DEP » Topics » provided

This excerpt taken from the DEP 10-K filed Apr 2, 2007.
provided that, any conflict of interest and any resolution of such conflict of interest will be conclusively deemed fair and reasonable to us if such conflict of interest or resolution is (i) approved by a majority of the members of our ACG Committee (“Special Approval”), or (ii) on terms objectively demonstrable to be no less favorable to us than those generally being provided to or available from unrelated third parties.

 

The ACG Committee (in connection with Special Approval) is authorized in connection with its resolution of any conflict of interest to consider:

 

 

 

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the relative interests of any party to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interest;

 

 

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the totality of the relationships between the parties involved (including other transactions that may be particularly favorable or advantageous to the Partnership);

 

 

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any customary or accepted industry practices and any customary or historical dealings with a particular person;

 

 

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any applicable generally accepted accounting or engineering practices or principles;

 

 

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the relative cost of capital of the parties and the consequent rates of return to the equity holders of the parties; and

 

 

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such additional factors as the committee determines in its sole discretion to be relevant, reasonable or appropriate under the circumstances.

 

Our general partner or its Board of Directors may, in their discretion, request that our ACG Committee review and approve related party transactions. The review and approval process of the ACG Committee, including factual matters that may be considered in determining whether a transaction is fair and reasonable, is generally governed by Section 7.9 of our partnership agreement. As discussed above, the ACG Committee’s Special Approval is conclusively deemed fair and reasonable to us under the partnership agreement. The processes followed by our management in approving or obtaining approval of related party transactions are in accordance with our written management authorization policy, which has been approved by the Board.

 

Under our Board-approved management authorization policy, the officers of our general partner have authorization limits for purchases and sales of assets, capital expenditures, commercial and financial transactions and legal agreements that ultimately limit the ability of executives of our general partner to enter into transactions involving capital expenditures in excess of $100 million without Board approval. This policy covers all transactions, including transactions with related parties. For example, under this policy, the chairman of our general partner may approve capital expenditures or the sale or other disposition of our assets up to a $100 million limit. Furthermore, any two of the chief executive officer and senior executives who are directors of our general partner may approve capital expenditures or the sale or other disposition of our assets up to a $100 million limit and individually may approve capital expenditures or the sale or other disposition of our assets up to $50 million. These senior executives have also been granted full approval authority for commercial, financial and service contracts.

 

In submitting a matter to the ACG Committee, the Board or the general partner may charge the committee with reviewing the transaction and providing the Board a recommendation, or it may delegate to the committee the power to approve the matter. When so engaged, the ACG Committee Charter currently provides that the ACG Committee may, if it deems necessary or advisable, perform the following functions:

 

 

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Review a summary of the proposed transaction(s) that outlines (i) its terms and conditions (explicit and implicit), (ii) a brief history of the transaction, and (iii) the impact that the transaction will have on our unitholders and personnel, including earnings per unit and distributable cash flow.

 

 

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Review due diligence findings by management and make additional due diligence requests, if necessary.

 

 

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Engage third-party independent advisors, where necessary, to provide committee members with comparable market values, legal advice and similar services directly related to the proposed transaction.

 

 

 

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Conduct interviews regarding the proposed transaction with the most knowledgeable company officials to ensure that the committee members have all relevant facts before rendering their judgment.

 

In the normal course of business, our management routinely reviews all other related party transactions, including proposed asset purchases and business combinations and purchases and sales of product. As a matter of course, management reviews the terms and conditions of the proposed transactions, performs appropriate levels of due diligence and assesses the impact of the transaction on our partnership.

 

The ACG Committee does not separately review transactions covered by our administrative services agreement with EPCO, which agreement has previously been approved by the ACG Committee and/or the Board. The administrative services agreement governs numerous day-to-day transactions between us and our subsidiaries and EPCO and its affiliates, including the provision by EPCO of administrative and other services to us and our subsidiaries and our reimbursement of costs for those services. For a description of the administrative services agreement, please read “

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