1
EXHIBIT 10.10
===============================================================================
PARENT COMPANY AGREEMENT
by and among
▇▇▇▇▇▇▇▇ PETROLEUM COMPANY
DUKE ENERGY CORPORATION
DUKE ENERGY FIELD SERVICES, LLC
and
DUKE ENERGY FIELD SERVICES CORPORATION
Dated as of _____, 2000
===============================================================================
2
PARENT COMPANY AGREEMENT, dated as of ______, 2000 (this "Agreement"),
by and among ▇▇▇▇▇▇▇▇ PETROLEUM COMPANY, a Delaware corporation ("▇▇▇▇▇▇▇▇"),
DUKE ENERGY CORPORATION, a North Carolina corporation ("Duke"), DUKE ENERGY
FIELD SERVICES, LLC, a Delaware limited liability company (the "Company") and
solely for purposes of Section 4.3(c) of this Agreement, DUKE ENERGY FIELD
SERVICES CORPORATION, a Delaware corporation ("DEFS Holding").
RECITALS:
1. Duke, ▇▇▇▇▇▇▇▇ and the Company are parties to a Governance
Agreement, dated as of December 16, 1999 (the "Governance Agreement") and a
Contribution Agreement, dated as of December 16, 1999 (the "Contribution
Agreement").
2. ▇▇▇▇▇▇▇▇ Gas Company, a Delaware corporation and an indirect
wholly-owned subsidiary of ▇▇▇▇▇▇▇▇ ("PGC"), and DEFS Holding, an indirect
wholly-owned subsidiary of Duke, have simultaneously herewith entered into an
Amended and Restated Limited Liability Company Agreement of Duke Energy Field
Services, LLC, dated as of the date hereof (the "LLC Agreement").
3. In connection with the closing of the transactions contemplated by
the Contribution Agreement, Duke, ▇▇▇▇▇▇▇▇ and the Company desire to terminate
the Governance Agreement and to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the
following terms shall have the respective meanings set forth below:
"Affiliate" shall mean, with respect to any Person, a Person
directly or indirectly Controlling, Controlled by or under common Control with
such Person.
"Agreement" shall have the meaning set forth in the Preamble.
"Agreement of Merger" shall have the meaning set forth in
Section 2.2(a).
"Average Market Price" shall mean, with respect to the
Corporation Common Stock to be sold by the Corporation to the public in the IPO,
the average of the closing prices, as reported on the NYSE Composite Tape, on
each of the first five days of trading on the NYSE (exclusive of the pricing
day).
3
"Business Day" shall mean any day on which banks are generally
open to conduct business in the State of New York.
"Change of Control" shall mean an event (such as a Transfer of
voting securities) that causes a Person that holds a Company Interest to cease
to be Controlled by such Person's Parent; provided, however, that an event that
causes Duke or ▇▇▇▇▇▇▇▇ to be Controlled by another Person shall not constitute
a Change of Control.
"Closing Date" shall have the meaning set forth in Section 3.1
of the Contribution Agreement.
"Code" shall mean the United States Internal Revenue Code of
1986, as amended.
"Company" shall have the meaning set forth in the Preamble.
"Company Interest" shall mean, with respect to any Person,
such Person's equity interest in the Company at the time of measurement.
"Contribution Agreement" shall have the meaning set forth in
the Recitals.
"Control" shall mean the possession, directly or indirectly,
through one or more intermediaries, by any Person or group (within the meaning
of Section 13(d)(3) under the Securities Exchange Act of 1934, as amended) of
both of the following:
(a) (i) in the case of a corporation, more than 25% of the
direct or indirect economic interests in the outstanding equity
securities thereof; (ii) in the case of a limited liability company,
partnership, limited partnership or venture, the right to more than 25%
of the distributions therefrom (including liquidating distributions);
(iii) in the case of a trust or estate, including a business trust,
more than 25% of the beneficial interest therein; and (iv) in the case
of any other entity, more than 25% of the economic or beneficial
interest therein; and
(b) in the case of any entity, the power or authority, through
ownership of voting securities, by contract or otherwise, to control or
direct the management and policies of the entity.
"Corporation" shall have the meaning set forth in Section
2.2(a).
"Corporation Common Stock" shall have the meaning set forth in
Section 2.2(e).
"Corporation Interest" shall mean, with respect to any Person,
such Person's percentage ownership (direct and indirect), exclusive of any
Market Shares owned (directly or indirectly) by such Person, of the outstanding
Corporation Common Stock at the time of measurement.
"DEFS Holding" shall have the meaning set forth in the
Preamble.
-2-
4
"DEFS Subsidiary" shall have the meaning set forth in the
Contribution Agreement for purposes of Annex B thereof.
"Disguised Sale Amount" shall mean the excess of (x)
$1,200,000,000 over (y) the product of the Percentage Interest of PGC in the
Company as of the Closing Date and $2,400,000,000.
"Distribution" shall have the meaning set forth in the LLC
Agreement.
"Duke" shall have the meaning set forth in the Preamble.
"Duke Group" shall mean Duke and its Subsidiaries (other than
the Company, any DEFS Subsidiary, any PGC Subsidiary or any other Subsidiary of
the Company).
"Duke Shareholder" shall mean the holder of any Corporation
Common Stock (other than Market Shares) that is Duke or a Subsidiary of Duke or,
if at any time there is more than one such holder, each of such holders.
"Enterprise Value" shall mean the sum of (x) the Parties'
Equity Value and (y) $2,400,000,000; provided, that if the Merger becomes
effective on or after the date two years after the Closing Date, "Enterprise
Value" shall mean $5,500,000,000.
"Financing" shall have the meaning set forth in the
Contribution Agreement.
"Flow Through Subsidiaries" shall have the meaning set forth
in the LLC Agreement.
"Governance Agreement" shall have the meaning set forth in the
Recitals.
"Governmental Entity" shall mean any federal, state, political
subdivision or other governmental agency or instrumentality, foreign or
domestic.
"Income Tax" shall mean any federal, state, local or foreign
Tax measured by net income or capital gain.
"IPO" shall mean the initial offering of shares of Corporation
Common Stock to the public in a transaction registered under the Securities Act.
"LLC Agreement" shall have the meaning set forth in the
Recitals.
"Market Shares" shall mean shares purchased by a Person
through open-market purchases, other than those shares purchased to prevent
dilution in accordance with Article X of the Certificate of Incorporation of the
Corporation.
"Member" shall have the meaning set forth in the LLC
Agreement.
"Merger" shall have the meaning set forth in Section 2.2(a).
"Neutral Firm" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ L.L.P.
-3-
5
"NYSE" shall mean the New York Stock Exchange, Inc.
"Parent" shall mean, with respect to a particular Person, the
Person that Controls such particular Person and that is not itself Controlled by
any other Person.
"Parties' Corporation Interest" shall mean the difference
between (x) 100% and (y) the Public's Corporation Interest.
