THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Magellan Midstream Partners, L.P. (MMP)

3/13/2006 Proxy Information

Mr. Eilers has served as a Vice President of Magellan Midstream Management, LLC, the general partner of Magellan Holdings, since April 2003.

Mr. Lancaster has served as a Vice President of Magellan Midstream Management, LLC, the general partner of Magellan Holdings, since May 2004.

Mr. Souleles has served as a Vice President of Magellan Midstream Management, LLC, the general partner of Magellan Holdings, since December 2004.

Mr. Derryberry has served as a Vice President of Magellan Midstream Management, LLC, the general partner of Magellan Holdings, since February 2005.

MGG is the owner of our general partner. We are managed and operated by our general partner, and the board of directors of our general partner makes decisions related to our general partner’s management of us. However, our general partner’s limited liability company agreement provides that our general partner’s board of directors may not take any action without approval of MGG with respect to an extraordinary matter that would have, or would reasonably be expected to have, a material effect on MGG’s interest in our general partner.

Distributions to and Incentive Distribution Rights of Our General Partner

Because our distributions have exceeded specified target levels as described in our partnership agreement, our general partner receives increasing percentages of our distributions. Distributions to our general partner above the highest target level are at 50%. Our general partner also owns 100% of our incentive distribution rights. As the owner of our general partner, MGG indirectly benefits from these distributions. Certain executive officers of our general partner collectively own approximately 6% of MGG Midstream Holdings, L.P., the owner of the general partner of MGG, and therefore also indirectly benefit from these distributions. For more information regarding the ownership of the Class B common units of MGG Midstream Holdings, L.P., please read “Security Ownership of Certain Beneficial Owners and Management.”

In 2005, distributions paid to our general partner totaled $30.1 million. In addition, during 2005, MGG received distributions totaling $5.0 million related to our common and subordinated units that it owned during the year. Assuming we have sufficient available cash to continue to pay distributions on all of our outstanding units for four quarters at our current quarterly distribution level of $0.5525 per unit, our general partner would receive distributions of approximately $51.4 million in 2006 on its combined 2% general partner interest and incentive distributions.

Payments to Our General Partner and Affiliates

Our general partner and its affiliates do not receive any management fee or other compensation for the management of our partnership. We pay our general partner and its affiliates, however, for direct and indirect expenses incurred on our behalf, subject to limitations under our omnibus agreement regarding our payment of general and administrative expenses. To the extent we pay our general partner and its affiliates an amount in excess of this limitation, they reimburse us the excess amount. The limitation on our general and administrative expenses payments under the omnibus agreement escalates annually as described below.

Omnibus Agreement

On June 17, 2003, MGG, Williams and certain of its affiliates entered into an omnibus agreement to which we are a third-party beneficiary. The omnibus agreement provides for limitations on the amount of general and administrative expenses, other than long-term incentive compensation expenses, we are required to pay, which operate as follows:

— MGG will reimburse us for expenses above a lower cap amount up to an upper cap amount; and

— MGG will not reimburse us for expenses above the upper cap amount.

The lower cap amount began escalating annually in 2004 at 7% (or, if greater, the percentage increase in the Consumer Price Index). The upper cap amount began escalating annually in 2004 at the lesser of 2.5% or the percentage increase in the Consumer Price Index. Both the upper and lower caps are also adjusted for acquisitions, construction of new assets or significant modifications to existing assets completed by us. As of January 1, 2006, the lower cap was $52.7 million and the upper cap was $59.0 million.

These limitations on our obligation for general and administrative expenses will terminate upon a change of control of MGG or our general partner. A change of control of our general partner will be deemed to occur if, among other things, directors are elected whose nomination for election to our general partner’s board of directors was not approved by our general partner or its board of directors at a time when the board was comprised of only such approved directors or the current directors.

