exv10w1






Exhibit 10.1




PROMISSORY NOTE





	BORROWER:  	 	PAA Natural Gas Storage, L.P.

333 Clay St., Suite 1500

Houston, Texas 77002
	 
	LENDER: 	 	 Plains All American Pipeline, L.P.

333 Clay St., Suite 1600

Houston, Texas 77002





			
	 	 	 
	PRINCIPAL AMOUNT: $200,000,000
	 	DATE OF NOTE: February 9, 2011            







	1.	 	DEFINITIONS. As used in this Note,
and unless the context
requires a different
meaning, the following
terms have the meanings
indicated:
	 
	 	 	“Borrowed Amount” is used herein as defined in Section 2 below.
	 
	 	 	“Borrower” shall mean PAA Natural Gas Storage, L.P., a Delaware limited partnership, and its
successors and assigns.
	 
	 	 	“Business Days” shall mean any day, other than a Saturday, Sunday or day which shall be in
New York, New York a legal holiday or day on which banking institutions are required or
authorized to close.
	 
	 	 	“Closing Date” shall mean the date when all Section 7 conditions have been satisfied to
Lender and Lender makes the loan of the Borrowed Amount.
	 
	 	 	“Credit Agreement” shall mean the Credit Agreement dated April 7, 2010 between Borrower,
Bank of America, N.A. and the other Lender’s parties thereto, as amended, restated, replaced
or otherwise modified.
	 
	 	 	“Event of Default” shall mean individually, collectively and interchangeably any of the
Events of Default set forth below in Section 8.
	 
	 	 	“Law” shall mean any statute, law, regulation, ordinance, rule, treaty, judgment,
order, decree, permit, concession, franchise, license, agreement or other governmental
restriction of the United States or any state or political subdivision thereof.
	 
	 	 	“Lender” shall mean Plains All American Pipeline, L.P., a Delaware limited partnership, and
its successors and assigns.
	 
	 	 	“Material Adverse Change” shall mean, with respect to Borrower, an event which causes a
material adverse effect on the business, assets, operation or condition (financial or





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	 	 	otherwise) of such Borrower, or which otherwise changes in a materially adverse way any
other facts, circumstances, or conditions which Lender has relied upon or utilized in
entering into or performing this Note.
	 
	 	 	“Note” shall mean this Promissory Note, as the same may from time to time be amended,
modified, supplemented, replaced (in whole or part) and/or restated and in effect.
	 
	 	 	“Scheduled Maturity Date” shall mean February 9, 2014.
	 
	2.	 	PROMISE TO PAY. Borrower, for value received, absolutely, irrevocably and
unconditionally promises to pay to the order of Lender, in lawful money of the United States
of America and in immediately available funds, the principal sum of TWO HUNDRED MILLION AND
00/100 DOLLARS (U.S. $200,000,000.00) (the “Borrowed Amount”), together with simple interest
assessed at the fixed rate per annum equal to five and a quarter percent (5.25%), calculated
on the basis of a 360 day calendar year (twelve 30 day months), on the principal balance of
this Note as outstanding from time to time, commencing on the date of this Note and continuing
until this Note is paid in full.
	 
	3.	 	PAYMENT AND INTEREST. From the date of this Note first written above until the
Scheduled Maturity Date, this Note shall accrue interest only on the outstanding Borrowed
Amount. Interest shall be payable semiannually on the last Business Day of June and December,
with the first such payment date being June 30, 2011, and the final interest payment date
being the Scheduled Maturity Date. Any of the Borrowed Amount outstanding on the Scheduled
Maturity Date shall be paid on such date. Borrower will pay Lender at its address stated
above, or at such other place as Lender may designate in writing, in lawful money of the
United States of America that at the time of payment is legal tender for payment of public and
private debts and in immediately available funds. Notwithstanding anything to the contrary
contained herein, if the rate of interest, late payment fee or any other charges or fees due
or paid hereunder are determined by a court of competent jurisdiction to be usurious, then
said interest rate, fees and/or charges shall be reduced to the maximum amount permissible
under applicable law. Any payment made under this Note shall be applied in the following
order: first, to any fees or expenses payable under this Note; second, to any accrued and
unpaid interest; and third, to any principal outstanding under this Note.
	 
