Exhibit 99.1
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT OF
DUKE ENERGY FIELD SERVICES, LLC
by and between
▇▇▇▇▇▇▇▇ GAS COMPANY
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....................................................8
ARTICLE II
ORGANIZATION
Section 2.1 Formation.......................................................8
Section 2.2 Name............................................................8
Section 2.3 Registered Office; Registered Agent; Principal Office; Other....9
Section 2.4 Purpose; Powers.................................................9
Section 2.5 Foreign Qualification...........................................9
Section 2.6 Term............................................................9
Section 2.7 No State-Law Partnership........................................9
Section 2.8 Title to Company Assets........................................10
Section 2.9 No Power to Bind Company or Other Members......................10
Section 2.10 Liability to Third Parties.....................................10
ARTICLE III
MANAGEMENT
Section 3.1 Management of the Company's Affairs............................10
Section 3.2 Member Obligations.............................................11
Section 3.3 Company Board Composition; Initial Directors...................12
Section 3.4 Removal and Replacement of Directors...........................12
Section 3.5 Meetings of the Company Board..................................12
Section 3.6 Notice of Company Board Meetings...............................12
Section 3.7 Actions by the Company Board...................................13
Section 3.8 Action by Unanimous Written Consent............................14
Section 3.9 Officers.......................................................14
Section 3.10 Compensation...................................................16
ARTICLE IV
BOOKS AND RECORDS; REPORTS AND INFORMATION AND ACCOUNTS
Section 4.1 Maintenance of Books and Records...............................16
Section 4.2 Auditors; Corporate Reports; Annual Financial Statements.......16
Section 4.3 Confidentiality................................................17
ARTICLE V
LIQUIDITY AND TRANSFER RESTRICTIONS
Section 5.1 Transfers of the Company Interests.............................18
Section 5.2 Change of Control..............................................18
ARTICLE VI
CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
Section 6.1 Capital Contributions..........................................20
Section 6.2 Additional Capital Contributions...............................20
Section 6.3 Capital Accounts...............................................20
Section 6.4 Return of Contributions........................................20
ARTICLE VII
PROFITS AND LOSSES; DISTRIBUTIONS
Section 7.1 Allocation of Profit and Losses................................21
Section 7.2 Limitations on Allocations.....................................21
Section 7.3 Restoration of Negative Capital Accounts.......................23
Section 7.4 Interim Allocations Relating to Transferred Company Interests..23
Section 7.5 Code Section 704(c) Allocations................................23
Section 7.6 Distributions..................................................24
ARTICLE VIII
WITHHOLDING TAX MATTERS; TAX STATUS AND TREATMENT
Section 8.1 Withholding....................................................24
Section 8.2 Tax Status.....................................................25
Section 8.3 Tax Matters Partner; Tax Elections.............................26
ARTICLE IX
DISSOLUTION, WINDING-UP AND TERMINATION
Section 9.1 Dissolution....................................................26
Section 9.2 Winding-Up and Termination.....................................27
ARTICLE X
MISCELLANEOUS
Section 10.1 Counterparts...................................................27
Section 10.2 Governing Law; Jurisdiction and Forum; Waiver of Jury Trial....27
Section 10.3 Entire Agreement...............................................28
Section 10.4 Notices........................................................28
Section 10.5 Successors and Assigns.........................................30
Section 10.6 Headings.......................................................30
Section 10.7 Amendments and Waivers.........................................30
Section 10.8 Severability...................................................30
Section 10.9 Interpretation.................................................31
Section 10.10 Further Assurances.............................................31
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF DUKE ENERGY
FIELD SERVICES, LLC, dated as of March 31, 2000, by and between ▇▇▇▇▇▇▇▇ GAS
COMPANY, a Delaware corporation ("PGC"), and Duke Energy Field Services
Corporation, a Delaware corporation ("DEFS Holding").
RECITALS:
1. Duke Energy Field Services, LLC (the "Company") was formed as a
Delaware limited liability company on December 15, 1999 (the "Formation Date"),
by the filing of a Certificate of Formation (the "Certificate") under and
pursuant to the Act. DEFS Holding was admitted to the Company as the sole
member, effective as of the Formation Date, pursuant to that certain Limited
Liability Company Agreement of the Company, dated as of December 15, 1999 (the
"Original Agreement").
2. DEFS Holding and PGC now desire to amend and restate the Original
Agreement in its entirety to reflect the admission of PGC as a member of the
Company and the other matters 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 hereby, DEFS Holding and PGC hereby amend and restate the Original
Agreement as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Definitions. Each capitalized term used herein shall have the
meaning given such term set forth below:
"Act" shall mean the Delaware Limited Liability Company Act and any
successor statute, as amended from time to time.
"Adjusted Capital Account Deficit" shall mean, with respect to any Member,
the deficit balance, if any, in such Member's Capital Account as of the end of
the relevant Fiscal Year, after giving effect to the following adjustments:
(a) such Capital Account shall be deemed to be increased by
any amounts that such Member is obligated to restore to the Company (pursuant to
this Agreement or otherwise) or is deemed to be obligated to restore pursuant to
(i) the penultimate sentence of Regulation Section 1.704-2(g)(1), or (ii) the
penultimate sentence of Regulation Section 1.704-2(i)(5); and
(b) such Capital Account shall be deemed to be decreased by
the items described in Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5), and
(6).
The foregoing definition of Adjusted Capital Account Deficit is intended
to comply with the provisions of Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.
"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 mean this Amended and Restated Limited Liability Company
Agreement, as amended from time to time.
"Book Value" shall mean (a) with respect to the assets of the Company
contributed in accordance with Section 6.1 (i) by DEFS Holding, $3,585,500,000
and (ii) by PGC, $2,139,500,000; (b) with respect to any asset of the Company
contributed by any Member (other than as provided in clause (a) above), the
asset's fair market value at the time of such contribution; and (c) with respect
to any other asset of the Company, the adjusted tax basis of such asset as of
the relevant date for U.S. Federal income tax purposes, except as follows:
(1) the Book Values of all Company assets (including
intangible assets such as goodwill) shall be adjusted to equal their respective
fair market values (taking Code Section 7701(g) into account) as of the
following times:
(A) the acquisition of an additional interest in the
Company by any new or existing Member in exchange for more than a DE
MINIMIS Capital Contribution if such adjustment is necessary to reflect
the relative economic interests of the interest holders in the Company;
(B) the distribution by the Company to a Member of more
than a DE MINIMIS amount of money or Company property as consideration for
an interest in the Company if such adjustment is necessary to reflect the
relative economic interests of the interest holders in the Company; and
(C) the liquidation of the Company within the meaning
of Regulation Section 1.704-1(b)(2)(iv)(f)(5)(ii);
(2) the Book Value of any Company asset distributed in kind to
any Member shall be the gross fair market value of such asset (taking Code
Section 7701(g) into account) on the date of such distribution; and
(3) the Book Value of Company assets shall be increased or
decreased, as appropriate, to reflect any adjustments to the adjusted tax bases
of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only
to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Regulation Section 1.704-1(b)(2)(iv)(m) and
subparagraph (vi) of the definition of "Profits" and "Losses" herein; PROVIDED,
HOWEVER, that Book Values shall not be adjusted pursuant to this subparagraph
(3) to the extent that an adjustment pursuant to subparagraph (1) hereof is
required in connection with a transaction that would otherwise result in an
adjustment pursuant to this subparagraph (3).
The Book Value of an asset shall be adjusted by the Depreciation
taken into account with respect to such asset for purposes of computing Profits
and Losses and other items allocated pursuant to Article VII hereof. The
foregoing definition of Book Value is intended to comply with the provisions of
Regulation Section 1.704-1(b)(2)(iv) and shall be interpreted and applied
consistently therewith.
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"Business Day" shall mean any day on which banks are generally open to
conduct business in the State of New York.
"Capital Account" shall have the meaning set forth in Section 6.3.
"Capital Contribution" shall mean, with respect to any Member, the amount
of any money and the initial Book Value of any property (other than money)
contributed to the Company with respect to the interest in the Company held or
purchased by such Member and credited to each such Member's Capital Accounts
pursuant to Article VI hereof.
