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                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                    FORM 8-K

                                 CURRENT REPORT

                       Pursuant to Section 13 or 15(d) of
                      the Securities Exchange Act of 1934

        Date of Report (Date of earliest event reported) - June 27, 2001

                       PLAINS ALL AMERICAN PIPELINE, L.P.
                (Name of Registrant as specified in its charter)

            DELAWARE                      0-9808                 76-0582150
  (State or other jurisdiction    (Commission File Number)    (I.R.S. Employer
of incorporation or organization)                            Identification No.)

                          333 CLAY STREET, SUITE 2900
                             HOUSTON, TEXAS 77002
                                (713) 646-4100
              (Address, including zip code, and telephone number,
       including area code, of Registrant's principal executive offices)

                                      N/A
         (Former name or former address, if changed since last report.)

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ITEM 5.  OTHER EVENTS

  Effective as of June 27, 2001, Plains All American Pipeline, L.P. (the
"Partnership") and the Partnership's two principal operating subsidiaries
amended and restated their respective partnership agreements to reflect the
transactions contemplated by the Contribution, Assignment and Amendment
Agreement, dated as of the same date, among Plains All American Pipeline, L.P.,
Plains Marketing, L.P., All American Pipeline, L.P., Plains AAP, L.P., Plains
All American GP LLC and Plains Marketing GP Inc. The amended and restated
partnership agreements for each of the partnerships are attached to this Form
8-K. Also attached is the audited balance sheet for Plains AAP, L.P., the
general partner of the Partnership, as well as the consolidated financial
statements of the Partnership for the year ended December 31, 2000, which have
been updated to disclose the transactions affected by the restructuring
discussed above.

ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS

  (c) Exhibits

      3.1      Third Amended and Restated Agreement of Limited Partnership of
               Plains All American Pipeline, L.P., dated as of June 27, 2001.

      3.2      Second Amended and Restated Agreement of Limited Partnership of
               Plains Marketing, L.P., dated as of June 27, 2001.

      3.3.     Second Amended and Restated Agreement of Limited Partnership of
               All American Pipeline, L.P., dated as of June 27, 2001.

      99.1     Audited Balance Sheet of Plains AAP, L.P., dated as of June 8,
               2001.

      99.2     Plains All American Pipeline, L.P.'s consolidated financial
               statements for the year ended December 31, 2000.

                                   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 hereunto duly authorized.

                            PLAINS ALL AMERICAN PIPELINE, L.P.

Date:  August 27, 2001      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

                               INDEX TO EXHIBITS

  3.1  Third Amended and Restated Agreement of Limited Partnership of Plains All
       American Pipeline, L.P., dated as of June 27, 2001.

  3.2  Second Amended and Restated Agreement of Limited Partnership of Plains
       Marketing, L.P., dated as of June 27, 2001.

  3.3. Second Amended and Restated Agreement of Limited Partnership of All
       American Pipeline, L.P., dated as of June 27, 2001.

  99.1 Audited Balance Sheet of Plains AAP, L.P., dated as of June 8, 2001.

  99.2 Plains All American Pipeline, L.P.'s consolidated financial statements
       for the year ended December 31, 2000.

                                                                     Exhibit 3.1

                          THIRD AMENDED AND RESTATED

                       AGREEMENT OF LIMITED PARTNERSHIP

                                      OF

                      PLAINS ALL AMERICAN PIPELINE, L.P.

                               TABLE OF CONTENTS

                                                                                                  
                                               ARTICLE I
                                              DEFINITIONS

Section 1.1    Definitions........................................................................     2
Section 1.2    Construction.......................................................................    21

                                        ARTICLE II ORGANIZATION

Section 2.1    Formation..........................................................................    21
Section 2.2    Name...............................................................................    21
Section 2.3    Registered Office; Registered Agent; Principal Office; Other Offices...............    21
Section 2.4    Purpose and Business...............................................................    22
Section 2.5    Powers.............................................................................    22
Section 2.6    Power of Attorney..................................................................    22
Section 2.7    Term...............................................................................    24
Section 2.8    Title to Partnership Assets........................................................    24

                                              ARTICLE III
                                       RIGHTS OF LIMITED PARTNERS

Section 3.1    Limitation of Liability............................................................    24
Section 3.2    Management of Business.............................................................    24
Section 3.3    Outside Activities of the Limited Partners.........................................    25
Section 3.4    Rights of Limited Partners.........................................................    25

                                               ARTICLE IV
                    CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS;
                                  REDEMPTION OF PARTNERSHIP INTERESTS

Section 4.1    Certificates.......................................................................    26
Section 4.2    Mutilated, Destroyed, Lost or Stolen Certificates..................................    26
Section 4.3    Record Holders.....................................................................    27
Section 4.4    Transfer Generally.................................................................    28
Section 4.5    Registration and Transfer of Limited Partner Interests.............................    28
Section 4.6    Transfer of the General Partner's General Partner Interest.........................    29
Section 4.7    Transfer of Incentive Distribution Rights..........................................    30
Section 4.8    Restrictions on Transfers..........................................................    30
Section 4.9    Citizenship Certificates; Non-citizen Assignees....................................    31
Section 4.10   Redemption of Partnership Interests of Non-citizen Assignees.......................    32

                                               ARTICLE V
                      CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS

Section 5.1     Organizational Contributions......................................................    33
Section 5.2     Contributions by the General Partner and its Affiliates...........................    33

                                      -i-

                                                                                                     
Section 5.3    Contributions by Initial Limited Partners and Reimbursement of the General Partner......  34
Section 5.4    Interest and Withdrawal.................................................................  34
Section 5.5    Capital Accounts........................................................................  34
Section 5.6    Issuances of Additional Partnership Securities..........................................  37
Section 5.7    Limitations on Issuance of Additional Partnership Securities............................  38
Section 5.8    Conversion of Subordinated Units........................................................  40
Section 5.9    Limited Preemptive Right................................................................  41
Section 5.10   Splits and Combination..................................................................  42
Section 5.11   Fully Paid and Non-Assessable Nature of Limited Partner Interests.......................  42
Section 5.12   Establishment of Class B Common Units...................................................  43

                                                ARTICLE VI
                                       ALLOCATIONS AND DISTRIBUTIONS

Section 6.1    Allocations for Capital Account Purposes................................................  45
Section 6.2    Allocations for Tax Purposes............................................................  52
Section 6.3    Requirement for and Characterization of Distributions; Distributions to Record Holders..  55
Section 6.4    Distributions of Available Cash from Operating Surplus..................................  55
Section 6.5    Distributions of Available Cash from Capital Surplus....................................  57
Section 6.6    Adjustment of Minimum Quarterly Distribution and Target Distribution Levels.............  57
Section 6.7    Special Provisions Relating to the Holders of Subordinated Units........................  58
Section 6.8    Special Provisions Relating to the Holders of Incentive Distribution Rights.............  58
Section 6.9    Entity-Level Taxation...................................................................  58

                                                ARTICLE VII
                                   MANAGEMENT AND OPERATION OF BUSINESS

Section 7.1    Management..............................................................................  59
Section 7.2    Certificate of Limited Partnership......................................................  61
Section 7.3    Restrictions on General Partner's Authority.............................................  62
Section 7.4    Reimbursement of the General Partner....................................................  62
Section 7.5    Outside Activities......................................................................  63
Section 7.6    Loans from the General Partner; Loans or Contributions from the Partnership; Contracts
               with Affiliates; Certain Restrictions on the General Partner............................  64
Section 7.7    Indemnification.........................................................................  66
Section 7.8    Liability of lndemnitees................................................................  68
Section 7.9    Resolution of Conflicts of Interest.....................................................  68
Section 7.10   Other Matters Concerning the General Partner............................................  70
Section 7.11   Purchase or Sale of Partnership Securities..............................................  70
Section 7.12   Registration Rights of the General Partner and its Affiliates...........................  71
Section 7.13   Reliance by Third Parties...............................................................  73

                                     -ii-

                                                                                                  
                                              ARTICLE VIII
                                 BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 8.1    Records and Accounting.............................................................    73
Section 8.2    Fiscal Year........................................................................    74
Section 8.3    Reports............................................................................    74

                                               ARTICLE IX
                                              TAX MATTERS

Section 9.1    Tax Returns and Information........................................................    74
Section 9.2    Tax Elections......................................................................    74
Section 9.3    Tax Controversies..................................................................    75
Section 9.4    Withholding........................................................................    75

                                               ARTICLE X
                                         ADMISSION OF PARTNERS

Section 10.1   Admission of Initial Limited Partners..............................................    75
Section 10.2   Admission of Substituted Limited Partner...........................................    75
Section 10.3   Admission of Successor General Partner.............................................    76
Section 10.4   Admission of Additional Limited Partners...........................................    76
Section 10.5   Amendment of Agreement and Certificate of Limited Partnership......................    77

                                               ARTICLE XI
                                   WITHDRAWAL OR REMOVAL OF PARTNERS

Section 11.1   Withdrawal of the General Partner..................................................    77
Section 11.2   Removal of the General Partner.....................................................    79
Section 11.3   Interest of Departing Partner and Successor General Partner........................    79
Section 11.4   Termination of Subordination Period, Conversion of Subordinated Units and
               Extinguishment of Cumulative Common Unit Arrearages................................    80
Section 11.5   Withdrawal of Limited Partners.....................................................    81

                                              ARTICLE XII
                                      DISSOLUTION AND LIQUIDATION

Section 12.1   Dissolution........................................................................    81
Section 12.2   Continuation of the Business of the Partnership After Dissolution..................    81
Section 12.3   Liquidator.........................................................................    82
Section 12.4   Liquidation........................................................................    83
Section 12.5   Cancellation of Certificate of Limited Partnership.................................    83
Section 12.6   Return of Contributions............................................................    84
Section 12.7   Waiver of Partition................................................................    84
Section 12.8   Capital Account Restoration........................................................    84

                                              ARTICLE XIII
                       AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE

Section 13.1   Amendment to be Adopted Solely by the General Partner..............................    84

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Section 13.2   Amendment Procedures.........................................................    85
Section 13.3   Amendment Requirements.......................................................    86
Section 13.4   Special Meetings.............................................................    87
Section 13.5   Notice of a Meeting..........................................................    87
Section 13.6   Record Date..................................................................    87
Section 13.7   Adjournment..................................................................    87
Section 13.8   Waiver of Notice; Approval of Meeting; Approval of Minutes...................    88
Section 13.9   Quorum.......................................................................    88
Section 13.10  Conduct of a Meeting.........................................................    89
Section 13.11  Action Without a Meeting.....................................................    89
Section 13.12  Voting and Other Rights......................................................    90

                                           ARTICLE XIV
                                              MERGER

Section 14.1   Authority....................................................................    90
Section 14.2   Procedure for Merger or Consolidation........................................    90
Section 14.3   Approval by Limited Partners of Merger or Consolidation......................    91
Section 14.4   Certificate of Merger........................................................    92
Section 14.5   Effect of Merger.............................................................    92

                                            ARTICLE XV
                            RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS

Section 15.1   Right to Acquire Limited Partner Interests...................................    93

                                           ARTICLE XVI
                                        GENERAL PROVISIONS

Section 16.1   Addresses and Notices........................................................    94
Section 16.2   Further Action...............................................................    95
Section 16.3   Binding Effect...............................................................    95
Section 16.4   Integration..................................................................    95
Section 16.5   Creditors....................................................................    95
Section 16.6   Waiver.......................................................................    96
Section 16.7   Counterparts.................................................................    96
Section 16.8   Applicable Law...............................................................    96
Section 16.9   Invalidity of Provisions.....................................................    96
Section 16.10  Consent of Partners..........................................................    96
Section 16.11  Amendments to Reflect the GP Restructuring Agreement.........................    96

                                     -iv-

          THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
                                      OF
                      PLAINS ALL AMERICAN PIPELINE, L.P.

     THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF PLAINS
ALL AMERICAN PIPELINE, L.P. dated as of June 27, 2001, is entered into by and
among Plains AAP, L.P., a Delaware limited partnership, as the General Partner,
and Plains AAP, L.P., as the lawful agent and attorney-in-fact for the Limited
Partners, together with any other Persons who become Partners in the Partnership
or parties hereto as provided herein.

     WHEREAS, the Predecessor General Partner and the other parties thereto
entered into that certain Second Amended and Restated Agreement of Limited
Partnership of the Partnership dated as of November 23, 1998 (the "1998
Agreement");

     WHEREAS, the Predecessor General Partner effected Amendment No. 1 to the
1998 Agreement on May 28, 1999 to provide for the issuance of Class B Common
Units;

     WHEREAS, the Predecessor General Partner effected Amendment No. 2 to the
1998 Agreement on October 2, 2000 to amend the definition of the Subordination
Period to make such definition consistent with the disclosure contained in the
Registration Statement for purposes of the Plains All American GP LLC 1998 Long-
Term Incentive Plan;

     WHEREAS, the Predecessor General Partner effected Amendment No. 3 to the
1998 Agreement on April 27, 2001 to include certain tax provisions appropriate
to reflect the Partnership's acquisition of operations in Canada;

     WHEREAS, the Predecessor General Partner, the General Partner and the other
parties thereto entered into that certain Contribution, Assignment and Amendment
Agreement (the "GP Transfer Agreement"), dated as of June 8, 2001, pursuant to
which the Predecessor General Partner transferred its General Partner Interest
to, and the recipient thereof became, the General Partner;

     WHEREAS, the General Partner and the other parties thereto entered into
that certain Contribution Assignment and Amendment Agreement (the "GP
Restructuring Agreement"), dated as of June 27, 2001, pursuant to which the
General Partner transferred its general partner interest in the Operating
Partnerships to the Operating General Partner;

     WHEREAS, the General Partner effected Amendment No. 4 to the 1998 Agreement
as of June 27, 2001 and consistent with the authority granted in the GP
Restructuring Agreement, to more fully reflect the transactions contemplated
thereby; and

     WHEREAS, the General Partner desires to amend and restate the 1998
Agreement in its entirety to reflect each of the foregoing amendments together
with such other changes as the General Partner has determined are necessary and
appropriate.

     NOW, THEREFORE, the General Partner does hereby amend and restate the 1998
Agreement  to provide, in its entirety, as follows:

                                   ARTICLE I
                                  DEFINITIONS

Section 1.1    Definitions.

     The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.

     "Acquisition" means any transaction in which any Group Member acquires
(through an asset acquisition, merger, stock acquisition or other form of
investment) control over all or a portion of the assets, properties or business
of another Person for the purpose of increasing the operating capacity or
revenues of the Partnership Group from the operating capacity or revenues of the
Partnership Group existing immediately prior to such transaction.

     "Additional Book Basis" means the portion of any remaining Carrying Value
of an Adjusted Property that is attributable to positive adjustments made to
such Carrying Value as a result of Book-Up Events.  For purposes of determining
the extent that Carrying Value constitutes Additional Book Basis:

               (i)  Any negative adjustment made to the Carrying Value of an
     Adjusted Property as a result of either a Book-Down Event or a Book-Up
     Event shall first be deemed to offset or decrease that portion of the
     Carrying Value of such Adjusted Property that is attributable to any prior
     positive adjustments made thereto pursuant to a Book-Up Event or Book-Down
     Event.

               (ii) If Carrying Value that constitutes Additional Book Basis is
     reduced as a result of a Book-Down Event and the Carrying Value of other
     property is increased as a result of such Book-Down Event, an allocable
     portion of any such increase in Carrying Value shall be treated as
     Additional Book Basis; provided that the amount treated as Additional Book
     Basis pursuant hereto as a result of such Book-Down Event shall not exceed
     the amount by which the Aggregate Remaining Net Positive Adjustments after
     such Book-Down Event exceeds the remaining Additional Book Basis
     attributable to all of the Partnership's Adjusted Property after such Book-
     Down Event (determined without regard to the application of this clause
     (ii) to such Book-Down Event).

     "Additional Book Basis Derivative Items" means any Book Basis Derivative
Items that are computed with reference to Additional Book Basis. To the extent
that the Additional Book Basis attributable to all of the Partnership's Adjusted
Property as of the beginning of any taxable period exceeds the Aggregate
Remaining Net Positive Adjustments as of the beginning of such period (the
"Excess Additional Book Basis"), the Additional Book Basis Derivative Items for
such period shall be reduced by the amount that bears the same ratio to the
amount of Additional Book Basis Derivative Items determined without regard to
this sentence as the Excess Additional Book Basis bears to the Additional Book
Basis as of the beginning of such period.

     "Additional Limited Partner" means a Person admitted to the Partnership as
a Limited Partner pursuant to Section 10.4 and who is shown as such on the books
and records of the Partnership.

                                      -2-

     "Adjusted Capital Account" means the Capital Account maintained for each
Partner as of the end of each fiscal year of the Partnership, (a) increased by
any amounts that such Partner is obligated to restore under the standards set by
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to
restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b)
decreased by (i) the amount of all losses and deductions that, as of the end of
such fiscal year, are reasonably expected to be allocated to such Partner in
subsequent years under Sections 704(e)(2) and 706(d) of the Code and Treasury
Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of all distributions
that, as of the end of such fiscal year, are reasonably expected to be made to
such Partner in subsequent years in accordance with the terms of this Agreement
or otherwise to the extent they exceed offsetting increases to such Partner's
Capital Account that are reasonably expected to occur during (or prior to) the
year in which such distributions are reasonably expected to be made (other than
increases as a result of a minimum gain chargeback pursuant to Section 6.1(d)(i)
or 6.1(d)(ii)).  The foregoing definition of Adjusted Capital Account is
intended to comply with the provisions of Treasury Regulation Section 1.704-
1(b)(2)(ii)(d) and shall be interpreted consistently therewith.  The "Adjusted
Capital Account" of a Partner in respect of a General Partner Interest, a Common
Unit, a Subordinated Unit or an Incentive Distribution Right or any other
specified interest in the Partnership shall be the amount which such Adjusted
Capital Account would be if such General Partner Interest, Common Unit,
Subordinated Unit, Incentive Distribution Right or other interest in the
Partnership were the only interest in the Partnership held by a Partner from and
after the date on which such General Partner Interest, Common Unit, Subordinated
Unit, Incentive Distribution Right or other interest was first issued.

     "Adjusted Operating Surplus" means, with respect to any period, Operating
Surplus generated during such period (a) less (i) any net increase in Working
Capital Borrowings during such period and (ii) any net reduction in cash
reserves for Operating Expenditures during such period not relating to an
Operating Expenditure made during such period, and (b) plus (i) any net decrease
in Working Capital Borrowings during such period and (ii) any net increase in
cash reserves for Operating Expenditures during such period required by any debt
instrument for the repayment of principal, interest or premium.  Adjusted
Operating Surplus does not include that portion of Operating Surplus included in
clause (a)(i) of the definition of Operating Surplus.

     "Adjusted Property" means any property the Carrying Value of which has been
adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii).  Once an Adjusted Property
is deemed contributed to a new partnership in exchange for an interest in the
new partnership, followed by a deemed liquidation of the Partnership for federal
income tax purposes upon a termination of the Partnership pursuant to Section
708(b)(1)(B) of the Code, such property shall thereafter constitute a
Contributed Property until the Carrying Value of such property is subsequently
adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii).

     "Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question.  As used
herein, the term "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.

                                      -3-

     "Aggregate Remaining Net Positive Adjustments" means, as of the end of any
taxable period, the sum of the Remaining Net Positive Adjustments of all the
Partners.

     "Agreed Allocation" means any allocation, other than a Required Allocation,
of an item of income, gain, loss or deduction pursuant to the provisions of
Section 6.1, including, without limitation, a Curative Allocation (if
appropriate to the context in which the term "Agreed Allocation" is used).

     "Agreed Value" of any Contributed Property means the fair market value of
such property or other consideration at the time of contribution as determined
by the General Partner using such reasonable method of valuation as it may
adopt. The General Partner shall, in its discretion, use such method as it deems
reasonable and appropriate to allocate the aggregate Agreed Value of Contributed
Properties contributed to the Partnership in a single or integrated transaction
among each separate property on a basis proportional to the fair market value of
each Contributed Property.

     "1998 Agreement" means the Second Amended and Restated Agreement of Limited
Partnership of Plains All American Pipeline, L.P.

     "Agreement" means this Third Amended and Restated Agreement of Limited
Partnership of Plains All American Pipeline, L.P., as it may be amended,
supplemented or restated from time to time.

     "Assignee" means a Non-citizen Assignee or a Person to whom one or more
Limited Partner Interests have been transferred in a manner permitted under this
Agreement and who has executed and delivered a Transfer Application as required
by this Agreement, but who has not been admitted as a Substituted Limited
Partner.

     "Associate" means, when used to indicate a relationship with any Person,
(a) any corporation or organization of which such Person is a director, officer
or partner or is, directly or indirectly, the owner of 20% or more of any class
of voting stock or other voting interest; (b) any trust or other estate in which
such Person has at least a 20% beneficial interest or as to which such Person
serves as trustee or in a similar fiduciary capacity; and (c) any relative or
spouse of such Person, or any relative of such spouse, who has the same
principal residence as such Person.

     "Available Cash" means, with respect to any Quarter ending prior to the
Liquidation Date,

          (a) the sum of (i) all cash and cash equivalents of the Partnership
     Group on hand at the end of such Quarter, and (ii) all additional cash and
     cash equivalents of the Partnership Group on hand on the date of
     determination of Available Cash with respect to such Quarter resulting from
     Working Capital Borrowings made subsequent to the end of such Quarter, less

          (b) the amount of any cash reserves that is necessary or appropriate
     in the reasonable discretion of the General Partner to (i) provide for the
     proper conduct of the business of the Partnership Group (including reserves
     for future capital expenditures and

                                      -4-

     for anticipated future credit needs of the Partnership Group) subsequent to
     such Quarter, (ii) comply with applicable law or any loan agreement,
     security agreement, mortgage, debt instrument or other agreement or
     obligation to which any Group Member is a party or by which it is bound or
     its assets are subject or (iii) provide funds for distributions under
     Section 6.4 or 6.5 in respect of any one or more of the next four Quarters;
     provided, however, that the General Partner may not establish cash reserves
     pursuant to (iii) above if the effect of such reserves would be that the
     Partnership is unable to distribute the Minimum Quarterly Distribution on
     all Common Units, plus any Cumulative Common Unit Arrearage on all Common
     Units, with respect to such Quarter; and, provided further, that
     disbursements made by a Group Member or cash reserves established,
     increased or reduced after the end of such Quarter but on or before the
     date of determination of Available Cash with respect to such Quarter shall
     be deemed to have been made, established, increased or reduced, for
     purposes of determining Available Cash, within such Quarter if the General
     Partner so determines.

     Notwithstanding the foregoing, "Available Cash" with respect to the Quarter
in which the Liquidation Date occurs and any subsequent Quarter shall equal
zero.

     "Board of Directors" means the Board of Directors (or the comparable
governing body of any successor to the General Partner) of the general partner
of the General Partner.

     "Book Basis Derivative Items" means any item of income, deduction, gain or
loss included in the determination of Net Income or Net Loss that is computed
with reference to the Carrying Value of an Adjusted Property (e.g.,
depreciation, depletion, or gain or loss with respect to an Adjusted Property).

     "Book-Down Event" means an event which triggers a negative adjustment to
the Capital Accounts of the Partners pursuant to Section 5.5(d).

     "Book-Tax Disparity" means with respect to any item of Contributed Property
or Adjusted Property, as of the date of any determination, the difference
between the Carrying Value of such Contributed Property or Adjusted Property and
the adjusted basis thereof for federal income tax purposes as of such date. A
Partner's share of the Partnership's Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the difference
between such Partner's Capital Account balance as maintained pursuant to Section
5.5 and the hypothetical balance of such Partner's Capital Account computed as
if it had been maintained strictly in accordance with federal income tax
accounting principles.

     "Book-Up Event" means an event which triggers a positive adjustment to the
Capital Accounts of the Partners pursuant to Section 5.5(d).

     "Business Day" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States of
America or the states of New York or Texas shall not be regarded as a Business
Day.

     "Capital Account" means the capital account maintained for a Partner
pursuant to Section 5.5. The "Capital Account" of a Partner in respect of a
General Partner Interest, a Common Unit, a Subordinated Unit, an Incentive
Distribution Right or any other Partnership

                                   -5-

Interest shall be the amount which such Capital Account would be if such General
Partner Interest, Common Unit, Subordinated Unit, Incentive Distribution Right
or other Partnership Interest were the only interest in the Partnership held by
a Partner from and after the date on which such General Partner Interest, Common
Unit, Subordinated Unit, Incentive Distribution Right or other Partnership
Interest was first issued.

     "Capital Contribution" means any cash, cash equivalents or the Net Agreed
Value of Contributed Property that a Partner contributes to the Partnership
pursuant to this Agreement or the Contribution and Conveyance Agreement.

     "Capital Improvement" means any (a) addition or improvement to the capital
assets owned by any Group Member or (b) acquisition of existing, or the
construction of new, capital assets (including, without limitation, pipeline
systems, terminalling and storage facilities and related assets), in each case
made to increase the operating capacity or revenues of the Partnership Group
from the operating capacity or revenues of the Partnership Group existing
immediately prior to such addition, improvement, acquisition or construction.

     "Capital Surplus" has the meaning assigned to such term in Section 6.3(a).

     "Carrying Value" means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' and
Assignees' Capital Accounts in respect of such Contributed Property, and (b)
with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Sections 5.5(d)(i) and 5.5(d)(ii) and to reflect changes,
additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the General
Partner.

     "Cause" means a court of competent jurisdiction has entered a final, non-
appealable judgment finding the General Partner liable for actual fraud, gross
negligence or willful or wanton misconduct in its capacity as general partner of
the Partnership.

     "Certificate" means a certificate (i) substantially in the form of Exhibit
A to this Agreement, (ii) issued in global form in accordance with the rules and
regulations of the Depositary or (iii) in such other form as may be adopted by
the General Partner in its discretion, issued by the Partnership evidencing
ownership of one or more Common Units or a certificate, in such form as may be
adopted by the General Partner in its discretion, issued by the Partnership
evidencing ownership of one or more other Partnership Securities.

     "Certificate of Limited Partnership" means the Certificate of Limited
Partnership of the Partnership filed with the Secretary of State of the State of
Delaware as referenced in Section 2.1, as such Certificate of Limited
Partnership may be amended, supplemented or restated from time to time.

     "Citizenship Certification" means a properly completed certificate in such
form as may be specified by the General Partner by which an Assignee or a
Limited Partner certifies that he

                                      -6-

(and if he is a nominee holding for the account of another Person, that to the
best of his knowledge such other Person) is an Eligible Citizen.

     "Claim" has the meaning assigned to such term in Section 7.12(c).

     "Closing Date" means the first date on which Common Units are sold by the
Partnership to the Underwriters pursuant to the provisions of the Underwriting
Agreement.

     "Closing Price" has the meaning assigned to such term in Section 15.1(a).

     "Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time.  Any reference herein to a specific section or sections of
the Code shall be deemed to include a reference to any corresponding provision
of successor law.

     "Combined Interest" has the meaning assigned to such term in Section
11.3(a).

     "Commission" means the United States Securities and Exchange Commission.

     "Common Unit" means a Partnership Security representing a fractional part
of the Partnership Interests of all Limited Partners and Assignees and of the
General Partner (exclusive of its interest as a holder of the General Partner
Interest and Incentive Distribution Rights) and having the rights and
obligations specified with respect to Common Units in this Agreement. The term
"Common Unit" does not refer to a Subordinated Unit prior to its conversion into
a Common Unit pursuant to the terms hereof.

     "Common Unit Arrearage" means, with respect to any Common Unit, whenever
issued, as to any Quarter within the Subordination Period, the excess, if any,
of (a) the Minimum Quarterly Distribution with respect to a Common Unit in
respect of such Quarter over (b) the sum of all Available Cash distributed with
respect to a Common Unit in respect of such Quarter pursuant to Section
6.4(a)(i).

     "Conflicts Committee" means a committee of the Board of Directors of the
general partner of the General Partner (or the applicable governing body of any
successor to the General Partner) composed entirely of two or more directors who
are neither security holders, officers nor employees of the General Partner nor
officers, directors or employees of any Affiliate of the General Partner.

     "Contributed Property" means each property or other asset, in such form as
may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership (or deemed contributed to a new partnership on termination of the
Partnership pursuant to Section 708 of the Code). Once the Carrying Value of a
Contributed Property is adjusted pursuant to Section 5.5(d), such property shall
no longer constitute a Contributed Property, but shall be deemed an Adjusted
Property.

     "Contribution and Conveyance Agreement" means that certain Contribution,
Conveyance and Assumption Agreement, dated as of the Closing Date, among the
General Partner, the Plains Midstream Subsidiaries, the Partnership, the
Operating Partnerships and certain other parties,

                                      -7-

together with the additional conveyance documents and instruments contemplated
or referenced thereunder.

     "Cumulative Common Unit Arrearage" means, with respect to any Common Unit,
whenever issued, and as of the end of any Quarter, the excess, if any, of (a)
the sum resulting from adding together the Common Unit Arrearage as to an
Initial Common Unit for each of the Quarters within the Subordination Period
ending on or before the last day of such Quarter over (b) the sum of any
distributions theretofore made pursuant to Section 6.4(a)(ii) and the second
sentence of Section 6.5 with respect to an Initial Common Unit (including any
distributions to be made in respect of the last of such Quarters).

     "Curative Allocation" means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 6.1(d)(xi).

     "Current Market Price" has the meaning assigned to such term in Section
15.1(a).

     "Delaware Act" means the Delaware Revised Uniform Limited Partnership Act,
6 Del C. (S) 17-101, et seq., as amended, supplemented or restated from time to
time, and any successor to such statute.

     "Departing Partner" means a former General Partner from and after the
effective date of any withdrawal or removal of such former General Partner
pursuant to Section 11.1 or 11.2.

     "Depositary" means, with respect to any Units issued in global form, The
Depository Trust Company and its successors and permitted assigns.

     "Economic Risk of Loss" has the meaning set forth in Treasury Regulation
Section 1.752-2(a).

     "Eligible Citizen" means a Person qualified to own interests in real
property in jurisdictions in which any Group Member does business or proposes to
do business from time to time, and whose status as a Limited Partner or Assignee
does not or would not subject such Group Member to a significant risk of
cancellation or forfeiture of any of its properties or any interest therein.

     "Event of Withdrawal" has the meaning assigned to such term in Section
11.1(a).

     "Final Subordinated Units" has the meaning assigned to such term in Section
6.1(d)(x).

     "First Liquidation Target Amount" has the meaning assigned to such term in
Section 6.1(c)(i)(D).

     "First Target Distribution" means $0.495 per Unit per Quarter (or, with
respect to the period commencing on the Closing Date and ending on December 31,
1998, it means the product of $0.495 multiplied by a fraction of which the
numerator is the number of days in such period, and of which the denominator is
91), subject to adjustment in accordance with Sections 6.6 and 6.9.

                                      -8-

     "General Partner" means Plains AAP, L.P., as the successor to the
Predecessor General Partner, its successors and permitted assigns as general
partner of the Partnership and, if the context otherwise requires, its
predecessor in interest.

     "General Partner Interest" means the ownership interest of the General
Partner in the Partnership (in its capacity as a general partner without
reference to any Limited Partner Interest held by it) which may be evidenced by
Partnership Securities or a combination thereof or interest therein, and
includes any and all benefits to which the General Partner is entitled as
provided in this Agreement, together with all obligations of the General Partner
to comply with the terms and provisions of this Agreement.

     "GP Transfer Agreement" means the Contribution, Assignment and Amendment
Agreement, dated as of June 8, 2001, among the Predecessor General Partner, the
General Partner and Plains All American GP LLC.

     "GP Restructuring Agreement" means the Contribution, Assignment and
Amendment Agreement, dated as of June 27, 2001, among the Partnership, the
Operating Partnerships, the General Partner, the Operating General Partner and
Plains All American GP LLC.

     "Group" means a Person that with or through any of its Affiliates or
Associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (except voting pursuant to a revocable proxy or
consent given to such Person in response to a proxy or consent solicitation made
to 10 or more Persons) or disposing of any Partnership Securities with any other
Person that beneficially owns, or whose Affiliates or Associates beneficially
own, directly or indirectly, Partnership Securities.

     "Group Member" means a member of the Partnership Group.

     "Holder" as used in Section 7.12, has the meaning assigned to such term in
Section 7.12(a).

     "Incentive Distribution Right" means a non-voting Limited Partner Interest,
that confers upon the holder thereof only the rights and obligations
specifically provided in this Agreement with respect to Incentive Distribution
Rights (and no other rights otherwise available to or other obligations of a
holder of a Partnership Interest). Notwithstanding anything in this Agreement to
the contrary, the holder of an Incentive Distribution Right shall not be
entitled to vote such Incentive Distribution Right on any Partnership matter
except as may otherwise be required by law.

     "Incentive Distributions" means any amount of cash distributed to the
holders of the Incentive Distribution Rights pursuant to Sections 6.4(a)(iv),
(v) and (vi) and 6.4(b)(ii), (iii) and (iv).

     "Indemnified Persons" has the meaning assigned to such term in Section
7.12(c).

     "Indemnitee" means (a) the General Partner, (b) any Departing Partner, (c)
any Person who is or was an Affiliate of the General Partner or any Departing
Partner, (d) any Person who is or was a member, partner, officer, director,
employee, agent or trustee of any Group Member, the

                                      -9-

General Partner, the Operating General Partner or any Departing Partner or any
Affiliate of any Group Member, the General Partner, the Operating General
Partner or any Departing Partner, and (e) any Person who is or was serving at
the request of the General Partner or any Departing Partner or any Affiliate of
the General Partner or any Departing Partner as an officer, director, employee,
member, partner, agent, fiduciary or trustee of another Person; provided, that a
Person shall not be an Indemnitee by reason of providing, on a fee-for-services
basis, trustee, fiduciary or custodial services.

     "Initial Common Units" means the Common Units sold in the Initial Offering.

     "Initial Limited Partners" means the Predecessor General Partner (with
respect to the Common Units, Subordinated Units and the Incentive Distribution
Rights received by it pursuant to Section 5.2) and the Underwriters, in each
case upon being admitted to the Partnership in accordance with Section 10.1.

     "Initial Offering" means the initial offering and sale of Common Units to
the public, as described in the Registration Statement.

     "Initial Unit Price" means (a) with respect to the Common Units and the
Subordinated Units, the initial public offering price per Common Unit at which
the Underwriters offered the Common Units to the public for sale as set forth on
the cover page of the prospectus included as part of the Registration Statement
and first issued at or after the time the Registration Statement first became
effective or (b) with respect to any other class or series of Units, the price
per Unit at which such class or series of Units is initially sold by the
Partnership, as determined by the General Partner, in each case adjusted as the
General Partner determines to be appropriate to give effect to any distribution,
subdivision or combination of Units.

     "Interim Capital Transactions" means the following transactions if they
occur prior to the Liquidation Date: (a) borrowings, refinancings or refundings
of indebtedness and sales of debt securities (other than Working Capital
Borrowings and other than for items purchased on open account in the ordinary
course of business) by any Group Member; (b) sales of equity interests by any
Group Member (other than the Common Units sold to the Underwriters pursuant to
the exercise of their over-allotment option); and (c) sales or other voluntary
or involuntary dispositions of any assets of any Group Member other than (i)
sales or other dispositions of inventory, accounts receivable and other assets
in the ordinary course of business, and (ii) sales or other dispositions of
assets as part of normal retirements or replacements.

     "Issue Price" means the price at which a Unit is purchased from the
Partnership, after taking into account any sales commission or underwriting
discount charged to the Partnership.

     "Limited Partner" means, unless the context otherwise requires, (a) the
Organizational Limited Partner prior to its withdrawal from the Partnership,
each Initial Limited Partner, each Substituted Limited Partner, each Additional
Limited Partner and any Partner upon the change of its status from General
Partner to Limited Partner pursuant to Section 11.3 or (b) solely for purposes
of Articles V, VI, VII and IX and Sections 12.3 and 12.4, each Assignee;
provided, however, that when the term "Limited Partner" is used herein in the
context of any vote or other approval, including without limitation Articles
XIII and XIV, such term shall not, solely for such

                                     -10-

purpose, include any holder of an Incentive Distribution Right except as may
otherwise be required by law.

     "Limited Partner Interest" means the ownership interest of a Limited
Partner or Assignee in the Partnership, which may be evidenced by Common Units,
Subordinated Units, Incentive Distribution Rights or other Partnership
Securities or a combination thereof or interest therein, and includes any and
all benefits to which such Limited Partner or Assignee is entitled as provided
in this Agreement, together with all obligations of such Limited Partner or
Assignee to comply with the terms and provisions of this Agreement; provided,
however, that when the term "Limited Partner Interest" is used herein in the
context of any vote or other approval, including without limitation Articles
XIII and XIV, such term shall not, solely for such purpose, include any holder
of an Incentive Distribution Right except as may otherwise be required by law.

     "Liquidation Date" means (a) in the case of an event giving rise to the
dissolution of the Partnership of the type described in clauses (a) and (b) of
the first sentence of Section 12.2, the date on which the applicable time period
during which the holders of Outstanding Units have the right to elect to
reconstitute the Partnership and continue its business has expired without such
an election being made, and (b) in the case of any other event giving rise to
the dissolution of the Partnership, the date on which such event occurs.

     "Liquidator" means one or more Persons selected by the General Partner to
perform the functions described in Section 12.3 as liquidating trustee of the
Partnership within the meaning of the Delaware Act.

     "Merger Agreement" has the meaning assigned to such term in Section 14.1.

     "Minimum Quarterly Distribution" means $0.45 per Unit per Quarter (or with
respect to the period commencing on the Closing Date and ending on December 31,
1998, it means the product of $0.45 multiplied by a fraction of which the
numerator is the number of days in such period and of which the denominator is
91), subject to adjustment in accordance with Sections 6.6 and 6.9.

     "National Securities Exchange" means an exchange registered with the
Commission under Section 6(a) of the Securities Exchange Act of 1934, as
amended, supplemented or restated from time to time, and any successor to such
statute, or the Nasdaq Stock Market or any successor thereto.

     "Net Agreed Value" means, (a) in the case of any Contributed Property, the
Agreed Value of such property reduced by any liabilities either assumed by the
Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
(as adjusted pursuant to Section 5.5(d)(ii)) at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner or
Assignee upon such distribution or to which such property is subject at the time
of distribution, in either case, as determined under Section 752 of the Code.

     "Net Income" means, for any taxable year, the excess, if any, of the
Partnership's items of income and gain (other than those items taken into
account in the computation of Net

                                     -11-

Termination Gain or Net Termination Loss) for such taxable year over the
Partnership's items of loss and deduction (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year. The items included in the calculation of Net Income shall be
determined in accordance with Section 5.5(b) and shall not include any items
specially allocated under Section 6.1(d); provided that the determination of the
items that have been specially allocated under Section 6.1(d) shall be made as
if Section 6.1(d)(xii) were not in this Agreement.

     "Net Loss" means, for any taxable year, the excess, if any, of the
Partnership's items of loss and deduction (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of income and gain (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Loss shall be determined in accordance with Section 5.5(b) and shall not
include any items specially allocated under Section 6.1(d); provided that the
determination of the items that have been specially allocated under Section
6.1(d) shall be made as if Section 6.1(d)(xii) were not in this Agreement.

     "Net Positive Adjustments" means, with respect to any Partner, the excess,
if any, of the total positive adjustments over the total negative adjustments
made to the Capital Account of such Partner pursuant to Book-Up Events and Book-
Down Events.

     "Net Termination Gain" means, for any taxable year, the sum, if positive,
of all items of income, gain, loss or deduction recognized by the Partnership
after the Liquidation Date.  The items included in the determination of Net
Termination Gain shall be determined in accordance with Section 5.5(b) and shall
not include any items of income, gain or loss specially allocated under Section
6.1(d).

     "Net Termination Loss" means, for any taxable year, the sum, if negative,
of all items of income, gain, loss or deduction recognized by the Partnership
after the Liquidation Date.  The items included in the determination of Net
Termination Loss shall be determined in accordance with Section 5.5(b) and shall
not include any items of income, gain or loss specially allocated under Section
6.1(d).

     "Non-citizen Assignee" means a Person whom the General Partner has
determined in its discretion does not constitute an Eligible Citizen and as to
whose Partnership Interest the General Partner has become the Substituted
Limited Partner, pursuant to Section 4.9.

     "Nonrecourse Built-in Gain" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or pledge
securing a Nonrecourse Liability, the amount of any taxable gain that would be
allocated to the Partners pursuant to Sections 6.2(b)(i)(A), 6.2(b)(ii)(A) and
6.2(b)(iii) if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.

     "Nonrecourse Deductions" means any and all items of loss, deduction or
expenditures (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of Treasury Regulation Section 1.704-2(b), are attributable
to a Nonrecourse Liability.

                                     -12-

     "Nonrecourse Liability" has the meaning set forth in Treasury Regulation
Section 1.752-1(a)(2).

     "Notice of Election to Purchase" has the meaning assigned to such term in
Section 15.1(b).

     "Omnibus Agreement" means that Omnibus Agreement, dated as of the Closing
Date, among Plains Resources Inc., the Predecessor General Partner, the
Partnership and each Operating Partnership.

     "Operating Expenditures" means all Partnership Group expenditures,
including, but not limited to, taxes, reimbursements of the General Partner,
debt service payments, and capital expenditures, subject to the following:

          (a) Payments (including prepayments) of principal of and premium on
     indebtedness shall not be an Operating Expenditure if the payment is (i)
     required in connection with the sale or other disposition of assets or (ii)
     made in connection with the refinancing or refunding of indebtedness with
     the proceeds from new indebtedness or from the sale of equity interests.
     For purposes of the foregoing, at the election and in the reasonable
     discretion of the General Partner, any payment of principal or premium
     shall be deemed to be refunded or refinanced by any indebtedness incurred
     or to be incurred by the Partnership Group within 180 days before or after
     such payment to the extent of the principal amount of such indebtedness.

          (b) Operating Expenditures shall not include (i) capital expenditures
     made for Acquisitions or for Capital Improvements, (ii) payment of
     transaction expenses relating to Interim Capital Transactions or (iii)
     distributions to Partners. Where capital expenditures are made in part for
     Acquisitions or for Capital Improvements and in part for other purposes,
     the General Partner's good faith allocation between the amounts paid for
     each shall be conclusive.

     "Operating General Partner" means Plains Marketing GP Inc., a Delaware
corporation and wholly owned subsidiary of the Partnership, and any successors
and permitted assigns as the general partner of the Operating Partnerships.

     "Operating Partnerships" means Plains Marketing, L.P., a Delaware limited
partnership, All American Pipeline, L.P., a Texas limited partnership, and such
other Persons that are treated as partnerships for federal income tax purposes
that are majority-owned by the Partnership and controlled by the Partnership
(whether by direct or indirect ownership of the general partner of such Person
or otherwise) and established or acquired for the purpose of conducting the
business of the Partnership.

     "Operating Partnership Agreements" means the agreements of limited
partnership of any Operating Partnerships that are limited partnerships, or any
limited liability company agreements of any Operating Partnerships that are
limited liability companies that are treated as partnerships for federal income
tax purposes, as such may be amended, supplemented or restated from time to
time.

                                     -13-

     "Operating Surplus" means, with respect to any period ending prior to the
Liquidation Date, on a cumulative basis and without duplication,

          (a) the sum of (i) $25 million plus all cash and cash equivalents of
     the Partnership Group on hand as of the close of business on the Closing
     Date, (ii) all cash receipts of the Partnership Group for the period
     beginning on the Closing Date and ending with the last day of such period,
     other than cash receipts from Interim Capital Transactions (except to the
     extent specified in Section 6.5) and (iii) all cash receipts of the
     Partnership Group after the end of such period but on or before the date of
     determination of Operating Surplus with respect to such period resulting
     from Working Capital Borrowings, less

          (b) the sum of (i) Operating Expenditures for the period beginning on
     the Closing Date and ending with the last day of such period and (ii) the
     amount of cash reserves that is necessary or advisable in the reasonable
     discretion of the General Partner to provide funds for future Operating
     Expenditures; provided, however, that disbursements made (including
     contributions to a Group Member or disbursements on behalf of a Group
     Member) or cash reserves established, increased or reduced after the end of
     such period but on or before the date of determination of Available Cash
     with respect to such period shall be deemed to have been made, established,
     increased or reduced, for purposes of determining Operating Surplus, within
     such period if the General Partner so determines.

     Notwithstanding the foregoing, "Operating Surplus" with respect to the
Quarter in which the Liquidation Date occurs and any subsequent Quarter shall
equal zero.

     "Opinion of Counsel" means a written opinion of counsel (who may be regular
counsel to the Partnership or the General Partner or any of its Affiliates)
acceptable to the General Partner in its reasonable discretion.

     "Organizational Limited Partner" means Michael R. Patterson in his capacity
as the organizational limited partner of the Partnership pursuant to this
Agreement.

     "Outstanding" means, with respect to Partnership Securities, all
Partnership Securities that are issued by the Partnership and reflected as
outstanding on the Partnership's books and records as of the date of
determination; provided, however, that if at any time any Person or Group (other
than the General Partner or its Affiliates) beneficially owns 20% or more of any
Outstanding Partnership Securities of any class then Outstanding, all
Partnership Securities owned by such Person or Group shall not be voted on any
matter and shall not be considered to be Outstanding when sending notices of a
meeting of Limited Partners to vote on any matter (unless otherwise required by
law), calculating required votes, determining the presence of a quorum or for
other similar purposes under this Agreement, except that Common Units so owned
shall be considered to be Outstanding for purposes of Section 11.1(b)(iv) (such
Common Units shall not, however, be treated as a separate class of Partnership
Securities for purposes of this Agreement); provided, further, that the
foregoing limitation shall not apply (i) to any Person or Group who acquired 20%
or more of any Outstanding Partnership Securities of any class then Outstanding
directly from the General Partner or its Affiliates or (ii) to any Person or
Group who

                                     -14-

acquired 20% or more of any Outstanding Partnership Securities of any class
then Outstanding directly or indirectly from a Person or Group described in
clause (i) provided that the General Partner shall have notified such Person or
Group in writing that such limitation shall not apply.

     "Over-Allotment Option" means the over-allotment option granted to the
Underwriters by the Partnership pursuant to the Underwriting Agreement.

     "Parity Units" means Common Units and all other Units having rights to
distributions or in liquidation ranking on a parity with the Common Units.

     "Partner Nonrecourse Debt" has the meaning set forth in Treasury Regulation
Section 1.704-2(b)(4).

     "Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).

     "Partner Nonrecourse Deductions" means any and all items of loss, deduction
or expenditure (including, without limitation, any expenditure described in
Section 705(a)(2)(B) of the Code) that, in accordance with the principles of
Treasury Regulation Section 1.704-2(i), are attributable to a Partner
Nonrecourse Debt.

     "Partners" means the General Partner and the Limited Partners.

     "Partnership" means Plains All American Pipeline, L.P., a Delaware limited
partnership, and any successors thereto.

     "Partnership Group" means the Partnership, the Operating Partnerships and
any Subsidiary of any such entity, including the Operating General Partner,
treated as a single consolidated entity.

     "Partnership Interest" means an interest in the Partnership, which shall
include the General Partner Interest and Limited Partner Interests.

     "Partnership Minimum Gain" means that amount determined in accordance with
the principles of Treasury Regulation Section 1.704-2(d).

     "Partnership Security" means any class or series of equity interest in the
Partnership (but excluding any options, rights, warrants and appreciation rights
relating to an equity interest in the Partnership), including without
limitation, Common Units, Subordinated Units and Incentive Distribution Rights.

     "Percentage Interest" means as of any date of determination (a) as to the
General Partner, (with respect to its General Partner Interest) 2% and (b) as to
any Unitholder or Assignee holding Units, the product obtained by multiplying
(i) 98% less the percentage applicable to paragraph (c) by (ii) the quotient
obtained by dividing (A) the number of Units held by such Unitholder or Assignee
by (B) the total number of all Outstanding Units and (c) as to the holders of
additional Partnership Securities issued by the Partnership in accordance with
Section 5.6, the percentage

                                     -15-

established as a part of such issuance. The Percentage Interest with respect to
an Incentive Distribution Right shall at all times be zero.

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

     "Per Unit Capital Amount" means, as of any date of determination, the
Capital Account, stated on a per Unit basis, underlying any Unit held by a
Person other than the General Partner or any Affiliate of the General Partner
who holds Units.

     "Predecessor General Partner" means Plains All American Inc., in its
capacity as the general partner of the Partnership prior to the transfer of the
General Partner Interest to the General Partner pursuant to the GP Transfer
Agreement.

     "Pro Rata" means (a) when modifying Units or any class thereof, apportioned
equally among all designated Units in accordance with their relative Percentage
Interests, (b) when modifying Partners and Assignees, apportioned among all
Partners and Assignees in accordance with their relative Percentage Interests
and (c) when modifying holders of Incentive Distribution Rights, apportioned
equally among all holders of Incentive Distribution Rights in accordance with
the relative number of Incentive Distribution Rights held by each such holder.

     "Purchase Date" means the date determined by the General Partner as the
date for purchase of all Outstanding Units of a certain class (other than Units
owned by the General Partner and its Affiliates) pursuant to Article XV.

     "Quarter" means, unless the context requires otherwise, a fiscal quarter of
the Partnership.

     "Recapture Income" means any gain recognized by the Partnership (computed
without regard to any adjustment required by Section 734 or Section 743 of the
Code) upon the disposition of any property or asset of the Partnership, which
gain is characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.

     "Record Date" means the date established by the General Partner for
determining (a) the identity of the Record Holders entitled to notice of, or to
vote at, any meeting of Limited Partners or entitled to vote by ballot or give
approval of Partnership action in writing without a meeting or entitled to
exercise rights in respect of any lawful action of Limited Partners or (b) the
identity of Record Holders entitled to receive any report or distribution or to
participate in any offer.

     "Record Holder" means the Person in whose name a Common Unit is registered
on the books of the Transfer Agent as of the opening of business on a particular
Business Day, or with respect to other Partnership Securities, the Person in
whose name any such other Partnership Security is registered on the books which
the General Partner has caused to be kept as of the opening of business on such
Business Day.

                                     -16-

     "Redeemable Interests" means any Partnership Interests for which a
redemption notice has been given, and has not been withdrawn, pursuant to
Section 4.10.

     "Registration Statement" means the Registration Statement on Form S-1
(Registration No. 333-64107) as it has been or as it may be amended or
supplemented from time to time, filed by the Partnership with the Commission
under the Securities Act to register the offering and sale of the Common Units
in the Initial Offering.

     "Remaining Net Positive Adjustments" means as of the end of any taxable
period, (i) with respect to the Unitholders holding Common Units or Subordinated
Units, the excess of (a) the Net Positive Adjustments of the Unitholders holding
Common Units or Subordinated Units as of the end of such period over (b) the sum
of those Partners' Share of Additional Book Basis Derivative Items for each
prior taxable period, (ii) with respect to the General Partner (as holder of the
General Partner Interest), the excess of (a) the Net Positive Adjustments of the
General Partner as of the end of such period over (b) the sum of the General
Partner's Share of Additional Book Basis Derivative Items with respect to the
General Partner Interest for each prior taxable period, and (iii) with respect
to the holders of Incentive Distribution Rights, the excess of (a) the Net
Positive Adjustments of the holders of Incentive Distribution Rights as of the
end of such period over (b) the sum of the Share of Additional Book Basis
Derivative Items of the holders of the Incentive Distribution Rights for each
prior taxable period.

     "Required Allocations" means (a) any limitation imposed on any allocation
of Net Losses or Net Termination Losses under Section 6.1(b) or 6.1(c)(ii) and
(b) any allocation of an item of income, gain, loss or deduction pursuant to
Section 6.1(d)(i), 6.1(d)(ii), 6.1(d)(iv), 6.1(d)(vii) or 6.1(d)(ix).

     "Residual Gain" or "Residual Loss" means any item of gain or loss; as the
case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 6.2(b)(i)(A) or 6.2(b)(ii)(A), respectively, to eliminate
Book-Tax Disparities.

     "Restricted Business" has the meaning assigned to such term in the Omnibus
Agreement.

     "Second Liquidation Target Amount" has the meaning assigned to such term in
Section 6.1(c)(i)(E).

     "Second Target Distribution" means $0.675 per Unit per Quarter (or, with
respect to the period commencing on the Closing Date and ending on December 31,
1998, it means the product of $0.675 multiplied by a fraction of which the
numerator is equal to the number of days in such period and of which the
denominator is 91), subject to adjustment in accordance with Sections 6.6 and
6.9.

     "Securities Act" means the Securities Act of 1933, as amended, supplemented
or restated from time to time and any successor to such statute.

     "Share of Additional Book Basis Derivative Items" means in connection with
any allocation of Additional Book Basis Derivative Items for any taxable period,
(i) with respect to

                                     -17-

the Unitholders holding Common Units or Subordinated Units, the amount that
bears the same ratio to such Additional Book Basis Derivative Items as the
Unitholders' Remaining Net Positive Adjustments as of the end of such period
bears to the Aggregate Remaining Net Positive Adjustments as of that time, (ii)
with respect to the General Partner (as holder of the General Partner Interest),
the amount that bears the same ratio to such additional Book Basis Derivative
Items as the General Partner's Remaining Net Positive Adjustments as of the end
of such period bears to the Aggregate Remaining Net Positive Adjustment as of
that time, and (iii) with respect to the Partners holding Incentive Distribution
Rights, the amount that bears the same ratio to such Additional Book Basis
Derivative Items as the Remaining Net Positive Adjustments of the Partners
holding the Incentive Distribution Rights as of the end of such period bears to
the Aggregate Remaining Net Positive Adjustments as of that time.

     "Special Approval" means approval by a majority of the members of the
Conflicts Committee.

     "Subordinated Unit" means a Unit representing a fractional part of the
Partnership Interests of all Limited Partners and Assignees (other than of
holders of the Incentive Distribution Rights) and having the rights and
obligations specified with respect to Subordinated Units in this Agreement.  The
term "Subordinated Unit" as used herein does not include a Common Unit.

     "Subordination Period" means the period commencing on the Closing Date and
ending on the first to occur of the following dates:

          (a) the first day of any Quarter beginning after December 31, 2003 in
     respect of which (i) (A) distributions of Available Cash from Operating
     Surplus on each of the Outstanding Common Units and Subordinated Units with
     respect to each of the three consecutive, non-overlapping four-Quarter
     periods immediately preceding such date equaled or exceeded the sum of the
     Minimum Quarterly Distribution on all Outstanding Common Units and
     Subordinated Units during such periods and (B) the Adjusted Operating
     Surplus generated during each of the three consecutive, non-overlapping
     four-Quarter periods immediately preceding such date equaled or exceeded
     the sum of the Minimum Quarterly Distribution on all of the Common Units
     and Subordinated Units that were Outstanding during such periods on a fully
     diluted basis (i.e., taking into account for purposes of such determination
     all Outstanding Common Units, all Outstanding Subordinated Units, all
     Common Units and Subordinated Units issuable upon exercise of employee
     options that have, as of the date of determination, already vested or are
     scheduled to vest prior to the end of the Quarter immediately following the
     Quarter with respect to which such determination is made, and all Common
     Units and Subordinated Units that have as of the date of determination,
     been earned by but not yet issued to management of the Partnership in
     respect of incentive compensation), plus the related distribution on the
     General Partner Interest in the Partnership and on the general partner
     interest in the Operating Partnerships, during such periods and (ii) there
     are no Cumulative Common Unit Arrearages; and

          (b) the date on which the General Partner is removed as general
     partner of the Partnership upon the requisite vote by holders of
     Outstanding Units under circumstances

                                     -18-

     where Cause does not exist and Units held by the General Partner and its
     Affiliates are not voted in favor of such removal.

     For purposes of the definition of Restricted Period in the Plains All
American GP LLC 1998 Long-Term Incentive Plan, the Subordination Period shall
end with respect to the number of Subordinated Units that are converted into
Common Units in accordance with Section 5.8. of this Agreement.

     "Subsidiary" means, with respect to any Person, (a) a corporation of which
more than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the directors or
other governing body of such Person.

     "Substituted Limited Partner" means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 10.2 in place of and with all the
rights of a Limited Partner and who is shown as a Limited Partner on the books
and records of the Partnership.

     "Surviving Business Entity" has the meaning assigned to such term in
Section 14.2(b).

     "Trading Day" has the meaning assigned to such term in Section 15.1(a).

     "Transfer" has the meaning assigned to such term in Section 4.4(a).

     "Transfer Agent" means such bank, trust company or other Person (including
the General Partner or one of its Affiliates) as shall be appointed from time to
time by the Partnership to act as registrar and transfer agent for the Common
Units; provided that if no Transfer Agent is specifically designated for any
other Partnership Securities, the General Partner shall act in such capacity.

     "Transfer Application" means an application and agreement for transfer of
Units in the form set forth on the back of a Certificate or in a form
substantially to the same effect in a separate instrument.

     "Underwriter" means each Person named as an underwriter in Schedule I to
the Underwriting Agreement who purchases Common Units pursuant thereto.

                                     -19-

     "Underwriting Agreement" means the Underwriting Agreement dated November
17, 1998 among the Underwriters, the Partnership and certain other parties,
providing for the purchase of Common Units by such Underwriters.

     "Unit" means a Partnership Security that is designated as a "Unit" and
shall include Common Units and Subordinated Units but shall not include (i) a
General Partner Interest or (ii) Incentive Distribution Rights.

     "Unitholders" means the holders of Common Units and Subordinated Units.

     "Unit Majority" means, during the Subordination Period, at least a majority
of the Outstanding Common Units voting as a class and at least a majority of the
Outstanding Subordinated Units voting as a class, and thereafter, at least a
majority of the Outstanding Common Units.

     "Unpaid MQD" has the meaning assigned to such term in Section 6.1(c)(i)(B).

     "Unrealized Gain" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the fair market
value of such property as of such date (as determined under Section 5.5(d)) over
(b) the Carrying Value of such property as of such date (prior to any adjustment
to be made pursuant to Section 5.5(d) as of such date).

     "Unrealized Loss" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the Carrying Value
of such property as of such date (prior to any adjustment to be made pursuant to
Section 5.5(d) as of such date) over (b) the fair market value of such property
as of such date (as determined under Section 5.5(d)).

     "Unrecovered Capital" means at any time, with respect to a Unit, the
Initial Unit Price less the sum of all distributions constituting Capital
Surplus theretofore made in respect of an Initial Common Unit and any
distributions of cash (or the Net Agreed Value of any distributions in kind) in
connection with the dissolution and liquidation of the Partnership theretofore
made in respect of an Initial Common Unit, adjusted as the General Partner
determines to be appropriate to give effect to any distribution, subdivision or
combination of such Units.

     "U.S. GAAP" means United States Generally Accepted Accounting Principles
consistently applied.

     "Withdrawal Opinion of Counsel" has the meaning assigned to such term in
Section 11.1(b).

     "Working Capital Borrowings" means borrowings exclusively for working
capital purposes made pursuant to a credit facility or other arrangement
requiring all such borrowings thereunder to be reduced to a relatively small
amount each year for an economically meaningful period of time.

                                     -20-

Section 1.2  Construction.

     Unless the context requires otherwise:  (a) any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa; (b) references to Articles and Sections refer to Articles and
Sections of this Agreement; and (c) the term "include" or "includes" means
includes, without limitation, and "including" means including, without
limitation.

                                  ARTICLE II
                                 ORGANIZATION

Section 2.1  Formation.

     The Predecessor General Partner and the Organizational Limited Partner have
previously formed the Partnership as a limited partnership pursuant to the
provisions of the Delaware Act.  This amendment and restatement shall become
effective on the date of this Agreement. Except as expressly provided to the
contrary in this Agreement, the rights, duties (including fiduciary duties),
liabilities and obligations of the Partners and the administration, dissolution
and termination of the Partnership shall be governed by the Delaware Act.  All
Partnership Interests shall constitute personal property of the owner thereof
for all purposes and a Partner has no interest in specific Partnership property.

Section 2.2  Name.

     The name of the Partnership shall be "Plains All American Pipeline, L.P."
The Partnership's business may be conducted under any other name or names deemed
necessary or appropriate by the General Partner in its sole discretion,
including the name of the General Partner.  The words "Limited Partnership,"
"L.P.," "Ltd." or similar words or letters shall be included in the
Partnership's name where necessary for the purpose of complying with the laws of
any jurisdiction that so requires.  The General Partner in its discretion may
change the name of the Partnership at any time and from time to time and shall
notify the Limited Partners of such change in the next regular communication to
the Limited Partners.

Section 2.3  Registered Office; Registered Agent; Principal Office; Other
Offices.

     Unless and until changed by the General Partner, the registered office of
the Partnership in the State of Delaware shall be located at 1209 Orange Street,
Wilmington, Delaware 19801, and the registered agent for service of process on
the Partnership in the State of Delaware at such registered office shall be The
Corporation Trust Company.  The principal office of the Partnership shall be
located at 333 Clay Street, Suite 2900, Houston, Texas 77002 or such other place
as the General Partner may from time to time designate by notice to the Limited
Partners.  The Partnership may maintain offices at such other place or places
within or outside the State of Delaware as the General Partner deems necessary
or appropriate.  The address of the General Partner shall be 333 Clay Street,
Suite 2900, Houston, Texas 77002 or such other place as the General Partner may
from time to time designate by notice to the Limited Partners.

                                     -21-

Section 2.4  Purpose and Business.

     The Purpose and nature of the business to be conducted by the Partnership
shall be to (a) serve as a partner of either or both of the Operating
Partnerships and, in connection therewith, to exercise, on behalf of the
Partnership, all the rights and powers held by the Partnership as a partner of
an Operating Partnership pursuant to the Operating Partnership Agreement for
such Operating Partnership or otherwise, (b) serve as the sole stockholder of
the Operating General Partner and in connection therewith, to exercise on behalf
of the Partnership all the rights and powers held by the Partnership as the sole
stockholder of the Operating General Partner, (c) engage directly in, or enter
into or form any corporation, partnership, joint venture, limited liability
company or other arrangement to engage indirectly in, any business activity that
the Operating Partnerships are permitted to engage in by the Operating
Partnership Agreements and, in connection therewith, to exercise all of the
rights and powers conferred upon the Partnership pursuant to the agreements
relating to such business activity, (d) engage directly in, or enter into or
form any corporation, partnership, joint venture, limited liability company or
other arrangement to engage indirectly in, any business activity that is
approved by the General Partner and which lawfully may be conducted by a limited
partnership organized pursuant to the Delaware Act and, in connection therewith,
to exercise all of the rights and powers conferred upon the Partnership pursuant
to the agreements relating to such business activity; provided, however, that
the General Partner reasonably determines, as of the date of the acquisition or
commencement of such activity, that such activity (i) generates "qualifying
income" (as such term is defined pursuant to Section 7704 of the Code) or (ii)
enhances the operations of an activity of any Group Member or a Partnership
activity that generates qualifying income, and (e) do anything necessary or
appropriate to the foregoing, including the making of capital contributions or
loans to a Group Member.  The General Partner has no obligation or duty to the
Partnership, the Limited Partners, or the Assignees to propose or approve, and
in its discretion may decline to propose or approve, the conduct by the
Partnership of any business.

Section 2.5  Powers.

     The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described in Section
2.4 and for the protection and benefit of the Partnership.

Section 2.6  Power of Attorney.

             (a) Each Limited Partner and each Assignee hereby constitutes and
appoints the General Partner and, if a Liquidator shall have been selected
pursuant to Section 12.3, the Liquidator (and any successor to the Liquidator by
merger, transfer, assignment, election or otherwise), and each of their
authorized officers and attorneys-in-fact, as the case may be, with full power
of substitution, as his true and lawful agent and attorney-in-fact, with full
power and authority in his name, place and stead, to:

             (i) execute, swear to, acknowledge, deliver, file and record in the
     appropriate public offices (A) all certificates, documents and other
     instruments (including this Agreement and the Certificate of Limited
     Partnership and all amendments or restatements

                                     -22-

     hereof or thereof) that the General Partner or the Liquidator deems
     necessary or appropriate to form, qualify or continue the existence or
     qualification of the Partnership as a limited partnership (or a partnership
     in which the limited partners have limited liability) in the State of
     Delaware and in all other jurisdictions in which the Partnership may
     conduct business or own property; (B) all certificates, documents and other
     instruments that the General Partner or the Liquidator deems necessary or
     appropriate to reflect, in accordance with its terms, any amendment,
     change, modification or restatement of this Agreement; (C) all
     certificates, documents and other instruments (including conveyances and a
     certificate of cancellation) that the General Partner or the Liquidator
     deems necessary or appropriate to reflect the dissolution and liquidation
     of the Partnership pursuant to the terms of this Agreement; (D) all
     certificates, documents and other instruments relating to the admission,
     withdrawal, removal or substitution of any Partner pursuant to, or other
     events described in, Article IV, X, XI or XII; (E) all certificates,
     documents and other instruments relating to the determination of the
     rights, preferences and privileges of any class or series of Partnership
     Securities issued pursuant to Section 5.6; and (F) all certificates,
     documents and other instruments (including agreements and a certificate of
     merger) relating to a merger or consolidation of the Partnership pursuant
     to Article XIV; and

        (ii) execute, swear to, acknowledge, deliver, file and record all
     ballots, consents, approvals, waivers, certificates, documents and other
     instruments necessary or appropriate, in the discretion of the General
     Partner or the Liquidator, to make, evidence, give, confirm or ratify any
     vote, consent, approval, agreement or other action that is made or given by
     the Partners hereunder or is consistent with the terms of this Agreement or
     is necessary or appropriate, in the discretion of the General Partner or
     the Liquidator, to effectuate the terms or intent of this Agreement;
     provided, that when required by Section 13.3 or any other provision of this
     Agreement that establishes a percentage of the Limited Partners or of the
     Limited Partners of any class or series required to take any action, the
     General Partner and the Liquidator may exercise the power of attorney made
     in this Section 2.6(a)(ii) only after the necessary vote, consent or
     approval of the Limited Partners or of the Limited Partners of such class
     or series, as applicable.

     Nothing contained in this Section 2.6(a) shall be construed as authorizing
the General Partner to amend this Agreement except in accordance with Article
XIII or as may be otherwise expressly provided for in this Agreement.

        (b)  The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and, to
the maximum extent permitted by law, not be affected by the subsequent death,
incompetency, disability, incapacity, dissolution, bankruptcy or termination of
any Limited Partner or Assignee and the transfer of all or any portion of such
Limited Partner's or Assignee's Partnership Interest and shall extend to such
Limited Partner's or Assignee's heirs, successors, assigns and personal
representatives. Each such Limited Partner or Assignee hereby agrees to be bound
by any representation made by the General Partner or the Liquidator acting in
good faith pursuant to such power of attorney; and each such Limited Partner or
Assignee, to the maximum extent permitted by law, hereby waives any and all
defenses that may be available to contest, negate or disaffirm the action of the
General Partner or the Liquidator taken in good faith under such power of
attorney. Each

                                     -23-

Limited Partner or Assignee shall execute and deliver to the General Partner or
the Liquidator, within 15 days after receipt of the request therefor, such
further designation, powers of attorney and other instruments as the General
Partner or the Liquidator deems necessary to effectuate this Agreement and the
purposes of the Partnership.

Section 2.7  Term.

     The term of the Partnership commenced upon the filing of the Certificate of
Limited Partnership in accordance with the Delaware Act and shall continue in
existence until the close of Partnership business on December 31, 2088 or until
the earlier dissolution of the Partnership in accordance with the provisions of
Article XII.  The existence of the Partnership as a separate legal entity shall
continue until the cancellation of the Certificate of Limited Partnership as
provided in the Delaware Act.

Section 2.8  Title to Partnership Assets.

     Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner or Assignee, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof.  Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner, one or more of its Affiliates or one or more nominees, as
the General Partner may determine.  The General Partner hereby declares and
warrants that any Partnership assets for which record title is held in the name
of the General Partner or one or more of its Affiliates or one or more nominees
shall be held by the General Partner or such Affiliate or nominee for the use
and benefit of the Partnership in accordance with the provisions of this
Agreement; provided, however, that the General Partner shall use reasonable
efforts to cause record title to such assets (other than those assets in respect
of which the General Partner determines that the expense and difficulty of
conveyancing makes transfer of record title to the Partnership impracticable) to
be vested in the Partnership as soon as reasonably practicable; provided,
further, that, prior to the withdrawal or removal of the General Partner or as
soon thereafter as practicable, the General Partner shall use reasonable efforts
to effect the transfer of record title to the Partnership and, prior to any such
transfer, will provide for the use of such assets in a manner satisfactory to
the General Partner.  All Partnership assets shall be recorded as the property
of the Partnership in its books and records, irrespective of the name in which
record title to such Partnership assets is held.

                                  ARTICLE III
                          RIGHTS OF LIMITED PARTNERS

Section 3.1  Limitation of Liability.

     The Limited Partners and the Assignees shall have no liability under this
Agreement except as expressly provided in this Agreement or the Delaware Act.

Section 3.2  Management of Business.

     No Limited Partner or Assignee, in its capacity as such, shall participate
in the operation, management or control (within the meaning of the Delaware Act)
of the Partnership's business,

                                     -24-

transact any business in the Partnership's name or have the power to sign
documents for or otherwise bind the Partnership. Any action taken by any
Affiliate of the General Partner or any officer, director, employee, member,
general partner, agent or trustee of the General Partner or any of its
Affiliates, or any officer, director, employee, member, general partner, agent
or trustee of a Group Member, in its capacity as such, shall not be deemed to be
participation in the control of the business of the Partnership by a limited
partner of the Partnership (within the meaning of Section 17-303(a) of the
Delaware Act) and shall not affect, impair or eliminate the limitations on the
liability of the Limited Partners or Assignees under this Agreement.

Section 3.3  Outside Activities of the Limited Partners.

     Subject to the provisions of Section 7.5 and the Omnibus Agreement, which
shall continue to be applicable to the Persons referred to therein, regardless
of whether such Persons shall also be Limited Partners or Assignees, any Limited
Partner or Assignee shall be entitled to and may have business interests and
engage in business activities in addition to those relating to the Partnership,
including business interests and activities in direct competition with the
Partnership Group.  Neither the Partnership nor any of the other Partners or
Assignees shall have any rights by virtue of this Agreement in any business
ventures of any Limited Partner or Assignee.

Section 3.4  Rights of Limited Partners.

             (a)  In addition to other rights provided by this Agreement or by
applicable law, and except as limited by Section 3.4(b), each Limited Partner
shall have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon reasonable written demand
and at such Limited Partner's own expense:

             (i)    to obtain true and full information regarding the status of
     the business and financial condition of the Partnership;

             (ii)   promptly after becoming available, to obtain a copy of the
     Partnership's federal, state and local income tax returns for each year;

             (iii)  to have furnished to him a current list of the name and last
     known business, residence or mailing address of each Partner;

             (iv)   to have furnished to him a copy of this Agreement and the
     Certificate of Limited Partnership and all amendments thereto, together
     with a copy of the executed copies of all powers of attorney pursuant to
     which this Agreement, the Certificate of Limited Partnership and all
     amendments thereto have been executed;

             (v)    to obtain true and full information regarding the amount of
     cash and a description and statement of the Net Agreed Value of any other
     Capital Contribution by each Partner and which each Partner has agreed to
     contribute in the future, and the date on which each became a Partner; and

             (vi)   to obtain such other information regarding the affairs of
     the Partnership as is just and reasonable.

                                     -25-

             (b) The General Partner may keep confidential from the Limited
Partners and Assignees, for such period of time as the General Partner deems
reasonable, (i) any information that the General Partner reasonably believes to
be in the nature of trade secrets or (ii) other information the disclosure of
which the General Partner in good faith believes (A) is not in the best
interests of the Partnership Group, (B) could damage the Partnership Group or
(C) that any Group Member is required by law or by agreement with any third
party to keep confidential (other than agreements with Affiliates of the
Partnership the primary purpose of which is to circumvent the obligations set
forth in this Section 3.4).

                                  ARTICLE IV
       CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS;
                      REDEMPTION OF PARTNERSHIP INTERESTS

Section 4.1  Certificates.

     Upon the Partnership's issuance of Common Units or Subordinated Units to
any Person, the Partnership shall issue one or more Certificates in the name of
such Person evidencing the number of such Units being so issued.  In addition,
(a) upon the General Partner's request, the Partnership shall issue to it one or
more Certificates in the name of the General Partner evidencing its interests in
the Partnership and (b) upon the request of any Person owning Incentive
Distribution Rights or any other Partnership Securities other than Common Units
or Subordinated Units, the Partnership shall issue to such Person one or more
certificates evidencing such Incentive Distribution Rights or other Partnership
Securities other than Common Units or Subordinated Units.  Certificates shall be
executed on behalf of the Partnership by the Chairman of the Board, President or
any Executive Vice President or Vice President and the Secretary or any
Assistant Secretary of the general partner of the General Partner.  No Common
Unit Certificate shall be valid for any purpose until it has been countersigned
by the Transfer Agent; provided, however, that if the General Partner elects to
issue Common Units in global form, the Common Unit Certificates shall be valid
upon receipt of a certificate from the Transfer Agent certifying that the Common
Units have been duly registered in accordance with the directions of the
Partnership and the Underwriters.  Subject to the requirements of Section
6.7(b), the Partners holding Certificates evidencing Subordinated Units may
exchange such Certificates for Certificates evidencing Common Units on or after
the date on which such Subordinated Units are converted into Common Units
pursuant to the terms of Section 5.8.

Section 4.2  Mutilated, Destroyed, Lost or Stolen Certificates.

             (a) If any mutilated Certificate is surrendered to the Transfer
Agent, the appropriate officers of the general partner of the General Partner on
behalf of the Partnership shall execute, and the Transfer Agent shall
countersign and deliver in exchange therefor, a new Certificate evidencing the
same number and type of Partnership Securities as the Certificate so
surrendered.

             (b) The appropriate officers of the general partner of the General
Partner on behalf of the Partnership shall execute and deliver, and the Transfer
Agent shall countersign a

                                     -26-

new Certificate in place of any Certificate previously issued if the Record
Holder of the Certificate:

             (i)   makes proof by affidavit, in form and substance satisfactory
     to the Partnership, that a previously issued Certificate has been lost,
     destroyed or stolen;

             (ii)  requests the issuance of a new Certificate before the
     Partnership has notice that the Certificate has been acquired by a
     purchaser for value in good faith and without notice of an adverse claim;

             (iii) if requested by the Partnership, delivers to the Partnership
     a bond, in form and substance satisfactory to the Partnership, with surety
     or sureties and with fixed or open penalty as the Partnership may
     reasonably direct, in its sole discretion, to indemnify the Partnership,
     the Partners, the General Partner and the Transfer Agent against any claim
     that may be made on account of the alleged loss, destruction or theft of
     the Certificate; and

             (iv)  satisfies any other reasonable requirements imposed by the
     Partnership.

     If a Limited Partner or Assignee fails to notify the Partnership within a
reasonable time after he has notice of the loss, destruction or theft of a
Certificate, and a transfer of the Limited Partner Interests represented by the
Certificate is registered before the Partnership, the General Partner or the
Transfer Agent receives such notification, the Limited Partner or Assignee shall
be precluded from making any claim against the Partnership, the General Partner
or the Transfer Agent for such transfer or for a new Certificate.

             (c)   As a condition to the issuance of any new Certificate under
this Section 4.2, the Partnership 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 (including the fees and expenses of the Transfer
Agent) reasonably connected therewith.

Section 4.3  Record Holders.

     The Partnership shall be entitled to recognize the Record Holder as the
Partner or Assignee with respect to any Partnership Interest and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such Partnership Interest on the part of any other Person, regardless of whether
the Partnership shall have actual or other notice thereof, except as otherwise
provided by law or any applicable rule, regulation, guideline or requirement of
any National Securities Exchange on which such Partnership Interests are listed
for trading. Without limiting the foregoing, when a Person (such as a broker,
dealer, bank, trust company or clearing corporation or an agent of any of the
foregoing) is acting as nominee, agent or in some other representative capacity
for another Person in acquiring and/or holding Partnership Interests, as between
the Partnership on the one hand, and such other Persons on the other, such
representative Person (a) shall be the Partner or Assignee (as the case may be)
of record and beneficially, (b) must execute and deliver a Transfer Application
and (c) shall be bound by this Agreement and shall have the rights and
obligations of a Partner or Assignee (as the case may be) hereunder and as, and
to the extent, provided for herein.

                                     -27-

Section 4.4  Transfer Generally.

             (a) The term "transfer," when used in this Agreement with respect
to a Partnership Interest, shall be deemed to refer to a transaction by which
the General Partner assigns its General Partner Interest to another Person who
becomes the General Partner, by which the holder of a Limited Partner Interest
assigns such Limited Partner Interest to another Person who is or becomes a
Limited Partner or an Assignee, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition by law
or otherwise.

             (b) No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article IV. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article IV shall be null and void.

             (c) Nothing contained in this Agreement shall be construed to
prevent a disposition by any stockholder, member, partner or owner of the
General Partner of any or all of the issued and outstanding stock, membership
interests, partnership interests or other ownership interests, as applicable, of
the General Partner.

Section 4.5  Registration and Transfer of Limited Partner Interests.

             (a) The Partnership shall keep or cause to be kept on behalf of the
Partnership a register in which, subject to such reasonable regulations as it
may prescribe and subject to the provisions of Section 4.5(b), the Partnership
will provide for the registration and transfer of Limited Partner Interests. The
Transfer Agent is hereby appointed registrar and transfer agent for the purpose
of registering Common Units and transfers of such Common Units as herein
provided. The Partnership shall not recognize transfers of Certificates
evidencing Limited Partner Interests unless such transfers are effected in the
manner described in this Section 4.5. Upon surrender of a Certificate for
registration of transfer of any Limited Partner Interests evidenced by a
Certificate, and subject to the provisions of Section 4.5(b), the appropriate
officers of the general partner of the General Partner on behalf of the
Partnership shall execute and deliver, and in the case of Common Units, the
Transfer Agent shall countersign and deliver, in the name of the holder or the
designated transferee or transferees, as required pursuant to the holder's
instructions, one or more new Certificates evidencing the same aggregate number
and type of Limited Partner Interests as was evidenced by the Certificate so
surrendered.

             (b) Except as otherwise provided in Section 4.9, the Partnership
shall not recognize any transfer of Limited Partner Interests until the
Certificates evidencing such Limited Partner Interests are surrendered for
registration of transfer and such Certificates are accompanied by a Transfer
Application duly executed by the transferee (or the transferee's attorney-in-
fact duly authorized in writing). No charge shall be imposed by the Partnership
for such transfer; provided, that as a condition to the issuance of any new
Certificate under this Section 4.5, the Partnership may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
with respect thereto.

