon as
practicable, the successor Trustee shall mail a notice of its succession to the
Issuers and the Holders of the Debt Securities then Outstanding.

     In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by the
Indenture any of the Debt Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Debt Securities so
authenticated; and in case at that time any of the Debt Securities shall not
have been

                                       46

authenticated, any successor to the Trustee may authenticate such Debt
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Debt Securities or in the Indenture
provided that the certificate of the Trustee shall have.

     SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all times
satisfy the requirements of Section 310(a) of the Trust Indenture Act. The
Trustee shall have a combined capital and surplus of at least $50,000,000, as
set forth in its most recently published annual report of condition. No obligor
upon the Debt Securities of a particular series or Person directly or indirectly
controlling, controlled by or under common control with such obligor shall serve
as Trustee upon the Debt Securities of such series. The Trustee shall comply
with Section 310(b) of the Trust Indenture Act; provided, however, that there
shall be excluded from the operation of Section 310(b)(1) of the Trust Indenture
Act the Indenture or any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Issuers are
outstanding if the requirements for such exclusion set forth in Section
310(b)(1) of the Trust Indenture Act are met.

     SECTION 7.11. Preferential Collection of Claims Against Issuers. The
Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding
any creditor relationship listed in Section 311(b) of the Trust Indenture Act. A
Trustee who had resigned or been removed shall be subject to Section 311(a) of
the Trust Indenture Act to the extent indicated therein.

     SECTION 7.12. Compliance with Tax Laws. The Trustee hereby agrees to comply
with all U.S. Federal income tax information reporting and withholding
requirements applicable to it with respect to payments of principal, premium (if
any) and interest on the Debt Securities, whether acting as Trustee, Security
Registrar, paying agent or otherwise with respect to the Debt Securities.

                                  ARTICLE VIII

                             Concerning the Holders

     SECTION 8.01. Evidence of Action by Holders. Whenever in the Indenture it
is provided that the Holders of a specified percentage in aggregate principal
amount of the Debt Securities of any or all series may take action (including
the making of any demand or request, the giving of any direction, notice,
consent or waiver or the taking of any other action) the fact that at the time
of taking any such action the Holders of such specified percentage have joined
therein may be evidenced (a) by any instrument or any number of instruments of
similar tenor executed by Holders in person or by agent or proxy appointed in
writing, (b) by the record of the Holders voting in favor thereof at any meeting
of Holders duly called and held in accordance with the provisions of Section
5.02, (c) by a combination of such instrument or instruments and any such record
of such a meeting of Holders or (d) in the case of

                                       47

Debt Securities evidenced by a Global Security, by any electronic transmission
or other message, whether or not in written format, that complies with the
Depositary's applicable procedures.

     SECTION 8.02. Proof of Execution of Instruments and of Holding of Debt
Securities. Subject to the provisions of Sections 7.01, 7.02 and 12.09, proof of
the execution of any instrument by a Holder or his agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall be satisfactory to
the Trustee.

     The ownership of Registered Securities of any series shall be proved by the
Debt Security Register or by a certificate of the Registrar for such series.

     The Trustee may require such additional proof of any matter referred to in
this Section 8.02 as it shall deem necessary.

     SECTION 8.03. Who May Be Deemed Owner of Debt Securities. Prior to due
presentment for registration of transfer of any Registered Security, the
Issuers, the Trustee, any paying agent and any Registrar may deem and treat the
Person in whose name any Registered Security shall be registered upon the books
of the Issuers as the absolute owner of such Registered Security (whether or not
such Registered Security shall be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal of and premium, if any, and (subject to Section
2.12) interest on such Registered Security and for all other purposes, and
neither the Issuers nor the Trustee nor any paying agent nor any Registrar shall
be affected by any notice to the contrary; and all such payments so made to any
such Holder for the time being, or upon his order, shall be valid and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Registered Security.

     SECTION 8.04. Instruments Executed by Holders Bind Future Holders. At any
time prior to (but not after) the evidencing to the Trustee, as provided in
Section 8.01, of the taking of any action by the Holders of the percentage in
aggregate principal amount of the Debt Securities of any series specified in the
Indenture in connection with such action and subject to the following paragraph,
any Holder of a Debt Security which is shown by the evidence to be included in
the Debt Securities the Holders of which have consented to such action may, by
filing written notice with the Trustee at its Corporate Trust Office of the
Trustee and upon proof of holding as provided in Section 8.02, revoke such
action so far as concerns such Debt Security. Except as aforesaid any such
action taken by the Holder of any Debt Security shall be conclusive and binding
upon such Holder and upon all future Holders and owners of such Debt Security
and of any Debt Security issued upon transfer thereof or in exchange or
substitution therefor, irrespective of whether or not any notation in regard
thereto is made upon such Debt Security or such other Debt Securities. Any
action taken by the Holders of the percentage in aggregate principal amount of
the Debt Securities of any series specified in the Indenture in connection with
such action shall be conclusively binding upon the Issuers, the Trustee and the
Holders of all the Debt Securities of such series.

                                       48

     The Issuers may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders of Registered Securities entitled to give
their consent or take any other action required or permitted to be taken
pursuant to the Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders of Registered
Securities at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders of Registered Securities after such record date. No such
consent shall be valid or effective for more than 120 days after such record
date unless the written consent of the Holders of the percentage in aggregate
principal amount of the Debt Securities of such series specified in the
Indenture shall have been received within such 120-day period.

                                   ARTICLE IX

                        Amendment, Supplement and Waiver

     SECTION 9.01. Without Consent of Holders of Debt Securities. The Issuers
and the Trustee may from time to time and at any time, without the consent of
Holders, enter into an Indenture or Indentures supplemental hereto (which shall
conform to the provisions of the Trust Indenture Act as in force at the date of
the execution thereof) for one or more of the following purposes:

          (a) to cure any ambiguity, defect or inconsistency contained herein,
     in any supplemental Indenture or in the Debt Securities of such series;

          (b) to provide for uncertificated Debt Securities in addition to or in
     place of certificated Debt Securities; provided, however, that the
     uncertificated Debt Securities are issued in registered form for purposes
     of Section 163(f) of the Code, or in a manner such that the uncertificated
     Debt Securities are described in Section 163(f)(2)(B) of the Code;

          (c) to provide for the assumption of an Issuer's obligations to
     Holders pursuant to Article X;

          (d) to add guarantors with respect to the Debt Securities as parties
     to the Indenture or to release guarantors in accordance with the provisions
     of any supplemental Indenture;

          (e) to make any changes that would provide any additional rights or
     benefits to the Holders of the Debt Securities or that do not, taken as a
     whole, adversely affect the legal rights hereunder of any Holder;

          (f) to comply with the requirements of the Commission to permit the
     qualification of the Indenture or any Indenture supplemental hereto under
     the Trust Indenture Act as then in effect, except that nothing herein
     contained shall permit or authorize the inclusion in any Indenture
     supplemental hereto of the provisions referred to in Section 316(a)(2) of
     the Trust Indenture Act;

                                       49

          (g) to evidence or provide for the acceptance of appointment hereunder
     by a successor or separate Trustee with respect to the Debt Securities of
     one or more series and to add to or change any of the provisions of the
     Indenture as shall be necessary to provide for or facilitate the
     administration of the trusts hereunder by more than one Trustee;

          (h) to add any additional Events of Default;

          (i) to secure the Debt Securities and/or any guarantee with respect to
     any Debt Securities; and

          (j) to establish the form or terms of the Debt Securities in
     accordance with Section 2.01 or 2.03.

     The Trustee is hereby authorized to join with the Issuers and any
guarantors with respect to any Debt Securities in the execution of any such
supplemental Indenture, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Trustee shall not be obligated to enter into any such supplemental Indenture
which affects the Trustee's own rights, duties or immunities under the Indenture
or otherwise.

     Any supplemental Indenture authorized by the provisions of this Section
9.01 may be executed by the Issuers, any guarantors with respect to any debt
Securities and the Trustee without the consent of the Holders of any of the Debt
Securities at the time outstanding, notwithstanding any of the provisions of
Section 9.02.

     After an amendment under this Section 9.01 becomes effective, the Issuers
shall mail to Holders of Debt Securities of each series affected thereby a
notice briefly describing such amendment. The failure to give such notice to all
such Holders, or any defect therein, shall not impair or affect the validity of
an amendment under this Section 9.01.

     SECTION 9.02. With Consent of Holders of Debt Securities. Without notice to
any Holder but with the consent (evidenced as provided in Section 8.01) of the
Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of each series affected by such supplemental Indenture, (a) the
Issuers, when authorized by Board Resolutions, any guarantors with respect to
any Debt Securities and the Trustee may from time to time and at any time enter
into an Indenture or Indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as in force at the date of execution
thereof) for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the Indenture or of any supplemental
Indenture or of modifying in any manner the rights of the Holders of the Debt
Securities of such series, and (b) subject to Sections 6.04 and 6.06, any
existing Default or Event of Default or compliance with any provision of the
Indenture or the Debt Securities of such series may be waived; provided, that no
such supplemental Indenture or waiver, without the consent of the Holders of
each Debt Security so affected, shall (i) reduce the percentage in principal
amount of Debt Securities of any series whose Holders must consent to an
amendment, supplement or waiver; (ii) reduce the principal of or change the
Stated Maturity of any Debt Security; (iii) reduce or waive the premium payable
upon the

                                       50

redemption of any Debt Security or alter or waive any provisions by which any
Debt Security may or shall be redeemed in accordance with Article III (other
than provisions requiring the repurchase of the Debt Securities of such series
if so permitted by the Board Resolutions or supplemental Indenture establishing
the terms of such series); (iv) reduce the rate of or change the time for
payment of interest on any Debt Security; (v) waive a Default or an Event of
Default in the payment of principal of, or premium, if any, or interest on a
Debt Security except for a rescission of an acceleration of such Debt Securities
by the Holders of at least a majority in aggregate principal amount of such Debt
Securities and a waiver of the payment default that resulted from such
acceleration; (vi) release any security that may have been granted in respect of
the Debt Securities; (vii) make any Debt Security payable in Currency other than
that stated in the Debt Security; (viii) make any change in the provisions of
the Indenture relating to waivers of past Defaults or the rights of Holders to
receive payments of principal of or premium, if any, or interest on the Debt
Securities; (ix) waive a redemption payment with respect to any Debt Security
(other than a payment required by a covenant requiring the repurchase of the
Debt Securities of such series if so permitted by the Board Resolutions or
supplemental Indenture establishing the terms of such Series); (x) except as
otherwise permitted under the Indenture, with respect to Debt Securities that
are guaranteed, release any guarantor from its obligations under the Indenture
or under its guarantee or change any guarantee in any manner that would
adversely affect the rights of Holders of such Debt Securities; or (xi) make any
change in Section 6.06 or this Section 9.02.

     A supplemental Indenture which changes or eliminates any covenant or other
provision of the Indenture which has been expressly included solely for the
benefit of one or more particular series of Debt Securities or which modifies
the rights of the Holders of Debt Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under the
Indenture of the Holders of Debt Securities of any other series.

     Upon the request of the Issuers, accompanied by copies of Board Resolutions
authorizing the execution of any such supplemental Indenture, and upon the
filing with the Trustee of evidence of the consent of Holders as aforesaid, the
Trustee shall join with the Issuers in the execution of such supplemental
Indenture unless such supplemental Indenture affects the Trustee's own rights,
duties or immunities under the Indenture or otherwise, in which case the Trustee
may in its discretion but shall not be obligated to enter into such supplemental
Indenture.

     It shall not be necessary for the consent of the Holders under this Section
9.02 to approve the particular form of any proposed supplemental Indenture, but
it shall be sufficient if such consent shall approve the substance thereof.

     After an amendment or waiver under this Section 9.02 becomes effective, the
Issuers shall mail to Holders of Debt Securities of each series affected thereby
a notice briefly describing such amendment or waiver. The failure to give such
notice to all such Holders, or any defect therein, shall not impair or affect
the validity of an amendment or waiver under this Section 9.02.

     SECTION 9.03. Effect of Supplemental Indentures.

                                       51

Upon the execution of any supplemental Indenture pursuant to the provisions of
this Article IX, the Indenture shall be and be deemed to be modified and amended
in accordance therewith and the respective rights, limitations of rights,
obligations, duties and immunities under the Indenture of the Trustee, the
Issuers and the Holders shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental Indenture shall be and be
deemed to be part of the terms and conditions of the Indenture for any and all
purposes.

     The Trustee, subject to the provisions of Sections 7.01 and 7.02, may
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such supplemental Indenture complies with the provisions of
this Article IX.

     SECTION 9.04. Debt Securities May Bear Notation of Changes by Supplemental
Indentures. Debt Securities of any series authenticated and delivered after the
execution of any supplemental Indenture pursuant to the provisions of this
Article IX may, and shall if required by the Trustee, bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental
Indenture. New Debt Securities of any series so modified as to conform, in the
opinion of the Trustee and the Board of Directors of the Managing General
Partner and PAA Finance, to any modification of the Indenture contained in any
such supplemental Indenture may be prepared and executed by the Issuers,
authenticated by the Trustee and delivered in exchange for the Debt Securities
of such series then outstanding. Failure to make the appropriate notation or to
issue a new Debt Security of such series shall not affect the validity of such
amendment.

                                   ARTICLE X

                    Consolidation, Merger, Sale or Conveyance

     SECTION 10.01. Consolidations and Mergers of the Issuers. Neither of the
Issuers may, directly or indirectly: (1) consolidate or merge with or into
another Person (whether or not such Issuer is the survivor); or (2) sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets, in one or more related transactions, to another
Person; unless:

          (1) either (a) such Issuer is the surviving entity of such
     transaction; or (b) the Person formed by or surviving any such
     consolidation or merger (if other than such Issuer) or to which such sale,
     assignment, transfer, lease, conveyance or other disposition shall have
     been made (the "Successor Company") is an entity organized or existing
     under the laws of the United States, any state thereof or the District of
     Columbia, provided that PAA Finance may not consolidate or merge with or
     into any entity other than a corporation satisfying such requirement for so
     long as the Partnership is not a corporation;

          (2) the Successor Company assumes all the obligations of such Issuer
     under the notes and the Indenture pursuant to agreements reasonably
     satisfactory to the Trustee;

                                       52

          (3) immediately after such transaction no Default or Event of Default
     exists; and

          (4) such Issuer has delivered to the Trustee an Officers' Certificate
     and an Opinion of Counsel, each stating that such consolidation, merger or
     transfer and, if a supplemental Indenture is required, such supplemental
     Indenture complies with the Indenture and all conditions precedent therein
     relating to such transaction have been satisfied.

     SECTION 10.02. Rights and Duties of Successor Company. In case of any
consolidation, merger, or disposition by or involving an Issuer in accordance
with Section 10.01, the Successor Company shall succeed to and be substituted
for such Issuer, with the same effect as if it had been named herein as the
party of the first part, and the Issuer shall be relieved of any further
obligation under the Indenture and the Debt Securities. The Successor Company
thereupon may cause to be signed, and may issue either in its own name or in the
name of such Issuer, any or all the Debt Securities issuable hereunder which
theretofore shall not have been signed by such Issuer and delivered to the
Trustee; and, upon the order of the Successor Company, instead of such Issuer,
and subject to all the terms, conditions and limitations in the Indenture
prescribed, the Trustee shall authenticate and shall deliver any Debt Securities
which previously shall have been signed and delivered by the officers of such
Issuer or its Managing General Partner, as the case may be, to the Trustee for
authentication, and any Debt Securities which the Successor Company thereafter
shall cause to be signed and delivered to the Trustee for that purpose. All the
Debt Securities so issued shall in all respects have the same legal rank and
benefit under the Indenture as the Debt Securities theretofore or thereafter
issued in accordance with the terms of the Indenture as though all such Debt
Securities had been issued at the date of the execution hereof.

     In case of any such consolidation, merger or disposition, such changes in
phraseology and form (but not in substance) may be made in the Debt Securities
appertaining thereto thereafter to be issued as may be appropriate.

                                   ARTICLE XI

                    Satisfaction and Discharge of Indenture;
                                Unclaimed Moneys

     SECTION 11.01. Satisfaction and Discharge; Application of Trust Money. The
Indenture shall upon the request of the Issuers cease to be of further effect
with respect to all Outstanding Debt Securities of any series (except as to (i)
surviving rights of registration of transfer or exchange of Debt Securities of
such series herein expressly provided for, (ii) the Issuers' obligations under
Section 7.06, and (iii) the Trustee's and each paying agent's obligations under
the last paragraph of this Section 11.01 and Section 11.02) and the Trustee, on
demand and at the expense of the Issuers, shall execute proper instruments
acknowledging satisfaction and discharge of the Indenture with respect to such
series, when:

          (a) either:

                                       53

               (i) all outstanding Debt Securities of such series therefore
          authenticated and delivered (other than (A) Debt Securities which have
          been destroyed, lost or stolen and which have been replaced or paid as
          provided in Section 2.09 and (B) Debt Securities for whose payment
          money has been deposited in trust with the Trustee or any paying agent
          and thereafter repaid to either Issuer or discharged from such trust)
          have been delivered to the Trustee for cancellation; or

               (ii) all outstanding Debt Securities of such series not
          theretofore delivered to the Trustee for cancellation

                    (A) have become due and payable by reason of the giving of a
               notice of redemption or otherwise;

                    (B) shall become due and payable at their Stated Maturity
               within one year; or

                    (C) are to be called for redemption within one year under
               arrangements satisfactory to the Trustee for the giving of notice
               of redemption by the Trustee in the name, and at the expense, of
               the Issuers,

               and the Issuers, in the case of clause (A), (B) or (C) above,
               have irrevocably deposited or caused to be irrevocably deposited
               with the Trustee as trust funds in trust for such purpose cash in
               Dollars or U.S. Government Obligations, or a combination thereof,
               in an amount sufficient (without consideration of any
               reinvestment of interest and as certified by an independent
               public accountant designated by the Partnership expressed in a
               written certification thereof delivered to the Trustee) to pay
               and discharge the entire indebtedness of such Debt Securities not
               theretofore delivered to the Trustee for cancellation, for
               principal (and premium, if any) and accrued and unpaid interest
               to the date of such deposit (in the case of Debt Securities which
               have become due and payable) or the Stated Maturity or redemption
               date, as the case may be;

          (b) the Issuers have paid or caused to be paid all other sums then due
     and payable hereunder by them under the Indenture; and

          (c) the Issuers have delivered to the Trustee an Officers' Certificate
     and an Opinion of Counsel, each stating that all conditions precedent
     herein provided for relating to the satisfaction and discharge of the
     Indenture have been complied with.

In order to have money available on a payment date to pay principal (and
premium, if any, on) and interest on the Debt Securities, the U.S. Government
Obligations shall be payable as to principal (and premium, if any) or interest
at least one Business Day before such payment date in such amounts as shall
provide the necessary money.

     The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to this Article XI. It shall apply the deposited
money and the money from U.S. Government Obligations through any paying agent
and in accordance with the Indenture to the payment of principal of, and
premium, if any, and interest on, the Debt Securities of the defeased

                                       54

series. Prior to the maturity of such series, the Trustee may, at the written
direction of the Issuers, invest such money in U.S. Government Obligations.

     SECTION 11.02. Repayment to Issuers. The Trustee and any paying agent shall
promptly turn over to the Issuers upon request any excess money or securities
held by them at any time.

     Subject to any applicable abandoned property law, the Trustee and any
paying agent shall pay to the Issuers upon request any money held by them for
the payment of principal, premium or interest that remains unclaimed for two
years, and, thereafter, Holders entitled to such money must look to the Issuers
for payment as general creditors.

     SECTION 11.03. Indemnity for U.S. Government Obligations. The Issuers shall
pay and shall indemnify the Trustee and the Holders against any tax, fee or
other charge imposed on or assessed against deposited U.S. Government
Obligations or the principal and interest received on such U.S. Government
Obligations.

     SECTION 11.04. Reinstatement. If the Trustee or any paying agent is unable
to apply any money or U.S. Government Obligations in accordance with this
Article XI by reason of any legal proceeding or by reason of any order or
judgment of any court or government authority enjoining, restraining or
otherwise prohibiting such application, the Issuers' obligations under the
Indenture and the Debt Securities of the defeased series shall be revived and
reinstated as though no deposit had occurred pursuant to this Article XI until
such time as the Trustee or any paying agent is permitted to apply all such
money or U.S. Government Obligations in accordance with this Article XI.

                                  ARTICLE XII

                            Miscellaneous Provisions

     SECTION 12.01. Successors and Assigns of Issuers Bound by Indenture. All
the covenants, stipulations, promises and agreements contained in the Indenture
by or on behalf of the Issuers or the Trustee shall bind their respective
successors and assigns, whether so expressed or not.

     SECTION 12.02. Acts of Board, Committee or Officer of Successor Company
Valid. Any act or proceeding by any provision of the Indenture authorized or
required to be done or performed by any Board of Directors, committee thereof or
officer of the Managing General Partner or PAA Finance, as applicable, shall and
may be done and performed with like force and effect by the like Board of
Directors, committee thereof or officer of any Successor Company.

     SECTION 12.03. Required Notices or Demands.

                                       55

Except as otherwise expressly provided in the Indenture, any notice or demand
which by any provision of the Indenture is required or permitted to be given or
served by the Trustee or by the Holders to or on the Issuers shall be in writing
in the English language and may be given or served by being deposited postage
prepaid in a post office letter box in the United States addressed (until
another address is filed by the Issuers with the Trustee) as follows: Plains All
American Pipeline, L.P., 333 Clay Street, Suite 2900, Houston, Texas 77002,
Attention: General Counsel. Except as otherwise expressly provided in the
Indenture, any notice, direction, request or demand by the Issuers or by any
Holder to or upon the Trustee shall be in writing in the English language and
may be given or made, for all purposes, by being deposited, postage prepaid, in
a post office letter box in the United States addressed to the Corporate Trust
Office of the Trustee initially at 58478 San Felipe, Suite 1050, Houston, Texas,
77057, Attention: Corporate Trust Group. The Issuers or the Trustee by notice to
the other may designate additional or different addresses for subsequent notices
or communications.

     Any notice required or permitted to a Registered Holder by the Issuers or
the Trustee pursuant to the provisions of the Indenture shall be in writing in
the English language and shall be deemed to be properly mailed by being
deposited postage prepaid in a post office letter box in the United States
addressed to such Holder at the address of such Holder as shown on the Debt
Security Register. Any report pursuant to Section 313 of the Trust Indenture Act
shall be transmitted in compliance with subsection (c) therein.

     In the event of suspension of regular mail service or by reason of any
other cause it shall be impracticable to give notice by mail, then such
notification as shall be given with the approval of the Trustee shall constitute
sufficient notice for every purpose thereunder.

     Failure to mail a notice or communication to a Holder or any defect in it
or any defect in any notice by publication as to a Holder shall not affect the
sufficiency of such notice with respect to other Holders. If a notice or
communication is mailed or published in the manner provided above, it is
conclusively presumed duly given.

     SECTION 12.04. Indenture and Debt Securities to Be Construed in Accordance
with the Laws of the State of New York. The Indenture and each Debt Security
shall be deemed to be New York contracts, and for all purposes shall be
construed in accordance with the laws of said State.

     SECTION 12.05. Officers' Certificate and Opinion of Counsel to Be Furnished
upon Application or Demand by the Issuers. Upon any application or demand by the
Issuers to the Trustee to take any action under any of the provisions of the
Indenture, the Issuers shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent provided for in the Indenture relating to
the proposed action have been complied with and an Opinion of Counsel stating
that, in the opinion of such counsel, all such conditions precedent have been
complied with, except that in the case of any such application or demand as to
which the furnishing of such document is specifically required by any provision
of the Indenture relating to such particular application or demand, no
additional certificate or opinion need be furnished.

                                       56

     Each certificate or opinion provided for in the Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided for
in the Indenture shall include (1) a statement that the Person making such
certificate or opinion has read such covenant or condition, (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based, (3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with and (4) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.

     SECTION 12.06. Payments Due on Legal Holidays. In any case where the date
of maturity of interest on or principal of and premium, if any, on the Debt
Securities of a series or the date fixed for redemption or repayment of any Debt
Security or the making of any sinking fund payment shall not be a business day
at any Place of Payment for the Debt Securities of such series, then payment of
interest or principal and premium, if any, or the making of such sinking fund
payment need not be made on such date at such Place of Payment, but may be made
on the next succeeding business day at such Place of Payment with the same force
and effect as if made on the date of maturity or the date fixed for redemption,
and no interest shall accrue for the period after such date. If a record date is
not a business day, the record date shall not be affected.

     SECTION 12.07. Provisions Required by Trust Indenture Act to Control. If
and to the extent that any provision of the Indenture limits, qualifies or
conflicts with another provision included in the Indenture which is required to
be included in the Indenture by any of Sections 310 to 318, inclusive, of the
Trust Indenture Act, such required provision shall control.

     SECTION 12.08. Computation of Interest on Debt Securities. Interest, if
any, on the Debt Securities shall be computed on the basis of a 360-day year of
twelve 30-day months, except as may otherwise be provided pursuant to Section
2.03.

     SECTION 12.09. Rules by Trustee, Paying Agent and Registrar. The Trustee
may make reasonable rules for action by or a meeting of Holders. The Registrar
and any paying agent may make reasonable rules for their functions.

     SECTION 12.10. No Recourse Against Others. No past, present or future
director, officer, partner, employee, incorporator, manager, stockholder,
unitholder or member of the Issuers, the General Partner, the Managing General
Partner or any other obligor on the Debt Securities of any series, as such,
shall have any liability for any obligations of the Issuers or such other
obligors under the Debt Securities, the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Debt Security waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Debt Securities.

                                       57

     SECTION 12.11. Severability. In case any provision in the Indenture or the
Debt Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

     SECTION 12.12. Effect of Headings. The article and section headings herein
and in the Table of Contents are for convenience only and shall not affect the
construction hereof.

     SECTION 12.13. Indenture May Be Executed in Counterparts. The Indenture may
be executed in any number of counterparts, each of which shall be an original,
but such counterparts shall together constitute but one and the same instrument.

     The Trustee hereby accepts the trusts in the Indenture upon the terms and
conditions herein set forth.

                                       58

     IN WITNESS WHEREOF, the parties hereto have caused the Indenture to be duly
signed as of the date first written above.

                               ISSUERS:

                               PLAINS ALL AMERICAN PIPELINE, L.P.

                               By:    PLAINS AAP, L.P., its General Partner

                               By:    PLAINS ALL AMERICAN GP LLC,
                                      its General Partner

                                      By:        /s/  Phillip D. Kramer
                                          ------------------------------------
                                           Name:  Phillip D. Kramer
                                           Title: Executive Vice President and
                                                  Chief Financial Officer

                               PAA FINANCE CORP.