"Certificate" shall have the meaning set forth in the Recitals.
"Change of Control" shall mean an event 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.
"Changing Member" shall have the meaning set forth in Section 5.2(b).
"Changing Member Appraiser" shall have the meaning set forth in Section
5.2(c).
"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 Recitals.
"Company Board" shall have the meaning set forth in Section 3.1.
"Company Interest" shall mean, with respect to either Member, such
Member's respective membership interest in the Company.
"Contribution Agreement" shall mean the Contribution Agreement, dated as
of December 16, 1999, by and among Duke, ▇▇▇▇▇▇▇▇ and the Company, as the same
may be amended from time to time.
"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 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
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(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 5.2(b).
"Control Appraiser Committee" shall have the meaning set forth in Section
5.2(c).
"Control Notice" shall have the meaning set forth in Section 5.2(b).
"Control Offer Period" shall have the meaning set forth in Section 5.2(b).
"DEFS Holding" shall have the meaning set forth in the Preamble.
"Depreciation" shall mean, for each Fiscal Year or part thereof, an amount
equal to the depreciation, amortization, or other cost recovery deduction
allowable for U.S. Federal income tax purposes with respect to an asset for such
Fiscal Year or part thereof, except that if the Book Value of an asset differs
from its adjusted tax basis for U.S. Federal income tax purposes at the
beginning of such Fiscal Year, the depreciation, amortization, or other cost
recovery deduction for such Fiscal Year or part thereof shall be an amount which
bears the same ratio to such Book Value as the U.S. Federal income tax
depreciation, amortization, or other cost recovery deduction for such Fiscal
Year or part thereof bears to such adjusted tax basis. If such asset has a zero
adjusted tax basis for U.S. Federal income tax purposes, the depreciation,
amortization, or other cost recovery deduction for such asset for such Fiscal
Year shall be determined under a method reasonably selected by agreement among
the Members.
"Director" shall mean one or more members of the Company Board, as the
context may require.
"Disguised Sale Amount" shall mean the excess of (a) $1,200,000,000 over
(b) the product of the Percentage Interest of PGC in the Company as of the
Closing Date and $2,400,000,000.
"Distribution" shall mean, with respect to any Member, the amount of money
and the Book Value of any property (other than money) distributed to such Member
pursuant to Section 7.6 hereof with respect to such Member's Company Interest.
"Duke" shall mean Duke Energy Corporation, a North Carolina corporation.
"Duke Directors" shall have the meaning set forth in Section 3.3.
"Fair Market Value" shall mean, with respect to any Member's Company
Interest, a purchase price equal to the value that would be obtained for such
Company 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 Company Interest.
"Financing" shall have the meaning set forth in the Contribution
Agreement.
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"Fiscal Year" shall mean the taxable year of the Company, which shall be a
fiscal year ending on December 31st.
"Flow Through Subsidiaries" shall have the meaning set forth in Section
8.2.
"Formation Date" shall have the meaning set forth in the Recitals.
"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.
"Income Taxes" shall have the meaning set forth in Annex B of the
Contribution Agreement.
"IPO" shall have the meaning set forth in the Parent Company Agreement.
"Law" shall mean any applicable constitutional provision, statute, act,
code (including the Code), law, regulation, rule, ordinance, order, decree,
ruling, proclamation, resolution, judgment, decision, declaration or
interpretative or advisory opinion or letter of a Governmental Entity.
"Member" shall mean one or more of DEFS Holding, PGC and any Person
hereafter admitted to the Company as a member as provided in this Agreement, as
the context may require, but such term does not include any Person who has
ceased to be a member in the Company.
"Neutral Control Appraiser" shall have the meaning set forth in Section
5.2(c).
"Neutral Firm" shall have the meaning set forth in the Contribution
Agreement.
"Non-Changing Member" shall have the meaning set forth in Section 5.2(b).
"Non-Changing Member Appraiser" shall have the meaning set forth in
Section 5.2(b).
"Nonrecourse Deductions" shall have the meaning set forth in Regulation
Section 1.704-2(b)(1). The amount of Nonrecourse Deductions for any Fiscal Year
equals the excess, if any, of (a) the net increase in the amount of Partnership
Minimum Gain during such Fiscal Year over (b) the aggregate amount of any
distributions during such Fiscal Year of proceeds of a Nonrecourse Liability
that are allocable to an increase in Partnership Minimum Gain, determined in
accordance with Regulation Section 1.704-2(c).
"Nonrecourse Liability" shall have the meaning set forth in Regulation
Section 1.704-2(b)(3).
"Officers" shall have the meaning set forth in Section 3.1.
"Original Agreement" shall have the meaning set forth in the Recitals.
"Other Member" shall have the meaning set forth in Section 7.6(a)(i).
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"Parent" shall mean, with respect to a particular Person, the Person that
Controls such particular Person and is not itself Controlled by any other
Person.
"Parent Company Agreement" shall mean the Parent Company Agreement of even
date herewith by and among Duke, Phillips, the Company and DEFS Holding.
"Partnership Minimum Gain" shall mean the aggregate amount of gain (of
whatever character), determined for each Nonrecourse Liability of the Company,
that would be realized by the Company if it disposed of the Company property
subject to such Nonrecourse Liability in a taxable transaction in full
satisfaction thereof (and for no other consideration), determined in accordance
with Regulation Sections 1.704-2(d) and (k), and the determination of a Member's
share of Partnership Minimum Gain in accordance with Regulation Section
1.704-2(g).
"Partner Nonrecourse Debt" shall have the meaning set forth in Regulation
Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" shall mean the aggregate amount of
gain (of whatever character), determined for each Partner Nonrecourse Debt, that
would be realized by the Company if it disposed of the Company property subject
to such Partner Nonrecourse Debt in a taxable transaction in full satisfaction
thereof (and for no other consideration), determined in accordance with
Regulation Sections 1.704-2(i)(3) and (k), and the determination of a Member's
share of minimum gain attributable to a Partner Nonrecourse Debt in accordance
with Regulation Section 1.704-2(i)(5).
"Partner Nonrecourse Deductions" shall mean the excess, if any, of (a) the
net increase, if any, in the amount of Partner Nonrecourse Debt Minimum Gain
during any Fiscal Year over (b) the aggregate amount of any distributions during
such Fiscal Year of proceeds of a Partner Nonrecourse Debt that are allocable to
an increase in Partner Nonrecourse Debt Minimum Gain, determined in accordance
with Regulation Sections 1.704-2(i)(2).
"PGC" shall have the meaning set forth in the Preamble.
"PGC Contribution" shall have the meaning set forth in Section 8.2.
"PGC Distribution" shall have the meaning set forth in Section 8.2.
"PGCSI" shall mean ▇▇▇▇▇▇▇▇ Gas Company Shareholder, Inc., a Delaware
corporation and a wholly-owned Subsidiary of ▇▇▇▇▇▇▇▇.
"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.
"▇▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇▇▇▇ Petroleum Company, a Delaware corporation.
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"▇▇▇▇▇▇▇▇ Directors" shall have the meaning set forth in Section 3.3.
