Document:

exv10w2

Exhibit 10.2

 

 

OMNIBUS AGREEMENT

among

PLAINS ALL AMERICAN GP LLC

PLAINS ALL AMERICAN PIPELINE, L.P.

PNGS GP LLC

and

PAA NATURAL GAS STORAGE, L.P.

 

 

 

 

OMNIBUS AGREEMENT

     THIS OMNIBUS AGREEMENT (“Agreement”) is entered into on, and effective as of, the Closing Date
(as defined herein), and is by and among Plains All American GP LLC, a Delaware limited liability
company (“PAA GP”), Plains All American Pipeline, L.P., a Delaware limited partnership (“PAA”),
PNGS GP LLC, a Delaware limited liability company (the “General Partner”) and PAA Natural Gas
Storage, L.P., a Delaware limited partnership (the “Partnership”). The above-named entities are
sometimes referred to in this Agreement each as a “Party” and collectively as the “Parties.”

R E C I T A L S:

     1. The Parties desire by their execution of this Agreement to evidence their agreement, as
more fully set forth in Article II, with respect to certain indemnification obligations of the
Parties.

     2. The Parties desire by their execution of this Agreement to evidence their agreement, as
more fully set forth in Article III, with respect to the amount to be paid by the Partnership for
certain general and administrative services to be performed by PAA GP and its Affiliates as well as
direct expenses, including operating expenses, incurred by PAA GP and its Affiliates for and on
behalf of the Partnership Group (as defined herein) and other
services to be provided among the Parties.

     3. The Parties desire by their execution of this Agreement to evidence their agreement, as
more fully set forth in Article IV, with respect to the granting of a license from PAA to the
Partnership Group and the General Partner.

     In consideration of the premises and the covenants, conditions, and agreements contained
herein, and for 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.

     As used in this Agreement, the following terms shall have the respective meanings set
forth below:

     “Affiliate” has the meaning given such term in the Partnership Agreement.

     “Agreement” means this Omnibus Agreement, as it may be amended, modified or
supplemented from time to time in accordance with the terms hereof.

     “Cause” has the meaning given such term in the Partnership Agreement.

     “Change of Control” means, for purposes of Section 5.4 with respect to the General
Partner or the Partnership, the point in time when neither PAA nor PAA GP

 

 

remains directly or indirectly in control of the General Partner or the Partnership.
For purposes of this definition, the term “control” means the possession, direct or
indirect, of the power to direct or cause the direction of the management and policies of
the General Partner or the Partnership, whether through the ownership of Voting Securities,
by contract or otherwise.

     “Closing Date” means the date of the closing of the Partnership’s initial public
offering of Common Units.

     “Common Units” has the meaning given such term in the Partnership Agreement.

     “Conflicts Committee” has the meaning given such term in the Partnership Agreement.

     “Covered Environmental Losses” means all environmental and toxic tort losses, damages,
liabilities, injuries, claims, demands, causes of action, judgments, settlements, fines,
penalties, costs and expenses (including, without limitation, costs and expenses of any
Environmental Activity, court costs and reasonable attorney’s and experts’ fees) of any and
every kind or character, by reason of or arising out of:

     (i) any violation or correction of violation of Environmental Laws, including without
limitation performance of any Environmental Activity; or

     (ii) any event, omission or condition associated with ownership or operation of the
Partnership Assets (including, without limitation, the
exposure to or presence of Hazardous Substances on, under, about or migrating to or from the
Partnership Assets or the exposure to or Release of Hazardous Substances arising out of
operation of the Partnership Assets) including, without limitation, (A) the cost and expense
of any Environmental Activities, (B) the cost or expense of the preparation and
implementation of any closure, remedial or corrective action or other plans required or
necessary under Environmental Laws and (C) the cost and expense for any environmental or
toxic tort pre-trial, trial or appellate legal or litigation support work.

