Energy Transfer 2012 Annual Report Download - page 135

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(3) Due to the ownership by certain officers and directors of the general partner of ETE of equity interests in ETE (either directly
or through one or more entities) and due to their positions as directors of the general partner of ETE, they may be deemed to
beneficially own the limited partnership interests held by ETE, to the extent of their respective interests therein. Any such
deemed ownership is not reflected in the table.
(4) ETE owns all member interests of Energy Transfer Partners, L.L.C and all of the Class A limited partner interests and Class
B limited partner interests in Energy Transfer Partners GP, L.P. Energy Transfer Partners, L.L.C. is the general partner of
Energy Transfer Partners GP, L.P. with a .01% general partner interest. LE GP, LLC, the general partner of ETE, may be
deemed to beneficially own the Common Units owned of record by ETE. The members of LE GP, LLC are Ray C. Davis and
Kelcy L. Warren.
(5) The Partnership indirectly owns 100% of the common stock of Heritage Holdings, Inc.
(6) The Partnership indirectly owns 100% of the common stock of Sunoco, Inc.
In connection with the Parent Company Credit Agreement, ETE and certain of its subsidiaries entered into a Pledge and Security
Agreement (the “Security Agreement”) with Credit Suisse AG, Cayman Islands Branch, as collateral agent (the “Collateral Agent”).
The Security Agreement secures all of ETE’s obligations under the Parent Company Credit Agreement and grants to the Collateral
Agent a continuing first priority lien on, and security interest in, all of ETE’s and the other grantors’ tangible and intangible assets.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
As a policy matter, the Conflicts Committee generally reviews any proposed related-party transaction that may be material to the
Partnership to determine whether the transaction is fair and reasonable to the Partnership. The Partnership's board of directors
makes the determinations as to whether there exists a related-party transaction in the normal course of reviewing transactions for
approval as the Partnership's board of directors is advised by its management of the parties involved in each material transaction
as to which the board of directors' approval is sought by the Partnership's management. In addition, the Partnership's board of
directors makes inquiries to independently ascertain whether related parties may have an interest in the proposed transaction.
While there are no written policies or procedures for the board of directors to follow in making these determinations, the Partnership's
board makes those determinations in light of its fiduciary duties to the Unitholders. The Partnership Agreement provides that any
matter approved by the Conflicts Committee will be conclusively deemed to be fair and reasonable to the Partnership, approved
by all the partners of the Partnership and not a breach by the General Partner or its Board of Directors of any duties they may owe
the Partnership or the Unitholders.
ETE owns directly and indirectly the general partner interest in ETP GP, 100% of the ETP Incentive Distribution Rights and
50,226,967 ETP Common Units.
We have a shared services agreement in which we provide various general and administrative services for ETE. See discussion
in Note 13 to our consolidated financial statements.
We have an operating lease agreement with the former owners of Energy Transfer Group, L.L.C. ("ETG"), which we acquired in
2009. These former owners include Mr. Warren and Mr. Ray C. Davis, a former ETP board member. We pay these former owners
$5 million in operating lease payments per year through 2017. With respect to the related party transaction with ETG, the Conflicts
Committee of ETP met numerous times prior to the consummation of the transaction to discuss the terms of the transaction. The
committee made the determination that the sale of ETG to ETP was fair and reasonable to ETP and that the terms of the operating
lease between ETP and the former owners of ETG are fair and reasonable to ETP.
We received $18 million, $17 million and $6 million in management fees from ETE for the provision of various general and
administrative services for ETE’s benefit for the years ended December 31, 2012, 2011 and 2010, respectively. The increase
recorded in the years ended December 31, 2012 and 2011 were the result of increased service fees related to the provision of
various general and administrative services for Regency which was acquired by ETE in 2010.
Immediately following the closing of the Partnership's acquisition of Sunoco, ETE contributed its interest in Southern Union into
Holdco, an ETP-controlled entity, in exchange for a 60% equity interest in Holdco. In conjunction with ETE's contribution, the
Partnership contributed its interest in Sunoco to Holdco and retained a 40% equity interest in Holdco. Prior to the contribution
of Sunoco to Holdco, Sunoco contributed $2.0 billion of cash and its interests in Sunoco Logistics to the Partnership in exchange
for 90,706,000 Class F Units representing limited partner interests in the Partnership. The Class F Units are entitled to 35% of
the quarterly cash distribution generated by the Partnership and its subsidiaries other than Holdco, subject to a maximum cash
distribution of $3.75 per Class F Unit per year, which is the current level.
On February 27, 2013, Southern Union entered into a definitive contribution agreement to contribute to Regency all of the issued
and outstanding membership interest in Southern Union Gathering Company, LLC, and its subsidiaries, including SUGS. The
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