"Profits" and "Losses" shall mean, for each Fiscal Year or part thereof,
the taxable income or loss of the Company for such Fiscal Year determined,
solely for U.S. Federal income tax purposes, in accordance with Code Section
703(a) (for this purpose, all items of income, gain, loss, or deduction required
to be stated separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments (without duplication):
(a) any income of the Company that is exempt from U.S. Federal
income tax and not otherwise taken into account in computing Profits or
Losses pursuant to this definition shall be added to such taxable income
or loss;
(b) any expenditure of the Company that is (i) not deductible in
computing U.S. taxable income and not properly chargeable to the Members'
Capital Accounts as described in Code Section 705(a)(2)(B) or treated as
such pursuant to Regulation Section 1.704-1(b)(2)(iv)(i), and (ii) not
otherwise taken into account in computing Profits and Losses pursuant to
this definition, shall be subtracted from such taxable income or loss;
(c) any Depreciation for such Fiscal Year or part thereof shall
be taken into account in lieu of the depreciation, amortization and other
cost recovery deductions taken into account in computing such taxable
income or loss;
(d) gain or loss resulting from any disposition of Company
property with respect to which gain or loss is recognized for U.S. Federal
income tax purposes shall be computed with reference to the Book Value of
the property disposed of, notwithstanding that the adjusted tax basis of
such property for U.S. Federal income tax purposes differs from its Book
Value;
(e) in the event the Book Value of any Company asset is adjusted
pursuant to subparagraphs (1) and (2) of the definition of Book Value, the
amount of such adjustment shall be treated as an item of gain (if the
adjustment increases the Book Value of the asset) or an item of loss (if
the adjustment decreases the Book Value of the asset) from the disposition
of such asset and shall be taken into account for purposes of computing
Profits and Losses;
(f) to the extent an adjustment to the adjusted tax basis of any
Company asset under Code Section 734(b) is required, pursuant to
Regulation Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in
determining Capital Accounts as a result of a distribution other than in
liquidation of a Member's Company Interest, the amount of such adjustment
shall be treated as an item of gain (if the adjustment increases the
adjusted tax basis of the asset) or an item of loss (if the adjustment
decreases the adjusted tax basis of the asset) from the disposition of
such asset and shall be taken into account for purposes of computing
Profits and Losses; and
(g) notwithstanding any other provision of this definition, such
taxable income or loss shall be deemed not to include any income, gain,
loss, deduction or other item thereof specially allocated pursuant to
Sections 7.2(b), (c), (d), (e), (f) or (h) or the proviso in Section
7.1(b).
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The amounts of the items of Company income, gain, loss or deduction
available to be specially allocated pursuant to Sections 7.2(b), (c), (d), (e),
(f) and (h) shall be determined by applying rules analogous to those set forth
in subparagraphs (a) through (f) above.
"Regulation" shall mean the income tax regulations promulgated under the
Code by the U.S. Department of the Treasury (whether final or temporary).
"Regulatory Allocations" shall have the meaning set forth in Section
7.2(g) hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Subsidiary" shall mean, when used with respect to any Person, any
Affiliate of such Person that is Controlled by such Person.
"Tax Matters Partner" shall have the meaning set forth in Section 8.3(a)
hereof.
"Taxing Authorities" shall have the meaning set forth in the Contribution
Agreement.
"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.
"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 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
ORGANIZATION
Section 2.1 Formation. The Company has been organized as a Delaware
limited liability company by the filing of the Certificate under and pursuant to
the Act. DEFS Holding's status as a Member is hereby continued, and PGC is
hereby admitted to the Company as a Member, in each case effective
contemporaneously with the execution by such Person of this Agreement.
Section 2.2 Name. The name of the Company is "Duke Energy Field Services,
LLC", and all Company business must be conducted in that name or such other
names that comply with Law as the Company Board may select.
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Section 2.3 Registered Office; Registered Agent; Principal Office; Other.
The registered office of the Company required by the Act to be maintained in the
State of Delaware shall be the office of the initial registered agent for
service of process named in the Certificate or such other office (which need not
be a place of business of the Company) as the Company Board may designate in the
manner provided by Law. The registered agent for service of process of the
Company in the State of Delaware shall be the initial registered agent for
service of process named in the Certificate or such other Person or Persons as
the Company Board may designate in the manner provided by Law. The principal
office of the Company in the United States shall be ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place as the Company Board may from time
to time designate, which need not be in the State of Delaware, and the Company
shall maintain records there and shall keep the street address of such principal
office at the registered office of the Company in the State of Delaware. The
Company may have such other offices as the Company Board may designate.
Section 2.4 Purpose; Powers. (a) The purposes of the Company 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 Company may also pursue other business purposes beyond those described
in the immediately preceding sentence; PROVIDED that any such other business
purposes (i) are not forbidden by the Act or by applicable Law and (ii) are
approved by the Company Board in accordance with Section 3.7.
(b) The Company has the power to do any and all acts necessary,
appropriate, proper, advisable, incidental or convenient to or in
furtherance of the purposes of the Company set forth in Section 2.4(a)
herein and has, without limitation, any and all powers that may be
exercised on behalf of the Company by the Directors and Officers pursuant
to Article III hereof.
Section 2.5 Foreign Qualification. Prior to the Company's conducting
business in any jurisdiction other than Delaware, the Company Board shall cause
the Company to comply, to the extent procedures are available and those matters
are reasonably within the control of the Company Board, with all requirements
necessary to qualify the Company as a foreign limited liability company in that
jurisdiction. At the request of the Company Board, each Member shall execute,
acknowledge, swear to and deliver all certificates and other instruments
conforming with this Agreement that are necessary or appropriate to qualify,
continue and terminate the Company as a foreign limited liability company in all
such jurisdictions in which the Company may conduct business.
Section 2.6 Term. The Company commenced on December 15, 1999 by the filing
of the Certificate with the Secretary of State of the State of Delaware, and its
existence shall be perpetual, unless and until it is dissolved in accordance
with Article IX.
Section 2.7 No State-Law Partnership. The Members intend that the Company
shall be a limited liability company and, except as provided in Section 8.2 with
respect to U.S. Federal income tax treatment (and other tax treatment consistent
therewith), the Company shall not be a state Law partnership (including a
limited partnership) or joint venture, and no Member shall be
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a state Law partner or joint venturer of any other Member, for any purposes, and
this Agreement may not be construed to suggest otherwise.
Section 2.8 Title to Company Assets. Title to Company assets, whether
real, personal or mixed and whether tangible or intangible, shall be deemed to
be owned by the Company as an entity, and no Member, Director or Officer,
individually or collectively, shall have any ownership interest in such Company
assets or any portion thereof. Title to any or all of the Company assets may be
held in the name of the Company or one or more of its Affiliates or one or more
nominees, as the Company Board may determine. All Company assets shall be
recorded as the property of the Company in its books and records, irrespective
of the name in which record title to such Company assets is held. The Company's
credit and assets shall be used solely for the benefit of the Company, and no
asset of the Company shall be Transferred or encumbered for, or in payment of
any individual obligation of, any Member, Director or Officer.
Section 2.9 No Power to Bind Company or Other Members. A Member or
Affiliate of a Member may not take any action purporting to bind the Company,
any other Member or their respective Affiliates, except as provided in this
Agreement. All actions undertaken by the Members and their Affiliates, or any of
them, are at their sole risk and expense except to the extent, if any, that the
Company assumes those obligations by executing appropriate documentation in
accordance with this Agreement. None of the Members is an agent, employee,
contractor, vendor, representative or (except for tax purposes) partner of any
other Member or its Affiliates by virtue of its execution of this Agreement, and
a Member may not hold itself out as such; PROVIDED, HOWEVER, that Members and
their Affiliates may, subject to any applicable terms hereof, be parties to
agreements with the Company.
Section 2.10 Liability to Third Parties. No Member shall be liable for
the debts, obligations or liabilities of the Company solely by reason of being
a Member.