                                     -28-

             (c) Limited Partner Interests may be transferred only in the manner
described in this Section 4.5. The transfer of any Limited Partner Interests and
the admission of any new Limited Partner shall not constitute an amendment to
this Agreement.

             (d) Until admitted as a Substituted Limited Partner pursuant to
Section 10.2, the Record Holder of a Limited Partner Interest shall be an
Assignee in respect of such Limited Partner Interest. Limited Partners may
include custodians, nominees or any other individual or entity in its own or any
representative capacity.

             (e) A transferee of a Limited Partner Interest who has completed
and delivered a Transfer Application shall be deemed to have (i) requested
admission as a Substituted Limited Partner, (ii) agreed to comply with and be
bound by and to have executed this Agreement, (iii) represented and warranted
that such transferee has the right, power and authority and, if an individual,
the capacity to enter into this Agreement, (iv) granted the powers of attorney
set forth in this Agreement and (v) given the consents and approvals and made
the waivers contained in this Agreement.

             (f) The General Partner and its Affiliates shall have the right at
any time to transfer their Subordinated Units and Common Units (whether issued
upon conversion of the Subordinated Units or otherwise) to one or more Persons.

Section 4.6  Transfer of the General Partner's General Partner Interest.

             (a) Subject to Section 4.6(c) below, prior to December 31, 2008,
the General Partner shall not transfer all or any part of its General Partner
Interest to a Person unless such transfer (i) has been approved by the prior
written consent or vote of the holders of at least a majority of the Outstanding
Common Units (excluding Common Units held by the General Partner and its
Affiliates) or (ii) is of all, but not less than all, of its General Partner
Interest to (A) an Affiliate of the General Partner or (B) another Person in
connection with the merger or consolidation of the General Partner with or into
another Person or the transfer by the General Partner of all or substantially
all of its assets to another Person.

             (b) Subject to Section 4.6(c) below, on or after December 31, 2008,
the General Partner may transfer all or any part of its General Partner Interest
without Unitholder approval.

             (c) Notwithstanding anything herein to the contrary, no transfer by
the General Partner of all or any part of its General Partner Interest to
another Person shall be permitted unless (i) the transferee agrees to assume the
rights and duties of the General Partner under this Agreement and to be bound by
the provisions of this Agreement, (ii) the Partnership receives an Opinion of
Counsel that such transfer would not result in the loss of limited liability of
any Limited Partner or of any limited partner of the Operating Partnerships or
cause the Partnership or the Operating Partnerships to be treated as an
association taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes (to the extent not already so treated or taxed) and
(iii) such transferee also agrees to purchase all (or the appropriate portion
thereof, if applicable) of the partnership interest of the General Partner as
the general partner or managing member of each other Group Member, if
applicable. In the case of a transfer pursuant to and in compliance with this
Section 4.6, the transferee or successor (as the case may be) shall, subject

                                     -29-

to compliance with the terms of Section 10.3, be admitted to the Partnership as
a General Partner immediately prior to the transfer of the Partnership Interest,
and the business of the Partnership shall continue without dissolution.

Section 4.7  Transfer of Incentive Distribution Rights.

     Prior to December 31, 2008, a holder of Incentive Distribution Rights may
transfer any or all of the Incentive Distribution Rights held by such holder
without any consent of the Unitholders (a) to an Affiliate or (b) to another
Person in connection with (i) the merger or consolidation of such holder of
Incentive Distribution Rights with or into such other Person or (ii) the
transfer by such holder of all or substantially all of its assets to such other
Person.  Any other transfer of the Incentive Distribution Rights prior to
December 31, 2008, shall require the prior approval of holders of at least a
majority of the Outstanding Common Units (excluding Common Units held by the
General Partner and its Affiliates).  On or after December 31, 2008, the General
Partner or any other holder of Incentive Distribution Rights may transfer any or
all of its Incentive Distribution Rights without Unitholder approval.
Notwithstanding anything herein to the contrary, no transfer of Incentive
Distribution Rights to another Person shall be permitted unless the transferee
agrees to be bound by the provisions of this Agreement.  The General Partner
shall have the authority (but shall not be required) to adopt such reasonable
restrictions on the transfer of Incentive Distribution Rights and requirements
for registering the transfer of Incentive Distribution Rights as the General
Partner, in its sole discretion, shall determine are necessary or appropriate.

Section 4.8  Restrictions on Transfers.

             (a) Except as provided in Section 4.8(d) below, but notwithstanding
the other provisions of this Article IV, no transfer of any Partnership
Interests shall be made if such transfer would (i) violate the then applicable
federal or state securities laws or rules and regulations of the Commission, any
state securities commission or any other governmental authority with
jurisdiction over such transfer, (ii) terminate the existence or qualification
of the Partnership or either Operating Partnership under the laws of the
jurisdiction of its formation, or (iii) cause the Partnership or either
Operating Partnership to be treated as an association taxable as a corporation
or otherwise to be taxed as an entity for federal income tax purposes (to the
extent not already so treated or taxed).

             (b) The General Partner may impose restrictions on the transfer of
Partnership Interests if a subsequent Opinion of Counsel determines that such
restrictions are necessary to avoid a significant risk of the Partnership
becoming taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes. The restrictions may be imposed by making such
amendments to this Agreement as the General Partner may determine to be
necessary or appropriate to impose such restrictions; provided, however, that
any amendment that the General Partner believes, in the exercise of its
reasonable discretion, could result in the delisting or suspension of trading of
any class of Limited Partner Interests on the principal National Securities
Exchange on which such class of Limited Partner Interests is then traded must be
approved, prior to such amendment being effected, by the holders of at least a
majority of the Outstanding Limited Partner Interests of such class.

                                     -30-

          (c) The transfer of a Subordinated Unit that has converted into a
Common Unit shall be subject to the restrictions imposed by Section 6.7(b).

          (d) Nothing contained in this Article IV, or elsewhere in this
Agreement, shall preclude the settlement of any transactions involving
Partnership Interests entered into through the facilities of any National
Securities Exchange on which such Partnership Interests are listed for trading.

Section 4.9  Citizenship Certificates; Non-citizen Assignees.

          (a) If any Group Member is or becomes subject to any federal, state or
local law or regulation that, in the reasonable determination of the General
Partner, creates a substantial risk of cancellation or forfeiture of any
property in which the Group Member has an interest based on the nationality,
citizenship or other related status of a Limited Partner or Assignee, the
General Partner may request any Limited Partner or Assignee to furnish to the
General Partner, within 30 days after receipt of such request, an executed
Citizenship Certification or such other information concerning his nationality,
citizenship or other related status (or, if the Limited Partner or Assignee is a
nominee holding for the account of another Person, the nationality, citizenship
or other related status of such Person) as the General Partner may request. If a
Limited Partner or Assignee fails to furnish to the General Partner within the
aforementioned 30-day period such Citizenship Certification or other requested
information or if upon receipt of such Citizenship Certification or other
requested information the General Partner determines, with the advice of
counsel, that a Limited Partner or Assignee is not an Eligible Citizen, the
Partnership Interests owned by such Limited Partner or Assignee shall be subject
to redemption in accordance with the provisions of Section 4.10.  In addition,
the General Partner may require that the status of any such Partner or Assignee
be changed to that of a Non-citizen Assignee and, thereupon, the General Partner
shall be substituted for such Non-citizen Assignee as the Limited Partner in
respect of his Limited Partner Interests.

          (b) The General Partner shall, in exercising voting rights in respect
of Limited Partner Interests held by it on behalf of Non-citizen Assignees,
distribute the votes in the same ratios as the votes of Partners (including
without limitation the General Partner) in respect of Limited Partner Interests
other than those of Non-citizen Assignees are cast, either for, against or
abstaining as to the matter.

          (c) Upon dissolution of the Partnership, a Non-citizen Assignee shall
have no right to receive a distribution in kind pursuant to Section 12.4 but
shall be entitled to the cash equivalent thereof, and the Partnership shall
provide cash in exchange for an assignment of the Non-citizen Assignee's share
of the distribution in kind. Such payment and assignment shall be treated for
Partnership purposes as a purchase by the Partnership from the Non-citizen
Assignee of his Limited Partner Interest (representing his right to receive his
share of such distribution in kind).

          (d) At any time after he can and does certify that he has become an
Eligible Citizen, a Non-citizen Assignee may, upon application to the General
Partner, request admission as a Substituted Limited Partner with respect to any
Limited Partner Interests of such Non-citizen Assignee not redeemed pursuant to
Section 4.10, and upon his admission pursuant to

                                     -31-

Section 10.2, the General Partner shall cease to be deemed to be the Limited
Partner in respect of the Non-citizen Assignee's Limited Partner Interests.

Section 4.10  Redemption of Partnership Interests of Non-citizen Assignees.

        (a) If at any time a Limited Partner or Assignee fails to furnish a
Citizenship Certification or other information requested within the 30-day
period specified in Section 4.9(a), or if upon receipt of such Citizenship
Certification or other information the General Partner determines, with the
advice of counsel, that a Limited Partner or Assignee is not an Eligible
Citizen, the Partnership may, unless the Limited Partner or Assignee establishes
to the satisfaction of the General Partner that such Limited Partner or Assignee
is an Eligible Citizen or has transferred his Partnership Interests to a Person
who is an Eligible Citizen and who furnishes a Citizenship Certification to the
General Partner prior to the date fixed for redemption as provided below, redeem
the Partnership Interest of such Limited Partner or Assignee as follows:

        (i) The General Partner shall, not later than the 30th day before the
     date fixed for redemption, give notice of redemption to the Limited Partner
     or Assignee, at his last address designated on the records of the
     Partnership or the Transfer Agent, by registered or certified mail, postage
     prepaid.  The notice shall be deemed to have been given when so mailed.
     The notice shall specify the Redeemable Interests, the date fixed for
     redemption, the place of payment, that payment of the redemption price will
     be made upon surrender of the Certificate evidencing the Redeemable
     Interests and that on and after the date fixed for redemption no further
     allocations or distributions to which the Limited Partner or Assignee would
     otherwise be entitled in respect of the Redeemable Interests will accrue or
     be made.

        (ii) The aggregate redemption price for Redeemable Interests shall be an
     amount equal to the Current Market Price (the date of determination of
     which shall be the date fixed for redemption) of Limited Partner Interests
     of the class to be so redeemed multiplied by the number of Limited Partner
     Interests of each such class included among the Redeemable Interests.  The
     redemption price shall be paid, in the discretion of the General Partner,
     in cash or by delivery of a promissory note of the Partnership in the
     principal amount of the redemption price, bearing interest at the rate of
     10% annually and payable in three equal annual installments of principal
     together with accrued interest, commencing one year after the redemption
     date.

        (iii)  Upon surrender by or on behalf of the Limited Partner or
     Assignee, at the place specified in the notice of redemption, of the
     Certificate evidencing the Redeemable Interests, duly endorsed in blank or
     accompanied by an assignment duly executed in blank, the Limited Partner or
     Assignee or his duly authorized representative shall be entitled to receive
     the payment therefor.

        (iv) After the redemption date, Redeemable Interests shall no longer
     constitute issued and Outstanding Limited Partner Interests.

                                     -32-

     (b) The provisions of this Section 4.10 shall also be applicable to Limited
Partner Interests held by a Limited Partner or Assignee as nominee of a Person
determined to be other than an Eligible Citizen.

     (c) Nothing in this Section 4.10 shall prevent the recipient of a notice of
redemption from transferring his Limited Partner Interest before the redemption
date if such transfer is otherwise permitted under this Agreement.  Upon receipt
of notice of such a transfer, the General Partner shall withdraw the notice of
redemption, provided the transferee of such Limited Partner Interest certifies
to the satisfaction of the General Partner in a Citizenship Certification
delivered in connection with the Transfer Application that he is an Eligible
Citizen. If the transferee fails to make such certification, such redemption
shall be effected from the transferee on the original redemption date.

                                   ARTICLE V
          CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS

Section 5.1  Organizational Contributions.

     In connection with the formation of the Partnership under the Delaware Act,
the Predecessor General Partner made an initial Capital Contribution to the
Partnership in the amount of $990.00, for a certain interest in the Partnership
and was admitted as the Predecessor General Partner and as a Limited Partner of
the Partnership, and the predecessor in interest to the Organizational Limited
Partner made an initial Capital Contribution to the Partnership in the amount of
$990.00 for an interest in the Partnership and was admitted as a Limited Partner
of the Partnership.  As of the Closing Date, the interest of the Organizational
Limited Partner was redeemed as provided in the Contribution and Conveyance
Agreement; the initial Capital Contributions of each Partner were refunded; and
the Organizational Limited Partner ceased to be a Limited Partner of the
Partnership.

Section 5.2  Contributions by the General Partner and its Affiliates.

     (a) On the Closing Date and pursuant to the Contribution and Conveyance
Agreement, (i) the Predecessor General Partner contributed to the Partnership,
as a Capital Contribution, all but 1.0101% of its general partner interest in
Plains Marketing, L.P. and all of its limited partner interest in All American
Pipeline, L.P. in exchange for (A) the continuation of its General Partner
Interest, subject to all of the rights, privileges and duties of the General
Partner under this Agreement, (B) 6,974,239 Common Units, (C) 9,859,581
Subordinated Units and (D) the Incentive Distribution Rights and (ii) PAAI LLC,
a Delaware limited liability company, contributed to the Partnership, as a
Capital Contribution, all of its limited partner interest in Plains Marketing in
exchange for 170,038 Subordinated Units.

     (b) Upon the issuance of any additional Limited Partner Interests by the
Partnership, the General Partner shall be required to make additional Capital
Contributions equal to 2% of any amount contributed to the Partnership by the
Limited Partners in exchange for such additional Limited Partner Interests.
Except as set forth in the immediately preceding sentence and Article XII, the
General Partner shall not be obligated to make any additional Capital
Contributions to the Partnership.

                                     -33-

Section 5.3  Contributions by Initial Limited Partners and Reimbursement of the
General Partner.

          (a)  On the Closing Date and pursuant to the Underwriting Agreement,
each Underwriter contributed to the Partnership cash in an amount equal to the
Issue Price per Initial Common Unit, multiplied by the number of Common Units
specified in the Underwriting Agreement to be purchased by such Underwriter at
the Closing Date. In exchange for such Capital Contributions by the
Underwriters, the Partnership issued Common Units to each Underwriter on whose
behalf such Capital Contribution was made in an amount equal to the quotient
obtained by dividing (i) the cash contribution to the Partnership by or on
behalf of such Underwriter by (ii) the Issue Price per Initial Common Unit.

          (b)  Approximately $147,989,500 of the proceeds received by the
Partnership from the issuance of Common Units pursuant to Section 5.3(a) were
distributed to the Predecessor General Partner as a reimbursement for certain
capital expenditures incurred by the Predecessor General Partner within two
years preceding the Closing Date with respect to Assets contributed to the
Partnership Group.

          (c)  No Limited Partner Interests were issued as of or at the Closing
Date other than (i) the Common Units issuable pursuant to subparagraph (a)
hereof in aggregate number equal to 13,085,000, (ii) the 10,029,619 Subordinated
Units issued to the General Partner or its Affiliates pursuant to Section 5.2
hereof and (iii) the Incentive Distribution Rights.

Section 5.4  Interest and Withdrawal.

     No interest shall be paid by the Partnership on Capital Contributions.  No
Partner or Assignee shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent, if any, that distributions made pursuant to
this Agreement or upon termination of the Partnership may be considered as such
by law and then only to the extent provided for in this Agreement.  Except to
the extent expressly provided in this Agreement, no Partner or Assignee shall
have priority over any other Partner or Assignee either as to the return of
Capital Contributions or as to profits, losses or distributions.  Any such
return shall be a compromise to which all Partners and Assignees agree within
the meaning of 17-502(b) of the Delaware Act.

Section 5.5  Capital Accounts.

          (a) The Partnership shall maintain for each Partner (or a beneficial
owner of Partnership Interests held by a nominee in any case in which the
nominee has furnished the identity of such owner to the Partnership in
accordance with Section 6031(c) of the Code or any other method acceptable to
the General Partner in its sole discretion) owning a Partnership Interest a
separate Capital Account with respect to such Partnership Interest in accordance
with the rules of Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital
Account shall be increased by (i) the amount of all Capital Contributions made
to the Partnership with respect to such Partnership Interest pursuant to this
Agreement and (ii) all items of Partnership income and gain (including, without
limitation, income and gain exempt from tax) computed in accordance with Section
5.5(b) and allocated with respect to such Partnership Interest pursuant to
Section 6.1, and decreased by (x) the amount of cash or Net Agreed Value of all
actual and

                                     -34-

deemed distributions of cash or property made with respect to such Partnership
Interest pursuant to this Agreement and (y) all items of Partnership deduction
and loss computed in accordance with Section 5.5(b) and allocated with respect
to such Partnership Interest pursuant to Section 6.1.

        (b)    For purposes of computing the amount of any item of income, gain,
loss or deduction which is to be allocated pursuant to Article VI and is to be
reflected in the Partners' Capital Accounts, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes (including,
without limitation, any method of depreciation, cost recovery or amortization
used for that purpose), provided, that:

        (i)    Solely for purposes of this Section 5.5, the Partnership shall be
     treated as owning directly its proportionate share (as determined by the
     General Partner based upon the provisions of the Operating Partnership
     Agreements) of all property owned by the Operating Partnerships or any
     other Subsidiary that is classified as a partnership for federal income tax
     purposes.

        (ii)   All fees and other expenses incurred by the Partnership to
     promote the sale of (or to sell) a Partnership Interest that can neither be
     deducted nor amortized under Section 709 of the Code, if any, shall, for
     purposes of Capital Account maintenance, be treated as an item of deduction
     at the time such fees and other expenses are incurred and shall be
     allocated among the Partners pursuant to Section 6.1.

        (iii)  Except as otherwise provided in Treasury Regulation Section
     1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss
     and deduction shall be made without regard to any election under Section
     754 of the Code which may be made by the Partnership and, as to those items
     described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code, without
     regard to the fact that such items are not includable in gross income or
     are neither currently deductible nor capitalized for federal income tax
     purposes.  To the extent an adjustment to the adjusted tax basis of any
     Partnership asset pursuant to Section 734(b) or 743(b) of the Code is
     required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to
     be taken into account in determining Capital Accounts, the amount of such
     adjustment in the Capital Accounts shall be treated as an item of gain or
     loss.

        (iv)   Any income, gain or loss attributable to the taxable disposition
     of any Partnership property shall be determined as if the adjusted basis of
     such property as of such date of disposition were equal in amount to the
     Partnership's Carrying Value with respect to such property as of such date.

        (v)    In accordance with the requirements of Section 704(b) of the
     Code, any deductions for depreciation, cost recovery or amortization
     attributable to any Contributed Property shall be determined as if the
     adjusted basis of such property on the date it was acquired by the
     Partnership were equal to the Agreed Value of such property. Upon an
     adjustment pursuant to Section 5.5(d) to the Carrying Value of any
     Partnership property subject to depreciation, cost recovery or
     amortization, any further deductions for such

                                     -35-

     depreciation, cost recovery or amortization attributable to such property
     shall be determined (A) as if the adjusted basis of such property were
     equal to the Carrying Value of such property immediately following such
     adjustment and (B) using a rate of depreciation, cost recovery or
     amortization derived from the same method and useful life (or, if
     applicable, the remaining useful life) as is applied for federal income tax
     purposes; provided, however, that, if the asset has a zero adjusted basis
     for federal income tax purposes, depreciation, cost recovery or
     amortization deductions shall be determined using any reasonable method
     that the General Partner may adopt.

        (vi) If the Partnership's adjusted basis in a depreciable or cost
     recovery property is reduced for federal income tax purposes pursuant to
     Section 48(q)(1) or 48(q)(3) of the Code, the amount of such reduction
     shall, solely for purposes hereof, be deemed to be an additional
     depreciation or cost recovery deduction in the year such property is placed
     in service and shall be allocated among the Partners pursuant to Section
     6.1.  Any restoration of such basis pursuant to Section 48(q)(2) of the
     Code shall, to the extent possible, be allocated in the same manner to the
     Partners to whom such deemed deduction was allocated.

        (c)  (i)   A transferee of a Partnership Interest shall succeed to a
pro rata portion of the Capital Account of the transferor relating to the
Partnership Interest so transferred.

        (ii) Immediately prior to the transfer of a Subordinated Unit or of a
     Subordinated Unit that has converted into a Common Unit pursuant to Section
     5.8 by a holder thereof (other than a transfer to an Affiliate unless, the
     General Partner elects to have this subparagraph 5.5(c)(ii) apply), the
     Capital Account maintained for such Person with respect to its Subordinated
     Units or converted Subordinated Units will (A) first, be allocated to the
     Subordinated Units or converted Subordinated Units to be transferred in an
     amount equal to the product of (x) the number of such Subordinated Units or
     converted Subordinated Units to be transferred and (y) the Per Unit Capital
     Amount for a Common Unit, and (B) second, any remaining balance in such
     Capital Account will be retained by the transferor, regardless of whether
     it has retained any Subordinated Units or converted Subordinated Units.
     Following any such allocation, the transferor's Capital Account, if any,
     maintained with respect to the retained Subordinated Units or converted
     Subordinated Units, if any, will have a balance equal to the amount
     allocated under clause (B) hereinabove, and the transferee's Capital
     Account established with respect to the transferred Subordinated Units or
     converted Subordinated Units will have a balance equal to the amount
     allocated under clause (A) hereinabove.

        (d)  (i)   In accordance with Treasury Regulation Section 1.704-
1(b)(2)(iv)(f), on an issuance of additional Partnership Interests for cash or
Contributed Property or the conversion of the General Partner's Combined
Interest to Common Units pursuant to Section 11.3(b), the Capital Account of all
Partners and the Carrying Value of each Partnership property immediately prior
to such issuance shall be adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such Partnership property, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual sale of each
such property immediately prior to such issuance and had been allocated to the
Partners at such time pursuant to Section 6.1 in the same manner as any item of
gain or loss actually recognized during such

                                     -36-

period would have been allocated. In determining such Unrealized Gain or
Unrealized Loss, the aggregate cash amount and fair market value of all
Partnership assets (including, without limitation, cash or cash equivalents)
immediately prior to the issuance of additional Partnership Interests shall be
determined by the General Partner using such reasonable method of valuation as
it may adopt; provided, however, that the General Partner, in arriving at such
valuation, must take fully into account the fair market value of the Partnership
Interests of all Partners at such time. The General Partner shall allocate such
aggregate value among the assets of the Partnership (in such manner as it
determines in its discretion to be reasonable) to arrive at a fair market value
for individual properties.

          (ii)    In accordance with Treasury Regulation Section 1.704-
     1(b)(2)(iv)(f), immediately prior to any actual or deemed distribution to a
     Partner of any Partnership property (other than a distribution of cash that
     is not in redemption or retirement of a Partnership Interest), the Capital
     Accounts of all Partners and the Carrying Value of all Partnership property
     shall be adjusted upward or downward to reflect any Unrealized Gain or
     Unrealized Loss attributable to such Partnership property, as if such
     Unrealized Gain or Unrealized Loss had been recognized in a sale of such
     property immediately prior to such distribution for an amount equal to its
     fair market value, and had been allocated to the Partners, at such time,
     pursuant to Section 6.1 in the same manner as any item of gain or loss
     actually recognized during such period would have been allocated.  In
     determining such Unrealized Gain or Unrealized Loss the aggregate cash
     amount and fair market value of all Partnership assets (including, without
     limitation, cash or cash equivalents) immediately prior to a distribution
     shall (A) in the case of an actual distribution which is not made pursuant
     to Section 12.4 or in the case of a deemed contribution and/or distribution
     occurring as a result of a termination of the Partnership pursuant to
     Section 708 of the Code, be determined and allocated in the same manner as
     that provided in Section 5.5(d)(i) or (B) in the case of a liquidating
     distribution pursuant to Section 12.4, be determined and allocated by the
     Liquidator using such reasonable method of valuation as it may adopt.

Section 5.6  Issuances of Additional Partnership Securities.

          (a)     Subject to Section 5.7, the Partnership may issue additional
Partnership Securities and options, rights, warrants and appreciation rights
relating to the Partnership Securities for any Partnership purpose at any time
and from time to time to such Persons for such consideration and on such terms
and conditions as shall be established by the General Partner in its sole
discretion, all without the approval of any Limited Partners.

          (b)     Each additional Partnership Security authorized to be issued
by the Partnership pursuant to Section 5.6(a) may be issued in one or more
classes, or one or more series of any such classes, with such designations,
preferences, rights, powers and duties (which may be senior to existing classes
and series of Partnership Securities), as shall be fixed by the General Partner
in the exercise of its sole discretion, including (i) the right to share
Partnership profits and losses or items thereof; (ii) the right to share in
Partnership distributions; (iii) the rights upon dissolution and liquidation of
the Partnership; (iv) whether, and the terms and conditions upon which, the
Partnership may redeem the Partnership Security; (v) whether such Partnership
Security is issued with the privilege of conversion or exchange and, if so, the
terms

                                     -37-

and conditions of such conversion or exchange; (vi) the terms and conditions
upon which each Partnership Security will be issued, evidenced by certificates
and assigned or transferred; and (vii) the right, if any, of each such
Partnership Security to vote on Partnership matters, including matters relating
to the relative rights, preferences and privileges of such Partnership Security.

          (c) The General Partner is hereby authorized and directed to take all
actions that it deems necessary or appropriate in connection with (i) each
issuance of Partnership Securities and options, rights, warrants and
appreciation rights relating to Partnership Securities pursuant to this Section
5.6, (ii) the conversion of the General Partner Interest and Incentive
Distribution Rights into Units pursuant to the terms of this Agreement, (iii)
the admission of Additional Limited Partners and (iv) all additional issuances
of Partnership Securities.  The General Partner is further authorized and
directed to specify the relative rights, powers and duties of the holders of the
Units or other Partnership Securities being so issued.  The General Partner
shall do all things necessary to comply with the Delaware Act and is authorized
and directed to do all things it deems to be necessary or advisable in
connection with any future issuance of Partnership Securities or in connection
with the conversion of the General Partner Interest and Incentive Distribution
Rights into Units pursuant to the terms of this Agreement, including compliance
with any statute, rule, regulation or guideline of any federal, state or other
governmental agency or any National Securities Exchange on which the Units or
other Partnership Securities are listed for trading.

Section 5.7  Limitations on Issuance of Additional Partnership Securities.

     The issuance of Partnership Securities pursuant to Section 5.6 shall be
subject to the following restrictions and limitations:

          (a) During the Subordination Period, the Partnership shall not issue
(and shall not issue any options, rights, warrants or appreciation rights
relating to) an aggregate of more than 10,030,000 additional Parity Units
without the prior approval of the holders of a Unit Majority. In applying this
limitation, there shall be excluded Common Units and other Parity Units issued
(A) in connection with the exercise of the Over-Allotment Option, (B) in
accordance with Sections 5.7(b) and 5.7(c), (C) upon conversion of Subordinated
Units pursuant to Section 5.8, (D) upon conversion of the General Partner
Interest and Incentive Distribution Rights pursuant to Section 11.3(b), (D)
pursuant to the employee benefit plans of the General Partner, the Partnership
or any other Group Member and (E) in the event of a combination or subdivision
of Common Units.

          (b) The Partnership may also issue an unlimited number of Parity
Units, prior to the end of the Subordination Period and without the prior
approval of the Unitholders, if such issuance occurs (i) in connection with an
Acquisition or a Capital Improvement or (ii) within 365 days of, and the net
proceeds from such issuance are used to repay debt incurred in connection with,
an Acquisition or a Capital Improvement, in each case where such Acquisition or
Capital Improvement involves assets that, if acquired by the Partnership as of
the date that is one year prior to the first day of the Quarter in which such
Acquisition is to be consummated or such Capital Improvement is to be completed,
would have resulted, on a pro forma basis, in an increase in:

                                     -38-

         (A)   the amount of Adjusted Operating Surplus generated by the
               Partnership on a per-Unit basis (for all Outstanding Units) with
               respect to each of the four most recently completed Quarters (on
               a pro forma basis as described below) as compared to

         (B)   the actual amount of Adjusted Operating Surplus generated by the
               Partnership on a per-Unit basis (for all Outstanding Units)
               (excluding Adjusted Operating Surplus attributable to the
               Acquisition or Capital Improvement) with respect to each of such
               four most recently completed Quarters.

     If the issuance of Parity Units with respect to an Acquisition or Capital
Improvement occurs within the first four full Quarters after the Closing Date,
then Adjusted Operating Surplus as used in clauses (A) (subject to the
succeeding sentence) and (B) above shall be calculated (i) for each Quarter, if
any, that commenced after the Closing Date for which actual results of
operations are available, based on the actual Adjusted Operating Surplus of the
Partnership generated with respect to such Quarter, and (ii) for each other
Quarter, on a pro forma basis consistent with the procedures, as applicable, set
forth in Appendix D to the Registration Statement.  Furthermore, the amount in
clause (A) shall be determined on a pro forma basis assuming that (1) all of the
Parity Units to be issued in connection with or within 365 days of such
Acquisition or Capital Improvement had been issued and outstanding, (2) all
indebtedness for borrowed money to be incurred or assumed in connection with
such Acquisition or Capital Improvement (other than any such indebtedness that
is to be repaid with the proceeds of such issuance of Parity Units) had been
incurred or assumed, in each case as of the commencement of such four-Quarter
period, (3) the personnel expenses that would have been incurred by the
Partnership in the operation of the acquired assets are the personnel expenses
for employees to be retained by the Partnership in the operation of the acquired
assets, and (4) the non-personnel costs and expenses are computed on the same
basis as those incurred by the Partnership in the operation of the Partnership's
business at similarly situated Partnership facilities.

         (c)   The Partnership may also issue an unlimited number of Parity
Units, prior to the end of the Subordination Period and without the approval of
the Unitholders, if the proceeds from such issuance are used exclusively to
repay up to $40 million of indebtedness of a Group Member where the aggregate
amount of distributions that would have been paid with respect to such newly
issued Units or Partnership Securities, plus the related distributions on the
General Partner Interest in the Partnership in respect of the four-Quarter
period ending prior to the first day of the Quarter in which the issuance is to
be consummated (assuming such additional Units or Partnership Securities had
been Outstanding throughout such period and that distributions equal to the
distributions that were actually paid on the Outstanding Units during the period
were paid on such additional Units or Partnership Securities) did not exceed the
interest costs actually incurred during such period on the indebtedness that is
to be repaid (or, if such indebtedness was not outstanding throughout the entire
period, would have been incurred had such indebtedness been outstanding for the
entire period). In the event that the Partnership is required to pay a
prepayment penalty in connection with the repayment of such indebtedness, for
purposes of the foregoing test the number of Parity Units issued to repay such
indebtedness shall be deemed increased by the number of Parity Units that would
need to be issued to pay such penalty.

                                     -39-

          (d)    During the Subordination Period, the Partnership shall not
issue (and shall not issue any options, rights, warrants or appreciation rights
relating to) additional Partnership Securities having rights to distributions or
in liquidation ranking prior or senior to the Common Units, without the prior
approval of the holders of a Unit Majority.

          (e)    No fractional Units shall be issued by the Partnership.

Section 5.8  Conversion of Subordinated Units.

          (a)    A total of 2,507,405 of the Outstanding Subordinated Units will
convert into Common Units on a one-for-one basis on the first day after the
Record Date for distribution in respect of any Quarter ending on or after
December 31, 2001, in respect of which:

          (i)    distributions under Section 6.4 in respect of all Outstanding
     Common Units and Subordinated Units with respect to each of the three
     consecutive, non-overlapping four-Quarter periods immediately preceding
     such date equaled or exceeded the sum of the Minimum Quarterly Distribution
     on all of the Outstanding Common Units and Subordinated Units during such
     periods;

          (ii)   the Adjusted Operating Surplus generated during each of the
     three consecutive, non-overlapping four-Quarter periods immediately
     preceding such date equaled or exceeded the sum of the Minimum Quarterly
     Distribution on all of the Common Units and Subordinated Units that were
     Outstanding during such periods on a fully-diluted basis (i.e. taking into
     account for purposes of such determination all Outstanding Common Units,
     all Outstanding Subordinated Units, all Common Units and Subordinated Units
     issuable upon exercise of employee options that have, as of the date of
     determination, already vested or are scheduled to vest prior to the end of
     the Quarter immediately following the Quarter with respect to which such
     determination is made, and all Common Units and Subordinated Units that
     have, as of the date of determination, been earned by but not yet issued to
     management of the Partnership in respect of incentive compensation), plus
     the related distribution on the General Partner Interest in the
     Partnership, during such periods; and

          (iii)  the Cumulative Common Unit Arrearage on all of he Common Units
     is zero.

          (b)    An additional 2,507,405 of the Outstanding Subordinated Units
will convert into Common Units on a one-for-one basis on the first day after the
Record Date for distribution in respect of any Quarter ending on or after
December 31, 2002, in respect of which;

          (i)    distributions under Section 6.4 in respect of all Outstanding
Common Units and Subordinated Units with respect to each of the three
consecutive, non-overlapping for-Quarter periods immediately preceding such date
equaled or exceeded the sum of the Minimum Quarterly Distribution on all the
Outstanding Common Units and Subordinated Units during such periods;

          (ii)   the Adjusted Operating Surplus generated during each of the
three consecutive, non-overlapping four-Quarter periods immediately preceding
such date

                                     -40-

     equaled or exceeded the sum of the Minimum Quarterly Distribution on all of
     the Common Units and Subordinated Units that were Outstanding during such
     periods on a fully-diluted basis (i.e. taking into account for purposes of
     such determination all Outstanding Common Units, all Outstanding
     Subordinated Units, all Common Units and Subordinated Units issuable upon
     exercise of employee options that have, as of the date of determination,
     already vested or are scheduled to vest prior to the end of the Quarter
     immediately following the Quarter with respect to which such determination
     is made, and all Common Units and Subordinated Units that have, as of the
     date of determination, been earned by but not yet issued to management of
     the Partnership in respect of incentive compensation), plus the related
     distribution on the General Partner Interest in the Partnership, during
     such periods; and

          (iii)  the Cumulative Common Unit Arrearage on all of the Common Units
     is zero;

provided, however, that the conversion of Subordinated Units pursuant to this
Section 5.8(b) may not occur until at least one year following the conversion of
Subordinated Units pursuant to Section 5.8(a).

          (c)  In the event that less than all of the Outstanding Subordinated
Units shall convert into Common Units pursuant to Section 5.8(a) or 5.8(b) at a
time when there shall be more than one holder of Subordinated Units, then,
unless all of the holders of Subordinated Units shall agree to a different
allocation, the Subordinated Units that are to be converted into Common Units
shall be allocated among the holders of Subordinated Units pro rata based on the
number of Subordinated Units held by each such holder.

          (d)  Any Subordinated Units that are not converted into Common Units
pursuant to Sections 5.8(a) and (b) shall convert into Common Units on a one-
for-one basis on the first day following the Record Date for distributions in
respect of the final Quarter of the Subordination Period.

          (e)  Notwithstanding any other provision of this Agreement, all the
then Outstanding Subordinated Units will automatically convert into Common Units
on a one-for-one basis as set forth in, and pursuant to the terms of, Section
11.4.

          (f)  A Subordinated Unit that has converted into a Common Unit shall
be subject to the provisions of Section 6.7(b).

Section 5.9  Limited Preemptive Right.

          Except as provided in this Section 5.9 and in Section 5.2, no Person
shall have any preemptive, preferential or other similar right with respect to
the issuance of any Partnership Security, whether unissued, held in the treasury
or hereafter created. The General Partner shall have the right, which it may
from time to time assign in whole or in part to any of its Affiliates, to
purchase Partnership Securities from the Partnership whenever, and on the same
terms that, the Partnership issues Partnership Securities to Persons other than
the General Partner and its Affiliates, to the extent necessary to maintain the
Percentage Interests of the General Partner and

                                     -41-

its Affiliates equal to that which existed immediately prior to the issuance of
such Partnership Securities.

Section 5.10  Splits and Combination.

          (a) Subject to Sections 5.10(d), 6.6 and 6.9 (dealing with adjustments
of distribution levels), the Partnership may make a Pro Rata distribution of
Partnership Securities to all Record Holders or may effect a subdivision or
combination of Partnership Securities so long as, after any such event, each
Partner shall have the same Percentage Interest in the Partnership as before
such event, and any amounts calculated on a per Unit basis (including any Common
Unit Arrearage or Cumulative Common Unit Arrearage) or stated as a number of
Units (including the number of Subordinated Units that may convert prior to the
end of the Subordination Period and the number of additional Parity Units that
may be issued pursuant to Section 5.7 without a Unitholder vote) are
proportionately adjusted retroactive to the beginning of the Partnership.

          (b) Whenever such a distribution, subdivision or combination of
Partnership Securities is declared, the General Partner shall select a Record
Date as of which the distribution, subdivision or combination shall be effective
and shall send notice thereof at least 20 days prior to such Record Date to each
Record Holder as of a date not less than 10 days prior to the date of such
notice. The General Partner also may cause a firm of independent public
accountants selected by it to calculate the number of Partnership Securities to
be held by each Record Holder after giving effect to such distribution,
subdivision or combination. The General Partner shall be entitled to rely on any
certificate provided by such firm as conclusive evidence of the accuracy of such
calculation.

          (c) Promptly following any such distribution, subdivision or
combination, the Partnership may issue Certificates to the Record Holders of
Partnership Securities as of the applicable Record Date representing the new
number of Partnership Securities held by such Record Holders, or the General
Partner may adopt such other procedures as it may deem appropriate to reflect
such changes. If any such combination results in a smaller total number of
Partnership Securities Outstanding, the Partnership shall require, as a
condition to the delivery to a Record Holder of such new Certificate, the
surrender of any Certificate held by such Record Holder immediately prior to
such Record Date.

          (d) The Partnership shall not issue fractional Units upon any
distribution, subdivision or combination of Units. If a distribution,
subdivision or combination of Units would result in the issuance of fractional
Units but for the provisions of Section 5.7(e) and this Section 5.10(d), each
fractional Unit shall be rounded to the nearest whole Unit (and a 0.5 Unit shall
be rounded to the next higher Unit).

Section 5.11  Fully Paid and Non-Assessable Nature of Limited Partner Interests.

     All Limited Partner Interests issued pursuant to, and in accordance with
the requirements of, this Article V shall be fully paid and non-assessable
Limited Partner Interests in the Partnership, except as such non-assessability
may be affected by Section 17-607 of the Delaware Act.

                                     -42-

Section 5.12  Establishment of Class B Common Units.

          (a)  There is hereby created a series of Units to be designated as
"Class B Common Units," consisting of Class B Common Units and having the
following terms and conditions:

          (i)    Subject to the provisions of Section 6.1(d)(iii)(A), all
     allocations of items of Partnership income, gain, loss, deduction and
     credit under Section 6.1 shall be allocated to the Class B Common Units on
     a basis that is pro rata with the Common Units, so that the amount thereof
     allocated to each Common Unit will equal the amount thereof allocated to
     each Class B Common Unit;

          (ii)   Except as provided in paragraph (f) of this Section 5.12,
     the Class B Common Units shall have the right to share in partnership
     distributions on a pro rata basis with the Common Units, so that the amount
     of any Partnership distribution to each Common Unit will equal the amount
     of such distribution to each Class B Common Unit;

          (iii)  The Class B Common Units shall have rights upon dissolution and
     liquidation of the Partnership, including the right to share in any
     liquidating distributions, that are pro rata with the Common Units, so that
     the amount of any liquidating distribution to each Common Unit will equal
     the amount of such distribution to each Class B Common Unit;

          (iv)   The Class B Common Units will not have the privilege of
     conversion except as provided in paragraphs (c) or (d) of this Section
     5.12;

          (v)    The Class B Common Units will have voting rights that are
     identical to the voting rights of the Common Units and will vote with the
     Common Units as a single class, so that each Class B Common Unit will be
     entitled to one vote on each matter with respect to which each Common Unit
     is entitled to vote, and shall not be deemed outstanding for purposes of
     determining a quorum, with respect to matters in which the requisite vote
     is determined by New York Stock Exchange rules or New York Stock Exchange
     staff interpretations of such rules for listing of the Common Units; each
     reference in the Partnership Agreement to a vote of holders of Common Units
     shall be deemed to be a reference to the holders of Common Units and Class
     B Common Units;

          (vi)   The Class B Common Units will be evidenced by certificates in
     such form as the General Partner may approve and, subject to the
     satisfaction of any applicable legal and regulatory requirements, may be
     assigned or transferred in a manner identical to the assignment and
     transfer of other Units; the General Partner will act as registrar and
     transfer agent for the Class B Common Units; and

          (vii)  Except as otherwise provided in the Partnership Agreement and
     unless the context otherwise requires, for purposes of allocations referred
     to in paragraph (a)(i), the right to share in Partnership distributions
     referred to in paragraph (a)(ii), rights upon dissolution and liquidation
     referred to in paragraph (a)(iii), and voting rights referred to in
     paragraph (a)(v), and for all other purposes, the Class B Common Units and
     the Common Units shall be considered as a single class of Units, each Class
     B Common Unit shall be

                                     -43-

     treated in a manner that is identical, in all respects, to each Common
     Unit, and each reference in the Partnership Agreement to Common Units shall
     also be deemed to be a reference to Class B Common Units.

          (b)  The Partnership issued the Class B Common Units to Plains
Resources Inc., and Plains Resources Inc. purchased such Class B Common Units
for $25,000,000 in cash; upon receipt of such purchase price the Partnership
issued a certificate to Plains Resources Inc. representing such Class B Common
Units.

          (c)  At any time after six months from May 28, 1999, upon written
notice to the General Partner, any holder of Class B Common Units will have the
right to require the Partnership to use its reasonable best efforts to submit to
a vote or consent of the holders of Partnership Securities the approval of a
change in the terms of the Class B Common Units to provide that each Class B
Common Unit is convertible into one Common Unit at the option of the holder of
such Class B Common Unit, such conversion option to be exercisable by any holder
of Class B Common Units in whole or in part at any time and from time to time.
The vote or consent required for such change will be the requisite vote
required, under New York Stock Exchange rules or New York Stock Exchange staff
interpretations of such rules, for listing of the Common Units that would be
issued upon any such conversion. Upon receipt of the required vote or consent,
the terms of the Class B Common Units will be changed so that they become
convertible as described above .

          (d)  Before any holder of Class B Common Units shall be entitled to
convert such holder's Class B Common Units into Common Units, he shall surrender
the Class B Common Unit Certificates therefor, duly endorsed, at the office of
the General Partner or of any transfer agent for the Class B Common units. In
the case of any such conversion, the Partnership shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Class B Common
Units one or more Common Unit Certificates, registered in the name of such
holder, for the number of Common Units to which he shall be entitled as
aforesaid. Such conversion shall be deemed to have been made as of the date of
the surrender of the Class B Common Units to be converted, and the person
entitled to receive the Common Units issuable upon such conversion shall be
treated for all purposes as the record holder of such Common Units on said date.

          (e)  If at any time the rules of the New York Stock Exchange or the
New York Stock Exchange staff interpretations of such rules are changed so that
no vote or consent of holders of Partnership Securities is required as a
condition to the listing of the Common Units that would be issued upon such
conversion, the terms of the Class B Common Units will be changed so that each
Class B Common Unit is convertible (without any vote of any securityholders of
the Partnership) into one Common Unit at the option of the holder thereof, such
conversion option to be exercisable by any holder of Class B Common Units in
whole or in part at any time and from time to time.

          (f)  In the event that (i) any holder of Class B Common Units requires
the Partnership to submit to a vote or consent of its holders of Partnership
Securities the approval of a change in the terms of the Class B Common Units to
provide that they are convertible as provided in Section 5.12(c) above, and (ii)
the holders of Partnership Securities do not approve

                                     -44-

such change by the requisite vote within 120 days after the notice given
pursuant to Section 5.12(c), then the terms of the Class B Common Units will be
changed so that each Class B Common Unit will become entitled to receive
quarterly cash distributions in an amount equal to 110% of the quarterly cash
distribution amount payable with respect to each Common Unit; provided, further,
that if the holders of Partnership Securities do not approve such change by the
requisite vote within 210 days after the notice given pursuant to Section
5.12(c), each Class B Common Unit will become entitled to receive quarterly cash
distributions equal to 115% of the quarterly cash distribution payable with
respect to each Common Unit. Notwithstanding the foregoing, in no such case
shall any holder of Class B Common Units have the right to convert its Class B
Common Units unless such holder and its affiliates voted their Partnership
Securities for approval of the change requested in Section 5.12(c) (if and to
the extent that such Partnership Securities were entitled to be voted).

                                  ARTICLE VI
                         ALLOCATIONS AND DISTRIBUTIONS

Section 6.1  Allocations for Capital Account Purposes.

     For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Section 5.5(b)) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.

          (a)  Net Income. After giving effect to the special allocations set
forth in Section 6.1(d), Net Income for each taxable year and all items of
income, gain, loss and deduction taken into account in computing Net Income for
such taxable year shall be allocated as follows:

          (i)   First, 100% to the General Partner in an amount equal to the
     aggregate Net Losses allocated to the General Partner pursuant to Section
     6.1(b)(iii) for all previous taxable years until the aggregate Net Income
     allocated to the General Partner pursuant to this Section 6.1(a)(i) for the
     current taxable year and all previous taxable years is equal to the
     aggregate Net Losses allocated to the General Partner pursuant to Section
     6.1(b)(iii) for all previous taxable years;

          (ii)  Second, 2% to the General Partner in an amount equal to the
     aggregate Net Losses allocated to the General Partner pursuant to Section
     6.1(b)(ii) for all previous taxable years and 98% to the Unitholders, in
     accordance with their respective Percentage Interests, until the aggregate
     Net Income allocated to such Partners pursuant to this Section 6.1(a)(ii)
     for the current taxable year and all previous taxable years is equal to the
     aggregate Net Losses allocated to such Partners pursuant to Section
     6.1(b)(ii) for all previous taxable years; and

          (iii) Third, the balance, if any, 100% to the General Partner and the
     Unitholders in accordance with their respective Percentage Interests.

                                     -45-

          (b)  Net Losses. After giving effect to the special allocations set
forth in Section 6.1(d), Net Losses for each taxable period and all items of
income, gain, loss and deduction taken into account in computing Net Losses for
such taxable period shall be allocated as follows:

          (i)   First, 2% to the General Partner and 98% to the Unitholders, in
     accordance with their respective Percentage Interests, until the aggregate
     Net Losses allocated pursuant to this Section 6.1(b)(i) for the current
     taxable year and all previous taxable years is equal to the aggregate Net
     Income allocated to such Partners pursuant to Section 6.1(a)(iii) for all
     previous taxable years, provided that the Net Losses shall not be allocated
     pursuant to this Section 6.1(b)(i) to the extent that such allocation would
     cause any Unitholder to have a deficit balance in its Adjusted Capital
     Account at the end of such taxable year (or increase any existing deficit
     balance in its Adjusted Capital Account);

          (ii)  Second, 2% to the General Partner and 98% to the Unitholders in
     accordance with their respective Percentage Interests; provided, that Net
     Losses shall not be allocated pursuant to this Section 6.1(b)(ii) to the
     extent that such allocation would cause any Unitholder to have a deficit
     balance in its Adjusted Capital Account at the end of such taxable year (or
     increase any existing deficit balance in its Adjusted Capital Account);

          (iii) Third, the balance, if any, 100% to the General Partner.

          (c)  Net Termination Gains and Losses. After giving effect to the
special allocations set forth in Section 6.1(d), all items of income, gain, loss
and deduction taken into account in computing Net Termination Gain or Net
Termination Loss for such taxable period shall be allocated in the same manner
as such Net Termination Gain or Net Termination Loss is allocated hereunder. All
allocations under this Section 6.1(c) shall be made after Capital Account
balances have been adjusted by all other allocations provided under this Section
6.1 and after all distributions of Available Cash provided under Sections 6.4
and 6.5 have been made; provided, however, that solely for purposes of this
Section 6.1(c), Capital Accounts shall not be adjusted for distributions made
pursuant to Section 12.4.

          (i)  If a Net Termination Gain is recognized (or deemed recognized
     pursuant to Section 5.5(d)), such Net Termination Gain shall be allocated
     among the General Partner and the Limited Partners in the following manner
     (and the Capital Accounts of the Partners shall be increased by the amount
     so allocated in each of the following subclauses, in the order listed,
     before an allocation is made pursuant to the next succeeding subclause):

          (A)  First, to each Partner having a deficit balance in its Capital
               Account, in the proportion that such deficit balance bears to the
               total deficit balances in the Capital Accounts of all Partners,
               until each such Partner has been allocated Net Termination Gain
               equal to any such deficit balance in its Capital Account;

                                     -46-

          (B)  Second, 100% to the General Partner and to all Limited Partners,
               in accordance with their respective Percentage Interests, until
               the Capital Account in respect of each Unit then Outstanding is
               equal to the sum of (1) its Unrecovered Capital plus (2) the
               Minimum Quarterly Distribution for the Quarter during which the
               Liquidation Date occurs, reduced by any distribution pursuant to
               Section 6.4(a)(i) or (b)(i) with respect to such Common Unit for
               such Quarter (the amount determined pursuant to this clause (2)
               is hereinafter defined as the "Unpaid MQD") plus (3) any then
               existing Cumulative Common Unit Arrearage;

          (C)  Third, if such Net Termination Gain is recognized (or is deemed
               to be recognized) prior to the expiration of the Subordination
               Period, 100% to the General Partner and to all Limited Partners,
               in accordance with their respective Percentage Interests until
               the Capital Account in respect of each Subordinated Unit then
               Outstanding equals the sum of (1) its Unrecovered Capital,
               determined for the taxable year (or portion thereof) to which
               this allocation of gain relates, plus (2) the Minimum Quarterly
               Distribution for the Quarter during which the Liquidation Date
               occurs, reduced by any distribution pursuant to Section
               6.4(a)(iii) with respect to such Subordinated Unit for such
               Quarter;

          (D)  Fourth, 85% to all Unitholders, Pro Rata, 13% to the holders of
               the Incentive Distribution Rights, Pro Rata, and 2% to the
               General Partner until the Capital Account in respect of each
               Common Unit then Outstanding is equal to the sum of (1) its
               Unrecovered Capital, plus (2) the Unpaid MQD, plus (3) any then
               existing Cumulative Common Unit Arrearage, plus (4) the excess of
               (aa) the First Target Distribution less the Minimum Quarterly
               Distribution for each Quarter of the Partnership's existence over
               (bb) the cumulative per Unit amount of any distributions of
               Operating Surplus that was distributed pursuant to Sections
               6.4(a)(iv) and 6.4(b)(ii) (the sum of (1) plus (2) plus (3) plus
               (4) is hereinafter defined as the "First Liquidation Target
               Amount");

          (E)  Fifth, 75% to all Unitholders, Pro Rata, 23% to the holders of
               the Incentive Distribution Rights, Pro Rata, and 2% to the
               General Partner until the Capital Account in respect of each
               Common Unit then Outstanding is equal to the sum of (1) the First
               Liquidation Target Amount, plus (2) the excess of (aa) the Second
               Target Distribution less the First Target Distribution for each
               Quarter of the Partnership's existence over (bb) the cumulative
               per Unit amount of any distributions of Operating Surplus that
               was distributed pursuant to Sections 6.4(a)(v) and 6.4(b)(iii)
               (the sum of (1) plus (2) is hereinafter defined as the "Second
               Liquidation Target Amount"); and

          (F)  Finally, any remaining amount 50% to all Unitholders, Pro Rata,
               48% to the holders of the Incentive Distribution Rights, Pro
               Rata, and 2% to the General Partner."

                                     -47-

          (ii) If a Net Termination Loss is recognized (or deemed recognized
     pursuant to Section 5.5(d)), such Net Termination Loss shall be allocated
     among the Partners in the following manner:

         (A)   First, if such Net Termination Loss is recognized (or is deemed
               to be recognized) prior to the conversion of the last Outstanding
               Subordinated Unit, 98% to the Unitholders holding Subordinated
               Units, Pro Rata, and 2% to the General Partner until the Capital
               Account in respect of each Subordinated Unit then Outstanding has
               been reduced to zero;

         (B)   Second, 98% to all Unitholders holding Common Units, Pro Rata,
               and 2% to the General Partner until the Capital Account in
               respect of each Common Unit then Outstanding has been reduced to
               zero; and

         (C)   Third, the balance, if any, 100% to the General Partner.

         (d) Special Allocations.  Notwithstanding any other provision of this
Section 6.1, the following special allocations shall be made for such taxable
period:

         (i)   Partnership Minimum Gain Chargeback.  Notwithstanding any other
     provision of this Section 6.1, if there is a net decrease in Partnership
     Minimum Gain during any Partnership taxable period, each Partner shall be
     allocated items of Partnership income and gain for such period (and, if
     necessary, subsequent periods) in the manner and amounts provided in
     Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and 1.704-
     2(j)(2)(i), or any successor provision.  For purposes of this Section
     6.1(d), each Partner's Adjusted Capital Account balance shall be
     determined, and the allocation of income or gain required hereunder shall
     be effected, prior to the application of any other allocations pursuant to
     this Section 6.1(d) with respect to such taxable period (other than an
     allocation pursuant to Sections 6.1(d)(vi) and 6.1(d)(vii)). This Section
     6.1(d)(i) is intended to comply with the Partnership Minimum Gain
     chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall
     be interpreted consistently therewith.

         (ii)  Chargeback of Partner Nonrecourse Debt Minimum Gain.
     Notwithstanding the other provisions of this Section 6.1 (other than
     Section 6.1(d)(i)), except as provided in Treasury Regulation Section
     1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse Debt
     Minimum Gain during any Partnership taxable period, any Partner with a
     share of Partner Nonrecourse Debt Minimum Gain at the beginning of such
     taxable period shall be allocated items of Partnership income and gain for
     such period (and, if necessary, subsequent periods) in the manner and
     amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and 1.704-
     2(j)(2)(ii), or any successor provisions.  For purposes of this Section
     6.1(d), each Partner's Adjusted Capital Account balance shall be
     determined, and the allocation of income or gain required hereunder shall
     be effected, prior to the application of any other allocations pursuant to
     this Section 6.1(d), other than Section 6.1(d)(i) and other than an
     allocation pursuant to Sections 6.1(d)(vi) and 6.1(d)(vii), with respect to
     such taxable period.  This Section 6.1(d)(ii) is intended to comply with
     the chargeback of items of income and gain

                                     -48-

     requirement in Treasury Regulation Section 1.704-2(i)(4) and shall be
     interpreted consistently therewith.

        (iii)  Priority Allocations.

        (A)    If the amount of cash or the Net Agreed Value of any property
               distributed (except cash or property distributed pursuant to
               Section 12.4) to any Unitholder with respect to its Units for a
               taxable year is greater (on a per Unit basis) than the amount of
               cash or the Net Agreed Value of property distributed to the other
               Unitholders with respect to their Units (on a per Unit basis),
               then (1) each Unitholder receiving such greater cash or property
               distribution shall be allocated gross income in an amount equal
               to the product of (aa) the amount by which the distribution (on a
               per Unit basis) to such Unitholder exceeds the distribution (on a
               per Unit basis) to the Unitholders receiving the smallest
               distribution and (bb) the number of Units owned by the Unitholder
               receiving the greater distribution; and (2) the General Partner
               shall be allocated gross income in an aggregate amount equal to
               1/99 of the sum of the amounts allocated in clause (1) above.

        (B)    After the application of Section 6.1(d)(iii)(A), all or any
               portion of the remaining items of Partnership gross income or
               gain for the taxable period, if any, shall be allocated 100% to
               the holders of Incentive Distribution Rights, Pro Rata, until the
               aggregate amount of such items allocated to the holders of
               Incentive Distribution Rights pursuant to this paragraph
               6.1(d)(iii)(B) for the current taxable year and all previous
               taxable years is equal to the cumulative amount of all Incentive
               Distributions made to the holders of Incentive Distribution
               Rights from the Closing Date to a date 45 days after the end of
               the current taxable year.

        (iv)   Qualified Income Offset.  In the event any Partner unexpectedly
     receives any adjustments, allocations or distributions described in
     Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-
     1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Partnership income
     and gain shall be specially allocated to such Partner in an amount and
     manner sufficient to eliminate, to the extent required by the Treasury
     Regulations promulgated under Section 704(b) of the Code, the deficit
     balance, if any, in its Adjusted Capital Account created by such
     adjustments, allocations or distributions as quickly as possible unless
     such deficit balance is otherwise eliminated pursuant to Section 6.1(d)(i)
     or (ii).

        (v)    Gross Income Allocations. In the event any Partner has a deficit
     balance in its Capital Account at the end of any Partnership taxable period
     in excess of the sum of (A) the amount such Partner is required to restore
     pursuant to the provisions of this Agreement and (B) the amount such
     Partner is deemed obligated to restore pursuant to Treasury Regulation
     Sections 1.704-2(g) and 1.704-2(i)(5), such Partner shall be specially
     allocated items of Partnership gross income and gain in the amount of such
     excess as quickly as possible; provided, that an allocation pursuant to
     this

                                     -49-

     Section 6.1(d)(v) shall be made only if and to the extent that such Partner
     would have a deficit balance in its Capital Account as adjusted after all
     other allocations provided for in this Section 6.1 have been tentatively
     made as if this Section 6.1(d)(v) were not in this Agreement.

         (vi)   Nonrecourse Deductions.  Nonrecourse Deductions for any taxable
     period shall be allocated to the Partners in accordance with their
     respective Percentage Interests.  If the General Partner determines in its
     good faith discretion that the Partnership's Nonrecourse Deductions must be
     allocated in a different ratio to satisfy the safe harbor requirements of
     the Treasury Regulations promulgated under Section 704(b) of the Code, the
     General Partner is authorized, upon notice to the other Partners, to revise
     the prescribed ratio to the numerically closest ratio that does satisfy
     such requirements.

         (vii)  Partner Nonrecourse Deductions. Partner Nonrecourse Deductions
     for any taxable period shall be allocated 100% to the Partner that bears
     the Economic Risk of Loss with respect to the Partner Nonrecourse Debt to
     which such Partner Nonrecourse Deductions are attributable in accordance
     with Treasury Regulation Section 1.704-2(i).  If more than one Partner
     bears the Economic Risk of Loss with respect to a Partner Nonrecourse Debt,
     such Partner Nonrecourse Deductions attributable thereto shall be allocated
     between or among such Partners in accordance with the ratios in which they
     share such Economic Risk of Loss.

         (viii) Nonrecourse Liabilities. For purposes of Treasury Regulation
     Section 1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of
     the Partnership in excess of the sum of (A) the amount of Partnership
     Minimum Gain and (B) the total amount of Nonrecourse Built-in Gain shall be
     allocated among the Partners in accordance with their respective Percentage
     Interests.

         (ix)   Code Section 754 Adjustments. To the extent an adjustment to the
     adjusted tax basis of any Partnership asset pursuant to Section 734(b) or
     743(b) of the Code is required, pursuant to Treasury Regulation Section
     1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
     Accounts, the amount of such adjustment to the Capital Accounts shall be
     treated as an item of gain (if the adjustment increases the basis of the
     asset) or loss (if the adjustment decreases such basis), and such item of
     gain or loss shall be specially allocated to the Partners in a manner
     consistent with the manner in which their Capital Accounts are required to
     be adjusted pursuant to such Section of the Treasury Regulations.

         (x)    Economic Uniformity. At the election of the General Partner with
     respect to any taxable period ending upon, or after, the termination of the
     Subordination Period, all or a portion of the remaining items of
     Partnership gross income or gain for such taxable period, after taking into
     account allocations pursuant to Section 6.1(d)(iii), shall be allocated
     100% to each Partner holding Subordinated Units that are Outstanding as of
     the termination of the Subordination Period ("Final Subordinated Units") in
     the proportion of the number of Final Subordinated Units held by such
     Partner to the total number of Final Subordinated Units then Outstanding,
     until each such Partner has been allocated an amount of gross income or
     gain which increases the Capital Account

                                     -50-

     maintained with respect to such Final Subordinated Units to an amount equal
     to the product of (A) the number of Final Subordinated Units held by such
     Partner and (B) the Per Unit Capital Amount for a Common Unit. The purpose
     of this allocation is to establish uniformity between the Capital Accounts
     underlying Final Subordinated Units and the Capital Accounts underlying
     Common Units held by Persons other than the General Partner and its
     Affiliates immediately prior to the conversion of such Final Subordinated
     Units into Common Units. This allocation method for establishing such
     economic uniformity will only be available to the General Partner if the
     method for allocating the Capital Account maintained with respect to the
     Subordinated Units between the transferred and retained Subordinated Units
     pursuant to Section 5.5(c)(ii) does not otherwise provide such economic
     uniformity to the Final Subordinated Units.

        (xi)   Curative Allocation.

        (A)    Notwithstanding any other provision of this Section 6.1, other
               than the Required Allocations, the Required Allocations shall be
               taken into account in making the Agreed Allocations so that, to
               the extent possible, the net amount of items of income, gain,
               loss and deduction allocated to each Partner pursuant to the
               Required Allocations and the Agreed Allocations, together, shall
               be equal to the net amount of such items that would have been
               allocated to each such Partner under the Agreed Allocations had
               the Required Allocations and the related Curative Allocation not
               otherwise been provided in this Section 6.1.  Notwithstanding the
               preceding sentence, Required Allocations relating to (1)
               Nonrecourse Deductions shall not be taken into account except to
               the extent that there has been a decrease in Partnership Minimum
               Gain and (2) Partner Nonrecourse Deductions shall not be taken
               into account except to the extent that there has been a decrease
               in Partner Nonrecourse Debt Minimum Gain. Allocations pursuant to
               this Section 6.1(d)(xi)(A) shall only be made with respect to
               Required Allocations to the extent the General Partner reasonably
               determines that such allocations will otherwise be inconsistent
               with the economic agreement among the Partners.  Further,
               allocations pursuant to this Section 6.1(d)(xi)(A) shall be
               deferred with respect to allocations pursuant to clauses (1) and
               (2) hereof to the extent the General Partner reasonably
               determines that such allocations are likely to be offset by
               subsequent Required Allocations.

        (B)    The General Partner shall have reasonable discretion, with
               respect to each taxable period, to (1) apply the provisions of
               Section 6.1(d)(xi)(A) in whatever order is most likely to
               minimize the economic distortions that might otherwise result
               from the Required Allocations, and (2) divide all allocations
               pursuant to Section 6.1(d)(xi)(A) among the Partners in a manner
               that is likely to minimize such economic distortions.

        (xii)  Corrective Allocations. In the event of any allocation of
     Additional Book Basis Derivative Items or any Book-Down Event or any
     recognition of a Net Termination Loss, the following rules shall apply:

                                     -51-

             (A)  In the case of any allocation of Additional Book Basis
                  Derivative Items (other than an allocation of Unrealized Gain
                  or Unrealized Loss under Section 5.5(d) hereof), the General
                  Partner shall allocate additional items of gross income and
                  gain away from the holders of Incentive Distribution Rights to
                  the Unitholders and the General Partner, or additional items
                  of deduction and loss away from the Unitholders and the
                  General Partner to the holders of Incentive Distribution
                  Rights, to the extent that the Additional Book Basis
                  Derivative Items allocated to the Unitholders or the General
                  Partner exceed their Share of Additional Book Basis Derivative
                  Items. For this purpose, the Unitholders and the General
                  Partner shall be treated as being allocated Additional Book
                  Basis Derivative Items to the extent that such Additional Book
                  Basis Derivative Items have reduced the amount of income that
                  would otherwise have been allocated to the Unitholders or the
                  General Partner under the Partnership Agreement (e.g.,
                  Additional Book Basis Derivative Items taken into account in
                  computing cost of goods sold would reduce the amount of book
                  income otherwise available for allocation among the Partners).
                  Any allocation made pursuant to this Section 6.1(d)(xii)(A)
                  shall be made after all of the other Agreed Allocations have
                  been made as if this Section 6.1(d)(xii) were not in this
                  Agreement and, to the extent necessary, shall require the
                  reallocation of items that have been allocated pursuant to
                  such other Agreed Allocations.

             (B)  In the case of any negative adjustments to the Capital
                  Accounts of the Partners resulting from a Book-Down Event or
                  from the recognition of a Net Termination Loss, such negative
                  adjustment (1) shall first be allocated, to the extent of the
                  Aggregate Remaining Net Positive Adjustments, in such a
                  manner, as reasonably determined by the General Partner, that
                  to the extent possible the aggregate Capital Accounts of the
                  Partners will equal the amount which would have been the
                  Capital Account balance of the Partners if no prior Book-Up
                  Events had occurred, and (2) any negative adjustment in excess
                  of the Aggregate Remaining Net Positive Adjustments shall be
                  allocated pursuant to Section 6.1(c) hereof.

             (C)  In making the allocations required under this Section
                  6.1(d)(xii), the General Partner, in its sole discretion, may
                  apply whatever conventions or other methodology it deems
                  reasonable to satisfy the purpose of this Section 6.1(d)(xii).

Section 6.2  Allocations for Tax Purposes.

             (a)  Except as otherwise provided herein, for federal income tax
purposes, each item of income, gain, loss and deduction shall be allocated among
the Partners in the same manner as its correlative item of "book" income, gain,
loss or deduction is allocated pursuant to Section 6. 1.

                                     -52-

             (b)    In an attempt to eliminate Book-Tax Disparities attributable
to a Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:

             (i)    (A)  In the case of a Contributed Property, such items
     attributable thereto shall be allocated among the Partners in the manner
     provided under Section 704(c) of the Code that takes into account the
     variation between the Agreed Value of such property and its adjusted basis
     at the time of contribution; and (B) any item of Residual Gain or Residual
     Loss attributable to a Contributed Property shall be allocated among the
     Partners in the same manner as its correlative item of "book" gain or loss
     is allocated pursuant to Section 6.1.

             (ii)   (A) In the case of an Adjusted Property, such items shall
     (1) first, be allocated among the Partners in a manner consistent with the
     principles of Section 704(c) of the Code to take into account the
     Unrealized Gain or Unrealized Loss attributable to such property and the
     allocations thereof pursuant to Section 5.5(d)(i) or 5-5(d)(ii), and (2)
     second, in the event such property was originally a Contributed Property,
     be allocated among the Partners in a manner consistent with Section
     6.2(b)(i)(A); and (B) any item of Residual Gain or Residual Loss
     attributable to an Adjusted Property shall be allocated among the Partners
     in the same manner as its correlative item of "book" gain or loss is
     allocated pursuant to Section 6.1.

             (iii)  The General Partner shall apply the principles of Treasury
     Regulation Section 1.704-3(d) to eliminate Book-Tax Disparities.

             (c)    For the proper administration of the Partnership and for the
preservation of uniformity of the Limited Partner Interests (or any class or
classes thereof), the General Partner shall have sole discretion to (i) adopt
such conventions as it deems appropriate in determining the amount of
depreciation, amortization and cost recovery deductions; (ii) make special
allocations for federal income tax purposes of income (including, without
limitation, gross income) or deductions; and (iii) amend the provisions of this
Agreement as appropriate (x) to reflect the proposal or promulgation of Treasury
Regulations under Section 704(b) or Section 704(c) of the Code or (y) otherwise
to preserve or achieve uniformity of the Limited Partner Interests (or any class
or classes thereof).  The General Partner may adopt such conventions, make such
allocations and make such amendments to this Agreement as provided in this
Section 6.2(c) only if such conventions, allocations or amendments would not
have a material adverse effect on the Partners, the holders of any class or
classes of Limited Partner Interests issued and Outstanding or the Partnership,
and if such allocations are consistent with the principles of Section 704 of the
Code.

             (d)    The General Partner in its discretion may determine to
depreciate or amortize the portion of an adjustment under Section 743(b) of the
Code attributable to unrealized appreciation in any Adjusted Property (to the
extent of the unamortized Book-Tax Disparity) using a predetermined rate derived
from the depreciation or amortization method and useful life applied to the
Partnership's common basis of such property, despite any inconsistency of such
approach with Proposed Treasury Regulation Section 1.167(c)-1(a)(6). If the
General Partner

                                     -53-

determines that such reporting position cannot reasonably be taken, the General
Partner may adopt depreciation and amortization conventions under which all
purchasers acquiring Limited Partner Interests in the same month would receive
depreciation and amortization deductions, based upon the same applicable rate as
if they had purchased a direct interest in the Partnership's property. If the
General Partner chooses not to utilize such aggregate method, the General
Partner may use any other reasonable depreciation and amortization conventions
to preserve the uniformity of the intrinsic tax characteristics of any Limited
Partner Interests that would not have a material adverse effect on the Limited
Partners or the Record Holders of any class or classes of Limited Partner
Interests.

          (e)  Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after taking
into account other required allocations of gain pursuant to this Section 6.2, be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.

          (f)  All items of income, gain, loss, deduction and credit recognized
by the Partnership for federal income tax purposes and allocated to the Partners
in accordance with the provisions hereof shall be determined without regard to
any election under Section 754 of the Code which may be made by the Partnership;
provided, however, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.

          (g)  Each item of Partnership income, gain, loss and deduction
attributable to a transferred Partnership Interest, shall for federal income tax
purposes, be determined on an annual basis and prorated on a monthly basis and
shall be allocated to the Partners as of the opening of the New York Stock
Exchange on the first Business Day of each month; provided, however, that (i)
such items for the period beginning on the Closing Date and ending on the last
day of the month in which the Option Closing Date or the expiration of the Over-
allotment Option occurs shall be allocated to the Partners as of the opening of
the New York Stock Exchange on the first Business Day of the next succeeding
month; and provided, further, that gain or loss on a sale or other disposition
of any assets of the Partnership other than in the ordinary course of business
shall be allocated to the Partners as of the opening of the New York Stock
Exchange on the first Business Day of the month in which such gain or loss is
recognized for federal income tax purposes. The General Partner may revise,
alter or otherwise modify such methods of allocation as it determines necessary,
to the extent permitted or required by Section 706 of the Code and the
regulations or rulings promulgated thereunder.

          (h)  Allocations that would otherwise be made to a Limited Partner
under the provisions of this Article VI shall instead be made to the beneficial
owner of Limited Partner Interests held by a nominee in any case in which the
nominee has furnished the identity of such owner to the Partnership in
accordance with Section 6031(c) of the Code or any other method acceptable to
the General Partner in its sole discretion.

                                     -54-

Section 6.3  Requirement for and Characterization of Distributions;
             Distributions to Record Holders.

             (a)  Within 45 days following the end of each Quarter commencing
with the Quarter ending on December 31, 1998, an amount equal to 100% of
Available Cash with respect to such Quarter shall, subject to Section 17-607 of
the Delaware Act, be distributed in accordance with this Article VI by the
Partnership to the Partners as of the Record Date selected by the General
Partner in its reasonable discretion. All amounts of Available Cash distributed
by the Partnership on any date from any source shall be deemed to be Operating
Surplus until the sum of all amounts of Available Cash theretofore distributed
by the Partnership to the Partners pursuant to Section 6.4 equals the Operating
Surplus from the Closing Date through the close of the immediately preceding
Quarter. Any remaining amounts of Available Cash distributed by the Partnership
on such date shall, except as otherwise provided in Section 6.5, be deemed to be
"Capital Surplus." All distributions required to be made under this Agreement
shall be made subject to Section 17-607 of the Delaware Act.

             (b)  Notwithstanding Section 6.31(a), in the event of the
dissolution and liquidation of the Partnership, all receipts received during or
after the Quarter in which the Liquidation Date occurs, other than from
borrowings described in (a)(ii) of the definition of Available Cash, shall be
applied and distributed solely in accordance with, and subject to the terms and
conditions of, Section 12.4.

             (c)  The General Partner shall have the discretion to treat as a
distribution of Available Cash to all or less than all of the Partners or
Assignees (i) taxes paid by any member of the Partnership Group on behalf of
such Partners or Assignees, (ii) amounts withheld by any member of the
Partnership Group for taxes with respect to such Partners or Assignees and (iii)
amounts seized by any taxing authority from any member of the Partnership Group
with respect to taxes owed by such Partners or Assignees.

             (d)  Each distribution in respect of a Partnership Interest shall
be paid by the Partnership, directly or through the Transfer Agent or through
any other Person or agent, only to the Record Holder of such Partnership
Interest as of the Record Date set for such distribution. Such payment shall
constitute full payment and satisfaction of the Partnership's liability in
respect of such payment, regardless of any claim of any Person who may have an
interest in such payment by reason of an assignment or otherwise.

Section 6.4  Distributions of Available Cash from Operating Surplus.

             (a)  During Subordination Period. Available Cash with respect to
any Quarter within the Subordination Period that is deemed to be Operating
Surplus pursuant to the provisions of Section 6.3 or 6.5 shall, subject to
Section 17-607 of the Delaware Act, be distributed as follows, except as
otherwise required by Section 5.12 with respect to the Class B Common Units or
Section 5.6(b) in respect of additional Partnership Securities issued pursuant
thereto:

                                     -55-

          (i)   First, 98% to the Unitholders holding Common Units, Pro Rata,
     and 2% to the General Partner until there has been distributed in respect
     of each Common Unit then Outstanding an amount equal to the Minimum
     Quarterly Distribution for such Quarter;

          (ii)   Second, 98% to the Unitholders holding Common Units, Pro Rata,
     and 2% to the General Partner until there has been distributed in respect
     of each Common Unit then Outstanding an amount equal to the Cumulative
     Common Unit Arrearage existing with respect to such Quarter;

          (iii)  Third, 98% to the Unitholders holding Subordinated Units, Pro
     Rata, and 2% to the General Partner until there has been distributed in
     respect of each Subordinated Unit then Outstanding an amount equal to the
     Minimum Quarterly Distribution for such Quarter;

          (iv)   Fourth, 85% to all Unitholders, Pro Rata, 13% to the holders of
     the Incentive Distribution Rights, Pro Rata, and 2% to the General Partner
     until there has been distributed in respect of each Unit then Outstanding
     an amount equal to the excess of the First Target Distribution over the
     Minimum Quarterly Distribution for such Quarter;

          (v)    Fifth, 75% to all Unitholders, Pro Rata, 23% to the holders of
     the Incentive Distribution Rights, Pro Rata, and 2% to the General Partner
     until there has been distributed in respect of each Unit then Outstanding
     an amount equal to the excess of the Second Target Distribution over the
     First Target Distribution for such Quarter; and

          (vi)   Thereafter, 50% to all Unitholders, Pro Rata, 48% to the
     holders of the Incentive Distribution Rights, Pro Rata, and 2% to the
     General Partner;

     provided, however, if the Minimum Quarterly Distribution, the First Target
     Distribution and the Second Target Distribution have been reduced to zero
     pursuant to the second sentence of Section 6.6(a), the distribution of
     Available Cash that is deemed to be Operating Surplus with respect to any
     Quarter will be made solely in accordance with Section 6.4(a)(vi).

          (b)    After Subordination Period. Available Cash with respect to any
Quarter after the Subordination Period that is deemed to be Operating Surplus
pursuant to the provisions of Section 6.3 or 6.5, subject to Section 17-607 of
the Delaware Act, shall be distributed as follows, except as otherwise required
by Section 5.12 with respect to the Class B Common Units or Section 5.6(b) in
respect of additional Partnership Securities issued pursuant thereto:

          (i)    First, 98% to all Unitholders, Pro Rata, and 2% to the General
     Partner until there has been distributed in respect of each Unit then
     Outstanding an amount equal to the Minimum Quarterly Distribution for such
     Quarter;

          (ii)   Second, 85% to all Unitholders, Pro Rata, and 13% to the
     holders of the Incentive Distribution Rights, Pro Rata, and 2% to the
     General Partner until there has been distributed in respect of each Unit
     then Outstanding an amount equal to the excess of

                                     -56-

     the First Target Distribution over the Minimum Quarterly Distribution for
     such Quarter;

             (iii)  Third, 75% to all Unitholders, Pro Rata, and 23% to the
     holders of the Incentive Distribution Rights, Pro Rata, and 2% to the
     General Partner until there has been distributed in respect of each Unit
     then Outstanding an amount equal to the excess of the Second Target
     Distribution over the First Target Distribution for such Quarter; and

             (iv)   Thereafter, 50% to all Unitholders, Pro Rata, and 48% to the
     holders of the Incentive Distribution Rights, Pro Rata, and 2% to the
     General Partner;

     provided, however, if the Minimum Quarterly Distribution, the First Target
     Distribution and the Second Target Distribution have been reduced to zero
     pursuant to the second sentence of Section 6.6(a), the distribution of
     Available Cash that is deemed to be Operating Surplus with respect to any
     Quarter will be made solely in accordance with Section 6.4(b)(iv).

Section 6.5  Distributions of Available Cash from Capital Surplus.

     Available Cash that is deemed to be Capital Surplus pursuant to the
provisions of Section 6.3(a) shall, subject to Section 17-607 of the Delaware
Act, be distributed, unless the provisions of Section 6.3 require otherwise, 98%
to all Unitholders, Pro Rata, and 2% to the General Partner until a hypothetical
holder of a Common Unit acquired on the Closing Date has received with respect
to such Common Unit, during the period since the Closing Date through such date,
distributions of Available Cash that are deemed to be Capital Surplus in an
aggregate amount equal to the Initial Unit Price.  Available Cash that is deemed
to be Capital Surplus shall then be distributed 98% to all Unitholders holding
Common Units, Pro Rata, and 2% to the General Partner until there has been
distributed in respect of each Common Unit then Outstanding an amount equal to
the Cumulative Common Unit Arrearage.  Thereafter, all Available Cash shall be
distributed as if it were Operating Surplus and shall be distributed in
accordance with Section 6.4.

Section 6.6  Adjustment of Minimum Quarterly Distribution and Target
Distribution Levels.

             (a)  The Minimum Quarterly Distribution, First Target Distribution,
Second Target Distribution, Common Unit Arrearages and Cumulative Common Unit
Arrearages shall be proportionately adjusted in the event of any distribution,
combination or subdivision (whether effected by a distribution payable in Units
or otherwise) of Units or other Partnership Securities in accordance with
Section 5.10. In the event of a distribution of Available Cash that is deemed to
be from Capital Surplus, the then applicable Minimum Quarterly Distribution,
First Target Distribution and Second Target Distribution shall be adjusted
proportionately downward to equal the product obtained by multiplying the
otherwise applicable Minimum Quarterly Distribution, First Target Distribution
and Second Target Distribution, as the case may be, by a fraction of which the
numerator is the Unrecovered Capital of the Common Units immediately after
giving effect to such distribution and of which the denominator is the
Unrecovered Capital of the Common Units immediately prior to giving effect to
such distribution.