     “Environmental Activity” shall mean any investigation, study, assessment, evaluation,
sampling, testing, monitoring, containment, removal, disposal, closure, corrective action,
remediation (regardless of whether active or passive), natural attenuation, restoration,
bioremediation, response, repair, corrective measure, cleanup or abatement that is required
or necessary under any applicable Environmental Law, including, but not limited to,
institutional or engineering controls or participation in a governmental voluntary cleanup
program to conduct voluntary investigatory and remedial actions for the clean-up, removal or
remediation of Hazardous Substances that exceed actionable levels established pursuant to
Environmental Laws, or participation in a supplemental environmental project in partial or
whole mitigation of a fine or penalty.

     “Environmental Laws” means all federal, state, and local laws, statutes, rules,
regulations, orders, judgments, ordinances, codes, injunctions, decrees, Environmental
Permits and other legally enforceable requirements and rules of common law relating to

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(a) pollution or protection of the environment or natural resources including, without
limitation, the federal Comprehensive Environmental Response, Compensation and Liability
Act, the Superfund Amendments and Reauthorization Act, the Resource Conservation and
Recovery Act, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, the Toxic
Substances Control Act, the Oil Pollution Act of 1990, the Hazardous Materials
Transportation Act, the Marine Mammal Protection Act, the Endangered Species Act, the
National Environmental Policy Act and other environmental conservation and protection laws,
each as amended through the Closing Date, (b) any Release or
threatened, the Occupational Safety and Health Act, Release of, or any
exposure of any Person or property to, any Hazardous Substances and (c) the generation,
manufacture, processing, distribution, use, treatment, storage, transport or handling of any
Hazardous Substances.

     “Environmental Permit” means any permit, approval, identification number, license,
registration, consent, exemption, variance or other authorization required under or issued
pursuant to any applicable Environmental Law.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “General Partner” has the meaning given such term in the introduction to this
Agreement.

     “Hazardous Substance” means (a) any substance that is designated, defined or classified
as a hazardous waste, solid waste, hazardous material, pollutant, contaminant or toxic or
hazardous substance, or terms of similar meaning, or that is otherwise regulated under any
Environmental Law, including, without limitation, any hazardous substance as defined under
the Comprehensive Environmental Response, Compensation and Liability Act, as amended, (b)
oil as defined in the Oil Pollution Act of 1990, as amended, including oil, gasoline,
natural gas, fuel oil, motor oil, waste oil, diesel fuel, jet fuel and other refined
petroleum hydrocarbons and petroleum products and (c) radioactive materials, asbestos
containing materials or polychlorinated biphenyls.

     “Indemnified
Party” means each Partnership Group Member or PAA GP, as the case may be,
in their capacities as parties entitled to indemnification in accordance with Article II.

     “Indemnifying
Party” means each of the Partnership or PAA, as the case may be, in
their capacity as the parties from whom indemnification may be required in accordance with
Article II.

     “Losses” means all losses, damages, liabilities, claims, demands, causes of action,
judgments, settlements, fines, penalties, costs and expenses (including, without limitation,
court costs and reasonable attorney’s and experts’ fees) of any and every kind or character.

     “PAA” has the meaning given such term in the introduction to this Agreement.

     “PAA GP” has the meaning given such term in the introduction to this Agreement.

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     “Partnership” has the meaning given such term in the introduction to this Agreement.

     “Partnership Agreement” means the First Amended and Restated Agreement of Limited
Partnership of PAA Natural Gas Storage, L.P., dated as of the Closing Date, as such
agreement is in effect on the Closing Date, to which reference is hereby made for all
purposes of this Agreement.

     “Partnership Assets” means the natural gas storage assets and associated infrastructure
(including the assets and equity interests to be contributed to the Partnership in
connection with its initial public offering and as more completely described in the
Registration Statement) conveyed, contributed or otherwise transferred, directly or through
the transfer of equity interests, or intended to be conveyed, contributed or otherwise
transferred to any Partnership Group Member in connection with the Partnership’s initial
public offering.

     “Partnership Entities” means the General Partner and each Partnership Group Member.

     “Partnership Group” means the Partnership and its Subsidiaries.

     “Partnership Group Member” means any member of the Partnership Group.