Services Agreement

On December 24, 2005, we entered into a services agreement with MGG GP, an affiliate, pursuant to which MGG GP has agreed to perform specified services, including providing necessary employees to operate our assets. In return, we are required to pay MGG GP for its direct and indirect expenses incurred in providing these services, subject to the limitations on reimbursement of general and administrative expenses under the omnibus agreement as described earlier. To the extent our total general and administrative expenses exceed the lower cap but do not exceed the upper cap amount, MGG reimburses us the excess amount. In 2005, we incurred general and administrative expenses of $61.1 million, including long-term incentive compensation expenses, and we were reimbursed $3.3 million of these costs.

MGG GP has the right at any time to terminate its obligations under this services agreement upon 90 days notice. To the extent that neither MGG GP nor any of its subsidiaries (including our general partner) provides these services to us, the limitations under the omnibus agreement on our payment of general and administrative expenses relating to these services would no longer apply and we could incur increased general and administrative expenses.

MGG Environmental Indemnification

MGG has indemnified us against certain known environmental liabilities. As of December 31, 2005, the amount remaining under this indemnity agreement that MGG may be liable to us was $6.7 million.

Revenues from Our Affiliates

In March 2004, we acquired a 50% ownership interest in Osage Pipe Line Company, LLC. We operate the Osage pipeline system and receive a fee for these services. During 2005, we received $0.7 million for operating fees.

Conflicts of Interest of Our Affiliates

MGG, which owns our general partner, is partially owned by an affiliate of the Carlyle/Riverstone Global Energy and Power Fund II, L.P. (“CRF”), which also owns, through affiliates, an interest in the general partner of Buckeye Partners, L.P. (“Buckeye Partners”) and the general partner of SemGroup, L.P. (“SemGroup”) and may acquire other entities that compete with us. Although we do not have extensive operations in the geographic areas primarily served by Buckeye Partners, we will compete directly with Buckeye Partners, SemGroup and perhaps other entities in which CRF has an interest for acquisition opportunities throughout the United States and potentially will compete with Buckeye Partners, SemGroup and these other entities for new business or extensions of existing services provided by our operating partnerships, creating actual and potential conflicts of interest between us and our affiliates. An affiliate of SemGroup is a significant customer of ours. The board of directors of our general partner has adopted a Board of Directors Conflict of Interest Policy and Procedures. In compliance with this policy, CRF has adopted procedures internally to assure that our proprietary and confidential information is protected from disclosure to SemGroup and Buckeye Partners. As part of these procedures, none of the nominees of CRF will serve on our general partner’s board of directors and on SemGroup’s or Buckeye Partners’ general partners’ board of directors at the same time.

4/4/2005 Proxy Information

Mr. Souleles has served as a Vice President of Magellan Midstream Management, LLC, the general partner of Magellan Holdings, since December 13, 2004. He has been employed principally by Madison Dearborn Partners, Inc.

Magellan Holdings owns, directly and through its ownership of our general partner, 1,194,779 common units and 2,839,848 subordinated units, representing an approximate aggregate ownership interest in us of 13.9% including its 2% general partner interest. Our general partner’s ability, as general partner, to manage and operate us effectively gives our general partner the right to veto some actions of ours and to control the management of our business. For more information about limited partner interests in us held by affiliates, please read “Security Ownership of Certain Beneficial Owners and Management.”

Distributions to Our General Partner

Because our distributions have exceeded specified target levels as specified in our partnership agreement, our general partner receives increasing percentages of our distributions. Distributions to our general partner above the highest target level are at 50%. As the owner of our general partner, Magellan Holdings indirectly benefits from these distributions. Through ownership of the Class B common units of Magellan Holdings, certain executive officers of our general partner also indirectly benefit from these distributions. For more information regarding the ownership of these Class B common units of Magellan Holdings, please read “Security Ownership of Certain Beneficial Owners and Management.”

In 2004, distributions paid to our general partner totaled $16.7 million. In addition, during 2004, Magellan Holdings received distributions totaling $28.7 million related to its common and subordinated units. Assuming we have sufficient available cash to continue to pay distributions on all of our outstanding units for four quarters at our current quarterly distribution level of $0.9125 per unit, in 2005 our general partner would receive distributions of approximately $20.8 million* on its combined 2% general partner interest and incentive distributions. Additionally, Magellan Holdings would receive $14.9 million on the distribution related to its common and subordinated units.

