-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DkwAJ8MXR+b+lOctyus/CNYLrc2aISiKXrsDjGrLZTcVQ5AWffVjey3odnAkPBlv aCVLnGWcoZZaOwMSkP8Ufg== 0000899243-98-002242.txt : 19981208 0000899243-98-002242.hdr.sgml : 19981208 ACCESSION NUMBER: 0000899243-98-002242 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19981123 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981207 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLAINS RESOURCES INC CENTRAL INDEX KEY: 0000350426 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PETROLEUM & PETROLEUM PRODUCTS (NO BULK STATIONS) [5172] IRS NUMBER: 132898764 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 033-50572 FILM NUMBER: 98765026 BUSINESS ADDRESS: STREET 1: 500 DALLAS STREET 2: SUITE 700 CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7136541414 MAIL ADDRESS: STREET 1: 1600 SMITH STREET STREET 2: SUITE 1500 CITY: HOUSTON STATE: TX ZIP: 77002 8-K 1 FORM 8-K ================================================================================ UNITED STATES 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): November 23, 1998 PLAINS RESOURCES INC. (Exact name of registrant as specified in charter) DELAWARE 0-9808 13-2898764 (State of Incorporation) (Commission File No.) (I.R.S. Employer Identification No.) 500 DALLAS STREET, SUITE 700 HOUSTON, TEXAS 77002 77002 (Address of Principal Executive Offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 654-1414 ================================================================================ ITEM 2. DISPOSITION OF ASSETS On November 23, 1998, (the "Closing Date"), Plains Resources Inc. ("Plains Resources"), and certain of its subsidiaries (the "Plains Midstream Subsidiaries") entered into a Contribution, Conveyance and Assumption Agreement (the "Agreement") with Plains All American Pipeline, L.P. (the "Partnership"), Plains Marketing, L.P. and All American Pipeline L.P. (collectively referred to as the "Operating Partnerships"). Plains All American Inc., a wholly-owned subsidiary of Plains Resources is the general partner ("General Partner") of the Partnership and the Operating Partnerships. Pursuant to the Agreement, Plains Resources transferred certain assets and liabilities to the Operating Partnerships. On the Closing Date, the Partnership closed its initial public offering (the "Offering") of common units representing limited partner interests. The Offering of 13,085,000 common units represents 42.6% of the Partnership's equity, and was priced at $20.00 per unit. Total proceeds, net of selling commissions and the underwriters' management and underwriting fees, were approximately $244.7 million. Concurrently with the closing of the Offering, certain of the Plains Midstream Subsidiaries were merged into Plains Resources, which pursuant to the Agreement, sold the assets of these subsidiaries to Plains Marketing, L.P. in exchange for $93.7 million in cash and the assumption of related indebtedness. At the same time, the General Partner conveyed all of its interest in the All American Pipeline System and SJV Gathering System, which it acquired in July 1998 for approximately $400 million, to the Operating Partnerships in exchange for (i) 6,974,239 common units, 10,020,619 subordinated units and an aggregate 2% general partner interest in the Partnership and the Operating Partnerships; (ii) the right to receive incentive distributions; and (iii) the assumption by the Operating Partnerships of $175 million of indebtedness incurred by the General Partner in connection with the acquisition of the All American Pipeline System and SJV Gathering System. In addition to the $93.7 million paid to Plains Resources, the Partnership distributed approximately $148.0 million to the General Partner and paid approximately $3 million in expenses incurred in connection with the Offering. The General Partner used $110 million of the cash distributed to it to retire the remaining indebtedness incurred in connection with the acquisition of the All American Pipeline System and the SJV Gathering System, approximately $9.0 million to pay expenses incurred in connection with the formation of the Partnership, primarily related to debt and interest rate swap restructuring, and the balance, approximately $29.0 million, was distributed to Plains Resources which used the cash to repay indebtedness and for other general corporate purposes. On the Closing Date, Plains Resources entered into various agreements with the Partnership, including (i) the Omnibus Agreement, providing for the resolution of certain conflicts arising from the conduct of the Partnership and Plains Resources of related businesses and for the General Partner's indemnification of the Partnership for certain matters and (ii) the Crude Oil Marketing Agreement which provides for the marketing by Plains Marketing, L.P. of Plains Resources' crude oil production. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Business Acquired Not applicable.
(b) Pro Forma Financial Information (unaudited) PLAINS RESOURCES INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS Introduction........................................................................... F-1 Pro Forma Consolidated Balance Sheet as of September 30, 1998......................... F-3 Pro Forma Consolidated Income Statement for the nine months ended September 30, 1998... F-4 Pro Forma Consolidated Income Statement for the year ended December 31, 1997........... F-5 Notes to Pro Forma Consolidated Financial Statements................................... F-6
(c) Exhibits 10(bb) Contribution, Conveyance and Assumption Agreement among Plains All American Pipeline System, and certain other parties. 1 10(cc) Crude Oil Marketing Agreement between Plains Resources Inc., Plains Illinois Inc., Stocker Resources, L.P., Calumet Florida, Inc. and Plains Marketing, L.P. 10(dd) Omnibus Agreement among Plains Resources Inc., Plains All American Pipeline, L.P., Plains Marketing, L.P., All American Pipeline, L.P. and Plains All American Inc. 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. Dates: December 7, 1998 PLAINS RESOURCES INC. By: /s/ Phillip D. Kramer ------------------------------- Name: Phillip D. Kramer Title: Executive Vice President and Chief Financial Officer 2 PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS OF PLAINS RESOURCES INC. AND SUBSIDIARIES The following pro forma consolidated financial statements are based upon the historical consolidated financial statements of Plains Resources Inc. and subsidiaries ("Plains Resources"), and Wingfoot Ventures Seven, Inc. ("Wingfoot"), a wholly owned subsidiary of The Goodyear Tire and Rubber Company ("Goodyear"). The September 30, 1998, consolidated financial statements of Plains Resources reflect the July 30, 1998, acquisition (the "Acquisition") by Plains All American Inc. ("PAAI"), a wholly owned subsidiary of Plains Resources, of all of the outstanding capital stock of the All American Pipeline Company, Celeron Gathering Corporation and Celeron Trading & Transportation Company (collectively, the "Celeron Companies," which comprise substantially all of Wingfoot) from Wingfoot for approximately $400 million in cash, which was financed in part through a borrowing of $300 million under PAAI's $325 million limited recourse bank facility (the "PAAI Credit Facility") (a portion of which funded initial working capital) and a capital contribution of $114 million from Plains Resources, $85 million of which represents the proceeds from the issuance of Plains Resources Series E Preferred Stock. The principal assets of the entities acquired include the All American Pipeline System, a 1,233-mile crude oil pipeline extending from California to Texas, and the SJV Gathering System, a 45-mile crude oil gathering system in the San Joaquin Valley of California, as well as other assets related to such operations. The Acquisition was accounted for by Plains Resources using the purchase method of accounting. On November 23, 1998, (the "Closing Date"), Plains Resources, and certain of its subsidiaries (the "Plains Midstream Subsidiaries") entered into a Contribution, Conveyance and Assumption Agreement (the "Agreement") with Plains All American Pipeline, L.P. (the "Partnership"), Plains Marketing, L.P. and All American Pipeline L.P. (collectively referred to as the "Operating Partnerships"). PAAI is the general partner ("General Partner") of the Partnership and the Operating Partnerships. Pursuant to the Agreement, Plains Resources transferred certain assets and liabilities to the Operating Partnerships. On the Closing Date, the Partnership closed its initial public offering (the "Offering") of common units representing limited partner interests. The Offering of 13,085,000 common units represents 42.6% of the Partnership's equity, and was priced at $20.00 per unit. Total proceeds, net of selling commissions and the underwriters' management and underwriting fees, were approximately $244.7 million. Concurrently with the closing of the Offering, certain of the Plains Midstream Subsidiaries were merged into Plains Resources, which pursuant to the Agreement, sold the assets of these subsidiaries to Plains Marketing, L.P. in exchange for $93.7 million in cash and the assumption of related indebtedness. At the same time, the General Partner conveyed all of its interest in the All American Pipeline System and SJV Gathering System to the Operating Partnerships in exchange for (i) 6,974,239 common units, 10,020,619 subordinated units and an aggregate 2% general partner interest in the Partnership and the Operating Partnerships; (ii) the right to receive incentive distributions; and (iii) the assumption by the Operating Partnerships of $175 million of indebtedness incurred by the General Partner in connection with the Acquisition. In the aggregate, Plains Resources interests in the Partnership represent an effective 57.4% ownership of the Partnership's equity, and the Partnership is consolidated in the pro forma consolidated financial statements of Plains Resources. In addition to the $93.7 million paid to Plains Resources, the Partnership distributed approximately $148.0 million to the General Partner and paid approximately $3 million in expenses incurred in connection with the Offering. The General Partner used $110 million of the cash distributed to it to retire the remaining indebtedness incurred in connection with the acquisition of the All American Pipeline System and the SJV Gathering System, approximately $9.0 million to pay expenses incurred in connection with the formation of the Partnership, primarily related to debt and interest rate swap restructuring, and the balance, approximately $29.0 million, was distributed to Plains Resources which used the cash to repay indebtedness and for other general corporate purposes. The pro forma consolidated financial statements reflect the Acquisition and Offering and related transactions described above. The pro forma and Offering adjustments are based upon currently available information and certain estimates and assumptions, and therefore, the actual adjustments may differ from the unaudited pro forma and Offering adjustments. However, management believes that the assumptions provide a reasonable basis for presenting the significant effects of the transactions as contemplated and that the unaudited pro forma and Offering adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma consolidated financial statements. The pro forma consolidated financial statements do not purport to present the financial position or results of operations of Plains Resources had the transactions to be effected at the closing of the Offering actually been completed as of the dates indicated. In addition, the pro forma consolidated financial statements are not necessarily F-1 indicative of the results of the future operations of Plains Resources and reference should be made to the historical financial statements of Plains Resources included in Form 10-K for the year ended December 31, 1997, and included in Form 10-Q for the nine months ended September 30, 1998, filed with the Securities and Exchange Commission. The following pro forma and Offering adjustments have been prepared as if the Acquisition and Offering had taken place on September 30, 1998, in the case of the Pro Forma Consolidated Balance Sheet or as of January 1, 1997, in the case of the Pro Forma Consolidated Income Statements for the nine months ended September 30, 1998, and the year ended December 31, 1997. F-2 PLAINS RESOURCES INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED) SEPTEMBER 30, 1998 (IN THOUSANDS)
HISTORICAL PRO FORMA PLAINS PRO FORMA OFFERING AS RESOURCES ADJUSTMENTS PRO FORMA ADJUSTMENTS ADJUSTED ---------- ----------- --------- ----------- --------- ASSETS ------ CURRENT ASSETS Cash and cash equivalents $ 7,887 $ $ 7,887 $ 241,690 K $ 7,887 (226,678)K (15,012)L Accounts receivable 113,828 113,828 113,828 Inventory 29,020 29,020 29,020 Prepaids and other 506 506 506 ---------- ------- ---------- --------- ---------- Total current assets 151,241 -- 151,241 -- 151,241 ---------- ------- ---------- --------- ---------- PROPERTY AND EQUIPMENT Oil and natural gas properties--full cost method: Subject to amortization 562,575 562,575 562,575 Not subject to amortization 55,979 55,979 55,979 Crude oil pipeline, gathering and terminal assets 379,983 (6,060)H 373,923 373,923 Other property and equipment 8,813 8,813 8,813 ---------- ------- ---------- --------- ---------- 1,007,350 (6,060) 1,001,290 -- 1,001,290 Less allowance for depreciation, depletion and amortization (201,139) 6,060 H (195,079) (195,079) ---------- ------- ---------- --------- ---------- 806,211 -- 806,211 -- 806,211 ---------- ------- ---------- --------- ---------- OTHER ASSETS Pipeline linefill 52,479 52,479 52,479 Other 22,185 22,185 22,185 ---------- ------- ---------- --------- ---------- $1,032,116 $ -- $1,032,116 $ -- $1,032,116 ========== ======= ========== ========= ========== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES Accounts payable and other current liabilities $ 134,675 $ $ 134,675 $ $ 134,675 Interest payable 6,569 6,569 6,569 Royalties payable 3,922 3,922 3,922 Notes payable and other current obligations 12,011 12,011 12,011 ---------- ------- ---------- --------- ---------- Total current liabilities 157,177 -- 157,177 -- 157,177 BANK DEBT 439,500 439,500 (226,678)K 212,822 SUBORDINATED DEBT 202,488 202,488 202,488 OTHER LONG-TERM DEBT 2,556 2,556 2,556 OTHER LONG-TERM LIABILITIES 5,652 5,652 21,460 L 27,112 ---------- ------- ---------- --------- ---------- 807,373 -- 807,373 (205,218) 602,155 ---------- ------- ---------- --------- ---------- MINORITY INTEREST -- -- 241,690 K 171,653 (70,037)L ---------- ------- ---------- --------- ---------- SERIES E CUMULATIVE CONVERTIBLE PREFERRED STOCK, STATED AT LIQUIDATION PREFERENCE 85,000 85,000 85,000 ---------- ------- ---------- --------- ---------- NON-REDEEMABLE PREFERRED STOCK, COMMON STOCK AND OTHER STOCKHOLDERS' EQUTY Preferred stock 21,620 21,620 21,620 Common stock 1,685 1,685 1,685 Additional paid in capital 124,360 124,360 124,360 Retained earnings (deficit) (7,922) (7,922) 33,565 L 25,643 ---------- ------- ---------- --------- ---------- 139,743 -- 139,743 33,565 173,308 ---------- ------- ---------- --------- ---------- $1,032,116 $ -- $1,032,116 $ -- $1,032,116 ========== ======= ========== ========= ==========
See notes to pro forma consolidated financial statements. F-3 PLAINS RESOURCES INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED INCOME STATEMENT (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL ------------------------------------ PLAINS RESOURCES WINGFOOT ------------------- ----------- NINE MONTHS SIX MONTHS ENDED ENDED SEPTEMBER 30, JUNE 30, PRO FORMA 1998 1998 ADJUSTMENTS PRO FORMA ------------------- ----------- ----------- ------------------- REVENUE Oil and natural gas sales $ 77,719 $ -- $ -- $ 77,719 Marketing, transportation, storage and 698,274 374,654 62,995 A 1,135,923 terminalling revenues Interest and other income 739 -- 5 A 744 ----------- ---------- ---------- ------------ 776,732 374,654 63,000 1,214,386 ----------- ---------- ---------- ------------ EXPENSES Production expenses 38,604 -- 38,604 Marketing, transportation, storage and terminalling expenses 675,160 344,538 59,962 A 1,078,683 (977)F General and administrative 7,696 1,053 151 A 8,900 Depreciation, depletion and amortization 21,945 6,808 1,025 A 27,107 (7,833)B 5,162 C Interest expense 24,385 21,929 (21,929)D 33,553 9,168 J Minority interest in net income of consolidated subsidiary -- -- -- -- ----------- ---------- ---------- ------------ 767,790 374,328 44,729 1,186,847 ----------- ---------- ---------- ------------ INCOME BEFORE INCOME TAXES 8,942 326 18,271 27,539 Income tax expense 2,468 84 419 A 9,721 6,750 I ----------- ---------- ---------- ------------ NET INCOME 6,474 242 11,102 17,818 Less: cumulative preferred stock dividends 2,361 -- 4,644 G 7,005 ----------- ---------- ---------- ------------ NET INCOME AVAILABLE TO COMMMON STOCKHOLDERS $ 4,113 $ 242 $ 6,458 $ 10,813 =========== ========== ========== ============ Earnings per share: Basic $ 0.24 =========== Diluted $ 0.22 =========== Weighted Average Number of Common and Common Equivalent Shares: Basic 16,792 =========== Diluted 18,440 ===========
OFFERING PRO FORMA ADJUSTMENTS AS ADJUSTED ----------- ----------- REVENUE Oil and natural gas sales $ $ 77,719 Marketing, transportation, storage and terminalling revenues 1,135,923 Interest and other income 744 --------- ------------ -- 1,214,386 --------- ------------ EXPENSES Production expenses 38,604 Marketing, transportation, storage and terminalling expenses 1,078,683 General and administrative 8,900 Depreciation, depletion and amortization 495 P 27,602 Interest expense (9,728)M 23,825 Minority interest in net income of consolidated subsidiary 15,032 N 15,032 --------- ------------ 5,799 1,192,646 --------- ------------ INCOME BEFORE INCOME TAXES (5,799) 21,740 Income tax expense (2,261)O 7,460 --------- ------------ NET INCOME (3,538) 14,280 Less: cumulative preferred stock dividends 7,005 --------- ------------ NET INCOME AVAILABLE TO COMMMON STOCKHOLDERS $ (3,538) $ 7,275 ========= ============ Earnings per share: Basic $ 0.43 ============ Diluted $ 0.39 ============ Weighted Average Number of Common and Common Equivalent Shares: Basic 16,792 ============ Diluted 18,440 ============