     “Partnership Indemnitee” means any Person who is an Indemnitee as defined in the
Partnership Agreement; provided, however, that for purposes of this definition, the term
“Indemnitee” shall exclude PAA GP and any Affiliate of PAA GP which is not a Partnership
Group Member.

     “Party” and “Parties” are defined in the introduction to this Agreement.

     “Person” means an individual or a corporation, limited liability company, partnership,
joint venture, trust, business trust, employee benefit plan, unincorporated organization,
association, government agency or political subdivision thereof or other entity.

     “Registration Statement” means the Registration Statement on Form S-1, as amended,
(Registration No. 333-164492) filed with the Securities and Exchange Commission with respect
to the proposed initial public offering of Common Units by the Partnership.

     “Release” means any depositing, spilling, leaking, pumping, pouring, placing, emitting,
discarding, abandoning, emptying, discharging, migrating, injecting, escaping, leaching,
dumping or disposing into the environment.

     “Subsidiary” has the meaning given such term in the Partnership Agreement.

     “Units” has the meaning given such term in the Partnership Agreement.

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     “Voting Securities” means securities of any class of a Person entitling the holders
thereof to vote in the election of, or to appoint, members of the board of directors or
other similar governing body of the Person.

ARTICLE II

Indemnification

     2.1 Environmental Indemnification.

          (a) Subject to the provisions of Section 2.3 and provided that the Indemnified Party notifies
the Indemnifying Party of such claim prior to the third anniversary of the Closing Date, PAA shall
indemnify, defend and hold harmless the Partnership Group and the Partnership Indemnitees from and
against any Covered Environmental Losses suffered or incurred by the Partnership Group or any
Partnership Indemnitee relating to the Partnership Assets, but only to the extent the violations,
corrections, events or conditions giving rise to such Covered
Environmental Losses occurred or existed on or
before the Closing Date, even if such liability does not accrue until
after the Closing Date.

          (b) Subject to the provisions of Section 2.3, the Partnership Group shall indemnify, defend
and hold harmless PAA GP and its Affiliates, other than any Partnership Group Member, from and
against any Covered Environmental Losses suffered or incurred by PAA GP and its Affiliates, other
than any Partnership Group Member, relating to the Partnership Assets, but only to the extent the
violations, corrections, events or conditions giving rise to such Covered Environmental Losses
occurred after the Closing Date.

          (c) The aggregate liability of PAA under Section 2.1(a) shall not exceed $15 million.

          (d) No claims may be made against PAA for indemnification pursuant to Section 2.1(a) unless
and until, and PAA shall only be liable to provide indemnification pursuant to this Section 2.1(a)
to the extent that, the aggregate dollar amount of the Losses suffered or incurred by the
Partnership Group or Partnership Indemnitees exceed $250,000, subject to the limitations of Section
2.1(c).

          (e) Notwithstanding anything herein to the contrary, in no event shall PAA have any
indemnification obligations under this Agreement for claims made as a result of additions to or
modifications of Environmental Laws promulgated after the Closing Date.

     2.2 Additional Indemnification

          (a) Subject to the provisions of Section 2.3, PAA shall indemnify, defend and hold harmless
the Partnership Group and the Partnership Indemnitees from and against any Losses suffered or
incurred by the Partnership Group or any Partnership Indemnitee resulting from of or arising out
of:

     (i) the
failure of the Partnership Group to be the owner of (A) valid and
indefeasible easement rights, leasehold and/or fee ownership interests in and to the
lands on which are located any Partnership Assets and (B) valid
title to 100% of the equity interest of PAA Natural
Gas Storage, LLC, Bluewater Natural Gas Holding, LLC, Bluewater Gas Storage,
LLC, BGS Kimball Gas Storage LLC, Pine Prairie Holding LLC, Pine Prairie Energy
Center, LLC and PPEC Bondholder, LLC, in each case to the extent that such failure renders the
Partnership Group liable or unable to use or operate the Partnership Assets in

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substantially the same manner that the Partnership Assets were used and
operated by PAA and its Affiliates immediately prior to the Closing Date as
described in the Registration Statement;

