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EXHIBIT 2.1
AGREEMENT OF MERGER
OF
PHILLIPS GAS COMPANY SHAREHOLDER, INC.
(a Delaware corporation)
WITH AND INTO
DUKE ENERGY FIELD SERVICES CORPORATION
(a Delaware corporation)
This Agreement of Merger, dated as of May ___, 2000 (this "Agreement"),
is hereby executed pursuant to Section 251 of the General Corporation Law of the
State of Delaware (the "DGCL") by and between PHILLIPS GAS COMPANY SHAREHOLDER,
INC., a Delaware corporation ("PGCSI"), and DUKE ENERGY FIELD SERVICES
CORPORATION, a Delaware corporation ("DEFS Corp." and, following the Merger (as
hereinafter defined), the "Surviving Corporation," and, collectively with PGCSI,
the "Constituent Corporations").
RECITALS:
1. Pursuant to its Certificate of Incorporation, as amended to the date
hereof, PGCSI is authorized to issue a total of 1,000 shares of Common Stock,
with no par value ("PGCSI Common Stock"), of which ten shares are now issued and
outstanding and each of which is entitled to one vote and held of record by
Phillips Petroleum Company ("PGCSI Parent");
2. Pursuant to its Certificate of Incorporation, DEFS Corp. is
authorized to issue a total of 500,000,000 shares of Common Stock, par value
$.01 per share ("DEFS Corp. Common Stock"), of which 1,000 shares are now issued
and outstanding and each of which is entitled to one vote and held of record by
Duke Energy Natural Gas Corporation ("DENG"), a wholly owned subsidiary of Duke
Energy Corporation ("Duke");
3. The registered office of PGCSI in the State of Delaware is located
at 1013 Centre Road, Wilmington, New Castle County, Delaware 19805-1297 and The
Prentice-Hall Corporation Systems, Inc. is the registered agent in charge
thereof upon whom process against PGCSI may be served;
4. The registered office of DEFS Corp. in the State of Delaware is
located at 1209 Orange Street, Wilmington, Delaware 19801 and The Corporation
Trust Company is the registered agent in charge thereof upon whom process
against DEFS Corp. may be served; and
5. The Boards of Directors of both of the Constituent Corporations have
adopted resolutions declaring the advisability of the proposed merger (the
"Merger") of PGCSI with and into DEFS Corp. upon the terms and conditions
hereinafter set forth, approving this Agreement and directing that it be
submitted to their respective sole stockholders for approval in accordance with
the applicable statutes of the State of Delaware.
6. Upon consummation of the Merger, DENG and PGCSI Parent will enter
into a Shareholders Agreement.
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7. It is intended that the Merger shall qualify as a tax-free
"reorganization" within the meaning of Section 368 of the Internal Revenue Code,
as amended.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and for the purpose of prescribing
the terms and conditions of the Merger, the mode of carrying it into effect, the
manner and basis of converting shares of each of the Constituent Corporations
into shares of the Surviving Corporation and such other details and provisions
of the Merger as are deemed necessary or desirable, the parties hereto have
agreed and covenanted, and do hereby agree and covenant, as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Definitions. Each capitalized term used and not otherwise
defined herein shall have the meaning given such term set forth below:
"Company" shall mean Duke Energy Field Services, LLC, a
Delaware limited liability company.
"Contribution Closing" shall mean March 31, 2000.
"Independent Directors" shall mean directors meeting the
independence and experience requirements, as set forth by the New York Stock
Exchange as of the date of the IPO for membership on an audit committee of a
board of directors, with respect to each of PGCSI, DENG and the Surviving
Corporation.
"IPO" shall mean the initial offering of shares of Surviving
Corporation Common Stock to the public in a transaction registered under the
Securities Act of 1933, as amended.
Section 1.2 Construction. Unless the context requires otherwise: (a)
the gender (or lack of gender) of all words used in this Agreement includes the
masculine, feminine and neuter; (b) references to Articles and Sections refer to
Articles and Sections of this Agreement; (c) references to laws refer to such
laws as they may be amended from time to time, and references to particular
provisions of a law include any corresponding provisions of any succeeding law;
(d) references to money refer to legal currency of the United States of America;
(e) the word "including" means "including, without limitation"; and (f) all
capitalized terms defined herein are equally applicable to both the singular and
plural forms of such terms.