See notes to pro forma consolidated financial statements. F-4 PLAINS RESOURCES INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED INCOME STATEMENT (UNAUDITED) FOR THE YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL --------------------------------------- PLAINS PRO FORMA RESOURCES WINGFOOT ADJUSTMENTS PRO FORMA ----------------- ------------- --------------- ------------------- REVENUE Oil and natural gas sales $ 109,403 $ -- $ $ 109,403 Marketing, transportation, storage and terminalling revenues 752,522 992,318 1,744,840 Interest and other income 319 -- 319 ------------ ------------ ---------- ------------ 862,244 992,318 -- 1,854,562 ------------ ------------ ---------- ------------ EXPENSES Production expenses 45,486 -- 45,486 Marketing, transportation, storage and terminalling expenses 740,042 923,152 391 E 1,662,282 (1,303)F General and administrative 8,340 2,767 (114)E 10,993 Depreciation, depletion and amortization 23,778 16,290 (16,290)B 32,729 8,951 C Impairment of pipeline assets and linefill -- 64,173 64,173 Interest expense 22,012 52,745 (52,745)D 34,236 12,224 J Minority interest in net loss of consolidated subsidiary -- -- -- ------------ ------------ ---------- ------------ 839,658 1,059,127 (48,886) 1,849,899 ------------ ------------ ---------- ------------ INCOME BEFORE INCOME TAXES 22,586 (66,809) 48,886 4,663 Income tax expense (benefit) 8,327 276 (6,784)I 1,819 ------------ ------------ ---------- ------------ NET INCOME 14,259 (67,085) 55,670 2,844 Less: cumulative preferred stock dividends 163 -- 8,075 G 8,238 ------------ ------------ ---------- ------------ NET INCOME AVAILABLE TO COMMMON STOCKHOLDERS $ 14,096 $ (67,085) $ 47,595 $ (5,394) ============ ============ ========== ============ Earnings per share: Basic $ 0.85 ============ Diluted $ 0.77 ============ Weighted Average Number of Common and Common Equivalent Shares: Basic 16,603 ============ Diluted 18,204 ============
OFFERING PRO FORMA ADJUSTMENTS AS ADJUSTED ----------- ----------- REVENUE Oil and natural gas sales $ $ 109,403 Marketing, transportation, storage and terminalling revenues 1,744,840 Interest and other income 319 ---------- ------------ -- 1,854,562 ---------- ------------ EXPENSES Production expenses 45,486 Marketing, transportation, storage and terminalling expenses 1,662,282 General and administrative 10,993 Depreciation, depletion and amortization 659 P 33,388 Impairment of pipeline assets and linefill 64,173 Interest expense (6,310)M 27,926 Minority interest in net loss of consolidated subsidiary (4,811)N (4,811) ---------- ------------ (10,462) 1,839,437 ---------- ------------ INCOME BEFORE INCOME TAXES 10,462 15,125 Income tax expense (benefit) 4,080 O 5,899 ---------- ------------ NET INCOME 6,382 9,226 Less: cumulative preferred stock dividends 8,238 ---------- ------------ NET INCOME AVAILABLE TO COMMMON STOCKHOLDERS $ 6,382 $ 988 ========== ============ Earnings per share: Basic $ 0.06 ============ Diluted $ 0.05 ============ Weighted Average Number of Common and Common Equivalent Shares: Basic 16,603 ============ Diluted 18,204 ============
See notes to pro forma consolidated financial statements. F-5 PLAINS RESOURCES INC. AND SUBSIDIARIES NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Pro Forma Adjustments Introduction In addition to the Acquisition, Formation and Offering adjustments below, Plains Resources estimates that incremental expenses will be incurred due to the Acquisition. Such amounts include estimated expenses associated with the operation of the Partnership as a separate public entity (e.g., costs of tax return preparation, audit fees, annual and quarterly reports to Unitholders, investor relations, and registrar and transfer agent fees), estimated expenses for issuance of letters of credit in excess of such amounts incurred by Plains Resources and Wingfoot due primarily to the elimination of Goodyear as a guarantor of Wingfoot's crude oil purchase obligations and additional estimated amounts included for insurance expenses related to the assets and operations of Wingfoot. The additional insurance expense reflects Goodyear's past practice of self insuring the assets and operations of Wingfoot. The pro forma and Offering adjustments do not give effect to these incremental expenses. Additionally, the pro forma consolidated income statement for the year ended December 31, 1997, does not include a pro forma adjustment to eliminate a non-cash impairment charge of $64.2 million related to the writedown of pipeline assets and linefill by Wingfoot in connection with the sale of Wingfoot by Goodyear to Plains Resources. However, based on Plains Resources' purchase price allocation of property and equipment, Plains Resources would not have incurred an impairment charge during 1997 had it actually acquired Wingfoot as of January 1, 1997. Acquisition A. The acquisition of the Celeron Companies was completed on July 30, 1998. As a result, the historical financial information of Plains Resources for the nine months ended September 30, 1998, includes the results of operations of the Celeron Companies from July 30, 1998, through September 30, 1998. The amounts below reflect the results of operations for periods not otherwise included in the historical financial information of Plains Resources or Wingfoot. PERIOD FROM JULY 1, 1998 TO JULY 30, 1998 (DATE OF ACQUISITION) --------------- Revenues........................... $62,995 Cost of Sales and Operations....... 59,962 ------- Gross Margin....................... 3,033 General and administrative......... 151 Depreciation and amortization...... 1,025 ------- Operating income................... 1,857 Interest and other income.......... 5 ------- Net income before taxes............ 1,862 Provision in lieu of income taxes.. 419 ------- Net income......................... $ 1,443 ======= B. Reflects the elimination of historical Wingfoot depreciation and amortization expense. C. Reflects pro forma depreciation and amortization expense based on the purchase price of the Wingfoot assets by Plains Resources. D. Reflects the elimination of interest expense on loans from Goodyear to Wingfoot. In connection with the Acquisition, Goodyear made a capital contribution of $866.1 million to Wingfoot. Concurrently, the related party debt and accrued interest of approximately $865.2 million was repaid in full to Goodyear on June 15, 1998. F-6 E. Reflects the elimination of expenses and credits associated with Wingfoot's post retirement pension, health and benefit plans in which Wingfoot's employees are no longer entitled to participate so that cost of sales and operations and general and administrative expense reflect the ongoing cost of employee benefits to Plains Resources. The credit reflected in 1997 relates to amounts earned by Wingfoot on its prepaid pension assets. F. Reflects the reduction in compensation and benefits expense due to the recent termination of personnel. Such amounts are based on historical expenses incurred by Wingfoot. The terminations occurred in August 1998 and Plains Resources has no plans to replace these personnel. The reduction in personnel is not expected to adversely impact Plains Resources' revenues or costs. G. Reflects dividends on the Series E Preferred Stock. Formation H. Reflects the transactions by which the Partnership obtains ownership of certain assets and liabilities of Plains Resources at net book value in exchange for 6,974,239 common units, 10,020,619 subordinated units and an aggregate 2% general partner interest in the Partnership and the Operating Partnerships resulting in Plains Resources having an aggregate 57.4% ownership in the Partnership and the Operating Partnerships. Accumulated depreciation in the amount of $6.1 million has been credited against the Property and Equipment balance to reflect the Partnership's bases in the assets. I. Reflects income tax expense on pro forma pre-tax income based on an effective tax rate of 39% which is the estimated tax rate of Plains Resources. For the nine months ended September 30, 1998, Plains Resources tax provision includes an approximate $1.0 million tax benefit due to a reduction in the valuation allowance reserved against its deferred tax asset, resulting in a reduction in the overall effective tax rate for such period. J. Reflects pro forma interest expense on borrowings of $175 million assumed from PAAI. PAAI used $110 million of the cash distributed to it in connection with the Offering to retire the remaining indebtedness incurred by PAAI in connection with the Acquisition. The Partnership has entered into a series of 10-year interest rate swaps which fix the LIBOR portion of the interest rate at a weighted average rate of 5.24% (6.99% after giving effect to the weighted average interest rate margin under the Partnership's Bank Credit Agreement). Offering K. Reflects (i) the net proceeds to the Partnership of $241.7 million from the issuance and sale of 13.1 million Common Units at an initial public offering price of $20.00 per Common Unit in the Offering, net of underwriters' discounts and commissions of approximately $17.0 million and Offering expenses of approximately $3.0 million (ii) the payment of formation and transaction expenses by Plains Resources in the amount of approximately $15.0 million and (iii) the subsequent paydown of debt which reduced interest expense for the periods. L. Reflects the economic gain of $70.0 million recognized by Plains Resources upon formation of the Partnership. Such gain is reduced by approximately $15.0 million in formation related expenses incurred by Plains Resources and approximately $21.5 million of deferred income tax expense, resulting in a net gain of approximately $33.6 million. Immediately upon formation of the Partnership, in the event of liquidation, all common unit holders participate equally in distributions, resulting in immediate dilution to the public common unit holders and an offsetting increase in the distributable capital to Plains Resources. The amount of gain recognized by Plains Resources represents the realized economic gain due to the dilution of the public unit holders. The formation related expenses incurred by Plains Resources consist primarily of amounts paid to settle interest rate swaps, debt prepayment penalty and associated legal fees and amounts due to certain key employees in connection with the successful formation of the Partnership. The income tax expense was based on an effective tax rate of 39% which is the estimated tax rate of Plains Resources. The gain on formation is not included in the pro forma consolidated income statements for the nine months ended September 30, 1998, and for the year ended December 31, 1997. M. Reflects the interest reduction resulting from the repayment of debt with proceeds from the Offering. N. Reflects the minority interest in the pro forma net income (loss) of the Partnership. F-7 O. Reflects income tax expense on pro forma as adjusted pre-tax income based on an effective tax rate of 39% which is the estimated tax rate of Plains Resources. P. Reflects amortization expense on debt issue costs incurred in connection with the assumption by the Partnership of $175 million of indebtedness of PAAI. F-8 EX-10.BB 2 CONTRIBUTION, CONVEYANCE & ASSUMPTION AGREEMENT CONTRIBUTION, CONVEYANCE AND ASSUMPTION AGREEMENT THIS CONTRIBUTION, CONVEYANCE AND ASSUMPTION AGREEMENT, dated as of November 23, 1998, is entered into by and among PLAINS RESOURCES INC., a Delaware corporation ("Plains Resources"), PLAINS ALL AMERICAN INC., a Delaware corporation ("PAAI"), PLAINS ALL AMERICAN PIPELINE, L.P., a Delaware limited partnership (the "Partnership"), PLAINS MARKETING, L.P., a Delaware limited partnership ("Plains Marketing"), ALL AMERICAN PIPELINE, L.P., a Texas limited partnership ("All American L.P."), PAAI LLC, a Delaware limited liability company ("PAAI LLC"), and GATHERING LLC, a Delaware limited liability company ("Gathering LLC"). RECITALS WHEREAS, PAAI and Plains Resources have formed the Partnership pursuant to the Delaware Revised Uniform Limited Partnership Act (the "Delaware Act") for the purpose of serving as the sole limited partner of Plains Marketing; WHEREAS, PAAI contributed $990.00 to the capital of the Partnership and received a 1% general partner interest and a 49% limited partner interest therein; and Plains Resources contributed $990.00 to the capital of the Partnership and received a 50% limited partner interest therein; WHEREAS, Plains Resources sold its 50% limited partner interest in the Partnership to Michael Patterson (the "Organizational Limited Partner"); WHEREAS, PAAI and the Partnership have heretofore formed Plains Marketing pursuant to the Delaware Act for the purpose of acquiring, owning and operating the midstream crude oil business and assets of Plains Resources and its subsidiaries, including, without limitation, the business of crude oil marketing, gathering, transportation, storage, terminaling and pipeline operation and the assets (other than the Plains Excluded Assets) of Plains Transportation, Plains Terminal, PLX Crude and PLX Ingleside (as defined herein) (the "Business"); WHEREAS, PAAI contributed $500 to the capital of Plains Marketing and received a 1% general partner interest and a 49% limited partner interest therein; and the Partnership contributed $500 to the capital of Plains Marketing and received a 50% limited partner interest therein; WHEREAS, All American Pipeline Company, a Texas corporation ("All American"), has previously formed Gathering LLC as a wholly owned subsidiary of All American and has caused its subsidiary Celeron Gathering Corporation, a Delaware corporation ("CGC"), to merge into Gathering LLC; WHEREAS, PAAI has previously formed PAAI LLC as a wholly-owned subsidiary of PAAI to hold one share of All American stock; WHEREAS, All American has previously adopted articles of conversion and converted to All American L.P. in which PAAI holds a .001% general partner interest and a 98.999% limited partner interest (such limited partner interest, the "All American LP Interest"), and PAAI LLC holds a 1% limited partner interest; WHEREAS, concurrently with the consummation of the transactions contemplated hereby, All American L.P. will assume $175 million of PAAI's outstanding debt and will distribute its ownership interest in Gathering LLC (the "Gathering LLC Interest") to PAAI; -2- WHEREAS, concurrently with the consummation of the transactions contemplated hereby, each of Plains Marketing & Transportation Inc., a Delaware corporation ("Plains Transportation"), Plains Terminal & Transfer Corporation, a Delaware corporation ("Plains Terminal"), PLX Crude Lines Inc., a Delaware corporation ("PLX Crude"), and PLX Ingleside, Inc., a Delaware corporation ("PLX Ingleside"), will be merged with and into Plains Resources; WHEREAS, concurrently with the consummation of the transactions contemplated hereby Celeron Trading & Transportation Company, a Delaware corporation ("CT&T"), shall be merged with and into PAAI; WHEREAS, concurrently with the consummation of the transactions contemplated hereby, PAAI and the Partnership have entered into that certain Amended and Restated Agreement of Limited Partnership of Plains Marketing (the "Operating Partnership Agreement"); WHEREAS, concurrently with the consummation of the transactions contemplated hereby, PAAI and the Organizational Limited Partner have entered into that certain Second Amended and Restated Agreement of Limited Partnership of the Partnership (the "Partnership Agreement"); NOW, THEREFORE, in consideration of their mutual undertakings and agreements hereunder, the parties to this Agreement undertake and agree as follows: ARTICLE I DEFINITIONS; CONCURRENT TRANSACTIONS 1.1 Definitions. The following capitalized terms shall have the meanings given below. "Agreement" means this Contribution, Conveyance and Assumption Agreement. -3- "All American" has the meaning assigned to such term in the Recitals to this Agreement. "Additional All American L.P. Interest" has the meaning assigned to such term in Section 2.3. "All American L.P." has the meaning assigned to such term in the opening paragraph of this Agreement. "All American LP Interest" has the meaning assigned to such term in the Recitals to this Agreement. "Assets" means the Plains Assets and the PAAI Assets. "Business" has the meaning assigned to such term in the Recitals to this Agreement. "CGC" has the meaning assigned to such term in the Recitals to this Agreement. "Common Units" means common limited partner interests in the Partnership. "Conveyance, Assignment and Bill of Sale" means a Conveyance, Assignment and Bill of Sale in recordable form from each of Plains Resources and PAAI, as the case may be, to Plains Marketing, the form of which is attached hereto as Exhibit A. "CT&T" has the meaning assigned to such term in the Recitals to this Agreement. "CT&T Assets" means all of the assets owned, leased or held by CT&T, as of the Effective Time, of every kind and description, whether tangible or intangible, whether real, personal or mixed, and wherever located, including, without limitation, all of the crude oil inventory (line fill) owned by CT&T and located in the crude oil pipeline system owned by All American L.P. "Cushing Terminal" means the crude oil terminal and storage facility located in Payne and Lincoln Counties, Oklahoma, including, without limitation, the real property and other property -4- interests described in that certain Conveyance, Assignment and Bill of Sale (Cushing) of even date herewith from Plains Resources to Plains Marketing (a copy of the form of which is attached hereto as Exhibit A) along with the Plains Midstream Subsidiaries' Assets described below that are a part of or are used exclusively in connection with the crude oil terminal and storage facility: (i) storage tanks, stations, substations, terminal facilities and related properties and assets, along with all crude oil inventory located in such facilities; (ii) all motor vehicles, tractors, trailers, tanks, railcars, other vehicles, machinery and related equipment, whether owned or leased; (iii) every contract, agreement, arrangement, grant, gift, trust or other arrangement or understanding of any kind; (iv) any and all rights, claims and causes of action under warranties, insurance policies, contracts and related rights; (v) communication equipment, computer equipment and software and leasehold interests therein; (vi) all know-how, every trade secret, every customer list and all other confidential information of every kind; (vii) every customer relationship, employee relationship, supplier relationship and other relationship of any kind; (viii) every other proprietary right of any kind; (ix) all governmental licenses, permits, approvals, franchises, registrations and authorizations of every kind; -5- (x) copies of all of the books, records, papers and instruments, including without limitation, accounting and financial records; (xi) any and all monies, rents, revenues, accounts receivable or other proceeds receivable; (xii) all deposits, prepayments and prepaid expenses; (xiii) all unbilled receivables; (xiv) all trade names, trademarks, service marks, logos, marks and symbols of any kind, together with all goodwill associated therewith and all other trade names, trademarks and service marks; (xv) all rights, benefits, privileges and appurtenances pertaining to any of the foregoing; excluding, however, any of such assets that constitute Plains Excluded Assets. "Delaware Act" has the meaning assigned to such term in the Recitals to this Agreement. "Effective Time" means 12:01 a.m. Eastern Standard Time on November 23, 1998. "Existing Indebtedness" means indebtedness, liabilities and obligations of PAAI under that certain $325 million Senior Secured Credit Facility dated July 30, 1998 with ING (U.S.) Capital Corporation, as Administrative Agent, executed in connection with the acquisition of all of the capital stock of CT&T and All American by PAAI. "Gathering LLC" has the meaning assigned to such term in the opening paragraph of this Agreement. -6- "Gathering LLC Interest" has the meaning assigned to such term in the Recitals to this Agreement. "Ingleside Terminal" means the crude oil terminal and storage facility located in San Patricio County, Texas, including, without limitation, the real property and other property interests described in that certain Conveyance, Assignment and Bill of Sale (Ingleside) of even date herewith from Plains Resources to Plains Marketing (a copy of the form of which is attached hereto as Exhibit A) along with the Plains Midstream Subsidiaries' Assets described below that are a part of or are used exclusively in connection with the crude oil terminal and storage facility: (i) storage tanks, stations, substations, terminal facilities and related properties and assets, along with all crude oil inventory located in such facilities; (ii) all motor vehicles, tractors, trailers, tanks, railcars, other vehicles, machinery and related equipment, whether owned or leased; (iii) every contract, agreement, arrangement, grant, gift, trust or other arrangement or understanding of any kind; (iv) any and all rights, claims and causes of action under warranties, insurance policies, contracts and related rights; (v) communication equipment, computer equipment and software and leasehold interests therein; (vi) all know-how, every trade secret, every customer list and all other confidential information of every kind; (vii) every customer relationship, employee relationship, supplier relationship and other relationship of any kind; -7- (viii) every other proprietary right of any kind; (ix) all governmental licenses, permits, approvals, franchises, registrations and authorizations of every kind; (x) copies of all of the books, records, papers and instruments, including without limitation, accounting and financial records; (xi) any and all monies, rents, revenues, accounts receivable or other proceeds receivable; (xii) all deposits, prepayments and prepaid expenses; (xiii) all unbilled receivables; (xiv) all trade names, trademarks, service marks, logos, marks and symbols of any kind, together with all goodwill associated therewith and all other trade names, trademarks and service marks; (xv) all rights, benefits, privileges and appurtenances pertaining to any of the foregoing; excluding, however, any of such assets that constitute Plains Excluded Assets. "Laws" means any and all laws, statutes, ordinances, rules or regulations promulgated by a governmental authority, orders of a governmental authority, judicial decisions, decisions of arbitrators or determinations of any governmental authority or court. "Operating Partnership Agreement" has the meaning assigned to such term in the Recitals to this Agreement. "Organizational Limited Partner" has the meaning assigned to such term in the Recitals to this Agreement. -8- "PAAI" has the meaning assigned to such term in the opening paragraph of this Agreement. "PAAI Assets" means the CT&T Assets and the Gathering LLC Interest of PAAI. "PAAI Assumed Liabilities" means all of PAAI's liabilities arising from or relating to the PAAI Assets or the Business, as of the Effective Time, of every kind, character and description, whether known or unknown, accrued or contingent, and whether or not reflected on the books and records of PAAI as of the Effective Time, excluding, however, any of such liabilities that constitute PAAI Excluded Liabilities. "PAAI Excluded Liabilities" means (i) all of the liabilities and obligations of CT&T and CGC for the Existing Indebtedness, (ii) all federal, state and local income tax liabilities attributable to operation of the PAAI Assets prior to the Effective Time, including any such income tax liabilities that may result from the consummation of the transactions contemplated by this Agreement and (iii) all of the liabilities that arise pursuant to the indemnification obligation of PAAI under the Omnibus Agreement dated of even date with this Agreement among Plains Resources, PAAI, the Partnership, Plains Marketing and All American L.P. "PAAI LLC" has the meaning assigned to such term in the Recitals to this Agreement. "PAAI OLP Interest" has the meaning assigned to such term in Section 2.1. "Partnership" has the meaning assigned to such term in the opening paragraph of this Agreement. "Partnership Agreement" has the meaning assigned to such term in the Recitals to this Agreement. -9- "Plains Assets" means (a) the Cushing Terminal and the Ingleside Terminal and (b) the Plains Midstream Subsidiaries' Assets described below, to the extent the following comprise a part of or are used exclusively in connection with the operation of the Business, and without duplication of the Cushing Terminal and the Ingleside Terminal: (i) the real property and other property interests described in that certain Conveyance, Assignment and Bill of Sale (Other Assets) of even date herewith from Plains Resources to Plains Marketing; (ii) storage tanks, stations, substations, terminal facilities and related properties and assets, along with all crude oil inventory located in such facilities; (iii) all motor vehicles, tractors, trailers, tanks, railcars, other vehicles, machinery and related equipment, whether owned or leased; (iv) every contract, agreement, arrangement, grant, gift, trust or other arrangement or understanding of any kind; (v) any and all rights, claims and causes of action under warranties, insurance policies, contracts or related rights; (vi) communication equipment, computer equipment and software and leasehold interests therein; (vii) all know-how, every trade secret, every customer list and all other confidential information of every kind; (viii) every customer relationship, employee relationship, supplier relationship and other relationship of any kind; (ix) every other proprietary right of any kind; -10- (x) all governmental licenses, permits, approvals, franchises, registrations and authorizations of every kind; (xi) copies of all of the books, records, papers and instruments, including without limitation, accounting and financial records; (xii) any and all monies, rents, revenues, accounts receivable or other proceeds receivable; (xiii) all deposits, prepayments and prepaid expenses; (xiv) all unbilled receivables; (xv) all trade names, trademarks, service marks, logos, marks and symbols of any kind, together with all goodwill associated therewith and all other trade names, trademarks and service marks; (xvi) all rights, benefits, privileges and appurtenances pertaining to any of the foregoing; excluding, however, any of such assets that constitute Plains Excluded Assets. "Plains Assumed Liabilities" means all of Plains Resources' liabilities arising from or relating to the Plains Assets or the Business, as of the Effective Time, of every kind, character and description, whether known or unknown, accrued or contingent, and whether or not reflected on the books and records of Plains Resources as of the Effective Time, specifically including the indebtedness, obligations and liabilities under that certain Credit Agreement dated July 30, 1998 among Plains Transportation, BankBoston, N.A., as Administrative Agent and certain other Agents and Lenders party thereto providing for loans and letters of credit up to the amount of $175 million, excluding, however, any of such liabilities that constitute Plains Excluded Liabilities. -11- "Plains Excluded Assets" means the Employment Agreement between Plains Resources and Harry Pefanis. "Plains Excluded Liabilities" means (i) all of the liabilities that arise pursuant to the indemnification obligations of Plains Resources under the Omnibus Agreement dated of even date with this Agreement among Plains Resources, PAAI, the Partnership, Plains Marketing and All American L.P., (ii) the Subsidiary Debt and (iii) all federal, state and local income tax liabilities attributable to operation of the Plains Assets prior to the Effective Time, including any such income tax liabilities that may result from the consummation of the transactions contemplated by this Agreement. "Plains Grantors" means Plains Resources and PAAI. "Plains Marketing" has the meaning assigned to such term in the opening paragraph of this Agreement. "Plains Midstream Subsidiaries" means, collectively, Plains Transportation, Plains Terminal, PLX Crude and PLX Ingleside. "Plains Midstream Subsidiaries' Assets" means, collectively, all of the assets, properties, titles, interests, benefits and rights owned by each of the Plains Midstream Subsidiaries at the time of its merger into Plains Resources, which, as a result of such merger, became the assets, properties, titles, interests, benefits and rights of Plains Resources. "Plains Resources" has the meaning assigned to such term in the opening paragraph of this Agreement. "Plains Terminal" has the meaning assigned to such term in the Recitals to this Agreement. -12- "Plains Transportation" has the meaning assigned to such term in the Recitals to this Agreement. "PLX Crude" has the meaning assigned to such term in the Recitals to this Agreement. "PLX Ingleside" has the meaning assigned to such term in the Recitals to this Agreement. "Restriction" has the meaning assigned to such term in Section 9.2. "Restriction-Asset" has the meaning assigned to such term in Section 9.2. "Specific Conveyances" has the meaning assigned to such term in Section 2.9. "Subordinated Units" means subordinated limited partner interests in the Partnership. "Subsidiary Debt" shall mean (i) all indebtedness of the Plains Midstream Subsidiaries owed to Plains Resources that was extinguished in the merger of the Plains Midstream Subsidiaries into Plains Resources and (ii) all indebtedness owed by the Plains Midstream Subsidiaries to affiliates of Plains Resources, other than the Plains Midstream Subsidiaries. 1.2 Concurrent Transactions. (a) All American L.P. hereby assumes and agrees to pay $175 million of Existing Indebtedness. (b) All American L.P. hereby distributes 100% of its ownership interest in Gathering LLC to PAAI. -13- ARTICLE II CONTRIBUTIONS AND SALE OF ASSETS 2.1 Contribution of Assets by PAAI to Plains Marketing. PAAI hereby grants, contributes, transfers and conveys to Plains Marketing, its successors and assigns, for its and their own use forever, all right, title and interest in and to the PAAI Assets in exchange for (i) the continuation of a 1.0101% general partner interest and a limited partner interest (such limited partner interest, the "PAAI OLP Interest") in Plains Marketing and (ii) other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and Plains Marketing hereby accepts the PAAI Assets, as a contribution to the capital of Plains Marketing. TO HAVE AND TO HOLD the PAAI Assets unto Plains Marketing, its successors and assigns, together with all and singular the rights and appurtenances thereto in any wise belonging, subject, however, to the terms and conditions stated in this Agreement, forever. 2.2 Contribution by PAAI to the Partnership. PAAI hereby grants, contributes, transfers and conveys to the Partnership, its successors and assigns, for its and their own use forever, all right, title and interest of PAAI in and to the PAAI OLP Interest and the All American LP Interest in exchange for (i) a 1% general partner interest in the Partnership, (ii) 9,859,581 Subordinated Units and 6,974,239 Common Units and (iii) other good and valuable consideration, the sufficiency of which is hereby acknowledged, and the Partnership hereby accepts the PAAI OLP Interest and the All American LP Interest, as a contribution to the capital of the Partnership. TO HAVE AND TO HOLD the PAAI OLP Interest and the All American L.P. Interest unto the Partnership, its successors and assigns, together with all and singular the rights and -14- appurtenances thereto in anywise belonging, subject, however, to the terms and conditions stated in this Agreement, forever. 2.3 Contribution by PAAI LLC to the Partnership. PAAI LLC hereby grants, contributes, transfers and conveys to the Partnership, its successors and assigns, for its and their own use forever, all right, title and interest of PAAI LLC in and to its 1% limited partner interest (the "Additional All American L.P. Interest") in All American L.P. in exchange for 170,038 Subordinated Units and other good and valuable consideration, the sufficiency of which is hereby acknowledged, and the Partnership hereby accepts the 1% limited partner interest in All American L.P., as a contribution to the capital of the Partnership. TO HAVE AND TO HOLD the Additional All American L.P. Interest unto the Partnership, its successors and assigns, together with all and singular the rights and appurtenances thereto in anywise belonging, subject, however, to the terms and conditions stated in this Agreement, forever. 2.4 Public Cash Contribution. The parties to this Agreement acknowledge a cash contribution of $244,689,500 from the public in exchange for Common Units. 2.5 Partnership Cash Distribution and Contribution. PAAI acknowledges that the Partnership has distributed cash in the amount of $147,989,500 to PAAI as a reimbursement for certain capital expenditures and Plains Marketing acknowledges that the Partnership has contributed (i) cash in the amount of $96,700,000 to Plains Marketing and (ii) all of the syndication costs incurred by the Partnership in connection with the public offering of the Common Units. 2.6 Sale of Assets by Plains Resources. Plains Resources hereby sells and conveys to Plains Marketing, its successors and assigns, for its and their own use forever, all right, title and -15- interest in and to the Plains Assets in exchange for (i) the payment of $93.7 million in cash, (ii) the assumption of certain liabilities by Plains Marketing as provided in Section 4.1 and (iii) other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged. TO HAVE AND TO HOLD the Plains Assets unto Plains Marketing, its successors and assigns, together with all and singular, the rights and appurtenances thereto in any wise belonging, subject, however, to the terms and conditions stated in this Agreement, forever. 2.7 PAAI Use of Proceeds. The parties to this Agreement acknowledge that PAAI has used a portion of the cash received from the Partnership in Section 2.5 above to discharge approximately $110 million of the Existing Indebtedness plus all accrued and unpaid interest, prepayment premiums, fees and expenses in connection with the Existing Indebtedness and has distributed the balance of cash to Plains Resources. 2.8 Contribution by the Partnership to Plains Marketing. The Partnership hereby grants, contributes, transfers and conveys to Plains Marketing, its successors and assigns, for its and their own use forever, all right, title and interest of the Partnership in and to the All American LP Interest and the Additional All American L.P. Interest, as a contribution to the capital of Plains Marketing, and Plains Marketing hereby accepts the All American LP Interest and the Additional All American L.P. Interest, as a contribution to the capital of Plains Marketing. TO HAVE AND TO HOLD the All American LP Interest and the Additional All American L.P. Interest, unto Plains Marketing, its successors and assigns, together with all and singular the rights and appurtenances thereto in anywise belonging, subject, however, to the terms and conditions stated in this Agreement, forever. -16- 2.9 Specific Conveyances. To further evidence the asset conveyances recited in this Article II and more fully and effectively convey record title with respect to the real property included in the Assets, Plains Resources has executed and delivered to Plains Marketing certain Conveyance, Assignment and Bill of Sale instruments (the "Specific Conveyances"). The Specific Conveyances shall evidence and perfect the sale and contribution made by this Agreement and shall not constitute a second conveyance of the Plains Assets or interests therein and shall be subject to the terms of this Agreement. The Specific Conveyances are not intended to modify, and shall not modify, any of the terms, covenants and conditions herein set forth and are not intended to create, and shall not create, any additional covenants or warranties of or by Plains Resources. ARTICLE III ADDITIONAL TRANSACTIONS 3.1 Merger of Gathering LLC and Plains Marketing. The parties to this Agreement acknowledge that, concurrent with the transactions referred to in Article II of this Agreement, Gathering LLC has been merged with and into Plains Marketing. 3.2 PAAI Contribution to PAAI LLC. PAAI hereby grants, contributes, transfers and conveys to PAAI LLC, its successors and assigns, for its and their own use forever, all right, title and interest of PAAI in and to all of the Subordinated Units and Common Units held by PAAI as a contribution to the capital of PAAI LLC, and PAAI LLC hereby accepts all of such Subordinated Units and Common Units, as a contribution to the capital of PAAI LLC. TO HAVE AND TO HOLD such Subordinated Units and Common Units unto PAAI LLC, its successors and assigns, together with all and singular the rights and appurtenances thereto -17- in anywise belonging, subject, however, to the terms and conditions stated in this Agreement, forever. 3.3 All American L.P. Refinancing. The parties to this Agreement acknowledge that All American L.P. shall refinance the portion of Existing Indebtedness assumed in Section 1.2(a) above. ARTICLE IV ASSUMPTION OF CERTAIN LIABILITIES 4.1. Assumption of Certain Plains Liabilities by Plains Marketing. In connection with the sale and transfer of the Plains Assets to Plains Marketing by Plains Resources, Plains Marketing hereby assumes and agrees to duly and timely pay, perform and discharge the Plains Assumed Liabilities, to the full extent that Plains Resources has been heretofore or would have been in the future, were it not for the execution and delivery of this Agreement, obligated to pay, perform and discharge the Plains Assumed Liabilities; provided, however, that said assumption and agreement to duly and timely pay, perform and discharge the Plains Assumed Liabilities shall not (i) increase the obligation of Plains Marketing with respect to the Plains Assumed Liabilities beyond that of Plains Resources, (ii) waive any valid defense that was available to Plains Resources with respect to the Plains Assumed Liabilities or (iii) enlarge any rights or remedies of any third party under any of the Plains Assumed Liabilities. 