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Exhibit 10.6
SHAREHOLDERS AGREEMENT
by and among
DUKE ENERGY NATURAL GAS CORPORATION
and
▇▇▇▇▇▇▇▇ PETROLEUM COMPANY
Dated as of _________ __, 2000
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TABLE OF CONTENTS
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Definitions....................................................................................1
Section 1.2 Construction...................................................................................4
ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Composition of the Corporation Board...........................................................5
Section 2.2 Removal and Replacement of Directors...........................................................5
ARTICLE III
OTHER AGREEMENTS
Section 3.1 Special Buy-out Right..........................................................................6
ARTICLE IV
LIQUIDITY AND TRANSFER RESTRICTIONS
Section 4.1 Right of First Offer...........................................................................7
Section 4.2 Change of Control..............................................................................8
Section 4.3 Open Market Purchases and Transfers...........................................................10
Section 4.4 Affiliate Transfers...........................................................................10
Section 4.5 Void Transfers................................................................................10
ARTICLE V
TERMINATION
Section 5.1 Termination...................................................................................10
ARTICLE VI
MISCELLANEOUS
Section 6.1 Counterparts..................................................................................10
Section 6.2 Governing Law; Jurisdiction and Forum; Waiver of Jury Trial...................................11
Section 6.3 Entire Agreement..............................................................................11
Section 6.4 Expenses......................................................................................11
Section 6.5 Notices.......................................................................................11
Section 6.6 Successors and Assigns........................................................................13
Section 6.7 Headings; Definitions.........................................................................13
Section 6.8 Amendments and Waivers........................................................................13
Section 6.9 Severability..................................................................................13
Section 6.10 Interpretation................................................................................13
Section 6.11 Specific Performance..........................................................................14
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SHAREHOLDERS AGREEMENT, dated as of ____________, 2000 (this
"Agreement"), by and among DUKE ENERGY NATURAL GAS CORPORATION, a Delaware
corporation ("DENG"), and ▇▇▇▇▇▇▇▇ PETROLEUM COMPANY, a Delaware corporation
("PGCSI Parent" or "▇▇▇▇▇▇▇▇").
RECITALS
1. DENG, an indirect wholly owned subsidiary of Duke Energy
Corporation, a North Carolina corporation ("Duke"), and PGCSI Parent are
currently Shareholders (as defined below) of Duke Energy Field Services
Corporation (the "Corporation").
2. The Shareholders desire to set forth herein the terms and conditions
concerning their ownership of and cooperation concerning the Corporation.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the Shareholders agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms
shall have the respective meanings set forth below:
"Affiliate" shall mean, with respect to any Person, a Person directly
or indirectly Controlling, Controlled by or under common Control with such
Person.
"Agreement" shall have the meaning set forth in the Preamble.
"Appraiser Committee" shall have the meaning set forth in Section
3.1(b).
"Business Day" shall mean any day on which banks are generally open to
conduct business in the State of New York.
"Buy-Out Notice" shall have the meaning set forth in Section 3.1(a).
"Buy-Out Right" shall have the meaning set forth in Section 3.1(a).
"Change of Control" shall mean an event (such as a Transfer of voting
securities) that causes a Person that holds a Corporation Interest to cease to
be Controlled by such Person's Parent; provided, however, that an event that
causes Duke or ▇▇▇▇▇▇▇▇ to be Controlled by another Person shall not constitute
a Change of Control, and a Transfer by either a Duke Shareholder or a ▇▇▇▇▇▇▇▇
Shareholder of its Corporation Interest shall not constitute a Change of Control
(it being the intent of the parties that such Transfers shall be governed by and
subject to the right of first offer provisions set forth in Section 4.1 hereof).
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"Changing Party" shall have the meaning set forth in Section 4.2(b).
"Changing Party Appraiser" shall have the meaning set forth in Section
4.2(c).
"Contribution Agreement" shall mean the Contribution Agreement by and
among ▇▇▇▇▇▇▇▇, ▇▇▇▇ and Duke Energy Field Services L.L.C., dated as of December
16, 1999.
"Control" shall mean the possession, directly or indirectly, through
one or more intermediaries, by any Person or group (within the meaning of
Section 13(d)(3) under the Securities Exchange Act of 1934, as amended) of both
of the following:
(a) (i) in the case of a corporation, more than 25% of the direct or
indirect economic interests in the outstanding equity securities thereof; (ii)
in the case of a limited liability company, partnership, limited partnership or
venture, the right to more than 25% of the distributions therefrom (including
liquidating distributions); (iii) in the case of a trust or estate, including a
business trust, more than 25% of the beneficial interest therein; and (iv) in
the case of any other entity, more than 25% of the economic or beneficial
interest therein; and
(b) in the case of any entity, the power or authority, through
ownership of voting securities, by contract or otherwise, to control or direct
the management and policies of the entity.
