Exhibit 99.2
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PARENT COMPANY AGREEMENT
by and among
▇▇▇▇▇▇▇▇ PETROLEUM COMPANY
DUKE ENERGY CORPORATION
DUKE ENERGY FIELD SERVICES, LLC
and
DUKE ENERGY FIELD SERVICES CORPORATION
Dated as of March 31, 2000
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TABLE OF CONTENTS
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Definitions......................................................1
Section 1.2 Construction.....................................................6
ARTICLE II
THE IPO
Section 2.1 Efforts..........................................................6
Section 2.2 Formation of the Corporation.....................................7
Section 2.3 Post-IPO Ownership...............................................8
Section 2.4 Certificate of Incorporation and Bylaws..........................8
ARTICLE III
EXECUTION OF AGREEMENTS; PRIMARY VEHICLE
Section 3.1 Execution of Agreements..........................................8
Section 3.2 Market Shares....................................................9
Section 3.3 Primary Vehicle..................................................9
ARTICLE IV
TAX MATTERS
Section 4.1 Distributions to PGC.............................................9
Section 4.2 Tax Status......................................................10
Section 4.3 Tax Proceedings; Cooperation and Exchange of Information........11
Section 4.3 Debt Repayment..................................................13
ARTICLE V
TRANSFER RESTRICTIONS
Section 5.1 Structure; Transfers............................................13
Section 5.2 Change of Control...............................................13
ARTICLE VI
TERMINATION OF AGREEMENTS
Section 6.1 Termination of Agreements.......................................13
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ARTICLE VII
EMPLOYEE MATTERS
Section 7.1 Termination of Agreements.......................................14
Section 7.2 Transfer of Employees...........................................14
Section 7.3 TEPPCO Employees................................................14
Section 7.4 Welfare Benefits................................................15
Section 7.5 Severance Benefits..............................................16
Section 7.6 Miscellaneous...................................................16
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Counterparts....................................................17
Section 8.2 Governing Law; Jurisdiction and Forum; Waiver of Jury Trial.....17
Section 8.3 Entire Agreement................................................17
Section 8.4 Expenses........................................................18
Section 8.5 Notices.........................................................18
Section 8.6 Successors and Assigns..........................................19
Section 8.7 Headings; Definitions...........................................20
Section 8.8 Amendments and Waivers..........................................20
Section 8.9 Severability....................................................20
Section 8.10 Interpretation..................................................20
Section 8.11 Specific Performance............................................20
Section 8.12 Actions by Affiliates of ▇▇▇▇▇▇▇▇ and ▇▇▇▇......................20
Exhibits:
Exhibit A Agreement of Merger
Exhibit B Shareholders Agreement
Exhibit C Registration Rights Agreement
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PARENT COMPANY AGREEMENT, dated as of March 31, 2000 (this
"Agreement"), by and among ▇▇▇▇▇▇▇▇ PETROLEUM COMPANY, a Delaware corporation
("▇▇▇▇▇▇▇▇"), ▇▇▇▇ ENERGY CORPORATION, a North Carolina corporation ("Duke"),
DUKE ENERGY FIELD SERVICES, LLC, a Delaware limited liability company (the
"Company") and solely for purposes of Section 4.3(c) of this Agreement, DUKE
ENERGY FIELD SERVICES CORPORATION, a Delaware corporation ("DEFS Holding").
RECITALS:
1. Duke, ▇▇▇▇▇▇▇▇ and the Company are parties to a Governance Agreement,
dated as of December 16, 1999 (the "Governance Agreement") and a Contribution
Agreement, dated as of December 16, 1999 (the "Contribution Agreement").
2. ▇▇▇▇▇▇▇▇ Gas Company, a Delaware corporation and an indirect
wholly-owned subsidiary of ▇▇▇▇▇▇▇▇ ("PGC"), and DEFS Holding, an indirect
wholly-owned subsidiary of Duke, have simultaneously herewith entered into an
Amended and Restated Limited Liability Company Agreement of Duke Energy Field
Services, LLC, dated as of the date hereof (the "LLC Agreement").
3. In connection with the closing of the transactions contemplated by the
Contribution Agreement, Duke, ▇▇▇▇▇▇▇▇ and the Company desire to terminate the
Governance Agreement and to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following
terms shall have the respective meanings set forth below:
"Affiliate" shall mean, with respect to any Person, a Person
directly or indirectly Controlling, Controlled by or under common Control with
such Person.
"Agreement" shall have the meaning set forth in the Preamble.
"Agreement of Merger" shall have the meaning set forth in Section
2.2(a).
"Average Market Price" shall mean, with respect to the Corporation
Common Stock to be sold by the Corporation to the public in the IPO, the average
of the closing prices, as reported on the NYSE Composite Tape, on each of the
first five days of trading on the NYSE (exclusive of the pricing day).
"Business Day" shall mean any day on which banks are generally open
to conduct business in the State of New York.
"Change of Control" shall mean an event (such as a Transfer of
voting securities) that causes a Person that holds a Company Interest to cease
to be Controlled by such Person's Parent; PROVIDED, HOWEVER, that an event that
causes Duke or ▇▇▇▇▇▇▇▇ to be Controlled by another Person shall not constitute
a Change of Control.
"Closing Date" shall have the meaning set forth in Section 3.1 of
the Contribution Agreement.
"Code" shall mean the United States Internal Revenue Code of 1986,
as amended.
"Company" shall have the meaning set forth in the Preamble.
"Company Interest" shall mean, with respect to any Person, such
Person's equity interest in the Company.
"Contribution Agreement" shall have the meaning set forth in the
Recitals.
"Control" shall mean the possession, directly or indirectly, through
one or more intermediaries, by any Person or group (within the meaning of
Section 13(d)(3) under the Securities Exchange Act of 1934, as amended) of both
of the following:
(a) (i) in the case of a corporation, more than 25% of the direct or
indirect economic interests in the outstanding equity securities
thereof; (ii) in the case of a limited liability company, partnership,
limited partnership or venture, the right to more than 25% of the
distributions therefrom (including liquidating distributions); (iii) in
the case of a trust or estate, including a business trust, more than
25% of the beneficial interest therein; and (iv) in the case of any
other entity, more than 25% of the economic or beneficial interest
therein; and
(b) in the case of any entity, the power or authority, through
ownership of voting securities, by contract or otherwise, to control or
direct the management and policies of the entity.
"Corporation" shall have the meaning set forth in Section 2.2(a).
"Corporation Common Stock" shall have the meaning set forth in
Section 2.2(e).
"Corporation Interest" shall mean, with respect to any Person, such
Person's percentage ownership (direct and indirect), exclusive of any Market
Shares owned (directly or indirectly) by such Person, of the outstanding
Corporation Common Stock at the time of measurement.
"DEFS Holding" shall have the meaning set forth in the Preamble.
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"DEFS Subsidiary" shall have the meaning set forth in the
Contribution Agreement for purposes of Annex B thereof.
"Disguised Sale Amount" shall mean the excess of (x) $1,200,000,000
over (y) the product of the Percentage Interest of PGC in the Company as of the
Closing Date and $2,400,000,000.
"Distribution" shall have the meaning set forth in the LLC
Agreement.
"Duke" shall have the meaning set forth in the Preamble.
"Duke Group" shall mean Duke and its Subsidiaries (other than the
Company, any DEFS Subsidiary, any PGC Subsidiary or any other Subsidiary of the
Company).
"Duke Shareholder" shall mean the holder of any Corporation Common
Stock (other than Market Shares) that is Duke or a Subsidiary of Duke or, if at
any time there is more than one such holder, each of such holders.
"Enterprise Value" shall mean the sum of (x) the Parties' Equity
Value and (y) $2,400,000,000; PROVIDED, that if the Merger becomes effective on
or after the date two years after the Closing Date, "Enterprise Value" shall
mean $5,500,000,000.
"Financing" shall have the meaning set forth in the Contribution
Agreement.
"Flow Through Subsidiaries" shall have the meaning set forth in the
LLC Agreement.
"Governance Agreement" shall have the meaning set forth in the
Recitals.
"Governmental Entity" shall mean any federal, state, political
subdivision or other governmental agency or instrumentality, foreign or
domestic.
"Income Tax" shall mean any federal, state, local or foreign Tax
measured by net income or capital gain.
"IPO" shall mean the initial offering of shares of Corporation
Common Stock to the public in a transaction registered under the Securities Act.
"LLC Agreement" shall have the meaning set forth in the Recitals.
"Market Shares" shall mean shares purchased by a Person through
open-market purchases, other than those shares purchased to prevent dilution in
accordance with Article X of the Certificate of Incorporation of the
Corporation.
"Member" shall have the meaning set forth in the LLC Agreement.
"Merger" shall have the meaning set forth in Section 2.2(a).
"Neutral Firm" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ L.L.P.
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"NYSE" shall mean the New York Stock Exchange, Inc.
"Parent" shall mean, with respect to a particular Person, the Person
that Controls such particular Person and that is not itself Controlled by any
other Person.
"Parties' Corporation Interest" shall mean the difference between
(x) 100% and (y) the Public's Corporation Interest.
"Parties' Equity Value" shall mean the product of (i) the quotient
of (x) the Parties' Corporation Interest divided by (y) the Public's Actual
Corporation Interest multiplied by (ii) the Public's Equity Value.
"Percentage Interest" shall mean, with respect to the Company
Interest issued to DEFS Holding pursuant to Section 2.1(j)(i) of the
Contribution Agreement, 69.7 percent, and with respect to the Company Interest
issued to PGC pursuant to Section 2.1(k)(i) of the Contribution Agreement, 30.3
percent.
"Person" shall mean any individual, partnership, limited liability
company, firm, corporation, association, joint venture, trust or other entity or
any Governmental Entity.
"PGC" shall have the meaning set forth in the Recitals.
"PGC Contribution" shall have the meaning set forth in Section 4.2.
"PGC Distribution" shall have the meaning set forth in Section 4.2.
"PGC Subsidiary" shall have the meaning set forth in the
Contribution Agreement for purposes of Annex B thereof.
"PGCSI" or "▇▇▇▇▇▇▇▇ Member Parent" shall mean ▇▇▇▇▇▇▇▇ Gas Company
Shareholder, Inc., a Delaware corporation and a wholly-owned Subsidiary of
▇▇▇▇▇▇▇▇.
"▇▇▇▇▇▇▇▇" shall have the meaning set forth in the Preamble.
"▇▇▇▇▇▇▇▇ Enterprise Value" shall mean the product of (x) the
Enterprise Value and (y) .389.
"▇▇▇▇▇▇▇▇ Equity Value" shall mean the difference between (x)
▇▇▇▇▇▇▇▇ Enterprise Value and (y) $1,200,000,000.
"▇▇▇▇▇▇▇▇ Group" shall mean ▇▇▇▇▇▇▇▇ and its Subsidiaries (other
than the Company, any DEFS Subsidiary, any PGC Subsidiary or any other
Subsidiary of the Company).
"▇▇▇▇▇▇▇▇ Shareholder" shall mean the holder of any Corporation
Common Stock (other than Market Shares) that is ▇▇▇▇▇▇▇▇ or a Subsidiary of
▇▇▇▇▇▇▇▇ or, if at any time there is more than one such holder, each of such
holders.
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"Post-Closing Period" for any Person means any taxable period
beginning, with respect to such Person, after the Closing Date, and the portion,
beginning after the Closing Date, of any taxable period that includes, with
respect to such Person, but does not end on, the Closing Date.
"Public's Actual Corporation Interest" shall mean the quotient,
expressed as a percentage, of (x) the number of shares of the Corporation Common
Stock sold by the Corporation in the IPO (which excludes shares issued to
officers and employees of the Corporation or the Company concurrently with the
IPO pursuant to compensation or benefit plans), but excluding any shares sold
pursuant to the underwriters' over-allotment option, divided by (y) the number
of shares of Corporation Common Stock outstanding immediately after the Merger
(including shares to be issued pursuant to rights received in the Merger) and
the IPO, plus shares issued to officers and employees of the Corporation or the
Company concurrently with the IPO pursuant to compensation or benefit plans, but
excluding any shares sold pursuant to the underwriters' over-allotment option.
"Public's Corporation Interest" shall mean the quotient, expressed
as a percentage, of (x) the number of shares of the Corporation Common Stock
sold by the Corporation in the IPO, plus shares issued to officers and employees
of the Corporation or the Company concurrently with the IPO pursuant to
compensation or benefit plans, but excluding any shares sold pursuant to the
underwriters' over-allotment option, divided by (y) the number of shares of
Corporation Common Stock outstanding immediately after the Merger (including
shares to be issued pursuant to rights received in the Merger) and the IPO, plus
shares issued to officers and employees of the Corporation or the Company
concurrently with the IPO pursuant to compensation or benefit plans, but
excluding any shares sold pursuant to the underwriters' over-allotment option.
"Public's Equity Value" shall mean the product of (i) the Average
Market Price multiplied by (ii) the number of shares sold by the Corporation in
the IPO (which excludes shares issued to officers and employees of the
Corporation or the Company concurrently with the IPO pursuant to compensation or
benefit plans), but excluding any shares sold pursuant to the underwriters'
over-allotment option.
"Registration Rights Agreement" shall have the meaning set forth in
Section 3.1(a).
"Regulation" shall mean the income tax regulations promulgated under
the Code by the U.S. Department of the Treasury (whether final or temporary).
"Returns" or "Tax Returns" means returns, declarations, statements,
reports, forms, property tax renditions or other documents or information
required to be filed with or supplied to any Taxing Authority.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shareholders Agreement" shall have the meaning set forth in Section
3.1(a).
"Subsidiary" shall mean, when used with respect to any Person, any
Affiliate of such Person that is Controlled by such Person.
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"Tax" or "Taxes" shall mean all taxes (whether federal, state, local
or foreign) based upon or measured by income and any other tax whatsoever,
including gross receipts, profits, windfall profits, sales, use, occupation,
value added, AD VALOREM, transfer, franchise, withholding, payroll, employment,
excise, stamp, premium, capital stock, production, business and occupation,
disability, severance, or real or personal property taxes, fees, or assessments
of any kind whatsoever imposed by any Governmental Entity, together with any
interest or penalties imposed with respect thereto.
"Tax Proceeding" means any Tax audit, contest, litigation or other
proceeding with or against a Governmental Entity.
"Taxing Authority" shall mean any Governmental Entity having
jurisdiction over the assessment, determination, collection or other imposition
of any Tax.
"Transfer" shall mean any sale, assignment or other transfer,
whether by operation of law or otherwise (but not any deemed transfer pursuant
to Section 338 of the Code of the assets of a corporation or its Subsidiary in
connection with the purchase of the stock of such corporation). "Transferred"
and "Transferring" shall have correlative meanings.
"Total Equity Value" shall mean the quotient of (x) the Public's
Equity Value divided by (y) the Public's Actual Corporation Interest.
"Two Year Period" shall mean the period beginning on (and including)
the Closing Date and ending on (and including) the later of (a) the second
anniversary of the Closing Date and (b) the date of consummation of the IPO.
Section 1.2 Construction. Unless the context requires otherwise: (a)
the gender (or lack of gender) of all words used in this Agreement includes the
masculine, feminine and neuter; (b) references to Articles and Sections refer to
Articles and Sections of this Agreement; (c) references to Exhibits refer to the
Exhibits attached to this Agreement; (d) references to laws refer to such laws
as they may be amended from time to time, and references to particular
provisions of a law include any corresponding provisions of any succeeding law;
(e) references to money refer to legal currency of the United States of America;
(f) the word "including" means "including, without limitation"; and (g) all
capitalized terms defined herein are equally applicable to both the singular and
plural forms of such terms.
ARTICLE II
THE IPO
Section 2.1 Efforts. (a) The Company agrees to use its reasonable best
efforts to prepare for, effect and consummate the IPO (market conditions
permitting) as soon as practicable following the date hereof, including
selecting underwriters, preparing and filing with the SEC a registration
statement and filings under applicable state securities or "blue sky" laws or
similar securities laws and determining the terms of the IPO; PROVIDED that,
notwithstanding anything to the contrary in this Agreement, the Company shall
not consummate any IPO on or before the date two years after the date of this
Agreement without the prior written consent of ▇▇▇▇▇▇▇▇ if the consummation of
the IPO (including the potential effect of any underwriters' over-allotment) in
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accordance with the provisions of this Agreement would result in (i) ▇▇▇▇▇▇▇▇'
Corporation Interest being less than 20% upon consummation of the IPO or (ii) an
Enterprise Value immediately following the IPO of less than $4,400,000,000;
PROVIDED, FURTHER, that for purposes of the calculations contemplated in (i)
and (ii) in the preceding proviso only, the "Average Market Price" shall be the
proposed public offering price of the Corporation Common Stock in the IPO.
(b) Each of Duke and ▇▇▇▇▇▇▇▇ agrees to (i) provide reasonable
assistance to the Company in effecting the IPO and (ii) cause any Duke
Shareholder or ▇▇▇▇▇▇▇▇ Shareholder, respectively, not to Transfer any or all
of their shares of Corporation Common Stock for a period of six months
following the consummation of the IPO and to agree to such other customary
terms as are reasonably requested by the underwriters in connection with the
IPO.
(c) Duke agrees that, prior to the consummation of the Merger, it will
cause the board of directors of DEFS Holding to be comprised solely of three
directors designated by ▇▇▇▇▇▇▇▇ (or four if ▇▇▇▇▇▇▇▇ designates an Independent
Director (as defined in the Certificate of Incorporation)) and five directors
designated by Duke (or six or seven if Duke designates one or two Independent
Directors, respectively).
Section 2.2 Formation of the Corporation. (a) Each of Duke and
▇▇▇▇▇▇▇▇ agrees to take such corporate action as is necessary and desirable to
cause (i) PGCSI to be merged with and into DEFS Holding, with DEFS Holding
surviving (such surviving corporation, the "Corporation", and such merger, the
"Merger"), immediately prior to the consummation of the IPO and (ii) an
Agreement of Merger substantially in the form of Exhibit A (the "Agreement of
Merger") to be filed in accordance with the Delaware General Corporation Law.
(b) Each of Duke and ▇▇▇▇▇▇▇▇ presently intends that, if the IPO
occurs, approximately 20% of the Corporation Common Stock shall be sold by the
Corporation pursuant to the IPO (including shares to be issued to officers and
employees of the Corporation or the Company concurrently with the IPO);
PROVIDED, HOWEVER, that this percentage may vary depending on market conditions
and other factors.
(c) ▇▇▇▇▇▇▇▇ represents, warrants and agrees that at the time of such
Merger, (i) PGCSI shall have no assets or liabilities, contingent or otherwise,
other than through its ownership of its interest in PGC and (ii) PGC shall have
no assets or liabilities, contingent or otherwise, other than through its
ownership of its interest in the Company.
(d) Duke represents, warrants and agrees that at the time of the
Merger, DEFS Holding shall have no assets or liabilities, contingent or
otherwise, other than through its ownership of its interest in the Company.
(e) Duke agrees to cause the Duke Shareholder and ▇▇▇▇▇▇▇▇ agrees to
cause the ▇▇▇▇▇▇▇▇ Shareholder, respectively, to vote its shares to cause the
Corporation upon consummation of the IPO to have a single class of common stock
(the "Corporation Common Stock") outstanding and no other classes of capital
stock or other securities (except for options to purchase shares of the
Corporation Common Stock issued to officers, directors and employees of the
Corporation or the Company or its Subsidiaries).
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Section 2.3 Post-IPO Ownership. (a) Each of Duke and ▇▇▇▇▇▇▇▇
presently intends that, if the IPO occurs, approximately 20% of the Corporation
Common Stock (including shares to be issued to officers and employees of the
Corporation or the Company concurrently with the IPO) shall be sold by the
Corporation pursuant to the IPO; PROVIDED, HOWEVER, that this percentage may
vary depending on market conditions and other factors.
(b) Each of Duke and ▇▇▇▇▇▇▇▇ agrees to take, or cause to be taken,
such action (including the Merger and any adjustments by the Corporation to the
number of shares of Corporation Common Stock owned by Duke and ▇▇▇▇▇▇▇▇) as is
necessary and desirable to provide that upon the end of the seventh day of
trading on the NYSE (excluding the pricing day and without regard to the
exercise of any underwriters' over-allotment), each of Duke and ▇▇▇▇▇▇▇▇ shall
own, directly or indirectly, a percentage of the outstanding Corporation Common
Stock determined as follows:
(1) ▇▇▇▇▇▇▇▇' Corporation Interest shall equal the quotient,
expressed as a percentage, of (x) ▇▇▇▇▇▇▇▇ Equity Value divided by (y) Total
Equity Value.
(2) Duke's Corporation Interest shall equal the difference
between (x) the Parties' Corporation Interest and (y) ▇▇▇▇▇▇▇▇' Corporation
Interest.
Annex A sets forth examples of determinations of ▇▇▇▇▇▇▇▇'
Corporation Interest and Duke's Corporation Interest at various Public's Equity
Values (assuming that no shares are issued to officers or employees of the
Corporation or the Company concurrently with the IPO pursuant to compensation or
benefit plans). The percentages and calculations set forth in this Section 2.3
do not give effect to any underwriters' over-allotment. In the event that there
is an underwriters' over-allotment and such over-allotment is exercised, each of
Duke's and ▇▇▇▇▇▇▇▇' Corporation Interest and the interest of the public in the
Corporation (prior to such exercise) shall all be reduced pro rata.
Section 2.4 Certificate of Incorporation and Bylaws. Each of Duke and
▇▇▇▇▇▇▇▇ agrees to take such corporate action as is necessary to cause the
Corporation to adopt a Certificate of Incorporation and Bylaws of the
Corporation substantially in the forms attached to the Agreement of Merger.
ARTICLE III
EXECUTION OF AGREEMENTS; PRIMARY VEHICLE
Section 3.1 Execution of Agreements. (a) Duke agrees to take all
corporate action to cause each Duke Shareholder (including Duke, if applicable)
to execute, and ▇▇▇▇▇▇▇▇ agrees to take all corporate action to cause each
▇▇▇▇▇▇▇▇ Shareholder (including ▇▇▇▇▇▇▇▇, if applicable) to execute, a
Shareholders Agreement substantially in the form of Exhibit B (the
"Shareholders Agreement"). Each of Duke and ▇▇▇▇▇▇▇▇ agrees to execute, and
agrees that it will take all corporate action to cause the Corporation to
execute, a Registration Rights Agreement substantially in the form of Exhibit C
(the "Registration Rights Agreement").
(b) Duke agrees to cause each Duke Shareholder to comply with the
obligations of a Duke Shareholder under the Shareholders Agreement, and
▇▇▇▇▇▇▇▇ agrees to cause each ▇▇▇▇▇▇▇▇
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Shareholder to comply with the obligations of a ▇▇▇▇▇▇▇▇ Shareholder under the
Shareholders Agreement.
(c) The parties hereto agree that, from time to time, whether before,
at or after the Closing Date, each of them will execute and deliver, or cause
to be executed and delivered, such further agreements and instruments and take
such other action as may be necessary to effectuate the provisions, purposes
and intents of this Agreement.
Section 3.2 Market Shares. Duke agrees to, and to cause its
Affiliates to, make nominations and vote any and all of their Market Shares in
accordance with the requirements applicable to Duke's Total Corporation Interest
(as defined in the Shareholders Agreement) and take all other actions required
of a Duke Shareholder (as defined in the Shareholders Agreement) under Sections
2.1 and 2.2 of the Shareholders Agreement. ▇▇▇▇▇▇▇▇ agrees to, and to cause its
Affiliates to, make nominations and vote any and all of their Market Shares in
accordance with the requirements applicable to ▇▇▇▇▇▇▇▇'▇ Total Corporation
Interest (as defined in the Shareholders Agreement) and take all other actions
required of a ▇▇▇▇▇▇▇▇ Shareholder (as defined in the Shareholders Agreement)
under Sections 2.1 and 2.2 of the Shareholders Agreement.
Section 3.3 Primary Vehicle. Each of Duke and ▇▇▇▇▇▇▇▇ presently
intends that the Corporation shall be the primary vehicle by which it conducts
the midstream gas gathering and processing business in the United States and
Canada.
ARTICLE IV
TAX MATTERS
Section 4.1 Distributions to PGC. For the period, if any, beginning
at the time of consummation of the IPO and ending on the second anniversary of
the Closing Date, without the prior written consent of Duke and ▇▇▇▇▇▇▇▇: (i)
the Company shall not make (or enter into a plan or arrangement to make) any
Distribution of cash or other property to PGC in excess of the product of the
aggregate Distribution to all Members and PGC's Percentage Interest as of the
Closing Date, (ii) the Company shall not make (or enter into a plan or
arrangement to make) any Distribution to PGC of cash or other property other
than Distributions to fund dividends by the Corporation to its shareholders and
Distributions pursuant to Section 7.6(a)(i) of the LLC Agreement and (iii) PGC
shall not be liquidated, shall not be merged into the Corporation, shall not
distribute to any shareholder of PGC the Company Interest issued to PGC
pursuant to Section 2.1(k) of the Contribution Agreement and shall not be
converted into, or merged into or otherwise caused to become, a partnership or
disregarded entity for federal income tax purposes (nor shall there be any plan
or arrangement to do so). Without the prior written consent of each of Duke and
▇▇▇▇▇▇▇▇: (a) no amendment shall be made to Section 6.3, Article VII or Article
VIII (other than Section 8.2(b)) of the LLC Agreement, or any reference thereto
in the LLC Agreement or any defined term used therein, prior to the second
anniversary of the Closing Date, and any amendment made after such second
anniversary to any such provision shall not apply to any taxable period, or
portion thereof, ending on or before the second anniversary of the Closing Date
and (b) no amendment shall be made to Section 8.2(b) of the LLC Agreement or
any reference thereto in the LLC Agreement or any defined term used therein.
