Exhibit 10.3
Execution Version
TAX SHARING AGREEMENT
BY AND AMONG
PLAINS ALL AMERICAN PIPELINE, L.P.
AND
PAA NATURAL GAS STORAGE, L.P.
May 5, 2010

 

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TAX SHARING AGREEMENT
BY AND AMONG
PLAINS ALL AMERICAN PIPELINE, L.P. AND PAA NATURAL GAS STORAGE, L.P.
     Tax Sharing Agreement (the “Agreement”), dated this 5th day of May, 2010,
by and among PLAINS ALL AMERICAN PIPELINE, L.P. (“PAA”), a Delaware limited
partnership, and PAA NATURAL GAS STORAGE, L.P. (“PNGS”), a Delaware limited
partnership.
RECITALS
     WHEREAS, PAA is the owner of the member interests of PNGS GP LLC (the
general partner of PNGS) and common and subordinated units of PNGS;
     WHEREAS, the PNGS Group (as defined below) includes various entities that
may be required to join with PAA or its affiliates in the filing of a
consolidated, combined or unitary state tax return;
     WHEREAS, the Parties (as defined below) wish to set forth the general
principles under which they will allocate and share various Taxes (as defined
below) and related liabilities;
     WHEREAS, PAA, on behalf of itself and its present and future subsidiaries
other than the PNGS Group (“PAA Group”), and PNGS, on behalf of itself and its
present and future subsidiaries (the “PNGS Group”), are entering into this
Agreement to provide for the allocation among the PAA Group and the PNGS Group
of all responsibilities, liabilities and benefits relating to any Tax for which
a Combined Return (as defined below) is filed for a taxable period including or
beginning on or after the Effective Date (as defined below) and to provide for
certain other matters;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:
ARTICLE I
Definitions
     1.1 Definitions. The following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and the plural
forms of the terms defined):
     “Accounting Referee” is defined in Section 6.11 herein.
     “Code” means the Internal Revenue Code of 1986, as amended, or any
successor thereto, as in effect for the taxable period in question.
     “Combined Group” means a group of corporations or other entities that files
a Combined Return.

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     “Combined Return” means any Tax Return (other than a Tax Return for U.S.
federal income taxes) filed on a consolidated, combined (including nexus
combination, worldwide combination, domestic combination, line of business
combination or any other form of combination) or unitary basis that includes
activities of any member of the PAA Group and any member of the PNGS Group.
     “Effective Date” means 7:00 a.m., Central time, on [date of closing].
     “Final Determination” means the final resolution of any Tax (or other
matter) for a taxable period, including related interest or penalties, that,
under applicable law, is not subject to further appeal, review or modification
through proceedings or otherwise, including (i) by the expiration of a statute
of limitations or a period for the filing of claims for refunds, amending Tax
Returns, appealing from adverse determinations or recovering any refund
(including by offset), (ii) by a decision, judgment, decree or other order by a
court of competent jurisdiction, which has become final and unappealable,
(iii) by a closing agreement, an accepted offer in compromise or a comparable
agreement under laws of the particular Tax Authority, (iv) by execution of a
form under the laws of a Tax Authority that is comparable to an Internal Revenue
Service Form 870 or 870-AD (excluding, however, with respect to a particular Tax
Item for a particular taxable period any such form that reserves (whether by its
terms or by operation of law) the right of the taxpayer to file a claim for
refund and/or the right of the Tax Authority to assert a further deficiency with
respect to such Tax Item for such period) or (v) by any allowance of a refund or
credit, but only after the expiration of all periods during which such refund
may be adjusted.
     “Notice” is defined in Section 6.1 herein.
     “PAA Group” is defined in the recitals to this Agreement.
     “Party” means each of PAA and PNGS, and solely for purposes of this
definition, “PAA” includes the PAA Group and PNGS includes the PNGS Group. Each
of PAA and PNGS shall cause the PAA Group and the PNGS Group, respectively, to
comply with this Agreement.
     “PNGS Group” is defined in the Recitals to this Agreement.
     “PNGS Group Combined Tax Liability” means, with respect to any Tax, the
PNGS Group’s liability for such Tax owed with respect to a Combined Return for a
taxable period, as determined under Section 3.2 of this Agreement.
     “PNGS Group Deposit” is defined in Section 3.4 herein.
     “PNGS Group Members” means those entities included in the PNGS Group.
     “PNGS Group Pro Forma Combined Return” means a pro forma Combined Return or
other schedule prepared pursuant to Section 3.2 of this Agreement.
     “Reporting Entity” means the entity that is required by statute or rule to
file the particular Combined Return.

