Sunoco 2014 Annual Report Download - page 26

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RISKS RELATED TO OUR PARTNERSHIP STRUCTURE
Our general partner's discretion in determining the level of cash reserves may adversely affect our ability to make cash
distributions to our unitholders.
Our partnership agreement provides that our general partner may reduce our operating surplus by establishing cash
reserves to provide funds for our future operating expenditures. In addition, the partnership agreement provides that our general
partner may reduce available cash by establishing cash reserves for the proper conduct of our business, to comply with
applicable law or agreements to which we are a party or to provide funds for future distributions to our unitholders in any one
or more of the next four quarters. These cash reserves will affect the amount of cash available for current distribution to our
unitholders.
Even if unitholders are dissatisfied, they have limited rights under the partnership agreement to remove our general partner
without its consent, which could lower the trading price of the common units.
The partnership agreement also contains provisions limiting the ability of unitholders to call meetings or to acquire
information about our operations, as well as other provisions limiting the unitholders' ability to influence the manner or
direction of management. Unlike the holders of common stock in a corporation, unitholders have only limited voting rights on
matters affecting our business and, therefore, limited ability to influence management’s decisions regarding our business.
Unitholders did not elect our general partner or its board of directors and will have no right to elect our general partner or its
board of directors on an annual or other continuing basis. The board of directors of our general partner is chosen by ETP, the
controlling member of our general partner. Furthermore, if the unitholders are dissatisfied with the performance of our general
partner, they will have little ability to remove our general partner. As a result of these limitations, the price at which the
common units trade could be diminished because of the absence or reduction of a control premium in the trading price.
Our general partner may, in its sole discretion, approve the issuance of partnership securities and specify the terms of such
partnership securities.
Pursuant to our partnership agreement, our general partner has the ability, in its sole discretion and without the approval
of the unitholders, to approve the issuance of securities by the Partnership at any time and to specify the terms and conditions
of such securities. The securities authorized to be issued may be issued in one or more classes or series, with such
designations, preferences, rights, powers and duties (which may be senior to existing classes and series of partnership
securities), as shall be determined by our general partner, including:
• the right to share in the Partnership’s profits and losses;
• the right to share in the Partnership’s distributions;
• the rights upon dissolution and liquidation of the Partnership;
• whether, and the terms upon which, the Partnership may redeem the securities;
• whether the securities will be issued, evidenced by certificates and assigned or transferred; and
• the right, if any, of the security to vote on matters relating to the Partnership, including matters relating to the relative
rights, preferences and privileges of such security.
Please see “We may issue additional common units without unitholder approval, which would dilute our unitholders' ownership
interests.” below.
The control of our general partner may be transferred to a third party without unitholder consent.
Our general partner has the right to transfer its general partner interest to a third party in a merger or in a sale of all or
substantially all of its assets without the consent of the unitholders. Furthermore, there is no restriction in the partnership
agreement on the ability of the owner of our general partner from transferring its ownership interest in the general partner to a
third party. The new owner of our general partner would then be in a position to replace the board of directors and officers of
the general partner with its own appointees.
Conflicts of interest may arise between us and ETP as they are the controlling owner of our general partner, which, due to
limited fiduciary responsibilities, may permit ETP and its affiliates to favor their own interests to the detriment of our
unitholders.
ETP is the controlling owner of our general partner interest and owns 29.7 percent of our limited partnership interests.
Conflicts may arise between the interests of ETP and its affiliates (including our general partner), and our interests and those of
our unitholders. As a result of these conflicts, our general partner may favor its own interests and the interests of its affiliates