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Section 4.2 Tax Status. Each of Duke, ▇▇▇▇▇▇▇▇ and the Company shall
take no action or position inconsistent with (or that could reasonably be
expected to be viewed by the Internal Revenue Service as inconsistent with),
and shall make or cause to be made all applicable elections with respect to: (a)
the treatment of the Company (or any successor thereto), with respect to all
times during the Two Year Period, as a partnership for U.S. Federal income tax
purposes and the treatment of each of the Flow Through Subsidiaries (or any
successor thereto), with respect to all times during the Two Year Period, as a
partnership or disregarded entity for U.S. Federal income tax purposes; (b) the
treatment of the Company, with respect to all times during the Two Year Period,
as not being a publicly traded partnership for United States Federal income tax
purposes; (c) the allocation of the Financing under Regulation
Section 1.752-3(a)(3) among the Members in proportion to their Percentage
Interests as of the Closing Date; (d) the treatment of the contribution to the
Company by DEFS Holding pursuant to Section 2.2 of the Contribution Agreement
as a contribution pursuant to Code Section 721, the treatment of the
distribution to DEFS Holding pursuant to Section 3.2(c)(2) of the Contribution
Agreement (as adjusted pursuant to Section 3.3 thereof) as a distribution
pursuant to Code Section 731 and the treatment that, for purposes of the Code,
neither such contribution nor such distribution is a transfer that constitutes
a sale or exchange (or portion thereof) of property in whole or in part to the
Company by a Member in the Company acting in a capacity other than as a Member
of the Company; (e) the treatment of the contribution to the Company by PGC
pursuant to Section 2.3 of the Contribution Agreement (the "PGC Contribution")
as a contribution pursuant to Code Section 721, the treatment of the
distribution to PGC pursuant to Section 3.2(c)(1) of the Contribution Agreement
(as adjusted pursuant to Section 3.3) (the "PGC Distribution") as a
distribution pursuant to Code Section 731 and the treatment that, for purposes
of the Code, neither the PGC Contribution nor the PGC Distribution is a transfer
that constitutes a sale or exchange (or portion thereof) of property in whole or
in part to the Company by a Member in the Company acting in a capacity other
than as a Member of the Company (except in the case of this clause (e) that
Duke, ▇▇▇▇▇▇▇▇ and the Company shall treat (except to the extent Duke, Phillips,
the Members and the Company agree in writing or are required by the Neutral Firm
to treat otherwise) an amount of the PGC Distribution equal to the Disguised
Sale Amount as proceeds of a sale by PGC to the Company under Code Section
707(a) and an amount of the PGC Contribution equal in fair market value to the
Disguised Sale Amount as property that is sold by PGC to the Company under Code
Section 707(a) (such property treated as having been sold having regular federal
income tax basis equal to the aggregate regular Federal income tax basis of the
property contributed in the PGC Contribution multiplied by a fraction the
numerator of which is the Disguised Sale Amount and the denominator of which is
the value of the property contributed in the PGC Contribution, such value being
for this purpose $2,139,500,000)); and (f) the treatment of the merger of PGCSI
into DEFS Holding pursuant to Section 2.2(a) hereof as a "reorganization"
within the meaning of Code Section 368(a) in which no gain or loss is recognized
to Duke, Phillips, PGC, DEFS Holding, the Company, or any other Person.
Section 4.3 Tax Proceedings; Cooperation and Exchange of Information.
(a) In the case of any Tax Proceeding relating to any Income Tax Return or any
Income Tax items of the Company or any Subsidiary of the Company for any
Post-Closing Period, the Company shall be entitled to control such Tax
Proceeding; PROVIDED, HOWEVER, that (i) the Company shall promptly notify Duke
and ▇▇▇▇▇▇▇▇ (describing the jurisdiction and year(s) at issue and including a
copy of any materials received from the applicable Governmental Entity in
connection therewith) upon receipt of notice of any such Tax Proceeding and
shall thereafter promptly forward to Duke and ▇▇▇▇▇▇▇▇ copies of any
communications received from or sent to any Governmental Entity by the Company
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or any of its Subsidiaries in connection with any such Tax Proceeding; (ii) the
Company shall provide Duke and ▇▇▇▇▇▇▇▇ with a timely and reasonably detailed
account of each stage of such Tax Proceeding and a copy of all documents
relating to such Tax Proceeding; (iii) the Company shall consult with Duke and
▇▇▇▇▇▇▇▇ before taking any significant action in connection with such Tax
Proceeding; (iv) the Company shall consult with Duke and ▇▇▇▇▇▇▇▇ and offer Duke
and ▇▇▇▇▇▇▇▇ an opportunity to comment before submitting any written materials
prepared or furnished in connection with such Tax Proceeding (including, to the
extent practicable, any documents furnished to the applicable Governmental
Entity in connection with any discovery request); (v) the Company shall defend
such Tax Proceeding diligently and in good faith as if the Company were the
taxpayer in interest in connection with such Tax Proceeding; and (vi) (A) in the
case of any proposed settlement of any such Tax Proceeding, which settlement
will result in aggregate Tax payments by ▇▇▇▇▇▇▇▇ with respect to the period
beginning on the Closing Date and ending on the second anniversary of the
Closing Date (or, if the Tax Proceeding relates to a taxable period (or portion
thereof) after such second anniversary, then with respect to the two year period
beginning on the first day of the taxable period to which the Tax Proceeding
relates) of greater than $7,575,000, the Company shall not settle, compromise or
abandon any such Tax Proceeding without obtaining the prior written consent,
which consent shall not be unreasonably withheld, of ▇▇▇▇▇▇▇▇ and (B) in the
case of any proposed settlement of any such Tax Proceeding, which settlement
will result in aggregate Tax payments by Duke with respect to the period
beginning on the Closing Date and ending on the second anniversary of the
Closing Date (or, if the Tax Proceeding relates to a taxable period (or portion
thereof) after such second anniversary, then with respect to the two year period
beginning on the first day of the taxable period to which the Tax Proceeding
relates) of greater than $17,425,000, the Company shall not settle, compromise
or abandon any such Tax Proceeding without obtaining the prior written consent,
which consent shall not be unreasonably withheld, of Duke. In the event that
Duke or ▇▇▇▇▇▇▇▇ reasonably withholds such consent pursuant to the preceding
clause (vi)(A) or (B), the parties shall negotiate in good faith to resolve
their differences and, failing that, the Neutral Firm shall resolve such
disagreement. The above provisions of this Section 4.3(a) shall cease to apply
with respect to taxable periods beginning after the consummation of the IPO,
except to the extent that failure of such provisions to apply could reasonably
be expected to affect any member of the ▇▇▇▇▇▇▇▇ Group or the Duke Group (other
than in its capacity as a direct or indirect shareholder, or affiliate of such a
shareholder, of the Corporation).
(b) The Company shall present (such presentation to be made (i) in
the case of a Tax Return for a Company taxable year ending on December 31st, no
later than July 1st in the year following the end of such Company taxable year
and (ii) in the case of a Tax Return for a Company taxable year ending on a date
other than December 31st, no later than the date that is six months following
the end of such Company taxable year) any Federal Income Tax Returns of the
Company to ▇▇▇▇▇▇▇▇ for ▇▇▇▇▇▇▇▇' review and shall revise such Tax Returns prior
to filing to reflect any reasonable comments requested in good faith by ▇▇▇▇▇▇▇▇
in writing within 15 Business Days after such presentation of such Tax Returns
to ▇▇▇▇▇▇▇▇; PROVIDED, HOWEVER, that in the event that the Company or Duke
disagrees with any such comments of ▇▇▇▇▇▇▇▇, then the Company, Duke and
▇▇▇▇▇▇▇▇ shall endeavor to resolve their disagreement over such comments and,
failing that, the Neutral Firm shall resolve such disagreement prior to the date
such Tax Returns are due (including extensions) and such Tax Returns shall be
filed in such manner as the Neutral Firm determines. The fees and expenses of
the Neutral Firm in connection with this Section 4.3(b) shall be allocated
between ▇▇▇▇▇▇▇▇ and Duke by the Neutral Firm. At Duke's or ▇▇▇▇▇▇▇▇' request,
the Company shall make available to Duke and ▇▇▇▇▇▇▇▇, respectively, for their
review at least 15 Business Days prior
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to the due date (including extensions) any state, local or foreign Income Tax
Returns of the Company or its Subsidiaries. The above provisions of this Section
4.3(b) shall cease to apply with respect to taxable periods beginning after the
consummation of the IPO, except to the extent that failure of such provisions to
apply could reasonably be expected to affect any member of the ▇▇▇▇▇▇▇▇ Group
(other than in its capacity as a direct or indirect shareholder, or affiliate of
such a shareholder, of the Corporation).
(c) Cooperation and Exchange of Information. Duke, Phillips, the
Company and DEFS Holding (and the Corporation, from and after the Merger) shall
(and shall cause their respective Subsidiaries to) cooperate with one another
with respect to Tax matters. As soon as practicable, but in any event within 30
days after the request of Duke or ▇▇▇▇▇▇▇▇, from and after the Closing Date, the
Company shall deliver to Duke or ▇▇▇▇▇▇▇▇, respectively, such information and
data concerning the Company and its Subsidiaries and make available such
employees of the Company and its Subsidiaries as Duke or ▇▇▇▇▇▇▇▇ may reasonably
request (including providing the information and data reasonably required by
Duke's and ▇▇▇▇▇▇▇▇' customary Tax and accounting questionnaires) in order to
enable Duke and ▇▇▇▇▇▇▇▇ to complete and file all Tax Returns which they each
may be required to file with respect to the Company and its Subsidiaries or to
respond to Tax audits or other inquiries relating to Taxes by any Governmental
Entities with respect to such operations and to otherwise enable Duke and
▇▇▇▇▇▇▇▇ each to satisfy their respective accounting, Tax and other legitimate
business requirements. Such cooperation and information shall include provision
of powers of attorney to Duke or ▇▇▇▇▇▇▇▇ relating to Tax matters (e.g., for the
purpose of signing Returns and defending audits) and promptly forwarding copies
of appropriate notices and forms or other communications received from or sent
to any Governmental Entity that relate to the Company and its Subsidiaries, and
providing copies of all relevant Tax Returns, together with accompanying
schedules and related workpapers, documents relating to rulings or other
determinations by any Governmental Entities and records concerning the ownership
and tax basis of property, which the Company, the Corporation and their
Subsidiaries may possess. The Company and DEFS Holding (and the Corporation,
from and after the time of the Merger) shall (and shall cause their respective
Subsidiaries to) make their respective employees and facilities available on a
mutually convenient basis to provide explanation of any documents or information
provided hereunder. The above provisions of this Section 4.3(c) shall cease to
apply with respect to taxable periods beginning after the consummation of the
IPO, except to the extent that failure of such provisions to apply could
reasonably be expected to affect any member of the ▇▇▇▇▇▇▇▇ Group or the Duke
Group (other than in its capacity as a direct or indirect shareholder or
affiliate of such a shareholder, of the Corporation). Notwithstanding any other
provision, (i) Duke shall not be required to provide any Person with any
consolidated, combined, affiliated or unitary Income Tax Return or copy thereof
that includes Duke or any other member of the Duke Group and (ii) ▇▇▇▇▇▇▇▇ shall
not be required to provide any Person with any consolidated, combined,
affiliated or unitary Income Tax Return or copy thereof that includes ▇▇▇▇▇▇▇▇
or any other member of the ▇▇▇▇▇▇▇▇ Group.
Section 4.4 Debt Repayment. From and after consummation of the IPO,
to the extent that proceeds from the IPO (or any other funds contributed to the
Company or any of its Subsidiaries) are used to repay debt owed by the Company
or any of its Subsidiaries (for so long as the Company or such Subsidiary is
treated as a partnership for federal income tax purposes), such funds shall be
contributed to the Company and its Subsidiaries by the limited liability company
interest holders or other equity interest holders in the Company or such
Subsidiaries in proportion to the allocation of debt to such holders provided in
Section 8.2(b)(iii) of the LLC Agreement.
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ARTICLE V
TRANSFER RESTRICTIONS
Section 5.1 Structure; Transfers. For the period from the date of
this Agreement until the consummation of the IPO, (i) Duke shall cause DEFS
Holding to own and hold all of Duke's Company Interest and no other assets or
liabilities, and (ii) ▇▇▇▇▇▇▇▇ shall cause (A) PGC to own and hold all of
▇▇▇▇▇▇▇▇' Company Interest and no other assets or liabilities and (B) PGCSI to
own and hold all of the capital stock of PGC and no other assets or liabilities.
Section 5.2 Change of Control. Each of Duke and ▇▇▇▇▇▇▇▇ agrees that
prior to consummation of the IPO, as a condition to the consummation of any
transaction that will result in a Change of Control of DEFS Holding or PGC,
respectively, it will cause the new Parent of DEFS Holding or PGC, respectively,
to assume the obligations of Duke or ▇▇▇▇▇▇▇▇, as applicable, under this
Agreement.
ARTICLE VI
TERMINATION OF AGREEMENTS
Section 6.1 Termination of Agreements. The Governance Agreement is
hereby terminated in its entirety and shall be void and have no further force
and effect; PROVIDED, HOWEVER, that such termination shall not relieve any party
thereto of any liability for any breach of the Governance Agreement that
occurred prior to the termination thereof. From and after the termination of the
Governance Agreement, any reference to the Governance Agreement in Annex B of
the Contribution Agreement (or in any definition of a defined term used in Annex
B) shall be deemed to be a reference to the corresponding provision or
provisions of this Agreement or the LLC Agreement.
ARTICLE VII
EMPLOYEE MATTERS
Section 7.1 Definitions; Controlling Provisions. As used in this
Article VII, (i) the terms "DEFS" and "TEPPCO" shall have the meanings assigned
to such terms in the Contribution Agreement, (ii) the terms "Bonuses," "Change
in Control Severance Plan," "Continued Employees," "DEFS Employee," "Duke FSP,"
"Eligible Expenses," "Employee," "New Welfare Plans," "Old Welfare Plans," "PGC
Employee," "▇▇▇▇▇▇▇▇ FSP," "Retained DEFS Employee" and "Transferred PGC
Employee" shall have the meanings assigned to such terms in Annex A to the
Contribution Agreement, (iii) the term "Continued Duke Welfare Plan" shall have
the meaning set forth in Section 7.4(a), (iv) the term "TEPPCO Employee" shall
mean any individual who is, immediately prior to the date hereof, an Employee of
TEPPCO, and (v) the term "DEFS Severance Plan" shall mean that certain 2000 Duke
Energy Field Services Severance Benefits Plan as in effect on April 1, 2000. The
terms of this Article VII shall govern and control to the extent they are
inconsistent or conflict with the terms of Annex A to the Contribution
Agreement, and the provisions of Sections 7.3, 7.4 and 7.5 shall be deemed to be
a part of Annex A to the Contribution Agreement
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for purposes of the indemnification provisions of Sections 9.1(iii), 9.2(a)(iv)
and 9.2(b)(iv) of the Contribution Agreement. The provisions of Section 5.1 of
Annex A to the Contribution Agreement shall apply with respect to the
compensation and benefit matters addressed in this Article VII.
Section 7.2 Transfer of Employees. If a DEFS Employee or a PGC
Employee is to be transferred to the Company pursuant to the terms of Annex A to
the Contribution Agreement, then the Company may direct Duke and ▇▇▇▇▇▇▇▇,
respectively, to cause the transfer of such employee to be made to the Company
or to a Subsidiary of the Company that is designated by the Company. Continued
Employees may be employed by the Company or any Affiliate of the Company as
determined by the Company from time to time in its sole discretion.
Section 7.3 TEPPCO Employees. For all purposes of Annex A to the
Contribution Agreement and this Article VII (except where specifically provided
otherwise), each TEPPCO Employee shall be considered a Retained DEFS Employee.
Duke shall have no obligation under Section 3.2 of Annex A to the Contribution
Agreement to reimburse the Company for a pro-rata portion of the Bonuses for
calendar year 2000 that are paid to Retained DEFS Employees who are TEPPCO
Employees. Schedule 7.3 to this Agreement sets forth a list of agreements
relating to TEPPCO Employees that shall be considered to be among the agreements
listed in Schedule 2.5(a)(i) or Schedule 2.5(a)(ii) to Annex A to the
Contribution Agreement (as indicated on Schedule 7.3 to this Agreement);
provided, however, that the Company shall have no reimbursement obligation to
Duke with respect to any such agreement that is considered to be among the
agreements listed in Schedule 2.5(a)(i) to Annex A to the Contribution
Agreement.
Section 7.4 Welfare Benefits. (a) In order to permit benefits
transition with respect to Retained DEFS Employees, for the period beginning on
the date hereof and ending on the earliest of (i) December 31, 2000, (ii) such
date as Duke shall cease to have a greater than 50%, direct or indirect,
ownership interest in the Company, or (iii) such date as the Company or Duke
shall designate with respect to any particular Old Welfare Plan (provided that
Duke or the Company shall provide reasonable notice under the circumstances to
the other party prior to any such date), the Company and/or its wholly-owned
Subsidiaries shall be participating employers on behalf of their employees
(including any Continued Employees) who meet the requirements for eligibility
under the following Old Welfare Plans maintained by Duke: the Duke Energy
Medical, Dental, Cafeteria (FSP), Basic Life Insurance, Supplemental and
Dependent Life Insurance, Basic, Supplemental and Dependent Accidental Death and
Dismemberment Insurance, Business Travel Accident Insurance and Long-Term Care
Insurance Plans (each such Old Welfare Plan is herein referred to as a
"Continued Duke Welfare Plan"); provided, however, that retiree medical, dental
and life insurance coverages under the applicable Continued Duke Welfare Plans
shall not become applicable to an individual who either is not a Retained DEFS
Employee or fails to meet such requirements as Duke shall impose for such
coverages. Duke may terminate the participation by the Company and its
wholly-owned Subsidiaries in a particular Continued Duke Welfare Plan prior to
December 31, 2000, pursuant to clause (iii) of the preceding sentence only if
(1) Duke will be terminating such plan in its entirety as of the date designated
by Duke pursuant to such clause or (2) Duke has determined that such continued
participation by the Company and/or any of its wholly-owned Subsidiaries could
subject Duke or such plan to fines, penalties, excise taxes, loss of tax
deductions or other liabilities (other than liabilities for the benefits to be
provided under such plan). Without limiting the generality of the preceding
provisions of this Section 7.4(a), it is understood
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and agreed that such provisions shall not override the provisions of Section
4.2(b) of Annex A to the Contribution Agreement. For purposes of applying
Section 4.5(c) of Annex A to the Contribution Agreement, the Continued Duke
Welfare Plans shall be deemed to be New Welfare Plans; provided, however, that
Eligible Expenses of a Retained DEFS Employee shall be determined without regard
to when such expenses are recorded by the applicable plan administrator or
reported to the Company.
(b) Notwithstanding the provisions of Section 4.5(d) of Annex A to
the Contribution Agreement, for the period specified in Section 7.4(a) as it
applies to the Duke FSP, the Retained DEFS Employees shall continue to be
eligible, and the Transferred PGC Employees shall be eligible, to participate in
the Duke FSP. In the case of the Retained DEFS Employees, such continued
participation shall be based on their elections under the Duke FSP that are in
effect immediately prior to the date hereof (as such elections may be adjusted
from time to time in accordance with the terms of the Duke FSP). In the case of
the Transferred PGC Employees, the provisions of Section 4.5(d) of Annex A to
the Contribution Agreement shall be applied as if the Duke FSP were the New FSP
as defined therein, except that references therein to the Company shall be
deemed to refer to Duke; provided, however, that if the aggregate amount of the
transferred account balances of Transferred PGC Employees from the ▇▇▇▇▇▇▇▇ FSP
to the Duke FSP is negative, then the Company shall pay ▇▇▇▇▇▇▇▇ the amount of
such aggregate negative balance promptly following such account balance
transfer. The parties hereto agree and acknowledge that it is their intention
that the economic risks and benefits associated with calendar year 2000 (or any
portion thereof) participation in the Duke FSP by Retained DEFS Employees (both
before and after the date hereof), Transferred PGC Employees, and any other
employees of the Company and its Subsidiaries be borne or enjoyed, as the case
may be, by the Company. Accordingly, Duke and the Company agree that, as soon as
administratively feasible after all claims under the Duke FSP have been
processed for calendar year 2000 with respect to the employees of the Company
and its Subsidiaries, one such party shall make a payment to the other (as
appropriate) to ensure such result to the greatest extent possible.
Section 7.5 Severance Benefits. (a) The Company or a Subsidiary of
the Company shall reimburse ▇▇▇▇▇▇▇▇ for the cash severance benefit paid by
▇▇▇▇▇▇▇▇ or any Subsidiary of ▇▇▇▇▇▇▇▇ to certain of their employees in
accordance with the terms of Article I of Exhibit A to that certain Transition
Services Agreement between ▇▇▇▇▇▇▇▇ and the Company dated March 17, 2000.
(b) Section 4.2(b) of Annex A to the Contribution Agreement shall
apply to each Retained DEFS Employee who is a TEPPCO Employee and who was
covered by the Change in Control Severance Plan immediately prior to the date
hereof; provided, however, that (i) the Company shall not have any reimbursement
obligation to Duke under such Section 4.2(b) with respect to the cash severance
benefit paid to any such employee and (ii) Duke shall not have any reimbursement
obligation to the Company under such Section 4.2(b) for any extended coverage
under a welfare benefit plan.
(c) The provisions of this Section 7.5(c) shall not apply with
respect to any Retained DEFS Employee who is a TEPPCO Employee. Duke shall
reimburse the Company or a Subsidiary of the Company for the severance benefit
paid under the DEFS Severance Plan to any
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Retained DEFS Employee who receives notice from the Company or a Subsidiary of
the Company on or about the date hereof that such individual's employment will
be terminated in connection with (and in any event within 30 days after) the
closing of the transactions contemplated under the Contribution Agreement. On or
about the date hereof, the Company and its Subsidiaries shall also notify
certain Retained DEFS Employees selected by the Company in its sole discretion
that such individuals will be requested to perform services for the Company or a
Subsidiary of the Company on only a transitional basis. Duke shall reimburse the
Company or a Subsidiary of the Company for the severance benefit paid under the
DEFS Severance Plan to any Retained DEFS Employee who receives the notice
described in the preceding sentence provided that the termination of such
individual's employment from the Company and its Affiliates occurs within six
months of the date hereof (or within nine months of the date hereof in the case
of such a Retained DEFS Employee who is an accountant).
Section 7.6 Miscellaneous. The reference in Section 2.3 of Annex A to
the Contribution Agreement to Section 6.1 of the Governance Agreement shall be
deemed to refer to Section 6.1 of the Governance Agreement as in effect
immediately before the termination of the Governance Agreement. All references
in Sections 3.1, 4.1, 4.5(a), 4.5(b)(i)(A), 4.5(b)(ii)(I), 4.5(b)(iii)(x) and
the last sentence of Section 4.5(b) of Annex A to the Contribution Agreement to
the "Closing Date" shall be deemed to refer to the day after the Closing Date.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties hereto and delivered (including by facsimile) to the other
parties.
Section 8.2 Governing Law; Jurisdiction and Forum; Waiver of
Jury Trial. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without reference to the
choice of law principles thereof.
(b) Each party hereto irrevocably submits to the jurisdiction of any
Delaware state court or any federal court sitting in the State of Delaware in
any action arising out of or relating to this Agreement, and hereby irrevocably
agrees that all claims in respect of such action may be heard and determined in
such Delaware state or federal court. Each party hereto hereby irrevocably
waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding. The parties
hereto further agree, to the extent permitted by law, that final and
unappealable judgment against any of them in any action or proceeding
contemplated above shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States by suit on the judgment, a
certified copy of which shall be conclusive evidence of the fact and amount of
such judgment.
(c) To the extent that any party hereto has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice,
-16-
attachment prior to judgment, attachment in aid of execution, execution or
otherwise) with respect to itself or its property, each party hereto hereby
irrevocably waives such immunity in respect of its obligations with respect to
this Agreement.
(d) Each party hereto waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect of any
action, suit or proceeding arising out of or relating to this Agreement. Each
party hereto certifies that it has been induced to enter into this Agreement by,
among other things, the mutual waivers and certifications set forth above in
this Section 8.2.
Section 8.3 Entire Agreement. The parties hereto acknowledge that the
Contribution Agreement, the Confidentiality Agreements dated August 11, 1999 and
August 26, 1999 between Duke and ▇▇▇▇▇▇▇▇, the LLC Agreement and this Agreement,
together with the exhibits hereto and the exhibits to such exhibits, including
the Certificate of Incorporation and the Bylaws of the Corporation, have been
executed or adopted as part of the same transaction. This Agreement, together
with the Contribution Agreement and the exhibits hereto and thereto, constitutes
the entire agreement of the parties with respect to the subject matter hereof
and there are no agreements, understandings, representations or warranties
between the parties other than those set forth or referred to herein. This
Agreement is not intended to confer upon any person not a party hereto (and
their successors and assigns) any rights, remedies or obligations hereunder.
Section 8.4 Expenses. Except as set forth in this Agreement, whether
or not the transactions contemplated by this Agreement or the Contribution
Agreement are consummated, all legal and other costs and expenses incurred in
connection with this Agreement and the Contribution Agreement and the
transactions contemplated by this Agreement and the Contribution Agreement shall
be paid by the party incurring such costs and expenses; provided, however, that
third party costs incurred by each party after December 16, 1999 for planning
and information purposes relating to the transactions contemplated by this
Agreement and the Contribution Agreement (including costs of consultants and
contractors hired for such purposes, prepayments for services required by the
Company, rating agency fees and outside attorneys' fees for ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
and regulatory matters, but excluding wages and expenses of employees of Duke or
▇▇▇▇▇▇▇▇, costs incurred in performing due diligence on Duke or ▇▇▇▇▇▇▇▇, as
applicable) shall be paid or reimbursed by the Company or the Corporation, as
applicable.
Section 8.5 Notices. All notices and other communications to be given
to any party hereunder shall be sufficiently given for all purposes hereunder if
in writing and delivered by hand, courier or overnight delivery service or three
days after being mailed by certified or registered mail, return receipt
requested, with appropriate postage prepaid, or when received in the form of a
telegram or facsimile and shall be directed, if to a party hereunder, to the
address or facsimile number set forth below (or at such other address or
facsimile number as such party shall designate by like notice):
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(a) If to ▇▇▇▇▇▇▇▇:
▇▇▇▇▇▇▇▇ Petroleum Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Duke:
Duke Energy Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to the Company:
Duke Energy Field Services, LLC
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Duke Energy Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
-18-
and
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8.6 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided, however, that no party hereto will
assign its rights or delegate any or all of its obligations under this Agreement
without the express prior written consent of each other party hereto.
Section 8.7 Headings; Definitions. The section and article headings
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement.
Section 8.8 Amendments and Waivers. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
all parties hereto. Either party hereto may, only by an instrument in writing,
waive compliance by the other party hereto with any term or provision of this
Agreement on the part of such other party hereto to be performed or complied
with. The waiver by any party hereto of a breach of any term or provision of
this Agreement shall not be construed as a waiver of any subsequent breach.
Except as otherwise expressly provided herein, no failure to exercise, delay in
exercising or single or partial exercise of any right, power or remedy by any
party, and no course of dealing between the parties, shall constitute a waiver
of any such right, power or remedy.
Section 8.9 Severability. If any provision of this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality or enforceability
of the other provisions of this Agreement shall not be affected thereby, and
there shall be deemed substituted for the provision at issue a valid, legal and
enforceable provision as similar as possible to the provision at issue.
Section 8.10 Interpretation. In the event an ambiguity or question of
intent or interpretation arises with respect to this Agreement, this Agreement
shall be construed as if it were drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
Section 8.11 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any party fails to consummate
the transactions contemplated by this Agreement in accordance with the terms of
this Agreement and that the parties shall be entitled to specific performance in
such event, in addition to any other remedy at law or in equity, including
temporary restraining orders or temporary or permanent injunctions.
Section 8.12 Actions by Affiliates of ▇▇▇▇▇▇▇▇ and ▇▇▇▇. In addition
to, and not in limitation of, any other provisions of this Agreement, each of
▇▇▇▇▇▇▇▇ and Duke shall ensure that each of their respective Affiliates (other
than the Company and the Corporation) takes all actions necessary to be taken by
such Affiliate in order to fulfill the obligations of ▇▇▇▇▇▇▇▇ or ▇▇▇▇, as the
case may be, under this Agreement.
-19-
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to
be duly executed and delivered on the date first set forth above.
