exv10w1






Exhibit 10.1




Execution Version




CONTRIBUTION AGREEMENT




By and Among



PAA NATURAL GAS STORAGE, L.P.



PNGS GP LLC



PLAINS ALL AMERICAN PIPELINE, L.P.



PAA NATURAL GAS STORAGE, LLC



PAA/VULCAN GAS STORAGE, LLC



PLAINS MARKETING, L.P.



And



PLAINS MARKETING GP INC.



Dated as of April 29, 2010










 









 








CONTRIBUTION AGREEMENT




     This Contribution Agreement, dated as of April 29, 2010 (this “Agreement”), is by and among
PAA Natural Gas Storage, L.P., a Delaware limited partnership (the “Partnership”), PNGS GP LLC, a
Delaware limited liability company and the general partner of the Partnership (the “General
Partner”), Plains All American Pipeline, L.P., a Delaware limited partnership (“PAA”), PAA Natural
Gas Storage, LLC, a Delaware limited liability company (“PNGS”), PAA/Vulcan Gas Storage, LLC, a
Delaware limited liability company (“PVGS”), Plains Marketing, L.P., a Texas limited partnership
(“PMLP”), and Plains Marketing GP Inc., a Delaware corporation (“PMGP”). The above-named entities
are sometimes referred to in this Agreement each as a “Party” and collectively as the “Parties.”
Capitalized terms used herein shall have the meanings assigned to such terms in Article I.



RECITALS




     WHEREAS, PAA formed the General Partner under the terms of the Delaware Limited Liability
Company Act and contributed $1,000 in exchange for all of the member interests in the General
Partner (the “Initial PNGS GP Interest”).



     WHEREAS, the General Partner and PAA formed the Partnership, pursuant to the Delaware Revised
Uniform Limited Partnership Act (the “Delaware LP Act”), for the primary purpose of having the
Partnership own, operate and grow the natural gas storage business that PAA acquired in 2005 and
has continuously operated since that time (the “Gas Storage Business”).



     WHEREAS, in connection with the formation of the Partnership, the General Partner and PAA
contributed $20 and $980, respectively (the “Initial Contributions”), in exchange for a 2.0%
general partner interest (the “Initial GP Interest”) and a 98.0% limited partner interest (the
“Initial LP Interest”), respectively, in the Partnership.



     WHEREAS, as contemplated by that certain Registration Statement on Form S-1 (Registration No.
333-164492) filed by the Partnership with the Securities and Exchange Commission (the “Commission”)
to register the public offering and sale of the limited partner interests in the Partnership (as
amended, the “Registration Statement”), PAA intends to cause various transactions to occur at or
prior to the closing of such offering, including the contribution of the equity interest in the
entities that own the Gas Storage Business to the Partnership.



     WHEREAS, the Parties desire to enter into this Agreement for the purpose of effecting such
transactions.



     NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and
agreements herein contained, the parties hereto agree as follows:



ARTICLE I

DEFINITIONS




     The terms set forth below in this Article I shall have the meanings ascribed to them below:



 









 





     “Applicable Time” has the meaning assigned to such term in Section 2.6.



     “Common Unit” has the meaning assigned to such term in the Partnership Agreement.



     “Credit Agreement” has the meaning assigned to such term in the Partnership Agreement.



     “Deferred Issuance and Distribution” has the meaning assigned to such term in the
Partnership Agreement.



     “Effective Time” means 12:01 a.m. Central Standard Time on the date of the Closing of
the Initial Offering.



     “Excess Intercompany Debt” means an amount of Intercompany Debt equal to the
Intercompany Debt as of the Effective Time minus (i) the Partnership’s initial draw under the
Credit Agreement in the amount of $200,000,000 and (ii) the Net IPO Proceeds.



     “GP Contribution Interest” means an undivided 2% interest in and to PVGS’ 100% equity
ownership interest in PNGS.



     “Incentive Distribution Rights” has the meaning assigned to such term in the
Partnership Agreement.



     “Initial Offering” has the meaning assigned to such term in the Partnership Agreement.



     “Intercompany Debt” means the indebtedness owed by PNGS to PAA pursuant to that
certain note payable dated September 3, 2009.