     (ii) the failure of the Partnership Group to have on the Closing Date any
consent or governmental permit necessary to allow (A) the transfer of any of the
Partnership Assets, including the 100% interest in PAA Natural Gas Storage, LLC, Bluewater Natural Gas Holding, LLC,
Bluewater Gas Storage, LLC, BGS Kimball Gas Storage LLC, Pine Prairie Holding LLC, Pine Prairie
Energy Center, LLC and PPEC Bondholder, LLC, to the Partnership Group on the Closing Date or (B) any such
Partnership Assets to cross the roads, waterways, railroads and other areas upon
which any such Partnership Assets are located as of the Closing Date, in each case to the extent
any such
failure renders the Partnership Group unable to use or
operate the Partnership Assets in substantially the same manner that the Partnership
Assets were owned and operated by PAA and its Affiliates immediately prior to the
Closing Date as described in the Registration Statement;

     (iii) all federal, state and local income tax liabilities attributable to the
ownership or operation of the Partnership Assets prior to the Closing Date, including (A) any such income tax liabilities of the Partnership Group
that may result from the consummation of the formation transactions for the Partnership Group
occurring on or prior to the Closing Date and (B) any income tax liabilities arising under Treasury
Regulation Section 1.1502-6 and any similar provision from applicable state, local or foreign law,
by contract, as successor, transferree or otherwise and which income tax is attributable to having
been a member of any consolidated combined or unitary group prior to the Closing Date; and

     (iv) the assets or operations of PAA GP and its Affiliates (other than the
Partnership Assets and the operations of any Partnership Group Member).

provided, however, that, in the case of clauses (i), (ii) and (iv) above, the Indemnified Party
must notify the Indemnifying Party of such claim prior to the third anniversary of the Closing
Date, and that in the case of clause (iii) above, the Indemnified Party must notify the
Indemnifying Party of such claim prior to the sixtieth day following the expiration of any
applicable statute of limitations;

          (b) Subject to the provisions of Section 2.3, in addition to and not in limitation of the
indemnification provided under this Article II, the Partnership Group shall indemnify, defend, and
hold harmless PAA and its Affiliates, other than any Partnership Group Member, from and against any
Losses suffered or incurred by PAA and its Affiliates, other than any Partnership Group Member, by
reason of or arising out of events and conditions associated with the operation of the Partnership
Assets that occurs on or after the Closing Date (other than Covered Environmental Losses, which are
covered by Section 2.1) except to the extent that the Partnership Group is indemnified with respect
to any such Losses under Section 2.2(a).

          (c) Notwithstanding anything herein to the contrary, in no event will PAA be obligated to
indemnify the Partnership Group for any claims, losses or expenses or income taxes referred to in
Section 2.1(a) and Sections 2.2 (a)(i)-(iv), if, and to the
extent that such claims, losses, or expenses, or
income taxes were either (i) reserved for in the Partnership’s financial statements as of the
Closing Date, or (ii) are recovered under available insurance coverage, from contractual rights or
other recoveries against any third party.

     2.3 Indemnification Procedures.

          (a) The Indemnified Party agrees that within a reasonable period of time after it becomes
aware of facts giving rise to a claim for indemnification pursuant to this Article II, it will
provide notice thereof in writing to the Indemnifying Party specifying the nature of and

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specific basis for such claim; provided, however, that the Indemnified Party shall not submit
claims more frequently than once a calendar quarter (or twice in the case of the last calendar
quarter prior to the expiration of the applicable indemnity coverage
under this Agreement). Notwithstanding the foregoing, the Indemnified Party’s failure to provide notice under this Section
2.3 will not relieve the Indemnifying Party from liability hereunder with respect to such matter
except in the event and only to the extent that the Indemnifying Party is materially prejudiced by
such failure or delay or the Indemnifying Party does not receive notice of the claim prior to the
applicable deadline for making such claim.