4.2. Assumption of Certain PAAI Liabilities by Plains Marketing. In connection with the contribution and transfer of the PAAI Assets to Plains Marketing by PAAI, Plains Marketing hereby assumes and agrees to duly and timely pay, perform and discharge the PAAI Assumed Liabilities, to the full extent that PAAI has been heretofore or would have been in the future, were it not for the execution and delivery of this Agreement, obligated to pay, perform and discharge the PAAI -18- Assumed Liabilities; provided, however, that said assumption and agreement to duly and timely pay, perform and discharge the PAAI Assumed Liabilities shall not (i) increase the obligation of Plains Marketing with respect to the PAAI Assumed Liabilities beyond that of PAAI, (ii) waive any valid defense that was available to PAAI with respect to the PAAI Assumed Liabilities or (iii) enlarge any rights or remedies of any third party under any of the PAAI Assumed Liabilities. ARTICLE V INDEMNIFICATION 5.1. Indemnification With Respect to Plains Excluded Liabilities. Plains Resources shall indemnify, defend and hold harmless the Partnership, Plains Marketing, their respective officers and directors and their respective successors and assigns from and against any and all claims, demands, costs, liabilities (including, without limitation, liabilities arising by way of active or passive negligence) and expenses (including court costs and reasonable attorneys' fees) of every kind, character and description, whether known or unknown, accrued or contingent, and whether or not reflected on the books and records of Plains Resources as of the Effective Time, arising from or relating to (i) the Plains Excluded Liabilities or (ii) any failure of Plains Resources to comply with any applicable bulk sales law of any jurisdiction in connection with the transfer of the Plains Assets to Plains Marketing. 5.2. Indemnification With Respect to PAAI Excluded Liabilities. PAAI shall indemnify, defend and hold harmless the Partnership, Plains Marketing, their respective officers and directors and their respective successors and assigns from and against any and all claims, demands, costs, liabilities (including, without limitation, liabilities arising by way of active or passive negligence) and expenses (including court costs and reasonable attorneys' fees) of every kind, character and -19- description, whether known or unknown, accrued or contingent, and whether or not reflected on the books and records of PAAI as of the Effective Time, arising from or relating to (i) the PAAI Excluded Liabilities or (ii) any failure of PAAI to comply with any applicable bulk sales law of any jurisdiction in connection with the transfer of the PAAI Assets to Plains Marketing. 5.3. Indemnification With Respect to Plains Assumed Liabilities. Plains Marketing shall indemnify, defend and hold harmless Plains Resources, its officers and directors, its successors and assigns from and against any and all claims, demands, costs, liabilities (including, without limitation, liabilities arising by way of active or passive negligence) and expenses (including court costs and reasonable attorneys' fees) of every kind, character and description, whether known or unknown, accrued or contingent, and whether or not reflected on the books and records of Plains Resources as of the Effective Time, arising from or relating to the Plains Assumed Liabilities. 5.4. Indemnification With Respect to PAAI Assumed Liabilities. Plains Marketing shall indemnify, defend and hold harmless PAAI, its officers and directors, its successors and assigns from and against any and all claims, demands, costs, liabilities (including, without limitation, liabilities arising by way of active or passive negligence) and expenses (including court costs and reasonable attorneys' fees) of every kind, character and description, whether known or unknown, accrued or contingent, and whether or not reflected on the books and records of PAAI as of the Effective Time, arising from or relating to the PAAI Assumed Liabilities. -20- ARTICLE VI TITLE MATTERS 6.1. Encumbrances. The contribution and sale of the Assets made under this Agreement are made expressly subject to (a) all recorded and unrecorded liens, encumbrances, agreements, defects, restrictions, adverse claims and all laws, rules, regulations, ordinances, judgments and orders of governmental authorities or tribunals having or asserting jurisdiction over the Assets or the Business and operations conducted thereon or therewith, in each case to the extent the same are valid and enforceable and affect the Assets, including, without limitation, all matters that a current on the ground survey or visual inspection of the Assets would reflect, (b) the Plains Assumed Liabilities, (c) the PAAI Assumed Liabilities and (d) all matters contained in the Specific Conveyances. 6.2. Disclaimer of Warranties; Subrogation; Waiver of Bulk Sales Laws. (a) THE PLAINS GRANTORS ARE CONVEYING THE ASSETS "AS IS" WITHOUT REPRESENTATION OR WARRANTY, WHETHER EXPRESS, IMPLIED OR STATUTORY (ALL OF WHICH THE PLAINS GRANTORS HEREBY DISCLAIM), AS TO (i) TITLE, (ii) FITNESS FOR ANY PARTICULAR PURPOSE OR MERCHANTABILITY OR DESIGN OR QUALITY, OR (iii) ANY OTHER MATTER WHATSOEVER. THE PROVISIONS OF THIS SECTION 6.2 HAVE BEEN NEGOTIATED BY PLAINS MARKETING AND THE PLAINS GRANTORS AFTER DUE CONSIDERATION AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY REPRESENTATIONS OR WARRANTIES OF THE PLAINS GRANTORS, WHETHER EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO -21- THE ASSETS THAT MAY ARISE PURSUANT TO ANY LAW NOW OR HEREAFTER IN EFFECT, OR OTHERWISE, EXCEPT AS EXPRESSLY SET FORTH HEREIN. (b) The contribution of the Assets made under this Agreement is made with full rights of substitution and subrogation of Plains Marketing, and all persons claiming by, through and under Plains Marketing, to the extent assignable, in and to all covenants and warranties by the predecessors-in- title of the Plains Grantors, and with full subrogation of all rights accruing under applicable statutes of limitation and all rights of action of warranty against all former owners of the Assets. (c) The Plains Grantors and Plains Marketing agree that the disclaimers contained in this Section 6.2 are "conspicuous" disclaimers. Any covenants implied by statute or law by the use of the words "grant," "convey," "bargain," "sell," "assign," "transfer," "deliver," or "set over" or any of them or any other words used in this Agreement are hereby expressly disclaimed, waived and negated. (d) Each of the parties hereto hereby waives compliance with any applicable bulk sales law or any similar law in any applicable jurisdiction in respect of the transactions contemplated by this Agreement. ARTICLE VII FURTHER ASSURANCES 7.1. Further Assurances. From time to time after the date hereof, and without any further consideration, Plains Resources or PAAI, as the case may be, shall execute, acknowledge and deliver all such additional deeds, assignments, bills of sale, conveyances, instruments, notices, releases, acquittances and other documents, and will do all such other acts and things, all in accordance with -22- applicable law, as may be necessary or appropriate (i) more fully to assure Plains Marketing, its successors and assigns, all of the properties, rights, titles, interests, estates, remedies, powers and privileges by this Agreement granted to Plains Marketing or intended so to be and (ii) more fully and effectively to vest in the Partnership and its successors and assigns beneficial and record title to the interests hereby contributed and assigned to the Partnership or intended so to be and to more fully and effectively carry out the purposes and intent of this Agreement. 7.2. Partnership and Operating Partnership Assurances. From time to time after the date hereof, and without any further consideration, the Partnership and Plains Marketing shall execute, acknowledge and deliver all such additional instruments, notices and other documents, and will do all such other acts and things, all in accordance with applicable law, as may be necessary or appropriate to more fully and effectively carry out the purposes and intent of this Agreement. 7.3. Post-Closing Adjustment. On or before December 31, 1998, PAAI shall prepare balance sheets as of the Effective Time for All American L.P. and Plains Marketing and determine the aggregate excess net working capital of All American L.P. and Plains Marketing. In the event such aggregate excess net working capital of All American L.P. and Plains Marketing does not equal $8 million, PAAI shall either (i) if the aggregate excess net working capital is less than $8 million, contribute cash sufficient to cause such aggregate excess net working capital to equal $8 million, or (ii) if the aggregate excess net working capital is more than $8 million, be distributed cash in an amount equal to the excess over $8 million. -23- ARTICLE VIII POWER OF ATTORNEY The Plains Grantors hereby constitute and appoint Plains Marketing, its successors and assigns, their true and lawful attorney-in-fact with full power of substitution for it and in its name, place and stead or otherwise on behalf of the Plains Grantors, their successors and assigns, and for the benefit of Plains Marketing, its successors and assigns, to demand and receive from time to time the Assets and to execute in the name of the Plains Grantors and their successors and assigns instruments of conveyance, instruments of further assurance and to give receipts and releases in respect of the same, and from time to time to institute and prosecute in the name of Plains Marketing or the Plains Grantors for the benefit of Plains Marketing, as may be appropriate, any and all proceedings at law, in equity or otherwise which Plains Marketing, its successors and assigns may deem proper in order to collect, assert or enforce any claims, rights or titles of any kind in and to the Assets, and to defend and compromise any and all actions, suits or proceedings in respect of any of the Assets and to do any and all such acts and things in furtherance of this Agreement as Plains Marketing, its successors or assigns shall deem advisable. The Plains Grantors hereby declare that the appointment hereby made and the powers hereby granted are coupled with an interest and are and shall be irrevocable and perpetual and shall not be terminated by any act of the Plains Grantors, their successors or assigns or by operation of law. -24- ARTICLE IX MISCELLANEOUS 9.1. Order of Completion of Transactions; Effective Time. (a) The transactions provided for in Articles I, II, III and IV of this Agreement shall be completed on the date of this Agreement in the following order: First, the transactions provided for in Article I shall be completed; Second, the transactions provided for in Article II shall be completed; Third, the transactions provided for in Article III shall be completed; and Fourth, the transactions provided for in Article IV shall be completed. (b) The sale of the Assets to Plains Marketing shall be effective for all purposes as of the Effective Time. 9.2. Consents; Restriction on Assignment. If there are prohibitions against or conditions to the conveyance of one or more portions of the Assets without the prior written consent of third parties, including, without limitation, governmental agencies (other than consents of a ministerial nature which are normally granted in the ordinary course of business), which if not satisfied would result in a breach of such prohibitions or conditions or would give an outside party the right to terminate Plains Marketing's rights with respect to such portion of the Assets (herein called a "Restriction"), then any provision contained in this Agreement to the contrary notwithstanding, the transfer of title to or interest in each such portion of the Assets (herein called the "Restriction-Asset") pursuant to this Agreement shall not become effective unless and until such Restriction is satisfied, waived or no longer applies. When and if such a Restriction is so satisfied, waived or no longer applies, to the extent permitted by applicable law and any applicable contractual provisions, -25- the assignment of the Restriction-Asset subject thereto shall become effective automatically as of the Effective Time, without further action on the part of Plains Marketing or either of the Plains Grantors. The Plains Grantors and Plains Marketing agree to use their reasonable best efforts to obtain satisfaction of any Restriction on a timely basis. The description of any portion of the Assets as a "Restriction-Asset" shall not be construed as an admission that any Restriction exists with respect to the transfer of such portion of the Assets. In the event that any Restriction-Asset exists, the Plains Grantors agree to hold such Restriction-Asset in trust for the exclusive benefit of Plains Marketing and to otherwise use their reasonable best efforts to provide Plains Marketing with the benefits thereof, and the Plains Grantors will enter into other agreements, or take such other action as they deem necessary, in order to help ensure that Plains Marketing has the assets and concomitant rights necessary to enable it to operate the Assets contributed to Plains Marketing in all material respects as they were operated prior to the Effective Time. 9.3. Costs. Plains Marketing shall pay all sales, use and similar taxes arising out of the contributions, conveyances and deliveries to be made hereunder, and shall pay all documentary, filing, recording, transfer, deed, and conveyance taxes and fees required in connection therewith. In addition, Plains Marketing shall be responsible for all costs, liabilities and expenses (including court costs and reasonable attorneys' fees) incurred in connection with the satisfaction or waiver of any Restriction pursuant to Section 9.2. 9.4. Headings: References: Interpretation. All Article and Section headings in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any of the provisions hereof. The words "hereof," "herein" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, -26- including, without limitation, all Schedules and Exhibits attached hereto, and not to any particular provision of this Agreement. All references herein to Articles, Sections, Schedules and Exhibits shall, unless the context requires a different construction, be deemed to be references to the Articles and Sections of this Agreement and the Schedules and Exhibits attached hereto, and all such Schedules and Exhibits attached hereto are hereby incorporated herein and made a part hereof for all purposes. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders, and the singular shall include the plural and vice versa. The use herein of the word "including" following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as "without limitation," "but not limited to," or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter. 9.5. Successors and Assigns. The Agreement shall be binding upon and inure to the benefit of the parties signatory hereto and their respective successors and assigns. 9.6. No Third Party Rights. The provisions of this Agreement are intended to bind the parties signatory hereto as to each other and are not intended to and do not create rights in any other person or confer upon any other person any benefits, rights or remedies and no person is or is intended to be a third party beneficiary of any of the provisions of this Agreement. 9.7. Counterparts. This Agreement may be executed in any number of counterparts, all of which together shall constitute one agreement binding on the parties hereto. -27- 9.8. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas applicable to contracts made and to be performed wholly within such state without giving effect to conflict of law principles thereof, except to the extent that it is mandatory that the law of some other jurisdiction, wherein the Assets are located, shall apply. 9.9. Severability. If any of the provisions of this Agreement are held by any court of competent jurisdiction to contravene, or to be invalid under, the laws of any political body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not invalidate the entire Agreement. Instead, this Agreement shall be construed as if it did not contain the particular provision or provisions held to be invalid, and an equitable adjustment shall be made and necessary provision added so as to give effect to the intention of the parties as expressed in this Agreement at the time of execution of this Agreement. 9.10. Deed; Bill of Sale; Assignment. To the extent required by applicable law, this Agreement shall also constitute a "deed," "bill of sale" or "assignment" of the Assets. 9.11. Amendment or Modification. This Agreement may be amended or modified from time to time only by the written agreement of all the parties hereto. 