ARTICLE III
MANAGEMENT
Section 3.1 Management of the Company's Affairs. All management powers
over the business and affairs of the Company shall be exclusively vested in a
board of directors (the "Company Board") and, subject to the direction of the
Company Board, the officers of the Company (the "Officers"). The Officers and
Directors shall collectively constitute "managers" of the Company within the
meaning of the Act. Neither Member, by virtue of its status as a member of the
Company, shall have any management power over the business and affairs of the
Company or actual or apparent authority to enter into contracts on behalf of, or
to otherwise bind, the Company. Except as otherwise specifically provided in
this Agreement, the authority and functions of the Company Board on the one hand
and of the Officers on the other shall be identical to the authority and
functions of the board of directors and officers, respectively, of a corporation
organized under the Delaware General Corporation Law. Thus, except as otherwise
specifically provided in this Agreement, the business and affairs of the Company
shall be managed under the direction of the Company Board, which may delegate
from time to time such authority and duties as it deems appropriate to one or
more of the Officers, who shall be agents of the Company. In addition to the
powers that now or hereafter can be granted to managers under the Act and to all
other powers granted under any other provision of this Agreement, and subject to
any voting requirements and other provisions of this Agreement (including
Sections
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3.7 and 3.9) that require approval of specified Persons prior to the taking of
certain actions, the Company Board and the Officers (subject to the direction of
the Company Board) shall have full, complete and absolute power and authority to
do all things on such terms as they may deem necessary or appropriate to
conduct, or cause to be conducted, or to manage, the business and affairs of the
Company, including the following:
(a) the making of any expenditures, the lending or borrowing of
money, the assumption or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of evidences of
indebtedness and the incurring of any other obligations;
(b) the making of tax (consistent with Articles VII and VIII),
regulatory and other filings, or rendering of periodic or other reports to
governmental or other agencies having jurisdiction over the business or
assets of the Company;
(c) the merger or other combination of the Company with or into
another Person;
(d) the use of the assets of the Company (including cash on hand)
for any purpose consistent with the terms of this Agreement and the
repayment of obligations of the Company;
(e) the negotiation, execution and performance of any contracts,
conveyances or other instruments;
(f) the distribution of Company cash;
(g) the selection, engagement and dismissal of Officers, employees
and agents, outside attorneys, accountants, engineers, consultants and
contractors and the determination of their compensation and other terms of
employment or hiring;
(h) the maintenance of such insurance for the benefit of the
Company as it deems necessary or appropriate;
(i) the acquisition or disposition of assets;
(j) the formation of, or acquisition of an interest in, or the
contribution of property to, any entity;
(k) the control of any matters affecting the rights and obligations
of the Company, including the commencement, prosecution and defense of
actions at law or in equity and otherwise engaging in the conduct of
litigation and the incurring of legal expense and the settlement of claims
and litigation; and
(l) the indemnification of any Person against liabilities and
contingencies to the extent permitted by law.
Section 3.2 Member Obligations. Neither Member nor any Affiliate of, or
any Director appointed by, either Member shall have any obligation or owe any
duty, fiduciary or otherwise, to the Company or to any other Member or its
Affiliates, including any obligation
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(a) to offer business opportunities to the Company, (b) to refrain from pursuing
business opportunities that may have a competitive impact upon the Company or
(c) to refrain from taking any other action that will or may be detrimental to
the Company, and neither Member nor any Affiliate of such Member shall, by
virtue of the relationship established pursuant to this Agreement or the Parent
Company Agreement, have any other obligations to take or refrain from taking any
other action that may impact the Company. The provisions of this Section 3.2
constitute an agreement to modify or eliminate fiduciary duties pursuant to the
provisions of Section 18-1101 of the Act.
Section 3.3 Company Board Composition; Initial Directors. The Company
Board shall consist of five Directors, and (a) DEFS Holding shall appoint three
of such Directors (the "Duke Directors") and (b) PGC shall appoint two of such
Directors (the "▇▇▇▇▇▇▇▇ Directors"). Each Director appointed to the Company
Board shall serve until his or her successor is duly appointed or until his or
her earlier removal or resignation.
Section 3.4 Removal and Replacement of Directors. DEFS Holding shall have
the right, at any time and for any reason (or for no reason), to remove any or
all of the Duke Directors. PGC shall have the right, at any time and for any
reason (or for no reason), to remove any or all of the ▇▇▇▇▇▇▇▇ Directors.
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 the
expiration of any applicable term of office), then (a) in the case of a vacancy
of a Duke Director, DEFS Holding shall fill the resulting vacancy on the Company
Board by a Person designated by Duke, and (b) in the case of a vacancy of a
▇▇▇▇▇▇▇▇ Director, PGC shall fill the resulting vacancy in the Company Board by
a Person designated by PGC.
Section 3.5 Meetings of the Company Board. (a) Regular meetings of
the Company Board shall be held quarterly.
(b) Either Member may request a special meeting of the Company Board
at any time on two Business Days' prior notice.
(c) A quorum for meetings of the Company Board shall be at least
three Directors, present in person, by telephone or represented by proxy.
(d) Directors may participate in and hold a meeting of the Company
Board by means of conference telephone, videoconference or similar
communications equipment by which all Persons participating in the meeting can
hear each other, and participation in such manner in any such meeting
constitutes presence in person at the meeting.
(e) The Company Board shall elect one of its members as Chairman of
the Board. The Chairman of the Board, if present and acting, shall preside at
all meetings of the Company Board and of Members. Otherwise, the President, if
present, acting and a Director, or any other Director chosen by the Company
Board, shall preside. Unless the Company Board provides otherwise, the Chairman
of the Board shall be an Officer of the Company and shall have the same power
and authority as the President.
Section 3.6 Notice of Company Board Meetings. Written notice of all
regular meetings of the Company Board must be given to all Directors at least 15
days prior to any
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regular meeting of the Company Board and two Business Days prior to any special
meeting of the Company Board. Any such notice, or waiver thereof, need not state
the purpose of such meeting except as may otherwise be required by Law.
Attendance of a Director at a meeting (including pursuant to Section 3.5(d))
shall constitute a waiver of notice of such meeting, except where such Director
attends the meeting for the express purposes of objecting to the transaction of
any business on the ground that the meeting is not lawfully called or convened.
Section 3.7 Actions by the Company Board. (a) Except as set forth in
Section 3.7(b), all decisions of the Company Board shall require the affirmative
vote of a majority of the Directors present at a meeting at which a quorum is
present.
(b) No action shall be taken by the Company Board with respect to
the following matters without the prior approval of at least four of the five
Directors:
(i) Compensation policies for employees of the Company,
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.
(ii) Entering a new line of business outside of the midstream
gas gathering, processing, transportation and marketing businesses (and
directly related activities) in the United States and Canada.
(iii) A change in the Company's auditors.
(iv) Distributions and dividends (other than tax distributions
as set forth in Section 7.6(a)(i) and the distributions described in
Section 3.2(c) of the Contribution Agreement) prior to the IPO.
(v) 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
$100,000,000 in value to or from the Company;
(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 Company in excess of 5% of the Company's total annual sales
revenues for the most recently completed Fiscal Year;
(D) admittance of any new Member prior to the IPO (it
being understood that the IPO is not subject to this Section
3.7(b));
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(E) requirement of any additional Capital Contribution
by either Member; and
(F) liquidation or dissolution of the Company.
(vi) Any capital expenditure in excess of $100,000,000 (other
than a capital expenditure to effect any merger, consolidation,
recapitalization, acquisition, divestiture, joint venture or alliance).
(vii) Any borrowing in excess of $200,000,000 (other than
borrowings described in clauses (i) through (iii) of Section 6.17 of the
Contribution Agreement).
(viii) The settlement of any action or claim against the
Company involving payment by the Company of in excess of $25,000,000,
excluding amounts covered or reimbursed by insurance.
(ix) Entering into transactions with either Member or
Affiliates of either Member on terms that are clearly less favorable than
those terms that are within the range of comparable transactions between
unaffiliated third parties.
If a particular action that the Company proposes to take is reflected in an
operating or capital budget of the Company that has been approved by four or
more Directors, no further approval of such action is required before it may be
taken, notwithstanding the inclusion of such action in this Section 3.7(b).
Section 3.8 Action by Unanimous Written Consent. To the extent permitted
by applicable Law, the Company Board may act without a meeting, without prior
notice and without a vote so long as all Directors shall have executed a written
consent or consents with respect to any such Company Board action taken in lieu
of a meeting.
Section 3.9 Officers. (a) Generally. The Company Board, as set forth
below, shall appoint agents of the Company, referred to as "Officers" of the
Company. Unless provided otherwise by resolution of the Company Board, the
Officers shall have the titles, power, authority and duties described below in
this Section 3.9.
(b) Titles and Number. The Officers of the Company shall be the
Chairman of the Board (unless the Company Board provides otherwise), the
President, any and all Vice Presidents, the Secretary and Treasurer and any and
all Assistant Secretaries and Assistant Treasurers. There shall be appointed
from time to time, in accordance with Section 3.9(c) below, such Vice
Presidents, Secretaries, Assistant Secretaries, Treasurers and Assistant
Treasurers as the Board of Directors may desire. Any person may hold two or more
offices.
(c) Appointment and Term of Office. The Officers shall be appointed
by the Company Board at such time and for such term as the Company Board shall
determine. Any Officer may be removed, with or without cause, only by the
Company Board, PROVIDED, HOWEVER, that such removal shall be without prejudice
to the rights, if any, of such Officer under any contract to which the Company
is a party. Vacancies in any office may be filled only by the Company Board. Any
Officer may resign at any time by giving written notice to the Company
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Board. Any resignation shall take effect at the date of the receipt of that
notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the Company under any contract to which the officer is a
party.