"Parties' Equity Value" shall mean the product of (i) the
quotient of (x) the Parties' Corporation Interest divided by (y) the Public's
Actual Corporation Interest multiplied by (ii) the Public's Equity Value.
"Percentage Interest" shall mean, with respect to the Company
Interest issued to DEFS Holding pursuant to Section 2.1(j)(i) of the
Contribution Agreement, 69.7 percent, and with respect to the Company Interest
issued to PGC pursuant to Section 2.1(k)(i) of the Contribution Agreement, 30.3
percent.
"Person" shall mean any individual, partnership, limited
liability company, firm, corporation, association, joint venture, trust or other
entity or any Governmental Entity.
"PGC" shall have the meaning set forth in the Recitals.
"PGC Contribution" shall have the meaning set forth in Section
4.2.
"PGC Distribution" shall have the meaning set forth in Section
4.2.
"PGC Subsidiary" shall have the meaning set forth in the
Contribution Agreement for purposes of Annex B thereof.
"PGCSI" shall mean ▇▇▇▇▇▇▇▇ Gas Company Shareholder, Inc., a
Delaware corporation and a wholly-owned Subsidiary of ▇▇▇▇▇▇▇▇.
"▇▇▇▇▇▇▇▇" shall have the meaning set forth in the Preamble.
"▇▇▇▇▇▇▇▇ Enterprise Value" shall mean the product of (x) the
Enterprise Value and (y) .389.
"▇▇▇▇▇▇▇▇ Equity Value" shall mean the difference between (x)
▇▇▇▇▇▇▇▇ Enterprise Value and (y) $1,200,000,000.
"▇▇▇▇▇▇▇▇ Group" shall mean ▇▇▇▇▇▇▇▇ and its Subsidiaries
(other than the Company, any DEFS Subsidiary, any PGC Subsidiary or any other
Subsidiary of the Company).
"▇▇▇▇▇▇▇▇ Shareholder" shall mean the holder of any
Corporation Common Stock (other than Market Shares) that is ▇▇▇▇▇▇▇▇ or a
Subsidiary of ▇▇▇▇▇▇▇▇ or, if at any time there is more than one such holder,
each of such holders.
"Post-Closing Period" for any Person means any taxable period
beginning, with respect to such Person, after the Closing Date, and the portion,
beginning after the Closing Date, of
-4-
6
any taxable period that includes, with respect to such Person, but does not end
on, the Closing Date.
"Public's Actual Corporation Interest" shall mean the
quotient, expressed as a percentage, of (x) the number of shares of the
Corporation Common Stock sold by the Corporation in the IPO (excluding shares
issued to officers and employees of the Corporation or the Company concurrently
with the IPO and without giving effect to any underwriters' over-allotment)
divided by (y) the number of shares of Corporation Common Stock outstanding
immediately after the IPO (including shares issued to officers and employees of
the Corporation or the Company concurrently with the IPO and without giving
effect to any underwriters' over-allotment).
"Public's Corporation Interest" shall mean the quotient,
expressed as a percentage, of (x) the number of shares of the Corporation Common
Stock sold by the Corporation in the IPO (including shares issued to officers
and employees of the Corporation or the Company concurrently with the IPO and
without giving effect to any underwriters' over-allotment) divided by (y) the
number of shares of Corporation Common Stock outstanding immediately after the
IPO (including shares issued to officers and employees of the Corporation or the
Company concurrently with the IPO and without giving effect to any underwriters'
over-allotment).
"Public's Equity Value" shall mean the product of (i) the
Average Market Price multiplied by (ii) the number of shares sold by the
Corporation in the IPO (excluding shares issued to officers and employees of the
Corporation or the Company concurrently with the IPO and without giving effect
to any underwriters' over-allotment).
"Registration Rights Agreement" shall have the meaning set
forth in Section 3.1(a).
"Regulation" shall mean the income tax regulations promulgated
under the Code by the U.S. Department of the Treasury (whether final or
temporary).
"Returns" or "Tax Returns" means returns, declarations,
statements, reports, forms, property tax renditions or other documents or
information required to be filed with or supplied to any Taxing Authority.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Shareholders Agreement" shall have the meaning set forth in
Section 3.1(a).
"Subsidiary" shall mean, when used with respect to any Person,
any Affiliate of such Person that is Controlled by such Person.
"Tax" or "Taxes" shall mean all taxes (whether federal, state,
local or foreign) based upon or measured by income and any other tax whatsoever,
including gross receipts, profits, windfall profits, sales, use, occupation,
value added, ad valorem, transfer, franchise, withholding, payroll, employment,
excise, stamp, premium, capital stock, production, business and occupation,
disability, severance, or real or personal property taxes, fees, or assessments
of any kind whatsoever imposed by any Governmental Entity, together with any
interest or penalties imposed with respect thereto.
-5-
7
"Tax Proceeding" means any Tax audit, contest, litigation or
other proceeding with or against a Governmental Entity.
"Taxing Authority" shall mean any Governmental Entity having
jurisdiction over the assessment, determination, collection or other imposition
of any Tax.
"Transfer" shall mean any sale, assignment or other transfer,
whether by operation of law or otherwise (but not any deemed transfer pursuant
to Section 338 of the Code of the assets of a corporation or its Subsidiary in
connection with the purchase of the stock of such corporation). "Transferred"
and "Transferring" shall have correlative meanings.
"Total Equity Value" shall mean the quotient of (x) the
Public's Equity Value divided by (y) the Public's Actual Corporation Interest.
"Two Year Period" shall mean the period beginning on (and
including) the Closing Date and ending on the second anniversary thereof.
Section 1.2 Construction. Unless the context requires
otherwise: (a) the gender (or lack of gender) of all words used in this
Agreement includes the masculine, feminine and neuter; (b) references to
Articles and Sections refer to Articles and Sections of this Agreement; (c)
references to Exhibits refer to the Exhibits attached to this Agreement; (d)
references to laws refer to such laws as they may be amended from time to time,
and references to particular provisions of a law include any corresponding
provisions of any succeeding law; (e) references to money refer to legal
currency of the United States of America; (f) the word "including" means
"including, without limitation"; and (g) all capitalized terms defined herein
are equally applicable to both the singular and plural forms of such terms.
ARTICLE II
THE IPO
Section 2.1 Efforts. (a) The Company agrees to use its
reasonable best efforts to prepare for, effect and consummate the IPO (market
conditions permitting) as soon as practicable following the date hereof,
including selecting underwriters, preparing and filing with the SEC a
registration statement and filings under applicable state securities or "blue
sky" laws or similar securities laws and determining the terms of the IPO;
provided that, notwithstanding anything to the contrary in this Agreement, the
Company shall not consummate any IPO on or before the date two years after the
date of this Agreement without the prior written consent of ▇▇▇▇▇▇▇▇ if the
consummation of the IPO (including the potential effect of any underwriters'
over-allotment) in accordance with the provisions of this Agreement would result
in (i) ▇▇▇▇▇▇▇▇' Corporation Interest being less than 20% upon consummation of
the IPO or (ii) an Enterprise Value immediately following the IPO of less than
$4,400,000,000; provided, further, that for purposes of the calculations
contemplated in (i) and (ii) in the preceding proviso only, the "Average Market
Price" shall be the proposed public offering price of the Corporation Common
Stock in the IPO.