9.12 Integration. This Agreement supersedes all previous understandings or agreements between the parties, whether oral or written, with respect to its subject matter. This document is an integrated agreement which contains the entire understanding of the parties. No understanding, representation, promise or agreement, whether oral or written, is intended to be or shall be included in or form part of this Agreement unless it is contained in a written amendment hereto executed by the parties hereto after the date of this Agreement. -28- IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the date first above written. PLAINS RESOURCES INC., a Delaware corporation By: /s/ Phillip D. Kramer ------------------------------------------- Phillip D. Kramer, Executive Vice President and Chief Financial Officer PLAINS MARKETING, L.P., a Delaware limited partnership By: Plains All American Inc., a Delaware corporation, as general partner By: /s/ Phillip D. Kramer --------------------------------------- Phillip D. Kramer, Executive Vice President and Chief Financial Officer PLAINS ALL AMERICAN PIPELINE, L.P., a Delaware limited partnership By: Plains All American Inc., a Delaware corporation, as general partner By: /s/ Phillip D. Kramer ---------------------------------------- Phillip D. Kramer, Executive Vice President and Chief Financial Officer -29- ALL AMERICAN PIPELINE, L.P., a Texas limited partnership By: Plains All American Inc., a Delaware corporation, as general partner By: /s/ Phillip D. Kramer ----------------------------------------- Phillip D. Kramer, Executive Vice President and Chief Financial Officer PLAINS ALL AMERICAN INC., a Delaware corporation By: /s/ Phillip D. Kramer -------------------------------------------- Phillip D. Kramer, Executive Vice President and Chief Financial Officer PAAI LLC, a Delaware limited liability company By: Plains All American Inc., a Delaware corporation, its sole member By: /s/ Phillip D. Kramer ---------------------------------------- Phillip D. Kramer, Executive Vice President and Chief Financial Officer GATHERING LLC, a Delaware limited liability company By: Plains All American Inc., a Delaware corporation, its sole member By: /s/ Phillip D. Kramer --------------------------------------- Phillip D. Kramer, Executive Vice President and Chief Financial Officer -30- EX-10.CC 3 CRUDE OIL MARKETING AGREEMENT ================================================================================ CRUDE OIL MARKETING AGREEMENT among PLAINS RESOURCES INC. PLAINS ILLINOIS INC. STOCKER RESOURCES, L.P. CALUMET FLORIDA, INC. and PLAINS MARKETING, L.P. ================================================================================ TABLE OF CONTENTS ARTICLE I DEFINITIONS -5- 1.1 Definitions -5- ARTICLE II PURCHASE AND SALE -3- 2.1 Purchase and Sale -3- 2.2 Addition or Release of Properties or Sellers -4- 2.3 Delivery -5- 2.4 Price -5- 2.5 Payment -5- 2.6 General Provisions -6- 2.7 No Restrictions -6- ARTICLE III RENEGOTIATION -6- ARTICLE IV ADDITIONAL SERVICES -7- 4.1 Additional Services -7- 4.2 Sellers Indemnity -7- ARTICLE V TERM -8- ARTICLE VI REPRESENTATIONS AND WARRANTIES -8- 6.1 Representations and Warranties of Sellers -8- 6.2 Representations and Warranties of Buyer -9- ARTICLE VII CREDIT REQUIREMENTS -9- ARTICLE VIII SPECIFIED EVENTS -10- 8.1 Buyer Specified Events -10- 8.2 Seller Specified Events -11- 8.3 Early Termination -12- 8.4 Specified Damages -12- ARTICLE IX FORCE MAJEURE -12- 9.1 Excuse for Nonperformance -12- 9.2 Definition -12- 9.3 Notice and Cure -13- ARTICLE X GENERAL PROVISIONS -13- 10.1 No Survival of Representations and Warranties -13- 10.2 Headings -13- 10.3 Rights and Remedies Cumulative -13- 10.4 Entire Agreement; Supersedure -13- 10.5 Severability -13- 10.6 Choice of Law; Submission to Jurisdiction -13- 10.7 Binding Agreement -14- 10.8 No Agency -14- 10.9 Notice -14- 10.10 Effect of Waiver or Consent -14- 10.11 Assignment -14- 10.12 Counterparts -14- 10.13 Amendment or Modification -15- 10.14 Further Assurances -15- 10.15 Withholding or Granting of Consent -15- 10.16 U.S. Currency -15- 10.17 Laws and Regulations -15- 10.18 Construction of Agreement -15- CRUDE OIL MARKETING AGREEMENT This CRUDE OIL MARKETING AGREEMENT (this "Agreement"), dated November ___, 1998, is by and between PLAINS RESOURCES INC., a Delaware corporation ("Plains Resources"), PLAINS ILLINOIS INC., a Delaware corporation ("Plains Illinois"), STOCKER RESOURCES, L.P., a California limited partnership ("Stocker"), CALUMET FLORIDA, INC., a Delaware corporation ("Calumet"), and PLAINS MARKETING, L.P., a Delaware limited partnership ("Buyer"). Plains Resources, Plains Illinois, Stocker, and Calumet are sometimes referred to herein individually as a "Seller" and collectively as the "Sellers." Sellers and Buyer are sometimes referred to herein individually as a "Party" and collectively as the "Parties." R E C I T A L S: - - - - - - - - A. Sellers own and produce crude oil from properties located within the lower 48 states of the United States. B. Sellers desire to sell and Buyer desires to purchase all of the crude oil which is produced and owned by Sellers from such properties. NOW, THEREFORE, the Parties agree as follows: ARTICLE I DEFINITIONS 1.1 Definitions. As used herein, the following terms shall have the following meanings: "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. "Agreement" means this Agreement and all exhibits, schedules, amendments, modifications, and supplements to this Agreement. "Anniversary Date" has the meaning assigned in Article III. "Barrel" means forty-two (42) United States gallons of Crude Oil measured in accordance with the General Provisions. "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. "Buyer Specified Event" has the meaning assigned in Section 8.1. "Change of Control" has the meaning assigned in that certain Omnibus Agreement, dated as of the Closing Date (as defined therein), among Plains Resources, Buyer, General Partner, Plains All American Pipeline, L.P., a Delaware limited partnership, and All American, L.P., a Texas limited partnership. "Conflicts Committee" means a committee of the Board of Directors of the General Partner composed entirely of two or more directors who are neither securityholders, officers nor employees of the General Partner nor officers, directors or employees of any Affiliate of the General Partner. "Corporate Governance Documents" means, with respect to any Person, the Certificate or Articles of Incorporation, or Partnership Agreement (or their equivalents), the by-laws (or their equivalents), and the other corporate governance documents of such Person. "Crude Oil" means crude oil meeting the specifications set forth in the General Provisions. "Defaulting Party" means (a) in the case of a Buyer Specified Event, Buyer, and (b) in the case of a Seller Specified Event, any Seller affected by such Seller Specified Event. "Delivery Point" has the meaning assigned in Section 2.3. "Effective Date" means the date of execution of this Agreement. "Existing Contract" has the meaning assigned in Section 2.2(g). "Force Majeure" has the meaning assigned in Article IX. "General Partner" means Plains All American Inc., a Delaware corporation, and its predecessors, successors and permitted assigns as general partner of the Buyer. "General Provisions" has the meaning assigned in Section 2.6. "Governmental Requirements" means all judgments, orders, writs, injunctions, decrees, awards, laws, ordinances, statutes, regulations, rules, franchises, permits, certificates, licenses, authorizations, and the like of any government, or any commission, board, court, agency, instrumentality, or political subdivision thereof. "Marketing and Administrative Fee" has the meaning assigned in Section 2.4. -2- "Marketing Area" means the lower 48 states of the United States. "Non-defaulting Party" means (i) in the case of a Buyer Specified Event, any Seller which is affected by such Buyer Specified Event, and (ii) in the case of a Seller Specified Event, Buyer. "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. "Platt's P+ Average" means the arithmetic average of the Platt's Prices for P-Plus WTI during a Trading Cycle. "Platt's Difference" means the arithmetic average for a Trading Cycle of the difference between the Platt's Prices of the applicable grade of crude to be exchanged (i.e. WTS, LLS, HLS, Eugene Island, Bonito, etc.) and the prompt month WTI. "Platt's Prices" means the average of the price range of a particular grade of crude oil as published in the Crude Price Assessments table of Platt's Oilgram Price Report. "Purchase Price" has the meaning assigned in Section 2.4. "Sales Price" has the meaning assigned in Section 2.4. "Seller Specified Event" has the meaning assigned in Section 8.2. "Specified Event" means a Buyer Specified Event or a Seller Specified Event, as the case may be. "Trading Cycle" means for a particular month of delivery, a cycle beginning on the 26/th/ day of the second month preceding such month of delivery through the 25/th/ day of the month preceding such month of delivery. "Trade Location" has the meaning assigned in Section 2.4(b). ARTICLE II PURCHASE AND SALE 2.1 Purchase and Sale. Buyer hereby agrees to purchase and receive and Sellers hereby agree to sell and deliver all of the Crude Oil produced and owned by Sellers from properties located within the Marketing Area. Currently, such properties are set forth on Exhibit A attached hereto and incorporated herein. Exhibit A shall be promptly updated to add or delete, as the case may be, Crude Oil production dedicated to this Agreement. -3- 2.2 Addition or Release of Properties or Sellers. Crude Oil producing properties and Sellers shall be added or released from the terms and provisions of this Agreement upon the occurrence of the following events: (a) If a Person who owns Crude Oil producing properties within the Marketing Area becomes an Affiliate of Plains Resources, Plains Resources shall cause such Affiliate to become a Seller hereunder by executing and delivering a ratification of this Agreement to Buyer as soon as practicable after the date such Person became an Affiliate of Plains Resources. (b) If a Seller acquires additional Crude Oil properties within the Marketing Area, such additional properties and the Crude Oil owned and produced therefrom by such Seller shall become subject to this Agreement as soon as practicable after the date of acquisition of such properties. (c) If a Seller, other than Plains Resources, ceases to be an Affiliate of Plains Resources, this Agreement shall terminate with respect to such Seller, its properties, and the Crude Oil produced therefrom, with such termination to be effective as soon as practicable following the date such Seller gives written notice to Buyer that it has ceased to be an Affiliate of Plains Resources. (d) If a Seller sells, transfers or otherwise disposes of any of its properties or the interests therein which are within the Marketing Area, such properties or interests shall cease to be subject to this Agreement as soon as practicable following the date of such sale, transfer or disposition; but in no event shall such properties or interests cease to be subject to this Agreement prior to the termination of any agreement Buyer has previously entered into for the sale of Crude Oil attributable to production from such properties or interests. (e) If a Seller and Buyer determine that it is impracticable for Buyer to purchase Crude Oil from any property owned by such Seller within the Marketing Area, such Seller and Buyer may, by mutual written agreement with the concurrence of the Conflicts Committee, terminate this Agreement with respect to such properties. Thereafter, neither such Seller nor Buyer shall have any further obligations under this Agreement with respect to such properties. (f) Upon the occurrence of any of the foregoing events under subparagraphs (a), (b), (c), (d) or (e) above, the affected Seller shall give written notice to Buyer as soon as practicable and Exhibit A shall be revised to reflect the effect of such event. Upon request by any Party affected by such event, all Parties hereto shall execute and deliver to the requesting Party such documents and instruments as may be reasonably necessary to evidence additions or releases of Parties or properties to this Agreement. (g) Notwithstanding the provisions of subparagraphs (a) and (b) above, the addition of any Seller or properties to this Agreement shall be subject to any crude oil sales contract to which such Seller or properties are bound at the time such Seller or properties would otherwise become subject to this Agreement (an "Existing Contract"). Accordingly, no Crude Oil shall be sold -4- hereunder in contravention of an Existing Contract by such Seller or from such properties until the Existing Contract has expired or been terminated. 2.3 Delivery. Delivery shall be made from the lease tankage on the properties, or such other point as is mutually agreed to and reflected on Exhibit A (a "Delivery Point"), into transportation facilities designated by Buyer. 2.4 Price. The price to be paid by Buyer for Crude Oil sold hereunder (the "Purchase Price") shall be equal to the Sales Price for each Barrel as determined in this Section 2.4, less the sum of (i) a marketing and administrative fee of $.20 for each Barrel sold (the "Marketing and Administrative Fee") and (ii) with respect to Crude Oil which is not sold by Buyer at a Delivery Point, the reasonable out-of-pocket expenses (if any) incurred by Buyer to transport or exchange each Barrel of such Crude Oil. (a) For Crude Oil which Buyer resells at a Delivery Point, the Sales Price shall be the price received by Buyer for each Barrel sold at the Delivery Point. (b) For Crude Oil which Buyer either (i) transports to a location other than a Delivery Point (a "Trade Location") or (ii) exchanges for other Crude Oil at a Trade Location, the Sales Price shall be determined as follows: (x) if such Crude Oil is not aggregated with other Crude Oil owned by Buyer, the Sales Price shall be equal to the price received by Buyer for each Barrel sold at the Trade Location; or (y) if such Crude Oil is aggregated with other Crude Oil owned by Buyer, the Sales Price shall be equal to the sum of (i) the posted price received by Buyer for each Barrel sold at the Trade Location and (ii) a premium equal to the Platt's P+ Average and plus or minus, as applicable, the Platt's Difference at the Trade Location. If the Platt's P+ Average or the Platt's Difference is not published, then the price shall be the weighted average for each Barrel of Buyer's sales at such Trade Location. 2.5 Payment. Payments by Buyer for Crude Oil purchased hereunder shall be based on the applicable Purchase Price, the volumes delivered by Sellers, and 100% of the interest shown on Exhibit A attached hereto, less state taxes which are withheld by Buyer. All payments shall be wired to Plains Resources for the account of the Sellers in accordance with written instructions from Plains Resources. Such wire transfers shall be made on the twentieth day of the month following the month of actual receipt of Crude Oil; provided that, if the twentieth day of the month falls on a Sunday or a banking holiday, payment will be made on the following Business Day, or if the twentieth day of the month falls on a Saturday, payment will be made on the preceding Business Day. -5- 2.6 General Provisions. Plains Marketing, L.P.'s General Provisions dated November 1, 1998, is attached hereto as Exhibit B and is incorporated by reference and made a part of this Agreement. If any conflict should arise between the General Provisions and the information stated herein, this Agreement shall apply. 2.7 No Restrictions. No provision contained in this Agreement shall in any way be interpreted as being a restriction on the ability of any Seller to convey or transfer Crude Oil to any other Seller, or to any of their subsidiaries. However, all such Crude Oil conveyed or transferred to a Seller or subsidiary is and shall remain subject to this Agreement including the obligations contained in this Article II. ARTICLE III RENEGOTIATION Prior to the third anniversary of this Agreement, and the end of each successive three-year period thereafter (an "Anniversary Date"), either the Sellers or Buyer may request, in writing, to renegotiate the Marketing and Administrative Fee. Any such renegotiation request must be accompanied with documentation supporting the request to either increase or decrease the Marketing and Administrative Fee, and shall be in accordance with the following procedures: (a) At least 120 days prior to the applicable Anniversary Date, either the Sellers or Buyer may request, in writing, to renegotiate the Marketing and Administrative Fee. (b) Sellers and Buyer shall renegotiate the Marketing and Administrative Fee in good faith. If a revised Marketing and Administrative Fee has not been agreed upon at least 75 days prior to the applicable Anniversary Date, then Sellers may enter into negotiations for the sale of their Crude Oil with any Person who is not an Affiliate of Sellers. If Sellers do not reach an agreement with such non-affiliated Person at least 30 days prior to applicable Anniversary Date, then this Agreement shall continue and the Marketing and Administrative Fee shall be revised, effective the first day after the applicable Anniversary Date, to equal the Marketing and Administrative Fee last offered by Buyer. (c) If Sellers are successful in reaching agreement with such non- affiliated Person which provides for (i) a term of not less than one year nor more than three years; (ii) a Marketing and Administrative Fee which is less than the Marketing and Administrative Fee last offered by Buyer; and (iii) additional services substantially similar to those provided for in Article IV below, this Agreement shall terminate. Such termination shall be effective on the next Anniversary Date and, thereafter, Sellers may sell their Crude Oil to such non-affiliated Person during the term of their agreement with such Person. Within 120 days prior to the end of the term of such other agreement, either the Sellers or Buyer may request negotiations to resume this Agreement and to negotiate a revised Marketing and Administrative Fee in accordance with the procedures set forth above. -6- (d) Sellers' and Buyer's right to request a renegotiation of the Marketing and Administrative Fee in order to resume this Agreement shall continue until such time that this Agreement terminates pursuant to Article V, or until such time that Sellers have sold their Crude Oil production to a Person who is not an Affiliate of Sellers for a period of five (5) consecutive years. ARTICLE IV ADDITIONAL SERVICES 4.1 Additional Services. Upon request, Buyer agrees to provide Sellers with the following services which shall be provided at no additional cost to Sellers except for reimbursement of all reasonable out-of-pocket costs incurred by Buyer to provide such services: (a) Provide Sellers with (i) historical information related to crude oil and natural gas prices in the possession of, or accessible to, Buyer, and (ii) Buyer's assessment of crude oil and natural gas prices to assist Sellers in their hedging strategies and decisions. (b) Execute hedges on behalf of, or for the benefit of, Sellers' crude oil and natural gas production. (c) Assist Sellers in their evaluation of potential acquisitions of oil and gas properties. (d) Assist Sellers in preparing information relating to their potential disposition of any of their crude oil and natural gas properties. (e) Market the production of their natural gas and natural gas liquids produced in association with Sellers' crude oil production. (f) Negotiate natural gas purchase agreements required for the operation of Sellers' properties. (g) Provide royalty distribution services. 