                                     -57-

             (b)  The Minimum Quarterly Distribution, First Target Distribution
and Second Target Distribution shall also be subject to adjustment pursuant to
Section 6.9.

Section 6.7  Special Provisions Relating to the Holders of Subordinated Units.

             (a) Except with respect to the right to vote on or approve matters
requiring the vote or approval of a percentage of the holders of Outstanding
Common Units and the right to participate in allocations of income, gain, loss
and deduction and distributions made with respect to Common Units, the holder of
a Subordinated Unit shall have all of the rights and obligations of a Unitholder
holding Common Units hereunder; provided, however, that immediately upon the
conversion of Subordinated Units into Common Units pursuant to Section 5.8, the
Unitholder holding a Subordinated Unit shall possess all of the rights and
obligations of a Unitholder holding Common Units hereunder, including the right
to vote as a Common Unitholder and the right to participate in allocations of
income, gain, loss and deduction and distributions made with respect to Common
Units; provided, however, that such converted Subordinated Units shall remain
subject to the provisions of Sections 5.5(c)(ii), 6.1(d)(x) and 6.7(b).

             (b)  The Unitholder holding a Subordinated Unit which has converted
into a Common Unit pursuant to Section 5.8 shall not be issued a Common Unit
Certificate pursuant to Section 4.1, and shall not be permitted to transfer its
converted Subordinated Units to a Person which is not an Affiliate of the holder
until such time as the General Partner determines, based on advice of counsel,
that a converted Subordinated Unit should have, as a substantive matter, like
intrinsic economic and federal income tax characteristics, in all material
respects, to the intrinsic economic and federal income tax characteristics of an
Initial Common Unit. In connection with the condition imposed by this Section
6.7(b), the General Partner may take whatever reasonable steps are required to
provide economic uniformity to the converted Subordinated Units in preparation
for a transfer of such converted Subordinated Units, including the application
of Sections 5.5(c)(ii) and 6.1(d)(x); provided, however, that no such steps may
be taken that would have a material adverse effect on the Unitholders holding
Common Units represented by Common Unit Certificates.

Section 6.8  Special Provisions Relating to the Holders of Incentive
             Distribution Rights.

     Notwithstanding anything to the contrary set forth in this Agreement, the
holders of the Incentive Distribution Rights (a) shall (i) possess the rights
and obligations provided in this Agreement with respect to a Limited Partner
pursuant to Articles III and VII and (ii) have a Capital Account as a Partner
pursuant to Section 5.5 and all other provisions related thereto and (b) shall
not (i) be entitled to vote on any matters requiring the approval or vote of the
holders of Outstanding Units, (ii) be entitled to any distributions other than
as provided in Sections 6.4(a)(iv), (v) and (vi), 6.4(b)(ii), (iii) and (iv),
and 12.4 or (iii) be allocated items of income, gain, loss or deduction other
than as specified in this Article VI.

Section 6.9  Entity-Level Taxation.

     If legislation is enacted or the interpretation of existing language is
modified by the relevant governmental authority which causes the Partnership or
an Operating Partnership to be treated as an association taxable as a
corporation or otherwise subjects the Partnership or an

                                     -58-

Operating Partnership to entity-level taxation for federal income tax purposes,
the then applicable Minimum Quarterly Distribution, First Target Distribution
and Second Target Distribution shall be adjusted to equal the product obtained
by multiplying (a) the amount thereof by (b) one minus the sum of (i) the
highest marginal federal corporate (or other entity, as applicable) income tax
rate of the Partnership or such Operating Partnership for the taxable year of
the Partnership or such Operating Partnership in which such Quarter occurs
(expressed as a percentage) plus (ii) the effective overall state and local
income tax rate (expressed as a percentage) applicable to the Partnership or
such Operating Partnership for the calendar year next preceding the calendar
year in which such Quarter occurs (after taking into account the benefit of any
deduction allowable for federal income tax purposes with respect to the payment
of state and local income taxes), but only to the extent of the increase in such
rates resulting from such legislation or interpretation. Such effective overall
state and local income tax rate shall be determined for the taxable year next
preceding the first taxable year during which the Partnership or such Operating
Partnership is taxable for federal income tax purposes as an association taxable
as a corporation or is otherwise subject to entity-level taxation by determining
such rate as if the Partnership or such Operating Partnership had been subject
to such state and local taxes during such preceding taxable year.

                                  ARTICLE VII
                     MANAGEMENT AND OPERATION OF BUSINESS

Section 7.1  Management.

             (a)    The General Partner shall conduct, direct and manage all
activities of the Partnership. Except as otherwise expressly provided in this
Agreement, all management powers over the business and affairs of the
Partnership shall be exclusively vested in the General Partner, and no Limited
Partner or Assignee shall have any management power over the business and
affairs of the Partnership. In addition to the powers now or hereafter granted a
general partner of a limited partnership under applicable law or which are
granted to the General Partner under any other provision of this Agreement, the
General Partner, subject to Section 7.3, shall have full power and authority to
do all things and on such terms as it, in its sole discretion, may deem
necessary or appropriate to conduct the business of the Partnership, to exercise
all powers set forth in Section 2.5 and to effectuate the purposes set forth in
Section 2.4, including the following:

             (i)    the making of any expenditures, the lending or borrowing of
     money, the assumption or guarantee of, or other contracting for,
     indebtedness and other liabilities, the issuance of evidences of
     indebtedness, including indebtedness that is convertible into Partnership
     Securities, and the incurring of any other obligations;

             (ii)   the making of tax, regulatory and other filings, or
     rendering of periodic or other reports to governmental or other agencies
     having jurisdiction over the business or assets of the Partnership;

             (iii)  the acquisition, disposition, mortgage, pledge, encumbrance,
     hypothecation or exchange of any or all of the assets of the Partnership or
     the merger or other combination of the Partnership with or into another
     Person (the matters described in

                                     -59-

     this clause (iii) being subject, however, to any prior approval that may be
     required by Section 7.3);

          (iv)   the use of the assets of the Partnership (including cash on
     hand) for any purpose consistent with the terms of this Agreement,
     including the financing of the conduct of the operations of the Partnership
     Group; subject to Section 7.6(a), the lending of funds to other Persons
     (including the Operating Partnerships); the repayment of obligations of the
     Partnership Group and the making of capital contributions to any member of
     the Partnership Group;

          (v)    the negotiation, execution and performance of any contracts,
     conveyances or other instruments (including instruments that limit the
     liability of the Partnership under contractual arrangements to all or
     particular assets of the Partnership, with the other party to the contract
     to have no recourse against the General Partner or its assets other than
     its interest in the Partnership, even if same results in the terms of the
     transaction being less favorable to the Partnership than would otherwise be
     the case);

          (vi)   the distribution of Partnership cash;

          (vii)  the selection and dismissal of employees (including employees
     having titles such as "president," "vice president," "secretary" and
     "treasurer") and agents, outside attorneys, accountants, consultants and
     contractors and the determination of their compensation and other terms of
     employment or hiring;

          (viii) the maintenance of such insurance for the benefit of the
     Partnership Group and the Partners as it deems necessary or appropriate;

          (ix)   the formation of, or acquisition of an interest in, and the
     contribution of property and the making of loans to, any further limited or
     general partnerships, joint ventures, corporations or other relationships
     (including the acquisition of interests in, and the contributions of
     property to, the Operating Partnerships from time to time) subject to the
     restrictions set forth in Section 2.4;

          (x)    the control of any matters affecting the rights and obligations
     of the Partnership, including the bringing and defending of actions at law
     or in equity and otherwise engaging in the conduct of litigation and the
     incurring of legal expense and the settlement of claims and litigation;

          (xi)   the indemnification of any Person against liabilities and
     contingencies to the extent permitted by law;

          (xii)  the entering into of listing agreements with any National
     Securities Exchange and the delisting of some or all of the Limited Partner
     Interests from, or requesting that trading be suspended on, any such
     exchange (subject to any prior approval that may be required under Section
     4.8);

                                     -60-

             (xiii)  unless restricted or prohibited by Section 5.7, the
     purchase, sale or other acquisition or disposition of Partnership
     Securities, or the issuance of additional options, rights, warrants and
     appreciation rights relating to Partnership Securities; and

             (xiv)   the undertaking of any action in connection with the
     Partnership's ownership or operation of any Group Member, including
     exercising, on behalf and for the benefit of the Partnership, the
     Partnership's rights as the sole stockholder of the Operating General
     Partner.

             (b)     Notwithstanding any other provision of this Agreement, the
Operating Partnership Agreements, the Delaware Act or any applicable law, rule
or regulation, each of the Partners and the Assignees and each other Person who
may acquire an interest in Partnership Securities hereby (i) approves, ratifies
and confirms the execution, delivery and performance by the parties thereto of
the Operating Partnership Agreements, the Underwriting Agreement, the Omnibus
Agreement, the Contribution and Conveyance Agreement, and the other agreements
and documents described in or filed as exhibits to the Registration Statement
that are related to the transactions contemplated by the Registration Statement;
(ii) agrees that the General Partner (on its own or through any officer of the
Partnership) is authorized to execute, deliver and perform the agreements
referred to in clause (i) of this sentence and the other agreements, acts,
transactions and matters described in or contemplated by the Registration
Statement on behalf of the Partnership without any further act, approval or vote
of the Partners or the Assignees or the other Persons who may acquire an
interest in Partnership Securities; and (iii) agrees that the execution,
delivery or performance by the General Partner, any Group Member or any
Affiliate of any of them, of this Agreement or any agreement authorized or
permitted under this Agreement (including the exercise by the General Partner or
any Affiliate of the General Partner of the rights accorded pursuant to Article
XV), shall not constitute a breach by the General Partner of any duty that the
General Partner may owe the Partnership or the Limited Partners or any other
Persons under this Agreement (or any other agreements) or of any duty stated or
implied by law or equity.

Section 7.2  Certificate of Limited Partnership.

     The General Partner has caused the Certificate of Limited Partnership to be
filed with the Secretary of State of the State of Delaware as required by the
Delaware Act and shall use all reasonable efforts to cause to be filed such
other certificates or documents as may be determined by the General Partner in
its sole discretion to be reasonable and necessary or appropriate for the
formation, continuation, qualification and operation of a limited partnership
(or a partnership in which the limited partners have limited liability) in the
State of Delaware or any other state in which the Partnership may elect to do
business or own property.  To the extent that such action is determined by the
General Partner in its sole discretion to be reasonable and necessary or
appropriate, the General Partner shall file amendments to and restatements of
the Certificate of Limited Partnership and do all things to maintain the
Partnership as a limited partnership (or a partnership or other entity in which
the limited partners have limited liability) under the laws of the State of
Delaware or of any other state in which the Partnership may elect to do business
or own property.  Subject to the terms of Section 3.4(a), the General Partner
shall not be required, before or after filing, to deliver or mail a copy of the
Certificate of Limited Partnership, any qualification document or any amendment
thereto to any Limited Partner.

                                     -61-

Section 7.3  Restrictions on General Partner's Authority.

             (a)  The General Partner may not, without written approval of the
specific act by holders of all of the Outstanding Limited Partner Interests or
by other written instrument executed and delivered by holders of all of the
Outstanding Limited Partner Interests subsequent to the date of this Agreement,
take any action in contravention of this Agreement, including, except as
otherwise provided in this Agreement, (i) committing any act that would make it
impossible to carry on the ordinary business of the Partnership; (ii) possessing
Partnership property, or assigning any rights in specific Partnership property,
for other than a Partnership purpose; (iii) admitting a Person as a Partner;
(iv) amending this Agreement in any manner; or (v) transferring its interest as
general partner of the Partnership.

             (b)  Except as provided in Articles XII and XIV, the General
Partner may not sell, exchange or otherwise dispose of all or substantially all
of the Partnership's assets in a single transaction or a series of related
transactions (including by way of merger, consolidation or other combination) or
approve on behalf of the Partnership the sale, exchange or other disposition of
all or substantially all of the assets of the Operating Partnerships, taken as a
whole, without the approval of holders of a Unit Majority; provided however that
this provision shall not preclude or limit the General Partner's ability to
mortgage, pledge, hypothecate or grant a security interest in all or
substantially all of the assets of the Partnership or Operating Partnerships and
shall not apply to any forced sale of any or all of the assets of the
Partnership or Operating Partnerships pursuant to the foreclosure of, or other
realization upon, any such encumbrance. Without the approval of holders of a
Unit Majority, the General Partner shall not, on behalf of the Partnership, (i)
consent to any amendment to the Operating Partnership Agreements or, except as
expressly permitted by Section 7.9(d), take any action permitted to be taken by
a partner of an Operating Partnership, in either case, that would have a
material adverse effect on the Partnership as a partner of an Operating
Partnership or (ii) except as permitted under Sections 4.6, 11.1 and 11.2, elect
or cause the Partnership to elect a successor general partner.

Section 7.4  Reimbursement of the General Partner.

             (a)  Except as provided in this Section 7.4 and elsewhere in this
Agreement or in the Operating Partnership Agreements, the General Partner shall
not be compensated for its services as general partner or managing member of any
Group Member.

             (b)  The General Partner shall be reimbursed on a monthly basis, or
such other reasonable basis as the General Partner may determine in its sole
discretion, for (i) all direct and indirect expenses it incurs or payments it
makes on behalf of the Partnership (including payments made for the benefit of
the Partnership to or on behalf of the Operating General Partner and including
salary, bonus, incentive compensation and other amounts paid to any Person
including Affiliates of the General Partner to perform services for the benefit
of the Partnership, any Group Member or for the General Partner in the discharge
of its duties to the Partnership), and (ii) all other necessary or appropriate
expenses allocable to the Partnership or otherwise reasonably incurred by the
General Partner in connection with operating the Partnership's business
(including expenses allocated to the General Partner by its Affiliates). The
General Partner shall determine the expenses that are allocable to the
Partnership in any reasonable manner determined

                                     -62-

by the General Partner in its sole discretion. Reimbursements pursuant to this
Section 7.4 shall be in addition to any reimbursement to the General Partner as
a result of indemnification pursuant to Section 7.7.

             (c)  Subject to Section 5.7, the General Partner, in its sole
discretion and without the approval of the Limited Partners (who shall have no
right to vote in respect thereof), may propose and adopt on behalf of the
Partnership employee benefit plans, employee programs and employee practices
(including plans, programs and practices involving the issuance of Partnership
Securities or options to purchase Partnership Securities), or cause the
Partnership to issue Partnership Securities in connection with, or pursuant to,
any employee benefit plan, employee program or employee practice maintained or
sponsored by the General Partner or any of its Affiliates, in each case for the
benefit of employees of the General Partner, any Group Member or any Affiliate,
or any of them, in respect of services performed, directly or indirectly, for
the benefit of the Partnership Group. The Partnership agrees to issue and sell
to the General Partner or any of its Affiliates any Partnership Securities that
the General Partner or such Affiliate is obligated to provide to any employees
pursuant to any such employee benefit plans, employee programs or employee
practices. Expenses incurred by the General Partner in connection with any such
plans, programs and practices (including the net cost to the General Partner or
such Affiliate of Partnership Securities purchased by the General Partner or
such Affiliate from the Partnership to fulfill options or awards under such
plans, programs and practices) shall be reimbursed in accordance with Section
7.4(b). Any and all obligations of the General Partner under any employee
benefit plans, employee programs or employee practices adopted by the General
Partner as permitted by this Section 7.4(c) shall constitute obligations of the
General Partner hereunder and shall be assumed by any successor General Partner
approved pursuant to Section 11.1 or 11.2 or the transferee of or successor to
all of the General Partner's General Partner Interest pursuant to Section 4.6.

Section 7.5  Outside Activities.

             (a)   After the Closing Date, the General Partner, for so long as
it is the General Partner of the Partnership (i) agrees that its sole business
will be to act as the general partner of the Partnership and, as applicable, any
other partnership or limited liability company of which the Partnership is,
directly or indirectly, a partner and to undertake activities that are ancillary
or related thereto (including being a limited partner in the Partnership), (ii)
shall not engage in any business or activity or incur any debts or liabilities
except in connection with or incidental to (A) its performance as general
partner of one or more Group Members or as described in or contemplated by the
Registration Statement or (B) the acquiring, owning or disposing of debt or
equity securities in any Group Member and (iii) except to the extent permitted
in the Omnibus Agreement, shall not, and shall cause its Affiliates not to,
engage in any Restricted Business.

             (b)   Plains Resources Inc. has entered into the Omnibus Agreement
with the Partnership and the Operating Partnerships, which agreement sets forth
certain restrictions on the ability of Plains Resources Inc. and its Affiliates
to engage in Restricted Businesses.

             (c)   Except as specifically restricted by Section 7.5(a) and the
Omnibus Agreement, each Indemnitee (other than the General Partner) shall have
the right to engage in businesses of every type and description and other
activities for profit and to engage in and

                                     -63-

possess an interest in other business ventures of any and every type or
description, whether in businesses engaged in or anticipated to be engaged in by
any Group Member, independently or with others, including business interests and
activities in direct competition with the business and activities of any Group
Member, and none of the same shall constitute a breach of this Agreement or any
duty express or implied by law to any Group Member or any Partner or Assignee.
Neither any Group Member, any Limited Partner nor any other Person shall have
any rights by virtue of this Agreement, either Operating Partnership Agreement
or the partnership relationship established hereby or thereby in any business
ventures of any Indenmitee.

              (d)  Subject to the terms of Section 7.5(a), Section 7.5(b),
Section 7.5(c) and the Omnibus Agreement, but otherwise notwithstanding anything
to the contrary in this Agreement, (i) the engaging in competitive activities by
any Indemnitees (other than the General Partner) in accordance with the
provisions of this Section 7.5 is hereby approved by the Partnership and all
Partners, (ii) it shall be deemed not to be a breach of the General Partner's
fiduciary duty or any other obligation of any type whatsoever of the General
Partner for the Indemnitees (other than the General Partner) to engage in such
business interests and activities in preference to or to the exclusion of the
Partnership and (iii) except as set forth in the Omnibus Agreement, the General
Partner and the Indemnities shall have no obligation to present business
opportunities to the Partnership.

              (e)  The General Partner and any of its Affiliates may acquire
Units or other Partnership Securities in addition to those acquired on the
Closing Date and, except as otherwise provided in this Agreement, shall be
entitled to exercise all rights of the General Partner or Limited Partner, as
applicable, relating to such Units or Partnership Securities.

             (f)   The term "Affiliates" when used in Section 7.5(a) and Section
7.5(e) with respect to the General Partner shall not include any Group Member or
any Subsidiary of the Group Member.

             (g)   Anything in this Agreement to the contrary notwithstanding,
to the extent that provisions of Sections 7.7, 7.8, 7.9, 7.10 or other Sections
of this Agreement purport or are interpreted to have the effect of restricting
the fiduciary duties that might otherwise, as a result of Delaware or other
applicable law, be owed by the General Partner to the Partnership and its
Limited Partners, or to constitute a waiver or consent by the Limited Partners
to any such restriction, such provisions shall be inapplicable and have no
effect in determining whether the General Partner has complied with its
fiduciary duties in connection with determinations made by it under this Section
7.5.

Section 7.6  Loans from the General Partner; Loans or Contributions from the
Partnership; Contracts with Affiliates; Certain Restrictions on the General
Partner.

             (a)   The General Partner or its Affiliates may lend to any Group
Member, and any Group Member may borrow from the General Partner or any of its
Affiliates, funds needed or desired by the Group Member for such periods of time
and in such amounts as the General Partner may determine; provided, however,
that in any such case the lending party may not charge the borrowing party
interest at a rate greater than the rate that would be charged the borrowing
party or impose terms less favorable to the borrowing party than would be
charged or

                                     -64-

imposed on the borrowing party by unrelated lenders on comparable loans made on
an arm's-length basis (without reference to the lending party's financial
abilities or guarantees). The borrowing party shall reimburse the lending party
for any costs (other than any additional interest costs) incurred by the lending
party in connection with the borrowing of such funds. For purposes of this
Section 7.6(a) and Section 7.6(b), the term "Group Member" shall include any
Affiliate of a Group Member that is controlled by the Group Member. No Group
Member may lend funds to the General Partner or any of its Affiliates (other
than another Group Member).

             (b)   The Partnership may lend or contribute to any Group Member,
and any Group Member may borrow from the Partnership, funds on terms and
conditions established in the sole discretion of the General Partner; provided,
however, that the Partnership may not charge the Group Member interest at a rate
less than the rate that would be charged to the Group Member (without reference
to the General Partner's financial abilities or guarantees) by unrelated lenders
on comparable loans. The foregoing authority shall be exercised by the General
Partner in its sole discretion and shall not create any right or benefit in
favor of any Group Member or any other Person.

             (c)   The General Partner may itself, or may enter into an
agreement with any of its Affiliates to, render services to a Group Member or to
the General Partner in the discharge of its duties as general partner of the
Partnership. Any services rendered to a Group Member by the General Partner or
any of its Affiliates shall be on terms that are fair and reasonable to the
Partnership; provided, however, that the requirements of this Section 7.6(c)
shall be deemed satisfied as to (i) any transaction approved by Special
Approval, (ii) any transaction, the terms of which are no less favorable to the
Partnership Group than those generally being provided to or available from
unrelated third parties or (iii) any transaction that, taking into account the
totality of the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership Group), is equitable to the Partnership Group. The provisions of
Section 7.4 shall apply to the rendering of services described in this Section
7.6(c).

             (d)   The Partnership Group may transfer assets to joint ventures,
other partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.

             (e)   Neither the General Partner nor any of its Affiliates shall
sell, transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, however, that the requirements
of this Section 7.6(e) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to Sections 5.2 and 5.3, the Contribution and
Conveyance Agreement and any other transactions described in or contemplated by
the Registration Statement, (ii) any transaction approved by Special Approval,
(iii) any transaction, the terms of which are no less favorable to the
Partnership than those generally being provided to or available from unrelated
third parties, or (iv) any transaction that, taking into account the totality of
the relationships between the parties involved (including other transactions
that may be particularly favorable or advantageous to the Partnership), is
equitable to the Partnership. With respect to any contribution of assets to the
Partnership in exchange for Partnership Securities, the Conflicts

                                     -65-

Committee, in determining whether the appropriate number of Partnership
Securities are being issued, may take into account, among other things, the fair
market value of the assets, the liquidated and contingent liabilities assumed,
the tax basis in the assets, the extent to which tax-only allocations to the
transferor will protect the existing partners of the Partnership against a low
tax basis, and such other factors as the Conflicts Committee deems relevant
under the circumstances.

             (f)   The General Partner and its Affiliates will have no
obligation to permit any Group Member to use any facilities or assets of the
General Partner and its Affiliates, except as may be provided in contracts
entered into from time to time specifically dealing with such use, nor shall
there be any obligation on the part of the General Partner or its Affiliates to
enter into such contracts.

             (g)   Without limitation of Sections 7.6(a) through 7.6(f), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Registration Statement are hereby
approved by all Partners.

Section 7.7  Indemnification.

             (a)   To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, all Indemnitees shall be
indemnified and held harmless by the Partnership from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which
any Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, by reason of its status as an Indemnitee; provided, that in each case
the Indemnitee acted in good faith and in a manner that such Indemnitee
reasonably believed to be in, or (in the case of a Person other than the General
Partner) not opposed to, the best interests of the Partnership and, with respect
to any criminal proceeding, had no reasonable cause to believe its conduct was
unlawful; provided, further, no indemnification pursuant to this Section 7.7
shall be available to the General Partner with respect to its obligations
incurred pursuant to the Underwriting Agreement or the Contribution and
Conveyance Agreement (other than obligations incurred by the General Partner on
behalf of the Partnership or any Operating Partnership). The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
the Indemnitee acted in a manner contrary to that specified above. Any
indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership, it being agreed that the General Partner shall not be
personally liable for such indemnification and shall have no obligation to
contribute or loan any monies or property to the Partnership to enable it to
effectuate such indemnification.

             (b)   To the fullest extent permitted by law, expenses (including
legal fees and expenses) incurred by an Indemnitee who is indemnified pursuant
to Section 7.7(a) in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by the Partnership prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Partnership of any undertaking by or on behalf of the Indemnitee to repay
such

                                     -66-

amount if it shall be determined that the Indemnitee is not entitled to be
indemnified as authorized in this Section 7.7.

             (c)   The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the holders of Outstanding Limited Partner
Interests, as a matter of law or otherwise, both as to actions in the
Indemnitee's capacity as an Indemnitee and as to actions in any other capacity
(including any capacity under the Underwriting Agreement), and shall continue as
to an Indemnitee who has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Indemnitee.

             (d)   The Partnership may purchase and maintain (or reimburse the
General Partner or its Affiliates for the cost of) insurance, on behalf of the
General Partner, its Affiliates and such other Persons as the General Partner
shall determine, against any liability that may be asserted against or expense
that may be incurred by such Person in connection with the Partnership's
activities or such Person's activities on behalf of the Partnership, regardless
of whether the Partnership would have the power to indemnify such Person against
such liability under the provisions of this Agreement.

             (e)   For purposes of this Section 7.7, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership
also imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute "fines" within the meaning of Section 7.7(a); and action taken
or omitted by it with respect to any employee benefit plan in the performance of
its duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Partnership.

             (f)   In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.

             (g)   An Indemnitee shall not be denied indemnification in whole or
in part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.

             (h)   The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.

             (i)   No amendment, modification or repeal of this Section 7.7 or
any provision hereof shall in any manner terminate, reduce or impair the right
of any past, present or future Indemnitee to be indemnified by the Partnership,
nor the obligations of the Partnership to indemnify any such Indemnitee under
and in accordance with the provisions of this Section 7.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims

                                     -67-

arising from or relating to matters occurring, in whole or in part, prior to
such amendment, modification or repeal, regardless of when such claims may arise
or be asserted.

Section 7.8  Liability of lndemnitees.

             (a)   Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Partnership, the Limited Partners, the Assignees or any other Persons who have
acquired interests in the Partnership Securities, for losses sustained or
liabilities incurred as a result of any act or omission if such Indemnitee acted
in good faith.

             (b)   Subject to its obligations and duties as General Partner set
forth in Section 7.1(a), the General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents, and the General Partner
shall not be responsible for any misconduct or negligence on the part of any
such agent appointed by the General Partner in good faith.

             (c)   To the extent that, at law or in equity, an Indemnitee has
duties (including fiduciary duties) and liabilities relating thereto to the
Partnership or to the Partners, the General Partner and any other Indemnitee
acting in connection with the Partnership's business or affairs shall not be
liable to the Partnership or to any Partner for its good faith reliance on the
provisions of this Agreement. The provisions of this Agreement, to the extent
that they restrict or otherwise modify the duties and liabilities of an
Indemnitee otherwise existing at law or in equity, are agreed by the Partners to
replace such other duties and liabilities of such Indemnitee.

             (d)   Any amendment, modification or repeal of this Section 7.8 or
any provision hereof shall be prospective only and shall not in any way affect
the limitations on the liability to the Partnership, the Limited Partners, the
General Partner, and the Partnership's and General Partner's and the Operating
General Partner's directors, officers and employees under this Section 7.8 as in
effect immediately prior to such amendment, modification or repeal with respect
to claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.

Section 7.9  Resolution of Conflicts of Interest.

             (a)   Unless otherwise expressly provided in this Agreement or an
Operating Partnership Agreement, whenever a potential conflict of interest
exists or arises between the General Partner or any of its Affiliates, on the
one hand, and the Partnership, an Operating Partnership, any Partner or any
Assignee, on the other, any resolution or course of action by the General
Partner or its Affiliates in respect of such conflict of interest shall be
permitted and deemed approved by all Partners, and shall not constitute a breach
of this Agreement, of any Operating Partnership Agreement, of any agreement
contemplated herein or therein, or of any duty stated or implied by law or
equity, if the resolution or course of action is, or by operation of this
Agreement is deemed to be, fair and reasonable to the Partnership. The General
Partner shall be authorized but not required in connection with its resolution
of such conflict of interest to seek Special Approval of such resolution. Any
conflict of interest and any resolution of such conflict of interest shall be
conclusively deemed fair and reasonable to the Partnership if such

                                     -68-

conflict of interest or resolution is (i) approved by Special Approval (as long
as the material facts known to the General Partner or any of its Affiliates
regarding any proposed transaction were disclosed to the Conflicts Committee at
the time it gave its approval), (ii) on terms no less favorable to the
Partnership than those generally being provided to or available from unrelated
third parties or (iii) fair to the Partnership, taking into account the totality
of the relationships between the parties involved (including other transactions
that may be particularly favorable or advantageous to the Partnership). The
General Partner may also adopt a resolution or course of action that has not
received Special Approval. The General Partner (including the Conflicts
Committee in connection with Special Approval) shall be authorized in connection
with its determination of what is "fair and reasonable" to the Partnership and
in connection with its resolution of any conflict of interest to consider (A)
the relative interests of any party to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interest; (B) any
customary or accepted industry practices and any customary or historical
dealings with a particular Person; (C) any applicable generally accepted
accounting practices or principles; and (D) such additional factors as the
General Partner (including the Conflicts Committee) determines in its sole
discretion to be relevant, reasonable or appropriate under the circumstances.
Nothing contained in this Agreement, however, is intended to nor shall it be
construed to require the General Partner (including the Conflicts Committee) to
consider the interests of any Person other than the Partnership. In the absence
of bad faith by the General Partner, the resolution, action or terms so made,
taken or provided by the General Partner with respect to such matter shall not
constitute a breach of this Agreement or any other agreement contemplated herein
or a breach of any standard of care or duty imposed herein or therein or, to the
extent permitted by law, under the Delaware Act or any other law, rule or
regulation.

             (b)   Whenever this Agreement or any other agreement contemplated
hereby provides that the General Partner or any of its Affiliates is permitted
or required to make a decision (i) in its "sole discretion" or "discretion,"
that it deems "necessary or appropriate" or "necessary or advisable" or under a
grant of similar authority or latitude, except as otherwise provided herein, the
General Partner or such Affiliate shall be entitled to consider only such
interests and factors as it desires and shall have no duty or obligation to give
any consideration to any interest of, or factors affecting, the Partnership, any
Operating Partnership, any Limited Partner or any Assignee, (ii) it may make
such decision in its sole discretion (regardless of whether there is a reference
to "sole discretion" or "discretion") unless another express standard is
provided for, or (iii) in "good faith" or under another express standard, the
General Partner or such Affiliate shall act under such express standard and
shall not be subject to any other or different standards imposed by this
Agreement, any Operating Partnership Agreement, any other agreement contemplated
hereby or under the Delaware Act or any other law, rule or regulation. In
addition, any actions taken by the General Partner or such Affiliate consistent
with the standards of "reasonable discretion" set forth in the definitions of
Available Cash or Operating Surplus shall not constitute a breach of any duty of
the General Partner to the Partnership or the Limited Partners. The General
Partner shall have no duty, express or implied, to sell or otherwise dispose of
any asset of the Partnership Group other than in the ordinary course of
business. No borrowing by any Group Member or the approval thereof by the
General Partner shall be deemed to constitute a breach of any duty of the
General Partner to the Partnership or the Limited Partners by reason of the fact
that the purpose or effect of such borrowing is directly or indirectly to (A)
enable distributions to the General Partner or its Affiliates (including in
their capacities as Limited Partners) to exceed 2% of the total amount
distributed to all partners or

                                     -69-

(B) hasten the expiration of the Subordination Period or the conversion of any
Subordinated Units into Common Units.

             (c)   Whenever a particular transaction, arrangement or resolution
of a conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.

             (d)   The Unitholders hereby authorize the General Partner, on
behalf of the Partnership as a partner of a Group Member, to approve of actions
by the general partner of such Group Member (including the Operating General
Partner) similar to those actions permitted to be taken by the General Partner
pursuant to this Section 7.9.

Section 7.10  Other Matters Concerning the General Partner.

             (a)   The General Partner may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties.

             (b)   The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and other
consultants and advisers selected by it, and any act taken or omitted to be
taken in reliance upon the opinion (including an Opinion of Counsel) of such
Persons as to matters that the General Partner reasonably believes to be within
such Person's professional or expert competence shall be conclusively presumed
to have been done or omitted in good faith and in accordance with such opinion.

             (c)   The General Partner shall have the right, in respect of any
of its powers or obligations hereunder, to act through any of its duly
authorized officers, a duly appointed attorney or attorneys-in-fact or the duly
authorized officers of the Partnership.

             (d)   Any standard of care and duty imposed by this Agreement or
under the Delaware Act or any applicable law, rule or regulation shall be
modified, waived or limited, to the extent permitted by law, as required to
permit the General Partner to act under this Agreement or any other agreement
contemplated by this Agreement and to make any decision pursuant to the
authority prescribed in this Agreement, so long as such action is reasonably
believed by the General Partner to be in, or not inconsistent with, the best
interests of the Partnership.

Section 7.11  Purchase or Sale of Partnership Securities.

        The General Partner may cause the Partnership to purchase or otherwise
acquire Partnership Securities; provided that, except as permitted pursuant to
Section 4.10, the General Partner may not cause any Group Member to purchase
Subordinated Units during the Subordination Period.  As long as Partnership
Securities are held by any Group Member, such Partnership Securities shall not
be considered Outstanding for any purpose, except as otherwise provided herein.
The General Partner or any Affiliate of the General Partner may also purchase

                                     -70-

or otherwise acquire and sell or otherwise dispose of Partnership Securities for
its own account, subject to the provisions of Articles IV and X.

Section 7.12  Registration Rights of the General Partner and its Affiliates.

              (a)   If (i) the General Partner or any Affiliate of the General
Partner (including for purposes of this Section 7.12, any Person that is an
Affiliate of the General Partner at the date hereof notwithstanding that it may
later cease to be an Affiliate of the General Partner) holds Partnership
Securities that it desires to sell and (ii) Rule 144 of the Securities Act (or
any successor rule or regulation to Rule 144) or another exemption from
registration is not available to enable such holder of Partnership Securities
(the "Holder") to dispose of the number of Partnership Securities it desires to
sell at the time it desires to do so without registration under the Securities
Act, then upon the request of the General Partner or any of its Affiliates, the
Partnership shall file with the Commission as promptly as practicable after
receiving such request, and use all reasonable efforts to cause to become
effective and remain effective for a period of not less than six months
following its effective date or such shorter period as shall terminate when all
Partnership Securities covered by such registration statement have been sold, a
registration statement under the Securities Act registering the offering and
sale of the number of Partnership Securities specified by the Holder; provided,
however, that the Partnership shall not be required to effect more than three
registrations pursuant to this Section 7.12(a); and provided further, however,
that if the Conflicts Committee determines in its good faith judgment that a
postponement of the requested registration for up to six months would be in the
best interests of the Partnership and its Partners due to a pending transaction,
investigation or other event, the filing of such registration statement or the
effectiveness thereof may be deferred for up to six months, but not thereafter.
In connection with any registration pursuant to the immediately preceding
sentence, the Partnership shall promptly prepare and file (x) such documents as
may be necessary to register or qualify the securities subject to such
registration under the securities laws of such states as the Holder shall
reasonably request; provided, however, that no such qualification shall be
required in any jurisdiction where, as a result thereof, the Partnership would
become subject to general service of process or to taxation or qualification to
do business as a foreign corporation or partnership doing business in such
jurisdiction solely as a result of such registration, and (y) such documents as
may be necessary to apply for listing or to list the Partnership Securities
subject to such registration on such National Securities Exchange as the Holder
shall reasonably request, and do any and all other acts and things that may
reasonably be necessary or advisable to enable the Holder to consummate a public
sale of such Partnership Securities in such states. Except as set forth in
Section 7.12(c), all costs and expenses of any such registration and offering
(other than the underwriting discounts and commissions) shall be paid by the
Partnership, without reimbursement by the Holder.

              (b)   If the Partnership shall at any time propose to file a
registration statement under the Securities Act for an offering of equity
securities of the Partnership for cash (other than an offering relating solely
to an employee benefit plan), the Partnership shall use all reasonable efforts
to include such number or amount of securities held by the Holder in such
registration statement as the Holder shall request. If the proposed offering
pursuant to this Section 7.12(b) shall be an underwritten offering, then, in the
event that the managing underwriter or managing underwriters of such offering
advise the Partnership and the Holder in writing that in their opinion the
inclusion of all or some of the Holder's Partnership Securities would adversely
and

                                     -71-

materially affect the success of the offering, the Partnership shall include in
such offering only that number or amount, if any, of securities held by the
Holder which, in the opinion of the managing underwriter or managing
underwriters, will not so adversely and materially affect the offering. Except
as set forth in Section 7.12(c), all costs and expenses of any such registration
and offering (other than the underwriting discounts and commissions) shall be
paid by the Partnership, without reimbursement by the Holder.

              (c)   If underwriters are engaged in connection with any
registration referred to in this Section 7.12, the Partnership shall provide
indemnification, representations, covenants, opinions and other assurance to the
underwriters in form and substance reasonably satisfactory to such underwriters.
Further, in addition to and not in limitation of the Partnership's obligation
under Section 7.7, the Partnership shall, to the fullest extent permitted by
law, indemnify and hold harmless the Holder, its officers, directors and each
Person who controls the Holder (within the meaning of the Securities Act) and
any agent thereof (collectively, "Indemnified Persons") against any losses,
claims, demands, actions, causes of action, assessments, damages, liabilities
(joint or several), costs and expenses (including interest, penalties and
reasonable attorneys' fees and disbursements), resulting to, imposed upon, or
incurred by the Indemnified Persons, directly or indirectly, under the
Securities Act or otherwise (hereinafter referred to in this Section 7.12(c) as
a "claim" and in the plural as "claims") based upon, arising out of or resulting
from any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which any Partnership Securities
were registered under the Securities Act or any state securities or Blue Sky
laws, in any preliminary prospectus (if used prior to the effective date of such
registration statement), or in any summary or final prospectus or in any
amendment or supplement thereto (if used during the period the Partnership is
required to keep the registration statement current), or arising out of, based
upon or resulting from the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
made therein not misleading; provided, however, that the Partnership shall not
be liable to any Indemnified Person to the extent that any such claim arises out
of, is based upon or results from an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
such preliminary, summary or final prospectus or such amendment or supplement,
in reliance upon and in conformity with written information furnished to the
Partnership by or on behalf of such Indemnified Person specifically for use in
the preparation thereof.

              (d)   The provisions of Section 7.12(a) and 7.12(b) shall continue
to be applicable with respect to the General Partner (and any of the General
Partner's Affiliates) after it ceases to be a Partner of the Partnership, during
a period of two years subsequent to the effective date of such cessation and for
so long thereafter as is required for the Holder to sell all of the Partnership
Securities with respect to which it has requested during such two-year period
inclusion in a registration statement otherwise filed or that a registration
statement be filed; provided, however, that the Partnership shall not be
required to file successive registration statements covering the same
Partnership Securities for which registration was demanded during such two-year
period. The provisions of Section 7.12(c) shall continue in effect thereafter.

              (e)   Any request to register Partnership Securities pursuant to
this Section 7.12 shall (i) specify the Partnership Securities intended to be
offered and sold by the Person making the request, (ii) express such Person's
present intent to offer such shares for distribution,

                                     -72-

(iii) describe the nature or method of the proposed offer and sale of
Partnership Securities, and (iv) contain the undertaking of such Person to
provide all such information and materials and take all action as may be
required in order to permit the Partnership to comply with all applicable
requirements in connection with the registration of such Partnership Securities.

Section 7.13  Reliance by Third Parties.

        Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner and any officer of the General Partner authorized by the General Partner
to act on behalf of and in the name of the Partnership has full power and
authority to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf of the
Partnership, and such Person shall be entitled to deal with the General Partner
or any such officer as if it were the Partnership's sole party in interest, both
legally and beneficially.  Each Limited Partner hereby waives any and all
defenses or other remedies that may be available against such Person to contest,
negate or disaffirm any action of the General Partner or any such officer in
connection with any such dealing.  In no event shall any Person dealing with the
General Partner or any such officer or its representatives be obligated to
ascertain that the terms of the Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General Partner or
any such officer or its representatives.  Each and every certificate, document
or other instrument executed on behalf of the Partnership by the General Partner
or its representatives shall be conclusive evidence in favor of any and every
Person relying thereon or claiming thereunder that (a) at the time of the
execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.

                                 ARTICLE VIII
                    BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 8.1  Records and Accounting.

        The General Partner shall keep or cause to be kept at the principal
office of the Partnership appropriate books and records with respect to the
Partnership's business, including all books and records necessary to provide to
the Limited Partners any information required to be provided pursuant to Section
3.4(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including the record of the Record Holders
and Assignees of Units or other Partnership Securities, books of account and
records of Partnership proceedings, may be kept on, or be in the form of,
computer disks, hard drives, punch cards, magnetic tape, photographs,
micrographics or any other information storage device; provided, that the books
and records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial reporting purposes, on an accrual basis in accordance
with U.S. GAAP.

                                     -73-

Section 8.2  Fiscal Year.

     The fiscal year of the Partnership shall be a fiscal year ending December
31.

Section 8.3  Reports.

     (a)   As soon as practicable, but in no event later than 120 days after the
close of each fiscal year of the Partnership, the General Partner shall cause to
be mailed or furnished to each Record Holder of a Unit as of a date selected by
the General Partner in its discretion, an annual report containing financial
statements of the Partnership for such fiscal year of the Partnership, presented
in accordance with U.S. GAAP, including a balance sheet and statements of
operations, Partnership equity and cash flows, such statements to be audited by
a firm of independent public accountants selected by the General Partner.

     (b)   As soon as practicable, but in no event later than 90 days after the
close of each Quarter except the last Quarter of each fiscal year, the General
Partner shall cause to be mailed or furnished to each Record Holder of a Unit,
as of a date selected by the General Partner in its discretion, a report
containing unaudited financial statements of the Partnership and such other
information as may be required by applicable law, regulation or rule of any
National Securities Exchange on which the Units are listed for trading, or as
the General Partner determines to be necessary or appropriate.

                                   ARTICLE IX
                                  TAX MATTERS

Section 9.1  Tax Returns and Information.

     The Partnership shall timely file all returns of the Partnership that are
required for federal, state and local income tax purposes on the basis of the
accrual method and a taxable year ending on December 31.  The tax information
reasonably required by Record Holders for federal and state income tax reporting
purposes with respect to a taxable year shall be furnished to them within 90
days of the close of the calendar year in which the Partnership's taxable year
ends.  The classification, realization and recognition of income, gain, losses
and deductions and other items shall be on the accrual method of accounting for
federal income tax purposes.

Section 9.2  Tax Elections.

             (a)   The Partnership shall make the election under Section 754 of
the Code in accordance with applicable regulations thereunder, subject to the
reservation of the right to seek to revoke any such election upon the General
Partner's determination that such revocation is in the best interests of the
Limited Partners. Notwithstanding any other provision herein contained, for the
purposes of computing the adjustments under Section 743(b) of the Code, the
General Partner shall be authorized (but not required) to adopt a convention
whereby the price paid by a transferee of a Limited Partner Interest will be
deemed to be the lowest quoted closing price of the Limited Partner Interests on
any National Securities Exchange on which such Limited Partner Interests are
traded during the calendar month in which such transfer is deemed to occur
pursuant to Section 6.2(g) without regard to the actual price paid by such
transferee.

                                     -74-

             (b) The Partnership shall elect to deduct expenses incurred in
organizing the Partnership ratably over a sixty-month period as provided in
Section 709 of the Code.

             (c) Except as otherwise provided herein, the General Partner shall
determine whether the Partnership should make any other elections permitted by
the Code.

Section 9.3  Tax Controversies.

     Subject to the provisions hereof, the General Partner is designated as the
Tax Matters Partner (as defined in the Code) and is authorized and required to
represent the Partnership (at the Partnership's expense) in connection with all
examinations of the Partnership's affairs by tax authorities, including
resulting administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith.  Each Partner
agrees to cooperate with the General Partner and to do or refrain from doing any
or all things reasonably required by the General Partner to conduct such
proceedings.

Section 9.4  Withholding.

     Notwithstanding any other provision of this Agreement, the General Partner
is authorized to take any action that it determines in its discretion to be
necessary or appropriate to cause the Partnership to comply with any withholding
requirements established under the Code or any other federal, state, local or
foreign law including, without limitation, pursuant to Sections 1441, 1442, 1445
and 1446 of the Code.  To the extent that the Partnership or any member of the
Partnership Group is required or elects to withhold or pay over to any taxing
authority, or any taxing authority seizes, any amount resulting from the
allocation or distribution of income to any member of the Partnership Group,
Partner or Assignee, the amount withheld, paid over or seized may at the
discretion of the General Partner be treated by the Partnership as a
distribution of cash pursuant to Section 6.3 to the Partner or Assignee to whom
such withholding, payment or seizure is attributed.

                                   ARTICLE X
                             ADMISSION OF PARTNERS

Section 10.1 Admission of Initial Limited Partners.

     Upon the issuance by the Partnership of Common Units, Subordinated Units
and Incentive Distribution Rights to the General Partner as described in Section
5.2, the General Partner shall be deemed to have been admitted to the
Partnership as a Limited Partner in respect of the Common Units, Subordinated
Units and Incentive Distribution Rights issued to it.  Upon the issuance by the
Partnership of Common Units to the Underwriters as described in Section 5.3 in
connection with the Initial Offering and the execution by each Underwriter of a
Transfer Application, the General Partner shall admit the Underwriters to the
Partnership as Initial Limited Partners in respect of the Common Units purchased
by them.

Section 10.2 Admission of Substituted Limited Partner.

     By transfer of a Limited Partner Interest in accordance with Article IV,
the transferor shall be deemed to have given the transferee the right to seek
admission as a Substituted Limited

                                     -75-

Partner subject to the conditions of, and in the manner permitted under, this
Agreement. A transferor of a Certificate representing a Limited Partner Interest
shall, however, only have the authority to convey to a purchaser or other
transferee who does not execute and deliver a Transfer Application (a) the right
to negotiate such Certificate to a purchaser or other transferee and (b) the
right to transfer the right to request admission as a Substituted Limited
Partner to such purchaser or other transferee in respect of the transferred
Limited Partner Interests. Each transferee of a Limited Partner Interest
(including any nominee holder or an agent acquiring such Limited Partner
Interest for the account of another Person) who executes and delivers a Transfer
Application shall, by virtue of such execution and delivery, be an Assignee and
be deemed to have applied to become a Substituted Limited Partner with respect
to the Limited Partner Interests so transferred to such Person. Such Assignee
shall become a Substituted Limited Partner (x) at such time as the General
Partner consents thereto, which consent may be given or withheld in the General
Partner's discretion, and (y) when any such admission is shown on the books and
records of the Partnership. If such consent is withheld, such transferee shall
be an Assignee. An Assignee shall have an interest in the Partnership equivalent
to that of a Limited Partner with respect to allocations and distributions,
including liquidating distributions, of the Partnership. With respect to voting
rights attributable to Limited Partner Interests that are held by Assignees, the
General Partner shall be deemed to be the Limited Partner with respect thereto
and shall, in exercising the voting rights in respect of such Limited Partner
Interests on any matter, vote such Limited Partner Interests at the written
direction of the Assignee who is the Record Holder of such Limited Partner
Interests. If no such written direction is received, such Limited Partner
Interests will not be voted. An Assignee shall have no other rights of a Limited
Partner.

Section 10.3  Admission of Successor General Partner.

     A successor General Partner approved pursuant to Section 11.1 or 11.2 or
the transferee of or successor to all of the General Partner Interest pursuant
to Section 4.6 who is proposed to be admitted as a successor General Partner
shall be admitted to the Partnership as the General Partner, effective
immediately prior to the withdrawal or removal of the predecessor or
transferring General Partner pursuant to Section 11.1 or 11.2 or the transfer of
the General Partner Interest pursuant to Section 4.6, provided, however, that no
such successor shall be admitted to the Partnership until compliance with the
terms of Section 4.6 has occurred and such successor has executed and delivered
such other documents or instruments as may be required to effect such admission.
Any such successor shall, subject to the terms hereof, carry on the business of
the members of the Partnership Group without dissolution.

Section 10.4  Admission of Additional Limited Partners.

              (a)   A Person (other than the General Partner, an Initial Limited
Partner or a Substituted Limited Partner) who makes a Capital Contribution to
the Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance in form satisfactory to the General Partner
of all of the terms and conditions of this Agreement, including the power of
attorney granted in Section 2.6, and (ii) such other documents or instruments as
may be required in the discretion of the General Partner to effect such Person's
admission as an Additional Limited Partner.

                                     -76-

              (b) Notwithstanding anything to the contrary in this Section 10.4,
no Person shall be admitted as an Additional Limited Partner without the consent
of the General Partner, which consent may be given or withheld in the General
Partner's discretion. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such Person is
recorded as such in the books and records of the Partnership, following the
consent of the General. Partner to such admission.

Section 10.5  Amendment of Agreement and Certificate of Limited Partnership.

     To effect the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Delaware Act to
amend the records of the Partnership to reflect such admission and, if
necessary, to prepare as soon as practicable an amendment to this Agreement and,
if required by law, the General Partner shall prepare and file an amendment to
the Certificate of Limited Partnership, and the General Partner may for this
purpose, among others, exercise the power of attorney granted pursuant to
Section 2.6.

                                   ARTICLE XI
                       WITHDRAWAL OR REMOVAL OF PARTNERS

Section 11.1  Withdrawal of the General Partner.

              (a)    The General Partner shall be deemed to have withdrawn from
the Partnership upon the occurrence of any one of the following events (each
such event herein referred to as an "Event of Withdrawal");

              (i)    The General Partner voluntarily withdraws from the
     Partnership by giving written notice to the other Partners;

              (ii)   The General Partner transfers all of its rights as General
     Partner pursuant to Section 4.6;

              (iii)  The General Partner is removed pursuant to Section 11.2;

              (iv)   The General Partner (A) makes a general assignment for the
     benefit of creditors; (B) files a voluntary bankruptcy petition for relief
     under Chapter 7 of the United States Bankruptcy Code; (C) files a petition
     or answer seeking for itself a liquidation, dissolution or similar relief
     (but not a reorganization) under any law; (D) files an answer or other
     pleading admitting or failing to contest the material allegations of a
     petition filed against the General Partner in a proceeding of the type
     described in clauses (A)-(C) of this Section 11.1(a)(iv); or (E) seeks,
     consents to or acquiesces in the appointment of a trustee (but not a
     debtor-in-possession), receiver or liquidator of the General Partner or of
     all or any substantial part of its properties;

              (v)    A final and non-appealable order of relief under Chapter 7
     of the United States Bankruptcy Code is entered by a court with appropriate
     jurisdiction pursuant to a voluntary or involuntary petition by or against
     the General Partner; or

                                     -77-

        (vi)   (A) in the event the General Partner is a corporation, a
     certificate of dissolution or its equivalent is filed for the General
     Partner, or 90 days expire after the date of notice to the General Partner
     of revocation of its charter without a reinstatement of its charter, under
     the laws of its state of incorporation; (B) in the event the General
     Partner is a partnership or a limited liability company, the dissolution
     and commencement of winding up of the General Partner; (C) in the event the
     General Partner is acting in such capacity by virtue of being a trustee of
     a trust, the termination of the trust; (D) in the event the General Partner
     is a natural person, his death or adjudication of incompetency; and (E)
     otherwise in the event of the termination of the General Partner.

     If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or (vi)(A),
(B), (C) or (E) occurs, the withdrawing General Partner shall give notice to the
Limited Partners within 30 days after such occurrence.  The Partners hereby
agree that only the Events of Withdrawal described in this Section 11.1 shall
result in the withdrawal of the General Partner from the Partnership.

        (b)    Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall not constitute a breach of this
Agreement under the following circumstances:  (i) at any time during the period
beginning on the Closing Date and ending at 12:00 midnight, Eastern Standard
Time, on December 31, 2008, the General Partner voluntarily withdraws by giving
at least 90 days' advance notice of its intention to withdraw to the Limited
Partners; provided that prior to the effective date of such withdrawal, the
withdrawal is approved by Unitholders holding at least a majority of the
Outstanding Common Units (excluding Common Units held by the General Partner and
its Affiliates) and the General Partner delivers to the Partnership an Opinion
of Counsel ("Withdrawal Opinion of Counsel") that such withdrawal (following the
selection of the successor General Partner) would not result in the loss of the
limited liability of any Limited Partner or of a limited partner of an Operating
Partnership or cause the Partnership or an Operating Partnership to be treated
as an association taxable as a corporation or otherwise to be taxed as an entity
for federal income tax purposes (to the extent not previously treated as such);
(ii) at any time after 12:00 midnight, Eastern Standard Time, on December 31,
2008, the General Partner voluntarily withdraws by giving at least 90 days'
advance notice to the Unitholders, such withdrawal to take effect on the date
specified in such notice; (iii) at any time that the General Partner ceases to
be the General Partner pursuant to Section 11.1(a)(ii) or is removed pursuant to
Section 11.2; or (iv) notwithstanding clause (i) of this sentence, at any time
that the General Partner voluntarily withdraws by giving at least 90 days'
advance notice of its intention to withdraw to the Limited Partners, such
withdrawal to take effect on the date specified in the notice, if at the time
such notice is given one Person and its Affiliates (other than the General
Partner and its Affiliates) own beneficially or of record or control at least
50% of the Outstanding Units.  The withdrawal of the General Partner from the
Partnership upon the occurrence of an Event of Withdrawal shall also constitute
the withdrawal of the General Partner as general partner or managing member, as
the case may be, of the other Group Members.  If the General Partner gives a
notice of withdrawal pursuant to Section 11.1(a)(i), the holders of a Unit
Majority, may, prior to the effective date of such withdrawal, elect a successor
General Partner.  The Person so elected as successor General Partner shall
automatically become the successor general partner or managing member, as the
case may be, of the other Group Members of which the General Partner is a
general partner or a managing member.  If, prior to the effective date of the
General Partner's withdrawal, a

                                     -78-

successor is not selected by the Unitholders as provided herein or the
Partnership does not receive a Withdrawal Opinion of Counsel, the Partnership
shall be dissolved in accordance with Section 12.1. Any successor General
Partner elected in accordance with the terms of this Section 11.1 shall be
subject to the provisions of Section 10.3.

Section 11.2  Removal of the General Partner.

     The General Partner may be removed if such removal is approved by the
Unitholders holding at least 66 [_]% of the Outstanding Units (including Units
held by the General Partner and its Affiliates).  Any such action by such
holders for removal of the General Partner must also provide for the election of
a successor General Partner by the Unitholders holding a Unit Majority
(including Units held by the General Partner and its Affiliates).  Such removal
shall be effective immediately following the admission of a successor General
Partner pursuant to Section 10.3.  The removal of the General Partner shall also
automatically constitute the removal of the General Partner as general partner
or managing member, as the case may be, of the other Group Members of which the
General Partner is a general partner or a managing member.  If a Person is
elected as a successor General Partner in accordance with the terms of this
Section 11.2, such Person shall, upon admission pursuant to Section 10.3,
automatically become a successor general partner or managing member, as the case
may be, of the other Group Members of which the General Partner is a general
partner or a managing member.  The right of the holders of Outstanding Units to
remove the General Partner shall not exist or be exercised unless the
Partnership has received an opinion opining as to the matters covered by a
Withdrawal Opinion of Counsel.  Any successor General Partner elected in
accordance with the terms of this Section 11.2 shall be subject to the
provisions of Section 10.3.

Section 11.3  Interest of Departing Partner and Successor General Partner.

          (a) In the event of (i) withdrawal of the General Partner under
circumstances where such withdrawal does not violate this Agreement or (ii)
removal of the General Partner by the holders of Outstanding Units under
circumstances where Cause does not exist, if a successor General Partner is
elected in accordance with the terms of Section 11.1 or 11.2, the Departing
Partner shall have the option exercisable prior to the effective date of the
departure of such Departing Partner to require its successor to purchase its
General Partner Interest and its general partner interest (or equivalent
interest) in the other Group Members, if any, and all of its Incentive
Distribution Rights (collectively, the "Combined Interest") in exchange for an
amount in cash equal to the fair market value of such Combined Interest, such
amount to be determined and payable as of the effective date of its departure.
If the General Partner is removed by the Unitholders under circumstances where
Cause exists or if the General Partner withdraws under circumstances where such
withdrawal violates this Agreement and if a successor General Partner is elected
in accordance with the terms of Section 11.1 or 11.2, such successor shall have
the option, exercisable prior to the effective date of the departure of such
Departing Partner, to purchase the Combined Interest for such fair market value
of such Combined Interest.  In either event, the Departing Partner shall be
entitled to receive all reimbursements due such Departing Partner pursuant to
Section 7.4, including any employee-related liabilities (including severance
liabilities), incurred in connection with the termination of any employees
employed by the General Partner for the benefit of the Partnership or the other
Group Members.

                                     -79-

     For purposes of this Section 11.3(a), the fair market value of the Combined
Interest shall be determined by agreement between the Departing Partner and its
successor or, failing agreement within 30 days after the effective date of such
Departing Partner's departure, by an independent investment banking firm or
other independent expert selected by the Departing Partner and its successor,
which, in turn, may rely on other experts, and the determination of which shall
be conclusive as to such matter.  If such parties cannot agree upon one
independent investment banking firm or other independent expert within 45 days
after the effective date of such departure, then the Departing Partner shall
designate an independent investment banking firm or other independent expert,
the Departing Partner's successor shall designate an independent investment
banking firm or other independent expert, and such firms or experts shall
mutually select a third independent investment banking firm or independent
expert, which third independent investment banking firm or other independent
expert shall determine the fair market value of the Combined Interest.  In
making its determination, such third independent investment banking firm or
other independent expert may consider the then current trading price of Units on
any National Securities Exchange on which Units are then listed, the value of
the Partnership's assets, the rights and obligations of the Departing Partner
and other factors it may deem relevant.

          (b) If the Combined Interest is not purchased in the manner set forth
in Section 11.3(a), the Departing Partner (or its transferee) shall become a
Limited Partner and its Combined Interest shall be converted into Common Units
pursuant to a valuation made by an investment banking firm or other independent
expert selected pursuant to Section 11.3(a), without reduction in such
Partnership Interest (but subject to proportionate dilution by reason of the
admission of its successor). Any successor General Partner shall indemnify the
Departing Partner (or its transferee) as to all debts and liabilities of the
Partnership arising on or after the date on which the Departing Partner (or its
transferee) becomes a Limited Partner. For purposes of this Agreement,
conversion of the Combined Interest to Common Units will be characterized as if
the General Partner (or its transferee) contributed its Combined Interest to the
Partnership in exchange for the newly issued Common Units.

          (c) If a successor General Partner is elected in accordance with the
terms of Section 11.1 or 11.2 and the option described in Section 11.3(a) is not
exercised by the party entitled to do so, the successor General Partner shall,
at the effective date of its admission to the Partnership, contribute to the
Partnership cash in the amount equal to 2% of the Net Agreed Value of the
Partnership's assets on such date. In such event, such successor General Partner
shall, subject to the following sentence, be entitled to 2% of all Partnership
allocations and distributions. The successor General Partner shall cause this
Agreement to be amended to reflect that, from and after the date of such
successor General Partner's admission, the successor General Partner's interest
in all Partnership distributions and allocations shall be 2%.

Section 11.4  Termination of Subordination Period, Conversion of Subordinated
Units and Extinguishment of Cumulative Common Unit Arrearages.

     Notwithstanding any provision of this Agreement, if the General Partner is
removed as general partner of the Partnership under circumstances where Cause
does not exist and Units held by the General Partner and its Affiliates are not
voted in favor of such removal, (i) the Subordination Period will end and all
Outstanding Subordinated Units will immediately and

                                     -80-

automatically convert into Common Units on a one-for-one basis and (ii) all
Cumulative Common Unit Arrearages on the Common Units will be extinguished.

Section 11.5  Withdrawal of Limited Partners.

     No Limited Partner shall have any right to withdraw from the Partnership;
provided, however, that when a transferee of a Limited Partner's Limited Partner
Interest becomes a Record Holder of the Limited Partner Interest so transferred,
such transferring Limited Partner shall cease to be a Limited Partner with
respect to the Limited Partner Interest so transferred.

                                  ARTICLE XII
                          DISSOLUTION AND LIQUIDATION

Section 12.1  Dissolution.

     The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement.  Upon
the removal or withdrawal of the General Partner, if a successor General Partner
is elected pursuant to Section 11.1 or 11.2, the Partnership shall not be
dissolved and such successor General Partner shall continue the business of the
Partnership.  The Partnership shall dissolve, and (subject to Section 12.2) its
affairs shall be wound up, upon:

              (a)   the expiration of its term as provided in Section 2.7;

              (b)   an Event of Withdrawal of the General Partner as provided in
Section 11.1(a) (other than Section 11.1(a)(ii)), unless a successor is elected
and an Opinion of Counsel is received as provided in Section 11.1(b) or 11.2 and
such successor is admitted to the Partnership pursuant to Section 10.3;

              (c)   an election to dissolve the Partnership by the General
Partner that is approved by the holders of a Unit Majority;

              (d)   the entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Delaware Act; or

              (e)   the sale of all or substantially all of the assets and
properties of the Partnership Group.

Section 12.2  Continuation of the Business of the Partnership After Dissolution.

         Upon (a) dissolution of the Partnership following an Event of
Withdrawal caused by the withdrawal or removal of the General Partner as
provided in Section 11.1(a)(i) or (iii) and the failure of the Partners to
select a successor to such Departing Partner pursuant to Section 11.1 or 11.2,
then within 90 days thereafter, or (b) dissolution of the Partnership upon an
event constituting an Event of Withdrawal as defined in Section 11.1(a)(iv), (v)
or (vi), then, to the maximum extent permitted by law, within 180 days
thereafter, the holders of a Unit Majority may elect to reconstitute the
Partnership and continue its business on the same terms and conditions set forth
in this Agreement by forming a new limited partnership on terms identical to

                                     -81-

those set forth in this Agreement and having as the successor general partner a
Person approved by the holders of a Unit Majority. Unless such an election is
made within the applicable time period as set forth above, the Partnership shall
conduct only activities necessary to wind up its affairs. If such an election is
so made, then:

        (i)    the reconstituted Partnership shall continue until the end of the
     term set forth in Section 2.7 unless earlier dissolved in accordance with
     this Article XII;

        (ii)   if the successor General Partner is not the former General
     Partner, then the interest of the former General Partner shall be treated
     in the manner provided in Section 11.3; and

        (iii)  all necessary steps shall be taken to cancel this Agreement and
     the Certificate of Limited Partnership and to enter into and, as necessary,
     to file a new partnership agreement and certificate of limited partnership,
     and the successor general partner may for this purpose exercise the powers
     of attorney granted the General Partner pursuant to Section 2.6; provided,
     that the right of the holders of a Unit Majority to approve a successor
     General Partner and to reconstitute and to continue the business of the
     Partnership shall not exist and may not be exercised unless the Partnership
     has received an Opinion of Counsel that (x) the exercise of the right would
     not result in the loss of limited liability of any Limited Partner and (y)
     neither the Partnership, the reconstituted limited partnership nor an
     Operating Partnership would be treated as an association taxable as a
     corporation or otherwise be taxable as an entity for federal income tax
     purposes upon the exercise of such right to continue.

Section 12.3  Liquidator.

     Upon dissolution of the Partnership, unless the Partnership is continued
under an election to reconstitute and continue the Partnership pursuant to
Section 12.2, the General Partner shall select one or more Persons to act as
Liquidator.  The Liquidator (if other than the General Partner) shall be
entitled to receive such compensation for its services as may be approved by
holders of at least a majority of the Outstanding Common Units and Subordinated
Units voting as a single class.  The Liquidator (if other than the General
Partner) shall agree not to resign at any time without 15 days' prior notice and
may be removed at any time, with or without cause, by notice of removal approved
by holders of at least a majority of the Outstanding Common Units and
Subordinated Units voting as a single class.  Upon dissolution, removal or
resignation of the Liquidator, a successor and substitute Liquidator (who shall
have and succeed to all rights, powers and duties of the original Liquidator)
shall within 30 days thereafter be approved by holders of at least a majority of
the Outstanding Common Units and Subordinated Units voting as a single class.
The right to approve a successor or substitute Liquidator in the manner provided
herein shall be deemed to refer also to any such successor or substitute
Liquidator approved in the manner herein provided.  Except as expressly provided
in this Article XII, the Liquidator approved in the manner provided herein shall
have and may exercise, without further authorization or consent of any of the
parties hereto, all of the powers conferred upon the General Partner under the
terms of this Agreement (but subject to all of the applicable limitations,
contractual and otherwise, upon the exercise of such powers, other than the
limitation on sale set forth in Section 7.3(b)) to the extent necessary or
desirable in the good faith judgment

                                     -82-

of the Liquidator to carry out the duties and functions of the Liquidator
hereunder for and during such period of time as shall be reasonably required in
the good faith judgment of the Liquidator to complete the winding up and
liquidation of the Partnership as provided for herein.

Section 12.4  Liquidation.

     The Liquidator shall proceed to dispose of the assets of the Partnership,
discharge its liabilities, and otherwise wind up its affairs in such manner and
over such period as the Liquidator determines to be in the best interest of the
Partners, subject to Section 17-804 of the Delaware Act and the following:

              (a)   Disposition of Assets. The assets may be disposed of by
public or private sale or by distribution in kind to one or more Partners on
such terms as the Liquidator and such Partner or Partners may agree. If any
property is distributed in kind, the Partner receiving the property shall be
deemed for purposes of Section 12.4(c) to have received cash equal to its fair
market value; and contemporaneously therewith, appropriate cash distributions
must be made to the other Partners. The Liquidator may, in its absolute
discretion, defer liquidation or distribution of the Partnership's assets for a
reasonable time if it determines that an immediate sale or distribution of all
or some of the Partnership's assets would be impractical or would cause undue
loss to the Partners. The Liquidator may, in its absolute discretion, distribute
the Partnership's assets, in whole or in part, in kind if it determines that a
sale would be impractical or would cause undue loss to the Partners.

              (b)   Discharge of Liabilities. Liabilities of the Partnership
include amounts owed to Partners otherwise than in respect of their distribution
rights under Article VI. With respect to any liability that is contingent,
conditional or unmatured or is otherwise not yet due and payable, the Liquidator
shall either settle such claim for such amount as it thinks appropriate or
establish a reserve of cash or other assets to provide for its payment. When
paid, any unused portion of the reserve shall be distributed as additional
liquidation proceeds.

              (c)   Liquidation Distributions. All property and all cash in
excess of that required to discharge liabilities as provided in Section 12.4(b)
shall be distributed to the Partners in accordance with, and to the extent of,
the positive balances in their respective Capital Accounts, as determined after
taking into account all Capital Account adjustments (other than those made by
reason of distributions pursuant to this Section 12.4(c)) for the taxable year
of the Partnership during which the liquidation of the Partnership occurs (with
such date of occurrence being determined pursuant to Treasury Regulation Section
1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of such
taxable year (or, if later, within 90 days after said date of such occurrence).

Section 12.5  Cancellation of Certificate of Limited Partnership.

     Upon the completion of the distribution of Partnership cash and property as
provided in Section 12.4 in connection with the liquidation of the Partnership,
the Partnership shall be terminated and the Certificate of Limited Partnership
and all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware shall be canceled and such other
actions as may be necessary to terminate the Partnership shall be taken.

                                     -83-

Section 12.6  Return of Contributions.

     The General Partner shall not be personally liable for, and shall have no
obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate, the return of the Capital Contributions of the Limited
Partners or Unitholders, or any portion thereof, it being expressly understood
that any such return shall be made solely from Partnership assets.

Section 12.7  Waiver of Partition.

     To the maximum extent permitted by law, each Partner hereby waives any
right to partition of the Partnership property.

Section 12.8  Capital Account Restoration.

     No Limited Partner shall have any obligation to restore any negative
balance in its Capital Account upon liquidation of the Partnership. The General
Partner shall be obligated to restore any negative balance in its Capital
Account upon liquidation of its interest in the Partnership by the end of the
taxable year of the Partnership during which such liquidation occurs, or, if
later, within 90 days after the date of such liquidation.

                                 ARTICLE XIII
           AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE

Section 13.1  Amendment to be Adopted Solely by the General Partner.

     Each Partner agrees that the General Partner, without the approval of any
Partner or Assignee, may amend any provision of this Agreement and execute,
swear to, acknowledge, deliver, file and record whatever documents may be
required in connection therewith, to reflect:

              (a)   a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership;

              (b)   admission, substitution, withdrawal or removal of Partners
in accordance with this Agreement;

              (c)   a change that, in the sole discretion of the General
Partner, is necessary or advisable to qualify or continue the qualification of
the Partnership as a limited partnership or a partnership in which the Limited
Partners have limited liability under the laws of any state or to ensure that
the Partnership and the Operating Partnerships will not be treated as an
association taxable as a corporation or otherwise taxed as an entity for federal
income tax purposes;

              (d)   a change that, in the discretion of the General Partner, (i)
does not adversely affect the Limited Partners in any material respect, (ii) is
necessary or advisable to (A) satisfy any requirements, conditions or guidelines
contained in any opinion, directive, order, ruling or regulation of any federal
or state agency or judicial authority or contained in any federal or state
statute (including the Delaware Act) or (B) facilitate the trading of the
Limited Partner Interests (including the division of any class or classes of
Outstanding Limited Partner Interests into

                                     -84-

different classes to facilitate uniformity of tax consequences within such
classes of Limited Partner Interests) or comply with any rule, regulation,
guideline or requirement of any National Securities Exchange on which the
Limited Partner Interests are or will be listed for trading, compliance with any
of which the General Partner determines in its discretion to be in the best
interests of the Partnership and the Limited Partners, (iii) is necessary or
advisable in connection with action taken by the General Partner pursuant to
Section 5.10 or (iv) is required to effect the intent expressed in the
Registration Statement or the intent of the provisions of this Agreement or is
otherwise contemplated by this Agreement;

              (e)   a change in the fiscal year or taxable year of the
Partnership and any changes that, in the discretion of the General Partner, are
necessary or advisable as a result of a change in the fiscal year or taxable
year of the Partnership including, if the General Partner shall so determine, a
change in the definition of "Quarter" and the dates on which distributions are
to be made by the Partnership;

              (f)   an amendment that is necessary, in the Opinion of Counsel,
to prevent the Partnership, or the General Partner or its directors, officers,
trustees or agents from in any manner being subjected to the provisions of the
Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940,
as amended, or "plan asset" regulations adopted under the Employee Retirement
Income Security Act of 1974, as amended, regardless of whether such are
substantially similar to plan asset regulations currently applied or proposed by
the United States Department of Labor;

              (g)   subject to the terms of Section 5.7, an amendment that, in
the discretion of the General Partner, is necessary or advisable in connection
with the authorization of issuance of any class or series of Partnership
Securities pursuant to Section 5.6;

              (h)   any amendment expressly permitted in this Agreement to be
made by the General Partner acting alone;

              (i)   an amendment effected, necessitated or contemplated by a
Merger Agreement approved in accordance with Section 14.3;

              (j)   an amendment that, in the discretion of the General Partner,
is necessary or advisable to reflect, account for and deal with appropriately
the formation by the Partnership of, or investment by the Partnership in, any
corporation, partnership, joint venture, limited liability company or other
entity, in connection with the conduct by the Partnership of activities
permitted by the terms of Section 2.4;

              (k)   a merger or conveyance pursuant to Section 14.3(d); or

              (l)   any other amendments substantially similar to the foregoing.

Section 13.2  Amendment Procedures.

     Except as provided in Sections 13.1 and 13.3, all amendments to this
Agreement shall be made in accordance with the following requirements.
Amendments to this Agreement may be proposed only by or with the consent of the
General Partner which consent may be given or

                                     -85-

withheld in its sole discretion. A proposed amendment shall be effective upon
its approval by the holders of a Unit Majority, unless a greater or different
percentage is required under this Agreement or by Delaware law. Each proposed
amendment that requires the approval of the holders of a specified percentage of
Outstanding Units shall be set forth in a writing that contains the text of the
proposed amendment. If such an amendment is proposed, the General Partner shall
seek the written approval of the requisite percentage of Outstanding Units or
call a meeting of the Unitholders to consider and vote on such proposed
amendment. The General Partner shall notify all Record Holders upon final
adoption of any such proposed amendments.

Section 13.3  Amendment Requirements.

              (a)   Notwithstanding the provisions of Sections 13.1 and 13.2, no
provision of this Agreement that establishes a percentage of Outstanding Units
(including Units deemed owned by the General Partner) required to take any
action shall be amended, altered, changed, repealed or rescinded in any respect
that would have the effect of reducing such voting percentage unless such
amendment is approved by the written consent or the affirmative vote of holders
of Outstanding Units whose aggregate Outstanding Units constitute not less than
the voting requirement sought to be reduced.

              (b)   Notwithstanding the provisions of Sections 13.1 and 13.2, no
amendment to this Agreement may (i) enlarge the obligations of any Limited
Partner without its consent, unless such shall be deemed to have occurred as a
result of an amendment approved pursuant to Section 13.3(c), (ii) enlarge the
obligations of, restrict in any way any action by or rights of, or reduce in any
way the amounts distributable, reimbursable or otherwise payable to, the General
Partner or any of its Affiliates without its consent, which consent may be given
or withheld in its sole discretion, (iii) change Section 12.1(a) or 12.1(c), or
(iv) change the term of the Partnership or, except as set forth in Section
12.1(c), give any Person the right to dissolve the Partnership.

              (c)   Except as provided in Section 14.3, and except as otherwise
provided, and without limitation of the General Partner's authority to adopt
amendments to this Agreement as contemplated in Section 13.1, any amendment that
would have a material adverse effect on the rights or preferences of any class
of Partnership Interests in relation to other classes of Partnership Interests
must be approved by the holders of not less than a majority of the Outstanding
Partnership Interests of the class affected.

              (d)   Notwithstanding any other provision of this Agreement,
except for amendments pursuant to Section 13.1 and except as otherwise provided
by Section 14.3(b), no amendments shall become effective without the approval of
the holders of at least 90% of the Outstanding Common Units and Subordinated
Units voting as a single class unless the Partnership obtains an Opinion of
Counsel to the effect that such amendment will not affect the limited liability
of any Limited Partner under applicable law.

              (e)   Except as provided in Section 13.1, this Section 13.3 shall
only be amended with the approval of the holders of at least 90% of the
Outstanding Units.

                                     -86-

Section 13.4  Special Meetings.

     All acts of Limited Partners to be taken pursuant to this Agreement shall
be taken in the manner provided in this Article XIII.  Special meetings of the
Limited Partners may be called by the General Partner or by Limited Partners
owning 20% or more of the Outstanding Limited Partner Interests of the class or
classes for which a meeting is proposed.  Limited Partners shall call a special
meeting by delivering to the General Partner one or more requests in writing
stating that the signing Limited Partners wish to call a special meeting and
indicating the general or specific purposes for which the special meeting is to
be called.  Within 60 days after receipt of such a call from Limited Partners or
within such greater time as may be reasonably necessary for the Partnership to
comply with any statutes, rules, regulations, listing agreements or similar
requirements governing the holding of a meeting or the solicitation of proxies
for use at such a meeting, the General Partner shall send a notice of the
meeting to the Limited Partners either directly or indirectly through the
Transfer Agent.  A meeting shall be held at a time and place determined by the
General Partner on a date not less than 10 days nor more than 60 days after the
mailing of notice of the meeting.  Limited Partners shall not vote on matters
that would cause the Limited Partners to be deemed to be taking part in the
management and control of the business and affairs of the Partnership so as to
jeopardize the Limited Partners' limited liability under the Delaware Act or the
law of any other state in which the Partnership is qualified to do business.

Section 13.5  Notice of a Meeting.

     Notice of a meeting called pursuant to Section 13.4 shall be given to the
Record Holders of the class or classes of Limited Partner Interests for which a
meeting is proposed in writing by mail or other means of written communication
in accordance with Section 16.1.  The notice shall be deemed to have been given
at the time when deposited in the mail or sent by other means of written
communication.

Section 13.6  Record Date.

     For purposes of determining the Limited Partners entitled to notice of or
to vote at a meeting of the Limited Partners or to give approvals without a
meeting as provided in Section 13.11 the General Partner may set a Record Date,
which shall not be less than 10 nor more than 60 days before (a) the date of the
meeting (unless such requirement conflicts with any rule, regulation, guideline
or requirement of any National Securities Exchange on which the Limited Partner
Interests are listed for trading, in which case the rule, regulation, guideline
or requirement of such exchange shall govern) or (b) in the event that approvals
are sought without a meeting, the date by which Limited Partners are requested
in writing by the General Partner to give such approvals.

Section 13.7  Adjournment.

     When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting and a new Record Date need not be fixed, if the
time and place thereof are announced at the meeting at which the adjournment is
taken, unless such adjournment shall be for more than 45 days.  At the adjourned
meeting, the Partnership may transact any business which might have been
transacted at the original meeting.  If the adjournment is for more than

                                     -87-

45 days or if a new Record Date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given in accordance with this Article XIII.

Section 13.8  Waiver of Notice; Approval of Meeting; Approval of Minutes.

     The transactions of any meeting of Limited Partners, however called and
noticed, and whenever held, shall be as valid as if it had occurred at a meeting
duly held after regular call and notice, if a quorum is present either in person
or by proxy, and if, either before or after the meeting, Limited Partners
representing such quorum who were present in person or by proxy and entitled to
vote, sign a written waiver of notice or an approval of the holding of the
meeting or an approval of the minutes thereof.  All waivers and approvals shall
be filed with the Partnership records or made a part of the minutes of the
meeting.  Attendance of a Limited Partner at a meeting shall constitute a waiver
of notice of the meeting, except when the Limited Partner does not approve, at
the beginning of the meeting, of the transaction of any business because the
meeting is not lawfully called or convened; and except that attendance at a
meeting is not a waiver of any right to disapprove the consideration of matters
required to be included in the notice of the meeting, but not so included, if
the disapproval is expressly made at the meeting.

Section 13.9  Quorum.