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     “Tax Attribute” means a Tax Item of a member of the PNGS Group reflected on
a Combined Return that is comparable to one or more of the following attributes
with respect to a U.S. federal income tax consolidated tax return: a net
operating loss, a net capital loss, an unused investment credit, an unused
foreign tax credit, an excess charitable contribution, a U.S. federal minimum
tax credit or a U.S. federal general business credit (but not tax basis or
earnings and profits).
     “Tax Authority” means a domestic governmental authority (other than the
United States) or any subdivision, agency, commission or authority thereof or
any quasi-governmental or private body having jurisdiction over the assessment,
determination, collection or imposition of any Tax (excluding the U.S. Internal
Revenue Service).
     “Tax Controversy” means any audit, examination, dispute, suit, action,
litigation or other judicial or administrative proceeding initiated by PAA or
PNGS or any Tax Authority.
     “Tax Item” means any item of income, gain, loss, deduction or credit, or
other item reflected on a Tax Return or any Tax Attribute.
     “Tax Return” means any return, report, certificate, form or similar
statement or document (including any related or supporting information or
schedule attached thereto and any information return, amended Tax Return, claim
for refund or declaration of estimated tax) required to be supplied to, or filed
with, a Tax Authority in connection with the determination, assessment or
collection of any Tax or the administration of any laws, regulations or
administrative requirements relating to any Tax.
     “Tax” or “Taxes” means all forms of taxation, whenever created or imposed,
and whether imposed by a domestic, local, municipal, governmental, state,
federation or other body, but excluding taxes imposed by the United States, and
without limiting the generality of the foregoing, shall include net income,
alternative or add-on minimum, gross income, sales, use, ad valorem, gross
receipts, value added, franchise, profits, license, transfer, recording,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, windfall profit, custom duty or other tax, governmental fee or like
assessment or charge of any kind whatsoever, together with any related interest,
penalties or other additions to tax, or additional amounts imposed by any such
Tax Authority.
Any term used but not capitalized herein that is defined in the Code or in the
Treasury Regulations thereunder shall, to the extent required by the context of
the provision at issue, have the meaning assigned to it in the Code or such
regulation.
ARTICLE II
Preparation and Filing of Tax Returns
2.1 Manner of Filing
          (a) For periods that include the Effective Date and periods after the
Effective Date, PAA shall have the sole and exclusive responsibility for the
preparation and filing of, and shall cause the Reporting Entity to prepare and
file, all Combined Returns. PAA shall be authorized to take any and all action
necessary or incidental to the preparation and filing of a

