Energy Transfer 2012 Annual Report Download - page 182

F - 37
upon at the time of sale. Any sale of Common Units to BofA Merrill Lynch as principal would be pursuant to the terms of a
separate agreement between us and BofA Merrill Lynch.
Equity Incentive Plan Activity
As discussed in Note 8, we issue Common Units to employees and directors upon vesting of awards granted under our equity
incentive plans. Upon vesting, participants in the equity incentive plans may elect to have a portion of the Common Units to
which they are entitled withheld by the Partnership to satisfy tax-withholding obligations.
Distribution Reinvestment Program
In April 2011, we filed a registration statement with the SEC covering our Distribution Reinvestment Plan (the “DRIP”). The
DRIP provides Unitholders of record and beneficial owners of our Common Units a voluntary means by which they can
increase the number of ETP Common Units they own by reinvesting the quarterly cash distributions they would otherwise
receive in the purchase of additional Common Units. The registration statement covers the issuance of up to 5,750,000 Common
Units under the DRIP.
During 2012, distributions of approximately $43 million were reinvested under the DRIP resulting in the issuance of 1,038,825
Common Units.
Class E Units
There are 8,853,832 Class E Units outstanding that are reported as treasury units. These Class E Units are entitled to aggregate
cash distributions equal to 11.1% of the total amount of cash distributed to all Unitholders, including the Class E Unitholders,
up to $1.41 per unit per year, with any excess thereof available for distribution to Unitholders other than the holders of Class
E Units in proportion to their respective interests. The Class E Units are treated as treasury units for accounting purposes
because they are owned by a subsidiary of Holdco, Heritage Holdings, Inc. Although no plans are currently in place,
management may evaluate whether to retire some or all of the Class E Units at a future date.
Class F Units
In conjunction with the Sunoco Merger, we amended our partnership agreement to create the Class F units. The number of
Class F units issued was determined at the closing of the merger and equaled 90,706,000. The Class F units generally do not
have any voting rights. The Class F units issued to Sunoco in connection with the Sunoco merger are entitled to aggregate
cash distributions equal to 35% of the total amount of cash that is generated by us and our subsidiaries (other than Holdco)
and available for distribution, up to a maximum of $3.75 per Class F unit per year.
Quarterly Distributions of Available Cash
The Partnership Agreement requires that we distribute all of our Available Cash to our Unitholders and our General Partner
within forty-five days following the end of each fiscal quarter, subject to the payment of incentive distributions to the holders
of IDRs to the extent that certain target levels of cash distributions are achieved. The term Available Cash generally means,
with respect to any of our fiscal quarters, all cash on hand at the end of such quarter, plus working capital borrowings after
the end of the quarter, less reserves established by the General Partner in its sole discretion to provide for the proper conduct
of our business, to comply with applicable laws or any debt instrument or other agreement, or to provide funds for future
distributions to partners with respect to any one or more of the next four quarters. Available Cash is more fully defined in our
Partnership Agreement.
Our distributions of Available Cash from operating surplus, excluding incentive distributions, to our General Partner and
Limited Partner interests are based on their respective interests as of the distribution record date. Incentive distributions
allocated to our General Partner are determined based on the amount by which quarterly distribution to common Unitholders
exceed certain specified target levels, as set forth in our Partnership Agreement.
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