                               By:         /s/ Phillip D. Kramer
                                      ----------------------------------------
                                      Name:  Phillip D. Kramer
                                      Title: Executive Vice President and Chief
                                             Financial Officer

                               TRUSTEE:

                               WACHOVIA BANK, NATIONAL ASSOCIATION,
                               as Trustee

                               By:         /s/ Kevin M. Doprava
                                      ----------------------------------------
                                      Name:  Kevin M. Doprava
                                      Title: Vice President

                                       59

                                                                     EXHIBIT 4.2

                       PLAINS ALL AMERICAN PIPELINE, L.P.
                                PAA FINANCE CORP.
                                   as Issuers

                                       and

                     THE SUBSIDIARY GUARANTORS NAMED HEREIN

                                  as Guarantors

                                  $200,000,000

                              SERIES A AND SERIES B

                          7 3/4% SENIOR NOTES DUE 2012

                                      FIRST

                                  SUPPLEMENTAL

                                    INDENTURE

                         Dated as of September 25, 2002

                       WACHOVIA BANK, NATIONAL ASSOCIATION

                                   as Trustee

                                TABLE OF CONTENTS

ARTICLE I                                                                      1
  Section 1.01.     Establishment                                              1

ARTICLE II DEFINITIONS AND INCORPORATION BY REFERENCE                          2
  Section 2.01.     Definitions                                                2
  Section 2.02.     Other Definitions                                         23

ARTICLE III THE NOTES                                                         24
  Section 3.01.     Form                                                      24
  Section 3.02.     Issuance of Additional Notes                              24
  Section 3.03.     Transfer of Transfer Restricted Securities                24
  Section 3.04.     Restrictive Legends                                       26

ARTICLE IV REDEMPTION AND PREPAYMENT                                          27
  Section 4.01.     Optional Redemption                                       27
  Section 4.02.     Mandatory Redemption                                      28
  Section 4.03.     Offer to Purchase by Application of Excess Proceeds       28

ARTICLE V COVENANTS                                                           30
  Section 5.01.     Compliance Certificate                                    30
  Section 5.02.     Restricted Payments                                       30
  Section 5.03.     Incurrence of Indebtedness and Issuance of Disqualified
                    Equity                                                    34
  Section 5.04.     Sale and Lease-Back Transactions                          36
  Section 5.05.     Asset Sales                                               36
  Section 5.06.     Liens                                                     38
  Section 5.07.     Dividend and Other Payment Restrictions Affecting
                    Subsidiaries                                              38
  Section 5.08.     Transactions with Affiliates                              39
  Section 5.09.     Offer to Repurchase Upon Change of Control                41
  Section 5.10.     Additional Subsidiary Guarantees                          42
  Section 5.11.     Designation of Restricted and Unrestricted Subsidiaries   43
  Section 5.12.     Business Activities                                       43
  Section 5.13.     Restrictions on Nature of Indebtedness and Activities
                    of PAA Finance                                            43
  Section 5.14.     Payments for Consent                                      43
  Section 5.15.     Covenant Termination                                      43

ARTICLE VI SUCCESSORS                                                         44
  Section 6.01.     Merger, Consolidation, or Sale of Assets by Issuers       44
  Section 6.02.     Merger or Consolidation of Subsidiary Guarantors          45
  Section 6.03.     Successor Corporation Substituted                         45
  Section 6.04.     Supplemental Indenture                                    45

ARTICLE VII DEFAULTS AND REMEDIES                                             46
  Section 7.01.     Events of Default                                         46

ARTICLE VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE                         48
  Section 8.01.     Option to Effect Legal Defeasance or Covenant Defeasance  48

                                       i

  Section 8.02.     Legal Defeasance and Discharge                            48
  Section 8.03.     Covenant Defeasance                                       48
  Section 8.04.     Conditions to Legal or Covenant Defeasance                49
  Section 8.05.     Deposited Money and U.S. Government Obligations to be
                    Held in Trust; Other Miscellaneous Provisions             50
  Section 8.06.     Repayment to Issuers                                      50
  Section 8.07.     Reinstatement                                             51

ARTICLE IX SUBSIDIARY GUARANTEES                                              51
  Section 9.01.     Subsidiary Guarantees                                     51
  Section 9.02.     Limitation on Liability                                   53
  Section 9.03.     Successors and Assigns                                    53
  Section 9.04.     No Waiver                                                 53
  Section 9.05.     Modification                                              53
  Section 9.06.     Execution of Supplemental Indenture for Future
                    Subsidiary Guarantors                                     53
  Section 9.07.     Release of Guarantee                                      54

ARTICLE X MISCELLANEOUS                                                       54

SCHEDULE A:       Investments Required to Be Made as of the Issue Date
EXHIBIT A:        Form of Note
EXHIBIT B:        Form of Supplemental Indenture
EXHIBIT C:        Certificate to be Delivered Upon Exchange or Registration of
                  Transfer of Securities Pursuant to Rule 144A or Rule 501
EXHIBIT D:        Transferee Letter of Representations
EXHIBIT E:        Certificate to be Delivered Upon Exchange or Registration of
                  Transfer of Securities Pursuant to Regulation S

                                       ii

     FIRST SUPPLEMENTAL INDENTURE dated as of September 25, 2002 (this
"Supplemental Indenture") among PLAINS ALL AMERICAN PIPELINE, L.P., a Delaware
limited partnership (the "Partnership"), PAA FINANCE CORP., a wholly owned
subsidiary of the Partnership and a Delaware corporation ("PAA Finance" and,
together with the Partnership, the "Issuers"), and the subsidiary guarantors
signatory hereto (the "Subsidiary Guarantors"), and WACHOVIA BANK, NATIONAL
ASSOCIATION, as trustee (the "Trustee").

                              W I T N E S S E T H:

     WHEREAS, the Issuers have heretofore entered into an Indenture, dated as of
September 25, 2002 (the "Original Indenture"), with Wachovia Bank, National
Association, as trustee;

     WHEREAS, the Original Indenture, as supplemented by this Supplemental
Indenture, is herein called the "Indenture";

     WHEREAS, under the Original Indenture, a new series of Debt Securities may
at any time be established by the Boards of Directors of the Managing General
Partner and PAA Finance in accordance with the provisions of the Original
Indenture and the form and terms of such series may be established by a
supplemental Indenture executed by the Issuers and the Trustee;

     WHEREAS, also under the Original Indenture, guarantors with respect to a
series of Debt Securities may be added as parties to the Indenture by a
supplemental Indenture executed by themselves, the Issuer and the Trustee;

     WHEREAS, the Issuers propose to create under the Indenture a new series of
Debt Securities, such series to be guaranteed by the Subsidiary Guarantors;

     WHEREAS, additional Debt Securities of other series hereafter established,
except as may be limited in the Original Indenture as at the time supplemented
and modified, may be issued from time to time pursuant to the Indenture as at
the time supplemented and modified; and

     WHEREAS, all conditions necessary to authorize the execution and delivery
of this Supplemental Indenture and to make it a valid and binding obligation of
the Issuers and the Subsidiary Guarantors have been done or performed.

     NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:

                                   ARTICLE I

     Section 1.01. Establishment. (a) There is hereby established a new series
of Notes to be issued under the Indenture, to be designated as the Issuers' 7
3/4% Senior Notes due 2012 (the "Notes"). As provided in Article II hereof, the
Notes shall be issued as either Series A Notes or Series B Notes, and any Notes
may have such additional designation.

     (b) There are to be authenticated and delivered $200,000,000 principal
amount of Series A Notes on the Issue Date, and from time to time thereafter
there may be authenticated and delivered an unlimited principal amount of
Additional Notes, subject to Section 5.03 hereof. Further, from time to time
after the Issue Date, Series B Notes may be authenticated and delivered in a
principal amount equal to the principal amount of the Series A Notes exchanged
therefor pursuant to an Exchange Offer.

     (c) The Notes shall be issued initially in the form of one or more Global
Securities in substantially the form set out in Exhibit A hereto. The Depositary
with respect to the Notes shall be The Depository Trust Company.

     (d) Each Note shall be dated the date of authentication thereof and shall
bear interest from the date of original issuance thereof or from the most recent
date to which interest has been paid or duly provided for.

     (e) If and to the extent that the provisions of the Original Indenture are
duplicative of, or in contradiction with, the provisions of this Supplemental
Indenture, the provisions of this Supplemental Indenture shall govern.

                                   ARTICLE II

                   DEFINITIONS AND INCORPORATION BY REFERENCE

     Section 2.01. Definitions. All capitalized terms used herein and not
otherwise defined below shall have the meanings ascribed thereto in the Original
Indenture. The following are definitions used in this Supplemental Indenture:

     "Acquired Debt" means, with respect to any specified Person:

          (1) Indebtedness of any other Person existing at the time such other
     Person is merged with or into or became a Subsidiary of such specified
     Person, whether or not such Indebtedness is incurred in connection with, or
     in contemplation of, such other Person merging with or into, or becoming a
     Subsidiary of, such specified Person, but excluding Indebtedness which is
     extinguished, retired or repaid in connection with such Person merging with
     or becoming a Subsidiary of such specified Person; and

          (2) Indebtedness secured by a Lien encumbering any asset acquired by
     such specified Person.

     "Additional Interest" means all additional interest then owing pursuant to
a registration default under an Exchange and Registration Rights Agreement.

     "Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession directly or
indirectly of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a specified

                                       E-2

Person shall be deemed to be control by the other Person; provided, further,
that any third Person which also beneficially owns 10% or more of the Voting
Stock of a specified Person shall not be deemed to be an Affiliate of either the
Specified Person or the other Person merely because of such common ownership in
such specified Person. For purposes of this definition, the terms "controlling,"
"controlled by" and "under common control with" shall have correlative meanings.
Notwithstanding the foregoing, the term "Affiliate" shall not include a
Restricted Subsidiary of any specified Person.

     "Asset Sale" means:

          (1) the sale, lease, conveyance or other disposition of any assets or
     rights, other than dispositions of inventory and obsolete equipment in the
     ordinary course of business; provided that the sale, conveyance or other
     disposition of all or substantially all of the assets of the Partnership or
     the Partnership and its Restricted Subsidiaries taken as a whole shall be
     governed by Section 5.09 hereof, and/or Article VI hereof and not by
     Section 5.05 hereof; and

          (2) the issuance of Equity Interests by any of the Partnership's
     Restricted Subsidiaries or the sale by the Partnership or any of its
     Restricted Subsidiaries of Equity Interests in any of its Restricted
     Subsidiaries.

Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:

          (1) any single transaction or series of related transactions that: (a)
     involves assets having a fair market value of less than $5.0 million; or
     (b) results in Net Proceeds to the Partnership and its Restricted
     Subsidiaries of less than $5.0 million;

          (2) a transfer of assets or Equity Interests in a Restricted
     Subsidiary of the Partnership between or among the Partnership and its
     Restricted Subsidiaries;

          (3) an issuance of Equity Interests by a Restricted Subsidiary of the
     Partnership to the Partnership or to a Wholly Owned Restricted Subsidiary;

          (4) a Restricted Payment that is permitted by Section 5.02 hereof;

          (5) any transaction whereby assets or rights (including (a) Equity
     Interests in any Subsidiary or Joint Venture and (b) in the case of an
     exchange or a contribution for tangible assets, up to 25% in the form of
     cash, Cash Equivalents, accounts receivable or other current assets), owned
     by the Partnership or any of its Restricted Subsidiaries are exchanged or
     contributed for the Equity Interests of a Joint Venture or Unrestricted
     Subsidiary in a transaction that satisfies the requirements of Permitted
     Business Investment or for other assets (not more than 25% of which
     consists of cash, Cash Equivalents, accounts receivable or other current
     assets) or rights (including Equity Interests in any Subsidiary or Joint
     Venture) so long as (i) the fair market value of the assets or rights (if
     other than a Permitted Business Investment) received is substantially
     equivalent to the fair market value of the assets or properties given up,
     and (ii) any cash received in such exchange or contribution by the
     Partnership or any of its Restricted Subsidiaries is applied in accordance
     with Section 5.05 hereof;

                                       E-3

          (6) any sale, transfer or other disposition of cash or Cash
     Equivalents, Hedging Obligations or other financial instruments in the
     ordinary course of business;

          (7) the creation or perfection of a Lien on any properties or assets
     (or any income or profit therefrom) of the Partnership or any of its
     Restricted Subsidiaries that is not prohibited by Section 5.06 hereof;

          (8) the surrender or waiver of contract rights or the settlement,
     release or surrender of contractual, non-contractual or other claims of any
     kind; and

          (9) the grant in the ordinary course of business of any non-exclusive
     license of patents, trademarks, registrations therefor and other similar
     intellectual property.

     "Attributable Debt" in respect of a Sale and Lease-Back Transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
Sale and Lease-Back Transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP. As used in the
preceding sentence, the "net rental payments" under any lease for any such
period shall mean the sum of rental and other payments required to be paid with
respect to such period by the lessee thereunder, excluding any amounts required
to be paid by such lessee on account of maintenance and repairs, insurance,
taxes, assessments, water rates or similar charges. In the case of any lease
that is terminable by the lessee upon payment of penalty, such net rental
payment shall also include the amount of such penalty, but no rent shall be
considered as required to be paid under such lease subsequent to the first date
upon which it may be so terminated.

     "Available Cash" has the meaning assigned to such term in the Partnership
Agreement, as in effect on the date of the Indenture.

     "Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet of the lessee in
accordance with GAAP.

     "Cash Equivalent" means:

          (1) United States or Canadian dollars or, in an amount up to the
     amount necessary or appropriate to fund local operating expenses, other
     currencies;

          (2) securities issued or directly and fully guaranteed or insured by
     the government of the United States or any country whose sovereign debt has
     a rating of at least A3 from Moody's and at least A- from S&P or any agency
     or instrumentality of any such government (provided that the full faith and
     credit of such government is pledged in support thereof), in each case
     having maturities of not more than one year from the date of acquisition;

          (3) certificates of deposit, time deposits and Eurodollar deposits
     with maturities of one year or less from the date of acquisition, bankers'
     acceptances with maturities not exceeding 365 days, demand and overnight
     bank deposits and other similar types of investments routinely offered by
     commercial banks, in each case, with any lender under the

                                       E-4

     Partnership Credit Facilities or any commercial bank having capital and
     surplus in excess of $500.0 million and a Thompson Bank Watch Rating of "B"
     or better;

          (4) repurchase obligations with a term of not more than seven days for
     underlying securities of the types described in clauses (2) and (3) above
     entered into with any financial institution meeting the qualifications
     specified in clause (3) above;

          (5) commercial paper having one of the two highest ratings obtainable
     from Moody's or S&P and in each case maturing within 270 days after the
     date of acquisition;

          (6) deposits available for withdrawal on demand with any commercial
     bank not meeting the qualifications specified in clause (3) above, provided
     that all such deposits are made in the ordinary course of business, do not
     remain on deposit for more than 30 consecutive days and do not exceed $10.0
     million in the aggregate at any one time; and

          (7) money market funds substantially all of the assets of which
     constitute Cash Equivalents of the kinds described in clauses (1) through
     (5) of this definition.

     "Change of Control" means the occurrence of any of the following:

          (1) the sale, transfer, lease, conveyance or other disposition (other
     than by way of merger or consolidation), in one or a series of related
     transactions, of all or substantially all of the assets of the Partnership
     and its Restricted Subsidiaries taken as a whole to any "person" (as such
     term is used in Section 13(d)(3) of the Exchange Act), which occurrence is
     followed by a Rating Decline within 90 days of the consummation of such
     transaction;

          (2) the adoption of a plan relating to the liquidation or dissolution
     of the Partnership, or the removal of the General Partner by the limited
     partners of the Partnership;

          (3) such time as Qualifying Directors shall cease for any reason to
     constitute collectively a majority of the members of the Board of Directors
     of the Managing General Partner in office, which occurrence is followed by
     a Rating Decline within 90 days thereof; or

          (4) any "person" or "group," as such terms are used in Sections
     13(d)(2) and 14(d)(2) of the Exchange Act, excluding the Qualifying Owners
     identified in clause (1) of the definition of "Qualifying Owners," obtains
     the right to appoint a majority of the Board of Directors of the Managing
     General Partner, which occurrence is followed by a Rating Decline within 90
     days thereof.

     Notwithstanding the foregoing, a conversion of the Partnership or any of
its Restricted Subsidiaries from a limited partnership, corporation, limited
liability company or other form of entity to a limited partnership, corporation,
limited liability company or other form of entity or an exchange of all of the
outstanding Equity Interests in one form of entity for Equity Interests for
another form of entity shall not constitute a Change of Control, so long as
following such conversion or exchange the Qualifying Owners beneficially own,
directly or indirectly, in the aggregate more than 50% of the Voting Stock of
such entity, or continue to beneficially own a sufficient Equity Interests in
such entity to elect a majority of its directors, managers, trustees or other
persons serving in a similar capacity for such entity.

                                       E-5

     "Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus:

          (1) an amount equal to the dividends or distributions paid during such
     period in cash or Cash Equivalents to such Person or any of its Restricted
     Subsidiaries by a Person that is not a Restricted Subsidiary of such
     Person; plus

          (2) an amount equal to any extraordinary loss of such Person and its
     Restricted Subsidiaries plus any net loss realized by such Person and its
     Restricted Subsidiaries in connection with an Asset Sale, disposition of
     any securities or extinguishment of Indebtedness, to the extent such losses
     were deducted in computing such Consolidated Net Income; plus

          (3) the provision for taxes based on income or profits of such Person
     and its Restricted Subsidiaries for such period or foreign withholding
     taxes, to the extent that such provision for taxes was deducted in
     computing such Consolidated Net Income; plus

          (4) the consolidated interest expense of such Person and its
     Restricted Subsidiaries for such period, whether paid or accrued
     (including, without limitation, amortization of debt issuance costs and
     original issue discount, non-cash interest payments, the interest component
     of any deferred payment obligations, the interest component of all payments
     associated with Capital Lease Obligations, imputed interest with respect to
     Attributable Debt, commissions, discounts and other fees and charges
     incurred in respect of letter of credit or bankers' acceptance financings
     and net payments, if any, pursuant to Hedging Obligations), to the extent
     that any such expense was deducted in computing such Consolidated Net
     Income, excluding any such expenses to the extent incurred by a Person that
     is not a Restricted Subsidiary of the Person for which the calculation is
     being made; plus

          (5) depreciation, depletion and amortization (including amortization
     of goodwill and other intangibles but excluding amortization of prepaid
     cash expenses that were paid in a prior period) and other non-cash expenses
     (excluding any such non-cash expense to the extent that it represents an
     accrual of or reserve for cash expenses in any future period or
     amortization of a prepaid cash expense that was paid in a prior period) of
     such Person and its Restricted Subsidiaries for such period to the extent
     that such depreciation, amortization and other non-cash expenses were
     deducted in computing such Consolidated Net Income (excluding any such
     expenses to the extent incurred by a Person that is neither an Issuer nor a
     Restricted Subsidiary of an Issuer); minus

          (6) non-cash items increasing such Consolidated Net Income for such
     period, other than items that were accrued in the ordinary course of
     business,

in each case, on a consolidated basis and determined in accordance with GAAP.

Notwithstanding the preceding, the provision for taxes based on the income or
profits of, and the depreciation and amortization and other non-cash charges of,
a Restricted Subsidiary of the Partnership shall be added to Consolidated Net
Income to compute Consolidated Cash Flow of the Partnership only to the extent
that a corresponding amount would be permitted at the date of determination to
be dividended or distributed to the Partnership by such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all

                                       E-6

agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Restricted Subsidiary or its
stockholders, partners or members.

     "Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:

          (1) the aggregate Net Income (but not net loss in excess of such
     aggregate Net Income) of all Persons that are Unrestricted Subsidiaries
     shall be excluded (without duplication);

          (2) the earnings included therein attributable to all entities that
     are accounted for by the equity method of accounting and the aggregate Net
     Income (but not net loss in excess of such aggregate Net Income) included
     therein attributable to all entities constituting Joint Ventures that are
     accounted for on a consolidated basis (rather than by the equity method of
     accounting) shall be excluded;

          (3) the Net Income of any Restricted Subsidiary shall be excluded to
     the extent that the declaration or payment of dividends or similar
     distributions by that Restricted Subsidiary of that Net Income is not at
     the date of determination permitted without any prior governmental approval
     (that has not been obtained) or, directly or indirectly, by operation of
     the terms of its charter or any agreement (other than the Indenture or its
     Guarantee), instrument, judgment, decree, order, statute, rule or
     governmental regulation applicable to that Restricted Subsidiary or its
     stockholders, partners or members;

          (4) the Net Income of any Person acquired in a pooling of interests
     transaction for any period prior to the date of such acquisition shall be
     excluded;

          (5) the cumulative effect of a change in accounting principles shall
     be excluded; and

          (6) unrealized losses and gains under derivative instruments included
     in the determination of Consolidated Net Income, including, without
     limitation those resulting from the application of Statement of Financial
     Accounting Standards No. 133 or EITF 98-10, shall be excluded.

     "Consolidated Net Tangible Assets" means, with respect to any Person, at
any date of determination, the aggregate amount of total assets included in such
Person's most recent quarterly or annual consolidated balance sheet prepared in
accordance with GAAP less applicable reserves reflected in such balance sheet,
after deducting the following amounts: (i) all current liabilities reflected in
such balance sheet, and (ii) all goodwill, trademarks, patents, unamortized debt
discounts and expenses and other like intangibles reflected in such balance
sheet.

     "Contango Market Transaction" means a transaction in which the Partnership
or any of its Restricted Subsidiaries establishes a position using New York
Mercantile Exchange Crude Oil Futures contracts to purchase Hydrocarbons for
future delivery to the Partnership or such Restricted Subsidiary, and
contemporaneously with such purchase transaction either (1) establishes one or
more positions using New York Mercantile Exchange Crude Oil Futures contracts to
resell at a date after such delivery date, or (2) enters into a contract with
that Person or another Person to resell at a date

                                       E-7

after such delivery date, a similar aggregate quantity and quality of
Hydrocarbons as so purchased by the Partnership or such Restricted Subsidiary,
as applicable, and at an aggregate price greater than the Indebtedness incurred
for the Hydrocarbons so purchased by the Partnership or such Restricted
Subsidiary.

     "Credit Facilities" means, with respect to the Partnership, PAA Finance or
any Restricted Subsidiary of the Partnership, one or more debt, letter of credit
or bankers' acceptances facilities or commercial paper facilities, including the
Partnership Credit Facilities, providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables), bankers' acceptances or letters of credit, in each case, as
amended, supplemented, restated, modified, renewed, rearranged, increased,
refunded, replaced or refinanced in whole or in part from time to time.

     "Disqualified Equity" means any Equity Interest that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date on which the Notes mature.
Notwithstanding the preceding sentence, any Equity Interest that would
constitute Disqualified Equity solely because the holders thereof have the right
to require the Partnership or a Restricted Subsidiary of the Partnership to
repurchase such Equity Interests upon the occurrence of a change of control or
an asset sale shall not constitute Disqualified Equity if the terms of such
Equity Interests provide that the Partnership or such Restricted Subsidiary may
not repurchase or redeem any such Equity Interests pursuant to such provisions
unless such repurchase or redemption complies with Section 5.02 hereof.

     "Equity Offering" means any sale for cash of Equity Interests of the
Partnership or any Restricted Subsidiary of the Partnership (excluding sales
made to any Restricted Subsidiary and excluding sales of Disqualified Equity)
(a) to the public pursuant to an effective registration statement under the
Securities Act or (b) in a private placement pursuant to an exemption from the
registration requirements of the Securities Act.

     "Existing Indebtedness" means the aggregate principal amount of
Indebtedness of the Partnership and its Restricted Subsidiaries in existence on
the date of the Indenture.

     "Exchange and Registration Rights Agreement" means (a) the Registration
Rights Agreement among the Partnership, PAA Finance, the Subsidiary Guarantors
and UBS Warburg LLC dated the Issue Date relating to the Series A Notes issued
on such date and (b) any similar agreement that the Issuers may enter into in
relation to any other Series A Notes, in each case as such agreement may be
amended or modified from time to time.

     "Exchange Offer" means the offer by the Issuers to the Holders of all
outstanding Transfer Restricted Securities to exchange all such outstanding
Transfer Restricted Securities held by such Holders for Series B Notes, in an
aggregate principal amount equal to the aggregate principal amount of the
Transfer Restricted Securities tendered in such exchange offer by such Holders.

     "Fitch" means Fitch, Inc. or any successor to the rating agency business
thereof.

                                       E-8

     "Fixed Charges" means, with respect to any Person, for any period, the
aggregate amount of (i) interest, whether expensed or capitalized, paid, accrued
or scheduled to be paid or accrued during such period (except to the extent
accrued in a prior period) in respect of all Indebtedness of such Person and its
consolidated Restricted Subsidiaries (including (a) original issue discount on
any Indebtedness and (b) the interest portion of all deferred payment
obligations, calculated in accordance with the effective interest method, in
each case to the extent attributable to such period), (ii) charges incurred in
respect of letter of credit or bankers' acceptance financings, and (iii)
dividend requirements on Disqualified Equity of such Person and its consolidated
Restricted Subsidiaries (whether in cash or otherwise (non-cash dividends being
valued as determined in good faith by the Board of Directors of such Person, as
evidenced by a Board Resolution)) paid, accrued or scheduled to be paid or
accrued during such period (except to the extent accrued in a prior period) and
excluding items eliminated in consolidation.

     For purposes of the definition of Fixed Charges, (a) interest on a Capital
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by such Person to be the rate of interest implicit in such Capital
Lease Obligation in accordance with GAAP; (b) interest on Indebtedness that is
determined on a fluctuating basis shall be deemed to have accrued at a fixed
rate per annum equal to the rate of interest of such Indebtedness in effect on
the date Fixed Charges are being calculated, subject to the proviso in clause
(c); (c) interest on Indebtedness that may optionally be determined at an
interest rate based upon a factor of a prime or similar rate, a eurocurrency
interbank offered rate, or other rate, shall be deemed to have been based upon
the rate actually chosen, or, if none, then based upon such optional rate chosen
as the Managing General Partner may designate (provided that, for the period
following the date on which the rate actually chosen ceases to be in effect, the
Managing General Partner may designate an optional rate other than that actually
chosen, which optional rate shall be deemed to accrue at a fixed rate per annum
equal to the rate of interest on such optional rate in effect on the date Fixed
Charges are being calculated); and (d) Fixed Charges shall be increased or
reduced by the net cost (including amortization of discount) or benefit
associated with obligations pursuant to Hedging Obligations attributable to such
period.

     "Fixed Charge Coverage Ratio" means, with respect to any specified Person,
for any period, the ratio of (1) the Consolidated Cash Flow of such Person and
its Restricted Subsidiaries for such period (the "Pro Forma Period") consisting
of the most recent four full fiscal quarters for which financial information in
respect thereof is available immediately prior to the date of the transaction
giving rise to the need to calculate the Fixed Charge Coverage Ratio (the
"Transaction Date") to (2) the aggregate Fixed Charges that such Person will
accrue during the fiscal quarter in which the Transaction Date occurs and the
three fiscal quarters immediately subsequent to such fiscal quarter on the
aggregate amount of Indebtedness outstanding on the Transaction Date, including
any Indebtedness proposed to be incurred on such date and excluding any
Indebtedness repaid with the proceeds of such Indebtedness (as though all such
Indebtedness was incurred or repaid on the first day of the quarter in which the
Transaction Date occurred).