          (b) The Indemnifying Party shall have the right to control all aspects of the defense of (and
any counterclaims with respect to) any claims brought against the Indemnified Party that are
covered by the indemnification set forth in this Article II, including, without limitation, the
selection of counsel (provided that if such claim involves Covered Environmental Losses, such counsel shall be
reasonably acceptable to the Indemnified Party), determination of whether to appeal any decision of any court or similar
authority, performance of any Environmental Activity associated with
any Covered Environmental Losses and the settling of any matter or any issues relating thereto; provided, however,
that no such settlement shall be entered into without the consent (which consent shall not be
unreasonably withheld, conditioned or delayed) of the Indemnified Party unless it includes a full
release of the Indemnified Party from such matter or issues, as the case may be.

          (c) The Indemnified Party agrees to cooperate fully with the Indemnifying Party with respect
to all aspects of the defense of any claims covered by the indemnification set forth in this
Article II, including, without limitation, the prompt furnishing to the Indemnifying Party of any
correspondence or other notice relating thereto that the Indemnified Party may receive, permitting
the names of the Indemnified Party to be utilized in connection with such defense, the making
available to the Indemnifying Party of any files, records or other information of the Indemnified
Party that the Indemnifying Party considers relevant to such defense and the making available to
the Indemnifying Party of any employees of the Indemnified Party; provided, however, that in
connection therewith the Indemnifying Party agrees to use reasonable efforts to minimize the impact
thereof on the operations of the Indemnified Party and further agrees to maintain the
confidentiality of all files, records and other information furnished by the Indemnified Party
pursuant to this Section 2.3. In no event shall the obligation of the Indemnified Party to
cooperate with the Indemnifying Party as set forth in the immediately preceding sentence be
construed as imposing upon the Indemnified Party an obligation to hire and pay for counsel in
connection with the defense of any claims covered by the indemnification set forth in this Article
II; provided, however, that the Indemnified Party may, at its own option, cost and expense, hire
and pay for counsel in connection with any such defense. The Indemnifying Party agrees to keep any
such counsel hired by the Indemnified Party reasonably informed as to the status of any such
defense, but the Indemnifying Party shall have the right to retain sole control over such defense.

          (d) In determining the amount of any loss, cost, damage or expense for which the Indemnified
Party is entitled to indemnification under this Agreement, the gross amount of the indemnification
will be reduced by (i) any insurance proceeds realized by the Indemnified Party, and such
correlative insurance benefit shall be net of any incremental insurance premium that becomes due
and payable by the Indemnified Party as a result of such claim, (ii) all amounts recovered by the
Indemnified Party under contractual indemnities from third Persons and (iii) any correlative tax
benefit.

          (e) NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IN NO EVENT SHALL ANY PARTY’S
INDEMNIFICATION OBLIGATION HEREUNDER COVER OR INCLUDE CONSEQUENTIAL, INDIRECT, INCIDENTAL,
PUNITIVE, EXEMPLARY, SPECIAL OR SIMILAR DAMAGES OR LOST PROFITS SUFFERED BY ANY OTHER PARTY
ENTITLED TO INDEMNIFICATION UNDER THIS AGREEMENT.

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ARTICLE III

Provision of Services; Reimbursement

     3.1 Agreement to Provide Services. Until such time as this Agreement is terminated as provided in
Section 5.4, PAA GP hereby agrees to provide the Partnership Group with such general and
administrative services and management and operating services as may be necessary to manage and
operate the business and affairs of the Partnership, including, without limitation, accounting,
audit, business development, financial services, real property/land, legal, operations/engineering,
geology/geophysics, investor relations, risk management, commercial/marketing, information
technology, insurance, government relations/compliance, tax, payroll, human resources and environmental,
health and safety (collectively, “Services”). The Services shall be consistent in nature and
quality to the services of such type previously provided by PAA GP in connection with its
management and operation of the Partnership Assets prior to their acquisition by the Partnership.