"Control Acceptance" shall have the meaning set forth in Section
4.2(b).
"Control Appraiser Committee" shall have the meaning set forth in
Section 4.2(c).
"Control Notice" shall have the meaning set forth in Section 4.2(b).
"Control Offer Period" shall have the meaning set forth in Section
4.2(b).
"Corporation" shall have the meaning set forth in the Preamble.
"Corporation Board" shall have the meaning set forth in Section 2.1.
"Corporation Common Stock" shall mean the common stock, par value $0.01
per share, of the Corporation.
"Corporation Interest" shall mean, with respect to any Person, such
Person's percentage ownership (direct and indirect), exclusive of any Market
Shares owned (directly or indirectly) by such Person, of the outstanding
Corporation Common Stock at the time of measurement.
"DENG" shall have the meaning set forth in the Preamble.
"Director" shall mean one or more of the members of the Corporation
Board, as the context may require.
"Duke" shall have the meaning set forth in the Recitals.
"Duke Appraiser" shall have the meaning set forth in Section 3.1(a).
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"Duke Directors" shall have the meaning set forth in Section 2.1.
"Duke Shareholder" shall mean the holder of any Corporation Common
Stock (other than Market Shares) that is Duke or a Subsidiary of Duke or, if at
any time there is more than one such holder, each of such holders.
"Fair Market Value" shall mean, with respect to any Person's
Corporation Interest, a purchase price equal to the value that would be obtained
for such Corporation Interest in an arm's-length transaction between an informed
and willing buyer under no compulsion to buy and an informed and willing seller
under no compulsion to sell such Corporation Interest.
"GAAP" shall mean generally accepted accounting principles in the
United States.
"Governmental Entity" shall mean any federal, state, political
subdivision or other governmental agency or instrumentality, foreign or
domestic.
"Independent Directors" shall mean directors meeting the independence
and experience requirements, as set forth by the New York Stock Exchange as of
the date of the IPO for membership on an audit committee of a board of
directors, with respect to each of PGCSI Parent, DENG, Duke and the Corporation.
"IPO" shall mean the initial offering of shares of Corporation Common
Stock to the public in a transaction registered under the Securities Act.
"Market Shares" shall mean shares purchased by a Person through
open-market purchases, other than those shares purchased to prevent dilution in
accordance with Article X of the Certificate of Incorporation of the
Corporation.
"Neutral Appraiser" shall have the meaning set forth in Section 3.1(b).
"Neutral Control Appraiser" shall have the meaning set forth in Section
4.2(c).
"Non-Changing Party" shall have the meaning set forth in Section
4.2(b).
"Non-Changing Party Appraiser" shall have the meaning set forth in
Section 4.2(b).
"Non-Transferring Entity" shall have the meaning set forth in Section
4.1.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Parent" shall mean, with respect to a particular Person, the Person
that Controls such particular Person and that is not itself Controlled by any
other Person.
"Party" shall mean each of DENG and PGCSI Parent and any Affiliates of
Duke or ▇▇▇▇▇▇▇▇, respectively, who become party hereto in accordance with
Section 4.4.
"Person" shall mean any individual, partnership, limited liability
company, firm, corporation, association, joint venture, trust or other entity or
any Governmental Entity.
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"PGCSI Parent" shall have the meaning set forth in the Preamble.
"▇▇▇▇▇▇▇▇" shall have the meaning set forth in the Preamble.
"▇▇▇▇▇▇▇▇ Appraiser" shall have the meaning set forth in Section
3.1(b).
"▇▇▇▇▇▇▇▇ Directors" shall have the meaning set forth in Section 2.1.
"▇▇▇▇▇▇▇▇ Shareholder" shall mean the holder of any Corporation Common
Stock (other than Market Shares) that is ▇▇▇▇▇▇▇▇ or a Subsidiary of ▇▇▇▇▇▇▇▇
or, if at any time there is more than one such holder, each of such holders.
"▇▇▇▇▇▇▇▇ Veto" shall mean the failure of the requisite number of
directors of the Corporation Board to vote in favor of any of the actions
described in Exhibit B hereto where none of the ▇▇▇▇▇▇▇▇ Directors voted in
favor of such action; provided, however, that if any of the Duke Directors
failed to vote in favor of such action, such failure of the requisite number of
directors of the Corporation Board to vote in favor of such action shall not
constitute a ▇▇▇▇▇▇▇▇ Veto.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shareholder" shall have the meaning set forth in Section 4.1.
"Subsidiary" shall mean, when used with respect to any Person, any
Affiliate of such Person that is Controlled by such Person.
"Total Corporation Interest" shall mean, with respect to any Person,
the sum of (i) such Person's Corporation Interest and (ii) any Market Shares
owned (directly or indirectly) by such Person (expressed as a percentage of the
outstanding Corporation Common Stock at the time of measurement).
