Document:

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                                                                   Exhibit 10.22

                                 AMENDMENT NO. 1
                          TO EMPLOYEE MATTERS AGREEMENT

     AMENDMENT NO. 1 TO EMPLOYEE MATTERS AGREEMENT (this "Amendment"), dated as
of September 18, 2002, by and between Plains Resources Inc., a Delaware
corporation ("Plains"), and Plains Exploration & Production Company, a Delaware
corporation (fka Plains Exploration & Production Company, L.P., a California
limited partnership) ("Plains Exploration"). Undefined capitalized terms are
defined in the Agreement (as defined below).

     WHEREAS, Plains and Plains Exploration & Production Company, L.P., a
California limited partnership, entered into the Employee Matters Agreement,
dated as of July 3, 2002 (the "Agreement");

     WHEREAS, on September 18, 2002, Plains Exploration & Production Company,
L.P., a California limited partnership, converted into Plains Exploration;

     WHEREAS, Plains and Plains Exploration desire to enter into this Amendment
to change the treatment of Plains Options upon the Distribution as set forth
herein;

     NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the Parties hereby agree as follows:

     1.   The following definitions shall be added to Article I of the
Agreement:

     ""Distribution Ratio" means the number of shares of Spinco common stock
each holder of Plains common stock on the Record Date (or such holder's
designated transferee or transferees) will be entitled to receive in the
Distribution determined by multiplying the number of shares of Plains common
stock held by such holder on the Record Date by a fraction, the numerator of
which is the number of shares of Spinco common stock beneficially owned by
Plains on the Record Date and the denominator of which is the number of shares
of Plains common stock outstanding on the Record Date.

     "Plains Stock Value" means the closing price (with dividend) of a share of
Plains common stock on the Distribution Date as reported on the NYSE.

     "Spinco SAR" means the right to receive an appreciation value of a share of
Spinco common stock pursuant to a plan providing such benefits to be established
by Spinco pursuant to Section 2.04 and ARTICLE VI.

     "Spinco Stock Value" means the closing price of a share of Spinco common
stock on the Distribution Date as reported on the NYSE."

     2.   Sections 6.01 and 6.02 of the Agreement are hereby amended by deleting
them in their entirety and replacing them with the following:

     "Section 6.01 Plains Options. Outstanding Plains Options granted prior to
the Distribution Date that are unexercised and unexpired as of the Distribution
Date shall be replaced

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with two securities, one an Adjusted Plains Option and one a Spinco SAR as
follows. With respect to each Adjusted Plains Option, (i) the number of shares
of Plains common stock subject to such Adjusted Plains Option shall equal the
number of shares of Plains common stock subject to the Plains Option immediately
before the Distribution Date, and (ii) the per-share exercise price of such
Adjusted Plains Option shall equal the per-share exercise price of the Plains
Option immediately prior to the Distribution Date multiplied by (the "Plains
Price Adjustment Factor") 1 minus a fraction, the numerator of which is the
Distribution Ratio multiplied by the Spinco Stock Value and the denominator of
which is the Plains Stock Value. With respect to each Spinco SAR, (i) the number
of shares of Spinco common stock subject to such Spinco SAR shall equal the
number of shares of Plains common stock subject to the Plains Option immediately
before the Distribution Date multiplied by the Distribution Ratio, and (ii) the
per-share exercise price of such Spinco SAR shall equal the Spinco Stock Value
multiplied by (the "Spinco Price Adjustment Factor") a fraction, the numerator
of which is the per-share exercise price of the Plains Option immediately prior
to the Distribution Date and the denominator of which is the Plains Stock Value.
The exercise price per share of each such Adjusted Plains Option and Spinco SAR
will be determined such that, immediately following the Distribution Date, the
difference between the exercise price of each option and right and the fair
market value of the shares underlying each option and right approximately
equals, in the aggregate, the difference between the exercise price of each
Plains Option and the fair market value per share of Plains common stock (with
dividend) immediately prior to the Distribution Date. In addition, the ratio of
the exercise price of the Adjusted Plains Options to the fair market value of
Plains common stock immediately after the Distribution Date, and the ratio of
the exercise price of the Spinco SARs to the fair market value of Spinco common
stock immediately after the Distribution Date, will both approximately equal the
ratio of the exercise price of the Plains Options to the fair market value of
Plains common stock (with dividend) immediately prior to the Distribution Date.
Employment with Spinco, and service as a member of the Spinco Board, will be
treated as employment and service with Plains for purposes of the Adjusted
Plains Options, and employment with Plains, and service as a member of the
Plains board of directors, will be treated as employment and service with Spinco
for purposes of the Spinco SARs. Other than the adjustments described in this
Section 6.01, all other terms and conditions applicable to the Plains Options
(including, but not limited to, the vesting schedule) shall remain applicable to
the Adjusted Plains Options and the Spinco SARs following the Distribution Date,
and the Spinco SARs shall be issued pursuant to a Spinco stock incentive plan.
The intent of this Section 6.01 is to preserve fixed accounting treatment with
respect to the options adjusted hereunder, and to the extent possible, to
preserve the qualified tax treatment of options designated as "incentive stock
options". The compensation committees of Plains and Spinco shall have the
ability to make any adjustments to these formulas to preserve fixed accounting
treatment for outstanding options.