     “Net IPO Proceeds” means the gross amount of proceeds from the Initial Offering less
an amount equal to the sum of (i) the transaction expenses of the Initial Offering of approximately
$2,600,000 and (ii) the Underwriter’s spread of 6.125% of the gross proceeds from the Initial
Offering.



     “Over-Allotment Option” has the meaning assigned to such term in the Partnership
Agreement.



     “Partnership Agreement” means the First Amended and Restated Agreement of Limited
Partnership of the Partnership dated as of the closing of the Initial Offering.



     “Partnership Contribution Interest” means all of PVGS’ equity interest in PNGS except
for the GP Contribution Interest.



     “Registration Statement” means the Registration Statement on Form S-1 filed with the
Commission (Registration No. 333-164492).



     “Series A Subordinated Units” has the meaning assigned to such term in the Partnership
Agreement.



     “Series B Subordinated Units” has the meaning assigned to such term in the Partnership
Agreement.



2









 





     “Underwriters” means those underwriters listed in the Underwriting Agreement.



     “Underwriting Agreement” means that certain Underwriting Agreement to be entered into
among Barclays Capital Inc., UBS Securities LLC, Citigroup Global Markets Inc. and Wells Fargo
Securities, LLC, as representatives of the Underwriters, the General Partner, the Partnership, PAA
and the other parties thereto.



ARTICLE II

CERTAIN CONTRIBUTIONS AND OTHER TRANSACTIONS




     Section 2.1 Contribution of a 50% Interest in the Excess Intercompany Debt by PAA to
PMLP. Effective immediately following the Effective Time, PAA hereby contributes, conveys,
assigns and transfers to PMLP a 50% interest in the Excess Intercompany Debt (0.001% of such 50%
interest is hereby deemed to have been contributed by PAA to PMGP and then by PMGP to PMLP).



     Section 2.2 Contribution of a 50% Interest in the Excess Intercompany Debt by each of PAA
and PMLP to PVGS. Effective immediately following the consummation of the transaction
described in Section 2.1, PAA and PMLP each hereby contribute, convey, assign and transfer to PVGS
a 50% interest in the Excess Intercompany Debt.



     Section 2.3 Contribution of the Excess Intercompany Debt by PVGS to PNGS. Effective
immediately following the consummation of the transaction described in Section 2.2, PVGS hereby
contributes, conveys, assigns and transfers to PNGS the Excess Intercompany Debt, thereby
extinguishing the Excess Intercompany Debt.



     Section 2.4 Contribution of the GP Contribution Interest by PVGS to the General
Partner. Effective immediately following the consummation of the transaction described in
Section 2.3, PVGS hereby contributes, conveys, assigns and transfers to the General Partner the GP
Contribution Interest in exchange for a membership interest in the General Partner (the “PNGS GP
Interest”).



     Section 2.5 Redemption of the Initial PNGS GP Interest. Effective simultaneously with
the consummation of the transaction described in Section 2.4, the General Partner hereby redeems
the Initial PNGS GP Interest in exchange for the repayment to PAA of the $1,000 contribution made
by PAA to the General Partner in connection with the formation of the General Partner, along with
any interest or other profit that may have resulted from the investment or other use of such
contribution.



     Section 2.6 Contribution of the GP Contribution Interest by the General Partner to the
Partnership. Effective simultaneously with the initial delivery of Common Units by the
Partnership to the Underwriters on the “Initial Delivery Date” under the Underwriting Agreement
(the “Applicable Time”), the General Partner hereby contributes, conveys, assigns and transfers
the GP Contribution Interest to the Partnership, as a capital contribution, in exchange for (a) a
continuation of its 2.0% general partner interest in the Partnership, (b) the issuance of the
Incentive Distribution Rights and (c) the return of its Initial Contribution, along with any
interest or other profit that may have resulted from the investment or other use of such Initial
Contribution.