(d) President. Subject to the limitations imposed by this Agreement,
any employment agreement, any employee plan or any determination of the Company
Board, the President, subject to the direction of the Company Board, shall be
the chief executive officer of the Company and, as such, shall be responsible
for the management and direction of the day-to-day business and affairs of the
Company, its other Officers, employees and agents, shall supervise generally the
affairs of the Company and shall have the full authority to execute all
documents and take all actions that the Company may legally take. The President
shall exercise such other powers and perform such other duties as may be
assigned to him by this Agreement or the Board of Directors, including any
duties and powers stated in any employment agreement approved by the Company
Board.
(e) Vice President. In the absence of the President, each Vice
President appointed by the Board of Directors shall have all of the powers and
duties conferred upon the President, including the same power as the President
to execute documents on behalf of the Company. Each such Vice President shall
perform such other duties and may exercise such other powers as may from time to
time be assigned to him by the Company Board or the President.
(f) Secretary and Assistant Secretaries. The Secretary shall record
or cause to be recorded in books provided for that purpose the minutes of the
meetings or actions of the Company Board and Members, shall see that all notices
are duly given in accordance with the provisions of this Agreement and as
required by Law, shall be custodian of all records (other than financial), shall
see that the books, reports, statements, certificates and all other documents
and records required by Law are properly kept and filed, and, in general, shall
perform duties incident to the office of Secretary and such other duties as may,
from time to time, be assigned to him by this Agreement, the Company Board or
the President. The Assistant Secretaries shall exercise the powers of the
Secretary during that Officer's absence or inability or refusal to act.
(g) Treasurer and Assistant Treasurers. The Treasurer shall keep or
cause to be kept the books of account of the Company and shall render statements
of the financial affairs of the Company in such form and as often as required by
this Agreement, the Company Board or the President. The Treasurer, subject to
the order of the Company Board, shall have the custody of all funds and
securities of the Company. The Treasurer shall perform all other duties commonly
incident to his office and shall perform such other duties and have such other
powers at this Agreement, the Company Board or the President shall designate
from time to time. The Assistant Treasurers shall exercise the power of the
Treasurer during the Officer's absence or inability or refusal to act. Each of
the Assistant Treasurers shall possess the same power as the Treasurer to sign
all certificates, contracts, obligations and other instruments of the Company.
If no Treasurer or Assistant Treasurer is appointed and serving or in the
absence of the appointed Treasurer and Assistant Treasurer, the Senior Vice
President, or such other Officer as the Company Board shall select, shall have
the powers and duties conferred upon the Treasurer.
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Section 3.10 Compensation. The Officers shall receive such compensation
for their services as may be designated by the Company. In addition, the
Officers shall be entitled to be reimbursed for out-of-pocket costs and expenses
incurred in the course of their service hereunder. In addition, the members of
the Company Board shall be entitled to be reimbursed for out-of-pocket costs and
expenses incurred in the course of their service hereunder.
ARTICLE IV
BOOKS AND RECORDS; REPORTS AND
INFORMATION AND ACCOUNTS
Section 4.1 Maintenance of Books and Records. Records and books of account
(including those required by the Act) shall be kept by the Company in which
shall be entered all transactions and other matters relative to the Company's
business as are usually entered into records and books of account maintained by
Persons engaged in business of like character. The Company books and records
shall be maintained in accordance with GAAP.
Section 4.2 Auditors; Corporate Reports; Annual Financial Statements.
(a) Auditors. As of the date hereof, the auditors of the Company
shall be Deloitte & Touche L.L.P.; PROVIDED that the Company's auditors may be
changed from time to time by the Company Board, in accordance with Section 3.7.
(b) Company Reports. (i) Each Member and its respective
representatives shall be entitled to reasonable access, during regular business
hours and upon reasonable advance notice, to the corporate books and records and
properties, and the executive officers and representatives, of the Company and
its Subsidiaries, for any reasonable purpose, including in order to conduct any
investigation or audit of the business, financial position and financial
statements of any such entity; PROVIDED that nothing herein shall authorize
access to classified or controlled unclassified information, except as
authorized by applicable Law.
(ii) Each Member shall be supplied not later than 45 days
after the end of each of the first three calendar quarters of each year
with unaudited financial statements of the Company and each of its
Subsidiaries on a consolidated basis, including a balance sheet, an income
statement and a statement of cash flows, as well as a comparison of actual
performance with any applicable business plan and such tax information as
either Member may reasonably request.
(iii) The Company Board shall be supplied not later than 45
days after the end of each calendar month with unaudited financial
statements of the Company and each of its Subsidiaries on a consolidated
basis, including a balance sheet, an income statement and a statement of
cash flows, as well as a comparison of actual performance with any
applicable business plan and, within 45 days of the end of each calendar
quarter, budget and cash flow forecasts showing the position of the
Company and its Subsidiaries on a consolidated basis for the next 12-month
period together with such additional information as the Company Board may
reasonably request.
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(c) Annual Financial Statements. (i) Annual financial statements
for the Company and its Subsidiaries on a consolidated basis shall be prepared
in accordance with GAAP and subject to an audit by the auditors of the Company.
(ii) The Company shall make available to each Member
simultaneously the consolidated annual audited financial statements for
the Company and its Subsidiaries, taken as a whole, and the reports of the
auditors thereon as soon as practicable after the issuance by the auditors
of such reports.
(iii) The Company and its Subsidiaries shall prepare annual
financial statements in respect of each fiscal year for presentation to
the auditors within one month from the end of that fiscal year and shall
use reasonable best efforts to ensure that the auditors will issue their
reports on such financial statements by March 15 of each year.
Section 4.3 Confidentiality. (a) Each Member and its respective Affiliates
shall keep confidential all information which is obtained by them as Members or
otherwise pursuant to this Agreement, the Contribution Agreement or the Parent
Company Agreement whether that information is (i) generated or commissioned by
the Company or any of its Subsidiaries or (ii) related to the business affairs
of any of the Members or of their respective Affiliates.
(b) The restrictions in Section 4.3(a) shall not apply to:
(i) information which enters the public domain otherwise
than by breach of this Agreement;
(ii) information already in the possession of a Member or any
of its Affiliates before disclosure to it under this Agreement and which
was not acquired directly or indirectly from the other Member or any of
its Affiliates and which is not the subject of a confidentiality agreement
in favor of the provider of such information;
(iii) information lawfully obtained from a third party that
is free to disclose such information;
(iv) information developed or created by a Member or any of
its Affiliates (other than the Company or its Subsidiaries) independent
of this Agreement;
(v) information required to be disclosed at any time after the
date one year after the date hereof by a Member or any of its Affiliates
to a third party contemplating purchasing shares in that Member in order
to permit such third party to decide whether or not to proceed and what
price to offer; PROVIDED that such third party shall prior to any such
disclosure have entered into a confidentiality agreement with such Member
and its Affiliates on terms no less strict than the terms of this Section
4.3;
(vi) information requested by any Governmental Entity entitled
by Law to require the same; PROVIDED that prior to such disclosure if
practicable, the disclosing Member shall notify in writing the owner of
such information (where the identity of such owner can be reasonably
determined) that such request has been made; PROVIDED FURTHER that the
Member seeking to rely on an exemption contained in this Section 4.3(b)
shall
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provide such evidence as the other Member may reasonably require to
prove that the information sought to be exempted falls within the relevant
category; and
(vii) information that a Member or its Affiliates must
disclose under applicable securities Laws or stock exchange regulations.
(c) The restrictions contained in Section 4.3(a) shall last until
the earlier of the IPO and the date two years from the relevant disclosure.
ARTICLE V
LIQUIDITY AND TRANSFER RESTRICTIONS
Section 5.1 Transfers of the Company Interests. For the period from the
date hereof until the consummation of the IPO, (a) DEFS Holding shall directly
own and hold all of Duke's Company Interests and shall have no other assets or
liabilities and (b) PGC shall directly own and hold all of ▇▇▇▇▇▇▇▇' Company
Interests and shall have no other assets or liabilities.