(b) Each of Duke and ▇▇▇▇▇▇▇▇ agrees to (i) provide reasonable
assistance to the Company in effecting the IPO and (ii) cause any Duke
Shareholder or ▇▇▇▇▇▇▇▇ Shareholder,
-6-
8
respectively, not to Transfer any or all of their shares of Corporation Common
Stock for a period of six months following the consummation of the IPO and to
agree to such other customary terms as are reasonably requested by the
underwriters in connection with the IPO.
(c) Duke agrees that, prior to the consummation of the Merger,
it will cause the board of directors of DEFS Holding to be comprised solely of
three directors designated by ▇▇▇▇▇▇▇▇ (or four if ▇▇▇▇▇▇▇▇ designates an
Independent Director (as defined in the Certificate of Incorporation)) and five
directors designated by Duke (or six or seven if Duke designates one or two
Independent Directors, respectively).
Section 2.2 Formation of the Corporation. (a) Each of Duke and
▇▇▇▇▇▇▇▇ agrees to take such corporate action as is necessary and desirable to
cause (i) PGCSI to be merged with and into DEFS Holding, with DEFS Holding
surviving (such surviving corporation, the "Corporation," and such merger, the
"Merger"), immediately prior to the consummation of the IPO and (ii) an
Agreement of Merger substantially in the form of Exhibit A (the "Agreement of
Merger") to be filed in accordance with the Delaware General Corporation Law.
(b) Each of Duke and ▇▇▇▇▇▇▇▇ presently intends that, if the
IPO occurs, approximately 20% of the Corporation Common Stock shall be sold by
the Corporation pursuant to the IPO (including shares to be issued to officers
and employees of the Corporation or the Company concurrently with the IPO);
provided, however, that this percentage may vary depending on market conditions
and other factors.
(c) ▇▇▇▇▇▇▇▇ represents, warrants and agrees that at the time
of such Merger, (i) PGCSI shall have no assets or liabilities, contingent or
otherwise, other than through its ownership of its interest in PGC and (ii) PGC
shall have no assets or liabilities, contingent or otherwise, other than through
its ownership of its interest in the Company.
(d) Duke represents, warrants and agrees that at the time of
the Merger, DEFS Holding shall have no assets or liabilities, contingent or
otherwise, other than through its ownership of its interest in the Company.
(e) Following the Merger and prior to the consummation of the
IPO, the percentage of the total number of issued and outstanding shares of
Corporation Common Stock owned by (i) ▇▇▇▇▇▇▇▇ and its Affiliates (other than
the Corporation and its Subsidiaries) shall equal the quotient, expressed as a
percentage, of (x) ▇▇▇▇▇▇▇▇' Corporation Interest upon the consummation of the
IPO determined in accordance with Section 2.3(b)(1) divided by (y) the sum of
▇▇▇▇▇▇▇▇' Corporation Interest and Duke's Corporation Interest upon the
consummation of the IPO determined in accordance with Section 2.3(b)(1) and
Section 2.3(b)(2), respectively, and (ii) Duke and its Affiliates (other than
the Corporation and its Subsidiaries) shall equal the quotient, expressed as a
percentage, of (x) Duke's Corporation Interest upon consummation of the IPO
determined in accordance with Section 2.3(b)(2) divided by (y) the sum of Duke's
Corporation Interest and ▇▇▇▇▇▇▇▇' Corporation Interest upon consummation of the
IPO determined in accordance with Section 2.3(b)(2) and Section 2.3(b)(1),
respectively. If necessary, for purposes of the above calculation only, Duke and
▇▇▇▇▇▇▇▇ shall estimate in good faith the Average Market Price and the number of
shares of Corporation Common Stock to be sold to the public (including shares to
be issued to officers and employees of the Corporation or the Company
concurrently with the IPO). Duke agrees
-7-
9
to cause the Duke Shareholder and ▇▇▇▇▇▇▇▇ agrees to cause the ▇▇▇▇▇▇▇▇
Shareholder, respectively, to vote its shares to cause the Corporation upon
consummation of the IPO to have a single class of common stock (the "Corporation
Common Stock") outstanding and no other classes of capital stock or other
securities (except for options to purchase shares of the Corporation Common
Stock issued to officers, directors and employees of the Corporation or the
Company or its Subsidiaries).
Section 2.3 Post-IPO Ownership. (a) Each of Duke and ▇▇▇▇▇▇▇▇
presently intends that, if the IPO occurs, approximately 20% of the Corporation
Common Stock (including shares to be issued to officers and employees of the
Corporation or the Company concurrently with the IPO) shall be sold by the
Corporation pursuant to the IPO; provided, however, that this percentage may
vary depending on market conditions and other factors.
(b) Each of Duke and ▇▇▇▇▇▇▇▇ agrees to take, or cause to be
taken, such action (including the Merger and any adjustments by the Corporation
to the number of shares of Corporation Common Stock owned by Duke and ▇▇▇▇▇▇▇▇)
as is necessary and desirable to provide that upon the end of the fifth day of
trading on the NYSE (excluding the pricing day and without regard to the
exercise of any underwriters' over-allotment), each of Duke and ▇▇▇▇▇▇▇▇ shall
own, directly or indirectly, a percentage of the outstanding Corporation Common
Stock determined as follows:
(1) ▇▇▇▇▇▇▇▇' Corporation Interest shall equal the quotient,
expressed as a percentage, of (x) ▇▇▇▇▇▇▇▇ Equity Value divided by (y) Total
Equity Value.
(2) Duke's Corporation Interest shall equal the difference
between (x) the Parties' Corporation Interest and (y) ▇▇▇▇▇▇▇▇' Corporation
Interest.
Annex A sets forth examples of determinations of ▇▇▇▇▇▇▇▇'
Corporation Interest and Duke's Corporation Interest at various Public's Equity
Values (assuming that no shares are issued to officers or employees of the
Corporation or the Company concurrently with the IPO). The percentages and
calculations set forth in this Section 2.3 do not give effect to any
underwriters' over-allotment. In the event that there is an underwriters'
over-allotment and such over-allotment is exercised, each of Duke's and
▇▇▇▇▇▇▇▇' Corporation Interest and the interest of the public in the Corporation
(prior to such exercise) shall all be reduced pro rata.