     In addition to, but without duplication of, the preceding paragraph, for
purposes of this definition Consolidated Cash Flow shall be calculated after
giving effect (without duplication), on a pro forma basis for the Pro Forma
Period (but no longer), to:

          (1) any Investment, during the period commencing on the first day of
     the Pro Forma Period to and including the Transaction Date (the "Reference
     Period"), in any other Person that, as a result of such Investment, becomes
     a Restricted Subsidiary of such Person;

                                       E-9

          (2) the acquisition, during the Reference Period (by merger,
     consolidation or purchase of stock or assets) of any business or assets,
     which acquisition is not prohibited by the Indenture, including but not
     limited to Permitted Business Investments held by such Person or any
     Restricted Subsidiary of such Person, as if such acquisition had occurred
     on the first day of the Reference Period;

          (3) any sales or other dispositions of assets by such Person or any
     Restricted Subsidiary of such Person occurring during the Reference Period,
     in each case as if such incurrence, Investment, repayment, acquisition or
     assets sale had occurred on the first day of the Reference Period; and

          (4) interest income reasonably anticipated by such Person to be
     received during the Pro Forma Period from cash or Cash Equivalents held by
     such Person or any Restricted Subsidiary of such Person, which cash or Cash
     Equivalents exist on the Transaction Date or will exist as a result of the
     transaction giving rise to the need to calculate the Fixed Charge Coverage
     Ratio.

     "Guarantee" means a guarantee of the Notes given by a Subsidiary Guarantor
pursuant to the Indenture, including all obligations under Article IX hereof.

     "guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets, or through letters of credit or reimbursement, "claw-back,"

     "make-well," or "keep-well" agreements in respect thereof), of all or any
part of the payment of any Indebtedness. The term "guarantee" used as a verb has
a corresponding meaning.

     "Hedging Obligations" means, with respect to any Person, the net
obligations (not the notional amount) of such Person under interest rate and
commodity price swap agreements, interest rate and commodity price cap
agreements, interest rate and commodity price collar agreements and foreign
currency and commodity price exchange agreements, options or futures contracts
or other similar agreements or arrangements or Hydrocarbon hedge contracts or
Hydrocarbon forward sale contracts, in each case designed to protect such Person
against fluctuations in interest rates, foreign exchange rates or commodity
prices.

     "Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all constituents, elements or compounds thereof and products refined or
processed therefrom.

     "Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent, in respect of:

          (1) borrowed money;

          (2) bonds, notes, debentures or similar instruments or letters of
     credit (or reimbursement agreements in respect thereof), other than letters
     of credit issued by such Person in the ordinary course of business, to the
     extent not drawn;

          (3) obligations for the reimbursement of banker's acceptances;

                                       E-10

          (4) Capital Lease Obligations;

          (5) all Attributable Debt of such Person in respect of Sale and
     Lease-Back Transactions not involving a Capital Lease Obligation;

          (6) the balance deferred and unpaid of the purchase price of any
     property, except to the extent payable in Equity Interests and except any
     such balance that constitutes an accrued expense or trade payable incurred
     in the ordinary course of business;

          (7) Disqualified Equity; or

          (8) any Hedging Obligations;

if and to the extent any of the preceding items (other than letters of credit,
bankers' acceptances and Hedging Obligations) but excluding amounts recorded in
accordance with Statement of Financial Accounting Standards No. 133 would appear
as a liability upon a balance sheet of the specified Person prepared in
accordance with GAAP. In addition, the term "Indebtedness" includes all
obligations of the type referred to in clauses (1) through (8) above of others
secured by a Lien on any asset of the specified Person (whether or not such
obligations are assumed by the specified Person) and, to the extent not
otherwise included, the guarantee by such Person of any obligations of the type
referred to in clauses (1) through (8) above of any other Person, provided that
a guarantee otherwise permitted by the Indenture to be incurred by the
Partnership or any of its Restricted Subsidiaries of Indebtedness incurred by
the Partnership or a Restricted Subsidiary in compliance with the terms of the
Indenture shall not constitute a separate incurrence of Indebtedness.

     The amount of any noncontingent Indebtedness outstanding as of any date
shall be:

          (1) the accreted value thereof, in the case of any Indebtedness issued
     with original issue discount; and

          (2) the principal amount thereof, together with any interest thereon
     that is more than 30 days past due, in the case of any other Indebtedness.

     The amount of any contingent obligations constituting Indebtedness as of
any date shall be the maximum amount of such obligations at such date, assuming
the contingency in respect thereof had occurred as of such date.

     For purposes of clause (7) of the first paragraph of this definition,
Disqualified Equity shall be valued at the maximum fixed redemption, repayment
or repurchase price, which shall be calculated in accordance with the terms of
such Disqualified Equity as if such Disqualified Equity were repurchased on any
date on which Indebtedness shall be required to be determined pursuant to the
Indenture; provided, however, that if such Disqualified Equity is not then
permitted by its terms to be redeemed, repaid or repurchased, the redemption,
repayment or repurchase price shall be the book value of such Disqualified
Equity.

     "Investment Grade Rating" means a rating equal to or higher than Baa3 (or
the equivalent) by Moody's or BBB -- (or the equivalent) by S&P or Fitch.

                                       E-11

     "Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances (other than advances to customers in the ordinary course of business
that are recorded as accounts receivable on the balance sheet of the lender and
commission, moving, travel and similar advances to officers and employees made
in the ordinary course of business) or capital contributions, purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. For purposes of
the definition of "Unrestricted Subsidiary," the definition of "Restricted
Payment" and Section 5.02 hereof, (i) the term "Investment" shall include the
portion (proportionate to the Partnership's Equity Interest in such Subsidiary)
of the fair market value of the net assets of any Subsidiary of the Partnership
or any of its Restricted Subsidiaries at the time that such Subsidiary is
designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Partnership or
such Restricted Subsidiary shall be deemed to continue to have a permanent
"Investment" in such Subsidiary at the time immediately before the effectiveness
of such redesignation less the portion (proportionate to the Partnership's or
such Restricted Subsidiary's Equity Interest in such Subsidiary) of the fair
market value of the net assets of such Subsidiary at the time of such
redesignation, and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors of
the Managing General Partner. If the Partnership or any Restricted Subsidiary of
the Partnership sells or otherwise disposes of any Equity Interests of any
direct or indirect Restricted Subsidiary of the Partnership such that, after
giving effect to any such sale or disposition, such Person is no longer a
Restricted Subsidiary of the Partnership, the Partnership shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Restricted Subsidiary not sold
or disposed of in an amount determined as provided in Section 5.02(c) hereof.

     "Issue Date" means the date of the first issuance of the Notes under the
Indenture.

     "Joint Venture" means any Person that is not a direct or indirect
Subsidiary of the Partnership in which the Partnership or any Restricted
Subsidiary makes an Investment.

     "Marketing Agreement" means the Crude Oil Marketing Agreement among Plains
Resources Inc., Plains Illinois Inc., Stocker Resources, L.P., Calumet Florida,
Inc. and Plains Marketing, L.P. dated as of November 23, 1998, as such agreement
may be amended, modified or supplemented from time to time.

     "Moody's" means Moody's Investors Service, Inc. or any successor to the
rating agency business thereof.

     "Net Income" means, with respect to any Person, the net income (loss) of
such Person and its Restricted Subsidiaries, determined in accordance with GAAP
and before any reduction in respect of preferred stock dividends, excluding,
however:

          (1) the aggregate gain (but not loss in excess of such aggregate
     gain), together with any related provision for taxes on such gain, realized
     in connection with:

               (a) any Asset Sale; or

                                       E-12

               (b) the disposition of any securities by such Person or any of
          its Restricted Subsidiaries or the extinguishment of any Indebtedness
          of such Person or any of its Restricted Subsidiaries; and

          (2) the aggregate extraordinary gain (but not loss in excess of such
     aggregate extraordinary gain), together with any related provision for
     taxes on such aggregate extraordinary gain (but not loss in excess of such
     aggregate extraordinary gain).

     "Net Proceeds" means, with respect to any Asset Sale, an amount equal to
the aggregate proceeds received by the Partnership or any of its Restricted
Subsidiaries in cash or Cash Equivalents in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any such sale), net of,
without duplication, (i) the direct costs relating to such Asset Sale,
including, without limitation, brokerage commissions and legal, accounting and
investment banking fees, sales commissions, recording fees, title transfer fees,
and any relocation expenses incurred as a result thereof, (ii) taxes paid or
estimated to be payable as a result thereof, in each case after taking into
account any available tax credits or deductions and any tax sharing
arrangements, (iii) amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the asset or assets that were the subject of
such Asset Sale, (iv) all distributions and payments required to be made to
minority interest holders in Restricted Subsidiaries as a result of such Asset
Sale and (v) any amounts to be set aside in any reserve established in
accordance with GAAP or any amount placed in escrow, in either case for
adjustment in respect of the sale price of such asset or assets or for
liabilities associated with such Asset Sale and retained by the Partnership or
any of its Restricted Subsidiaries until such time as such reserve is reversed
or such escrow arrangement is terminated, in which case Net Proceeds shall
include only the amount of the reserve so reversed or the amount returned to the
Partnership or its Restricted Subsidiaries from such escrow arrangement, as the
case may be.

     "Non-Recourse Debt" means Indebtedness as to which:

          (1) neither the Partnership nor any of its Restricted Subsidiaries (a)
     provides credit support of any kind (including any undertaking, agreement
     or instrument that would constitute Indebtedness), (b) is directly or
     indirectly liable as a guarantor or otherwise, or (c) constitutes the
     lender of such Indebtedness;

          (2) no default with respect to which (including any rights that the
     holders thereof may have to take enforcement action against an Unrestricted
     Subsidiary) would permit upon notice, lapse of time or both any holder of
     any other Indebtedness (other than the Notes) of the Partnership or any of
     its Restricted Subsidiaries to declare a default on such other Indebtedness
     or cause the payment thereof to be accelerated or payable prior to its
     Stated Maturity; and

          (3) the lenders have been notified in writing that they shall not have
     any recourse to the stock or assets of the Partnership or any of its
     Restricted Subsidiaries.

     "Notes" has the meaning assigned to it in Section 1.01(a) hereof, and
includes both the Series A Notes and the Series B Notes.

                                       E-13

     "Obligations" means any principal, interest, liquidated damages, penalties,
fees, indemnifications, reimbursement obligations, damages and other liabilities
payable under the documentation governing any Indebtedness.

     "Operating Surplus" shall have the meaning assigned to such term in the
Partnership Agreement, as in effect on the date of the Indenture.

     "Partnership Agreement" means the Third Amended and Restated Agreement of
Limited Partnership of Plains All American Pipeline, L.P., amended and restated
effective as of June 27, 2001, as such may be amended, modified or supplemented
from time to time.

     "Partnership Credit Facilities" means (1) the Second Amended and Restated
Credit Agreement [Letter of Credit and Hedged Inventory Facility] dated July 2,
2002 and (2) the Second Amended and Restated Credit Agreement [Revolving Credit
Facility] dated July 2, 2002, each among Plains Marketing, L.P., All American
Pipeline, L.P., Plains All American Pipeline, L.P., and Fleet National Bank and
certain other lenders party thereto, including any deferrals, renewals,
extensions, replacements, refinancings or refundings thereof, and any
amendments, modifications or supplements thereto and any agreement providing
therefor (including any restatement thereof and any increases in the amount of
commitments thereunder), whether by or with the same or any other lenders,
creditors, group of lenders or group of creditors and including related notes,
guarantees, collateral security documents and other instruments and agreements
executed in connection therewith.

     "Permitted Business" means either (1) marketing, gathering, transporting
(by barge, pipeline, ship, truck or other modes of Hydrocarbon transportation),
terminalling, storing, producing, acquiring, developing, exploring for,
exploiting, producing, processing, dehydrating and otherwise handling
Hydrocarbons, including, without limitation, constructing pipeline, platform,
dehydration, processing and other energy-related facilities, and activities or
services reasonably related or ancillary thereto including entering into Hedging
Obligations to support these businesses, or (2) any other business that
generates gross income that constitutes "qualifying income" under Section
7704(d) of the Code.

     "Permitted Business Investments" means Investments by the Partnership or
any of its Restricted Subsidiaries in any Unrestricted Subsidiary of the
Partnership or in any Joint Venture, provided that:

          (1) either (a) at the time of such Investment and immediately
     thereafter, the Partnership could incur $1.00 of additional Indebtedness
     under the Fixed Charge Coverage ratio test set forth in Section 5.03(a)
     hereof above or (b) such Investment does not exceed the aggregate amount of
     Incremental Funds (as defined in Section 5.02 hereof) not previously
     expended at the time of making such Investment;

          (2) if such Unrestricted Subsidiary or Joint Venture has outstanding
     Indebtedness at the time of such Investment, either (a) all such
     Indebtedness is Non-Recourse Debt or (b) any such Indebtedness of such
     Unrestricted Subsidiary or Joint Venture that is recourse to the
     Partnership or any of its Restricted Subsidiaries (which shall include,
     without limitation, all Indebtedness of such Unrestricted Subsidiary or
     Joint Venture for which the Partnership or any of its Restricted
     Subsidiaries may be directly or indirectly, contingently or otherwise,
     obligated to pay, whether pursuant to the terms of such Indebtedness, by
     law or pursuant to

                                       E-14

     any guarantee (including, without limitation, any "claw-back," "make-well"
     or "keep-well" arrangement) could, at the time such Investment is made, be
     incurred at that time by the Partnership and its Restricted Subsidiaries
     under the Fixed Charge Coverage ratio test set forth in Section 5.03(a)
     hereof and

          (3) such Unrestricted Subsidiary's or Joint Venture's activities are
     not outside the scope of the Permitted Business.

     "Permitted Contango Market Transaction Obligations" means Indebtedness of
the Partnership or any of its Restricted Subsidiaries under letters of credit,
bankers' acceptances or borrowed money obligations, or in lieu of or in addition
to such letters of credit or borrowed money, guarantees of such Indebtedness or
other obligations of the Partnership or any Restricted Subsidiary by the
Partnership or any other Restricted Subsidiary, as applicable, related to a
Contango Market Transaction, provided that, (1) if the Partnership or such
Restricted Subsidiary has entered into such a contract to resell at a subsequent
date, as distinguished from establishing a position using New York Mercantile
Exchange Crude Oil Future contracts to resell at a subsequent date, (a) the
Person with which the Partnership or such Restricted Subsidiary has such
contract to sell has an Investment Grade Rating, or in lieu thereof, a Person
guaranteeing the payment of such obligated Person has an Investment Grade
Rating, or (b) such Person posts a letter of credit in favor of the Partnership
or such Restricted Subsidiary with respect to such contract and (2) for the
period commencing on the date the Partnership or such Restricted Subsidiary is
obligated to take delivery of such Hydrocarbons so purchased by it and until and
including the date on which delivery to the purchaser is fulfilled, the
Partnership or such Restricted Subsidiary has the right and ability to store
such quantity and quality of Hydrocarbons in storage facilities owned, leased,
operated or otherwise controlled by the Partnership or any Restricted Subsidiary
or in pipelines, or such Hydrocarbons are in transit to such facilities.

     "Permitted Investments" means:

          (1) any Investment in the Partnership or in a Restricted Subsidiary of
     the Partnership (excluding redemptions, purchases, acquisitions or other
     retirements of Equity Interests in the Partnership);

          (2) any Investment in cash or Cash Equivalents;

          (3) any Investment by the Partnership or any of its Restricted
     Subsidiaries in a Person if as a result of such Investment:

               (a) such Person becomes a Restricted Subsidiary of the
          Partnership; or

               (b) such Person is merged, consolidated or amalgamated with or
          into, or transfers or conveys substantially all of its assets to, or
          is liquidated into, the Partnership or a Restricted Subsidiary of the
          Partnership;

          (4) any Investment made as a result of the receipt of consideration
     consisting of other than cash or Cash Equivalents from (a) an Asset Sale
     that was made pursuant to and in compliance with Section 5.05 hereof or (b)
     a disposition of assets not constituting an Asset Sale pursuant to clause
     (1) of the items deemed not to be Asset Sales under the definition of
     "Asset Sale";

                                       E-15

          (5) payroll advances in the ordinary course of business and other
     advances and loans to officers and employees of the Partnership or any of
     its Restricted Subsidiaries, so long as the aggregate principal amount of
     such advances and loans that constitute Investments does not exceed $2.0
     million at any one time outstanding;

          (6) Investments in stock, obligations or securities received in
     settlement of debts owing to the Partnership or any of its Restricted
     Subsidiaries as a result of bankruptcy or insolvency proceedings or upon
     the foreclosure, perfection or enforcement of any Lien in favor of the
     Partnership or any such Restricted Subsidiary, in each case as to debts
     owing to the Partnership or any of its Restricted Subsidiaries that arose
     in the ordinary course of business of the Partnership or any such
     Restricted Subsidiary;

          (7) any Investment in Hedging Obligations;

          (8) any Investments in prepaid expenses, negotiable instruments held
     for collection and lease, utility, workers' compensation and performance
     and other similar deposits and prepaid expenses made in the ordinary course
     of business;

          (9) any Investments required to be made pursuant to any agreement or
     obligation of the Partnership or any of its Restricted Subsidiaries in
     effect on the Issue Date and listed on Schedule A to this Supplemental
     Indenture; and

          (10) other Investments in any Person engaged in a Permitted Business
     (other than an Investment in an Unrestricted Subsidiary) having an
     aggregate fair market value (measured on the date each such Investment was
     made and without giving effect to subsequent changes in value), when taken
     together with all other Investments made pursuant to this clause (10) since
     the date of the Indenture and existing at the time the Investment, which is
     the subject of the determination, was made, not to exceed $5.0 million; and

          (11) Investments in any Unrestricted Subsidiary or Joint Venture
     having an aggregate fair market value (measured on the date each such
     Investment was made and without giving effect to subsequent changes in
     value), when taken together with all other Investments made pursuant to
     this clause (11) since the date of the Indenture and existing at the time
     of Investment, which is the subject of the determination, was made, not to
     exceed $5.0 million.

     "Permitted Liens" means:

          (1) Liens securing Indebtedness under the Credit Facilities in an
     aggregate principal amount not to exceed $1.13 billion;

          (2) Liens securing reimbursement obligations of the Partnership or any
     of its Restricted Subsidiaries with respect to letters of credit or
     bankers' acceptances encumbering only documents and other property relating
     to such letters of credit and the products and proceeds thereof;

          (3) Liens encumbering deposits made to secure obligations arising from
     statutory, regulatory, contractual or warranty requirements of the
     Partnership and its Restricted Subsidiaries;

                                       E-16

          (4) Liens in favor of the Partnership or any of its Restricted
     Subsidiaries;

          (5) any interest or title of a lessor in the property subject to a
     Capital Lease Obligation or an operating lease;

          (6) Liens on property of a Person existing at the time such Person is
     merged with or into or consolidated with the Partnership or any Restricted
     Subsidiary of the Partnership, provided that such Liens were in existence
     prior to its contemplation of such merger or consolidation and do not
     extend to any assets other than those of the Person merged into or
     consolidated with the Partnership or such Restricted Subsidiary;

          (7) (a) Liens on property existing at the time of acquisition thereof
     by the Partnership or any Restricted Subsidiary of the Partnership or (b)
     Liens on property of an Unrestricted Subsidiary at the time such
     Unrestricted Subsidiary is designated as a Restricted Subsidiary in
     accordance with this Supplemental Indenture, provided that such Liens were
     in existence prior to the contemplation of such acquisition or designation
     and relate solely to such property, accessions thereto and the proceeds
     thereof;

          (8) Liens to secure the performance of tenders, bids, statutory
     obligations, surety or appeal bonds, government contracts, performance
     bonds or other obligations of a like nature incurred in the ordinary course
     of business;

          (9) Liens on any property or asset acquired, developed, constructed,
     repaired or improved by the Partnership or any of its Restricted
     Subsidiaries in the ordinary course of business (a "Purchase Money Lien"),
     which (A) are in favor of the seller of such property or assets, in favor
     of the Person developing, constructing, repairing or improving such asset
     or property, or in favor of the Person that provided the funding for the
     acquisition, development, construction, repair or improvement of such asset
     or property, (B) are created within 360 days after the date of acquisition,
     development, construction, repair or improvement, (C) secure the purchase
     price or development, construction, repair or improvement cost, as the case
     may be, of such asset or property in an amount up to the lesser of (x) 100%
     of the cost of such property or asset acquired, developed, constructed,
     repaired or improved (taking into consideration the cost of such
     acquisition, development, construction, repair or improvement) or (y) 100%
     of the fair market value (as determined by the Board of Directors of the
     Managing General Partner) of such acquisition, development, construction,
     repair or improvement of such asset or property, and (D) are limited to the
     asset or property so acquired, developed, constructed, repaired or improved
     (including proceeds thereof, accessions thereto and upgrades thereof);

          (10) Liens existing on the date of the Indenture, other than Liens
     securing the Credit Facilities;

          (11) Liens on and pledges of the Equity Interests of any Unrestricted
     Subsidiary or any Joint Venture owned by the Partnership or any Restricted
     Subsidiary of the Partnership to the extent securing Non-Recourse Debt or
     other Indebtedness of such Unrestricted Subsidiary or Joint Venture
     otherwise permitted by the Fixed Charge Coverage Ratio test set forth in
     Section 5.03(a) hereof;

          (12) Liens on pipelines or pipeline facilities that arise by operation
     of law;

                                       E-17

          (13) Liens arising under operating agreements, joint venture
     agreements, partnership agreements, oil and gas leases, farmout agreements,
     division orders, contracts for sale, transportation or exchange of oil and
     natural gas, unitization and pooling declarations and agreements, area of
     mutual interest agreements and other agreements arising in the ordinary
     course of the Partnership's or any Restricted Subsidiary's business that
     are customary in the Permitted Business;

          (14) prejudgment, judgment and attachment Liens not giving rise to a
     Default or an Event of Default;

          (15) Liens securing the Obligations of the Issuers under the Notes and
     the Indenture and of the Subsidiary Guarantors under the Guarantees;

          (16) Liens upon specific items of inventory, receivables or other
     goods and proceeds of the Partnership or any of its Restricted Subsidiaries
     securing such Person's obligations in respect of bankers' acceptances or
     receivables securitizations issued or created for the account of such
     Person to facilitate the purchase, shipment or storage of such inventory,
     receivables or other goods and permitted under Section 5.03 hereof;

          (17) Liens securing any Indebtedness equally and ratably with all
     Obligations due under the Notes, the Indenture or any Guarantee pursuant to
     a contractual covenant that limits Liens in a manner substantially similar
     to the covenant contained in Section 5.06 hereof;

          (18) Liens incurred in the ordinary course of business of the
     Partnership or any Restricted Subsidiary of the Partnership with respect to
     Indebtedness that at the time of incurrence does not exceed 10% of the
     Consolidated Net Tangible Assets of the Partnership;

          (19) Liens in favor of collecting or payor banks having a right of
     setoff, revocation, refund or chargeback with respect to money or
     instruments of the Partnership or any of its Restricted Subsidiaries on
     deposit with or in possession of such bank;

          (20) Liens to secure performance of Hedging Obligations of the
     Partnership or a Restricted Subsidiary of the Partnership; and

          (21) any Lien renewing, extending, refinancing or refunding a Lien
     permitted by clauses (1) through (20) above; provided that (a) the
     principal amount of the Indebtedness secured by such Lien does not exceed
     the principal amount of such Indebtedness outstanding immediately prior to
     the renewal, extension, refinance or refund of such Lien and (b) no assets
     encumbered by any such Lien other than the assets permitted to be
     encumbered immediately prior to such renewal, extension, refinance or
     refund are encumbered thereby.

     "Permitted Marketing Obligations" means, other than Permitted Operating
Obligations or Indebtedness relating to Contango Market Transactions,
Indebtedness of the Partnership or any Restricted Subsidiary of the Partnership
under letter of credit or borrowed money obligations, or in lieu of or in
addition to such letters of credit or borrowed money, guarantees of such
Indebtedness or other obligations of the Partnership or any Restricted
Subsidiary of the Partnership by any other Restricted Subsidiary or the
Partnership, as applicable, related to the purchase by the Partnership or any
Restricted Subsidiary of the Partnership of Hydrocarbons for

                                       E-18

which the Partnership or such Restricted Subsidiary has contracts to sell;
provided, that if such Indebtedness or obligations are guaranteed by the
Partnership or any Restricted Subsidiary of the Partnership, then either (1) the
Person with which the Partnership or such Restricted Subsidiary has contracts to
sell has an Investment Grade Rating, or in lieu thereof, a Person guaranteeing
the payment of such obligated Person has an Investment Grade Rating, or (2) such
Person posts, or has posted for it, a letter of credit in favor of the
Partnership and such Restricted Subsidiary with respect to all of such Person's
obligations to the Partnership or such Restricted Subsidiary under such
contracts.

     "Permitted Operating Obligations" means Indebtedness of the Partnership or
any Restricted Subsidiary of the Partnership in respect of one or more standby
letters of credit, bid, performance or surety bonds, or other reimbursement
obligations, issued for the account of, or entered into by, the Partnership or
any Restricted Subsidiary of the Partnership in the ordinary course of business
(excluding obligations related to the purchase by the Partnership or any
Restricted Subsidiary of Hydrocarbons for which the Partnership or such
Restricted Subsidiary of the Partnership has contracts to sell), or in lieu of
any thereof or in addition to any thereto, guarantees and letters of credit
supporting any such obligations and Indebtedness (in each case, other than for
an obligation for borrowed money, other than borrowed money represented by any
such letter of credit, bid, performance or surety bond, or reimbursement
obligations itself, or any guarantee and letter of credit related thereto).

     "Permitted Refinancing Indebtedness" means any Indebtedness of the
Partnership or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund, other Indebtedness of the Partnership or any of its Restricted
Subsidiaries (other than intercompany Indebtedness); provided that:

          (1) the principal amount of such Permitted Refinancing Indebtedness
     does not exceed the principal amount of, plus accrued interest on, the
     Indebtedness so extended, refinanced, renewed, replaced, defeased or
     refunded (plus the amount of necessary fees and expenses incurred in
     connection therewith and any premiums paid on the Indebtedness so extended,
     refinanced, renewed, replaced, defeased or refunded);

          (2) such Permitted Refinancing Indebtedness has a final maturity date
     no earlier than the final maturity date of, and has a Weighted Average Life
     to Maturity equal to or greater than the Weighted Average Life to Maturity
     of, the Indebtedness being extended, refinanced, renewed, replaced,
     defeased or refunded;

          (3) if the Indebtedness being extended, refinanced, renewed, replaced,
     defeased or refunded is subordinated in right of payment to the Notes or
     the Guarantees, such Permitted Refinancing Indebtedness has a final
     maturity date later than the final maturity date of, and is subordinated in
     right of payment to, the Notes or the Guarantees, as the case may be, on
     terms at least as favorable to the Holders of Notes as those contained in
     the documentation governing the Indebtedness being extended, refinanced,
     renewed, replaced, defeased or refunded; and

          (4) if the Partnership is the obligor on the Indebtedness being
     extended, refinanced, renewed, replaced, defeased or refunded, then such
     Permitted Refinancing Indebtedness is solely its Indebtedness.

                                       E-19

     "Qualifying Director" means (i) any Person who is a member of the Board of
Directors of the Managing General Partner on the Issue Date, (ii) any Person,
who, at the time of initial appointment or election to the Board of Directors of
the Managing General Partner, is designated by any Qualifying Owner as its
representative on the Board of Directors of the Managing General Partner and
(iii) any Person elected as a member of the Board of Directors of the Managing
General Partner by a majority of the ownership interests in the Managing General
Partner at a time when Qualifying Owners own a majority of the ownership
interests of the Managing General Partner entitling the holders thereof to vote
in elections for directors.