4.2 SELLERS INDEMNITY. SELLERS AGREE TO RELEASE, PROTECT, DEFEND, INDEMNIFY AND HOLD BUYER, THE GENERAL PARTNER, AND THEIR PARENTS, SUBSIDIARIES, AFFILIATES, SUCCESSORS AND ASSIGNS, AND THEIR AGENTS, OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES AND CONTRACTORS (HEREINAFTER COLLECTIVELY REFERRED TO AS THE "BUYER GROUP") HARMLESS FROM AND AGAINST ALL CLAIMS, LOSSES, COSTS, DEMANDS, DAMAGES, SUITS, JUDGMENTS, PENALTIES, LIABILITIES, DEBTS, EXPENSES AND CAUSES OF ACTION OF WHATSOEVER NATURE OR CHARACTER, INCLUDING BUT NOT LIMITED TO REASONABLE ATTORNEY'S FEES AND OTHER COSTS AND EXPENSES, WHICH IN ANY WAY ARISE OUT OF OR ARE RELATED TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, (I) THE PERFORMANCE OR SUBJECT MATTER OF THIS AGREEMENT, (II) THE PERFORMANCE OF THE SERVICES IN SECTION 4.1, (III) THE BREACH BY SELLERS OF ANY TERMS OF THIS AGREEMENT, OR (IV) THE INGRESS, EGRESS OR PRESENCE ON ANY PREMISES, WHETHER LAND, BUILDINGS, OR OTHERWISE, IN CONJUNCTION WITH THIS AGREEMENT (COLLECTIVELY, THE "CLAIMS"), INCLUDING CLAIMS DUE TO PERSONAL INJURY, DEATH, OR LOSS OR DAMAGE OF PROPERTY, WHETHER OR NOT CAUSED BY THE SOLE, JOINT AND/OR CONCURRENT NEGLIGENCE, FAULT OR STRICT LIABILITY OF ANY MEMBER -7- OF THE BUYER GROUP, BUT IN NO EVENT DOES THIS INDEMNITY INCLUDE CLAIMS CAUSED BY THE BUYER GROUP'S OWN GROSS NEGLIGENCE OR WILFUL MISCONDUCT. ARTICLE V TERM The term of this Agreement shall commence on the date of this Agreement, and unless sooner terminated as provided herein, shall continue in effect until the earlier to occur of: (i) the time at which any Affiliate of Plains Resources ceases to be the general partner of Buyer, or (ii) a Change of Control of Plains Resources. ARTICLE VI REPRESENTATIONS AND WARRANTIES 6.1 Representations and Warranties of Sellers. Each Seller represents and warrants to Buyer as of the date hereof that: (a) Each Seller is a corporation or limited partnership duly organized, validly existing, and in good standing under the laws of the state of their respective formation, and has all requisite corporate or partnership power and authority to execute, deliver, and perform this Agreement. (b) The execution, delivery, and performance by each Seller of this Agreement, and the consummation of the transactions contemplated herein, are within its corporate or partnership power and authority and have been duly authorized by all necessary corporate or partnership action. (c) No authorization, consent, or approval of, or other action by, or notice to, or filing with, any governmental authority, regulatory body, or any other Person is required for the due authorization, execution, delivery, or performance by any Seller of this Agreement, or the consummation of the transactions contemplated herein, except those authorizations, consents, and approvals which have been obtained and remain in full force and effect, and those notices and filings which have been made and remain in full force and effect. (d) This Agreement has been duly executed and delivered by each Seller, and is the legal, valid, and binding obligation of each Seller enforceable against it in accordance with its terms, except that enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the rights of creditors generally, and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). (e) Neither the execution, delivery, or performance by any Seller of this Agreement, nor the consummation of the transactions contemplated herein, will violate any provision of any Seller's Corporate Governance Documents, or any agreement, indenture, or instrument to which any Seller -8- is a party or by which any of its property or assets are bound, or any provision of any existing Governmental Requirement. 6.2 Representations and Warranties of Buyer. Buyer represents and warrants to Sellers as of the date hereof that: (a) Buyer is a limited partnership duly organized, validly existing, and in good standing under the laws of the state of Delaware, and has all requisite power and authority to execute, deliver, and perform this Agreement. (b) The execution, delivery, and performance by Buyer of this Agreement, and the consummation of the transactions contemplated herein, are within Buyer's partnership power and authority and have been duly authorized by all necessary partnership action. (c) No authorization, consent, or approval of, or other action by, or notice to, or filing with, any governmental authority, regulatory body, or any other Person is required for the due authorization, execution, delivery, or performance by Buyer of this Agreement, or the consummation of the transactions contemplated by this Agreement, except those authorizations, consents, and approvals which have been obtained and remain in full force and effect, and those notices and filings which have been made and remain in full force and effect. (d) This Agreement has been duly executed and delivered by Buyer, and is the legal, valid, and binding obligation of Buyer enforceable against Buyer in accordance with its terms, except that enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the rights of creditors generally, and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). (e) Neither the execution, delivery, or performance by Buyer of this Agreement, nor the consummation of the transactions contemplated hereby, will violate any provision of Buyer's Corporate Governance Documents, or any agreement, indenture, or instrument to which Buyer is a party or by which any of its property or assets are bound, or any provision of any existing Governmental Requirement. ARTICLE VII CREDIT REQUIREMENTS Purchases made by Buyer hereunder shall be on open account provided that: (a) Buyer or its Affiliates are not in default in the payment when due of any of its indebtedness in excess of $2,500,000 in the aggregate; and -9- (b) Buyer's sales of Crude Oil hereunder are in accordance with the credit policies set forth by Plains Resources' chief financial officer. ARTICLE VIII SPECIFIED EVENTS 8.1 Buyer Specified Events. Each of the following shall constitute a Buyer Specified Event for all purposes of this Agreement: (a) Any amount due hereunder for the purchase of Crude Oil shall not be paid in full when due and Buyer does not cause the cure of such failure on or before the fifteenth (15th) Business Day after notice from a Seller of such failure is received by Buyer; (b) Buyer fails to receive and purchase Crude Oil production dedicated to this Agreement for reasons other than Force Majeure or any action or inaction of a Seller, and such failure is not remedied on or before the earlier of the thirtieth (30th) day after (i) any officer of the General Partner becomes aware of such failure or (ii) a Seller has given written notice of such failure to Buyer; (c) any representation and warranty made in Section 6.2 shall prove to have been incorrect in any material respect when made, and (i) such default or breach shall continue unremedied for a period of thirty (30) days after the earlier of (x) any officer of the General Partner becomes aware of such default or (y) a Seller has given written notice of such default to Buyer, and (ii) a Seller reasonably determines that the continuation of such default or breach may materially and adversely affect Buyer's ability to satisfy its obligations hereunder; (d) Buyer and Sellers fail to agree upon a revised Marketing and Administrative Fee as provided in Article III; (e) Buyer (i) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (ii) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (iii) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (iv) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment or insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within thirty (30) days of the institution or presentation thereof, (v) has a resolution passed for its winding-up or liquidation (other than pursuant to a consolidation, amalgamation or merger); (vi) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar -10- official for it, or for all or substantially all its assets; (vii) has a secured party take possession of all or substantially all of its assets or has an execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all of its assets and such secured party maintains possession or any such process is not dismissed, discharged, stayed or restrained in each case within thirty (30) days thereafter; (viii) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (i) to (vii) (inclusive); or (ix) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts. 8.2 Seller Specified Events. Each of the following shall constitute a Seller Specified Event for all purposes of this Agreement: (a) A Seller shall fail to deliver Crude Oil production subject to this Agreement and such failure is not remedied by such Seller on or before the fifteenth (15th) Business Day after notice from Buyer of such failure is received by the Seller; (b) Any representation and warranty made in Section 6.1 shall prove to have been incorrect in any material respect when made, and (i) such default or breach shall continue unremedied for a period of thirty (30) days after the earlier of (x) any officer of a Seller becomes aware of such default or (y) Buyer has given written notice of such default to a Seller, and (ii) Buyer reasonably determines that the continuation of such default or breach may materially adversely affect Seller's ability to satisfy its obligations hereunder; (c) A Seller (i) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (ii) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (iii) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (iv) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment or insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within thirty (30) days of the institution or presentation thereof, (v) has a resolution passed for its winding-up or liquidation (other than pursuant to a consolidation, amalgamation or merger); (vi) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (vii) has a secured party take possession of all or substantially all of its assets or has an execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within thirty (30) days thereafter; (viii) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, had an analogous effect to any of the events specified -11- in clauses (i) to (vii) (inclusive); or (ix) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; (d) Sellers and Buyer fail to agree upon a revised Marketing and Administrative Fee as provided in Article III. 8.3 Early Termination. If any Specified Event shall have occurred and be continuing, then the Non-defaulting Party may by notice to the Defaulting Party designate a date (which date shall not be earlier than 60 days after receipt of such notice) on which this Agreement shall terminate as between the Non- defaulting Party and the Defaulting Party, and this Agreement shall terminate as between the Non-defaulting Party and the Defaulting Party on such designated date whether or not such Specified Event is then continuing; provided that the provisions of Section 8.4 shall survive such termination. 8.4 Specified Damages. The Defaulting Party shall pay all damages and expenses incurred by the Non-defaulting Party as a result of the termination of this Agreement under Section 8.3 arising out of or in connection with any collection, bankruptcy, insolvency, or other enforcement proceedings resulting from the occurrence of the Specified Event giving rise to such termination. Payment of such damages and expenses shall be the Defaulting Party's only liability, and the Non-defaulting Party's sole remedy and exclusive claim, as a result of the Specified Event and the resulting termination of this Agreement under Section 8.3 as between the Non-defaulting Party and the Defaulting Party. ARTICLE IX FORCE MAJEURE 9.1 Excuse for Nonperformance. Subject to the other provisions of this Agreement, the obligations of a Party under this Agreement (including the obligation of Sellers to deliver Crude Oil), except the obligation to pay money to the other Party, may be suspended for a reasonable period as a result of an event of Force Majeure, to the extent that nonperformance is caused by Force Majeure, and the affected Party shall be relieved of liability for failing to perform from the inception of such event and during the continuance thereof and the time of any such suspension of obligations shall be added to the term of this Agreement. 9.2 Definition. An event of "Force Majeure" means war, riots, insurrections, fire, explosions, sabotage, strikes, and other labor or industrial disturbances, acts of God or the elements, Governmental Requirements, disruption or breakdown of production or transportation facilities, delays of pipeline carrier in receiving and delivering crude oil tendered, or any other cause, whether similar or not, reasonably beyond the control of the affected Party. -12- 9.3 Notice and Cure. A Party affected by Force Majeure shall, as a condition to invoking Force Majeure as an excuse for nonperformance under this Agreement, promptly give notice of the occurrence of Force Majeure to the other Party, with reasonably detailed information about the event of Force Majeure and the effect it has had, and is anticipated to have, on the performance of the invoking Party, and shall confirm such notice of Force Majeure and its consequences in writing no later than two (2) Business Days after the occurrence of such event of Force Majeure. The invoking Party shall exercise due diligence in good faith to remedy the Force Majeure and resume full performance under this Agreement as soon as reasonably practicable. ARTICLE X GENERAL PROVISIONS 10.1 No Survival of Representations and Warranties. Notwithstanding anything to the contrary herein, all representations and warranties provided by Sellers and Buyer in Article VI shall not survive the termination of this Agreement. 10.2 Headings. The headings, captions, and arrangements contained in this Agreement have been inserted for convenience only and shall not be deemed in any manner to modify, explain, enlarge, or restrict any of the provisions hereof. 10.3 Rights and Remedies Cumulative. Except as provided in Section 8.4, the rights and remedies of each of the Parties under this Agreement shall be cumulative and non-exclusive of any other rights or remedies which each Party may have under any other agreement or instrument, by operation of law, or otherwise. 10.4 Entire Agreement; Supersedure. This Agreement constitutes the entire agreement of the parties relating to the matters contained herein, superseding all prior contracts or agreements, whether oral or written, relating to the matters contained herein. 10.5 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance shall be held invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law. 10.6 Choice of Law; Submission to Jurisdiction. This Agreement shall be subject to and governed by the laws of the State of Texas, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state. Each party hereby submits to the jurisdiction of the state and federal courts in the State of Texas and to venue in Houston, Harris County, Texas. -13- 10.7 Binding Agreement. This Agreement is entered into for the benefit of the Parties and their permitted successors and assigns. It shall be binding upon and shall inure to the benefit of such Parties and their successors and assigns. 10.8 No Agency. Except as otherwise provided in this Agreement, nothing herein shall serve to create any agency, employment, master and servant relationship, partnership, or joint venture between Sellers and Buyer, their Affiliates, or any officer, director, employee or agent thereof. 10.9 Notice. All notices or requests or consents provided for or permitted to be given pursuant to this Agreement must be in writing and must be given by depositing same in the United States mail, addressed to the Person to be notified, postpaid, and registered or certified with return receipt requested or by delivering such notice in person or by telecopier or telegram to such party. Notice given by personal delivery or mail shall be effective upon actual receipt. Notice given by telegram or telecopier shall be effective upon actual receipt if received during the recipient's normal business hours, or at the beginning of the recipient's next business day after receipt if not received during the recipient's normal business hours. All notices to be sent to a party pursuant to this Agreement shall be sent to or made at the address set forth below, or at such other address as such party may stipulate to the other parties in the manner provided in this Section 10.9. If to Buyer: If to Sellers: Plains Marketing, L.P. Plains Resources Inc. 500 Dallas, Suite 700 500 Dallas, Suite 700 Houston, Texas 77002 Houston, Texas 77002 Attention: President of Attention: President Plains All American Inc. 10.10 Effect of Waiver or Consent. No waiver or consent, express or implied, by any party to or of any breach or default by any Person in the performance by such Person of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such Person of the same or any other obligations of such Person hereunder. Failure on the part of a party to complain of any act of any Person or to declare any Person in default, irrespective of how long such failure continues, shall not constitute a waiver by such party of its rights hereunder until the applicable statute of limitations period has run. 10.11 Assignment. No party shall have the right to assign its rights or obligations under this Agreement without the consent of the other parties hereto. 10.12 Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all signatory parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument. -14- 10.13 Amendment or Modification. This Agreement may be amended or modified from time to time only by the written agreement of all the parties hereto. Each such instrument shall be reduced to writing and shall be designated on its face an "Amendment" or an "Addendum" to this Agreement. 10.14 Further Assurances. In connection with this Agreement and all transactions contemplated by this Agreement, each signatory party hereto agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions. 10.15 Withholding or Granting of Consent. Each party may, with respect to any consent or approval that it is entitled to grant pursuant to this Agreement, grant or withhold such consent or approval in its sole and uncontrolled discretion, with or without cause, and subject to such conditions as it shall deem appropriate. 10.16 U.S. Currency. All sums and amounts payable to or to be payable pursuant to the provisions of this Agreement shall be payable in coin or currency of the United States of America that, at the time of payment, is legal tender for the payment of public and private debts in the United States of America. 10.17 Laws and Regulations. Notwithstanding any provision of this Agreement to the contrary, no party hereto shall be required to take any act, or fail to take any act, under this Agreement if the effect thereof would be to cause such party to be in violation of any applicable law, statute, rule or regulation. 10.18 Construction of Agreement. In construing this Agreement: (a) no consideration shall be given to the fact or presumption that one Party had a greater or lesser hand in drafting this Agreement; (b) examples shall not be construed to limit, expressly or by implication, the matter they illustrate; (c) the word "includes" and its derivatives means "includes, but is not limited to" and corresponding derivative expressions; (d) a defined term has its defined meaning throughout this Agreement, regardless of whether it appears before or after the place where it is defined; (e) the plural shall be deemed to include the singular, and vice versa; (f) each gender shall be deemed to include the other genders; -15- (g) each reference to an article, section, or subsection refers to an article, section, or subsection of this Agreement unless expressly otherwise provided; and (h) all references to a party shall include all successors and permitted assigns of such party. [The next page is the signature page] -16- IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date and year first above written. BUYER: PLAINS MARKETING, L.P. By: Plains All American Inc., its General Partner By: /s/ Michael R. Patterson ------------------------ Name: Michael R. Patterson Title: Senior Vice President SELLERS: PLAINS RESOURCES INC. By: /s/ Michael R. Patterson ------------------------ Name: Michael R. Patterson Title: Senior Vice President PLAINS ILLINOIS INC. By: /s/ Michael R. Patterson ------------------------ Name: Michael R. Patterson Title: Senior Vice President STOCKER RESOURCES, L.P. By: Stocker Resources, Inc., its General Partner By: /s/ Michael R. Patterson ------------------------ Name: Michael R. Patterson Title: Senior Vice President CALUMET FLORIDA INC. By: /s/ Michael R. Patterson --- ------------------------ Name: Michael R. Patterson Title: Senior Vice President -17- EXHIBIT A SELLERS' CRUDE OIL PRODUCING PROPERTIES WITHIN MARKETING AREA
