Common use of Simplification Transactions Clause in Contracts

Simplification Transactions. On November 15, 2016, the Plains Entities closed a series of transactions and executed several organizational and ancillary documents (the “Simplification Transactions”) intended to simplify our capital structure, better align the interests of our stakeholders and improve our overall credit profile. The Simplification Transactions included, among other things: • the permanent elimination of our incentive distribution rights (“IDRs”) and the economic rights associated with our 2% general partner interest in exchange for the issuance by us to AAP of 245.5 million PAA common units (including approximately 0.8 million units to be issued in the future) and the assumption by us of all of AAP’s outstanding debt ($642 million); • the implementation of a unified governance structure pursuant to which the board of directors of GP LLC was eliminated and an expanded board of directors of PAGP GP assumed oversight responsibility over both us and PAGP; • the provision for annual PAGP shareholder elections beginning in 2018 for the purpose of electing certain directors, and the participation of our common unitholders and Series A preferred unitholders in such elections through our ownership of Class C shares in PAGP, which provide us, as the sole holder of such Class C shares, the right to vote, as directed by our common and Series A preferred unitholders, in elections of eligible PAGP directors together with the holders of PAGP Class A and Class B shares; • the execution by AAP of a reverse split to adjust the number of AAP Class A units (“AAP units”) such that the number of outstanding AAP units (assuming the conversion of AAP Class B units (the “AAP Management Units”) into AAP units) equaled the number of our common units received by AAP at the closing of the Simplification Transactions. Simultaneously, PAGP executed reverse splits to adjust the number of (i) PAGP Class A shares outstanding to equal the number of AAP units it owned following AAP’s reverse unit split and (ii) PAGP Class B shares outstanding to equal the number of AAP units owned by AAP’s unitholders other than PAGP following AAP’s reverse unit split. These reverse splits, along with the Omnibus Agreement, resulted in economic alignment between our common unitholders and PAGP’s Class A shareholders, such that the number of outstanding PAGP Class A shares equals the number of AAP units owned by PAGP, which in turn equals the number of our common units held by AAP that are attributable to PAGP’s interest in AAP. The Plains Entities also entered into an Omnibus Agreement, pursuant to which such one-to-one relationship will be maintained subsequent to the closing of the Simplification Transactions; and • the creation of a right for certain holders of the AAP units to cause AAP to redeem such AAP units in exchange for an equal number of our common units held by AAP. The Simplification Transactions were between and among consolidated subsidiaries of PAGP that are considered entities under common control. These equity transactions did not result in a change in the carrying value of the underlying assets and liabilities.