     "Qualifying Owners" means (i) the owners of the Managing General Partner on
the Issue Date, consisting of Plains Holdings Inc., E-Holdings III, L.P., Kafu
Holdings, L.P., Mark E. Strome, First Union Investors, Inc. and Sable
Investments L.P., or any Affiliate of the foregoing and (ii) any transferee of
any of the foregoing to the extent such transferee is approved by a majority of
the ownership interests of the then Qualifying Owners (other than the
transferor) or any Affiliate of any of the foregoing.

     "Rating Category" means:

          (1) with respect to S&P, any of the following categories: AAA, AA, A,
     BBB, BB, B, CCC, CC, C and D (or equivalent successor categories) and

          (2) with respect to Moody's, any of the following categories: Aaa, Aa,
     A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories).

     "Rating Decline" means a decrease in the rating of the Notes by either
Moody's or S&P by one or more gradations (including gradations within Rating
Categories as well as between Rating Categories). In determining whether the
rating of the Notes has decreased by one or more gradations, gradations within
Rating Categories, namely + and - for S&P, and 1, 2 and 3 for Moody's, shall be
taken into account; for example, in the case of S&P, a rating decline either
from BB+ to BB or BB- to B+ shall constitute a decrease of one gradation.

     "Restricted Investment" means an Investment other than a Permitted
Investment or a Permitted Business Investment.

     "Restricted Subsidiary" of a Person means any Subsidiary of the referenced
Person that is not an Unrestricted Subsidiary. Notwithstanding anything in the
Indenture to the contrary, PAA Finance shall be a Restricted Subsidiary of the
Partnership.

     "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor to the rating agency business
thereof.

     "Sale and Lease-Back Transaction" means an arrangement relating to property
owned by the Partnership or a Restricted Subsidiary on the Issue Date or
thereafter acquired by the Partnership or a Restricted Subsidiary whereby the
Partnership or a Restricted Subsidiary transfers such property to a Person and
the Partnership or a Restricted Subsidiary leases it from such Person.

     "Securities" shall have the meaning assigned to such term in the Exchange
and Registration Rights Agreement relating thereto.

                                       E-20

     "Senior Debt" means:

          (1) all Indebtedness outstanding under the Credit Facilities and all
     Hedging Obligations;

          (2) any other Indebtedness permitted to be incurred by the Partnership
     and the Restricted Subsidiaries under the terms of the Indenture, unless
     the instrument under which such Indebtedness is incurred expressly provides
     that it is subordinated or junior in right of payment to the Notes; and

          (3) all Obligations with respect to the items listed in the preceding
     clauses (1) and (2).

Notwithstanding anything to the contrary in the preceding, Senior Debt shall not
include:

          (1) any Indebtedness that is expressly subordinated or junior in right
     of payment to any Indebtedness of the Partnership or any Subsidiary
     Guarantor;

          (2) any obligations with respect to any Equity Interests;

          (3) any liability for federal, state, local or other taxes owed or
     owing by the Partnership or any Subsidiary Guarantor;

          (4) any Indebtedness of the Partnership or any of its Subsidiaries to
     any of its Subsidiaries or other Affiliates;

          (5) any trade payables; or

          (6) any Indebtedness that is incurred in violation of the Indenture.

     "Series A Notes" means the Issuers' 7 3/4% Series A Senior Notes due 2012
to be issued pursuant to this Supplemental Indenture.

     "Series B Notes" means the Issuers' 7 3/4% Series B Notes due 2012 to be
issued pursuant to an Exchange Offer.

     "Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act and the Exchange Act, as such Regulation is in
effect on the Issue Date.

     "Subsidiary Guarantors" means each of:

          (1) the Subsidiaries of the Partnership on the Issue Date;

          (2) any other Subsidiary that executes a supplemental Indenture to
     provide a Guarantee in accordance with the provisions of the Indenture; and

          (3) their respective successors and assigns.

                                       E-21

Notwithstanding anything in the Indenture to the contrary, neither PAA Finance
nor 3794865 Canada Ltd. shall be a Subsidiary Guarantor.

     "Transfer Restricted Securities" means the Securities under the Exchange
and Registration Rights Agreement relating thereto.

     "Unrestricted Subsidiary" means any Subsidiary of the Partnership (other
than PAA Finance) that is designated by the Board of Directors of the Managing
General Partner as an Unrestricted Subsidiary pursuant to a Board Resolution;
provided that (i) all Indebtedness of such Subsidiary is Non-Recourse Debt or
any Indebtedness of such Subsidiary (whether contingent or otherwise and whether
pursuant to the terms of such Indebtedness or the terms governing the
organization of such Subsidiary or by law) that (a) is guaranteed by the
Partnership or any other Restricted Subsidiary or is otherwise recourse to or
obligates the Partnership or any Restricted Subsidiary in any way (including any
"claw-back," "keep-well," "make-well" or other agreements, arrangements or
understandings to maintain the financial performance of such Subsidiary or to
otherwise infuse or contribute cash to such Subsidiary) or (b) subjects any
property or assets of the Partnership or any Restricted Subsidiary, directly or
indirectly, contingently or otherwise, to the satisfaction of such Indebtedness,
shall be treated as an incurrence of such Indebtedness and an Investment in that
Subsidiary by the Partnership or such Restricted Subsidiary (or both), as the
case may be, and subject to the provisions of Section 5.02 and the Fixed Charge
Coverage Ratio test set forth in Section 5.03(a) hereof at the time of the
designation of such Subsidiary as an Unrestricted Subsidiary or, if later, at
the time such Unrestricted Subsidiary becomes obligated with respect to that
Indebtedness, (ii) no Equity Interests of a Restricted Subsidiary are held by
such Subsidiary, directly or indirectly, and (iii) the amount of the
Partnership's Investment, as determined at the time of such designation, in such
Subsidiary since the Issue Date to the date of such designation is treated as of
the date of such designation as a Restricted Investment, Permitted Investment or
Permitted Business Investment, as applicable. As of the date of the Indenture,
no Subsidiary of the Partnership is designated as an Unrestricted Subsidiary.
Notwithstanding anything in the Indenture to the contrary, PAA Finance shall not
be, and shall not be designated as, an Unrestricted Subsidiary.

     Any designation of a Subsidiary of the Partnership as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a Board
Resolution of the Managing General Partner giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 5.02 hereof. If, at any time,
any Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary
shall be deemed to be incurred by a Restricted Subsidiary of the Partnership as
of such date and, if such Indebtedness is not permitted to be incurred as of
such date under Section 5.03 hereof the Partnership shall be in default of such
covenant. The Board of Directors of the Managing General Partner may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Partnership of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall be permitted only if (1) such
Indebtedness is permitted under Section 5.03 hereof, calculated on a pro forma
basis as if such designation had occurred at the beginning of the four-quarter
reference period; and (2) no Default or Event of Default would be in existence
following such designation.

     "Voting Stock" of any Person as of any date means the Equity Interests of
such Person pursuant to which the holders thereof have the general voting power
under ordinary

                                       E-22

circumstances to elect at least a majority of the board of directors, managers,
general partners or trustees of any Person (regardless of whether, at the time,
Equity Interests of any other class or classes shall have, or might have, voting
power by reason of the occurrence of any contingency) or, with respect to a
partnership (whether general or limited), any general partner interest in such
partnership.

     "Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:

          (1) the sum of the products obtained by multiplying (a) the amount of
     each then remaining installment, sinking fund, serial maturity or other
     required payments of principal, including payment at final maturity, in
     respect thereof, by (b) the number of years (calculated to the nearest
     one-twelfth) that shall elapse between such date and the making of such
     payment; by

          (2) the then outstanding principal amount of such Indebtedness.

     "Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary of the
Partnership of which all of the outstanding Equity Interests (other than
directors' qualifying shares, if any, or other ownership interests required by
applicable law to be held by third parties) shall at the time be owned, directly
or indirectly, by the Partnership and its Restricted Subsidiaries.

     Section 2.02. Other Definitions.

                                                      Defined in
                  Term                                  Section
                  ----                                ----------
"Additional Notes"                                         3.02
"Affiliate Transaction"                                    5.08
"Applicable Premium"                                       4.01
"Asset Sale Offer"                                         4.03
"Change of Control Offer"                                  5.09
"Change of Control Payment"                                5.09
"Change of Control Payment Date"                           5.09
"Covenant Defeasance"                                      8.03
"Event of Default"                                         7.01
"Excess Proceeds"                                          5.06
"IAIs"                                                     3.01
"Incremental Funds"                                        5.02
"incur"                                                    5.03
"Legal Defeasance"                                         8.02
"Note Obligations"                                         9.01
"Offer Amount"                                             4.03
"Offer Period"                                             4.03
"Payment Default                                           7.01
"Permitted Debt"                                           5.03
"Purchase Date"                                            4.03

                                       E-23

"QIBs"                                                     3.01
"Regulation S"                                             3.01
"Reinstatement Date"                                       5.17
"Resale Restriction Termination Date"                      3.04
"Restricted Payments"                                      5.02
"Rule 144A"                                                3.01
"Successor"                                                6.01
"Treasury Rate"                                            4.01
"U.S. Persons"                                             3.01

                                   ARTICLE III

                                    THE NOTES

     Section 3.01. Form. The Notes shall be issued initially in the form of one
or more Global Securities as Series A Notes, and the Series A Notes and
Trustee's authentication shall be substantially in the form of Exhibit A hereto,
the terms of which are incorporated in and made a part of this Supplemental
Indenture, and the Issuers and the Trustee, by their execution and delivery of
this Supplemental Indenture, expressly agree to such terms and provisions and to
be bound thereby. The Series A Notes constituting Transfer Restricted Securities
will be resold initially only to (a) Qualified Institutional Buyers (as such
term is defined in Section 144A of the Securities Act) ("QIBs") in reliance on
Rule 144A of the Securities Act ("Rule 144A") and (b) Persons other than U.S.
Persons (as defined under Regulation S under the Securities Act ("Regulation
S")) ("U.S. Persons") in reliance on Regulation S. Thereafter, the Series A
Notes may be transferred to, among others, QIBs, purchasers in reliance upon
Regulation S and institutional "accredited investors" (as defined in Rule 501 of
the Securities Act ("IAIs")) in accordance with the procedures set forth in Rule
501 of the Securities Act, provided that any Series A Notes constituting
Transfer Restricted Securities that are transferred to IAIs who are not QIBs
shall be issued only in definitive form. Pursuant to the terms of an Exchange
and Registration Rights Agreement, upon consummation of the Exchange Offer
contemplated thereby, the Series A Notes constituting Transfer Restricted
Securities will be exchanged by the Holders for Series B Notes to be issued by
the Issuers in accordance with Section 3.03 hereof. The Series B Notes shall be
issued initially in the form of one or more Global Securities, and the Series B
Notes and the Trustee's authentication shall be substantially in the form of
Exhibit A hereto.

     Section 3.02. Issuance of Additional Notes. The Issuers may, subject to
Section 5.03 hereof, issue an unlimited amount of additional Series A Notes
("Additional Notes") under the Indenture which shall be issued in the same form
as the Series A Notes issued on the Issue Date and which shall have identical
terms as the Series A Notes issued on the Issue Date other than with respect to
the issue date, issue price and first payment of interest. The Series A Notes
issued on the Issue Date shall be limited in aggregate principal amount to
$200,000,000. The Series A Notes issued on the Issue Date and any Additional
Notes subsequently issued, together with any Series B Notes issued in exchange
therefor pursuant to an Exchange Offer, shall be treated as a single class for
all purposes under the Indenture, including waivers, amendments, redemptions and
offers to purchase.

                                       E-24

     Section 3.03. Transfer of Transfer Restricted Securities.

     (a) When Notes are presented to the Registrar with the request to register
the transfer of such Notes or exchange such Notes for an equal principal amount
of Notes of other authorized denominations, the Registrar shall register the
transfer or make the exchange in accordance with Article II of the Original
Indenture. In addition, in the case of Series A Notes that are Transfer
Restricted Securities, such request to register the transfer or make the
exchange shall be accompanied by the following additional information and
documents, as applicable, upon which the Registrar may conclusively rely:

          (1) if such Transfer Restricted Securities are being delivered to the
     Registrar by a Holder for registration in the name of such Holder, without
     transfer, a certification from such Holder to that effect in substantially
     the form of Exhibit C hereto; or

          (2) if such Transfer Restricted Securities are being transferred (i)
     to a QIB in accordance with Rule 144A under the Securities Act or (ii)
     pursuant to an exemption from registration in accordance with Rule 144
     under the Securities Act (and based upon an opinion of counsel if the
     Issuers or the Trustee so requests) or (iii) pursuant to an effective
     registration statement under the Securities Act, a certification to that
     effect from such Holder in substantially the form of Exhibit C hereto; or

          (3) if such Transfer Restricted Securities are being transferred to an
     IAI within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
     Securities Act pursuant to a private placement exemption from the
     registration requirements of the Securities Act (and based upon an opinion
     of counsel if the Issuers or the Trustee so requests), a certification to
     that effect from such Holder in substantially the form of Exhibit C hereto
     and a certification from the applicable transferee in substantially the
     form of Exhibit D hereto; or

          (4) if such Transfer Restricted Securities are being transferred to
     Persons other than U.S. Persons in reliance on Regulation S, a
     certification to that effect from such Holder in substantially the form of
     Exhibit E hereto; or

          (5) if such Transfer Restricted Securities are being transferred in
     reliance on another exemption from the registration requirements of the
     Securities Act (and based upon an opinion of counsel if the Issuers or the
     Trustee so requests), a certification to that effect from such Holder in
     substantially the form of Exhibit C hereto.

     (b) Upon any sale or transfer of a Transfer Restricted Security (including
any Transfer Restricted Security represented by a Global Security) pursuant to
Rule 144 under the Securities Act or an effective registration statement under
the Securities Act:

          (1) in the case of any Transfer Restricted Security that is in the
     form of a definitive Note, the Registrar shall permit the Holder thereof to
     exchange such Transfer Restricted Security for a definitive Note that does
     not bear the legend set forth in Section 3.04(a) below and rescind any
     restriction on the transfer of such Transfer Restricted Security; and

                                       E-25

          (2) in the case of any Transfer Restricted Security represented by a
     Global Security, such Transfer Restricted Security shall not be required to
     bear the legend set forth in Section 3.04(a) below if all other interests
     in such Global Security have been or are concurrently being sold or
     transferred pursuant to Rule 144 under the Securities Act or pursuant to an
     effective registration statement under the Securities Act.

Notwithstanding the foregoing, upon consummation of an Exchange Offer, the
Issuers shall issue and, upon receipt of an authentication order in accordance
with Section 2.05 of the Original Indenture, the Trustee shall authenticate
Series B Notes in exchange for Series A Notes accepted for exchange in the
Exchange Offer, which Series B Notes shall not bear the legend set forth in
Section 3.04(a) below, and the Registrar shall rescind any restriction on the
transfer of such Notes, in each case unless the Holder of such Series A Notes is
either (A) a Person participating in the distribution of the Series A Notes or
(B) a Person who is an affiliate (as defined in Rule 144 under the Securities
Act) of the Issuers. The Issuers shall identify to the Trustee such Holders of
the Notes in a written certification signed by an officer of each Issuer and,
absent certification from the Issuers to such effect, the Trustee shall assume
that there are no such Holders.

     (c) Upon any sale or transfer of a Transfer Restricted Security (including
any Transfer Restricted Security represented by a Global Security) initially
resold to Persons other than U.S. Persons in reliance upon Regulation S pursuant
to (i) Regulation S following 40 consecutive days beginning on and including the
later of the day on which such Transfer Restricted Security was offered to
Persons other than "distributors" (as such term is defined in Regulation S) and
the date of the closing of the original offering, or (ii) an effective
registration statement under the Securities Act, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security for a definitive
Note that does not bear the legend set forth in Section 3.04(b) below and
rescind any restriction on the transfer of such Transfer Restricted Security.

     Section 3.04. Restrictive Legends.

     (a) Except as provided in Section 3.03 hereof, prior to the Resale
Restriction Termination Date, each security certificate evidencing the Notes
shall bear a legend in substantially the following form:

     THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR ANY
APPLICABLE STATE SECURITIES LAWS. THE HOLDER HEREOF, BY ITS ACCEPTANCE OF THIS
SECURITY, AGREES FOR THE BENEFIT OF THE ISSUERS THAT THIS SECURITY MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED PRIOR TO THE EXPIRATION OF THE
HOLDING PERIOD APPLICABLE THERETO UNDER RULE 144(k) UNDER THE SECURITIES ACT
WHICH IS APPLICABLE TO THIS SECURITY (THE "RESALE RESTRICTION TERMINATION DATE")
OTHER THAN (1) TO THE ISSUERS OR THEIR RESPECTIVE SUBSIDIARIES, (2) SO LONG AS
THIS SECURITY IS ELIGIBLE FOR RESALE

                                       E-26

PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" WITHIN THE
MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER, IN EACH CASE TO WHOM NOTICE IS GIVEN THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (3)
INSIDE THE UNITED STATES TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT), (4) TO A NON-"U.S.
PERSON" IN AN "OFFSHORE TRANSACTION" (AS SUCH TERMS ARE DEFINED IN REGULATION S
UNDER THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES
ACT, (5) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, INCLUDING THE EXEMPTION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT, IF AVAILABLE, OR (6) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, SUBJECT IN EACH OF THE
FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS PROPERTY
OR THE PROPERTY OF SUCH INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN ITS
OR THEIR CONTROL, AND SUBJECT TO THE RIGHT OF THE ISSUERS OR THE TRUSTEE FOR THE
SECURITIES PRIOR TO ANY SUCH SALE, PLEDGE OR OTHER TRANSFER ABOVE TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON REQUEST OF THE
HOLDER ON OR AFTER THE RESALE RESTRICTION TERMINATION DATE.

     (b) Each security certificate evidencing the Global Securities shall bear a
legend in substantially the following form:

     THIS GLOBAL SECURITY IS HELD BY OR ON BEHALF OF THE DEPOSITARY (AS DEFINED
IN THE INDENTURE GOVERNING THIS NOTE) IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (A) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.08 OF THE ORIGINAL INDENTURE, (B) THIS GLOBAL
SECURITY MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.15 OF
THE ORIGINAL INDENTURE, (C) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE
FOR CANCELLATION PURSUANT TO SECTION 2.10 OF THE ORIGINAL INDENTURE AND (D) THIS
GLOBAL SECURITY MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY OR ITS NOMINEE WITH
THE PRIOR WRITTEN CONSENT OF THE ISSUERS.

                                   ARTICLE IV

                            REDEMPTION AND PREPAYMENT

     Section 4.01. Optional Redemption.

     (a) At their option, the Issuers may choose to redeem all or any portion of
the Notes, at once or from time to time.

                                       E-27

     (b) To redeem the Notes, the Issuers must pay a redemption price equal to
100% of the principal amount of the Notes to be redeemed plus the Applicable
Premium as of, and accrued and unpaid interest, if any, and Additional Interest,
if any, to, the redemption date (subject to the right of Holders on the relevant
record date to receive interest due on the relevant interest payment date).

     "Applicable Premium" means, with respect to any Note on any redemption
date, the greater of (i) 1.0% of the principal amount of the Note and (ii) the
excess of (A) the present value at such time of the principal amount of such
Note plus any required interest payments due on such Note from the redemption
date to October 15, 2012 (excluding accrued but unpaid interest), computed using
a discount rate equal to the Treasury Rate on such redemption date plus 50 basis
points over (B) the principal amount of such Note.

     "Treasury Rate" means, as of any redemption date, the yield to maturity as
of such redemption date of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
business days prior to the redemption date (or, if such statistical release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the redemption date to October 15, 2012;
provided, however, that if the period from the redemption date to October 15,
2012 is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used.

     (c) Any redemption pursuant to this Section 4.01 shall be made pursuant to
the provisions of Sections 3.01 through 3.03 of the Original Indenture. The
actual redemption price shall be set forth in an Officers' Certificate delivered
to the Trustee no later than two Business Days prior to each redemption date.

     Section 4.02. Mandatory Redemption. Except as set forth in Sections 5.05
and 5.09 hereof, the Issuers shall not be required to make mandatory redemption
or sinking fund payments with respect to the Notes.

     Section 4.03. Offer to Purchase by Application of Excess Proceeds. In the
event that, pursuant to Section 5.05 hereof, the Issuers shall be required to
commence an Asset Sale Offer to all Holders of the Notes and all holders of
Indebtedness that is pari passu with the Notes, the Issuers shall follow the
procedures specified below.

     The Asset Sale Offer shall remain open for a period of 20 business days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
business days after the termination of the Offer Period (the "Purchase Date"),
the Issuers shall purchase the principal amount of Notes required to be
purchased pursuant to Section 5.05 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as principal payments are made at the Stated Maturity.

     If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a

                                       E-28

Note is registered at the close of business on such record date, and no
additional interest shall be payable to Holders who tender Notes pursuant to the
Asset Sale Offer.

     Upon the commencement of an Asset Sale Offer, the Issuers shall send, by
first class mail, a notice to the Trustee and each of the Holders. The notice
shall contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be
made to all Holders. The notice, which shall govern the terms of the Asset Sale
Offer, shall state:

          (a) that the Asset Sale Offer is being made pursuant to this Section
     4.03 and Section 5.05 hereof and the length of time the Asset Sale Offer
     shall remain open;

          (b) the Offer Amount, the purchase price and the Purchase Date;

          (c) that any Note not tendered or accepted for payment shall continue
     to accrue interest;

          (d) that, unless the Issuers default in making such payment, any Note
     accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
     interest after the Purchase Date;

          (e) that Holders electing to have a Note purchased pursuant to an
     Asset Sale Offer may only elect to have all of such Note purchased and may
     not elect to have only a portion of such Note purchased;

          (f) that Holders electing to have a Note purchased pursuant to any
     Asset Sale Offer shall be required to surrender the Note, with the form
     entitled "Option of Holder to Elect Purchase" on the reverse of the Note
     completed, or transfer by book-entry transfer, to the Issuers, a
     Depositary, if appointed by the Issuers, or a paying agent at the address
     specified in the notice at least three days before the Purchase Date;

          (g) that Holders shall be entitled to withdraw their election if the
     Issuers, the Depositary or the paying agent, as the case may be, receives,
     not later than the expiration of the Offer Period, a telegram, telex,
     facsimile transmission or letter setting forth the name of the Holder, the
     principal amount of the Note the Holder delivered for purchase and a
     statement that such Holder is withdrawing his election to have such Note
     purchased;

          (h) that, if the aggregate principal amount of Notes surrendered by
     Holders exceeds the Offer Amount, the Trustee shall select the Notes to be
     purchased on a pro rata basis (with such adjustments as may be deemed
     appropriate by the Issuers so that only Notes in denominations of $1,000,
     or integral multiples thereof, shall be purchased); and

          (i) that Holders whose Notes were purchased only in part shall be
     issued new Notes equal in principal amount to the unpurchased portion of
     the Notes surrendered (or transferred by book-entry transfer).

     On or before the Purchase Date, the Issuers shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, the Offer
Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer,
or if less than the Offer Amount has been tendered, all Notes tendered, and
shall deliver to the Trustee an Officers' Certificate stating that such Notes or

                                       E-29

portions thereof were accepted for payment by the Issuers in accordance with the
terms of this Section 4.03. The Issuers, the Depositary or the paying agent, as
the case may be, shall promptly (but in any case not later than five days after
the Purchase Date) mail or deliver to each tendering Holder an amount equal to
the purchase price of the Notes tendered by such Holder and accepted by the
Issuers for purchase, and the Issuers shall promptly issue a new Note, and the
Trustee, upon written request from the Issuers shall authenticate and mail or
deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Issuers to the Holder thereof. The Issuers
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.

     The Issuers will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable to the purchase of the Notes in
a Change of Control Offer or Asset Sale Offer. To the extent that the provisions
of any securities laws or regulations conflict with the provisions of this
Section 4.03, Section 5.05 or Section 5.09, the Issuers will comply with the
applicable securities laws and regulations and will not be deemed to have
committed a breach of their obligations under such provisions by virtue of such
conflict.

                                    ARTICLE V

                                    COVENANTS

     Section 5.01. Compliance Certificate. (a) In lieu of the Officers'
Certificate required by Section 4.05 of the Original Indenture, the Issuers and
Subsidiary Guarantors shall deliver to the Trustee, within 90 days after the end
of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Partnership and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers (one of whom
shall be the principal executive, financial or accounting officer of each Issuer
and Subsidiary Guarantor) with a view to determining whether the Issuers have
kept, observed, performed and fulfilled their obligations under the Indenture,
and further stating, as to each such Officer signing such certificate, that to
the best of his or her knowledge the Issuers have kept, observed, performed and
fulfilled each and every covenant contained in the Indenture and are not in
default in the performance or observance of any of the terms, provisions and
conditions of the Indenture (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which he or she
may have knowledge and what action the Issuers are taking or propose to take
with respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event and what action the Issuers are taking
or propose to take with respect thereto.

     (b) The Issuers shall, so long as any of the Notes are outstanding, deliver
to the Trustee, forthwith and in any event within five days upon any Officer
becoming aware of any Default or Event of Default or an event which, with notice
or the lapse of time or both, would constitute an Event of Default, an Officers'
Certificate specifying such Default or Event of Default and what action the
Issuers are taking or propose to take with respect thereto.

     Section 5.02. Restricted Payments.