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Combined Return, including, without limitation, (i) making elections and
adopting accounting methods, (ii) filing all extensions of time, including
extensions of time for payment of tax, (iii) filing claims for refund or credit
or (iv) giving waivers or bonds.
          (b) For periods that include the Effective Date and periods after the
Effective Date, the PNGS Group shall have the sole and exclusive responsibility
for the preparation and filing of, and shall prepare and file or cause to be
prepared and filed, all Tax Returns of the PNGS Group Members that are not
Combined Returns.
          (c) PAA shall have sole discretion to include, or cause to be
included, in a Combined Return for any Tax any member of the PNGS Group for
which inclusion in such Combined Return is elective; provided, however, that the
PNGS Group Combined Tax Liability for any period shall not exceed the aggregate
of (x) each such elective PNGS Group Member’s liability for such Tax for such
period, computed as if such PNGS Group Member were not included in such Combined
Return and (y) the PNGS Group Combined Tax Liability calculated for the PNGS
Group Members for which inclusion is not elective. PAA shall provide pro forma
Tax Returns pursuant to Section 3.5 of this Agreement to support the calculation
of the amount of any decrease in the PNGS Group Combined Tax Liability pursuant
to this Section 2.1(c).
     2.2 Franchise Tax Taxable Period. References to “taxable period” for any
franchise or other doing business Tax shall mean the taxable period during which
the income, operations, assets or capital comprising the base of such Tax is
measured, regardless of whether the right to do business for another taxable
period is obtained by the payment of such franchise Tax.
ARTICLE III
Allocation of Taxes
     3.1 Liability of the PNGS Group for Combined Taxes. For each Tax for each
taxable period that includes or begins on or after the Effective Date and for
which a Combined Return is filed, the PNGS Group Members included in such
Combined Return shall be liable to PAA for an amount equal to the PNGS Group
Combined Tax Liability in respect of such Tax.
     3.2 PNGS Group Combined Tax Liability. With respect to each Tax for each
taxable period that includes or begins on or after the Effective Date and for
which a member of the PNGS Group is included in a Combined Return, the PNGS
Group Combined Tax Liability for such Tax for such taxable period shall be the
Tax for such taxable period as determined on a PNGS Group Pro Forma Combined
Return prepared:
          (a) by including only the Tax Items of the members of the PNGS Group
that are included in the Combined Return and computing the liability of the PNGS
Group Members for such Tax as if such PNGS Group Members were included in a
separate combined, consolidated or unitary return that includes only the PNGS
Group Members;
          (b) except as provided in Section 3.2(e) hereof, using all elections,
accounting methods and conventions used on the Combined Return for such period;

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          (c) applying the Tax rate in effect for the Combined Return of the
Combined Group for such taxable period;
          (d) assuming that the PNGS Group elects not to carry back any net
operating losses and
          (e) assuming that the PNGS Group’s utilization of any Tax Attribute
carryforward or carryback is limited to the Tax Attributes of the PNGS Group
that would be available if the PNGS Group Combined Tax Liability for each
taxable period ending after the Effective Date were determined in accordance
with this Section 3.2.
     3.3 Preparation and Delivery of Pro Forma Tax Returns. Not later than
90 days following the date on which a Combined Return is filed with the
appropriate Tax Authority, PAA shall prepare and deliver to PNGS the related
PNGS Group Pro Forma Combined Return calculating the PNGS Group Combined Tax
Liability attributable to the period covered by such filed Combined Return.
     3.4 Payment of Tax. PAA shall timely pay (or shall cause to be timely paid)
any Tax reflected on a Combined Return and hold PNGS harmless for all liability
for such Tax. In the event PAA is required to make an estimated payment or
deposit of any Tax of any Combined Group which includes any member of the PNGS
Group, PAA shall calculate the portion, if any, of such estimated payment or
deposit attributable to the PNGS Group using a methodology similar to that
described in Section 3.2 (the “PNGS Group Deposit”) and shall present such
calculation to PNGS. Within 5 days thereafter, PNGS shall pay the PNGS Group
Deposit to PAA. Within 30 days after delivery by PAA of a PNGS Group Pro Forma
Combined Return to PNGS calculating the PNGS Group Combined Tax Liability with
respect to a Combined Return, PNGS shall pay to PAA such PNGS Group Combined Tax
Liability less the amount of any PNGS Group Deposit relating to the same
Combined Return.
     3.5 Subsequent Changes in Treatment of Tax Items. With respect to any
Combined Return for any taxable period beginning on or after the Effective Date,
in the event of a change in the treatment of any Tax Item of any member of a
Combined Group as a result of a Final Determination, within 30 days following
such Final Determination (i) PAA shall calculate the change, if any, to the PNGS
Group Combined Tax Liability resulting from such change, (ii) PAA shall pay any
decrease in the PNGS Group Combined Tax Liability to PNGS and (iii) PNGS shall
pay any increase in the PNGS Group Combined Tax Liability to PAA.
ARTICLE IV
Control of Tax Proceedings; Cooperation and Exchange of Information
     4.1 Control of Proceedings. Except as provided in this Article IV, PAA
shall have full responsibility and discretion in handling, settling or
contesting any Tax Controversy involving a Tax Return for which it has filing
responsibility under this Agreement as well as all Tax Returns for all taxable
periods ending before the Effective Date. PNGS shall have full responsibility
and discretion in handling, settling or contesting any Tax Controversy involving
a Tax Return for which it has filing responsibility under this Agreement. Except
as otherwise