▇▇▇▇▇▇▇▇ PETROLEUM COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Treasurer
DUKE ENERGY CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Group President -
Energy Transmission
DUKE ENERGY FIELD SERVICES, LLC
By: /s/ ▇.▇. ▇▇▇▇
-------------------------------
Name: ▇.▇. ▇▇▇▇
Title: Chairman, President and CEO
DUKE ENERGY FIELD SERVICES CORPORATION
(solely for purposes of Section 4.3(c) of
this Agreement)
By: /s/ ▇.▇. ▇▇▇▇
-------------------------------
Name: ▇.▇. ▇▇▇▇
Title: Chairman, President and CEO
-20-
EXHIBIT A
TO
PARENT COMPANY
AGREEMENT
AGREEMENT OF MERGER
OF
▇▇▇▇▇▇▇▇ GAS COMPANY SHAREHOLDER, INC.
(a Delaware corporation)
WITH AND INTO
DUKE ENERGY FIELD SERVICES CORPORATION
(a Delaware corporation)
This Agreement of Merger, dated as of ________________, 2000 (this
"Agreement"), is hereby executed pursuant to Section 251 of the General
Corporation Law of the State of Delaware (the "DGCL") by and between ▇▇▇▇▇▇▇▇
GAS COMPANY SHAREHOLDER, INC., a Delaware corporation ("PGCSI"), and DUKE ENERGY
FIELD SERVICES CORPORATION, a Delaware corporation ("DEFS Corp." and, following
the Merger (as hereinafter defined), the "Surviving Corporation," and,
collectively with PGCSI, the "Constituent Corporations").
RECITALS:
1. Pursuant to its Certificate of Incorporation, as amended to the date
hereof, PGCSI is authorized to issue a total of 1,000 shares of Common Stock,
with no par value ("PGCSI Common Stock"), of which ten shares are now issued and
outstanding and each of which is entitled to one vote and held of record by
▇▇▇▇▇▇▇▇ Petroleum Company ("PGCSI Parent");
2. Pursuant to its Certificate of Incorporation, DEFS Corp. is authorized
to issue a total of ______ shares of Common Stock, par value $.01 per share
("DEFS Corp. Common Stock"), of which 1,000 shares are now issued and
outstanding and each of which is entitled to one vote and held of record by Duke
Energy Natural Gas Corporation ("DENG"), a wholly owned subsidiary of Duke
Energy Corporation ("Duke");
3. The registered office of PGCSI in the State of Delaware is located at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ and The
▇▇▇▇▇▇▇▇-▇▇▇▇ Corporation Systems, Inc. is the registered agent in charge
thereof upon whom process against PGCSI may be served;
4. The registered office of DEFS Corp. in the State of Delaware is
located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and The Corporation
Trust Company is the registered agent in charge thereof upon whom process
against DEFS Corp. may be served; and
5. The Boards of Directors of both of the Constituent Corporations have
adopted resolutions declaring the advisability of the proposed merger (the
"Merger") of PGCSI with and into DEFS Corp. upon the terms and conditions
hereinafter set forth, approving this Agreement and directing that it be
submitted to their respective sole stockholders for approval in accordance with
the applicable statutes of the State of Delaware.
6. Upon consummation of the Merger, DENG and PGCSI Parent will enter
into a Shareholders Agreement.
7. It is intended that the Merger shall qualify as a tax-free
"reorganization" within the meaning of Section 368 of the Internal Revenue Code,
as amended.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and for the purpose of prescribing the terms
and conditions of the Merger, the mode of carrying it into effect, the manner
and basis of converting shares of each of the Constituent Corporations into
shares of the Surviving Corporation and such other details and provisions of the
Merger as are deemed necessary or desirable, the parties hereto have agreed and
covenanted, and do hereby agree and covenant, as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Definitions. Each capitalized term used and not otherwise
defined herein shall have the meaning given such term set forth below:
"Company" shall mean Duke Energy Field Services, LLC, a Delaware
limited liability company.
"Contribution Closing" shall mean , 2000.
"Independent Directors" shall mean directors meeting the
independence and experience requirements, as set forth by the New York Stock
Exchange as of the date of the IPO for membership on an audit committee of a
board of directors, with respect to each of PGCSI, DENG and the Surviving
Corporation.
"IPO" shall mean the initial offering of shares of Surviving
Corporation Common Stock to the public in a transaction registered under the
Securities Act of 1933, as amended.
Section 1.2 Construction. Unless the context requires otherwise: (a) the
gender (or lack of gender) of all words used in this Agreement includes the
masculine, feminine and neuter; (b) references to Articles and Sections refer to
Articles and Sections of this Agreement; (c) references to laws refer to such
laws as they may be amended from time to time, and references to particular
provisions of a law include any corresponding provisions of any succeeding law;
(d) references to money refer to legal currency of the United States of America;
(e) the word "including" means "including, without limitation"; and (f) all
capitalized terms defined herein are equally applicable to both the singular and
plural forms of such terms.
ARTICLE II
THE AGREEMENT
Section 2.1 Approval and Certification. This Agreement shall be submitted
as promptly as practicable to the sole stockholder of each of the Constituent
Corporations, and, if duly adopted and approved by each such stockholder in
accordance with the provisions of the
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DGCL, shall, subject to the further provisions of this Agreement, promptly be
certified in accordance with the DGCL at such time as the respective authorized
officers of PGCSI and DEFS Corp. deem proper.
Section 2.2 Filing of Agreement or Certificate of Merger. Immediately
after the approvals and certification referenced in Section 2.1 hereof, the
Constituent Corporations shall file this Agreement or a Certificate of Merger
with the Secretary of State of Delaware, as required by Section 251 of the DGCL.
The Merger shall be effective upon acceptance of such filing or such later time
as is set forth in such Certificate of Merger, which time is hereinafter called
the "Effective Time."
ARTICLE III
RESULT OF MERGER
Section 3.1 Effective Time Events. At the Effective Time:
(a) PGCSI shall be merged with and into DEFS Corp., with
the effect as provided in the DGCL, at which time the separate existence of
PGCSI shall cease.
(b) DEFS Corp., as the corporation surviving the Merger,
shall continue its corporate existence under the DGCL.
(c) The Certificate of Incorporation of DEFS Corp. as in effect
immediately prior to the Effective Time shall be amended and restated in its
entirety as set forth in Exhibit A hereto (as so amended and restated, the
"Amended and Restated Charter") and as so amended and restated shall continue in
full force and effect as the certificate of incorporation of the Surviving
Corporation until the same shall thereafter be altered, amended or repealed in
accordance with applicable law and such Amended and Restated Charter.
(d) The Bylaws of DEFS Corp. as in effect immediately prior to the
Effective Time shall be amended and restated, in their entirety, as set forth in
Exhibit B hereto (as so amended and restated, the "Bylaws") and as so amended
and restated shall continue in full force and effect as the bylaws of the
Surviving Corporation, until the same shall thereafter be altered, amended or
repealed in accordance with applicable law, the Amended and Restated Charter and
such Bylaws.
(e) All shares of PGCSI Common Stock issued and outstanding shall
automatically be converted, without any action on the part of the holder
thereof, into (i) an aggregate of ___________ [1] fully paid and non-assessable
shares of Surviving Corporation
-------------------------
[1] to equal 80% of (x) the parties' good faith estimate at the time of the
Merger of ▇▇▇▇▇▇▇▇' Corporation Interest (as defined in Exhibit C) multiplied by
(y) (1) the aggregate number of shares of Surviving Corporation Common Stock to
be outstanding immediately after the Merger (including shares to be issued
pursuant to rights received in the Merger) and the IPO, plus (2) shares issued
to officers and employees of the Surviving Corporation or the Company
concurrently with the IPO pursuant to compensation or benefit plans, but
excluding any shares sold pursuant to the underwriters' over-allotment option.
-3-
Common Stock and (ii) the right to receive a number of additional fully paid and
non-assessable shares of Surviving Corporation Common Stock in accordance with
and on the terms and subject to the conditions set forth in Exhibit C hereto,
and all such shares of PGCSI Common Stock thereafter shall be cancelled and
cease to exist.
(f) All shares of DEFS Corp. Common Stock issued and outstanding
shall automatically be converted, without any action on the part of the holder
thereof, into (i) an aggregate of _________ [2] fully paid and non-assessable
shares of Surviving Corporation Common Stock and (ii) the right to receive a
number of additional fully paid and non-assessable shares of Surviving
Corporation Common Stock in accordance with and on the terms and subject to the
conditions set forth in Exhibit D hereto.
(g) The Board of Directors of the Surviving Corporation (who shall
hold office subject to the provisions of the Bylaws from the Effective Time
until the next annual meeting of the stockholders of the Surviving Corporation
and until their successors are elected and qualified) shall be the directors of
DEFS Corp. in office immediately prior to the Effective Time.
ARTICLE IV
ACTIONS OF THE CORPORATIONS
Section 4.1 Execution of Documents. Each of the Constituent Corporations
hereby agrees that at any time, or from time to time, as and when requested by
the Surviving Corporation, or by its successors and assigns, it will execute and
deliver, or cause to be executed and delivered in its name by its last acting
officers or by the corresponding officers of the Surviving Corporation, all such
acknowledgments, assurances, conveyances, assignments, transfers, deeds or other
instruments, and will take or cause to be taken such further or other action, as
the Surviving Corporation, or its successors or assigns, may deem necessary or
desirable in order to evidence the transfer, vesting or devolution to the
Surviving Corporation of any property, right, privilege or franchise pursuant to
applicable law, or to vest or perfect in or confirm to the Surviving
Corporation, its successors and assigns, title to and possession of all the
property, rights, privileges, powers, franchises and interests as a result of
the merger referred to herein pursuant to applicable law, and otherwise to carry
out the intent and purpose hereof.
Section 4.2 Delivery of Certificates. Upon the end of the seventh day of
trading on the NYSE (excluding the pricing day), the Surviving Corporation shall
deliver to each of DENG and to PGCSI Parent, respectively, certificates
representing the number of shares of Surviving
-------------------------
[2] to equal 80% of (x) the parties' good faith estimate at the time of the
Merger of Duke's Corporation Interest (as defined in Exhibit C) multiplied by
(y) (1) the aggregate number of shares of Surviving Corporation Common Stock to
be outstanding immediately after the Merger (including shares to be issued
pursuant to rights received in the Merger) and the IPO, plus (2) shares issued
to officers and employees of the Surviving Corporation or the Company
concurrently with the IPO pursuant to compensation or benefit plans, but
excluding any shares sold pursuant to the underwriters' over-allotment option.
-4-
Corporation Common Stock held by each, calculated in accordance with Sections
3.1(e) and (f) hereof.
ARTICLE V
AMENDMENT AND TERMINATION
Section 5.1 Amendment. At any time prior to the Effective Time, the Boards
of Directors of the Constituent Corporations may, to the fullest extent
permitted by law, amend, modify or supplement this Agreement by mutual consent
in such manner as they may determine.
Section 5.2 Termination. This Agreement may be terminated, and the Merger
herein provided for may be abandoned by mutual consent of the Boards of
Directors of the Constituent Corporations at any time prior to the Effective
Time notwithstanding approval of this Agreement by the stockholders of the
Constituent Corporation.
-5-
IN WITNESS WHEREOF, each of the undersigned have caused this
Agreement to be duly executed and delivered on the date first set forth above.
▇▇▇▇▇▇▇▇ GAS COMPANY SHAREHOLDER, INC.
By:
---------------------------------------
Name:
Title:
DUKE ENERGY FIELD SERVICES CORPORATION
By:
---------------------------------------
Name:
Title:
EXHIBIT A
to
AGREEMENT OF
MERGER
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
DUKE ENERGY FIELD SERVICES CORPORATION
The name of the corporation is "Duke Energy Field Services
Corporation" (the "Corporation").
The original Certificate of Incorporation was filed with the
Secretary of State of the State of Delaware on December 8, 1999, under the name
"DEFS Holding Corp."
This Amended and Restated Certificate of Incorporation has been
declared advisable by the board of directors of the Corporation (the "Board"),
duly adopted by the stockholders of the Corporation and duly executed and
acknowledged by the officers of the Corporation in accordance with Sections 103,
242 and 245 of the General Corporation Law of the State of Delaware (the
"DGCL").
The text of the Certificate of Incorporation of the Corporation is
hereby amended and restated to read in its entirety as follows:
ARTICLE I
NAME
The name of the Corporation is:
Duke Energy Field Services Corporation.
ARTICLE II
REGISTERED AGENT
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
ARTICLE III
PURPOSE
The purposes of the Corporation are to engage in the midstream gas
gathering, processing, transportation and marketing business in the United
States and Canada, the marketing of natural gas liquids in Mexico, the
transportation of refined petroleum products and liquefied petroleum gases and
related products and related terminaling, storage and other activities, and the
gathering, transportation, storage and marketing of crude oil (the "Designated
Business"). The Corporation may also pursue other legal businesses beyond the
Designated Business, provided that any such other business (i) is approved by
the Board pursuant to the
Bylaws of the Corporation (the "Bylaws"), and (ii) if Duke Energy Corporation, a
North Carolina corporation ("Duke"), owns, directly or indirectly, a majority of
the Common Stock or otherwise controls the Corporation, directly or indirectly,
is approved by Duke in its sole discretion.
ARTICLE IV
CAPITAL STOCK
Section 4.1. Issuance of Shares. The Corporation shall be
authorized to issue _____ shares of capital stock, of which _____ shares shall
be shares of common stock, $.01 par value ("Common Stock"), and _____ shares
shall be shares of preferred stock, $.01 par value ("Preferred Stock").
Section 4.2. Preferred Stock. The Preferred Stock may be issued from
time to time in one or more series. The Board is hereby authorized to provide
for the issuance of shares of Preferred Stock in series and, by filing a
certificate pursuant to the DGCL (hereinafter referred to as a "Preferred Stock
Designation"), to establish from time to time the number of shares to be
included in each such series, and to fix the voting rights, if any,
designations, powers, privileges, preferences and other rights, if any, of the
shares of each such series and the qualifications, limitations and restrictions
thereof. The authority of the Board with respect to each series shall include,
but not be limited to, determination of the following:
(a) the designation of the series, which may be by
distinguishing number, letter or title;
(b) the number of shares of the series, which number the
Board may thereafter (except where otherwise provided in the Preferred Stock
Designation) increase or decrease (but not below the number of shares thereof
then outstanding);
(c) whether dividends, if any, shall be cumulative or
noncumulative, and, in the case of shares of any series having cumulative
dividend rights, the date or dates or method of determining the date or dates
from which dividends on the shares of such series shall be cumulative;
(d) the rate of any dividends (or method of determining
such dividends) payable to the holders of the shares of such series, any
conditions upon which such dividends shall be paid and the date or dates (or
the method for determining the date or dates) upon which such dividends shall
be payable;
(e) the price or prices (or method of determining such
price or prices) at which, the form of payment of such price or prices (which
may be cash, property or rights, including securities of the same or another
corporation or other entity) for which, the period or periods within which and
the terms and conditions upon which the shares of such series may be redeemed,
in whole or in part, at the option of the Corporation or at the option of the
holder or holders thereof or upon the happening of a specified event or events,
if any;
(f) the obligation, if any, of the Corporation to purchase
or redeem shares of such series pursuant to a sinking fund or otherwise and the
price or prices at which, the
-2-
form of payment of such price or prices (which may be cash, property or rights,
including securities of the same or another corporation or other entity) for
which, the period or periods within which and the terms and conditions upon
which the shares of such series shall be redeemed or purchased, in whole or in
part, pursuant to such obligation;
(g) the amount payable out of the assets of the
Corporation to the holders of shares of the series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation;
(h) provisions, if any, for the conversion or exchange of
the shares of such series, at any time or times at the option of the holder or
holders thereof or at the option of the Corporation or upon the happening of a
specified event or events, into shares of any other class or classes or any
other series of the same or any other class or classes of stock, or any other
security, of the Corporation, or any other corporation or other entity, and the
price or prices or rate or rates of conversion or exchange and any adjustments
applicable thereto, and all other terms and conditions upon which such
conversion or exchange may be made;
(i) restrictions on the issuance of shares of the same
series or of any other class or series, if any; and
(j) the voting rights, if any, of the holders of shares of
the series.
Section 4.3. Common Stock. The Common Stock shall be subject to the
express terms of the Preferred Stock and any series thereof. The holders of
shares of Common Stock shall be entitled to one vote for each such share upon
all proposals on which the holders of Common Stock are entitled to vote and the
Common Stock shall vote together as a single class. Except as otherwise provided
by law or by the resolution or resolutions adopted by the Board designating the
rights, powers and preferences of any series of Preferred Stock, the holders of
Common Stock shall have the exclusive right to vote for the members of the Board
(the "Directors") and for all other purposes. The number of authorized shares of
Preferred Stock may be increased or decreased (but not below the number of
shares thereof then outstanding) by the affirmative vote of the holders of a
majority of the outstanding Common Stock, without a vote of the holders of the
Preferred Stock, or of any series thereof, unless a vote of any such holders is
required pursuant to any Preferred Stock Designation. The Corporation shall be
entitled to treat the Person in which name any share of its stock is registered
as the owner thereof for all purposes and shall not be bound to recognize any
equitable or other claim to, or interest in, such share on the part of any other
person, whether or not the Corporation shall have notice thereof, except as
expressly provided by applicable law.
ARTICLE V
THE BOARD
The number, nominations, qualifications, tenure, vacancies and
removal of the Directors shall be as set forth in the Bylaws. Except and to the
extent that the Bylaws shall so require, the election of the Directors need not
be by written ballot.
-3-
ARTICLE VI
BYLAWS
In furtherance and not in limitation of the powers conferred by
statute, the Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by the Board in accordance with the Bylaws.
ARTICLE VII
AMENDMENT OF CERTIFICATE OF INCORPORATION
Except as set forth in Article VI, Article X and Article XII hereof,
the Corporation reserves the right at any time and from time to time to amend,
alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and, except as set forth in Article XI, all rights,
preferences and privileges of whatsoever nature conferred upon stockholders,
Directors or any other persons whomsoever by and pursuant to this Certificate of
Incorporation in its present form or as hereafter amended are granted subject to
the right reserved in this Article.
ARTICLE VIII
STOCKHOLDER ACTION BY WRITTEN CONSENT
Prior to the first date (the "Trigger Date") upon which Duke is not
the holder of record (directly or through its subsidiaries) of a majority of the
outstanding voting stock of the Corporation entitled to vote generally in the
election of directors, any action required or permitted to be taken by the
stockholders of the Corporation may be taken without a meeting if a consent in
writing, setting forth the action so taken, is signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. On and after the Trigger Date,
any action required or permitted to be taken by the stockholders of the
Corporation must be taken at a duly held annual or special meeting of
stockholders and may not be taken by any consent in writing of such
stockholders.
ARTICLE IX
DELAWARE ANTITAKEOVER STATUTE
The provisions of Section 203 of the Delaware General Corporation
Law shall not be applicable to the Corporation.
ARTICLE X
ANTI-DILUTION
At any time following the initial offering of shares of Common Stock
in a transaction registered under the Securities Act of 1933, as amended, if the
Corporation offers or issues additional shares of Common Stock or additional
shares of any other previously issued and outstanding capital stock in a public
offering, then, so long as Duke and ▇▇▇▇▇▇▇▇ Petroleum Company, a Delaware
corporation ("▇▇▇▇▇▇▇▇"), each owns at least 20%, directly or indirectly, of all
outstanding Common Stock, then each of Duke and ▇▇▇▇▇▇▇▇ shall have the
opportunity to
-4-
subscribe for and purchase such number of shares of Common Stock or such other
capital stock, as the case may be, such that the percentage ownership (direct or
indirect) of the total issued and outstanding Common Stock or such other capital
stock, as the case may be, of such party following the offering or issuance
remains equal to such party's percentage ownership (direct or indirect) of the
issued and outstanding Common Stock or such other capital stock, as the case may
be, immediately prior to the offering or issuance; provided, however, that
neither Duke nor ▇▇▇▇▇▇▇▇ shall have the right or opportunity hereunder to
purchase any additional Common Stock in connection with the issuance by the
Corporation of any Common Stock or options, warrants or other similar securities
in respect of Common Stock pursuant to a compensation or benefit plan or program
for officers or employees of the Corporation that has been approved by the Board
in accordance with the Bylaws. So long as Duke and ▇▇▇▇▇▇▇▇ each owns at least
20%, directly or indirectly, of all outstanding Common Stock, then any proposed
amendment to this Article X shall require the consent of Duke and ▇▇▇▇▇▇▇▇.
ARTICLE XI
LIMITED LIABILITY; INDEMNIFICATION
Section 11.1. Limited Liability of Directors. A Director shall not
be personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a Director, except, if required by the DGCL, as
amended from time to time, for liability (a) for any breach of the Director's
duty of loyalty to the Corporation or its stockholders, (b) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (c) under Section 174 of the DGCL or (d) for any transaction
from which the Director derived an improper personal benefit. Neither the
amendment nor repeal of this Section 11.1 shall eliminate or reduce the effect
of this Section 11.1 in respect of any matter occurring, or any cause of action,
suit or claim that, but for this Section 11.1, would accrue or arise, prior to
such amendment or repeal.
Section 11.2. Indemnification and Insurance.
-----------------------------
(a) Right to Indemnification. Each person who was or is made a
party to or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter, a "proceeding"), by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was a Director or
officer of the Corporation or is or was serving at the request of the
Corporation as a Director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a Director, officer, employee or agent
or in any other capacity while serving as a Director, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the DGCL, as the same exists or may hereafter be amended
(but, in the case of any such amendment, to the fullest extent permitted by law,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including, without limitation, attorneys' fees, judgments, fines, amounts paid
or to be paid in settlement and excise taxes or penalties arising under the
Employment Retirement Income Security Act of 1974, as in effect from time to
time) reasonably incurred or suffered by such person in connection therewith,
and
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such indemnification shall continue as to a person who has ceased to be a
Director, officer, employee or agent and shall inure to the benefit of such
person's heirs, executors and administrators; PROVIDED, HOWEVER, that, except as
provided in paragraph (b) hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board. The right to indemnification conferred in this Section
11.2 shall be a contract right and shall include the right to have the
Corporation pay the expenses incurred in defending any such proceeding in
advance of its final disposition, any advance payments to be paid by the
Corporation within 20 calendar days after the receipt by the Corporation of a
statement or statements from the claimant requesting such advance or advances
from time to time; PROVIDED, HOWEVER, that, if and to the extent the DGCL
requires, the payment of such expenses incurred by a Director or officer in such
person's capacity as a Director or officer (and not in any other capacity in
which service was or is rendered by such person while a Director or officer
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such Director or officer, to
repay all amounts so advanced if it shall ultimately be determined that such
Director or officer is not entitled to be indemnified under this Section 11.2 or
otherwise. The Corporation may, to the extent authorized from time to time by
the Board, grant rights to indemnification, and rights to have the Corporation
pay the expenses incurred in defending any proceeding in advance of its final
disposition, to any employee or agent of the Corporation to the fullest extent
of the provisions of this Article XI with respect to the indemnification and
advancement of expenses of Directors and officers of the Corporation.
(b) Right of Claimant to Bring Suit. If a claim under
paragraph (a) of this Section is not paid in full by the Corporation within 30
calendar days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is required, has
been tendered to the Corporation) that the claimant has not met the standard of
conduct which makes it permissible under the DGCL for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board, independent legal counsel or its stockholders) to have
made a determination prior to the circumstances that the claimant has met the
applicable standard of conduct set forth in the DGCL, nor an actual
determination by the Corporation (including its Board, independent legal counsel
or its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification
and the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Section 11.2 shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, Bylaw, agreement, vote of
stockholders or disinterested Directors or otherwise. No repeal or
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modification of this Article XI shall in any way diminish or adversely affect
the rights of any Director, officer, employee or agent of the Corporation
hereunder in respect of any occurrence or matter arising prior to any such
repeal or modification.
(d) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any Director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the DGCL.
(e) Severability. If any provision or provisions of this
Article XI shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (i) the validity, legality and enforceability of the remaining
provisions of this Article XI (including, without limitation, each portion of
any paragraph of this Article XI containing any such provision held to be
invalid, illegal or unenforceable, that is not itself held to be invalid,
illegal or unenforceable) shall not in any way be affected or impaired thereby;
and (ii) to the fullest extent possible, the provisions of this Article XI
(including, without limitation, each such portion of any paragraph of this
Article XI containing any such provision held to be invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision or provisions held invalid, illegal or unenforceable.
ARTICLE XII
BUSINESS OPPORTUNITIES AGREEMENT
Section 12.1. Scope of Business of the Corporation and its
Subsidiaries. The Corporation hereby renounces any interest or expectancy in any
business opportunity, transaction or other matter (each, a "Business Activity")
in which Duke engages or seeks to engage that does not consist exclusively of
the Designated Business.
Section 12.2. Corporate Opportunities.
-----------------------
(a) In recognition that Duke is currently (at least
indirectly), and in anticipation that Duke will remain, a substantial
stockholder of the Corporation, and in anticipation that the Corporation and
Duke may engage in the same or similar activities or lines of business and have
an interest in the same or similar areas of business, and in recognition of the
benefits to be derived by the Corporation through its continued contractual,
corporate and business relations with Duke (including services of employees,
officers and directors of Duke as Directors and officers of the Corporation),
the provisions of this Article XII are set forth to regulate and define the
conduct of certain affairs of the Corporation as they may involve Duke and its
employees, officers and directors, and the powers, rights, duties, liabilities,
interests and expectancies of the Corporation in connection therewith.
(b) Duke shall have the right to engage (and shall have no
duty to refrain from engaging) in the same or similar activities or lines of
business as the Corporation, and the Corporation shall not be deemed to have any
interest or expectancy, and hereby renounces any interest or expectancy, in any
Business Activity, provided that such Business Activity is conducted by Duke in
accordance with the standards set forth in Section 12.3 hereof.
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Neither Duke nor any employee, officer, director or agent thereof shall be
liable to the Corporation or its stockholders for breach of any fiduciary or
other duty by reason of any such Business Activity of Duke or of such person's
participation therein. In the event that Duke acquires knowledge of a potential
Business Activity, unless such Business Activity is pursued in violation of the
standards set forth in Section 12.3 hereof, Duke shall have no duty to
communicate or offer to the Corporation the opportunity to participate in such
Business Activity and shall not be liable to the Corporation or its stockholders
for breach of any fiduciary duty as a stockholder of the Corporation by reason
of the fact that Duke conducts, pursues or acquires such Business Activity for
itself, directs such Business Activity to another Person or does not communicate
information regarding such Business Activity to the Corporation, and no officer,
director, employee or other agent of Duke who serves as a Director or officer of
the Corporation or of any subsidiary of the Corporation shall have any duty to
communicate or offer the opportunity to participate in such Business Activity to
the Corporation or any liability to the Corporation or its stockholders for
breach of any fiduciary duty as a Director or officer of the Corporation by
reason of the fact that Duke conducts, pursues or acquires such Business
Activity for itself, directs such Business Activity to another Person or does
not communicate information regarding such Business Activity to the Corporation.