                                       E-30

(a) The Partnership shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly:

          (i) declare or pay any dividend or make any other payment or
     distribution on account of the Partnership's or any of its Restricted
     Subsidiaries' Equity Interests (including, without limitation, any payment
     in connection with any merger or consolidation involving the Partnership or
     any of its Restricted Subsidiaries) or to the direct or indirect holders of
     the Partnership's or any of its Restricted Subsidiaries' Equity Interests
     in their capacity as such (other than distributions or dividends payable in
     Equity Interests of the Partnership (other than Disqualified Equity) and
     other than distributions or dividends payable to the Partnership or to a
     Wholly Owned Restricted Subsidiary);

          (ii) except to the extent permitted by clause (iv) of this Section
     5.02, purchase, redeem or otherwise acquire or retire for value (including,
     without limitation, in connection with any merger or consolidation
     involving an Issuer) any Equity Interests of the Partnership or any of its
     Restricted Subsidiaries (other than any such Equity Interests owned by the
     Partnership or by any of its Wholly Owned Restricted Subsidiaries);

          (iii) except to the extent permitted by clause (iv) of this Section
     5.02, make any payment on or with respect to, or purchase, redeem, defease
     or otherwise acquire or retire for value, any Indebtedness of the
     Partnership or any Restricted Subsidiary that is subordinated by its terms
     to the Notes or the Subsidiary Guarantees, except (A) a payment of interest
     or principal at the Stated Maturity thereof and (B) a purchase, redemption,
     acquisition or retirement required to be made pursuant to the terms of such
     Indebtedness (including pursuant to an asset sale or change of control
     provision); or

          (iv) make any Investment other than a Permitted Investment or a
     Permitted Business Investment

(all such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "Restricted Payments"), unless, at the time of
and after giving effect to such Restricted Payment, no Default or Event of
Default shall have occurred and be continuing or would occur as a consequence
thereof and either:

               (I) if the Fixed Charge Coverage Ratio for the Partnership's four
          most recent fiscal quarters for which internal financial statements
          are available is not less than 1.75 to 1.0, such Restricted Payment,
          together with the aggregate amount of all other Restricted Payments
          made by the Partnership and its Restricted Subsidiaries with respect
          to the quarter for which such Restricted Payment is made, is less than
          the sum, without duplication, of:

                    (A) Available Cash from Operating Surplus with respect to
               the immediately preceding quarter, plus

                    (B) the sum of the aggregate net cash proceeds and the fair
               market value of any assets or rights used or useful in a
               Permitted Business received by the Partnership or any of its
               Restricted Subsidiaries in connection with (i) a capital
               contribution to the Partnership from any Person (other than a
               Restricted Subsidiary of the Partnership) made after the Issue
               Date or a capital contribution to a Restricted Subsidiary from
               any Person (other than the Partnership or another Restricted

                                       E-31

               Subsidiary) made after the Issue Date, or (ii) an issuance and
               sale made after the Issue Date of Equity Interests (other than
               Disqualified Equity) of the Partnership or from the issuance or
               sale made after the Issue Date of convertible or exchangeable
               Disqualified Equity or convertible or exchangeable debt
               securities of the Partnership that have been converted into or
               exchanged for such Equity Interests (other than Disqualified
               Equity), plus

                    (C) to the extent that any Restricted Investment that was
               made after the Issue Date is sold for cash or Cash Equivalents or
               otherwise liquidated or repaid for cash or Cash Equivalents, the
               lesser of the refund of capital or similar payment made in cash
               or Cash Equivalents with respect to such Restricted Investment
               (less the cost of such disposition, if any) and the initial
               amount of such Restricted Investment (other than to a Restricted
               Subsidiary of the Partnership), plus

                    (D) the net reduction in Restricted Investments resulting
               from dividends, repayments of loans or advances, or other
               transfers of assets in each case to the Partnership or any of its
               Restricted Subsidiaries from any Person (including, without
               limitation, Unrestricted Subsidiaries) or from redesignations of
               Unrestricted Subsidiaries as Restricted Subsidiaries, to the
               extent such amounts have not been included in Available Cash from
               Operating Surplus for any period commencing on or after the Issue
               Date (items (B), (C) and (D) being referred to as "Incremental
               Funds"), minus

                    (E) the aggregate amount of Incremental Funds previously
               expended pursuant to this clause (I) and clause (II) below; or

               (II) if the Fixed Charge Coverage Ratio for the Partnership's
          four most recent fiscal quarters for which internal financial
          statements are available is less than 1.75 to 1.0, such Restricted
          Payment, together with the aggregate amount of all other Restricted
          Payments made by the Partnership and its Restricted Subsidiaries with
          respect to the quarter for which such Restricted Payment is made (such
          Restricted Payments for purposes of this clause (II) meaning only
          distributions on common units of the Partnership, plus the related
          distribution on the general partner interest), is less than the sum,
          without duplication, of

                    (x) $75.0 million less the aggregate amount of all
               Restricted Payments declared or made by the Partnership and its
               Restricted Subsidiaries pursuant to this clause (II)(x) during
               the period ending on the last day of the fiscal quarter of the
               Partnership immediately preceding the date of such Restricted
               Payment and beginning on the Issue Date, plus

                    (y) Incremental Funds to the extent not previously expended
               pursuant to this clause (II) or clause (I) above.

     (b) So long as no Default has occurred and is continuing or would be caused
thereby (except with respect to clause (i) below under which the payment of a
distribution or dividend is permitted), Section 5.02(a) hereof shall not
prohibit:

                                       E-32

          (i) the payment by the Partnership or any Restricted Subsidiary of any
     distribution or dividend within 60 days after the declaration thereof, if
     at said date of declaration such payment would have complied with the
     provisions of the Indenture;

          (ii) the redemption, repurchase, retirement, defeasance or other
     acquisition of any Indebtedness of the Partnership or any of its Restricted
     Subsidiaries that is subordinated to the Notes or the Guarantees or of any
     Equity Interests of the Partnership or any of its Restricted Subsidiaries
     in exchange for, or out of the net cash proceeds of, a substantially
     concurrent (A) capital contribution to the Partnership or such Restricted
     Subsidiary from any Person (other than the Partnership or another
     Restricted Subsidiary) or (B) sale (a sale shall be deemed substantially
     concurrent if such redemption, repurchase, retirement, defeasance or
     acquisition occurs not more than 120 days after such sale) (other than to a
     Restricted Subsidiary of the Partnership) of Equity Interests (other than
     Disqualified Equity) of the Partnership or such Restricted Subsidiary;
     provided, however, that the amount of any net cash proceeds that are
     utilized for any such redemption, repurchase or other acquisition or
     retirement shall be excluded or deducted from the calculation of Available
     Cash from Operating Surplus and Incremental Funds;

          (iii) the defeasance, redemption, repurchase or other acquisition of
     Indebtedness of the Partnership or any Restricted Subsidiary that is
     subordinated to the Notes or the Guarantees with the net cash proceeds from
     an incurrence of Permitted Refinancing Indebtedness;

          (iv) the payment of any distribution or dividend by a Restricted
     Subsidiary to the Partnership or to the holders of its Equity Interests
     (other than Disqualified Equity) on a pro rata basis;

          (v) the purchase or other acquisition of one or more Equity Interests
     in the Partnership from former employees of the Partnership; provided, that
     the aggregate price paid for all such purchased or acquired Equity
     Interests shall not exceed $2.0 million in any twelve month period;

          (vi) the repurchase, redemption or other acquisition or retirement for
     value of any Equity Interests to satisfy awards under the General Partner's
     1998 Long-Term Incentive Plan, as amended, provided such repurchases do not
     exceed an aggregate of 1,425,000 common units (as such number may be
     adjusted for any subdivision or combination of common units) after the
     Issue Date; and

          (vii) the repurchase, redemption or other acquisition or retirement
     for value of any Equity Interests of the Partnership or any Restricted
     Subsidiary of the Partnership pursuant to any management equity
     subscription agreement or equity option agreement or other employee benefit
     plan or to satisfy obligations under any Equity Interests appreciation
     rights or option plan or similar arrangement; provided that the aggregate
     price paid for all such repurchased, redeemed, acquired or retired Equity
     Interests does not exceed $5.0 million in any calendar year; provided,
     further, that if the amount so paid in any calendar year is less than $5.0
     million, such shortfall may be used to so repurchase, redeem, acquire or
     retire Equity Interests in either of the next two calendar years in
     addition to the $5.0 million that may otherwise be paid in each such
     calendar year.

                                       E-33

     (c) In computing the amount of Restricted Payments previously made for
purposes of Section 5.02(b), Restricted Payments made under clauses (b)(i) (but
only if the declaration or such dividend or other distribution has not been
counted in a prior period) and, to the extent of amounts paid to Holders other
than the Partnership or a Restricted Subsidiary, (b)(iv) shall be included, and
Restricted Payments made under clauses (b)(ii), (b)(iii), (b)(v), (b)(vi) and
(b)(vii) and, except to the extent noted above, (b)(iv) of this Section 5.02
shall not be included. The amount of all Restricted Payments (other than cash)
shall be the fair market value on the date of the Restricted Payment of the
asset(s) or securities proposed to be transferred or issued by the Partnership
or such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. The fair market value of any assets or securities that are required to
be valued by this Section 5.02 shall be determined by the Board of Directors of
the Managing General Partner whose Board Resolution with respect thereto shall
be delivered to the Trustee.

     Section 5.03. Incurrence of Indebtedness and Issuance of Disqualified
Equity. (a) The Partnership shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt and Disqualified Equity), other than
Permitted Debt; provided, however, that the Partnership and any Subsidiary
Guarantor may incur Indebtedness (including Acquired Debt and Disqualified
Equity), if the Fixed Charge Coverage Ratio for the Partnership's most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such additional Indebtedness
is incurred would have been at least 2.00 to 1.00, determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred at the beginning of such
four-quarter period.

     (b) Section 5.03(a) shall not prohibit the incurrence of any of the
following items of Indebtedness (collectively, "Permitted Debt"):

          (i) the incurrence by the Partnership and any of its Restricted
     Subsidiaries of the Indebtedness under the Credit Facilities and the
     guarantees thereof; provided that the aggregate principal amount of all
     Indebtedness of the Partnership and its Restricted Subsidiaries outstanding
     under all Credit Facilities pursuant to this clause (b)(i), after giving
     effect to such incurrence, does not exceed $650.0 million less the
     aggregate amount of all repayments of Indebtedness under the Credit
     Facilities that have been made by the Partnership or any of its Restricted
     Subsidiaries in respect of Asset Sales to the extent such repayments
     constitute a permanent reduction of commitments under such Credit
     Facilities;

          (ii) the incurrence by the Partnership and its Restricted Subsidiaries
     of Existing Indebtedness;

          (iii) the incurrence by the Partnership and the Subsidiary Guarantors
     of (A) $200.0 million in aggregate principal amount of Indebtedness
     represented by the Series A Notes and the Guarantees and the related
     Obligations and (B) Indebtedness represented by the Series B Notes and the
     Guarantees and the related Obligations;

          (iv) the incurrence by the Partnership or any of its Restricted
     Subsidiaries of Indebtedness represented by Capital Lease Obligations,
     mortgage financings or purchase money obligations, in each case, incurred
     in the ordinary course of business for the purpose

                                       E-34

     of financing all or any part of the purchase price or cost of construction,
     improvement or development of property, plant or equipment used in the
     business of the Partnership or such Restricted Subsidiary, in an aggregate
     principal amount not to exceed $20.0 million at any time outstanding;

          (v) the incurrence by the Partnership or any of its Restricted
     Subsidiaries of Permitted Refinancing Indebtedness;

          (vi) the incurrence by the Partnership or any of its Restricted
     Subsidiaries of intercompany Indebtedness between or among the Partnership
     and any of its Restricted Subsidiaries; provided, however, that

               (A) if an Issuer or any Subsidiary Guarantor is the obligor on
          such Indebtedness to a Restricted Subsidiary of the Partnership that
          is not a Subsidiary Guarantor, such Indebtedness must be expressly
          subordinated to the prior payment in full in cash of all Obligations
          with respect to the Notes, in the case of the Partnership, or the
          Guarantee of such Subsidiary Guarantor, in the case of a Subsidiary
          Guarantor,

               (B) such intercompany Indebtedness is owed by the Partnership or
          any of its Restricted Subsidiaries to either the Partnership or a
          Wholly Owned Restricted Subsidiary and

               (C)(I) any subsequent issuance or transfer of Equity Interests
          that results in any such Indebtedness being held by a Person other
          than the Partnership or a Wholly Owned Restricted Subsidiary and (II)
          any sale or other transfer of any such Indebtedness to a Person that
          is not either the Partnership or a Wholly Owned Restricted Subsidiary,
          shall be deemed, in each case, to constitute an incurrence of such
          Indebtedness by the Partnership or such Restricted Subsidiary, as the
          case may be, that was not permitted by this clause (vi);

          (vii) the incurrence by the Partnership or any of its Restricted
     Subsidiaries of Hedging Obligations entered into in the ordinary course of
     business;

          (viii) the guarantee by the Partnership or any of the Subsidiary
     Guarantors of Indebtedness of the Partnership or a Restricted Subsidiary
     that was permitted to be incurred by another provision of this Section
     5.03;

          (ix) Indebtedness in respect of bid, performance, surety and appeal
     bonds issued for the account of the Partnership or any of its Restricted
     Subsidiaries in the ordinary course of business, including guarantees and
     obligations of the Partnership or any of its Restricted Subsidiaries with
     respect to letters of credit supporting such obligations (in each case
     other than for an obligation for money borrowed);

          (x) the incurrence by the Partnership or any of its Restricted
     Subsidiaries of additional Indebtedness in an aggregate principal amount
     not to exceed $20.0 million at any time outstanding; and

                                       E-35

          (xi) the incurrence by the Partnership or any of its Restricted
     Subsidiaries of Permitted Marketing Obligations, Permitted Contango Market
     Transaction Obligations and Permitted Operating Obligations.

     (c) To the extent that the Partnership's Unrestricted Subsidiaries incur
Non-Recourse Debt and any such Indebtedness ceases to be Non-Recourse Debt of
such Unrestricted Subsidiary, then such event shall be deemed to constitute an
incurrence of Indebtedness by a Restricted Subsidiary of the Partnership that
was subject to this Section 5.03.

     (d) For purposes of determining compliance with this Section 5.03, in the
event that an item of proposed Indebtedness meets the criteria of more than one
of the categories of Permitted Debt described in clauses (i) through (xi) above,
or is entitled to be incurred pursuant to Section 5.03(a), the Partnership shall
be permitted, in its sole discretion, to classify such item of Indebtedness on
the date it is incurred, or later reclassify all or a portion of such item of
Indebtedness in any manner that complies with this Section 5.03. An item of
Indebtedness may be divided and classified in one or more of the types of
Permitted Debt.

     Section 5.04. Sale and Lease-Back Transactions. The Partnership shall not,
and shall not permit any of its Restricted Subsidiaries to, enter into any Sale
and Lease-Back Transaction; provided that the Partnership or any of its
Restricted Subsidiaries that is a Subsidiary Guarantor may enter into a Sale and
Lease-Back Transaction if:

     (a) the Partnership or that Subsidiary Guarantor, as applicable, could have
(i) incurred Indebtedness in an amount equal to the Attributable Debt relating
to such Sale and Lease-Back Transaction pursuant to Section 5.03(a) hereof and
(ii) incurred a Lien to secure such Indebtedness pursuant to Section 5.06
hereof; or

     (b) the gross cash proceeds of such Sale and Lease-Back Transaction are at
least equal to the fair market value, as determined in good faith by the Board
of Directors of the Managing General Partner, of the property that is the
subject of such Sale and Lease-Back Transaction, and the Partnership or such
Subsidiary Guarantor applies such proceeds in compliance with the provisions of
Sections 4.03 and 5.05 hereof.

     Section 5.05. Asset Sales. (a) The Issuers shall not, and shall not permit
any of their Restricted Subsidiaries to, consummate an Asset Sale unless:

          (i) the Partnership (or the Restricted Subsidiary, as the case may be)
     receives consideration at the time of such Asset Sale at least equal to the
     fair market value of the assets or Equity Interests issued or sold or
     otherwise disposed of;

          (ii) such fair market value is determined by (A) an executive officer
     of the Managing General Partner if the value is less than $10.0 million, as
     evidenced by an Officers' Certificate delivered to the Trustee, or (B) the
     Board of Directors of the Managing General Partner if the value is $10.0
     million or more, as evidenced by a resolution of such Board of Directors
     delivered to the Trustee; and

                                       E-36

          (iii) at least 75% of the consideration therefor received by the
     Partnership or such Restricted Subsidiary is in the form of (A) cash or
     Cash Equivalents, (B) assets or rights used or useful in a Permitted
     Business or (C) any Permitted Business Investment or any other Permitted
     Investment other than Hedging Obligations. For purposes of this paragraph
     (a), each of the following shall be deemed to be cash: (i) any liabilities
     (as shown on the Partnership's or such Restricted Subsidiary's most recent
     balance sheet) of the Partnership or any Restricted Subsidiary (other than
     contingent liabilities and liabilities that are by their terms subordinated
     to the Notes or any Guarantee) that are assumed by the transferee of any
     such assets pursuant to a customary novation agreement that releases the
     Partnership or such Restricted Subsidiary from further liability; and (ii)
     any securities, notes or other obligations received by the Partnership or
     any such Restricted Subsidiary from such transferee that are within 90 days
     after the Asset Sale (subject to ordinary settlement periods) converted by
     the Partnership or such Restricted Subsidiary into cash (to the extent of
     the cash received in such conversion).

     (b) Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, the Partnership or a Restricted Subsidiary may apply (or enter into a
definitive agreement for such application within such 360-day period, provided
that such capital expenditure or acquisition is closed within 90 days after the
end of such 360-day period) such Net Proceeds at its option:

          (i) to repay Senior Debt of the Partnership and/or its Restricted
     Subsidiaries (or to make an offer to repurchase or redeem Senior Debt,
     provided that such repurchase or redemption closes within 45 days after the
     end of such 360-day period) with a permanent reduction in availability for
     any Credit Facilities pursuant to Section 5.03(b)(i);

          (ii) to make a capital expenditure in a Permitted Business;

          (iii) to acquire other assets or rights that are used or useful in a
     Permitted Business; or

          (iv) to invest in any other Permitted Business Investment or any other
     Permitted Investment other than Investments in Cash Equivalents or Hedging
     Obligations.

Pending the final application of any such Net Proceeds, the Partnership may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by the Indenture and the
Partnership shall reserve the amount of such Net Proceeds, other than those
temporarily applied, in calculating Available Cash.

     (c) Any Net Proceeds from Asset Sales that are not applied or invested as
provided in paragraph (b) shall constitute "Excess Proceeds". When the aggregate
amount of Excess Proceeds exceeds $10.0 million, the Issuers shall make a pro
rata offer (an "Asset Sale Offer") in accordance with the procedures set forth
in Section 4.03 hereof to all Holders of Notes and all holders of other
Indebtedness that is pari passu with the Notes containing provisions similar to
those set forth in this Section 5.05 and Section 4.03 hereof with respect to
offers to purchase or redeem with the proceeds of sales of assets to purchase
the maximum principal amount of Notes and such other pari passu Indebtedness
that may be purchased out of the Excess Proceeds. The offer price in any Asset
Sale Offer shall be equal to 100% of principal amount plus accrued and unpaid
interest (including any Additional Interest in the case of the Notes), if any,
and premium, if any, to the date of purchase, and shall be payable in cash. If
any Excess Proceeds remain after consummation of an

                                       E-37

Asset Sale Offer, such Excess Proceeds shall be deemed to constitute Available
Cash from Operating Surplus for purposes of the Indenture, and the Partnership
may use such Excess Proceeds for any purpose not otherwise prohibited by the
Indenture. If the aggregate principal amount of Notes tendered into such Asset
Sale Offer exceeds the amount of Excess Proceeds allocated for repurchases of
Notes pursuant to the Asset Sale Offer for Notes, the Trustee shall select the
Notes to be purchased on a pro rata basis. Upon completion of each Asset Sale
Offer, the amount of Excess Proceeds shall be reset at zero.

     (d) To the extent that the provisions of any securities laws or regulations
conflict with provisions of this covenant, each of the Issuers shall comply with
the applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this covenant by virtue thereof.

     Section 5.06. Liens. The Partnership shall not, and shall not permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien of any kind securing Indebtedness on any asset now
owned or hereafter acquired, except Permitted Liens, without making effective
provision whereby all Obligations due under the Notes and the Indenture or any
Guarantee, as applicable, shall be secured (a) by a Lien equally and ratably
with any and all Obligations thereby secured for so long as any such Obligations
shall be so secured, or (b) in the case of Indebtedness so secured that is
expressly subordinated to the Notes or any Guarantee, as applicable, by a Lien
prior to any Liens securing any and all Obligations thereby secured for so long
as any such Obligations shall be so secured.

     Section 5.07. Dividend and Other Payment Restrictions Affecting
Subsidiaries. (a) The Partnership shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or permit to exist or
become effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to:

          (i) pay dividends or make any other distributions on its Equity
     Interests to the Partnership or to any of the Partnership's Restricted
     Subsidiaries, or pay any Indebtedness owed to the Partnership or any of its
     Restricted Subsidiaries;

          (ii) make loans or advances to or make other investments in the
     Partnership or any of its Restricted Subsidiaries; or

          (iii) transfer any of its properties or assets to the Partnership or
     to any of its Restricted Subsidiaries.

     (b) The restrictions in the preceding paragraph (a) shall not apply to
encumbrances or restrictions existing under or by reason of:

          (i) agreements as in effect on the Issue Date and any amendments,
     modifications, restatements, renewals, increases, supplements, refundings,
     replacements or refinancings of any such agreements or any Existing
     Indebtedness to which such agreement relates, provided that such
     amendments, modifications, restatements, renewals, increases, supplements,
     refundings, replacements or refinancings are no more restrictive, taken as
     a whole, with

                                       E-38

     respect to such distribution, dividend and other payment restrictions and
     loan or investment restrictions than those contained in such agreement, as
     in effect on the date of the Indenture;

          (ii) the Indenture, the Notes and the Guarantees;

          (iii) applicable law;

          (iv) any instrument governing Indebtedness or Equity Interests of a
     Person acquired by the Partnership or any of its Restricted Subsidiaries as
     in effect at the time of such acquisition (except to the extent such
     Indebtedness was incurred in connection with or in contemplation of such
     acquisition), which encumbrance or restriction is not applicable to any
     Person, or the properties or assets of any Person, other than such Person,
     or the property or assets of such Person, so acquired, provided that, in
     the case of Indebtedness, such Indebtedness was permitted by the terms of
     the Indenture to be incurred;

          (v) customary nonassignment provisions in Hydrocarbon purchase and
     sale or exchange agreements, or similar operational agreements and in
     licenses and leases entered into in the ordinary course of business;

          (vi) purchase money obligations for property acquired in the ordinary
     course of business that impose restrictions on the property so acquired of
     the nature described in clause (a)(iii) above;

          (vii) any agreement for the sale or other disposition of assets or
     Equity Interests in a Restricted Subsidiary of the Partnership that
     contains any one or more of the restrictions described in clauses (a)(i)
     through (a)(iii) above by such Restricted Subsidiary pending its sale or
     other disposition, provided that such sale or disposition is consummated,
     or such restrictions are canceled or terminated or lapse, within 90 days;

          (viii) Permitted Refinancing Indebtedness, provided that the
     restrictions contained in the agreements governing such Permitted
     Refinancing Indebtedness are no more restrictive, taken as a whole, than
     those contained in the agreements governing the Indebtedness being
     refinanced;

          (ix) Permitted Liens securing Indebtedness otherwise permitted to be
     issued pursuant to Section 5.06 hereof that limit the right of the
     Partnership or any of its Restricted Subsidiaries to dispose of the assets
     subject to such Lien; or

          (x) any agreement or instrument relating to any property or assets
     acquired after the Issue Date, so long as such encumbrance or restriction
     relates only to the property or assets so acquired and is not and was not
     created in anticipation of such acquisitions; or

          (xi) provisions with respect to the disposition or distribution of
     assets in Joint Venture agreements and other similar agreements entered
     into in the ordinary course of business.

     Section 5.08. Transactions with Affiliates.

                                       E-39

(a) The Partnership shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each, an "Affiliate Transaction"), unless:

          (i) such Affiliate Transaction is between or among the Partnership and
     any of its Restricted Subsidiaries or is either (A) on terms that are no
     less favorable to the Partnership or the relevant Restricted Subsidiary
     than those that would have been obtained in a comparable transaction made
     on an arm's-length basis with an unrelated Person or, if there is no such
     comparable transaction, on terms that are fair and reasonable to the
     Partnership or such Restricted Subsidiary, or (B) in the ordinary course of
     business and consistent with past practice; and

          (ii) the Partnership delivers to the Trustee:

               (A) with respect to any Affiliate Transaction or series of
          related Affiliate Transactions involving aggregate consideration with
          a fair market value in excess of $10.0 million, an Officers'
          Certificate certifying that such Affiliate Transaction complies with
          this Section 5.08 and that such Affiliate Transaction has been
          approved (either pursuant to specific or general resolutions) by a
          majority of the disinterested members of the Board of Directors of the
          Managing General Partner or has been approved by an officer pursuant
          to a delegation (specific or general) of authority from such Board of
          Directors; and

               (B) with respect to any Affiliate Transaction or series of
          related Affiliate Transactions involving aggregate consideration with
          a fair market value in excess of $25.0 million, (I) a resolution of
          the Board of Directors of the Managing General Partner set forth in an
          Officers' Certificate certifying that such Affiliate Transaction
          complies with this Section 5.08 and that such Affiliate Transaction
          has been approved by a majority of the disinterested members of such
          Board of Directors and (II) an opinion as to the fairness to the
          Partnership of such Affiliate Transaction from a financial point of
          view issued by an accounting, appraisal or investment banking firm
          that is recognized nationally in the energy industry as an expert in
          rendering fairness opinions on transactions such as those proposed.

     (b) The following items shall not be deemed to be Affiliate Transactions
and shall not be subject to the provisions of paragraph (a) above:

          (i) any employment, equity award, equity option or equity appreciation
     agreement or plan entered into by the Partnership or any of its Restricted
     Subsidiaries in the ordinary course of business of the Partnership or such
     Restricted Subsidiary;

          (ii) Restricted Payments that are permitted to be made pursuant to
     Section 5.02 hereof;

          (iii) transactions effected in accordance with the terms of agreements
     as in effect on the Issue Date;

                                       E-40

          (iv) transactions effected in accordance with the Marketing Agreement
     that are fair and reasonable to the Partnership and its Restricted
     Subsidiaries;

          (v) customary compensation, indemnification and other benefits made
     available to officers, directors or employees of the Partnership or a
     Restricted Subsidiary of the Partnership or the Managing General Partner,
     including reimbursement or advancement of out-of-pocket expenses and
     provision of officers' and directors' liability insurance; and

          (vi) loans to officers and employees made in the ordinary course of
     business in an aggregate amount not to exceed $1.0 million at any one time
     outstanding.

     Section 5.09. Offer to Repurchase Upon Change of Control. (a) Upon the
occurrence of a Change of Control, the Issuers shall make an offer (a "Change of
Control Offer") to each Holder of Notes to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes at an offer price
(the "Change of Control Payment") in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest thereon, if any, and
Additional Interest, if any, to the date of purchase (the "Change of Control
Payment Date"), subject to the rights of Holders on a record date occurring
prior to the Change of Control Payment Date to receive interest on an interest
payment date occurring after such Change of Control Payment Date. Within 30 days
following any Change of Control, the Issuers shall mail a notice to each Holder
describing the transaction or transactions that constitute the Change of Control
and stating:

          (i) that the Change of Control Offer is being made pursuant to this
     Section 5.09 and that all Notes tendered shall be accepted for payment;

          (ii) the purchase price and the Change of Control Payment Date, which
     shall be no later than 30 business days from the date such notice is
     mailed;

          (iii) that any Note not tendered shall continue to accrue interest;

          (iv) that, unless the Issuers default in the payment of the Change of
     Control Payment, all Notes accepted for payment pursuant to the Change of
     Control Offer shall cease to accrue interest after the Change of Control
     Payment Date;

          (v) that Holders electing to have any Notes purchased pursuant to a
     Change of Control Offer shall be required to surrender the Notes, with the
     form entitled "Option of Holder to Elect Purchase" on the reverse of the
     Notes completed, to the paying agent at the address specified in the notice
     prior to the close of business on the third business day preceding the
     Change of Control Payment Date;

          (vi) that Holders shall be entitled to withdraw their election if the
     paying agent receives, not later than the close of business on the second
     business day preceding the Change of Control Payment Date, a telegram,
     telex, facsimile transmission or letter setting forth the name of the
     Holder, the principal amount of Notes delivered for purchase, and a
     statement that such Holder is withdrawing his election to have the Notes
     purchased; and

          (vii) that Holders whose Notes are being purchased only in part shall
     be issued new Notes equal in principal amount to the unpurchased portion of
     the Notes surrendered, which

                                       E-41

     unpurchased portion must be equal to $1,000 in principal amount or an
     integral multiple thereof.