ARTICLE II
THE AGREEMENT
Section 2.1 Approval and Certification. This Agreement shall be
submitted as promptly as practicable to the sole stockholder of each of the
Constituent Corporations, and, if duly adopted and approved by each such
stockholder in accordance with the provisions of the
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DGCL, shall, subject to the further provisions of this Agreement, promptly be
certified in accordance with the DGCL at such time as the respective authorized
officers of PGCSI and DEFS Corp. deem proper.
Section 2.2 Filing of Agreement or Certificate of Merger. Immediately
after the approvals and certification referenced in Section 2.1 hereof, the
Constituent Corporations shall file this Agreement or a Certificate of Merger
with the Secretary of State of Delaware, as required by Section 251 of the DGCL.
The Merger shall be effective upon acceptance of such filing or such later time
as is set forth in such Certificate of Merger, which time is hereinafter called
the "Effective Time."
ARTICLE III
RESULT OF MERGER
Section 3.1 Effective Time Events. At the Effective Time:
(a) PGCSI shall be merged with and into DEFS Corp., with the
effect as provided in the DGCL, at which time the separate existence of PGCSI
shall cease.
(b) DEFS Corp., as the corporation surviving the Merger, shall
continue its corporate existence under the DGCL.
(c) The Certificate of Incorporation of DEFS Corp. as in
effect immediately prior to the Effective Time shall be amended and restated in
its entirety as set forth in Exhibit A hereto (as so amended and restated, the
"Amended and Restated Charter") and as so amended and restated shall continue in
full force and effect as the certificate of incorporation of the Surviving
Corporation until the same shall thereafter be altered, amended or repealed in
accordance with applicable law and such Amended and Restated Charter.
(d) The Bylaws of DEFS Corp. as in effect immediately prior to
the Effective Time shall be amended and restated, in their entirety, as set
forth in Exhibit B hereto (as so amended and restated, the "Bylaws") and as so
amended and restated shall continue in full force and effect as the bylaws of
the Surviving Corporation, until the same shall thereafter be altered, amended
or repealed in accordance with applicable law, the Amended and Restated Charter
and such Bylaws.
(e) All shares of PGCSI Common Stock issued and outstanding
shall automatically be converted, without any action on the part of the holder
thereof, into (i) an aggregate of ___________ [1] fully paid and non-assessable
shares of Surviving Corporation Common Stock and (ii) the right to receive a
number of additional fully paid and non-assessable
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[1] to equal 80% of (x) the parties' good faith estimate at the time of the
Merger of Phillips' Corporation Interest (as defined in Exhibit C) multiplied by
(y) (1) the aggregate number of shares of Surviving Corporation Common Stock to
be outstanding immediately after the Merger (including shares to be issued
pursuant to rights received in the Merger) and the IPO, plus (2) shares issued
to officers and employees of the Surviving Corporation or the Company
concurrently with the IPO pursuant to compensation or benefit plans, but
excluding any shares sold pursuant to the underwriters' over-allotment option.
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shares of Surviving Corporation Common Stock in accordance with and on the terms
and subject to the conditions set forth in Exhibit C hereto, and all such shares
of PGCSI Common Stock thereafter shall be cancelled and cease to exist.
(f) All shares of DEFS Corp. Common Stock issued and
outstanding shall automatically be converted, without any action on the part of
the holder thereof, into (i) an aggregate of _________ [2] fully paid and
non-assessable shares of Surviving Corporation Common Stock and (ii) the right
to receive a number of additional fully paid and non-assessable shares of
Surviving Corporation Common Stock in accordance with and on the terms and
subject to the conditions set forth in Exhibit D hereto.
(g) The Board of Directors of the Surviving Corporation (who
shall hold office subject to the provisions of the Bylaws from the Effective
Time until the next annual meeting of the stockholders of the Surviving
Corporation and until their successors are elected and qualified) shall be the
directors of DEFS Corp. in office immediately prior to the Effective Time.