	4.	 	SECURITY AND PRIORITY. This Note is unsecured. Credit support for this obligation
will remain pari passu with the Credit Agreement.
	 
	5.	 	VOLUNTARY AND MANDATORY PREPAYMENT. Borrower may prepay this Note in part or in full
at any time by paying the then outstanding Borrowed Amount of this Note, plus any accrued
interest.
	 
	6.	 	REPRESENTATIONS AND WARRANTIES. In order to induce Lender to enter into this Note,
Borrower represents and warrants to Lender as follows:




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	 	(a)	 	Borrower is a limited partnership duly created, validly existing, and in good
standing under the laws of the State of Delaware. Borrower has the power and authority
to enter into this Note and Borrower has the power to perform its obligations
hereunder;
	 
	 	(b)	 	Borrower is not party to any agreement or instrument, nor subject to any
charter or other restriction, compliance with the terms of which materially and
adversely affect the business, properties, assets , or operations of Borrower or its
condition (financial or otherwise), and Borrower is not in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions contained
in any agreement or instrument to which they are a party, which default could
reasonably be expected to constitute a Material Adverse Change;
	 
	 	(c)	 	The execution and delivery by Borrower of this Note, the performance by it of
its obligations, and the consummation of the transactions contemplated thereby, do not
and will not violate (i) any provision of Law; (ii) Borrower’s organizational
documents; (iii) the terms and conditions of the Credit Agreement; or (iv) any other
material contract;
	 
	 	(d)	 	No authorization, consent, approval or formal exemption of, nor any filing or
registration with, any governmental body or regulatory authority (federal, state or
local), and no further vote, consent or approval of Borrower is or will be required in
connection with the execution and delivery by Borrower of this Note or the performance
by Borrower of its obligations hereunder; and
	 
	 	(e)	 	Borrower understands and agrees that Lender is relying upon the above
representations and warranties in entering into this Note, and the foregoing
representations and warranties shall be continuing in nature and shall remain in full
force and effect until such time as the Borrowed Amount shall be paid in full, or until
this Note shall be terminated, whichever is the last to occur.






	7.	 	CONDITIONS PRECEDENT TO CLOSING. The obligation of Lender to loan the Borrowed
Amount on the Closing Date shall be subject to the satisfaction and the continued satisfaction
to Lender of the following conditions precedent:






	 	(a)	 	Borrower shall have executed and delivered to Lender this Note and all other
documents required by this Note, all in form and substance and in such number of
counterparts as may be reasonably required by Lender;
	 
	 	(b)	 	The representations, warranties, and covenants of Borrower as set forth in this
Note, shall be and remain true and correct;
	 
	 	(c)	 	No Event of Default shall exist or shall result from the making of the Loan;
and
	 
	 	(d)	 	A Material Adverse Change shall not have occurred.






	8.	 	DEFAULT. Each of the following shall constitute an “Event of Default” under this
Note:




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	 	(a)	 	Borrower shall fail to pay interest due under this Note within five (5)
Business Days after the same becomes due;
	 
	 	(b)	 	Borrower shall fail to pay principal due under this Note;
	 
	 	(c)	 	Borrower fails to duly observe, perform or comply with its obligations under
any covenant, agreement, condition or provision of the Credit Agreement, and such
failure results in an Event of Default as defined under such Credit Agreement;
	 
	 	(d)	 	Borrower shall commence a voluntary proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar official of
it or a substantial part of its property or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case or
other proceeding commenced against it or shall make a general assignment for the
benefit of creditors or shall generally fail to pay its debts as they become due or
shall take any corporate action to authorize any of the foregoing; or
	 
	 	(e)	 	An involuntary proceeding shall be commenced against Borrower seeking
liquidation, reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the
appointment of trustee, receiver, liquidator, custodian or other similar official for
it or a substantial part of its property, and such involuntary proceeding shall remain
undismissed and unstayed for a period of sixty (60) days.