     The holders of a majority of the Outstanding Limited Partner Interests of
the class or classes for which a meeting has been called (including Limited
Partner Interests deemed owned by the General Partner) represented in person or
by proxy shall constitute a quorum at a meeting of Limited Partners of such
class or classes unless any such action by the Limited Partners requires
approval by holders of a greater percentage of such Limited Partner Interests,
in which case the quorum shall be such greater percentage.  At any meeting of
the Limited Partners duly called and held in accordance with this Agreement at
which a quorum is present, the act of Limited Partners holding Outstanding
Limited Partner Interests that in the aggregate represent a majority of the
Outstanding Limited Partner Interests entitled to vote and be present in person
or by proxy at such meeting shall be deemed to constitute the act of all Limited
Partners, unless a greater or different percentage is required with respect to
such action under the provisions of this Agreement, in which case the act of the
Limited Partners holding Outstanding Limited Partner Interests that in the
aggregate represent at least such greater or different percentage shall be
required.  The Limited Partners present at a duly called or held meeting at
which a quorum is present may continue to transact business until adjournment,
notwithstanding the withdrawal of enough Limited Partners to leave less than a
quorum, if any action taken (other than adjournment) is approved by the required
percentage of Outstanding Limited Partner Interests specified in this Agreement
(including Limited Partner Interests deemed owned by the General Partner).  In
the absence of a quorum any meeting of Limited Partners may be adjourned from
time to time by the affirmative vote of holders of at least a majority of the
Outstanding Limited Partner Interests entitled to vote at such meeting
(including Limited Partner Interests deemed owned by the General Partner)
represented either in person or by proxy, but no other business may be
transacted, except as provided in Section 13.7.

                                     -88-

Section 13.10  Conduct of a Meeting.

     The General Partner shall have full power and authority concerning the
manner of conducting any meeting of the Limited Partners or solicitation of
approvals in writing, including the determination of Persons entitled to vote,
the existence of a quorum, the satisfaction of the requirements of Section 13.4,
the conduct of voting, the validity and effect of any proxies and the
determination of any controversies, votes or challenges arising in connection
with or during the meeting or voting.  The General Partner shall designate a
Person to serve as chairman of any meeting and shall further designate a Person
to take the minutes of any meeting.  All minutes shall be kept with the records
of the Partnership maintained by the General Partner.  The General Partner may
make such other regulations consistent with applicable law and this Agreement as
it may deem advisable concerning the conduct of any meeting of the Limited
Partners or solicitation of approvals in writing, including regulations in
regard to the appointment of proxies, the appointment and duties of inspectors
of votes and approvals, the submission and examination of proxies and other
evidence of the right to vote, and the revocation of approvals in writing.

Section 13.11  Action Without a Meeting.

     If authorized by the General Partner, any action that may be taken at a
meeting of the Limited Partners may be taken without a meeting if an approval in
writing setting forth the action so taken is signed by Limited Partners owning
not less than the minimum percentage of the Outstanding Limited Partner
Interests (including Limited Partner Interests deemed owned by the General
Partner) that would be necessary to authorize or take such action at a meeting
at which all the Limited Partners were present and voted (unless such provision
conflicts with any rule, regulation, guideline or requirement of any National
Securities Exchange on which the Limited Partner Interests are listed for
trading, in which case the rule, regulation, guideline or requirement of such
exchange shall govern).  Prompt notice of the taking of action without a meeting
shall be given to the Limited Partners who have not approved in writing.  The
General Partner may specify that any written ballot submitted to Limited
Partners for the purpose of taking any action without a meeting shall be
returned to the Partnership within the time period, which shall be not less than
20 days, specified by the General Partner.  If a ballot returned to the
Partnership does not vote all of the Limited Partner Interests held by the
Limited Partners the Partnership shall be deemed to have failed to receive a
ballot for the Limited Partner Interests that were not voted.  If approval of
the taking of any action by the Limited Partners is solicited by any Person
other than by or on behalf of the General Partner, the written approvals shall
have no force and effect unless and until (a) they are deposited with the
Partnership in care of the General Partner, (b) approvals sufficient to take the
action proposed are dated as of a date not more than 90 days prior to the date
sufficient approvals are deposited with the Partnership and (c) an Opinion of
Counsel is delivered to the General Partner to the effect that the exercise of
such right and the action proposed to be taken with respect to any particular
matter (i) will not cause the Limited Partners to be deemed to be taking part in
the management and control of the business and affairs of the Partnership so as
to jeopardize the Limited Partners' limited liability, and (ii) is otherwise
permissible under the state statutes then governing the rights, duties and
liabilities of the Partnership and the Partners.

                                     -89-

Section 13.12  Voting and Other Rights.

               (a)  Only those Record Holders of the Limited Partner Interests
on the Record Date set pursuant to Section 13.6 (and also subject to the
limitations contained in the definition of "Outstanding") shall be entitled to
notice of, and to vote at, a meeting of Limited Partners or to act with respect
to matters as to which the holders of the Outstanding Limited Partner Interests
have the right to vote or to act. All references in this Agreement to votes of,
or other acts that may be taken by, the Outstanding Limited Partner Interests
shall be deemed to be references to the votes or acts of the Record Holders of
such Outstanding Limited Partner Interests.

               (b)  With respect to Limited Partner Interests that are held for
a Person's account by another Person (such as a broker, dealer, bank, trust
company or clearing corporation, or an agent of any of the foregoing), in whose
name such Limited Partner Interests are registered, such other Person shall, in
exercising the voting rights in respect of such Limited Partner Interests on any
matter, and unless the arrangement between such Persons provides otherwise, vote
such Limited Partner Interests in favor of, and at the direction of, the Person
who is the beneficial owner, and the Partnership shall be entitled to assume it
is so acting without further inquiry. The provisions of this Section 13.12(b)
(as well as all other provisions of this Agreement) are subject to the
provisions of Section 4.3.

                                  ARTICLE XIV
                                    MERGER

Section 14.1   Authority.

     The Partnership may merge or consolidate with one or more corporations,
limited liability companies, business trusts or associations, real estate
investment trusts, common law trusts or unincorporated businesses, including a
general partnership or limited partnership, formed under the laws of the State
of Delaware or any other state of the United States of America, pursuant to a
written agreement of merger or consolidation ("Merger Agreement") in accordance
with this Article XIV.

Section 14.2   Procedure for Merger or Consolidation.

     Merger or consolidation of the Partnership pursuant to this Article XIV
requires the prior approval of the General Partner.  If the General Partner
shall determine, in the exercise of its discretion, to consent to the merger or
consolidation, the General Partner shall approve the Merger Agreement, which
shall set forth:

               (a)  The names and jurisdictions of formation or organization of
each of the business entities proposing to merge or consolidate;

               (b)  The name and jurisdiction of formation or organization of
the business entity that is to survive the proposed merger or consolidation (the
"Surviving Business Entity");

               (c)  The terms and conditions of the proposed merger or
consolidation;

                                     -90-

               (d)  The manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash, property or
general or limited partner interests, rights, securities or obligations of the
Surviving Business Entity; and (i) if any general or limited partner interests,
securities or rights of any constituent business entity are not to be exchanged
or converted solely for, or into, cash, property or general or limited partner
interests, rights, securities or obligations of the Surviving Business Entity,
the cash, property or general or limited partner interests, rights, securities
or obligations of any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity) which the holders of such general or
limited partner interests, securities or rights are to receive in exchange for,
or upon conversion of their general or limited partner interests, securities or
rights, and (ii) in the case of securities represented by certificates, upon the
surrender of such certificates, which cash, property or general or limited
partner interests, rights, securities or obligations of the Surviving Business
Entity or any general or limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to be
delivered;

               (e)  A statement of any changes in the constituent documents or
the adoption of new constituent documents (the articles or certificate of
incorporation, articles of trust, declaration of trust, certificate or agreement
of limited partnership or other similar charter or governing document) of the
Surviving Business Entity to be effected by such merger or consolidation;

               (f)  The effective time of the merger, which may be the date of
the filing of the certificate of merger pursuant to Section 14.4 or a later date
specified in or determinable in accordance with the Merger Agreement (provided,
that if the effective time of the merger is to be later than the date of the
filing of the certificate of merger, the effective time shall be fixed no later
than the time of the filing of the certificate of merger and stated therein);
and

               (g)  Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the General Partner.

Section 14.3   Approval by Limited Partners of Merger or Consolidation.

               (a)  Except as provided in Section 14.3(d), the General Partner,
upon its approval of the Merger Agreement, shall direct that the Merger
Agreement be submitted to a vote of Limited Partners, whether at a special
meeting or by written consent, in either case in accordance with the
requirements of Article XIII. A copy or a summary of the Merger Agreement shall
be included in or enclosed with the notice of a special meeting or the written
consent.

               (b)  Except as provided in Section 14.3(d), the Merger Agreement
shall be approved upon receiving the affirmative vote or consent of the holders
of a Unit Majority unless the Merger Agreement contains any provision that, if
contained in an amendment to this Agreement, the provisions of this Agreement or
the Delaware Act would require for its approval the vote or consent of a greater
percentage of the Outstanding Limited Partner Interests or of any class of
Limited Partners, in which case such greater percentage vote or consent shall be
required for approval of the Merger Agreement.

                                     -91-

               (c)  Except as provided in Section 14.3(d), after such approval
by vote or consent of the Limited Partners, and at any time prior to the filing
of the certificate of merger pursuant to Section 14.4, the merger or
consolidation may be abandoned pursuant to provisions therefor, if any, set
forth in the Merger Agreement.

               (d)  Notwithstanding anything else contained in this Article XIV
or in this Agreement, the General Partner is permitted, in its discretion,
without Limited Partner approval, to merge the Partnership or any Group Member
into, or convey all of the Partnership's assets to, another limited liability
entity which shall be newly formed and shall have no assets, liabilities or
operations at the time of such Merger other than those it receives from the
Partnership or other Group Member if (i) the General Partner has received an
Opinion of Counsel that the merger or conveyance, as the case may be, would not
result in the loss of the limited liability of any Limited Partner or any
partner in the Operating Partnership or cause the Partnership or Operating
Partnership to be treated as an association taxable as a corporation or
otherwise to be taxed as an entity for federal income tax purposes (to the
extent not previously treated as such), (ii) the sole purpose of such merger or
conveyance is to effect a mere change in the legal form of the Partnership into
another limited liability entity and (iii) the governing instruments of the new
entity provide the Limited Partners and the General Partner with the same rights
and obligations as are herein contained.

Section 14.4   Certificate of Merger.

     Upon the required approval by the General Partner and the Unitholders of a
Merger Agreement, a certificate of merger shall be executed and filed with the
Secretary of State of the State of Delaware in conformity with the requirements
of the Delaware Act.

Section 14.5   Effect of Merger.

               (a)  At the effective time of the certificate of merger:

               (i)    all of the rights, privileges and powers of each of the
     business entities that has merged or consolidated, and all property, real,
     personal and mixed, and all debts due to any of those business entities and
     all other things and causes of action belonging to each of those business
     entities, shall be vested in the Surviving Business Entity and after the
     merger or consolidation shall be the property of the Surviving Business
     Entity to the extent they were of each constituent business entity;

               (ii)   the title to any real property vested by deed or otherwise
     in any of those constituent business entities shall not revert and is not
     in any way impaired because of the merger or consolidation;

               (iii)  all rights of creditors and all liens on or security
     interests in property of any of those constituent business entities shall
     be preserved unimpaired; and

               (iv)   all debts, liabilities and duties of those constituent
     business entities shall attach to the Surviving Business Entity and may be
     enforced against it to the same extent as if the debts, liabilities and
     duties had been incurred or contracted by it.

                                     -92-

               (b)  A merger or consolidation effected pursuant to this Article
shall not be deemed to result in a transfer or assignment of assets or
liabilities from one entity to another.

                                  ARTICLE XV
                  RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS

Section 15.1   Right to Acquire Limited Partner Interests.

               (a)  Notwithstanding any other provision of this Agreement, if at
any time not more than 20% of the total Limited Partner Interests of any class
then Outstanding is held by Persons other than the General Partner and its
Affiliates, the General Partner shall then have the right, which right it may
assign and transfer in whole or in part to the Partnership or any Affiliate of
the General Partner, exercisable in its sole discretion, to purchase all, but
not less than all, of such Limited Partner Interests of such class then
Outstanding held by Persons other than the General Partner and its Affiliates,
at the greater of (x) the Current Market Price as of the date three days prior
to the date that the notice described in Section 15 is mailed and (y) the
highest price paid by the General Partner or any of its Affiliates for any such
Limited Partner Interest of such class purchased during the 90-day period
preceding the date that the notice described in Section 15.1(b) is mailed. As
used in this Agreement, (i) "Current Market Price" as of any date of any class
of Limited Partner Interests listed or admitted to trading on any National
Securities Exchange means the average of the daily Closing Prices (as
hereinafter defined) per limited partner interest of such class for the 20
consecutive Trading Days (as hereinafter defined) immediately prior to such
date; (ii) "Closing Price" for any day means the last sale price on such day,
regular way, or in case no such sale takes place on such day, the average of the
closing bid and asked prices on such day, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted for trading on the principal National
Securities Exchange (other than the Nasdaq Stock Market) on which such Limited
Partner Interests of such class are listed or admitted to trading or, if such
Limited Partner Interests of such class are not listed or admitted to trading on
any National Securities Exchange (other than the Nasdaq Stock Market), the last
quoted price on such day or, if not so quoted, the average of the high bid and
low asked prices on such day in the over-the-counter market, as reported by the
Nasdaq Stock Market or such other system then in use, or, if on any such day
such Limited Partner Interests of such class are not quoted by any such
organization, the average of the closing bid and asked prices on such day as
furnished by a professional market maker making a market in such Limited Partner
Interests of such class selected by the General Partner, or if on any such day
no market maker is making a market in such Limited Partner Interests of such
class, the fair value of such Limited Partner Interests on such day as
determined reasonably and in good faith by the General Partner; and (iii)
"Trading Day" means a day on which the principal National Securities Exchange on
which such Limited Partner Interests of any class are listed or admitted to
trading is open for the transaction of business or, if Limited Partner Interests
of a class are not listed or admitted to trading on any National Securities
Exchange, a day on which banking institutions in New York City generally are
open.

               (b)  If the General Partner, any Affiliate of the General Partner
or the Partnership elects to exercise the right to purchase Limited Partner
Interests granted pursuant to Section 15.1(a), the General Partner shall deliver
to the Transfer Agent notice of such election to purchase (the "Notice of
Election to Purchase") and shall cause the Transfer Agent to mail a

                                     -93-

copy of such Notice of Election to Purchase to the Record Holders of Limited
Partner Interests of such class (as of a Record Date selected by the General
Partner) at least 10, but not more than 60, days prior to the Purchase Date.
Such Notice of Election to Purchase shall also be published for a period of at
least three consecutive days in at least two daily newspapers of general
circulation printed in the English language and published in the Borough of
Manhattan, New York. The Notice of Election to Purchase shall specify the
Purchase Date and the price (determined in accordance with Section 15.1(a)) at
which Limited Partner Interests will be purchased and state that the General
Partner, its Affiliate or the Partnership, as the case may be, elects to
purchase such Limited Partner Interests, upon surrender of Certificates
representing such Limited Partner Interests in exchange for payment, at such
office or offices of the Transfer Agent as the Transfer Agent may specify, or as
may be required by any National Securities Exchange on which such Limited
Partner Interests are listed or admitted to trading. Any such Notice of Election
to Purchase mailed to a Record Holder of Limited Partner Interests at his
address as reflected in the records of the Transfer Agent shall be conclusively
presumed to have been given regardless of whether the owner receives such
notice. On or prior to the Purchase Date, the General Partner, its Affiliate or
the Partnership, as the case may be, shall deposit with the Transfer Agent cash
in an amount sufficient to pay the aggregate purchase price of all of such
Limited Partner Interests to be purchased in accordance with this Section 15.1.
If the Notice of Election to Purchase shall have been duly given as aforesaid at
least 10 days prior to the Purchase Date, and if on or prior to the Purchase
Date the deposit described in the preceding sentence has been made for the
benefit of the holders of Limited Partner Interests subject to purchase as
provided herein, then from and after the Purchase Date, notwithstanding that any
Certificate shall not have been surrendered for purchase, all rights of the
holders of such Limited Partner Interests (including any rights pursuant to
Articles IV, V, VI, and XII) shall thereupon cease, except the right to receive
the purchase price (determined in accordance with Section 15.1(a)) for Limited
Partner Interests therefor, without interest, upon surrender to the Transfer
Agent of the Certificates representing such Limited Partner Interests, and such
Limited Partner Interests shall thereupon be deemed to be transferred to the
General Partner, its Affiliate or the Partnership, as the case may be, on the
record books of the Transfer Agent and the Partnership, and the General Partner
or any Affiliate of the General Partner, or the Partnership, as the case may be,
shall be deemed to be the owner of all such Limited Partner Interests from and
after the Purchase Date and shall have all rights as the owner of such Limited
Partner Interests (including all rights as owner of such Limited Partner
Interests pursuant to Articles IV, V, VI and XII).

               (c)  At any time from and after the Purchase Date, a holder of an
Outstanding Limited Partner Interest subject to purchase as provided in this
Section 15.1 may surrender his Certificate evidencing such Limited Partner
Interest to the Transfer Agent in exchange for payment of the amount described
in Section 15.1(a), therefor, without interest thereon.

                                  ARTICLE XVI
                              GENERAL PROVISIONS

Section 16.1   Addresses and Notices.

     Any notice, demand, request, report or proxy materials required or
permitted to be given or made to a Partner or Assignee under this Agreement
shall be in writing and shall be deemed given or made when delivered in person
or when sent by first class United States mail or by other

                                     -94-

means of written communication to the Partner or Assignee at the address
described below. Any notice, payment or report to be given or made to a Partner
or Assignee hereunder shall be deemed conclusively to have been given or made,
and the obligation to give such notice or report or to make such payment shall
be deemed conclusively to have been fully satisfied, upon sending of such
notice, payment or report to the Record Holder of such Partnership Securities at
his address as shown on the records of the Transfer Agent or as otherwise shown
on the records of the Partnership, regardless of any claim of any Person who may
have an interest in such Partnership Securities by reason of any assignment or
otherwise. An affidavit or certificate of making of any notice, payment or
report in accordance with the provisions of this Section 16.1 executed by the
General Partner, the Transfer Agent or the mailing organization shall be prima
facie evidence of the giving or making of such notice, payment or report. If any
notice, payment or report addressed to a Record Holder at the address of such
Record Holder appearing on the books and records of the Transfer Agent or the
Partnership is returned by the United States Postal Service marked to indicate
that the United States Postal Service is unable to deliver it, such notice,
payment or report and any subsequent notices, payments and reports shall be
deemed to have been duly given or made without further mailing (until such time
as such Record Holder or another Person notifies the Transfer Agent or the
Partnership of a change in his address) if they are available for the Partner or
Assignee at the principal office of the Partnership for a period of one year
from the date of the giving or making of such notice, payment or report to the
other Partners and Assignees. Any notice to the Partnership shall be deemed
given if received by the General Partner at the principal office of the
Partnership designated pursuant to Section 2.3. The General Partner may rely and
shall be protected in relying on any notice or other document from a Partner,
Assignee or other Person if believed by it to be genuine.

Section 16.2   Further Action.

     The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.

Section 16.3   Binding Effect.

     This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.

Section 16.4   Integration.

     This Agreement constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.

Section 16.5   Creditors.

     None of the provisions of this Agreement shall be for the benefit of, or
shall be enforceable by, any creditor of the Partnership.

                                     -95-

Section 16.6  Waiver.

     No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach of any other covenant, duty, agreement or condition.

Section 16.7  Counterparts.

     This Agreement may be executed in counterparts, all of which together shall
constitute an agreement binding on all the parties hereto, notwithstanding that
all such parties are not signatories to the original or the same counterpart.
Each party shall become bound by this Agreement immediately upon affixing its
signature hereto or, in the case of a Person acquiring a Unit, upon accepting
the certificate evidencing such Unit or executing and delivering a Transfer
Application as herein described, independently of the signature of any other
party.

Section 16.8  Applicable Law.

     This Agreement shall be construed in accordance with and governed by the
laws of the State of Delaware, without regard to the principles of conflicts of
law.

Section 16.9  Invalidity of Provisions.

     If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in an: respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.

Section 16.10  Consent of Partners.

     Each Partner hereby expressly consents and agrees that, whenever in this
Agreement it i specified that an action may be taken upon the affirmative vote
or consent of less than all of the Partners, such action may be so taken upon
the concurrence of less than all of the Partners and each Partner shall be bound
by the results of such action.

Section 16.11  Amendments to Reflect the GP Restructuring Agreement.

     In addition to the amendments to this Agreement contained in the GP
Restructuring Agreement and notwithstanding any other provision of this
Agreement to the contrary, this Agreement shall be deemed to be further amended
and modified to the extent necessary, but only to the extent necessary, to carry
out the purposes and intent of the GP Restructuring Agreement.

                    [Rest of Page Intentionally Left Blank]

                                     -96-

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

                              GENERAL PARTNER:

                              PLAINS AAP, L.P.

                              By:  PLAINS ALL AMERICAN GP LLC

                              By:  /s/ Tim Moore
                                  ----------------------------------------------
                              Name:  Tim Moore
                              Title: Vice President

                              LIMITED PARTNERS:

                              All Limited Partners now and hereafter admitted as
                              Limited Partners of the Partnership, pursuant to
                              powers of attorney now and hereafter executed in
                              favor of, and granted and delivered to the General
                              Partner.

                              PLAINS AAP, L.P.

                              By:  PLAINS ALL AMERICAN GP LLC

                              By:  /s/ Tim Moore
                                  ----------------------------------------------
                              Name:  Tim Moore
                              Title: Vice President

                                     -97-

                                   EXHIBIT A
                           to the Second Amended and
                 Restated Agreement of Limited Partnership of
                      Plains All American Pipeline, L.P.

                      Certificate Evidencing Common Units
                  Representing, Limited Partner Interests in
                      Plains All American Pipeline, L.P.

No. __________                                           __________ Common Units

     In accordance with Section 4.1 of the Second Amended and Restated Agreement
of Limited Partnership of Plains All American Pipeline, L.P., as amended,
supplemented or restated from time to time (the "Partnership Agreement"), Plains
All American Pipeline, L.P., a Delaware limited partnership (the "Partnership"),
hereby certifies that __________________ (the "Holder") is the registered owner
of _____________ Common Units representing limited partner interests in the
Partnership (the "Common Units") transferable on the books of the Partnership,
in person or by duly authorized attorney, upon surrender of this Certificate
properly endorsed and accompanied by a properly executed application for
transfer of the Common Units represented by this Certificate.  The rights,
preferences and limitations of the Common Units are set forth in, and this
Certificate and the Common Units represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Partnership Agreement.
Copies of the Partnership Agreement are on file at, and will be furnished
without charge on delivery of written request to the Partnership at, the
principal office of the Partnership located at 333 Clay Street, Suite 2900,
Houston, Texas 77002. Capitalized terms used herein but not defined shall have
the meanings given them in the Partnership Agreement.

     The Holder, by accepting this Certificate, is deemed to have (i) requested
admission as, and agreed to become, a Limited Partner and to have agreed to
comply with and be bound by and to have executed the Partnership Agreement, (ii)
represented and warranted that the Holder has all right, power and authority
and, if an individual, the capacity necessary to enter into the Partnership
Agreement, (iii) granted the powers of attorney provided for in the Partnership
Agreement and (iv) made the waivers and given the consents and approvals
contained in the Partnership Agreement.

                                     -98-

     This Certificate shall not be valid far any purpose unless it has been
countersigned and registered by the Transfer Agent and Registrar.

Dated:_______________               Plains All American Pipeline, L.P.

Countersigned and Registered by:    By:  Plains AAP, L.P., its General Partner

                                    By:  Plains All American GP LLC, its General
                                         Partner

_________________________________   By:_________________________________________
as Transfer Agent and Registrar     Name:_______________________________________

By:______________________________   By:_________________________________________
     Authorized Signature                     Secretary

                                     -99-

                           [Reverse of Certificate]

                                 ABBREVIATIONS

     The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as follows according to applicable laws or
regulations:

TEN COM -    as tenants in common            UNIF GIFT/TRANSFERS MIN ACT
TEN ENT -    as tenants by the entireties    __________ Custodian ____________
                                             (Cust)                    (Minor)
JT TEN  -    as joint tenants with right of  under Uniform Gifts/Transfers to
             survivorship and not as         Minors Act ______________________
             tenants in common                                 (State)

     Additional abbreviations, though not in the above list, may also be used.

                          ASSIGNMENT OF COMMON UNITS
                                      in
                      PLAINS ALL AMERICAN PIPELINE, L.P.
             IMPORTANT NOTICE REGARDING INVESTOR RESPONSIBILITIES
        DUE TO TAX SHELTER STATUS OF PLAINS ALL AMERICAN PIPELINE, L.P.

     You have acquired an interest in Plains All American Pipeline, L.P., 333
Clay Street, Suite 2900, Houston, Texas 77002, whose taxpayer identification
number is 76-0582150.  The Internal Revenue Service has issued Plains All
American Pipeline, L.P. the following tax shelter registration number:
99061000009.

     YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL REVENUE SERVICE IF
YOU CLAIM ANY DEDUCTION, LOSS, CREDIT OR OTHER TAX BENEFIT OR REPORT ANY INCOME
BY REASON OF YOUR INVESTMENT IN PLAINS ALL AMERICAN PIPELINE, L.P.

     You must report the registration number as well as the name and taxpayer
identification number of Plains All American Pipeline, L.P. on Form 8271.  FORM
8271 MUST BE ATTACHED TO THE RETURN ON WHICH YOU CLAIM THE DEDUCTION, LOSS,
CREDIT OR OTHER TAX BENEFIT OR REPORT ANY INCOME BY REASON OF YOUR INVESTMENT IN
PLAINS ALL AMERICAN PIPELINE, L.P.

     If you transfer your interest in Plains All American Pipeline, L.P. to
another person, you are required by the Internal Revenue Service to keep a list
containing (a) that person's name, address and taxpayer identification number,
(b) the date on which you transferred the interest and (c) the name, address and
tax shelter registration number of Plains All American Pipeline, L.P.  If you do
not want to keep such a list, you must (1) send the information specified above
to the Partnership, which will keep the list for this tax shelter, and (2) give
a copy of this notice to the person to whom you transfer your interest.  Your
failure to comply with any of the above-described responsibilities could result
in the imposition of a penalty under Section 6707(b) or

                                     -100-

6708(a) of the Internal Revenue Code of 1986, as amended, unless such failure is
shown to be due to reasonable cause.

     ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS INVESTMENT OR
THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED BY THE
INTERNAL REVENUE SERVICE.

     FOR VALUE RECEIVED, ________________________________ hereby assigns,
conveys, sells and transfers unto

_________________________________   _________________________________________
(Please print or typewrite name     (Please insert Social Security or other
and address of Assignee)            identifying number of Assignee)

__________ Common Units representing limited partner interests evidenced by this
Certificate, subject to the Partnership Agreement, and does hereby irrevocably
constitute and appoint __________ as its attorney-in-fact with full power of
substitution to transfer the same on the books of Plains All American Pipeline,
L.P.

Date:                         NOTE:     The signature to any endorsement hereon
                                        must correspond with the name as written
                                        upon the face of this Certificate in
                                        every particular, without alteration,
                                        enlargement or change.

SIGNATURE(S) MUST BE                    (Signature)
GUARANTEED BY A
MEMBER FIRM OF THE
NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC.                (Signature)
OR BY A COMMERCIAL
BANK OR TRUST COMPANY

SIGNATURE(S) GUARANTEED

     No transfer of the Common Units evidenced hereby will be registered on the
books of the Partnership, unless the Certificate evidencing the Common Units to
be transferred is surrendered for registration or transfer and an Application
for Transfer of Common Units has been executed by a transferee either (a) on the
form set forth below or (b) on a separate application that the Partnership will
furnish on request without charge.  A transferor of the Common Units shall have
no duty to the transferee with respect to execution of the transfer application
in order for such transferee to obtain registration of the transfer of the
Common Units.

                                     -101-

                   APPLICATION FOR TRANSFER OF COMMON UNITS

     The undersigned ("Assignee") hereby applies for transfer to the name of the
Assignee of the Common Units evidenced hereby.

     The Assignee (a) requests admission as a Substituted Limited Partner and
agrees to comply with and be bound by, and hereby executes, the Second Amended
and Restated Agreement of Limited Partnership of Plains All American Pipeline,
L.P. (the "Partnership"), as amended, supplemented or restated to the date
hereof (the "Partnership Agreement"), (b) represents and warrants that the
Assignee has all right, power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement, (c) appoints the General
Partner of the Partnership and, if a Liquidator shall be appointed, the
Liquidator of the Partnership as the Assignee's attorney-in-fact to execute,
swear to, acknowledge and file any document, including, without limitation, the
Partnership Agreement and any amendment thereto and the Certificate of Limited
Partnership of the Partnership and any amendment thereto, necessary or
appropriate for the Assignee's admission as a Substituted Limited Partner and as
a party to the Partnership Agreement, (d) gives the powers of attorney provided
for in the Partnership Agreement, and (e) makes the waivers and gives the
consents and approvals contained in the Partnership Agreement. Capitalized terms
not defined herein have the meanings assigned to such terms in the Partnership
Agreement.

Date:____________

Social Security or other identifying number          Signature of Assignee
               of Assignee

Purchase Price including commissions, if any      Name and Address of Assignee

Type of Entity (check one):

     [_]  Individual          [_]  Partnership         [_]  Corporation

     [_]  Trust               [_]  Other (specify)___________________________

Nationality (check one):

     [_]  U.S. Citizen, Resident or Domestic Entity

     [_]  Foreign Corporation [_]  Non-resident Alien

     If the U.S. Citizen, Resident or Domestic Entity box is checked, the
following certification must be completed.

     Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the
"Code"), the Partnership must withhold tax with respect to certain transfers of
property if a holder of an interest in the Partnership is a foreign person.  To
inform the Partnership that no withholding is required with respect to the
undersigned interestholder's interest in it, the undersigned hereby certifies
the following (or, if applicable, certifies the following on behalf of the
interestholder).

                                     -102-

Complete Either A or B:

A.   Individual Interestholder

     1.   I am not a non-resident alien for purposes of U.S. income taxation.

     2.   My U.S. taxpayer identification number (Social Security Number) is
          __________.

     3.   My home address is ___________.

B.   Partnership, Corporation or Other Interestholder

     1.   ________________ is not a foreign corporation, foreign partnership,
          foreign trust (Name of Interestholder) or foreign estate (as those
          terms are defined in the Code and Treasury Regulations).

     2.   The interestholder's U.S. employer identification number is
          _____________.

     3.   The interestholder's office address and place of incorporation (if
          applicable) is ___________.

     The interestholder agrees to notify the Partnership within sixty (60) days
of the date the interestholder becomes a foreign person.

     The interestholder understands that this certificate may be disclosed to
the Internal Revenue Service by the Partnership and that any false statement
contained herein could be punishable by fine, imprisonment or both.

     Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete and, if applicable, I further declare that I have authority to sign
this document on behalf of:

                        ________________________________
                             Name of Interestholder
                        ________________________________
                               Signature and Date
                        ________________________________
                             Title (if applicable)

     Note:  If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee holder or an agent of any of the foregoing, and is
holding for the account of any other person, this application should be
completed by an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.,
or, in the case of any other nominee holder, a person performing a similar
function.  If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee owner or an agent of any of the foregoing, the above
certification as to any person for whom the Assignee will hold the Common Units
shall be made to the best of the Assignee's knowledge.

                                     -103-

                                                                     Exhibit 3.2

                          SECOND AMENDED AND RESTATED

                       AGREEMENT OF LIMITED PARTNERSHIP

                                      OF

                            PLAINS MARKETING, L.P.

                               TABLE OF CONTENTS

                                                                                                     
                                                ARTICLE I
                                               DEFINITIONS

Section 1.1    Definitions.......................................................................        2
Section 1.2    Construction......................................................................       12

                                                ARTICLE II
                                               ORGANIZATION

Section 2.1    Formation.........................................................................       12
Section 2.2    Name..............................................................................       12
Section 2.3    Registered Office; Registered Agent; Principal Office; Other Offices..............       13
Section 2.4    Purpose and Business..............................................................       13
Section 2.5    Powers............................................................................       13
Section 2.6    Power of Attorney.................................................................       14
Section 2.7    Term..............................................................................       15
Section 2.8    Title to Partnership Assets.......................................................       15

                                                ARTICLE III
                                        RIGHTS OF LIMITED PARTNERS

Section 3.1    Limitation of Liability...........................................................       16
Section 3.2    Management of Business............................................................       16
Section 3.3    Outside Activities of the Limited Partners........................................       16
Section 3.4    Rights of Limited Partners........................................................       16

                                                ARTICLE IV
                                    TRANSFERS OF PARTNERSHIP INTERESTS

Section 4.1    Transfer Generally................................................................       17
Section 4.2    Transfer of General Partner's Partnership Interest................................       18
Section 4.3    Transfer of a Limited Partner's Partnership Interest..............................       18
Section 4.4    Restrictions on Transfers.........................................................       18

                                                ARTICLE V
                       CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS

Section 5.1    Initial Contributions.............................................................       19
Section 5.2    Contributions Pursuant to the Contribution and Conveyance Agreement...............       19
Section 5.3    Additional Capital Contributions..................................................       20
Section 5.4    Interest and Withdrawal...........................................................       20
Section 5.5    Capital Accounts..................................................................       20
Section 5.6    Loans from Partners...............................................................       23
Section 5.7    Limited Preemptive Rights.........................................................       23
Section 5.8    Fully Paid and Non-Assessable Nature of Partnership Interests.....................       23

                                      -i-

                                                                                                                 
                                                      ARTICLE VI
                                            ALLOCATIONS AND DISTRIBUTIONS

Section 6.1    Allocations for Capital Account Purposes........................................................     23
Section 6.2    Allocations for Tax Purposes....................................................................     27
Section 6.3    Distributions...................................................................................     29

                                                     ARTICLE VII
                                         MANAGEMENT AND OPERATION OF BUSINESS

Section 7.1    Management......................................................................................     30
Section 7.2    Certificate of Limited Partnership..............................................................     32
Section 7.3    Restrictions on General Partner's Authority.....................................................     32
Section 7.4    Reimbursement of the General Partner............................................................     33
Section 7.5    Outside Activities..............................................................................     33
Section 7.6    Loans from the General Partner; Loans or Contributions from the Partnership; Contracts with
               Affiliates; Certain Restrictions on the General Partner.........................................     35
Section 7.7    Indemnification.................................................................................     36
Section 7.8    Liability of Indemnitees........................................................................     38
Section 7.9    Resolution of Conflicts of Interest.............................................................     38
Section 7.10   Other Matters Concerning the General Partner....................................................     40
Section 7.11   Reliance by Third Parties.......................................................................     40

                                                     ARTICLE VIII
                                        BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 8.1    Records and Accounting..........................................................................     41
Section 8.2    Fiscal Year.....................................................................................     41

                                                      ARTICLE IX
                                                     TAX MATTERS

Section 9.1    Tax Returns and Information.....................................................................     41
Section 9.2    Tax Elections...................................................................................     42
Section 9.3    Tax Controversies...............................................................................     42
Section 9.4    Withholding.....................................................................................     42

                                                      ARTICLE X
                                                ADMISSION OF PARTNERS

Section 10.1   Admission of Partners...........................................................................     42
Section 10.2   Admission of Substituted Limited Partner........................................................     43
Section 10.3   Admission of Additional Limited Partners........................................................     43
Section 10.4   Admission of Successor or Transferee General Partner............................................     43
Section 10.5   Amendment of Agreement and Certificate of Limited Partnership...................................     44

                                     -ii-

                                                                                               
                                             ARTICLE XI
                                 WITHDRAWAL OR REMOVAL OF PARTNERS

Section 11.1    Withdrawal of the General Partner...........................................      44
Section 11.2    Removal of the General Partner..............................................      45
Section 11.3    Interest of Departing Partner...............................................      46
Section 11.4    Withdrawal of a Limited Partner.............................................      46

                                            ARTICLE XII
                                    DISSOLUTION AND LIQUIDATION

Section 12.1    Dissolution.................................................................      46
Section 12.2    Continuation of the Business of the Partnership After Dissolution...........      47
Section 12.3    Liquidator..................................................................      48
Section 12.4    Liquidation.................................................................      48
Section 12.5    Cancellation of Certificate of Limited Partnership..........................      49
Section 12.6    Return of Contributions.....................................................      49
Section 12.7    Waiver of Partition.........................................................      49
Section 12.8    Capital Account Restoration.................................................      49

                                            ARTICLE XIII
                                 AMENDMENT OF PARTNERSHIP AGREEMENT

Section 13.1    Amendment to be Adopted Solely by the General Partner.......................      50
Section 13.2    Amendment Procedures........................................................      51

                                            ARTICLE XIV
                                               MERGER

Section 14.1    Authority...................................................................      51
Section 14.2    Procedure for Merger or Consolidation.......................................      51
Section 14.3    Approval by Limited Partners of Merger or Consolidation.....................      52
Section 14.4    Certificate of Merger.......................................................      53
Section 14.5    Effect of Merger............................................................      53

                                             ARTICLE XV
                                         GENERAL PROVISIONS

Section 15.1    Addresses and Notices.......................................................      54
Section 15.2    Further Action..............................................................      54
Section 15.3    Binding Effect..............................................................      54
Section 15.4    Integration.................................................................      54
Section 15.5    Creditors...................................................................      54
Section 15.6    Waiver......................................................................      54
Section 15.7    Counterparts................................................................      55
Section 15.8    Applicable Law..............................................................      55
Section 15.9    Invalidity of Provisions....................................................      55
Section 15.10   Consent of Partners.........................................................      55

                                     -iii-

                                                                                               
Section 15.11    Amendments to Reflect GP Restructuring Agreement...........................      55

                                     -iv-

                          SECOND AMENDED AND RESTATED
                       AGREEMENT OF LIMITED PARTNERSHIP
                                      OF
                            PLAINS MARKETING, L.P.

     THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of PLAINS
MARKETING, L.P., dated as of June 27, 2001 is entered into by and between Plains
Marketing GP Inc., a Delaware corporation, as the General Partner, and Plains
All American Pipeline, L.P., a Delaware limited partnership, as the Limited
Partner, together with any other Persons who hereafter become Partners in the
Partnership or parties hereto as provided herein.  In consideration of the
covenants, conditions and agreements contained herein, the parties hereto hereby
agree as follows:

     WHEREAS, Plains All American Inc. and the other parties thereto entered
into that certain Amended and Restated Agreement of Limited Partnership of
Plains Marketing, L.P. dated as of November 23, 1998 (the "1998 Agreement"); and

     WHEREAS, Plains All American Inc. effected Amendment No. 1 to the 1998
Agreement on April 27, 2001 to include certain tax provisions appropriate to
reflect acquisition of operations in Canada; and

     WHEREAS, Plains All American Inc. and the other parties thereto entered
into that certain Contribution, Assignment and Amendment Agreement (the "GP
Transfer Agreement"), dated as of June 8, 2001, pursuant to which Plains All
American Inc. transferred its General Partner Interest to Plains AAP, L.P.
(consistent with the definition contained herein, each of Plains All American
Inc. and Plains AAP, L.P. may be referred to in this Agreement as the
"Predecessor General Partner"); and

     WHEREAS, the Partnership, the Predecessor General Partner and the other
parties thereto entered into that certain Contribution Assignment and Amendment
Agreement (the "GP Restructuring Agreement"), dated as of June 27, 2001,
pursuant to which the Predecessor General Partner transferred its General
Partner Interest to the General Partner; and

     WHEREAS, the General Partner, consistent with the authority granted to it
in the GP Restructuring Agreement, effected Amendment No. 2 to the 1998
Agreement as of June 27, 2001 to more fully reflect the transactions
contemplated by the GP Restructuring Agreement; and

     WHEREAS, the General Partner deems it in the best interest of the
Partnership to amend and restate the 1998 Agreement in its entirety to reflect
the prior amendments adopted by each of the Predecessor General Partners and the
General Partner, and to reflect the transactions contemplated by the GP
Restructuring Agreement.

                                      -1-

                                   ARTICLE I
                                  DEFINITIONS

     Section 1.1  Definitions.

     The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
Capitalized terms used herein but not otherwise defined shall have the meaning
assigned to such term in the MLP Agreement.

          "Additional Limited Partner" means a Person admitted to the
     Partnership as a Limited Partner pursuant to Section 10.4 and who is shown
     as such on the books and records of the Partnership.

          "Adjusted Capital Account" means the Capital Account maintained for
     each Partner as of the end of each fiscal year of the Partnership, (a)
     increased by any amounts that such Partner is obligated to restore under
     the standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or
     is deemed obligated to restore under Treasury Regulation Sections 1.704-
     2(g) and 1.704-2(i)(5)) and (b) decreased by (i) the amount of all losses
     and deductions that, as of the end of such fiscal year, are reasonably
     expected to be allocated to such Partner in subsequent years under Sections
     704(e)(2) and 706(d) of the Code and Treasury Regulation Section 1.751-
     1(b)(2)(ii), and (ii) the amount of all distributions that, as of the end
     of such fiscal year, are reasonably expected to be made to such Partner in
     subsequent years in accordance with the terms of this Agreement or
     otherwise to the extent they exceed offsetting increases to such Partner's
     Capital Account that are reasonably expected to occur during (or prior to)
     the year in which such distributions are reasonably expected to be made
     (other than increases as a result of a minimum gain chargeback pursuant to
     Section 6.1(d)(i) or 6.1(d)(ii)). The foregoing definition of Adjusted
     Capital Account is intended to comply with the provisions of Treasury
     Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
     consistently therewith.  The "Adjusted Capital Account" of a Partner in
     respect of a General Partner Interest or any other specified interest in
     the Partnership shall be the amount which such Adjusted Capital Account
     would be if such General Partner Interest or other interest in the
     Partnership were the only interest in the Partnership held by a Partner
     from and after the date on which such general partner interest or other
     interest was first issued.

          "Adjusted Property" means any property the Carrying Value of which has
     been adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii). Once an Adjusted
     Property is deemed contributed to a new partnership in exchange for an
     interest in the new partnership, followed by a deemed liquidation of the
     Partnership for federal income tax purposes upon a termination of the
     Partnership pursuant to Section 708(b)(1)(B) of the Code, such property
     shall thereafter constitute a Contributed Property until the Carrying Value
     of such property is subsequently adjusted pursuant to Section 5.5(d)(i) or
     5.5(d)(ii).

          "Affiliate" means, with respect to any Person, any other Person that
     directly or indirectly through one or more intermediaries controls, is
     controlled by or is under common control with, the Person in question. As
     used herein, the term "control" means the possession, direct or indirect,
     of the power to direct or cause the direction of the

                                      -2-

     management and policies of a Person, whether through ownership of voting
     securities, by contract or otherwise.

          "Agreed Allocation" means any allocation, other than a Required
     Allocation, of an item of income, gain, loss or deduction pursuant to the
     provisions of Section 6.1, including, without limitation, a Curative
     Allocation (if appropriate to the context in which the term "Agreed
     Allocation" is used).

          "Agreed Value" of any Contributed Property means the fair market value
     of such property or other consideration at the time of contribution as
     determined by the General Partner using such reasonable method of valuation
     as it may adopt. The General Partner shall, in its discretion, use such
     method as it deems reasonable and appropriate to allocate the aggregate
     Agreed Value of Contributed Properties contributed to the Partnership in a
     single or integrated transaction among each separate property on a basis
     proportional to the fair market value of each Contributed Property.

          "1998 Agreement" means the Amended and Restated Agreement of Limited
     Partnership of Plains Marketing, L.P.

          "Agreement" means this Second Amended and Restated Agreement of
     Limited Partnership of Plains Marketing, L.P., as it may be amended,
     supplemented or restated from time to time.

          "All American" means All American Pipeline, L.P., a Delaware limited
     partnership.

          "All American Partnership Agreement" means the Second Amended and
     Restated Agreement of Limited Partnership of All American Pipeline, L.P.,
     as it may be amended, supplemented or restated from time to time.

          "Assets" means the assets being conveyed to the Partnership on the
     Closing Date pursuant to Section 5.2 and the Contribution and Conveyance
     Agreement.

          "Assignee" means a Person to whom one or more Partnership Interests
     have been transferred in a manner permitted under this Agreement, but who
     has not been admitted as a Substituted Limited Partner.

          "Associate" means, when used to indicate a relationship with any
     Person, (a) any corporation or organization of which such Person is a
     director, officer or partner or is, directly or indirectly, the owner of
     20% or more of any class of voting stock or other voting interest; (b) any
     trust or other estate in which such Person has at least a 20% beneficial
     interest or as to which such Person serves as trustee or in a similar
     fiduciary capacity; and (c) any relative or spouse of such Person, or any
     relative of such spouse, who has the same principal residence as such
     Person.

          "Assumed Liabilities" means the liabilities that the Partnership is
     either assuming or taking subject to in connection with the conveyance of
     the Assets pursuant to Section 5.2 and the Contribution and Conveyance
     Agreement.

                                      -3-

          "Available Cash" means, with respect to any Quarter ending prior to
     the Liquidation Date,

          (a)  the sum of (i) all cash and cash equivalents of the Partnership
     Group on hand at the end of such Quarter, and (ii) all additional cash and
     cash equivalents of the Partnership Group on hand on the date of
     determination of Available Cash with respect to such Quarter resulting from
     Working Capital Borrowings made subsequent to the end of such Quarter, less

          (b)  the amount of any cash reserves that is necessary or appropriate
     in the reasonable discretion of the General Partner to (i) provide for the
     proper conduct of the business of the Partnership Group (including reserves
     for future capital expenditures and for anticipated future credit needs of
     the Partnership Group) subsequent to such Quarter, (ii) comply with
     applicable law or any loan agreement, security agreement, mortgage, debt
     instrument or other agreement or obligation to which any Group Member is a
     party or by which it is bound or its assets are subject or (iii) provide
     funds for distributions under Section 6.4 or 6.5 of the MLP Agreement in
     respect of any one or more of the next four Quarters; provided, however,
     that the General Partner may not establish cash reserves pursuant to (iii)
     above if the effect of such reserves would be that the MLP is unable to
     distribute the Minimum Quarterly Distribution on all Common Units, plus any
     Cumulative Common Unit Arrearage on all Common Units, with respect to such
     Quarter; and provided further that disbursements made by a Group Member or
     cash reserves established, increased or reduced after the end of such
     Quarter but on or before the date of determination of Available Cash with
     respect to such Quarter shall be deemed to have been made, established,
     increased or reduced, for purposes of determining Available Cash, within
     such Quarter if the General Partner so determines.

          Notwithstanding the foregoing, "Available Cash" with respect to the
     Quarter in which the Liquidation Date occurs and any subsequent Quarter
     shall equal zero.

          "Book-Tax Disparity" means with respect to any item of Contributed
     Property or Adjusted Property, as of the date of any determination, the
     difference between the Carrying Value of such Contributed Property or
     Adjusted Property and the adjusted basis thereof for federal income tax
     purposes as of such date. A Partner's share of the Partnership's Book-Tax
     Disparities in all of its Contributed Property and Adjusted Property will
     be reflected by the difference between such Partner's Capital Account
     balance as maintained pursuant to Section 5.5 and the hypothetical balance
     of such Partner's Capital Account computed as if it had been maintained
     strictly in accordance with federal income tax accounting principles.

          "Business Day" means Monday through Friday of each week, except that a
     legal holiday recognized as such by the government of the United States of
     America or the states of New York or Texas shall not be regarded as a
     Business Day.

          "Capital Account" means the capital account maintained for a Partner
     pursuant to Section 5.5. The "Capital Account" of a Partner in respect of a
     General Partner Interest or any other specified interest in the Partnership
     shall be the amount which such Capital

                                      -4-

     Account would be if such General Partner Interest or other specified
     interest in the Partnership were the only interest in the Partnership held
     by a Partner from and after the date on which such General Partner Interest
     or other specified interest in the Partnership was first issued.

          "Capital Contribution" means any cash, cash equivalents or the Net
     Agreed Value of Contributed Property that a Partner contributes to the
     Partnership pursuant to this Agreement or the Contribution and Conveyance
     Agreement.

          "Carrying Value" means (a) with respect to a Contributed Property, the
     Agreed Value of such property reduced (but not below zero) by all
     depreciation, amortization and cost recovery deductions charged to the
     Partners' and Assignees' Capital Accounts in respect of such Contributed
     Property, and (b) with respect to any other Partnership property, the
     adjusted basis of such property for federal income tax purposes, all as of
     the time of determination. The Carrying Value of any property shall be
     adjusted from time to time in accordance with Sections 5.5(d)(i) and
     5.5(d)(ii) and to reflect changes, additions or other adjustments to the
     Carrying Value for dispositions and acquisitions of Partnership properties,
     as deemed appropriate by the General Partner.

          "CT&T" means Celeron Trading & Transportation Company, a Delaware
     corporation.

          "Certificate of Limited Partnership" means the Certificate of Limited
     Partnership of the Partnership filed with the Secretary of State of the
     State of Delaware as referenced in Section 2.1, as such Certificate of
     Limited Partnership may be amended, supplemented or restated from time to
     time.

          "Closing Date" means the first date on which Common Units are sold by
     the MLP to the Underwriters pursuant to the provisions of the Underwriting
     Agreement.

          "Code" means the Internal Revenue Code of 1986, as amended and in
     effect from time to time. Any reference herein to a specific Section or
     sections of the Code shall be deemed to include a reference to any
     corresponding provision of successor law.

          "Commission" means the United States Securities and Exchange
     Commission.

          "Common Unit" has the meaning assigned to such term in the MLP
     Agreement.

          "Conflicts Committee" means a committee of the Board of Directors of
     the general partner of the general partner of the MLP (or the applicable
     governing body of any successor to such entity) composed entirely of two or
     more directors who are neither security holders, officers nor employees of
     the general partner of the general partner of the MLP nor officers,
     directors or employees of any Affiliate of such entity.

          "Contributed Property" means each property or other asset, in such
     form as may be permitted by the Delaware Act, but excluding cash,
     contributed to the Partnership (or deemed contributed to a new partnership
     on termination of the Partnership pursuant to Section 708 of the Code. Once
     the Carrying Value of a Contributed Property is adjusted

                                      -5-

     pursuant to Section 5.5(d), such property shall no longer constitute a
     Contributed Property, but shall be deemed an Adjusted Property.

          "Contribution and Conveyance Agreement" means that certain
     Contribution, Conveyance and Assumption Agreement, dated as of the Closing
     Date, among the Predecessor General Partner, the Plains Midstream
     Subsidiaries, the MLP, the Partnership and certain other parties, together
     with the additional conveyance documents and instruments contemplated or
     referenced thereunder.

          "Curative Allocation" means any allocation of an item of income, gain,
     deduction, loss or credit pursuant to the provisions of Section 6.1(d)(ix).

          "Delaware Act" means the Delaware Revised Uniform Limited Partnership
     Act, 6 Del. C. (S)17-101, et seq., as amended, supplemented or restated
     from time to time, and any successor to such statute.

          "Departing Partner" means a former General Partner from and after the
     effective date of any withdrawal or removal of such former General Partner
     pursuant to Section 11.1 or 11.2.

          "Economic Risk of Loss" has the meaning set forth in Treasury
     Regulation Section 1.752-2(a).

          "Event of Withdrawal" has the meaning assigned to such term in Section
     11.1(a).

          "Gathering LLC" means Gathering LLC, a Delaware limited liability
     company.

          "General Partner" means Plains Marketing GP Inc. and its successors
     and permitted assigns as general partner of the Partnership.

          "General Partner Interest" means the ownership interest of the General
     Partner in the Partnership (in its capacity as a general partner) and
     includes any and all benefits to which the General Partner is entitled as
     provided in this Agreement, together with all obligations of the General
     Partner to comply with the terms and provisions of this Agreement.

          "GP Transfer Agreement" means the Contribution, Assignment and
     Amendment Agreement, dated as of June 8, 2001, among the Predecessor
     General Partners and Plains All American GP LLC.

          "GP Restructuring Agreement" means the Contribution, Assignment and
     Amendment Agreement, dated as of June 27, 2001, among the Partnership, the
     MLP, All American, the General Partner, the MLP General Partner and Plains
     All American GP LLC.

          "Group" means a Person that with or through any of its Affiliates or
     Associates has any agreement, arrangement or understanding for the purpose
     of acquiring, holding, voting (except voting pursuant to a revocable proxy
     or consent given to such Person in

                                      -6-

     response to a proxy or consent solicitation made to 10 or more Persons) or
     disposing of any MLP Securities with any other Person that beneficially
     owns, or whose Affiliates or Associates beneficially own, directly or
     indirectly, MLP Securities.

          "Group Member" means a member of the Partnership Group.

          "Indemnitee" means (a) the General Partner, (b) any Departing Partner,
     (c) any Person who is or was an Affiliate of the General Partner or any
     Departing Partner, including the MLP General Partner, (d) any Person who is
     or was a member, partner, officer,  director, employee, agent or trustee of
     any Group Member,  the General Partner or any Departing Partner or any
     Affiliate of any Group Member, the General Partner or any Departing
     Partner, including the MLP General Partner, and (e) any Person who is or
     was serving at the request of the General Partner or any Departing Partner
     or any Affiliate of the General Partner or any Departing Partner as an
     officer, director, employee, member, partner, agent, fiduciary or trustee
     of another Person; provided, that a Person shall not be an Indemnitee by
     reason of providing, on a fee-for-services basis, trustee, fiduciary or
     custodial services.

          "Initial Offering" means the initial offering and sale of Common Units
     to the public, as described in the Registration Statement.

          "Limited Partner" means any Person that is admitted to the Partnership
     as a limited partner pursuant to the terms and conditions of this
     Agreement; but the term Limited Partner shall not include any Person from
     and after the time such Person withdraws as a Limited Partner from the
     Partnership.

          "Limited Partner Interest" means the ownership interest of a Limited
     Partner or Assignee in the Partnership and includes any and all benefits to
     which such Limited Partner or Assignee is entitled as provided in this
     Agreement, together with all obligations of such Limited Partner or
     Assignee to comply with the terms and provisions of this Agreement.

          "Liquidation Date" means (a) in the case of an event giving rise to
     the dissolution of the Partnership of the type described in clauses (a) and
     (b) of the first sentence of Section 12.2, the date on which the applicable
     time period during which the Partners have the right to elect to
     reconstitute the Partnership and continue its business has expired without
     such an election being made, and (b) in the case of any other event giving
     rise to the dissolution of the Partnership, the date on which such event
     occurs.

          "Liquidator" means one or more Persons selected by the General Partner
     to perform the functions described in Section 12.3 as liquidating trustee
     of the Partnership within the meaning of the Delaware Act.

          "Merger Agreement" has the meaning assigned to such term in Section
     14.1.

          "Minimum Quarterly Distribution" has the meaning assigned to such term
     in the MLP Agreement.

                                      -7-

          "MLP" means Plains All American Pipeline, L.P.

          "MLP  Agreement" means the Third Amended and Restated Agreement of
     Limited Partnership of Plains All American Pipeline, L.P., as it may be
     amended, supplemented or restated from time to time.

          "MLP General Partner" means Plains AAP, L.P. and its successors and
     permitted assigns, in its capacity as the general partner of the MLP.

          "MLP Security" has the meaning assigned to the term "Partnership
     Security" in the MLP Agreement.

          "Net Agreed Value" means, (a) in the case of any Contributed Property,
     the Agreed Value of such property reduced by any liabilities either assumed
     by the Partnership upon such contribution or to which such property is
     subject when contributed, and (b) in the case of any property distributed
     to a Partner or Assignee by the Partnership, the Partnership's Carrying
     Value of such property (as adjusted pursuant to Section 5.5(d)(ii)) at the
     time such property is distributed, reduced by any indebtedness either
     assumed by such Partner or Assignee upon such distribution or to which such
     property is subject at the time of distribution, in either case, as
     determined under Section 752 of the Code.

          "Net Income" means, for any taxable year, the excess, if any, of the
     Partnership's items of income and gain (other than those items taken into
     account in the computation of Net Termination Gain or Net Termination Loss)
     for such taxable year over the Partnership's items of loss and deduction
     (other than those items taken into account in the computation of Net
     Termination Gain or Net Termination Loss) for such taxable year. The items
     included in the calculation of Net Income shall be determined in accordance
     with Section 5.5(b) and shall not include any items specially allocated
     under Section 6.1(d).

          "Net Loss" means, for any taxable year, the excess, if any, of the
     Partnership's items of loss and deduction (other than those items taken
     into account in the computation of Net Termination Gain or Net Termination
     Loss) for such taxable year over the Partnership's items of income and gain
     (other than those items taken into account in the computation of Net
     Termination Gain or Net Termination Loss) for such taxable year. The items
     included in the calculation of Net Loss shall be determined in accordance
     with Section 5.5(b) and shall not include any items specially allocated
     under Section 6.1(d).

          "Net Termination Gain" means, for any taxable year, the sum, if
     positive, of all items of income, gain, loss or deduction recognized by the
     Partnership after the Liquidation Date. The items included in the
     determination of Net Termination Gain shall be determined in accordance
     with Section 5.5(b) and shall not include any items of income, gain or
     loss specially allocated under Section 6.1(d).

          "Net Termination Loss" means, for any taxable year, the sum, if
     negative, of all items of income, gain, loss or deduction recognized by
     the Partnership after the Liquidation Date. The items included in the
     determination of Net Termination Loss shall

                                 -8-

     be determined in accordance with Section 5.5(b) and shall not include any
     items of income, gain or loss specially allocated under Section 6.1(d).

          "Nonrecourse Built-in Gain" means with respect to any Contributed
     Properties or Adjusted Properties that are subject to a mortgage or pledge
     securing a Nonrecourse Liability, the amount of any taxable gain that would
     be allocated to the Partners pursuant to Sections 6.2(b)(i)(A),
     6.2(b)(ii)(A) and 6.2(b)(iii) if such properties were disposed of in a
     taxable transaction in full satisfaction of such liabilities and for no
     other consideration.

          "Nonrecourse Deductions" means any and all items of loss, deduction or
     expenditures (described in Section 705(a)(2)(B) of the Code) that, in
     accordance with the principles of Treasury Regulation Section 1.704-2(b),
     are attributable to a Nonrecourse Liability.

          "Nonrecourse Liability" has the meaning set forth in Treasury
     Regulation Section 1.752-1(a)(2).

          "OLP Subsidiary" means a Subsidiary of the Partnership or All
     American.

          "Omnibus Agreement" means that Omnibus Agreement, dated as of the
     Closing Date, among Plains Resources, Inc., the Predecessor General
     Partner, the MLP, the Partnership and All American.

          "Opinion of Counsel" means a written opinion of counsel (which may be
     regular counsel to the Partnership or the General Partner or any of its
     Affiliates) acceptable to the General Partner in its reasonable discretion.

          "Partner Nonrecourse Debt" has the meaning set forth in Treasury
     Regulation Section 1.704-2(b)(4).

          "Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
     Treasury Regulation Section 1.704-2(i)(2).

          "Partner Nonrecourse Deductions" means any and all items of loss,
     deduction or expenditure (including, without limitation, any expenditure
     described in Section 705(a)(2)(B) of the Code) that, in accordance with the
     principles of Treasury Regulation Section 1.704-2(i), are attributable to a
     Partner Nonrecourse Debt.

          "Partnership" means Plains Marketing, L.P., a Delaware limited
     partnership, and any successors thereto.

          "Partnership Group" means the Partnership and all OLP Subsidiaries,
     treated as a single consolidated entity.

          "Partnership Interest" means an ownership interest of a Partner in the
     Partnership, which shall include the General Partner Interest and the
     Limited Partner Interest(s).

                                      -9-

          "Partnership Minimum Gain" means that amount determined in accordance
     with the principles of Treasury Regulation Section 1.704-2(d).

          "Percentage Interest" means as of the date of such determination (a)
     as to the General Partner, 0.001% and (b) as to the MLP, 99.999%.

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

          "Predecessor General Partner" means (a) Plains All American Inc., in
     its capacity as general partner of the Partnership prior to the transfer of
     the General Partner Interest to Plains AAP, L.P. pursuant to the GP
     Transfer Agreement and (b) Plains AAP, L.P., in its capacity as general
     partner of the Partnership following the execution of the GP Transfer
     Agreement and prior to the transfer of the General Partner Interest
     pursuant to the GP Restructuring Agreement.  References to the "Predecessor
     General Partner" may be to Plains All American Inc. or to Plains AAP, L.P.,
     individually, and to "Predecessor General Partners," collectively, as the
     context requires.

          "Prior Agreement" is defined in the Recitals.

          "Pro Rata" means,  when modifying Partners and Assignees, apportioned
     among all Partners and Assignees in accordance with their relative
     Percentage Interests.

          "Quarter" means, unless the context requires otherwise, a fiscal
     quarter of the Partnership.

          "Recapture Income" means any gain recognized by the Partnership
     (computed without regard to any adjustment required by Section 734 or
     Section 743 of the Code) upon the disposition of any property or asset of
     the Partnership, which gain is characterized as ordinary income because it
     represents the recapture of deductions previously taken with respect to
     such property or asset.

          "Registration Statement" means the Registration Statement on Form S-1
     (Registration No. 333-64107) as it has been or as it may be amended or
     supplemented from time to time, filed by the MLP with the Commission under
     the Securities Act to register the offering and sale of the Common Units in
     the Initial Offering.

          "Required Allocations" means (a) any limitation imposed on any
     allocation of Net Losses or Net Termination Losses under Section 6.1(b) or
     6.1(c)(ii) and (b) any allocation of an item of income, gain, loss or
     deduction pursuant to Section 6.1(d)(i), 6.1(d)(ii), 6.1(d)(iv),
     6.1(d)(vii) or 6.1(d)(ix).

          "Residual Gain" or "Residual Loss" means any item of gain or loss, as
     the case may be, of the Partnership recognized for federal income tax
     purposes resulting from a sale, exchange or other disposition of a
     Contributed Property or Adjusted Property, to the extent such item of gain
     or loss is not allocated pursuant to Section 6.2(b)(i)(A) or 6.2(b)(ii)(A),
     respectively, to eliminate Book-Tax Disparities.

                                      -10-

          "Restricted Business" has the meaning assigned to such term in the
     Omnibus Agreement.

          "Securities Act" means the Securities Act of 1933, as amended,
     supplemented or restated from time to time and any successor to such
     statute.

          "Special Approval" means approval by a majority of the members of the
     Conflicts Committee.

          "Subsidiary" means, with respect to any Person, (a) a corporation of
     which more than 50% of the voting power of shares entitled (without regard
     to the occurrence of any contingency) to vote in the election of directors
     or other governing body of such corporation is owned, directly or
     indirectly, at the date of determination, by such Person, by one or more
     Subsidiaries of such Person or a combination thereof, (b) a partnership
     (whether general or limited) in which such Person or a Subsidiary of such
     Person is, at the date of determination, a general or limited partner of
     such partnership, but only if more than 50% of the partnership interests of
     such partnership (considering all of the partnership interests of the
     partnership as a single class) is owned, directly or indirectly, at the
     date of determination, by such Person, by one or more Subsidiaries of such
     Person, or a combination thereof, or (c) any other Person (other than a
     corporation or a partnership) in which such Person, one or more
     Subsidiaries of such Person, or a combination thereof, directly or
     indirectly, at the date of determination, has (i) at least a majority
     ownership interest or (ii) the power to elect or direct the election of a
     majority of the directors or other governing body of such Person.

          "Substituted Limited Partner" means a Person who is admitted as a
     Limited Partner to the Partnership pursuant to Section 10.2 in place of and
     with all the rights of a Limited Partner and who is shown as a Limited
     Partner on the books and records of the Partnership.

          "Surviving Business Entity" has the meaning assigned to such term in
     Section 14.2(b).

          "Transfer" has the meaning assigned to such term in Section 4.1(a).

          "Underwriter" means each Person named as an underwriter in Schedule I
     to the Underwriting Agreement who purchases Common Units pursuant thereto.

          "Underwriting Agreement" means the Underwriting Agreement dated
     November 17, 1998 among the Underwriters, the MLP and certain other
     parties, providing for the purchase of Common Units by such Underwriters.

          "Unit" has the meaning assigned to such term in the MLP Agreement.

          "Unit Majority" has the meaning assigned to such term in the MLP
     Agreement.

          "Unrealized Gain" attributable to any item of Partnership property
     means, as of any date of determination, the excess, if any, of (a) the fair
     market value of such property

                                      -11-

     as of such date (as determined under Section 5.5(d)) over (b) the Carrying
     Value of such property as of such date (prior to any adjustment to be made
     pursuant to Section 5.5(d) as of such date).

          "Unrealized Loss" attributable to any item of Partnership property
     means, as of any date of determination, the excess, if any, of (a) the
     Carrying Value of such property as of such date (prior to any adjustment to
     be made pursuant to Section 5.5(d) as of such date) over (b) the fair
     market value of such property as of such date (as determined under Section
     5.5(d)).

          "U.S. GAAP" means United States Generally Accepted Accounting
     Principles consistently applied.

          "Working Capital Borrowings" means borrowings exclusively for working
     capital purposes made pursuant to a credit facility or other arrangement
     requiring all such borrowings thereunder to be reduced to a relatively
     small amount each year for an economically meaningful period of time.

     Section 1.2  Construction.

     Unless the context requires otherwise: (a) any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa; (b) references to Articles and Sections refer to Articles and
Sections of this Agreement; and (c) the term "include" or "includes" means
includes, without limitation, and "including" means including, without
limitation.

                                  ARTICLE II
                                 ORGANIZATION

     Section 2.1  Formation.

     The Partnership was previously formed as a limited partnership pursuant to
the provisions of the Delaware Act.  This amendment and restatement shall become
effective on the date of this Agreement. Except as expressly provided to the
contrary in this Agreement, the rights, duties (including fiduciary duties),
liabilities and obligations of the Partners and the administration, dissolution
and termination of the Partnership shall be governed by the Delaware Act. All
Partnership Interests shall constitute personal property of the owner thereof
for all purposes and a Partner has no interest in specific Partnership property.

     Section 2.2  Name.

     The name of the Partnership shall be "Plains Marketing, L.P."  The
Partnership's business may be conducted under any other name or names deemed
necessary or appropriate by the General Partner in its sole discretion,
including the name of the General Partner. The words "Limited Partnership,"
"L.P." or "Ltd." or similar words or letters shall be included in the
Partnership's name where necessary for the purpose of complying with the laws of
any jurisdiction that so requires. The General Partner in its discretion may
change the name of the

                                      -12-

Partnership at any time and from time to time and shall notify the other
Partner(s) of such change in the next regular communication to the Partners.

     Section 2.3  Registered Office; Registered Agent; Principal Office; Other
                  Offices.

     Unless and until changed by the General Partner, the registered office of
the Partnership in the State of Delaware shall be located at 1209 Orange Street,
Wilmington, Delaware 19801, and the registered agent for service of process on
the Partnership in the State of Delaware at such registered office shall be The
Corporation Trust Company. The principal office of the Partnership shall be
located at 333 Clay Street, Suite 2900, Houston, Texas 77002 or such other place
as the General Partner may from time to time designate by notice to the Limited
Partners. The Partnership may maintain offices at such other place or places
within or outside the State of Delaware as the General Partner deems necessary
or appropriate. The address of the General Partner shall be 333 Clay Street,
Suite 2900, Houston, Texas 77002 or such other place as the General Partner may
from time to time designate by notice to the Limited Partners.

     Section 2.4  Purpose and Business.

     The purpose and nature of the business to be conducted by the Partnership
shall be to (a) acquire, manage, operate and sell the Assets and any similar
assets or properties now or hereafter acquired by the Partnership, (b) to serve
as a limited partner of All American and, in connection therewith, to exercise
all the rights and powers conferred upon the Partnership as a partner of All
American pursuant to the All American Partnership Agreement, (c) engage directly
in, or enter into or form any corporation, partnership, joint venture, limited
liability company or other arrangement to engage indirectly in, any business
activity that the Partnership is permitted to engage in, or any type of business
or activity engaged in by the Predecessor General Partner prior to the Closing
Date and, in connection therewith, to exercise all of the rights and powers
conferred upon the Partnership pursuant to the agreements relating to such
business activity, (d) engage directly in, or enter into or form any
corporation, partnership, joint venture, limited liability company or other
arrangement to engage indirectly in, any business activity that is approved by
the General Partner and which lawfully may be conducted by a limited partnership
organized pursuant to the Delaware Act and, in connection therewith, to exercise
all of the rights and powers conferred upon the Partnership pursuant to the
agreements relating to such business activity; provided, however, that the
General Partner reasonably determines, as of the date of the acquisition or
commencement of such activity, that such activity (i) generates "qualifying
income" (as such term is defined pursuant to Section 7704 of the Code) or (ii)
enhances the operations of an activity of the Partnership that generates
qualifying income, and (e) do anything necessary or appropriate to the
foregoing, including the making of capital contributions or loans to a Group
Member, the MLP or any Subsidiary of the MLP. The General Partner has no
obligation or duty to the Partnership, the Limited Partners, or the Assignees to
propose or approve, and in its discretion may decline to propose or approve, the
conduct by the Partnership of any business.

     Section 2.5  Powers.

     The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and

                                      -13-

accomplishment of the purposes and business described in Section 2.4 and for the
protection and benefit of the Partnership.

     Section 2.6  Power of Attorney.

     (a)  Each Partner and each Assignee hereby constitutes and appoints the
General Partner and, if a Liquidator shall have been selected pursuant to
Section 12.3, the Liquidator (and any successor to the Liquidator by merger,
transfer, assignment, election or otherwise) and each of their authorized
officers and attorneys-in-fact, as the case may be, with full power of
substitution, as its true and lawful agent and attorney-in-fact, with full power
and authority in his name, place and stead, to:

          (i)   execute, swear to, acknowledge, deliver, file and record in the
     appropriate public offices (A) all certificates, documents and other
     instruments (including this Agreement and the Certificate of Limited
     Partnership and all amendments or restatements hereof or thereof) that the
     General Partner or the Liquidator deems necessary or appropriate to form,
     qualify or continue the existence or qualification of the Partnership as a
     limited partnership (or a partnership in which the limited partners have
     limited liability) in the State of Delaware and in all other jurisdictions
     in which the Partnership may conduct business or own property; (B) all
     certificates, documents and other instruments that the General Partner or
     the Liquidator deems necessary or appropriate to reflect, in accordance
     with its terms, any amendment, change, modification or restatement of this
     Agreement; (C) all certificates, documents and other instruments (including
     conveyances and a certificate of cancellation) that the General Partner or
     the Liquidator deems necessary or appropriate to reflect the dissolution
     and liquidation of the Partnership pursuant to the terms of this Agreement;
     (D) all certificates, documents and other instruments relating to the
     admission, withdrawal, removal or substitution of any Partner pursuant to,
     or other events described in, Article IV, X, XI or XII; (E) all
     certificates, documents and other instruments relating to the determination
     of the rights, preferences and privileges of any class or series of
     Partnership Interests issued pursuant hereto; and (F) all certificates,
     documents and other instruments (including agreements and a certificate of
     merger) relating to a merger or consolidation of the Partnership pursuant
     to Article XIV; and

          (ii)  execute, swear to, acknowledge, deliver, file and record all
     ballots, consents, approvals, waivers, certificates, documents and other
     instruments necessary or appropriate, in the discretion of the General
     Partner or the Liquidator, to make, evidence, give, confirm or ratify any
     vote, consent, approval, agreement or other action that is made or given by
     the Partners hereunder or is consistent with the terms of this Agreement or
     is necessary or appropriate, in the discretion of the General Partner or
     the Liquidator, to effectuate the terms or intent of this Agreement;
     provided, that when required by any provision of this Agreement that
     establishes a percentage of the Limited Partners or of the Limited Partners
     of any class or series required to take any action, the General Partner and
     the Liquidator may exercise the power of attorney made in this Section
     2.6(a)(ii) only after the necessary vote, consent or approval of the
     Limited Partners or of the Limited Partners of such class or series, as
     applicable.

                                      -14-

     Nothing contained in this Section 2.6(a) shall be construed as authorizing
the General Partner to amend this Agreement except in accordance with Article
XIII or as may be otherwise expressly provided for in this Agreement.

     (b)  The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, and it shall survive and, to the maximum
extent permitted by law, not be affected by the subsequent death, incompetency,
disability, incapacity, dissolution, bankruptcy or termination of any Limited
Partner or Assignee and the transfer of all or any portion of such Limited
Partner's or Assignee's Partnership Interest and shall extend to such Limited
Partner's or Assignee's successors and assigns. Each such Limited Partner or
Assignee hereby agrees to be bound by any representation made by the General
Partner or the Liquidator acting in good faith pursuant to such power of
attorney; and each such Limited Partner or Assignee, to the maximum extent
permitted by law, hereby waives any and all defenses that may be available to
contest, negate or disaffirm the action of the General Partner or the Liquidator
taken in good faith under such power of attorney.  Each Limited Partner or
Assignee shall execute and deliver to the General Partner or the Liquidator,
within 15 days after receipt of the request therefor, such further designation,
powers of attorney and other instruments as the General Partner or the
Liquidator deems necessary to effectuate this Agreement and the purposes of the
Partnership.

     Section 2.7  Term.

     The term of the Partnership commenced upon the filing of the Certificate of
Limited Partnership in accordance with the Delaware Act and shall continue in
existence until the close of Partnership business on December 31, 2088 or until
the earlier dissolution of the Partnership in accordance with the provisions of
Article XII. The existence of the Partnership as a separate legal entity shall
continue until the cancellation of the Certificate of Limited Partnership as
provided in the Delaware Act.

     Section 2.8  Title to Partnership Assets.

     Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner or Assignee, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner, one or more of its Affiliates or one or more nominees, as
the General Partner may determine. The General Partner hereby declares and
warrants that any Partnership assets for which record title is held in the name
of the General Partner or one or more of its Affiliates or one or more nominees
shall be held by the General Partner or such Affiliate or nominee for the use
and benefit of the Partnership in accordance with the provisions of this
Agreement; provided, however, that the General Partner shall use reasonable
efforts to cause record title to such assets (other than those assets in respect
of which the General Partner determines that the expense and difficulty of
conveyancing makes transfer of record title to the Partnership impracticable) to
be vested in the Partnership as soon as reasonably practicable; provided,
further, that, prior to the withdrawal or removal of the General Partner or as
soon thereafter as practicable, the General Partner shall use reasonable efforts
to effect the transfer of record title to the Partnership and, prior to any such
transfer, will provide for the use of such

                                      -15-

assets in a manner satisfactory to the General Partner. All Partnership assets
shall be recorded as the property of the Partnership in its books and records,
irrespective of the name in which record title to such Partnership assets is
held.

                                  ARTICLE III
                          RIGHTS OF LIMITED PARTNERS

     Section 3.1  Limitation of Liability.

     The Limited Partners and the Assignees shall have no liability under this
Agreement except as expressly provided in this Agreement or in the Delaware Act.

     Section 3.2  Management of Business.

     No Limited Partner or Assignee, in its capacity as such, shall participate
in the operation, management or control (within the meaning of the Delaware Act)
of the Partnership's business, transact any business in the Partnership's name
or have the power to sign documents for or otherwise bind the Partnership. Any
action taken by any Affiliate of the General Partner or any officer, director,
employee, member, general partner, agent or trustee of the General Partner or
any of its Affiliates, or any officer, director, employee, member, general
partner, agent or trustee of a Group Member, in its capacity as such, shall not
be deemed to be participation in the control of the business of the Partnership
by a limited partner of the Partnership (within the meaning of Section 17-303(a)
of the Delaware Act) and shall not affect, impair or eliminate the limitations
on the liability of the Limited Partners or Assignees under this Agreement.

     Section 3.3  Outside Activities of the Limited Partners.

     Subject to the provisions of Section 7.5 and the Omnibus Agreement, which
shall continue to be applicable to the Persons referred to therein, regardless
of whether such Persons shall also be Limited Partners or Assignees, any Limited
Partner or Assignee shall be entitled to and may have business interests and
engage in business activities in addition to those relating to the Partnership,
including business interests and activities in direct competition with the
Partnership Group. Neither the Partnership nor any of the other Partners or
Assignees shall have any rights by virtue of this Agreement in any business
ventures of any Limited Partner or Assignee.

     Section 3.4  Rights of Limited Partners.

     (a)  In addition to other rights provided by this Agreement or by
applicable law, and except as limited by Section 3.4(b), each Limited Partner
shall have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon reasonable written demand
and at such Limited Partner's own expense:

          (i)   to obtain true and full information regarding the status of the
     business and financial condition of the Partnership;

          (ii)  promptly after becoming available, to obtain a copy of the
     Partnership's federal, state and local income tax returns for each year;

                                      -16-

          (iii)  to have furnished to him a current list of the name and last
     known business, residence or mailing address of each Partner;

          (iv)   to have furnished to him a copy of this Agreement and the
     Certificate of Limited Partnership and all amendments thereto, together
     with a copy of the executed copies of all powers of attorney pursuant to
     which this Agreement, the Certificate of Limited Partnership and all
     amendments thereto have been executed;

          (v)    to obtain true and full information regarding the amount of
     cash and a description and statement of the Net Agreed Value of any other
     Capital Contribution by each Partner and which each Partner has agreed to
     contribute in the future, and the date on which each became a Partner; and

          (vi)   to obtain such other information regarding the affairs of the
     Partnership as is just and reasonable.

     (b)  The General Partner may keep confidential from the Limited Partners
and Assignees, for such period of time as the General Partner deems reasonable,
(i) any information that the General Partner reasonably believes to be in the
nature of trade secrets or (ii) other information the disclosure of which the
General Partner in good faith believes (A) is not in the best interests of the
MLP or the Partnership Group, (B) could damage the MLP or the Partnership Group
or (C) that any Group Member is required by law or by agreement with any third
party to keep confidential (other than agreements with Affiliates of the
Partnership the primary purpose of which is to circumvent the obligations set
forth in this Section 3.4).

                                  ARTICLE IV
                      TRANSFERS OF PARTNERSHIP INTERESTS

     Section 4.1 Transfer Generally.

     (a)  The term "transfer," when used in this Agreement with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which the
General Partner assigns its General Partner Interest to another Person who
becomes the General Partner (or an Assignee) or by which the holder of a Limited
Partner Interest assigns such Limited Partner Interest to another Person who
becomes a Limited Partner (or an Assignee), and includes a sale, assignment,
gift, pledge, encumbrance, hypothecation, mortgage, exchange or any other
disposition by law or otherwise.

     (b)  No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article IV.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article IV shall be null and void.

     (c)  Nothing contained in this Agreement shall be construed to prevent a
disposition by any shareholder of the General Partner of any or all of the
issued and outstanding capital stock of the General Partner.

                                      -17-

     Section 4.2  Transfer of General Partner's Partnership Interest.