ARTICLE IV
ACTIONS OF THE CORPORATIONS
Section 4.1 Execution of Documents. Each of the Constituent
Corporations hereby agrees that at any time, or from time to time, as and when
requested by the Surviving Corporation, or by its successors and assigns, it
will execute and deliver, or cause to be executed and delivered in its name by
its last acting officers or by the corresponding officers of the Surviving
Corporation, all such acknowledgments, assurances, conveyances, assignments,
transfers, deeds or other instruments, and will take or cause to be taken such
further or other action, as the Surviving Corporation, or its successors or
assigns, may deem necessary or desirable in order to evidence the transfer,
vesting or devolution to the Surviving Corporation of any property, right,
privilege or franchise pursuant to applicable law, or to vest or perfect in or
confirm to the Surviving Corporation, its successors and assigns, title to and
possession of all the property, rights, privileges, powers, franchises and
interests as a result of the merger referred to herein pursuant to applicable
law, and otherwise to carry out the intent and purpose hereof.
Section 4.2 Delivery of Certificates. Upon the end of the seventh day
of trading on the NYSE (excluding the pricing day), the Surviving Corporation
shall deliver to each of DENG and to PGCSI Parent, respectively, certificates
representing the number of shares of Surviving Corporation Common Stock held by
each, calculated in accordance with Sections 3.1(e) and (f) hereof.
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[2] to equal 80% of (x) the parties' good faith estimate at the time of the
Merger of Duke's Corporation Interest (as defined in Exhibit C) multiplied by
(y) (1) the aggregate number of shares of Surviving Corporation Common Stock to
be outstanding immediately after the Merger (including shares to be issued
pursuant to rights received in the Merger) and the IPO, plus (2) shares issued
to officers and employees of the Surviving Corporation or the Company
concurrently with the IPO pursuant to compensation or benefit plans, but
excluding any shares sold pursuant to the underwriters' over-allotment option.
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ARTICLE V
AMENDMENT AND TERMINATION
Section 5.1 Amendment. At any time prior to the Effective Time, the
Boards of Directors of the Constituent Corporations may, to the fullest extent
permitted by law, amend, modify or supplement this Agreement by mutual consent
in such manner as they may determine.
Section 5.2 Termination. This Agreement may be terminated, and the
Merger herein provided for may be abandoned by mutual consent of the Boards of
Directors of the Constituent Corporations at any time prior to the Effective
Time notwithstanding approval of this Agreement by the stockholders of the
Constituent Corporation.
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IN WITNESS WHEREOF, each of the undersigned have caused this
Agreement to be duly executed and delivered on the date first set forth above.
PHILLIPS GAS COMPANY SHAREHOLDER, INC.
By:
----------------------------------------
Name:
Title:
DUKE ENERGY FIELD SERVICES CORPORATION
By:
----------------------------------------
Name:
Title:
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EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
DUKE ENERGY FIELD SERVICES CORPORATION
The name of the corporation is "Duke Energy Field Services
Corporation" (the "Corporation").
The original Certificate of Incorporation was filed with the
Secretary of State of the State of Delaware on December 8, 1999, under the name
"DEFS Holding Corp."
This Amended and Restated Certificate of Incorporation has
been declared advisable by the board of directors of the Corporation (the
"Board"), duly adopted by the stockholders of the Corporation and duly executed
and acknowledged by the officers of the Corporation in accordance with Sections
103, 242 and 245 of the General Corporation Law of the State of Delaware (the
"DGCL").
The text of the Certificate of Incorporation of the
Corporation is hereby amended and restated to read in its entirety as follows:
ARTICLE I
NAME
The name of the Corporation is:
Duke Energy Field Services Corporation.