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provided in this Article IV, any costs incurred in handling, settling or
contesting any Tax Controversy shall be borne by the Party having full
responsibility and discretion thereof.
     4.2 Cooperation and Exchange of Information.
          (a) Each Party shall cooperate fully at such time and to the extent
reasonably requested by any other Party in connection with the preparation and
filing of any Tax Return or claim for refund, or the conduct of any audit,
dispute, proceeding, suit or action concerning any issues or other matters
considered in this Agreement. Such cooperation shall include, without
limitation, the following: (i) the retention and provision on demand of Tax
Returns, books, records (including those concerning ownership and Tax basis of
property which a Party may possess), documentation or other information relating
to the Tax Returns, including accompanying schedules, related workpapers and
documents relating to rulings or other determinations by Taxing Authorities,
until the expiration of the applicable statute of limitations (giving effect to
any extension, waiver or mitigation thereof); (ii) the provision of additional
information, including an explanation of material provided under clause (i) of
this Section 4.2(a), to the extent such information is necessary or reasonably
helpful in connection with the foregoing; (iii) the execution of any document
that may be necessary or reasonably helpful in connection with the filing of a
Tax Return by PAA, PNGS or of their respective subsidiaries, or in connection
with any audit, dispute, proceeding, suit or action and (iv) such Party’s
commercially reasonable efforts to obtain any documentation from a governmental
authority or a third party that may be necessary or reasonably helpful in
connection with any of the foregoing.
          (b) Each Party shall make its employees and facilities available on a
reasonable and mutually convenient basis in connection with any of the foregoing
matters.
          (c) If any Party fails to provide any information requested pursuant
to Section 4.2 hereof within a reasonable period, as determined in good faith by
the Party requesting the information, then the requesting Party shall have the
right to engage a public accounting firm to gather such information, provided
that 30 days’ prior written notice is given to the unresponsive Party. If the
unresponsive Party fails to provide the requested information within 30 days of
receipt of such notice, then such unresponsive Party shall permit the requesting
Party’s public accounting firm full access to all appropriate records or other
information as reasonably necessary to comply with this Section 4.2 and shall
reimburse the requesting Party or pay directly all costs connected with the
requesting Party’s engagement of the public accounting firm.
ARTICLE V
Warranties and Representations; Payment Obligations
     5.1 Warranties and Representations Relating to Actions of PAA and PNGS.
Each of PAA and PNGS warrants and represents to the other that:
          (a) in the case of PAA, it 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 to carry out the transactions contemplated by this
Agreement;