Section 5.2 Change of Control. (a) If prior to the IPO, (i) a Change of
Control occurs with respect to DEFS Holding, PGC shall have the option to
purchase DEFS Holding's Company Interest for Fair Market Value pursuant to the
provisions of Section 5.2(b), (c) and (d), or (ii) a Change of Control occurs
with respect to PGC, DEFS Holding shall have the option to purchase PGC's
Company Interest for Fair Market Value pursuant to the provisions of Section
5.2(b), (c) and (d).
(b) In the event of a transaction giving rise to a Change of Control
of either DEFS Holding or PGC, the Member who has suffered such a Change of
Control (the "Changing Member") shall promptly (and in any event within three
days of the consummation of such transaction) deliver notice (the "Control
Notice") to the other Member (the "Non-Changing Member") of such Change of
Control transaction. The Non-Changing Member 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 Company Interest of the Changing Member 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 be an investment
banking, accounting or other firm that performs appraisal and valuation
services) designated by the Non-Changing Member as its appraisal firm (the
"Non-Changing Member Appraiser").
(c) If the Non-Changing Member timely delivers the Control
Acceptance during the Control Offer Period, within 15 days from the date of
receipt of the Control Acceptance, the Changing Member shall notify the
Non-Changing Member 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 Member's appraisal firm (the
"Changing Member Appraiser"); provided, however, that if the Changing Member
fails to select an appraisal firm, and the Changing Member is DEFS Holding, the
Changing Member Appraiser shall be Deloitte & Touche L.L.P., or, if the Changing
Member is PGC, the Changing Member 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 Member of the Control Acceptance, the
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Control Appraiser Committee shall consist solely of the Non-Changing Member
Appraiser. Except as provided in the second proviso of the immediately preceding
sentence, the Non-Changing Member Appraiser and the Changing Member 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 Member Appraiser (PROVIDED,
HOWEVER, that if they fail to select a third appraisal firm within 15 days after
the appointment of the Non-Changing Member 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 Member Appraiser and the
Non-Changing Member Appraiser, the "Control Appraiser Committee"). Once the
Control Appraiser Committee has been chosen, each of the Changing Member and
Non-Changing Member shall submit proposed Fair Market Values of the Changing
Member's Company Interest to the Control Appraiser Committee, together with any
supporting documentation such Member 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
Control 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 Member of the Control Notice. If either Member fails to submit its
proposed Fair Market Value within the required time period, the Fair Market
Value proposed by the other Member (assuming such other Member has submitted its
proposed value within the required time period) shall be deemed to be the Fair
Market Value of the Changing Member's Company Interest for purposes of this
Section 5.2. If both Members 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
Member's Company 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 Members. The cost of such appraisal shall be
paid in equal portions by DEFS Holding and PGC. Each of the Changing Member and
the Non-Changing Member 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 Member's acquisition of the
Changing Member's Company Interest shall be consummated on or before the 60th
day after the determination of the Fair Market Value in accordance with Section
5.2(c). The acquisition shall be consummated at a closing held at the principal
offices of the Company (unless otherwise mutually agreed by the Changing Member
and the Non-Changing Member) at which time the purchase price, payable in the
form of immediately available funds, shall be delivered to the Changing Member,
and the Changing Member shall deliver or cause to be delivered to the
Non-Changing Member (or at the election of the Non-Changing Member, its
designee) such transfer documentation reasonably acceptable to the Non-Changing
Member as shall be required to evidence the transfer of the Changing Member's
Company Interest free and clear of all liens and encumbrances, except those
created under this Agreement.
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ARTICLE VI
CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
Section 6.1 Capital Contributions. The initial Capital Contributions made
to the Company by the Members shall be the property contributed by the Members
pursuant to Article II of the Contribution Agreement.
Section 6.2 Additional Capital Contributions. The Members may make
additional Capital Contributions or loans to the Company as requested by the
Company Board. Except for the Capital Contributions required of the Members
pursuant to Section 6.1, no Member shall be required to make any Capital
Contributions to the Company.
Section 6.3 Capital Accounts. A "Capital Account" shall be maintained for
each Member on the books of the Company in compliance with the requirements of
Code Section 704(b) and the Regulations thereunder. The initial Capital Accounts
of the Members shall be (prior to reduction for the amount of any cash
distributed to DEFS Holding and PGC on the Closing Date), in the case of DEFS
Holding, $3,585,500,000 and, in the case of PGC, $2,139,500,000. Each Member's
Capital Account shall be increased by (i) the Capital Contributions of such
Member, (ii) Profits and items of income or gain allocated to such Member as set
forth in Article VII hereof, (iii) any positive adjustment to such Capital
Account by reason of an adjustment to the Book Value of Company assets, and (iv)
the amount of Company liabilities assumed by such Member or which are secured by
any property distributed to such Member. Each Member's Capital Account shall be
decreased by (i) the amount of any cash and the Book Value of any property
distributed to such Member, (ii) Losses, Nonrecourse Deductions, Partner
Nonrecourse Deductions, and items of loss or deduction allocated to such Member
as set forth in Article VII hereof, (iii) any negative adjustment to such
Capital Account by reason of an adjustment to the Book Value of Company assets,
and (iv) the amount of any liabilities of such Member assumed by the Company or
which are secured by property contributed by such Member to the Company. In
determining the amount of any liability for purposes of the preceding two
sentences, there shall be taken into account Code Section 752(c) and any other
applicable provisions of the Code and Regulations.
Section 6.4 Return of Contributions. Although a Member has the right to
receive Distributions in accordance with the terms of this Agreement, a Member
is not entitled to the return of any part of its Capital Contributions or to be
paid interest in respect of either its Capital Account or its Capital
Contributions. An unrepaid Capital Contribution is not a liability of the
Company or of any Member. No Member will be required to contribute or to lend
any cash or property to the Company to enable the Company to return any Member's
Capital Contributions.
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ARTICLE VII
PROFITS AND LOSSES; DISTRIBUTIONS
Section 7.1 Allocation of Profit and Losses. (a) In General. This Section
7.1 sets forth the general rules for book allocations to the Members and shall
apply to allocations with respect to the operations and liquidation of the
Company, maintaining the books and records of the Company and computing the
Members' Capital Accounts or share of Profit, Losses, other items or
distributions pursuant to this Agreement, in each case as required for U.S.
Federal income tax purposes under Code Section 704(b) and the Regulations
thereunder. These provisions do not apply to the requirement that the Company
maintain books and records for financial reporting purposes in accordance with
Section 4.1.
(b) Profits and Losses. Commencing on the Closing Date, Profits and
Losses shall be allocated among the Members in accordance with their respective
Percentage Interests in the Company; PROVIDED, HOWEVER, that the Company shall
make special allocations to the extent required pursuant to Article V of Annex A
to the Contribution Agreement.
Section 7.2 Limitations on Allocations. Notwithstanding the general
allocation rules set forth in Section 7.1 hereof, the following special
allocation rules and limitations shall apply with respect to maintaining the
Company's books and records and computing the Members' Capital Accounts or share
of Profits, Losses, other items or distributions pursuant to this Agreement, in
each case as required for U.S. Federal income tax purposes under Code Section
704(b) and the Regulations thereunder.
(a) Limitations on Loss Allocations. The losses allocated to any
Member pursuant to Section 7.1(b) hereof with respect to any Fiscal Year shall
not exceed the maximum amount of losses that can be so allocated without causing
such Member to have an Adjusted Capital Account Deficit at the end of such
Fiscal Year. In the event some but not all of the Members would have Adjusted
Capital Account Deficits as a consequence of an allocation of losses pursuant to
Section 7.1(b) hereof, the limitation set forth in this Section 7.2(a) shall be
applied on a Member-by-Member basis and any such losses not allocable to a
Member as a result of such limitation shall be allocated to the other Members in
accordance with their positive Capital Account balances so as to allocate the
maximum possible losses to each Member under Regulation Section
1.704-1(b)(2)(ii)(d).