ARTICLE II
REGISTERED AGENT
The address of the Corporation's registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the city
of Wilmington, County of New Castle. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
ARTICLE III
PURPOSE
The purposes of the Corporation are to engage in the midstream
gas gathering, processing, transportation and marketing business in the United
States and Canada, the marketing of natural gas liquids in Mexico, the
transportation of refined petroleum products and liquefied petroleum gases and
related products and related terminaling, storage and other activities, and the
gathering, transportation, storage and marketing of crude oil (the "Designated
Business"). The Corporation may also pursue other legal businesses beyond the
Designated Business, provided that any such other business (i) is approved by
the Board pursuant to the Bylaws of the Corporation (the "Bylaws"), and (ii) if
Duke Energy Corporation, a North
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Carolina corporation ("Duke"), owns, directly or indirectly, a majority of the
Common Stock or otherwise controls the Corporation, directly or indirectly, is
approved by Duke in its sole discretion.
ARTICLE IV
CAPITAL STOCK
Section 4.1. Issuance of Shares. The Corporation shall be
authorized to issue 510,000,000 shares of capital stock, of which 500,000,000
shares shall be shares of common stock, $.01 par value ("Common Stock"), and
10,000,000 shares shall be shares of preferred stock, $.01 par value ("Preferred
Stock").
Section 4.2. Preferred Stock. The Preferred Stock may be
issued from time to time in one or more series. The Board is hereby authorized
to provide for the issuance of shares of Preferred Stock in series and, by
filing a certificate pursuant to the DGCL (hereinafter referred to as a
"Preferred Stock Designation"), to establish from time to time the number of
shares to be included in each such series, and to fix the voting rights, if any,
designations, powers, privileges, preferences and other rights, if any, of the
shares of each such series and the qualifications, limitations and restrictions
thereof. The authority of the Board with respect to each series shall include,
but not be limited to, determination of the following:
(a) the designation of the series, which may be by
distinguishing number, letter or title;
(b) the number of shares of the series, which number
the Board may thereafter (except where otherwise provided in the Preferred Stock
Designation) increase or decrease (but not below the number of shares thereof
then outstanding);
(c) whether dividends, if any, shall be cumulative or
noncumulative, and, in the case of shares of any series having cumulative
dividend rights, the date or dates or method of determining the date or dates
from which dividends on the shares of such series shall be cumulative;
(d) the rate of any dividends (or method of
determining such dividends) payable to the holders of the shares of such series,
any conditions upon which such dividends shall be paid and the date or dates (or
the method for determining the date or dates) upon which such dividends shall be
payable;
(e) the price or prices (or method of determining
such price or prices) at which, the form of payment of such price or prices
(which may be cash, property or rights, including securities of the same or
another corporation or other entity) for which, the period or periods within
which and the terms and conditions upon which the shares of such series may be
redeemed, in whole or in part, at the option of the Corporation or at the option
of the holder or holders thereof or upon the happening of a specified event or
events, if any;
(f) the obligation, if any, of the Corporation to
purchase or redeem shares of such series pursuant to a sinking fund or otherwise
and the price or prices at which, the form of payment of such price or prices
(which may be cash, property or rights, including
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securities of the same or another corporation or other entity) for which, the
period or periods within which and the terms and conditions upon which the
shares of such series shall be redeemed or purchased, in whole or in part,
pursuant to such obligation;
(g) the amount payable out of the assets of the
Corporation to the holders of shares of the series in the event of any voluntary
or involuntary liquidation, dissolution or winding up of the affairs of the
Corporation;
(h) provisions, if any, for the conversion or
exchange of the shares of such series, at any time or times at the option of the
holder or holders thereof or at the option of the Corporation or upon the
happening of a specified event or events, into shares of any other class or
classes or any other series of the same or any other class or classes of stock,
or any other security, of the Corporation, or any other corporation or other
entity, and the price or prices or rate or rates of conversion or exchange and
any adjustments applicable thereto, and all other terms and conditions upon
which such conversion or exchange may be made;
(i) restrictions on the issuance of shares of the
same series or of any other class or series, if any; and
(j) the voting rights, if any, of the holders of
shares of the series.