"Transfer" shall mean any sale, assignment or other transfer, whether
by operation of law or otherwise (but not any deemed transfer pursuant to
▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Internal Revenue Code of 1986, as amended, of
the assets of a corporation or its Subsidiary in connection with the purchase of
the stock of such corporation).
"Transfer Notice" shall have the meaning set forth in Section 4.1.
"Transferring Entity" shall have the meaning set forth in Section 4.1.
Section 1.2 Construction. Unless the context requires otherwise: (a)
the gender (or lack of gender) of all words used in this Agreement includes the
masculine, feminine and neuter; (b) references to Articles and Sections refer to
Articles and Sections of this Agreement; (c) references to Exhibits refer to the
Exhibits attached to this Agreement; (d) references to laws refer to such laws
as they may be amended from time to time, and references to particular
provisions of a law include any corresponding provisions of any succeeding law;
(e) references to money refer to legal currency of the United States of America;
(f) the word "including" means "including, without limitation"; and (g) all
capitalized terms defined herein are equally applicable to both the singular and
plural forms of such terms.
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ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Composition of the Corporation Board. Each Duke Shareholder
(including DENG so long as it is a Duke Shareholder) shall, and shall cause its
Affiliates to, make nominations and vote Duke's Total Corporation Interest, and
each ▇▇▇▇▇▇▇▇ Shareholder (including PGCSI Parent so long as it is a ▇▇▇▇▇▇▇▇
Shareholder) shall, and shall cause its Affiliates to, make nominations and vote
▇▇▇▇▇▇▇▇' Total Corporation Interest, so that (a) the Corporation shall be
managed by a board of directors (the "Corporation Board") that shall be
comprised of 11 Persons, including: (i) so long as Duke's Corporation Interest
equals or exceeds 30%, (A) seven individuals designated by DENG (the "Duke
Directors"), including at least two Independent Directors, and (B) so long as
▇▇▇▇▇▇▇▇' Corporation Interest equals or exceeds 20%, four individuals
designated by PGCSI Parent (the "▇▇▇▇▇▇▇▇ Directors"), including at least one
Independent Director and (ii) if Duke's Corporation Interest equals or exceeds
20% but is less than 30%, (A) the number of Duke Directors shall equal the
product, rounded to the nearest whole number, of (1) 11 and (2) the quotient of
(x) Duke's Corporation Interest divided by (y) the sum of (I) Duke's Corporation
Interest and (II) ▇▇▇▇▇▇▇▇' Corporation Interest; (B) the number of ▇▇▇▇▇▇▇▇
Directors shall equal the difference between (1) 11 and (2) the number of Duke
Directors, (C) if there are more Duke Directors than ▇▇▇▇▇▇▇▇ Directors, then at
least two of the Duke Directors and at least one of the ▇▇▇▇▇▇▇▇ Directors must
be Independent Directors and (D) if there are more ▇▇▇▇▇▇▇▇ Directors than Duke
Directors, then at least two of the ▇▇▇▇▇▇▇▇ Directors and at least one of the
Duke Directors must be Independent Directors, and (b) the Chairman of the
Corporation Board shall be one of the Directors designated by whichever of the
Parties has the right at such time to designate more Directors. Each Director
will serve as a Director until his or her successor is duly elected and
qualified or until his or her earlier resignation or removal.
Section 2.2 Removal and Replacement of Directors. Each Duke Shareholder
(including DENG so long as it is a Duke Shareholder) shall, and shall cause its
Affiliates to, vote Duke's Total Corporation Interest, and PGCSI Parent and each
▇▇▇▇▇▇▇▇ Shareholder (including PGCSI Parent so long as it is a ▇▇▇▇▇▇▇▇
Shareholder) shall, and shall cause its Affiliates to, vote ▇▇▇▇▇▇▇▇' Total
Corporation Interest, to remove (a) any or all of the Duke Directors at the
request of DENG at any time and for any reason (or for no reason) and (b) any or
all of the ▇▇▇▇▇▇▇▇ Directors at the request of PGCSI Parent at any time and for
any reason (or for no reason). Should any Director be unwilling or unable to
continue to serve, or otherwise cease to serve (including by reason of his or
her involuntary removal or at the expiration of any applicable term of office),
then (i) each Duke Shareholder (including DENG so long as it is a Duke
Shareholder) shall, and shall cause its Affiliates to, (A) make nominations and
vote Duke's Total Corporation Interest to, and (B) cause the Duke Directors to,
and (ii) each ▇▇▇▇▇▇▇▇ Shareholder (including PGSCI so long as it is a ▇▇▇▇▇▇▇▇
Shareholder) shall, and shall cause its Affiliates to, (A) make nominations and
vote ▇▇▇▇▇▇▇▇' Total Corporation Interest to, and (B) cause the ▇▇▇▇▇▇▇▇
Directors to, vote to fill the resulting vacancy on the Corporation Board by a
Person designated by DENG, in the case of a vacancy of a Duke Director, and by a
Person designated by PGCSI Parent, in the case of a vacancy of a ▇▇▇▇▇▇▇▇
Director, but in each case in accordance with the Independent Director
requirements of Section 2.1.