The Issuers will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable to the purchase of the Notes in an Change of
Control Offer. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 5.09, the Issuers will
comply with the applicable securities laws and regulations and will not be
deemed to have committed a breach of its obligations under this Section 5.09 by
virtue of such conflict.

     (b) On the Change of Control Payment Date, the Issuers shall, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the paying agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Issuers. The paying agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate (upon an Issuer Order) and mail (or cause to be
transferred by book entry) to each Holder a new Note equal in principal amount
to any unpurchased portion of the Notes surrendered, if any; provided that each
such new Note shall be in a principal amount of $1,000 or an integral multiple
thereof. The Issuers shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.

     (c) Notwithstanding anything to the contrary in this Section 5.09, the
Issuers shall not be required to make a Change of Control Offer upon a Change of
Control if a third party makes an offer to purchase the Notes in the manner, at
the times and otherwise in compliance with the requirements set forth in this
Section 5.09 and purchases all Notes validly tendered and not withdrawn under
such Change of Control Offer.

     Section 5.10. Additional Subsidiary Guarantees. If any Restricted
Subsidiary of the Partnership that is not then a Subsidiary Guarantor (a)
guarantees Indebtedness of either of the Issuers or any other Restricted
Subsidiary of the Partnership or (b) incurs Indebtedness other than Permitted
Debt described in clause (vi), (vii), (ix), (x) or (xi) of the definition
thereof), in either case after the Issue Date, then such Restricted Subsidiary
shall execute and deliver a supplemental Indenture providing for the guarantee
of the payment of the Notes pursuant to Article IX hereof.

     Section 5.11. Designation of Restricted and Unrestricted Subsidiaries. (a)
The Board of Directors of the Managing General Partner may designate any
Restricted Subsidiary of the Partnership to be an Unrestricted Subsidiary if
that designation would not cause a Default or an Event of Default hereunder. If
a Restricted Subsidiary of the Partnership is designated as an Unrestricted
Subsidiary, all outstanding Investments owned by the Partnership and its
Restricted Subsidiaries in the Subsidiary so designated shall be deemed to be an
Investment made as of the time of such designation and shall reduce the amount
available for Restricted Payments under Section 5.02(a) hereof for Permitted
Investments or for Permitted Business Investments, as applicable. All such
outstanding Investments shall be valued at their fair market value at the time
of

                                       E-42

such designation. Such designation shall only be permitted if such Restricted
Payment, Permitted Investment or Permitted Business Investment would be
permitted at that time and such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary. All Subsidiaries of an Unrestricted
Subsidiary shall also be Unrestricted Subsidiaries. Upon the designation of a
Restricted Subsidiary that is a Subsidiary Guarantor as an Unrestricted
Subsidiary, the Guarantee of such entity shall be released as provided in
Section 9.07.

     (b) The Board of Directors of the Managing General Partner may redesignate
any Unrestricted Subsidiary to be a Restricted Subsidiary if such designation
complies with the provisions set forth in the definition of "Unrestricted
Subsidiary."

     Section 5.12. Business Activities. The Partnership shall not, and shall not
permit any of its Restricted Subsidiaries to, materially or substantially engage
in any business other than Permitted Businesses.

     Section 5.13. Restrictions on Nature of Indebtedness and Activities of PAA
Finance. In addition to the restrictions set forth in Section 5.03 hereof, PAA
Finance shall not incur any Indebtedness unless (a) the Partnership is a
co-obligor or guarantor of such Indebtedness or (b) the net proceeds of such
Indebtedness are loaned to the Partnership, used to acquire outstanding debt
securities issued by the Partnership or used to repay Indebtedness permitted
under Section 5.03. PAA Finance shall not engage in any business not related
directly or indirectly to obtaining money or arranging financing for the
Partnership or its Restricted Subsidiaries.

     Section 5.14. Payments for Consent. The Partnership shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, pay or cause to
be paid any consideration to or for the benefit of any Holder of Notes for or as
an inducement to any consent, waiver or amendment of any of the terms or
provisions of the Indenture or the Notes unless such consideration is offered to
be paid and is paid to all Holders of the Notes that consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to such
consent, waiver or agreement.

     Section 5.15. Covenant Termination. In the event that at any time (a) the
rating assigned to the Notes by at least two of S&P, Moody's or Fitch is an
Investment Grade Rating and (b) no Default hereunder has occurred and is
continuing, the Issuers and their Restricted Subsidiaries will no longer be
subject to the proviso to the definition of "Unrestricted Subsidiary" in Section
2.01 hereof or to Sections 5.02, 5.03, 5.05, 5.07, 5.08, 5.12 and 5.13 hereof;
provided, however that the Issuers and their Restricted Subsidiaries will remain
subject to Sections 5.04 (other than the financial test set forth in
5.04(a)(i)), 5.06, 5.09, 5.10, 5.14, Article VI (other than the financial test
set forth in clause (iv) of Section 6.01(a)) and Article IV and Section 5.03 of
the Original Indenture.

                                       E-43

                                   ARTICLE VI

                                   SUCCESSORS

     With respect to the Notes, the provisions of this Article VI shall preempt
the provisions of Article X of the Original Indenture in their entirety.

     Section 6.01. Merger, Consolidation, or Sale of Assets by Issuers. (a)
Neither of the Issuers shall, directly or indirectly, consolidate or merge with
or into another Person (whether or not such Issuer is the survivor) or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets, in one or more related transactions, to another
Person unless:

          (i) either (A) such Issuer is the surviving entity of such
     transaction; or (B) the Person formed by or surviving any such
     consolidation or merger (if other than such Issuer) or to which such sale,
     assignment, transfer, lease, conveyance or other disposition shall have
     been made (the "Successor Company") is an entity organized or existing
     under the laws of the United States, any state thereof or the District of
     Columbia, provided that PAA Finance may not consolidate or merge with or
     into any entity other than a corporation satisfying such requirement for so
     long as the Partnership is not a corporation;

          (ii) the Successor Company expressly assumes all the obligations of
     such Issuer under the Notes and the Indenture pursuant to a supplemental
     Indenture in a form reasonably satisfactory to the Trustee;

          (iii) immediately after such transaction no Default or Event of
     Default exists;

          (iv) except in the case of a transaction involving PAA Finance, such
     Issuer or Successor Company shall on the date of such transaction after
     giving pro forma effect thereto and any related financing transactions as
     if such transaction had occurred at the beginning of the applicable
     four-quarter period, be permitted to incur at least $1.00 of additional
     Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
     Section 5.03(a); and

          (v) such Issuer has delivered to the Trustee an Officers' Certificate
     and an Opinion of Counsel, each stating that such consolidation, merger or
     disposition and, if a supplemental Indenture is required, such supplemental
     Indenture complies with the Indenture and all conditions precedent therein
     relating to such transaction have been satisfied.

     (b) Notwithstanding the foregoing paragraph (a), the Partnership is
permitted to reorganize as any other form of entity in accordance with the
following procedures; provided that:

          (i) the reorganization involves the conversion (by merger, sale,
     contribution or exchange of assets or otherwise) of the Partnership into a
     form of entity other than a limited partnership formed under Delaware law;

          (ii) the entity so formed by or resulting from such reorganization is
     an entity organized or existing under the laws of the United States, any
     state thereof or the District of Columbia;

                                       E-44

          (iii) the entity so formed by or resulting from such reorganization
     assumes all the obligations of the Partnership under the Notes and the
     Indenture pursuant to a supplemental Indenture in a form reasonably
     satisfactory to the Trustee;

          (iv) immediately after such reorganization no Default or Event of
     Default exists; and

          (v) such reorganization is not materially adverse to the Holders of
     the Notes (for purposes of this clause (v) a reorganization shall not be
     considered materially adverse to the Holders of the Notes solely because
     the successor or survivor of such reorganization (A) is subject to federal
     or state income taxation as an entity or (B) is considered to be an
     "includable corporation" of an affiliated group of corporations within the
     meaning of Section 1504(b)(i) of the Code or any similar state or local
     law).

     Section 6.02. Merger or Consolidation of Subsidiary Guarantors. No
Subsidiary Guarantor shall, directly or indirectly, consolidate with or merge
with or into another Person (whether or not such Subsidiary Guarantor is the
surviving Person), except for the Partnership or another Subsidiary Guarantor,
unless: (a) immediately after giving effect to such transaction, no Default or
Event of Default exists, (b) the Person (if not otherwise a Subsidiary
Guarantor) formed by or surviving any such transaction expressly assumes all the
obligations of the Subsidiary Guarantor under the Notes and the Indenture
pursuant to a supplemental Indenture in form reasonably satisfactory to the
Trustee, except as provided in Section 9.07, and (c) the Issuers have delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such supplemental Indenture complies with this Indenture and all conditions
precedent therein relating to such transaction have been satisfied.

     Section 6.03. Successor Corporation Substituted. Upon any consolidation or
merger of an Issuer or Subsidiary Guarantor, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the
properties or assets of an Issuer in accordance with Sections 6.01 and 6.02
hereof, the Person formed by or surviving any such consolidation or merger of an
Issuer or a Subsidiary Guarantor (if other than such Issuer or Subsidiary
Guarantor, as the case may be) or to which any such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made by an Issuer, shall
succeed to, and be substituted for, and may exercise every right and power of
such Issuer or of such Subsidiary Guarantor under the Indenture, as the case may
be, but the predecessor Issuer in the case of a lease shall not be released from
any of the obligations or covenants under the Indenture, including with respect
to the payment of the Notes.

     Section 6.04. Supplemental Indenture. Section 9.01 of the Original
Indenture is hereby amended, with respect to the Notes, by adding the words ",
the Subsidiary Guarantors" immediately after the word "Issuers" in the
introductory clause of such Section and by adding the words "or a Subsidiary
Guarantor's" immediately after the word "Issuer's" in Section 9.01(c).

                                       E-45

                                  ARTICLE VII

                              DEFAULTS AND REMEDIES

     Section 7.01. Events of Default. With respect to the Notes, the provisions
of this Section 7.01 shall preempt the provisions of the first and final
paragraphs of Section 6.01 of the Original Indenture in their entirety.

     (a) An "Event of Default" occurs if:

          (i) the Issuers default for 60 days in the payment when due of
     interest on, or Additional Interest with respect to, the Notes;

          (ii) the Issuers default in the payment when due of principal of or
     premium, if any, on the Notes at maturity, upon redemption or otherwise;

          (iii) failure by the Partnership or any of its Restricted Subsidiaries
     to comply with any of the provisions of Section 4.03, 5.05 or 5.09 hereof;

          (iv) failure by the Partnership or any of its Restricted Subsidiaries
     for 30 days after notice has been given to the Issuers by the Trustee or to
     the Issuers and the Trustee by the Holders of at least 25% in principal
     amount of the Notes then Outstanding to comply with any of the other
     agreements in the Indenture (provided that notice need not be given, and an
     Event of Default shall occur, 30 days after any breach of the provisions of
     Sections 5.02, 5.03 and 6.01 hereof);

          (v) default under any mortgage, indenture or instrument under which
     there may be issued or by which there may be secured or evidenced any
     Indebtedness for money borrowed by an Issuer or any of the Partnership's
     Restricted Subsidiaries (or the payment of which is guaranteed by the
     Partnership or any of its Restricted Subsidiaries), whether such
     Indebtedness or guarantee now exists or is created after the date of the
     Indenture, if that default (A) is caused by a failure to pay principal of
     or premium, if any, or interest on such Indebtedness prior to the
     expiration of the grace period provided in such Indebtedness on the date of
     such default (a "Payment Default") or (B) results in the acceleration of
     such Indebtedness prior to its express maturity, and, in each case, the
     principal amount of any such Indebtedness, together with the principal
     amount of any other such Indebtedness under which there has been a Payment
     Default or the maturity of which has been so accelerated, aggregates $10.0
     million or more; provided, further, that if any such default is cured or
     waived or any such acceleration rescinded, or such Indebtedness is repaid,
     within a period of 30 days from the continuation of such default beyond the
     applicable grace period or the occurrence of such acceleration, as the case
     may be, such Event of Default and any consequential acceleration of the
     Notes shall be automatically rescinded, so long as such rescission does not
     conflict with any judgment or decree;

          (vi) failure by an Issuer or any of the Partnership's Restricted
     Subsidiaries to pay final judgments aggregating in excess of $10.0 million,
     which judgments are not paid, discharged or stayed for a period of 60 days;

                                       E-46

          (vii) except as permitted by the Indenture, any Guarantee shall be
     held in any judicial proceeding to be unenforceable or invalid or shall
     cease for any reason to be in full force and effect or any Subsidiary
     Guarantor, or any Person acting on behalf of any Subsidiary Guarantor,
     shall deny or disaffirm its obligations under its Guarantee;

          (viii) an Issuer or any Restricted Subsidiary that constitutes a
     Significant Subsidiary or any group of Restricted Subsidiaries that, taken
     as a whole, would constitute a Significant Subsidiary pursuant to or within
     the meaning of Bankruptcy Law:

               (A) commences a voluntary case,

               (B) consents to the entry of an order for relief against it in an
          involuntary case,

               (C) consents to the appointment of a custodian of it or for all
          or substantially all of its property,

               (D) makes a general assignment for the benefit of its creditors,
          or

               (E) generally is not paying its debts as they become due; or

          (ix) a court of competent jurisdiction enters an order or decree under
     any Bankruptcy Law that:

               (A) is for relief against an Issuer or any Restricted Subsidiary
          that constitutes a Significant Subsidiary or any group of Restricted
          Subsidiaries that, taken as a whole, would constitute a Significant
          Subsidiary in an involuntary case;

               (B) appoints a custodian of an Issuer or any Restricted
          Subsidiary that constitutes a Significant Subsidiary or any group of
          Restricted Subsidiaries that, taken as a whole, would constitute a
          Significant Subsidiary or for all or substantially all of the property
          of an Issuer or any Restricted Subsidiary that constitutes a
          Significant Subsidiary or any group of Restricted Subsidiaries that,
          taken as a whole, would constitute a Significant Subsidiary; or

               (C) orders the liquidation of an Issuer or any Restricted
          Subsidiary that constitutes a Significant Subsidiary or any group of
          Restricted Subsidiaries that, taken as a whole, would constitute a
          Significant Subsidiary;

          and the order or decree remains unstayed and in effect for 60
          consecutive days.

     (b) In the case of an Event of Default arising from Section 7.01(a)(viii)
or 7.01(a)(ix) hereof, the principal amount of all Outstanding Notes and
interest thereon shall become due and payable immediately without further action
or notice. If any other Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then Outstanding Notes
may declare the principal amount of all the Notes and interest thereon to be due
and payable immediately by a notice in writing to the Issuers (and to the
Trustee if given by the Holders) and upon any such declaration such principal
amount and interest thereon shall be due and payable immediately.

                                       E-47

                                  ARTICLE VIII

                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

     Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance. The
Issuers may, at the option of the Boards of Directors evidenced by a Board
Resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes and
Guarantees upon compliance with the conditions set forth below in this Article
VIII.

     Section 8.02. Legal Defeasance and Discharge. Upon the Issuers' exercise
under Section 8.01 hereof of the option applicable to this Section 8.02, each of
the Issuers and the Subsidiary Guarantors shall, subject to the satisfaction of
the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes and
Guarantees on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that
each of the Issuers shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Notes, which shall thereafter be
deemed to be "Outstanding" only for the purposes of Section 8.05 hereof and the
other Sections of the Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes and the Indenture, and each
of the Subsidiary Guarantors shall be deemed to have discharged its obligations
under its Guarantee (and the Trustee, on demand of and at the expense of the
Issuers, shall execute proper instruments acknowledging the same), except for
the following provisions which shall survive until otherwise terminated or
discharged hereunder:

          (a) the rights of Holders of Outstanding Notes to receive solely from
     the trust fund described in Section 8.04 hereof, and as more fully set
     forth in such Section, payments in respect of the principal of, premium on,
     if any, interest and Additional Interest, if any, on such Notes when such
     payments are due (but not the Change of Control Payment or the payment
     pursuant to an Asset Sale Offer),

          (b) the Issuers' obligations with respect to such Notes under Sections
     2.07, 2.08, 2.09 and 4.02 of the Original Indenture,

          (c) the rights, powers, trusts, duties and immunities of the Trustee
     hereunder and the Issuers' obligations in connection therewith,

          (d) this Article VIII, and

          (e) the Issuers' rights of optional redemption under Section 4.01
     hereof.

Subject to compliance with this Article VIII, the Issuers may exercise their
option under this Section 8.02 notwithstanding the prior exercise of their
option under Section 8.03 hereof.

     Section 8.03. Covenant Defeasance. Upon the Issuers' exercise under Section
8.01 hereof of the option applicable to this Section 8.03, each of the Issuers
shall, subject to the satisfaction of the conditions set forth in Section 8.04
hereof,

                                       E-48

be released from its obligations under the covenants contained in Sections 5.02,
5.03, 5.04, 5.05, 5.06, 5.07, 5.08, 5.09, 5.10, 5.11, 5.12, 5.13 and 5.14 hereof
with respect to the Outstanding Notes on and after the date the conditions set
forth in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and
the Notes shall thereafter be deemed not "Outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "Outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
Outstanding Notes, the Issuers may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 7.01
hereof, but, except as specified above, the remainder of the Indenture, the
Guarantees and such Notes shall be unaffected thereby.

     Section 8.04. Conditions to Legal or Covenant Defeasance. The following
shall be the conditions to the application of either Section 8.02 or 8.03 hereof
to the Outstanding Notes:

     In order to exercise either Legal Defeasance or Covenant Defeasance:

          (a) the Issuers must irrevocably deposit with the Trustee, in trust,
     for the benefit of the Holders of the Notes, cash in Dollars, U.S.
     Government Obligations, or a combination thereof, in such amounts as shall
     be sufficient, in the written opinion of a nationally recognized firm of
     independent public accountants, to pay the principal of, premium on, if
     any, interest and Additional Interest, if any, on the Outstanding Notes at
     the Stated Maturity thereof or on the applicable redemption date, as the
     case may be, and the Issuers must specify whether the Notes are being
     defeased to maturity or to a particular redemption date;

          (b) in the case of an election under Section 8.02 hereof, the Issuers
     shall have delivered to the Trustee an Opinion of Counsel confirming that
     (i) the Issuers have received from, or there has been published by, the
     Internal Revenue Service a ruling or (ii) since the date of the Indenture,
     there has been a change in the applicable federal income tax law, in either
     case to the effect that, and based thereon such Opinion of Counsel shall
     confirm that, the Holders of the Outstanding Notes shall not recognize
     income, gain or loss for federal income tax purposes as a result of such
     Legal Defeasance and shall be subject to federal income tax on the same
     amounts, in the same manner and at the same times as would have been the
     case if such Legal Defeasance had not occurred;

          (c) in the case of an election under Section 8.03 hereof, the Issuers
     shall have delivered to the Trustee an Opinion of Counsel confirming that
     the Holders of the Outstanding Notes shall not recognize income, gain or
     loss for federal income tax purposes as a result of such Covenant
     Defeasance and shall be subject to federal income tax on the same amounts,
     in the same manner and at the same times as would have been the case if
     such Covenant Defeasance had not occurred;

          (d) no Default or Event of Default shall have occurred and be
     continuing either (i) on the date of such deposit (other than a Default or
     Event of Default resulting from the incurrence of Indebtedness all or a
     portion of the proceeds of which shall be applied to such deposit) or

                                       E-49

     (ii) insofar as Section 7.01(a)(viii) or 7.01(a)(ix) hereof is concerned,
     at any time in the period ending on the 91st day after the date of deposit;

          (e) such Legal Defeasance or Covenant Defeasance shall not result in a
     breach or violation of, or constitute a default under, any material
     agreement or instrument (other than the Indenture) to which the Partnership
     or any of its Restricted Subsidiaries is a party or by which the
     Partnership or any of its Restricted Subsidiaries is bound;

          (f) the Issuers shall have delivered to the Trustee an Opinion of
     Counsel to the effect that after the 91st day following the deposit, the
     trust funds shall not be subject to the effect of any applicable
     bankruptcy, insolvency, reorganization or similar laws affecting creditors'
     rights generally;

          (g) the Issuers shall have delivered to the Trustee an Officers'
     Certificate stating that the deposit was not made by the Issuers with the
     intent of preferring the Holders over any other creditors of the Issuers or
     with the intent of defeating, hindering, delaying or defrauding any other
     creditors of the Issuers; and

          (h) the Issuers shall have delivered to the Trustee an Officers'
     Certificate and an Opinion of Counsel, each stating that all conditions
     precedent provided for or relating to the Legal Defeasance or the Covenant
     Defeasance have been complied with.

     Section 8.05. Deposited Money and U.S. Government Obligations to be Held in
Trust; Other Miscellaneous Provisions. Subject to Section 8.06 hereof, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee (or other qualifying trustee, collectively for purposes of this
Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and the Indenture, to the payment,
either directly or through any paying agent (including an Issuer acting as
paying agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium on, if any,
interest and Additional Interest, if any, but such money need not be segregated
from other funds except to the extent required by law.

     The Issuers shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or U.S. Government
Obligations deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the Outstanding Notes.

     Anything in this Article VIII to the contrary notwithstanding, the Trustee
shall deliver or pay to the Issuers from time to time upon the written request
of the Issuers any money or U.S. Government Obligations held by it as provided
in Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

     Section 8.06. Repayment to Issuers.

                                       E-50

Any money deposited with the Trustee or any paying agent, or then held by the
Issuers, in trust for the payment of the principal of, premium on, if any,
interest or Additional Interest, if any, on any Note and remaining unclaimed for
two years after such principal, premium, if any, interest or Additional
Interest, if any, has become due and payable shall be paid to the Issuers on
their written request or (if then held by the Issuers) shall be discharged from
such trust; and the Holder of such Note shall thereafter, as an unsecured
creditor, look only to the Issuers for payment thereof, and all liability of the
Trustee or such paying agent with respect to such trust money, and all liability
of the Issuers as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such paying agent, before being required to make any such
repayment, may at the expense of the Issuers cause to be published once, in the
New York Times and The Wall Street Journal (national edition), notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining shall be repaid to the Issuers.

     Section 8.07. Reinstatement. If the Trustee or paying agent is unable to
apply any Dollars or U.S. Government Obligations in accordance with Section 8.02
or 8.03 hereof, as the case may be, by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Issuers' obligations under the Indenture and the
Notes and the Subsidiary Guarantors' obligations under the Guarantees shall be
revived and reinstated as though no deposit had occurred pursuant to Section
8.02 or 8.03 hereof until such time as the Trustee or paying agent is permitted
to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the
case may be; provided, however, that, if the Issuers make any payment of
principal of, premium on, if any, interest or Additional Interest, if any, on
any Note following the reinstatement of their obligations, the Issuers shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or paying agent.

                                   ARTICLE IX

                              SUBSIDIARY GUARANTEES

     Section 9.01. Subsidiary Guarantees. (a) Each Subsidiary Guarantor hereby
jointly and severally unconditionally and irrevocably guarantees on a senior
basis to each Holder and to the Trustee and its successors and assigns (i) the
full and punctual payment of principal, premium, if any, interest, and
Additional Interest, if any, with respect to, the Notes when due, whether at
maturity, by acceleration, by redemption or otherwise, and all other monetary
obligations of the Issuers under the Indenture (including obligations to the
Trustee) and the Notes and (ii) the full and punctual performance within
applicable grace periods of all other obligations of the Issuers under the
Indenture and the Notes (all the foregoing being hereinafter collectively called
the "Note Obligations"). Each Subsidiary Guarantor further agrees that the Note
Obligations may be extended or renewed, in whole or in part, without notice or
further assent from each such Subsidiary Guarantor, and that each such
Subsidiary Guarantor shall remain bound under this Article IX notwithstanding
any extension or renewal of any Note Obligation.

     (b) Each Subsidiary Guarantor waives presentation to, demand of, payment
from and protest to the Issuers of any of the Note Obligations and also waives
notice of protest for nonpayment. Each Subsidiary Guarantor waives notice of any
Default or Event of Default under the Notes or the Note Obligations. The
obligations of each Subsidiary Guarantor hereunder shall not be

                                       E-51

affected by (i) the failure of any Holder or the Trustee to assert any claim or
demand or to enforce any right or remedy against the Issuers or any other Person
under the Indenture, the Notes or any other agreement or otherwise; (ii) any
extension or renewal of any thereof; (iii) any rescission, waiver, amendment or
modification of any of the terms or provisions of the Indenture, the Notes or
any other agreement; (iv) the release of any security held by any Holder or the
Trustee for the Note Obligations or any of them; (v) the failure of any Holder
or Trustee to exercise any right or remedy against any other guarantor of the
Note Obligations; or (vi) any change in the ownership of such Subsidiary
Guarantor, except as provided in Section 9.02 hereof.

     (c) Each Subsidiary Guarantor further agrees that its Guarantee herein
constitutes a guarantee of payment, performance and compliance when due (and not
a guarantee of collection) and waives any right to require that any resort be
had by any Holder or the Trustee to any security held for payment of the Note
Obligations.

     (d) The obligations of each Subsidiary Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason
other than indefeasible payment in full of the Note Obligations, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Note Obligations or otherwise. Without limiting the generality of the foregoing,
the obligations of each Subsidiary Guarantor herein shall not be discharged or
impaired or otherwise affected by the failure of any Holder or the Trustee to
assert any claim or demand or to enforce any remedy under the Indenture, the
Notes or any other agreement, by any waiver or modification of any thereof, by
any default, failure or delay, willful or otherwise, in the performance of the
obligations, or by 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 Subsidiary Guarantor or would otherwise operate as a discharge of any
Subsidiary Guarantor as a matter of law or equity.

     (e) Each Subsidiary Guarantor further agrees that its Guarantee herein
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of principal, premium, if any, interest or
Additional Interest, if any, with respect to any Note Obligation is rescinded or
must otherwise be restored by any Holder or the Trustee upon the bankruptcy or
reorganization of either of the Issuers or otherwise.

     (f) In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against any
Subsidiary Guarantor by virtue hereof, upon the failure of the Issuers to pay
the principal, premium, if any, interest or Additional Interest, if any, with
respect to any Note Obligation when and as the same shall become due, whether at
maturity, by acceleration, by redemption or otherwise, or to perform or comply
with any other Note Obligation, each Subsidiary Guarantor hereby promises to and
shall forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee
an amount equal to the sum of (i) the unpaid principal amount of such Note
Obligations, (ii) accrued and unpaid interest on such Note Obligations (but only
to the extent not prohibited by law) and (iii) all other monetary Note
Obligations of the Issuers to the Holders and the Trustee.

     (g) Each Subsidiary Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any Note
Obligations guaranteed hereby until payment in full of all Note Obligations.
Each Subsidiary Guarantor further agrees that, as between it, on the one hand,
and the Holders and the Trustee, on the other hand, (i) the maturity of the Note

                                       E-52

Obligations guaranteed hereby may be accelerated as provided in Article VII
hereof for the purposes of any Subsidiary Guarantor's Guarantee herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Note Obligations guaranteed hereby, and (ii) in
the event of any declaration of acceleration of such obligations as provided in
Article VII hereof, such Note Obligations (whether or not due and payable) shall
forthwith become due and payable by such Subsidiary Guarantor for the purposes
of this Section.

     (h) Each Subsidiary Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees) incurred by the Trustee or any
Holder in enforcing any rights under this Section.