     No provision of this Agreement shall be construed to prevent (and the
Limited Partners do hereby expressly consent to) (i) the transfer by the General
Partner of all or a portion of its General Partner Interest to one or more
Affiliates, which transferred General Partner Interest, to the extent not
transferred to a successor General Partner, shall constitute a Limited Partner
Interest or (ii) the transfer by the General Partner, in whole and not in part,
of its General Partner Interest upon its merger, consolidation or other
combination into any other Person or the transfer by it of all or substantially
all of its assets to another Person if, in the case of a transfer described in
either clause (i) or (ii) of this sentence, the rights and duties of the General
Partner with respect to the General Partner Interest so transferred (or the
rights and duties of a Limited Partner with respect to the Limited Partner
Interest so transferred) are assumed by the transferee and the transferee agrees
to be bound by the provisions of this Agreement; provided, however, that in
either such case, the transferee is primarily controlled, directly or
indirectly, by the MLP General Partner or any Person primarily controlling,
directly or indirectly, the MLP General Partner; provided, further, that in
either such case, such transferee furnishes to the Partnership an Opinion of
Counsel that such merger, consolidation, combination, transfer or assumption
will not result in a loss of limited liability of the Limited Partners or cause
the Partnership to be taxable as a corporation or otherwise taxed as an entity
for federal income tax purposes.  In the case of a transfer pursuant to this
Section 4.2 to a Person proposed as a successor general partner of the
Partnership, the transferee or successor (as the case may be) shall be admitted
to the Partnership as the General Partner immediately prior to the transfer of
the Partnership Interest, and the business of the Partnership shall continue
without dissolution.

     Section 4.3  Transfer of a Limited Partner's Partnership Interest.

     A Limited Partner may transfer all, but not less than all, of its
Partnership Interest as a Limited Partner in connection with the merger,
consolidation or other combination of such Limited Partner with or into any
other Person or the transfer by such Limited Partner of all or substantially all
of its assets to another Person, and following any such transfer such Person may
become a Substituted Limited Partner pursuant to Article X.  Except as set forth
in the immediately preceding sentence and in Section 5.2, or in connection with
any pledge of (or any related foreclosure on) a Partnership Interest as a
Limited Partner solely for the purpose of securing, directly or indirectly,
indebtedness of the Partnership or the MLP, and except for the transfers
contemplated by Sections 5.2 and 10.1, a Limited Partner may not transfer all or
any part of its Partnership Interest or withdraw from the Partnership.

     Section 4.4  Restrictions on Transfers.

     (a) Notwithstanding the other provisions of this Article IV, no transfer of
any Partnership Interest shall be made if such transfer would (i) violate the
then applicable federal or state securities laws or rules and regulations of the
Commission, any state securities commission or any other governmental authority
with jurisdiction over such transfer, (ii) terminate the existence or
qualification of the Partnership or the MLP under the laws of the jurisdiction
of its formation or (iii) cause the Partnership or the MLP to be treated as an
association taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes (to the extent not already so treated or taxed).

                                      -18-

     (b) The General Partner may impose restrictions on the transfer of
Partnership Interests if a subsequent Opinion of Counsel determines that such
restrictions are necessary to avoid a significant risk of the Partnership or the
MLP becoming taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes. The restrictions may be imposed by making such
amendments to this Agreement as the General Partner may determine to be
necessary or appropriate to impose such restrictions.

                                   ARTICLE V
          CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS

     Section 5.1     Initial Contributions.

     In connection with the formation of the Partnership under the Delaware Act,
the Predecessor General Partner made an initial Capital Contribution to the
Partnership in the amount of $500.00 in exchange for an interest in the
Partnership and was admitted as Predecessor General Partner and as a Limited
Partner, and the MLP made an initial Capital Contribution to the Partnership in
the amount of $500.00 in exchange for an interest in the Partnership and was
admitted as a Limited Partner.

     Section 5.2     Contributions Pursuant to the Contribution and Conveyance
Agreement.

     (a) Pursuant to the Contribution and Conveyance Agreement, the Predecessor
General Partner contributed to the Partnership, as a Capital Contribution, all
of its interest in Gathering LLC and certain assets acquired by it from CT&T in
exchange for a continuation of its General Partner Interest and a Limited
Partner Interest. Immediately following such contribution, the Predecessor
General Partner transferred all of its Partnership Interests except a 1.0101%
General Partner Interest to the MLP in exchange for certain interests therein as
more particularly described in the Registration Statement.

     (b) Pursuant to the Contribution and Conveyance Agreement, the MLP
contributed to the Partnership, as a Capital Contribution (i) cash in the amount
of $96,700,000, (ii) all of the syndication costs incurred by the Partnership in
connection with the Initial Offering and (iii) all of its limited partner
interest in All American, in exchange for its Limited Partner Interest.

     (c) Pursuant to the Contribution and Conveyance Agreement, the Partnership
has assumed certain indebtedness relating to the Assets as described in the
Contribution and Conveyance Agreement.

     (d) Notwithstanding anything else herein contained, if the aggregate excess
net working capital reflected on the balance sheets of the Partnership and All
American that are prepared in accordance with Section 7.3 of the Contribution
and Conveyance Agreement is in excess of $8,000,000 then the Partnership shall
distribute to the General Partner an amount of cash equal to the difference
between (i) such excess and (ii) the amount of any similar distribution made to
the General Partner by All American. In the event that such aggregate excess net
working capital is less than $8,000,000, the General Partner shall contribute to
the Partnership, as a Capital Contribution, cash in an amount equal to the
amount that, when added to the amount of the similar contribution made to All
American by the General Partner, would

                                      -19-

cause the aggregate excess net working capital of the Partnership and All
American to be equal to $8,000,000.

     Section 5.3     Additional Capital Contributions.

With the consent of the General Partner, any Limited Partner may, but shall
not be obligated to, make additional Capital Contributions to the Partnership.
Contemporaneously with the making of any Capital Contributions by a Limited
Partner, in addition to those provided in Sections 5.1 and 5.2, the General
Partner shall be obligated to make an additional Capital Contribution to the
Partnership in an amount equal to 0.001 divided by 99.999 times the amount of
the additional Capital Contribution then made by such Limited Partner.   Except
as set forth in the immediately preceding sentence and in Article XII, the
General Partner shall not be obligated to make any additional Capital
Contributions to the Partnership.

     Section 5.4     Interest and Withdrawal.

     No interest shall be paid by the Partnership on Capital Contributions. No
Partner or Assignee shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent, if any, that distributions made pursuant to
this Agreement or upon termination of the Partnership may be considered as such
by law and then only to the extent provided for in this Agreement. Except to the
extent expressly provided in this Agreement, no Partner or Assignee shall have
priority over any other Partner or Assignee either as to the return of Capital
Contributions or as to profits, losses or distributions. Any such return shall
be a compromise to which all Partners and Assignees agree within the meaning of
Section 17-502(b) of the Delaware Act.

     Section 5.5     Capital Accounts.

     (a) The Partnership shall maintain for each Partner (or a beneficial owner
of Partnership Interests held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the General
Partner in its sole discretion) owning a Partnership Interest a separate Capital
Account with respect to such Partnership Interest in accordance with the rules
of Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital Account shall be
increased by (i) the amount of all Capital Contributions made to the Partnership
with respect to such Partnership Interest pursuant to this Agreement and (ii)
all items of Partnership income and gain (including, without limitation, income
and gain exempt from tax) computed in accordance with Section 5.5(b) and
allocated with respect to such Partnership Interest pursuant to Section 6.1, and
decreased by (x) the amount of cash or Net Agreed Value of all actual and deemed
distributions of cash or property made with respect to such Partnership Interest
pursuant to this Agreement and (y) all items of Partnership deduction and loss
computed in accordance with Section 5.5(b) and allocated with respect to such
Partnership Interest pursuant to Section 6.1.

     (b) For purposes of computing the amount of any item of income, gain, loss
or deduction which is to be allocated pursuant to Article VI and is to be
reflected in the Partners' Capital Accounts, the determination, recognition and
classification of any such item shall be the

                                      -20-

same as its determination, recognition and classification for federal income tax
purposes (including, without limitation, any method of depreciation, cost
recovery or amortization used for that purpose), provided, that:

          (i)   Solely for purposes of this Section 5.5, the Partnership shall
     be treated as owning directly its proportionate share (as determined by the
     General Partner) of all property owned by any OLP Subsidiary that is
     classified as a partnership for federal income tax purposes.

          (ii)  All fees and other expenses incurred by the Partnership to
     promote the sale of (or to sell) a Partnership Interest that can neither be
     deducted nor amortized under Section 709 of the Code, if any, shall, for
     purposes of Capital Account maintenance, be treated as an item of deduction
     at the time such fees and other expenses are incurred and shall be
     allocated among the Partners pursuant to Section 6.1.

          (iii) Except as otherwise provided in Treasury Regulation Section
     1.704-1(b)(2)(iv)(m), computation of all items of income, gain, loss and
     deduction shall be made without regard to any election under Section 754 of
     the Code which may be made by the Partnership and, as to those items
     described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code, without
     regard to the fact that such items are not includable in gross income or
     are neither currently deductible nor capitalized for federal income tax
     purposes. To the extent an adjustment to the adjusted tax basis of any
     Partnership asset pursuant to Section 734(b) or 743(b) of the Code is
     required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to
     be taken into account in determining Capital Accounts, the amount of such
     adjustment in the Capital Accounts shall be treated as an item of gain or
     loss.

          (iv)  Any income, gain or loss attributable to the taxable disposition
     of any Partnership property shall be determined as if the adjusted basis of
     such property as of such date of disposition were equal in amount to the
     Partnership's Carrying Value with respect to such property as of such date.

          (v)   In accordance with the requirements of Section 704(b) of the
     Code, any deductions for depreciation, cost recovery or amortization
     attributable to any Contributed Property shall be determined as if the
     adjusted basis of such property on the date it was acquired by the
     Partnership were equal to the Agreed Value of such property. Upon an
     adjustment pursuant to Section 5.5(d) to the Carrying Value of any
     Partnership property subject to depreciation, cost recovery or
     amortization, any further deductions for such depreciation, cost recovery
     or amortization attributable to such property shall be determined (A) as if
     the adjusted basis of such property were equal to the Carrying Value of
     such property immediately following such adjustment and (B) using a rate of
     depreciation, cost recovery or amortization derived from the same method
     and useful life (or, if applicable, the remaining useful life) as is
     applied for federal income tax purposes; provided, however, that, if the
     asset has a zero adjusted basis for federal income tax purposes,
     depreciation, cost recovery or amortization derived from the same method
     and useful life (or, if applicable, the remaining useful life) as is
     applied for federal income tax purposes; provided, however, that, if the
     asset has a zero adjusted basis for federal

                                      -21-

     income tax purposes, depreciation, cost recovery or amortization deductions
     shall be determined using any reasonable method that the General Partner
     may adopt.

          (vi)  If the Partnership's adjusted basis in a depreciable or cost
     recovery property is reduced for federal income tax purposes pursuant to
     Section 48(q)(1) or 48(q)(3) of the Code, the amount of such reduction
     shall, solely for purposes hereof, be deemed to be an additional
     depreciation or cost recovery deduction in the year such property is placed
     in service and shall be allocated among the Partners pursuant to Section
     6.1. Any restoration of such basis pursuant to Section 48(q)(2) of the Code
     shall, to the extent possible, be allocated in the same manner to the
     Partners to whom such deemed deduction was allocated.

     (c) A transferee of a Partnership Interest shall succeed to a pro rata
portion of the Capital Account of the transferor relating to the Partnership
Interest so transferred.

     (d)  (i)  In accordance with Treasury Regulation Section 1.704-
     1(b)(2)(iv)(f), on an issuance of additional Partnership Interests for cash
     or Contributed Property or the conversion of the General Partner's
     Partnership Interest to Common Units pursuant to Section 11.3(a), the
     Capital Accounts of all Partners and the Carrying Value of each Partnership
     property immediately prior to such issuance shall be adjusted upward or
     downward to reflect any Unrealized Gain or Unrealized Loss attributable to
     such Partnership property, as if such Unrealized Gain or Unrealized Loss
     had been recognized on an actual sale of each such property immediately
     prior to such issuance and had been allocated to the Partners at such time
     pursuant to Section 6.1 in the same manner as any item of gain or loss
     actually recognized during such period would have been allocated. In
     determining such Unrealized Gain or Unrealized Loss, the aggregate cash
     amount and fair market value of all Partnership assets (including, without
     limitation, cash or cash equivalents) immediately prior to the issuance of
     additional Partnership Interests shall be determined by the General Partner
     using such reasonable method of valuation as it may adopt; provided,
     however, that the General Partner, in arriving at such valuation, must take
     fully into account the fair market value of the Partnership Interests of
     all Partners at such time. The General Partner shall allocate such
     aggregate value among the assets of the Partnership (in such manner as it
     determines in its discretion to be reasonable) to arrive at a fair market
     value for individual properties.

          (ii) In accordance with Treasury Regulation Section 1.704-
     1(b)(2)(iv)(f), immediately prior to any actual or deemed distribution to a
     Partner of any Partnership property (other than a distribution of cash that
     is not in redemption or retirement of a Partnership Interest), the Capital
     Accounts of all Partners and the Carrying Value of all Partnership property
     shall be adjusted upward or downward to reflect any Unrealized Gain or
     Unrealized Loss attributable to such Partnership property, as if such
     Unrealized Gain or Unrealized Loss had been recognized in a sale of such
     property immediately prior to such distribution for an amount equal to its
     fair market value, and had been allocated to the Partners, at such time,
     pursuant to Section 6.1 in the same manner as any item of gain or loss
     actually recognized during such period would have been allocated. In
     determining such Unrealized Gain or Unrealized Loss the aggregate cash
     amount and fair market value of all Partnership assets (including, without
     limitation, cash or cash

                                      -22-

     equivalents) immediately prior to a distribution shall (A) in the case of
     an actual distribution which is not made pursuant to Section 12.4 or in the
     case of a deemed contribution and/or distribution occurring as a result of
     a termination of the Partnership pursuant to Section 708 of the Code, be
     determined and allocated in the same manner as that provided in Section
     5.5(d)(i) or (B) in the case of a liquidating distribution pursuant to
     Section 12.4, be determined and allocated by the Liquidator using such
     reasonable method of valuation as it may adopt.

     Section 5.6     Loans from Partners.

     Loans by a Partner to the Partnership shall not constitute Capital
Contributions. If any Partner shall advance funds to the Partnership in excess
of the amounts required hereunder to be contributed by it to the capital of the
Partnership, the making of such excess advances shall not result in any increase
in the amount of the Capital Account of such Partner. The amount of any such
excess advances shall be a debt obligation of the Partnership to such Partner
and shall be payable or collectible only out of the Partnership assets in
accordance with the terms and conditions upon which such advances are made.

     Section 5.7     Limited Preemptive Rights.

     Except as provided in Section 5.3, no Person shall have preemptive,
preferential or other similar rights with respect to (a) additional Capital
Contributions; (b) issuance or sale of any class or series of Partnership
Interests, whether unissued, held in the treasury or hereafter created; (c)
issuance of any obligations, evidences of indebtedness or other securities of
the Partnership convertible into or exchangeable for, or carrying or accompanied
by any rights to receive, purchase or subscribe to, any such Partnership
Interests; (d) issuance of any right of subscription to or right to receive, or
any warrant or option for the purchase of, any such Partnership Interests; or
(e) issuance or sale of any other securities that may be issued or sold by the
Partnership.

     Section 5.8     Fully Paid and Non-Assessable Nature of Partnership
Interests.

     All Partnership Interests issued to Limited Partners pursuant to, and in
accordance with the requirements of, this Article V shall be fully paid and non-
assessable Partnership Interests, except as such non-assessability may be
affected by Section 17-607 of the Delaware Act.

                                  ARTICLE VI
                         ALLOCATIONS AND DISTRIBUTIONS

     Section 6.1     Allocations for Capital Account Purposes.

     For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Section 5.5(b)) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.

     (a) Net Income.   After giving effect to the special allocations set forth
         ----------
in Section 6.1(d), Net Income for each taxable year and all items of income,
gain, loss and

                                      -23-

deduction taken into account in computing Net Income for such taxable year shall
be allocated among the Partners as follows:

          (i)  First, 100% to the General Partner, until the aggregate Net
     Income allocated to the General Partner pursuant to this Section 6.1(a)(i)
     for the current taxable year and all previous taxable years is equal to the
     aggregate Net Losses allocated to the General Partner pursuant to Section
     6.1(b)(ii) for all previous taxable years;

          (ii) Second, 100% to the General Partner and the Limited Partners in
     accordance with their respective Percentage Interests.

     (b) Net Losses.  After giving effect to the special allocations set forth
         ----------
in Section 6.1(d), Net Losses for each taxable period and all items of income,
gain, loss and deduction taken into account in computing Net Losses for such
taxable period shall be allocated among the Partners as follows:

          (i)  First, 100% to the General Partner and the Limited Partners in
     accordance with their respective Percentage Interests; provided, however,
     that the Net Losses shall not be allocated to a Limited Partner pursuant to
     this Section 6.1(b)(i) to the extent that such allocation would cause a
     Limited Partner to have deficit balance in its Adjusted Capital Account at
     the end of such taxable year (or increase any existing deficit balance in
     such Limited Partner's Adjusted Capital Account);

          (ii) Second, the balance, if any, 100% to the General Partner.

     (c) Net Termination Gains and Losses.  After giving effect to the special
         --------------------------------
allocations set forth in Section 6.1(d), all items of income, gain, loss and
deduction taken into account in computing Net Termination Gain or Net
Termination Loss for such taxable period shall be allocated in the same manner
as such Net Termination Gain or Net Termination Loss is allocated hereunder.
All allocations under this Section 6.1(c) shall be made after Capital Account
balances have been adjusted by all other allocations provided under this Section
6.1 and after all distributions of Available Cash provided under Section 6.4
have been made with respect to the taxable period ending on or before the
Liquidation Date; provided, however, that solely for purposes of this Section
6.1(c), Capital Accounts shall not be adjusted for distributions made pursuant
to Section 12.4.

          (i) If a Net Termination Gain is recognized (or deemed recognized
     pursuant to Section 5.5(d)), such Net Termination Gain shall be allocated
     among the Partners in the following manner (and the Capital Accounts of the
     Partners shall be increased by the amount so allocated in each of the
     following subclauses, in the order listed, before an allocation is made
     pursuant to the next succeeding subclause):

               (A) First, to each Partner having a deficit balance in its
          Capital Account, in the proportion that such deficit balance bears to
          the total deficit balances in the Capital Accounts of all Partners,
          until each such Partner has been allocated Net Termination Gain equal
          to any such deficit balance in its Capital Account; and

                                      -24-

               (B) Second, 100% to the General Partner and the Limited Partners
          in accordance with their respective Percentage Interests.

          (ii) If a Net Termination Loss is recognized (or deemed recognized
     pursuant to Section 5.5(d)), such Net Termination Loss shall be allocated
     among the Partners in the following manner:

               (A) First, to the General Partner and the Limited Partners in
          proportion to, and to the extent of, the positive balances in their
          respective Capital Accounts; and

               (B) Second, the balance, if any, 100% to the General Partner.

     (d) Special Allocations.   Notwithstanding any other provision of this
         -------------------
Section 6.1, the following special allocations shall be made for such taxable
period:

          (i)     Partnership Minimum Gain Chargeback.   Notwithstanding any
                  -----------------------------------
     other provision of this Section 6.1, if there is a net decrease in
     Partnership Minimum Gain during any Partnership taxable period, each
     Partner shall be allocated items of Partnership income and gain for such
     period (and, if necessary, subsequent periods) in the manner and amounts
     provided in Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and
     1.704-2(j)(2)(i), or any successor provision. For purposes of this Section
     6.1(d), each Partner's Adjusted Capital Account balance shall be
     determined, and the allocation of income or gain required hereunder shall
     be effected, prior to the application of any other allocations pursuant to
     this Section 6.1(d) with respect to such taxable period (other than an
     allocation pursuant to Sections 6.1(d)(v) and 6.1(d)(vi)). This Section
     6.1(d)(i) is intended to comply with the Partnership Minimum Gain
     chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall
     be interpreted consistently therewith.

          (ii)    Chargeback of Partner Nonrecourse Debt Minimum Gain.
                  ---------------------------------------------------
     Notwithstanding the other provisions of this Section 6.1 (other than
     Section 6.1(d)(i)), except as provided in Treasury Regulation Section
     1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse Debt
     Minimum Gain during any Partnership taxable period, any Partner with a
     share of Partner Nonrecourse Debt Minimum Gain at the beginning of such
     taxable period shall be allocated items of Partnership income and gain for
     such period (and, if necessary, subsequent periods) in the manner and
     amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and 1.704-
     2(j)(2)(ii), or any successor provisions. For purposes of this Section
     6.1(d), each Partner's Adjusted Capital Account balance shall be
     determined, and the allocation of income or gain required hereunder shall
     be effected, prior to the application of any other allocations pursuant to
     this Section 6.1(d), other than Section 6.1(d)(i) and other than an
     allocation pursuant to Sections 6.1(d)(v) and 6.1(d)(vi), with respect to
     such taxable period. This Section 6.1(d)(ii) is intended to comply with the
     chargeback of items of income and gain requirement in Treasury Regulation
     Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

                                      -25-

          (iii)   Qualified Income Offset.   In the event any Partner
                  -----------------------
     unexpectedly receives any adjustments, allocations or distributions
     described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-
     1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Partnership income
     and gain shall be specially allocated to such Partner in an amount and
     manner sufficient to eliminate, to the extent required by the Treasury
     Regulations promulgated under Section 704(b) of the Code, the deficit
     balance, if any, in its Adjusted Capital Account created by such
     adjustments, allocations or distributions as quickly as possible unless
     such deficit balance is otherwise eliminated pursuant to Section 6.1(d)(i)
     or (ii).

          (iv)    Gross Income Allocations.   In the event any Partner has a
                  ------------------------
     deficit balance in its Capital Account at the end of any Partnership
     taxable period in excess of the sum of (A) the amount such Partner is
     required to restore pursuant to the provisions of this Agreement and (B)
     the amount such Partner is deemed obligated to restore pursuant to Treasury
     Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such Partner shall be
     specially allocated items of Partnership gross income and gain in the
     amount of such excess as quickly as possible; provided, that an allocation
     pursuant to this Section 6.1(d)(iv) shall be made only if and to the extent
     that such Partner would have a deficit balance in its Capital Account as
     adjusted after all other allocations provided for in this Section 6.1 have
     been tentatively made as if this Section 6.1(d)(iv) were not in this
     Agreement.

          (v)     Nonrecourse Deductions.   Nonrecourse Deductions for any
                  ----------------------
     taxable period shall be allocated to the Partners in accordance with their
     respective Percentage Interests. If the General Partner determines in its
     good faith discretion that the Partnership's Nonrecourse Deductions must be
     allocated in a different ratio to satisfy the safe harbor requirements of
     the Treasury Regulations promulgated under Section 704(b) of the Code, the
     General Partner is authorized, upon notice to the other Partners, to revise
     the prescribed ratio to the numerically closest ratio that does satisfy
     such requirements.

          (vi)    Partner Nonrecourse Deductions.   Partner Nonrecourse
                  ------------------------------
     Deductions for any taxable period shall be allocated 100% to the Partner
     that bears the Economic Risk of Loss with respect to the Partner
     Nonrecourse Debt to which such Partner Nonrecourse Deductions are
     attributable in accordance with Treasury Regulation Section 1.704-2(i). If
     more than one Partner bears the Economic Risk of Loss with respect to a
     Partner Nonrecourse Debt, such Partner Nonrecourse Deductions attributable
     thereto shall be allocated between or among such Partners in accordance
     with the ratios in which they share such Economic Risk of Loss.

          (vii)   Nonrecourse Liabilities.   For purposes of Treasury Regulation
                  -----------------------
     Section 1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of
     the Partnership in excess of the sum of (A) the amount of Partnership
     Minimum Gain and (B) the total amount of Nonrecourse Built-in Gain shall be
     allocated among the Partners in accordance with their respective Percentage
     Interests.

          (viii)  Code Section 754 Adjustments.   To the extent an adjustment to
                  ----------------------------
     the adjusted tax basis of any Partnership asset pursuant to Section 734(b)
     or 743(b) of the

                                      -26-

     Code is required, pursuant to Treasury Regulation Section 1.704-
     1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
     the amount of such adjustment to the Capital Accounts shall be treated as
     an item of gain (if the adjustment increases the basis of the asset) or
     loss (if the adjustment decreases such basis), and such item of gain or
     loss shall be specially allocated to the Partners in a manner consistent
     with the manner in which their Capital Accounts are required to be adjusted
     pursuant to such Section of the Treasury Regulations.

          (ix)    Curative Allocation.
                  -------------------

                  (A) Notwithstanding any other provision of this Section 6.1,
          other than the Required Allocations, the Required Allocations shall be
          taken into account in making the Agreed Allocations so that, to the
          extent possible, the net amount of items of income, gain, loss and
          deduction allocated to each Partner pursuant to the Required
          Allocations and the Agreed Allocations, together, shall be equal to
          the net amount of such items that would have been allocated to each
          such Partner under the Agreed Allocations had the Required Allocations
          and the related Curative Allocation not otherwise been provided in
          this Section 6.1. Notwithstanding the preceding sentence, Required
          Allocations relating to (1) Nonrecourse Deductions shall not be taken
          into account except to the extent that there has been a decrease in
          Partnership Minimum Gain and (2) Partner Nonrecourse Deductions shall
          not be taken into account except to the extent that there has been a
          decrease in Partner Nonrecourse Debt Minimum Gain. Allocations
          pursuant to this Section 6.1(d)(ix)(A) shall only be made with respect
          to Required Allocations to the extent the General Partner reasonably
          determines that such allocations will otherwise be inconsistent with
          the economic agreement among the Partners. Further, allocations
          pursuant to this Section 6.1(d)(ix)(A) shall be deferred with respect
          to allocations pursuant to clauses (1) and (2) hereof to the extent
          the General Partner reasonably determines that such allocations are
          likely to be offset by subsequent Required Allocations.

                  (B) The General Partner shall have reasonable discretion, with
          respect to each taxable period, to (1) apply the provisions of Section
          6.1(d)(ix)(A) in whatever order is most likely to minimize the
          economic distortions that might otherwise result from the Required
          Allocations, and (2) divide all allocations pursuant to Section
          6.1(d)(ix)(A) among the Partners in a manner that is likely to
          minimize such economic distortions.

     Section 6.2     Allocations for Tax Purposes.

     (a) Except as otherwise provided herein, for federal income tax purposes,
each item of income, gain, loss and deduction shall be allocated among the
Partners in the same manner as its correlative item of "book" income, gain, loss
or deduction is allocated pursuant to Section 6.1.

     (b) In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost

                                      -27-

recovery deductions shall be allocated for federal income tax purposes among the
Partners as follows:

          (i)    (A) In the case of a Contributed Property, such items
     attributable thereto shall be allocated among the Partners in the manner
     provided under Section 704(c) of the Code that takes into account the
     variation between the Agreed Value of such property and its adjusted basis
     at the time of contribution; and (B) any item of Residual Gain or Residual
     Loss attributable to a Contributed Property shall be allocated among the
     Partners in the same manner as its correlative item of "book" gain or loss
     is allocated pursuant to Section 6.1.

          (ii)   (A) In the case of an Adjusted Property, such items shall (1)
     first, be allocated among the Partners in a manner consistent with the
     principles of Section 704(c) of the Code to take into account the
     Unrealized Gain or Unrealized Loss attributable to such property and the
     allocations thereof pursuant to Section 5.5(d)(i) or 5.5(d)(ii), and (2)
     second, in the event such property was originally a Contributed Property,
     be allocated among the Partners in a manner consistent with Section
     6.2(b)(i)(A); and (B) any item of Residual Gain or Residual Loss
     attributable to an Adjusted Property shall be allocated among the Partners
     in the same manner as its correlative item of "book" gain or loss is
     allocated pursuant to Section 6.1.

          (iii)  The General Partner shall apply the principles of Treasury
     Regulation Section 1.704-3(d) to eliminate Book-Tax Disparities.

     (c) For the proper administration of the Partnership and for the
preservation of uniformity of the Units or other limited partner interests of
the MLP (or any class or classes thereof), the General Partner shall have sole
discretion to (i) adopt such conventions as it deems appropriate in determining
the amount of depreciation, amortization and cost recovery deductions; (ii) make
special allocations for federal income tax purposes of income (including,
without limitation, gross income) or deductions; and (iii) amend the provisions
of this Agreement as appropriate (x) to reflect the proposal or promulgation of
Treasury Regulations under Section 704(b) or Section 704(c) of the Code or (y)
otherwise to preserve or achieve uniformity of the Units or other limited
partner interests of the MLP (or any class or classes thereof). The General
Partner may adopt such conventions, make such allocations and make such
amendments to this Agreement as provided in this Section 6.2(c) only if such
conventions, allocations or amendments would not have a material adverse effect
on the Partners, the holders of any class or classes of Units or other limited
partner interests of the MLP issued and outstanding or the Partnership and if
such allocations are consistent with the principles of Section 704 of the Code.

     (d) The General Partner in its discretion may determine to depreciate or
amortize the portion of an adjustment under Section 743(b) of the Code
attributable to unrealized appreciation in any Adjusted Property (to the extent
of the unamortized Book-Tax Disparity) using a predetermined rate derived from
the depreciation or amortization method and useful life applied to the
Partnership's common basis of such property, despite any inconsistency of such
approach with Treasury Regulation Section 1.167(c)-l(a)(6). If the General
Partner determines that such reporting position cannot reasonably be taken, the
General Partner may adopt depreciation and amortization conventions under which
all purchasers acquiring limited partner interests of the

                                      -28-

MLP in the same month would receive depreciation and amortization deductions,
based upon the same applicable rate as if they had purchased a direct interest
in the Partnership's property. If the General Partner chooses not to utilize
such aggregate method, the General Partner may use any other reasonable
depreciation and amortization conventions to preserve the uniformity of the
intrinsic tax characteristics of any limited partner interests of the MLP that
would not have a material adverse effect on the Partners or the holders of any
class or classes of limited partner interests of the MLP.

     (e) Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after taking
into account other required allocations of gain pursuant to this Section 6.2, be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.

     (f) All items of income, gain, loss, deduction and credit recognized by the
Partnership for federal income tax purposes and allocated to the Partners in
accordance with the provisions hereof shall be determined without regard to any
election under Section 754 of the Code which may be made by the Partnership;
provided, however, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.

     (g) The General Partner may adopt such methods of allocation of income,
gain, loss or deduction between a transferor and a transferee of a Partnership
Interest as it determines necessary, to the extent permitted or required by
Section 706 of the Code and the regulations or rulings promulgated thereunder.

     (h) Allocations that would otherwise be made to a Partner under the
provisions of this Article VI shall instead be made to the beneficial owner of
Partnership Interests held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the General
Partner in its sole discretion.

     Section 6.3     Distributions.

     (a) Within 45 days following the end of each Quarter commencing with the
Quarter ending on December 31, 1998, an amount equal to 100% of Available Cash
with respect to such Quarter shall, subject to Section 17-607 of the Delaware
Act, be distributed in accordance with this Article VI by the Partnership to the
Partners in accordance with their respective Percentage Interests. The
immediately preceding sentence shall not require any distribution of cash if and
to the extent such distribution would be prohibited by applicable law or by any
loan agreement, security agreement, mortgage, debt instrument or other agreement
or obligation to which the Partnership is a party or by which it is bound or its
assets are subject. All distributions required to be made under this Agreement
shall be made subject to Section 17-607 of the Delaware Act.

     (b) In the event of the dissolution and liquidation of the Partnership, all
receipts received during or after the Quarter in which the Liquidation Date
occurs, other than from

                                      -29-

borrowings described in (a)(ii) of the definition of Available Cash, shall be
applied and distributed solely in accordance with, and subject to the terms and
conditions of, Section 12.4.

     (c) The General Partner shall have the discretion to treat as a
distribution of Available Cash to all or less than all of the Partners or
Assignees (i) taxes paid by any member of the Partnership Group on behalf of
such Partners or Assignees, (ii) amounts withheld by any member of the
Partnership Group for taxes with respect to such Partners or Assignees and (iii)
amounts seized by any taxing authority from any member of the Partnership Group
with respect to taxes owed by such Partners or Assignees.

                                  ARTICLE VII
                     MANAGEMENT AND OPERATION OF BUSINESS

     Section 7.1     Management.

     (a) The General Partner shall conduct, direct and manage all activities of
the Partnership. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership shall be
exclusively vested in the General Partner, and no Limited Partner or Assignee
shall have any management power over the business and affairs of the
Partnership. In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or which are granted to
the General Partner under any other provision of this Agreement, the General
Partner, subject to Section 7.3, shall have full power and authority to do all
things and on such terms as it, in its sole discretion, may deem necessary or
appropriate to conduct the business of the Partnership, to exercise all powers
set forth in Section 2.5 and to effectuate the purposes set forth in Section
2.4, including the following:

          (i)    the making of any expenditures, the lending or borrowing of
     money, the assumption or guarantee of, or other contracting for,
     indebtedness and other liabilities, the issuance of evidences of
     indebtedness, including indebtedness that is convertible into a Partnership
     Interest, and the incurring of any other obligations;

          (ii)   the making of tax, regulatory and other filings, or rendering
     of periodic or other reports to governmental or other agencies having
     jurisdiction over the business or assets of the Partnership;

          (iii)  the acquisition, disposition, mortgage, pledge, encumbrance,
     hypothecation or exchange of any or all of the assets of the Partnership or
     the merger or other combination of the Partnership with or into another
     Person (the matters described in this clause (iii) being subject, however,
     to any prior approval that may be required by Section 7.3);

          (iv)   the use of the assets of the Partnership (including cash on
     hand) for any purpose consistent with the terms of this Agreement,
     including the financing of the conduct of the operations of the Partnership
     Group, subject to Section 7.6, the lending of funds to other Persons
     (including the MLP and any member of the Partnership Group), the repayment
     of obligations of the MLP or any member of the Partnership Group and the
     making of capital contributions to any member of the Partnership Group;

                                      -30-

          (v)     the negotiation, execution and performance of any contracts,
     conveyances or other instruments (including instruments that limit the
     liability of the Partnership under contractual arrangements to all or
     particular assets of the Partnership, with the other party to the contract
     to have no recourse against the General Partner or its assets other than
     its interest in the Partnership, even if same results in the terms of the
     transaction being less favorable to the Partnership than would otherwise be
     the case);

          (vi)    the distribution of Partnership cash;

          (vii)   the selection and dismissal of employees (including employees
     having titles such as "president," "vice president," "secretary" and
     "treasurer") and agents, outside attorneys, accountants, consultants and
     contractors and the determination of their compensation and other terms of
     employment or hiring;

          (viii)  the maintenance of such insurance for the benefit of the
     Partnership Group and the Partners as it deems necessary or appropriate;

          (ix)    the formation of, or acquisition of an interest in, and the
     contribution of property and the making of loans to, any further limited or
     general partnerships, joint ventures, corporations or other relationships
     subject to the restrictions set forth in Section 2.4;

          (x)     the control of any matters affecting the rights and
     obligations of the Partnership, including the bringing and defending of
     actions at law or in equity and otherwise engaging in the conduct of
     litigation and the incurring of legal expense and the settlement of claims
     and litigation; and

          (xi)    the indemnification of any Person against liabilities and
     contingencies to the extent permitted by law.

     (b)  Notwithstanding any other provision of this Agreement, the MLP
Agreement, the Delaware Act or any applicable law, rule or regulation, each of
the Partners and Assignees and each other Person who may acquire an interest in
the Partnership hereby (i) approves, ratifies and confirms the execution,
delivery and performance by the parties thereto of the Partnership Agreement,
the MLP Agreement, the Underwriting Agreement, the Omnibus Agreement, the
Contribution and Conveyance Agreement and the other agreements and documents
described in or filed as exhibits to the Registration Statement that are related
to the transactions contemplated by the Registration Statement; (ii) agrees that
the General Partner (on its own or through any officer of the Partnership) is
authorized to execute, deliver and perform the agreements referred to in clause
(i) of this sentence and the other agreements, acts, transactions and matters
described in or contemplated by the Registration Statement on behalf of the
Partnership without any further act, approval or vote of the Partners or the
Assignees or the other Persons who may acquire an interest in the Partnership;
and (iii) agrees that the execution, delivery or performance by the General
Partner, the MLP, any Group Member or any Affiliate of any of them, of this
Agreement or any agreement authorized or permitted under this Agreement
(including the exercise by the General Partner or any Affiliate of the General
Partner of the rights accorded pursuant to Article XV), shall not constitute a
breach by the General Partner of any duty that the General Partner

                                      -31-

may owe the Partnership or the Limited Partners or any other Persons under this
Agreement (or any other agreements) or of any duty stated or implied by law or
equity.

     Section 7.2    Certificate of Limited Partnership.

     The Predecessor General Partner caused the Certificate of Limited
Partnership to be filed with the Secretary of State of the State of Delaware as
required by the Delaware Act and the General Partner shall use all reasonable
efforts to cause to be filed such other certificates or documents as may be
determined by the General Partner in its sole discretion to be reasonable and
necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware or any other state in
which the Partnership may elect to do business or own property. To the extent
that such action is determined by the General Partner in its sole discretion to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate of Limited Partnership and do
all things to maintain the Partnership as a limited partnership (or a
partnership or other entity in which the limited partners have limited
liability) under the laws of the State of Delaware or of any other state in
which the Partnership may elect to do business or own property. Subject to the
terms of Section 3.4(a), the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate of Limited
Partnership, any qualification document or any amendment thereto to any Limited
Partner or Assignee.

     Section 7.3    Restrictions on General Partner's Authority.

     (a)  The General Partner may not, without written approval of the specific
act by the Limited Partners or by other written instrument executed and
delivered by the Limited Partners subsequent to the date of this Agreement, take
any action in contravention of this Agreement, including, except as otherwise
provided in this Agreement, (i) committing any act that would make it impossible
to carry on the ordinary business of the Partnership; (ii) possessing
Partnership property, or assigning any rights in specific Partnership property,
for other than a Partnership purpose; (iii) admitting a Person as a Partner;
(iv) amending this Agreement in any manner or (v) transferring its General
Partner Interest.

     (b)  Except as provided in Articles XII and XIV, the General Partner may
not sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related transactions
(including by way of merger, consolidation or other combination) or approve on
behalf of the Partnership the sale, exchange or other disposition of all or
substantially all of the assets of the Partnership, without the approval of the
Limited Partners; provided however that this provision shall not preclude or
limit the General Partner's ability to mortgage, pledge, hypothecate or grant a
security interest in all or substantially all of the assets of the Partnership
and shall not apply to any forced sale of any or all of the assets of the
Partnership pursuant to the foreclosure of, or other realization upon, any such
encumbrance. Without the approval of at least a Unit Majority, the General
Partner shall not (i) consent to any amendment to this Agreement or, except as
expressly permitted by Section 7.9(d) of the MLP Agreement, take any action
permitted to be taken by a Partner, in either case, that would have a material
adverse effect on the MLP as a Partner or (ii) except as permitted under
Sections 4.2, 11.1 and 11.2 of this Agreement, elect a successor general partner
of the Partnership.

                                      -32-

     Section 7.4    Reimbursement of the General Partner.

     (a)  Except as provided in this Section 7.4 and elsewhere in this Agreement
or in the MLP Agreement, the General Partner shall not be compensated for its
services as General Partner or as general partner of any Group Member.

     (b)  The General Partner, and the MLP General Partner on behalf of the
General Partner, shall be reimbursed on a monthly basis, or such other
reasonable basis as the General Partner may determine in its sole discretion,
for (i) all direct and indirect expenses it incurs or payments it makes on
behalf of the Partnership (including salary, bonus, incentive compensation and
other amounts paid to any Person including employees of the MLP General Partner
and other Affiliates of the General Partner to perform services for the
Partnership or for the General Partner or the MLP General Partner on behalf of
the General Partner in the discharge of its duties to the Partnership), and (ii)
all other necessary or appropriate expenses allocable to the Partnership or
otherwise reasonably incurred by the General Partner in connection with
operating the Partnership's business (including expenses allocated to the
General Partner by its Affiliates). The General Partner shall determine the
expenses that are allocable to the Partnership in any reasonable manner
determined by the General Partner in its sole discretion. Reimbursements
pursuant to this Section 7.4 shall be in addition to any reimbursement to the
General Partner as a result of indemnification pursuant to Section 7.7.

     (c)  Subject to Section 5.7, the General Partner, in its sole discretion
and without the approval of the Limited Partners (who shall have no right to
vote in respect thereof), may propose and adopt on behalf of the Partnership
employee benefit plans, employee programs and employee practices, or cause the
Partnership to issue Partnership Interests, in connection with, pursuant to any
employee benefit plan, employee program or employee practice maintained or
sponsored by the General Partner or any of its Affiliates, in each case for the
benefit of employees of the General Partner any Group Member or any Affiliate,
or any of them, in respect of services performed, directly or indirectly, for
the benefit of the Partnership Group. Expenses incurred by the General Partner
or the MLP General Partner on behalf of the General Partner in connection with
any such plans, programs and practices shall be reimbursed in accordance with
Section 7.4(b). Any and all obligations of the General Partner or the MLP
General Partner on behalf of the General Partner under any employee benefit
plans, employee programs or employee practices adopted by the General Partner as
permitted by this Section 7.4(c) shall constitute obligations of the General
Partner hereunder and shall be assumed by any successor General Partner approved
pursuant to Section 11.1 or 11.2 or the transferee of or successor to all of the
General Partner's General Partner Interest pursuant to Section 4.2.

     Section 7.5    Outside Activities.

     (a)  After the Closing Date, the General Partner, for so long as it is the
General Partner of the Partnership (i) agrees that its sole business will be to
act as the General Partner of the Partnership and a general partner of any other
partnership of which the Partnership or the MLP is, directly or indirectly, a
partner and to undertake activities that are ancillary or related thereto, (ii)
shall not engage in any business or activity or incur any debts or liabilities
except in connection with or incidental to (A) its performance as general
partner of the Partnership or one or more Group Members or as described in or
contemplated by the Registration Statement or (B)

                                      -33-

the acquiring, owning or disposing of debt or equity securities in any Group
Member and (iii) except to the extent permitted in the Omnibus Agreement, shall
not, and shall cause its Affiliates not to, engage in any Restricted Business.

     (b) The Omnibus Agreement, to which the Partnership is a party, sets forth
certain restrictions on the ability of Plains Resources Inc. to engage in
Restricted Businesses.

     (c) Except as specifically restricted by Section 7.5(a) and the Omnibus
Agreement, each Indemnitee (other than the General Partner) shall have the right
to engage in businesses of every type and description and other activities for
profit and to engage in and possess an interest in other business ventures of
any and every type or description, whether in businesses engaged in or
anticipated to be engaged in by the MLP or any Group Member, independently or
with others, including business interests and activities in direct competition
with the business and activities of the MLP or any Group Member, and none of the
same shall constitute a breach of this Agreement or any duty express or implied
by law to the MLP or any Group Member or any Partner or Assignee. Neither the
MLP nor any Group Member, any Limited Partner, nor any other Person shall have
any rights by virtue of this Agreement, the MLP Agreement or the partnership
relationship established hereby or thereby in any business ventures of any
Indemnitee.

     (d) Subject to the terms of Section 7.5(a), Section 7.5(b), Section 7.5(c)
and the Omnibus Agreement, but otherwise notwithstanding anything to the
contrary in this Agreement, (i) the engaging in competitive activities by any
Indemnitees (other than the General Partner) in accordance with the provisions
of this Section 7.5 is hereby approved by the Partnership and all Partners, (ii)
it shall be deemed not to be a breach of the General Partner's fiduciary duty or
any other obligation of any type whatsoever of the General Partner for the
Indemnitees (other than the General Partner) to engage in such business
interests and activities in preference to or to the exclusion of the Partnership
and (iii) except as set forth in the Omnibus Agreement, the General Partner and
the Indemnities shall have no obligation to present business opportunities to
the Partnership.

     (e) The General Partner and any of its Affiliates may acquire Units or
other MLP Securities in addition to those acquired on the Closing Date and,
except as otherwise provided in this Agreement, shall be entitled to exercise
all rights relating to such Units or MLP Securities.

     (f) The term "Affiliates" when used in Section 7.5(a) and Section 7.5(e)
with respect to the General Partner shall not include any Group Member or any
Subsidiary of the MLP or any Group Member.

     (g) Anything in this Agreement to the contrary notwithstanding, to the
extent that provisions of Sections 7.7, 7.8, 7.9, 7.10 or other Sections of this
Agreement purport or are interpreted to have the effect of restricting the
fiduciary duties that might otherwise, as a result of Delaware or other
applicable law, be owed by the General Partner to the Partnership and its
Limited Partners, or to constitute a waiver or consent by the Limited Partners
to any such restriction, such provisions shall be inapplicable and have no
effect in determining whether the General Partner has complied with its
fiduciary duties in connection with determinations made by it under this Section
7.5.

                                      -34-

     Section 7.6    Loans from the General Partner; Loans or Contributions from
the Partnership; Contracts with Affiliates; Certain Restrictions on the General
Partner.

     (a) The General Partner or its Affiliates may lend to the MLP or any Group
Member, and the MLP or any Group Member may borrow from the General Partner or
any of its Affiliates, funds needed or desired by the MLP or the Group Member
for such periods of time and in such amounts as the General Partner may
determine; provided, however, that in any such case the lending party may not
charge the borrowing party interest at a rate greater than the rate that would
be charged the borrowing party or impose terms less favorable to the borrowing
party than would be charged or imposed on the borrowing party by unrelated
lenders on comparable loans made on an arm's-length basis (without reference to
the lending party's financial abilities or guarantees). The borrowing party
shall reimburse the lending party for any costs (other than any additional
interest costs) incurred by the lending party in connection with the borrowing
of such funds. For purposes of this Section 7.6(a) and Section 7.6(b), the term
"Group Member" shall include any Affiliate of a Group Member that is controlled
by the Group Member. No Group Member may lend funds to the General Partner or
any of its Affiliates (other than the MLP, a Subsidiary of the MLP or a
Subsidiary of another Group Member).

     (b) The Partnership may lend or contribute to any Group Member, and any
Group Member may borrow from the Partnership, funds on terms and conditions
established in the sole discretion of the General Partner; provided, however,
that the Partnership may not charge the Group Member interest at a rate less
than the rate that would be charged to the Group Member (without reference to
the General Partner's financial abilities or guarantees) by unrelated lenders on
comparable loans. The foregoing authority shall be exercised by the General
Partner in its sole discretion and shall not create any right or benefit in
favor of any Group Member or any other Person.

     (c) The General Partner may itself, or may enter into an agreement with the
MLP General Partner or any of its Affiliates to, render services to a Group
Member or to the General Partner in the discharge of its duties as general
partner of the Partnership. Any services rendered to a Group Member by the
General Partner, the MLP General Partner or any of their Affiliates shall be on
terms that are fair and reasonable to the Partnership; provided, however, that
the requirements of this Section 7.6(c) shall be deemed satisfied as to (i) any
transaction approved by Special Approval, (ii) any transaction, the terms of
which are no less favorable to the Partnership Group than those generally being
provided to or available from unrelated third parties or (iii) any transaction
that, taking into account the totality of the relationships between the parties
involved (including other transactions that may be particularly favorable or
advantageous to the Partnership Group), is equitable to the Partnership Group.
The provisions of Section 7.4 shall apply to the rendering of services described
in this Section 7.6(c).

     (d) The Partnership Group may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.

     (e) Neither the General Partner, the MLP General Partner nor any of their
Affiliates shall sell, transfer or convey any property to, or purchase any
property from, the Partnership,

                                      -35-

directly or indirectly, except pursuant to transactions that are fair and
reasonable to the Partnership; provided, however, that the requirements of this
Section 7.6(e) shall be deemed to be satisfied as to (i) the transactions
effected pursuant to Sections 5.2 and 5.3, the Contribution and Conveyance
Agreement and any other transactions described in or contemplated by the
Registration Statement, (ii) any transaction approved by Special Approval, (iii)
any transaction, the terms of which are no less favorable to the Partnership
than those generally being provided to or available from unrelated third
parties, or (iv) any transaction that, taking into account the totality of the
relationships between the parties involved (including other transactions that
may be particularly favorable or advantageous to the Partnership), is equitable
to the Partnership.

     (f) The General Partner and its Affiliates will have no obligation to
permit any Group Member to use any facilities or assets of the General Partner
and its Affiliates, except as may be provided in contracts entered into from
time to time specifically dealing with such use, nor shall there be any
obligation on the part of the General Partner or its Affiliates to enter into
such contracts.

     (g) Without limitation of Sections 7.6(a) through 7.6(f), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Registration Statement are hereby
approved by all Partners.

     Section 7.7    Indemnification.

     (a) To the fullest extent permitted by law but subject to the limitations
expressly provided in this Agreement, all Indemnitees shall be indemnified and
held harmless by the Partnership from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including legal fees and
expenses), judgments, fines, penalties, interest, settlements or other amounts
arising from any and all claims, demands, actions, suits or proceedings, whether
civil, criminal, administrative or investigative, in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, by reason of
its status as an Indemnitee; provided, that in each case the Indemnitee acted in
good faith and in a manner that such Indemnitee reasonably believed to be in, or
(in the case of a Person other than the General Partner) not opposed to, the
best interests of the Partnership and, with respect to any criminal proceeding,
had no reasonable cause to believe its conduct was unlawful; provided, further,
no indemnification pursuant to this Section 7.7 shall be available to the
General Partner with respect to its obligations incurred pursuant to the
Underwriting Agreement or the Contribution and Conveyance Agreement (other than
obligations incurred by the General Partner on behalf of the Partnership). The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that the Indemnitee acted in a manner contrary to that
specified above. Any indemnification pursuant to this Section 7.7 shall be made
only out of the assets of the Partnership, it being agreed that the General
Partner shall not be personally liable for such indemnification and shall have
no obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate such indemnification.

     (b) To the fullest extent permitted by law, expenses (including legal fees
and expenses) incurred by an Indemnitee who is indemnified pursuant to Section
7.7(a) in defending any claim, demand, action, suit or proceeding shall, from
time to time, be advanced by the

                                      -36-

Partnership prior to the final disposition of such claim, demand, action, suit
or proceeding upon receipt by the Partnership of any undertaking by or on behalf
of the Indemnitee to repay such amount if it shall be determined that the
Indemnitee is not entitled to be indemnified as authorized in this Section 7.7.

     (c) The indemnification provided by this Section 7.7 shall be in addition
to any other rights to which an Indemnitee may be entitled under any agreement,
pursuant to any vote of the Partners, as a matter of law or otherwise, both as
to actions in the Indemnitee's capacity as an Indemnitee and as to actions in
any other capacity (including any capacity under the Underwriting Agreement),
and shall continue as to an Indemnitee who has ceased to serve in such capacity
and shall inure to the benefit of the heirs, successors, assigns and
administrators of the Indemnitee.

     (d) The Partnership may purchase and maintain (or reimburse the General
Partner, the MLP General Partner or its Affiliates for the cost of) insurance,
on behalf of the General Partner, the MLP General Partner or their Affiliates
and such other Persons as the General Partner shall determine, against any
liability that may be asserted against or expense that may be incurred by such
Person in connection with the Partnership's activities or such Person's
activities on behalf of the Partnership, regardless of whether the Partnership
would have the power to indemnify such Person against such liability under the
provisions of this Agreement.

     (e) For purposes of this Section 7.7, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute "fines"
within the meaning of Section 7.7(a); and action taken or omitted by it with
respect to any employee benefit plan in the performance of its duties for a
purpose reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is in, or
not opposed to, the best interests of the Partnership.

     (f) In no event may an Indemnitee subject the Limited Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.

     (g) An Indemnitee shall not be denied indemnification in whole or in part
under this Section 7.7 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.

     (h) The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.

     (i) No amendment, modification or repeal of this Section 7.7 or any
provision hereof shall in any manner terminate, reduce or impair the right of
any past, present or future Indemnitee to be indemnified by the Partnership, nor
the obligations of the Partnership to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 7.7

                                      -37-

as in effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.

     Section 7.8    Liability of Indemnitees.

     (a) Notwithstanding anything to the contrary set forth in this Agreement,
no Indemnitee shall be liable for monetary damages to the Partnership, the
Limited Partners, the Assignees or any other Persons who have acquired interests
in the Units or other Partnership Securities of the MLP, for losses sustained or
liabilities incurred as a result of any act or omission if such Indemnitee acted
in good faith.

     (b) Subject to its obligations and duties as General Partner set forth in
Section 7.1(a), the General Partner may exercise any of the powers granted to it
by this Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agents, and the General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.

     (c) To the extent that, at law or in equity, an Indemnitee has duties
(including fiduciary duties) and liabilities relating thereto to the Partnership
or to the Limited Partners, the General Partner and any other Indemnitee acting
in connection with the Partnership's business or affairs shall not be liable to
the Partnership or to any Partner for its good faith reliance on the provisions
of this Agreement. The provisions of this Agreement, to the extent that they
restrict or otherwise modify the duties and liabilities of an Indemnitee
otherwise existing at law or in equity, are agreed by the Partners to replace
such other duties and liabilities of such Indemnitee.

     (d) Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability to the Partnership, the Limited Partners, the
General Partner, the MLP General Partner and the Partnership's and General
Partner's directors, officers and employees under this Section 7.8 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.

     Section 7.9    Resolution of Conflicts of Interest.

     (a) Unless otherwise expressly provided in this Agreement or the MLP
Agreement, whenever a potential conflict of interest exists or arises between
the General Partner or any of its Affiliates, on the one hand, and the
Partnership, the MLP, any Partner or any Assignee, on the other, any resolution
or course of action by the General Partner or its Affiliates in respect of such
conflict of interest shall be permitted and deemed approved by all Partners, and
shall not constitute a breach of this Agreement or the MLP Agreement, of any
agreement contemplated herein or therein, or of any duty stated or implied by
law or equity, if the resolution or course of action is, or by operation of this
Agreement is deemed to be, fair and reasonable to the Partnership. The General
Partner shall be authorized but not required in connection with its resolution
of such conflict of interest to seek Special Approval of such resolution. Any
conflict of interest and any resolution of such conflict of interest shall be
conclusively deemed fair and

                                      -38-

reasonable to the Partnership if such conflict of interest or resolution is (i)
approved by Special Approval (as long as the material facts known to the General
Partner or any of its Affiliates regarding any proposed transaction were
disclosed to the Conflicts Committee at the time it gave its approval), (ii) on
terms no less favorable to the Partnership than those generally being provided
to or available from unrelated third parties or (iii) fair to the Partnership,
taking into account the totality of the relationships between the parties
involved (including other transactions that may be particularly favorable or
advantageous to the Partnership). The General Partner may also adopt a
resolution or course of action that has not received Special Approval. The
General Partner (including the Conflicts Committee in connection with Special
Approval) shall be authorized in connection with its determination of what is
"fair and reasonable" to the Partnership and in connection with its resolution
of any conflict of interest to consider (A) the relative interests of any party
to such conflict, agreement, transaction or situation and the benefits and
burdens relating to such interest; (B) any customary or accepted industry
practices and any customary or historical dealings with a particular Person; (C)
any applicable generally accepted accounting practices or principles; and (D)
such additional factors as the General Partner (including the Conflicts
Committee) determines in its sole discretion to be relevant, reasonable or
appropriate under the circumstances. Nothing contained in this Agreement,
however, is intended to nor shall it be construed to require the General Partner
(including the Conflicts Committee) to consider the interests of any Person
other than the Partnership. In the absence of bad faith by the General Partner,
the resolution, action or terms so made, taken or provided by the General
Partner with respect to such matter shall not constitute a breach of this
Agreement or any other agreement contemplated herein or a breach of any standard
of care or duty imposed herein or therein or, to the extent permitted by law,
under the Delaware Act or any other law, rule or regulation.

     (b) Whenever this Agreement or any other agreement contemplated hereby
provides that the General Partner or any of its Affiliates is permitted or
required to make a decision (i) in its "sole discretion" or "discretion," that
it deems "necessary or appropriate" or "necessary or advisable" or under a grant
of similar authority or latitude, except as otherwise provided herein, the
General Partner or such Affiliate shall be entitled to consider only such
interests and factors as it desires and shall have no duty or obligation to give
any consideration to any interest of, or factors affecting, the Partnership, the
MLP, any Limited Partner or any Assignee, (ii) it may make such decision in its
sole discretion (regardless of whether there is a reference to "sole discretion"
or "discretion") unless another express standard is provided for, or (iii) in
"good faith" or under another express standard, the General Partner or such
Affiliate shall act under such express standard and shall not be subject to any
other or different standards imposed by this Agreement, the MLP Agreement, any
other agreement contemplated hereby or under the Delaware Act or any other law,
rule or regulation. In addition, any actions taken by the General Partner or
such Affiliate consistent with the standards of "reasonable discretion" set
forth in the definition of Available Cash shall not constitute a breach of any
duty of the General Partner to the Partnership or the Limited Partners. The
General Partner shall have no duty, express or implied, to sell or otherwise
dispose of any asset of the Partnership Group other than in the ordinary course
of business. No borrowing by any Group Member or the approval thereof by the
General Partner shall be deemed to constitute a breach of any duty of the
General Partner to the Partnership or the Limited Partners by reason of the fact
that the purpose or effect of such borrowing is directly or indirectly to (A)
enable distributions to the General Partner or its Affiliates to exceed 0.001%
of the total amount distributed to all Partners or (B) hasten the

                                      -39-

expiration of the Subordination Period or the conversion of any Subordinated
Units into Common Units.

     (c) Whenever a particular transaction, arrangement or resolution of a
conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.

     (d) The Limited Partner hereby authorizes the General Partner, on behalf of
the Partnership as a partner or member of a Group Member, to approve of actions
by the general partner of such Group Member similar to those actions permitted
to be taken by the General Partner pursuant to this Section 7.9.

     Section 7.10   Other Matters Concerning the General Partner.

     (a) The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties.

     (b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion (including an Opinion of Counsel) of such Persons as to matters
that the General Partner reasonably believes to be within such Person's
professional or expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such opinion.

     (c) The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers, a duly appointed attorney or attorneys-in-fact or the duly authorized
officers of the Partnership.

     (d) Any standard of care and duty imposed by this Agreement or under the
Delaware Act or any applicable law, rule or regulation shall be modified, waived
or limited, to the extent permitted by law, as required to permit the General
Partner to act under this Agreement or any other agreement contemplated by this
Agreement and to make any decision pursuant to the authority prescribed in this
Agreement, so long as such action is reasonably believed by the General Partner
to be in, or not inconsistent with, the best interests of the Partnership.

     Section 7.11   Reliance by Third Parties.

     Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner and any officer of the General Partner authorized by the General Partner
to act on behalf of and in the name of the Partnership has full power and
authority to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf of the
Partnership, and such Person shall be entitled to deal with the General Partner
or any such officer as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies that may be available against such Person to

                                      -40-

contest, negate or disaffirm any action of the General Partner or any such
officer in connection with any such dealing. In no event shall any Person
dealing with the General Partner or any such officer or its representatives be
obligated to ascertain that the terms of the Agreement have been complied with
or to inquire into the necessity or expedience of any act or action of the
General Partner or any such officer or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (a) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (b) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership and (c)
such certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.

                                 ARTICLE VIII
                    BOOKS, RECORDS, ACCOUNTING AND REPORTS

     Section 8.1    Records and Accounting.

     The General Partner shall keep or cause to be kept at the principal office
of the Partnership appropriate books and records with respect to the
Partnership's business, including all books and records necessary to provide to
the Limited Partners any information required to be provided pursuant to Section
3.4(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including books of account and records of
Partnership proceedings, may be kept on, or be in the form of, computer disks,
hard drives, punch cards, magnetic tape, photographs, micrographics or any other
information storage device; provided, that the books and records so maintained
are convertible into clearly legible written form within a reasonable period of
time. The books of the Partnership shall be maintained, for financial reporting
purposes, on an accrual basis in accordance with U.S. GAAP.

     Section 8.2    Fiscal Year.

     The fiscal year of the Partnership shall be a fiscal year ending December
31.

                                  ARTICLE IX
                                  TAX MATTERS

     Section 9.1    Tax Returns and Information.

     The Partnership shall timely file all returns of the Partnership that are
required for federal, state and local income tax purposes on the basis of the
accrual method and a taxable year ending on December 31. The tax information
reasonably required by the Partners for federal and state income tax reporting
purposes with respect to a taxable year shall be furnished to them within 90
days of the close of the calendar year in which the Partnership's taxable year
ends. The classification, realization and recognition of income, gain, losses
and deductions and other items shall be on the accrual method of accounting for
federal income tax purposes.

                                      -41-

     Section 9.2    Tax Elections.

     (a) The Partnership shall make the election under Section 754 of the Code
in accordance with applicable regulations thereunder, subject to the reservation
of the right to seek to revoke any such election upon the General Partner's
determination that such revocation is in the best interests of the Limited
Partners.

     (b) The Partnership shall elect to deduct expenses incurred in organizing
the Partnership ratably over a sixty-month period as provided in Section 709 of
the Code.

     (c) Except as otherwise provided herein, the General Partner shall
determine whether the Partnership should make any other elections permitted by
the Code.

     Section 9.3    Tax Controversies.

     Subject to the provisions hereof, the General Partner is designated as the
Tax Matters Partner (as defined in the Code) and is authorized and required to
represent the Partnership (at the Partnership's expense) in connection with all
examinations of the Partnership's affairs by tax authorities, including
resulting administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith. Each Partner
agrees to cooperate with the General Partner and to do or refrain from doing any
or all things reasonably required by the General Partner to conduct such
proceedings.

     Section 9.4    Withholding.

     Notwithstanding any other provision of this Agreement, the General Partner
is authorized to take any action that it determines in its discretion to be
necessary or appropriate to cause the Partnership to comply with any withholding
requirements established under the Code or any other federal, state, local or
foreign law including, without limitation, pursuant to Sections 1441, 1442, 1445
and 1446 of the Code.  To the extent that the Partnership is required or elects
to withhold or pay over to any taxing authority, or any taxing authority seizes,
any amount resulting from the allocation or distribution of income to any member
of the Partnership Group, Partner or Assignee, the amount withheld, paid over or
seized may at the discretion of the General Partner be treated by the
Partnership as a distribution of cash pursuant to Section 6.3 to the Partner or
Assignee to whom such withholding, payment or seizure is attributed.

                                   ARTICLE X
                             ADMISSION OF PARTNERS

     Section 10.1   Admission of Partners.

     Upon the consummation of the transfers and conveyances described in Section
5.2, the Predecessor General Partner was the sole general partner of the
Partnership and the MLP was the sole limited partner of the Partnership.

                                      -42-

     Section 10.2   Admission of Substituted Limited Partner.

     By transfer of a Limited Partner Interest in accordance with Article IV,
the transferor shall be deemed to have given the transferee the right to seek
admission as a Substituted Limited Partner subject to the conditions of, and in
the manner permitted under, this Agreement. A transferor of a Limited Partner
Interest shall, however, only have the authority to convey to a purchaser or
other transferee (a) the right to negotiate such Limited Partner Interest to a
purchaser or other transferee and (b) the right to request admission as a
Substituted Limited Partner to such purchaser or other transferee in respect of
the transferred Limited Partner Interests. Each transferee of a Limited Partner
Interest shall be an Assignee and be deemed to have applied to become a
Substituted Limited Partner with respect to the Limited Partner Interests so
transferred to such Person. Such Assignee shall become a Substituted Limited
Partner (x) at such time as the General Partner consents thereto, which consent
may be given or withheld in the General Partner's discretion, and (y) when any
such admission is shown on the books and records of the Partnership. If such
consent is withheld, such transferee shall remain an Assignee. An Assignee shall
have an interest in the Partnership equivalent to that of a Limited Partner with
respect to allocations and distributions, including liquidating distributions,
of the Partnership. With respect to voting rights attributable to Limited
Partner Interests that are held by Assignees, the General Partner shall be
deemed to be the Limited Partner with respect thereto and shall, in exercising
the voting rights in respect of such Limited Partner Interests on any matter,
vote such Limited Partner Interests at the written direction of the Assignee. If
no such written direction is received, such Partnership Interests will not be
voted. An Assignee shall have no other rights of a Limited Partner.

     Section 10.3   Admission of Additional Limited Partners.

     (a)  A Person (other than the General Partner, the MLP or a Substituted
Limited Partner) who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of the
terms and conditions of this Agreement, including the power of attorney granted
in Section 2.6, and (ii) such other documents or instruments as may be required
in the discretion of the General Partner to effect such Person's admission as an
Additional Limited Partner.

     (b)  Notwithstanding anything to the contrary in this Section 10.3, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's discretion. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such Person is
recorded as such in the books and records of the Partnership, following the
consent of the General Partner to such admission.

     Section 10.4   Admission of Successor or Transferee General Partner.

     A successor General Partner approved pursuant to Section 11.1 or 11.2 or
the transferee of or successor to all of the General Partner's Partnership
Interest pursuant to Section 4.2 who is proposed to be admitted as a successor
General Partner shall, subject to compliance with the terms of Section 11.3, if
applicable, be admitted to the Partnership as the General Partner,

                                      -43-

effective immediately prior to the withdrawal or removal of the predecessor or
transferring General Partner pursuant to Section 11.1 or 11.2 or the transfer of
the General Partner Interest pursuant to Section 4.2, provided, however, that no
such successor shall be admitted to the Partnership until compliance with the
terms of Section 4.2 has occurred and such successor has executed and delivered
such other documents or instruments as may be required to effect such admission.
Any such successor shall, subject to the terms hereof, carry on the business of
the members of the Partnership Group without dissolution.

     Section 10.5   Amendment of Agreement and Certificate of Limited
                    Partnership.

     To effect the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Delaware Act to
amend the records of the Partnership to reflect such admission and, if
necessary, to prepare as soon as practicable an amendment to this Agreement and,
if required by law, the General Partner shall prepare and file an amendment to
the Certificate of Limited Partnership, and the General Partner may for this
purpose, among others, exercise the power of attorney granted pursuant to
Section 2.6.

                                  ARTICLE XI
                       WITHDRAWAL OR REMOVAL OF PARTNERS

     Section 11.1   Withdrawal of the General Partner.

     (a)  The General Partner shall be deemed to have withdrawn from the
Partnership upon the occurrence of any one of the following events (each such
event herein referred to as an "Event of Withdrawal");

          (i)   The General Partner voluntarily withdraws from the Partnership
     by giving written notice to the other Partners;

          (ii)  The General Partner transfers all of its rights as General
     Partner pursuant to Section 4.2;

          (iii) The General Partner is removed pursuant to Section 11.2;

          (iv)  The General Partner (A) makes a general assignment for the
     benefit of creditors; (B) files a voluntary bankruptcy petition for relief
     under Chapter 7 of the United States Bankruptcy Code; (C) files a petition
     or answer seeking for itself a liquidation, dissolution or similar relief
     (but not a reorganization) under any law; (D) files an answer or other
     pleading admitting or failing to contest the material allegations of a
     petition filed against the General Partner in a proceeding of the type
     described in clauses (A)-(C) of this Section 11.1(a)(iv); or (E) seeks,
     consents to or acquiesces in the appointment of a trustee (but not a debtor
     in possession), receiver or liquidator of the General Partner or of all or
     any substantial part of its properties;

          (v)   A final and non-appealable order of relief under Chapter 7 of
     the United States Bankruptcy Code is entered by a court with appropriate
     jurisdiction pursuant to a voluntary or involuntary petition by or against
     the General Partner; or

                                      -44-

          (vi) (A) in the event the General Partner is a corporation, a
     certificate of dissolution or its equivalent is filed for the General
     Partner, or 90 days expire after the date of notice to the General Partner
     of revocation of its charter without a reinstatement of its charter, under
     the laws of its state of incorporation; (B) in the event the General
     Partner is a partnership or limited liability company, the dissolution and
     commencement of winding up of the General Partner; (C) in the event the
     General Partner is acting in such capacity by virtue of being a trustee of
     a trust, the termination of the trust; (D) in the event the General Partner
     is a natural person, his death or adjudication of incompetency; and (E)
     otherwise in the event of the termination of the General Partner.

     If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or (vi)(A),
(B), (C) or (E) occurs, the withdrawing General Partner shall give notice to the
Limited Partners within 30 days after such occurrence. The Partners hereby agree
that only the Events of Withdrawal described in this Section 11.1 shall result
in the withdrawal of the General Partner from the Partnership.

     (b)  Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall not constitute a breach of this
Agreement under the following circumstances: (i) at any time during the period
beginning on the Closing Date and ending at 12:00 midnight, Eastern Standard
Time, on December 31, 2008, the General Partner voluntarily withdraws by giving
at least 90 days' advance notice of its intention to withdraw to the Limited
Partners; provided that prior to the effective date of such withdrawal, the
withdrawal is approved by the Limited Partners and the General Partner delivers
to the Partnership an Opinion of Counsel ("Withdrawal Opinion of Counsel") that
such withdrawal (following the selection of the successor General Partner) would
not result in the loss of the limited liability of any Limited Partner or of the
limited partners of the MLP or cause the Partnership or the MLP to be treated as
an association taxable as a corporation or otherwise to be taxed as an entity
for federal income tax purposes (to the extent not previously treated as such);
(ii) at any time after 12:00 midnight, Eastern Standard Time, on December 31,
2008, the General Partner voluntarily withdraws by giving at least 90 days'
advance notice to the Limited Partners, such withdrawal to take effect on the
date specified in such notice; (iii) at any time that the General Partner ceases
to be the General Partner pursuant to Section 11.1(a)(ii) or (iii). If the
General Partner gives a notice of withdrawal pursuant to Section 11.1(a)(i)
hereof, the Limited Partners may, prior to the effective date of such
withdrawal, elect a successor General Partner. If, prior to the effective date
of the General Partner's withdrawal, a successor is not selected by the Limited
Partners as provided herein or the Partnership does not receive a Withdrawal
Opinion of Counsel, the Partnership shall be dissolved in accordance with
Section 12.1. Any successor General Partner elected in accordance with the terms
of this Section 11.1 shall be subject to the provisions of Section 10.4.

     Section 11.2   Removal of the General Partner.

     The General Partner may be removed by the holders of a majority of the
Limited Partner Interests. If the General Partner is removed pursuant to this
Section 11.2, the Limited Partners may, prior to the effective date of such
removal, elect a successor General Partner. The admission of any such successor
General Partner to the Partnership shall be subject to the provisions of Section
10.4.

                                      -45-

     Section 11.3   Interest of Departing Partner.

     (a)  The Partnership Interest of the Departing Partner departing as a
result of withdrawal or removal pursuant to Section 11.1 or 11.2 shall be
purchased by the successor to the Departing Partner for cash in the manner
specified in the MLP Agreement. Such purchase (or conversion into Common Units,
as applicable) shall be a condition to the admission to the Partnership of the
successor as the General Partner. Notwithstanding the foregoing, an assignment
of all or any portion of a General Partner's (or Departing General Partner's)
Partnership Interest to the MLP as Limited Partner, or to any other Person
(other than an individual) the ownership interest of which is then transferred
to the MLP, can be made in exchange for an increased interest in the MLP and in
lieu of a cash purchase. Any successor General Partner shall indemnify the
Departing Partner as to all debts and liabilities of the Partnership arising on
or after the effective date of the withdrawal or removal of the Departing
Partner.

     (b)  The Departing Partner shall be entitled to receive all reimbursements
due such Departing Partner pursuant to Section 7.4, including any employee-
related liabilities (including severance liabilities), incurred in connection
with the termination of any employees employed by such Departing Partner for the
benefit of the Partnership.

     Section 11.4   Withdrawal of a Limited Partner.

     Without the prior written consent of the General Partner, which may be
granted or withheld in its sole discretion, and except as provided in Section
10.1, no Limited Partner shall have the right to withdraw from the Partnership.

                                  ARTICLE XII
                          DISSOLUTION AND LIQUIDATION

     Section 12.1   Dissolution.

     The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the removal or withdrawal of the General Partner, if a successor General Partner
is elected pursuant to Section 11.1 or 11.2, the Partnership shall not be
dissolved and such successor General Partner shall continue the business of the
Partnership. The Partnership shall dissolve, and (subject to Section 12.2) its
affairs shall be wound up, upon:

     (a)  the expiration of its term as provided in Section 2.7;

     (b)  an Event of Withdrawal of the General Partner as provided in Section
11.1(a) (other than Section 11.1(a)(ii)), unless a successor is elected and an
Opinion of Counsel is received as provided in Section 11.1(b) or 11.2 and such
successor is admitted to the Partnership pursuant to Section 10.3;

     (c)  an election to dissolve the Partnership by the General Partner that is
approved by all of the Limited Partners;

                                      -46-

     (d)  the entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware Act;

     (e)  the sale of all or substantially all of the assets and properties of
the Partnership Group; or

     (f)  the dissolution of the MLP.

     Section 12.2   Continuation of the Business of the Partnership After
Dissolution.

     Upon (a) dissolution of the Partnership following an Event of Withdrawal
caused by the withdrawal or removal of the General Partner as provided in
Section 11.1(a)(i) or (iii) and the failure of the Partners to select a
successor to such Departing Partner pursuant to Section 11.1 or 11.2, then
within 90 days thereafter, or (b) dissolution of the Partnership upon an event
constituting an Event of Withdrawal as defined in Section 11.1(a)(iii), (iv) or
(v) of the MLP Agreement, then, to the maximum extent permitted by law, within
180 days thereafter, all of the Limited Partners may elect to reconstitute the
Partnership and continue its business on the same terms and conditions set forth
in this Agreement by forming a new limited partnership on terms identical to
those set forth in this Agreement and having as a general partner a Person
approved by a majority in interest of the Limited Partners. In addition, upon
dissolution of the Partnership pursuant to Section 12.1(f), if the MLP is
reconstituted pursuant to Section 12.2 of the MLP Agreement, the reconstituted
MLP may, within 180 days after such event of dissolution, acting alone,
regardless of whether there are any other Limited Partners, elect to
reconstitute the Partnership in accordance with the immediately preceding
sentence. Upon any such election by the Limited Partners or the MLP, as the case
may be, all Partners shall be bound thereby and shall be deemed to have approved
same. Unless such an election is made within the applicable time period as set
forth above, the Partnership shall conduct only activities necessary to wind up
its affairs. If such an election is so made, then:

     (a)  the reconstituted Partnership shall continue until the end of the term
set forth in Section 2.7 unless earlier dissolved in accordance with this
Article XII;

     (b)  if the successor General Partner is not the former General Partner,
then the interest of the former General Partner shall be purchased by the
successor General Partner; and

     (c)  all necessary steps shall be taken to cancel this Agreement and the
Certificate of Limited Partnership and to enter into and, as necessary, to file,
a new partnership agreement and certificate of limited partnership, and the
successor General Partner may for this purpose exercise the power of attorney
granted the General Partner pursuant to Section 2.6; provided, that the right to
approve a successor General Partner and to reconstitute and to continue the
business of the Partnership shall not exist and may not be exercised unless the
Partnership has received an Opinion of Counsel that (x) the exercise of the
right would not result in the loss of limited liability of the Limited Partners
or any limited partner of the MLP and (y) neither the Partnership, the
reconstituted limited partnership, the MLP nor any Group Member would be treated
as an association taxable as a corporation or otherwise be taxable as an entity
for federal income tax purposes upon the exercise of such right to continue.

                                      -47-

     Section 12.3   Liquidator.

     Upon dissolution of the Partnership, unless the Partnership is continued
under an election to reconstitute and continue the Partnership pursuant to
Section 12.2, the General Partner shall select one or more Persons to act as
Liquidator. The Liquidator (if other than the General Partner) shall be entitled
to receive such compensation for its services as may be approved by a majority
of the Limited Partners. The Liquidator (if other than the General Partner)
shall agree not to resign at any time without 15 days' prior notice and may be
removed at any time, with or without cause, by notice of removal approved by a
majority in interest of the Limited Partners. Upon dissolution, removal or
resignation of the Liquidator, a successor and substitute Liquidator (who shall
have and succeed to all rights, powers and duties of the original Liquidator)
shall within 30 days thereafter be approved by at least a majority in interest
of the Limited Partners. The right to approve a successor or substitute
Liquidator in the manner provided herein shall be deemed to refer also to any
such successor or substitute Liquidator approved in the manner herein provided.
Except as expressly provided in this Article XII, the Liquidator approved in the
manner provided herein shall have and may exercise, without further
authorization or consent of any of the parties hereto, all of the powers
conferred upon the General Partner under the terms of this Agreement (but
subject to all of the applicable limitations, contractual and otherwise, upon
the exercise of such powers, other than the limitation on sale set forth in
Section 7.3(b)) to the extent necessary or desirable in the good faith judgment
of the Liquidator to carry out the duties and functions of the Liquidator
hereunder for and during such period of time as shall be reasonably required in
the good faith judgment of the Liquidator to complete the winding up and
liquidation of the Partnership as provided for herein.

     Section 12.4   Liquidation.

     The Liquidator shall proceed to dispose of the assets of the Partnership,
discharge its liabilities, and otherwise wind up its affairs in such manner and
over such period as the Liquidator determines to be in the best interest of the
Partners, subject to Section 17-804 of the Delaware Act and the following:

     (a)  Disposition of Assets. The assets may be disposed of by public or
          ---------------------
private sale or by distribution in kind to one or more Partners on such terms as
the Liquidator and such Partner or Partners may agree. If any property is
distributed in kind, the Partner receiving the property shall be deemed for
purposes of Section 12.4(c) to have received cash equal to its fair market
value; and contemporaneously therewith, appropriate cash distributions must be
made to the other Partners. The Liquidator may, in its absolute discretion,
defer liquidation or distribution of the Partnership's assets for a reasonable
time if it determines that an immediate sale or distribution of all or some of
the Partnership's assets would be impractical or would cause undue loss to the
Partners. The Liquidator may, in its absolute discretion, distribute the
Partnership's assets, in whole or in part, in kind if it determines that a sale
would be impractical or would cause undue loss to the Partners.

     (b)  Discharge of Liabilities. Liabilities of the Partnership include
          ------------------------
amounts owed to Partners otherwise than in respect of their distribution rights
under Article VI. With respect to any liability that is contingent, conditional
or unmatured or is otherwise not yet due and payable, the Liquidator shall
either settle such claim for such amount as it thinks appropriate or establish a

                                      -48-

reserve of cash or other assets to provide for its payment. When paid, any
unused portion of the reserve shall be distributed as additional liquidation
proceeds.

