Energy Transfer 2013 Annual Report Download - page 39

Table of Contents
to our Unitholders. Therefore, our General Partner’s duties to us may conflict with the duties of its officers and directors to ETE as its sole owner. As a result
of these conflicts of interest, our General Partner may favor its own interest or those of ETE, Regency or their owners or affiliates over the interest of our
Unitholders.
Such conflicts may arise from, among others, the following:
•Our partnership agreement limits the liability and reduces the fiduciary duties of our General Partner while also restricting the remedies available to our
Unitholders for actions that, without these limitations, might constitute breaches of fiduciary duty. Unitholders are deemed to have consented to some
actions and conflicts of interest that might otherwise be deemed a breach of fiduciary or other duties under applicable state law. Our General Partner is
allowed to take into account the interests of parties in addition to us in resolving conflicts of interest, thereby limiting its fiduciary duties to us.
•Our General Partner is allowed to take into account the interests of parties in addition to us, including ETE, Regency and their affiliates, in resolving
conflicts of interest, thereby limiting its fiduciary duties to us.
•Our General Partner’s affiliates, including ETE, Regency and their affiliates, are not prohibited from engaging in other businesses or activities, including
those in direct competition with us.
•Our General Partner determines the amount and timing of our asset purchases and sales, capital expenditures, borrowings, repayments of debt, issuances
of equity and debt securities and cash reserves, each of which can affect the amount of cash that is distributed to Unitholders and to ETE.
•Neither our partnership agreement nor any other agreement requires ETE or its affiliates, including Regency, to pursue a business strategy that favors us.
The directors and officers of the general partners of ETE and Regency have a fiduciary duty to make decisions in the best interest of their members,
limited partners and unitholders, which may be contrary to our best interests.
•Some of the directors and officers of ETE who provide advice to us also may devote significant time to the businesses of ETE, Regency and their
affiliates and will be compensated by them for their services.
•Our General Partner determines which costs, including allocated overhead costs, are reimbursable by us.
•Our General Partner is allowed to resolve any conflicts of interest involving us and our General Partner and its affiliates, and any resolution of a conflict
of interest by our General Partner that is fair and reasonable to us will be deemed approved by all partners and will not constitute a breach of the
partnership agreement.
•Our General Partner controls the enforcement of obligations owed to us by it.
•Our General Partner decides whether to retain separate counsel, accountants or others to perform services for us.
•Our General Partner is not restricted from causing us to pay it or its affiliates for any services rendered on terms that are fair and reasonable to us or
entering into additional contractual arrangements with any of these entities on our behalf.
•Our General Partner intends to limit its liability regarding our contractual and other obligations and, in some circumstances, may be entitled to be
indemnified by us.
•In some instances, our General Partner may cause us to borrow funds in order to permit the payment of distributions, even if the purpose or effect of the
borrowing is to make incentive distributions.
In addition, certain conflicts may arise as a result of our pursuing acquisitions or development opportunities that may also be advantageous to Regency. If we
are limited in our ability to pursue such opportunities, we may not realize any or all of the commercial value of such opportunities. In addition, if Regency is
allowed access to our information concerning any such opportunity and Regency uses this information to pursue the opportunity to our detriment, we may not
realize any of the commercial value of this opportunity. In either of these situations, our business, results of operations and the amount of our distributions to
our Unitholders may be adversely affected. We cannot assure Unitholders that such conflicts will not occur or that our internal conflicts policy will be
effective in all circumstances to protect our commercially sensitive information or to realize the commercial value of our business opportunities.
Affiliates of our General Partner may compete with us.
Except as provided in our partnership agreement, affiliates and related parties of our General Partner are not prohibited from engaging in other businesses or
activities, including those that might be in direct competition with us. Regency competes with us with respect to our natural gas operations. Additionally, two
directors of Regency’s general partner currently serve as directors of LE GP, LLC, the general partner of ETE.
34