     Section 9.02. Limitation on Liability. Any term or provision of the
Indenture to the contrary notwithstanding, the maximum, aggregate amount of the
Note Obligations guaranteed hereunder by any Subsidiary Guarantor shall not
exceed the maximum amount that can be hereby guaranteed without rendering the
Indenture, as it relates to any Subsidiary Guarantor, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer.

     Section 9.03. Successors and Assigns. This Article IX shall be binding upon
each Subsidiary Guarantor and, except as provided in Section 9.07, its
successors and assigns and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
conferred upon that party in the Indenture and in the Notes shall automatically
extend to and be vested in such transferee or assignee, all subject to the terms
and conditions of the Indenture.

     Section 9.04. No Waiver. Neither a failure nor a delay on the part of
either the Trustee or the Holders in exercising any right, power or privilege
under this Article IX shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article IX at law,
in equity, by statute or otherwise.

     Section 9.05. Modification. No modification, amendment or waiver of any
provision of this Article IX, nor the consent to any departure by any Subsidiary
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on any Subsidiary Guarantor in any case shall entitle such
Subsidiary Guarantor to any other or further notice or demand in the same,
similar or other circumstances.

     Section 9.06. Execution of Supplemental Indenture for Future Subsidiary
Guarantors.

                                       E-53

Each Subsidiary which is required to become a Subsidiary Guarantor pursuant to
Section 5.10 hereof shall promptly execute and deliver to the Trustee a
supplemental Indenture in substantially the form of Exhibit B hereto pursuant to
which such Subsidiary shall become a Subsidiary Guarantor under this Article IX
and shall guarantee the Note Obligations. Concurrently with the execution and
delivery of such supplemental Indenture, the Issuers shall deliver to the
Trustee an Opinion of Counsel to the effect that such supplemental Indenture has
been duly authorized, executed and delivered by such Subsidiary and that,
subject to the application of bankruptcy, insolvency, moratorium, fraudulent
conveyance or transfer and other similar laws relating to creditors' rights
generally and to the principles of equity, whether considered in a proceeding at
law or in equity, the Guarantee of such Subsidiary Guarantor is a legal, valid
and binding obligation of such Subsidiary Guarantor, enforceable against such
Subsidiary Guarantor in accordance with its terms.

     Section 9.07. Release of Guarantee. The Guarantee of a Subsidiary Guarantor
under this Article IX shall terminate and be of no further force and effect, and
such Subsidiary Guarantor shall be released from the Indenture and all Note
Obligations, upon the following events:

          (a) in connection with any sale or other disposition of all or
     substantially all of the assets of such Subsidiary Guarantor (including by
     way of merger, consolidation or otherwise) if the Partnership applies the
     Net Proceeds therefrom in accordance with the provisions of Section 5.05
     hereof; or

          (b) in connection with any sale or other disposition of all of the
     Equity Interests of a Subsidiary Guarantor, if the Partnership applies the
     Net Proceeds therefrom in accordance with the provisions of Section 5.05
     hereof; or

          (c) if the Partnership designates any Restricted Subsidiary that is a
     Subsidiary Guarantor as an Unrestricted Subsidiary; or

          (d) at such time as such Subsidiary Guarantor (a) does not guarantee
     any Indebtedness of any of the Issuers and the Restricted Subsidiaries of
     the Partnership and (b) is not obligated under any Indebtedness (other than
     Permitted Debt described in clause (vi), (vii), (ix), (x) or (xi) of the
     definition thereof).

                                    ARTICLE X

                                  MISCELLANEOUS

     References to (A) "Section 6.01" in the Original Indenture shall be deemed
to be references to Section 7.01 of this Supplemental Indenture; (B) "Section
11.02" in the Original Indenture shall be deemed to be references to "Section
8.06" of this Supplemental Indenture; (C) "Section 6.01(g) or (h)" in the
Original Indenture shall be deemed to be references to Section 7.01(a)(viii) or
(a)(ix) of this Supplemental Indenture; and (D) "Article X" in the Original
Indenture shall be deemed to be a reference to Article VI of this Supplemental
Indenture. All references to "interest" in the Original Indenture shall be
deemed to include Additional Interest, if any, unless the context otherwise
requires. The provisions of Sections 4.03, 5.05 and 5.09 shall not be subject to
the restrictions on amendments, supplements and waivers contained in Sections
9.02(iii) and 9.02(ix) of the Original Indenture, and such provisions shall be
subject to amendment,

                                       E-54

supplement or waiver with only the consent (evidenced as provided in Section
8.01 of the Original Indenture) of the Holders of a majority in aggregate
principal amount of the Notes then Outstanding.

                         [Signatures on following page]

                                       E-55

                                   SIGNATURES

                                  ISSUERS:

                                  PLAINS ALL AMERICAN PIPELINE, L.P.

                                  By:    Plains AAP, L.P., its General Partner

                                  By:    Plains All American GP LLC, its General
                                         Partner

                                         By:   /s/  Phillip D. Kramer
                                            -----------------------------------
                                             Name:  Phillip D. Kramer
                                             Title: Executive Vice President and
                                                    Chief Financial Officer

                                  PAA FINANCE CORP.

                                  By:       /s/ Phillip D. Kramer
                                     ------------------------------------------
                                       Name:  Phillip D. Kramer
                                       Title: Executive Vice President and
                                              Chief Financial Officer

                                  SUBSIDIARY GUARANTORS:

                                  PLAINS MARKETING, L.P.

                                  By: Plains Marketing GP Inc., its
                                      General Partner

                                         By:   /s/ Phillip D. Kramer
                                            -----------------------------------
                                             Name:  Phillip D. Kramer
                                             Title: Executive Vice President and
                                                    Chief Financial Officer

                                       E-56

                         ALL AMERICAN PIPELINE, L.P.

                         By:    Plains Marketing GP Inc., its General Partner

                                By:   /s/ Phillip D. Kramer
                                   --------------------------------------------
                                    Name:     Phillip D. Kramer
                                    Title:    Executive Vice President and
                                              Chief Financial Officer

                         PLAINS MARKETING GP INC.

                         By:       /s/ Phillip D. Kramer
                            ---------------------------------------------------
                              Name:    Phillip D. Kramer
                              Title:   Executive Vice President and
                                       Chief Financial Officer

                         PLAINS MARKETING CANADA LLC

                         By:    Plains Marketing, L.P., its Sole Member

                         By:    Plains Marketing GP Inc., its General Partner

                                By:   /s/ Phillip D. Kramer
                                   --------------------------------------------
                                     Name:     Phillip D. Kramer
                                     Title:    Executive Vice President and
                                               Chief Financial Officer

                         PMC (NOVA SCOTIA) COMPANY

                         By:    /s/ Phillip D. Kramer
                            ---------------------------------------------------
                              Name:    Phillip D. Kramer
                              Title:   Executive Vice President and
                                       Chief Financial Officer

                                       E-57

                               PLAINS MARKETING CANADA, L.P.

                               By:    PMC (Nova Scotia) Company, its General
                                      Partner

                                      By:   /s/ Phillip D. Kramer
                                         --------------------------------------
                                          Name:  Phillip D. Kramer
                                          Title: Executive Vice President and
                                                 Chief Financial Officer

                               BASIN HOLDINGS GP LLC

                               By:    All American Pipeline, L.P., its Sole
                                      Member

                               By:    Plains Marketing GP Inc., its General
                                      Partner

                                      By:   /s/ Phillip D. Kramer
                                         --------------------------------------
                                          Name:  Phillip D. Kramer
                                          Title: Executive Vice President and
                                                 Chief Financial Officer

                               BASIN PIPELINE HOLDINGS, L.P.

                               By:    Basin Holdings GP LLC, its General
                                      Partner

                               By:    All American Pipeline, L.P., its Sole
                                      Member

                               By:    Plains Marketing GP Inc., its General
                                      Partner

                                      By:   /s/ Phillip D. Kramer
                                         --------------------------------------
                                          Name:  Phillip D. Kramer
                                          Title: Executive Vice President and
                                                 Chief Financial Officer

                                       E-58

                               RANCHO HOLDINGS GP LLC

                               By:    All American Pipeline, L.P., its Sole
                                      Member

                               By:    Plains Marketing GP Inc., its General
                                      Partner

                                      By:   /s/ Phillip D. Kramer
                                         --------------------------------------
                                          Name:  Phillip D. Kramer
                                          Title: Executive Vice President and
                                                 Chief Financial Officer

                               RANCHO PIPELINE HOLDINGS, L.P.

                               By:    Rancho Holdings GP LLC, its General
                                      Partner

                               By:    All American Pipeline, L.P., its Sole
                                      Member

                               By:    Plains Marketing GP Inc., its General
                                      Partner

                                      By:   /s/ Phillip D. Kramer
                                         --------------------------------------
                                          Name:  Phillip D. Kramer
                                          Title: Executive Vice President and
                                                 Chief Financial Officer

                               TRUSTEE:

                               WACHOVIA BANK, NATIONAL ASSOCIATION,
                               as Trustee

                               By:       /s/ Kevin M. Dobrava
                                  ---------------------------------------------
                                   Name:  Kevin M. Dobrava
                                   Title: Vice President

                                       E-59

                                                                     EXHIBIT 4.3

                   EXCHANGE AND REGISTRATION RIGHTS AGREEMENT

                                      AMONG

                       PLAINS ALL AMERICAN PIPELINE, L.P.,

                               PAA FINANCE CORP.,

                                 THE GUARANTORS

                                       AND

                              THE INITIAL PURCHASER

                         Dated as of September 25, 2002

                       PLAINS ALL AMERICAN PIPELINE, L.P.
                                PAA FINANCE CORP.

                          7 3/4% Senior Notes due 2012

                   EXCHANGE AND REGISTRATION RIGHTS AGREEMENT

                                                              September 25, 2002

UBS Warburg LLC
677 Washington Blvd.
Stamford, Connecticut 06901

Ladies and Gentlemen:

     Plains All American Pipeline, L.P., a Delaware limited partnership (the
"Partnership"), PAA Finance Corp., a Delaware corporation ("PAA Finance," and
together with the Partnership, the "Issuers") and the Guarantors listed on
Schedule 1 hereto (the "Guarantors"), propose to issue and sell to UBS Warburg
LLC (the "Initial Purchaser"), upon the terms set forth in a purchase agreement
dated September 18, 2002 (the "Purchase Agreement"), $200,000,000 principal
amount of 7 3/4% Senior Notes due 2012 (the "Securities") relating to the
initial placement of the Securities (the "Initial Placement"). To induce the
Initial Purchaser to enter into the Purchase Agreement and to satisfy a
condition of your obligations thereunder, the Issuers and the Guarantors agree
with you for your benefit and the benefit of the holders from time to time of
the Securities (including the Initial Purchaser) (each a "Holder" and, together,
the "Holders"), as follows:

     1. Definitions. Capitalized terms used herein without definition shall have
their respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following capitalized defined terms shall have the following
meanings:

     "Act" shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.

     "Affiliate" of any specified Person shall mean any other Person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified Person. For purposes of this definition, control of
a Person shall mean the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise; and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing.

     "Broker-Dealer" shall mean any broker or dealer registered as such under
the Exchange Act.

     "Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.

     "Commission" shall mean the Securities and Exchange Commission.

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

     "Exchange Offer Registration Period" shall mean the one-year period
following the consummation of the Registered Exchange Offer, exclusive of any
period during which any stop order shall be in effect suspending the
effectiveness of the Exchange Offer Registration Statement.

     "Exchange Offer Registration Statement" shall mean a registration statement
of the Issuers and the Guarantors on an appropriate form under the Act with
respect to the Registered Exchange Offer, all amendments and supplements to such
registration statement, including post-effective amendments thereto, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.

     "Exchanging Dealer" shall mean any Holder (which may include the Initial
Purchaser) that is a Broker-Dealer and elects to exchange for New Securities any
Securities that it acquired for its own account as a result of market-making
activities or other trading activities (but not directly from the Issuers and
the Guarantors or any Affiliate of the Issuers and the Guarantors) for New
Securities.

     "Final Memorandum" shall have the meaning set forth in the Purchase
Agreement.

     "Guarantors" shall have the meaning set forth in the preamble hereto and
shall also include any Guarantor's successor.

     "Holder" shall have the meaning set forth in the preamble hereto.

     "Indenture" shall mean the Indenture relating to the Securities and the New
Securities, dated as of September 25, 2002, among the Issuers and Wachovia Bank,
National Association, as trustee, as amended by the First Supplemental
Indenture, dated as of September 25, 2002, among the Issuers, the Guarantors and
the Trustee, and as the same may be amended from time to time in accordance with
the terms thereof.

     "Initial Placement" shall have the meaning set forth in the preamble
hereto.

     "Initial Purchaser" shall have the meaning set forth in the preamble
hereto.

     "Losses" shall have the meaning set forth in Section 7(d) hereof.

     "Majority Holders" shall mean the Holders of a majority of the aggregate
principal amount of Securities registered under a Registration Statement.

                                       2

     "Managing Underwriters" shall mean the investment banker or investment
bankers and manager or managers that shall administer an underwritten offering.

     "New Securities" shall mean debt securities of the Issuers identical in all
material respects to the Securities (except that the interest rate step-up
provisions and the transfer restrictions shall be eliminated) and to be issued
under the Indenture.

     "Prospectus" shall mean the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Securities or the New Securities covered by such
Registration Statement, and all amendments and supplements thereto and all
material incorporated by reference therein.

     "Purchase Agreement" shall have the meaning set forth in the preamble
hereto.

     "Registered Exchange Offer" shall mean the proposed offer of the Issuers
and the Guarantors to issue and deliver to the Holders of the Securities that
are not prohibited by any law or policy of the Commission from participating in
such offer, in exchange for the Securities, a like aggregate principal amount of
the New Securities.

     "Registration Default" shall have the meaning set forth in Section 4
herein.

     "Registration Statement" shall mean any Exchange Offer Registration
Statement or Shelf Registration Statement that covers any of the Securities or
the New Securities pursuant to the provisions of this Agreement, any amendments
and supplements to such registration statement, including post-effective
amendments (in each case including the Prospectus contained therein), all
exhibits thereto and all material incorporated by reference therein.

     "Securities" shall have the meaning set forth in the preamble hereto.

     "Shelf Registration" shall mean a registration effected pursuant to Section
3 hereof.

     "Shelf Registration Period" has the meaning set forth in Section 3(b)
hereof.

     "Shelf Registration Statement" shall mean a "shelf" registration statement
of the Issuers and the Guarantors pursuant to the provisions of Section 3 hereof
which covers some or all of the Securities or New Securities, as applicable, on
an appropriate form under Rule 415 under the Act, or any similar rule that may
be adopted by the Commission, amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.

     "Trustee" shall mean the trustee with respect to the Securities and the New
Securities under the Indenture.

                                       3

     "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended from time to time.

     "underwriter" shall mean any underwriter of Securities in connection with
an offering thereof under a Shelf Registration Statement.

     2. Registered Exchange Offer. Except as set forth in Section 3, (a) The
Issuers and the Guarantors shall prepare and shall use their reasonable best
efforts to file with the Commission the Exchange Offer Registration Statement
with respect to the Registered Exchange Offer, not later than 60 days following
the date of the original issuance of the Securities (or if such 60th day is not
a Business Day, the next succeeding Business Day). The Issuers and the
Guarantors shall use their reasonable best efforts to cause the Exchange Offer
Registration Statement to become effective under the Act within 180 days of the
date of the original issuance of the Securities (or if such 180th day is not a
Business Day, the next succeeding Business Day).

     (b) Upon the effectiveness of the Exchange Offer Registration Statement,
the Issuers and the Guarantors shall promptly commence the Registered Exchange
Offer, it being the objective of such Registered Exchange Offer to enable each
Holder electing to exchange Securities for New Securities (assuming that such
Holder is not an Affiliate of the Issuers or the Guarantors, acquires the New
Securities in the ordinary course of such Holder's business, has no arrangements
with any Person to participate in the distribution of the New Securities and is
not prohibited by any law or policy of the Commission from participating in the
Registered Exchange Offer) to trade such New Securities from and after their
receipt without any limitations or restrictions under the Act and without
material restrictions under the securities laws of a substantial proportion of
the several states of the United States.

     (c) In connection with the Registered Exchange Offer, the Issuers and the
Guarantors shall:

          (i) mail to each Holder a copy of the Prospectus forming part of the
     Exchange Offer Registration Statement, together with an appropriate letter
     of transmittal and related documents;

          (ii) keep the Registered Exchange Offer open for not less than 20
     Business Days after the date notice thereof is mailed to the Holders (or,
     in each case, longer if required by applicable law);

          (iii) use their reasonable best efforts to keep the Exchange Offer
     Registration Statement continuously effective under the Act, supplemented
     and amended as required, under the Act to ensure that it is available for
     sales of New Securities by Exchanging Dealers during the Exchange Offer
     Registration Period;

          (iv) utilize the services of a bank depositary for the Registered
     Exchange Offer with an address in the Borough of Manhattan in New York
     City, which may be the Trustee or an Affiliate of the Trustee;

                                       4

          (v) permit Holders to withdraw tendered Securities at any time prior
     to the close of business, New York time, on the last Business Day on which
     the Registered Exchange Offer is open;

          (vi) prior to effectiveness of the Exchange Offer Registration
     Statement, provide a supplemental letter to the Commission (A) stating that
     the Issuers and the Guarantors are conducting the Registered Exchange Offer
     in reliance on the position of the Commission in Exxon Capital Holdings
     Corporation (pub. avail. May 13, 1988) and Morgan Stanley and Co., Inc.
     (pub. avail. June 5, 1991) and (B) including a representation that the
     Issuers and the Guarantors have not entered into any arrangement or
     understanding with any Person to distribute the New Securities to be
     received in the Registered Exchange Offer and that, to the best of the
     Issuers' and the Guarantors' information and belief, each Holder
     participating in the Registered Exchange Offer is acquiring the New
     Securities in the ordinary course of business and has no arrangement or
     understanding with any Person to participate in the distribution of the New
     Securities; and

          (vii) comply in all material respects with all applicable laws.

     (d) As soon as practicable after the close of the Registered Exchange
Offer, the Issuers and the Guarantors shall:

          (i) accept for exchange all Securities tendered and not validly
     withdrawn pursuant to the Registered Exchange Offer; and

          (ii) issue and cause the Trustee promptly to authenticate a global
     certificate representing New Securities exchanged for Securities and to
     deliver to each Holder of Securities a principal amount of New Securities
     equal to the principal amount of the Securities of such Holder so accepted
     for exchange.

     (e) Each Holder hereby acknowledges and agrees that any Broker-Dealer and
any such Holder using the Registered Exchange Offer to participate in a
distribution of the New Securities (x) could not under Commission policy as in
effect on the date of this Agreement rely on the position of the Commission in
Morgan Stanley and Co., Inc. (pub. avail. June 5, 1991) and Exxon Capital
Holdings Corporation (pub. avail. May 13, 1988), as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993 and similar
no-action letters; and (y) must comply with the registration and prospectus
delivery requirements of the Act in connection with any secondary resale
transaction and must be covered by an effective registration statement
containing the selling security holder information required by Item 507 or 508,
as applicable, of Regulation S-K under the Act if the resales are of New
Securities obtained by such Holder in exchange for Securities acquired by such
Holder directly from the Issuers or the Guarantors or one of their Affiliates.
Accordingly, each Holder participating in the Registered Exchange Offer shall be
required to represent to the Issuers and the Guarantors that, at the time of the
consummation of the Registered Exchange Offer:

          (i) any New Securities received by such Holder will be acquired in the
     ordinary course of business;

                                       5

          (ii) such Holder will have no arrangement or understanding with any
     Person to participate in the distribution of the Securities or the New
     Securities within the meaning of the Act; and

          (iii) such Holder is not an Affiliate of the Issuers or the
     Guarantors.

     3. Shelf Registration. (a) If (i) due to any change in law or applicable
interpretations thereof by the Commission's staff, the Issuers and the
Guarantors determine upon advice of their outside counsel that they are not
permitted to effect the Registered Exchange Offer as contemplated by Section 2
hereof; (ii) for any other reason the Registered Exchange Offer is not
consummated within 360 days of the date hereof; (iii) the Initial Purchaser so
requests with respect to Securities that are not eligible to be exchanged for
New Securities in the Registered Exchange Offer and that are held by it
following consummation of the Registered Exchange Offer; or (iv) any Holder
(other than the Initial Purchaser) is not eligible to participate in the
Registered Exchange Offer, the Issuers and the Guarantors shall effect a Shelf
Registration Statement in accordance with subsection (b) below.

     (b) (i) The Issuers and the Guarantors shall as promptly as practicable
(but in no event more than 60 days after so required or requested pursuant to
this Section 3), file with the Commission and thereafter shall use their
reasonable best efforts to cause to be declared effective under the Act, within
180 days after it is filed, a Shelf Registration Statement relating to the offer
and sale of the Securities or the New Securities, as applicable, by the Holders
thereof from time to time in accordance with the methods of distribution elected
by such Holders and set forth in such Shelf Registration Statement; provided,
however, that no Holder (other than the Initial Purchaser) shall be entitled to
have the Securities held by it covered by such Shelf Registration Statement
unless such Holder agrees in writing to be bound by all of the provisions of
this Agreement applicable to such Holder; and provided further, that with
respect to New Securities received by the Initial Purchaser in exchange for
Securities constituting any portion of an unsold allotment, the Issuers and the
Guarantors may, if permitted by current interpretations by the Commission's
staff, file a post-effective amendment to the Exchange Offer Registration
Statement containing the information required by Item 507 or 508 of Regulation
S-K, as applicable, in satisfaction of their obligations under this subsection
with respect thereto, and any such Exchange Offer Registration Statement, as so
amended, shall be referred to herein as, and governed by the provisions herein
applicable to, a Shelf Registration Statement.

          (ii) The Issuers and the Guarantors shall use their reasonable best
     efforts to keep the Shelf Registration Statement continuously effective,
     supplemented and amended as required by the Act, in order to permit the
     Prospectus forming part thereof to be usable by Holders for a period of two
     years from the date the Shelf Registration Statement is declared effective
     by the Commission or such shorter period that will terminate when all the
     Securities or New Securities, as applicable, covered by the Shelf
     Registration Statement have been sold pursuant to the Shelf Registration
     Statement (in any such case, such period being called the "Shelf
     Registration Period"). The Issuers and the Guarantors shall be deemed not
     to have used their best efforts to keep the Shelf Registration Statement
     effective during the requisite period if either Issuer or any

                                       6

     Guarantor voluntarily takes any action that would result in Holders of
     Securities covered thereby not being able to offer and sell such Securities
     during that period, unless (A) such action is required by applicable law;
     or (B) such action is taken by such Issuer or such Guarantor in good faith
     and for valid business reasons (not including avoidance of the Issuers' or
     the Guarantors' obligations hereunder), including the acquisition or
     divestiture of assets, so long as the Issuers and the Guarantors promptly
     thereafter comply with the requirements of Section 5(k) hereof, if
     applicable.

          (ii) The Issuers and the Guarantors shall cause the Shelf Registration
     Statement and the related Prospectus and any amendment or supplement
     thereto, as of the effective date of the Shelf Registration Statement or
     such amendment or supplement, (A) to comply in all material respects with
     the applicable requirements of the Act and the rules and regulations of the
     Commission; and (B) not to contain any untrue statement of a material fact
     or omit to state a material fact required to be stated therein or necessary
     in order to make the statements therein, in the light of the circumstances
     under which they were made, not misleading.

     4. Additional Interest. (a) In the event that (i) the Issuers and the
Guarantors have not filed the Exchange Offer Registration Statement or the Shelf
Registration Statement with the Commission on or before the date on which such
Registration Statement is required to be so filed pursuant to Section 2(a) and
3(b), respectively, or (ii) such Exchange Offer Registration Statement or Shelf
Registration Statement has not been declared effective by the Commission under
the Act on or before the date on which such Registration Statement is required
to be declared effective under the Act pursuant to Section 2(a) or 3(b),
respectively, or (iii) the Exchange Offer has not been Consummated within 210
days after the date of issuance of the Securities, or (iv) the Exchange Offer
Registration Statement or Shelf Registration Statement required by Section 2(a)
or 2(b) hereof is filed and declared effective by the Commission under the Act
but shall thereafter cease to be effective (except as specifically permitted
herein) without being succeeded immediately by an additional Registration
Statement filed and declared effective by the Commission under the Act (each
such event referred to in clauses (i) through (iv) is referred to herein as a
"Registration Default"), then the interest rate on the New Securities will be
increased, for the period from the occurrence of the Registration Default until
such time as all Registration Defaults are cured (at which time the interest
rate will be reduced to its initial rate) by 0.25% per annum during the first
90-day period following the occurrence and during the continuation of the
Registration Default, and by 0.25% per annum for each subsequent 90-day period
during which such Registration Default continues. The interest rate will not at
any time be increased by greater than 1.00% per annum.

     (b) Without limiting the remedies available to the Initial Purchaser and
the Holders, the Issuers and the Guarantors acknowledge that any failure by the
Issuers or the Guarantors to comply with their obligations under Section 2(a)
and Section 3(b) hereof may result in material irreparable injury to the Initial
Purchasers or the Holders for which there is no adequate remedy at law, that it
will not be possible to measure damages for such injuries precisely and that, in
the event of any such failure, the Initial Purchasers or any Holder may

                                       7

obtain such relief as may be required to specifically enforce the Issuers' and
the Guarantors' obligations under Section 2(a) and Section 3(b) hereof.

     5. Additional Registration Procedures. In connection with any Shelf
Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply.

     (a) The Issuers and the Guarantors shall:

          (i) furnish to you, not less than five Business Days prior to the
     filing thereof with the Commission, a copy of any Exchange Offer
     Registration Statement and any Shelf Registration Statement, and each
     amendment thereof and each amendment or supplement, if any, to the
     Prospectus included therein (including all documents incorporated by
     reference therein after the initial filing) and shall use their reasonable
     best efforts to reflect in each such document, when so filed with the
     Commission, such comments as you reasonably propose;

          (ii) include the information set forth in Annex A hereto on the facing
     page of the Exchange Offer Registration Statement, in Annex B hereto in the
     forepart of the Exchange Offer Registration Statement in a section setting
     forth details of the Exchange Offer, in Annex C hereto in the underwriting
     or plan of distribution section of the Prospectus contained in the Exchange
     Offer Registration Statement, and in Annex D hereto in the letter of
     transmittal delivered pursuant to the Registered Exchange Offer;

          (iii) if requested by the Initial Purchaser, include the information
     required by Item 507 or 508 of Regulation S-K, as applicable, in the
     Prospectus contained in the Shelf Registration Statement; and

          (iv) in the case of a Shelf Registration Statement, include the names
     of the Holders that propose to sell Securities pursuant to the Shelf
     Registration Statement as selling security holders.

     (b) The Issuers and the Guarantors shall ensure that:

          (i) any Registration Statement and any amendment thereto and any
     Prospectus forming part thereof and any amendment or supplement thereto
     comply in all material respects with the Act and the rules and regulations
     thereunder; and

          (ii) any Registration Statement and any amendment thereto do not, when
     they become effective, contain an untrue statement of a material fact or
     omit to state a material fact required to be stated therein or necessary to
     make the statements therein not misleading.

