Exhibit 10.8

 

LOGO [g275013g77j45.jpg]

February 2, 2012

 

«First_Name» «Last_Name»

                                          Note:      This letter replaces and
supersedes

«Address_Line_1»

     original grant letter dated

«City», «State» «ZIP_Code»

     «Modified»

Re: Grant of Phantom Units (Category 1)

Dear «First_Name»:

I am pleased to inform you that you have been granted «A_Units» Phantom Units as
of the above date pursuant to the Company’s 2010 Long-Term Incentive Plan (the
“Plan”). In addition, in tandem with each Phantom Unit, you have been granted a
distribution equivalent right (or “DER”). A DER represents the right to receive
a cash payment equivalent to the amount, if any, paid in cash distributions on
one Common Unit of PNG to the holder of such Common Unit. The terms and
conditions of this grant are as set forth below:

 

  1. Subject to the further provisions of this Agreement, your Phantom Units
shall vest (become payable in the form of one Common Unit of PAA Natural Gas
Storage, L.P. for each Phantom Unit) as follows: (i) 30% will vest upon the date
on which the Partnership pays a quarterly distribution of at least $0.3625,
(ii) 30% will vest upon the date on which the Partnership pays a quarterly
distribution of at least $0.3750, and (iii) 40% will vest upon the date on which
the Partnership pays a distribution of at least $0.3875. One-half of any
unvested Phantom Units that remain outstanding as of the November 2016
Distribution Date will vest on such date and the remaining Phantom Units will
expire.

 

  2. Subject to the further provisions of this Agreement, your DERs shall vest
(i.e., begin receiving cash payments equal to the amount paid in cash
distributions on one Common Unit) as follows: (i) 30% shall vest upon and
effective with the February 2012 Distribution Date, (ii) 30% shall vest upon and
effective with the May 2013 Distribution Date, and (iii) 40% shall vest upon and
effective with the May 2014 Distribution Date. Your DERs will not accrue
payments prior to vesting.

 

  3. Upon vesting of any Phantom Units, an equivalent number of DERs will
expire. Any DERs that would vest as of the Distribution Date on which the
Phantom Units vest, will be payable on such Distribution Date prior to their
expiration.

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<<First_Name>> <<Last_Name>>   - 2 -   February 2, 2012

 

 

  4. Any distribution level required for vesting under paragraph 1 above shall
be proportionately reduced or increased for any split or reverse split,
respectively, of the Units, or any event or transaction having similar effect.

 

  5. In the event of the termination of your employment with the Company and its
Affiliates (other than in connection with a Change in Status or by reason of
your death or “disability,” as defined in paragraph 6 below), all of your then
outstanding DERs (regardless of vesting) and Phantom Units shall automatically
be forfeited as of the date of termination.

 

  6. In the event of termination of your employment with the Company and its
Affiliates by reason of your death or your “disability” (a physical or mental
infirmity that impairs your ability substantially to perform your duties for a
period of eighteen months or that the Company otherwise determines constitutes a
“disability”), your then outstanding Phantom Units and tandem DERs shall not be
forfeited on such date, and (i) such DERs will vest in accordance with paragraph
2 above and expire in accordance with paragraph 3 above, and (ii) such Phantom
Units shall vest or expire in accordance with paragraph 1 above. As soon as
administratively practicable after the vesting of any Phantom Units pursuant to
this paragraph 6, payment will be made in cash in an amount equal to the Market
Value of the number of Phantom Units vesting.

 

  7. In the event of a Change in Status, all of your then outstanding Phantom
Units and tandem DERs shall be deemed 100% nonforfeitable on such date, and such
Phantom Units shall vest in full upon the next Distribution Date.

 

  8. Upon payment pursuant to a DER, you agree that the Company may withhold any
taxes due from your compensation as required by law. Upon vesting of a Phantom
Unit, you agree that the Company may withhold any taxes due from your
compensation as required by law, which (in the sole discretion of the Company)
may include withholding a number of Common Units otherwise payable to you.