Section 2.4 Certificate of Incorporation and Bylaws. Each of
Duke and ▇▇▇▇▇▇▇▇ agrees to take such corporate action as is necessary to cause
the Corporation to adopt a Certificate of Incorporation and Bylaws of the
Corporation substantially in the forms attached to the Agreement of Merger.
ARTICLE III
EXECUTION OF AGREEMENTS; PRIMARY VEHICLE
Section 3.1 Execution of Agreements. (a) Duke agrees to take
all corporate action to cause each Duke Shareholder (including Duke, if
applicable) to execute, and ▇▇▇▇▇▇▇▇ agrees to take all corporate action to
cause each ▇▇▇▇▇▇▇▇ Shareholder (including ▇▇▇▇▇▇▇▇, if applicable) to execute,
a Shareholders Agreement substantially in the form of Exhibit B (the
"Shareholders
-8-
10
Agreement"). Each of Duke and ▇▇▇▇▇▇▇▇ agrees to execute, and agrees that it
will take all corporate action to cause the Corporation to execute, a
Registration Rights Agreement substantially in the form of Exhibit C (the
"Registration Rights Agreement").
(b) Duke agrees to cause each Duke Shareholder to comply with
the obligations of a Duke Shareholder under the Shareholders Agreement, and
▇▇▇▇▇▇▇▇ agrees to cause each ▇▇▇▇▇▇▇▇ Shareholder to comply with the
obligations of a ▇▇▇▇▇▇▇▇ Shareholder under the Shareholders Agreement.
(c) The parties hereto agree that, from time to time, whether
before, at or after the date, each of them will execute and deliver, or cause to
be executed and delivered, such further agreements and instruments and take such
other action as may be necessary to effectuate the provisions, purposes and
intents of this Agreement.
Section 3.2 Market Shares. Duke agrees to, and to cause its
Affiliates to, make nominations and vote any and all of their Market Shares in
accordance with the requirements applicable to Duke's Total Corporation Interest
(as defined in the Shareholders Agreement) and take all other actions required
of a Duke Shareholder (as defined in the Shareholders Agreement) under Sections
2.1 and 2.2 of the Shareholders Agreement. ▇▇▇▇▇▇▇▇ agrees to, and to cause its
Affiliates to, make nominations and vote any and all of their Market Shares in
accordance with the requirements applicable to ▇▇▇▇▇▇▇▇'▇ Total Corporation
Interest (as defined in the Shareholders Agreement) and take all other actions
required of a ▇▇▇▇▇▇▇▇ Shareholder (as defined in the Shareholders Agreement)
under Sections 2.1 and 2.2 of the Shareholders Agreement.
Section 3.3 Primary Vehicle. Each of Duke and ▇▇▇▇▇▇▇▇
presently intends that the Corporation shall be the primary vehicle by which it
conducts the midstream gas gathering and processing business in the United
States and Canada.
ARTICLE IV
TAX MATTERS
Section 4.1 Distributions to PGC. For the period, if any,
beginning at the time of consummation of the IPO and ending on the second
anniversary of the Closing Date, without the prior written consent of Duke and
▇▇▇▇▇▇▇▇: (i) the Company shall not make (or enter into a plan or arrangement to
make) any Distribution of cash or other property to PGC in excess of the product
of the aggregate Distribution to all Members and PGC's Percentage Interest as of
the Closing Date, (ii) the Company shall not make (or enter into a plan or
arrangement to make) any Distribution to PGC of cash or other property other
than Distributions to fund dividends by the Corporation to its shareholders and
Distributions pursuant to Section 7.6(a)(i) of the LLC Agreement and (iii) PGC
shall not be liquidated, shall not be merged into the Corporation, shall not
distribute to any shareholder of PGC the Company Interest issued to PGC pursuant
to Section 2.1(k) of the Contribution Agreement and shall not be converted into,
or merged into or otherwise caused to become, a partnership or disregarded
entity for federal income tax purposes (nor shall there be any plan or
arrangement to do so). Without the prior written consent of each of Duke and
▇▇▇▇▇▇▇▇: (a) no amendment shall be made to Section 6.3, Article VII or Article
VIII (other than Section 8.2(b)) of the LLC Agreement, or any reference thereto
in the LLC Agreement or any defined term
-9-
11
used therein, prior to the second anniversary of the Closing Date, and any
amendment made after such second anniversary to any such provision shall not
apply to any taxable period, or portion thereof, ending on or before the second
anniversary of the Closing Date and (b) no amendment shall be made to Section
8.2(b) of the LLC Agreement or any reference thereto in the LLC Agreement or any
defined term used therein.
Section 4.2 Tax Status. Each of Duke, ▇▇▇▇▇▇▇▇ and the Company
shall take no action or position inconsistent with (or that could reasonably be
expected to be viewed by the Internal Revenue Service as inconsistent with), and
shall make or cause to be made all applicable elections with respect to: (a) the
treatment of the Company (or any successor thereto), with respect to all times
during the Two Year Period, as a partnership for U.S. Federal income tax
purposes and the treatment of each of the Flow Through Subsidiaries (or any
successor thereto), with respect to all times during the Two Year Period, as a
partnership or disregarded entity for U.S. Federal income tax purposes; (b) the
treatment of the Company, with respect to all times during the Two Year Period,
as not being a publicly traded partnership for United States Federal income tax
purposes; (c) the allocation of the Financing under Regulation Section
1.752-3(a)(3) among the Members in proportion to their Percentage Interests as
of the Closing Date; (d) the treatment of the contribution to the Company by
DEFS Holding pursuant to Section 2.2 of the Contribution Agreement as a
contribution pursuant to Code Section 721, the treatment of the distribution to
DEFS Holding pursuant to Section 3.2(c)(2) of the Contribution Agreement (as
adjusted pursuant to Section 3.3 thereof) as a distribution pursuant to Code
Section 731 and the treatment that, for purposes of the Code, neither such
contribution nor such distribution is a transfer that constitutes a sale or
exchange (or portion thereof) of property in whole or in part to the Company by
a Member in the Company acting in a capacity other than as a Member of the
Company; (e) the treatment of the contribution to the Company by PGC pursuant to
Section 2.3 of the Contribution Agreement (the "PGC Contribution") as a
contribution pursuant to Code Section 721, the treatment of the distribution to
PGC pursuant to Section 3.2(c)(1) of the Contribution Agreement (as adjusted
pursuant to Section 3.3) (the "PGC Distribution") as a distribution pursuant to
Code Section 731 and the treatment that, for purposes of the Code, neither the
PGC Contribution nor the PGC Distribution is a transfer that constitutes a sale
or exchange (or portion thereof) of property in whole or in part to the Company
by a Member in the Company acting in a capacity other than as a Member of the
Company (except in the case of this clause (e) that Duke, ▇▇▇▇▇▇▇▇ and the
Company shall treat (except to the extent Duke, Phillips, the Members and the
Company agree in writing or are required by the Neutral Firm to treat otherwise)
an amount of the PGC Distribution equal to the Disguised Sale Amount as proceeds
of a sale by PGC to the Company under Code Section 707(a) and an amount of the
PGC Contribution equal in fair market value to the Disguised Sale Amount as
property that is sold by PGC to the Company under Code Section 707(a) (such
property treated as having been sold having regular federal income tax basis
equal to the aggregate regular Federal income tax basis of the property
contributed in the PGC Contribution multiplied by a fraction the numerator of
which is the Disguised Sale Amount and the denominator of which is the value of
the property contributed in the PGC Contribution, such value being for this
purpose $2,139,500,000); and (f) the treatment of the merger of PGCSI into DEFS
Holding pursuant to Section 2.2(a) hereof as a "reorganization" within the
meaning of Code Section 368(a) in which no gain or loss is recognized to Duke,
Phillips, PGC, DEFS Holding, the Company, or any other Person.