(b) Qualified Income Offset. If in any Fiscal Year a Member
unexpectedly receives an adjustment, allocation or distribution described in
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and such adjustment,
allocation, or distribution causes or increases an Adjusted Capital Account
Deficit for such Member, then, before any other allocations are made under this
Article VII or otherwise, such Member shall be allocated items of income and
gain (consisting of a PRO RATA portion of each item of Company income, including
gross income and gain) in an amount and manner sufficient to eliminate such
Adjusted Capital Account Deficit as quickly as possible; PROVIDED that an
allocation pursuant to this Section 7.2(b) shall be made only if and to the
extent that the Member would have an Adjusted Capital Account Deficit after all
other allocations provided for in this Article VII have been made as if this
Section 7.2(b) were not in this Agreement. This Section 7.2(b) is intended to
constitute a "qualified income offset" as provided in Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
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(c) Partnership Minimum Gain Chargeback. If there is a net decrease
in Partnership Minimum Gain during any Fiscal Year, then, except as provided in
Regulation Section 1.704-2(f)(2), (3), or (5), each Member shall be allocated
items of income and gain for such Fiscal Year (and, if necessary, for subsequent
Fiscal Years) in proportion to, and to the extent of, such Member's share of the
net decrease in Partnership Minimum Gain during such Fiscal Year. Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Member pursuant thereto and the items
to be so allocated shall be determined in accordance with Regulation Sections
1.704-2(f)(6) and 1.704-2(j)(2). To the extent that this Section 7.2(c) is
inconsistent with Regulation Section 1.704-2(f) or incomplete with respect to
such Regulations, the Partnership Minimum Gain chargeback provided for herein
shall be applied and interpreted in accordance with such Regulation.
(d) Partner Nonrecourse Debt Minimum Gain Chargeback. If there is a
net decrease in Partner Nonrecourse Debt Minimum Gain during any Fiscal Year,
then, except as provided in Regulation Section 1.704-2(i)(4), each Member with a
share of Partner Nonrecourse Debt Minimum Gain shall be allocated items of
income and gain for such Fiscal Year (and, if necessary, for subsequent Fiscal
Years) in proportion to, and to the extent of, such Member's share of the net
decrease in Partner Nonrecourse Debt Minimum Gain during such Fiscal Year.
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Member pursuant thereto and
the items to be so allocated shall be determined in accordance with Regulation
Sections 1.704-2(i)(4) and 1.704-2(j)(2). To the extent that this Section 7.2(d)
is inconsistent with Regulation Section 1.704-2(i) or incomplete with respect to
such Regulation, the Partner Nonrecourse Debt Minimum Gain chargeback provided
for herein shall be applied and interpreted in accordance with such Regulation.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal
Year shall be specially allocated to the Members in proportion to each of their
respective Percentage Interests in the Company. This provision is to be
interpreted in a manner consistent with Regulation Sections 1.704-2(b)(1) and
1.704-2(e).
(f) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions
shall be allocated among the Members in accordance with the ratios in which the
Members share the economic risk of loss for the Partner Nonrecourse Debt that
gave rise to those deductions. This allocation is intended to comply with the
requirements of Regulation Section 1.704-2(i) and shall be interpreted and
applied consistently therewith.
(g) Limited Effect and Interpretation. The special rules set forth
in Sections 7.2(a), (b), (c), (d), (e) and (f) (the "Regulatory Allocations")
shall be applied only to the extent required by applicable Regulations for the
resulting allocations provided for in this Section 7.2, taking into account such
Regulatory Allocations, to be respected for U.S. Federal income tax purposes.
The Regulatory Allocations are intended to comply with the requirements of
Regulation Sections 1.704-1(b), 1.704-2 and 1.752-1 through 1.752-5, inclusive
and shall be interpreted and applied consistently therewith.
(h) Offsetting Allocations. The Regulatory Allocations may not be
consistent with the manner in which the Members intend to divide Company
Profits, Losses, and other similar items. It is the intent of the Members that,
to the extent possible, all Regulatory
-22-
Allocations shall be offset either with other Regulatory Allocations or with
special allocations of other items of Company income, gain, loss or deduction
pursuant to this Section 7.2(h). Therefore, notwithstanding any other provision
of this Article VII (other than the Regulatory Allocations), the Company shall
make such offsetting special allocations of Company income, gain, loss or
deduction in a manner such that, after the offsetting allocations are made, each
Member's Capital Account Balance is, to the extent possible, equal to the
Capital Account balance such Member would have had if the Regulatory Allocations
were not part of this Agreement and all Company items were allocated pursuant to
Section 7.1 hereof.
Section 7.3 Restoration of Negative Capital Accounts. At no time shall a
Member with a negative balance in its Capital Account have any obligation to the
Company or to any other Member to restore such negative balance.
Section 7.4 Interim Allocations Relating to Transferred Company Interests.
Notwithstanding any other provision of this Agreement or the Contribution
Agreement, in the event of a change in a Member's Percentage Interest in the
Company as a result of a Transfer or deemed Transfer of a Member's Company
Interest during a Fiscal Year, the allocations required under this Article VII
shall be made with respect to the Members for the portion of the Fiscal Year
through the date of the Transfer and after the date of the Transfer based on an
interim closing of the Company's books. The effective date of any such Transfer
shall be the actual date of the Transfer as recorded on the books of the
Company. This Section 7.4 shall also apply for purposes of computing a Member's
Capital Account.
Section 7.5 Code Section 704(c) Allocations. (a) In accordance with Code
Section 704(c) and the Regulations thereunder, income, gain, loss and deduction
with respect to any property contributed to the capital of the Company or any
Subsidiary thereof that is treated as a partnership or disregarded entity for
U.S. Federal income tax purposes shall, solely for U.S. Federal income tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted tax basis of such property to the Company for U.S. Federal
income tax purposes and its Book Value (computed in accordance with the
definition of Book Value) using the "Traditional Method with Curative
Allocations" as defined in Regulation Section 1.704-3(c).
(b) In the event the Book Value of any asset of the Company (or any
Subsidiary thereof that is treated as a partnership or disregarded entity for
U.S. Federal income tax purposes) is adjusted pursuant to subparagraph (i) of
the definition of Book Value or otherwise pursuant to Code Section 704(b) and
the Regulations thereunder, subsequent allocations of income, gain, loss and
deduction with respect to any such asset so adjusted shall take account of any
variation between the adjusted tax basis of such asset for U.S. Federal income
tax purposes and the Book Value in the same manner as under Code Section 704(c),
the Regulations thereunder and Section 7.5(a).
(c) Allocations pursuant to this Section 7.5 are solely for purposes
of U.S. Federal income taxes and shall not affect, or in any way be taken into
account in computing, any Member's Capital Account or share of Profits, Losses
or other items allocated under Section 7.1 or 7.2.
-23-
Section 7.6 Distributions. (a) Distributions Other Than in Liquidation of
the Company. Except as provided in Section 7.6(b) below (and taking into account
deemed distributions, if any, under Section 8.1 which are not re-contributed
pursuant to Section 8.1), Distributions of cash of the Company shall be made at
the end of each quarterly accounting period of the Company, and one Business Day
prior to the date of the IPO, to each Member of the Company in the following
amounts:
(i) the greater of (A) the excess of (x) the product of (I)
the sum of the maximum United States regular Federal income tax rate
applicable to C corporations under Section 11 of the Code and 4.5 percent
and (II) the excess, if any, of taxable income and gain over taxable loss
or deduction of the Company allocated to such Member with respect to such
period over (y) the amount of any credits allocated to such Member with
respect to such period for United States regular Federal income tax
purposes and State income tax purposes and (B) (x) such Member's
Percentage Interest in the Company multiplied by the quotient of (y) the
amount calculated under clause (A) with respect to such period for the
other Member (or Members) (the "Other Member") divided by (z) the Other
Member's Percentage Interest in the Company; and
(ii) such Distributions as the Company Board may determine in
its discretion pursuant to Section 3.7.
Such Distributions pursuant to clause (i) shall be made in a manner consistent
with the estimated annual tax items of the Company, and Distributions pursuant
to clause (i) for each quarterly accounting period (or portion thereof) shall be
adjusted to the extent Distributions for prior quarterly accounting periods did
not correctly estimate such items.
