Exhibit 10.3

 

GRAPHIC [g191731kci001.jpg]

 

 

PLAINS

ALL AMERICAN

 

TRANSACTION GRANT AGREEMENT

 

September 9, 2010

 

[name and address]

 

Re:  Grant of MLP Phantom Units

 

Dear [name]:

 

I am pleased to inform you that Plains All American Pipeline, L.P. (“PAA” or the
“Partnership”) hereby grants to you a total of [amount] MLP Phantom Units, as
described below, certain of which include tandem Distribution Equivalent Rights
(“DERs”).  The MLP Phantom Units represent the right to receive, upon vesting as
provided below, equity securities of PAA Natural Gas Storage, L.P. (the “MLP”). 
Your MLP Phantom Units are denominated by reference to the currently outstanding
series and classes of MLP equity, as follows:

 

A.           [one-third amount] MLP Phantom Units shall be denominated in Common
Units of the MLP (the “Phantom Common Units”);

 

B.             [one-third amount] MLP Phantom Units shall be denominated in
Series A Subordinated Units of the MLP (the “Phantom Series A Units”); and

 

C.             [one-third amount] MLP Phantom Units shall be denominated in
Series B Subordinated Units of the MLP (the “Phantom Series B Units”).

 

A DER is a right to receive a quarterly cash payment from PAA equal to the
distributions made by the MLP with respect to a Common Unit or Series A
Subordinated Unit until such time that the tandem Phantom Common Unit or Phantom
Series A Unit is paid to you or forfeited.  No DERs are granted with respect to
the Phantom Series B Units.  The terms of this grant are set forth below.

 

1.                                       Subject to the further vesting
provisions below, the MLP Phantom Units will vest (become payable) and be
subject to payment as follows:

 

(a)                                  50% of the Phantom Common Units will vest
on May 5, 2011 and the remaining 50% on May 5, 2012, respectively, and be
payable on or within 20 Business Days of the applicable vesting date, in Common
Units equal in amount to the number of Phantom Common Units vesting.  Upon
vesting and payment, the DERs associated with your Phantom Common Units will
expire.  Notwithstanding the foregoing, you shall be entitled to receive a
proportionate

 

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share of the May 2011 and May 2012 distribution received by PAA with respect to
the delivered units.

 

(b)                                 100% of the Phantom Series A Units will vest
upon satisfaction of the requirements necessary to achieve conversion of the
Series A Subordinated Units into Common Units as set forth in the MLP
Partnership Agreement.  Because the Series A Subordinated Units will convert
into Common Units on the first Business Day following the satisfaction of such
requirements, upon vesting of the Phantom Series A Units, PAA will deliver
Common Units in lieu of the Series A Subordinated Units underlying the Phantom
Series A Units.  Any Phantom Series A Units that have not vested as of
December 31, 2018 will be automatically cancelled on such date. DERs associated
with the Phantom Series A Units will expire on the first Business Day following
vesting or cancellation of such units.

 

(c)                                  The Phantom Series B Units will vest as
follows: (i) 20% of your Phantom Series B Units will vest upon satisfaction of
the requirements necessary to achieve conversion of the First Tranche Series B
Subordinated Units into Series A Subordinated Units or Common Units, as set
forth in the MLP Partnership Agreement; (ii) 21% of your Phantom Series B Units
will vest upon satisfaction of the requirements necessary to achieve conversion
of the Second Tranche Series B Subordinated Units into Series A Subordinated
Units or Common Units, as set forth in the MLP Partnership Agreement; (iii) 15%
of your Phantom Series B Units will vest upon satisfaction of the requirements
necessary to achieve conversion of the Third Tranche Series B Subordinated Units
into Series A Subordinated Units or Common Units, as set forth in the MLP
Partnership Agreement; (iv) 22% of your Phantom Series B Units will vest upon
satisfaction of the requirements necessary to achieve conversion of the Fourth
Tranche Series B Subordinated Units into Series A Subordinated Units or Common
Units, as set forth in the MLP Partnership Agreement; and (v) 22% of your
Phantom Series B Units will vest upon satisfaction of the requirements necessary
to achieve conversion of the Fifth Tranche Series B Subordinated Units into
Series A Subordinated Units or Common Units, as set forth in the MLP Partnership
Agreement.  Upon vesting, the Phantom Series B Units will be payable by PAA in
Series A Subordinated Units or in Common Units it receives upon conversion of
the Series B Subordinated Units.  You shall be entitled to receive a
proportionate share of any distribution payment received by PAA upon conversion
of the Series B Subordinated Units pursuant to the terms of Section 5.12 of the
MLP Partnership Agreement. Any Phantom Series B Units that have not vested as of
December 31, 2018 will be automatically cancelled on such date.

 

(d)                                 Notwithstanding any other provision of this
Agreement, all of your Phantom Series A Units and Phantom Series B Units will
vest upon conversion of the Series A Subordinated Units and Series B
Subordinated Units pursuant to the terms of Section 11.4 of the MLP Partnership
Agreement.