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ARTICLE III
OTHER AGREEMENTS
Section 3.1 Special Buy-out Right. (a) Following the one year
anniversary of the consummation of the IPO, if a ▇▇▇▇▇▇▇▇ Veto occurs with
regard to different proposals proposed in good faith at three separate meetings
(with at least two months between the first and third meetings) of the
Corporation Board within any 18-month period, DENG shall have the right (the
"Buy-Out Right"), exercisable upon written notice (the "Buy-Out Notice") at any
time after the third such ▇▇▇▇▇▇▇▇ Veto, but not later than the thirtieth day
after the end of the eighteenth month after the occurrence of the first of the
three ▇▇▇▇▇▇▇▇ Vetoes that are the basis for the exercise of the Buy-Out Right,
to purchase all (but not less than all) of ▇▇▇▇▇▇▇▇' Corporation Interest
pursuant to this Section 3.1. The Buy-Out Notice shall set forth the name of a
nationally recognized appraisal firm (which may be an investment banking,
accounting or other firm that performs appraisal and valuation services)
designated by DENG as its appraisal firm (the "Duke Appraiser").
(b) Within 15 days from the date of receipt of the Buy-Out Notice,
PGCSI Parent shall notify DENG in writing of the name of an appraisal firm
(which may be an investment banking, accounting or other firm that performs
appraisal and valuation services) designated as PGCSI Parent's appraisal firm
(the "▇▇▇▇▇▇▇▇ Appraiser"); provided, however, that if ▇▇▇▇▇▇▇▇ fails to select
an appraisal firm, the ▇▇▇▇▇▇▇▇ Appraiser shall be Ernst & Young L.L.P.
(provided, further, that if Ernst & Young L.L.P. fails to accept the appointment
within 30 days from the date of PGCSI Parent's receipt of the Buy-Out Notice,
the Appraiser Committee shall consist solely of the Duke Appraiser). If
applicable, the Duke Appraiser and the ▇▇▇▇▇▇▇▇ Appraiser shall jointly choose a
third appraisal firm (which may be an investment banking, accounting or other
firm that performs appraisal and valuation services) within 15 days after the
appointment of the ▇▇▇▇▇▇▇▇ Appraiser (provided, however, that if they fail to
select a third appraisal firm within 15 days after the appointment of the
▇▇▇▇▇▇▇▇ Appraiser, such third firm (which shall be an investment banking,
accounting or other firm that performs appraisal and valuation services) will be
selected by the American Arbitration Association at the request of either party
within 10 days after such request) (the "Neutral Appraiser," and together with
the Duke Appraiser and the ▇▇▇▇▇▇▇▇ Appraiser, the "Appraiser Committee"). Once
the Appraiser Committee has been selected, each of DENG and PGCSI Parent shall
submit proposed Fair Market Values of ▇▇▇▇▇▇▇▇' Corporation Interest to the
Appraiser Committee, together with any supporting documentation such Party deems
appropriate, as soon as practicable, but in no event earlier than 30 days after
the date of receipt of the Buy-Out Notice nor later than (i) 30 days after the
date of selection of the Neutral Appraiser, or (ii) in the event of the failure
of Ernst & Young L.L.P. to accept the appointment within the required time
period, 60 days from the date of PGCSI Parent's receipt of the Buy-Out Notice.
If either Party fails to submit its proposed Fair Market Value within the
required time period, the Fair Market Value proposed by the other Party
(assuming such other Party has submitted its proposed value within the required
time period) shall be deemed to be the Fair Market Value of ▇▇▇▇▇▇▇▇'
Corporation Interest for purposes of this Section 3.1. If both Parties submit
their respective proposed values on a timely basis, the Appraiser Committee
shall determine, by majority vote, the Fair Market Value of ▇▇▇▇▇▇▇▇'
Corporation Interest as of the date of the Buy-Out Notice as promptly as
possible (and in any event on or before the 30th day after submittal of the
competing proposals), which determination shall be final and binding on the
Parties. The cost of such appraisal shall be paid in equal portions by each of
DENG and PGCSI Parent. The Company shall provide to each of Duke and ▇▇▇▇▇▇▇▇
and, if applicable, the Appraiser Committee, all information reasonably
requested by them.
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(c) The closing of DENG's acquisition of ▇▇▇▇▇▇▇▇' Corporation Interest
shall be consummated on or before the 60th day after the determination of the
Fair Market Value in accordance with Section 3.1(b). The acquisition shall be
consummated at a closing held at the principal offices of the Corporation
(unless otherwise mutually agreed by DENG and PGCSI Parent) at which time the
purchase price, payable in the form of immediately available funds, shall be
delivered to PGCSI Parent, and PGCSI Parent shall deliver or cause to be
delivered to DENG (or, at DENG's option, to a designee of DENG designated by
DENG not less than five days prior to the closing) such transfer documentation
reasonably acceptable to DENG (or such designee) as shall be required to
evidence the transfer of ▇▇▇▇▇▇▇▇' Corporation Interest, free and clear of all
liens and encumbrances, except those created under this Agreement.