     (c)  Liquidation Distributions. All property and all cash in excess of that
          -------------------------
required to discharge liabilities as provided in Section 12.4(b) shall be
distributed to the Partners in accordance with, and to the extent of, the
positive balances in their respective Capital Accounts, as determined after
taking into account all Capital Account adjustments (other than those made by
reason of distributions pursuant to this Section 12.4(c)) for the taxable year
of the Partnership during which the liquidation of the Partnership occurs (with
such date of occurrence being determined pursuant to Treasury Regulation Section
1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of such
taxable year (or, if later, within 90 days after said date of such occurrence).

     Section 12.5   Cancellation of Certificate of Limited Partnership.

     Upon the completion of the distribution of Partnership cash and property as
provided in Section 12.4 in connection with the liquidation of the Partnership,
the Partnership shall be terminated and the Certificate of Limited Partnership,
and all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware, shall be canceled and such other
actions as may be necessary to terminate the Partnership shall be taken.

     Section 12.6   Return of Contributions.

     The General Partner shall not be personally liable for, and shall have no
obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate, the return of the Capital Contributions of the Limited
Partners, or any portion thereof, it being expressly understood that any such
return shall be made solely from Partnership assets.

     Section 12.7   Waiver of Partition.

     To the maximum extent permitted by law, each Partner hereby waives any
right to partition of the Partnership property.

     Section 12.8   Capital Account Restoration.

     No Limited Partner shall have any obligation to restore any negative
balance in its Capital Account upon liquidation of the Partnership. The General
Partner shall be obligated to restore any negative balance in its Capital
Account upon liquidation of its interest in the Partnership by the end of the
taxable year of the Partnership during which such liquidation occurs, or, if
later, within 90 days after the date of such liquidation.

                                      -49-

                                 ARTICLE XIII
                      AMENDMENT OF PARTNERSHIP AGREEMENT

     Section 13.1   Amendment to be Adopted Solely by the General Partner.

     Each Partner agrees that the General Partner, without the approval of any
Partner or Assignee, may amend any provision of this Agreement and execute,
swear to, acknowledge, deliver, file and record whatever documents may be
required in connection therewith, to reflect:

     (a)  a change in the name of the Partnership, the location of the principal
place of business of the Partnership, the registered agent of the Partnership or
the registered office of the Partnership;

     (b)  admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;

     (c)  a change that, in the sole discretion of the General Partner, is
necessary or advisable to qualify or continue the qualification of the
Partnership as a limited partnership or a partnership in which the Limited
Partners have limited liability under the laws of any state or to ensure that no
Group Member will be treated as an association taxable as a corporation or
otherwise taxed as an entity for federal income tax purposes;

     (d)  a change that, in the discretion of the General Partner, (i) does not
adversely affect the Limited Partners in any material respect, (ii) is necessary
or advisable to (A) satisfy any requirements, conditions or guidelines contained
in any opinion, directive, order, ruling or regulation of any federal or state
agency or judicial authority or contained in any federal or state statute
(including the Delaware Act) or (B) facilitate the trading of limited partner
interests of the MLP (including the division of any class or classes of
outstanding limited partner interests of the MLP into different classes to
facilitate uniformity of tax consequences within such classes of limited partner
interests of the MLP) or comply with any rule, regulation, guideline or
requirement of any National Securities Exchange on which such limited partner
interests are or will be listed for trading, compliance with any of which the
General Partner determines in its discretion to be in the best interests of the
MLP and the limited partners of the MLP, (iii) is required to effect the intent
expressed in the Registration Statement or the intent of the provisions of this
Agreement or is otherwise contemplated by this Agreement or (iv) is required to
conform the provisions of this Agreement with the provisions of the MLP
Agreement as the provisions of the MLP Agreement may be amended, supplemented or
restated from time to time;

     (e)  a change in the fiscal year or taxable year of the Partnership and any
changes that, in the discretion of the General Partner, are necessary or
advisable as a result of a change in the fiscal year or taxable year of the
Partnership including, if the General Partner shall so determine, a change in
the definition of "Quarter" and the dates on which distributions are to be made
by the Partnership;

     (f)  an amendment that is necessary, in the Opinion of Counsel, to prevent
the Partnership, or the General Partner or its directors, officers, trustees or
agents from in any manner being subjected to the provisions of the Investment
Company Act of 1940, as amended, the Investment Advisers Act of 1940, as
amended, or "plan asset" regulations adopted under the

                                      -50-

Employee Retirement Income Security Act of 1974, as amended, regardless of
whether such are substantially similar to plan asset regulations currently
applied or proposed by the United States Department of Labor;

     (g)  any amendment expressly permitted in this Agreement to be made by the
General Partner acting alone;

     (h)  an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 14.3;

     (i)  an amendment that, in the discretion of the General Partner, is
necessary or advisable to reflect, account for and deal with appropriately the
formation by the Partnership of, or investment by the Partnership in, any
corporation, partnership, joint venture, limited liability company or other
entity, in connection with the conduct by the Partnership of activities
permitted by the terms of Section 2.4;

     (j)  a merger or conveyance pursuant to Section 14.3(d); or

     (k)  any other amendments substantially similar to the foregoing.

     Section 13.2   Amendment Procedures.

     Except with respect to amendments of the type described in Section 13.1,
all amendments to this Agreement shall be made in accordance with the following
requirements: Amendments to this Agreement may be proposed only by or with the
consent of the General Partner which consent may be given or withheld in its
sole discretion. A proposed amendment shall be effective upon its approval by
the Limited Partner.

                                  ARTICLE XIV
                                    MERGER

     Section 14.1   Authority.

     The Partnership may merge or consolidate with one or more corporations,
limited liability companies, business trusts or associations, real estate
investment trusts, common law trusts or unincorporated businesses, including a
general partnership or limited partnership, formed under the laws of the State
of Delaware or any other state of the United States of America, pursuant to a
written agreement of merger or consolidation ("Merger Agreement") in accordance
with this Article XIV.

     Section 14.2   Procedure for Merger or Consolidation.

     Merger or consolidation of the Partnership pursuant to this Article XIV
requires the prior approval of the General Partner. If the General Partner shall
determine, in the exercise of its discretion, to consent to the merger or
consolidation, the General Partner shall approve the Merger Agreement, which
shall set forth:

                                      -51-

     (a)  The names and jurisdictions of formation or organization of each of
the business entities proposing to merge or consolidate;

     (b)  The name and jurisdiction of formation or organization of the business
entity that is to survive the proposed merger or consolidation (the "Surviving
Business Entity");

     (c)  The terms and conditions of the proposed merger or consolidation;

     (d)  The manner and basis of exchanging or converting the equity securities
of each constituent business entity for, or into, cash, property or general or
limited partner interests, rights, securities or obligations of the Surviving
Business Entity; and (i) if any general or limited partner interests, securities
or rights of any constituent business entity are not to be exchanged or
converted solely for, or into, cash, property or general or limited partner
interests, rights, securities or obligations of the Surviving Business Entity,
the cash, property or general or limited partner interests, rights, securities
or obligations of any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity) which the holders of such general or
limited partner interests, securities or rights are to receive in exchange for,
or upon conversion of their general or limited partner interests, securities or
rights, and (ii) in the case of securities represented by certificates, upon the
surrender of such certificates, which cash, property or general or limited
partner interests, rights, securities or obligations of the Surviving Business
Entity or any general or limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to be
delivered;

     (e)  A statement of any changes in the constituent documents or the
adoption of new constituent documents (the articles or certificate of
incorporation, articles of trust, declaration of trust, certificate or agreement
of limited partnership or other similar charter or governing document) of the
Surviving Business Entity to be effected by such merger or consolidation;

     (f)  The effective time of the merger, which may be the date of the filing
of the certificate of merger pursuant to Section 14.4 or a later date specified
in or determinable in accordance with the Merger Agreement (provided, that if
the effective time of the merger is to be later than the date of the filing of
the certificate of merger, the effective time shall be fixed no later than the
time of the filing of the certificate of merger and stated therein); and

     (g)  Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the General Partner.

     Section 14.3   Approval by Limited Partners of Merger or Consolidation.

     (a)  Except as provided in Section 14.3(d), the General Partner, upon its
approval of the Merger Agreement, shall direct that the Merger Agreement be
submitted to a vote of the Limited Partners, whether at a special meeting or by
written consent, in either case in accordance with the requirements of Article
XIII. A copy or a summary of the Merger Agreement shall be included in or
enclosed with the notice of a special meeting or the written consent.

     (b)  Except as provided in Section 14.3(d), the Merger Agreement shall be
approved upon receiving the affirmative vote or consent of the Limited Partners.

                                      -52-

     (c)  Except as provided in Section 14.3(d), after such approval by vote or
consent of the Limited Partners, and at any time prior to the filing of the
certificate of merger pursuant to Section 14.4, the merger or consolidation may
be abandoned pursuant to provisions therefor, if any, set forth in the Merger
Agreement.

     (d)  Notwithstanding anything else contained in this Article XIV or in this
Agreement, the General Partner is permitted, in its discretion, without Limited
Partner approval, to merge the Partnership or any Group Member into, or convey
all of the Partnership's assets to, another limited liability entity which shall
be newly formed and shall have no assets, liabilities or operations at the time
of such Merger other than those it receives from the Partnership or other Group
Member if (i) the General Partner has received an Opinion of Counsel that the
merger or conveyance, as the case may be, would not result in the loss of the
limited liability of any Limited Partner or any limited partner in the MLP or
cause the Partnership or the MLP to be treated as an association taxable as a
corporation or otherwise to be taxed as an entity for federal income tax
purposes (to the extent not previously treated as such), (ii) the sole purpose
of such merger or conveyance is to effect a mere change in the legal form of the
Partnership into another limited liability entity and (iii) the governing
instruments of the new entity provide the Limited Partners and the General
Partner with the same rights and obligations as are herein contained.

     Section 14.4   Certificate of Merger.

     Upon the required approval by the General Partner and the Limited Partners
of a Merger Agreement, a certificate of merger shall be executed and filed with
the Secretary of State of the State of Delaware in conformity with the
requirements of the Delaware Act.

     Section 14.5   Effect of Merger.

     (a)  At the effective time of the certificate of merger:

          (i)   all of the rights, privileges and powers of each of the business
     entities that has merged or consolidated, and all property, real, personal
     and mixed, and all debts due to any of those business entities and all
     other things and causes of action belonging to each of those business
     entities, shall be vested in the Surviving Business Entity and after the
     merger or consolidation shall be the property of the Surviving Business
     Entity to the extent they were of each constituent business entity;

          (ii)  the title to any real property vested by deed or otherwise in
     any of those constituent business entities shall not revert and is not in
     any way impaired because of the merger or consolidation;

          (iii) all rights of creditors and all liens on or security interests
     in property of any of those constituent business entities shall be
     preserved unimpaired; and

          (iv)  all debts, liabilities and duties of those constituent business
     entities shall attach to the Surviving Business Entity and may be enforced
     against it to the same extent as if the debts, liabilities and duties had
     been incurred or contracted by it.

                                      -53-

     (b)  A merger or consolidation effected pursuant to this Article shall not
be deemed to result in a transfer or assignment of assets or liabilities from
one entity to another.

                                  ARTICLE XV
                              GENERAL PROVISIONS

     Section 15.1   Addresses and Notices.

     Any notice, demand, request, report or proxy materials required or
permitted to be given or made to a Partner or Assignee under this Agreement
shall be in writing and shall be deemed given or made when delivered in person
or when sent by first class United States mail or by other means of written
communication to the Partner at the address described below. Any notice to the
Partnership shall be deemed given if received by the General Partner at the
principal office of the Partnership designated pursuant to Section 2.3. The
General Partner may rely and shall be protected in relying on any notice or
other document from a Partner, Assignee or other Person if believed by it to be
genuine.

     Section 15.2   Further Action.

     The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.

     Section 15.3   Binding Effect.

     This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.

     Section 15.4   Integration.

     This Agreement constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.

     Section 15.5   Creditors.

     None of the provisions of this Agreement shall be for the benefit of, or
shall be enforceable by, any creditor of the Partnership.

     Section 15.6   Waiver.

     No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach of any other covenant, duty, agreement or condition.

                                      -54-

     Section 15.7   Counterparts.

     This Agreement may be executed in counterparts, all of which together shall
constitute an agreement binding on all the parties hereto, notwithstanding that
all such parties are not signatories to the original or the same counterpart.
Each party shall become bound by this Agreement immediately upon affixing its
signature hereto, independently of the signature of any other party.

     Section 15.8   Applicable Law.

     This Agreement shall be construed in accordance with and governed by the
laws of the State of Delaware, without regard to the principles of conflicts of
law.

     Section 15.9   Invalidity of Provisions.

     If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.

     Section 15.10  Consent of Partners.

     Each Partner hereby expressly consents and agrees that, whenever in this
Agreement it is specified that an action may be taken upon the affirmative vote
or consent of less than all of the Partners, such action may be so taken upon
the concurrence of less than all of the Partners and each Partner shall be bound
by the results of such action.

     Section 15.11  Amendments to Reflect GP Restructuring Agreement.

     In addition to the amendments to this Agreement contained in the GP
Restructuring Agreement and notwithstanding any other provision of this
Agreement to the contrary, this Agreement shall be deemed to be further amended
and modified to the extent necessary, but only to the extent necessary, to carry
out the purposes and intent of the GP Restructuring Agreement.

                    [Rest of Page Intentionally Left Blank]

                                      -55-

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

                              GENERAL PARTNER:

                              Plains Marketing GP Inc.

                              By:    /s/ Tim Moore
                                     ------------------------------
                              Name:  Tim Moore
                              Title: Vice President

                              LIMITED PARTNER:

                              Plains Marketing, L.P.

                              By:    Plains Marketing GP Inc.,
                                     its General Partner

                              By:    /s/ Tim Moore
                                     ------------------------------
                                     Name:  Tim Moore
                                     Title: Vice President

                                      -56-

                                                                     EXHIBIT 3.3

                          SECOND AMENDED AND RESTATED

                       AGREEMENT OF LIMITED PARTNERSHIP

                                      OF

                          ALL AMERICAN PIPELINE, L.P.

                               TABLE OF CONTENTS

                                   ARTICLE I
                                  DEFINITIONS
                                                                       
Section 1.1     Definitions...........................................     2
Section 1.2     Construction..........................................    12

                                  ARTICLE II
                                 ORGANIZATION

Section 2.1     Formation.............................................    12
Section 2.2     Name..................................................    12
Section 2.3     Registered Office; Registered Agent; Principal Office;
                 Other Offices........................................    13
Section 2.4     Purpose and Business..................................    13
Section 2.5     Powers................................................    13
Section 2.6     Power of Attorney.....................................    14
Section 2.7     Term..................................................    15
Section 2.8     Title to Partnership Assets...........................    15

                                  ARTICLE III
                          RIGHTS OF LIMITED PARTNERS

Section 3.1     Limitation of Liability...............................    16
Section 3.2     Management of Business................................    16
Section 3.3     Outside Activities of the Limited Partners............    16
Section 3.4     Rights of Limited Partners............................    16

                                  ARTICLE IV
                       TRANSFERS OF PARTNERSHIP INTERESTS

Section 4.1     Transfer Generally....................................    17
Section 4.2     Transfer of General Partner's Partnership Interest....    18
Section 4.3     Transfer of a Limited Partner's Partnership Interest..    18
Section 4.4     Restrictions on Transfers.............................    18

                                   ARTICLE V
          CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS

Section 5.1     Initial Contributions.................................    19
Section 5.2     Contributions Pursuant to the Contribution and
                 Conveyance Agreement.................................    19
Section 5.3     Additional Capital Contributions......................    19
Section 5.4     Interest and Withdrawal...............................    20
Section 5.5     Capital Accounts......................................    20
Section 5.6     Loans from Partners...................................    22
Section 5.7     Limited Preemptive Rights.............................    23

                                      -i-

Section 5.8     Fully Paid and Non-Assessable Nature of Partnership
                 Interests............................................    23

                                  ARTICLE VI
                         ALLOCATIONS AND DISTRIBUTIONS

Section 6.1     Allocations for Capital Account Purposes..............    23
Section 6.2     Allocations for Tax Purposes..........................    27
Section 6.3     Distributions.........................................    29

                                  ARTICLE VII
                     MANAGEMENT AND OPERATION OF BUSINESS

Section 7.1     Management............................................    29
Section 7.2     Certificate of Limited Partnership....................    31
Section 7.3     Restrictions on General Partner's Authority...........    32
Section 7.4     Reimbursement of the General Partner..................    32
Section 7.5     Outside Activities....................................    33
Section 7.6     Loans from the General Partner; Loans or Contributions
                 from the Partnership; Contracts with Affiliates;
                 Certain Restrictions on the General Partner..........    34
Section 7.7     Indemnification.......................................    36
Section 7.8     Liability of Indemnitees..............................    37
Section 7.9     Resolution of Conflicts of Interest...................    38
Section 7.10    Other Matters Concerning the General Partner..........    39
Section 7.11    Reliance by Third Parties.............................    40

                                 ARTICLE VIII
                    BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 8.1     Records and Accounting................................    41
Section 8.2     Fiscal Year...........................................    41

                                  ARTICLE IX
                                  TAX MATTERS

Section 9.1     Tax Returns and Information...........................    41
Section 9.2     Tax Elections.........................................    41
Section 9.3     Tax Controversies.....................................    42
Section 9.4     Withholding...........................................    42

                                   ARTICLE X
                             ADMISSION OF PARTNERS

Section 10.1    Admission of Partners.................................    42
Section 10.2    Admission of Substituted Limited Partner..............    42
Section 10.3    Admission of Additional Limited Partners..............    43
Section 10.4    Admission of Successor or Transferee General Partner..    43
Section 10.5    Amendment of Agreement and Certificate of Limited
                 Partnership..........................................    43

                                     -ii-

                                  ARTICLE XI
                       WITHDRAWAL OR REMOVAL OF PARTNERS

Section 11.1    Withdrawal of the General Partner.....................    44
Section 11.2    Removal of the General Partner........................    45
Section 11.3    Interest of Departing Partner.........................    45
Section 11.4    Withdrawal of a Limited Partner.......................    46

                                  ARTICLE XII
                          DISSOLUTION AND LIQUIDATION

Section 12.1    Dissolution...........................................    46
Section 12.2    Continuation of the Business of the Partnership After
                 Dissolution..........................................    46
Section 12.3    Liquidator............................................    47
Section 12.4    Liquidation...........................................    48
Section 12.5    Cancellation of Certificate of Limited Partnership....    48
Section 12.6    Return of Contributions...............................    49
Section 12.7    Waiver of Partition...................................    49
Section 12.8    Capital Account Restoration...........................    49

                                 ARTICLE XIII
                      AMENDMENT OF PARTNERSHIP AGREEMENT

Section 13.1    Amendment to be Adopted Solely by the General
                 Partner.............................................     49
Section 13.2    Amendment Procedures.................................     50

                                  ARTICLE XIV
                                    MERGER

Section 14.1    Authority.............................................    51
Section 14.2    Procedure for Merger or Consolidation.................    51
Section 14.3    Approval by Limited Partners of Merger or
                 Consolidation........................................    52
Section 14.4    Certificate of Merger.................................    52
Section 14.5    Effect of Merger......................................    53

                                  ARTICLE XV
                              GENERAL PROVISIONS

Section 15.1    Addresses and Notices.................................    53
Section 15.2    Further Action........................................    53
Section 15.3    Binding Effect........................................    54
Section 15.4    Integration...........................................    54
Section 15.5    Creditors.............................................    54
Section 15.6    Waiver................................................    54
Section 15.7    Counterparts..........................................    54
Section 15.8    Applicable Law........................................    54
Section 15.9    Invalidity of Provisions..............................    54
Section 15.10   Consent of Partners...................................    54

                                     -iii-

Section 15.11   Amendments to Reflect GP Restructuring Agreement......    55

                                     -iv-

                          SECOND AMENDED AND RESTATED
                       AGREEMENT OF LIMITED PARTNERSHIP
                                      OF
                          ALL AMERICAN PIPELINE, L.P.

     THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of ALL
AMERICAN PIPELINE, L.P., dated as of June 27, 2001, is entered into by and
between Plains Marketing GP Inc., a Delaware corporation, as the General
Partner, and Plains Marketing, L.P., a Delaware limited partnership, as the
Limited Partner, together with any other Persons who hereafter become Partners
in the Partnership or parties hereto as provided herein. In consideration of the
covenants, conditions and agreements contained herein, the parties hereto hereby
agree as follows:

     WHEREAS, Plains All American Inc. and the other parties thereto entered
into that certain Amended and Restated Agreement of Limited Partnership of All
American Pipeline, L.P. dated as of November 23, 1998 (the "1998 Agreement");
and

     WHEREAS, Plains All American Inc. effected Amendment No. 1 to the 1998
Agreement on April 27, 2001 to include certain tax provisions appropriate to
reflect acquisition of operations in Canada; and

     WHEREAS, Plains All American Inc. and the other parties thereto entered
into that certain Contribution, Assignment and Amendment Agreement (the "GP
Transfer Agreement"), dated as of June 8, 2001, pursuant to which Plains All
American Inc. transferred its General Partner Interest to Plains AAP, L.P.
(consistent with the definition contained herein, each of Plains All American
Inc. and Plains AAP, L.P. may be referred to in this Agreement as the
"Predecessor General Partner"); and

     WHEREAS, the Partnership, the Predecessor General Partner and the other
parties thereto entered into that certain Contribution Assignment and Amendment
Agreement (the "GP Restructuring Agreement"), dated as of June 27, 2001,
pursuant to which the Predecessor General Partner transferred its General
Partner Interest to the General Partner; and

     WHEREAS, the General Partner, consistent with the authority granted to it
in the GP Restructuring Agreement, effected Amendment No. 2 to the 1998
Agreement as of June 27, 2001 to more fully reflect the transactions
contemplated by the GP Restructuring Agreement; and

     WHEREAS, the General Partner deems it in the best interest of the
Partnership to amend and restate the 1998 Agreement in its entirety to reflect
the prior amendments adopted by each of the Predecessor General Partners and the
General Partner, and to reflect the transactions contemplated by the GP
Restructuring Agreement.

                                      -1-

                                   ARTICLE I
                                  DEFINITIONS

Section 1.1    Definitions.

     The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
Capitalized terms used herein but not otherwise defined shall have the meaning
assigned to such term in the MLP Agreement.

          "Additional Limited Partner" means a Person admitted to the
     Partnership as a Limited Partner pursuant to Section 10.4 and who is shown
     as such on the books and records of the Partnership.

          "Adjusted Capital Account" means the Capital Account maintained for
     each Partner as of the end of each fiscal year of the Partnership, (a)
     increased by any amounts that such Partner is obligated to restore under
     the standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or
     is deemed obligated to restore under Treasury Regulation Sections 1.704-
     2(g) and 1.704-2(i)(5)) and (b) decreased by (i) the amount of all losses
     and deductions that, as of the end of such fiscal year, are reasonably
     expected to be allocated to such Partner in subsequent years under Sections
     704(e)(2) and 706(d) of the Code and Treasury Regulation Section 1.751-
     1(b)(2)(ii), and (ii) the amount of all distributions that, as of the end
     of such fiscal year, are reasonably expected to be made to such Partner in
     subsequent years in accordance with the terms of this Agreement or
     otherwise to the extent they exceed offsetting increases to such Partner's
     Capital Account that are reasonably expected to occur during (or prior to)
     the year in which such distributions are reasonably expected to be made
     (other than increases as a result of a minimum gain chargeback pursuant to
     Section 6.1(d)(i) or 6.1(d)(ii)). The foregoing definition of Adjusted
     Capital Account is intended to comply with the provisions of Treasury
     Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
     consistently therewith. The "Adjusted Capital Account" of a Partner in
     respect of a General Partner Interest or any other specified interest in
     the Partnership shall be the amount which such Adjusted Capital Account
     would be if such General Partner Interest or other interest in the
     Partnership were the only interest in the Partnership held by a Partner
     from and after the date on which such general partner interest or other
     interest was first issued.

          "Adjusted Property" means any property the Carrying Value of which has
     been adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii). Once an Adjusted
     Property is deemed contributed to a new partnership in exchange for an
     interest in the new partnership, followed by a deemed liquidation of the
     Partnership for federal income tax purposes upon a termination of the
     Partnership pursuant to Section 708(b)(1)(B) of the Code, such property
     shall thereafter constitute a Contributed Property until the Carrying Value
     of such property is subsequently adjusted pursuant to Section 5.5(d)(i) or
     5.5(d)(ii).

          "Affiliate" means, with respect to any Person, any other Person that
     directly or indirectly through one or more intermediaries controls, is
     controlled by or is under common control with, the Person in question. As
     used herein, the term "control" means the possession, direct or indirect,
     of the power to direct or cause the direction of the

                                      -2-

     management and policies of a Person, whether through ownership of voting
     securities, by contract or otherwise.

          "Agreed Allocation" means any allocation, other than a Required
     Allocation, of an item of income, gain, loss or deduction pursuant to the
     provisions of Section 6.1, including, without limitation, a Curative
     Allocation (if appropriate to the context in which the term "Agreed
     Allocation" is used).

          "Agreed Value" of any Contributed Property means the fair market value
     of such property or other consideration at the time of contribution as
     determined by the General Partner using such reasonable method of valuation
     as it may adopt. The General Partner shall, in its discretion, use such
     method as it deems reasonable and appropriate to allocate the aggregate
     Agreed Value of Contributed Properties contributed to the Partnership in a
     single or integrated transaction among each separate property on a basis
     proportional to the fair market value of each Contributed Property.

          "1998 Agreement" means the Amended and Restated Agreement of Limited
     Partnership of All American Pipeline, L.P.

          "Agreement" means this Second Amended and Restated Agreement of
     Limited Partnership of All American Pipeline, L.P., as it may be amended,
     supplemented or restated from time to time.

          "Assets" means the assets being conveyed to the Partnership on the
     Closing Date pursuant to Section 5.2 and the Contribution and Conveyance
     Agreement.

          "Assignee" means a Person to whom one or more Partnership Interests
     have been transferred in a manner permitted under this Agreement, but who
     has not been admitted as a Substituted Limited Partner.

          "Associate" means, when used to indicate a relationship with any
     Person, (a) any corporation or organization of which such Person is a
     director, officer or partner or is, directly or indirectly, the owner of
     20% or more of any class of voting stock or other voting interest; (b) any
     trust or other estate in which such Person has at least a 20% beneficial
     interest or as to which such Person serves as trustee or in a similar
     fiduciary capacity; and (c) any relative or spouse of such Person, or any
     relative of such spouse, who has the same principal residence as such
     Person.

          "Assumed Liabilities" means the liabilities that the Partnership is
     either assuming or taking subject to in connection with the conveyance of
     the Assets pursuant to Section 5.2 and the Contribution and Conveyance
     Agreement.

          "Available Cash" means, with respect to any Quarter ending prior to
     the Liquidation Date,

               (a) the sum of (i) all cash and cash equivalents of the
     Partnership Group on hand at the end of such Quarter, and (ii) all
     additional cash and cash equivalents of the Partnership Group on hand on
     the date of determination of Available

                                      -3-

     Cash with respect to such Quarter resulting from Working Capital Borrowings
     made subsequent to the end of such Quarter, less

               (b) the amount of any cash reserves that is necessary or
     appropriate in the reasonable discretion of the General Partner to (i)
     provide for the proper conduct of the business of the Partnership Group
     (including reserves for future capital expenditures and for anticipated
     future credit needs of the Partnership Group) subsequent to such Quarter,
     (ii) comply with applicable law or any loan agreement, security agreement,
     mortgage, debt instrument or other agreement or obligation to which any
     Group Member is a party or by which it is bound or its assets are subject
     or (iii) provide funds for distributions under Section 6.4 or 6.5 of the
     MLP Agreement in respect of any one or more of the next four Quarters;
     provided, however, that the General Partner may not establish cash reserves
     pursuant to (iii) above if the effect of such reserves would be that the
     MLP is unable to distribute the Minimum Quarterly Distribution on all
     Common Units, plus any Cumulative Common Unit Arrearage on all Common
     Units, with respect to such Quarter; and provided further that
     disbursements made by a Group Member or cash reserves established,
     increased or reduced after the end of such Quarter but on or before the
     date of determination of Available Cash with respect to such Quarter shall
     be deemed to have been made, established, increased or reduced, for
     purposes of determining Available Cash, within such Quarter if the General
     Partner so determines.

               Notwithstanding the foregoing, "Available Cash" with respect to
     the Quarter in which the Liquidation Date occurs and any subsequent Quarter
     shall equal zero.

          "Book-Tax Disparity" means with respect to any item of Contributed
     Property or Adjusted Property, as of the date of any determination, the
     difference between the Carrying Value of such Contributed Property or
     Adjusted Property and the adjusted basis thereof for federal income tax
     purposes as of such date. A Partner's share of the Partnership's Book-Tax
     Disparities in all of its Contributed Property and Adjusted Property will
     be reflected by the difference between such Partner's Capital Account
     balance as maintained pursuant to Section 5.5 and the hypothetical balance
     of such Partner's Capital Account computed as if it had been maintained
     strictly in accordance with federal income tax accounting principles.

          "Business Day" means Monday through Friday of each week, except that a
     legal holiday recognized as such by the government of the United States of
     America or the states of New York or Texas shall not be regarded as a
     Business Day.

          "Capital Account" means the capital account maintained for a Partner
     pursuant to Section 5.5. The "Capital Account" of a Partner in respect of a
     General Partner Interest or any other specified interest in the Partnership
     shall be the amount which such Capital Account would be if such General
     Partner Interest or other specified interest in the Partnership were the
     only interest in the Partnership held by a Partner from and after the date
     on which such General Partner Interest or other specified interest in the
     Partnership was first issued.

                                      -4-

          "Capital Contribution" means any cash, cash equivalents or the Net
     Agreed Value of Contributed Property that a Partner contributes to the
     Partnership pursuant to this Agreement or the Contribution and Conveyance
     Agreement.

          "Carrying Value" means (a) with respect to a Contributed Property, the
     Agreed Value of such property reduced (but not below zero) by all
     depreciation, amortization and cost recovery deductions charged to the
     Partners' and Assignees' Capital Accounts in respect of such Contributed
     Property, and (b) with respect to any other Partnership property, the
     adjusted basis of such property for federal income tax purposes, all as of
     the time of determination. The Carrying Value of any property shall be
     adjusted from time to time in accordance with Sections 5.5(d)(i) and
     5.5(d)(ii) and to reflect changes, additions or other adjustments to the
     Carrying Value for dispositions and acquisitions of Partnership properties,
     as deemed appropriate by the General Partner.

          "Certificate of Limited Partnership" means the Certificate of Limited
     Partnership of the Partnership filed with the Secretary of State of the
     State of Texas as referenced in Section 2.1, as such Certificate of Limited
     Partnership may be amended, supplemented or restated from time to time.

          "Closing Date" means the first date on which Common Units are sold by
     the MLP to the Underwriters pursuant to the provisions of the Underwriting
     Agreement.

          "Code" means the Internal Revenue Code of 1986, as amended and in
     effect from time to time. Any reference herein to a specific Section or
     sections of the Code shall be deemed to include a reference to any
     corresponding provision of successor law.

          "Commission" means the United States Securities and Exchange
     Commission.

          "Common Unit" has the meaning assigned to such term in the MLP
     Agreement.

          "Conflicts Committee" means a committee of the Board of Directors of
     the general partner of the general partner of the MLP (or the applicable
     governing body of any successor to such entity) composed entirely of two or
     more directors who are neither security holders, officers nor employees of
     the general partner of the general partner of the MLP nor officers,
     directors or employees of any Affiliate of such entity.

          "Contributed Property" means each property or other asset, in such
     form as may be permitted by the Texas Act, but excluding cash, contributed
     to the Partnership (or deemed contributed to a new partnership on
     termination of the Partnership pursuant to Section 708 of the Code. Once
     the Carrying Value of a Contributed Property is adjusted pursuant to
     Section 5.5(d), such property shall no longer constitute a Contributed
     Property, but shall be deemed an Adjusted Property.

          "Contribution and Conveyance Agreement" means that certain
     Contribution, Conveyance and Assumption Agreement, dated as of the Closing
     Date, among the Predecessor General Partner, the Plains Midstream
     Subsidiaries, the MLP, the Partnership and certain other parties, together
     with the additional conveyance documents and instruments contemplated or
     referenced thereunder.

                                      -5-

          "Curative Allocation" means any allocation of an item of income, gain,
     deduction, loss or credit pursuant to the provisions of Section 6.1(d)(ix).

          "Departing Partner" means a former General Partner from and after the
     effective date of any withdrawal or removal of such former General Partner
     pursuant to Section 11.1 or 11.2.

          "Economic Risk of Loss" has the meaning set forth in Treasury
     Regulation Section 1.752-2(a).

          "Event of Withdrawal" has the meaning assigned to such term in Section
     11.1(a).

          "Gathering LLC" means Gathering LLC, a Delaware limited liability
     company.

          "General Partner" means Plains Marketing GP Inc. and its successors
     and permitted assigns as general partner of the Partnership.

          "General Partner Interest" means the ownership interest of the General
     Partner in the Partnership (in its capacity as a general partner) and
     includes any and all benefits to which the General Partner is entitled as
     provided in this Agreement, together with all obligations of the General
     Partner to comply with the terms and provisions of this Agreement.

          "GP Transfer Agreement" means the Contribution, Assignment and
     Amendment Agreement, dated as of June 8, 2001, among the Predecessor
     General Partners and Plains All American GP LLC.

          "GP Restructuring Agreement" means the Contribution, Assignment and
     Amendment Agreement, dated as of June 27, 2001, among the Partnership, the
     MLP, Marketing, the General Partner, the MLP General Partner and Plains All
     American GP LLC.

          "Group" means a Person that with or through any of its Affiliates or
     Associates has any agreement, arrangement or understanding for the purpose
     of acquiring, holding, voting (except voting pursuant to a revocable proxy
     or consent given to such Person in response to a proxy or consent
     solicitation made to 10 or more Persons) or disposing of any MLP Securities
     with any other Person that beneficially owns, or whose Affiliates or
     Associates beneficially own, directly or indirectly, MLP Securities.

          "Group Member" means a member of the Partnership Group.

          "Indemnitee" means (a) the General Partner, (b) any Departing Partner,
     (c) any Person who is or was an Affiliate of the General Partner or any
     Departing Partner, including the MLP General Partner, (d) any Person who is
     or was a member, partner, officer, director, employee, agent or trustee of
     any Group Member, the General Partner or any Departing Partner or any
     Affiliate of any Group Member, the General Partner or any Departing
     Partner, including the MLP General Partner, and (e) any Person who is or
     was serving at the request of the General Partner or any Departing Partner
     or any

                                      -6-

     Affiliate of the General Partner or any Departing Partner as an officer,
     director, employee, member, partner, agent, fiduciary or trustee of another
     Person; provided, that a Person shall not be an Indemnitee by reason of
     providing, on a fee-for-services basis, trustee, fiduciary or custodial
     services.

          "Initial Offering" means the initial offering and sale of Common Units
     to the public, as described in the Registration Statement.

          "Limited Partner" means any Person that is admitted to the Partnership
     as a limited partner pursuant to the terms and conditions of this
     Agreement; but the term Limited Partner shall not include any Person from
     and after the time such Person withdraws as a Limited Partner from the
     Partnership.

          "Limited Partner Interest" means the ownership interest of a Limited
     Partner or Assignee in the Partnership and includes any and all benefits to
     which such Limited Partner or Assignee is entitled as provided in this
     Agreement, together with all obligations of such Limited Partner or
     Assignee to comply with the terms and provisions of this Agreement.

          "Liquidation Date" means (a) in the case of an event giving rise to
     the dissolution of the Partnership of the type described in clauses (a) and
     (b) of the first sentence of Section 12.2, the date on which the applicable
     time period during which the Partners have the right to elect to
     reconstitute the Partnership and continue its business has expired without
     such an election being made, and (b) in the case of any other event giving
     rise to the dissolution of the Partnership, the date on which such event
     occurs.

          "Liquidator" means one or more Persons selected by the General Partner
     to perform the functions described in Section 12.3 as liquidating trustee
     of the Partnership within the meaning of the Texas Act.

          "Marketing" means Plains Marketing, L.P., a Delaware limited
     partnership.

          "Marketing Partnership Agreement" means the Amended and Restated
     Agreement of Limited Partnership of Plains Marketing, L.P., as it may be
     amended, supplemented or restated from time to time.

          "Merger Agreement" has the meaning assigned to such term in Section
     14.1.

          "Minimum Quarterly Distribution" has the meaning assigned to such term
     in the MLP Agreement.

          "MLP" means Plains All American Pipeline, L.P.

          "MLP Agreement" means the Third Amended and Restated Agreement of
     Limited Partnership of Plains All American Pipeline, L.P., as it may be
     amended, supplemented or restated from time to time.

                                      -7-

          "MLP General Partner" means Plains AAP, L.P. and its successors and
     permitted assigns, in its capacity as the general partner of the MLP.

          "MLP Security" has the meaning assigned to the term "Partnership
     Security" in the MLP Agreement.

          "Net Agreed Value" means, (a) in the case of any Contributed Property,
     the Agreed Value of such property reduced by any liabilities either assumed
     by the Partnership upon such contribution or to which such property is
     subject when contributed, and (b) in the case of any property distributed
     to a Partner or Assignee by the Partnership, the Partnership's Carrying
     Value of such property (as adjusted pursuant to Section 5.5(d)(ii)) at the
     time such property is distributed, reduced by any indebtedness either
     assumed by such Partner or Assignee upon such distribution or to which such
     property is subject at the time of distribution, in either case, as
     determined under Section 752 of the Code.

          "Net Income" means, for any taxable year, the excess, if any, of the
     Partnership's items of income and gain (other than those items taken into
     account in the computation of Net Termination Gain or Net Termination Loss)
     for such taxable year over the Partnership's items of loss and deduction
     (other than those items taken into account in the computation of Net
     Termination Gain or Net Termination Loss) for such taxable year. The items
     included in the calculation of Net Income shall be determined in accordance
     with Section 5.5(b) and shall not include any items specially allocated
     under Section 6.1(d).

          "Net Loss" means, for any taxable year, the excess, if any, of the
     Partnership's items of loss and deduction (other than those items taken
     into account in the computation of Net Termination Gain or Net Termination
     Loss) for such taxable year over the Partnership's items of income and gain
     (other than those items taken into account in the computation of Net
     Termination Gain or Net Termination Loss) for such taxable year. The items
     included in the calculation of Net Loss shall be determined in accordance
     with Section 5.5(b) and shall not include any items specially allocated
     under Section 6.1(d).

          "Net Termination Gain" means, for any taxable year, the sum, if
     positive, of all items of income, gain, loss or deduction recognized by the
     Partnership after the Liquidation Date. The items included in the
     determination of Net Termination Gain shall be determined in accordance
     with Section 5.5(b) and shall not include any items of income, gain or loss
     specially allocated under Section 6.1(d).

          "Net Termination Loss" means, for any taxable year, the sum, if
     negative, of all items of income, gain, loss or deduction recognized by the
     Partnership after the Liquidation Date. The items included in the
     determination of Net Termination Loss shall be determined in accordance
     with Section 5.5(b) and shall not include any items of income, gain or loss
     specially allocated under Section 6.1(d).

          "Nonrecourse Built-in Gain" means with respect to any Contributed
     Properties or Adjusted Properties that are subject to a mortgage or pledge
     securing a Nonrecourse

                                      -8-

     Liability, the amount of any taxable gain that would be allocated to the
     Partners pursuant to Sections 6.2(b)(i)(A), 6.2(b)(ii)(A) and 6.2(b)(iii)
     if such properties were disposed of in a taxable transaction in full
     satisfaction of such liabilities and for no other consideration.

          "Nonrecourse Deductions" means any and all items of loss, deduction or
     expenditures (described in Section 705(a)(2)(B) of the Code) that, in
     accordance with the principles of Treasury Regulation Section 1.704-2(b),
     are attributable to a Nonrecourse Liability.

          "Nonrecourse Liability" has the meaning set forth in Treasury
     Regulation Section 1.752-1(a)(2).

          "OLP Subsidiary" means a Subsidiary of the Partnership or Marketing.

          "Omnibus Agreement" means that Omnibus Agreement, dated as of the
     Closing Date, among Plains Resources, Inc., the Predecessor General
     Partner, the MLP, Marketing and the Partnership.

          "Opinion of Counsel" means a written opinion of counsel (which may be
     regular counsel to the Partnership or the General Partner or any of its
     Affiliates) acceptable to the General Partner in its reasonable discretion.

          "Partner Nonrecourse Debt" has the meaning set forth in Treasury
     Regulation Section 1.704-2(b)(4).

          "Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
     Treasury Regulation Section 1.704-2(i)(2).

          "Partner Nonrecourse Deductions" means any and all items of loss,
     deduction or expenditure (including, without limitation, any expenditure
     described in Section 705(a)(2)(B) of the Code) that, in accordance with the
     principles of Treasury Regulation Section 1.704-2(i), are attributable to a
     Partner Nonrecourse Debt.

          "Partnership" means All American Pipeline, L.P., a Texas limited
     partnership, and any successors thereto.

          "Partnership Group" means the Partnership and all OLP Subsidiaries,
     treated as a single consolidated entity.

          "Partnership Interest" means an ownership interest of a Partner in the
     Partnership, which shall include the General Partner Interest and the
     Limited Partner Interest(s).

          "Partnership Minimum Gain" means that amount determined in accordance
     with the principles of Treasury Regulation Section 1.704-2(d).

                                      -9-

          "Percentage Interest" means as of the date of such determination (a)
     as to the General Partner, 0.001% and (b) as to Plains Marketing, 99.999%.

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

          "Predecessor General Partner" means (a) Plains All American Inc., in
     its capacity as general partner of the Partnership prior to the transfer of
     the General Partner Interest to Plains AAP, L.P. pursuant to the GP
     Transfer Agreement, and (b) Plains AAP, L.P., in its capacity as general
     partner of the Partnership following the execution of the GP Transfer
     Agreement and prior to the transfer of the General Partner Interest
     pursuant to the GP Restructuring Agreement.  References to the "Predecessor
     General Partner" may be to Plains All American Inc. or to Plains AAP, L.P.,
     individually, and to "Predecessor General Partners," collectively, as the
     context requires.

          "Prior Agreement" is defined in the Recitals.

          "Pro Rata" means, when modifying Partners and Assignees, apportioned
     among all Partners and Assignees in accordance with their relative
     Percentage Interests.

          "Quarter" means, unless the context requires otherwise, a fiscal
     quarter of the Partnership.

          "Recapture Income" means any gain recognized by the Partnership
     (computed without regard to any adjustment required by Section 734 or
     Section 743 of the Code) upon the disposition of any property or asset of
     the Partnership, which gain is characterized as ordinary income because it
     represents the recapture of deductions previously taken with respect to
     such property or asset.

          "Registration Statement" means the Registration Statement on Form S-1
     (Registration No. 333-64107) as it has been or as it may be amended or
     supplemented from time to time, filed by the MLP with the Commission under
     the Securities Act to register the offering and sale of the Common Units in
     the Initial Offering.

          "Required Allocations" means (a) any limitation imposed on any
     allocation of Net Losses or Net Termination Losses under Section 6.1(b) or
     6.1(c)(ii) and (b) any allocation of an item of income, gain, loss or
     deduction pursuant to Section 6.1(d)(i), 6.1(d)(ii), 6.1(d)(iv),
     6.1(d)(vii) or 6.1(d)(ix).

          "Residual Gain" or "Residual Loss" means any item of gain or loss, as
     the case may be, of the Partnership recognized for federal income tax
     purposes resulting from a sale, exchange or other disposition of a
     Contributed Property or Adjusted Property, to the extent such item of gain
     or loss is not allocated pursuant to Section 6.2(b)(i)(A) or 6.2(b)(ii)(A),
     respectively, to eliminate Book-Tax Disparities.

          "Restricted Business" has the meaning assigned to such term in the
     Omnibus Agreement.

                                      -10-

          "Securities Act" means the Securities Act of 1933, as amended,
     supplemented or restated from time to time and any successor to such
     statute.

          "Special Approval" means approval by a majority of the members of the
     Conflicts Committee.

          "Subsidiary" means, with respect to any Person, (a) a corporation of
     which more than 50% of the voting power of shares entitled (without regard
     to the occurrence of any contingency) to vote in the election of directors
     or other governing body of such corporation is owned, directly or
     indirectly, at the date of determination, by such Person, by one or more
     Subsidiaries of such Person or a combination thereof, (b) a partnership
     (whether general or limited) in which such Person or a Subsidiary of such
     Person is, at the date of determination, a general or limited partner of
     such partnership, but only if more than 50% of the partnership interests of
     such partnership (considering all of the partnership interests of the
     partnership as a single class) is owned, directly or indirectly, at the
     date of determination, by such Person, by one or more Subsidiaries of such
     Person, or a combination thereof, or (c) any other Person (other than a
     corporation or a partnership) in which such Person, one or more
     Subsidiaries of such Person, or a combination thereof, directly or
     indirectly, at the date of determination, has (i) at least a majority
     ownership interest or (ii) the power to elect or direct the election of a
     majority of the directors or other governing body of such Person.

          "Substituted Limited Partner" means a Person who is admitted as a
     Limited Partner to the Partnership pursuant to Section 10.2 in place of and
     with all the rights of a Limited Partner and who is shown as a Limited
     Partner on the books and records of the Partnership.

          "Surviving Business Entity" has the meaning assigned to such term in
     Section 14.2(b).

          "Texas Act" means the Texas Revised Limited Partnership Act, Tex. Rev.
     Civ. Stat. Ann., art. 6132a-1 (Vernon's Texas Statutes), et seq., as
     amended, supplemented or restated from time to time, and any successor to
     such statute.

          "Transfer" has the meaning assigned to such term in Section 4.1(a).

          "Underwriter" means each Person named as an underwriter in Schedule I
     to the Underwriting Agreement who purchases Common Units pursuant thereto.

          "Underwriting Agreement" means the Underwriting Agreement dated
     November 17, 1998 among the Underwriters, the MLP and certain other
     parties, providing for the purchase of Common Units by such Underwriters.

          "Unit" has the meaning assigned to such term in the MLP Agreement.

          "Unit Majority" has the meaning assigned to such term in the MLP
     Agreement.

                                      -11-

          "Unrealized Gain" attributable to any item of Partnership property
     means, as of any date of determination, the excess, if any, of (a) the fair
     market value of such property as of such date (as determined under Section
     5.5(d)) over (b) the Carrying Value of such property as of such date (prior
     to any adjustment to be made pursuant to Section 5.5(d) as of such date).

          "Unrealized Loss" attributable to any item of Partnership property
     means, as of any date of determination, the excess, if any, of (a) the
     Carrying Value of such property as of such date (prior to any adjustment to
     be made pursuant to Section 5.5(d) as of such date) over (b) the fair
     market value of such property as of such date (as determined under Section
     5.5(d)).

          "U.S. GAAP" means United States Generally Accepted Accounting
     Principles consistently applied.

          "Working Capital Borrowings" means borrowings exclusively for working
     capital purposes made pursuant to a credit facility or other arrangement
     requiring all such borrowings thereunder to be reduced to a relatively
     small amount each year for an economically meaningful period of time.

Section 1.2  Construction.

               Unless the context requires otherwise: (a) any pronoun used in
     this Agreement shall include the corresponding masculine, feminine or
     neuter forms, and the singular form of nouns, pronouns and verbs shall
     include the plural and vice versa; (b) references to Articles and Sections
     refer to Articles and Sections of this Agreement; and (c) the term
     "include" or "includes" means includes, without limitation, and "including"
     means including, without limitation.

                                  ARTICLE II
                                 ORGANIZATION

Section 2.1  Formation

     The Partnership was previously formed as a limited partnership pursuant to
the provisions of the Texas Act. This amendment and restatement shall become
effective on the date of this Agreement. Except as expressly provided to the
contrary in this Agreement, the rights, duties (including fiduciary duties),
liabilities and obligations of the Partners and the administration, dissolution
and termination of the Partnership shall be governed by the Texas Act. All
Partnership Interests shall constitute personal property of the owner thereof
for all purposes and a Partner has no interest in specific Partnership property.

Section 2.2  Name.

     The name of the Partnership shall be "All American Pipeline, L.P."  The
Partnership's business may be conducted under any other name or names deemed
necessary or appropriate by the General Partner in its sole discretion,
including the name of the General Partner. The words "Limited Partnership,"
"L.P." or "Ltd." or similar words or letters shall be included in the

                                      -12-

Partnership's name where necessary for the purpose of complying with the laws of
any jurisdiction that so requires. The General Partner in its discretion may
change the name of the Partnership at any time and from time to time and shall
notify the other Partner(s) of such change in the next regular communication to
the Partners.

Section 2.3  Registered Office; Registered Agent; Principal Office; Other
             Offices.

     Unless and until changed by the General Partner, the registered office of
the Partnership in the State of Texas shall be located at 333 Clay Street, Suite
2900, Houston, Texas 77002, and the registered agent for service of process on
the Partnership in the State of Texas at such registered office shall be Tim
Moore. The principal office of the Partnership shall be located at 333 Clay
Street, Suite 2900, Houston, Texas 77002 or such other place as the General
Partner may from time to time designate by notice to the Limited Partners. The
Partnership may maintain offices at such other place or places within or outside
the State of Texas as the General Partner deems necessary or appropriate. The
address of the General Partner shall be 333 Clay Street, Suite 2900, Houston,
Texas 77002 or such other place as the General Partner may from time to time
designate by notice to the Limited Partners.

Section 2.4  Purpose and Business.

     The purpose and nature of the business to be conducted by the Partnership
shall be to (a) acquire, manage, operate and sell the Assets and any similar
assets or properties now or hereafter acquired by the Partnership, (b) engage
directly in, or enter into or form any corporation, partnership, joint venture,
limited liability company or other arrangement to engage indirectly in, any
business activity that the Partnership is permitted to engage in, or any type of
business or activity engaged in by the Predecessor General Partner prior to the
Closing Date and, in connection therewith, to exercise all of the rights and
powers conferred upon the Partnership pursuant to the agreements relating to
such business activity, (c) engage directly in, or enter into or form any
corporation, partnership, joint venture, limited liability company or other
arrangement to engage indirectly in, any business activity that is approved by
the General Partner and which lawfully may be conducted by a limited partnership
organized pursuant to the Texas Act and, in connection therewith, to exercise
all of the rights and powers conferred upon the Partnership pursuant to the
agreements relating to such business activity; provided, however, that the
General Partner reasonably determines, as of the date of the acquisition or
commencement of such activity, that such activity (i) generates "qualifying
income" (as such term is defined pursuant to Section 7704 of the Code) or (ii)
enhances the operations of an activity of the Partnership that generates
qualifying income, and (d) do anything necessary or appropriate to the
foregoing, including the making of capital contributions or loans to a Group
Member, the MLP or any Subsidiary of the MLP. The General Partner has no
obligation or duty to the Partnership, the Limited Partners, or the Assignees to
propose or approve, and in its discretion may decline to propose or approve, the
conduct by the Partnership of any business.

Section 2.5  Powers.

     The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and

                                      -13-

accomplishment of the purposes and business described in Section 2.4 and for the
protection and benefit of the Partnership.

Section 2.6  Power of Attorney.

     (a)  Each Partner and each Assignee hereby constitutes and appoints the
General Partner and, if a Liquidator shall have been selected pursuant to
Section 12.3, the Liquidator (and any successor to the Liquidator by merger,
transfer, assignment, election or otherwise) and each of their authorized
officers and attorneys-in-fact, as the case may be, with full power of
substitution, as its true and lawful agent and attorney-in-fact, with full power
and authority in his name, place and stead, to:

          (i)  execute, swear to, acknowledge, deliver, file and record in the
     appropriate public offices (A) all certificates, documents and other
     instruments (including this Agreement and the Certificate of Limited
     Partnership and all amendments or restatements hereof or thereof) that the
     General Partner or the Liquidator deems necessary or appropriate to form,
     qualify or continue the existence or qualification of the Partnership as a
     limited partnership (or a partnership in which the limited partners have
     limited liability) in the State of Texas and in all other jurisdictions in
     which the Partnership may conduct business or own property; (B) all
     certificates, documents and other instruments that the General Partner or
     the Liquidator deems necessary or appropriate to reflect, in accordance
     with its terms, any amendment, change, modification or restatement of this
     Agreement; (C) all certificates, documents and other instruments (including
     conveyances and a certificate of cancellation) that the General Partner or
     the Liquidator deems necessary or appropriate to reflect the dissolution
     and liquidation of the Partnership pursuant to the terms of this Agreement;
     (D) all certificates, documents and other instruments relating to the
     admission, withdrawal, removal or substitution of any Partner pursuant to,
     or other events described in, Article IV, X, XI or XII; (E) all
     certificates, documents and other instruments relating to the determination
     of the rights, preferences and privileges of any class or series of
     Partnership Interests issued pursuant hereto; and (F) all certificates,
     documents and other instruments (including agreements and a certificate of
     merger) relating to a merger or consolidation of the Partnership pursuant
     to Article XIV; and

          (ii) execute, swear to, acknowledge, deliver, file and record all
     ballots, consents, approvals, waivers, certificates, documents and other
     instruments necessary or appropriate, in the discretion of the General
     Partner or the Liquidator, to make, evidence, give, confirm or ratify any
     vote, consent, approval, agreement or other action that is made or given by
     the Partners hereunder or is consistent with the terms of this Agreement or
     is necessary or appropriate, in the discretion of the General Partner or
     the Liquidator, to effectuate the terms or intent of this Agreement;
     provided, that when required by any provision of this Agreement that
     establishes a percentage of the Limited Partners or of the Limited Partners
     of any class or series required to take any action, the General Partner and
     the Liquidator may exercise the power of attorney made in this Section
     2.6(a)(ii) only after the necessary vote, consent or approval of the
     Limited Partners or of the Limited Partners of such class or series, as
     applicable.

                                      -14-

     Nothing contained in this Section 2.6(a) shall be construed as authorizing
the General Partner to amend this Agreement except in accordance with Article
XIII or as may be otherwise expressly provided for in this Agreement.

     (b) The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, and it shall survive and, to the maximum
extent permitted by law, not be affected by the subsequent death, incompetency,
disability, incapacity, dissolution, bankruptcy or termination of any Limited
Partner or Assignee and the transfer of all or any portion of such Limited
Partner's or Assignee's Partnership Interest and shall extend to such Limited
Partner's or Assignee's successors and assigns. Each such Limited Partner or
Assignee hereby agrees to be bound by any representation made by the General
Partner or the Liquidator acting in good faith pursuant to such power of
attorney; and each such Limited Partner or Assignee, to the maximum extent
permitted by law, hereby waives any and all defenses that may be available to
contest, negate or disaffirm the action of the General Partner or the Liquidator
taken in good faith under such power of attorney.  Each Limited Partner or
Assignee shall execute and deliver to the General Partner or the Liquidator,
within 15 days after receipt of the request therefor, such further designation,
powers of attorney and other instruments as the General Partner or the
Liquidator deems necessary to effectuate this Agreement and the purposes of the
Partnership.

Section 2.7  Term.

     The term of the Partnership commenced upon the filing of the Certificate of
Limited Partnership in accordance with the Texas Act and shall continue in
existence until the close of Partnership business on December 31, 2088 or until
the earlier dissolution of the Partnership in accordance with the provisions of
Article XII. The existence of the Partnership as a separate legal entity shall
continue until the cancellation of the Certificate of Limited Partnership as
provided in the Texas Act.

Section 2.8  Title to Partnership Assets.

     Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner or Assignee, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner, one or more of its Affiliates or one or more nominees, as
the General Partner may determine. The General Partner hereby declares and
warrants that any Partnership assets for which record title is held in the name
of the General Partner or one or more of its Affiliates or one or more nominees
shall be held by the General Partner or such Affiliate or nominee for the use
and benefit of the Partnership in accordance with the provisions of this
Agreement; provided, however, that the General Partner shall use reasonable
efforts to cause record title to such assets (other than those assets in respect
of which the General Partner determines that the expense and difficulty of
conveyancing makes transfer of record title to the Partnership impracticable) to
be vested in the Partnership as soon as reasonably practicable; provided,
further, that, prior to the withdrawal or removal of the General Partner or as
soon thereafter as practicable, the General Partner shall use reasonable efforts
to effect the transfer of record title to the Partnership and, prior to any such
transfer, will provide for the use of such

                                      -15-

assets in a manner satisfactory to the General Partner. All Partnership assets
shall be recorded as the property of the Partnership in its books and records,
irrespective of the name in which record title to such Partnership assets is
held.

                                  ARTICLE III
                          RIGHTS OF LIMITED PARTNERS

Section 3.1  Limitation of Liability.

     The Limited Partners and the Assignees shall have no liability under this
Agreement except as expressly provided in this Agreement or in the Texas Act.

Section 3.2  Management of Business.

     No Limited Partner or Assignee, in its capacity as such, shall participate
in the operation, management or control (within the meaning of the Texas Act) of
the Partnership's business, transact any business in the Partnership's name or
have the power to sign documents for or otherwise bind the Partnership. Any
action taken by any Affiliate of the General Partner or any officer, director,
employee, member, general partner, agent or trustee of the General Partner or
any of its Affiliates, or any officer, director, employee, member, general
partner, agent or trustee of a Group Member, in its capacity as such, shall not
be deemed to be participation in the control of the business of the Partnership
by a limited partner of the Partnership (within the meaning of Section 3.03(a)
of the Texas Act) and shall not affect, impair or eliminate the limitations on
the liability of the Limited Partners or Assignees under this Agreement.

Section 3.3  Outside Activities of the Limited Partners.

     Subject to the provisions of Section 7.5 and the Omnibus Agreement, which
shall continue to be applicable to the Persons referred to therein, regardless
of whether such Persons shall also be Limited Partners or Assignees, any Limited
Partner or Assignee shall be entitled to and may have business interests and
engage in business activities in addition to those relating to the Partnership,
including business interests and activities in direct competition with the
Partnership Group. Neither the Partnership nor any of the other Partners or
Assignees shall have any rights by virtue of this Agreement in any business
ventures of any Limited Partner or Assignee.

Section 3.4  Rights of Limited Partners.

     (a)  In addition to other rights provided by this Agreement or by
applicable law, and except as limited by Section 3.4(b), each Limited Partner
shall have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon reasonable written demand
and at such Limited Partner's own expense:

          (i)  to obtain true and full information regarding the status of the
     business and financial condition of the Partnership;

          (ii) promptly after becoming available, to obtain a copy of the
     Partnership's federal, state and local income tax returns for each year;

                                      -16-

          (iii)  to have furnished to him a current list of the name and last
     known business, residence or mailing address of each Partner;

          (iv)   to have furnished to him a copy of this Agreement and the
     Certificate of Limited Partnership and all amendments thereto, together
     with a copy of the executed copies of all powers of attorney pursuant to
     which this Agreement, the Certificate of Limited Partnership and all
     amendments thereto have been executed;

          (v)    to obtain true and full information regarding the amount of
     cash and a description and statement of the Net Agreed Value of any other
     Capital Contribution by each Partner and which each Partner has agreed to
     contribute in the future, and the date on which each became a Partner; and

          (vi)   to obtain such other information regarding the affairs of the
     Partnership as is just and reasonable.

     (b)  The General Partner may keep confidential from the Limited Partners
and Assignees, for such period of time as the General Partner deems reasonable,
(i) any information that the General Partner reasonably believes to be in the
nature of trade secrets or (ii) other information the disclosure of which the
General Partner in good faith believes (A) is not in the best interests of the
MLP or the Partnership Group, (B) could damage the MLP or the Partnership Group
or (C) that any Group Member is required by law or by agreement with any third
party to keep confidential (other than agreements with Affiliates of the
Partnership the primary purpose of which is to circumvent the obligations set
forth in this Section 3.4).

                                  ARTICLE IV
                      TRANSFERS OF PARTNERSHIP INTERESTS

Section 4.1   Transfer Generally.

     (a)  The term "transfer," when used in this Agreement with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which the
General Partner assigns its General Partner Interest to another Person who
becomes the General Partner (or an Assignee) or by which the holder of a Limited
Partner Interest assigns such Limited Partner Interest to another Person who
becomes a Limited Partner (or an Assignee), and includes a sale, assignment,
gift, pledge, encumbrance, hypothecation, mortgage, exchange or any other
disposition by law or otherwise.

     (b)  No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article IV.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article IV shall be null and void.

     (c)  Nothing contained in this Agreement shall be construed to prevent a
disposition by any shareholder of the General Partner of any or all of the
issued and outstanding capital stock of the General Partner.

                                      -17-

Section 4.2  Transfer of General Partner's Partnership Interest.

     No provision of this Agreement shall be construed to prevent (and the
Limited Partners do hereby expressly consent to) (i) the transfer by the General
Partner of all or a portion of its General Partner Interest to one or more
Affiliates, which transferred General Partner Interest, to the extent not
transferred to a successor General Partner, shall constitute a Limited Partner
Interest or (ii) the transfer by the General Partner, in whole and not in part,
of its General Partner Interest upon its merger, consolidation or other
combination into any other Person or the transfer by it of all or substantially
all of its assets to another Person if, in the case of a transfer described in
either clause (i) or (ii) of this sentence, the rights and duties of the General
Partner with respect to the General Partner Interest so transferred (or the
rights and duties of a Limited Partner with respect to the Limited Partner
Interest so transferred) are assumed by the transferee and the transferee agrees
to be bound by the provisions of this Agreement; provided, however, that in
either such case the transferee is primarily controlled, directly or indirectly,
by the MLP General Partner or any Person primarily controlling, directly or
indirectly, the MLP General Partner; provided, further, that in either such
case, such transferee furnishes to the Partnership an Opinion of Counsel that
such merger, consolidation, combination, transfer or assumption will not result
in a loss of limited liability of the Limited Partners or cause the Partnership
to be taxable as a corporation or otherwise taxed as an entity for federal
income tax purposes.  In the case of a transfer pursuant to this Section 4.2 to
a Person proposed as a successor general partner of the Partnership, the
transferee or successor (as the case may be) shall be admitted to the
Partnership as the General Partner immediately prior to the transfer of the
Partnership Interest, and the business of the Partnership shall continue without
dissolution.

Section 4.3  Transfer of a Limited Partner's Partnership Interest.

     A Limited Partner may transfer all, but not less than all, of its
Partnership Interest as a Limited Partner in connection with the merger,
consolidation or other combination of such Limited Partner with or into any
other Person or the transfer by such Limited Partner of all or substantially all
of its assets to another Person, and following any such transfer such Person may
become a Substituted Limited Partner pursuant to Article X.  Except as set forth
in the immediately preceding sentence and in Section 5.2, or in connection with
any pledge of (or any related foreclosure on) a Partnership Interest as a
Limited Partner solely for the purpose of securing, directly or indirectly,
indebtedness of the Partnership or the MLP, and except for the transfers
contemplated by Sections 5.2 and 10.1, a Limited Partner may not transfer all or
any part of its Partnership Interest or withdraw from the Partnership.

Section 4.4  Restrictions on Transfers.

     (a)  Notwithstanding the other provisions of this Article IV, no transfer
of any Partnership Interest shall be made if such transfer would (i) violate the
then applicable federal or state securities laws or rules and regulations of the
Commission, any state securities commission or any other governmental authority
with jurisdiction over such transfer, (ii) terminate the existence or
qualification of the Partnership or the MLP under the laws of the jurisdiction
of its formation or (iii) cause the Partnership or the MLP to be treated as an
association taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes (to the extent not already so treated or taxed).

                                      -18-

     (b)  The General Partner may impose restrictions on the transfer of
Partnership Interests if a subsequent Opinion of Counsel determines that such
restrictions are necessary to avoid a significant risk of the Partnership or the
MLP becoming taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes.  The restrictions may be imposed by making such
amendments to this Agreement as the General Partner may determine to be
necessary or appropriate to impose such restrictions.

                                   ARTICLE V
          CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS

Section 5.1  Initial Contributions.

     In connection with the conversion of All American Pipeline Company to the
Partnership, the investment of the Predecessor General Partner and PAAI LLC in
the stock of All American Pipeline Company prior to its conversion became its
respective capital contribution to the Partnership.

Section 5.2  Contributions Pursuant to the Contribution and Conveyance
             Agreement.

     (a)  Pursuant to the Contribution and Conveyance Agreement, the Partnership
assumed certain indebtedness relating to the Assets as described in the
Contribution and Conveyance Agreement.

     (b)  Pursuant to the Contribution and Conveyance Agreement, the Partnership
distributed to the General Partner all of its interest in Gathering LLC.

     (c)  Notwithstanding anything else herein contained, if the aggregate
excess net working capital reflected on the balance sheets of the Partnership
and Marketing that are prepared in accordance with Section 7.3 of the
Contribution and Conveyance Agreement is in excess of $8,000,000, then the
Partnership shall distribute to the General Partner all of its excess net
working capital up to the total amount of such excess. In the event that such
aggregate excess net working capital is less than $8,000,000, the General
Partner shall contribute to the Partnership, as a Capital Contribution, cash in
an amount equal to the amount that, when added to the amount of the similar
contribution made to Marketing by the General Partner, would cause the aggregate
excess net working capital of the Partnership and Marketing to be equal to
$8,000,000.

Section 5.3  Additional Capital Contributions.

     With the consent of the General Partner, any Limited Partner may, but shall
not be obligated to, make additional Capital Contributions to the Partnership.
Contemporaneously with the making of any Capital Contributions by a Limited
Partner, in addition to those provided in Sections 5.1 and 5.2, the General
Partner shall be obligated to make an additional Capital Contribution to the
Partnership in an amount equal to 0.001 divided by 99.999 times the amount of
the additional Capital Contribution then made by such Limited Partner. Except as
set forth in the immediately preceding sentence and in Article XII, the General
Partner shall not be obligated to make any additional Capital Contributions to
the Partnership.

                                      -19-

Section 5.4  Interest and Withdrawal.

     No interest shall be paid by the Partnership on Capital Contributions. No
Partner or Assignee shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent, if any, that distributions made pursuant to
this Agreement or upon termination of the Partnership may be considered as such
by law and then only to the extent provided for in this Agreement. Except to the
extent expressly provided in this Agreement, no Partner or Assignee shall have
priority over any other Partner or Assignee either as to the return of Capital
Contributions or as to profits, losses or distributions.

Section 5.5  Capital Accounts.

     (a)  The Partnership shall maintain for each Partner (or a beneficial owner
of Partnership Interests held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the General
Partner in its sole discretion) owning a Partnership Interest a separate Capital
Account with respect to such Partnership Interest in accordance with the rules
of Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital Account shall be
increased by (i) the amount of all Capital Contributions made to the Partnership
with respect to such Partnership Interest pursuant to this Agreement and (ii)
all items of Partnership income and gain (including, without limitation, income
and gain exempt from tax) computed in accordance with Section 5.5(b) and
allocated with respect to such Partnership Interest pursuant to Section 6.1, and
decreased by (x) the amount of cash or Net Agreed Value of all actual and deemed
distributions of cash or property made with respect to such Partnership Interest
pursuant to this Agreement and (y) all items of Partnership deduction and loss
computed in accordance with Section 5.5(b) and allocated with respect to such
Partnership Interest pursuant to Section 6.1.

     (b)  For purposes of computing the amount of any item of income, gain, loss
or deduction which is to be allocated pursuant to Article VI and is to be
reflected in the Partners' Capital Accounts, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes (including,
without limitation, any method of depreciation, cost recovery or amortization
used for that purpose), provided, that:

          (i)  Solely for purposes of this Section 5.5, the Partnership shall be
     treated as owning directly its proportionate share (as determined by the
     General Partner) of all property owned by any OLP Subsidiary that is
     classified as a partnership for federal income tax purposes.

          (ii) All fees and other expenses incurred by the Partnership to
     promote the sale of (or to sell) a Partnership Interest that can neither be
     deducted nor amortized under Section 709 of the Code, if any, shall, for
     purposes of Capital Account maintenance, be treated as an item of deduction
     at the time such fees and other expenses are incurred and shall be
     allocated among the Partners pursuant to Section 6.1.

                                      -20-

          (iii)  Except as otherwise provided in Treasury Regulation Section
     1.704-1(b)(2)(iv)(m), computation of all items of income, gain, loss and
     deduction shall be made without regard to any election under Section 754 of
     the Code which may be made by the Partnership and, as to those items
     described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code, without
     regard to the fact that such items are not includable in gross income or
     are neither currently deductible nor capitalized for federal income tax
     purposes. To the extent an adjustment to the adjusted tax basis of any
     Partnership asset pursuant to Section 734(b) or 743(b) of the Code is
     required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to
     be taken into account in determining Capital Accounts, the amount of such
     adjustment in the Capital Accounts shall be treated as an item of gain or
     loss.

          (iv)   Any income, gain or loss attributable to the taxable
     disposition of any Partnership property shall be determined as if the
     adjusted basis of such property as of such date of disposition were equal
     in amount to the Partnership's Carrying Value with respect to such property
     as of such date.

          (v)    In accordance with the requirements of Section 704(b) of the
     Code, any deductions for depreciation, cost recovery or amortization
     attributable to any Contributed Property shall be determined as if the
     adjusted basis of such property on the date it was acquired by the
     Partnership were equal to the Agreed Value of such property. Upon an
     adjustment pursuant to Section 5.5(d) to the Carrying Value of any
     Partnership property subject to depreciation, cost recovery or
     amortization, any further deductions for such depreciation, cost recovery
     or amortization attributable to such property shall be determined (A) as if
     the adjusted basis of such property were equal to the Carrying Value of
     such property immediately following such adjustment and (B) using a rate of
     depreciation, cost recovery or amortization derived from the same method
     and useful life (or, if applicable, the remaining useful life) as is
     applied for federal income tax purposes; provided, however, that, if the
     asset has a zero adjusted basis for federal income tax purposes,
     depreciation, cost recovery or amortization derived from the same method
     and useful life (or, if applicable, the remaining useful life) as is
     applied for federal income tax purposes; provided, however, that, if the
     asset has a zero adjusted basis for federal income tax purposes,
     depreciation, cost recovery or amortization deductions shall be determined
     using any reasonable method that the General Partner may adopt.

          (vi)   If the Partnership's adjusted basis in a depreciable or cost
     recovery property is reduced for federal income tax purposes pursuant to
     Section 48(q)(1) or 48(q)(3) of the Code, the amount of such reduction
     shall, solely for purposes hereof, be deemed to be an additional
     depreciation or cost recovery deduction in the year such property is placed
     in service and shall be allocated among the Partners pursuant to Section
     6.1. Any restoration of such basis pursuant to Section 48(q)(2) of the Code
     shall, to the extent possible, be allocated in the same manner to the
     Partners to whom such deemed deduction was allocated.

     (c)  A transferee of a Partnership Interest shall succeed to a pro rata
portion of the Capital Account of the transferor relating to the Partnership
Interest so transferred.

                                      -21-

          (d)  (i)  In accordance with Treasury Regulation Section 1.704-
     1(b)(2)(iv)(f), on an issuance of additional Partnership Interests for cash
     or Contributed Property or the conversion of the General Partner's
     Partnership Interest to Common Units pursuant to Section 11.3(a), the
     Capital Accounts of all Partners and the Carrying Value of each Partnership
     property immediately prior to such issuance shall be adjusted upward or
     downward to reflect any Unrealized Gain or Unrealized Loss attributable to
     such Partnership property, as if such Unrealized Gain or Unrealized Loss
     had been recognized on an actual sale of each such property immediately
     prior to such issuance and had been allocated to the Partners at such time
     pursuant to Section 6.1 in the same manner as any item of gain or loss
     actually recognized during such period would have been allocated. In
     determining such Unrealized Gain or Unrealized Loss, the aggregate cash
     amount and fair market value of all Partnership assets (including, without
     limitation, cash or cash equivalents) immediately prior to the issuance of
     additional Partnership Interests shall be determined by the General Partner
     using such reasonable method of valuation as it may adopt; provided,
     however, that the General Partner, in arriving at such valuation, must take
     fully into account the fair market value of the Partnership Interests of
     all Partners at such time. The General Partner shall allocate such
     aggregate value among the assets of the Partnership (in such manner as it
     determines in its discretion to be reasonable) to arrive at a fair market
     value for individual properties.

          (ii) In accordance with Treasury Regulation Section 1.704-
     1(b)(2)(iv)(f), immediately prior to any actual or deemed distribution to a
     Partner of any Partnership property (other than a distribution of cash that
     is not in redemption or retirement of a Partnership Interest), the Capital
     Accounts of all Partners and the Carrying Value of all Partnership property
     shall be adjusted upward or downward to reflect any Unrealized Gain or
     Unrealized Loss attributable to such Partnership property, as if such
     Unrealized Gain or Unrealized Loss had been recognized in a sale of such
     property immediately prior to such distribution for an amount equal to its
     fair market value, and had been allocated to the Partners, at such time,
     pursuant to Section 6.1 in the same manner as any item of gain or loss
     actually recognized during such period would have been allocated. In
     determining such Unrealized Gain or Unrealized Loss the aggregate cash
     amount and fair market value of all Partnership assets (including, without
     limitation, cash or cash equivalents) immediately prior to a distribution
     shall (A) in the case of an actual distribution which is not made pursuant
     to Section 12.4 or in the case of a deemed contribution and/or distribution
     occurring as a result of a termination of the Partnership pursuant to
     Section 708 of the Code, be determined and allocated in the same manner as
     that provided in Section 5.5(d)(i) or (B) in the case of a liquidating
     distribution pursuant to Section 12.4, be determined and allocated by the
     Liquidator using such reasonable method of valuation as it may adopt.

Section 5.6  Loans from Partners.

     Loans by a Partner to the Partnership shall not constitute Capital
Contributions. If any Partner shall advance funds to the Partnership in excess
of the amounts required hereunder to be contributed by it to the capital of the
Partnership, the making of such excess advances shall not result in any increase
in the amount of the Capital Account of such Partner. The amount of any such
excess advances shall be a debt obligation of the Partnership to such Partner
and shall be

                                      -22-

payable or collectible only out of the Partnership assets in accordance with the
terms and conditions upon which such advances are made.

Section 5.7  Limited Preemptive Rights.

     Except as provided in Section 5.3, no Person shall have preemptive,
preferential or other similar rights with respect to (a) additional Capital
Contributions; (b) issuance or sale of any class or series of Partnership
Interests, whether unissued, held in the treasury or hereafter created; (c)
issuance of any obligations, evidences of indebtedness or other securities of
the Partnership convertible into or exchangeable for, or carrying or accompanied
by any rights to receive, purchase or subscribe to, any such Partnership
Interests; (d) issuance of any right of subscription to or right to receive, or
any warrant or option for the purchase of, any such Partnership Interests; or
(e) issuance or sale of any other securities that may be issued or sold by the
Partnership.

Section 5.8  Fully Paid and Non-Assessable Nature of Partnership Interests.

     All Partnership Interests issued to Limited Partners pursuant to, and in
accordance with the requirements of, this Article V shall be fully paid and non-
assessable Partnership Interests, except as such non-assessability may be
affected by Section 6.07 of the Texas Act.

                                  ARTICLE VI
                         ALLOCATIONS AND DISTRIBUTIONS

Section 6.1  Allocations for Capital Account Purposes.

     For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Section 5.5(b)) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.

     (a)  Net Income.  After giving effect to the special allocations set forth
          ----------
in Section 6.1(d), Net Income for each taxable year and all items of income,
gain, loss and deduction taken into account in computing Net Income for such
taxable year shall be allocated among the Partners as follows:

          (i)  First, 100% to the General Partner, until the aggregate Net
     Income allocated to the General Partner pursuant to this Section 6.1(a)(i)
     for the current taxable year and all previous taxable years is equal to the
     aggregate Net Losses allocated to the General Partner pursuant to Section
     6.1(b)(ii) for all previous taxable years;

          (ii) Second, 100% to the General Partner and the Limited Partners in
     accordance with their respective Percentage Interests.

     (b)  Net Losses.  After giving effect to the special allocations set forth
          ----------
in Section 6.1(d), Net Losses for each taxable period and all items of income,
gain, loss and deduction taken into account in computing Net Losses for such
taxable period shall be allocated among the Partners as follows:

                                      -23-

          (i)  First, 100% to the General Partner and the Limited Partners in
     accordance with their respective Percentage Interests; provided, however,
     that the Net Losses shall not be allocated to a Limited Partner pursuant to
     this Section 6.1(b)(i) to the extent that such allocation would cause a
     Limited Partner to have deficit balance in its Adjusted Capital Account at
     the end of such taxable year (or increase any existing deficit balance in
     such Limited Partner's Adjusted Capital Account);

          (ii) Second, the balance, if any, 100% to the General Partner.

     (c)  Net Termination Gains and Losses.  After giving effect to the special
          --------------------------------
allocations set forth in Section 6.1(d), all items of income, gain, loss and
deduction taken into account in computing Net Termination Gain or Net
Termination Loss for such taxable period shall be allocated in the same manner
as such Net Termination Gain or Net Termination Loss is allocated hereunder.
All allocations under this Section 6.1(c) shall be made after Capital Account
balances have been adjusted by all other allocations provided under this Section
6.1 and after all distributions of Available Cash provided under Section 6.4
have been made with respect to the taxable period ending on or before the
Liquidation Date; provided, however, that solely for purposes of this Section
6.1(c), Capital Accounts shall not be adjusted for distributions made pursuant
to Section 12.4.

          (i)  If a Net Termination Gain is recognized (or deemed recognized
     pursuant to Section 5.5(d)), such Net Termination Gain shall be allocated
     among the Partners in the following manner (and the Capital Accounts of the
     Partners shall be increased by the amount so allocated in each of the
     following subclauses, in the order listed, before an allocation is made
     pursuant to the next succeeding subclause):

               (A) First, to each Partner having a deficit balance in its
          Capital Account, in the proportion that such deficit balance bears to
          the total deficit balances in the Capital Accounts of all Partners,
          until each such Partner has been allocated Net Termination Gain equal
          to any such deficit balance in its Capital Account; and

               (B) Second, 100% to the General Partner and the Limited Partners
          in accordance with their respective Percentage Interests.

          (ii) If a Net Termination Loss is recognized (or deemed recognized
     pursuant to Section 5.5(d)), such Net Termination Loss shall be allocated
     among the Partners in the following manner:

               (A) First, to the General Partner and the Limited Partners in
          proportion to, and to the extent of, the positive balances in their
          respective Capital Accounts; and

               (B) Second, the balance, if any, 100% to the General Partner.