 

2.                                       Subject to the exceptions below, in the
event of the termination of your employment with the Company and its Affiliates,
all of your then outstanding MLP Phantom Units

 

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and associated DERs shall automatically be forfeited as of the date of
termination.  The exceptions are:

 

(a)                                  If the Company or its Affiliates terminate
your employment other than a Termination for Cause: (i) any unvested Phantom
Common Units shall be deemed nonforfeitable on the date of termination, and
shall be payable on the next following Distribution Date; and (ii) any DERs
associated with the unvested, nonforfeitable Phantom Common Units described in
clause (i) shall not be forfeited on the date of termination, but shall be
payable and shall expire in accordance with paragraph 1(a);

 

(b)                                 If your employment with the Company or its
Affiliates is terminated 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 MLP Phantom Units
and tandem DERs shall not be forfeited on such date and: (i) such MLP Phantom
Units shall vest or be cancelled in accordance with paragraph 1 above; and
(ii) such DERs shall be payable and shall expire in accordance with paragraphs
1(a) and 1(b) above; and

 

(c)                                  In the event of a Change in Status, all of
your then outstanding MLP Phantom Units and tandem DERs shall be deemed 100%
non-forfeitable on such date, and such MLP Phantom Units shall be payable on the
next following Distribution Date.

 

3.                                       Notwithstanding anything herein to the
contrary:

 

(a)                                  If any vesting hereunder is generally
coincident with the conversion of any tranche of the underlying denominated
series or class of securities into a different series or class, PAA will satisfy
its obligations hereunder by delivery of units of the class or series into which
the underlying denominated series or class is converted.  PAA will deliver units
in satisfaction of its obligations as soon as reasonably practicable, but not
more than 20 Business Days following each vesting date;

 

(b)                                 In the event that any vesting hereunder or
any actions associated with such vesting would create potential “short-swing”
liability under Section 16 of the Securities Exchange Act, the Company in its
sole discretion may postpone such vesting until such time as determined by the
Company, but no later than March 13 of the year following the year in which the
Phantom Units would otherwise have vested; and

 

(c)                                  To the extent any of the rights accruing to
you hereunder may constitute “deferred compensation” within the meaning of
Section 409A of the I.R.C., it is the intention of the Company that the
provisions of this agreement comply in all respects with Section 409A.  If the
Company determines after the date hereof that an amendment hereto is necessary
to ensure the foregoing, it may make such amendment effective as of the grant
date or any later date, without

 

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your consent (provided that any such amendment shall be narrowly tailored to
achieve such compliance with as little deviation from the intent of this
agreement as of the date hereof as is practicable).

 

4.                                       Upon payment pursuant to a DER, you
agree that PAA may withhold any taxes due from your compensation as required by
law.  Upon vesting of an MLP Phantom Unit, you agree that PAA may withhold any
taxes due from your compensation as required by law, which, in the sole
discretion of PAA, may include withholding a number of Common Units or Series A
Subordinated Units otherwise payable to you.

 

As used herein, the phrase “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).

 

The phrase “Change in Status” means (A) the termination of your employment by
the Company and its Affiliates 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 material breach of this agreement by the Company or its
Affiliates; provided, however, a termination by you under Clause (B) 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, (2) the Company fails
to remedy the condition (or cause it to be remedied) within the 30-day period
following such notice and (3) you terminate your employment within 10 days of
the end of the 30-day period. As used herein, a termination of your employment
means a “separation from service” for purposes of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”).

 

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) the Company ceasing
to retain direct or indirect control of the general partner of the Partnership;
(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 the Company, 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 the Company and (b) the
Partnership, the Company or both; (iv) the Persons who own membership interests
in the Company on the date hereof cease to beneficially own, directly or
indirectly, more than 50% of the membership interest in the Company; or (v) 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 if (x) the Company retains direct or indirect
control over the general partner and (y) the Persons who own membership
interests in the Company on the date hereof continue to beneficially own,
directly or indirectly, more than 50% of the membership interest in the Company.

 

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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.

 

The “Company” refers to Plains All American GP LLC.

 

Terms used but not defined herein shall have the meanings set forth in the
Second Amended and Restated Agreement of Limited Partnership of PAA Natural Gas
Storage, L.P. (as amended, the “MLP Partnership Agreement”); provided, however,
that terms used but not defined in the definitions of “Change in Status,”
“Change of Control” and “Termination for Cause” shall have the meanings set
forth in the Third Amended and Restated Agreement of Limited Partnership of
Plains All American Pipeline, L.P. (as amended, the “Partnership Agreement”). 
Copies of the MLP Partnership Agreement and 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.  Please execute and return a copy of this grant letter to me no
later than 10 Business Days after your receipt, and retain a copy for your
files.

 

 

Plains All American Pipeline, L.P.

 

 

 

 

By:

PAA GP LLC, its general partner

 

By:

Plains AAP, L.P., its sole member

 

By:

Plains All American GP LLC, its general partner

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

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