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          (b) in the case of PNGS, it 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 to carry out the transactions contemplated by this
Agreement;
          (c) it has duly and validly taken all action necessary to authorize
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby;
          (d) this Agreement has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation enforceable in accordance
with its terms subject, as to the enforcement of remedies, to (i) applicable
bankruptcy, reorganization, insolvency, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally from time to time in
effect and (ii) general principles of equity, whether enforcement is sought in a
proceeding at law or in equity and
          (e) the execution and delivery of this Agreement, the consummation of
the transactions contemplated hereby or the compliance with any of the
provisions of this Agreement will not (i) conflict with or result in a breach of
any provision of its certificate of incorporation, by-laws, certificate of
limited partnership, limited partnership agreement or general partnership
agreement, as the case may be, (ii) breach, violate or result in a default under
any of the terms of any agreement or other instrument or obligation to which it
is a party or by which it or any of its properties or assets may be bound or
(iii) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to it or affecting any of its properties or assets.
     5.2 Calculation of Payment Obligations. Except as otherwise provided under
this Agreement, to the extent that the payor Party has a payment obligation to
the payee Party pursuant to this Agreement, the payee Party shall provide the
payor Party with its calculation of the amount of such obligation. The
documentation of such calculation shall provide sufficient detail to permit the
payor Party to reasonably understand the calculation. All payment obligations
shall be made to the payee Party or to the appropriate Tax Authority as
specified by the payee Party within 30 days after delivery by the payee Party to
the payor Party of written notice of a payment obligation. Any disputes with
respect to payment obligations shall be resolved in accordance with Section 6.11
below.
     5.3 Prompt Performance. All actions required to be taken by any Party under
this Agreement shall be performed within the time prescribed for performance in
this Agreement or if no period is prescribed, such actions shall be performed
promptly.
     5.4 Interest. Payments pursuant to this Agreement that are not made within
the period prescribed therefor in this Agreement shall bear interest (compounded
daily) from and including the date immediately following the last date of such
period through and including the date of payment at a rate equal to the U.S.
federal short-term rate or rates established pursuant to Section 6621 of the
Code for the period during which such payment is due but unpaid.
     5.5 Tax Records. The Parties to this Agreement hereby agree to retain and
provide on proper demand by any Tax Authority (subject to any applicable
privileges) the books, records, documentation and other information relating to
any Tax Return until the later of (i) the

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expiration of the applicable statute of limitations (giving effect to any
extension, waiver or mitigation thereof), (ii) the date specified in an
applicable records retention agreement entered into with a Tax Authority,
(iii) a Final Determination made with respect to such Tax Return and (iv) the
final resolution of any claim made under this Agreement for which such
information is relevant.
     5.6 Continuing Covenants. Each Party agrees (i) not to take any action
reasonably expected to result in a new or changed Tax Item that is detrimental
to any other Party and (ii) to take any action reasonably requested by any other
Party that would reasonably be expected to result in a new or changed Tax Item
that produces a benefit or avoids a detriment to such other Party; provided that
such action does not result in any additional cost not fully compensated for by
the requesting Party. The Parties hereby acknowledge that the preceding sentence
is not intended to limit, and therefore shall not apply to, the rights of the
Parties with respect to matters otherwise covered by this Agreement.
ARTICLE VI
Miscellaneous Provisions
     6.1 Notice. Any notice, demand, claim or other communication required or
permitted to be given under this Agreement (a “Notice”) shall be in writing and
may be personally served provided a receipt is obtained therefor, or may be sent
by certified mail return receipt requested postage prepaid, to the Parties at
the following addresses (or at such other address as one Party may specify by
notice to any other Party):

         
 
  PAA at:   Plains All American Pipeline, L.P.
 
      333 Clay Street, Suite 1600
 
      Houston, Texas 77002
 
      Attention: General Counsel
 
       
 
  PNGS at:   PAA Natural Gas Storage, L.P.
 
      c/o PAA All American Pipeline, L.P.
 
      333 Clay Street, Suite 1500
 
      Houston, Texas 77002
 
      Attention: Vice President – Legal

     A Notice which is delivered personally shall be deemed given as of the date
specified on the written receipt therefor. A Notice mailed as provided herein
shall be deemed given on the third business day following the date so mailed.
Notification of a change of address may be given by any Party to another in the
manner provided in this Section 6.1 for providing a Notice.
     6.2 Required Payments. Unless otherwise provided in this Agreement, any
payment of Tax required shall be due within 30 days of a Final Determination of
the amount of such Tax.
     6.3 Injunctions. The Parties acknowledge that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or were otherwise breached. The
Parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically

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the terms and provisions of this Agreement in any court having jurisdiction,
such remedy being in addition to any other remedy to which they may be entitled
at law or in equity.
     6.4 Further Assurances. Subject to the provisions hereof, the Parties
hereto shall make, execute, acknowledge and deliver such other instruments and
documents, and take all such other actions, as may be reasonably required in
order to effectuate the purposes of this Agreement and to consummate the
transactions contemplated hereby. Subject to the provisions hereof, each of the
Parties shall, in connection with entering into this Agreement, perform its
obligations hereunder and take any and all actions relating hereto, comply with
all applicable laws, regulations, orders and decrees, obtain all required
consents and approvals and make all required filings with any governmental
agency, other regulatory or administrative agency, commission or similar
authority and promptly provide the other Parties with all such information as
such Parties may reasonably request in order to be able to comply with the
provisions of this sentence.
     6.5 Parties in Interest. Except as herein otherwise specifically provided,
nothing in this Agreement expressed or implied is intended to confer any right
or benefit upon any person, firm or corporation other than the Parties and their
respective successors and permitted assigns.
     6.6 Setoff. Except as provided by Section 2.1(c) of this Agreement, all
payments to be made under this Agreement shall be made without setoff,
counterclaim or withholding, all of which are expressly waived.
     6.7 Change of Law. If, due to any change in applicable law or regulations
or the interpretation thereof by any court of law or other governing body having
jurisdiction subsequent to the date of this Agreement, performance of any
provision of this Agreement or any transaction contemplated hereby shall become
impracticable or impossible, the Parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such provision.
     6.8 Termination and Survival. Notwithstanding anything in this Agreement to
the contrary, this Agreement shall remain in effect and its provisions shall
survive for the full period of all applicable statutes of limitation (giving
effect to any extension, waiver or mitigation thereof) or until otherwise agreed
to in writing by PAA and PNGS, or their successors.
     6.9 Amendments; No Waivers.
          (a) Any provision of this Agreement may be amended or waived if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by PAA and PNGS, or in the case of a waiver, by the Party against
whom the waiver is to be effective.
          (b) No failure or delay by any Party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.

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     6.10 Governing Law and Interpretation. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed in the State of Delaware.
     6.11 Resolution of Certain Disputes. Any disagreement between the Parties
with respect to any matter that is the subject of this Agreement, including,
without limitation, any disagreement with respect to any calculation or other
determinations by PAA hereunder, which is not resolved by mutual agreement of
the Parties, shall be resolved by a nationally recognized independent accounting
firm chosen by and mutually acceptable to the Parties hereto (an “Accounting
Referee”). Such Accounting Referee shall be chosen by the Parties within fifteen
(15) business days from the date on which one Party serves written notice on
another Party requesting the appointment of an Accounting Referee, provided that
such notice specifically describes the calculations to be considered and
resolved by the Accounting Referee. In the event the Parties cannot agree on the
selection of an Accounting Referee, then the Accounting Referee shall be any
office or branch of the public accounting firm of [PricewaterhouseCoopers LLP].
The Accounting Referee shall resolve any such disagreements as specified in the
notice within 30 days of appointment; provided, however, that no Party shall be
required to deliver any document or take any other action pursuant to this
Section 6.11 if it determines that such action would result in the waiver of any
legal privilege or any detriment to its business. Any resolution of an issue
submitted to the Accounting Referee shall be final and binding on the Parties
hereto without further recourse. The Parties shall share the costs and fees of
the Accounting Referee equally.
     6.12 Confidentiality. Except to the extent required to protect a Party’s
interests in a Tax Controversy, each Party shall hold and shall cause its
consultants and advisors to hold in strict confidence, unless compelled to
disclose by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law, all information (other than any such
information relating solely to the business or affairs of such Party) concerning
another Party or its representatives pursuant to this Agreement (except to the
extent that such information can be shown to have been (i) previously known by
the Party to which it was furnished, (ii) in the public domain through no fault
of such Party or (iii) later lawfully acquired from other sources by the Party
to which it was furnished), and each Party shall not release or disclose such
information to any other person, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors who shall be advised of the
provisions of this Agreement. Each Party shall be deemed to have satisfied its
obligation to hold confidential information concerning or supplied by another
Party if it exercises the same care as it takes to preserve confidentiality for
its own similar information.
     6.13 Costs, Expenses and Attorneys’ Fees. Except as expressly set forth in
this Agreement, each Party shall bear its own costs and expenses incurred
pursuant to this Agreement. In the event a Party to this Agreement brings an
action or proceeding for the breach or enforcement of this Agreement, the
prevailing party in such action, proceeding or appeal, whether or not such
action, proceeding or appeal proceeds to final judgment, shall be entitled to
recover as an element of its costs, and not as damages, such reasonable
attorneys’ fees as may be awarded in the action, proceeding or appeal in
addition to whatever other relief the prevailing party may be entitled. For
purposes of this Section 6.13, the “prevailing party” shall be the Party who is
entitled to recover its costs; a Party not entitled to recover its costs shall
not recover