3









 





     Section 2.7 Contribution of the Partnership Contribution Interest by PVGS to the
Partnership. Effective as of the Applicable Time, PVGS hereby contributes, conveys, assigns and
transfers the Partnership Contribution Interest to the Partnership, as a capital contribution, in
exchange for (a) 20,084,529 Common Units (or, to the extent the initial sale of Common Units by the
Partnership to the Underwriters on the “Initial Delivery Date” under the Underwriting Agreement
exceeds 10,000,000 Common Units, a number of Common Units equal to (i) 20,084,529 minus (ii) the
product of (A) the number of such Common Units sold to the Underwriters in excess of 10,000,000
Common Units and (B) 1.15), (b) 13,934,351 Series A Subordinated Units, (c) 11,500,00 Series B
Subordinated Units, and (d) the right to receive the Deferred Issuance and Distribution
(collectively, the “MLP LP Interests”).



     Section 2.8 Redemption of the Initial LP Interest. Effective as of the Applicable
Time, the Partnership hereby redeems the Initial LP Interest in exchange for the repayment to PAA
of the Initial Contribution made by PAA to the Partnership in connection with the formation of the
Partnership, along with any interest or other profit that resulted from the investment or other use
of such Initial Contribution.



     Section 2.9 Assumption of the Intercompany Debt by the Partnership. Effective
immediately following the Applicable Time, the Partnership hereby assumes the Intercompany Debt
obligation (as reduced by virtue of the transaction consummated pursuant to Section 2.3).



     Section 2.10 Contribution of Proceeds from the Partnership to PAA and Retirement of the
Intercompany Debt. Effective immediately following consummation of the transaction described
in Section 2.9 and in full and complete satisfaction of the Intercompany Debt, the Partnership
shall pay PAA an amount equal to the aggregate principal and interest outstanding under the
Intercompany Debt as of the Applicable Time (the “Outstanding Debt”), which amount represents the
sum of (i) the Partnership’s initial draw under the Credit Agreement in the amount of $200,000,000
and (ii) the Net IPO Proceeds.



     Section 2.11 Distribution of the MLP LP Interests and PNGS GP Interest by PVGS.
Effective immediately following consummation of the transaction described in Section 2.9, PVGS
hereby distributes the MLP LP Interests and the PNGS GP Interest to PMLP and PAA in accordance with
their respective percentage interests in PVGS.



     Section 2.12 Distribution of the MLP LP Interests and PNGS GP Interest by PMLP.
Effective immediately following consummation of the transaction described in Section 2.11, PMLP
hereby distributes the MLP LP Interests and the PNGS GP Interest owned by it to PAA and PMGP in
accordance with their respective percentage interests in PMLP.



     Section 2.13 Distribution of the MLP LP Interests and PNGS GP Interest by PMGP.
Effective immediately following consummation of the transaction described in Section 2.12, PMGP
hereby distributes the MLP LP Interests and the PNGS GP Interest owned by it to PAA.



4









 





ARTICLE III

FURTHER ASSURANCES




     From time to time after the Applicable Time, and without any further consideration, the
Parties agree to execute, acknowledge and deliver all such additional assignments, conveyances,
instruments, notices and other documents, and to do all such other acts and things, all in
accordance with applicable law, as may be necessary or appropriate (a) more fully to assure that
the applicable Parties own all of the properties, rights, titles, interests, estates, remedies,
powers and privileges granted by this Agreement, or which are intended to be so granted, (b) more
fully and effectively to vest in the applicable Parties and their respective successors and assigns
beneficial and record title to the interests contributed and assigned by this Agreement or intended
to be so and (c) more fully and effectively to carry out the purposes and intent of this Agreement.



ARTICLE IV

MISCELLANEOUS




     Section 4.1 Order of Completion of Transactions. The transactions provided for in
Article II of this Agreement shall be completed in the order and at the times set forth in Article
II.



     Section 4.2 Effective Time. Notwithstanding anything contained in this Agreement to
the contrary, the provisions of Article II and Article III shall not be binding or have any effect
until the Partnership executes the Underwriting Agreement, at which time all such provisions shall
be effective and operative without further action by any Party hereto.