Section 4.3 Tax Proceedings; Cooperation and Exchange of
Information. (a) In the case of any Tax Proceeding relating to any Income Tax
Return or any Income Tax items of the
-10-
12
Company or any Subsidiary of the Company for any Post-Closing Period, the
Company shall be entitled to control such Tax Proceeding; provided, however,
that (i) the Company shall promptly notify Duke and ▇▇▇▇▇▇▇▇ (describing the
jurisdiction and year(s) at issue and including a copy of any materials received
from the applicable Governmental Entity in connection therewith) upon receipt of
notice of any such Tax Proceeding and shall thereafter promptly forward to Duke
and ▇▇▇▇▇▇▇▇ copies of any communications received from or sent to any
Governmental Entity by the Company or any of its Subsidiaries in connection with
any such Tax Proceeding; (ii) the Company shall provide Duke and ▇▇▇▇▇▇▇▇ with a
timely and reasonably detailed account of each stage of such Tax Proceeding and
a copy of all documents relating to such Tax Proceeding; (iii) the Company shall
consult with Duke and ▇▇▇▇▇▇▇▇ before taking any significant action in
connection with such Tax Proceeding; (iv) the Company shall consult with Duke
and ▇▇▇▇▇▇▇▇ and offer Duke and ▇▇▇▇▇▇▇▇ an opportunity to comment before
submitting any written materials prepared or furnished in connection with such
Tax Proceeding (including, to the extent practicable, any documents furnished to
the applicable Governmental Entity in connection with any discovery request);
(v) the Company shall defend such Tax Proceeding diligently and in good faith as
if the Company were the taxpayer in interest in connection with such Tax
Proceeding, and (vi) (A) in the case of any proposed settlement of any such Tax
Proceeding, which settlement will result in aggregate Tax payments by ▇▇▇▇▇▇▇▇
with respect to the period beginning on the Closing Date and ending on the
second anniversary of the Closing Date (or, if the Tax Proceeding relates to a
taxable period (or portion thereof) after such second anniversary, then with
respect to the two year period beginning on the first day of the taxable period
to which the Tax Proceeding relates) of greater than $7,575,000, the Company
shall not settle, compromise or abandon any such Tax Proceeding without
obtaining the prior written consent, which consent shall not be unreasonably
withheld, of ▇▇▇▇▇▇▇▇ and (B) in the case of any proposed settlement of any such
Tax Proceeding, which settlement will result in aggregate Tax payments by Duke
with respect to the period beginning on the Closing Date and ending on the
second anniversary of the Closing Date (or, if the Tax Proceeding relates to a
taxable period (or portion thereof) after such second anniversary, then with
respect to the two year period beginning on the first day of the taxable period
to which the Tax Proceeding relates) of greater than $17,425,000, the Company
shall not settle, compromise or abandon any such Tax Proceeding without
obtaining the prior written consent, which consent shall not be unreasonably
withheld, of Duke. In the event that Duke or ▇▇▇▇▇▇▇▇ reasonably withholds such
consent pursuant to the preceding clause (vi)(A) or (B), the parties shall
negotiate in good faith to resolve their differences and, failing that, the
Neutral Firm shall resolve such disagreement. The above provisions of this
Section 4.3(a) shall cease to apply with respect to taxable periods beginning
after the consummation of the IPO, except to the extent that failure of such
provisions to apply could reasonably be expected to affect any member of the
▇▇▇▇▇▇▇▇ Group or the Duke Group (other than in its capacity as a direct or
indirect shareholder, or affiliate of such a shareholder, of the Corporation).
(b) The Company shall present (such presentation to be made
(i) in the case of a Tax Return for a Company taxable year ending on December
31st, no later than July 1st in the year following the end of such Company
taxable year and (ii) in the case of a Tax Return for a Company taxable year
ending on a date other than December 31st, no later than the date that is six
months following the end of such Company taxable year) any Federal Income Tax
Returns of the Company to ▇▇▇▇▇▇▇▇ for ▇▇▇▇▇▇▇▇' review and shall revise such
Tax Returns prior to filing to reflect any reasonable comments requested in good
faith by ▇▇▇▇▇▇▇▇ in writing within 15 Business Days after such presentation of
such Tax Returns to ▇▇▇▇▇▇▇▇; provided, however, that in the event that the
Company or Duke disagrees with any such comments of ▇▇▇▇▇▇▇▇, then the Company,
Duke and
-11-
13
▇▇▇▇▇▇▇▇ shall endeavor to resolve their disagreement over such comments and,
failing that, the Neutral Firm shall resolve such disagreement prior to the date
such Tax Returns are due (including extensions) and such Tax Returns shall be
filed in such manner as the Neutral Firm determines. The fees and expenses of
the Neutral Firm in connection with this Section 4.3(b) shall be allocated
between ▇▇▇▇▇▇▇▇ and Duke by the Neutral Firm. At Duke's or ▇▇▇▇▇▇▇▇' request,
the Company shall make available to Duke and ▇▇▇▇▇▇▇▇, respectively, for their
review at least 15 Business Days prior to the due date (including extensions)
any state, local or foreign Income Tax Returns of the Company or its
Subsidiaries. The above provisions of this Section 4.3(b) shall cease to apply
with respect to taxable periods beginning after the consummation of the IPO,
except to the extent that failure of such provisions to apply could reasonably
be expected to affect any member of the ▇▇▇▇▇▇▇▇ Group (other than in its
capacity as a direct or indirect shareholder, or affiliate of such a
shareholder, of the Corporation).