ARTICLE IV
LIQUIDITY AND TRANSFER RESTRICTIONS
Section 4.1 Right of First Offer. If a Duke Shareholder or a ▇▇▇▇▇▇▇▇
Shareholder (each, a "Shareholder") desires to Transfer all or any portion of
its Corporation Interest (other than pursuant to a registered public offering)
to a Person other than an Affiliate, then prior to effecting or making such
Transfer, the Person desiring to make such Transfer (a "Transferring Entity")
shall notify in writing the other Party or Parties that are not Affiliates of
the Transferring Entity (whether one or more, the "Non-Transferring Entity") of
the terms and conditions upon which it proposes to effect such Transfer (which
notice shall be herein referred to as a "Transfer Notice" and shall include all
material price and non-price terms and conditions). The Non-Transferring Entity
shall have the right to acquire all (but not less than all) of the Corporation
Interest that is the subject of the Transfer Notice on the same terms and
conditions as are set forth in the Transfer Notice. The Non-Transferring Entity
shall have 30 days following delivery of the Transfer Notice during which to
notify the Transferring Entity whether or not it desires to exercise its right
of first offer. If the Non-Transferring Entity does not respond during the
applicable period set forth above for exercising its purchasing right under this
Section 4.1, such Non-Transferring Entity shall be deemed to have waived such
right. If the Non-Transferring Entity elects to purchase all, but not less than
all, of the Corporation Interest that is the subject of the Transfer Notice, the
closing of such purchase shall occur at the principal place of business of the
Corporation on the tenth day following the first date on which all applicable
conditions precedent have been satisfied or waived (but in no event shall such
closing take place later than the date that is 60 days (subject to extension for
regulatory approvals, but in no event more than 180 days) following the date on
which the Non-Transferring Entity agrees to purchase all of the Corporation
Interest that is the subject of the Transfer Notice). The Transferring Entity
and the purchasing Non-Transferring Entity agree to use commercially reasonable
efforts to cause any applicable conditions precedent to be satisfied as
expeditiously as possible. At the closing, (a) the Transferring Entity shall
execute and deliver to the purchasing Non-Transferring Entity (or, at the option
of the Non-Transferring Entity, to an Affiliate of the Non-Transferring Entity
designated by the Non-Transferring Entity not less than five days prior to the
closing) (i) an assignment of the Corporation Interest described in the Transfer
Notice, in form and substance reasonably acceptable to the purchasing
Non-Transferring Entity (or such Affiliate) and (ii) any other instruments
reasonably requested by the purchasing Non-Transferring Entity to give effect to
the purchase; and (b) the purchasing Non-Transferring Entity shall deliver to
the Transferring Entity the purchase price specified in the Transfer Notice in
immediately available funds or other consideration as specified in the Transfer
Notice. If the Non-Transferring Entity does
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not elect to purchase the Corporation Interest pursuant to this Section 4.1, or
having elected to so purchase such Corporation Interests fails to do so within
the time period required by this Section 4.1, the Transferring Entity shall be
free for a period of 180 days after the expiration of the offer period referred
to above or the date of such failure, as applicable, to enter into a definitive
written agreement with an unaffiliated third party regarding the Transfer of its
Corporation Interest on terms and conditions that satisfy the following
criteria:
(1) the amount of consideration to be paid by the purchasing
party may not be less than the consideration set forth in the Transfer Notice;
(2) the form of consideration may not be materially different
from that set forth in the Transfer Notice, except to the extent any change in
the form of consideration makes the terms of the transaction less favorable from
the purchaser's standpoint; and
(3) the terms and conditions set forth in such definitive written
agreement, when considered together with the form and amount of consideration to
be paid by such purchasing party, may not render the terms of such transaction,
taken as a whole, materially inferior (to the Transferring Entity from an
economic standpoint) to those set forth in the Transfer Notice (it being agreed
that the granting by the Transferring Entity of representations, warranties and
indemnities with respect to the business or properties of the Corporation, as
applicable, or any of its subsidiaries that are different from or in addition to
any such provisions referenced in the Transfer Notice shall not be considered to
be more favorable to the purchaser for purposes of this clause (3)).
If such a definitive written agreement is entered into with an unaffiliated
third party within such time period, the Transferring Entity shall be free for a
period of 270 days following the execution of such definitive written agreement
to consummate the Transfer of its Corporation Interest in accordance with the
terms thereof. If such Transfer is not consummated within such time period in
accordance with the terms of such definitive written agreement, the requirements
of this Section 4.1 shall apply anew to any further efforts by the Transferring
Entity to Transfer its Corporation Interest.