Section 4.3. Common Stock. The Common Stock shall be subject
to the express terms of the Preferred Stock and any series thereof. The holders
of shares of Common Stock shall be entitled to one vote for each such share upon
all proposals on which the holders of Common Stock are entitled to vote and the
Common Stock shall vote together as a single class. Except as otherwise provided
by law or by the resolution or resolutions adopted by the Board designating the
rights, powers and preferences of any series of Preferred Stock, the holders of
Common Stock shall have the exclusive right to vote for the members of the Board
(the "Directors") and for all other purposes. The number of authorized shares of
Preferred Stock may be increased or decreased (but not below the number of
shares thereof then outstanding) by the affirmative vote of the holders of a
majority of the outstanding Common Stock, without a vote of the holders of the
Preferred Stock, or of any series thereof, unless a vote of any such holders is
required pursuant to any Preferred Stock Designation. The Corporation shall be
entitled to treat the Person in which name any share of its stock is registered
as the owner thereof for all purposes and shall not be bound to recognize any
equitable or other claim to, or interest in, such share on the part of any other
person, whether or not the Corporation shall have notice thereof, except as
expressly provided by applicable law.
ARTICLE V
THE BOARD
The number, nominations, qualifications, tenure, vacancies and
removal of the Directors shall be as set forth in the Bylaws. Except and to the
extent that the Bylaws shall so require, the election of the Directors need not
be by written ballot.
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ARTICLE VI
BYLAWS
In furtherance and not in limitation of the powers conferred
by statute, the Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by the Board in accordance with the Bylaws.
ARTICLE VII
AMENDMENT OF CERTIFICATE OF INCORPORATION
Except as set forth in Article VI, Article X and Article XII
hereof, the Corporation reserves the right at any time and from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and, except as set forth in Article XI, all rights,
preferences and privileges of whatsoever nature conferred upon stockholders,
Directors or any other persons whomsoever by and pursuant to this Certificate of
Incorporation in its present form or as hereafter amended are granted subject to
the right reserved in this Article.
ARTICLE VIII
STOCKHOLDER ACTION BY WRITTEN CONSENT
Prior to the first date (the "Trigger Date") upon which Duke
is not the holder of record (directly or through its subsidiaries) of a majority
of the outstanding voting stock of the Corporation entitled to vote generally in
the election of directors, any action required or permitted to be taken by the
stockholders of the Corporation may be taken without a meeting if a consent in
writing, setting forth the action so taken, is signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. On and after the Trigger Date,
any action required or permitted to be taken by the stockholders of the
Corporation must be taken at a duly held annual or special meeting of
stockholders and may not be taken by any consent in writing of such
stockholders.
ARTICLE IX
DELAWARE ANTITAKEOVER STATUTE
The provisions of Section 203 of the Delaware General
Corporation Law shall not be applicable to the Corporation.
ARTICLE X
ANTI-DILUTION
At any time following the initial offering of shares of Common
Stock in a transaction registered under the Securities Act of 1933, as amended,
if the Corporation offers or issues additional shares of Common Stock or
additional shares of any other previously issued and outstanding capital stock
in a public offering, then, so long as Duke and Phillips Petroleum Company, a
Delaware corporation ("Phillips"), each owns at least 20%, directly or
indirectly, of all outstanding Common Stock, then each of Duke and Phillips
shall have the opportunity to
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subscribe for and purchase such number of shares of Common Stock or such other
capital stock, as the case may be, such that the percentage ownership (direct or
indirect) of the total issued and outstanding Common Stock or such other capital
stock, as the case may be, of such party following the offering or issuance
remains equal to such party's percentage ownership (direct or indirect) of the
issued and outstanding Common Stock or such other capital stock, as the case may
be, immediately prior to the offering or issuance; provided, however, that
neither Duke nor Phillips shall have the right or opportunity hereunder to
purchase any additional Common Stock in connection with the issuance by the
Corporation of any Common Stock or options, warrants or other similar securities
in respect of Common Stock pursuant to a compensation or benefit plan or program
for officers or employees of the Corporation that has been approved by the Board
in accordance with the Bylaws. So long as Duke and Phillips each owns at least
20%, directly or indirectly, of all outstanding Common Stock, then any proposed
amendment to this Article X shall require the consent of Duke and Phillips.