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attorneys’ fees. No sum for attorneys’ fees shall be counted in calculating the
amount of the judgment for purposes of determining whether a Party is entitled
to recover its costs or attorneys’ fees.
     6.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
     6.15 Severability. The Parties hereby agree that, if any provision of this
Agreement should be adjudicated to be invalid or unenforceable, such provision
shall be deemed deleted herefrom with respect, and only with respect, to the
operation of such provision in the particular jurisdiction in which such
adjudication was made, and only to the extent of the invalidity, and any such
invalidity or unenforceability in a particular jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. All other
remaining provisions of this Agreement shall remain in full force and effect for
the particular jurisdiction and all other jurisdictions.
     6.16 Entire Agreement.
          (a) This Agreement contains the entire agreement between the Parties
with respect to the subject matter hereof and supersedes all other agreements,
whether or not written, in respect of any Tax between the PAA Group and the PNGS
Group.
          (b) In the event of any conflict or inconsistency between the
provisions of this Agreement and the provisions of any other agreement between
the PAA Group and the PNGS Group, the provisions of this Agreement shall take
precedence and to such extent shall be deemed to supersede such conflicting
provisions under the other agreement.
     6.17 Assignment. This Agreement is being entered into by PAA and PNGS on
behalf of themselves and each member of the PAA Group and the PNGS Group. This
Agreement shall constitute a direct obligation of each such member and shall be
deemed to have been readopted and affirmed on behalf of any entity that becomes
a member of the PAA Group or the PNGS Group in the future. Each of PAA and PNGS
hereby guarantee the performance of all actions, agreements and obligations
provided for under this Agreement of each member of the PAA Group and the PNGS
Group, respectively. Each of PAA and PNGS shall, upon the written request of the
other, cause any of their respective group members to formally execute this
Agreement. This Agreement shall be binding upon, and shall inure to the benefit
of, the successors, assigns and persons controlling any of the entities bound
hereby for so long as such successors, assigns or controlling persons are
members of the PAA Group or the PNGS Group or their successors and assigns.
     6.18 Fair Meaning. This Agreement shall be construed in accordance with its
fair meaning and shall not be construed strictly against the drafter.
     6.19 Titles and Headings. Titles and headings to sections herein are
inserted for the convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.

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     6.20 Construction. In this Agreement, unless the context otherwise
requires, the terms “herein,” “hereof” and “hereunder” refer to this Agreement.
[Signature Page Follows]

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     IN WITNESS WHEREOF, the Parties hereto have executed and delivered this
Agreement as of the day and year first above written.

            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:   /s/ Al Swanson         Name:   Al Swanson        Title:   Senior
Vice President and
Chief Financial Officer     

            PAA NATURAL GAS STORAGE, L.P.

      By:   PNGS GP LLC,         its general partner            By:   /s/
Richard McGee         Name:   Richard McGee        Title:   Vice President –
Legal and Business
Development and Secretary