Energy Transfer 2015 Annual Report Download - page 148

Table of Contents
(2) Beneficial ownership for the purposes of the foregoing table is defined by Rule 13d-3 under the Exchange Act. Under that rule, a person is generally
considered to be the beneficial owner of a security if he has or shares the power to vote or direct the voting thereof or to dispose or direct the disposition
thereof or has the right to acquire either of those powers within sixty (60) days.
(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 0.01% 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
For a discussion of director independence, see Item 10. “Directors, Executive Officers and Corporate Governance.”
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 contractually-limited 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 (see “Risks Related to Conflicts of
Interest” in Item 1A. Risk Factors in this annual report).
ETE owns directly and indirectly the general partner interest in ETP GP, 100% of the ETP Incentive Distribution Rights, 2.6 million ETP Common Units and
81.0 million Class H Units.
We have a shared services agreement in which we provide various general and administrative services for ETE. See discussion in Note 14 to our consolidated
financial statements.
We have an operating lease agreement with the former owners of 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 $23 million, $26 million and $27 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, 2015, 2014, and 2013, respectively.
Immediately following the closing of the Partnership’s acquisition of Sunoco, Inc., ETE contributed its interest in Southern Union into ETP Holdco, an ETP-
controlled entity, in exchange for a 60% equity interest in ETP Holdco. In conjunction with ETE’s contribution, the Partnership contributed its interest in
Sunoco, Inc. to ETP Holdco and retained a 40% equity interest in ETP Holdco. Prior to the contribution of Sunoco, Inc. to ETP Holdco, Sunoco, Inc.
contributed $2.0 billion of cash and its interests in Sunoco Logistics to the Partnership in exchange for 90.7 million Class F Units representing limited
partner interests in the
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