     (d)  Special Allocations. Notwithstanding any other provision of this
          -------------------
Section 6.1, the following special allocations shall be made for such taxable
period:

                                      -24-

          (i)    Partnership Minimum Gain Chargeback. Notwithstanding any other
                 -----------------------------------
     provision of this Section 6.1, if there is a net decrease in Partnership
     Minimum Gain during any Partnership taxable period, each Partner shall be
     allocated items of Partnership income and gain for such period (and, if
     necessary, subsequent periods) in the manner and amounts provided in
     Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and 1.704-
     2(j)(2)(i), or any successor provision. For purposes of this Section
     6.1(d), each Partner's Adjusted Capital Account balance shall be
     determined, and the allocation of income or gain required hereunder shall
     be effected, prior to the application of any other allocations pursuant to
     this Section 6.1(d) with respect to such taxable period (other than an
     allocation pursuant to Sections 6.1(d)(v) and 6.1(d)(vi)). This Section
     6.1(d)(i) is intended to comply with the Partnership Minimum Gain
     chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall
     be interpreted consistently therewith.

          (ii)   Chargeback of Partner Nonrecourse Debt Minimum Gain.
                 ---------------------------------------------------
     Notwithstanding the other provisions of this Section 6.1 (other than
     Section 6.1(d)(i)), except as provided in Treasury Regulation Section
     1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse Debt
     Minimum Gain during any Partnership taxable period, any Partner with a
     share of Partner Nonrecourse Debt Minimum Gain at the beginning of such
     taxable period shall be allocated items of Partnership income and gain for
     such period (and, if necessary, subsequent periods) in the manner and
     amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and 1.704-
     2(j)(2)(ii), or any successor provisions. For purposes of this Section
     6.1(d), each Partner's Adjusted Capital Account balance shall be
     determined, and the allocation of income or gain required hereunder shall
     be effected, prior to the application of any other allocations pursuant to
     this Section 6.1(d), other than Section 6.1(d)(i) and other than an
     allocation pursuant to Sections 6.1(d)(v) and 6.1(d)(vi), with respect to
     such taxable period. This Section 6.1(d)(ii) is intended to comply with the
     chargeback of items of income and gain requirement in Treasury Regulation
     Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

          (iii)  Qualified Income Offset. In the event any Partner unexpectedly
                 -----------------------
     receives any adjustments, allocations or distributions described in
     Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-
     1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Partnership income
     and gain shall be specially allocated to such Partner in an amount and
     manner sufficient to eliminate, to the extent required by the Treasury
     Regulations promulgated under Section 704(b) of the Code, the deficit
     balance, if any, in its Adjusted Capital Account created by such
     adjustments, allocations or distributions as quickly as possible unless
     such deficit balance is otherwise eliminated pursuant to Section 6.1(d)(i)
     or (ii).

          (iv)   Gross Income Allocations. In the event any Partner has a
                 ------------------------
     deficit balance in its Capital Account at the end of any Partnership
     taxable period in excess of the sum of (A) the amount such Partner is
     required to restore pursuant to the provisions of this Agreement and (B)
     the amount such Partner is deemed obligated to restore pursuant to Treasury
     Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such Partner shall be
     specially allocated items of Partnership gross income and gain in the
     amount of such

                                      -25-

     excess as quickly as possible; provided, that an allocation pursuant to
     this Section 6.1(d)(iv) shall be made only if and to the extent that such
     Partner would have a deficit balance in its Capital Account as adjusted
     after all other allocations provided for in this Section 6.1 have been
     tentatively made as if this Section 6.1(d)(iv) were not in this Agreement.

          (v)    Nonrecourse Deductions.  Nonrecourse Deductions for any taxable
                 ----------------------
     period shall be allocated to the Partners in accordance with their
     respective Percentage Interests. If the General Partner determines in its
     good faith discretion that the Partnership's Nonrecourse Deductions must be
     allocated in a different ratio to satisfy the safe harbor requirements of
     the Treasury Regulations promulgated under Section 704(b) of the Code, the
     General Partner is authorized, upon notice to the other Partners, to revise
     the prescribed ratio to the numerically closest ratio that does satisfy
     such requirements.

          (vi)   Partner Nonrecourse Deductions. Partner Nonrecourse Deductions
                 ------------------------------
     for any taxable period shall be allocated 100% to the Partner that bears
     the Economic Risk of Loss with respect to the Partner Nonrecourse Debt to
     which such Partner Nonrecourse Deductions are attributable in accordance
     with Treasury Regulation Section 1.704-2(i). If more than one Partner bears
     the Economic Risk of Loss with respect to a Partner Nonrecourse Debt, such
     Partner Nonrecourse Deductions attributable thereto shall be allocated
     between or among such Partners in accordance with the ratios in which they
     share such Economic Risk of Loss.

          (vii)  Nonrecourse Liabilities.  For purposes of Treasury Regulation
                 -----------------------
     Section 1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of
     the Partnership in excess of the sum of (A) the amount of Partnership
     Minimum Gain and (B) the total amount of Nonrecourse Built-in Gain shall be
     allocated among the Partners in accordance with their respective Percentage
     Interests.

          (viii) Code Section 754 Adjustments. To the extent an adjustment to
                 ----------------------------
     the adjusted tax basis of any Partnership asset pursuant to Section 734(b)
     or 743(b) of the Code is required, pursuant to Treasury Regulation Section
     1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
     Accounts, the amount of such adjustment to the Capital Accounts shall be
     treated as an item of gain (if the adjustment increases the basis of the
     asset) or loss (if the adjustment decreases such basis), and such item of
     gain or loss shall be specially allocated to the Partners in a manner
     consistent with the manner in which their Capital Accounts are required to
     be adjusted pursuant to such Section of the Treasury Regulations.

          (ix)   Curative Allocation.
                 -------------------

                 (A) Notwithstanding any other provision of this Section 6.1,
          other than the Required Allocations, the Required Allocations shall be
          taken into account in making the Agreed Allocations so that, to the
          extent possible, the net amount of items of income, gain, loss and
          deduction allocated to each Partner pursuant to the Required
          Allocations and the Agreed Allocations, together, shall be equal to
          the net amount of such items that would have been allocated to each
          such Partner

                                      -26-

          under the Agreed Allocations had the Required Allocations and the
          related Curative Allocation not otherwise been provided in this
          Section 6.1. Notwithstanding the preceding sentence, Required
          Allocations relating to (1) Nonrecourse Deductions shall not be taken
          into account except to the extent that there has been a decrease in
          Partnership Minimum Gain and (2) Partner Nonrecourse Deductions shall
          not be taken into account except to the extent that there has been a
          decrease in Partner Nonrecourse Debt Minimum Gain. Allocations
          pursuant to this Section 6.1(d)(ix)(A) shall only be made with respect
          to Required Allocations to the extent the General Partner reasonably
          determines that such allocations will otherwise be inconsistent with
          the economic agreement among the Partners. Further, allocations
          pursuant to this Section 6.1(d)(ix)(A) shall be deferred with respect
          to allocations pursuant to clauses (1) and (2) hereof to the extent
          the General Partner reasonably determines that such allocations are
          likely to be offset by subsequent Required Allocations.

               (B) The General Partner shall have reasonable discretion, with
          respect to each taxable period, to (1) apply the provisions of Section
          6.1(d)(ix)(A) in whatever order is most likely to minimize the
          economic distortions that might otherwise result from the Required
          Allocations, and (2) divide all allocations pursuant to Section
          6.1(d)(ix)(A) among the Partners in a manner that is likely to
          minimize such economic distortions.

Section 6.2  Allocations for Tax Purposes.

     (a)  Except as otherwise provided herein, for federal income tax purposes,
each item of income, gain, loss and deduction shall be allocated among the
Partners in the same manner as its correlative item of "book" income, gain, loss
or deduction is allocated pursuant to Section 6.1.

     (b)  In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:

          (i)  (A) In the case of a Contributed Property, such items
     attributable thereto shall be allocated among the Partners in the manner
     provided under Section 704(c) of the Code that takes into account the
     variation between the Agreed Value of such property and its adjusted basis
     at the time of contribution; and (B) any item of Residual Gain or Residual
     Loss attributable to a Contributed Property shall be allocated among the
     Partners in the same manner as its correlative item of "book" gain or loss
     is allocated pursuant to Section 6.1.

          (ii) (A) In the case of an Adjusted Property, such items shall (1)
     first, be allocated among the Partners in a manner consistent with the
     principles of Section 704(c) of the Code to take into account the
     Unrealized Gain or Unrealized Loss attributable to such property and the
     allocations thereof pursuant to Section 5.5(d)(i) or 5.5(d)(ii), and (2)
     second, in the event such property was originally a Contributed Property,
     be allocated among the Partners in a manner consistent with Section
     6.2(b)(i)(A); and (B) any item of

                                      -27-

     Residual Gain or Residual Loss attributable to an Adjusted Property shall
     be allocated among the Partners in the same manner as its correlative item
     of "book" gain or loss is allocated pursuant to Section 6.1.

          (iii)  The General Partner shall apply the principles of Treasury
     Regulation Section 1.704-3(d) to eliminate Book-Tax Disparities.

     (c)  For the proper administration of the Partnership and for the
preservation of uniformity of the Units or other limited partner interests of
the MLP (or any class or classes thereof), the General Partner shall have sole
discretion to (i) adopt such conventions as it deems appropriate in determining
the amount of depreciation, amortization and cost recovery deductions; (ii) make
special allocations for federal income tax purposes of income (including,
without limitation, gross income) or deductions; and (iii) amend the provisions
of this Agreement as appropriate (x) to reflect the proposal or promulgation of
Treasury Regulations under Section 704(b) or Section 704(c) of the Code or (y)
otherwise to preserve or achieve uniformity of the Units or other limited
partner interests of the MLP (or any class or classes thereof). The General
Partner may adopt such conventions, make such allocations and make such
amendments to this Agreement as provided in this Section 6.2(c) only if such
conventions, allocations or amendments would not have a material adverse effect
on the Partners, the holders of any class or classes of Units or other limited
partner interests of the MLP issued and outstanding or the Partnership and if
such allocations are consistent with the principles of Section 704 of the Code.

     (d)  The General Partner in its discretion may determine to depreciate or
amortize the portion of an adjustment under Section 743(b) of the Code
attributable to unrealized appreciation in any Adjusted Property (to the extent
of the unamortized Book-Tax Disparity) using a predetermined rate derived from
the depreciation or amortization method and useful life applied to the
Partnership's common basis of such property, despite any inconsistency of such
approach with Treasury Regulation Section 1.167(c)-l(a)(6). If the General
Partner determines that such reporting position cannot reasonably be taken, the
General Partner may adopt depreciation and amortization conventions under which
all purchasers acquiring limited partner interests of the MLP in the same month
would receive depreciation and amortization deductions, based upon the same
applicable rate as if they had purchased a direct interest in the Partnership's
property. If the General Partner chooses not to utilize such aggregate method,
the General Partner may use any other reasonable depreciation and amortization
conventions to preserve the uniformity of the intrinsic tax characteristics of
any limited partner interests of the MLP that would not have a material adverse
effect on the Partners or the holders of any class or classes of limited partner
interests of the MLP.

     (e)  Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after taking
into account other required allocations of gain pursuant to this Section 6.2, be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.

     (f)  All items of income, gain, loss, deduction and credit recognized by
the Partnership for federal income tax purposes and allocated to the Partners in
accordance with the

                                      -28-

provisions hereof shall be determined without regard to any election under
Section 754 of the Code which may be made by the Partnership; provided, however,
that such allocations, once made, shall be adjusted as necessary or appropriate
to take into account those adjustments permitted or required by Sections 734 and
743 of the Code.

     (g)  The General Partner may adopt such methods of allocation of income,
gain, loss or deduction between a transferor and a transferee of a Partnership
Interest as it determines necessary, to the extent permitted or required by
Section 706 of the Code and the regulations or rulings promulgated thereunder.

     (h)  Allocations that would otherwise be made to a Partner under the
provisions of this Article VI shall instead be made to the beneficial owner of
Partnership Interests held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the General
Partner in its sole discretion.

Section 6.3  Distributions.

     (a)  Within 45 days following the end of each Quarter commencing with the
Quarter ending on December 31, 1998, an amount equal to 100% of Available Cash
with respect to such Quarter shall, subject to Section 6.07 of the Texas Act, be
distributed in accordance with this Article VI by the Partnership to the
Partners in accordance with their respective Percentage Interests. The
immediately preceding sentence shall not require any distribution of cash if and
to the extent such distribution would be prohibited by applicable law or by any
loan agreement, security agreement, mortgage, debt instrument or other agreement
or obligation to which the Partnership is a party or by which it is bound or its
assets are subject.  All distributions required to be made under this Agreement
shall be made subject to Section 6.07 of the Texas Act.

     (b)  In the event of the dissolution and liquidation of the Partnership,
all receipts received during or after the Quarter in which the Liquidation Date
occurs, other than from borrowings described in (a)(ii) of the definition of
Available Cash, shall be applied and distributed solely in accordance with, and
subject to the terms and conditions of, Section 12.4.

     (c)  The General Partner shall have the discretion to treat as a
distribution of Available Cash to all or less than all of the Partners or
Assignees (i) taxes paid by any member of the Partnership Group on behalf of
such Partners or Assignees, (ii) amounts withheld by any member of the
Partnership Group for taxes with respect to such Partners or Assignees and (iii)
amounts seized by any taxing authority from any member of the Partnership Group
with respect to taxes owed by such Partners or Assignees.

                                  ARTICLE VII
                     MANAGEMENT AND OPERATION OF BUSINESS

Section 7.1  Management.

     (a)  The General Partner shall conduct, direct and manage all activities of
the Partnership. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership shall be
exclusively vested in the General Partner,

                                      -29-

and no Limited Partner or Assignee shall have any management power over the
business and affairs of the Partnership. In addition to the powers now or
hereafter granted a general partner of a limited partnership under applicable
law or which are granted to the General Partner under any other provision of
this Agreement, the General Partner, subject to Section 7.3, shall have full
power and authority to do all things and on such terms as it, in its sole
discretion, may deem necessary or appropriate to conduct the business of the
Partnership, to exercise all powers set forth in Section 2.5 and to effectuate
the purposes set forth in Section 2.4, including the following:

          (i)    the making of any expenditures, the lending or borrowing of
     money, the assumption or guarantee of, or other contracting for,
     indebtedness and other liabilities, the issuance of evidences of
     indebtedness, including indebtedness that is convertible into a Partnership
     Interest, and the incurring of any other obligations;

          (ii)   the making of tax, regulatory and other filings, or rendering
     of periodic or other reports to governmental or other agencies having
     jurisdiction over the business or assets of the Partnership;

          (iii)  the acquisition, disposition, mortgage, pledge, encumbrance,
     hypothecation or exchange of any or all of the assets of the Partnership or
     the merger or other combination of the Partnership with or into another
     Person (the matters described in this clause (iii) being subject, however,
     to any prior approval that may be required by Section 7.3);

          (iv)   the use of the assets of the Partnership (including cash on
     hand) for any purpose consistent with the terms of this Agreement,
     including the financing of the conduct of the operations of the Partnership
     Group, subject to Section 7.6, the lending of funds to other Persons
     (including the MLP and any member of the Partnership Group), the repayment
     of obligations of the MLP or any member of the Partnership Group and the
     making of capital contributions to any member of the Partnership Group;

          (v)    the negotiation, execution and performance of any contracts,
     conveyances or other instruments (including instruments that limit the
     liability of the Partnership under contractual arrangements to all or
     particular assets of the Partnership, with the other party to the contract
     to have no recourse against the General Partner or its assets other than
     its interest in the Partnership, even if same results in the terms of the
     transaction being less favorable to the Partnership than would otherwise be
     the case);

          (vi)   the distribution of Partnership cash;

          (vii)  the selection and dismissal of employees (including employees
     having titles such as "president," "vice president," "secretary" and
     "treasurer") and agents, outside attorneys, accountants, consultants and
     contractors and the determination of their compensation and other terms of
     employment or hiring;

          (viii) the maintenance of such insurance for the benefit of the
     Partnership Group and the Partners as it deems necessary or appropriate;

                                      -30-

          (ix) the formation of, or acquisition of an interest in, and the
     contribution of property and the making of loans to, any further limited or
     general partnerships, joint ventures, corporations or other relationships
     subject to the restrictions set forth in Section 2.4;

          (x)  the control of any matters affecting the rights and obligations
     of the Partnership, including the bringing and defending of actions at law
     or in equity and otherwise engaging in the conduct of litigation and the
     incurring of legal expense and the settlement of claims and litigation; and

          (xi) the indemnification of any Person against liabilities and
     contingencies to the extent permitted by law.

     (b)  Notwithstanding any other provision of this Agreement, the MLP
Agreement, the Texas Act or any applicable law, rule or regulation, each of the
Partners and Assignees and each other Person who may acquire an interest in the
Partnership hereby (i) approves, ratifies and confirms the execution, delivery
and performance by the parties thereto of the Partnership Agreement, the MLP
Agreement, the Underwriting Agreement, the Omnibus Agreement, the Contribution
and Conveyance Agreement and the other agreements and documents described in or
filed as exhibits to the Registration Statement that are related to the
transactions contemplated by the Registration Statement; (ii) agrees that the
General Partner (on its own or through any officer of the Partnership) is
authorized to execute, deliver and perform the agreements referred to in clause
(i) of this sentence and the other agreements, acts, transactions and matters
described in or contemplated by the Registration Statement on behalf of the
Partnership without any further act, approval or vote of the Partners or the
Assignees or the other Persons who may acquire an interest in the Partnership;
and (iii) agrees that the execution, delivery or performance by the General
Partner, the MLP, any Group Member or any Affiliate of any of them, of this
Agreement or any agreement authorized or permitted under this Agreement
(including the exercise by the General Partner or any Affiliate of the General
Partner of the rights accorded pursuant to Article XV), shall not constitute a
breach by the General Partner of any duty that the General Partner may owe the
Partnership or the Limited Partners or any other Persons under this Agreement
(or any other agreements) or of any duty stated or implied by law or equity.

Section 7.2  Certificate of Limited Partnership.

     The Certificate of Limited Partnership has been filed with the Secretary of
State of the State of Texas as required by the Texas Act and the General Partner
shall use all reasonable efforts to cause to be filed such other certificates or
documents as may be determined by the General Partner in its sole discretion to
be reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Texas or any other
state in which the Partnership may elect to do business or own property. To the
extent that such action is determined by the General Partner in its sole
discretion to be reasonable and necessary or appropriate, the General Partner
shall file amendments to and restatements of the Certificate of Limited
Partnership and do all things to maintain the Partnership as a limited
partnership (or a partnership or other entity in which the limited partners have
limited liability) under the laws of the State of Texas or of any other state in
which the Partnership may elect to do business or own

                                      -31-

property. Subject to the terms of Section 3.4(a), the General Partner shall not
be required, before or after filing, to deliver or mail a copy of the
Certificate of Limited Partnership, any qualification document or any amendment
thereto to any Limited Partner or Assignee.

Section 7.3  Restrictions on General Partner's Authority.

     (a) The General Partner may not, without written approval of the specific
act by the Limited Partners or by other written instrument executed and
delivered by the Limited Partners subsequent to the date of this Agreement, take
any action in contravention of this Agreement, including, except as otherwise
provided in this Agreement, (i) committing any act that would make it impossible
to carry on the ordinary business of the Partnership; (ii) possessing
Partnership property, or assigning any rights in specific Partnership property,
for other than a Partnership purpose; (iii) admitting a Person as a Partner;
(iv) amending this Agreement in any manner or (v) transferring its General
Partner Interest.

     (b) Except as provided in Articles XII and XIV, the General Partner may not
sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related transactions
(including by way of merger, consolidation or other combination) or approve on
behalf of the Partnership the sale, exchange or other disposition of all or
substantially all of the assets of the Partnership, without the approval of the
Limited Partners; provided however that this provision shall not preclude or
limit the General Partner's ability to mortgage, pledge, hypothecate or grant a
security interest in all or substantially all of the assets of the Partnership
and shall not apply to any forced sale of any or all of the assets of the
Partnership pursuant to the foreclosure of, or other realization upon, any such
encumbrance. Without the approval of at least a Unit Majority, the General
Partner shall not (i) consent to any amendment to this Agreement or, except as
expressly permitted by Section 7.9(d) of the MLP Agreement, take any action
permitted to be taken by a Partner, in either case, that would have a material
adverse effect on the MLP as a Partner or (ii) except as permitted under
Sections 4.2, 11.1 and 11.2 of this Agreement, elect a successor general partner
of the Partnership.

Section 7.4  Reimbursement of the General Partner.

     (a) Except as provided in this Section 7.4 and elsewhere in this Agreement
or in the MLP Agreement, the General Partner shall not be compensated for its
services as General Partner or as general partner of any Group Member.

     (b) The General Partner, and the MLP General Partner on behalf of the
General Partner, shall be reimbursed on a monthly basis, or such other
reasonable basis as the General Partner may determine in its sole discretion,
for (i) all direct and indirect expenses it incurs or payments it makes on
behalf of the Partnership (including salary, bonus, incentive compensation and
other amounts paid to any Person including employees of the MLP General Partner
and other Affiliates of the General Partner to perform services for the
Partnership or for the General Partner or the MLP General Partner on behalf of
the General Partner in the discharge of its duties to the Partnership), and (ii)
all other necessary or appropriate expenses allocable to the Partnership or
otherwise reasonably incurred by the General Partner in connection with
operating the Partnership's business (including expenses allocated to the
General Partner by its Affiliates). The General Partner shall determine the
expenses that are allocable to the Partnership in any

                                      -32-

reasonable manner determined by the General Partner in its sole discretion.
Reimbursements pursuant to this Section 7.4 shall be in addition to any
reimbursement to the General Partner as a result of indemnification pursuant to
Section 7.7.

     (c) Subject to Section 5.7, the General Partner, in its sole discretion and
without the approval of the Limited Partners (who shall have no right to vote in
respect thereof), may propose and adopt on behalf of the Partnership employee
benefit plans, employee programs and employee practices, or cause the
Partnership to issue Partnership Interests, in connection with, pursuant to any
employee benefit plan, employee program or employee practice maintained or
sponsored by the General Partner or any of its Affiliates, in each case for the
benefit of employees of the General Partner any Group Member or any Affiliate,
or any of them, in respect of services performed, directly or indirectly, for
the benefit of the Partnership Group. Expenses incurred by the General Partner
or the MLP General Partner on behalf of the General Partner in connection with
any such plans, programs and practices shall be reimbursed in accordance with
Section 7.4(b). Any and all obligations of the General Partner or the MLP
General Partner on behalf of the General Partner under any employee benefit
plans, employee programs or employee practices adopted by the General Partner as
permitted by this Section 7.4(c) shall constitute obligations of the General
Partner hereunder and shall be assumed by any successor General Partner approved
pursuant to Section 11.1 or 11.2 or the transferee of or successor to all of the
General Partner's General Partner Interest pursuant to Section 4.2.

Section 7.5  Outside Activities.

     (a) After the Closing Date, the General Partner, for so long as it is the
General Partner of the Partnership (i) agrees that its sole business will be to
act as the General Partner of the Partnership and a general partner of any other
partnership of which the Partnership or the MLP is, directly or indirectly, a
partner and to undertake activities that are ancillary or related thereto, (ii)
shall not engage in any business or activity or incur any debts or liabilities
except in connection with or incidental to (A) its performance as general
partner of the Partnership, or one or more Group Members or as described in or
contemplated by the Registration Statement or (B) the acquiring, owning or
disposing of debt or equity securities in any Group Member and (iii) except to
the extent permitted in the Omnibus Agreement, shall not, and shall cause its
Affiliates not to, engage in any Restricted Business.

     (b) The Omnibus Agreement, to which the Partnership is a party, sets forth
certain restrictions on the ability of Plains Resources Inc. to engage in
Restricted Businesses.

     (c) Except as specifically restricted by Section 7.5(a) and the Omnibus
Agreement, each Indemnitee (other than the General Partner) shall have the right
to engage in businesses of every type and description and other activities for
profit and to engage in and possess an interest in other business ventures of
any and every type or description, whether in businesses engaged in or
anticipated to be engaged in by the MLP or any Group Member, independently or
with others, including business interests and activities in direct competition
with the business and activities of the MLP or any Group Member, and none of the
same shall constitute a breach of this Agreement or any duty express or implied
by law to the MLP or any Group Member or any Partner or Assignee. Neither the
MLP nor any Group Member, any Limited Partner, nor any other Person shall have
any rights by virtue of this Agreement, the MLP Agreement or the

                                      -33-

partnership relationship established hereby or thereby in any business ventures
of any Indemnitee.

     (d) Subject to the terms of Section 7.5(a), Section 7.5(b), Section 7.5(c)
and the Omnibus Agreement, but otherwise notwithstanding anything to the
contrary in this Agreement, (i) the engaging in competitive activities by any
Indemnitees (other than the General Partner) in accordance with the provisions
of this Section 7.5 is hereby approved by the Partnership and all Partners, (ii)
it shall be deemed not to be a breach of the General Partner's fiduciary duty or
any other obligation of any type whatsoever of the General Partner for the
Indemnitees (other than the General Partner) to engage in such business
interests and activities in preference to or to the exclusion of the Partnership
and (iii) except as set forth in the Omnibus Agreement, the General Partner and
the Indemnities shall have no obligation to present business opportunities to
the Partnership.

     (e) The General Partner and any of its Affiliates may acquire Units or
other MLP Securities in addition to those acquired on the Closing Date and,
except as otherwise provided in this Agreement, shall be entitled to exercise
all rights relating to such Units or MLP Securities.

     (f) The term "Affiliates" when used in Section 7.5(a) and Section 7.5(e)
with respect to the General Partner shall not include any Group Member or any
Subsidiary of the MLP or any Group Member.

     (g) Anything in this Agreement to the contrary notwithstanding, to the
extent that provisions of Sections 7.7, 7.8, 7.9, 7.10 or other Sections of this
Agreement purport or are interpreted to have the effect of restricting the
fiduciary duties that might otherwise, as a result of Texas or other applicable
law, be owed by the General Partner to the Partnership and its Limited Partners,
or to constitute a waiver or consent by the Limited Partners to any such
restriction, such provisions shall be inapplicable and have no effect in
determining whether the General Partner has complied with its fiduciary duties
in connection with determinations made by it under this Section 7.5.

Section 7.6  Loans from the General Partner; Loans or Contributions from the
Partnership; Contracts with Affiliates; Certain Restrictions on the General
Partner.

     (a) The General Partner or its Affiliates may lend to the MLP or any Group
Member, and the MLP or any Group Member may borrow from the General Partner or
any of its Affiliates, funds needed or desired by the MLP or the Group Member
for such periods of time and in such amounts as the General Partner may
determine; provided, however, that in any such case the lending party may not
charge the borrowing party interest at a rate greater than the rate that would
be charged the borrowing party or impose terms less favorable to the borrowing
party than would be charged or imposed on the borrowing party by unrelated
lenders on comparable loans made on an arm's-length basis (without reference to
the lending party's financial abilities or guarantees). The borrowing party
shall reimburse the lending party for any costs (other than any additional
interest costs) incurred by the lending party in connection with the borrowing
of such funds. For purposes of this Section 7.6(a) and Section 7.6(b), the term
"Group Member" shall include any Affiliate of a Group Member that is controlled
by the Group Member. No

                                      -34-

Group Member may lend funds to the General Partner or any of its Affiliates
(other than the MLP, a Subsidiary of the MLP or a Subsidiary of another Group
Member).

     (b) The Partnership may lend or contribute to any Group Member, and any
Group Member may borrow from the Partnership, funds on terms and conditions
established in the sole discretion of the General Partner; provided, however,
that the Partnership may not charge the Group Member interest at a rate less
than the rate that would be charged to the Group Member (without reference to
the General Partner's financial abilities or guarantees) by unrelated lenders on
comparable loans. The foregoing authority shall be exercised by the General
Partner in its sole discretion and shall not create any right or benefit in
favor of any Group Member or any other Person.

     (c) The General Partner may itself, or may enter into an agreement with the
MLP General Partner or any of its Affiliates to, render services to a Group
Member or to the General Partner in the discharge of its duties as general
partner of the Partnership. Any services rendered to a Group Member by the
General Partner, the MLP General Partner or any of their Affiliates shall be on
terms that are fair and reasonable to the Partnership; provided, however, that
the requirements of this Section 7.6(c) shall be deemed satisfied as to (i) any
transaction approved by Special Approval, (ii) any transaction, the terms of
which are no less favorable to the Partnership Group than those generally being
provided to or available from unrelated third parties or (iii) any transaction
that, taking into account the totality of the relationships between the parties
involved (including other transactions that may be particularly favorable or
advantageous to the Partnership Group), is equitable to the Partnership Group.
The provisions of Section 7.4 shall apply to the rendering of services described
in this Section 7.6(c).

     (d) The Partnership Group may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.

     (e) Neither the General Partner, the MLP General Partner nor any of their
Affiliates shall sell, transfer or convey any property to, or purchase any
property from, the Partnership, directly or indirectly, except pursuant to
transactions that are fair and reasonable to the Partnership; provided, however,
that the requirements of this Section 7.6(e) shall be deemed to be satisfied as
to (i) the transactions effected pursuant to Sections 5.2 and 5.3, the
Contribution and Conveyance Agreement and any other transactions described in or
contemplated by the Registration Statement, (ii) any transaction approved by
Special Approval, (iii) any transaction, the terms of which are no less
favorable to the Partnership than those generally being provided to or available
from unrelated third parties, or (iv) any transaction that, taking into account
the totality of the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership), is equitable to the Partnership.

     (f) The General Partner and its Affiliates will have no obligation to
permit any Group Member to use any facilities or assets of the General Partner
and its Affiliates, except as may be provided in contracts entered into from
time to time specifically dealing with such use, nor shall there be any
obligation on the part of the General Partner or its Affiliates to enter into
such contracts.

                                      -35-

     (g) Without limitation of Sections 7.6(a) through 7.6(f), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Registration Statement are hereby
approved by all Partners.

Section 7.7  Indemnification.

     (a) To the fullest extent permitted by law but subject to the limitations
expressly provided in this Agreement, all Indemnitees shall be indemnified and
held harmless by the Partnership from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including legal fees and
expenses), judgments, fines, penalties, interest, settlements or other amounts
arising from any and all claims, demands, actions, suits or proceedings, whether
civil, criminal, administrative or investigative, in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, by reason of
its status as an Indemnitee; provided, that in each case the Indemnitee acted in
good faith and in a manner that such Indemnitee reasonably believed to be in, or
(in the case of a Person other than the General Partner) not opposed to, the
best interests of the Partnership and, with respect to any criminal proceeding,
had no reasonable cause to believe its conduct was unlawful; provided, further,
no indemnification pursuant to this Section 7.7 shall be available to the
General Partner with respect to its obligations incurred pursuant to the
Underwriting Agreement or the Contribution and Conveyance Agreement (other than
obligations incurred by the General Partner on behalf of the Partnership). The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that the Indemnitee acted in a manner contrary to that
specified above. Any indemnification pursuant to this Section 7.7 shall be made
only out of the assets of the Partnership, it being agreed that the General
Partner shall not be personally liable for such indemnification and shall have
no obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate such indemnification.

     (b) To the fullest extent permitted by law, expenses (including legal fees
and expenses) incurred by an Indemnitee who is indemnified pursuant to Section
7.7(a) in defending any claim, demand, action, suit or proceeding shall, from
time to time, be advanced by the Partnership prior to the final disposition of
such claim, demand, action, suit or proceeding upon receipt by the Partnership
of any undertaking by or on behalf of the Indemnitee to repay such amount if it
shall be determined that the Indemnitee is not entitled to be indemnified as
authorized in this Section 7.7.

     (c) The indemnification provided by this Section 7.7 shall be in addition
to any other rights to which an Indemnitee may be entitled under any agreement,
pursuant to any vote of the Partners, as a matter of law or otherwise, both as
to actions in the Indemnitee's capacity as an Indemnitee and as to actions in
any other capacity (including any capacity under the Underwriting Agreement),
and shall continue as to an Indemnitee who has ceased to serve in such capacity
and shall inure to the benefit of the heirs, successors, assigns and
administrators of the Indemnitee.

     (d) The Partnership may purchase and maintain (or reimburse the General
Partner, the MLP General Partner or its Affiliates for the cost of) insurance,
on behalf of the General Partner, the MLP General Partner or their Affiliates
and such other Persons as the General Partner shall

                                      -36-

determine, against any liability that may be asserted against or expense that
may be incurred by such Person in connection with the Partnership's activities
or such Person's activities on behalf of the Partnership, regardless of whether
the Partnership would have the power to indemnify such Person against such
liability under the provisions of this Agreement.

     (e) For purposes of this Section 7.7, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute "fines"
within the meaning of Section 7.7(a); and action taken or omitted by it with
respect to any employee benefit plan in the performance of its duties for a
purpose reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is in, or
not opposed to, the best interests of the Partnership.

     (f) In no event may an Indemnitee subject the Limited Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.

     (g) An Indemnitee shall not be denied indemnification in whole or in part
under this Section 7.7 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.

     (h) The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.

     (i) No amendment, modification or repeal of this Section 7.7 or any
provision hereof shall in any manner terminate, reduce or impair the right of
any past, present or future Indemnitee to be indemnified by the Partnership, nor
the obligations of the Partnership to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 7.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.

Section 7.8  Liability of Indemnitees.

     (a) Notwithstanding anything to the contrary set forth in this Agreement,
no Indemnitee shall be liable for monetary damages to the Partnership, the
Limited Partners, the Assignees or any other Persons who have acquired interests
in the Units or other Partnership Securities of the MLP, for losses sustained or
liabilities incurred as a result of any act or omission if such Indemnitee acted
in good faith.

     (b) Subject to its obligations and duties as General Partner set forth in
Section 7.1(a), the General Partner may exercise any of the powers granted to it
by this Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agents, and the General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.

                                      -37-

     (c) To the extent that, at law or in equity, an Indemnitee has duties
(including fiduciary duties) and liabilities relating thereto to the Partnership
or to the Limited Partners, the General Partner and any other Indemnitee acting
in connection with the Partnership's business or affairs shall not be liable to
the Partnership or to any Partner for its good faith reliance on the provisions
of this Agreement. The provisions of this Agreement, to the extent that they
restrict or otherwise modify the duties and liabilities of an Indemnitee
otherwise existing at law or in equity, are agreed by the Partners to replace
such other duties and liabilities of such Indemnitee.

     (d) Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability to the Partnership, the Limited Partners, the
General Partner, the MLP General Partner and the Partnership's and General
Partner's directors, officers and employees under this Section 7.8 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.

Section 7.9  Resolution of Conflicts of Interest.

     (a) Unless otherwise expressly provided in this Agreement or the MLP
Agreement, whenever a potential conflict of interest exists or arises between
the General Partner or any of its Affiliates, on the one hand, and the
Partnership, the MLP, any Partner or any Assignee, on the other, any resolution
or course of action by the General Partner or its Affiliates in respect of such
conflict of interest shall be permitted and deemed approved by all Partners, and
shall not constitute a breach of this Agreement or the MLP Agreement, of any
agreement contemplated herein or therein, or of any duty stated or implied by
law or equity, if the resolution or course of action is, or by operation of this
Agreement is deemed to be, fair and reasonable to the Partnership. The General
Partner shall be authorized but not required in connection with its resolution
of such conflict of interest to seek Special Approval of such resolution. Any
conflict of interest and any resolution of such conflict of interest shall be
conclusively deemed fair and reasonable to the Partnership if such conflict of
interest or resolution is (i) approved by Special Approval (as long as the
material facts known to the General Partner or any of its Affiliates regarding
any proposed transaction were disclosed to the Conflicts Committee at the time
it gave its approval), (ii) on terms no less favorable to the Partnership than
those generally being provided to or available from unrelated third parties or
(iii) fair to the Partnership, taking into account the totality of the
relationships between the parties involved (including other transactions that
may be particularly favorable or advantageous to the Partnership). The General
Partner may also adopt a resolution or course of action that has not received
Special Approval. The General Partner (including the Conflicts Committee in
connection with Special Approval) shall be authorized in connection with its
determination of what is "fair and reasonable" to the Partnership and in
connection with its resolution of any conflict of interest to consider (A) the
relative interests of any party to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interest; (B) any
customary or accepted industry practices and any customary or historical
dealings with a particular Person; (C) any applicable generally accepted
accounting practices or principles; and (D) such additional factors as the
General Partner (including the Conflicts Committee) determines in its sole
discretion to be relevant, reasonable or appropriate under the circumstances.
Nothing contained in this Agreement, however, is intended to nor shall it be
construed to require the General Partner (including the Conflicts Committee) to

                                      -38-

consider the interests of any Person other than the Partnership. In the absence
of bad faith by the General Partner, the resolution, action or terms so made,
taken or provided by the General Partner with respect to such matter shall not
constitute a breach of this Agreement or any other agreement contemplated herein
or a breach of any standard of care or duty imposed herein or therein or, to the
extent permitted by law, under the Texas Act or any other law, rule or
regulation.

     (b) Whenever this Agreement or any other agreement contemplated hereby
provides that the General Partner or any of its Affiliates is permitted or
required to make a decision (i) in its "sole discretion" or "discretion," that
it deems "necessary or appropriate" or "necessary or advisable" or under a grant
of similar authority or latitude, except as otherwise provided herein, the
General Partner or such Affiliate shall be entitled to consider only such
interests and factors as it desires and shall have no duty or obligation to give
any consideration to any interest of, or factors affecting, the Partnership, the
MLP, any Limited Partner or any Assignee, (ii) it may make such decision in its
sole discretion (regardless of whether there is a reference to "sole discretion"
or "discretion") unless another express standard is provided for, or (iii) in
"good faith" or under another express standard, the General Partner or such
Affiliate shall act under such express standard and shall not be subject to any
other or different standards imposed by this Agreement, the MLP Agreement, any
other agreement contemplated hereby or under the Texas Act or any other law,
rule or regulation. In addition, any actions taken by the General Partner or
such Affiliate consistent with the standards of "reasonable discretion" set
forth in the definition of Available Cash shall not constitute a breach of any
duty of the General Partner to the Partnership or the Limited Partners. The
General Partner shall have no duty, express or implied, to sell or otherwise
dispose of any asset of the Partnership Group other than in the ordinary course
of business. No borrowing by any Group Member or the approval thereof by the
General Partner shall be deemed to constitute a breach of any duty of the
General Partner to the Partnership or the Limited Partners by reason of the fact
that the purpose or effect of such borrowing is directly or indirectly to (A)
enable distributions to the General Partner or its Affiliates to exceed 0.001%
of the total amount distributed to all Partners or (B) hasten the expiration of
the Subordination Period or the conversion of any Subordinated Units into Common
Units.

     (c) Whenever a particular transaction, arrangement or resolution of a
conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.

     (d) The Limited Partner hereby authorizes the General Partner, on behalf of
the Partnership as a partner or member of a Group Member, to approve of actions
by the general partner of such Group Member similar to those actions permitted
to be taken by the General Partner pursuant to this Section 7.9.

Section 7.10  Other Matters Concerning the General Partner.

     (a) The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request,

                                      -39-

consent, order, bond, debenture or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties.

     (b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion (including an Opinion of Counsel) of such Persons as to matters
that the General Partner reasonably believes to be within such Person's
professional or expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such opinion.

     (c) The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers, a duly appointed attorney or attorneys-in-fact or the duly authorized
officers of the Partnership.

     (d) Any standard of care and duty imposed by this Agreement or under the
Texas Act or any applicable law, rule or regulation shall be modified, waived or
limited, to the extent permitted by law, as required to permit the General
Partner to act under this Agreement or any other agreement contemplated by this
Agreement and to make any decision pursuant to the authority prescribed in this
Agreement, so long as such action is reasonably believed by the General Partner
to be in, or not inconsistent with, the best interests of the Partnership.

Section 7.11  Reliance by Third Parties.

     Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner and any officer of the General Partner authorized by the General Partner
to act on behalf of and in the name of the Partnership has full power and
authority to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf of the
Partnership, and such Person shall be entitled to deal with the General Partner
or any such officer as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies that may be available against such Person to contest,
negate or disaffirm any action of the General Partner or any such officer in
connection with any such dealing. In no event shall any Person dealing with the
General Partner or any such officer or its representatives be obligated to
ascertain that the terms of the Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General Partner or
any such officer or its representatives. Each and every certificate, document or
other instrument executed on behalf of the Partnership by the General Partner or
its representatives shall be conclusive evidence in favor of any and every
Person relying thereon or claiming thereunder that (a) at the time of the
execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.

                                      -40-

                                 ARTICLE VIII
                    BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 8.1  Records and Accounting.

     The General Partner shall keep or cause to be kept at the principal office
of the Partnership appropriate books and records with respect to the
Partnership's business, including all books and records necessary to provide to
the Limited Partners any information required to be provided pursuant to Section
3.4(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including books of account and records of
Partnership proceedings, may be kept on, or be in the form of, computer disks,
hard drives, punch cards, magnetic tape, photographs, micrographics or any other
information storage device; provided, that the books and records so maintained
are convertible into clearly legible written form within a reasonable period of
time. The books of the Partnership shall be maintained, for financial reporting
purposes, on an accrual basis in accordance with U.S. GAAP.

Section 8.2  Fiscal Year.

     The fiscal year of the Partnership shall be a fiscal year ending December
31.

                                  ARTICLE IX
                                  TAX MATTERS

Section 9.1  Tax Returns and Information.

     The Partnership shall timely file all returns of the Partnership that are
required for federal, state and local income tax purposes on the basis of the
accrual method and a taxable year ending on December 31. The tax information
reasonably required by the Partners for federal and state income tax reporting
purposes with respect to a taxable year shall be furnished to them within 90
days of the close of the calendar year in which the Partnership's taxable year
ends. The classification, realization and recognition of income, gain, losses
and deductions and other items shall be on the accrual method of accounting for
federal income tax purposes.

Section 9.2  Tax Elections.

     (a) The Partnership shall make the election under Section 754 of the Code
in accordance with applicable regulations thereunder, subject to the reservation
of the right to seek to revoke any such election upon the General Partner's
determination that such revocation is in the best interests of the Limited
Partners.

     (b) The Partnership shall elect to deduct expenses incurred in organizing
the Partnership ratably over a sixty-month period as provided in Section 709 of
the Code.

     (c) Except as otherwise provided herein, the General Partner shall
determine whether the Partnership should make any other elections permitted by
the Code.

                                      -41-

Section 9.3    Tax Controversies.

     Subject to the provisions hereof, the General Partner is designated as the
Tax Matters Partner (as defined in the Code) and is authorized and required to
represent the Partnership (at the Partnership's expense) in connection with all
examinations of the Partnership's affairs by tax authorities, including
resulting administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith. Each Partner
agrees to cooperate with the General Partner and to do or refrain from doing any
or all things reasonably required by the General Partner to conduct such
proceedings.

Section 9.4    Withholding.

     Notwithstanding any other provision of this Agreement, the General Partner
is authorized to take any action that it determines in its discretion to be
necessary or appropriate to cause the Partnership to comply with any withholding
requirements established under the Code or any other federal, state, local or
foreign law including, without limitation, pursuant to Sections 1441, 1442, 1445
and 1446 of the Code.  To the extent that the Partnership is required or elects
to withhold or pay over to any taxing authority, or any taxing authority seizes,
any amount resulting from the allocation or distribution of income to any member
of the Partnership Group, Partner or Assignee, the amount withheld, paid over or
seized may at the discretion of the General Partner be treated by the
Partnership as a distribution of cash pursuant to Section 6.3 to the Partner or
Assignee to whom such withholding, payment or seizure is attributed.

                                   ARTICLE X
                             ADMISSION OF PARTNERS

Section 10.1   Admission of Partners.

     Upon the consummation of the transfers and conveyances described in Section
5.2, the Predecessor General Partner was the sole general partner of the
Partnership and Marketing was the sole limited partner of the Partnership.

Section 10.2   Admission of Substituted Limited Partner.

     By transfer of a Limited Partner Interest in accordance with Article IV,
the transferor shall be deemed to have given the transferee the right to seek
admission as a Substituted Limited Partner subject to the conditions of, and in
the manner permitted under, this Agreement. A transferor of a Limited Partner
Interest shall, however, only have the authority to convey to a purchaser or
other transferee (a) the right to negotiate such Limited Partner Interest to a
purchaser or other transferee and (b) the right to request admission as a
Substituted Limited Partner to such purchaser or other transferee in respect of
the transferred Limited Partner Interests. Each transferee of a Limited Partner
Interest shall be an Assignee and be deemed to have applied to become a
Substituted Limited Partner with respect to the Limited Partner Interests so
transferred to such Person. Such Assignee shall become a Substituted Limited
Partner (x) at such time as the General Partner consents thereto, which consent
may be given or withheld in the General Partner's discretion, and (y) when any
such admission is shown on the books and records of the Partnership. If such
consent is withheld, such transferee shall remain an Assignee. An Assignee shall
have an interest in the Partnership equivalent to that of a Limited

                                      -42-

Partner with respect to allocations and distributions, including liquidating
distributions, of the Partnership. With respect to voting rights attributable to
Limited Partner Interests that are held by Assignees, the General Partner shall
be deemed to be the Limited Partner with respect thereto and shall, in
exercising the voting rights in respect of such Limited Partner Interests on any
matter, vote such Limited Partner Interests at the written direction of the
Assignee. If no such written direction is received, such Partnership Interests
will not be voted. An Assignee shall have no other rights of a Limited Partner.

Section 10.3   Admission of Additional Limited Partners.

     (a)  A Person (other than the General Partner, the MLP or a Substituted
Limited Partner) who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of the
terms and conditions of this Agreement, including the power of attorney granted
in Section 2.6, and (ii) such other documents or instruments as may be required
in the discretion of the General Partner to effect such Person's admission as an
Additional Limited Partner.

     (b)  Notwithstanding anything to the contrary in this Section 10.3, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's discretion. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such Person is
recorded as such in the books and records of the Partnership, following the
consent of the General Partner to such admission.

Section 10.4   Admission of Successor or Transferee General Partner.

     A successor General Partner approved pursuant to Section 11.1 or 11.2 or
the transferee of or successor to all of the General Partner's Partnership
Interest pursuant to Section 4.2 who is proposed to be admitted as a successor
General Partner shall, subject to compliance with the terms of Section 11.3, if
applicable, be admitted to the Partnership as the General Partner, effective
immediately prior to the withdrawal or removal of the predecessor or
transferring General Partner pursuant to Section 11.1 or 11.2 or the transfer of
the General Partner Interest pursuant to Section 4.2, provided, however, that no
such successor shall be admitted to the Partnership until compliance with the
terms of Section 4.2 has occurred and such successor has executed and delivered
such other documents or instruments as may be required to effect such admission.
Any such successor shall, subject to the terms hereof, carry on the business of
the members of the Partnership Group without dissolution.

Section 10.5   Amendment of Agreement and Certificate of Limited Partnership.

     To effect the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Texas Act to
amend the records of the Partnership to reflect such admission and, if
necessary, to prepare as soon as practicable an amendment to this Agreement and,
if required by law, the General Partner shall prepare and file an amendment to
the Certificate of Limited Partnership, and the General Partner may for this
purpose, among others, exercise the power of attorney granted pursuant to
Section 2.6.

                                      -43-

                                  ARTICLE XI
                       WITHDRAWAL OR REMOVAL OF PARTNERS

Section 11.1   Withdrawal of the General Partner.

     (a)  The General Partner shall be deemed to have withdrawn from the
Partnership upon the occurrence of any one of the following events (each such
event herein referred to as an "Event of Withdrawal");

          (i)    The General Partner voluntarily withdraws from the Partnership
     by giving written notice to the other Partners;

          (ii)   The General Partner transfers all of its rights as General
     Partner pursuant to Section 4.2;

          (iii)  The General Partner is removed pursuant to Section 11.2;

          (iv)   The General Partner (A) makes a general assignment for the
     benefit of creditors; (B) files a voluntary bankruptcy petition for relief
     under Chapter 7 of the United States Bankruptcy Code; (C) files a petition
     or answer seeking for itself a liquidation, dissolution or similar relief
     (but not a reorganization) under any law; (D) files an answer or other
     pleading admitting or failing to contest the material allegations of a
     petition filed against the General Partner in a proceeding of the type
     described in clauses (A)-(C) of this Section 11.1(a)(iv); or (E) seeks,
     consents to or acquiesces in the appointment of a trustee (but not a debtor
     in possession), receiver or liquidator of the General Partner or of all or
     any substantial part of its properties;

          (v)    A final and non-appealable order of relief under Chapter 7 of
     the United States Bankruptcy Code is entered by a court with appropriate
     jurisdiction pursuant to a voluntary or involuntary petition by or against
     the General Partner; or

          (vi)   (A) in the event the General Partner is a corporation, a
     certificate of dissolution or its equivalent is filed for the General
     Partner, or 90 days expire after the date of notice to the General Partner
     of revocation of its charter without a reinstatement of its charter, under
     the laws of its state of incorporation; (B) in the event the General
     Partner is a partnership or limited liability company, the dissolution and
     commencement of winding up of the General Partner; (C) in the event the
     General Partner is acting in such capacity by virtue of being a trustee of
     a trust, the termination of the trust; (D) in the event the General Partner
     is a natural person, his death or adjudication of incompetency; and (E)
     otherwise in the event of the termination of the General Partner.

     If an Event of Withdrawal specified in Section 11.1(a)(iv), (v), or
(vi)(A), (B), (C) or (E) occurs, the withdrawing General Partner shall give
notice to the Limited Partners within 30 days after such occurrence. The
Partners hereby agree that only the Events of Withdrawal described in this
Section 11.1 shall result in the withdrawal of the General Partner from the
Partnership.

     (b)  Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall not constitute a breach of this
Agreement under the following

                                      -44-

circumstances: (i) at any time during the period beginning on the Closing Date
and ending at 12:00 midnight, Eastern Standard Time, on December 31, 2008, the
General Partner voluntarily withdraws by giving at least 90 days' advance notice
of its intention to withdraw to the Limited Partners; provided that prior to the
effective date of such withdrawal, the withdrawal is approved by the Limited
Partners and the General Partner delivers to the Partnership an Opinion of
Counsel ("Withdrawal Opinion of Counsel") that such withdrawal (following the
selection of the successor General Partner) would not result in the loss of the
limited liability of any Limited Partner or of the limited partners of the MLP
or cause the Partnership or the MLP to be treated as an association taxable as a
corporation or otherwise to be taxed as an entity for federal income tax
purposes (to the extent not previously treated as such); (ii) at any time after
12:00 midnight, Eastern Standard Time, on December 31, 2008, the General Partner
voluntarily withdraws by giving at least 90 days' advance notice to the Limited
Partners, such withdrawal to take effect on the date specified in such notice;
(iii) at any time that the General Partner ceases to be the General Partner
pursuant to Section 11.1(a)(ii) or (iii). If the General Partner gives a notice
of withdrawal pursuant to Section 11.1(a)(i) hereof, the Limited Partners may,
prior to the effective date of such withdrawal, elect a successor General
Partner. If, prior to the effective date of the General Partner's withdrawal, a
successor is not selected by the Limited Partners as provided herein or the
Partnership does not receive a Withdrawal Opinion of Counsel, the Partnership
shall be dissolved in accordance with Section 12.1. Any successor General
Partner elected in accordance with the terms of this Section 11.1 shall be
subject to the provisions of Section 10.4.

Section 11.2  Removal of the General Partner.

     The General Partner may be removed by the holders of a majority of the
Limited Partner Interests. If the General Partner is removed pursuant to this
Section 11.2, the Limited Partners may, prior to the effective date of such
removal, elect a successor General Partner. The admission of any such successor
General Partner to the Partnership shall be subject to the provisions of Section
10.4.

Section 11.3  Interest of Departing Partner.

     (a)  The Partnership Interest of the Departing Partner departing as a
result of withdrawal or removal pursuant to Section 11.1 or 11.2 shall be
purchased by the successor to the Departing Partner for cash in the manner
specified in the MLP Agreement. Such purchase (or conversion into Common Units,
as applicable) shall be a condition to the admission to the Partnership of the
successor as the General Partner. Notwithstanding the foregoing, an assignment
of all or any portion of a General Partner's (or Departing General Partner's)
Partnership Interest to the MLP as Limited Partner, or to any other Person
(other than an individual) the ownership interest of which is then transferred
to the MLP, can be made in exchange for an increased interest in the MLP and in
lieu of a cash purchase. Any successor General Partner shall indemnify the
Departing Partner as to all debts and liabilities of the Partnership arising on
or after the effective date of the withdrawal or removal of the Departing
Partner.

     (b)  The Departing Partner shall be entitled to receive all reimbursements
due such Departing Partner pursuant to Section 7.4, including any employee-
related liabilities (including

                                      -45-

severance liabilities), incurred in connection with the termination of any
employees employed by such Departing Partner for the benefit of the Partnership.

Section 11.4  Withdrawal of a Limited Partner.

     Without the prior written consent of the General Partner, which may be
granted or withheld in its sole discretion, and except as provided in Section
10.1, no Limited Partner  shall have the right to withdraw from the Partnership.

                                  ARTICLE XII
                          DISSOLUTION AND LIQUIDATION

Section 12.1  Dissolution.

     The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the removal or withdrawal of the General Partner, if a successor General Partner
is elected pursuant to Section 11.1 or 11.2, the Partnership shall not be
dissolved and such successor General Partner shall continue the business of the
Partnership. The Partnership shall dissolve, and (subject to Section 12.2) its
affairs shall be wound up, upon:

     (a) the expiration of its term as provided in Section 2.7;

     (b) an Event of Withdrawal of the General Partner as provided in Section
11.1(a) (other than Section 11.1(a)(ii)), unless a successor is elected and an
Opinion of Counsel is received as provided in Section 11.1(b) or 11.2 and such
successor is admitted to the Partnership pursuant to Section 10.3;

     (c) an election to dissolve the Partnership by the General Partner that is
approved by all of the Limited Partners;

     (d) the entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Texas Act;

     (e) the sale of all or substantially all of the assets and properties of
the Partnership Group; or

     (f) the dissolution of the MLP.

Section 12.2  Continuation of the Business of the Partnership After Dissolution.

     Upon (a) dissolution of the Partnership following an Event of Withdrawal
caused by the withdrawal or removal of the General Partner as provided in
Section 11.1(a)(i) or (iii) and the failure of the Partners to select a
successor to such Departing Partner pursuant to Section 11.1 or 11.2, then
within 90 days thereafter, or (b) dissolution of the Partnership upon an event
constituting an Event of Withdrawal as defined in Section 11.1(a)(iii), (iv) or
(v) of the MLP Agreement, then, to the maximum extent permitted by law, within
180 days thereafter, all of the Limited Partners may elect to reconstitute the
Partnership and continue its business on the same

                                      -46-

terms and conditions set forth in this Agreement by forming a new limited
partnership on terms identical to those set forth in this Agreement and having
as a general partner a Person approved by a majority in interest of the Limited
Partners. In addition, upon dissolution of the Partnership pursuant to Section
12.1(f), if the MLP is reconstituted pursuant to Section 12.2 of the MLP
Agreement, the reconstituted MLP may, within 180 days after such event of
dissolution, acting alone, regardless of whether there are any other Limited
Partners, elect to reconstitute the Partnership in accordance with the
immediately preceding sentence. Upon any such election by the Limited Partners
or the MLP, as the case may be, all Partners shall be bound thereby and shall be
deemed to have approved same. Unless such an election is made within the
applicable time period as set forth above, the Partnership shall conduct only
activities necessary to wind up its affairs. If such an election is so made,
then:

     (a) the reconstituted Partnership shall continue until the end of the term
set forth in Section 2.7 unless earlier dissolved in accordance with this
Article XII;

     (b) if the successor General Partner is not the former General Partner,
then the interest of the former General Partner shall be purchased by the
successor General Partner; and

     (c) all necessary steps shall be taken to cancel this Agreement and the
Certificate of Limited Partnership and to enter into and, as necessary, to file,
a new partnership agreement and certificate of limited partnership, and the
successor General Partner may for this purpose exercise the power of attorney
granted the General Partner pursuant to Section 2.6; provided, that the right to
approve a successor General Partner and to reconstitute and to continue the
business of the Partnership shall not exist and may not be exercised unless the
Partnership has received an Opinion of Counsel that (x) the exercise of the
right would not result in the loss of limited liability of the Limited Partners
or any limited partner of the MLP and (y) neither the Partnership, the
reconstituted limited partnership, the MLP nor any Group Member would be treated
as an association taxable as a corporation or otherwise be taxable as an entity
for federal income tax purposes upon the exercise of such right to continue.

Section 12.3  Liquidator.

     Upon dissolution of the Partnership, unless the Partnership is continued
under an election to reconstitute and continue the Partnership pursuant to
Section 12.2, the General Partner shall select one or more Persons to act as
Liquidator. The Liquidator (if other than the General Partner) shall be entitled
to receive such compensation for its services as may be approved by a majority
of the Limited Partners. The Liquidator (if other than the General Partner)
shall agree not to resign at any time without 15 days' prior notice and may be
removed at any time, with or without cause, by notice of removal approved by a
majority in interest of the Limited Partners. Upon dissolution, removal or
resignation of the Liquidator, a successor and substitute Liquidator (who shall
have and succeed to all rights, powers and duties of the original Liquidator)
shall within 30 days thereafter be approved by at least a majority in interest
of the Limited Partners. The right to approve a successor or substitute
Liquidator in the manner provided herein shall be deemed to refer also to any
such successor or substitute Liquidator approved in the manner herein provided.
Except as expressly provided in this Article XII, the Liquidator approved in the
manner provided herein shall have and may exercise, without further
authorization or consent of any of the parties hereto, all of the powers
conferred upon the General Partner under the terms of

                                      -47-

this Agreement (but subject to all of the applicable limitations, contractual
and otherwise, upon the exercise of such powers, other than the limitation on
sale set forth in Section 7.3(b)) to the extent necessary or desirable in the
good faith judgment of the Liquidator to carry out the duties and functions of
the Liquidator hereunder for and during such period of time as shall be
reasonably required in the good faith judgment of the Liquidator to complete the
winding up and liquidation of the Partnership as provided for herein.

Section 12.4  Liquidation.

     The Liquidator shall proceed to dispose of the assets of the Partnership,
discharge its liabilities, and otherwise wind up its affairs in such manner and
over such period as the Liquidator determines to be in the best interest of the
Partners, subject to Section 8.05 of the Texas Act and the following:

     (a) Disposition of Assets. The assets may be disposed of by public or
         ---------------------
private sale or by distribution in kind to one or more Partners on such terms as
the Liquidator and such Partner or Partners may agree. If any property is
distributed in kind, the Partner receiving the property shall be deemed for
purposes of Section 12.4(c) to have received cash equal to its fair market
value; and contemporaneously therewith, appropriate cash distributions must be
made to the other Partners. The Liquidator may, in its absolute discretion,
defer liquidation or distribution of the Partnership's assets for a reasonable
time if it determines that an immediate sale or distribution of all or some of
the Partnership's assets would be impractical or would cause undue loss to the
Partners. The Liquidator may, in its absolute discretion, distribute the
Partnership's assets, in whole or in part, in kind if it determines that a sale
would be impractical or would cause undue loss to the Partners.

     (b) Discharge of Liabilities. Liabilities of the Partnership include
         ------------------------
amounts owed to Partners otherwise than in respect of their distribution rights
under Article VI. With respect to any liability that is contingent, conditional
or unmatured or is otherwise not yet due and payable, the Liquidator shall
either settle such claim for such amount as it thinks appropriate or establish a
reserve of cash or other assets to provide for its payment. When paid, any
unused portion of the reserve shall be distributed as additional liquidation
proceeds.

     (c) Liquidation Distributions. All property and all cash in excess of that
         -------------------------
required to discharge liabilities as provided in Section 12.4(b) shall be
distributed to the Partners in accordance with, and to the extent of, the
positive balances in their respective Capital Accounts, as determined after
taking into account all Capital Account adjustments (other than those made by
reason of distributions pursuant to this Section 12.4(c)) for the taxable year
of the Partnership during which the liquidation of the Partnership occurs (with
such date of occurrence being determined pursuant to Treasury Regulation Section
1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of such
taxable year (or, if later, within 90 days after said date of such occurrence).

Section 12.5  Cancellation of Certificate of Limited Partnership.

     Upon the completion of the distribution of Partnership cash and property as
provided in Section 12.4 in connection with the liquidation of the Partnership,
the Partnership shall be

                                      -48-

terminated and the Certificate of Limited Partnership, and all qualifications of
the Partnership as a foreign limited partnership in jurisdictions other than the
State of Texas, shall be canceled and such other actions as may be necessary to
terminate the Partnership shall be taken.

Section 12.6  Return of Contributions.

     The General Partner shall not be personally liable for, and shall have no
obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate, the return of the Capital Contributions of the Limited
Partners, or any portion thereof, it being expressly understood that any such
return shall be made solely from Partnership assets.

Section 12.7  Waiver of Partition.

     To the maximum extent permitted by law, each Partner hereby waives any
right to partition of the Partnership property.

Section 12.8  Capital Account Restoration.

     No Limited Partner shall have any obligation to restore any negative
balance in its Capital Account upon liquidation of the Partnership. The General
Partner shall be obligated to restore any negative balance in its Capital
Account upon liquidation of its interest in the Partnership by the end of the
taxable year of the Partnership during which such liquidation occurs, or, if
later, within 90 days after the date of such liquidation.

                                 ARTICLE XIII
                      AMENDMENT OF PARTNERSHIP AGREEMENT

Section 13.1  Amendment to be Adopted Solely by the General Partner.

     Each Partner agrees that the General Partner, without the approval of any
Partner or Assignee, may amend any provision of this Agreement and execute,
swear to, acknowledge, deliver, file and record whatever documents may be
required in connection therewith, to reflect:

     (a) a change in the name of the Partnership, the location of the principal
place of business of the Partnership, the registered agent of the Partnership or
the registered office of the Partnership;

     (b) admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;

     (c) a change that, in the sole discretion of the General Partner, is
necessary or advisable to qualify or continue the qualification of the
Partnership as a limited partnership or a partnership in which the Limited
Partners have limited liability under the laws of any state or to ensure that no
Group Member will be treated as an association taxable as a corporation or
otherwise taxed as an entity for federal income tax purposes;

     (d) a change that, in the discretion of the General Partner, (i) does not
adversely affect the Limited Partners in any material respect, (ii) is necessary
or advisable to (A) satisfy any

                                      -49-

requirements, conditions or guidelines contained in any opinion, directive,
order, ruling or regulation of any federal or state agency or judicial authority
or contained in any federal or state statute (including the Texas Act) or (B)
facilitate the trading of limited partner interests of the MLP (including the
division of any class or classes of outstanding limited partner interests of the
MLP into different classes to facilitate uniformity of tax consequences within
such classes of limited partner interests of the MLP) or comply with any rule,
regulation, guideline or requirement of any National Securities Exchange on
which such limited partner interests are or will be listed for trading,
compliance with any of which the General Partner determines in its discretion to
be in the best interests of the MLP and the limited partners of the MLP, (iii)
is required to effect the intent expressed in the Registration Statement or the
intent of the provisions of this Agreement or is otherwise contemplated by this
Agreement or (iv) is required to conform the provisions of this Agreement with
the provisions of the MLP Agreement as the provisions of the MLP Agreement may
be amended, supplemented or restated from time to time;

     (e) a change in the fiscal year or taxable year of the Partnership and any
changes that, in the discretion of the General Partner, are necessary or
advisable as a result of a change in the fiscal year or taxable year of the
Partnership including, if the General Partner shall so determine, a change in
the definition of "Quarter" and the dates on which distributions are to be made
by the Partnership;

     (f) an amendment that is necessary, in the Opinion of Counsel, to prevent
the Partnership, or the General Partner or its directors, officers, trustees or
agents from in any manner being subjected to the provisions of the Investment
Company Act of 1940, as amended, the Investment Advisers Act of 1940, as
amended, or "plan asset" regulations adopted under the Employee Retirement
Income Security Act of 1974, as amended, regardless of whether such are
substantially similar to plan asset regulations currently applied or proposed by
the United States Department of Labor;

     (g) any amendment expressly permitted in this Agreement to be made by the
General Partner acting alone;

     (h) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 14.3;

     (i) an amendment that, in the discretion of the General Partner, is
necessary or advisable to reflect, account for and deal with appropriately the
formation by the Partnership of, or investment by the Partnership in, any
corporation, partnership, joint venture, limited liability company or other
entity, in connection with the conduct by the Partnership of activities
permitted by the terms of Section 2.4;

     (j) a merger or conveyance pursuant to Section 14.3(d); or

     (k) any other amendments substantially similar to the foregoing.

Section 13.2  Amendment Procedures.

     Except with respect to amendments of the type described in Section 13.1,
all amendments to this Agreement shall be made in accordance with the following
requirements:  Amendments to

                                      -50-

this Agreement may be proposed only by or with the consent of the General
Partner which consent may be given or withheld in its sole discretion. A
proposed amendment shall be effective upon its approval by the Limited Partner.

                                  ARTICLE XIV
                                    MERGER

Section 14.1  Authority.

     The Partnership may merge or consolidate with one or more corporations,
limited liability companies, business trusts or associations, real estate
investment trusts, common law trusts or unincorporated businesses, including a
general partnership or limited partnership, formed under the laws of the State
of Texas or any other state of the United States of America, pursuant to a
written agreement of merger or consolidation ("Merger Agreement") in accordance
with this Article XIV.

Section 14.2  Procedure for Merger or Consolidation.

     Merger or consolidation of the Partnership pursuant to this Article XIV
requires the prior approval of the General Partner. If the General Partner shall
determine, in the exercise of its discretion, to consent to the merger or
consolidation, the General Partner shall approve the Merger Agreement, which
shall set forth:

     (a) The names and jurisdictions of formation or organization of each of the
business entities proposing to merge or consolidate;

     (b) The name and jurisdiction of formation or organization of the business
entity that is to survive the proposed merger or consolidation (the "Surviving
Business Entity");

     (c) The terms and conditions of the proposed merger or consolidation;

     (d) The manner and basis of exchanging or converting the equity securities
of each constituent business entity for, or into, cash, property or general or
limited partner interests, rights, securities or obligations of the Surviving
Business Entity; and (i) if any general or limited partner interests, securities
or rights of any constituent business entity are not to be exchanged or
converted solely for, or into, cash, property or general or limited partner
interests, rights, securities or obligations of the Surviving Business Entity,
the cash, property or general or limited partner interests, rights, securities
or obligations of any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity) which the holders of such general or
limited partner interests, securities or rights are to receive in exchange for,
or upon conversion of their general or limited partner interests, securities or
rights, and (ii) in the case of securities represented by certificates, upon the
surrender of such certificates, which cash, property or general or limited
partner interests, rights, securities or obligations of the Surviving Business
Entity or any general or limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to be
delivered;

     (e) A statement of any changes in the constituent documents or the adoption
of new constituent documents (the articles or certificate of incorporation,
articles of trust, declaration of

                                      -51-

trust, certificate or agreement of limited partnership or other similar charter
or governing document) of the Surviving Business Entity to be effected by such
merger or consolidation;

     (f) The effective time of the merger, which may be the date of the filing
of the certificate of merger pursuant to Section 14.4 or a later date specified
in or determinable in accordance with the Merger Agreement (provided, that if
the effective time of the merger is to be later than the date of the filing of
the certificate of merger, the effective time shall be fixed no later than the
time of the filing of the certificate of merger and stated therein); and

     (g) Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the General Partner.

Section 14.3  Approval by Limited Partners of Merger or Consolidation.

     (a) Except as provided in Section 14.3(d), the General Partner, upon its
approval of the Merger Agreement, shall direct that the Merger Agreement be
submitted to a vote of the Limited Partners, whether at a special meeting or by
written consent, in either case in accordance with the requirements of Article
XIII. A copy or a summary of the Merger Agreement shall be included in or
enclosed with the notice of a special meeting or the written consent.

     (b) Except as provided in Section 14.3(d), the Merger Agreement shall be
approved upon receiving the affirmative vote or consent of the Limited Partners.

     (c) Except as provided in Section 14.3(d), after such approval by vote or
consent of the Limited Partners, and at any time prior to the filing of the
certificate of merger pursuant to Section 14.4, the merger or consolidation may
be abandoned pursuant to provisions therefor, if any, set forth in the Merger
Agreement.

     (d) Notwithstanding anything else contained in this Article XIV or in this
Agreement, the General Partner is permitted, in its discretion, without Limited
Partner approval, to merge the Partnership or any Group Member into, or convey
all of the Partnership's assets to, another limited liability entity which shall
be newly formed and shall have no assets, liabilities or operations at the time
of such Merger other than those it receives from the Partnership or other Group
Member if (i) the General Partner has received an Opinion of Counsel that the
merger or conveyance, as the case may be, would not result in the loss of the
limited liability of any Limited Partner or any limited partner in the MLP or
cause the Partnership or the MLP to be treated as an association taxable as a
corporation or otherwise to be taxed as an entity for federal income tax
purposes (to the extent not previously treated as such), (ii) the sole purpose
of such merger or conveyance is to effect a mere change in the legal form of the
Partnership into another limited liability entity and (iii) the governing
instruments of the new entity provide the Limited Partners and the General
Partner with the same rights and obligations as are herein contained.

Section 14.4  Certificate of Merger.

     Upon the required approval by the General Partner and the Limited Partners
of a Merger Agreement, a certificate of merger shall be executed and filed with
the Secretary of State of the State of Texas in conformity with the requirements
of the Texas Act.

                                      -52-

Section 14.5  Effect of Merger.

     (a)  At the effective time of the certificate of merger:

          (i)    all of the rights, privileges and powers of each of the
     business entities that has merged or consolidated, and all property, real,
     personal and mixed, and all debts due to any of those business entities and
     all other things and causes of action belonging to each of those business
     entities, shall be vested in the Surviving Business Entity and after the
     merger or consolidation shall be the property of the Surviving Business
     Entity to the extent they were of each constituent business entity;

          (ii)   the title to any real property vested by deed or otherwise in
     any of those constituent business entities shall not revert and is not in
     any way impaired because of the merger or consolidation;

          (iii)  all rights of creditors and all liens on or security interests
     in property of any of those constituent business entities shall be
     preserved unimpaired; and

          (iv)   all debts, liabilities and duties of those constituent business
     entities shall attach to the Surviving Business Entity and may be enforced
     against it to the same extent as if the debts, liabilities and duties had
     been incurred or contracted by it.

     (b)  A merger or consolidation effected pursuant to this Article shall not
be deemed to result in a transfer or assignment of assets or liabilities from
one entity to another.

                                  ARTICLE XV
                              GENERAL PROVISIONS

Section 15.1  Addresses and Notices.

     Any notice, demand, request, report or proxy materials required or
permitted to be given or made to a Partner or Assignee under this Agreement
shall be in writing and shall be deemed given or made when delivered in person
or when sent by first class United States mail or by other means of written
communication to the Partner at the address described below. Any notice to the
Partnership shall be deemed given if received by the General Partner at the
principal office of the Partnership designated pursuant to Section 2.3. The
General Partner may rely and shall be protected in relying on any notice or
other document from a Partner, Assignee or other Person if believed by it to be
genuine.

Section 15.2  Further Action.

     The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.

                                      -53-

Section 15.3  Binding Effect.

     This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.

Section 15.4  Integration.

     This Agreement constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.

Section 15.5  Creditors.

     None of the provisions of this Agreement shall be for the benefit of, or
shall be enforceable by, any creditor of the Partnership.

Section 15.6  Waiver.

     No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach of any other covenant, duty, agreement or condition.

Section 15.7  Counterparts.

     This Agreement may be executed in counterparts, all of which together shall
constitute an agreement binding on all the parties hereto, notwithstanding that
all such parties are not signatories to the original or the same counterpart.
Each party shall become bound by this Agreement immediately upon affixing its
signature hereto, independently of the signature of any other party.

Section 15.8  Applicable Law.

     This Agreement shall be construed in accordance with and governed by the
laws of the State of Texas, without regard to the principles of conflicts of
law.

Section 15.9  Invalidity of Provisions.

     If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.

Section 15.10 Consent of Partners.

     Each Partner hereby expressly consents and agrees that, whenever in this
Agreement it is specified that an action may be taken upon the affirmative vote
or consent of less than all of the Partners, such action may be so taken upon
the concurrence of less than all of the Partners and each Partner shall be bound
by the results of such action.

                                      -54-

Section 15.11  Amendments to Reflect GP Restructuring Agreement.

     In addition to the amendments to this Agreement contained in the GP
Restructuring Agreement and notwithstanding any other provision of this
Agreement to the contrary, this Agreement shall be deemed to be further amended
and modified to the extent necessary, but only to the extent necessary, to carry
out the purposes and intent of the GP Restructuring Agreement.

                    [Rest of Page Intentionally Left Blank]

                                      -55-

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

                                    GENERAL PARTNER:

                                    Plains Marketing GP Inc.

                                    By:  /s/ Tim Moore
                                         ---------------------------------
                                    Name:  Tim Moore
                                    Title: Vice President

                                    LIMITED PARTNER:

                                    Plains Marketing, L.P.

                                    By:  Plains Marketing GP Inc.,
                                         its General Partner

                                    By:  /s/ Tim Moore
                                         ---------------------------------
                                         Name:  Tim Moore
                                         Title: Vice President

                                      -56-

                                                                    EXHIBIT 99.1

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of
Plains AAP, L.P.

In our opinion, the accompanying balance sheet presents fairly, in all material
respects, the financial position of Plains AAP, L.P. at June 8, 2001 (date of
inception) in conformity with accounting principles generally accepted in the
United States of America.  This financial statement is the responsibility of
Plains AAP, L.P.'s management; our responsibility is to express an opinion on
this financial statement based on our audit.  We conducted our audit of this
statement in accordance with auditing standards generally accepted in the United
States of America, which require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall balance sheet presentation.  We believe that our audit provides a
reasonable basis for our opinion.

Houston, Texas
August 27, 2001

                                       1

                               PLAINS AAP. L.P.
                                 BALANCE SHEET
                                (IN THOUSANDS)

                                                                June 8,
                                                                 2001
                                                                -------
                        ASSETS

Investment in Plains All American Pipeline, L.P.                $50,657
                                                                -------
                                                                $50,657
                                                                =======
            LIABILITIES AND PARTNERS' CAPITAL

COMMITMENTS AND CONTINGENCIES

Limited partners                                                $50,312
General partner                                                     345
                                                                -------
                                                                $50,657
                                                                =======

                   See the notes to the financial statement.

                                       2

NOTE 1 - ORGANIZATION

     Organization

     Plains AAP, L.P. (the "Partnership") is a Delaware Limited Partnership
which was formed on May 21, 2001 and, through a series of transactions was
capitalized on June 8, 2001. Through these series of transactions Plains All
American Inc. ("PAAI") conveyed to the Partnership its general partner interest
in Plains All American Pipeline, L.P.  ("PAA") and, subsequently, sold a portion
of its interest in the newly formed Partnership to certain investors consisting
of Kafu Holdings, L.P., Sable Entities, E-Holdings III, L.P., Mark E. Strome,
Management of PAA, Strome Hedgecap Fund, L.P. and John T. Raymond.  The
accounting for the formation of the Partnership is based on PAAI's historical
carrying value of its retained ownership interest (45.54% limited partner
interest) and fair value, based on the cash contributed, for the investor
group's 53.45% limited partner interest and Plains All American GP LLC's 1%
general partner interest. As a result of these transactions, the ownership
interest in the Partnership (collectively, the "Partners") at June 8, 2001, was
comprised of a 1% general partner interest held by Plains All American GP, LLC,
and the following limited partner interests:

 .  Plains All American Inc -45.54%

 .  Kafu Holdings, L.P. -19.602%

 .  Sable Entities - 18.810%

 .  E-Holdings III, L.P. - 8.910%

 .  Mark E. Strome - 2.113%

 .  Management of Plains All American Pipeline, L.P.  - 1.980%

 .  Strome Hedgecap Fund, L.P. - 1.057%

 .  John T. Raymond - .990%

     As noted above, the Partnership effective as of June 8, 2001, owns a 2%
general partner interest in PAA. PAA was formed in the fourth quarter of 1998,
as a result of Plains Resources Inc. conveying all of its interest in the All
American Pipeline and the San Joaquin Valley Gathering System to PAA in exchange
for (1) 6,974,239 Common Units, 10,029,619 Subordinated Units and an aggregate
2% general partnership interest in PAA; (2) the right to receive Incentive
Distributions; and (3) the assumption by PAA of $175.0 million of indebtedness
incurred by Plains All American Inc. in connection with the All American
Pipeline acquisition.

   PAA's operations are concentrated in Texas, Oklahoma, California, Louisiana,
Illinois and the Gulf of Mexico and in the Canadian provinces of Alberta and
Saskatchewan, and can be categorized into two primary business activities:

 .  Crude Oil Pipeline Transportation. PAA owns and operates over 3,000 miles of
   gathering and mainline crude oil pipelines located throughout the United
   States and Canada. Their activities from pipeline operations generally
   consist of transporting third-party volumes of crude oil for a tariff, as
   well as merchant activities designed to capture location and quality price
   differentials.

 .  Terminalling and Storage Activities and Gathering and Marketing Activities.
   PAA owns and operates a state-of-the-art, 3.1 million barrel, above-ground
   crude oil terminalling and storage facility at Cushing, Oklahoma, the largest
   crude oil trading hub in the United States and the designated delivery point
   for New York Mercantile Exchange ("NYMEX") crude oil futures contracts.
   They also have an additional 7.8 million barrels of terminalling and storage
   capacity in other facilities, including tankage associated with their
   pipeline and gathering systems. Their terminalling and storage operations
   generate revenue through a combination of storage and throughput charges to
   third parties.

   Their gathering and marketing operations include:

     .  the purchase of crude oil at the wellhead and the bulk purchase of crude
        oil at pipeline and terminal facilities;

     .  the transportation of crude oil on trucks, barges or pipelines; and

     .  the subsequent resale or exchange of crude oil at various points along
        the crude oil distribution chain.

                                       3

  The Partnership has no commitment or intent to fund cash flow deficits or
furnish other financial assistance to PAA.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the balance
sheet.  Although management believes these estimates are reasonable, actual
results could differ from these estimates.

Investment in PAA

     The Partnership accounts for its 2% ownership investment in PAA under the
equity method as it has the ability to exercise significant influence but not
control of the activities of PAA.  Accordingly, the Partnership's share of the
earnings of PAA and distributions by PAA are included in partners' capital.

Income Taxes

     In accordance with the provisions of the Internal Revenue Code, the
Partnership is not subject to U.S. Federal income taxes.  Each partner includes
its allocated share of the Partnership's income or loss in its own federal and
state income tax returns.