Section 4.2 Change of Control. (a) If (i) a Change of Control occurs
with respect to a Duke Shareholder, PGCSI Parent shall have the option to
purchase such Duke Shareholder's Corporation Interest for Fair Market Value
pursuant to the provisions of Section 4.2(b), (c) and (d), or (ii) a Change of
Control occurs with respect to a ▇▇▇▇▇▇▇▇ Shareholder, DENG shall have the
option to purchase such ▇▇▇▇▇▇▇▇ Shareholder's Corporation Interest for Fair
Market Value pursuant to the provisions of Section 4.2(b), (c) and (d).
(b) In the event of a transaction giving rise to a Change of Control
with respect to a Duke Shareholder or a ▇▇▇▇▇▇▇▇ Shareholder, as applicable, the
Party who has experienced such a Change of Control transaction (the "Changing
Party") shall promptly (and in any event within three days of the consummation
of such transaction) deliver notice (the "Control Notice") to the other Party or
Parties that are not Affiliates of the Changing Party (whether one or more, the
"Non-Changing Party") of such Change of Control transaction. The Non-Changing
Party shall have the right, to be exercised by notice (the "Control Acceptance")
on or before the 60th day following receipt of the Control Notice (the "Control
Offer Period"), to elect to purchase the Corporation Interest of the Changing
Party for Fair Market Value as of the date of the Change of Control. The Control
Acceptance shall set forth the name of a nationally recognized appraisal firm
(which may be an investment banking, accounting or other firm that performs
appraisal and valuation services) designated by the Non-Changing Party as its
appraisal firm (the "Non-Changing Party Appraiser").
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(c) If the Non-Changing Party timely delivers the Control Acceptance
during the Control Offer Period, within 15 days from the date of receipt of the
Control Acceptance, the Changing Party shall notify the Non-Changing Party in
writing of the name of an appraisal firm (which may be an investment banking,
accounting or other firm that performs appraisal and valuation services)
designated as the Changing Party's appraisal firm (the "Changing Party
Appraiser"); provided, however, that if the Changing Party fails to select an
appraisal firm, and the Changing Party is a Duke Shareholder, the Changing Party
Appraiser shall be Deloitte & Touche L.L.P., or, if the Changing Party is a
▇▇▇▇▇▇▇▇ Shareholder, the Changing Party Appraiser shall be Ernst & Young
L.L.P.; provided, further, that if Deloitte & Touche L.L.P. or Ernst & Young
L.L.P., as the case may be, fails to accept the appointment within 30 days from
the date of receipt by the Changing Party of the Control Acceptance, the Control
Appraiser Committee shall consist solely of the Non-Changing Party Appraiser.
Except as provided in the second proviso of the immediately preceding sentence,
the Non-Changing Party Appraiser and the Changing Party Appraiser shall jointly
choose a third appraisal firm (which may be an investment banking, accounting or
other firm that performs appraisal and valuation services) within 15 days after
the appointment of the Non-Changing Party Appraiser (provided, however, that if
they fail to select a third appraisal firm within 15 days after the appointment
of the Non-Changing Party Appraiser, such third firm (which shall be an
investment banking, accounting or other firm that performs appraisal and
valuation services) will be selected by the American Arbitration Association at
the request of either Party within 10 days after such request) (the "Neutral
Control Appraiser," and together with the Changing Party Appraiser and the
Non-Changing Party Appraiser, the "Control Appraiser Committee"). Once the
Control Appraiser Committee has been chosen, each of the Changing Party and
Non-Changing Party shall submit proposed Fair Market Values of the Changing
Party's Corporation Interest to the Control Appraiser Committee, together with
any supporting documentation such Party deems appropriate, as soon as
practicable, but in no event earlier than 30 days after the date of receipt of
the Control Acceptance nor later than (i) 30 days after the date of selection of
the Neutral Appraiser or (ii) in the event of the failure of Deloitte & Touche
L.L.P. or Ernst & Young L.L.P., as the case may be, to accept the appointment
within the required time period, 60 days from the date of receipt by the
Non-Changing Party of the Control Notice. If either Party fails to submit its
proposed Fair Market Value within the required time period, the Fair Market
Value proposed by the other Party (assuming such other Party has submitted its
proposed value within the required time period) shall be deemed to be the Fair
Market Value of the Changing Party's Corporation Interest for purposes of this
Section 4.2. If both Parties submit their respective proposed values on a timely
basis, the Control Appraiser Committee shall determine, by majority vote, the
Fair Market Value as of the date of the Change of Control of the Changing
Party's Corporation Interest, as promptly as possible (and in any event on or
before the 30th day after submittal of the competing proposals), which
determination shall be final and binding on the Parties. The cost of such
appraisal shall be paid in equal portions by (A) the Changing Party and (B) the
Non-Changing Party. Each of the Changing Party and the Non-Changing Party shall
provide to the other and, if applicable, the Control Appraisal Committee, all
information reasonably requested by them.