     3.2 Reimbursement. Subject to and in accordance with the terms and provisions of this Article III
and such reasonable allocation and other procedures as may be agreed upon by PAA GP and the
General Partner from time to time, the Partnership Group hereby agrees to reimburse PAA GP for all
reasonable direct and indirect costs and expenses incurred by PAA GP or its Affiliates in connection with the
provision of the Services to the Partnership Group, including, without limitation, the following:

          (a) any expenses incurred or payments made by PAA GP for insurance coverage with respect to
the Partnership Assets or the business of the Partnership Group;

          (b) any costs incurred in connection with the provision of information technology services;

          (c) salaries
and related benefits and expenses of personnel employed by PAA GP or
its Affiliates (other than the Partnership Group) who render Services to the
Partnership Group, plus general and administrative expenses associated with such personnel; it
being agreed, however, that for purposes of allocating costs associated with executive or senior
level management of PAA, such allocation shall not include any costs attributable to incentive
compensation arrangements that are unrelated to the operations of the General Partner or the
Partnership;

          (d) any capital expenditures, maintenance and repair costs, taxes or other direct expenses
paid by PAA GP or its Affiliates for the benefit of the Partnership Group; and

          (e) all expenses and expenditures incurred by PAA GP or its Affiliates as a result of the
Partnership becoming and continuing as a publicly traded entity, including, but not limited to,
costs associated with annual and quarterly reports, tax return and Schedule K-1 preparation and
distribution, independent auditor fees, partnership governance and compliance, registrar and
transfer agent fees, legal fees and independent director compensation.

it being agreed, however, that to the extent any reimbursable costs or expenses incurred by PAA GP
or its Affiliates consist of an allocated portion of costs and expenses incurred by PAA GP or its
Affiliates for the benefit of both the Partnership Group and the other Affiliates of PAA, such
allocation shall be made on a reasonable cost reimbursement basis as determined by PAA GP.

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     3.3 Services Provided by Partnership Group. To the extent necessary in connection with any gas
storage or other assets that are owned or operated by PAA and its Affiliates (other than the
Partnership Group) following the Closing Date, upon request from PAA, the General Partner shall
provide such requested management and operating services to PAA on a reasonable cost reimbursement
basis, including any applicable taxes.

     3.4
Provision by PAA of Limited Guaranty/Trade Credit
Support. PAA may from time to time, but shall not be
obligated to, provide the Partnership Group with guaranty or trade credit support as requested by
the General Partner to support the ongoing operations of the Partnership Group; it being understood
and agreed that (a) any such guaranties or credit support provided by PAA shall be limited to
ordinary course obligations of the Partnership Group and shall not extend to indebtedness for
borrowed money or other obligations that could be characterized as debt, (b) PAA shall be under no
obligation to provide any such guaranty or credit support and may refuse to do so for any reason
and (c) upon the receipt by PAA of a request for guaranty or credit support from the General
Partner, PAA GP and the General Partner shall promptly meet to discuss such request and, if applicable,
negotiate and agree upon the terms under which such guaranty or credit support will be provided by
PAA.

ARTICLE IV

License of Name and Mark

     4.1 Grant of License. Upon the terms and conditions set forth in this Article IV, PAA hereby
grants and conveys to each of the entities currently or hereafter comprising a part of the
Partnership Group a nontransferable, nonexclusive, royalty free right and license (“License”) to
use the name “PAA” (the “Name”) and any
associated or related marks (the “Mark”).

     4.2
Ownership and Quality. The Partnership agrees that ownership of the Name and the Mark and the goodwill
relating thereto shall remain vested in PAA both during the term of this License and thereafter,
and the Partnership further agrees, and agrees to cause the other members of the Partnership Group,
never to challenge, contest or question the validity of PAA’s ownership of the Name and Mark or any
registration thereto by PAA. In connection with the use of the Name and the Mark, the Partnership
and any other member of the Partnership Group shall not in any manner represent that they have any
ownership in the Name and the Mark or registration thereof except as set forth herein, and the
Partnership, on behalf of itself and the other members of the Partnership Group, acknowledge that
the use of the Name and the Mark shall not create any right, title or interest in or to the Name
and the Mark, and all use of the Name and the Mark by the Partnership or any other member of the
Partnership Group, shall inure to the benefit of PAA. The Partnership agrees, and agrees to cause the other members of the Partnership Group, to use the
Name and Marks in accordance with such quality standards established by PAA and communicated to the
Partnership from time to time, it being understood that the products and services offered by the
members of the Partnership Group immediately before the Closing Date are of a quality that is
acceptable to PAA and justifies the License.