     Section 4.3 Headings; References; Interpretation. All Article and Section headings in
this Agreement are for convenience only and shall not be deemed to control or affect the meaning or
construction of any of the provisions hereof. The words “hereof,” “herein” and “hereunder” and
words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, and
not to any particular provision of this Agreement. All references herein to Articles and Sections
shall, unless the context requires a different construction, be deemed to be references to the
Articles and Sections of this Agreement. All personal pronouns used in this Agreement, whether used
in the masculine, feminine or neuter gender, shall include all other genders, and the singular
shall include the plural and vice versa. The use herein of the word “including” following any
general statement, term or matter shall not be construed to limit such statement, term or matter to
the specific items or matters set forth immediately following such word or to similar items or
matters, whether or not non-limiting language (such as “without limitation”, “but not limited to”,
or words of similar import) is used with reference thereto, but rather shall be deemed to refer to
all other items or matters that could reasonably fall within the broadest possible scope of such
general statement, term or matter.



     Section 4.4 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Parties and their respective successors and assigns.



     Section 4.5 No Third Party Rights. The provisions of this Agreement are intended to
bind the Parties as to each other and are not intended to and do not create rights in



5









 




any other person or confer upon any other person any benefits, rights or remedies, and no
person is or is intended to be a third party beneficiary of any of the provisions of this
Agreement.




     Section 4.6 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.



     Section 4.7 Choice of Law. This Agreement shall be subject to and governed by the laws
of the State of Texas. Each Party hereby submits to the jurisdiction of the state and federal
courts in the State of Texas and to venue in Houston, Texas.



     Section 4.8 Severability. If any of the provisions of this Agreement are held by any
court of competent jurisdiction to contravene, or to be invalid under, the laws of any political
body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not
invalidate the entire Agreement. Instead, this Agreement shall be construed as if it did not
contain the particular provisions or provisions held to be invalid and an equitable adjustment
shall be made and necessary provision added so as to give effect to the intention of the Parties as
expressed in this Agreement at the time of execution of this Agreement.



     Section 4.9 Amendment or Modification. This Agreement may be amended or modified from
time to time only by the written agreement of all the Parties. Each such instrument shall be
reduced to writing and shall be designated on its face as an amendment to this Agreement.



     Section 4.10 Integration. This Agreement and the instruments referenced herein
supersede all previous understandings or agreements among the Parties, whether oral or written,
with respect to the specific transactions effected pursuant to this Agreement and such instruments.



     Section 4.11 Deed; Bill of Sale; Assignment. To the extent required and permitted by
applicable law, this Agreement shall also constitute a “deed,” “bill of sale” or “assignment” of
the assets and interests referenced herein.



[Signature Pages Follow]




6









 





     IN WITNESS WHEREOF, the parties to this Agreement have caused it to be duly executed as of the
date first above written.



	 	 	 	 	 
	 	PAA NATURAL GAS STORAGE, L.P.

 	 
	 	By:  	PNGS GP LLC, its general partner
 	 
	 	 	 
	 	By:  	                  /s/ Tina L. Summers
 	 
	 	 	Name:  	Tina L. Summers 	 
	 	 	Title:  	Vice President 	 
	 
	 	PNGS GP LLC

 	 
	 	By:  	/s/ Tina L. Summers
 	 
	 	 	Name:  	Tina L. Summers 	 
	 	 	Title:  	Vice President 	 
	 
	 	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/ Tim Moore
 	 
	 	 	Name:  	Tim Moore 	 
	 	 	Title:  	Vice President 	 
	 
	 	PAA NATURAL GAS STORAGE, LLC

 	 
	 	By:  	/s/ Tim Moore
 	 
	 	 	Name:  	Tim Moore 	 
	 	 	Title:  	Vice President 	 
	 



Signature Page to Contribution Agreement






 









 








	 	 	 	 	 
	 	PAA/VULCAN GAS STORAGE, LLC

 	 
	 	By:  	/s/ Tim Moore
 	 
	 	 	Name:  	Tim Moore 	 
	 	 	Title:  	Vice President 	 
	 
	 	PLAINS MARKETING, L.P.

 	 
	 	By:  	Plains Marketing GP Inc., its general partner
 	 
	 	 	 
	 	By:  	           /s/ Tim Moore
 	 
	 	 	Name:  	Tim Moore 	 
	 	 	Title:  	Vice President 	 
	 
	 	PLAINS MARKETING GP INC.

 	 
	 	By:  	/s/ Tim Moore
 	 
	 	 	Name:  	Tim Moore 	 
	 	 	Title:  	Vice President 	 
	 



Signature Page to Contribution Agreement