	9.	 	LENDER’S RIGHTS AND REMEDIES UPON AN EVENT OF DEFAULT. Should any one or more Events
of Default occur or exist under this Note as provided above, in addition to other rights and
remedies provided for herein or otherwise available at law or equity, Lender shall have the
right, at its sole option, to accelerate the payments due under, and/or maturity of, this Note
and insist upon immediate payment in full of the unpaid principal balance then outstanding
under this Note, plus accrued interest and reasonable attorneys’ fees, costs, expenses and
other fees and charges as provided herein.
	 
	10.	 	DEFAULT INTEREST. If an Event of Default occurs and is continuing, any amount
outstanding under this Note during such period shall bear interest at a per annum default
interest rate equal to the interest rate set forth Section 2 plus three percent (3%).
	 
	11.	 	WAIVER OF JURY TRIAL. BORROWER AND LENDER HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER BORROWER OR LENDER AGAINST THE OTHER
PARTY.
	 
	12.	 	GOVERNING LAW. This Note will be governed by, construed and enforced in accordance
with the laws of the State of Texas without regard to any laws that might result in the
application of the laws of any other jurisdiction.




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	13.	 	FEES. If Lender refers this Note to an attorney for collection or enforcement, or
files suit against Borrower to collect or enforce this Note, or if Borrower files for
bankruptcy or other relief from creditors, Borrower agrees to pay all of Lender’s reasonable
attorneys’ fees, court costs and administrative costs associated therewith.
	 
	14.	 	INDEMNITY. Borrower agrees to indemnify Lender against and to hold Lender harmless
from any and all losses, liabilities, expenses, claims, or damages of whatever kind or nature,
including Lender’s reasonable attorneys’ fees and costs (to be reimbursed as and when
incurred) based upon or resulting from this Note or Lender’s loan to Borrower or the exercise
of its remedies under this Note, even if such losses, liabilities, expenses, claims, or
damages resulted, in whole or in part, from Lender’s negligence.
	 
	15.	 	AMENDMENT, SUPPLEMENT, WAIVER. This Note may only be amended or supplemented with
the consent of Borrower and Lender.
	 
	16.	 	SUCCESSORS AND ASSIGNS LIABLE. Borrower’s obligations and agreements under this Note
shall be binding upon Borrower’s successors and assigns. The rights and remedies granted to
Lender under this Note shall inure to the benefit of Lender’s successors and assigns, as well
as to any subsequent holder or holders of this Note.
	 
	17.	 	CAPTION HEADINGS. Caption headings of the sections of this Note are for convenience
purposes only and are not to be used to interpret or to define their provisions. In this Note,
whenever the context so requires, the singular includes the plural and the plural also
includes the singular.
	 
	18.	 	SEVERABILITY. If any term or provision of this Note (including interest charged
hereunder), or the application thereof to any person or circumstance, shall at any time or to
any extent be invalid, illegal or unenforceable in any respect as written, the parties intend
for any court or arbitrator construing this Note to reform, modify or limit such provision so
as to render it valid and enforceable to the fullest extent allowed by law. Any such
provision that is not susceptible of such reformation shall be ignored so as to not affect any
other term or provision hereof, and the remainder of this Note, or the application of such
term or provision to persons or circumstances other than those as to which it is held invalid,
illegal or unenforceable, shall not be affected thereby and each term and provision of this
Note shall be valid and enforced to the fullest extent permitted by law.




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PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL OF THE PROVISIONS OF THIS NOTE.




	 	 	 	 	 
	 	BORROWER:



PAA NATURAL GAS STORAGE, L.P.

 	 
	 	By:  	PNGS GP LLC,
 	 
	 	 	its General Partner 	 
	 	 	 
	 	By:  	/s/
Al Swanson
 	 
	 	 	Name:  	Al Swanson 	 
	 	 	Title:  	Senior Vice President and
Chief Financial Officer 	 
	 



	 	 	 	 	 
	 	LENDER:



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/
Charles Kingswell-Smith
 	 
	 	 	Name:  	Charles Kingswell-Smith 	 
	 	 	Title:  	Vice President and Treasurer 	 



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