Section 12.3. Standards for Separate Conduct of Business. In the
event that Duke or any Director or officer of the Corporation who is also a
director, officer, employee or agent of Duke acquires knowledge of a potential
Business Activity, Duke, or any such person on behalf of Duke, may pursue such
Business Activity, and such pursuit shall be in accordance with the standards
set forth in this Section 12.3, if (i) such knowledge was acquired by Duke or
any such person other than through disclosure of information by or on behalf of
a Director, officer, employee or agent of the Corporation in or during the
course of such person's relationship with the Corporation and other than solely
in, and as a direct result of, such person's service as a Director or officer of
the Corporation (it being understood that if the opportunity to pursue such
Business Activity is separately identified by Duke or one of its officers,
directors, employees or agents or separately presented to Duke or one of its
officers, directors, employees or agents, Duke, or any such officer, director,
employee or agent on behalf of Duke, shall be free to pursue such opportunity
even if it also came to the attention of another officer, director, employee or
agent of Duke as a result of and in his or her capacity as a Director or officer
of the Corporation), and (ii) such Business Activity is developed and pursued
solely through the use of personnel and assets of Duke (including such person in
his or her capacity as a director, officer, employee or agent of Duke). The
Corporation shall renounce any interest or expectancy in any Business Activity
that is conducted by Duke or its officers, directors, employees or agents on
behalf of Duke in accordance with the foregoing standards. Nothing in this
Article XII shall allow any Director designated by Duke to pursue a Business
Activity in the Designated Business solely for his or her personal benefit (as
opposed to for the benefit of Duke).
Section 12.4. Consent. Any Person purchasing or otherwise
acquiring any interest in shares of the capital stock of the Corporation
shall be deemed to have consented to these provisions.
-8-
Section 12.5. Interpretation.
--------------
(a) For purposes of this Article XII, "Duke" shall include all
Subsidiaries and Affiliates of Duke Energy Corporation (other than the
Corporation and its Subsidiaries).
(b) As used in this Article XII, the following definitions
shall apply:
(i) "Affiliate" shall mean, with respect to any
Person, a Person directly or indirectly Controlling, Controlled by or under
common Control with such Person.
(ii) "Control" shall mean the possession, directly or
indirectly, through one or more intermediaries, by any Person or group (within
the meaning of Section 13(d)(3) under the Securities Exchange Act of 1934, as
amended) of both of the following: (A)(1) in the case of a corporation, more
than 25% of the direct or indirect economic interest in the outstanding equity
securities thereof; (2) in the case of a limited liability company, partnership,
limited partnership or venture, the right to more than 25% of the distributions
therefrom (including liquidating distributions); (3) in the case of a trust or
estate, including a business trust, more than 25% of the beneficial interest
therein; and (4) in the case of any other entity, more than 25% of the economic
or beneficial interest therein; and (B) in the case of any entity, the power or
authority, through ownership of voting securities, by contract or otherwise, to
control or direct the management and policies of the entity.
(iii) "Governmental Entity" shall mean any federal,
state, political subdivision or other governmental agency or instrumentality,
foreign or domestic.
(iv) "Person" shall mean any individual, partnership,
limited liability company, firm, corporation, association, joint venture, trust
or other entity or any Governmental Entity.
(v) "Subsidiary" shall mean, when used with respect
to any Person, any Affiliate of such Person that is Controlled by such Person.
Section 12.6. Amendment. Any proposed amendment to Article III or
this Article XII shall require, in addition to the consent of Duke, the approval
of at least a majority of the Directors who are not officers, directors or
employees of Duke and who are otherwise disinterested or of a committee of the
Board consisting exclusively of Directors who are not officers, directors or
employees of Duke and who are otherwise disinterested.
Section 12.7. Term. The provisions of this Article XII shall
terminate at such time as Duke no longer owns, directly or indirectly, a
majority of the Common Stock and no longer otherwise controls the Corporation,
directly or indirectly.
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IN WITNESS WHEREOF, Duke Energy Field Services Corporation has
caused this Amended and Restated Certificate of Incorporation to be signed by
its President this ____ day of _________, 2000.
-----------------------------
▇. ▇. ▇▇▇▇
President
EXHIBIT B
to
AGREEMENT OF
MERGER
==============================================================================
AMENDED AND RESTATED BYLAWS
OF
DUKE ENERGY FIELD SERVICES CORPORATION
DATED AS OF ___, 2000
==============================================================================
TABLE OF CONTENTS
Page
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ARTICLE I
OFFICES AND RECORDS
ARTICLE II
STOCKHOLDERS
Section 2.1 Annual Meeting................................................1
Section 2.2 Special Meeting...............................................1
Section 2.3 Place of Meeting..............................................2
Section 2.4 Notice of Meeting.............................................2
Section 2.5 Quorum and Adjournment; Voting................................2
Section 2.6 Proxies.......................................................2
Section 2.7 Notice of Stockholder Business and Nominations................3
Section 2.8 Procedure for Election of Directors; Required Vote............5
Section 2.9 Inspectors of Elections; Opening and Closing the Polls........5
Section 2.10 Conduct of Meetings...........................................5
ARTICLE III
THE BOARD
Section 3.1 General Powers................................................6
Section 3.2 Number; Qualifications and Tenure.............................6
Section 3.3 Regular Meetings..............................................6
Section 3.4 Special Meetings..............................................6
Section 3.5 Notice........................................................6
Section 3.6 Action by Consent of Board....................................7
Section 3.7 Conference Telephone Meetings.................................7
Section 3.8 Quorum........................................................7
Section 3.9 Vacancies; Increases in the Number of Directors...............7
Section 3.10 Executive and Other Committees................................7
Section 3.11 Removal.......................................................8
Section 3.12 Records.......................................................8
ARTICLE IV
OFFICERS
Section 4.1 Elected Officers..............................................8
Section 4.2 Election and Term of Office...................................9
Section 4.3 Chairman of the Board; Chief Executive Officer................9
Section 4.4 President.....................................................9
Section 4.5 Vice Presidents...............................................9
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Page
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Section 4.6 Treasurer.....................................................9
Section 4.7 Secretary.....................................................9
Section 4.8 Removal......................................................10
Section 4.9 Vacancies....................................................10
ARTICLE V
STOCK CERTIFICATES AND TRANSFERS
Section 5.1 Stock Certificates and Transfers.............................10
Section 5.2 Lost, Stolen or Destroyed Certificates.......................11
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1 Fiscal Year..................................................11
Section 6.2 Dividends....................................................11
Section 6.3 Seal.........................................................11
Section 6.4 Waiver of Notice.............................................11
Section 6.5 Audits.......................................................11
Section 6.6 Resignations.................................................11
ARTICLE VII
CONTRACTS, PROXIES, ETC.
Section 7.1 Contracts....................................................12
Section 7.2 Proxies......................................................12
ARTICLE VIII
AMENDMENTS
Annex A
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AMENDED AND RESTATED BYLAWS
OF
DUKE ENERGY FIELD SERVICES CORPORATION
The original Bylaws of Duke Energy Field Services Corporation
(formerly known as DEFS Holding Corp.) (the "Corporation") were adopted by the
board of directors of the Corporation (the "Board") on December 8, 1999.
These Amended and Restated Bylaws have been declared advisable by
the Board, duly adopted by the stockholders of the Corporation and duly executed
and acknowledged by the officers of the Corporation in accordance with Section
109 of the General Corporation Law of the State of Delaware ("DGCL").
The text of the Bylaws of the Corporation is hereby amended and
restated to read in its entirety as follows:
ARTICLE I
OFFICES AND RECORDS
The Corporation shall maintain a registered office in Delaware and
may maintain such other offices and keep its books, documents and records at
such places within or without Delaware as may, from time to time, be designated
by the Board.
ARTICLE II
STOCKHOLDERS
Section 2.1. Annual Meeting. The annual meeting of the
stockholders of the Corporation shall be held on such date and at such time
as may be fixed by resolution of the Board.
Section 2.2. Special Meeting. Except as otherwise required by law
and subject to the rights of the holders of any class or series of stock having
a preference over the Common Stock, as defined in the Certificate of
Incorporation of the Corporation (the "Certificate of Incorporation"), as to
dividends or upon liquidation, special meetings of the stockholders of the
Corporation for any purpose or purposes may be called only by:
(a) the Board pursuant to a resolution stating the purpose or
purposes thereof approved by a majority of the Board, or
(b) the Chairman of the Board.
No business other than that stated in the notice shall be transacted at any
special meeting.
Section 2.3. Place of Meeting. The Board or the Chairman of the
Board, as the case may be, may designate the place of meeting for any annual
meeting or for any special meeting of the stockholders. If no designation is so
made, the place of meeting shall be the principal office of the Corporation.
Section 2.4. Notice of Meeting. Written or printed notice, stating
the place, day and hour of the meeting and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be delivered by
the Corporation not less than ten calendar days nor more than 60 calendar days
before the date of the meeting, either personally or by mail, to each
stockholder of record entitled to vote at such meeting. Holders of Preferred
Stock, as defined in the Certificate of Incorporation, shall not be entitled to
receive notice of any meeting of stockholders at which they are not entitled to
vote. If mailed, such notice shall be deemed to be delivered when deposited in
the United States mail with postage thereon prepaid, addressed to the
stockholder at such person's address as it appears on the stock transfer books
of the Corporation. Only such business shall be conducted at a special meeting
of stockholders as shall have been included in the Corporation's notice of
meeting. Meetings may be held without notice if all stockholders entitled to
vote are present, or if notice is waived by those not present in accordance with
Section 6.4 of these Bylaws. Any previously scheduled meeting of the
stockholders may be postponed, and any special meeting of the stockholders may
be canceled, by resolution of the Board upon public notice given prior to the
date previously scheduled for such meeting of stockholders.
Section 2.5. Quorum and Adjournment; Voting. Except as otherwise
provided by law or by the Certificate of Incorporation, the holders of a
majority of the voting power of all outstanding shares of the Corporation
entitled to vote generally in the election of Directors (as hereinafter defined)
(the "Voting Stock"), represented in person or by proxy, shall constitute a
quorum at a meeting of stockholders, except that when specified business is to
be voted on by a class or series of stock voting as a class, the holders of a
majority of the shares of such class or series shall constitute a quorum of such
class or series for the transaction of such business. The chairman of the
meeting or a majority of the shares so represented may adjourn the meeting from
time to time, whether or not there is such a quorum. No notice of the time and
place of adjourned meetings need be given except as required by law. The
stockholders present at a duly called meeting at which a quorum is present may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
Section 2.6. Proxies. At all meetings of stockholders, a
stockholder may vote by proxy executed in writing (or in such other manner
permitted by the DGCL) by the stockholder or by such person's duly authorized
attorney-in-fact.
Section 2.7. Notice of Stockholder Business and Nominations.
(a) Annual Meetings of Stockholders.
(i) Nominations of persons for election to the Board and
the proposal of business to be considered by the stockholders may be made at an
annual meeting of stockholders (A) pursuant to the Corporation's notice of
meeting in accordance with Section 2.4 of these Bylaws, (B) by or at the
direction of the Board, or (C) by any stockholder of the Corporation who was a
stockholder of record at the time the notice provided for in this Bylaw was
delivered, who is entitled to vote at the meeting and who complies with the
notice procedures set forth in this Bylaw.
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(ii) For nominations or other business to be properly
brought before an annual meeting by a stockholder pursuant to clause (C) of
Section 2.7(a)(i) hereof, the stockholder must have given timely notice thereof
in writing to the Secretary of the Corporation and such other business must
otherwise be a proper matter for stockholder action. To be timely, a
stockholder's notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business on the
90th calendar day nor earlier than the close of business on the 120th calendar
day prior to the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that the date of the annual meeting is more
than 30 calendar days before or more than 60 calendar days after such
anniversary date, notice by the stockholder to be timely must be so delivered
not earlier than the close of business on the 120th calendar day prior to such
annual meeting and not later than the close of business on the later of the 90th
calendar day prior to such annual meeting or the 10th calendar day following the
calendar day on which public announcement of the date of such meeting is first
made by the Corporation. In no event shall the public announcement of an
adjournment of an annual meeting commence a new time period for the giving of a
stockholder's notice as described above. Such stockholder's notice shall set
forth (A) as to each person whom the stockholder proposes to nominate for
election or reelection as a Director, all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
Directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and Rule 14a-11 thereunder (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a member of the Board (a "Director") if elected); (B) as to any other
business that the stockholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (C) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is
made, (1) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (2) the class and number
of shares of the Corporation which are owned beneficially and of record by such
stockholder and such beneficial owner.
(iii) Notwithstanding anything in the second sentence of
paragraph (a)(ii) of this Bylaw to the contrary, in the event that the number of
Directors to be elected to the Board is increased and there is no public
announcement by the Corporation naming all of the nominees for Director or
specifying the size of the increased Board at least 100 calendar days prior to
the first anniversary of the preceding year's annual meeting, a stockholder's
notice required by this Bylaw shall also be considered timely, but only with
respect to nominees for any new positions created by such increase, if it shall
be delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the tenth calendar day
following the day on which such public announcement is first made by the
Corporation.
(b) Special Meetings of the Stockholders. Only such business
shall be conducted at a special meeting of stockholders as shall have been
brought before the meeting pursuant to the Corporation's notice of meeting under
Section 2.4 of these Bylaws. Nominations of persons for election to the Board
may be made at a special meeting of stockholders at which Directors are to be
elected pursuant to the Corporation's notice of meeting (i) by or at the
direction of the Board, (ii) provided that the Board has determined that
Directors shall be elected
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at such meeting, by any stockholder of the Corporation who is a stockholder of
record at the time of giving of notice provided for in this Bylaw, who shall be
entitled to vote at the meeting and who complies with the notice procedures set
forth in this Bylaw. In the event the Corporation calls a special meeting of
stockholders for the purpose of electing one or more Directors to the Board, any
stockholder may nominate a person or persons (as the case may be) for election
to such position(s) as specified in the Corporation's notice of meeting pursuant
to clause (ii) if the stockholder's notice required by paragraph (a)(ii) of this
Bylaw shall be delivered to the Secretary at the principal executive offices of
the Corporation not earlier than the close of business on the 120th calendar day
prior to such special meeting and not later than the close of business on the
later of the 90th calendar day prior to such special meeting or the tenth
calendar day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board to be
elected at such meeting. In no event shall the public announcement of an
adjournment of a special meeting commence a new time period for the giving of a
stockholder's notice as described above.
(c) General.
(i) Only such persons who are nominated in accordance with
the procedures set forth in this Bylaw shall be eligible to serve as Directors
and only such business shall be conducted at a meeting of stockholders as shall
have been brought before the meeting in accordance with the procedures set forth
in this Bylaw. Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, the chairman of the meeting shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made or proposed, as the case may be, in
accordance with the procedures set forth in this Bylaw and, if any proposed
nomination or business in not in compliance with this Bylaw, to declare that
such defective proposal or nomination shall be disregarded.
(ii) For purposes of this Bylaw, "public announcement"
shall mean disclosure in a press release reported by the Dow ▇▇▇▇▇ News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this
Bylaw, a stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Bylaw. Nothing in this Bylaw shall be deemed to affect
any rights (A) of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or
(B) of the holders of any series of Preferred Stock to elect Directors under an
applicable Preferred Stock Designation (as defined in the Certificate of
Incorporation).
Section 2.8. Procedure for Election of Directors; Required Vote.
Election of Directors at all meetings of the stockholders at which Directors are
to be elected shall be by ballot, and, subject to the rights of the holders of
any series of Preferred Stock to elect Directors under an applicable Preferred
Stock Designation, a plurality of the votes cast thereat shall elect Directors.
Except as otherwise provided by law, the Certificate of Incorporation, Preferred
Stock Designation or these Bylaws, in all matters other than the election of
Directors, the affirmative
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vote of a majority of the voting power of the shares present in person or
represented by proxy at the meeting and entitled to vote on the matter shall be
the act of the stockholders.
Section 2.9. Inspectors of Elections; Opening and Closing the
Polls. The Board by resolution shall appoint, or shall authorize an officer of
the Corporation to appoint, one or more inspectors, which inspector or
inspectors may include individuals who serve the Corporation in other
capacities, including, without limitation, as officers, employees, agents or
representatives, to act at the meetings of stockholders and make a written
report thereof. One or more persons may be designated as alternate inspector(s)
to replace any inspector who fails to act. If no inspector or alternate has been
appointed to act or is able to act at a meeting of the stockholders, the
chairman of the meeting shall appoint one or more inspectors to act at the
meeting. Each inspector, before discharging such person's duties, shall take and
sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of such person's ability. The
inspector(s) shall have the duties prescribed by law. The chairman of the
meeting shall fix and announce at the meeting the date and time of the opening
and the closing of the polls for each matter upon which the stockholders will
vote at a meeting.
Section 2.10. Conduct of Meetings. The Board may to the extent not
prohibited by law adopt such rules and regulations for the conduct of meetings
of stockholders as it shall deem appropriate. Except to the extent inconsistent
with such rules and regulations as adopted by the Board, the chairman of any
meeting of stockholders shall have the right and authority to prescribe such
rules, regulations and procedures and to do all such acts as, in the judgment of
such chairman, are appropriate for the proper conduct of the meeting. Such
rules, regulations or procedures, whether adopted by the Board or prescribed by
the chairman of the meeting, may to the extent not prohibited by law include,
without limitation, the following: (a) the establishment of an agenda or order
of business for the meeting; (b) rules and procedures for maintaining order at
the meeting and the safety of those present; (c) limitations on attendance at or
participation in the meeting to stockholders of record of the Corporation, their
duly authorized and constituted proxies or such other persons as the chairman of
the meeting shall determine; (d) restrictions on entry to the meeting after the
time fixed for the commencement thereof; and (e) limitations on the time
allotted to questions or comments by participants. The date and time of the
opening and closing of the polls for each matter upon which the stockholders
will vote at a meeting shall be announced at the meeting by the person presiding
over the meeting. Unless and to the extent determined by the Board or the
chairman of the meeting, meetings of stockholders shall not be required to be
held in accordance with the rules of parliamentary procedure.
ARTICLE III
THE BOARD
Section 3.1. General Powers. The business and affairs of the
Corporation shall be managed under the direction of the Board. In addition to
the powers and authorities expressly conferred upon the Board by these Bylaws,
the Board may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute, by the Certificate of Incorporation or by
these Bylaws required to be exercised or done by the stockholders. Except as
provided in the following sentence with respect to actions with respect to the
matters set forth in Annex A hereto, all decisions of the Board shall require
the affirmative vote of a majority of
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the Directors present at a meeting at which a quorum is present. So long as each
of ▇▇▇▇▇▇▇▇ Petroleum Company, a Delaware corporation ("▇▇▇▇▇▇▇▇"), and Duke
Energy corporation, a North Carolina corporation ("Duke"), owns, directly or
indirectly, at least 20% of the Common Stock, no action shall be taken by the
Board with respect to the matters set forth in Annex A hereto without the prior
approval of at least eight of the 11 Directors of the Board.
Section 3.2. Number; Qualifications and Tenure. The number of the
Directors shall be 11. A Director need not be a stockholder of the Corporation.
Section 3.3. Regular Meetings. The Board shall meet at least
quarterly. The Board may, by resolution and notice to each of the Directors,
provide the time and place for the holding of additional regular meetings
without other notice than such resolution and notice to the Directors.
Section 3.4. Special Meetings. A special meeting of the Board may
be called at any time on two Business Days' prior notice at the request of (a)
the Chairman of the Board or (b) any four Directors. As used in these Bylaws,
the term "Business Day" shall mean any day on which banks are generally open to
conduct business in the State of New York. The place of any special meeting
shall be the corporate headquarters of the Corporation unless otherwise agreed
by a majority of the Directors.
Section 3.5. Notice. Written notice of all regular meetings of the
Board must be given to all Directors at least 15 days prior to the regular
meeting of the Board and two Business Days prior to any special meeting of the
Board. All notices and other communications to be given to Directors shall be
sufficiently given for all purposes hereunder if in writing and delivered by
hand, courier or overnight delivery service or three days after being mailed by
certified or registered mail, return receipt requested, with appropriate postage
prepaid, or when received in the form of a telegram or facsimile, and shall be
directed to the address or facsimile number as such Director shall designate by
notice to the Corporation. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board need be specified in the
notice of such meeting, except for amendments to these Bylaws, as provided under
Article VIII. A meeting may be held at any time without notice if all the
Directors are present or if those not present waive notice of the meeting in
accordance with Section 6.4.
Section 3.6. Action by Consent of Board. To the extent permitted by
applicable law, the Board and any committee thereof may act without a meeting so
long as all members of the Board or committee shall have executed a written
consent with respect to any Board action taken in lieu of a meeting.
Section 3.7. Conference Telephone Meetings. Members of the Board or
any committee thereof may participate in a meeting of the Board or such
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and such participation in a meeting shall constitute presence in person at such
meeting.
Section 3.8. Quorum. At least six Directors, present in person,
participating in accordance with Section 3.7 or represented by proxy, shall
constitute a quorum for the
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transaction of business, but if at any meeting of the Board there shall be less
than a quorum present, a majority of the Directors present may adjourn the
meeting from time to time without further notice. Subject to the supermajority
voting provisions of Section 3.1, the act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board.
The Directors present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough Directors
to leave less than a quorum.
Section 3.9. Vacancies; Increases in the Number of Directors.
Vacancies and newly created directorships resulting from any increase in the
authorized number of Directors may be filled by a majority of the Directors then
in office, although less than a quorum, or a sole remaining Director; and any
Director so chosen shall hold office until the next annual election and until
his successor shall be duly elected and shall qualify, unless sooner displaced.
Section 3.10. Executive and Other Committees. (a) The Board may
establish committees of the Board and, to the extent not inconsistent with the
supermajority voting provisions of Section 3.1, may delegate certain of its
responsibilities to such committees, provided that so long as each of ▇▇▇▇▇▇▇▇
and ▇▇▇▇ owns, directly or indirectly, at least 20% of the Common Stock, each
committee of the Board, other than the audit committee, shall include at least
one Director designated by ▇▇▇▇▇▇▇▇ who is not an Independent Director (as
hereinafter defined) and one Director designated by Duke who is not an
Independent Director.
(b) The Board shall have an audit committee comprised of
three Independent Directors, which audit committee shall establish a written
audit committee charter in accordance with the rules of the New York Stock
Exchange, Inc. (the "NYSE"), as amended from time to time. "Independent
Director" shall mean a Director meeting the independence and experience
requirements, as set forth by the NYSE as of ______________, 2000 for membership
on the audit committee of the Board, with respect to each of ▇▇▇▇▇▇▇▇, ▇▇▇▇ and
the Corporation.
(c) Unless the Board shall otherwise provide, a majority
of any committee may fix the time and place of its meetings and, subject to the
supermajority voting provisions of Section 3.1, may determine its action. Notice
of such meetings shall be given to each member of the committee in the manner
provided for in Section 3.5 of these Bylaws. Subject to Section 3.10(a), the
Board shall have power at any time to fill vacancies in, to change the
membership of, or to dissolve any such committee. Nothing herein shall be deemed
to prevent the Board from appointing one or more committees consisting in whole
or in part of persons who are not Directors; provided, however, that no such
committee shall have or may exercise any authority of the Board.
Section 3.11. Removal. Any Director or the entire Board may be
removed, with or without cause, by the holders of a majority of the Voting
Stock.
Section 3.12. Records. The Board shall cause to be kept a record
containing the minutes of the proceedings of the meetings of the Board and of
the stockholders, appropriate stock books and registers and such books of
records and accounts as may be necessary for the proper conduct of the business
of the Corporation.
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ARTICLE IV
OFFICERS
Section 4.1. Elected Officers. The executive officers of the
Corporation shall be selected by, and serve at the pleasure of, the Board. Such
officers shall have the authority and duties delegated to each of them,
respectively, by the Board from time to time. The elected officers of the
Corporation shall be a Chairman of the Board, a President, a Secretary, a
Treasurer, and such other officers (including, without limitation, Executive
Vice Presidents, Senior Vice Presidents and Vice Presidents) as the Board from
time to time may deem proper. The Chairman of the Board shall be chosen from
among the Directors. All officers elected by the Board shall each have such
powers and duties as generally pertain to their respective offices, subject to
the specific provisions of this Article IV. The Board or any committee thereof
may from time to time elect, or the Chairman of the Board may appoint, such
other officers (including one or more Vice Presidents, Controllers, Assistant
Secretaries and Assistant Treasurers), as may be necessary or desirable for the
conduct of the business of the Corporation. Such other officers and agents shall
have such duties and shall hold their offices for such terms as shall be
provided in these Bylaws or as may be prescribed by the Board or such committee
or by the Chairman of the Board, as the case may be.
Section 4.2. Election and Term of Office. The elected officers of
the Corporation shall be elected annually by the Board at the regular meeting of
the Board held after the annual meeting of the stockholders. If the election of
officers shall not be held at such meeting, such election shall be held as soon
thereafter as convenient. Each officer shall hold office until such person's
successor shall have been duly elected and shall have qualified or until such
person's death or until he shall resign or be removed pursuant to Section 4.8.
Section 4.3. Chairman of the Board; Chief Executive Officer. The
Chairman of the Board shall preside at all meetings of the stockholders and of
the Board and shall be the Chief Executive Officer of the Corporation. The
Chairman of the Board shall be responsible for the general management of the
affairs of the Corporation and shall perform all duties incidental to such
person's office which may be required by law and all such other duties as are
properly required of him by the Board. He shall make reports to the Board and
the stockholders and shall see that all orders and resolutions of the Board and
of any committee thereof are carried into effect. The Chairman of the Board may
also serve as President, if so elected by the Board. The Directors also may
elect a vice-chairman to act in the place of the Chairman upon his or her
absence or inability to act.
Section 4.4. President. The President shall act in a general
executive capacity and shall assist the Chairman of the Board in the
administration and operation of the Corporation's business and general
supervision of its policies and affairs. The President, if he is also a
director, shall, in the absence of or because of the inability to act of the
Chairman of the Board, perform all duties of the Chairman of the Board and
preside at all meetings of stockholders and of the Board.
Section 4.5. Vice Presidents. Each Executive Vice President and
Senior Vice President and any Vice President shall have such powers and shall
perform such duties as shall be assigned to him by the Board or the Chairman of
the Board.
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Section 4.6. Treasurer. (a) The Treasurer shall exercise general
supervision over the receipt, custody and disbursement of corporate funds. The
Treasurer shall cause the funds of the Corporation to be deposited in such banks
as may be authorized by the Board, or in such banks as may be designated as
depositories in the manner provided by resolution of the Board. The Treasurer
shall, in general, perform all duties incident to the office of the Treasurer
and shall have such further powers and duties and shall be subject to such
directions as may be granted or imposed from time to time by the Board or the
Chairman of the Board.
Section 4.7. Secretary. (a) The Secretary shall keep or cause to be
kept, in one or more books provided for that purpose, the minutes of all
meetings of the Board, the committees of the Board and the stockholders. The
Secretary shall see that all notices are duly given in accordance with the
provisions of these Bylaws and as required by law; shall be custodian of the
records and the seal of the Corporation and affix and attest the seal to all
stock certificates of the Corporation (unless the seal of the Corporation on
such certificates shall be a facsimile, as hereinafter provided) and affix and
attest the seal to all other documents to be executed on behalf of the
Corporation under its seal; and shall see that the books, reports, statements,
certificates and other documents and records required by law to be kept and
filed are properly kept and filed; and in general, shall perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to the Secretary by the Board or the Chairman of the Board.
(b) Assistant Secretaries shall have such of the authority
and perform such of the duties of the Secretary as may be provided in these
Bylaws or assigned to them by the Board, the Chairman of the Board or the
Secretary. Assistant Secretaries shall assist the Secretary in the performance
of the duties assigned to the Secretary, and in assisting the Secretary, each
Assistant Secretary shall for such purpose have the powers of the Secretary.