* In connection with our October 2004 acquisition of certain pipeline assets, our partnership agreement was amended to reduce the incentive cash distributions to be paid to our general partner by $5.0 million for 2005. Absent this agreement, the total distribution and combined general partner interest and incentive cash distribution amounts noted above would be $5.0 million higher.

Payments to Our General Partner and Affiliates

Our general partner and its affiliates do not receive any management fee or other compensation for the management of our partnership. We pay our general partner and its affiliates, however, for direct and indirect expenses incurred on our behalf, subject to limitations under our omnibus agreement regarding our payment of general and administrative expenses. To the extent we pay our general partner and its affiliates an amount in excess of this limitation, they reimburse us the excess amount. The limitation on our general and administrative expenses payments under the omnibus agreement escalates annually as described below.

Omnibus Agreement

On June 17, 2003, Magellan Holdings, Williams and certain of its affiliates entered into an omnibus agreement to which we are a third-party beneficiary. The omnibus agreement provides for the following:

• Magellan Holdings Non-Compete. Magellan Holdings and its subsidiaries, including our general partner, will not, subject to the limitations and procedures provided in the omnibus agreement, engage in or acquire certain businesses competing with us until June 2005, but these restrictions will terminate upon a change of control of Magellan Holdings or our general partner;

• Magellan Holdings General and Administrative Reimbursement Cap. There are limitations on the amount of general and administrative expenses we are required to pay, which operate as follows:

— Magellan Holdings will reimburse us for expenses above a lower cap amount up to an upper cap amount; and

— Magellan Holdings will not reimburse us for expenses above the upper cap amount.

The lower cap amount began escalating annually in 2004 at 7% (or, if greater, the percentage increase in the Consumer Price Index). The upper cap amount began escalating annually in 2004 at the lesser of 2.5% or the percentage increase in the Consumer Price Index. Both the upper and lower caps are also adjusted for acquisitions, construction of new assets or significant modifications to existing assets completed by us. As of January 1, 2005, the lower cap was $49.3 million and the upper cap was $57.6 million.

These limitations on our obligation for general and administrative expenses will terminate upon a change of control of Magellan Holdings or our general partner. A change of control of our general partner will be deemed to occur if, among other things, directors are elected whose nomination for election to our general partner’s board of directors was not approved by our general partner or its board of directors at a time when the board was comprised of only such approved directors or the current directors.

Services Agreement

We have entered into a services agreement with Magellan Holdings pursuant to which Magellan Holdings has agreed to perform specified services, including providing necessary employees to operate our assets. In return, we are required to pay Magellan Holdings for its direct and indirect expenses incurred in providing these services, subject to the limitations on reimbursement of general and administrative expenses under the omnibus agreement as described earlier. To the extent that we pay Magellan Holdings an amount in excess of this limitation, Magellan Holdings reimburses us the excess amount. In 2004, we incurred general and administrative expenses of $54.5 million and we were reimbursed $6.4 million of these costs by Magellan Holdings.

Magellan Holdings has the right at any time to terminate its obligations under this services agreement upon 90 days notice. To the extent that neither Magellan Holdings nor any of its subsidiaries (including our general partner) provides these services to us, the limitations under the omnibus agreement on our payment of general and administrative expenses relating to these services would no longer apply and we could incur increased general and administrative expenses.

Magellan Holdings Environmental Indemnification

Magellan Holdings has indemnified us against certain known environmental liabilities. As of December 31, 2004, the amount remaining under this indemnity agreement that Magellan Holdings may be liable to us was $11.5 million.

Revenues from Our Affiliates

In March 2004, we acquired a 50% ownership interest in Osage Pipe Line Company, LLC (the “Osage Pipeline”). We operate the Osage Pipeline and receive a fee for these services. During 2004, we received $0.5 million from Osage Pipeline for operating fees. We also received $0.3 million from Osage Pipeline for fees to transition accounting, billing and other administrative functions to us.