ARTICLE XI
LIMITED LIABILITY; INDEMNIFICATION
Section 11.1. Limited Liability of Directors. A Director shall
not be personally liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a Director, except, if required by the
DGCL, as amended from time to time, for liability (a) for any breach of the
Director's duty of loyalty to the Corporation or its stockholders, (b) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) under Section 174 of the DGCL or (d) for any
transaction from which the Director derived an improper personal benefit.
Neither the amendment nor repeal of this Section 11.1 shall eliminate or reduce
the effect of this Section 11.1 in respect of any matter occurring, or any cause
of action, suit or claim that, but for this Section 11.1, would accrue or arise,
prior to such amendment or repeal.
Section 11.2. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or
is made a party to or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter, a "proceeding"), by reason of the fact that such
person, or a person of whom such person is the legal representative, is or was a
Director or officer of the Corporation or is or was serving at the request of
the Corporation as a Director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a Director, officer, employee or agent
or in any other capacity while serving as a Director, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the DGCL, as the same exists or may hereafter be amended
(but, in the case of any such amendment, to the fullest extent permitted by law,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including, without limitation, attorneys' fees, judgments, fines, amounts paid
or to be paid in settlement and excise taxes or penalties arising under the
Employment Retirement Income Security Act of 1974, as in effect from time to
time) reasonably incurred or suffered by such person in connection therewith,
and
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such indemnification shall continue as to a person who has ceased to be a
Director, officer, employee or agent and shall inure to the benefit of such
person's heirs, executors and administrators; provided, however, that, except as
provided in paragraph (b) hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board. The right to indemnification conferred in this Section
11.2 shall be a contract right and shall include the right to have the
Corporation pay the expenses incurred in defending any such proceeding in
advance of its final disposition, any advance payments to be paid by the
Corporation within 20 calendar days after the receipt by the Corporation of a
statement or statements from the claimant requesting such advance or advances
from time to time; provided, however, that, if and to the extent the DGCL
requires, the payment of such expenses incurred by a Director or officer in such
person's capacity as a Director or officer (and not in any other capacity in
which service was or is rendered by such person while a Director or officer
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such Director or officer, to
repay all amounts so advanced if it shall ultimately be determined that such
Director or officer is not entitled to be indemnified under this Section 11.2 or
otherwise. The Corporation may, to the extent authorized from time to time by
the Board, grant rights to indemnification, and rights to have the Corporation
pay the expenses incurred in defending any proceeding in advance of its final
disposition, to any employee or agent of the Corporation to the fullest extent
of the provisions of this Article XI with respect to the indemnification and
advancement of expenses of Directors and officers of the Corporation.
(b) Right of Claimant to Bring Suit. If a claim under
paragraph (a) of this Section is not paid in full by the Corporation within 30
calendar days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is required, has
been tendered to the Corporation) that the claimant has not met the standard of
conduct which makes it permissible under the DGCL for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board, independent legal counsel or its stockholders) to have
made a determination prior to the circumstances that the claimant has met the
applicable standard of conduct set forth in the DGCL, nor an actual
determination by the Corporation (including its Board, independent legal counsel
or its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to
indemnification and the payment of expenses incurred in defending a proceeding
in advance of its final disposition conferred in this Section 11.2 shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of the Certificate of Incorporation, Bylaw,
agreement, vote of stockholders or disinterested Directors or otherwise. No
repeal or
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modification of this Article XI shall in any way diminish or adversely affect
the rights of any Director, officer, employee or agent of the Corporation
hereunder in respect of any occurrence or matter arising prior to any such
repeal or modification.
(d) Insurance. The Corporation may maintain
insurance, at its expense, to protect itself and any Director, officer, employee
or agent of the Corporation or another corporation, partnership, joint venture,
trust or other enterprise against any such expense, liability or loss, whether
or not the Corporation would have the power to indemnify such person against
such expense, liability or loss under the DGCL.