Delivery Seller Field State Point - ----------------------------- ----------- ---------- --------- Stocker Resources, L.P. Inglewood California Lease Tankage (including San Vicente and Packard drillsites) Montebello California Lease Tankage Arroyo Grande California Lease Tankage Plains Illinois, Inc. Elnora Indiana Lease Tankage Lawrence Illinois Lease Tankage St. James Illinois Lease Tankage West Kenner Illinois Lease Tankage Calumet Florida, Inc. Racoon Point Florida Coastal Fuels Sunniland Florida Terminal at Bear Island Florida Point Everglades South Bear Florida (all fields) Sunoco Florida West Felda Florida
EXHIBIT B PLAINS MARKETING, L.P. GENERAL PROVISIONS NOVEMBER 1, 1998 SPECIFIC TERMS: The General Provisions set forth herein are incorporated by reference and made a part of that certain Crude Oil Marketing Agreement dated November __, 1998, by and among Buyer and Sellers (the "Agreement"). In the event there is any inconsistency between these General Provisions and the Agreement, the Agreement shall prevail. All capitalized terms not otherwise defined in this Exhibit B shall have the meaning set forth for them in the Agreement. WARRANTY/INDEMNIFICATION: The Sellers warrant good title to or the right to sell all Crude Oil delivered pursuant to the Agreement and warrant that such shall be free from all royalties, liens, encumbrances, and all applicable foreign, federal, state and local taxes that are imposed upon the production and/or removal of Crude Oil from the premises through the Delivery Point. Sellers also warrant that such Crude Oil has been produced, handled and transported to the Delivery Point in accordance with all applicable laws, rules and regulations of all local, state and federal authorities. Sellers further warrant that all Crude Oil will be merchantable. Sellers further agree to indemnify, defend and hold harmless Buyer, the General Partner, and their parents, subsidiaries, Affiliates, successors and assigns, and their agents, officers, directors, employees, representatives and contractors from and against all loss, costs, damages or expenses of any nature by or on account of Buyer, the General Partner, or their parents, subsidiaries, Affiliates, successors and assigns, and their agents, officers, directors, employees, representatives or contractors having made (i) 100% payment to Sellers or (ii) payment to interest owners on behalf of Sellers based on information provided by Sellers. TAXES: Sellers shall be responsible for all production, severance and other related taxes incurred prior to delivery, provided that Buyer is hereby authorized to withhold such taxes from payments to Sellers and remit such taxes to the proper regulatory authority. Buyer shall be responsible for the payment of any and all taxes now in effect or hereafter imposed on the Crude Oil after the Delivery Point. TITLE AND RISK OF LOSS: Title to, possession of and risk of loss of Crude Oil shall pass to the Buyer as the Crude Oil passes from equipment owned or controlled by the Sellers, or owned or controlled by a party designated to make delivery on behalf of the Sellers, into equipment owned or controlled by Buyer, or owned or controlled by a party designated to take delivery on behalf of Buyer. Provided, however, that in cases of in line transfers, title to, possession of and risk of loss of Crude Oil shall pass to Buyer as the Crude Oil is deemed transferred. Such shall be deemed transferred to Buyer upon completion of each in line transfer with quantity determined, when available, in accordance with the transfer statement or other receipt issued by the carrier or storage facility. EQUAL DELIVERIES: For purposes of determining price, Crude Oil delivered during any given month hereunder shall be deemed to have been delivered in equal daily quantities during such month except as follows: Deliveries of Crude Oil at lease locations based on meter tickets shall be deemed to have been delivered in equal daily quantities during the period covered by the meter ticket and deliveries of Crude Oil at lease locations based on run tickets, shall be deemed to have been delivered on the date recorded on each run ticket issued by the designated carrier. MEASUREMENTS AND TESTS: All measurements hereunder shall represent one hundred percent (100%) volume with such volume and gravity adjusted to sixty degrees (60) Fahrenheit temperature. Procedures for measuring and testing, except for deliveries through positive displacement-type liquid meters, shall be according to latest ASTM published methods then in effect. Procedures for such metered- type delivery shall be according to the latest ASME-API published methods then in effect. The Crude Oil delivered hereunder shall be merchantable and acceptable to the carriers involved and full deduction shall be made for all BS&W content according to the latest ASTM standard method then in effect. Any Party shall have the right to have a representative present to witness all gauges, tests and measurements; however, should any Party hereto fail to have a representative present during such measuring and testing, the measurements and tests of the other Party will be accepted. CONFIRMATION OF DELIVERY: Confirmation of delivery shall be based on run tickets evidencing such delivery or allocation statements issued by the carriers involved. DIVISION ORDERS: In the event any Party signs a division order in favor of the other Party pertaining to the object of the Agreement, terms of the Agreement shall supersede the terms of such division order to the extent that there may be a conflict between the two. DISPUTE-WITHHOLDING OF FUNDS: If a suit is filed that affects the interest of a Seller, written notice shall be given to Buyer by such Seller together with a copy of the complaint or petition filed. In the event of a claim or dispute that affects title to the division interest credited to such Seller, Buyer is authorized to withhold payments accruing to such interest, without interest unless otherwise required by applicable statute, until the claim of dispute is settled. NOTICES: Sellers agree to notify Buyer in writing of any change of Payee, including changes of interest contingent on payment of money or expiration of time. No change is binding on Buyer until the recorded copy of the instrument of change or documents satisfactorily evidencing such change are furnished to Buyer at the time the change occurs. Any change shall be made effective on the first day of the month following receipt of such notice by Buyer. SET-OFF: In the event any Party shall fail to make timely delivery of any Crude Oil, or other applicable products due and owing to the other Party, or in the event any Party shall fail to make timely payment of any monies due and owing to the other Party, the other Party may offset any deliveries or payments due under this or any other agreement between the parties. AUDIT: Any Party and their duly authorized representatives shall have access to the accounting records and other documents maintained by the other Party which relate to the Agreement, and shall have the right to audit such records at any reasonable time or times within twenty-four (24) months of the date a statement is rendered. EX-10.DD 4 OMNIBUS AGREEMENT ================================================================================ OMNIBUS AGREEMENT among PLAINS RESOURCES INC. PLAINS ALL AMERICAN PIPELINE, L.P. PLAINS MARKETING, L.P. ALL AMERICAN PIPELINE, L.P. and PLAINS ALL AMERICAN INC. ================================================================================ TABLE OF CONTENTS ARTICLE I Definitions.............................................................. 1 1.1 Definitions..................................................... 1 ARTICLE II Business Opportunities................................................... 4 2.1 Restricted Businesses........................................... 4 2.2 Permitted Exceptions............................................ 4 2.3 Procedures...................................................... 4 2.4 Termination..................................................... 6 2.5 Scope of Restricted Business Prohibition........................ 6 2.6 Enforcement..................................................... 6 ARTICLE III Indemnification.......................................................... 7 3.1 Wingfoot Indemnification........................................ 7 3.2 Plains Resources Indemnification................................ 7 3.3 Limitations Regarding Indemnification........................... 8 3.4 Indemnification Procedures...................................... 8 ARTICLE IV Miscellaneous............................................................ 9 4.1 Choice of Law; Submission to Jurisdiction....................... 9 4.2 Notice.......................................................... 9 4.3 Entire Agreement; Supersedure................................... 9 4.4 Effect of Waiver or Consent..................................... 9 4.5 Amendment or Modification....................................... 9 4.6 Assignment......................................................10 4.7 Counterparts....................................................10 4.8 Severability....................................................10 4.9 Gender, Parts, Articles and Sections............................10 4.10 Further Assurances..............................................10 4.11 Withholding or Granting of Consent..............................10 4.12 U.S. Currency...................................................10 4.13 Laws and Regulations............................................10 4.14 Negotiation of Rights of Limited Partners, Assignees, and Third Parties..............................................10 -i- OMNIBUS AGREEMENT THIS OMNIBUS AGREEMENT is entered into on, and effective as of, the Closing Date among Plains Resources Inc., a Delaware corporation ("Plains Resources"), Plains All American Pipeline, L.P., a Delaware limited partnership (the "MLP"), Plains All American Inc., a Delaware corporation ("PAAI"), Plains Marketing, L.P., a Delaware limited partnership ("Operating OLP"), and All American Pipeline, L.P., a Delaware limited partnership ("All American OLP" and, together with Operating OLP, the "OLPs"). R E C I T A L S: 1. Plains Resources, the MLP, the OLPs and PAAI, in its capacity as the general partner of the MLP and the OLPs, desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Article II of this Agreement, with respect to (a) those business opportunities that Plains Resources will not avail itself of during the Applicable Period unless each of the MLP and the OLPs has declined to engage in such business opportunity for its own account and (b) the procedures whereby such business opportunities are to be offered to the MLP and the OLPs and accepted or declined. 2. Plains Resources, PAAI, the MLP and the OLPs desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Article III of this Agreement, with respect to certain indemnification obligations of Plains Resources and PAAI in favor of the MLP and the OLPs. In consideration of the premises and the covenants, conditions, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS 1.1 DEFINITIONS. (a) Capitalized terms used herein but not defined shall have the meanings given them in the MLP Agreement. (b) As used in this Agreement, the following terms shall have the respective meanings set forth below: "Affiliate" shall have the meaning attributed to such term in the MLP Agreement. "Agreement" shall mean this Omnibus Agreement, as it may be amended, modified, or supplemented from time to time. "Applicable Period" shall mean the period commencing on the Closing Date and terminating on the date on which PAAI (or any Affiliate of Plains Resources) ceases to be the general partner of the MLP and the OLPs. "Change of Control" shall have the meaning attributed to such term in Section 2.4. "Closing Date" shall mean the date of the closing of the initial public offering of common units representing limited partner interests in the MLP. "Conflicts Committee" shall have the meaning attributed to such term in the MLP Agreement. "Conveyance and Contribution Agreement" shall have the meaning attributed to such term in the MLP Agreement. "Environmental Laws" shall mean any federal, state or local law, rule, regulation, or enforceable order, as in effect as of the date of this Agreement, that regulates or imposes liability with respect to the health, environment, ecology, or work place. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "General Partner" shall mean PAAI and its successors as general partner of the MLP and the OLPs, unless the context otherwise requires. "Hazardous Materials" shall mean those materials in any way regulated by any Environmental Law. "Losses" shall have the meaning attributed to such term in Section 2.3. "Marketing Agreement" shall mean that Crude Oil Marketing Agreement dated as of the date hereof among Plains Resources, Plains Illinois Inc., Stocker Resources, L.P., Calumet Florida, Inc. and Operating OLP. "MLP Agreement" shall mean the Amended and Restated Agreement of Limited Partnership of the MLP, dated as of the Closing Date, as such agreement is in effect on the Closing Date, to which reference is hereby made for all purposes of this Agreement. No amendment or modification to the MLP Agreement subsequent to the Closing Date shall be given effect for the purposes of this Agreement unless consented to by each of the parties to this Agreement. "NonAffiliate Purchaser" shall have the meaning attributed to such term in Section 2.3. -2- "Offer" shall have the meaning attributed to such term in Section 2.3. "Partnership Entities" shall mean the General Partner, the MLP, the OLPs and any Affiliate controlled by the General Partner, the MLP or the OLPs. "Partnership Group" shall mean the MLP, the OLPs and any subsidiary of any such entities. "Person" shall mean an individual, corporation, partnership, joint venture, trust, limited liability company, unincorporated organization or any other entity. "Plains Entities" shall mean Plains Resources and any of its Affiliates, other than the Partnership Entities. "Plains Facility" shall mean any storage or terminalling facility or gathering line or system constituting part of the Plains Real Property. "Plains Leased Property" shall mean all of the real and personal properties leased by Plains Resources or the Plains Midstream Subsidiaries, including rights-of-way, which leases were conveyed or assigned to the OLPs by the Conveyance and Contribution Agreement. "Plains Midstream Subsidiaries" shall mean Plains Marketing & Transportation Inc., a Delaware corporation, Plains Terminal & Transfer Corporation, a Delaware corporation, PLX Crude Lines Inc., a Delaware corporation, and PLX Ingleside Inc., a Delaware corporation, each a wholly- owned subsidiary of Plains Resources prior to their merger into Plains Resources as of the date hereof. "Plains Real Property" shall mean all of the real properties, including the land, improvements and buildings located thereon, owned in fee simple by Plains Resources or the Plains Midstream Subsidiaries, which properties were conveyed to the OLPs by the Conveyance and Contribution Agreement. "Restricted Business" shall have the meaning attributed to such term in Section 2.1. "Second Offer" shall have the meaning attributed to such term in Section 2.3. "Voting Stock" means securities of any class of Plains Resources entitling the holders thereof to vote on a regular basis in the election of members of the board of directors of Plains Resources. "Wingfoot" shall have the meaning attributed to such term in Section 3.1. -3- "Wingfoot Agreement" shall have the meaning attributed to such term in Section 3.1. ARTICLE II BUSINESS OPPORTUNITIES 2.1 RESTRICTED BUSINESSES. During the Applicable Period, each of the Plains Entities shall be prohibited from engaging in or acquiring any business engaged in the following activities (a "Restricted Business"): (a) crude oil storage, terminalling and gathering activities in any state in the United States, except for Alaska and Hawaii, for any Person other than a Plains Entity or Partnership Entity, (b) crude oil marketing activities, and (c) transportation of crude oil by pipeline in any state in the United States, except for Alaska and Hawaii, for any Person other than a Plains Entity. A Restricted Business shall not include any activities required to be performed by a Plains Entity as the operator pursuant to any operating agreement entered into by such Plains Entity with respect to oil and gas properties owned jointly with other Persons. 2.2 PERMITTED EXCEPTIONS. Notwithstanding any provision of Section 2.1 to the contrary, a Plains Entity may engage in a Restricted Business under the following circumstances: (a) The Restricted Business was engaged in by the Plains Entity on the date of this Agreement. (b) The Restricted Business is conducted pursuant to and in accordance with the terms of the Marketing Agreement or any other arrangement entered into with the MLP or either of the OLPs with the concurrence of the Conflicts Committee. (c) The value of the assets acquired in a transaction that comprise a Restricted Business does not exceed $10 million, as determined by the Board of Directors of Plains Resources. (d) (i) The value of the assets acquired in a transaction that comprise a Restricted Business exceed $10 million, as determined by the Board of Directors of Plains Resources and (ii) the General Partner (with the approval of the Conflicts Committee) has elected not to cause a member of the Partnership Group to pursue such opportunity in accordance with the procedures set forth in Section 2.3. 