Conflicts of Interest of Our Affiliates

Magellan Holdings is partially owned by an affiliate of the Carlyle/Riverstone Global Energy and Power Fund II, L.P. (the “Carlyle/Riverstone Fund”), which also owns, through affiliates, an interest in the general partner of Buckeye Partners, L.P. (“Buckeye Partners”) and the general partner of SemGroup, L.P. (“SemGroup”) and may acquire other entities that compete with us. Although we do not have extensive operations in the geographic areas primarily served by Buckeye Partners, we will compete directly with Buckeye Partners, SemGroup and perhaps other entities in which the Carlyle/Riverstone Fund has an interest for acquisition opportunities throughout the United States and potentially will compete with Buckeye Partners, SemGroup and these other entities for new business or extensions of existing services provided by our operating partnerships, creating actual and potential conflicts of interest between us and affiliates of Magellan Holdings. An affiliate of SemGroup is a significant customer of ours. The board of directors of our general partner has adopted a Board of Directors Conflict of Interest Policy and Procedures. In compliance with this policy, Carlyle/Riverstone Global Energy and Power Fund II, L.P. has adopted procedures internally to assure that our proprietary and confidential information is protected.

3/10/2004 Proxy Information

Mr. Thomas S. Souleles is a Managing Director of Madison Dearborn. On June 17, 2003, Williams sold all of its interests in us and our general partner to Magellan Midstream Holdings, L.P. (or Magellan Holdings), a limited partnership owned jointly by Madison Dearborn Capital Partners IV, L.P. and Carlyle/Riverstone MLP Holdings, L.P.

Magellan Holdings owns, directly and through its ownership of our general partner, 5,355,541 common units and 4,259,771 subordinated units, representing an approximate aggregate ownership interest in us of 36%, including its 2% general partner interest. Our general partner’s ability, as general partner, to manage and operate us effectively gives our general partner the right to veto some actions of ours and to control the management of our business. For more information about limited partner interests in us held by affiliates, please read “Security Ownership of Certain Beneficial Owners and Management.”

Since June 17, 2003, the date of the Acquisition, we have had no revenues from affiliates. For information relating to our commercial agreements with Williams and its subsidiaries prior to June 17, 2003, please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Related Party Transactions” and “Note 11 – Related Party Transactions” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2003, which is incorporated by reference herein.

Distributions and Payments to Our General Partner and its Affiliates

The following table summarizes the distributions and payments to be made by us to our general partner and its affiliates in connection with the ongoing operation and liquidation of our partnership. These distributions and payments were determined by and among affiliated entities and are not the result of arm’s length negotiations.

Distributions of available cash to our general partner and its affiliates

Cash distributions will generally be made 98% to the unitholders, including to Magellan Holdings as a holder of common units and subordinated units, and 2% to our general partner. However, distributions that exceed the specified target levels in our partnership agreement will result in our general partner receiving increasing percentages of the distributions, up to 50% of the distributions above the highest target level.

Assuming we have sufficient available cash to continue to pay distributions on all of our outstanding units for four quarters at our current distribution level of $0.83 per unit per quarter, our general partner and its affiliates, other than officers and directors of our general partner, would receive annual distributions of approximately $44.2 million; approximately $12.3 million on the combined 2% general partner interest and incentive distributions and a distribution of approximately $31.9 million on their common and subordinated units.

Payments to our general partner and its affiliates

Our general partner and its affiliates do not receive any management fee or other compensation for the management of our partnership. We pay our general partner and its affiliates, however, for direct and indirect expenses incurred on our behalf, subject to limitations under our old omnibus agreement, which terminated upon the closing of the Acquisition, and under our new omnibus agreement regarding our payment of general and administrative expenses. To the extent we pay our general partner and its affiliates an amount in excess of this limitation, they reimburse us the excess amount. In 2003, we paid a net amount of $38.2 million for general and administrative expenses, excluding expenses associated with incentive compensation plans. The limitation on our general and administrative expenses payments under the new omnibus agreement escalates annually as described below.