As used herein, (i) “Company” refers to PNGS GP LLC; (ii) “Distribution Date”
means the day in February, May, August or November in any year (as context
dictates) that is 45 days after the end of the most recently completed calendar
quarter (or, if not a business day, the closest previous business day);
(iii) “Market Value” means the average of the closing sales prices for a Common
Unit on the New York Stock Exchange for the five trading days preceding the then
most recent “ex dividend” date for payment of a distribution by the Partnership;
and (iv) “Partnership” or “PNG” refers to PAA Natural Gas Storage, L.P.

The phrase “Change in Status” means (A) the termination of your employment by
the Company other than a Termination for Cause, within two and a half months
prior to or one year following a Change of Control (the “Protected Period”), or
(B) the termination of your employment by you due to the occurrence during the
Protected Period, without your written consent, of (i) any material diminution
in your authority, duties or responsibilities, (ii) any material reduction in
your base salary or (iii) any other action or inaction that constitutes a

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<<First_Name>> <<Last_Name>>   - 3 -   February 2, 2012

 

material breach of this agreement by the Company. A termination by you shall not
be a Change in Status unless (1) you provide written notice to the Company of
the condition in (B)(i), (ii) or (iii) that would constitute a Change in Status
within 90 days of the initial existence of the condition and (2) the Company
fails to remedy the condition within the 30-day period following such notice.

The phrase “Change of Control” means, and shall be deemed to have occurred upon
the occurrence of, one or more of the following events: (i) any transaction or
other occurrence as a result of which Plains All American Pipeline, L.P. retains
neither direct nor indirect control of the Company (or successor general partner
of the Partnership, if applicable), (ii) 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 Partnership or the Company to any Person
and/or its Affiliates, other than to the Partnership (or any of its
subsidiaries), the Company, or Plains All American Pipeline, L.P., including any
employee benefit plan thereof; (iii) a consolidation, reorganization, merger or
any other similar transaction involving (a) a Person other than the Partnership
(or any of its subsidiaries), the Company, or Plains All American Pipeline, L.P.
(or its Affiliates) and (b) the Partnership, the Company or both, or (iv) any
Person, including any partnership, limited partnership, syndicate or other group
deemed a “person” for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended, becoming after the date hereof the beneficial
owner, directly or indirectly, of more than 49.9% of the membership interest in
the Company. Notwithstanding the foregoing, no Change of Control shall be deemed
to have occurred in connection with a restructuring or reorganization related to
a securitization and sale to the public of direct or indirect equity interests
in the general partner interest of the Partnership if Plains All American
Pipeline, L.P. continues to have the power to elect, directly or indirectly, the
majority of the Board of Directors (or equivalent governing body) of the general
partner of the Partnership.

The phrase “Termination for Cause” shall mean severance of your employment with
the Company or its Affiliates based on your (i) failure to perform your job
function in accordance with standards described to you in writing, or
(ii) violation of the Company’s Code of Business Conduct (unless waived in
accordance with the terms thereof), in each case, with the specific failure or
violation described to you in writing.

Terms used herein that are not defined herein shall have the meanings set forth
in the Plan or, if not defined in the Plan, in the Second Amended and Restated
Agreement of Limited Partnership of PAA Natural Gas Storage, L.P., as amended
(the “Partnership Agreement”).

This award is intended to either (i) qualify as a “short-term deferral” under
Section 409A of the Internal Revenue Code of 1986, as amended, or (ii) comply
with the provisions of Section 409A. If it is determined that any payments or
benefits to be made or provided under this Agreement do not comply with
Section 409A, the parties agree to amend this Agreement or take such other
actions as reasonably necessary or appropriate to comply with Section 409A while
preserving the economic agreement of the parties.

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<<First_Name>> <<Last_Name>>   - 4 -   February 2, 2012

 

By signing below, you agree that the Phantom Units and DERs granted hereunder
are governed by the terms of the Plan. Copies of the Plan and the Partnership
Agreement are available upon request.

In order for this grant to be effective you must designate a beneficiary that
will be entitled to receive any benefits payable under this grant in the event
of your death. Unless you indicate otherwise by checking the appropriate box the
named beneficiaries on this form will serve as your beneficiaries for all
previous LTIP grants. Please execute and return a copy of this grant letter to
me and retain a copy for your records.

 

PAA NATURAL GAS STORAGE, L.P. By: PNGS GP LLC By:                           
                                                                       Name:  
Richard K. McGee Title:   Vice President