During the Secretary's absence or inability, the Secretary's authority and
duties shall be possessed by such Assistant Secretary or Assistant Secretaries
as the Board or the Chairman of the Board may designate.
Section 4.8. Removal. Any officer elected, or agent appointed, by
the Board may be removed by the affirmative vote of a majority of the Board
whenever, in its judgment, the best interests of the Corporation would be served
thereby. Any officer or agent appointed by the Chairman of the Board may be
removed by him whenever, in the judgment of the Chairman of the Board, the best
interests of the Corporation would be served thereby. No elected officer shall
have any contractual rights against the Corporation for compensation by virtue
of such election beyond the date of the election of such person's successor,
such person's death, such person's resignation or such person's removal,
whichever event shall first occur, except as otherwise provided in an employment
contract or under an employee deferred compensation plan.
Section 4.9. Vacancies. A newly created elected office and a
vacancy in any elected office because of death, resignation or removal may be
filled by the Board for the unexpired portion of the term at any meeting of the
Board. Any vacancy in an office appointed by the Chairman of the Board because
of death, resignation or removal may be filled by the Chairman of the Board.
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ARTICLE V
STOCK CERTIFICATES AND TRANSFERS
Section 5.1. Stock Certificates and Transfers. The interest of each
stockholder of the Corporation shall be evidenced by certificates for shares of
stock in such form as the appropriate officers of the Corporation may from time
to time prescribe. The shares of the stock of the Corporation shall be
transferred on the books of the Corporation by the holder thereof in person or
by such person's attorney, upon surrender for cancellation of certificates for
at least the same number of shares, with an assignment and power of transfer
endorsed thereon or attached thereto, duly executed, with such proof of the
authenticity of the signature as the Corporation or its agents may reasonably
require. The certificates of stock shall be signed, countersigned and registered
in such manner as the Board may by resolution prescribe, which resolution may
permit all or any of the signatures on such certificates to be in facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate has ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue. Notwithstanding the foregoing
provisions regarding share certificates, the proper officers of the Corporation
may provide that some or all of any or all classes or series of the
Corporation's common or any preferred shares may be uncertificated shares.
Section 5.2. Lost, Stolen or Destroyed Certificates. No certificate
for shares of stock in the Corporation shall be issued in place of any
certificate alleged to have been lost, destroyed or stolen, except on production
of such evidence of such loss, destruction or theft and on delivery to the
Corporation of a bond of indemnity in such amount, upon such terms and secured
by such surety, as the Board or any financial officer may in its or such
person's discretion require.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1. Fiscal Year. The fiscal year of the Corporation
shall begin on the first day of January and end on the thirty-first day of
December of each year.
Section 6.2. Dividends. The Board may from time to time declare,
and the Corporation may pay, dividends on its outstanding shares in the manner
and upon the terms and conditions provided by law and the Certificate of
Incorporation.
Section 6.3. Seal. The corporate seal, if any, shall have
inscribed thereon the words "Corporate Seal," the year of incorporation and the
word "Delaware."
Section 6.4. Waiver of Notice. Whenever any notice is required to
be given to any stockholder or Director under the provisions of the DGCL or
these Bylaws, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice. Neither the business to be
transacted at, nor the purpose of, any annual or special meeting of the
stockholders or the Board or committee thereof need be specified in any waiver
of notice of such meeting.
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Section 6.5. Audits. The accounts, books and records of the
Corporation shall be audited upon the conclusion of each fiscal year by an
independent certified public accountant selected by the Board, and it shall be
the duty of the Board to cause such audit to be done annually.
Section 6.6. Resignations. Any Director or any officer, whether
elected or appointed, may resign at any time by giving written notice of such
resignation to the Chairman of the Board or the Secretary, and such resignation
shall be deemed to be effective as of the close of business on the date said
notice is received by the Chairman of the Board of the Secretary, or at such
later time as is specified therein. No formal action shall be required of the
Board or the stockholders to make any such resignation effective.
ARTICLE VII
CONTRACTS, PROXIES, ETC.
Section 7.1. Contracts. Except as otherwise required by law, the
Certificate of Incorporation, a Preferred Stock Designation or these Bylaws, any
contracts or other instruments may be executed and delivered in the name and on
the behalf of the Corporation by such officer or officers of the Corporation as
the Board may from time to time direct. Such authority may be general or
confined to specific instances as the Board may determine. The Chairman of the
Board, the President or any Executive Vice President, Senior Vice President or
Vice President may execute bonds, contracts, deeds, leases and other instruments
to be made or executed for or on behalf of the Corporation. Subject to any
restrictions imposed by the Board, the Chairman of the Board, the President or
any Executive Vice President, Senior Vice President or Vice President of the
Corporation may delegate contractual powers to others under such person's
jurisdiction, it being understood, however, that any such delegation of power
shall not relieve such officer of responsibility with respect to the exercise of
such delegated power.
Section 7.2. Proxies. Unless otherwise provided by resolution
adopted by the Board, the Chairman of the Board, the President or any Executive
Vice President, Senior Vice President or Vice President may from time to time
appoint an attorney or attorneys or agent or agents of the Corporation, in the
name and on behalf of the Corporation, to cast the votes which the Corporation
may be entitled to cast as the holder of stock or other securities in any other
corporation, any of whose stock or other securities may be held by the
Corporation, at meetings of the holders of the stock or other securities of such
other corporation, or to consent in writing, in the name of the Corporation as
such holder, to any action by such other corporation, and may instruct the
person or persons so appointed as to the manner of casting such votes or giving
such consent, and may execute or cause to be executed in the name and on behalf
of the Corporation and under its corporate seal or otherwise, all such written
proxies or other instruments as he may deem necessary or proper in the premises.
ARTICLE VIII
AMENDMENTS
These Bylaws, including this Article VIII, may be altered, amended
or repealed and new Bylaws may be adopted (a) at any annual or special meeting
of stockholders by the affirmative vote of the holders of a majority of the
voting power of the stock issued and
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outstanding and entitled to vote thereat or (b) by the affirmative vote of a
majority of the Board; provided, however, that so long as each of Duke and
▇▇▇▇▇▇▇▇ owns at least 20%, directly or indirectly, of the Common Stock, any
proposed alteration, amendment or repeal of, or the adoption of any Bylaw
inconsistent with Sections 3.1 through 3.11 or this Article VIII, by the
stockholders or the Board shall require the consent of both Duke and ▇▇▇▇▇▇▇▇;
and provided, further, that, in the case of any such stockholder action at a
special meeting of stockholders, notice of the proposed alteration, amendment,
repeal or adoption of such Bylaws must be contained in the notice of such
special meeting.
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ANNEX A
SUPER-MAJORITY ITEMS
1. Compensation policies for employees of the Corporation, including
specific compensation and benefit plans and programs, to the extent
such policies are of the type that would customarily be considered
by a compensation committee of the board of directors of a
comparably sized, publicly-traded corporation; provided, however,
that these policies shall not include the hiring and firing and
compensation of senior officers and managers, evaluating their
performance and planning for their succession.
2. Entering a new line of business outside of the midstream gas
gathering, processing, marketing and transportation businesses (and
directly related activities) in the United States and Canada.
3. A change in auditors.
4. The following transactions:
a) Any merger, consolidation, recapitalization, acquisition,
divestiture, joint venture or alliance (or a related
series of such transactions) involving the acquisition
or expenditure (in the form of cash or otherwise) of in
excess of $200,000,000 in value to or from the
Corporation;
b) Any shut-down of a facility having a fair market value in
excess of $100,000,000;
c) Entering into any sales contract or commitment that has a
term of 5 years or more and that involves annual revenues to
the Corporation in excess of 5% of the Corporation's total
annual sales revenues for the most recently completed fiscal
year;
d) Liquidation or dissolution of the Corporation.
5. Any capital expenditure in excess of $200,000,000 (other than a
capital expenditure to effect any merger, consolidation,
recapitalization, acquisition, divestiture, joint venture or
alliance).
6. Any borrowing in excess of $200,000,000.
7. The settlement of actions or claims against the Corporation
involving payment by the Corporation of in excess of $25,000,000,
excluding amounts covered or reimbursed by insurance.
8. Entering into transactions with either Duke or ▇▇▇▇▇▇▇▇ or
Affiliates of either on terms that are clearly less favorable than
those terms that are within the range of comparable transactions
between unaffiliated third parties.
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If a particular action that the Corporation proposes to take is reflected in an
operating or capital budget of the Corporation that has been approved by eight
or more directors, no further approval of such action is required before it may
be taken, notwithstanding the inclusion of such action in this Annex A.
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EXHIBIT C
to
AGREEMENT OF
MERGER
Terms of PGCSI Parent Rights
1. Definitions. As used in this Exhibit C, the following terms
shall have the meanings set forth below (terms not defined herein shall have
the meanings specified therefor in the Agreement of Merger):
(a) "Agreement of Merger" means the Agreement of Merger to which
this Exhibit C is annexed.
(b) "Average Market Price" shall mean, with respect to the Surviving
Corporation Common Stock, the average of the closing prices, as reported
on the NYSE Composite Tape, on each of the first five days of trading on
the NYSE (exclusive of the pricing day).
(c) "Determination Date" shall mean the sixth day of trading of the
Surviving Corporation Common Stock on the NYSE (exclusive of the pricing
day).
(d) "Duke's Corporation Interest" shall mean the difference between
(x) the Parties' Corporation Interest and (y) ▇▇▇▇▇▇▇▇' Corporation
Interest.
(e) "Enterprise Value" shall mean the sum of (x) the Parties' Equity
Value and (y) $2,400,000,000; PROVIDED that, if the Effective Time is on
or after the date two years after the consummation of the Contribution
Closing, "Enterprise Value" shall mean $5,500,000,000.
(f) "IPO" shall mean the initial offering of shares of Surviving
Corporation Common Stock to the public in a transaction registered under
the Securities Act of 1933, as amended.
(g) "NYSE" shall mean the New York Stock Exchange, Inc.
(h) "Parties' Corporation Interest" shall mean the difference
between (x) 100% and (y) the Public's Corporation Interest.
(i) "Parties' Equity Value" shall mean the product of (i) the
quotient of (x) the Parties' Corporation Interest divided by (y) the
Public's Actual Corporation Interest multiplied by (ii) the Public's
Equity Value.
(j) "PGCSI Parent" shall mean ▇▇▇▇▇▇▇▇ Petroleum Company.
(k) "▇▇▇▇▇▇▇▇' Corporation Interest" shall mean the quotient,
expressed as a percentage, of (x) ▇▇▇▇▇▇▇▇ Equity Value divided by (y)
Total Equity Value.
(l) "▇▇▇▇▇▇▇▇ Enterprise Value" shall mean the product of (x) the
Enterprise Value and (y) .389.
(m) "▇▇▇▇▇▇▇▇ Equity Value" shall mean the difference between (x)
▇▇▇▇▇▇▇▇ Enterprise Value and (y) $1,200,000,000.
(n) "Public's Actual Corporation Interest" shall mean the quotient,
expressed as a percentage, of (x) [___][1] divided by (y) [___] [2].
(o) "Public's Corporation Interest" shall mean the quotient,
expressed as a percentage, of (x) [___] [3] divided by (y) [___] [2].
(p) "Public's Equity Value" shall mean the product of (i) the
Average Market Price multiplied by (ii) the number of shares sold by the
Surviving Corporation in the IPO (which excludes shares issued to officers
and employees of the Surviving Corporation or the Company concurrently
with the IPO pursuant to compensation or benefit plans), but excluding any
shares sold pursuant to the underwriters' over-allotment option.
(q) "Surviving Corporation Common Stock" shall mean the common
stock, par value $.01 per share, of the Surviving Corporation.
(r) "Total Equity Value" shall mean the quotient of (x) the Public's
Equity Value divided by (y) the Public's Actual Corporation Interest.
2. Non-Transferability.
2.1 The right of PGCSI Parent to receive the ▇▇▇▇▇▇▇▇ Additional
Shares (as defined herein) will not be represented by certificates.
2.2 The right of PGCSI Parent to receive the ▇▇▇▇▇▇▇▇ Additional
Shares may not be sold, assigned, conveyed, pledged, hypothecated or
otherwise transferred by PGCSI Parent, and Surviving Corporation shall not
record or recognize any such attempted transfer, except by will or under
the laws of descent and distribution, or otherwise by operation of
applicable law. Any such attempted sale, assignment, conveyance, pledge,
hypothecation or other transfer shall be null and void and without effect.
------------------------
[1] equal to the number of shares of Surviving Corporation Common Stock sold by
the Surviving Corporation in the IPO (which excludes shares issued to officers
and employees of the Surviving Corporation or the Company concurrently with the
IPO pursuant to compensation or benefit plans), but excluding any shares sold
pursuant to the underwriters' over-allotment option.
[2] equal to the number of shares of Surviving Corporation Common Stock to be
outstanding immediately after the Merger (including shares to be issued pursuant
to rights received in the Merger) and the IPO, plus shares issued to officers
and employees of the Surviving Corporation or the Company concurrently with the
IPO pursuant to compensation or benefit plans, but excluding any shares sold
pursuant to the underwriters' over-allotment option.
[3] equal to the number of shares of Surviving Corporation Common Stock sold by
the Surviving Corporation in the IPO, plus any shares issued to officers and
employees of the Surviving Corporation or the Company concurrently with the IPO
pursuant to compensation or benefit plans, but excluding any shares sold
pursuant to the underwriters' over-allotment option.
2
3. Distribution of ▇▇▇▇▇▇▇▇ Additional Shares.
3.1. ▇▇▇▇▇▇▇▇ Additional Shares.
(a) Following the Determination Date, the Surviving Corporation
shall issue to PGCSI Parent a number of shares of the Surviving
Corporation Common Stock (which shares shall be validly issued, fully paid
and nonassessable) equal to (i) the ▇▇▇▇▇▇▇▇ Corporation Interest
multiplied by _______ [4], less (ii) ______________ shares [5] (the
"▇▇▇▇▇▇▇▇ Additional Shares"). Certificates representing the ▇▇▇▇▇▇▇▇
Additional Shares shall be delivered by the Surviving Corporation to PGCSI
Parent within two (2) business days following the Determination Date.
(b) Notwithstanding the provisions of subsection 3.1(a) hereof, the
Surviving Corporation shall not issue any fractional shares of Surviving
Corporation Common Stock to PGCSI Parent. To the extent it would otherwise
be required to issue fractional shares of Surviving Corporation Common
Stock to PGCSI Parent pursuant to such subsection, the Surviving
Corporation shall in lieu thereof pay cash in an amount equal to the
fractional share percentage multiplied by the Average Market Price. Such
payment for fractional shares shall be forwarded to PGCSI Parent
simultaneously with forwarding the ▇▇▇▇▇▇▇▇ Additional Shares.
3.2 Certain Adjustments. For all purposes hereof, all calculations
required to be made pursuant to this Exhibit shall be appropriately
adjusted to take into account any stock dividend, stock split, combination
of shares, or reclassification, or any merger, consolidation, spin-off, or
partial or complete liquidation of the Surviving Corporation occurring
during the period commencing on the date hereof and terminating on the
distribution of the Surviving Corporation Common Stock pursuant hereto.
4. Notices. Except as otherwise expressly set forth herein, any notice,
request, instruction, correspondence or other document to be given thereunder by
any party to another party (herein collectively in this Section 4 called a
"Notice") shall be in writing and delivered personally or mailed by registered
or certified mail, postage prepaid and return receipt requested (except in such
case where mailing by first class mail is expressly permitted), or sent by
telecopier, as follows:
----------------------
[4] equal to the number of shares of Surviving Corporation Common Stock
to be outstanding immediately after the Merger (including shares to be issued
pursuant to rights received in the Merger) and the IPO, plus shares issued to
officers and employees of the Surviving Corporation or the Company concurrently
with the IPO pursuant to compensation or benefits plans, but excluding any
shares sold pursuant to the underwriters' over-allotment option.
[5] equal to the number of shares initially issued to PGCSI Parent in the Merger
(i.e., the same blank in 3.1(e) of Merger Agreement).
3
(a) If to the Surviving Corporation, addressed to:
Duke Energy Field Services Corporation
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Duke Energy Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (713) ▇▇▇- ▇▇▇▇
(b) If to PGCSI Parent, addressed to:
▇▇▇▇▇▇▇▇ Petroleum Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any Notice given by personal delivery or mail shall be effective upon actual
receipt. Any Notice given by telecopier shall be effective upon actual receipt
if received during the recipient's normal
4
business hours, or at the beginning of the recipient's next business day after
receipt if not received during the recipient's normal business hours. Any party
may change any address to which a Notice is to be given to it by giving a Notice
of such change of address as provided above.
5
EXHIBIT D
to
AGREEMENT OF
MERGER
Terms of DENG Rights
1. Definitions. As used in this Exhibit D, the following terms shall
have the meanings set forth below (terms not defined herein shall have the
meanings specified therefor in the Agreement of Merger):
(a) "Agreement of Merger" means the Agreement of Merger to which
this Exhibit D is annexed.
(b) "Average Market Price" shall mean, with respect to the Surviving
Corporation Common Stock, the average of the closing prices, as reported
on the NYSE Composite Tape, on each of the first five days of trading on
the NYSE (exclusive of the pricing day).
(c) "DENG" shall mean Duke Energy Natural Gas Corporation.
(d) "Determination Date" shall mean the sixth day of trading of the
Surviving Corporation Common Stock on the NYSE (exclusive of the pricing
day).
(e) "Duke's Corporation Interest" shall mean the difference between
(x) the Parties' Corporation Interest and (y) ▇▇▇▇▇▇▇▇' Corporation
Interest.
(f) "Enterprise Value" shall mean the sum of (x) the Parties' Equity
Value and (y) $2,400,000,000; PROVIDED that, if the Effective Time is on
or after the date two years after the consummation of the Contribution
Closing, "Enterprise Value" shall mean $5,500,000,000.
(g) "IPO" shall mean the initial offering of shares of Surviving
Corporation Common Stock to the public in a transaction registered under
the Securities Act of 1933, as amended.
(h) "NYSE" shall mean the New York Stock Exchange, Inc.
(i) "Parties' Corporation Interest" shall mean the difference
between (x) 100% and (y) the Public's Corporation Interest.
(j) "Parties' Equity Value" shall mean the product of (i) the
quotient of (x) the Parties' Corporation Interest divided by (y) the
Public's Actual Corporation Interest multiplied by (ii) the Public's
Equity Value.
(k) "▇▇▇▇▇▇▇▇' Corporation Interest" shall mean the quotient,
expressed as a percentage, of (x) ▇▇▇▇▇▇▇▇ Equity Value divided by (y)
Total Equity Value.
(l) "▇▇▇▇▇▇▇▇ Enterprise Value" shall mean the product of (x) the
Enterprise Value and (y) .389.
(m) "▇▇▇▇▇▇▇▇ Equity Value" shall mean the difference between (x)
▇▇▇▇▇▇▇▇ Enterprise Value and (y) $1,200,000,000.
(n) "Public's Actual Corporation Interest" shall mean the
quotient, expressed as a percentage, of (x) [___][1] divided by (y)
[___] [2].
(o) "Public's Corporation Interest" shall mean the quotient,
expressed as a percentage, of (x) [___] [3] divided by (y) [___] [2].
(p) "Public's Equity Value" shall mean the product of (i) the
Average Market Price multiplied by (ii) the number of shares sold by the
Surviving Corporation in the IPO (which excludes shares issued to officers
and employees of the Surviving Corporation or the Company concurrently
with the IPO pursuant to compensation or benefit plans), but excluding any
shares sold pursuant to the underwriters' over-allotment option.
(q) "Surviving Corporation Common Stock" shall mean the common
stock, par value $.01 per share, of the Surviving Corporation.
(r) "Total Equity Value" shall mean the quotient of (x) the Public's
Equity Value divided by (y) the Public's Actual Corporation Interest.
2. Non-Transferability.
2.1 The right of DENG to receive the Duke Additional Shares (as
defined herein) will not be represented by certificates.
2.2 The right of DENG to receive the Duke Additional Shares may not
be sold, assigned, conveyed, pledged, hypothecated or otherwise
transferred by DENG, and Surviving Corporation shall not record or
recognize any such attempted transfer, except by will or under the laws of
descent and distribution, or otherwise by operation of applicable law. Any
such attempted sale, assignment, conveyance, pledge, hypothecation or
other transfer shall be null and void and without effect.
--------------------
[1] equal to the number of shares of Surviving Corporation Common Stock sold by
the Surviving Corporation in the IPO (which excludes shares issued to officers
and employees of the Surviving Corporation or the Company concurrently with the
IPO pursuant to compensation or benefit plans), but excluding any shares sold
pursuant to the underwriters' over-allotment option.
[2] equal to the number of shares of Surviving Corporation Common Stock to be
outstanding immediately after the Merger (including shares to be issued pursuant
to rights received in the Merger) and the IPO, plus shares issued to officers
and employees of the Surviving Corporation or the Company concurrently with the
IPO pursuant to compensation or benefit plans, but excluding any shares sold
pursuant to the underwriters' over-allotment option.
[3] equal to the number of shares of Surviving Corporation Common Stock sold by
the Surviving Corporation in the IPO, plus any shares issued to officers and
employees of the Surviving Corporation or the Company concurrently with the IPO
pursuant to compensation or benefit plans, but excluding any shares sold
pursuant to the underwriters' over-allotment option.
2
3. Distribution of Duke Additional Shares.
3.1. Duke Additional Shares.
(a) Following the Determination Date, the Surviving Corporation
shall issue to DENG a number of shares of the Surviving Corporation Common
Stock (which shares shall be validly issued, fully paid and nonassessable)
equal to (i) the Duke Corporation Interest multiplied by _______ [4], less
(ii) ______________ shares [5] (the "Duke Additional Shares").
Certificates representing the Duke Additional Shares shall be delivered by
the Surviving Corporation to DENG within two (2) business days following
the Determination Date.
(b) Notwithstanding the provisions of subsection 3.1(a) hereof, the
Surviving Corporation shall not issue any fractional shares of Surviving
Corporation Common Stock to DENG. To the extent it would otherwise be
required to issue fractional shares of Surviving Corporation Common Stock
to DENG pursuant to such subsection, the Surviving Corporation shall in
lieu thereof pay cash in an amount equal to the fractional share
percentage multiplied by the Average Market Price. Such payment for
fractional shares shall be forwarded to DENG simultaneously with
forwarding the Duke Additional Shares.
3.2 Certain Adjustments. For all purposes hereof, all calculations
required to be made pursuant to this Exhibit shall be appropriately
adjusted to take into account any stock dividend, stock split, combination
of shares, or reclassification, or any merger, consolidation, spin-off, or
partial or complete liquidation of the Surviving Corporation occurring
during the period commencing on the date hereof and terminating on the
distribution of the Surviving Corporation Common Stock pursuant hereto.
4. Notices. Except as otherwise expressly set forth herein, any notice,
request, instruction, correspondence or other document to be given thereunder by
any party to another party (herein collectively in this Section 4 called a
"Notice") shall be in writing and delivered personally or mailed by registered
or certified mail, postage prepaid and return receipt requested (except in such
case where mailing by first class mail is expressly permitted), or sent by
telecopier, as follows:
--------------------
[4] equal to the number of shares of Surviving Corporation Common Stock
to be outstanding immediately after the Merger (including shares to be issued
pursuant to rights received in the Merger) and the IPO, plus shares issued to
officers and employees of the Surviving Corporation or the Company concurrently
with the IPO pursuant to compensation or benefits plans, but excluding any
shares sold pursuant to the underwriters' over-allotment option.
[5] equal to the number of shares initially issued to DENG in the Merger (i.e.,
the same blank in 3.1(f) of Merger Agreement).
3
(a) If to the Surviving Corporation, addressed to:
Duke Energy Field Services Corporation
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Duke Energy Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (713) ▇▇▇- ▇▇▇▇
(b) If to DENG, addressed to:
Duke Energy Natural Gas Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (713) ▇▇▇- ▇▇▇▇
4
Any Notice given by personal delivery or mail shall be effective upon actual
receipt. Any Notice given by telecopier shall be effective upon actual receipt
if received during the recipient's normal business hours, or at the beginning of
the recipient's next business day after receipt if not received during the
recipient's normal business hours. Any party may change any address to which a
Notice is to be given to it by giving a Notice of such change of address as
provided above.
5
EXHIBIT B
TO
PARENT COMPANY
AGREEMENT
SHAREHOLDERS AGREEMENT
by and among
DUKE ENERGY NATURAL GAS CORPORATION
and
▇▇▇▇▇▇▇▇ PETROLEUM COMPANY
Dated as of _________ __, 2000
TABLE OF CONTENTS
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Definitions......................................................1
Section 1.2 Construction.....................................................4
ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Composition of the Corporation Board.............................5
Section 2.2 Removal and Replacement of Directors.............................5
ARTICLE III
OTHER AGREEMENTS
Section 3.1 Special Buy-out Right............................................6
ARTICLE IV
LIQUIDITY AND TRANSFER RESTRICTIONS
Section 4.1 Right of First Offer.............................................7
Section 4.2 Change of Control................................................8
Section 4.3 Open Market Purchases and Transfers.............................10
Section 4.4 Affiliate Transfers.............................................10
Section 4.5 Void Transfers..................................................10
ARTICLE V
TERMINATION
Section 5.1 Termination.....................................................10
ARTICLE VI
MISCELLANEOUS
Section 6.1 Counterparts....................................................11
Section 6.2 Governing Law; Jurisdiction and Forum; Waiver of Jury Trial.....11
Section 6.3 Entire Agreement................................................11
Section 6.4 Expenses........................................................11
Section 6.5 Notices.........................................................12
Section 6.6 Successors and Assigns..........................................13
Section 6.7 Headings; Definitions...........................................13
Section 6.8 Amendments and Waivers..........................................13
Section 6.9 Severability....................................................14
Section 6.10 Interpretation..................................................14
Section 6.11 Specific Performance............................................14
-i-
SHAREHOLDERS AGREEMENT, dated as of ____________, 2000 (this
"Agreement"), by and among DUKE ENERGY NATURAL GAS CORPORATION, a Delaware
corporation ("DENG"), and ▇▇▇▇▇▇▇▇ PETROLEUM COMPANY, a Delaware corporation
("PGCSI Parent" or "▇▇▇▇▇▇▇▇").
RECITALS
1. DENG, an indirect wholly owned subsidiary of Duke Energy
Corporation, a North Carolina corporation ("Duke"), and PGCSI Parent are
currently Shareholders (as defined below) of Duke Energy Field Services
Corporation (the "Corporation").
2. The Shareholders desire to set forth herein the terms and
conditions concerning their ownership of and cooperation concerning the
Corporation.
NOW, THEREFORE, in consideration of the premises and the covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and intending to
be legally bound hereby, the Shareholders agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following
terms shall have the respective meanings set forth below:
"Affiliate" shall mean, with respect to any Person, a Person
directly or indirectly Controlling, Controlled by or under common Control with
such Person.
"Agreement" shall have the meaning set forth in the Preamble.
"Appraiser Committee" shall have the meaning set forth in Section
3.1(b).
"Business Day" shall mean any day on which banks are generally open
to conduct business in the State of New York.
"Buy-Out Notice" shall have the meaning set forth in Section 3.1(a).
"Buy-Out Right" shall have the meaning set forth in Section 3.1(a).
"Change of Control" shall mean an event (such as a Transfer of
voting securities) that causes a Person that holds a Corporation Interest to
cease to be Controlled by such Person's Parent; PROVIDED, HOWEVER, that an event
that causes Duke or ▇▇▇▇▇▇▇▇ to be Controlled by another Person shall not
constitute a Change of Control, and a Transfer by either a Duke Shareholder or a
▇▇▇▇▇▇▇▇ Shareholder of its Corporation Interest shall not constitute a Change
of Control (it being the intent of the parties that such Transfers shall be
governed by and subject to the right of first offer provisions set forth in
Section 4.1 hereof).
"Changing Party" shall have the meaning set forth in Section 4.2(b).
"Changing Party Appraiser" shall have the meaning set forth in
Section 4.2(c).
"Contribution Agreement" shall mean the Contribution Agreement by
and among ▇▇▇▇▇▇▇▇, ▇▇▇▇ and Duke Energy Field Services L.L.C., dated as of
December 16, 1999.
"Control" shall mean the possession, directly or indirectly, through
one or more intermediaries, by any Person or group (within the meaning of
Section 13(d)(3) under the Securities Exchange Act of 1934, as amended) of both
of the following:
(a) (i) in the case of a corporation, more than 25% of the direct or
indirect economic interests in the outstanding equity securities thereof; (ii)
in the case of a limited liability company, partnership, limited partnership or
venture, the right to more than 25% of the distributions therefrom (including
liquidating distributions); (iii) in the case of a trust or estate, including a
business trust, more than 25% of the beneficial interest therein; and (iv) in
the case of any other entity, more than 25% of the economic or beneficial
interest therein; and
(b) in the case of any entity, the power or authority, through
ownership of voting securities, by contract or otherwise, to control or direct
the management and policies of the entity.
"Control Acceptance" shall have the meaning set forth in Section
4.2(b).
"Control Appraiser Committee" shall have the meaning set forth in
Section 4.2(c).
"Control Notice" shall have the meaning set forth in Section 4.2(b).
"Control Offer Period" shall have the meaning set forth in Section
4.2(b).
"Corporation" shall have the meaning set forth in the Preamble.
"Corporation Board" shall have the meaning set forth in Section 2.1.
"Corporation Common Stock" shall mean the common stock, par value
$0.01 per share, of the Corporation.
"Corporation Interest" shall mean, with respect to any Person, such
Person's percentage ownership (direct and indirect), exclusive of any Market
Shares owned (directly or indirectly) by such Person, of the outstanding
Corporation Common Stock at the time of measurement.
"DENG" shall have the meaning set forth in the Preamble.
"Director" shall mean one or more of the members of the Corporation
Board, as the context may require.
"Duke" shall have the meaning set forth in the Recitals.
"Duke Appraiser" shall have the meaning set forth in Section 3.1(a).
-2-
"Duke Directors" shall have the meaning set forth in Section 2.1.
"Duke Shareholder" shall mean the holder of any Corporation Common
Stock (other than Market Shares) that is Duke or a Subsidiary of Duke or, if at
any time there is more than one such holder, each of such holders.
"Fair Market Value" shall mean, with respect to any Person's
Corporation Interest, a purchase price equal to the value that would be obtained
for such Corporation Interest in an arm's-length transaction between an informed
and willing buyer under no compulsion to buy and an informed and willing seller
under no compulsion to sell such Corporation Interest.
"GAAP" shall mean generally accepted accounting principles in the
United States.
"Governmental Entity" shall mean any federal, state, political
subdivision or other governmental agency or instrumentality, foreign or
domestic.
"Independent Directors" shall mean directors meeting the
independence and experience requirements, as set forth by the New York Stock
Exchange as of the date of the IPO for membership on an audit committee of a
board of directors, with respect to each of PGCSI Parent, DENG, Duke and the
Corporation.
"IPO" shall mean the initial offering of shares of Corporation
Common Stock to the public in a transaction registered under the Securities Act.
"Market Shares" shall mean shares purchased by a Person through
open-market purchases, other than those shares purchased to prevent dilution in
accordance with Article X of the Certificate of Incorporation of the
Corporation.
"Neutral Appraiser" shall have the meaning set forth in Section
3.1(b).
"Neutral Control Appraiser" shall have the meaning set forth in
Section 4.2(c).
"Non-Changing Party" shall have the meaning set forth in Section
4.2(b).
"Non-Changing Party Appraiser" shall have the meaning set forth in
Section 4.2(b).
"Non-Transferring Entity" shall have the meaning set forth in
Section 4.1.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Parent" shall mean, with respect to a particular Person, the Person
that Controls such particular Person and that is not itself Controlled by any
other Person.
"Party" shall mean each of DENG and PGCSI Parent and any Affiliates
of Duke or ▇▇▇▇▇▇▇▇, respectively, who become party hereto in accordance with
Section 4.4.
"Person" shall mean any individual, partnership, limited liability
company, firm, corporation, association, joint venture, trust or other entity or
any Governmental Entity.
-3-
"PGCSI Parent" shall have the meaning set forth in the Preamble.
"▇▇▇▇▇▇▇▇" shall have the meaning set forth in the Preamble.
"▇▇▇▇▇▇▇▇ Appraiser" shall have the meaning set forth in Section
3.1(b).
"▇▇▇▇▇▇▇▇ Directors" shall have the meaning set forth in Section
2.1.
"▇▇▇▇▇▇▇▇ Shareholder" shall mean the holder of any Corporation
Common Stock (other than Market Shares) that is ▇▇▇▇▇▇▇▇ or a Subsidiary of
▇▇▇▇▇▇▇▇ or, if at any time there is more than one such holder, each of such
holders.
"▇▇▇▇▇▇▇▇ Veto" shall mean the failure of the requisite number of
directors of the Corporation Board to vote in favor of any of the actions
described in Exhibit B hereto where none of the ▇▇▇▇▇▇▇▇ Directors voted in
favor of such action; PROVIDED, HOWEVER, that if any of the Duke Directors
failed to vote in favor of such action, such failure of the requisite number of
directors of the Corporation Board to vote in favor of such action shall not
constitute a ▇▇▇▇▇▇▇▇ Veto.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shareholder" shall have the meaning set forth in Section 4.1.
"Subsidiary" shall mean, when used with respect to any Person, any
Affiliate of such Person that is Controlled by such Person.
"Total Corporation Interest" shall mean, with respect to any Person,
the sum of (i) such Person's Corporation Interest and (ii) any Market Shares
owned (directly or indirectly) by such Person (expressed as a percentage of the
outstanding Corporation Common Stock at the time of measurement).
"Transfer" shall mean any sale, assignment or other transfer,
whether by operation of law or otherwise (but not any deemed transfer pursuant
to ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Internal Revenue Code of 1986, as amended,
of the assets of a corporation or its Subsidiary in connection with the purchase
of the stock of such corporation).
"Transfer Notice" shall have the meaning set forth in Section 4.1.
"Transferring Entity" shall have the meaning set forth in Section
4.1.
Section 1.2 Construction. Unless the context requires otherwise:
(a) the gender (or lack of gender) of all words used in this Agreement includes
the masculine, feminine and neuter; (b) references to Articles and Sections
refer to Articles and Sections of this Agreement; (c) references to Exhibits
refer to the Exhibits attached to this Agreement; (d) references to laws refer
to such laws as they may be amended from time to time, and references to
particular provisions of a law include any corresponding provisions of any
succeeding law; (e) references to money refer to legal currency of the United
States of America; (f) the word "including" means "including, without
limitation"; and (g) all capitalized terms defined herein are equally applicable
to both the singular and plural forms of such terms.
-4-
ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Composition of the Corporation Board. Each Duke
Shareholder (including DENG so long as it is a Duke Shareholder) shall, and
shall cause its Affiliates to, make nominations and vote Duke's Total
Corporation Interest, and each ▇▇▇▇▇▇▇▇ Shareholder (including PGCSI Parent so
long as it is a ▇▇▇▇▇▇▇▇ Shareholder) shall, and shall cause its Affiliates to,
make nominations and vote ▇▇▇▇▇▇▇▇' Total Corporation Interest, so that (a) the
Corporation shall be managed by a board of directors (the "Corporation Board")
that shall be comprised of 11 Persons, including: (i) so long as Duke's
Corporation Interest equals or exceeds 30%, (A) seven individuals designated by
DENG (the "Duke Directors"), including at least two Independent Directors, and
(B) so long as ▇▇▇▇▇▇▇▇' Corporation Interest equals or exceeds 20%, four
individuals designated by PGCSI Parent (the "▇▇▇▇▇▇▇▇ Directors"), including at
least one Independent Director and (ii) if Duke's Corporation Interest equals or
exceeds 20% but is less than 30%, (A) the number of Duke Directors shall equal
the product, rounded to the nearest whole number, of (1) 11 and (2) the quotient
of (x) Duke's Corporation Interest divided by (y) the sum of (I) Duke's
Corporation Interest and (II) ▇▇▇▇▇▇▇▇' Corporation Interest; (B) the number of
▇▇▇▇▇▇▇▇ Directors shall equal the difference between (1) 11 and (2) the number
of Duke Directors, (C) if there are more Duke Directors than ▇▇▇▇▇▇▇▇ Directors,
then at least two of the Duke Directors and at least one of the ▇▇▇▇▇▇▇▇
Directors must be Independent Directors and (D) if there are more ▇▇▇▇▇▇▇▇
Directors than Duke Directors, then at least two of the ▇▇▇▇▇▇▇▇ Directors and
at least one of the Duke Directors must be Independent Directors, and (b) the
Chairman of the Corporation Board shall be one of the Directors designated by
whichever of the Parties has the right at such time to designate more Directors.
Each Director will serve as a Director until his or her successor is duly
elected and qualified or until his or her earlier resignation or removal.
Section 2.2 Removal and Replacement of Directors. Each Duke
Shareholder (including DENG so long as it is a Duke Shareholder) shall, and
shall cause its Affiliates to, vote Duke's Total Corporation Interest, and PGCSI
Parent and each ▇▇▇▇▇▇▇▇ Shareholder (including PGCSI Parent so long as it is a
▇▇▇▇▇▇▇▇ Shareholder) shall, and shall cause its Affiliates to, vote ▇▇▇▇▇▇▇▇'
Total Corporation Interest, to remove (a) any or all of the Duke Directors at
the request of DENG at any time and for any reason (or for no reason) and (b)
any or all of the ▇▇▇▇▇▇▇▇ Directors at the request of PGCSI Parent at any time
and for any reason (or for no reason). Should any Director be unwilling or
unable to continue to serve, or otherwise cease to serve (including by reason of
his or her involuntary removal or at the expiration of any applicable term of
office), then (i) each Duke Shareholder (including DENG so long as it is a Duke
Shareholder) shall, and shall cause its Affiliates to, (A) make nominations and
vote Duke's Total Corporation Interest to, and (B) cause the Duke Directors to,
and (ii) each ▇▇▇▇▇▇▇▇ Shareholder (including PGSCI so long as it is a ▇▇▇▇▇▇▇▇
Shareholder) shall, and shall cause its Affiliates to, (A) make nominations and
vote ▇▇▇▇▇▇▇▇' Total Corporation Interest to, and (B) cause the ▇▇▇▇▇▇▇▇
Directors to, vote to fill the resulting vacancy on the Corporation Board by a
Person designated by DENG, in the case of a vacancy of a Duke Director, and by a
Person designated by PGCSI Parent, in the case of a vacancy of a ▇▇▇▇▇▇▇▇
Director, but in each case in accordance with the Independent Director
requirements of Section 2.1.
-5-
ARTICLE III
OTHER AGREEMENTS
Section 3.1 Special Buy-out Right. (a) Following the one year
anniversary of the consummation of the IPO, if a ▇▇▇▇▇▇▇▇ Veto occurs with
regard to different proposals proposed in good faith at three separate meetings
(with at least two months between the first and third meetings) of the
Corporation Board within any 18-month period, DENG shall have the right (the
"Buy-Out Right"), exercisable upon written notice (the "Buy-Out Notice") at any
time after the third such ▇▇▇▇▇▇▇▇ Veto, but not later than the thirtieth day
after the end of the eighteenth month after the occurrence of the first of the
three ▇▇▇▇▇▇▇▇ Vetoes that are the basis for the exercise of the Buy-Out Right,
to purchase all (but not less than all) of ▇▇▇▇▇▇▇▇' Corporation Interest
pursuant to this Section 3.1. The Buy-Out Notice shall set forth the name of a
nationally recognized appraisal firm (which may be an investment banking,
accounting or other firm that performs appraisal and valuation services)
designated by DENG as its appraisal firm (the "Duke Appraiser").
(b) Within 15 days from the date of receipt of the Buy-Out Notice,
PGCSI Parent shall notify DENG in writing of the name of an appraisal firm
(which may be an investment banking, accounting or other firm that performs
appraisal and valuation services) designated as PGCSI Parent's appraisal firm
(the "▇▇▇▇▇▇▇▇ Appraiser"); PROVIDED, HOWEVER, that if ▇▇▇▇▇▇▇▇ fails to select
an appraisal firm, the ▇▇▇▇▇▇▇▇ Appraiser shall be Ernst & Young L.L.P.
(PROVIDED, FURTHER, that if Ernst & Young L.L.P. fails to accept the appointment
within 30 days from the date of PGCSI Parent's receipt of the Buy-Out Notice,
the Appraiser Committee shall consist solely of the Duke Appraiser). If
applicable, the Duke Appraiser and the ▇▇▇▇▇▇▇▇ Appraiser shall jointly choose a
third appraisal firm (which may be an investment banking, accounting or other
firm that performs appraisal and valuation services) within 15 days after the
appointment of the ▇▇▇▇▇▇▇▇ Appraiser (PROVIDED, HOWEVER, that if they fail to
select a third appraisal firm within 15 days after the appointment of the
▇▇▇▇▇▇▇▇ Appraiser, such third firm (which shall be an investment banking,
accounting or other firm that performs appraisal and valuation services) will be
selected by the American Arbitration Association at the request of either party
within 10 days after such request) (the "Neutral Appraiser," and together with
the Duke Appraiser and the ▇▇▇▇▇▇▇▇ Appraiser, the "Appraiser Committee"). Once
the Appraiser Committee has been selected, each of DENG and PGCSI Parent shall
submit proposed Fair Market Values of ▇▇▇▇▇▇▇▇' Corporation Interest to the
Appraiser Committee, together with any supporting documentation such Party deems
appropriate, as soon as practicable, but in no event earlier than 30 days after
the date of receipt of the Buy-Out Notice nor later than (i) 30 days after the
date of selection of the Neutral Appraiser, or (ii) in the event of the failure
of Ernst & Young L.L.P. to accept the appointment within the required time
period, 60 days from the date of PGCSI Parent's receipt of the Buy-Out Notice.
If either Party fails to submit its proposed Fair Market Value within the
required time period, the Fair Market Value proposed by the other Party
(assuming such other Party has submitted its proposed value within the required
time period) shall be deemed to be the Fair Market Value of ▇▇▇▇▇▇▇▇'
Corporation Interest for purposes of this Section 3.1. If both Parties submit
their respective proposed values on a timely basis, the Appraiser Committee
shall determine, by majority vote, the Fair Market Value of ▇▇▇▇▇▇▇▇'
Corporation Interest as of the date of the Buy-Out Notice as promptly as
possible (and in any event on or before the 30th day after submittal of the
competing proposals), which determination shall be final and binding on the
Parties. The cost of such appraisal shall be paid in equal portions by each of
DENG and PGCSI Parent. The Company shall provide to each of Duke and ▇▇▇▇▇▇▇▇
and, if applicable, the Appraiser Committee, all information reasonably
requested by them.
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(c) The closing of DENG's acquisition of ▇▇▇▇▇▇▇▇' Corporation
Interest shall be consummated on or before the 60th day after the determination
of the Fair Market Value in accordance with Section 3.1(b). The acquisition
shall be consummated at a closing held at the principal offices of the
Corporation (unless otherwise mutually agreed by DENG and PGCSI Parent) at which
time the purchase price, payable in the form of immediately available funds,
shall be delivered to PGCSI Parent, and PGCSI Parent shall deliver or cause to
be delivered to DENG (or, at DENG's option, to a designee of DENG designated by
DENG not less than five days prior to the closing) such transfer documentation
reasonably acceptable to DENG (or such designee) as shall be required to
evidence the transfer of ▇▇▇▇▇▇▇▇' Corporation Interest, free and clear of all
liens and encumbrances, except those created under this Agreement.
ARTICLE IV
LIQUIDITY AND TRANSFER RESTRICTIONS
Section 4.1 Right of First Offer. If a Duke Shareholder or a
▇▇▇▇▇▇▇▇ Shareholder (each, a "Shareholder") desires to Transfer all or any
portion of its Corporation Interest (other than pursuant to a registered public
offering) to a Person other than an Affiliate, then prior to effecting or making
such Transfer, the Person desiring to make such Transfer (a "Transferring
Entity") shall notify in writing the other Party or Parties that are not
Affiliates of the Transferring Entity (whether one or more, the
"Non-Transferring Entity") of the terms and conditions upon which it proposes to
effect such Transfer (which notice shall be herein referred to as a "Transfer
Notice" and shall include all material price and non-price terms and
conditions). The Non-Transferring Entity shall have the right to acquire all
(but not less than all) of the Corporation Interest that is the subject of the
Transfer Notice on the same terms and conditions as are set forth in the
Transfer Notice. The Non-Transferring Entity shall have 30 days following
delivery of the Transfer Notice during which to notify the Transferring Entity
whether or not it desires to exercise its right of first offer. If the
Non-Transferring Entity does not respond during the applicable period set forth
above for exercising its purchasing right under this Section 4.1, such
Non-Transferring Entity shall be deemed to have waived such right. If the
Non-Transferring Entity elects to purchase all, but not less than all, of the
Corporation Interest that is the subject of the Transfer Notice, the closing of
such purchase shall occur at the principal place of business of the Corporation
on the tenth day following the first date on which all applicable conditions
precedent have been satisfied or waived (but in no event shall such closing take
place later than the date that is 60 days (subject to extension for regulatory
approvals, but in no event more than 180 days) following the date on which the
Non-Transferring Entity agrees to purchase all of the Corporation Interest that
is the subject of the Transfer Notice). The Transferring Entity and the
purchasing Non-Transferring Entity agree to use commercially reasonable efforts
to cause any applicable conditions precedent to be satisfied as expeditiously as
possible. At the closing, (a) the Transferring Entity shall execute and deliver
to the purchasing Non-Transferring Entity (or, at the option of the
Non-Transferring Entity, to an Affiliate of the Non-Transferring Entity
designated by the Non-Transferring Entity not less than five days prior to the
closing) (i) an assignment of the Corporation Interest described in the Transfer
Notice, in form and substance reasonably acceptable to the purchasing
Non-Transferring Entity (or such Affiliate) and (ii) any other instruments
reasonably requested by the purchasing Non-Transferring Entity to give effect to
the purchase; and (b) the purchasing Non-Transferring Entity shall deliver to
the Transferring Entity the purchase price specified in the Transfer Notice in
immediately available funds or other consideration as specified in the Transfer
Notice. If the Non-Transferring Entity does
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not elect to purchase the Corporation Interest pursuant to this Section 4.1, or
having elected to so purchase such Corporation Interests fails to do so within
the time period required by this Section 4.1, the Transferring Entity shall be
free for a period of 180 days after the expiration of the offer period referred
to above or the date of such failure, as applicable, to enter into a definitive
written agreement with an unaffiliated third party regarding the Transfer of its
Corporation Interest on terms and conditions that satisfy the following
criteria:
(1) the amount of consideration to be paid by the purchasing
party may not be less than the consideration set forth in the Transfer Notice;
(2) the form of consideration may not be materially different
from that set forth in the Transfer Notice, except to the extent any change in
the form of consideration makes the terms of the transaction less favorable
from the purchaser's standpoint; and
(3) the terms and conditions set forth in such definitive written
agreement, when considered together with the form and amount of consideration to
be paid by such purchasing party, may not render the terms of such transaction,
taken as a whole, materially inferior (to the Transferring Entity from an
economic standpoint) to those set forth in the Transfer Notice (it being agreed
that the granting by the Transferring Entity of representations, warranties and
indemnities with respect to the business or properties of the Corporation, as
applicable, or any of its subsidiaries that are different from or in addition to
any such provisions referenced in the Transfer Notice shall not be considered to
be more favorable to the purchaser for purposes of this clause (3)).
If such a definitive written agreement is entered into with an unaffiliated
third party within such time period, the Transferring Entity shall be free for a
period of 270 days following the execution of such definitive written agreement
to consummate the Transfer of its Corporation Interest in accordance with the
terms thereof. If such Transfer is not consummated within such time period in
accordance with the terms of such definitive written agreement, the requirements
of this Section 4.1 shall apply anew to any further efforts by the Transferring
Entity to Transfer its Corporation Interest.
Section 4.2 Change of Control. (a) If (i) a Change of Control occurs
with respect to a Duke Shareholder, PGCSI Parent shall have the option to
purchase such Duke Shareholder's Corporation Interest for Fair Market Value
pursuant to the provisions of Section 4.2(b), (c) and (d), or (ii) a Change of
Control occurs with respect to a ▇▇▇▇▇▇▇▇ Shareholder, DENG shall have the
option to purchase such ▇▇▇▇▇▇▇▇ Shareholder's Corporation Interest for Fair
Market Value pursuant to the provisions of Section 4.2(b), (c) and (d).
(b) In the event of a transaction giving rise to a Change of Control
with respect to a Duke Shareholder or a ▇▇▇▇▇▇▇▇ Shareholder, as applicable, the
Party who has experienced such a Change of Control transaction (the "Changing
Party") shall promptly (and in any event within three days of the consummation
of such transaction) deliver notice (the "Control Notice") to the other Party or
Parties that are not Affiliates of the Changing Party (whether one or more, the
"Non-Changing Party") of such Change of Control transaction. The Non-Changing
Party shall have the right, to be exercised by notice (the "Control Acceptance")
on or before the 60th day following receipt of the Control Notice (the "Control
Offer Period"), to elect to purchase the Corporation Interest of the Changing
Party for Fair Market Value as of the date of the Change of Control. The Control
Acceptance shall set forth the name of a nationally recognized appraisal firm
(which may
-8-
be an investment banking, accounting or other firm that performs appraisal and
valuation services) designated by the Non-Changing Party as its appraisal firm
(the "Non-Changing Party Appraiser").
(c) If the Non-Changing Party timely delivers the Control Acceptance
during the Control Offer Period, within 15 days from the date of receipt of the
Control Acceptance, the Changing Party shall notify the Non-Changing Party in
writing of the name of an appraisal firm (which may be an investment banking,
accounting or other firm that performs appraisal and valuation services)
designated as the Changing Party's appraisal firm (the "Changing Party
Appraiser"); PROVIDED, HOWEVER, that if the Changing Party fails to select an
appraisal firm, and the Changing Party is a Duke Shareholder, the Changing Party
Appraiser shall be Deloitte & Touche L.L.P., or, if the Changing Party is a
▇▇▇▇▇▇▇▇ Shareholder, the Changing Party Appraiser shall be Ernst & Young
L.L.P.; PROVIDED, FURTHER, that if Deloitte & Touche L.L.P. or Ernst & Young
L.L.P., as the case may be, fails to accept the appointment within 30 days from
the date of receipt by the Changing Party of the Control Acceptance, the Control
Appraiser Committee shall consist solely of the Non-Changing Party Appraiser.
Except as provided in the second proviso of the immediately preceding sentence,
the Non-Changing Party Appraiser and the Changing Party Appraiser shall jointly
choose a third appraisal firm (which may be an investment banking, accounting or
other firm that performs appraisal and valuation services) within 15 days after
the appointment of the Non-Changing Party Appraiser (PROVIDED, HOWEVER, that if
they fail to select a third appraisal firm within 15 days after the appointment
of the Non-Changing Party Appraiser, such third firm (which shall be an
investment banking, accounting or other firm that performs appraisal and
valuation services) will be selected by the American Arbitration Association at
the request of either Party within 10 days after such request) (the "Neutral
Control Appraiser," and together with the Changing Party Appraiser and the
Non-Changing Party Appraiser, the "Control Appraiser Committee"). Once the
Control Appraiser Committee has been chosen, each of the Changing Party and
Non-Changing Party shall submit proposed Fair Market Values of the Changing
Party's Corporation Interest to the Control Appraiser Committee, together with
any supporting documentation such Party deems appropriate, as soon as
practicable, but in no event earlier than 30 days after the date of receipt of
the Control Acceptance nor later than (i) 30 days after the date of selection of
the Neutral Appraiser or (ii) in the event of the failure of Deloitte & Touche
L.L.P. or Ernst & Young L.L.P., as the case may be, to accept the appointment
within the required time period, 60 days from the date of receipt by the
Non-Changing Party of the Control Notice. If either Party fails to submit its
proposed Fair Market Value within the required time period, the Fair Market
Value proposed by the other Party (assuming such other Party has submitted its
proposed value within the required time period) shall be deemed to be the Fair
Market Value of the Changing Party's Corporation Interest for purposes of this
Section 4.2. If both Parties submit their respective proposed values on a timely
basis, the Control Appraiser Committee shall determine, by majority vote, the
Fair Market Value as of the date of the Change of Control of the Changing
Party's Corporation Interest, as promptly as possible (and in any event on or
before the 30th day after submittal of the competing proposals), which
determination shall be final and binding on the Parties. The cost of such
appraisal shall be paid in equal portions by (A) the Changing Party and (B) the
Non-Changing Party. Each of the Changing Party and the Non-Changing Party shall
provide to the other and, if applicable, the Control Appraisal Committee, all
information reasonably requested by them.
(d) The closing of the Non-Changing Party's acquisition of the
Changing Party's Corporation Interest shall be consummated on or before the 60th
day after the determination of the
-9-
Fair Market Value in accordance with Section 4.2(c). The acquisition shall be
consummated at a closing held at the principal offices of the Corporation
(unless otherwise mutually agreed by the Changing Party and the Non-Changing
Party) at which time the purchase price, payable in the form of immediately
available funds, shall be delivered to the Changing Party, and the Changing
Party shall deliver or cause to be delivered to the Non-Changing Party (or, at
the option of the Non-Changing Party, to (i) an Affiliate of the Non-Changing
Party or (ii) if the interest being transferred represents the entire Duke
Corporation Interest or the entire ▇▇▇▇▇▇▇▇ Corporation Interest, a designee of
the Non-Changing Party, in each case as designated by the Non-Changing Party not
less than five days prior to the closing) such transfer documentation reasonably
acceptable to the Non-Changing Party (or such Affiliate or designee) as shall be
required to evidence the transfer of the Changing Party's Corporation Interest,
as the case may be, free and clear of all liens and encumbrances, except those
created under this Agreement.
Section 4.3 Open Market Purchases and Transfers. Following the IPO,
subject to applicable federal and state securities laws, each Shareholder and
its Affiliates may make open-market purchases or sales of shares of Corporation
Common Stock.