Withdrawal or removal of our general partner

If our general partner withdraws in violation of our partnership agreement or is removed for cause, a successor general partner has the option to buy the general partner interests and incentive distribution rights for a cash price equal to fair market value. If our general partner withdraws or is removed under any other circumstances, the departing general partner has the option to require the successor general partner to buy the departing general partner’s interests and its incentive distribution rights for a cash price equal to fair market value.

If either of these options is not exercised, the departing general partner’s interests and incentive distribution rights will automatically convert into common units equal to the fair market value of those interests. In addition, we will be required to pay the departing general partner for expense reimbursements.

Liquidation

Upon our liquidation, the partners, including our general partner and Magellan Holdings, will be entitled to receive liquidating distributions according to their particular capital account balances.

Old Omnibus Agreement; New Omnibus Agreement

The old omnibus agreement that we entered into with Williams and its affiliates and our general partner in February 2001 in connection with our initial public offering was amended at the time we acquired Williams Pipe Line Company, LLC and terminated upon the closing of the Acquisition. At the closing of the Acquisition, Magellan Holdings, Williams and certain of its affiliates entered into a new omnibus agreement to which we are a third-party beneficiary.

The new omnibus agreement, a copy of which is filed as an exhibit to the current report on Form 8-K that we filed with the SEC on June 17, 2003, provides for the following:

• Williams Non-Compete: Williams and its affiliates will not, subject to the limitations and procedures provided in the new omnibus agreement, engage in or acquire certain businesses competing with us until June 2005, but this restriction will terminate upon a change of control of Williams;

• Magellan Holdings Non-Compete: Magellan Holdings and its subsidiaries, including our general partner, will not, subject to the limitations and procedures provided in the new omnibus agreement, engage in or acquire certain businesses competing with us until June 2005, but these restrictions will terminate upon a change of control of Magellan Holdings or our general partner;

• Williams Environmental Indemnification: Williams and Williams Energy Services (WES) will continue to indemnify us for covered environmental losses on terms substantially similar to those provided under the old omnibus agreement;

• Williams Right-of-Way Indemnification: Williams and Williams Natural Gas Liquids, Inc. (NGL) will continue to indemnify us for right-of-way defects on terms substantially similar to those provided under the old omnibus agreement. These provisions are subject to early termination upon a change of control of Magellan Holdings or our general partner;

• Williams Maintenance Capital Expenditure Reimbursement: Williams and its affiliates will continue their obligation to reimburse us through 2004 for maintenance capital expenditures to maintain the Magellan Pipeline Company, LLC assets on terms substantially similar to those provided under the old omnibus agreement.

• Magellan Holdings General and Administrative Reimbursement Cap: There are limitations through 2010 on the amount of general and administrative expenses we are required to pay, which operate as follows:

— Magellan Holdings will reimburse us for expenses above a lower cap amount up to an upper cap amount; and

— Magellan Holdings will not reimburse us for expenses above the upper cap amount, although Williams will reimburse Magellan Holdings for these amounts through June 2004.

The initial lower cap amount for 2003 was equivalent to the 2003 cap under the old omnibus agreement of approximately $38.2 million and will escalate annually beginning in 2004 at 7% (or, if greater, the percentage increase in the Consumer Price Index), which is a higher escalation rate than under the old omnibus agreement. The upper cap amount was $49.3 million for 2003 and will escalate annually beginning in 2004 at the lesser of 2.5% or the percentage increase in the Consumer Price Index.

These limitations on our obligation for general and administrative expenses will terminate upon a change of control of Magellan Holdings or our general partner. A change of control of our general partner will be deemed to occur if, among other things, directors are elected whose nomination for election to our general partner’s board of directors was not approved by our general partner or its board of directors or any nominating committee thereof at a time when the board was comprised of only such approved directors or the current directors; and

Magellan Holdings Environmental Indemnification

Magellan Holdings has assumed a portion of Williams’ obligations to indemnify us for $21.9 million of known environmental liabilities, of which $18.9 million was associated with known liabilities at Magellan Pipeline facilities, $2.7 million was associated with known liabilities at our petroleum products terminal facilities and $0.2 million was associated with known liabilities on the ammonia pipeline system.