     4.3 Termination. The License shall terminate upon a termination of this Agreement pursuant to
Section 5.4.

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ARTICLE V

Miscellaneous

     5.1 Choice of Law; Submission to Jurisdiction. This Agreement shall be subject to and governed by
the laws of the State of Texas, excluding any conflicts-of-law rule or principle that might refer
the construction or interpretation of this Agreement to the laws of another state. Each Party
hereby submits to the jurisdiction of the state and federal courts in the State of Texas and to
venue in Houston, Texas.

     5.2 Notice. All notices or requests or consents provided for by, or permitted to be given pursuant
to, this Agreement must be in writing and must be given by depositing same in the United States
mail, addressed to the Person to be notified, postpaid, and registered or certified with return
receipt requested or by delivering such notice in person or by telecopier or telegram to such
Party. Notice given by personal delivery or mail shall be effective upon actual receipt. Notice
given by telegram or telecopier shall be effective upon actual receipt if received during the
recipient’s normal business hours or at the beginning of the recipient’s next business day after
receipt if not received during the recipient’s normal business hours. All notices to be sent to a
Party pursuant to this Agreement shall be sent to or made at the address set forth below or at such
other address as such Party may stipulate to the other Parties in the manner provided in this
Section 5.2.

For notice to PAA GP:

Plains All American GP LLC

333 Clay Street, Suite 1600

Houston, Texas 77002

Attention: General Counsel

Fax: (713) 646-4313

For notice to the Partnership Entities:

PAA Natural Gas Storage, L.P.

333 Clay Street, Suite 1500

Houston, Texas 77002

Attention: Vice President — Legal

Fax: (713) 652-3700

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     5.3 Entire Agreement. This Agreement constitutes the entire agreement of the Parties relating to
the matters contained herein, superseding all prior contracts or agreements, whether oral or
written, relating to the matters contained herein. In the event of a conflict between the
provisions of this Agreement and the provisions of the Partnership Agreement, the provisions of the
Partnership Agreement shall control.

     5.4 Termination. Notwithstanding any other provision of this Agreement, if (i) the General Partner
is removed as general partner of the Partnership under circumstances where Cause does not exist and
the Common Units held by the General Partner and its Affiliates are not voted in favor of such
removal or (ii) a Change of Control occurs, then this Agreement, other than the provisions set
forth in Article II hereof, may immediately thereupon be terminated by PAA.

     5.5 Effect of Waiver or Consent. No waiver or consent, express or implied, by any Party to or of
any breach or default by any Person in the performance by such Person of its obligations hereunder
shall be deemed or construed to be a consent or waiver to or of any other breach or default in the
performance by such Person of the same or any other obligations of such Person hereunder. Failure
on the part of a Party to complain of any act of any Person or to declare any Person in default,
irrespective of how long such failure continues, shall not constitute a waiver by such Party of its
rights hereunder until the applicable statute of limitations period has run.

     5.6 Amendment or Modification. This Agreement may be amended or modified from time to time only by
the written agreement of all the Parties; provided, however, that the Partnership may not, without
the prior approval of the Conflicts Committee, agree to any amendment or modification of this
Agreement that, in the reasonable discretion of the General Partner,
would be adverse in any material respect to the holders of Common Units. Each such instrument shall be reduced to writing and shall
be designated on its face an “Amendment” or an “Addendum” to this Agreement.

     5.7 Assignment; Third-Party Beneficiaries. No Party shall have the right to assign any of its
rights or obligations under this Agreement without the consent of the other Parties hereto. Each
of the Parties hereto specifically intends that PAA GP and each entity comprising the Partnership
Entities, as applicable, whether or not a Party to this Agreement, shall be entitled to assert
rights and remedies hereunder as third-party beneficiaries hereto with respect to those provisions
of this Agreement affording a right, benefit or privilege to any such entity. This Agreement does
not create any rights or benefits for any entity or individual.

     5.8
Successors. This Agreement shall bind and inure to the benefit of the Parties and to their respective
successors and assigns.