(e) Severability. If any provision or provisions of
this Article XI shall be held to be invalid, illegal or unenforceable for any
reason whatsoever: (i) the validity, legality and enforceability of the
remaining provisions of this Article XI (including, without limitation, each
portion of any paragraph of this Article XI containing any such provision held
to be invalid, illegal or unenforceable, that is not itself held to be invalid,
illegal or unenforceable) shall not in any way be affected or impaired thereby;
and (ii) to the fullest extent possible, the provisions of this Article XI
(including, without limitation, each such portion of any paragraph of this
Article XI containing any such provision held to be invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision or provisions held invalid, illegal or unenforceable.
ARTICLE XII
BUSINESS OPPORTUNITIES AGREEMENT
Section 12.1. Scope of Business of the Corporation and its
Subsidiaries. The Corporation hereby renounces any interest or expectancy in any
business opportunity, transaction or other matter (each, a "Business Activity")
in which Duke engages or seeks to engage that does not consist exclusively of
the Designated Business.
Section 12.2. Corporate Opportunities.
(a) In recognition that Duke is currently (at least
indirectly), and in anticipation that Duke will remain, a substantial
stockholder of the Corporation, and in anticipation that the Corporation and
Duke may engage in the same or similar activities or lines of business and have
an interest in the same or similar areas of business, and in recognition of the
benefits to be derived by the Corporation through its continued contractual,
corporate and business relations with Duke (including services of employees,
officers and directors of Duke as Directors and officers of the Corporation),
the provisions of this Article XII are set forth to regulate and define the
conduct of certain affairs of the Corporation as they may involve Duke and its
employees, officers and directors, and the powers, rights, duties, liabilities,
interests and expectancies of the Corporation in connection therewith.
(b) Duke shall have the right to engage (and shall
have no duty to refrain from engaging) in the same or similar activities or
lines of business as the Corporation, and the Corporation shall not be deemed to
have any interest or expectancy, and hereby renounces any interest or
expectancy, in any Business Activity, provided that such Business Activity is
conducted by Duke in accordance with the standards set forth in Section 12.3
hereof.
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Neither Duke nor any employee, officer, director or agent thereof shall be
liable to the Corporation or its stockholders for breach of any fiduciary or
other duty by reason of any such Business Activity of Duke or of such person's
participation therein. In the event that Duke acquires knowledge of a potential
Business Activity, unless such Business Activity is pursued in violation of the
standards set forth in Section 12.3 hereof, Duke shall have no duty to
communicate or offer to the Corporation the opportunity to participate in such
Business Activity and shall not be liable to the Corporation or its stockholders
for breach of any fiduciary duty as a stockholder of the Corporation by reason
of the fact that Duke conducts, pursues or acquires such Business Activity for
itself, directs such Business Activity to another Person or does not communicate
information regarding such Business Activity to the Corporation, and no officer,
director, employee or other agent of Duke who serves as a Director or officer of
the Corporation or of any subsidiary of the Corporation shall have any duty to
communicate or offer the opportunity to participate in such Business Activity to
the Corporation or any liability to the Corporation or its stockholders for
breach of any fiduciary duty as a Director or officer of the Corporation by
reason of the fact that Duke conducts, pursues or acquires such Business
Activity for itself, directs such Business Activity to another Person or does
not communicate information regarding such Business Activity to the Corporation.
Section 12.3. Standards for Separate Conduct of Business. In
the event that Duke or any Director or officer of the Corporation who is also a
director, officer, employee or agent of Duke acquires knowledge of a potential
Business Activity, Duke, or any such person on behalf of Duke, may pursue such
Business Activity, and such pursuit shall be in accordance with the standards
set forth in this Section 12.3, if (i) such knowledge was acquired by Duke or
any such person other than through disclosure of information by or on behalf of
a Director, officer, employee or agent of the Corporation in or during the
course of such person's relationship with the Corporation and other than solely
in, and as a direct result of, such person's service as a Director or officer of
the Corporation (it being understood that if the opportunity to pursue such
Business Activity is separately identified by Duke or one of its officers,
directors, employees or agents or separately presented to Duke or one of its
officers, directors, employees or agents, Duke, or any such officer, director,
employee or agent on behalf of Duke, shall be free to pursue such opportunity
even if it also came to the attention of another officer, director, employee or
agent of Duke as a result of and in his or her capacity as a Director or officer
of the Corporation), and (ii) such Business Activity is developed and pursued
solely through the use of personnel and assets of Duke (including such person in
his or her capacity as a director, officer, employee or agent of Duke). The
Corporation shall renounce any interest or expectancy in any Business Activity
that is conducted by Duke or its officers, directors, employees or agents on
behalf of Duke in accordance with the foregoing standards. Nothing in this
Article XII shall allow any Director designated by Duke to pursue a Business
Activity in the Designated Business solely for his or her personal benefit (as
opposed to for the benefit of Duke).