Simplification Transactions. On November 15, 2016, the Plains Entities closed a series of transactions and executed several organizational and ancillary documents (the “Simplification Transactions”) intended to simplify our capital structure, better align the interests of our stakeholders and improve our overall credit profile. The Simplification Transactions included, among other things: • the permanent elimination of our incentive distribution rights (“IDRs”) and the economic rights associated with our 2% general partner interest in exchange for the issuance by us to AAP of 245.5 million PAA common units (including approximately 0.8 million common units to be issued in the future) and the assumption by us of all of AAP’s outstanding debt ($642 million); • the implementation of a unified governance structure pursuant to which the board of directors of GP LLC our general partner was eliminated and an expanded board of directors of PAGP GP (the “PAGP GP Board”) assumed oversight responsibility over both us and PAGP; • the and provision for annual PAGP shareholder elections beginning in 2018 for the purpose of electing with certain directorsdirectors with expiring terms in 2018, and the participation of our common unitholders and Series A preferred unitholders in such elections through our ownership of newly issued Class C shares in PAGP, which provide us, as the sole holder of such Class C sharesholder, the right to vote, as directed by our common and Series A preferred unitholders, vote in elections of eligible PAGP GP directors together with the holders of PAGP Class A and Class B shares; • the execution by . In addition, we entered into an Omnibus Agreement with AAP of a reverse split and PAGP to adjust the number of AAP Class A units (“AAP units”) such that the number of outstanding AAP units (assuming the conversion of AAP Class B units (the “AAP Management Units”) into AAP units) equaled the number of our common units received by AAP at the closing of the Simplification Transactions. Simultaneously, PAGP executed reverse splits to adjust the number of (i) PAGP Class A shares outstanding to equal the number of AAP units it owned following AAP’s reverse unit split and (ii) PAGP Class B shares outstanding to equal the number of AAP units owned by AAP’s unitholders other than PAGP following AAP’s reverse unit split. These reverse splits, along with the Omnibus Agreement, resulted in promote economic alignment between our common unitholders and PAGP’s Class A shareholdersshareholders by, such that among other measures, maintaining a one-to-one relationship between the number of outstanding PAGP Class A shares equals the number of AAP units owned by PAGP, which in turn equals and the number of our common units held indirectly owned by AAP that are attributable to PAGP’s interest in PAGP through AAP. The Plains Entities also entered into an Omnibus Agreement, pursuant See Note 1 to which such one-to-one relationship will be maintained subsequent to the closing our Consolidated Financial Statements for further discussion of the Simplification Transactions. Our operations are conducted directly and indirectly through, and our operating assets are owned by, our subsidiaries. As the sole member of GP LLC, PAGP has responsibility for conducting our business and managing our operations; however, the PAGP GP Board has ultimate responsibility for managing the business and • affairs of PAGP, AAP and us. As the creation sole holder of a Class C shares of PAGP, we have the right for certain to vote in elections of eligible directors, together with the holders of the AAP units to cause AAP to redeem such AAP units PAGP’s Class A and Class B shares. See Item 10. “ Directors and Executive Officers of Our General Partner and Corporate Governance .” Our general partner does not receive a management fee or other compensation in exchange for an equal number connection with its management of our common units held by AAPbusiness, but it is reimbursed for substantially all direct and indirect expenses incurred on our behalf. The Simplification Transactions were between two diagrams below show our organizational structure and among consolidated subsidiaries ownership as of PAGP that are considered entities under common controlDecember 31, 2016 in both a summarized and more detailed format. These equity transactions did not result The first diagram depicts our legal structure in summary format, while the second diagram depicts a change in the carrying value more comprehensive view of the underlying assets such structure, including ownership and liabilities.economic interests and shares and units outstanding:

Simplification Transactions. On November 15, 2016, the Plains Entities closed a series of transactions and executed several organizational and ancillary documents (the “Simplification Transactions”) intended to simplify our capital structure, better align the interests of our stakeholders and improve our overall credit profile. The Simplification Transactions included, among other things: • the permanent elimination of our incentive distribution rights (“IDRs”) and the economic rights associated with our 2% general partner interest in exchange for the issuance by us to AAP of 245.5 million PAA common units (including approximately 0.8 million units to be issued in the future) and the assumption by us of all of AAP’s outstanding debt ($642 million); • the implementation of a unified governance structure pursuant to which the board of directors of GP LLC was eliminated and an expanded board of directors of PAGP GP assumed oversight responsibility over both us and PAGP; • the provision for annual PAGP shareholder elections beginning in 2018 for the purpose of electing certain directors, and the participation of our common unitholders and Series A preferred unitholders in such elections through our ownership of Class C shares in PAGP, which provide us, as the sole holder of such Class C shares, the right to vote, as directed by our common and Series A preferred unitholders, vote in elections of eligible PAGP directors together with the holders of PAGP Class A and Class B shares; • the execution by AAP of a reverse split to adjust the number of AAP Class A units (“AAP units”) such that the number of outstanding AAP units (assuming the conversion of AAP Class B units (the “AAP Management Units”) into AAP units) equaled the number of our common units received by AAP at the closing of the Simplification Transactions. Simultaneously, PAGP executed reverse splits to adjust the number of (i) PAGP Class A shares outstanding to equal the number of AAP units it owned following AAP’s reverse unit split and (ii) PAGP Class B shares outstanding to equal the number of AAP units owned by AAP’s unitholders other than PAGP following AAP’s reverse unit split. These reverse splits, along with the Omnibus Agreement, resulted in economic alignment between our common unitholders and PAGP’s Class A shareholders, such that the number of outstanding PAGP Class A shares equals the number of AAP units owned by PAGP, which in turn equals the number of our common units held by AAP that are attributable to PAGP’s interest in AAP. The Plains Entities also entered into an Omnibus Agreement, pursuant to which such one-to-one relationship will be maintained subsequent to the closing of the Simplification Transactions; and • the creation of a right for certain holders of the AAP units to cause AAP to redeem such AAP units in exchange for an equal number of our common units held by AAP. The Simplification Transactions were between and among consolidated subsidiaries of PAGP that are considered entities under common control. These equity transactions did not result in a change in the carrying value of the underlying assets and liabilities.