(c) Cooperation and Exchange of Information. Duke, Phillips,
the Company and DEFS Holding (and the Corporation, from and after the Merger)
shall (and shall cause their respective Subsidiaries to) cooperate with one
another with respect to Tax matters. As soon as practicable, but in any event
within 30 days after the request of Duke or ▇▇▇▇▇▇▇▇, from and after the Closing
Date, the Company shall deliver to Duke or ▇▇▇▇▇▇▇▇, respectively, such
information and data concerning the Company and its Subsidiaries and make
available such employees of the Company and its Subsidiaries as Duke or ▇▇▇▇▇▇▇▇
may reasonably request (including providing the information and data reasonably
required by Duke's and ▇▇▇▇▇▇▇▇' customary Tax and accounting questionnaires) in
order to enable Duke and ▇▇▇▇▇▇▇▇ to complete and file all Tax Returns which
they each may be required to file with respect to the Company and its
Subsidiaries or to respond to Tax audits or other inquiries relating to Taxes by
any Governmental Entities with respect to such operations and to otherwise
enable Duke and ▇▇▇▇▇▇▇▇ each to satisfy their respective accounting, Tax and
other legitimate business requirements. Such cooperation and information shall
include provision of powers of attorney to Duke or ▇▇▇▇▇▇▇▇ relating to Tax
matters (e.g., for the purpose of signing Returns and defending audits) and
promptly forwarding copies of appropriate notices and forms or other
communications received from or sent to any Governmental Entity that relate to
the Company and its Subsidiaries, and providing copies of all relevant Tax
Returns, together with accompanying schedules and related workpapers, documents
relating to rulings or other determinations by any Governmental Entities and
records concerning the ownership and tax basis of property, which the Company,
the Corporation and their Subsidiaries may possess. The Company and DEFS Holding
(and the Corporation, from and after the time of the Merger) shall (and shall
cause their respective Subsidiaries to) make their respective employees and
facilities available on a mutually convenient basis to provide explanation of
any documents or information provided hereunder. The above provisions of this
Section 4.3(c) shall cease to apply with respect to taxable periods beginning
after the consummation of the IPO, except to the extent that failure of such
provisions to apply could reasonably be expected to affect any member of the
▇▇▇▇▇▇▇▇ Group or the Duke Group (other than in its capacity as a direct or
indirect shareholder or affiliate of such a shareholder, of the Corporation).
Notwithstanding any other provision, (i) Duke shall not be required to provide
any Person with any consolidated, combined, affiliated or unitary Income Tax
Return or copy thereof that includes Duke or any other member of the Duke Group
and (ii) ▇▇▇▇▇▇▇▇ shall not be required to provide any Person with any
consolidated, combined, affiliated or unitary Income Tax Return or copy thereof
that includes ▇▇▇▇▇▇▇▇ or any other member of the ▇▇▇▇▇▇▇▇ Group.
-12-
14
Section 4.4 Debt Repayment. From and after consummation of the
IPO, to the extent that proceeds from the IPO (or any other funds contributed to
the Company or any of its Subsidiaries) are used to repay debt owed by the
Company or any of its Subsidiaries (for so long as the Company or such
Subsidiary is treated as a partnership for federal income tax purposes), such
funds shall be contributed to the Company and its Subsidiaries by the limited
liability company interest holders or other equity interest holders in the
Company or such Subsidiaries in proportion to the allocation of debt to such
holders provided in Section 8.2(b)(iii) of the LLC Agreement.
ARTICLE V
TRANSFER RESTRICTIONS
Section 5.1 Structure; Transfers. For the period from the date
of this Agreement until the consummation of the IPO, (i) Duke shall cause DEFS
Holding to own and hold all of Duke's Company Interest and no other assets or
liabilities, and (ii) ▇▇▇▇▇▇▇▇ shall cause (A) PGC to own and hold all of
▇▇▇▇▇▇▇▇' Company Interest and no other assets or liabilities and (B) PGCSI to
own and hold all of the capital stock of PGC and no other assets or liabilities.
Section 5.2 Change of Control. Each of Duke and ▇▇▇▇▇▇▇▇
agrees that prior to consummation of the IPO, as a condition to the consummation
of any transaction that will result in a Change of Control of DEFS Holding or
PGC, respectively, it will cause the new Parent of DEFS Holding or PGC,
respectively, to assume the obligations of Duke or ▇▇▇▇▇▇▇▇, as applicable,
under this Agreement.
ARTICLE VI
TERMINATION OF AGREEMENTS
Section 6.1 Termination of Agreements. The Governance
Agreement is hereby terminated in its entirety and shall be void and have no
further force and effect [(it being understood that any covenants in the
Contribution Agreement that refer to the Governance Agreement and involve
post-Closing Date actions shall be deemed to refer to this Agreement, the LLC
Agreement, the Shareholders Agreement, the Registration Rights Agreement, the
Agreement of Merger, the Amended and Restated Certificate of Incorporation of
the Corporation, and the Amended and Restated Bylaws of the Corporation)];
provided, however, that such termination shall not relieve any party thereto of
any liability for any breach of the Governance Agreement that occurred prior to
the termination thereof.
ARTICLE VII
EMPLOYEE MATTERS
Section 7.1 Definitions; Controlling Provisions. As used in
this Article VII, (i) the terms "DEFS" and "TEPPCO" shall have the meanings
assigned to such terms in the Contribution Agreement, (ii) the terms "Bonuses,"
"Change in Control Severance Plan," "Continued Employees," "DEFS Employee,"
"Duke FSP," "Eligible Expenses," "Employee," "New Welfare Plans," "Old Welfare
Plans," "PGC Employee," "▇▇▇▇▇▇▇▇ FSP," "Retained DEFS Employee" and
"Transferred PGC Employee" shall have the meanings assigned to such terms in
Annex A to the Contribution Agreement, (iii) the term "Continued Duke Welfare
Plan" shall have the meaning set forth in Section 7.4(a), (iv) the term "TEPPCO
Employee" shall mean any individual who is, immediately prior to the date
hereof, an Employee of TEPPCO, and (v) the term "DEFS Severance Plan" shall mean
that certain 2000 Duke Energy Field Services Severance Benefits Plan as in
effect on April 1, 2000. The terms of this Article VII shall govern and control
to the extent they are inconsistent or conflict with the terms of Annex A to the
Contribution Agreement, and the provisions of Sections 7.3, 7.4 and 7.5 shall be
deemed to be a part of Annex A to the Contribution Agreement for purposes of the
indemnification provisions of Sections 9.1(iii), 9.2(a)(iv) and 9.2(b)(iv) of
the Contribution Agreement. The provisions of Section 5.1 of Annex A to the
Contribution Agreement shall apply with respect to the compensation and benefit
matters addressed in this Article VII.
-13-
15
Section 7.2 Transfer of Employees. If a DEFS Employee or a PGC
Employee is to be transferred to the Company pursuant to the terms of Annex A to
the Contribution Agreement, then the Company may direct Duke and ▇▇▇▇▇▇▇▇,
respectively, to cause the transfer of such employee to be made to the Company
or to a Subsidiary of the Company that is designated by the Company. Continued
Employees may be employed by the Company or any Affiliate of the Company as
determined by the Company from time to time in its sole discretion.