NOTE 3 -INVESTMENT IN PAA

  The Partnership's investment in PAA is accounted for pursuant to the equity
method of accounting.  The summarized financial information of PAA at December
31, 2000, is presented below (in thousands):

Current assets                            $397,904
Non - current assets                      $487,897
Current liabilities                       $350,793
Long-term debt and other liabilities      $321,009
Partners' capital                         $213,999

  At the date of inception, our investment in PAA exceeded its share of the
underlying equity in the net assets of PAA by $44.5 million.  This excess will
be amortized on a straight line basis over a life not to exceed 40 years.
This amortization period approximates the useful lives of PAA's assets.

NOTE 4 - CONTRIBUTION OF SUBORDINATED UNITS

  On June 8, 2001, certain of our limited partners contributed to the
Partnership an aggregate of 450,000 Subordinated Units of PAA.  These
Subordinated Units are intended for use in connection with an option plan
pursuant to which certain members of the management of our general partner will,
subject to the satisfaction of vesting criteria, have a right to purchase a
portion of such Subordinated Units.  Until the exercise of such options, we will
continue to own and receive any distributions paid by PAA with respect to such
Subordinated Units.  Any distributions we make as a result of the receipt of
distributions on the Subordinated Units will be paid to our limited partners in
proportion to the original contribution of such Subordinated Units.

                                       4

                                                                    Exhibit 99.2

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of the General Partner and the Unitholders of Plains
All American Pipeline, L.P.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of changes in partners' capital and of
cash flows present fairly, in all material respects, the financial position of
Plains All American Pipeline, L.P. and its subsidiaries (the "Partnership") at
December 31, 2000 and 1999, and the results of their operations and their cash
flows for each of the two years in the period ended December 31, 2000 and the
period from inception (November 23, 1998) to December 31, 1998 in conformity
with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Partnership's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Houston, Texas
March 22, 2001, except Note 19 which is as of August 27, 2001

                                       1

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of the General Partner and the Unitholders of Plains
All American Pipeline, L.P.

In our opinion, the accompanying combined statements of operations and cash
flows of the Plains Midstream Subsidiaries, the predecessor entity of Plains All
American Pipeline, L.P., present fairly, in all material respects, the combined
results of their operations and their cash flows for the period from January 1,
1998 to November 22, 1998 in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Plains Midstream Subsidiaries' management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Houston, Texas
March 22, 2001

                                       2

              PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                       (in thousands, except unit data)

                                                                            December 31,
                                                                  ----------------------------
                                                                     2000             1999
                                                                  -----------      -----------
                                                                             
                                     ASSETS

CURRENT ASSETS
Cash and cash equivalents                                         $     3,426      $    53,768
Accounts receivable and other                                         347,698          508,920
Inventory                                                              46,780           34,826
Assets held for sale (Note 5)                                              --          141,486
                                                                  -----------      -----------
Total current assets                                                  397,904          739,000
                                                                  -----------      -----------

PROPERTY AND EQUIPMENT                                                467,619          454,878
Less allowance for depreciation and amortization                      (26,974)         (11,581)
                                                                  -----------      -----------
                                                                      440,645          443,297
                                                                  -----------      -----------

OTHER ASSETS
Pipeline linefill                                                      34,312           17,633
Other, net                                                             12,940           23,107
                                                                  -----------      -----------
                                                                  $   885,801      $ 1,223,037
                                                                  ===========      ===========

                         LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES
Accounts payable and other current liabilities                    $   328,542      $   485,400
Due to affiliates                                                      20,951           42,692
Short-term debt and current portion of long-term debt                   1,300          109,369
                                                                  -----------      -----------
Total current liabilities                                             350,793          637,461

LONG-TERM LIABILITIES
Bank debt                                                             320,000          259,450
Subordinated note payable - general partner                                --          114,000
Other long-term liabilities and deferred credits                        1,009           19,153
                                                                  -----------      -----------
Total liabilities                                                     671,802        1,030,064
                                                                  -----------      -----------

COMMITMENTS AND CONTINGENCIES (Note 15)

PARTNERS' CAPITAL
Common unitholders (23,049,239 units outstanding)                     217,073          208,359
Class B Common unitholders (1,307,190 units outstanding)               21,042           20,548
Subordinated unitholders (10,029,619 units outstanding)               (27,316)         (35,621)
General partner                                                         3,200             (313)
                                                                  -----------      -----------
                                                                      213,999          192,973
                                                                  -----------      -----------
                                                                  $   885,801      $ 1,223,037
                                                                  ===========      ===========

         See notes to consolidated and combined financial statements

                                       3

             PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
              CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
                     (in thousands, except per unit data)

                                                                                                                    Predecessor
                                                                                                                    -----------
                                                                                                   November 23,     January 1,
                                                                    Year Ended December 31,          1998 To         1998 To
                                                               --------------------------------    December 31,     November 22,
                                                                    2000             1999             1998             1998
                                                               -------------   ----------------   ------------    ---------------
                                                                                                      
REVENUES                                                        $ 6,641,187     $  10,910,423      $  398,918      $  3,118,353

COST OF SALES AND OPERATIONS                                      6,506,504        10,800,109         391,419         3,087,372
UNAUTHORIZED TRADING LOSSES
   AND RELATED EXPENSES (Note 3)                                      6,963           166,440           2,400             4,700
                                                               -------------   ----------------   ------------    ---------------

Gross Margin                                                        127,720           (56,126)          5,099            26,281
                                                               -------------   ----------------   ------------    ---------------
EXPENSES
General and administrative                                           40,821            23,211             771             4,526
Depreciation and amortization                                        24,523            17,344           1,192             4,179
Restructuring expense                                                     -             1,410               -                 -
                                                               -------------   ----------------   ------------    ---------------
Total expenses                                                       65,344            41,965           1,963             8,705
                                                               -------------   ----------------   ------------    ---------------

Operating income (loss)                                              62,376           (98,091)          3,136            17,576
Interest expense                                                    (28,691)          (21,139)         (1,371)          (11,260)
Gain on sale of assets (Note 5)                                      48,188            16,457               -                 -
Interest and other income                                            10,776               958              12               572
                                                               -------------   ----------------   ------------    ---------------
Net income (loss) before provision in lieu
   of income taxes and extraordinary item                            92,649          (101,815)          1,777             6,888
Provision in lieu of income taxes                                         -                 -               -             2,631
                                                               -------------   ----------------   ------------    ---------------

Net income (loss) before extraordinary item                          92,649          (101,815)          1,777             4,257
Extraordinary item (Note 9)                                         (15,147)           (1,545)              -                 -
                                                               =============   ================   ============    ===============
NET INCOME (LOSS)                                               $    77,502     $    (103,360)     $    1,777      $      4,257
                                                               =============   ================   ============    ===============

NET INCOME (LOSS) - LIMITED PARTNERS                            $    75,754     $    (101,517)     $    1,741      $      4,172
                                                               =============   ================   ============    ===============

NET INCOME (LOSS) - GENERAL PARTNER                             $     1,748     $      (1,843)     $       36      $         85
                                                               =============   ================   ============    ===============

BASIC AND DILUTED INCOME (LOSS)
PER LIMITED PARTNER UNIT
   Net income (loss) before extraordinary item                  $      2.64     $       (3.16)     $     0.06      $       0.25
   Extraordinary item                                                 (0.44)            (0.05)              -                 -
                                                               -------------   ----------------   ------------    ---------------
   Net income (loss)                                            $      2.20     $       (3.21)     $     0.06      $       0.25
                                                               =============   ================   ============    ===============
WEIGHTED AVERAGE NUMBER
   OF UNITS OUTSTANDING                                              34,386            31,633          30,089            17,004
                                                               =============   ================   ============    ===============

         See notes to consolidated and combined financial statements.

                                       4

             PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
              CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
                                (in thousands)

                                                                                                                  Predecessor
                                                                                                                  -----------
                                                                                                November 23,       January 1,
                                                                                                  1998 To           1998 To
                                                                  Year Ended December 31,       December 31,       November 22,
                                                             ------------------------------
                                                                   2000             1999            1998               1998
                                                             ---------------    -----------     -------------      -------------
                                                                                                       
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                            $        77,502    $  (103,360)    $       1,777      $       4,202
Items not affecting cash flows
   from operating activities:
     Depreciation and amortization                                    24,523         17,344             1,192              4,179
     (Gain) loss on sale of assets (Note 5)                          (48,188)       (16,457)                -                117
     Change in payable in lieu of deferred taxes                           -              -                 -              2,231
     Noncash compensation expense                                      3,089          1,013                 -                  -
     Allowance for doubtful accounts                                   5,000              -                 -                  -
     Other non cash items                                              4,574          1,047                45                  -
Change in assets and liabilities, net of acquisition:
     Accounts receivable and other                                   120,497       (224,181)          (10,245)            37,498
     Inventory                                                       (11,954)        34,772           (14,805)            (3,336)
     Accounts payable and other current liabilities                 (161,543)       164,783            36,675            (25,850)
     Pipeline linefill                                               (16,679)            (3)           (6,247)             2,343
     Other long-term liabilities and deferred credits                 (8,591)        18,873                 -                  -
     Advances from (payments to) affiliates                          (21,741)        34,924            (1,174)                 -
                                                             ---------------    -----------     -------------      -------------

Net cash provided by (used in) operating activities                  (33,511)       (71,245)            7,218             21,384
                                                             ---------------    -----------     -------------      -------------

CASH FLOWS FROM INVESTING ACTIVITIES

Costs incurred in connection with
   acquisitions (Note 4)                                                   -       (176,918)                -           (394,026)
Additions to property and equipment                                  (12,603)       (12,801)           (2,887)            (5,528)
 Disposals of property and equipment                                     402            294                 -                  8
Additions to other assets                                               (657)           (68)             (202)               (65)
Proceeds from asset sales (Note 5)                                   223,859          3,400                 -                  -
                                                             ---------------    -----------     -------------      -------------

Net cash provided by (used in) investing activities                  211,001       (186,093)           (3,089)          (399,611)
                                                             ---------------    -----------     -------------      -------------

CASH FLOWS FROM FINANCING ACTIVITIES

Advances from (payments to) affiliates                                     -              -                 -              3,349
Proceeds from issuance of units                                            -         76,450           241,690                  -
Distributions upon formation                                               -              -          (241,690)                 -
Costs incurred in connection
   with financing arrangements                                        (6,748)       (17,243)                -             (9,938)
Cash balance at formation                                                  -              -               224                  -
Subordinated notes - general partner                                (114,000)       114,000                 -                  -
Proceeds from long-term debt                                       1,433,750        403,721                 -            331,300
Proceeds from short-term debt                                         51,300        131,119             1,150             30,600
Principal payments of long-term debt                              (1,423,850)      (268,621)                -            (39,300)
Principal payments of short-term debt                               (108,719)       (82,150)                -            (40,000)
Capital contribution from Parent                                           -              -                 -            113,700
Dividend to Parent                                                         -              -                 -             (3,557)
Distributions to unitholders                                         (59,565)       (51,673)                -                  -
                                                             ---------------    -----------     -------------      -------------

Net cash provided by (used in) financing activities                 (227,832)       305,603             1,374            386,154
                                                             ---------------    -----------     -------------      -------------

Net increase (decrease) in cash and cash equivalents                 (50,342)        48,265             5,503              7,927
Cash and cash equivalents, beginning of period                        53,768          5,503                 -                  2
                                                             ---------------    -----------     -------------      -------------

Cash and cash equivalents, end of period                     $         3,426    $    53,768     $       5,503      $       7,929
                                                             ===============    ===========     =============      =============

         See notes to consolidated and combined financial statements.

                                       5

             PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
    FOR THE PERIOD FROM INCEPTION (NOVEMBER 23, 1998) TO DECEMBER 31, 1998
                AND THE YEARS ENDED DECEMBER 31, 1999 AND 2000
                                (in thousands)

                                                                                                                          Total
                                                                   Class B                                General       Partners'
                                          Common Units           Common Units      Subordinated Units     Partner        Capital
                                    ----------------------   -------------------  --------------------    -------      ----------
                                       Units        Amount     Units     Amount    Units       Amount     Amount         Amount
                                    --------     ---------   -------    --------  -------   ----------    -------      ----------
                                                                                               
Issuance of units to public           13,085     $ 241,690         -    $      -        -   $        -    $     -      $ 241,690

Contribution of assets and
   debt assumed                        6,974       106,392         -           -   10,030      153,005      9,369        268,766

Distribution at time
   of formation                            -       (95,675)        -           -        -     (137,590)    (8,425)      (241,690)

Net income for the period
   from November 23, 1998
   to December 31, 1998                    -         1,161         -           -        -          580         36          1,777
                                    --------     ---------   -------    --------  -------   ----------    -------      ----------

Balance at
   December 31, 1998                  20,059       253,568         -           -   10,030       15,995        980        270,543

Issuance of Class B
   Common Units                            -             -     1,307      25,000        -            -        252         25,252

Noncash compensation expense               -             -         -           -        -            -      1,013          1,013

Issuance of units to public            2,990        50,654         -           -        -            -        544         51,198

Distributions                              -       (33,265         -      (1,234)       -      (15,915)    (1,259)       (51,673)

Net loss                                   -       (62,598         -      (3,218)       -      (35,701)    (1,843)      (103,360)
                                    --------     ---------   -------    --------  -------   ----------    -------      ----------

Balance at December 31, 1999          23,049       208,359     1,307      20,548   10,030      (35,621)      (313)       192,973

Noncash compensation expense               -             -         -           -        -            -      3,089          3,089

Distributions                              -       (42,066         -      (2,384)       -      (13,791)    (1,324)       (59,565)

Net income                                 -        50,780         -       2,878        -       22,096      1,748         77,502
                                    --------     ---------   -------    --------  -------   ----------    -------      ----------

Balance at December 31, 2000          23,049     $ 217,073     1,307    $ 21,042   10,030   $  (27,316)   $ 3,200      $ 213,999
                                    ========     =========   =======    ========  =======   ==========    =======      ==========

         See notes to consolidated and combined financial statements.

                                       6

             PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

Note 1 -- Organization and Basis of Presentation

   Organization

     We are a Delaware limited partnership (the "Partnership") that was formed
in September of 1998 to acquire and operate the midstream crude oil business and
assets of Plains Resources Inc. ("Plains Resources") and its wholly owned
subsidiaries. On November 23, 1998, we completed our initial public offering and
the transactions whereby we became the successor to the business of the
midstream subsidiaries of Plains Resources, also referred to as our predecessor
or the Plains Midstream Subsidiaries. Our operations are conducted through
Plains Marketing, L.P. and All American Pipeline, L.P. Our general partner,
Plains All American Inc., is a wholly owned subsidiary of Plains Resources. We
are engaged in interstate and intrastate marketing, transportation and
terminalling of crude oil. Terminals are facilities where crude oil is
transferred to or from storage or a transportation system, such as trucks or
another pipeline. The operation of these facilities is called "terminalling".
Our operations are conducted primarily in California, Texas, Oklahoma,
Louisiana, Illinois and the Gulf of Mexico.

   Formation and Offering

     On November 23, 1998, we completed an initial public offering of 13,085,000
common units at $20.00 per unit, representing limited partner interests and
received net proceeds of approximately $244.7 million. Concurrently with the
closing of the initial public offering, certain of the Plains Midstream
subsidiaries were merged into Plains Resources, which sold the assets of these
subsidiaries to us in exchange for $64.1 million and the assumption of $11.0
million of related indebtedness. At the same time, our general partner conveyed
all of its interest in the All American Pipeline and the SJV Gathering System to
us in exchange for:

     .  6,974,239 common units, 10,029,619 subordinated units and an aggregate
        2% general partner interest;
     .  the right to receive incentive distributions as defined in the
        partnership agreement; and
     .  our assumption of $175.0 million of indebtedness incurred by our general
        partner in connection with the acquisition of the All American Pipeline
        and the SJV Gathering System.

     In addition to the $64.1 million discussed above, we distributed
approximately $177.6 million of the offering proceeds to our general partner and
used approximately $3.0 million of the remaining proceeds to pay expenses
incurred in connection with the initial public offering.

   Basis of Consolidation and Presentation

     The accompanying financial statements and related notes present our
consolidated financial position as of December 31, 2000 and 1999, and the
results of our operations, cash flows and changes in partners' capital for the
years ended December 31, 2000 and 1999 and the period from inception (November
23, 1998) to December 31, 1998, and the results of operations and cash flows of
our predecessor for the period from January 1, 1998 to November 22, 1998. All
significant intercompany transactions have been eliminated. Certain
reclassifications have been made to prior period amounts to conform with current
period presentation.

Note 2 -- Summary of Significant Accounting Policies

     Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Significant estimates made by management include
(1) depreciation and amortization, (2) allowance for doubtful accounts
receivable and (3) accrued liabilities. Although management believes these
estimates are reasonable, actual results could differ from these estimates.

     Revenue Recognition. Gathering and marketing revenues are accrued at the
time title to the product sold transfers to the purchaser, which occurs upon
receipt of the product by the purchaser, and purchases are accrued at the time
title to the product purchased transfers to us, which occurs upon our receipt of
the product. Terminalling and storage revenues are

                                       7

recognized at the time service is performed. Revenues for the transportation of
crude oil are recognized based upon regulated and non-regulated tariff rates and
the related transported volumes.

     Cost of Sales and Operations. Cost of sales and operations consists of the
cost of crude oil, transportation fees, field and pipeline operating expenses
and letter of credit expenses. Field and pipeline operating expenses consist
primarily of fuel and power costs, telecommunications, labor costs for pipeline
field personnel, maintenance, utilities, insurance and property taxes.

     Cash and Cash Equivalents. Cash and cash equivalents consist of all demand
deposits and funds invested in highly liquid instruments with original
maturities of three months or less. At December 31, 2000 and 1999, the majority
of cash and cash equivalents is concentrated in one institution and at times may
exceed federally insured limits. We periodically assess the financial condition
of the institution and believe that any possible credit risk is minimal.

     Accounts Receivable, Net. At December 31, 2000, our allowance for doubtful
accounts receivable totaled $5.0 million and is reflected in the consolidated
balance sheet as a reduction of certain accounts receivable which are included
in Other Assets. The allowance was established in 2000 by a $5.0 million charge
to general and administrative expense.

     Inventory. Inventory consists of crude oil in pipelines and in storage
tanks which is valued at the lower of cost or market, with cost determined using
the average cost method.

     Property and Equipment and Pipeline Linefill. Property and equipment is
stated at cost and consists of:

                                                                      December 31,
                                                               ------------------------
                                                                   2000        1999
                                                               -----------   ----------
                                                                       (in thousands)

          Crude oil pipelines                                  $   359,826   $  351,460
          Crude oil pipeline facilities                             39,358       39,358
          Crude oil storage and terminal facilities                 45,989       43,583
          Trucking equipment, injection stations and other          19,435       18,249
          Office property and equipment                              3,011        2,228

                                                                   467,619      454,878
          Less accumulated depreciation and amortization           (26,974)     (11,581)
                                                               -----------   ----------
                                                               $   440,645   $  443,297
                                                               ===========   ==========

Depreciation is computed using the straight-line method over estimated useful
lives as follows:

     .  crude oil pipelines - 40 years;
     .  crude oil pipeline facilities - 25 years;
     .  crude oil terminal and storage facilities - 30 to 40 years;
     .  trucking equipment, injection stations and other - 5 to 10 years; and
     .  other property and equipment - 5 to 7 years.

     Acquisitions and improvements are capitalized; maintenance and repairs are
expensed as incurred. Net gains or losses on property and equipment disposed of
are included in interest and other income in the period in which the transaction
occurs.

     Pipeline linefill is recorded at cost and consists of crude oil linefill
used to pack a pipeline such that when an incremental barrel enters a pipeline
it forces a barrel out at another location. At December 31, 2000, we had
approximately 1.6 million barrels of crude oil used to maintain our minimum
operating linefill requirements. Proceeds from the sale and repurchase of
pipeline linefill are reflected as cash flows from operating activities in the
accompanying consolidated and combined statements of cash flows. Proceeds from
the sale of 5.2 million barrels of crude oil linefill in connection with the
segment of the All American Pipeline that was sold are included in investing
activities in the accompanying consolidated and combined statements of cash
flows (see Note 5).

     Impairment of Long-Lived Assets. Long-lived assets, including any related
goodwill, with recorded values that are not expected to be recovered through
future cash flows are written-down to estimated fair value. Fair value is
generally determined from estimated discounted future net cash flows.

                                       8

Other Assets. Other assets consist of the following (in thousands):

                                                December 31,
                                          ----------------------
                                             2000         1999
                                          --------     ---------
          Debt issue costs                $  8,918     $  24,776
          Long-term receivable, net          5,000             -
          Goodwill and other                   770         1,994
                                          --------     ---------
                                            14,688        26,770
          Accumulated amortization          (1,748)       (3,663)
                                          --------     ---------
                                          $ 12,940     $  23,107
                                          ========     =========

     Costs incurred in connection with the issuance of long-term debt are
capitalized and amortized using the straight-line method over the term of the
related debt. Use of the straight-line method does not differ materially from
the "effective interest" method of amortization. Goodwill was recorded as the
amount of the purchase price in excess of the fair value of certain
transportation and crude oil gathering assets purchased by our predecessor and
is amortized using the straight-line method over a period of twenty years.

     Federal Income Taxes. No provision for income taxes related to our
operations is included in the accompanying consolidated financial statements,
because as a partnership we are not subject to federal or state income tax and
the tax effect of our activities accrues to the unitholders. Net earnings for
financial statement purposes may differ significantly from taxable income
reportable to unitholders as a result of differences between the tax bases and
financial reporting bases of assets and liabilities and the taxable income
allocation requirements under the partnership agreement. Individual unitholders
will have different investment bases depending upon the timing and price of
acquisition of partnership units. Further, each unitholder's tax accounting,
which is partially dependent upon his/her tax position, may differ from the
accounting followed in the consolidated financial statements. Accordingly, there
could be significant differences between each individual unitholder's tax bases
and his/her share of the net assets reported in the consolidated financial
statements. We do not have access to information about each individual
unitholder's tax attributes, and the aggregate tax bases cannot be readily
determined. Accordingly, management does not believe that in our circumstances,
the aggregate difference would be meaningful information.

     Our predecessor is included in the consolidated federal income tax return
of Plains Resources. Income taxes are calculated as if our predecessor had filed
a return on a separate company basis utilizing a federal statutory rate of 35%.

     Hedging. We utilize various derivative instruments, for purposes other than
trading, to hedge our exposure to price fluctuations on crude in storage and
expected purchases, sales and transportation of crude oil. The derivative
instruments consist primarily of futures and option contracts traded on the New
York Mercantile Exchange and crude oil swap contracts entered into with
financial institutions. We also utilize interest rate swaps and collars to
manage the interest rate exposure on our long-term debt.

     These derivative instruments qualify for hedge accounting as they reduce
the price risk of the underlying hedged item and are designated as a hedge at
inception. Additionally, the derivatives result in financial impacts that are
inversely correlated to those of the items being hedged. This correlation,
generally in excess of 80%, (a measure of hedge effectiveness) is measured both
at the inception of the hedge and on an ongoing basis. If correlation ceases to
exist, we would discontinue hedge accounting and apply mark to market
accounting. Gains and losses on the termination of hedging instruments are
deferred and recognized in income as the impact of the hedged item is recorded.

     Unrealized changes in the market value of crude oil hedge contracts are not
generally recognized in our statement of operations or our predecessor's
statements of operations until the underlying hedged transaction occurs. The
financial impacts of crude oil hedge contracts are included in our and our
predecessor's statements of operations as a component of revenues. Such
financial impacts are offset by gains or losses realized in the physical market.
Cash flows from crude oil hedging activities are included in operating
activities in the accompanying statements of cash flows. Net deferred gains and
losses on futures contracts, including closed futures contracts, entered into to
hedge anticipated crude oil purchases and sales, are included in current assets
or current liabilities in the accompanying consolidated balance sheets. Deferred
gains or losses from inventory hedges are included as part of the inventory
costs and recognized when the related inventory is sold.

     Amounts paid or received from interest rate swaps and collars are charged
or credited to interest expense and matched with the cash flows and interest
expense of the debt being hedged, resulting in an adjustment to the effective
interest rate.

                                       9

     Net income per unit. Basic and diluted net income (loss) per unit is
determined by dividing net income (loss) after deducting the amount allocated to
the general partner interest, by the weighted average number of outstanding
common units and subordinated units. Partnership income (loss) is allocated
first according to cash distributions, and the remainder according to percentage
ownership in the partnership. For periods prior to November 23, 1998,
outstanding units are assumed to equal the common and subordinated units
received by our general partner in exchange for assets contributed to us.

     Unit Options. We have elected to follow Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees ("APB 25") and related
interpretations in accounting for our employee unit options and awards. Under
APB 25, no compensation expense is recognized when the exercise price of options
equals the fair value (market price) of the underlying units on the date of
grant (see Note 14).

     Recent Accounting Pronouncements. We implemented Emerging Issues Task Force
("EITF") Issue No. 99-19, "Recording Revenue Gross as a Principal versus Net as
an Agent" in the fourth quarter of 2000. Crude oil buy/sell contracts and
exchanges whereby like volumes are purchased and sold were previously reported
net in cost of sales and operations. These transactions have been reclassified
to be reflected as gross revenues and cost of sales and operations in our
statements of operations for all periods presented with no effect on earnings.
The amounts by which revenues and cost of sales and operations have been
reclassified for the years ended December 31, 2000 and 1999 and the periods
November 23, 1998 to December 31, 1998 and January 1, 1998 to November 22, 1998
are $2.5 billion, $6.2 billion, $0.2 billion, and $2.1 billion, respectively.

     In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 was
subsequently amended (i) in June 1999 by SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities -Deferral of the Effective Date of
FASB Statement No. 133" ("SFAS 137"), which deferred the effective date of SFAS
133 to fiscal years beginning after June 15, 2000; and (ii) in June 2000 by SFAS
138, "Accounting for Certain Derivative Instruments and Certain Hedge
Activities," which amended certain provisions, inclusive of the definition of
the normal purchase and sale exclusion. We have determined that our physical
purchase and sale agreements, which under SFAS 133 could be considered
derivatives, qualify for the normal purchase and sale exclusion.

     SFAS 133 requires that all derivative instruments be recorded on the
balance sheet at their fair value. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if so, the type of hedge transaction. For fair value hedge transactions in
which we are hedging changes in the fair value of an asset, liability, or firm
commitment, changes in the fair value of the derivative instrument will
generally be offset in the income statement by changes in the fair value of the
hedged item. For cash flow hedge transactions, in which we are hedging the
variability of cash flows related to a variable-rate asset, liability, or a
forecasted transaction, changes in the fair value of the derivative instrument
will be reported in other comprehensive income, a component of partners'
capital. The gains and losses on the derivative instrument that are reported in
other comprehensive income will be reclassified as earnings in the periods in
which earnings are affected by the variability of the cash flows of the hedged
item. The ineffective portion of all hedges will be recognized in earnings in
the current period.

     We adopted SFAS 133, as amended, effective January 1, 2001. Our
implementation procedures identified all instruments in place at the adoption
date that are subject to the requirements of SFAS 133. Upon adoption, we
recorded a cumulative effect charge of $8.3 million in accumulated other
comprehensive income to recognize at fair value all derivative instruments that
are designated as cash flow hedging instruments and a cumulative effect gain of
$0.5 million to earnings.
Correspondingly, an asset of $2.8 million and a liability of $10.6 million have
been established. Implementation issues continue to be addressed by the FASB and
any change to existing guidance might impact our implementation. Adoption of
this standard could increase volatility in earnings and partners' capital
through comprehensive income.

Note 3 -- Unauthorized Trading Losses

     In November 1999, we discovered that a former employee had engaged in
unauthorized trading activity, resulting in losses of approximately $162.0
million ($174.0 million, including estimated associated costs and legal
expenses). A full investigation into the unauthorized trading activities by
outside legal counsel and independent accountants and consultants determined
that the vast majority of the losses occurred from March through November 1999.
Approximately $7.1 million of the unauthorized trading losses was recognized in
1998 and the remainder in 1999. In 2000, we recognized an additional $7.0
million charge for litigation related to the unauthorized trading losses (see
Note 15).

                                       10

Note 4 -- Acquisitions

   Scurlock Acquisition

     On May 12, 1999, we completed the acquisition of Scurlock Permian LLC and
certain other pipeline assets from Marathon Ashland Petroleum LLC. Including
working capital adjustments and closing and financing costs, the cash purchase
price was approximately $141.7 million.

     Financing for the Scurlock acquisition was provided through:

     .  borrowings of approximately $92.0 million under a previous bank
        facility;
     .  the sale to our general partner of 1.3 million of our Class B common
        units for a total cash consideration of $25.0 million, or $19.125 per
        unit, the price equal to the market value of our common units on May 12,
        1999; and
     .  a $25.0 million draw under our existing revolving credit agreement.

     The assets, liabilities and results of operations of Scurlock are included
in our consolidated financial statements effective May 1, 1999. The Scurlock
acquisition has been accounted for using the purchase method of accounting and
the purchase price was allocated in accordance with Accounting Principles Board
Opinion No. 16, Business Combinations, ("APB 16") as follow (in thousands):

                                                                                      
                              Crude oil pipeline, gathering and terminal assets             $        125,120
                              Other property and equipment                                             1,546
                              Pipeline linefill                                                       16,057
                              Other assets (debt issue costs)                                          3,100
                              Other long-term liabilities (environmental accrual)                     (1,000)
                              Net working capital items                                               (3,090)
                                                                                            ----------------
                              Cash paid                                                     $        141,733
                                                                                            ================

     The purchase accounting entries include a $1.0 million accrual for
estimated environmental remediation costs. Under the agreement for the sale of
Scurlock by Marathon Ashland Petroleum to Plains Scurlock, Marathon Ashland
Petroleum has agreed to indemnify and hold harmless Scurlock and Plains Scurlock
for claims, liabilities and losses resulting from any act or omission
attributable to Scurlock's business or properties occurring prior to the date of
the closing of such sale to the extent the aggregate amount of such losses
exceed $1.0 million; provided, however, that claims for such losses must
individually exceed $25,000 and must be asserted by Scurlock against Marathon
Ashland Petroleum on or before May 15, 2003.

West Texas Gathering System Acquisition

     On July 15, 1999, we completed the acquisition of a West Texas crude oil
pipeline and gathering system from Chevron Pipe Line Company for approximately
$36.0 million, including transaction costs. Our total acquisition cost was
approximately $38.9 million including costs to address certain issues identified
in the due diligence process. The principal assets acquired include
approximately 450 miles of crude oil transmission mainlines, approximately 400
miles of associated gathering and lateral lines and approximately 2.9 million
barrels of crude oil storage and terminalling capacity in Crane, Ector, Midland,
Upton, Ward and Winkler Counties, Texas. Financing for the amounts paid at
closing was provided by a draw under a previous credit facility.

                                       11

   Pro Forma Results for the Scurlock and West Texas Gathering System
Acquisitions

     The following unaudited pro forma data is presented to show pro forma
revenues, net income (loss) and basic and diluted net income (loss) per limited
partner unit as if the Scurlock and West Texas Gathering System acquisitions had
occurred on January 1, 1998 (in thousands):

                                                          Year           November 23,       January 1,
                                                          Ended             1998 to           1998 to
                                                      December 31,       December 31,      November 22,
                                                          1999               1998              1998
                                                      ------------       -----------       -----------

           Revenues                                   $ 11,301,492       $   501,578       $ 4,272,060
                                                      ============       ===========       ===========
           Net income (loss)                          $    (97,501)      $    (8,080)      $       936
                                                      ============       ===========       ===========
           Basic and diluted net income (loss)
              per limited partner unit                $      (3.02)      $     (0.25)      $      0.05
                                                      ============       ===========       ===========

   All American Pipeline Acquisition

     On July 30, 1998, our predecessor acquired all of the outstanding capital
stock of the All American Pipeline Company, Celeron Gathering Corporation and
Celeron Trading & Transportation Company (collectively the "Celeron Companies")
from Wingfoot, a wholly owned subsidiary of the Goodyear Tire and Rubber Company
("Goodyear"), for approximately $400.0 million, including transaction costs. The
principal assets of the entities acquired include the All American Pipeline and
the SJV Gathering System, as well as other assets related to such operations.
The acquisition was accounted for utilizing the purchase method of accounting
and the purchase price was allocated in accordance with APB 16 as follows (in
thousands):

                                                                             
               Crude oil pipeline, gathering and terminal assets                 $     392,528
               Other assets (debt issue costs)                                           6,138
               Net working capital items (excluding cash received of $7,481)             1,498
                                                                                 -------------
               Cash paid                                                         $     400,164
                                                                                 =============

Financing for the acquisition was provided through a $325.0 million, limited
recourse bank facility and an approximate $114.0 million capital contribution by
Plains All American Inc.

     We incurred a $1.4 million restructuring charge in 1999, primarily
associated with severance-related expenses of 24 employees who were terminated.
As of December 31, 1999, all severance costs were paid and the terminated
employees were not employed by us.

   Pro Forma Results for the All American Pipeline Acquisition

     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
as if the All American Pipeline acquisition had occurred on January 1, 1998 (in
thousands):

                                                                  January 1,
                                                                   1998 to
                                                                 November 22,
                                                                     1998
                                                                --------------

                    Revenues                                    $    3,556,002
                                                                ==============
                    Net income                                  $       14,448
                                                                ==============
                    Basic and diluted net income
                       per limited partner unit                 $         0.83
                                                                ==============

Note 5 -- Asset Dispositions

     In March 2000, we sold to a unit of El Paso Corporation ("El Paso") for
$129.0 million the segment of the All American Pipeline that extends from
Emidio, California to McCamey, Texas. Except for minor third-party volumes, one
of our subsidiaries, Plains Marketing, L.P., was the sole shipper on this
segment of the pipeline since its predecessor acquired the line from Goodyear in
July 1998. We realized net proceeds of approximately $124.0 million after the
associated transaction

                                       12

costs and estimated costs to remove equipment. We used the proceeds from the
sale to reduce outstanding debt. We recognized a gain of approximately $20.1
million in connection with the sale. The cost of the pipeline segment is
included in assets held for sale on the consolidated balance sheet at December
31, 1999.

     We had suspended shipments of crude oil on this segment of the pipeline in
November 1999. At that time, we owned approximately 5.2 million barrels of crude
oil in the segment of the pipeline. We sold this crude oil from November 1999 to
February 2000 for net proceeds of approximately $100.0 million, which were used
for working capital purposes. We recognized gains of approximately $28.1 million
and $16.5 million in 2000 and 1999, respectively, in connection with the sale of
the linefill. The amount of crude oil linefill for sale at December 31, 1999 was
$37.9 million and is included in assets held for sale on the consolidated
balance sheet.

Note 6 --Debt

     Short-term debt and current portion of long-term debt consists of the
following (in thousands):

                                                                                        December 31,
                                                                                ----------------------------
                                                                                      2000         1999
                                                                                -----------       ----------
                                                                                            
Plains Marketing, L.P. letter of credit facility and hedged inventory
   facility, bearing interest at a weighted average interest rate
   of 8.4% at December 31, 2000                                                 $     1,300       $        -
Letter of credit and borrowing facility, bearing interest at weighted
average interest rate of 8.7% at December 31, 1999                                        -           13,719
Secured term credit facility, bearing interest at a weighted average
   interest rate of 8.8% at December 31, 1999                                             -           45,000
                                                                                -----------       ----------
                                                                                      1,300           58,719
Current portion of long-term debt                                                         -           50,650
                                                                                -----------       ----------
                                                                                $     1,300       $  109,369
                                                                                ===========       ==========

Long-term debt consists of the following (in thousands):

                                                                                        December 31,
                                                                                ----------------------------
                                                                                  2000                 1999
                                                                                -----------       ----------
                                                                                           
Plains Marketing, L.P. revolving credit facility, bearing interest at
   a weighted average interest rate of 9.2% at December 31, 2000                $   320,000       $        -
All American Pipeline, L.P. bank credit agreement, bearing interest at
   a weighted average interest rate of 8.3% at December 31, 1999                          -          225,000
Plains Scurlock bank credit agreement, bearing interest at
   a weighted average interest rate of 9.1% at December 31, 1999                          -           85,100
Subordinated note payable - general partner, bearing interest at
   a weighted average interest rate of 8.7% at December 31, 1999                          -          114,000
                                                                                -----------       ----------
                                                                                    320,000          424,100
Less current maturities                                                                   -          (50,650)
                                                                                -----------       ----------
                                                                                $   320,000       $  373,450
                                                                                ===========       ==========

     On May 8, 2000, we entered into new bank credit agreements. The borrower
under the new facilities is Plains Marketing, L.P. We are a guarantor of the
obligations under the credit facilities. The obligations are also guaranteed by
the subsidiaries of Plains Marketing, L.P. We entered into the credit agreements
in order to:

     .    refinance the existing bank debt of Plains Marketing, L.P. and Plains
          Scurlock Permian, L.P. in conjunction with the merger of Plains
          Scurlock Permian, L.P. into All American Pipeline, L.P.;
     .    refinance existing bank debt of All American Pipeline, L.P.;
     .    repay up to $114.0 million plus accrued interest of subordinated debt
          to our general partner, and
     .    provide additional flexibility for working capital, capital
          expenditures, and for other general corporate purposes.

                                       13

     At December 31, 2000, our bank credit agreements consist of:

     .    a $400.0 million senior secured revolving credit facility. The
          revolving credit facility is secured by substantially all of our
          assets and matures in April 2004. No principal is scheduled for
          payment prior to maturity. The revolving credit facility bears
          interest at our option at either the base rate, as defined, plus an
          applicable margin, or LIBOR plus an applicable margin. We incur a
          commitment fee of 0.25% to 0.5% on the unused portion of the revolving
          credit facility.
     .    a $300.0 million senior secured letter of credit and borrowing
          facility, the purpose of which is to provide standby letters of credit
          to support the purchase and exchange of crude oil for resale and
          borrowings to finance crude oil inventory that has been hedged against
          future price risk. The letter of credit facility is secured by
          substantially all of our assets and has a sublimit for cash borrowings
          of $100.0 million to purchase crude oil that has been hedged against
          future price risk. The letter of credit facility expires in April
          2003. Aggregate availability under the letter of credit facility for
          direct borrowings and letters of credit is limited to a borrowing base
          that is determined monthly based on certain of our current assets and
          current liabilities (primarily inventory and accounts receivable and
          accounts payable related to the purchase and sale of crude oil). At
          December 31, 2000, approximately $59.7 million in letters of credit
          were outstanding under the letter of credit and borrowing facility.

     Our bank credit agreements prohibit distributions on, or purchases or
redemptions of, units if any default or event of default is continuing. In
addition, the agreements contain various covenants limiting our ability to,
among other things:

     .    incur indebtedness;
     .    grant liens;
     .    sell assets;
     .    make investments;
     .    engage in transactions with affiliates;
     .    enter into prohibited contracts; and
     .    enter into a merger or consolidation.

     Our bank credit agreements treat a change of control as an event of default
and also requires us to maintain:

     .    a current ratio (as defined) of 1.0 to 1.0;
     .    a debt coverage ratio that is not greater that 4.0 to 1.0 for the
          period from March 31, 2000 to March 31, 2002 and subsequently 3.75 to
          1.0;
     .    an interest coverage ratio that is not less than 2.75 to 1.0; and
     .    a debt to capital ratio of not greater than 0.65 to 1.0.

     A default under our bank credit agreements would permit the lenders to
accelerate the maturity of the outstanding debt and to foreclose on the assets
securing the credit facilities. As long as we are in compliance with our bank
credit agreements, they do not restrict our ability to make distributions of
"available cash" as defined in our partnership agreement. We are currently in
compliance with the covenants contained in our credit agreements. At December
31, 2000, we could have borrowed up to $386.4 million under our secured
revolving credit facility.

     In February 2001, our bank credit agreements were amended. The amount
available under the senior secured revolving credit facility was increased to
$500.0 million and the maturity date was extended to April 2005. The amount
available under the senior secured letter of credit and borrowing facility was
reduced to $200.0 million and the expiration date was extended to April 2004. In
addition, the banks agreed to an amendment which will allow us to borrow an
additional $130.0 million under the terms of the senior secured revolving credit
facility. We have an underwritten commitment, subject to conditions, for the
$130.0 million.

     In December 1999, our general partner loaned us $114.0 million that we used
for working capital requirements created by the 1999 unauthorized trading losses
(see Note 3). This loan was repaid in May 2000 with proceeds from our senior
secured revolving credit facility.

     On December 30, 1999, we entered into a $65.0 million senior secured term
credit facility to fund short-term working capital requirements resulting from
the unauthorized trading losses. The facility was secured by a portion of the
5.2 million barrels of linefill that was sold and receivables from certain sales
contracts applicable to the linefill. The facility had a maturity date of March
24, 2000 and was repaid with the proceeds from the sale of the linefill securing
the facility.

                                       14

     At December 31, 1999 we had a $225.0 million bank credit agreement that
included a $175.0 million term loan facility and a $50.0 million revolving
credit facility. As a result of the unauthorized trading losses discovered in
November 1999, the facility was in default of certain covenants, with those
defaults being subsequently waived and the facility amended in December 1999. At
December 31, 1999, we had $225.0 million outstanding under the terms of this
bank credit facility. In addition, at December 31, 1999, Plains Scurlock had a
bank credit agreement which consisted of a five-year $82.6 million term loan
facility and a three-year $35.0 million revolving credit facility. The revolving
credit facility could be used for borrowings or letters of credit to support
crude oil purchases. As of December 31, 1999, letters of credit of approximately
$29.5 million were outstanding under the revolver and borrowings of $82.6
million and $2.5 million were outstanding under the term loan and revolver,
respectively. Amounts outstanding under these credit agreements were repaid in
May 2000 with proceeds from our senior secured revolving credit facility.

   Maturities

     The aggregate amount of maturities of all long-term indebtedness at
December 31, 2000 for the next five years is: 2004 - $320.0. After the February
2001 amendments to the revolving credit facility, the maturities were: 2005 -
$320.0.

Note 7 -- Partnership Capital and Distributions

     Partner's capital consists of 24,356,429 common units, including 1,307,190
Class B common units, representing a 69.4% effective aggregate ownership
interest in the partnership and its subsidiaries, (a subsidiary of our general
partner owns 6,791,816 of such common units), 10,029,619 Subordinated units
owned by a subsidiary of our general partner representing a 28.6% effective
aggregate ownership interest in the partnership and its subsidiaries limited
partner interest and a 2% general partner interest. In the aggregate, our
general partner's interests represent an effective 54.0% ownership of our equity
at December 31, 2000.

     All of the subordinated units and 20,059,239 of the common units were
issued in connection with our November 1998 initial public offering. In October
1999, we completed a public offering of an additional 2,990,000 common units
representing limited partner interests at $18.00 per unit. Net proceeds,
including our general partners' contribution, from the offering were
approximately $51.3 million after deducting underwriters' discounts and
commissions and offering expenses of approximately $3.1 million. These proceeds
were used to reduce outstanding debt. The Class B common units were issued in
May 1999 to our general partner at $19.125 per unit for total proceeds of $25.0
million in connection with the Scurlock acquisition.

     We will distribute 100% of our available cash within 45 days after the end
of each quarter to unitholders of record and to our general partner. Available
cash is generally defined as all of our cash and cash equivalents on hand at the
end of each quarter less reserves established by our general partner for future
requirements. Distributions of available cash to holders of subordinated units
are subject to the prior rights of holders of common units to receive the
minimum quarterly distribution ("MQD") for each quarter during the subordination
period (which will not end earlier than December 31, 2003) and to receive any
arrearages in the distribution of the MQD on the common units for the prior
quarters during the subordination period. There were no arrearages on common
units at December 31, 2000. The MQD is $0.45 per unit ($1.80 per unit on an
annual basis). Upon expiration of the subordination period, all subordinated
units will be converted on a one-for-one basis into common units and will
participate pro rata with all other common units in future distributions of
available cash. Under certain circumstances, up to 50% of the subordinated units
may convert into common units prior to the expiration of the subordination
period. Common units will not accrue arrearages with respect to distributions
for any quarter after the subordination period and subordinated units will not
accrue any arrearages with respect to distributions for any quarter.

     If quarterly distributions of available cash exceed the MQD or the Target
Distribution Levels (as defined), our general partner will receive distributions
which are generally equal to 15%, then 25% and then 50% of the distributions of
available cash that exceed the MQD or Target Distribution Level. The Target
Distribution Levels are based on the amounts of available cash from our
Operating Surplus (as defined) distributed with respect to a given quarter that
exceed distributions made with respect to the MQD and common unit arrearages, if
any. Cash distributions for the second, third and fourth quarters of 2000 were
$0.4625 per unit on our outstanding common units, Class B units and subordinated
units, representing an increase of $0.0125 per unit over the MQD. Cash
distributions for the second and third quarters of 1999 were $0.4625 per unit
and $0.48125 per unit, respectively, on our outstanding common units, Class B
units and subordinated units, representing an increase of $0.0125 per unit and
$0.03125 per unit, respectively, over the MQD.

     The Class B common units are initially pari passu with common units with
respect to distributions, and are convertible into common units upon approval of
a majority of the common unitholders. The Class B unitholders may request that
we call a meeting of common unitholders to consider approval of the conversion
of Class B units into common units. If the approval of a conversion by the
common unitholders is not obtained within 120 days of a request, each Class B
common unitholder

                                       15

will be entitled to receive distributions, on a per unit basis, equal to 110% of
the amount of distributions paid on a common unit, with such distribution right
increasing to 115% if such approval is not secured within 90 days after the end
of the 120-day period. Except for the vote to approve the conversion, Class B
common units have the same voting rights as the common units.

Note 8 -- Financial Instruments

   Derivatives

     We utilize derivative financial instruments to hedge our exposure to price
volatility on crude oil and do not use such instruments for speculative trading
purposes. These arrangements expose us to credit risk (as to counterparties) and
to risk of adverse price movements in certain cases where our purchases are less
than expected. In the event of non-performance of a counterparty, we might be
forced to acquire alternative hedging arrangements or be required to honor the
underlying commitment at then-current market prices. In order to minimize credit
risk relating to the non-performance of a counterparty, we enter into such
contracts with counterparties that are considered investment grade, periodically
review the financial condition of such counterparties and continually monitor
the effectiveness of derivative financial instruments in achieving our
objectives. In view of our criteria for selecting counterparties, our process
for monitoring the financial strength of these counterparties and our experience
to date in successfully completing these transactions, we believe that the risk
of incurring significant financial statement loss due to the non-performance of
counterparties to these transactions is minimal.

     At December 31, 2000, our hedging activities included crude oil futures
contracts maturing in 2000 through 2002, covering approximately 3.2 million
barrels of crude oil. Since such contracts are designated as hedges and
correlate to price movements of crude oil, any gains or losses resulting from
market changes will be largely offset by losses or gains on our hedged inventory
or anticipated purchases of crude oil. Such contracts resulted in a reduction in
revenues of $15.1 million and $17.8 million for the years ended December 31,
2000 and 1999, respectively. The unrealized loss with respect to such
instruments at December 31, 2000 and 1999 was $7.8 million and $9.8 million,
respectively.

     Interest rate swaps and collars are used to hedge underlying debt
obligations. These instruments hedge specific debt issuances and qualify for
hedge accounting. The interest rate differential is reflected as an adjustment
to interest expense over the life of the instruments. At December 31, 2000, we
had interest rate swap and collar arrangements for an aggregate notional
principal amount of $215.0 million. The adjustment to interest expense resulting
from interest rate swaps for the years ended December 31, 2000 and 1999 was a
$0.1 million gain and a $0.1 million loss. These instruments are based on LIBOR
margins and provide for a floor of 5% and a ceiling of 6.5% with an expiration
date of February 2001 for $90.0 million notional principal amount and a floor of
6% and a ceiling of 8% with an expiration date of August 2002 for $125.0 million
notional principal amount.

   Fair Value of Financial Instruments

     The carrying values of items comprising current assets and current
liabilities approximate fair value due to the short-term maturities of these
instruments. The carrying value of bank debt approximates fair value as interest
rates are variable, based on prevailing market rates. Crude oil futures
contracts permit settlement by delivery of the crude oil and, therefore, are not
financial instruments, as defined. The fair value of crude oil swaps and option
contracts and interest rate swap and collar agreements are based on current
termination values or quoted market prices of comparable contracts.

     The carrying amounts and fair values of our financial instruments are as
follows (in thousands):

                                                                                       December 31,
                                                                   -------------------------------------------------
                                                                            2000                       1999
                                                                   ---------------------       ---------------------
                                                                                                
                                                                   Carrying        Fair        Carrying        Fair
                                                                    Amount        Value         Amount        Value
                                                                   --------       ------       --------     --------
      Unrealized loss on crude oil swaps and option contracts      $      -       $    -             -      $   (569)
      Unrealized gain (loss) on interest rate swaps and collars           -         (561)            -           388

Note 9 -- Early Extinguishment of Debt

     During 2000, we recognized extraordinary losses, consisting primarily of
unamortized debt issue costs, totaling $15.1 million related to the permanent
reduction of the All American Pipeline, L.P. term loan facility and the
refinancing of our credit facilities. In addition, interest and other income for
the year ended December 31, 2000, includes $9.7 million of previously deferred
gains from terminated interest rate swaps as a result of debt extinguishment
(see Notes 3 and 6). The

                                       16

extraordinary loss of $1.5 million in 1999 relates to the write-off of certain
debt issue costs and penalties associated with the prepayment of debt.

Note 10 -- Income Taxes

     As discussed in Note 2, our predecessor's results are included in Plains
Resources' combined federal income tax return. The amounts presented below were
calculated as if our predecessor filed a separate tax return.

     Provision in lieu of income taxes of our predecessor consists of the
following components (in thousands):

                                                   January 1,
                                                    1998 To
                                                  November 22,
                                                     1998
                                                  ------------
                              Federal
                                 Current           $       455
                                 Deferred                1,900
                              State
                                 Current                     -
                                 Deferred                  276
                                                  ------------
                              Total                $     2,631
                                                  ============

     A reconciliation of the provision in lieu of income taxes to the federal
statutory tax rate of 35% is as follows (in thousands):

                                                   January 1,
                                                     1998 To
                                                  November 22,
                                                     1998
                                                  ------------
             Provision at the statutory rate       $     2,410
             State income tax, net of
                benefit for federal deduction              181
             Permanent differences                          40
                                                  ------------
             Total                                 $     2,631
                                                  ============

Note 11 -- Supplemental Disclosures of Cash Flow Information

     In connection with our formation, certain investing and financial
activities occurred. Effective November 23, 1998, substantially all of the
assets and liabilities of our predecessor were conveyed to us at historical
cost. Net assets assumed by the operating partnership are as follows (in
thousands):

         Cash and cash equivalents                        $       224
         Accounts receivable                                  109,311
         Inventory                                             22,906
         Prepaid expenses and other current assets              1,059
         Property and equipment, net                          375,948
         Pipeline linefill                                     48,264
         Intangible assets, net                                11,001
                                                          -----------
            Total assets conveyed                             568,713
                                                          -----------

         Accounts payable and other current liabilities       107,405
         Due to affiliates                                      8,942
         Bank debt                                            183,600
                                                          -----------
            Total liabilities assumed                         299,947
                                                          -----------
         Net assets assumed by the Partnership            $   268,766
                                                          ===========

     Interest paid totaled $25.9 million, $22.3 million, $0.1 million and $8.5
million for the years ended December 31, 2000 and 1999, the period from November
23, 1998 to December 31, 1998 and the period from January 1, 1998 through
November 23, 1998, respectively.

                                       17

Note 12 -- Major Customers and Concentration of Credit Risk

     Customers accounting for 10% or more of revenues were as follows for the
periods indicated:

                                                                  Percentage
                                            --------------------------------------------------------
                                                                          November 23,   January 1,
                                                                            1998 To       1998 To
                                            Year Ended December 31,       December 31,  November 22,
                                            -----------------------
       Customer                                 2000        1999             1998           1998
       ---------------------------------    -----------   ---------       -----------   ------------
                                                                            
       Marathon Ashland Petroleum                    12%      -                     -              -
       Sempra Energy Trading Corporation              -      22%                   20%            31%
       Koch Oil Company                               -      19%                    -             19%
       ExxonMobil                                     -       -                    11%             -

     All of the customers above pertain to our marketing, gathering,
terminalling and storage segment.

     Financial instruments which potentially subject us to concentrations of
credit risk consist principally of trade receivables. Our accounts receivable
are primarily from purchasers and shippers of crude oil. This industry
concentration has the potential to impact our overall exposure to credit risk,
either positively or negatively, in that the customers may be similarly affected
by changes in economic, industry or other conditions. We generally require
letters of credit for receivables from customers that are not considered
investment grade, unless the credit risk can otherwise be reduced. We believe
that the loss of an individual customer would not have a material adverse
effect.

Note 13 -- Related Party Transactions

   Reimbursement of Expenses of Our General Partner and Its Affiliates

     We do not directly employ any persons to manage or operate our business.
These functions are provided by employees of our general partner and Plains
Resources. Our general partner does not receive a management fee or other
compensation in connection with its management of us. We reimburse our general
partner and Plains Resources for all direct and indirect costs of services
provided, including the costs of employee, officer and director compensation and
benefits properly allocable to us, and all other expenses necessary or
appropriate to the conduct of our business, and allocable to us. Our agreement
provides that our general partner will determine the expenses allocable to us in
any reasonable manner determined by our general partner in its sole discretion.
Total costs reimbursed to our general partner and Plains Resources by us were
approximately $63.8 million, $44.7 million and $0.5 million for the years ended
December 31, 2000 and 1999 and for period from November 23, 1998 to December 31,
1998, respectively. Such costs include, (1) allocated personnel costs (such as
salaries and employee benefits) of the personnel providing such services, (2)
rent on office space allocated to our general partner in Plains Resources'
offices in Houston, Texas (3) property and casualty insurance premiums and (4)
out-of-pocket expenses related to the provision of such services.

     Plains Resources allocated certain general and administrative expenses to
the Plains Midstream Subsidiaries during 1998. The types of indirect expenses
allocated to the Plains Midstream Subsidiaries during this period were office
rent, utilities, telephone services, data processing services, office supplies
and equipment maintenance. Direct expenses allocated by Plains Resources were
primarily salaries and benefits of employees engaged in the business activities
of the Plains Midstream Subsidiaries.

   Crude Oil Marketing Agreement

     We are the exclusive marketer/purchaser for all of Plains Resources' equity
crude oil production. The marketing agreement with Plains Resources provides
that we will purchase for resale at market prices all of Plains Resources' crude
oil production for which we charge a fee of $0.20 per barrel. For the years
ended December 31, 2000 and 1999 and the period from November 23, 1998 to
December 31, 1998, we paid Plains Resources approximately $244.9 million, $131.5
million and $4.1 million, respectively, for the purchase of crude oil under the
agreement, including the royalty share of production, and recognized profits of
approximately $1.7 million, $1.5 million and $0.1 million from the marketing fee
for the same periods, respectively. Prior to the marketing agreement, our
predecessor marketed crude oil production of Plains Resources, its subsidiaries
and its royalty owners. Our predecessor paid approximately $83.4 million for the
purchase of these products for the period from January 1, 1998 to November 22,
1998. In management's opinion, these purchases were made at prevailing market
prices. Our predecessor did not recognize a profit on the sale of the crude oil
purchased from Plains Resources.

                                       18

   Financing

     In May 2000, we repaid to our general partner $114.0 million of
subordinated debt (see Note 6). Interest expense related to the notes was $3.3
million and $0.6 million for the years ended December 31, 2000 and 1999,
respectively.

     To finance a portion of the purchase price of the Scurlock acquisition, we
sold to our general partner 1.3 million Class B common units at $19.125 per
unit, the market value of our common units on May 12, 1999 (see Note4).

     The balance of amounts due to affiliates at December 31, 2000 and 1999 was
$21.0 million and $42.7 million, respectively, and was related to the
transactions discussed above.

   Benefit Plan

     Plains Resources maintains a 401(k) defined contribution plan whereby they
match 100% of an employee's contribution (subject to certain limitations in the
plan), with matching contribution being made 50% in cash and 50% in common stock
(the number of shares for the stock match being based on the market value of the
common stock at the time the shares are granted). For the years ended December
31, 2000, 1999 and 1998, defined contribution plan expense was $1.0 million,
$0.7 million and $0.2 million, respectively.

Note 14 -- Long-Term Incentive Plans

     Our general partner has adopted the Plains All American Inc. 1998 Long-Term
Incentive Plan for employees and directors of our general partner and its
affiliates who perform services for us. The Long-Term Incentive Plan consists of
two components, a restricted unit plan and a unit option plan. The Long-Term
Incentive Plan currently permits the grant of restricted units and unit options
covering an aggregate of 975,000 common units. The plan is administered by the
Compensation Committee of our general partner's board of directors.

     Restricted Unit Plan. A restricted unit is a "phantom" unit that entitles
the grantee to receive a common unit upon the vesting of the phantom unit. As of
March 15, 2001, an aggregate of approximately 610,100 restricted units have been
granted to employees of our general partner. In addition, 15,000 restricted
units have been granted to non-employee directors of our general partner. The
Compensation Committee may, in the future, make additional grants under the plan
to employees and directors containing such terms as the Compensation Committee
shall determine. In general, restricted units granted to employees during the
subordination period will vest only upon, and in the same proportions as, the
conversion of the subordinated units to common units. Grants made to
non-employee directors of our general partner are eligible to vest prior to
termination of the subordination period.

     If a grantee terminates employment or membership on the board for any
reason, the grantee's restricted units will be automatically forfeited unless,
and to the extent, the Compensation Committee provides otherwise. Common units
to be delivered upon the vesting of rights may be common units acquired by our
general partner in the open market, common units already owned by our general
partner, common units acquired by our general partner directly from us or any
other person, or any combination of the foregoing. Our general partner will be
entitled to reimbursement by us for the cost incurred in acquiring common units.
If we issue new common units upon vesting of the restricted units, the total
number of common units outstanding will increase. Following the subordination
period, the Compensation Committee, in its discretion, may grant tandem
distribution equivalent rights with respect to restricted units.

     The issuance of the common units pursuant to the restricted unit plan is
primarily intended to serve as a means of incentive compensation for
performance. Therefore, no consideration will be paid to us by the plan
participants upon receipt of the common units.

     Unit Option Plan. The Unit Option Plan currently permits the grant of
options covering common units. No grants have been made under the Unit Option
Plan to date. However, the Compensation Committee may, in the future, make
grants under the plan to employees and directors containing such terms as the
committee shall determine, provided that unit options have an exercise price
equal to the fair market value of the units on the date of grant. Unit options
granted during the subordination period will become exercisable automatically
upon, and in the same proportions as, the conversion of the subordinated units
to common units, unless a later vesting date is provided.

     Upon exercise of a unit option, our general partner will deliver common
units acquired by it in the open market, purchased directly from us or any other
person, or use common units already owned by our general partner, or any
combination of the foregoing. Our general partner will be entitled to
reimbursement by us for the difference between the cost

                                       19

incurred by our general partner in acquiring such common units and the proceeds
received by our general partner from an optionee at the time of exercise. Thus,
the cost of the unit options will be borne by us. If we issue new common units
upon exercise of the unit options, the total number of common units outstanding
will increase, and our general partner will remit to us the proceeds received by
it from the optionee upon exercise of the unit option.

     The unit option plan has been designed to furnish additional compensation
to employees and directors and to align their economic interests with those of
the common unitholders. Our general partner's board of directors in its
discretion may terminate the Long-Term Incentive Plan at any time with respect
to any common units for which a grant has not yet been made. Our general
partner's board of directors also has the right to alter or amend the Long-Term
Incentive Plan or any part of the plan from time to time, including increasing
the number of common units with respect to which awards may be granted;
provided, however, that no change in any outstanding grant may be made that
would materially impair the rights of the participant without the consent of
such participant.

     We apply APB 25 and related interpretations in accounting for unit option
plans. In accordance with APB 25, no compensation expense has been recognized
for the unit option plan. Since no options have been granted to date, there is
no pro forma effect of a fair value based method of accounting in accordance
with SFAS No. 123 "Accounting for Stock-Based Compensation" ("SFAS 123").

     Transaction Grant Agreements. In addition to the grants made under the
Restricted Unit Plan described above, our general partner, at no cost to us,
agreed to transfer approximately 400,000 of its affiliates' common units
(including distribution equivalent rights attributable to such units) to certain
key officers and employees of our general partner and its affiliates. Generally,
under these grants, the common units vest based on attaining a targeted
operating surplus for a given year. Approximately 75,000 and 6,000 of the common
units vest for 2001 and 2002, respectively, if the operating surplus generated
in each year equals or exceeds the amount necessary to pay the minimum quarterly
distributions on all outstanding common units and the related distribution on
our general partner interest. If a tranche of common units does not vest for a
particular year due to a common unit arrearage, such common units will vest at
the time the common unit arrearages for such year have been paid. In addition,
approximately 58,000 and 11,000 of the common units vest for 2001and 2002,
respectively, if the operating surplus generated in such year exceeds the amount
necessary to pay the minimum quarterly distributions on all outstanding common
units and subordinated units and the related distributions on our general
partner interest. Approximately 69,000 and 113,000 (excluding approximately
20,000 units withheld for payment of federal income taxes) of the units vested
for 1999 and 2000, respectively and approximately 47,000 common units remain
unvested as no distribution on the subordinated units was made for the fourth
quarter of 1999. Any common units remaining unvested shall vest upon, and in the
same proportion as, the conversion of subordinated units to common units.
Distribution equivalent rights are paid in cash at the time of the vesting of
the associated common units. Notwithstanding the foregoing, all common units
become vested if Plains All American Inc. is removed as our general partner
prior to January 1, 2002.

     We recognized noncash compensation expense of approximately $3.1 million
and $1.0 million for the years ended December 31, 2000 and 1999, respectively,
related to the transaction grants which vested for 2000 and 1999. These amounts
are included in general and administrative expense on the Consolidated
Statements of Operations. We reflected a capital contribution from our general
partner for like amounts. There were no transaction grants which vested for
1998.

Note 15 -- Commitments and Contingencies

     We lease certain real property, equipment and operating facilities under
various operating leases. We also incur costs associated with leased land,
rights-of-way, permits and regulatory fees, the contracts for which generally
extend beyond one year but can be canceled at any time should they not be
required for operations. Future non-cancelable commitments related to these
items at December 31, 2000, are summarized below (in thousands):

                       2001                   $   6,420
                       2002                       3,716
                       2003                       3,727
                       2004                       3,744
                       2005                       3,764
                       Thereafter                 2,797

     Total lease expense incurred for 2000 and 1999 was $6.7 million and $8.9
million, respectively. Lease expense incurred for the period from November 23,
1998 to December 31, 1998 and from January 1, 1998 to November 22, 1998 was $0.2
million and $0.9 million, respectively.

                                       20

     During 1997, the All American Pipeline experienced a leak in a segment of
its pipeline in California that resulted in an estimated 12,000 barrels of crude
oil being released into the soil. Immediate action was taken to repair the
pipeline leak, contain the spill and to recover the released crude oil. We have
expended approximately $400,000 to date in connection with this spill and do not
expect any additional expenditures to be material, although we can provide no
assurances in that regard.

     Prior to being acquired by our predecessor in 1996, the Ingleside Terminal
experienced releases of refined petroleum products into the soil and groundwater
underlying the site due to activities on the property. We are undertaking a
voluntary state-administered remediation of the contamination on the property to
determine the extent of the contamination. We have proposed extending the scope
of our study and are awaiting the state's response. We have spent approximately
$140,000 to date in investigating the contamination at this site. We do not
anticipate the total additional costs related to this site to exceed $250,000,
although no assurance can be given that the actual cost could not exceed such
estimate. In addition, a portion of any such costs may be reimbursed to us from
Plains Resources.

   Litigation

     Texas Securities Litigation. On November 29, 1999, a class action lawsuit
was filed in the United States District Court for the Southern District of Texas
entitled Di Giacomo v. Plains All American Pipeline, L.P., et al. The suit
alleged that Plains All American and certain of our general partner's officers
and directors violated federal securities laws, primarily in connection with
unauthorized trading by a former employee. An additional nineteen cases have
been filed in the Southern District of Texas, some of which name our general
partner and Plains Resources as additional defendants. All of the federal
securities claims are being consolidated into two actions. The first
consolidated action is that filed by purchasers of Plains Resources' common
stock and options, and is captioned Koplovitz v. Plains Resources Inc., et al.
The second consolidated action is that filed by purchasers of our common units,
and is captioned Di Giacomo v. Plains All American Pipeline, L.P., et al.
Plaintiffs alleged that the defendants were liable for securities fraud
violations under Rule 10b-5 and Section 20(a) of the Securities Exchange Act of
1934 and for making false registration statements under Sections 11 and 15 of
the Securities Act of 1933.

     We and Plains Resources reached an agreement with representatives for the
plaintiffs for the settlement of all of the class actions, and in January 2001,
we deposited approximately $30.0 million under the terms of the settlement
agreement. The total cost of the settlement to us and Plains Resources,
including interest and expenses and after insurance reimbursements, was $14.9
million. Of that amount, $1.0 million was allocated to Plains Resources by
agreement between special independent committees of the board of directors of
our general partner and the board of directors of Plains Resources. All such
amounts were reflected in our financial statements at December 31, 2000. The
settlement is subject to a number of conditions, including final approval by the
court. A hearing is set for March 30, 2001. The settlement agreement does not
affect the Texas Derivative Litigation and Delaware Derivative Litigation
described below.

     Delaware Derivative Litigation. On December 3, 1999, two derivative
lawsuits were filed in the Delaware Chancery Court, New Castle County, entitled
Susser v. Plains All American Inc., et al and Senderowitz v. Plains All American
Inc., et al. These suits, and three others which were filed in Delaware
subsequently, named our general partner, its directors and certain of its
officers as defendants, and allege that the defendants breached the fiduciary
duties that they owed to Plains All American Pipeline, L.P. and its unitholders
by failing to monitor properly the activities of its employees. The court has
consolidated all of the cases under the caption In Re Plains All American Inc.
Shareholders Litigation, and has designated the complaint filed in Susser v.
Plains All American Inc. as the complaint in the consolidated action. A motion
to dismiss was filed on behalf of the defendants on August 11, 2000.

     The plaintiffs in the Delaware derivative litigation seek that the
defendants

     .  account for all losses and damages allegedly sustained by Plains All
        American from the unauthorized trading losses;

     .  establish and maintain effective internal controls ensuring that our
        affiliates and persons responsible for our affairs do not engage in
        wrongful practices detrimental to Plains All American;

     .  pay for the plaintiffs' costs and expenses in the litigation, including
        reasonable attorneys' fees, accountants' fees and experts' fees; and

     .  provide the plaintiffs any additional relief as may be just and proper
        under the circumstances.

     We have reached an agreement in principle with the plaintiffs, subject to
approval by the Delaware court, to settle the Delaware litigation for
approximately $1.1 million.

                                       21

     Texas Derivative Litigation. On July 11, 2000, a derivative lawsuit was
filed in the United States District Court of the Southern District of Texas
entitled Fernandes v. Plains All American Inc., et al, naming our general
partner, its directors and certain of its officers as defendants. This lawsuit
contains the same claims and seeks the same relief as the Delaware derivative
litigation, described above. A motion to dismiss was filed on behalf of the
defendants on August 14, 2000.

     We intend to vigorously defend the claims made in the Texas derivative
litigation. We believe that Delaware court approval of the settlement of the
Delaware derivative litigation will effectively preclude prosecution of the
Texas derivative litigation. However, there can be no assurance that we will be
successful in our defense or that this lawsuit will not have a material adverse
effect on our financial position or results of operation.

     We, in the ordinary course of business, are a claimant and/or a defendant
in various other legal proceedings. Management does 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.

     We may experience future re leases of crude oil into the environment from
our pipeline and storage operations, or discover releases that were previously
unidentified. While we maintain an extensive inspection program designed to
prevent and, as applicable, to detect and address such releases promptly,
damages and liabilities incurred due to any future environmental releases from
our assets may substantially affect our business.

Note 16 -- Quarterly Financial Data (Unaudited)

                                                       First         Second        Third            Fourth
                                                       Quarter       Quarter       Quarter       Quarter (1)       Total
                                                   -------------- ------------  ------------    -------------  ------------
                                                                     (in thousands, except per unit data)
                                                                                                
     2000
     ----
     Revenues, as reclassified (2)                  $  2,002,507  $  1,481,834  $   1,555,863   $  1,600,983   $   6,641,187
     Revenues, as previously reported                    999,319       738,967        756,926              -       2,495,212
     Gross margin (3)                                     36,552        32,774         25,960         32,434         127,720
     Operating income                                     17,788        20,164         10,700         13,724          62,376
     Net income before extraordinary item                 64,300        17,063          4,516          6,770          92,649
     Extraordinary item                                   (4,145)      (11,002)             -              -         (15,147)
     Net income                                           60,155         6,061          4,516          6,770          77,502
     Net income per limited partner unit
        Before extraordinary item                           1.83          0.49           0.13           0.19            2.64
        Extraordinary item                                 (0.12)        (0.32)             -              -           (0.44)
        After extraordinary item                            1.71          0.17           0.13           0.19            2.20
     Cash distributions per common unit (4)         $      0.450  $      0.463  $       0.463   $      0.463   $       1.839

     1999
     ----
     Revenues, as reclassified (2)                  $  1,128,839  $  2,535,200  $   3,000,282   $  4,246,102   $  10,910,423
     Revenues, as previously reported                    471,209       885,046      1,127,808      2,255,829       4,739,892
     Gross margin (3)                                     (1,546)        4,985        (38,922)       (20,643)        (56,126)
     Operating loss                                       (6,965)       (4,624)       (53,839)       (32,663)        (98,091)
     Net loss before extraordinary item                  (10,061)       (9,154)       (60,131)       (22,469)       (101,815)
     Extraordinary item                                        -             -              -         (1,545)         (1,545)
     Net loss                                            (10,061)       (9,154)       (60,131)       (24,014)       (103,360)
     Net loss per limited partner unit
        Before extraordinary item                          (0.33)        (0.29)         (1.88)         (0.64)          (3.16)
        Extraordinary item                                     -             -              -          (0.05)          (0.05)
        After extraordinary item                           (0.33)        (0.29)         (1.88)         (0.69)          (3.21)
     Cash distributions per common unit (4)         $      0.450  $      0.463  $       0.481   $      0.450   $       1.844
______________

(1) For 2000, includes a $5.0 million charge to reserve for potentially
    uncollectible accounts receivable.
(2) These amounts represent the reclassification from previously reported
    amounts due to the adoption of EITF 99-19 (see Note 2).
(3) For the third and fourth quarters of 2000, includes the effects of the
    charge for litigation related to the unauthorized trading losses and the
    effects of the unauthorized trading losses for all quarters of 1999 (see
    Note 3).
(4) Represents cash distributions declared and paid per common unit for the
    period indicated. Distributions are paid in the following calendar quarter.

                                       22

Note 17 -- 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) Marketing, Gathering, Terminalling and
Storage Operations - engages in purchases and resales of crude oil at various
points along the distribution chain and the leasing of certain terminalling and
storage assets. Prior to the July 1998 acquisition of the All American Pipeline
and SJV Gathering System, our predecessor had only marketing, gathering,
terminalling and storage operations. We evaluate segment performance based on
gross margin, gross profit and income before provision in lieu of income taxes
and extraordinary items.

     The following table summarizes segment revenues, gross margin, gross profit
and income (loss) before provision in lieu of income taxes and extraordinary
items:

                                                                                           Marketing,
                                                                                           Gathering,
                                                                                          Terminalling
               (In thousands)                                            Pipeline        & Storage (a)          Total (a)
              ------------------------------------------------------------------------------------------------------------
                                                                                                  
               2000
               Revenues:
                  External Customers                                $    505,712      $       6,135,475     $    6,641,187
                  Intersegment  (b)                                       68,745                      -             68,745
                  Other                                                    9,045                  1,731             10,776
                                                                    ------------      -----------------     --------------
                    Total revenues of reportable segments           $    583,502      $       6,137,206     $    6,720,708
                                                                    ============      =================     ==============

               Segment gross margin (c)                             $     51,787      $          75,933     $      127,720
               Segment gross profit (d)                                   49,996                 36,903             86,899
               Net income (loss) before extraordinary item                94,461                 (1,812)            92,649
               Interest expense                                            5,738                 22,953             28,691
               Depreciation and amortization                               7,030                 17,493             24,523
               Capital expenditures                                        1,544                 11,059             12,603
               Total assets                                              324,751                561,050            885,801
              ------------------------------------------------------------------------------------------------------------
               1999
               Revenues:
                  External Customers                                $    854,377      $      10,056,046     $   10,910,423
                  Intersegment  (b)                                      131,445                      -            131,445
                  Other                                                      195                    763                958
                                                                    ------------      -----------------     --------------
                    Total revenues of reportable segments           $    986,017      $      10,056,809     $   11,042,826
                                                                    ============      =================     ==============
               Segment gross margin (c)                             $     58,001      $        (114,127)    $      (56,126)
               Segment gross profit (d)                                   55,384               (134,721)           (79,337)
               Net income (loss) before extraordinary item                46,075               (147,890)          (101,815)
               Interest expense                                           13,572                  7,567             21,139
               Depreciation and amortization                              10,979                  6,365             17,344
               Capital expenditures                                       69,375                119,911            189,286
               Total assets                                              524,438                698,599          1,223,037
              ------------------------------------------------------------------------------------------------------------
               November 23, 1998 to December 31, 1998
               Revenues:
                  External Customers                                $     54,089      $         344,829     $      398,918
                  Intersegment  (b)                                        2,029                    429              2,458
                  Other                                                        -                     12                 12
                                                                    ------------      -----------------     --------------
                    Total revenues of reportable segments           $     56,118      $         345,270     $      401,388
                                                                    ============      =================     ==============
               Segment gross margin (c)                             $      3,546      $           1,553     $        5,099
               Segment gross profit (d)                                    3,329                    999              4,328
               Net income                                                  1,035                    742              1,777
               Interest expense                                            1,321                     50              1,371
               Depreciation and amortization                                 973                    219              1,192
               Capital expenditures                                          352                  2,535              2,887
               Total assets                                              471,864                135,322            607,186
              ------------------------------------------------------------------------------------------------------------

                                               Table continued on following page

                                       23

                                                                                 Marketing,
                                                                                 Gathering,
                                                                                Terminalling
     (In thousands)                                            Pipeline        & Storage (a)            Total (a)
    -------------------------------------------------------------------------------------------------------------------
                                                                                            
     January 1, 1998 to November 22, 1998 (Predecessor)
     Revenues:
        External Customers                                  $  200,139      $       2,918,214        $        3,118,353
        Intersegment (b)                                        21,166                  2,391                    23,557
        Other                                                      603                    (31)                      572
                                                            ----------      -----------------        ------------------
          Total revenues of reportable segments             $  221,908      $       2,920,574        $        3,142,482
                                                            ==========      =================        ==================
     Segment gross margin (c)                               $   13,222      $          13,059        $           26,281
     Segment gross profit (d)                                   12,394                  9,361                    21,755
     Net income before provision in lieu of income taxes         2,152                  4,736                     6,888
     Interest expense                                            7,787                  3,473                    11,260
     Depreciation and amortization                               3,058                  1,121                     4,179
     Provision in lieu of income taxes                             822                  1,809                     2,631
     Capital expenditures                                      393,379                  4,677                   398,056
    -------------------------------------------------------------------------------------------------------------------

     a)  Revenues for the marketing, gathering, terminalling and storage segment
         include the effects of the adoption of EITF 99-19 (see Note 2). For the
         years ending December 31, 2000 and 1999 and the periods November 23,
         1998 to December 31, 1998 and January 1, 1998 to November 22, 1998,
         revenues have been reclassified by $2.5 billion, $6.2 billion, $0.2
         billion and $2.1 billion, respectively.
     b)  Intersegment sales were conducted on an arm's length basis.
     c)  Gross margin is calculated as revenues less cost of sales and
         operations expenses.
     d)  Gross profit is calculated as revenues less costs of sales and
         operations expenses and general and administrative expenses.

Note 18 -- Subsequent Events

 Acquisitions

   Murphy Oil Company Ltd. Midstream Operations

   On March 1, 2001, we signed an agreement to purchase substantially all of the
crude oil pipeline, gathering, storage and terminalling assets of Murphy Oil
Company Ltd. ("Murphy") for approximately $155.0 million in cash, plus an
additional cash payment, to be determined prior to closing in accordance with
the agreement, for excess inventory in the systems (estimated to be
approximately $5.0 million). The principal assets to be acquired include
approximately 450 miles of crude oil and condensate transmission mainlines and
associated gathering and lateral lines, and approximately 1.1 million barrels of
crude oil storage and terminalling capacity located primarily in Kerrobert,
Saskatchewan, approximately 200,000 barrels of linefill, as well as a currently
inactive 108-mile mainline system and 121 trailers used primarily for crude oil
transportation.

   Murphy has agreed to continue to transport production from fields currently
delivering crude oil to these pipeline systems, under a new long-term contract.
The current volume is approximately 11,000 barrels per day. The pipeline systems
transport approximately 200,000 barrels per day of light, medium and heavy
crudes, as well as condensate.

   Canadian Marketing Assets

   We have entered into a letter of intent to purchase the assets of a Canadian
marketing company. The expected purchase price is approximately $43.0 million,
of which approximately $18.0 million will be subject to certain performance
targets. The marketing company currently gathers approximately 75,000 barrels
per day of crude oil and markets approximately 26,000 barrels per day of natural
gas liquids. Tangible assets include a crude oil handling facility, a 100,000
barrel tank facility and working capital of approximately $8.5 million.

   Initial financing for the acquisitions will be provided via an expansion of
our existing revolving credit, letter of credit and inventory facility. The
expanded facility will initially be underwritten by Fleet Boston and will
consist of a $100.0 million five-year term loan and a $30.0 million revolving
credit facility that will expire in April 2005.

                                       24

Note 19 -- Debt Securities

On August 27, 2001, the Partnership filed a registration statement to register
common units representing limited partner interests and debt securities,
including guarantees. The Partnership has no independent assets or operations,
and PAA Finance Corp., a 100% owned finance subsidiary, may co-issue the debt
securities. If a series of debt securities is guaranteed, such series will be
guaranteed by all subsidiaries, all of which are 100% owned, other than minor
subsidiaries. Such guarantees will be full and unconditional and joint and
several.

                                       25