(d) The closing of the Non-Changing Party's acquisition of the Changing
Party's Corporation Interest shall be consummated on or before the 60th day
after the determination of the
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Fair Market Value in accordance with Section 4.2(c). The acquisition shall be
consummated at a closing held at the principal offices of the Corporation
(unless otherwise mutually agreed by the Changing Party and the Non-Changing
Party) at which time the purchase price, payable in the form of immediately
available funds, shall be delivered to the Changing Party, and the Changing
Party shall deliver or cause to be delivered to the Non-Changing Party (or, at
the option of the Non-Changing Party, to (i) an Affiliate of the Non-Changing
Party or (ii) if the interest being transferred represents the entire Duke
Corporation Interest or the entire ▇▇▇▇▇▇▇▇ Corporation Interest, a designee of
the Non-Changing Party, in each case as designated by the Non-Changing Party not
less than five days prior to the closing) such transfer documentation reasonably
acceptable to the Non-Changing Party (or such Affiliate or designee) as shall be
required to evidence the transfer of the Changing Party's Corporation Interest,
as the case may be, free and clear of all liens and encumbrances, except those
created under this Agreement.
Section 4.3 Open Market Purchases and Transfers. Following the IPO,
subject to applicable federal and state securities laws, each Shareholder and
its Affiliates may make open-market purchases or sales of shares of Corporation
Common Stock.
Section 4.4 Affiliate Transfers. If either a Duke Shareholder or a
▇▇▇▇▇▇▇▇ Shareholder desires to Transfer all or any portion of its Corporation
Interest to an Affiliate, such Transfer shall only be permitted hereunder if the
transferee (other than any transferee that is already a party to this Agreement)
becomes a party to this Agreement by executing an adoption agreement in
substantially the form of Exhibit A hereto.
Section 4.5 Void Transfers. Any purported Transfer of all or any
portion of a Corporation Interest not permitted by this Article IV shall be
void. The provisions of this Article IV with respect to Corporation Interests
shall apply equally to any rights or options to purchase, or securities
convertible into or exchangeable for Corporation Interests.
ARTICLE V
TERMINATION
Section 5.1 Termination. (a) This Agreement shall terminate immediately
if at any time either Duke's Total Corporation Interest or ▇▇▇▇▇▇▇▇' Total
Corporation Interest is less than 20%.
(b) In the case of termination in accordance with this Section 5.1,
upon such termination, this Agreement shall become void and have no effect;
provided, however, that such termination shall not relieve any Party of any
liability for any breach of this Agreement that occurred prior to such
termination.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the Parties and delivered (including by facsimile) to the other Parties.
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Section 6.2 Governing Law; Jurisdiction and Forum; Waiver of Jury
Trial. (a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without reference to the choice of law
principles thereof.
(b) Each Party irrevocably submits to the jurisdiction of any Delaware
state court or any federal court sitting in the State of Delaware in any action
arising out of or relating to this Agreement, and hereby irrevocably agrees that
all claims in respect of such action may be heard and determined in such
Delaware state or federal court. Each Party hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of such action or proceeding. The Parties further agree, to the
extent permitted by law, that final and unappealable judgment against any of
them in any action or proceeding contemplated above shall be conclusive and may
be enforced in any other jurisdiction within or outside the United States by
suit on the judgment, a certified copy of which shall be conclusive evidence of
the fact and amount of such judgment.
(c) To the extent that any Party has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, each
Party hereby irrevocably waives such immunity in respect of its obligations with
respect to this Agreement.
(d) Each Party waives, to the fullest extent permitted by applicable
law, any right it may have to a trial by jury in respect of any action, suit or
proceeding arising out of or relating to this Agreement. Each Party certifies
that it has been induced to enter into this Agreement by, among other things,
the mutual waivers and certifications set forth above in this Section 6.2.
Section 6.3 Entire Agreement. This Agreement constitutes the entire
agreement between the Parties with respect to the subject matter hereof and
there are no agreements, understandings, representations or warranties between
the parties other than those set forth or referred to herein. This Agreement is
not intended to confer upon any person not a Party hereto any rights or remedies
hereunder.
Section 6.4 Expenses. Except as set forth in this Agreement, all legal
and other costs and expenses incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the Party incurring
such costs and expenses.
Section 6.5 Notices. All notices and other communications to be given
to any Party hereunder shall be sufficiently given for all purposes hereunder if
in writing and delivered by hand, courier or overnight delivery service or three
days after being mailed by certified or registered mail, return receipt
requested, with appropriate postage prepaid, or when received in the form of a
telegram or facsimile and shall be directed, if to a Party hereunder, to the
address or facsimile number set forth below (or at such other address or
facsimile number as such Party shall designate by like notice):
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(a) If to PGCSI Parent:
▇▇▇▇▇▇▇▇ Petroleum Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to DENG:
Duke Energy Natural Gas Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Duke Energy Field Services Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
And to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to the Corporation:
Duke Energy Field Services Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
Duke Energy Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
And to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 6.6 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors and
permitted assigns; provided, however, that no Party will assign its rights or
delegate any or all of its obligations under this Agreement without the express
prior written consent of each other Party.