Section 7.3 TEPPCO Employees. For all purposes of Annex A to
the Contribution Agreement and this Article VII (except where specifically
provided otherwise), each TEPPCO Employee shall be considered a Retained DEFS
Employee. Duke shall have no obligation under Section 3.2 of Annex A to the
Contribution Agreement to reimburse the Company for a pro-rata portion of the
Bonuses for calendar year 2000 that are paid to Retained DEFS Employees who are
TEPPCO Employees. Schedule 7.3 to this Agreement sets forth a list of agreements
relating to TEPPCO Employees that shall be considered to be among the agreements
listed in Schedule 2.5(a)(i) or Schedule 2.5(a)(ii) to Annex A to the
Contribution Agreement (as indicated on Schedule 7.3 to this Agreement);
provided, however, that the Company shall have no reimbursement obligation to
Duke with respect to any such agreement that is considered to be among the
agreements listed in Schedule 2.5(a)(i) to Annex A to the Contribution
Agreement.
Section 7.4 Welfare Benefits. (a) In order to permit benefits
transition with respect to Retained DEFS Employees, for the period beginning on
the date hereof and ending on the earliest of (i) December 31, 2000, (ii) such
date as Duke shall cease to have a greater than 50%, direct or indirect,
ownership interest in the Company, or (iii) such date as the Company or Duke
shall designate with respect to any particular Old Welfare Plan (provided that
Duke or the Company shall provide reasonable notice under the circumstances to
the other party prior to any such date), the Company and/or its wholly-owned
Subsidiaries shall be participating employers on behalf of their employees
(including any Continued Employees) who meet the requirements for eligibility
under the following Old Welfare Plans maintained by Duke: the Duke Energy
Medical, Dental, Cafeteria (FSP), Basic Life Insurance, Supplemental and
Dependent Life Insurance, Basic, Supplemental and Dependent Accidental Death and
Dismemberment Insurance, Business Travel Accident Insurance and Long-Term Care
Insurance Plans (each such Old Welfare Plan is herein referred to as a
"Continued Duke Welfare Plan"); provided, however, that retiree medical, dental
and life insurance coverages under the applicable Continued Duke Welfare Plans
shall not become applicable to an individual who either is not a Retained DEFS
Employee or fails to meet such requirements as Duke shall impose for such
coverages. Duke may terminate the participation by the Company and its
wholly-owned Subsidiaries in a particular Continued Duke Welfare Plan prior to
December 31, 2000, pursuant to clause (iii) of the preceding sentence only if
(1) Duke will be terminating such plan in its entirety as of the date designated
by Duke pursuant to such clause or (2) Duke has determined that such continued
participation by the Company and/or any of its wholly-owned Subsidiaries could
subject Duke or such plan to fines, penalties, excise taxes, loss of tax
deductions or other liabilities (other than liabilities for the benefits to be
provided under such plan). Without limiting the generality of the preceding
provisions of this Section 7.4(a), it is understood and agreed that such
provisions shall not override the provisions of Section 4.2(b) of Annex A to the
Contribution Agreement. For purposes of applying Section 4.5(c) of Annex A to
the Contribution Agreement, the Continued Duke Welfare Plans shall be deemed to
be New Welfare Plans; provided, however, that Eligible Expenses of a Retained
DEFS Employee shall be determined without regard to when such expenses are
recorded by the applicable plan administrator or reported to the Company.
-14-
16
(b) Notwithstanding the provisions of Section 4.5(d) of Annex
A to the Contribution Agreement, for the period specified in Section 7.4(a) as
it applies to the Duke FSP, the Retained DEFS Employees shall continue to be
eligible, and the Transferred PGC Employees shall be eligible, to participate in
the Duke FSP. In the case of the Retained DEFS Employees, such continued
participation shall be based on their elections under the Duke FSP that are in
effect immediately prior to the date hereof (as such elections may be adjusted
from time to time in accordance with the terms of the Duke FSP). In the case of
the Transferred PGC Employees, the provisions of Section 4.5(d) of Annex A to
the Contribution Agreement shall be applied as if the Duke FSP were the New FSP
as defined therein, except that references therein to the Company shall be
deemed to refer to Duke; provided, however, that if the aggregate amount of the
transferred account balances of Transferred PGC Employees from the ▇▇▇▇▇▇▇▇ FSP
to the Duke FSP is negative, then the Company shall pay ▇▇▇▇▇▇▇▇ the amount of
such aggregate negative balance promptly following such account balance
transfer. The parties hereto agree and acknowledge that it is their intention
that the economic risks and benefits associated with calendar year 2000 (or any
portion thereof) participation in the Duke FSP by Retained DEFS Employees (both
before and after the date hereof), Transferred PGC Employees, and any other
employees of the Company and its Subsidiaries be borne or enjoyed, as the case
may be, by the Company. Accordingly, Duke and the Company agree that, as soon as
administratively feasible after all claims under the Duke FSP have been
processed for calendar year 2000 with respect to the employees of the Company
and its Subsidiaries, one such party shall make a payment to the other (as
appropriate) to ensure such result to the greatest extent possible.
Section 7.5 Severance Benefits. (a) The Company or a
Subsidiary of the Company shall reimburse ▇▇▇▇▇▇▇▇ for the cash severance
benefit paid by ▇▇▇▇▇▇▇▇ or any Subsidiary of ▇▇▇▇▇▇▇▇ to certain of their
employees in accordance with the terms of Article I of Exhibit A to that certain
Transition Services Agreement between ▇▇▇▇▇▇▇▇ and the Company dated March 17,
2000.
(b) Section 4.2(b) of Annex A to the Contribution Agreement
shall apply to each Retained DEFS Employee who is a TEPPCO Employee and who was
covered by the Change in Control Severance Plan immediately prior to the date
hereof; provided, however, that (i) the Company shall not have any reimbursement
obligation to Duke under such Section 4.2(b) with respect to the cash severance
benefit paid to any such employee and (ii) Duke shall not have any reimbursement
obligation to the Company under such Section 4.2(b) for any extended coverage
under a welfare benefit plan.
(c) The provisions of this Section 7.5(c) shall not apply with
respect to any Retained DEFS Employee who is a TEPPCO Employee. Duke shall
reimburse the Company or a Subsidiary of the Company for the severance benefit
paid under the DEFS Severance Plan to any Retained DEFS Employee who receives
notice from the Company or a Subsidiary of the Company on or about the date
hereof that such individual's employment will be terminated in connection with
(and in any event within 30 days after) the closing of the transactions
contemplated under the Contribution Agreement. On or about the date hereof, the
Company and its Subsidiaries shall also notify certain Retained DEFS Employees
selected by the Company in its sole discretion that such individuals will be
requested to perform services for the Company or a Subsidiary of the Company on
only a transitional basis. Duke shall reimburse the Company or a Subsidiary of
the Company for the severance benefit paid under the DEFS Severance Plan to any
Retained DEFS Employee who receives the notice described in the preceding
sentence provided that the termination of such individual's employment from the
Company and its Affiliates occurs within six months of the date hereof (or
within nine months of the date hereof in the case of such a Retained DEFS
Employee who is an accountant).