Section 4.4 Affiliate Transfers. If either a Duke Shareholder or a
▇▇▇▇▇▇▇▇ Shareholder desires to Transfer all or any portion of its Corporation
Interest to an Affiliate, such Transfer shall only be permitted hereunder if the
transferee (other than any transferee that is already a party to this Agreement)
becomes a party to this Agreement by executing an adoption agreement in
substantially the form of Exhibit A hereto.
Section 4.5 Void Transfers. Any purported Transfer of all or any
portion of a Corporation Interest not permitted by this Article IV shall be
void. The provisions of this Article IV with respect to Corporation Interests
shall apply equally to any rights or options to purchase, or securities
convertible into or exchangeable for Corporation Interests.
ARTICLE V
TERMINATION
Section 5.1 Termination. (a) This Agreement shall terminate
immediately if at any time either Duke's Total Corporation Interest or ▇▇▇▇▇▇▇▇'
Total Corporation Interest is less than 20%.
(b) In the case of termination in accordance with this Section 5.1,
upon such termination, this Agreement shall become void and have no effect;
PROVIDED, HOWEVER, that such termination shall not relieve any Party of any
liability for any breach of this Agreement that occurred prior to such
termination.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become
-10-
effective when one or more counterparts have been signed by each of the Parties
and delivered (including by facsimile) to the other Parties.
Section 6.2 Governing Law; Jurisdiction and Forum; Waiver of Jury
Trial. (a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without reference to the choice of law
principles thereof.
(b) Each Party irrevocably submits to the jurisdiction of any
Delaware state court or any federal court sitting in the State of Delaware in
any action arising out of or relating to this Agreement, and hereby irrevocably
agrees that all claims in respect of such action may be heard and determined in
such Delaware state or federal court. Each Party hereby irrevocably waives, to
the fullest extent it may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding. The Parties further
agree, to the extent permitted by law, that final and unappealable judgment
against any of them in any action or proceeding contemplated above shall be
conclusive and may be enforced in any other jurisdiction within or outside the
United States by suit on the judgment, a certified copy of which shall be
conclusive evidence of the fact and amount of such judgment.
(c) To the extent that any Party has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, each
Party hereby irrevocably waives such immunity in respect of its obligations with
respect to this Agreement.
(d) Each Party waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect of any
action, suit or proceeding arising out of or relating to this Agreement. Each
Party certifies that it has been induced to enter into this Agreement by, among
other things, the mutual waivers and certifications set forth above in this
Section 6.2.
Section 6.3 Entire Agreement. This Agreement constitutes the entire
agreement between the Parties with respect to the subject matter hereof and
there are no agreements, understandings, representations or warranties between
the parties other than those set forth or referred to herein. This Agreement is
not intended to confer upon any person not a Party hereto any rights or remedies
hereunder.
Section 6.4 Expenses. Except as set forth in this Agreement, all
legal and other costs and expenses incurred in connection with this Agreement
and the transactions contemplated by this Agreement shall be paid by the Party
incurring such costs and expenses.
Section 6.5 Notices. All notices and other communications to be
given to any Party hereunder shall be sufficiently given for all purposes
hereunder if in writing and delivered by hand, courier or overnight delivery
service or three days after being mailed by certified or registered mail, return
receipt requested, with appropriate postage prepaid, or when received in the
form of a telegram or facsimile and shall be directed, if to a Party hereunder,
to the address or facsimile number set forth below (or at such other address or
facsimile number as such Party shall designate by like notice):
(a) If to PGCSI Parent:
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▇▇▇▇▇▇▇▇ Petroleum Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to DENG:
Duke Energy Natural Gas Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Duke Energy Field Services Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
And to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to the Corporation:
Duke Energy Field Services Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
-12-
With a copy to:
Duke Energy Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
And to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 6.6 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors and
permitted assigns; PROVIDED, HOWEVER, that no Party will assign its rights or
delegate any or all of its obligations under this Agreement without the express
prior written consent of each other Party.
Section 6.7 Headings; Definitions. The section and article headings
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement. All references
to Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated. All capitalized terms defined herein are
equally applicable to both the singular and plural forms of such terms.
Section 6.8 Amendments and Waivers. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
all Parties. Any Party may, only by an instrument in writing, waive compliance
by the other Parties with any term or provision of this Agreement on the part of
such other Parties to be performed or complied with. The waiver by any Party of
a breach of any term or provision of this Agreement shall not be construed as a
waiver of any subsequent breach. Except as otherwise expressly provided herein,
no failure to exercise, delay in exercising or single or partial exercise of any
right, power or remedy by any Party, and no course of dealing between the
Parties, shall constitute a waiver of any such right, power or remedy.
Section 6.9 Severability. If any provision of this Agreement shall
be held invalid, illegal or unenforceable, the validity, legality or
enforceability of the other provisions of this Agreement shall not be affected
thereby, and there shall be deemed substituted for the provision at issue a
valid, legal and enforceable provision as similar as possible to the provision
at issue.
Section 6.10 Interpretation. In the event an ambiguity or question
of intent or interpretation arises with respect to this Agreement, this
Agreement shall be construed as if it was drafted jointly by the Parties, and no
presumption or burden of proof shall arise favoring or disfavoring any Party by
virtue of the authorship of any provisions of this Agreement.
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Section 6.11 Specific Performance. The Parties agree that
irreparable damage would occur in the event that any Party fails to consummate
the transactions contemplated by this Agreement in accordance with the terms of
this Agreement and that the Parties shall be entitled to specific performance in
such event, in addition to any other remedy at law or in equity, including
temporary restraining orders or temporary or permanent injunctions.
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IN WITNESS WHEREOF, each of the undersigned has caused this
Agreement to be duly executed and delivered on the date first set forth above.
DUKE ENERGY NATURAL GAS CORPORATION
By:_______________________________
Name:
Title:
▇▇▇▇▇▇▇▇ PETROLEUM COMPANY
By:_______________________________
Name:
Title:
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EXHIBIT A
ADOPTION AGREEMENT
This Adoption Agreement ("Adoption") is executed pursuant to the
terms of the Shareholders Agreement by and among Duke Energy Natural Gas
Corporation and ▇▇▇▇▇▇▇▇ Petroleum Company, dated as of _________ , 2000, as
amended to date, a copy of which is attached hereto (the "Shareholders
Agreement"), by the transferee ("Transferee") executing this Adoption. By the
execution of this Adoption, the Transferee agrees as follows:
1. Acknowledgment. Transferee acknowledges that Transferee is
acquiring certain [describe securities acquired], subject to the terms and
conditions of the Shareholders Agreement. Capitalized terms used herein
without definition are defined in the Shareholders Agreement.
2. Agreement. Transferee (a) agrees that [describe securities]
acquired by Transferee shall be bound by and subject to the terms of the
Shareholders Agreement and (b) hereby joins in, and agrees to be bound by, the
Shareholders Agreement with the same force and effect as if it were originally a
party thereto and a Duke Shareholder or a ▇▇▇▇▇▇▇▇ Shareholder, as applicable,
thereunder.
3. Notice. Any notice required by the Shareholders Agreement shall
be given to Transferee at the address listed beside Transferee's signature
below.
EXECUTED AND DATED on this____day of______, _____.
TRANSFEREE:
By:
--------------------------------------
Notice
Address:
Telecopy:
EXHIBIT C
TO
PARENT COMPANY
AGREEMENT
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Registration Rights Agreement
by and among
DUKE ENERGY FIELD SERVICES CORPORATION,
DUKE ENERGY CORPORATION
and
▇▇▇▇▇▇▇▇ PETROLEUM COMPANY
Dated as of ________, 2000
-------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of
__________, 2000, by and among Duke Energy Field Services Corporation, a
Delaware corporation (the "Corporation"), Duke Energy Corporation, a North
Carolina corporation ("Duke") and ▇▇▇▇▇▇▇▇ Petroleum Company, a Delaware
corporation ("▇▇▇▇▇▇▇▇").
RECITALS:
WHEREAS, Duke, Duke Energy Field Services LLC, a Delaware limited
liability company, the Company and ▇▇▇▇▇▇▇▇ have entered into the Parent Company
Agreement, dated as of ____________, 2000 (the "Parent Company Agreement"); and
WHEREAS, in the Parent Company Agreement each of Duke and ▇▇▇▇▇▇▇▇ has
agreed to execute and deliver, and cause the Corporation to execute and deliver,
on or prior to the consummation of the IPO (as defined herein), a registration
rights agreement granting each of them the registration rights set forth herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound, the parties hereto agree as follows:
AGREEMENT:
The parties hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms will have the following
meanings:
"Affiliate" means, with respect to any Person, a Person directly or
indirectly Controlling, Controlled by, or under common Control with such Person.
"Common Stock" means shares of the Corporation's Common Stock.
"Control" shall mean the possession, directly or indirectly, through one
or more intermediaries, by any Person or group (within the meaning of Section
13(d)(3) under the Exchange Act) of both of the following: (a) (i) in the case
of a corporation, more than 25% of the direct or indirect economic interest in
the outstanding equity securities thereof; (ii) in the case of a limited
liability company, partnership, limited partnership or venture, the right to
more than 25% of the distributions therefrom (including liquidating
distributions); (iii) in the case of a trust or estate, including a business
trust, more than 25% of the beneficial interest therein; and (iv) in the case of
any other entity, more than 25% of the economic or beneficial interest therein;
and (b) in the case of any entity, the power or authority, through ownership of
voting securities, by contract or otherwise, to control or direct the management
and policies of the entity.
"Demand Registration" means either a Duke Demand Registration or a
▇▇▇▇▇▇▇▇ Demand Registration.
"Duke Demand Registration" has the meaning set forth in Section 4(a).
"Duke Registrable Securities" means (i) shares of Common Stock owned by
Duke or its Affiliates and securities issued in respect thereof by way of
conversion, dividend or stock split or stock issuance or in connection with a
combination of shares, recapitalization, reclassification, merger, sale of
assets, consolidation or reorganization or otherwise, to Duke or its Affiliates
and (ii) shares of Common Stock (or securities issued in respect thereof by way
of conversion, dividend or stock split or stock issuance or in connection with a
combination of shares, recapitalization, reclassification, merger or
reorganization or otherwise) transferred directly by Duke or its Affiliates to a
transferee that is assigned all or any portion of the transferor's rights
hereunder in accordance with Section 12(f); provided, however, a Duke
Registrable Security shall cease to be a Duke Registrable Security to the extent
so provided in Section 2.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Governmental Entity" shall mean any federal, state, political subdivision
or other governmental agency or instrumentality, foreign or domestic.
"IPO" means the initial offering of shares of Common Stock to the public
in a transaction registered under the Securities Act.
"Majority" means 50.1% or more.
"Merger" means the merger of ▇▇▇▇▇▇▇▇ Gas Company Shareholder, Inc.,
a Delaware corporation, with and into the Corporation.
"Person" means any individual, partnership, corporation, limited liability
company, firm, corporation, association, joint venture, trust or other entity,
or any Governmental Entity.
"▇▇▇▇▇▇▇▇ Demand Registration" has the meaning set forth in Section 3(a).
"▇▇▇▇▇▇▇▇ Registrable Securities" means (i) shares of Common Stock owned
by ▇▇▇▇▇▇▇▇ or its Affiliates and securities issued in respect thereof by way of
conversion, dividend or stock split or stock issuance or in connection with a
combination of shares, recapitalization, reclassification, merger, sale of
assets, consolidation, reorganization or otherwise, to ▇▇▇▇▇▇▇▇ or its
Affiliates and (ii) shares of Common Stock (or securities issued in respect
thereof by way of conversion, dividend or stock split or stock issuance or in
connection with a combination of shares, recapitalization, reclassification,
merger or reorganization or otherwise) transferred directly by ▇▇▇▇▇▇▇▇ or its
Affiliates to a transferee that is assigned all or any portion of the
transferor's rights hereunder in accordance with Section 12(f); provided,
however, a ▇▇▇▇▇▇▇▇ Registrable Security shall cease to be a ▇▇▇▇▇▇▇▇
Registrable Security to the extent provided in Section 2.
"Piggyback Registration" has the meaning set forth in Section 5(a).
-2-
"Registration Expenses" has the meaning set forth in Section 8(a).
"Registrable Securities" means the Duke Registrable Securities and
the ▇▇▇▇▇▇▇▇ Registrable Securities.
"SEC" means the Securities and Exchange Commission or any other Federal
agency at the time administering the Securities Act and the Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Underwritten registration" or "underwritten offering" means any
registration in which securities of the Corporation are sold pursuant to a firm
commitment underwriting.
2. SECURITIES SUBJECT TO THIS AGREEMENT.
The securities entitled to the benefits of this Agreement are the Duke
Registrable Securities and the ▇▇▇▇▇▇▇▇ Registrable Securities but, with respect
to any particular Registrable Security, only so long as such security continues
to be a Duke Registrable Security or a ▇▇▇▇▇▇▇▇ Registrable Security. A
Registrable Security shall cease to be a Duke Registrable Security or a ▇▇▇▇▇▇▇▇
Registrable Security when (i) it has been disposed of in a transaction
registered under the Securities Act, (ii) it has been sold pursuant to Rule 144
(or any similar provisions then in force) under the Securities Act, (iii) an
opinion of counsel to the Corporation, reasonably satisfactory to the holder of
such Registrable Security, shall have been delivered to such holder, or an
opinion of counsel to the holder of such Registrable Security, reasonably
satisfactory to the Corporation, shall have been delivered to the Corporation,
in either case to the effect that such Registrable Security may be publicly
offered for sale in the United States without restriction as to manner of sale
and amount of securities sold and without registration or other restriction
under the Securities Act, or (iv) it has been sold or transferred to a Person
that is not an Affiliate of Duke or ▇▇▇▇▇▇▇▇ in a private transaction in which
the transferor's rights under this Agreement are not assignable to the
transferee.
3. DEMAND REGISTRATION WITH RESPECT TO ▇▇▇▇▇▇▇▇ REGISTRABLE SECURITIES.
(a) REQUESTS FOR REGISTRATION. Subject to the provisions of Section 3(b),
at any time after 180 days following the closing of the IPO any holder or
holders of a Majority of the then outstanding ▇▇▇▇▇▇▇▇ Registrable Securities
may request a registration by the Corporation under the Securities Act of all or
part of its or their ▇▇▇▇▇▇▇▇ Registrable Securities (a "▇▇▇▇▇▇▇▇ Demand
Registration"); provided, that the number of ▇▇▇▇▇▇▇▇ Registrable Securities
requested to be registered represents at least 3% of the Corporation's then
outstanding Common Stock. Within 15 days after receipt of such request, the
Corporation will provide written notice of such registration request to all
holders of Registrable Securities and will, subject to the provisions of
Section 3(b) and Section 3(d), include in such registration all Registrable
Securities with respect to which the Corporation has received written requests
for inclusion therein within 15 days after distribution to the applicable
holder of the Corporation's notice. All requests made pursuant to this Section
3(a) will specify the number of Registrable Securities to be registered and will
also specify the intended method of disposition thereof; provided, however, that
such method of disposition will be limited to an underwritten offering if so
requested by the holders of the ▇▇▇▇▇▇▇▇ Registrable Securities who initiated
the request.
-3-
(b) NUMBER OF REGISTRATIONS. The holders of ▇▇▇▇▇▇▇▇ Registrable Securities
will be entitled to request an aggregate of two ▇▇▇▇▇▇▇▇ Demand Registrations.
For purposes of this Section 3(b), a registration initiated as a ▇▇▇▇▇▇▇▇ Demand
Registration will not constitute a ▇▇▇▇▇▇▇▇ Demand Registration (i) unless such
registration is declared effective by the SEC and remains effective for the
period set forth in Section 7(a)(iii); provided, however, that a registration
which does not become effective after the Corporation has filed a registration
statement in accordance with the provisions hereof by reason of the refusal to
proceed of the initiating holders or such of the initiating holders as would
result in the inclusion of less than 3% of the then outstanding Common Stock
(other than any refusal to proceed (x) based upon the advice of their counsel
that the registration statement, or the prospectus contained therein, contains
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, or that such
registration statement or such prospectus, or the distribution contemplated
thereby, otherwise violates or would, if such distribution using such prospectus
took place, violate any applicable state or federal securities law or (y)
following a material breach by the Corporation of its obligations hereunder, but
only if such breach has materially and adversely affected the initiating
holder's ability to consummate the proposed offering or the pricing of such
offering) shall be deemed to have been effected; (ii) if after such registration
has been declared effective by the SEC it is subject to any stop order,
injunction or other adverse order or action of the SEC or other governmental
authority which is not removed within 15 days; or (iii) if such registration is
withdrawn as a result of the withdrawal of the demand pursuant to Section 3(g)
hereof prior to the filing by the Corporation of a registration statement with
the SEC.
(c) LIMITATION ON RIGHTS OF CORPORATION OR OTHER SECURITYHOLDERS TO
PIGGYBACK ON ▇▇▇▇▇▇▇▇ DEMAND REGISTRATIONS. Neither the Corporation nor any of
its securityholders (other than the holders of ▇▇▇▇▇▇▇▇ Registrable Securities
in such capacity) has any right to include any of the Corporation's securities
in a registration statement initiated as a ▇▇▇▇▇▇▇▇ Demand Registration under
this Section 3 if such Demand Registration is an underwritten offering unless
(i) such securities are of the same class as the ▇▇▇▇▇▇▇▇ Registrable Securities
being registered, (ii) the managing underwriters agree that some or all of such
securities can be included without adversely affecting such offering or offering
price, and (iii) the Corporation, or the selling securityholders, as applicable,
agree to sell their securities on the same terms and conditions as apply to the
▇▇▇▇▇▇▇▇ Registrable Securities and the holders of such ▇▇▇▇▇▇▇▇ Registrable
Securities. If any securityholders of the Corporation (other than the holders of
▇▇▇▇▇▇▇▇ Registrable Securities in such capacity) register securities of the
Corporation in a ▇▇▇▇▇▇▇▇ Demand Registration (in accordance with the provisions
of this Section 3(c)), such securityholders will pay the fees and expenses of
counsel to such securityholders and their pro rata share of the Registration
Expenses if such pro rata share of the Registration Expenses for such
registration are not paid by the Corporation for any reason. The Corporation and
any such securityholders may withdraw their securities from a ▇▇▇▇▇▇▇▇ Demand
Registration; provided, however, if the ▇▇▇▇▇▇▇▇ Demand Registration is an
underwritten offering, they may do so only on the reasonable and customary terms
agreed upon by the managing underwriters for such offering.
(d) PRIORITY ON ▇▇▇▇▇▇▇▇ DEMAND REGISTRATIONS. If a ▇▇▇▇▇▇▇▇ Demand
Registration is an underwritten offering and the managing underwriters advise
the Corporation and the selling holders of the ▇▇▇▇▇▇▇▇ Registrable Securities
in writing that in their opinion the number of
-4-
▇▇▇▇▇▇▇▇ Registrable Securities requested to be included exceeds the number of
securities which can be sold in such offering without adversely affecting the
proposed offering or the offering price, the Corporation will include in such
registration the number of ▇▇▇▇▇▇▇▇ Registrable Securities which in the opinion
of such underwriters can be sold without adversely affecting the proposed
offering or the offering price, and such securities will be allocated pro rata
among the holders of ▇▇▇▇▇▇▇▇ Registrable Securities requesting to be included
in the registration on the basis of the number of the ▇▇▇▇▇▇▇▇ Registrable
Securities requested to be included in such registration by their respective
holders. If securities (other than ▇▇▇▇▇▇▇▇ Registrable Securities) are proposed
to be included by the Corporation or its other securityholders in a ▇▇▇▇▇▇▇▇
Demand Registration which is an underwritten offering (subject to and in
accordance with the provisions of Section 3(c)) and the managing underwriters
advise the Corporation and the selling holders of ▇▇▇▇▇▇▇▇ Registrable
Securities in writing that some but not all of said other securities can be sold
without adversely affecting the proposed offering or the offering price in such
underwritten offering, in addition to all of the ▇▇▇▇▇▇▇▇ Registrable Securities
being registered, those securities which are permitted to be included will be
allocated (i) first, to the Corporation, (ii) second, to the holders of Duke
Registrable Securities, allocated pro rata among the holders of Duke Registrable
Securities requesting to be included in the registration on the basis of the
number of Duke Registrable Securities requested to be included in such
registration by their respective holders and (iii) third, to the other
securityholders, allocated among them in such proportions as such
securityholders and the Corporation may agree.
(e) SELECTION OF UNDERWRITERS. If any ▇▇▇▇▇▇▇▇ Demand Registration is an
underwritten offering, or a best efforts underwritten offering, the investment
banker or investment bankers and manager or managers that will administer the
offering will be selected by the holders of two-thirds (by number of shares) of
the ▇▇▇▇▇▇▇▇ Registrable Securities requested to be included in such offering;
provided, however, such investment bankers and managers must be reasonably
satisfactory to the Corporation.
(f) OTHER REGISTRATION RIGHTS AGREEMENTS. Without the prior written consent
of the holders of a Majority of the ▇▇▇▇▇▇▇▇ Registrable Securities, the
Corporation will not enter into any agreement with any holder or prospective
holder of any securities of the Corporation which grants to such holder or
prospective holder any registration rights unless such agreement and the rights
granted thereunder are subject and subordinate to the rights of holders
hereunder.
(g) WITHDRAWAL BY HOLDERS OF ▇▇▇▇▇▇▇▇ REGISTRABLE SECURITIES. The holders
of ▇▇▇▇▇▇▇▇ Registrable Securities may withdraw a ▇▇▇▇▇▇▇▇ Demand Request at any
time and under any circumstances.
4. DEMAND REGISTRATION WITH RESPECT TO DUKE REGISTRABLE SECURITIES.
(a) REQUESTS FOR REGISTRATION. Subject to the provisions of Section 4(b),
at any time after 180 days following the closing of the IPO any holder or
holders of a Majority of the then outstanding Duke Registrable Securities may
request a registration by the Corporation under the Securities Act of all or
part of its or their Duke Registrable Securities (a "Duke Demand Registration");
provided that the number of Duke Registrable Securities requested to be
registered represents at least 3% of the Corporation's then outstanding Common
Stock. Within 15 days after receipt of such request, the Corporation will
provide written notice of such
-5-
registration request to all holders of Registrable Securities and will, subject
to the provisions of Section 4(b) and Section 4(d), include in such registration
all Duke Registrable Securities with respect to which the Corporation has
received written requests for inclusion therein within 15 days after
distribution to the applicable holder of the Corporation's notice. All requests
made pursuant to this Section 4(a) will specify the amount of Registrable
Securities to be registered and will also specify the intended method of
disposition thereof; provided, however, that such method of disposition will be
limited to an underwritten offering if so requested by the holders of the Duke
Registrable Securities who initiated the request.
(b) NUMBER OF REGISTRATIONS. The holders of Duke Registrable Securities
will be entitled to request an aggregate of two Duke Demand Registrations. For
purposes of this Section 4(b), a registration initiated as a Duke Demand
Registration will not constitute a Duke Demand Registration (i) unless such
registration is declared effective by the SEC and remains effective for the
period set forth in Section 7(a)(iii); provided, however, that a registration
which does not become effective after the Corporation has filed a registration
statement in accordance with the provisions hereof by reason of the refusal to
proceed of the initiating holders or such of the initiating holders as would
result in the inclusion of less than 3% of the then outstanding Common Stock
(other than any refusal to proceed (x) based upon the advice of their counsel
that the registration statement, or the prospectus contained therein, contains
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, or that such
registration statement or such prospectus, or the distribution contemplated
thereby, otherwise violates or would, if such distribution using such prospectus
took place, violate any applicable state or federal securities law or (y)
following a material breach by the Corporation of its obligations hereunder, but
only if such breach has materially and adversely affected the initiating
holder's ability to consummate the proposed offering) shall be deemed to have
been effected; (ii) if after such registration has been declared effective by
the SEC it is subject to any stop order, injunction or other adverse order or
action of the SEC or other governmental authority which is not removed within 15
days; or (iii) if such registration is withdrawn as a result of the withdrawal
of the demand pursuant to Section 4(g) hereof prior to the filing by the
Corporation of a registration statement with the SEC.
(c) LIMITATION ON RIGHTS OF CORPORATION OR OTHER SECURITYHOLDERS TO
PIGGYBACK ON DUKE DEMAND REGISTRATIONS. Neither the Corporation nor any of its
securityholders (other than the holders of Duke Registrable Securities in such
capacity) has any right to include any of the Corporation's securities in a
registration statement initiated as a Demand Registration under this Section 4
if such Demand Registration is an underwritten offering unless (i) such
securities are of the same class as the Duke Registrable Securities being
registered, (ii) the managing underwriters agree that some or all of such
securities can be included without adversely affecting such offering or offering
price, and (iii) the Corporation, or the selling securityholders, as applicable,
agree to sell their securities on the same terms and conditions as apply to the
Duke Registrable Securities and the holders of such Duke Registrable Securities.
If any securityholders of the Corporation (other than the holders of Duke
Registrable Securities in such capacity) register securities of the Corporation
in a Duke Demand Registration (in accordance with the provisions of this Section
4(c)), such securityholders will pay the fees and expenses of counsel to such
securityholders and their pro rata share of the Registration Expenses if such
pro rata share of the Registration Expenses for such registration are not paid
by the Corporation for
-6-
any reason. The Corporation and any such securityholders may withdraw their
securities from a Duke Demand Registration; PROVIDED, HOWEVER, if the Duke
Demand Registration is an underwritten offering, they may do so only on the
reasonable and customary terms agreed upon by the managing underwriters for such
offering.
(d) PRIORITY ON DUKE DEMAND REGISTRATIONS. If a Duke Demand Registration is
an underwritten offering and the managing underwriters advise the Corporation
and the selling holders of the Duke Registrable Securities in writing that in
their opinion the number of Duke Registrable Securities requested to be included
exceeds the number of securities which can be sold in such offering without
adversely affecting the proposed offering or the offering price, the Corporation
will include in such registration the number of Duke Registrable Securities
which in the opinion of such underwriters can be sold without adversely
affecting the proposed offering or the offering price, and such securities will
be allocated pro rata among the holders of Duke Registrable Securities
requesting to be included in the registration on the basis of the number of the
Duke Registrable Securities requested to be included in such registration by
their respective holders. If securities (other than Duke Registrable Securities)
are proposed to be included by the Corporation or its other securityholders in a
Duke Demand Registration which is an underwritten offering (subject to and in
accordance with the provisions of Section 4(c)) and the managing underwriters
advise the Corporation and the selling holders of Duke Registrable Securities in
writing that some but not all of said other securities can be sold without
adversely affecting the proposed offering or the offering price in such
underwritten offering, in addition to all of the Duke Registrable Securities
being registered, those securities which are permitted to be included will be
allocated (i) first, to the Corporation, (ii) second, to the holders of ▇▇▇▇▇▇▇▇
Registrable Securities, allocated pro rata among the holders of ▇▇▇▇▇▇▇▇
Registrable Securities requesting to be included in the registration on the
basis of the number of ▇▇▇▇▇▇▇▇ Registrable Securities requested to be included
in such registration by their respective holders and (iii) third, to the other
securityholders, allocated among them in such proportions as such
securityholders and the Corporation may agree.
(e) SELECTION OF UNDERWRITERS. If any Duke Demand Registration is an
underwritten offering, or a best efforts underwritten offering, the investment
banker or investment bankers and manager or managers that will administer the
offering will be selected by the holders of two-thirds (by number of shares) of
the Duke Registrable Securities requested to be included in such offering;
PROVIDED, HOWEVER, such investment bankers and managers must be reasonably
satisfactory to the Corporation.