     (c) The Issuers and the Guarantors shall advise you, the Holders of
Securities covered by any Shelf Registration Statement and any Exchanging Dealer
under any Exchange Offer Registration Statement that has provided in writing to
the Issuers and the Guarantors a telephone or facsimile number and address for
notices, and, if requested in writing by you or any

                                       8

such Holder or Exchanging Dealer, shall confirm such advice in writing (which
notice pursuant to clauses (ii)-(v) hereof shall be accompanied by an
instruction to suspend the use of the Prospectus until the Issuers and the
Guarantors shall have remedied the basis for such suspension):

          (i) when a Registration Statement and any amendment thereto have been
     filed with the Commission and when the Registration Statement or any
     post-effective amendment thereto has become effective;

          (ii) of any request by the Commission for any amendment or supplement
     to the Registration Statement or the Prospectus or for additional
     information;

          (iii) of the issuance by the Commission of any stop order suspending
     the effectiveness of the Registration Statement or the initiation of any
     proceedings for that purpose;

          (iv) of the receipt by the Issuers and the Guarantors of any
     notification with respect to the suspension of the qualification of the
     securities included therein for sale in any jurisdiction or the initiation
     of any proceeding for such purpose; and

          (v) of the happening of any event that requires any change in the
     Registration Statement or the Prospectus so that, as of such date, the
     statements therein are not misleading and do not omit to state a material
     fact required to be stated therein or necessary to make the statements
     therein (in the case of the Prospectus, in the light of the circumstances
     under which they were made) not misleading.

     (d) The Issuers and the Guarantors shall use their reasonable best efforts
to obtain the withdrawal of any order suspending the effectiveness of any
Registration Statement or the qualification of the securities therein for sale
in any jurisdiction at the earliest possible time.

     (e) The Issuers and the Guarantors shall furnish to each Holder of
Securities covered by any Shelf Registration Statement, without charge, at least
one copy of such Shelf Registration Statement and any post-effective amendment
thereto, including all material incorporated therein by reference, and, if the
Holder so requests in writing, all exhibits thereto (including exhibits
incorporated by reference therein).

     (f) The Issuers and the Guarantors shall, during the Shelf Registration
Period, deliver to each Holder of Securities covered by any Shelf Registration
Statement, without charge, as many copies of the Prospectus (including each
preliminary Prospectus) included in such Shelf Registration Statement and any
amendment or supplement thereto as such Holder may reasonably request. The
Issuers and the Guarantors consent to the use of the Prospectus or any amendment
or supplement thereto by each of the selling Holders of Securities in connection
with the offering and sale of the Securities covered by the Prospectus, or any
amendment or supplement thereto, included in the Shelf Registration Statement.

     (g) The Issuers and the Guarantors shall furnish to each Exchanging Dealer
which so requests, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto, including all
material incorporated by

                                       9

reference therein, and, if the Exchanging Dealer so requests in writing, all
exhibits thereto (including exhibits incorporated by reference therein).

     (h) The Issuers and the Guarantors shall promptly deliver to the Initial
Purchaser, each Exchanging Dealer and each other Person required to deliver a
Prospectus during the effectiveness of the Exchange Offer Registration
Statement, without charge, as many copies of the Prospectus included in such
Exchange Offer Registration Statement and any amendment or supplement thereto as
any such Person may reasonably request. The Issuers and the Guarantors consent
to the use of the Prospectus or any amendment or supplement thereto by the
Initial Purchaser, any Exchanging Dealer and any such other Person that may be
required to deliver a Prospectus following the Registered Exchange Offer in
connection with the offering and sale of the New Securities covered by the
Prospectus, or any amendment or supplement thereto, included in the Exchange
Offer Registration Statement.

     (i) Prior to the Registered Exchange Offer or any other offering of
Securities pursuant to any Registration Statement, the Issuers and the
Guarantors shall arrange, if necessary, for the qualification of the Securities
or the New Securities for sale under the laws of such jurisdictions as any
Holder shall reasonably request and will maintain such qualification in effect
so long as required; provided that in no event shall either Issuer or any
Guarantor be obligated to qualify to do business in any jurisdiction where it is
not then so qualified or to take any action that would subject it to service of
process in suits, other than those arising out of the Initial Placement, the
Registered Exchange Offer or any offering pursuant to a Shelf Registration
Statement, in any such jurisdiction where it is not then so subject.

     (j) If any of the Securities or the New Securities are not issued in global
form, then the Issuers and the Guarantors shall cooperate with the Holders of
Securities to facilitate the timely preparation and delivery of certificates
representing New Securities or Securities to be issued or sold pursuant to any
Registration Statement free of any restrictive legends and in such denominations
and registered in such names as Holders may request.

     (k) Upon the occurrence of any event contemplated by subsections (c)(ii) or
(v) above, the Issuers and the Guarantors shall promptly prepare a
post-effective amendment to the applicable Registration Statement or an
amendment or supplement to the related Prospectus or file any other required
document so that, as thereafter delivered to Initial Purchaser of the securities
included therein, the Prospectus will not include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. In such circumstances, the period of effectiveness of the
Exchange Offer Registration Statement provided for in Section 2 and the Shelf
Registration Statement provided for in Section 3(b) shall each be extended by
the number of days from and including the date of the giving of a notice of
suspension pursuant to Section 5(c) to and including the date when the Initial
Purchaser, the Holders of the Securities and any known Exchanging Dealer shall
have received such amended or supplemented Prospectus pursuant to this Section.

     (l) Not later than the effective date of any Registration Statement, the
Issuers and the Guarantors shall provide a CUSIP number for the Securities or
the New Securities, as the case may be, registered under such Registration
Statement and provide the Trustee with

                                       10

certificates for such Securities or New Securities, in a form eligible for
deposit with The Depository Trust Company.

     (m) The Issuers and the Guarantors shall comply with all applicable rules
and regulations of the Commission and shall make generally available to the
Issuers' security holders as soon as practicable after the effective date of the
applicable Registration Statement an earnings statement satisfying the
provisions of Section 11(a) of the Act.

     (n) The Issuers and the Guarantors shall cause the Indenture to be
qualified under the Trust Indenture Act in a timely manner.

     (o) The Issuers and the Guarantors may require each Holder of Securities to
be sold pursuant to any Shelf Registration Statement to furnish to the Issuers
and the Guarantors such information regarding the Holder and the distribution of
such Securities as the Issuers and the Guarantors may from time to time
reasonably require for inclusion in such Registration Statement. The Issuers and
the Guarantors may exclude from such Shelf Registration Statement the Securities
of any Holder that unreasonably fails to furnish such information within a
reasonable time after receiving such request.

     (p) In the case of any Shelf Registration Statement, the Issuers and the
Guarantors shall enter into such agreements and take all other appropriate
actions (including if requested an underwriting agreement in customary form) in
order to expedite or facilitate the registration or the disposition of the
Securities, and in connection therewith, if an underwriting agreement is entered
into, cause the same to contain indemnification provisions and procedures no
less favorable than those set forth in Section 7 (or such other provisions and
procedures acceptable to the Majority Holders and the Managing Underwriters, if
any, with respect to all parties to be indemnified pursuant to Section 7).

     (q) In the case of any Shelf Registration Statement, the Issuers and the
Guarantors shall:

          (i) make reasonably available for inspection by the Holders of
     Securities to be registered thereunder, any underwriter participating in
     any disposition pursuant to such Registration Statement, and any attorney,
     accountant or other agent retained by the Holders or any such underwriter
     all relevant financial and other records, pertinent corporate documents and
     properties of the Issuers and the Guarantors and their respective
     subsidiaries;

          (ii) cause the Issuers' and the Guarantors' respective officers,
     directors and employees to supply all relevant information reasonably
     requested by the Holders or any such underwriter, attorney, accountant or
     agent in connection with any such Registration Statement as is customary
     for similar due diligence examinations; provided, however, that any
     information that is designated in writing by the Issuers or the Guarantors,
     in good faith, as confidential at the time of delivery of such information
     shall be kept confidential by the Holders or any such underwriter,
     attorney, accountant or agent, unless such disclosure is made in connection
     with a court proceeding or required

                                       11

     by law, or such information becomes available to the public generally or
     through a third party without an accompanying obligation of
     confidentiality;

          (iii) make such representations and warranties to the Holders of
     Securities registered thereunder and the underwriters, if any, in form,
     substance and scope as are customarily made by issuers to underwriters in
     primary underwritten offerings and covering matters including, but not
     limited to, those set forth in the Purchase Agreement;

          (iv) obtain opinions of counsel to the Issuers and the Guarantors and
     updates thereof (which counsel and opinions (in form, scope and substance)
     shall be reasonably satisfactory to the Managing Underwriters, if any)
     addressed to each selling Holder and the underwriters, if any, covering
     such matters as are customarily covered in opinions requested in
     underwritten offerings and such other matters as may be reasonably
     requested by such Holders and underwriters;

          (v) obtain "cold comfort" letters and updates thereof from the
     independent certified public accountants of the Issuers and the Guarantors
     (and, if necessary, any other independent certified public accountants of
     any subsidiary of the Issuers and the Guarantors or of any business
     acquired by the Issuers and the Guarantors for which financial statements
     and financial data are, or are required to be, included in the Registration
     Statement), addressed to each selling Holder of Securities registered
     thereunder and the underwriters, if any, in customary form and covering
     matters of the type customarily covered in "cold comfort" letters in
     connection with primary underwritten offerings; and

          (vi) deliver such documents and certificates as may be reasonably
     requested by the Majority Holders and the Managing Underwriters, if any,
     including those to evidence compliance with Section 5(k) and with any
     customary conditions contained in the underwriting agreement or other
     agreement entered into by the Issuers or the Guarantors.

The actions set forth in clauses (iii), (iv), (v) and (vi) of this Section shall
be performed at (A) the effectiveness of such Registration Statement and each
post-effective amendment thereto; and (B) each closing under any underwriting or
similar agreement as and to the extent required thereunder.

     (r) [omitted]

     (s) [omitted]

     (t) [omitted]

     (u) In the event that any Broker-Dealer shall underwrite any Securities or
participate as a member of an underwriting syndicate or selling group or "assist
in the distribution" (within the meaning of the Conduct Rules and the By-Laws of
the National Association of Securities Dealers, Inc.) thereof, whether as a
Holder of such Securities or as an underwriter, a placement or sales agent or a
broker or dealer in respect thereof, or otherwise,

                                       12

assist such Broker-Dealer in complying with the requirements of such Rules and
By-Laws, including, without limitation, by:

          (i) if such Rules or By-Laws shall so require, engaging a "qualified
     independent underwriter" (as defined in such Rules) to participate in the
     preparation of the Registration Statement, to exercise usual standards of
     due diligence with respect thereto and, if any portion of the offering
     contemplated by such Registration Statement is an underwritten offering or
     is made through a placement or sales agent, to recommend the yield of such
     Securities;

          (ii) indemnifying any such qualified independent underwriter to the
     extent of the indemnification of underwriters provided in Section 7 hereof;
     and

          (iii) providing such information to such Broker-Dealer as may be
     required in order for such Broker-Dealer to comply with the requirements of
     such Rules.

          (iv) The Issuers and the Guarantors shall use their reasonable best
     efforts to take all other steps necessary to effect the registration of the
     Securities or the New Securities, as the case may be, covered by a
     Registration Statement.

     6. Registration Expenses. The Issuers and the Guarantors bear all expenses
incurred in connection with the performance of their obligations under Sections
2, 3 and 5 hereof and, in the event of any Shelf Registration Statement, will
reimburse the Holders for the reasonable fees and disbursements of one firm or
counsel designated by the Majority Holders to act as counsel for the Holders in
connection therewith, and, in the case of any Exchange Offer Registration
Statement, will reimburse the Initial Purchaser for the reasonable fees and
disbursements of counsel acting in connection therewith.

     7. Indemnification and Contribution. (a) The Issuers and each Guarantor
agree to indemnify and hold harmless each Holder of Securities or New
Securities, as the case may be, covered by any Registration Statement (including
the Initial Purchaser and, with respect to any Prospectus delivery as
contemplated in Section 5(h) hereof, each Exchanging Dealer), the directors,
officers, employees and agents of each such Holder and each Person who controls
any such Holder within the meaning of either the Act or the Exchange Act against
any and all losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement as
originally filed or in any amendment thereof, or in any preliminary Prospectus
or the Prospectus, or in any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and agree to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action;

                                       13

provided, however, that the Issuers and the Guarantors will not be liable in any
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Issuers or the Guarantors by or on
behalf of any such Holder specifically for inclusion therein. This indemnity
agreement will be in addition to any liability which the Issuers or the
Guarantors may otherwise have.

     The Issuers and each Guarantor also agree to indemnify or contribute as
provided in Section 7(d) to Losses of any underwriter of Securities or New
Securities, as the case may be, registered under a Shelf Registration Statement,
their directors, officers, employees or agents and each Person who controls such
underwriter on substantially the same basis as that of the indemnification of
the Initial Purchaser and the selling Holders provided in this Section 7(a). The
Issuers and each Guarantor shall, if requested by any Holder, enter into an
underwriting agreement reflecting such agreement, as provided in Section 5(p)
hereof.

     (b) Each Holder of securities covered by a Registration Statement
(including the Initial Purchaser and, with respect to any Prospectus delivery as
contemplated in Section 5(h) hereof, each Exchanging Dealer) severally and not
jointly agrees to indemnify and hold harmless the Issuers, the Guarantors, the
Initial Purchaser, the director of the Issuers and the Guarantors, the officers
of the Issuers and the Guarantors who signs such Registration Statement and each
Person who controls the Issuers, the Guarantors and the Initial Purchaser within
the meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Issuers and the Guarantors to each such Holder, but
only with reference to written information relating to such Holder furnished to
the Issuers and the Guarantors by or on behalf of such Holder specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any such Holder
may otherwise have.

     (c) Promptly after receipt by an indemnified party under this Section 7 or
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses; and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest; (ii) the actual or potential defendants

                                       14

in, or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party; (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action; or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.

     (d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section is unavailable to or insufficient to hold harmless an indemnified
party for any reason, then each applicable indemnifying party shall have a joint
and several obligation to contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses") to
which such indemnified party may be subject in such proportion as is appropriate
to reflect the relative benefits received by such indemnifying party, on the one
hand, and such indemnified party, on the other hand, from the Initial Placement
and the Registration Statement which resulted in such Losses; provided, however,
that in no case shall the Initial Purchaser or any subsequent Holder of any
Security or New Security be responsible, in the aggregate, for any amount in
excess of the purchase discount or commission applicable to such Security, or in
the case of a New Security, applicable to the Security that was exchangeable
into such New Security, as set forth on the cover page of the Final Memorandum,
nor shall any underwriter be responsible for any amount in excess of the
underwriting discount or commission applicable to the securities purchased by
such underwriter under the Registration Statement which resulted in such Losses.
If the allocation provided by the immediately preceding sentence is unavailable
for any reason, the indemnifying party and the indemnified party shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of such indemnifying party, on the
one hand, and such indemnified party, on the other hand, in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Issuers or the
Guarantors shall be deemed to be equal to the sum of (x) the total net proceeds
from the Initial Placement (before deducting expenses) as set forth on the cover
page of the Final Memorandum and (y) the total amount of additional interest
which the Issuers and the Guarantors were not required to pay as a result of
registering the securities covered by the Registration Statement which resulted
in such Losses. Benefits received by the Initial Purchaser shall be deemed to be
equal to the total purchase discounts and commissions as set forth on the cover
page of the Final Memorandum, and benefits received by any other Holders shall
be deemed to be equal to the value of receiving Securities or New Securities, as
applicable, registered under the Act. Benefits received by any underwriter shall
be deemed to be equal to the total underwriting discounts and commissions, as
set forth on the cover page of the Prospectus forming a part of the Registration
Statement which resulted in such Losses. Relative fault shall be determined by
reference to, among other things, whether any alleged untrue statement or
omission relates to information provided by the

                                       15

indemnifying party, on the one hand, or by the indemnified party, on the other
hand, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The parties agree that it would not be just and equitable if
contribution were determined by pro rata allocation (even if the Holders were
treated as one entity for such purpose) or any other method of allocation which
does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section, each Person who
controls a Holder within the meaning of either the Act or the Exchange Act and
each director, officer, employee and agent of such Holder shall have the same
rights to contribution as such Holder, and each Person who controls the Issuers
and the Guarantors within the meaning of either the Act or the Exchange Act,
each officer of the Issuers and the Guarantors who shall have signed the
Registration Statement and each director of the Issuers and the Guarantors shall
have the same rights to contribution as the Issuers and the Guarantors, subject
in each case to the applicable terms and conditions of this paragraph (d).

     (e) The provisions of this Section will remain in full force and effect,
regardless of any investigation made by or on behalf of any Holder or the
Issuers and the Guarantors or any of the officers, directors or controlling
Persons referred to in this Section hereof, and will survive the sale by a
Holder of securities covered by a Registration Statement.

     8. Underwritten Registrations. (a) If any of the Securities or New
Securities, as the case may be, covered by any Shelf Registration Statement are
to be sold in an underwritten offering, the Managing Underwriters shall be
selected by the Majority Holders and shall be reasonably satisfactory to the
Partnership.

     (b) No Person may participate in any underwritten offering pursuant to any
Shelf Registration Statement, unless such Person (i) agrees to sell such
Person's Securities or New Securities, as the case may be, on the basis
reasonably provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements; and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.

     9. No Inconsistent Agreements. The Issuers and the Guarantors have not, as
of the date hereof, entered into, nor shall they, on or after the date hereof,
enter into, any agreement with respect to their securities that is inconsistent
with the rights granted to the Holders herein or otherwise conflicts with the
provisions hereof.

     10. Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Issuers and the Guarantors have obtained the

                                       16

written consent of the Majority Holders (or, after the consummation of any
Registered Exchange Offer in accordance with Section 2 hereof, of New
Securities); provided that, with respect to any matter that directly or
indirectly affects the rights of the Initial Purchaser hereunder, the Issuers
and the Guarantors shall obtain the written consent of the Initial Purchaser
against which such amendment, qualification, supplement, waiver or consent is to
be effective. Notwithstanding the foregoing (except the foregoing proviso), a
waiver or consent to departure from the provisions hereof with respect to a
matter that relates exclusively to the rights of Holders whose Securities or New
Securities, as the case may be, are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the rights of other
Holders may be given by the Majority Holders, determined on the basis of
Securities or New Securities, as the case may be, being sold rather than
registered under such Registration Statement.

     11. Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, telex,
telecopier or air courier guaranteeing overnight delivery:

          (a) if to a Holder, at the most current address given by such holder
     to the Issuers and the Guarantors in accordance with the provisions of this
     Section, which address initially is, with respect to each Holder, the
     address of such Holder maintained by the Registrar under the Indenture,
     with a copy in like manner to UBS Warburg LLC;

          (b) if to you, initially at the respective addresses set forth in the
     Purchase Agreement;

          (c) if to the Issuers, initially at the address set forth in the
     Purchase Agreement; and

          (d) if to the Guarantors, initially at 333 Clay Street, Suite 1600,
     Houston, Texas 77002.

          All such notices and communications shall be deemed to have been duly
     given when received.

          The Initial Purchaser, the Issuers or the Guarantors by notice to the
     other parties may designate additional or different addresses for
     subsequent notices or communications.

     12. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including, without the need for an express assignment or any consent by the
Issuers or the Guarantors thereto, subsequent Holders of Securities and the New
Securities. The Issuers and the Guarantors hereby agree to extend the benefits
of this Agreement to any Holder of Securities and the New Securities, and any
such Holder may specifically enforce the provisions of this Agreement as if an
original party hereto.

                                       17

     13. Counterparts. This agreement may be in signed counterparts, each of
which shall constitute an original and all of which together shall constitute
one and the same agreement.

     14. Purchases and Sales of Securities. The Issuers and the Guarantors shall
not, and shall use their best efforts to cause their affiliates (as defined in
Rule 405 under the Act) not to, purchase and then resell or otherwise transfer
any Securities for two (2) years, or if a Shelf Registration Statement shall
become effective during such two (2) year period, for the period of such
effectiveness.

     15. Third Party Beneficiaries. Each Holder shall be a third party
beneficiary to the agreements made hereunder between the Issuers and the
Guarantors, on the one hand, and the Initial Purchaser, on the other hand, and
shall have the right to enforce such agreements directly to the extent it deems
such enforcement necessary or advisable to protect its rights or the rights of
other Holders hereunder.

     16. Headings. The headings used herein are for convenience only and shall
not affect the construction hereof.

     17. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed in the State of New York.

     18. Severability. In the event that any one of more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.

     19. Securities Held by the Issuers, the Guarantors, etc. Whenever the
consent or approval of Holders of a specified percentage of principal amount of
Securities or New Securities is required hereunder, Securities or New
Securities, as applicable, held by the Issuers, the Guarantors or their
Affiliates (other than subsequent Holders of Securities or New Securities if
such subsequent Holders are deemed to be Affiliates solely by reason of their
holdings of such Securities or New Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.

                                       18

     If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a building agreement among the
Issuers, the Guarantors and the several Initial Purchaser.

                             Very truly yours,

                             PLAINS ALL AMERICAN PIPELINE, L.P.

                             By:    PLAINS AAP, L.P.
                                    its General Partner

                             By:    PLAINS ALL AMERICAN GP LLC
                                    its General Partner

                                    By:     /s/ Phillip D. Kramer
                                         ---------------------------------------
                                         Name:     Phillip D. Kramer
                                         Title:    Executive Vice President and
                                                   Chief Financial Officer

                             PAA FINANCE CORP.

                                    By:     /s/ Phillip D. Kramer
                                         ---------------------------------------
                                         Name:     Phillip D. Kramer
                                         Title:    Executive Vice President and
                                                   Chief Financial Officer

                             PLAINS MARKETING, L.P.

                             By:    PLAINS MARKETING GP INC.
                                    its General Partner

                                    By:     /s/ Phillip D. Kramer
                                         ---------------------------------------
                                         Name:     Phillip D. Kramer
                                         Title:    Executive Vice President and
                                                   Chief Financial Officer

                                       19

                         ALL AMERICAN PIPELINE, L.P.

                         By:    PLAINS MARKETING GP INC.
                                its General Partner

                                By:     /s/ Phillip D. Kramer
                                     -------------------------------------------
                                     Name:     Phillip D. Kramer
                                     Title:    Executive Vice President and
                                               Chief Financial Officer

                         PLAINS MARKETING GP INC.

                                By:     /s/ Phillip D. Kramer
                                     -------------------------------------------
                                     Name:     Phillip D. Kramer
                                     Title:    Executive Vice President and
                                               Chief Financial Officer

                         PLAINS MARKETING CANADA LLC

                         By:    PLAINS MARKETING, L.P.
                                its Sole Member

                         By:    PLAINS MARKETING GP INC.
                                its General Partner

                                By:     /s/ Phillip D. Kramer
                                     -------------------------------------------
                                     Name:     Phillip D. Kramer
                                     Title:    Executive Vice President and
                                               Chief Financial Officer

                         PMC (NOVA SCOTIA) COMPANY

                                By:     /s/ Phillip D. Kramer
                                     -------------------------------------------
                                     Name:     Phillip D. Kramer
                                     Title:    Executive Vice President and
                                               Chief Financial Officer

                                       20

                         PLAINS MARKETING CANADA, L.P.

                         By: PMC (NOVA SCOTIA) COMPANY
                             its General Partner

                                By:     /s/  Phillip D. Kramer
                                    --------------------------------------------
                                    Name:     Phillip D. Kramer
                                    Title:    Executive Vice President and
                                              Chief Financial Officer

                         BASIN HOLDINGS GP LLC

                         By:    ALL AMERICAN PIPELINE, L.P.
                                its Sole Member

                         By:    PLAINS MARKETING GP INC.
                                its General Partner

                                By:     /s/ Phillip D. Kramer
                                    --------------------------------------------
                                    Name:     Phillip D. Kramer
                                    Title:    Executive Vice President and
                                              Chief Financial Officer

                         BASIN PIPELINE HOLDINGS, L.P.

                         By:    BASIN HOLDINGS GP LLC
                                its General Partner

                         By:    ALL AMERICAN PIPELINE, L.P.
                                its Sole Member

                         By:    PLAINS MARKETING GP INC.
                                its General Partner

                                By:     /s/ Phillip D. Kramer
                                    --------------------------------------------
                                    Name:     Phillip D. Kramer
                                    Title:    Executive Vice President and
                                              Chief Financial Officer

                                       21

                         RANCHO HOLDINGS GP LLC

                         By:    ALL AMERICAN PIPELINE, L.P.
                                its Sole Member

                         By:    PLAINS MARKETING GP INC.
                                its General Partner

                                By:     /s/ Phillip D. Kramer
                                     -------------------------------------------
                                     Name:     Phillip D. Kramer
                                     Title:    Executive Vice President and
                                               Chief Financial Officer

                         RANCHO PIPELINE HOLDINGS, L.P.

                         By:    RANCHO HOLDINGS GP LLC
                                its General Partner

                         By:    ALL AMERICAN PIPELINE, L.P.
                                its Sole Member

                         By:    PLAINS MARKETING GP INC.
                                its General Partner

                                By:     /s/ Phillip D. Kramer
                                     -------------------------------------------
                                     Name:     Phillip D. Kramer
                                     Title:    Executive Vice President and
                                               Chief Financial Officer

The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.

UBS WARBURG LLC

By:         /s/ Michael Jamieson
    -------------------------------------------------
Name:   Michael Jamieson
Title:  Executive Director

By:         /s/ Robert B. Wallace
    -------------------------------------------------
Name:   Robert B. Wallace
Title:  Executive Director

                                       22

                                                                   Exhibit 99.1

                               CERTIFICATION OF
                            CHIEF EXECUTIVE OFFICER
                     OF PLAINS ALL AMERICAN PIPELINE, L.P.
                        PURSUANT TO 18 U.S.C. (S) 1350

   I, Greg L. Armstrong, Chief Executive Officer of Plains All American
Pipeline, L.P. (the "Company"), hereby certify that:

   (i) the accompanying report on Form 10-Q for the period ending September 30,
       2002, and filed with the Securities and Exchange Commission on the date
       hereof (the "Report") by the Company fully complies with the
       requirements of section 13(a) or 15(d) of the Securities Exchange Act of
       1934 (15 U.S.C. 78m or 78o(d)); and

  (ii) the information contained in the Report fairly presents, in all material
       respects, the financial operations and results of operations of the
       Company.

                                          /s/  GREG L. ARMSTRONG
                                          --------------------------------------
                                          Name: Greg L. Armstrong
                                          Date: November 11, 2002

                                                                   Exhibit 99.2

                               CERTIFICATION OF
                            CHIEF FINANCIAL OFFICER
                     OF PLAINS ALL AMERICAN PIPELINE, L.P.
                        PURSUANT TO 18 U.S.C. (S) 1350

   I, Phillip D. Kramer, Chief Financial Officer of Plains All American
Pipeline, L.P. (the "Company"), hereby certify that:

   (1) the accompanying report on Form 10-Q for the period ending September 30,
       2002, and filed with the Securities and Exchange Commission on the date
       hereof (the "Report") by the Company fully complies with the
       requirements of section 13(a) or 15(d) of the Securities Exchange Act of
       1934 (15 U.S.C. 78m or 78o(d)); and

   (2) the information contained in the Report fairly presents, in all material
       respects, the financial operations and results of operations of the
       Company.

                                          /s/  PHILLIP D. KRAMER
                                          --------------------------------------
                                          Name: Phillip D. Kramer
                                          Date: November 11, 2002