Energy Transfer 2010 Annual Report Download - page 32

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.
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;”
• generally provides that affiliated transactions and resolutions of conflicts of interest not involving a required
vote of Unitholders must be “fair and reasonable” to us and that, in determining whether a transaction or
resolution is “fair and reasonable,” our General Partner may consider the interests of all parties involved,
including its own. Unless our General Partner has acted in bad faith, the action taken by our General Partner
shall not constitute a breach of its fiduciary duty; and
• provides that our General Partner and its officers and directors will not be liable for monetary damages to us,
our limited partners or assignees for errors of judgment or for any acts or omissions if our General Partner
and those other persons acted in good faith.
In order to become a limited partner of our partnership, a Unitholder is required to agree to be bound by the
provisions in our Partnership Agreement, including the provisions discussed above.
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