Energy Transfer 2012 Annual Report Download - page 43

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Cost reimbursements due to our General Partner may be substantial and may reduce our ability to pay the distributions to
Unitholders.
Prior to making any distributions to our Unitholders, we will reimburse our General Partner for all expenses it has incurred on our
behalf. In addition, our General Partner and its affiliates may provide us with services for which we will be charged reasonable
fees as determined by the General Partner. The reimbursement of these expenses and the payment of these fees could adversely
affect our ability to make distributions to the Unitholders. Our General Partner has sole discretion to determine the amount of
these expenses and fees.
Unitholders may have liability to repay distributions.
Under certain circumstances, Unitholders may have to repay us amounts wrongfully distributed to them. Under Delaware law, we
may not make a distribution to Unitholders if the distribution causes our liabilities to exceed the fair value of our assets. Liabilities
to partners on account of their partnership interests and non-recourse liabilities are not counted for purposes of determining whether
a distribution is permitted. Delaware law provides that a limited partner who receives such a distribution and knew at the time of
the distribution that the distribution violated Delaware law, will be liable to the limited partnership for the distribution amount for
three years from the distribution date. Under Delaware law, an assignee who becomes a substituted limited partner of a limited
partnership is liable for the obligations of the assignor to make contributions to the partnership. However, such an assignee is not
obligated for liabilities unknown to him at the time he or she became a limited partner if the liabilities could not be determined
from the partnership agreement.
We have a holding company structure in which our subsidiaries conduct our operations and own our operating assets.
We are a holding company, and our subsidiaries conduct all of our operations and own all of our operating assets. We do not have
significant assets other than the partnership interests and the equity in our subsidiaries. As a result, our ability to pay distributions
to our Unitholders and to service our debt depends on the performance of our subsidiaries and their ability to distribute funds to
us. The ability of our subsidiaries to make distributions to us may be restricted by, among other things, credit facilities and applicable
state partnership laws and other laws and regulations. If we are unable to obtain funds from our subsidiaries we may not be able
to pay distributions to our Unitholders or to pay interest or principal on our debt when due.
We do not have the same flexibility as other types of organizations to accumulate cash, which may limit cash available to service
our debt or to repay debt at maturity.
Unlike a corporation, our partnership agreement requires us to distribute, on a quarterly basis, 100% of our Available Cash (as
defined in our partnership agreement) to our Unitholders of record and our General Partner. Available Cash is generally all of our
cash on hand as of the end of a quarter, adjusted for cash distributions and net changes to reserves. Our General Partner will
determine the amount and timing of such distributions and has broad discretion to establish and make additions to our reserves or
the reserves of our operating subsidiaries in amounts it determines in its reasonable discretion to be necessary or appropriate:
• to provide for the proper conduct of our business and the businesses of our operating subsidiaries (including reserves for
future capital expenditures and for our anticipated future credit needs);
• to provide funds for distributions to our Unitholders and our General Partner for any one or more of the next four calendar
quarters; or
• to comply with applicable law or any of our loan or other agreements.
Risks Related to Conflicts of Interest
Our partnership agreement limits our General Partner’s fiduciary duties to our Unitholders and restricts the remedies available
to Unitholders for actions taken by our General Partner that might otherwise constitute breaches of fiduciary duty.
Our partnership agreement contains provisions that waive or consent to conduct by our General Partner and its affiliates and reduce
the obligations to which our General Partner would otherwise be held by state-law fiduciary duty standards. The following is a
summary of the material restrictions contained in our partnership agreement on the fiduciary duties owed by our General Partner
to the limited partners. Our partnership agreement:
• permits our General Partner to make a number of decisions in its “sole discretion.” This entitles our General Partner to consider
only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or
factors affecting, us, our affiliates or any limited partner;
• provides that our General Partner is entitled to make other decisions in its “reasonable discretion;”
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