Section 7.6 Miscellaneous. The reference in Section 2.3 of
Annex A to the Contribution Agreement to Section 6.1 of the Governance Agreement
shall be deemed to refer to Section 6.1 of the Governance Agreement as in effect
immediately before the termination of the Governance Agreement. All references
in Sections 3.1, 4.1, 4.5(a), 4.5(b)(i)(A), 4.5(b)(ii)(I), 4.5(b)(iii)(x) and
the last sentence of Section 4.5(b) of Annex A to the Contribution Agreement to
the "Closing Date" shall be deemed to refer to the day after the Closing Date.
-15-
17
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties hereto and delivered (including by facsimile) to
the other parties.
Section 8.2 Governing Law; Jurisdiction and Forum; Waiver of
Jury Trial. (a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without reference to the choice of law
principles thereof.
(b) Each party hereto irrevocably submits to the jurisdiction
of any Delaware state court or any federal court sitting in the State of
Delaware in any action arising out of or relating to this Agreement, and hereby
irrevocably agrees that all claims in respect of such action may be heard and
determined in such Delaware state or federal court. Each party hereto hereby
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding. The
parties hereto further agree, to the extent permitted by law, that final and
unappealable judgment against any of them in any action or proceeding
contemplated above shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States by suit on the judgment, a
certified copy of which shall be conclusive evidence of the fact and amount of
such judgment.
(c) To the extent that any party hereto has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property, each party hereto hereby irrevocably waives such immunity in respect
of its obligations with respect to this Agreement.
(d) Each party hereto waives, to the fullest extent permitted
by applicable law, any right it may have to a trial by jury in respect of any
action, suit or proceeding arising out of or relating to this Agreement. Each
party hereto certifies that it has been induced to enter into this Agreement by,
among other things, the mutual waivers and certifications set forth above in
this Section 8.2.
Section 8.3 Entire Agreement. The parties hereto acknowledge
that the Contribution Agreement, the Confidentiality Agreements dated August 11,
1999 and August 26, 1999 between Duke and ▇▇▇▇▇▇▇▇, the LLC Agreement and this
Agreement, together with the exhibits hereto and the exhibits to such exhibits,
including the Certificate of Incorporation and the Bylaws of the Corporation,
have been executed or adopted as part of the same transaction. This Agreement,
together with the Contribution Agreement and the exhibits hereto and thereto,
constitutes the entire agreement of the parties with respect to the subject
matter hereof and there are no agreements, understandings, representations or
warranties between the parties other than those set forth or referred to herein.
This Agreement is not intended to confer upon any person not a party hereto (and
their successors and assigns) any rights, remedies or obligations hereunder.
Section 8.4 Expenses. Except as set forth in this Agreement,
whether or not the transactions contemplated by this Agreement or the
Contribution Agreement are consummated, all legal and other costs and expenses
incurred in connection with this Agreement and the Contribution Agreement and
the transactions contemplated by this Agreement and the Contribution Agreement
shall be paid by the party incurring such costs and expenses; provided, however,
that third party costs incurred by each party after December 16, 1999 for
planning and information purposes relating
-16-
18
to the transactions contemplated by this Agreement and the Contribution
Agreement (including costs of consultants and contractors hired for such
purposes, prepayments for services required by the Company, rating agency fees
and outside attorneys fees for ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ and regulatory matters, but
excluding wages and expenses of employees of Duke or ▇▇▇▇▇▇▇▇, costs incurred in
performing due diligence on Duke or ▇▇▇▇▇▇▇▇, as applicable) shall be paid or
reimbursed by the Company or the Corporation, as applicable.
Section 8.5 Notices. All notices and other communications to
be given to any party hereunder shall be sufficiently given for all purposes
hereunder if in writing and delivered by hand, courier or overnight delivery
service or three days after being mailed by certified or registered mail, return
receipt requested, with appropriate postage prepaid, or when received in the
form of a telegram or facsimile and shall be directed, if to a party hereunder,
to the address or facsimile number set forth below (or at such other address or
facsimile number as such party shall designate by like notice):
(a) If to ▇▇▇▇▇▇▇▇:
▇▇▇▇▇▇▇▇ Petroleum Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Duke:
Duke Energy Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
-17-
19
(c) If to the Company:
Duke Energy Field Services, LLC
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Duke Energy Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8.6 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided, however, that no party hereto will
assign its rights or delegate any or all of its obligations under this Agreement
without the express prior written consent of each other party hereto.
Section 8.7 Headings; Definitions. The section and article
headings contained in this Agreement are inserted for convenience of reference
only and will not affect the meaning or interpretation of this Agreement.
Section 8.8 Amendments and Waivers. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
all parties hereto. Either party hereto may, only by an instrument in writing,
waive compliance by the other party hereto with any term or provision of this
Agreement on the part of such other party hereto to be performed or complied
with. The waiver by any party hereto of a breach of any term or provision of
this Agreement shall not be construed as a waiver of any subsequent breach.
Except as otherwise expressly provided herein, no failure to exercise, delay in
exercising or single or partial exercise of any right, power or remedy by any
party, and no course of dealing between the parties, shall constitute a waiver
of any such right, power or remedy.
Section 8.9 Severability. If any provision of this Agreement
shall be held invalid, illegal or unenforceable, the validity, legality or
enforceability of the other provisions of this Agreement shall not be affected
thereby, and there shall be deemed substituted for the provision at issue a
valid, legal and enforceable provision as similar as possible to the provision
at issue.
-18-
20
Section 8.10 Interpretation. In the event an ambiguity or
question of intent or interpretation arises with respect to this Agreement, this
Agreement shall be construed as if it was drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
Section 8.11 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event that any party fails to
consummate the transactions contemplated by this Agreement in accordance with
the terms of this Agreement and that the parties shall be entitled to specific
performance in such event, in addition to any other remedy at law or in equity,
including temporary restraining orders or temporary or permanent injunctions.
-19-
21
IN WITNESS WHEREOF, each of the undersigned has caused this
Agreement to be duly executed and delivered on the date first set forth above.
▇▇▇▇▇▇▇▇ PETROLEUM COMPANY
By:
-------------------------------------
Name:
Title:
DUKE ENERGY CORPORATION
By:
-------------------------------------
Name:
Title:
DUKE ENERGY FIELD SERVICES, LLC
By:
-------------------------------------
Name:
Title:
DUKE ENERGY FIELD SERVICES CORPORATION
(solely for purposes of Section 4.3(c)
of this Agreement)
By:
-------------------------------------
Name:
Title:
-20-