Section 6.7 Headings; Definitions. The section and article headings
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement. All references
to Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated. All capitalized terms defined herein are
equally applicable to both the singular and plural forms of such terms.
Section 6.8 Amendments and Waivers. This Agreement may not be modified
or amended except by an instrument or instruments in writing signed by all
Parties. Any Party may, only by an instrument in writing, waive compliance by
the other Parties with any term or provision of this Agreement on the part of
such other Parties to be performed or complied with. The waiver by any Party of
a breach of any term or provision of this Agreement shall not be construed as a
waiver of any subsequent breach. Except as otherwise expressly provided herein,
no failure to exercise, delay in exercising or single or partial exercise of any
right, power or remedy by any Party, and no course of dealing between the
Parties, shall constitute a waiver of any such right, power or remedy.
Section 6.9 Severability. If any provision of this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality or enforceability
of the other provisions of this Agreement shall not be affected thereby, and
there shall be deemed substituted for the provision at issue a valid, legal and
enforceable provision as similar as possible to the provision at issue.
Section 6.10 Interpretation. In the event an ambiguity or question of
intent or interpretation arises with respect to this Agreement, this Agreement
shall be construed as if it was drafted jointly by the Parties, and no
presumption or burden of proof shall arise favoring or disfavoring any Party by
virtue of the authorship of any provisions of this Agreement.
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Section 6.11 Specific Performance. The Parties agree that irreparable
damage would occur in the event that any Party fails to consummate the
transactions contemplated by this Agreement in accordance with the terms of this
Agreement and that the Parties shall be entitled to specific performance in such
event, in addition to any other remedy at law or in equity, including temporary
restraining orders or temporary or permanent injunctions.
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IN WITNESS WHEREOF, each of the undersigned has caused this Agreement
to be duly executed and delivered on the date first set forth above.
DUKE ENERGY NATURAL GAS CORPORATION
By:
---------------------------------------
Name:
Title:
▇▇▇▇▇▇▇▇ PETROLEUM COMPANY
By:
---------------------------------------
Name:
Title:
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EXHIBIT A
ADOPTION AGREEMENT
This Adoption Agreement ("Adoption") is executed pursuant to
the terms of the Shareholders Agreement by and among Duke Energy Natural Gas
Corporation and ▇▇▇▇▇▇▇▇ Petroleum Company, dated as of _________ , 2000, as
amended to date, a copy of which is attached hereto (the "Shareholders
Agreement"), by the transferee ("Transferee") executing this Adoption. By the
execution of this Adoption, the Transferee agrees as follows:
1. Acknowledgment. Transferee acknowledges that Transferee is acquiring
certain [describe securities acquired], subject to the terms and conditions of
the Shareholders Agreement. Capitalized terms used herein without definition are
defined in the Shareholders Agreement.
2. Agreement. Transferee (a) agrees that [describe securities] acquired
by Transferee shall be bound by and subject to the terms of the Shareholders
Agreement and (b) hereby joins in, and agrees to be bound by, the Shareholders
Agreement with the same force and effect as if it were originally a party
thereto and a Duke Shareholder or a ▇▇▇▇▇▇▇▇ Shareholder, as applicable,
thereunder.
3. Notice. Any notice required by the Shareholders Agreement shall be
given to Transferee at the address listed beside Transferee's signature below.
EXECUTED AND DATED on this day of , .
-------- ----------------- ----------
TRANSFEREE:
By:
----------------------------------
Notice
Address:
-----------------------------
-----------------------------
Telecopy:
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EXHIBIT B
▇▇▇▇▇▇▇▇ VETO ACTIONS
1. Entering a new line of business outside of the midstream gas gathering,
processing, marketing and transportation businesses (and directly related
activities) in the United States and Canada.
2. The following transactions:
a) Any merger, consolidation, recapitalization, acquisition, divestiture,
joint venture or alliance (or a related series of such transactions)
involving the acquisition or expenditure (in the form of cash or
otherwise) of in excess of $200,000,000 in value to or from the
Corporation;
b) Entering into any sales contract or commitment that has a term of 5
years or more and that involves annual revenues to the Corporation in
excess of 5% of the Corporation's total annual sales revenues for the
most recently completed fiscal year.
3. Any capital expenditure in excess of $200,000,000 (other than a capital
expenditure to effect any merger, consolidation, recapitalization,
acquisition, divestiture, joint venture or alliance).
4. Any borrowing in excess of $200,000,000.