2.3 PROCEDURES. In the event that a Plains Entity acquires a Restricted Business comprised of assets valued in excess of $10 million, as determined by the Board of Directors of Plains Resources, then not later than 30 days after the consummation of the acquisition by such Plains Entity of the Restricted Business, such Plains Entity shall notify the General Partner of such purchase and offer the Partnership the opportunity to purchase such Restricted Business. As soon as practicable, but in any event, within 30 days after receipt of such notification, the General Partner shall notify the Plains Entity that either (i) the General Partner has elected, with the approval of the Conflicts Committee, not to cause a member of the Partnership Group to purchase such Restricted -4- Business, in which event the Plains Entity shall be free to continue to engage in such Restricted Business, or (ii) the General Partner has elected to cause a member of the Partnership Group to purchase such Restricted Business, in which event the following procedures shall be followed: (a) The Plains Entity shall submit a good faith offer to the General Partner to sell the Restricted Business (the "Offer") to any member of the Partnership Group on the terms and for the consideration stated in the Offer. (b) The Plains Entity and the General Partner shall negotiate in good faith, for 60 days after receipt of such Offer by the General Partner, the terms on which the Restricted Business will be sold to a member of the Partnership Group. The Plains Entity shall provide all information concerning the business, operations and finances of such Restricted Business as may be reasonably requested by the General Partner. (i) If the Plains Entity and the General Partner agree on such terms within 60 days after receipt by the General Partner of the Offer, a member of the Partnership Group shall purchase the Restricted Business on such terms as soon as commercially practicable after such agreement has been reached. (ii) If the Plains Entity and the General Partner are unable to agree on the terms of a sale during such 60-day period, the Plains Entity shall attempt to sell the Restricted Business to a Person that is not an Affiliate of the Plains Entity (a "NonAffiliate Purchaser") within nine months of the termination of such 60-day period. Any such sale to a NonAffiliate Purchaser must be for a purchase price, as determined by the Board of Directors of Plains Resources, not less than 95% of the purchase price last offered by a member of the Partnership Group. (c) If, after the expiration of such nine-month period, the Plains Entity has not sold the Restricted Business to a NonAffiliate Purchaser, it shall submit another Offer (the "Second Offer") to the General Partner within seven days after the expiration of such nine-month period. The Plains Entity shall provide all information concerning the business, operations and finances of such Restricted Business as may be reasonably requested by the General Partner. (i) If the General Partner, with the concurrence of the Conflicts Committee, elects not to cause a member of the Partnership Group to pursue the Second Offer, the Plains Entity shall be free to continue to engage in such Restricted Business. (ii) If the General Partner shall elect to cause a member of the Partnership Group to purchase such Restricted Business, then the General Partner and the Plains Entity shall negotiate the terms of such purchase for 60 days. If the Plains Entity and the General Partner agree on such terms within 60 days after receipt by the General Partner of the Second Offer, a member of the Partnership Group shall purchase the Restricted Business on such terms as soon as commercially practicable after such agreement has been reached. -5- (iii) If during such 60-day period, no agreement has been reached between the Plains Entity and the General Partner or a member of the Partnership, the Plains Entity and the General Partner will engage an independent investment banking firm with a national reputation to determine the value of the Restricted Business. Such investment banking firm will determine the value of the Restricted Business within 30 days and furnish the Plains Entity and the General Partner its opinion of such value. The Plains Entity will pay the fees and expenses of such investment banking firm. Upon receipt of such opinion, the General Partner will have the option, subject to the approval of the Conflicts Committee, to (A) cause a member of the Partnership Group to purchase the Restricted Business for an amount equal to the value determined by such investment banking firm or (B) decline to purchase such Restricted Business, in which event the Plains Entity will be free to continue to engage in such Restricted Business. 2.4 TERMINATION. The provisions of this Article II may be terminated by Plains Resources upon a "Change of Control" of Plains Resources. A Change of Control of Plains Resources shall be deemed to have occurred upon the occurrence of one or more of the following events: (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Plains Entities to any Person and its Affiliates unless immediately following such sale, lease, exchange or other transfer such assets are owned, directly or indirectly, by the Plains Entities; (ii) the consolidation or merger of Plains Resources with or into another Person pursuant to a transaction in which the outstanding Voting Stock of Plains Resources is changed into or exchanged for cash, securities or other property, other than any such transaction where (a) the outstanding Voting Stock of Plains Resources is changed into or exchanged for Voting Stock of the surviving corporation or its parent and (b) the holders of the Voting Stock of Plains Resources immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Stock of the surviving corporation or its parent immediately after such transaction; and (iii) a "person" or "group" (within the meaning of Sections 13(d) or 14(d)(2) of the Exchange Act) being or becoming the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 50% of all Voting Stock of Plains Resources, then outstanding, except in a merger or consolidation which would not constitute a Change of Control under clause (ii) above. 2.5 SCOPE OF RESTRICTED BUSINESS PROHIBITION. Except as provided in this Article II and the Partnership Agreement, each Plains Entity shall be free to engage in any business activity whatsoever, including those that may be in direct competition with any Partnership Entity. 2.6 ENFORCEMENT. The Plains Entities agree and acknowledge that the Partnership Group does not have an adequate remedy at law for the breach by the Plains Entities of the covenants and agreements set forth in this Article II, and that any breach by the Plains Entities of the covenants and agreements set forth in Article II would result in irreparable injury to the Partnership Group. The Plains Entities further agree and acknowledge that any member of the Partnership Group may, in addition to the other remedies which may be available to the Partnership Group, file a suit in equity to enjoin the Plains Entities from such breach, and consent to the issuance of injunctive relief hereunder. -6- ARTICLE III INDEMNIFICATION 3.1 WINGFOOT INDEMNIFICATION. PAAI shall indemnify, defend and hold harmless the MLP and the OLPs from and against Losses (as hereinafter defined) to the extent that PAAI is entitled to and receives indemnification from Wingfoot Ventures Seven, Inc., a Delaware corporation ("Wingfoot"), pursuant to Article VIII of the Stock Purchase Agreement, dated as of March 15, 1998, among Plains Resources, PAAI and Wingfoot, as amended and in effect from time to time (the "Wingfoot Agreement"). "Losses" shall have the meaning set forth in the Wingfoot Agreement. 3.2 PLAINS RESOURCES INDEMNIFICATION. Plains Resources shall indemnify, defend and hold harmless the General Partner, the MLP and the OLPs from and against Losses that are caused by, arise out of or are attributable to: (a) Any enforcement proceeding under any federal, state or local Environmental Law to the extent arising out of any action or omission to act by Plains Resources or any of the Plains Midstream Subsidiaries prior to the date of this Agreement with respect to any Plains Real Property, Plains Leased Property, or Plains Facility, whether such proceeding arises before or after the date of this Agreement. (b) Any disposal, release, spill or leakage of Hazardous Materials to the soil or surface or ground water to the extent that it has occurred prior to the date of this Agreement (i) on any Plains Real Property during the period owned by Plains Resources or any of the Plains Midstream Subsidiaries and (ii) on any Plains Leased Property during the period Plains Resources or any of the Plains Midstream Subsidiaries has been in possession of such Plains Leased Property. (c) Any release, spill, leakage or migration of Hazardous Materials onto, under or upon the property of any Person (other than property owned, leased or used by Plains Resources or any of the Plains Midstream Subsidiaries) to the extent that it has occurred prior to the date of this Agreement as a result of the operations of Plains Resources or any of the Plains Midstream Subsidiaries. (d) Hazardous Materials to the extent that they are demonstrated to have been present on any Plains Real Property or Plains Leased Property on the date of this Agreement. (e) Hazardous Materials to the extent transported prior to the date of this Agreement by Plains Resources or any of the Plains Midstream Subsidiaries to any waste treatment, storage, disposal, reclaiming, or recycling site other than (i) any site located on any Plains Real Property or any Plains Leased Property, (ii) any site located on any property owned, leased or used by any Partnership Entity, or (iii) any site used (whether before or after the date of this Agreement) by any Partnership Entity, or (iv) any site used by Plains Resources or any of the Plains Midstream Subsidiaries after the date of this Agreement. -7- 3.3 LIMITATIONS REGARDING INDEMNIFICATION. Plains Resources shall have no indemnification obligation under Section 3.2 for claims made after the third anniversary of the date of this Agreement. The aggregate liability of Plains Resources in respect of all Losses under Section 3.2 shall not exceed $3 million (including up to $500,000 of reserves included in the MLP's working capital upon closing of the MLP's initial public offering). 3.4 INDEMNIFICATION PROCEDURES. (a) The Partnership Entities agree that within a reasonable period of time after they become aware of facts giving rise to a claim for indemnification pursuant to Section 3.2, they will provide notice thereof in writing to Plains Resources specifying the nature of and specific basis for such claim. (b) Plains Resources shall have the right to control all aspects of the defense of (and any counterclaims with respect to) any claims brought against the Partnership Entities that are covered by the indemnification set forth in Section 3.2, including, without limitation, the selection of counsel, determination of whether to appeal any decision of any court and the settling of any such matter or any issues relating thereto; provided, however, that no such settlement shall be entered into without the consent of the Partnership Entities unless it includes a full release of the Partnership Entities from such matter or issues, as the case may be. (c) The Partnership Entities agree, at their own cost and expense, to cooperate fully with Plains Resources with respect to all aspects of the defense of any claims covered by the indemnification set forth in Section 3.2, including, without limitation, the prompt furnishing to Plains of any correspondence or other notice relating thereto that the General Partner or the Partnership Entities may receive, permitting the names of the General Partner and the Partnership Entities to be utilized in connection with such defense, the making available to Plains Resources of any files, records or other information of the General Partner or the Partnership Entities that Plains Resources considers relevant to such defense and the making available to Plains Resources of any employees of the Partnership Entities or the General Partner; provided, however, that in connection therewith Plains Resources agrees to use reasonable efforts to minimize the impact thereof on the operations of such Partnership Entities. In no event shall the obligation of the Partnership Entities to cooperate with Plains Resources as set forth in the immediately preceding sentence be construed as imposing upon the Partnership Entities an obligation to hire and pay for counsel in connection with the defense of any claims covered by the indemnification set forth in this Article III; provided, however, that the Partnership Entities may, at their own option, cost and expense, hire and pay for counsel in connection with any such defense. Plains Resources agrees to keep any such counsel hired by the Partnership Entities reasonably informed as to the status of any such defense, but Plains Resources shall have the right to retain sole control over such defense. (d) In determining the amount of any loss, liability or expense for which any of the Partnership Entities are entitled to indemnification under this Agreement, the gross amount thereof will be reduced by any insurance proceeds realized or to be realized by the Partnership -8- Entities, and such correlative insurance benefit shall be net of any insurance premium that becomes due as a result of such claim. ARTICLE IV MISCELLANEOUS 4.1 CHOICE OF LAW; SUBMISSION TO JURISDICTION. This Agreement shall be subject to and governed by the laws of the State of Texas, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state. Each party hereby submits to the jurisdiction of the state and federal courts in the State of Texas and to venue in Houston, Harris County, Texas. 4.2 NOTICE. All notices or requests or consents provided for or permitted to be given pursuant to this Agreement must be in writing and must be given by depositing same in the United States mail, addressed to the Person to be notified, postpaid, and registered or certified with return receipt requested or by delivering such notice in person or by telecopier or telegram to such party. Notice given by personal delivery or mail shall be effective upon actual receipt. Notice given by telegram or telecopier shall be effective upon actual receipt if received during the recipient's normal business hours, or at the beginning of the recipient's next business day after receipt if not received during the recipient's normal business hours. All notices to be sent to a party pursuant to this Agreement shall be sent to or made at the address set forth below such party's signature to this Agreement, or at such other address as such party may stipulate to the other parties in the manner provided in this Section 4.2. 4.3 ENTIRE AGREEMENT; SUPERSEDURE. This Agreement constitutes the entire agreement of the parties relating to the matters contained herein, superseding all prior contracts or agreements, whether oral or written, relating to the matters contained herein. 4.4 EFFECT OF WAIVER OR CONSENT. No waiver or consent, express or implied, by any party to or of any breach or default by any Person in the performance by such Person of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such Person of the same or any other obligations of such Person hereunder. Failure on the part of a party to complain of any act of any Person or to declare any Person in default, irrespective of how long such failure continues, shall not constitute a waiver by such party of its rights hereunder until the applicable statute of limitations period has run. 4.5 AMENDMENT OR MODIFICATION. This Agreement may be amended or modified from time to time only by the written agreement of all the parties hereto; provided, however, that the MLP and the OLPs may not, without the prior approval of the Conflicts Committee, agree to any amendment or modification of this Agreement that, in the reasonable discretion of the General Partner, will adversely affect the holders of Common Units. Each such instrument shall be reduced to writing and shall be designated on its face an "Amendment" or an "Addendum" to this Agreement. -9- 4.6 ASSIGNMENT. No party shall have the right to assign its rights or obligations under this Agreement without the consent of the other parties hereto. 4.7 COUNTERPARTS. This Agreement may be executed in any number of counterparts with the same effect as if all signatory parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument. 4.8 SEVERABILITY. If any provision of this Agreement or the application thereof to any Person or circumstance shall be held invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law. 4.9 GENDER, PARTS, ARTICLES AND SECTIONS. Whenever the context requires, the gender of all words used in this Agreement shall include the masculine, feminine and neuter, and the number of all words shall include the singular and plural. All references to Article numbers and Section numbers refer to Parts, Articles and Sections of this Agreement. 4.10 FURTHER ASSURANCES. In connection with this Agreement and all transactions contemplated by this Agreement, each signatory party hereto agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions. 4.11 WITHHOLDING OR GRANTING OF CONSENT. Each party may, with respect to any consent or approval that it is entitled to grant pursuant to this Agreement, grant or withhold such consent or approval in its sole and uncontrolled discretion, with or without cause, and subject to such conditions as it shall deem appropriate. 4.12 U.S. CURRENCY. All sums and amounts payable to or to be payable pursuant to the provisions of this Agreement shall be payable in coin or currency of the United States of America that, at the time of payment, is legal tender for the payment of public and private debts in the United States of America. 4.13 LAWS AND REGULATIONS. Notwithstanding any provision of this Agreement to the contrary, no party hereto shall be required to take any act, or fail to take any act, under this Agreement if the effect thereof would be to cause such party to be in violation of any applicable law, statute, rule or regulation. 4.14 NEGOTIATION OF RIGHTS OF LIMITED PARTNERS, ASSIGNEES, AND THIRD PARTIES. The provisions of this Agreement are enforceable solely by the parties to this Agreement, and no Limited Partner, Assignee or other Person shall have the right, separate and apart from the MLP or the OLP, to enforce any provision of this Agreement or to compel any party to this Agreement to comply with the terms of this Agreement. -10- IN WITNESS WHEREOF, the parties have executed this Agreement on, and effective as of, the Closing Date. PLAINS RESOURCES INC. By: /s/ Michael R. Patterson ------------------------ Name: Michael R. Patterson Title: Senior Vice President Address for Notice: 500 Dallas, Suite 700 Houston, Texas 77002 Telecopy Number: (713) 654-1523 PLAINS ALL AMERICAN PIPELINE, L.P. By: PLAINS ALL AMERICAN INC., its sole general partner By: /s/ Michael R. Patterson ------------------------ Name: Michael R. Patterson Title: Senior Vice President Address for Notice: 500 Dallas, Suite 700 Houston, Texas 77002 Telecopy Number: (713) 652-2730 PLAINS MARKETING, L.P. By: PLAINS ALL AMERICAN INC., its sole general partner By: /s/ Michael R. Patterson ------------------------ Name: Michael R. Patterson Title: Senior Vice President -11- Address for Notice: 500 Dallas, Suite 700 Houston, Texas 77002 Telecopy Number: (713) 652-2730 ALL AMERICAN PIPELINE, L.P. By: PLAINS ALL AMERICAN INC., its sole general partner By: /s/ Michael R. Patterson ------------------------ Name: Michael R. Patterson Title: Senior Vice President Address for Notice: 500 Dallas, Suite 700 Houston, Texas 77002 Telecopy Number: (713) 652-2730 PLAINS ALL AMERICAN INC. By: /s/ Michael R. Patterson ------------------------ Name: Michael R. Patterson Title: Senior Vice President Address for Notice: 500 Dallas, Suite 700 Houston, Texas 77002 Telecopy Number: (713) 652-2730 -12- -----END PRIVACY-ENHANCED MESSAGE-----