(f) OTHER REGISTRATION RIGHTS AGREEMENTS. Without the prior written consent
of the holders of a Majority of the Duke Registrable Securities, the Corporation
will not enter into any agreement with any holder or prospective holder of any
securities of the Corporation which grants to such holder or prospective holder
any registration rights unless such agreement and the rights granted thereunder
are subject and subordinate to the rights of holders hereunder.
(g) WITHDRAWAL BY HOLDERS OF DUKE REGISTRABLE SECURITIES. The holders of
Duke Registrable Securities may withdraw a Duke Demand Request at any time and
under any circumstances.
-7-
5. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. If at any time after consummation of the IPO the
Corporation proposes to register any securities under the Securities Act in
connection with the public offering of such securities (other than a
registration relating to employee benefit plans or a corporate reorganization or
acquisition, or a registration on any form that does not permit inclusion of
sales of Registrable Securities) (a "Piggyback Registration"), the Corporation
will give written notice to all holders of Registrable Securities of its
intention to effect such a registration not later than the earlier to occur of
(i) 10 days following receipt by the Corporation of notice of exercise of demand
registration rights or (ii) 30 days prior to the anticipated filing date;
PROVIDED, that such notice indicate the number of shares proposed to be
registered, the proposed means of distribution of such securities and the
proposed managing underwriters of such offering; PROVIDED, HOWEVER, that the
Corporation shall not be required to give such notice or to include any
Registrable Securities in a Piggyback Registration unless the Registrable
Securities to be so included are of the same class as the other securities to be
included in such registration. Subject to the provisions of Sections 5(b) and
(c), the Corporation will include in such Piggyback Registration all Registrable
Securities with respect to which the Corporation has received written requests
for inclusion therein within 15 days after delivery of the Corporation's notice.
The holders of Registrable Securities will be permitted to withdraw all or any
part of such holder's Registrable Securities from a Piggyback Registration at
any time prior to the date such Piggyback Registration becomes effective with
the SEC; PROVIDED, HOWEVER, if the Piggyback Registration is an underwritten
offering, the holders of Registrable Securities may do so only on the reasonable
and customary terms agreed upon by the managing underwriters for such offering.
If a Piggyback Registration is an underwritten offering effected under (i)
Section 5(b), all Persons whose securities are included in the Piggyback
Registration will be obligated to sell their securities on the same terms and
conditions as apply to the securities being issued and sold by the Corporation
or (ii) Section 5(c), all Persons whose securities are included in the Piggyback
Registration will be obligated to sell their securities on the same terms and
conditions as apply to the securities being sold by the Person or Persons who
initiated the Piggyback Registration under Section 5(c). The foregoing
notwithstanding, if, at any time after giving written notice of a Piggyback
Registration but prior to the effective date of the registration statement filed
in connection therewith, the Corporation shall determine for any reason not to
register the securities described in its notice of its intention to file a
registration statement, the Corporation may, at its election, give written
notice of such determination to the holders of Registrable Securities and
thereupon shall be relieved of its obligation to register any Registrable
Securities in such registration.
(b) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is an
underwritten primary registration on behalf of the Corporation, and the managing
underwriters advise the Corporation in writing that in their opinion the total
number of securities requested to be included in such registration exceeds the
number of securities which can be sold in such offering without adversely
affecting the offering or the offering price, the Corporation will include in
such registration: first, all securities the Corporation proposes to sell, then,
to the extent that additional securities can, in the opinion of such
underwriters, be included in such registration without adversely affecting the
offering or the offering price, (i) first, up to the full number of securities
requested to be included in such registration by holders of Registrable
Securities allocated pro rata among such holders on the basis of the number of
securities requested to be
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included therein by each such holder, (ii) second, up to the full number of
securities requested to be included in such registration by other holders of
securities entitled to include securities in such Piggyback Registration, and
(iii) third, such additional securities as may be agreed upon by the Corporation
and any other securityholders.
(c) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration is an
underwritten secondary registration on behalf of holders of the Corporation's
securities pursuant to the exercise of such holders' demand registration rights
or otherwise, and the managing underwriters advise the Corporation in writing
that in their opinion the number of securities requested to be included in such
registration exceeds the number of securities which can be sold in such offering
without adversely affecting the offering or the offering price, the Corporation
will include in such registration (i) first, the number of securities proposed
to be included therein on behalf of the holders of the Corporation's securities
exercising demand registration rights, allocated among the holders of such
securities in such proportions as the Corporation and such holders may agree,
(ii) second, up to the full number of securities the Corporation proposes to
sell, (iii) third, to the extent that additional securities can, in the opinion
of such underwriters, be included in such registration without adversely
affecting the offering or the offering price, up to the full number of
securities requested to be included in such registration by the holders of
Registrable Securities and other holders of securities entitled to include
securities in such Piggyback Registration, allocated pro rata among such holders
on the basis of the number of securities requested to be included therein by
each such holder and (iv) fourth, any additional securities that may be included
in such registration, in the opinion of such underwriters, without adversely
affecting the offering or the offering price, as may be agreed upon by the
Corporation and any other securityholders.
(d) SELECTION OF UNDERWRITERS. If any Piggyback Registration is an
underwritten offering, as between the Corporation and the holders of the
Registrable Securities, the Corporation will have the sole right to select the
investment banker or investment bankers and manager or managers to administer
the offering.
(e) LIMITATION. No Piggyback Registration effected under this Section 5 (i)
shall be deemed to constitute a Demand Registration or to have been effected
pursuant to Section 3 or Section 4 hereof or (ii) shall release the Corporation
of its obligations to effect any Demand Registration upon request as provided
under Section 3 or Section 4 hereof.
6. DEFERRAL OF FILING; PREEMPTION.
(a) DEFERRAL OF FILING. Anything herein to the contrary notwithstanding,
the Corporation may defer the filing of any registration statement otherwise
required to be filed by it pursuant to Section 3 or 4 for up to 180 days if the
Corporation notifies each requesting holder promptly after such request that the
Corporation's Board of Directors has determined in its good faith judgement that
the requested registration and offering would require disclosure of pending or
contemplated matters or information, the disclosure of which would likely be
detrimental to the Corporation or materially interfere with its business or a
pending or contemplated material transaction involving the Corporation. In
addition to the foregoing deferral rights, the Corporation shall not be required
to file any registration statement pursuant to Section 3 or 4 (i) within 120
days after the effectiveness of a registration statement relating to a Demand
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Registration or (ii) within 180 days (or such shorter period as may be agreed to
by the underwriters but in no event less than 120 days) after the effectiveness
of a registration statement referred to in Section 5.
(b) PREEMPTION BY THE CORPORATION. Anything herein to the contrary
notwithstanding, in the event the Corporation reasonably expects to file, within
60 days of a demand for registration, a registration statement pertaining to
securities for the account of the Corporation (except a registration statement
on Form S-4 or Form S-8 or with respect to a transaction subject to Rule 145
under the Securities Act) then such request shall constitute a request made
pursuant to Section 5 hereof to include in such registration statement all
Registrable Securities subject to such request and the Corporation shall not be
obligated to file a separate registration statement for the Registrable
Securities subject to such request; PROVIDED, that the Corporation is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective.
(c) TERMINATION OF DEFERRAL PERIOD. In the case of a deferral pursuant to
Section 6(a), the deferral period shall terminate upon the earlier of the
completion or abandonment of the relevant securities offering or sale,
Corporation business or other pending or contemplated material transaction.
After the termination or expiration of any deferral period and without further
request from the holders of Registrable Securities, the relevant Demand
Registration shall be reinstated, and the Corporation shall effect the filing of
the relevant Demand Registration unless the initiating holders shall have, prior
to the filing of such registration, withdrawn the initial request.
7. REGISTRATION PROCEDURES.
(a) Subject to the terms hereof, whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered in
accordance with the terms and conditions of this Agreement, the Corporation will
use its reasonable best efforts to effect the registration and to permit the
sale of such Registrable Securities in accordance with the intended method of
disposition thereof, and pursuant thereto the Corporation will promptly:
(i) prepare and file with the SEC, subject to the availability of all
required consents of independent accountants (which the Corporation agrees
to use all reasonable efforts to obtain), not later than 60 days after
receipt of a request to file a registration statement with respect to such
Registrable Securities, a registration statement with respect to such
Registrable Securities, and use its reasonable best efforts to cause such
registration statement to become effective; PROVIDED, that each such
registration statement will be on a form for which the Corporation then
qualifies, which is available for the sale of the Registrable Securities in
accordance with the intended method of disposition thereof, and will
provide for the registration of at least such number of shares as shall
have been demanded be registered; PROVIDED, HOWEVER, that before filing a
registration statement or prospectus or any amendments or supplements
thereto, the Corporation will furnish to each of the holders including
shares therein, and the managing underwriters, if any, draft copies of all
such documents proposed to be filed a reasonable period prior to such
filing, which documents will be subject to the reasonable review of each of
such holders, and the managing underwriters, if any, and their respective
agents and
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representatives and (x) the Corporation will not include in any
registration statement information concerning or relating to the holders
including shares therein to which any such holder shall reasonably object
in writing (unless the inclusion of such information is required by
applicable law or the regulations of any securities exchange to which the
Corporation may be subject or is required to prevent a material omission or
misstatement in the filing), and (y) with respect to any Duke Demand
Registration or ▇▇▇▇▇▇▇▇ Demand Registration, respectively, the Corporation
will not file any Demand Registration or amendment thereto or any
prospectus or any supplement thereto to which Duke or ▇▇▇▇▇▇▇▇,
respectively, shall reasonably object in writing;
(ii) notify each seller of Registrable Securities of any stop order
issued by the SEC and take all reasonable actions required to prevent the
entry of such stop order or to remove it at the earliest possible time if
entered;
(iii) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a
period of not less than 90 days, or such shorter period as may be required
if all Registrable Securities covered by such registration statement are
sold prior to the expiration of such 90-day period (except in connection
with an underwritten offering, in which case such registration statement
shall be kept effective as long as the underwriters reasonably request in
the underwriting agreement), and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement;
(iv) furnish without charge to each seller and managing underwriters
of Registrable Securities such number of copies of such registration
statement, each amendment and supplement thereto (in each case including
all exhibits thereto), the prospectus included in such registration
statement (including each preliminary, final, summary, amended or
supplemented prospectus) and such other documents as such seller and
managing underwriters may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
(v) use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions within the United States as any seller reasonably requests,
keep such registrations or qualifications in effect for so long as the
registration statement remains in effect, and do any and all other acts and
things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller; PROVIDED, HOWEVER, that the Corporation
will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for
this Section 7(a)(v), (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction;
(vi) use its reasonable best efforts to cause the Registrable
Securities covered by such registration statement to be registered with or
approved by such other
-11-
governmental agencies or authorities within the United States as may be
necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(vii) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event of which the Corporation is
aware as a result of which the prospectus included in such registration
statement or any document incorporated therein by reference contains an
untrue statement of a material fact or omits to state any material fact
necessary to make the statements therein not misleading in light of the
circumstance then existing, and prepare and file promptly with the SEC a
supplement or amendment to such prospectus or any such document
incorporated therein by reference so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the
circumstance then existing;
(viii) use its reasonable best efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar
securities issued by the Corporation are then listed or traded;
(ix) provide a transfer agent and registrar for all Registrable
Securities and a CUSIP number for all such Registrable Securities, in each
case not later than the effective date of such registration statement;
(x) enter into such customary agreements (including an underwriting
agreement in customary form with customary lock-up provisions not to exceed
90 days from the date of the prospectus) and take such other actions in
connection therewith as the holders of a Majority of the Registrable
Securities being registered or the managing underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities; and make such representations and warranties
with respect to the registration statement, post-effective amendment or
supplement thereto, prospectus or any amendment or supplement thereto, and
documents incorporated by reference, if any, to the managing underwriters
of the Registrable Securities, in form, substance and scope as are
customarily made by the Corporation in connection with offerings of
Registrable Securities in transactions of such kind;
(xi) make available for inspection by any underwriter participating in
any disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such underwriter, all financial
and other records, pertinent corporate documents and properties of the
Corporation, and cause the Corporation's officers, directors and employees
and accountants to supply all information reasonably requested by any such
underwriter, attorney, accountant or agent in connection with such
registration statement, in each case upon receipt of an appropriate
confidentiality agreement;
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(xii) in the case of an underwritten offering, obtain a cold comfort
letter from the Corporation's independent public accountants in customary
form and covering such matters of the type customarily covered by cold
comfort letters, as the managing underwriters reasonably request; and
(xiii)otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC, and generally make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more than
eighteen months, beginning with the first month after the effective date of
the Registration Statement, which earnings statement will satisfy the
provisions of Section 11(a) of the Securities Act and may be prepared in
accordance with Rule 158 under the Securities Act.
(b) The Corporation may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Corporation in
writing such information regarding the seller and the distribution of such
securities as the Corporation may from time to time reasonably request and to
timely complete and execute all questionnaires, powers of attorney, indemnities,
hold-back agreements, underwriting agreements and other documents reasonably
requested by the Corporation.
8. REGISTRATION EXPENSES.
(a) All expenses incident to the Corporation's performance of or compliance
with this Agreement, including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel for the underwriters in
connection with blue sky qualifications of the Registrable Securities),
messenger, telephone and delivery expenses, and fees and disbursements of
counsel for the Corporation and of the Corporation's independent certified
public accountants (including the expenses of any special audit or "cold
comfort" letters required by or incident to such performance), fees and expenses
of underwriters customarily paid by issuers of securities (including liability
insurance if the Corporation so desires), all expenses relating to the
preparation, printing, distribution and reproduction of the registration
statement and prospectus and any amendment or supplement to the foregoing,
certificates representing the Registrable Securities and all other documents
relating to any of the foregoing, the reasonable fees and expenses of any
special experts retained by the Corporation or at the request of the managing
underwriters in connection with such registration and fees and expenses of other
Persons retained by the Corporation, but excluding underwriting discounts,
commissions, fees, discounts and commissions of brokers and dealers and capital
gains, income and transfer taxes, if any, relating to any sale of Registrable
Securities and the fees and disbursements of counsel for the holders of
Registrable Securities, will be borne and paid promptly by the Corporation (all
such expenses being herein called "Registration Expenses").
(b) In connection with each registration hereunder, the holders of
Registrable Securities included therein shall be responsible for all fees and
disbursements of their counsel and for (i) all underwriting discounts or other
commissions, fees, discounts and commissions of brokers and dealers payable by
them as selling securityholders and (ii) capital gains, income and transfer
taxes, if any, relating to the sale of such Registrable Securities.
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9. INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY CORPORATION. In the event any Registrable Securities
are included in a registration statement pursuant to this Agreement, the
Corporation shall indemnify and hold harmless each holder of such Registrable
Securities, its employees, officers, directors and constituent partners and each
Person who controls such holder (within the meaning of the Securities Act and
the Exchange Act) against all losses, claims, damages, liabilities and expenses
(or actions in respect thereof) arising out of or based upon any untrue or
alleged untrue statement of a material fact contained in any registration
statement or preliminary or final prospectus relating to the registration of
such Registrable Securities or any amendment or supplement thereto or any
document incorporated by reference therein or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading, except insofar as the same are contained in any
information furnished in writing to the Corporation by or on behalf of such
holder or other indemnified Person expressly for use therein or caused by such
holder's failure to deliver a copy of the registration statement or prospectus
or any amendments or supplements thereto after the Corporation has furnished
such holder with a sufficient number of copies of the same. Subject to the
provisions of Section 9(c), the Corporation will reimburse each holder of
Registrable Securities, its officers, directors, constituent partners and
controlling Persons for any reasonable legal and other expenses as incurred in
connection with investigating or defending any such losses, claims, damages,
liabilities, expenses or actions for which such Person is entitled to
indemnification hereunder. In connection with a firm commitment or best efforts
underwritten offering, the Corporation will indemnify the underwriters or
agents, their officers, directors, constituent partners and each Person who
controls such underwriters (within the meaning of the Securities Act and the
Exchange Act) or agents to the same extent as provided above (or such greater
extent as may be customarily required by the managing underwriters) with respect
to the indemnification of the holders of Registrable Securities.
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. In connection with
any registration statement in which a holder of Registrable Securities is
participating, such holder will furnish to the Corporation in writing such
information and affidavits as the Corporation reasonably requests for use in
connection with any such registration statement or preliminary or final
prospectus or any amendment or supplement thereto or any document incorporated
by reference therein and shall indemnify and hold harmless the Corporation, its
employees, directors and officers, each Person who controls the Corporation
(within the meaning of the Securities Act and the Exchange Act) and all other
prospective sellers and their respective directors, officers and controlling
Persons (within the meaning of the Securities Act and the Exchange Act) against
any losses, claims, damages, liabilities and expenses (or actions in respect
thereof) arising out of or based upon any untrue or alleged untrue statement of
a material fact or any omission or alleged omission of a material fact required
to be stated in any registration statement or preliminary or final prospectus
relating to the registration of such Registrable Securities or any amendment
thereof or supplement thereto or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, to the
extent, but only to the extent, that such untrue or alleged untrue statement or
omission or alleged omission is contained in any written information or
affidavit furnished by or on behalf of such holder specifically for use in such
registration statement or prospectus and then only to the extent of the total
proceeds received by such holder of Registrable Securities. Subject to the
provisions of Section 9(c), the
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holders of Registrable Securities participating in any registration will
reimburse, to the extent of the total proceeds received by the holders of
Registrable Securities, the Corporation, its officers, directors and controlling
Persons and all other prospective sellers and their respective directors,
officers and controlling Persons for any reasonable legal and other expenses as
incurred in connection with investigation or defending any such losses, claims,
damages, liabilities, expenses or actions.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification (but omission of
such notice shall not relieve the indemnifying party from liability hereunder
except to the extent such indemnifying party is actually prejudiced by such
failure to give notice) and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest may exist between such indemnified and
indemnifying parties with respect to such claim, permit such indemnifying party
to assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. The indemnifying party will not be subject to any liability
for any settlement made without its consent (but such consent will not be
unreasonably withheld or delayed). No indemnifying party will consent to entry
of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of an unconditional release from all liability in respect to
such claim or litigation and does not subject the indemnified party to any
material injunctive relief or other material equitable remedy. An indemnifying
party who is not entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more than one counsel for
all parties indemnified by such indemnifying party with respect to such claim.
(d) CONTRIBUTION. If the indemnification provided for in Section 9(a) or
Section 9(b) is unavailable or insufficient to hold harmless each of the
indemnified parties against any losses, claims, damages, liabilities and
expenses (or actions in respect thereof) to which such persons may become
subject under the Securities Act, then the indemnifying party shall, in lieu of
indemnifying each party entitled to indemnification hereunder, contribute to the
amount paid or payable by such party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand and such
indemnified persons on the other in connection with the statements or omissions
or alleged statements or omissions that resulted in such losses, claims,
damages, liabilities or expenses. The relative fault of such persons shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact, or omission or alleged omission to state a
material fact, relates to information supplied by or concerning the indemnifying
party on the one hand, or by such indemnified person on the other, and such
person's relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The parties hereto agree that it
would not be just and equitable if contribution pursuant to this Section 9(d)
were determined by pro rata allocation or by any other allocation that does not
take into account the equitable considerations referred to in this Section 9(d).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or expenses referred to above shall be deemed to
include (subject to the limitations set forth in Section 9(b) or 9(c) hereof)
any legal or other fees or expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action, proceeding
or claim. No person guilty of fraudulent misrepresentation within the
-15-
meaning of the Act shall be entitled to contribution from any person that is not
guilty of such fraudulent misrepresentation.
(e) PRIORITY OF INDEMNIFICATION. Notwithstanding the foregoing, to the
extent that provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with an underwritten offering
are in conflict with the foregoing, the provisions of the underwriting agreement
shall prevail.
(f) PAYMENT. The indemnification and contribution required by this Section
9 shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
(g) BENEFICIARIES OF INDEMNIFICATION. The obligations of the Corporation
and the holders of Registrable Securities under this Section 9 shall be in
addition to any liability that they may otherwise have.
10. RULE 144.
The Corporation covenants that after the consummation of the IPO it will
use its reasonable best efforts to timely file the reports required to be filed
by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, if the Corporation is not
required to file such reports, it will, upon the request of any holder of
Registrable Securities, make publicly available such information), all to the
extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of any holder of Registrable
Securities, the Corporation will deliver to such holder a written statement as
to whether it has complied with such requirements.
11. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS; MARKET STAND-OFF AGREEMENT.
(a) PARTICIPATION IN UNDERWRITTEN REGISTRATION. No Person may participate
in any underwritten registration hereunder unless such Person (i) agrees to sell
such Person's securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (ii)
completes and executes all customary questionnaires, powers of attorney,
underwriting agreements, lock-ups and other documents required under the terms
of such underwriting arrangements.
(b) MARKET STAND-OFF AGREEMENT. Each holder of Registrable Securities
agrees, whether or not it is participating in such registration statement, that
it shall not, to the extent requested by an underwriter of Common Stock (or
other securities of the Corporation), sell or otherwise transfer or dispose of
any securities of the Corporation (other than those included in the
registration) during the 90 day period following the effective date of a
registration statement of the Corporation filed under the Securities Act if such
holder owns or has the right to acquire 5% or more of the outstanding Common
Stock. In order to enforce the foregoing covenant, the Corporation may impose
stop-transfer instructions with respect to the securities of the Corporation
owned by holders of Registrable Securities until the end of such 90 day period.
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12. MISCELLANEOUS.
(a) RIGHT TO SUSPEND. The Corporation may, by notice in writing to each
holder of Registrable Securities, require the holder of Registrable Securities
to suspend use of any prospectus included in a registration statement filed
hereunder if the Corporation reasonably determines that it contains an untrue
statement of a material fact or omits to state any material fact necessary to
make the statements therein not misleading or that any transaction in which the
Corporation is engaged or proposes to engage, or any event that has occurred or
is expected to occur, would require an amendment to such registration statement
or a supplement to such prospectus (including any such amendment or supplement
made through incorporation by reference to a report filed under Section 13 of
the Exchange Act). Each holder of Registrable Securities agrees that, upon
receipt of any notice from the Corporation of the happening of any event of the
kind described in this Section 12(a), such holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such holder's receipt of the copies
of a properly supplemented or amended prospectus, and, if so directed by the
Corporation, such holder will deliver to the Corporation all copies, other than
permanent file copies, then in such holder's possession, of the most recent
prospectus covering such Registrable Securities at the time of receipt of such
notice. In the event the Corporation gives any such notice, the time period
mentioned in Section 7(a)(iii), if applicable, will be extended by the number of
days during the period from and including the date of the giving of such notice
to and including the date when each seller of Registrable Securities covered by
such registration statement has received the copies of such supplemented or
amended prospectus. The Corporation agrees to use its reasonable best efforts to
cause any suspension of use of any prospectus pursuant to this paragraph to be
as short a period of time as possible.
(b) REMEDIES. No holder of Registrable Securities shall have any right to
take any action to restrain, enjoin or otherwise delay any registration as a
result of any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given unless the Corporation has obtained the
written consent of (i) the holders of at least a Majority of the outstanding
▇▇▇▇▇▇▇▇ Registrable Securities and (ii) the holders of at least a Majority of
the outstanding Duke Registrable Securities. Each holder of any Registrable
Securities at the time or thereafter shall be bound by any consent authorized by
this Section 12(c), whether or not such holder consented or whether or not such
Registrable Securities have been marked to indicate such consent.
(d) REGISTRABLE SECURITIES HELD BY THE CORPORATION OR ITS SUBSIDIARIES.
Whenever the consent or approval of holders of all or any specified percentage
of Registrable Securities is required hereunder, Registrable Securities held by
the Corporation or any of its subsidiaries will not be counted in determining
whether such consent or approval was given by such holders.
(e) NOTICES. All notices or other communications provided for hereunder
shall be in writing and shall be effective (i) on the day on which delivered if
delivered personally or transmitted by telex or telegram or telecopier with
evidence of receipt, (ii) one business day after
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the date on which the same is delivered to a nationally recognized overnight
courier service with evidence of receipt, or (iii) three days after the date on
which the same is deposited, postage prepaid, in the U.S. mail, sent by
certified or registered mail, return receipt requested, and addressed to the
party to be notified at the address indicated below for the Corporation, or at
the address for the holder of the Registrable Securities set forth in a registry
maintained by the Corporation, or at such other address and/or telecopy or telex
number and/or to the attention of such other person as the Corporation or the
holder of the Registrable Securities may designate by ten-day advance written
notice.
(f) SUCCESSORS AND ASSIGNS; TRANSFER OF REGISTRATION RIGHTS. This Agreement
will inure to the benefit of and be binding upon the successors and permitted
assigns of each of the parties. The registration rights granted by this
Agreement may be transferred or assigned by operation of law or in connection
with any transfer or assignment of Registrable Securities (other than in a
transaction described in clause (i), (ii) or (iv) of Section 2) provided that
(x) upon such transfer or assignment the transferee or assignee holds
Registrable Securities equal to at least 10% of the then outstanding Common
Stock, (y) such transferee or assignee agrees in writing to be bound by the
terms of this Agreement and (z) the Corporation is given written notice of such
transfer or assignment within 10 days after such transfer or assignment, setting
forth the name and address of the transferee or assignee and identifying the
Registrable Securities with respect to which such registration rights have been
assigned. For purposes of exercise of requests pursuant to Section 3 or Section
4, transferees shall be included with Duke or ▇▇▇▇▇▇▇▇, as the case may be,
based on who was the original transferor of such Registrable Securities.
(g) COUNTERPARTS. This Agreement may be executed in one or more
counterparts and by the parties hereto in separate counterparts, all of which
will constitute one and the same agreement and shall become effective when one
or more counterparts have been signed by each of the parties hereto and
delivered (including by facsimile) to the other parties.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and will not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW; JURISDICTION. This Agreement will be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to conflict of law principles. Any holder of Registrable Securities may
bring any action or proceeding to enforce or arising out of this Agreement or in
the instruments and agreements annexed hereto in any court of competent
jurisdiction.
(j) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein will not be affected or impaired thereby.
(k) TERMINATION OF REGISTRATION RIGHTS. The rights of any holder hereunder
to request registration or inclusion in any registration pursuant to Section 4
or 5, respectively, with respect to any Duke Registrable Securities shall
terminate at such time as Duke and its Affiliates shall own less than 10% of the
outstanding common stock of the Corporation. The rights of any holder hereunder
to request registration or inclusion in any registration pursuant to Section 3
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or 5, respectively, with respect to any ▇▇▇▇▇▇▇▇ Registrable Securities shall
terminate at such time as ▇▇▇▇▇▇▇▇ and its Affiliates shall own less than 10% of
the outstanding common stock of the Corporation.
(l) ENTIRE AGREEMENT. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Corporation with respect
to the Registrable Securities. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
DUKE ENERGY FIELD SERVICES
CORPORATION
Corporation Address:
[to come] By:
-----------------
Name:
Title:
DUKE ENERGY CORPORATION
By:
-----------------
Name:
Title:
▇▇▇▇▇▇▇▇ PETROLEUM COMPANY
By:
-----------------
Name:
Title:
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