Amendments to Our General Partner’s Limited Liability Company Agreement

Upon the closing of the Acquisition, Magellan Holdings, as the sole member of our general partner, entered into the Second Amendment to Limited Liability Company Agreement of Magellan GP, LLC (or the Second Amendment). The provisions of the Second Amendment provided for, among other matters, amendments to address the single-member status of our general partner as of the closing of the Acquisition.

Upon the closing of the Acquisition, the board of directors of our general partner and Magellan Holdings, as the sole member of our general partner, adopted the Third Amendment to Limited Liability Company Agreement of Magellan GP, LLC (or the Third Amendment). Among other provisions, the Third Amendment requires our general partner to obtain the prior approval of Magellan Holdings before taking certain actions that would have, or would reasonably be expected to have, a direct or indirect material affect on Magellan Holdings’ membership interest in our general partner.

The Second Amendment and Third Amendment are filed as exhibits to our current report on Form 8-K that we filed with the SEC on June 17, 2003.

On December 1, 2003, Magellan Holdings, as the sole member of our general partner, adopted the Amended & Restated Limited Liability Company Agreement of Magellan GP, LLC (or the A&R LLC Agreement). The A&R LLC Agreement addressed the name change of our general partner and certain of its affiliates.

On February 3, 2004, the board of directors of our general partner and Magellan Holdings, as the sole member of our general partner, adopted the First Amendment to the Amended & Restated Limited Liability Company Agreement of Magellan GP, LLC (or the First Amendment to the A&R LLC Agreement). The First Amendment to the A&R LLC Agreement provided that notice of board meetings may be provided by e-mail delivery.

The A&R LLC Agreement and the First Amendment to the A&R LLC Agreement are filed as exhibits to our Annual Report on Form 10-K for the year ended December 31, 2003.

Old Services Agreement; New Services Agreement

During a transition period after the closing of the Acquisition and until January 1, 2004, the employees that managed our operations continued to be employees of Williams and its affiliates. We were a party to a services agreement with affiliates of Williams whereby these entities agreed to perform specified services, including providing necessary employees, to operate our assets. On June 17, 2003, Williams exercised its right to terminate this services agreement, effective as of September 15, 2003, although Williams was required to continue after that date to provide similar services to Magellan Holdings under a transition services agreement with Magellan Holdings if the necessary employees had not yet been transferred from Williams to Magellan Holdings or its affiliates by that time. The necessary employees transferred from Williams to Magellan Holdings on January 1, 2004 and most of the services are no longer provided by Williams. However, Williams continues to provide financial and administrative services under this transition services agreement. We expect these services to continue through the second quarter of 2004.

At the closing of the Acquisition, we entered into a new services agreement with Magellan Holdings pursuant to which Magellan Holdings has agreed to perform specified services, including providing necessary employees to operate our assets after the transition period. In return, we are required to pay Magellan Holdings for its direct and indirect expenses incurred in providing these services, subject to the limitations on reimbursement of general and administrative expenses under the new omnibus agreement. To the extent that we pay Magellan Holdings an amount in excess of this limitation, Magellan Holdings reimburses us the excess amount.

As with our old services agreement, Magellan Holdings has the right at any time to terminate its obligations under this new services agreement upon 90 days notice. To the extent that neither Magellan Holdings nor any of its subsidiaries (including our general partner) provides these services to us, the limitations under the new omnibus agreement on our payment of general and administrative expenses relating to these services would no longer apply and we may incur increased general and administrative expenses.

ATLAS 2000 Assignment, Contribution and License Agreement

In connection with the Acquisition, an affiliate of Williams assigned its rights in the ATLAS 2000 software system, which we use to manage our pipeline and terminals systems, and contributed the related hardware to us. Upon such assignment, we granted to an affiliate of Williams a license to use the ATLAS 2000 software system. A copy of the assignment, contribution and license agreement relating to the ATLAS 2000 software system was filed as an exhibit to our current report on Form 8-K that we filed with the SEC on June 17, 2003.