exv10w4






Exhibit 10.4




, 2010




Grantee Name

Grantee Address

City, State Zip




     Re:     Grant of Phantom Units



Dear Grantee:




     I am pleased to inform you that you have been granted [No. of 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 (a “DER”). 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) one-third shall vest upon the later to occur of
the May 2012 Distribution Date and the date on which the Partnership pays a quarterly
distribution of at least $0.3875, (ii) one-third shall vest upon the later to occur of
the May 2013 distribution date and the date the Partnership pays a quarterly
distribution of at least $0.450, and (iii) one-third shall vest upon the later to occur
of the May 2014 distribution date and the date the Partnership pays a quarterly
distribution of at least $0.475. Any remaining Phantom Units that are not vested by
the May 2015 Distribution Date, and any tandem DERs (regardless of vesting) associated
with such Phantom Units, shall expire on such date.
	 
	 	2.	 	Subject to the further provisions of this Agreement, your DERs shall vest
(become payable in cash) as follows: (i) 25% shall vest upon and effective with the
date on which the partnership pays a quarterly distribution of at least $0.370 per
unit, (ii) 25% shall vest upon and effective with the date on which the partnership
pays a quarterly distribution of at least $0.390 per unit, (iii) 25% shall vest upon
and effective with the date on which the partnership pays a quarterly distribution of
at least $0.440 per unit, and (iv) 25% shall vest upon and effective with the date on
which the partnership pays a quarterly distribution of at least $0.475.
	 
	 	3.	 	Your DERs shall not accrue payments prior to vesting.
	 
	 	4.	 	Any distribution level required for vesting under paragraphs 1 or 2 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.





333
Clay Street, Suite 1500 n
Houston, Texas 77002 n 713/646-4100 or 800-564-3036






 









 








					
	 	 	 	 	 
	Grantee Name
	 	-2-
	 	Month Day, Year







	 	5.	 	Upon vesting of any Phantom Units, an equivalent number of DERs will expire.
Any such DERs that are vested prior to, or that would vest as of, the Distribution Date
on which the Phantom Units vest, shall be payable on such Distribution Date prior to
their expiration.
	 
	 	6.	 	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 7 below), all of your then outstanding DERs
(regardless of vesting) and Phantom Units shall automatically be forfeited as of the
date of termination; provided, however, that if the Company or its Affiliates
terminate your employment other than a Termination for Cause: (i) any unvested Phantom
Units that have satisfied all vesting criteria as of the date of termination but for
the passage of time shall be deemed nonforfeitable on the date of termination, and
shall vest on the next following Distribution Date; (ii) any DERs associated with the
unvested, nonforfeitable Phantom 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 5 above; and (iii) any unvested Phantom Units that have satisfied none of the
vesting criteria as of the date of termination, and any tandem DERs (regardless of
vesting) associated with such Phantom Units, shall automatically be forfeited as of the
date of termination.
	 
	 	7.	 	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 shall vest in accordance with paragraph 2 above and expire in accordance with
paragraph 1 or paragraph 5 above, as applicable, and (ii) such Phantom Units shall
vest or expire in accordance with paragraph 1 above; provided, however, that such
vesting of Phantom Units shall occur either (x) on the date the Partnership pays the
quarterly distribution specified in clause (i), (ii) or (iii) of paragraph 1 (and in
the proportion indicated therein) without regard to any requirement for further passage
of time or (y) if the relevant quarterly distribution has been paid prior to the date
of termination, on the next following Distribution Date. As soon as administratively
practicable after the vesting of any Phantom Units pursuant to this paragraph 7,
payment will be made in cash in an amount equal to the Market Value of the number of
Phantom Units vesting.
	 
	 	8.	 	In the event of a Change of 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.
	 
	 	9.	 	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




 









 











					
	 	 	 	 	 
	Grantee Name
	 	-3-
	 	Month Day, Year







	 	 	 	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, 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). “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.



     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 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. As used herein, a
termination of the Employee’s 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) 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.



 









 





					
	 	 	 	 	 
	Grantee Name
	 	-4-
	 	Month Day, Year






     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 PNGS GP LLC. The “Partnership” refers to PAA Natural Gas Storage,
L.P.



     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 Amended and Restated Agreement of Limited Partnership of PAA
Natural Gas Storage, L.P., as amended (the “Partnership Agreement”). 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:  	[PLAINS ALL AMERICAN GP LLC]
 	 
	 	 	(pursuant to Omnibus Agreement) 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



Beneficiary Designation




	 	 	 	 	 
	Primary Beneficiary Name	 	Relationship	 	Percent (Must total 100%)
	 
	 	 	 	 





	 	 	 	 	 
	Secondary Beneficiary Name	 	Relationship	 	Percent (Must total 100%)
	 
	 	 	 	 





 









 






					
	 	 	 	 	 
	Grantee Name
	 	-5-
	 	Month Day, Year






o Check this box only if designation does not apply to prior grants





	 	 	 

	 
	 	 
	 


	 	 
	Grantee Name
	 	 
	 
	 	 
	No. of Units:
	 	 
	 


	 	 
	 
	 	 
	Dated: