distributions that they would have otherwise received had we not issued new Class B units to our general
partner in connection with resetting the target distribution levels related to our general partner incentive
distribution rights.
Holders of our common units have limited voting rights and are not entitled to elect our general partner or
its directors.
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 do not elect our general partner or its board of directors, and 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 are chosen by the members of 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 takeover premium
in the trading price.
Even if holders of our common units are dissatisfied, they may be unable to remove our general partner
without its consent.
The unitholders may be unable to remove our general partner without its consent because our general
partner and its affiliates own a significant percentage of our outstanding units. The vote of the holders of at least
66 2/3% of all outstanding units voting together as a single class is required to remove the general partner. As
of December 31, 2011, our general partner and its affiliates owned approximately 27% of our aggregate
outstanding units.
Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common
units.
Unitholders’ voting rights are further restricted by the partnership agreement provision providing that any
units held by a person that owns 20% or more of any class of units then outstanding, other than our general
partner, its affiliates, their transferees and persons who acquired such units with the prior approval of the board
of directors of our general partner, cannot vote on any matter. Our 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.
If we are deemed an “investment company” under the Investment Company Act of 1940, it would
adversely affect the price of our common units and could have a material adverse effect on our business.
Our assets include a 40% interest in the Discovery system and, from January 2011, a 33.33% interest in the
Southeast Texas system which may be deemed to be “investment securities” within the meaning of the
Investment Company Act of 1940. If a sufficient amount of our assets are deemed to be “investment securities”
within the meaning of the Investment Company Act, we would either have to register as an investment
company under the Investment Company Act, obtain exemptive relief from the SEC or modify our
organizational structure or our contract rights to fall outside the definition of an investment company.
Registering as an investment company could, among other things, materially limit our ability to engage in
transactions with affiliates, including the purchase and sale of certain securities or other property to or from our
affiliates, restrict our ability to borrow funds or engage in other transactions involving leverage and require us
to add additional directors who are independent of us or our affiliates. The occurrence of some or all of these
events may have a material adverse effect on our business.
Moreover, treatment of us as an investment company would prevent our qualification as a partnership for
federal income tax purposes in which case we would be treated as a corporation for federal income tax
purposes, and be subject to federal income tax at the corporate tax rate, significantly reducing the cash available
for distributions. Additionally, distributions to the unitholders would be taxed again as corporate distributions
and none of our income, gains, losses or deductions would flow through to the unitholders.
Additionally, as a result of our desire to avoid having to register as an investment company under the
Investment Company Act, we may have to forego potential future acquisitions of interests in companies that
may be deemed to be investment securities within the meaning of the Investment Company Act or dispose of
our current interests in Discovery or Southeast Texas.
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