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     5.9 Continuation of Work During
Dispute. Notwithstanding any dispute, it shall be the responsibility of each Party to continue to perform
its obligations under this Agreement pending resolution of the
dispute.

     5.10 Counterparts. This
Agreement may be executed in any number of counterparts, including facsimile 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.

     5.11 Severability. If any provision of this Agreement or the application thereof to any Person or
circumstance shall be held invalid or unenforceable by a court or regulatory body of competent
jurisdiction, the remainder of this Agreement and the application of such provision to other
Persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent
permitted by law.

     5.12 Gender, Parts, Articles and Sections. Whenever the context requires, the gender of all words
used in this Agreement shall include the masculine, feminine and neuter, and the number of all
words shall include the singular and plural. All references to Article numbers and Section numbers
refer to Articles and Sections of this Agreement.

     5.13 Further Assurances. In connection with this Agreement and all transactions contemplated by
this Agreement, each Party agrees to execute and deliver such additional documents and instruments
and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and
perform all of the terms, provisions and conditions of this Agreement and all such transactions.

     5.14
Withholding or Granting of Consent. Unless
otherwise provided herein, each Party may, with respect to any consent or approval
that it is entitled to grant pursuant to this Agreement, grant or withhold such consent or approval
in its sole and uncontrolled discretion, with or without cause, and subject to such conditions as
it shall deem appropriate.

     5.15
Laws and Regulations. Notwithstanding any provision of this Agreement to the contrary, no
Party shall take any act, or fail to take any act, under this Agreement which would violate any
applicable law, statute, rule or regulation.

     5.16
Negation of Rights of Limited Partners, Assignees and Third
Parties. Except as set forth in Section 5.7, the provisions of this
Agreement are enforceable solely by the Parties, and no stockholder, limited partner, member or
assignee of PAA GP, the Partnership or other Person shall have the right, separate and apart from PAA GP or the Partnership, to enforce any provision of this
Agreement or to compel any Party to comply with the terms of this Agreement.

     5.17 No Recourse Against Officers or Directors. For the avoidance of doubt, the provisions of this
Agreement shall not give rise to any right of recourse against any officer or director of PAA GP,
PAA, the General Partner, the Partnership or any entity comprising a part of the Partnership Group.

     5.18
Legal Compliance.

- 12 -

 

The Parties acknowledge and agree that this Agreement, and all services provided under this
Agreement, are intended to comply with any and all laws and legal obligations and that this
Agreement should be construed and interpreted with this purpose in mind. In this regard, the
Parties specifically agree as follows:

          (a) The Parties will comply with all equal employment opportunity requirements and other
applicable employment laws. Where a joint or combined action is required by the law in order to
comply with an employment obligation, the parties will cooperate fully and in good faith to comply
with the applicable obligation.

          (b) The Parties agree that they will adhere to the Fair Labor Standards Act of 1938, as
amended, any comparable state law and any law regulating the payment of wages or compensation.

- 13 -

 

IN WITNESS WHEREOF, the Parties have executed this Agreement on, and effective as of, the
Closing Date.

	 	 	 	 	 
	 	PLAINS ALL AMERICAN GP, LLC

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	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:  	 	 
	 

	 	 	 	 	 
	 	PNGS GP LLC

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	PAA NATURAL GAS STORAGE, L.P.

 
	 	By: 	PNGS GP LLC, its general partner
 	 	 
	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Signature Page to the Omnibus Agreement]exv10w5

Exhibit 10.5

TAX SHARING AGREEMENT

BY AND AMONG

PLAINS ALL AMERICAN PIPELINE, L.P.

AND

PAA NATURAL GAS STORAGE, L.P.

                     ___, 2010

 

 

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 ___th day of                     , 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.

2

 

          “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.

3

 

          “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

4

 

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;

5

 

          (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

6

 

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;

7

 

               (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

8

 

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

9

 

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.

10

 

          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

11

 

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]

13

 

     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:  	
 	 
	 	 	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:  	
 	 
	 	 	Name:  	Richard McGee 	 
	 	 	Title:  	Vice President – Legal and Business

Development and Secretary

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