     6.02  Plains Restricted Shares. Except as otherwise provided in the
applicable restricted stock agreement, holders of time-based awards of
restricted shares of Plains common stock granted prior to the Distribution Date
that are outstanding on the Distribution Date shall receive awards of restricted
shares of Spinco common stock in the same ratio as Plains stockholders, but such
restricted shares of Spinco common stock shall be subject to the same time-based
vesting schedule and the other terms and conditions of the applicable plan under
which they were granted. Employment with Spinco will be treated as employment
with Plains for purposes of the awards of restricted shares of Plains common
stock, and employment with

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Plains will be treated as employment with Spinco for purposes of the awards of
restricted shares of Spinco common stock.

     6.03 General. The compensation committees of Plains and Spinco shall have
the ability to make any adjustments with respect to any respective equity-based
compensation that the respective companies have granted prior to the
Distribution Date to be consistent with the intent of the provisions in this
Agreement."

     3.   Effect on the Agreement. Except as specifically amended or waived by
this Amendment, all terms and conditions of the Agreement shall remain in full
force and effect. The term "Agreement" used in the Agreement shall mean the
Agreement as amended hereby.

     4.   Counterparts. This Amendment may be executed in counterparts each of
which shall be deemed to be an original but all of which shall constitute one
and the same agreement.

     5.   Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to its principles
of conflicts of law.

                            [Signature Page Follows]

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     IN WITNESS WHEREOF, each of the parties have caused this Amendment to be
executed on its behalf by its officers thereunto duly authorized on the day and
year first written above.

                                    PLAINS RESOURCES INC.

                                    By: /s/ John T. Raymond
                                       -----------------------------------------
                                    Name:  John T. Raymond
                                    Title: President and Chief Operating Officer

                                    PLAINS EXPLORATION & PRODUCTION
                                    COMPANY

                                    By: /s/ James C. Flores
                                       -----------------------------------------
                                    Name:  James C. Flores
                                    Title: Chairman and Chief Executive Officer

                                        4<PAGE>

                                                                   EXHIBIT 10.23

================================================================================

                               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.

================================================================================

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                               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

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                                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.

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          "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.

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          "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.

          "Wingfoot Agreement" shall have the meaning attributed to such term in
     Section 3.1.

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                                    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
Business, in which event the Plains Entity shall be free to continue to engage
in such Restricted Business, or

                                       4

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(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.

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          (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

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                                   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.

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<PAGE>

      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 Entities, and

                                       8

<PAGE>

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

<PAGE>

      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

<PAGE>

     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

                                       11

<PAGE>

                                 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

                                 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

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