(b) Distributions in Liquidation of the Company. Upon the
dissolution or liquidation of the Company, the proceeds of sale of the
properties and assets of the Company that have been sold in liquidation, and all
other properties and assets of the Company not otherwise sold (and valued at
their fair market value), shall be applied and distributed as follows, and in
the following order of priority: (i) first, to the payment of all debts and
liabilities of the Company and the expenses of liquidation not otherwise
adequately provided for; (ii) second, to the setting up of any reserves that are
reasonably necessary for any contingent unforeseen liabilities or obligations of
the Company or of the Members arising out of or in connection with the Company;
(iii) third, to the Members in proportion to the positive balances of each of
their respective Capital Accounts after all allocations have been made to such
Capital Accounts pursuant to this Agreement, until the remaining balances of
such Capital Accounts are zero; and (iv) fourth, the remaining proceeds to the
Members in proportion to each of their Percentage Interests in the Company.
ARTICLE VIII
WITHHOLDING TAX MATTERS; TAX STATUS AND TREATMENT
Section 8.1 Withholding. The Company shall comply with all withholding
requirements under U.S. Federal, state, local and foreign tax Laws and shall
remit amounts withheld to, and file required forms with, such applicable Taxing
Authorities. To the extent that the Company withholds and pays over any amounts
to any Taxing Authority with respect to the distributions or allocations to any
Member, the amount withheld (or credited against withholding
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tax otherwise due) shall be treated as a distribution to such Member in the
amount of the withholding (or credit). In the event of any claimed
overwithholding by the Company, if the Company is required to take any action in
order to secure a refund or credit for the benefit of a Member in respect of any
amount withheld by it, it will take any such action including applying for such
refund on behalf of the Member and paying it over to such Member. If any amount
required to be withheld was not withheld from actual distributions made to a
Member, the Member to which the distribution was made shall reimburse the
Company for such withholding. In the event of any underwithholding by the
Company to a Member, each Member agrees to indemnify and hold harmless the
Company and its subsidiaries from and against any liability, including interest
and penalties, with respect to such underwithholding to such Member. Each Member
agrees to furnish the Company with any representations and forms as shall
reasonably be requested by the Company to assist the Company in determining the
extent of, and in fulfilling, the Company's withholding obligations, if any. The
provisions of this Section 8.1 shall be applied in a manner, taking into
consideration any tiered partnership structure that the Company may be part of,
that reflects the relative economic interests of each Member in the Company.
Section 8.2 Tax Status. (a) The Company is intended to be treated as a
partnership for U.S. Federal income tax purposes, and each of the Subsidiaries
of the Company organized under the laws of the United States, a State of the
United States or any political subdivision thereof (other than Duke Energy Field
Services Canada Holdings, Inc.) (the "Flow Through Subsidiaries") is intended to
be treated as a partnership or disregarded entity for U.S. Federal income tax
purposes.
(b) Each of the Members 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: (i) 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; (ii) 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; (iii) 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; (iv)
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; (v) 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
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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 (v) that the Members 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 (vi) the treatment of the merger of PGCSI into DEFS
Holding pursuant to Section 2.2(a) of the Parent Company Agreement as a
"reorganization" within the meaning of Code Section 368(a) in which no gain or
loss is recognized to PGC, DEFS Holding, the Company, Duke, ▇▇▇▇▇▇▇▇ or any
other Person.
Section 8.3 Tax Matters Partner; Tax Elections. (a) The Company hereby
elects to have a "tax matters partner" as provided under Code Section
6231(a)(7)(B) (the "Tax Matters Partner"). DEFS Holding is hereby designated as
such Tax Matters Partner.
(b) The Company shall make all elections required under United
States Income Tax Laws and regulations and any similar state statutes and shall
make the following elections:
(1) Adopt the calendar year as the annual accounting
period;
(2) Adopt the accrual method of accounting; and
(3) Adopt the maximum allowable accelerated method and
shortest permissible life for determining depreciation
deductions.
(c) At the request of any Member, the Company shall make the
election provided for in Section 754 of the Code.
ARTICLE IX
DISSOLUTION, WINDING-UP AND TERMINATION
Section 9.1 Dissolution. The Company shall dissolve and its affairs shall
be wound up on the first to occur of the following events (each a "Dissolution
Event"):
(a) the consent of the Company Board pursuant to Section 3.7; or
(b) entry of a decree of judicial dissolution of the Company
under Section 18-802 of the Act.
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Section 9.2 Winding-Up and Termination. (a) On the occurrence of a
Dissolution Event, the Company Board shall select one or more Persons to act as
liquidator. The liquidator shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided in Section 7.6(b) and in
the Act. The costs of winding up shall be borne as a Company expense. Until
final distribution, the liquidator shall continue to operate the Company
properties with all of the power and authority of the Company Board.
(b) All distributions in kind to the Members shall be made subject
to the liability of each distributee for costs, expenses and liabilities
theretofore incurred or for the payment of which the Company has committed prior
to the date of termination. The distribution of cash or property to a Member in
accordance with the provisions of Section 7.6(b) and this Section 9.2
constitutes a complete return to the Member of its Capital Contributions and a
complete distribution to the Member of its share of all the Company's property
and constitutes a compromise to which all Members have consented within the
meaning of Section 18-502(b) of the Act.
(c) On completion of such final distribution, the liquidator shall
file a Certificate of Cancellation with the Secretary of State of the State of
Delaware and take such other actions as may be necessary to terminate the
existence of the Company.
ARTICLE X
MISCELLANEOUS
Section 10.1 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 party.
Section 10.2 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 Member 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 Member 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
Members 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 Member 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
Member hereby irrevocably waives such immunity in respect of its obligations
with respect to this Agreement.
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(d) Each Member 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
Member 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 10.2.
Section 10.3 Entire Agreement. This Agreement constitutes the entire
agreement of the Members between the Members with respect to the subject matter
hereof and there are no agreements, understandings, representations or
warranties between the Members 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, except that Sections 6.3 and Articles VII and VIII
are for the benefit of Duke and ▇▇▇▇▇▇▇▇ to the extent that such provisions may
not be amended without the consent of Duke and ▇▇▇▇▇▇▇▇ as provided in Section
10.7 of this Agreement and Section 4.1 of the Parent Company Agreement.
Section 10.4 Notices. All notices and other communications to be given to
any party hereunder (including notices to Directors under Section 3.6) 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 the Company or a Member, to the address or facsimile number set
forth below (or at such other address or facsimile number as the Company or such
Member shall designate by like notice):
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(a) If to PGC:
▇▇▇▇▇▇▇▇ Gas Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to DEFS Holding:
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.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to the Company:
Duke Energy Field Services, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
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Duke Energy Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 10.5 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Members (and Duke and ▇▇▇▇▇▇▇▇ to the extent
provided in Section 10.3) and their respective successors and permitted assigns;
PROVIDED, HOWEVER, that no Member will assign its rights or delegate any or all
of its obligations under this Agreement without the express prior written
consent of each other Member.
Section 10.6 Headings. 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 10.7 Amendments and Waivers. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by all of the
Members. In addition to the foregoing, 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 this Agreement, or any reference
thereto in this 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 this Agreement or any
reference thereto in this Agreement or any defined term used therein. Either
Member may, only by an instrument in writing, waive compliance by the other
Member 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 Member 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 Member, and no course of dealing between the
Members, shall constitute a waiver of any such right, power or remedy.
Section 10.8 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.
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Section 10.9 Interpretation. In the event an ambiguity or questions of
intent or interpretation arises with respect to this Agreement, this Agreement
shall be construed as if it was drafted jointly by the Members, and no
presumption or burden of proof shall arise favoring or disfavoring either Member
by virtue of the authorship of any provisions of this Agreement.
Section 10.10 Further Assurances. The Members agree that, from time to
time, 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.
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IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as
of the date first set forth above.
DUKE ENERGY FIELD SERVICES
CORPORATION
By: /s/ ▇.▇. ▇▇▇▇
-----------------------------------
Name: ▇.▇. ▇▇▇▇
Title: Chairman, President and
Chief Executive Officer
▇▇▇▇▇▇▇▇ GAS COMPANY
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
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Name: ▇.▇. ▇▇▇▇▇▇▇▇
Title: President and
Chief Executive Officer