Section 12.4. Consent. Any Person purchasing or otherwise
acquiring any interest in shares of the capital stock of the Corporation shall
be deemed to have consented to these provisions.
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Section 12.5. Interpretation.
(a) For purposes of this Article XII, "Duke" shall
include all Subsidiaries and Affiliates of Duke Energy Corporation (other than
the Corporation and its Subsidiaries).
(b) As used in this Article XII, the following
definitions shall apply:
(i) "Affiliate" shall mean, with respect to
any Person, a Person directly or indirectly Controlling, Controlled by or under
common Control with such Person.
(ii) "Control" shall mean the possession,
directly or indirectly, through one or more intermediaries, by any Person or
group (within the meaning of Section 13(d)(3) under the Securities Exchange Act
of 1934, as amended) of both of the following: (A)(1) in the case of a
corporation, more than 25% of the direct or indirect economic interest in the
outstanding equity securities thereof; (2) in the case of a limited liability
company, partnership, limited partnership or venture, the right to more than 25%
of the distributions therefrom (including liquidating distributions); (3) in the
case of a trust or estate, including a business trust, more than 25% of the
beneficial interest therein; and (4) in the case of any other entity, more than
25% of the economic or beneficial interest therein; and (B) in the case of any
entity, the power or authority, through ownership of voting securities, by
contract or otherwise, to control or direct the management and policies of the
entity.
(iii) "Governmental Entity" shall mean any
federal, state, political subdivision or other governmental agency or
instrumentality, foreign or domestic.
(iv) "Person" shall mean any individual,
partnership, limited liability company, firm, corporation, association, joint
venture, trust or other entity or any Governmental Entity.
(v) "Subsidiary" shall mean, when used with
respect to any Person, any Affiliate of such Person that is Controlled by such
Person.
Section 12.6. Amendment. Any proposed amendment to Article III
or this Article XII shall require, in addition to the consent of Duke, the
approval of at least a majority of the Directors who are not officers, directors
or employees of Duke and who are otherwise disinterested or of a committee of
the Board consisting exclusively of Directors who are not officers, directors or
employees of Duke and who are otherwise disinterested.
Section 12.7. Term. The provisions of this Article XII shall
terminate at such time as Duke no longer owns, directly or indirectly, a
majority of the Common Stock and no longer otherwise controls the Corporation,
directly or indirectly.
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IN WITNESS WHEREOF, Duke Energy Field Services Corporation has
caused this Amended and Restated Certificate of Incorporation to be signed by
its President this ___ day of ___________, 2000.
-------------------------------
J. W. Mogg
President
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EXHIBIT B
================================================================================
AMENDED AND RESTATED BYLAWS
OF
DUKE ENERGY FIELD SERVICES CORPORATION
Dated as of ___, 2000
================================================================================
18
TABLE OF CONTENTS
Page
ARTICLE I
OFFICES AND RECORDS
ARTICLE II
STOCKHOLDERS
Section 2.1. Annual Meeting.............................................1
Section 2.2. Special Meeting............................................1
Section 2.3. Place of Meeting...........................................1
Section 2.4. Notice of Meeting..........................................2
Section 2.5. Quorum and Adjournment; Voting.............................2
Section 2.6. Proxies....................................................2
Section 2.7. Notice of Stockholder Business and Nominations.............2
Section 2.8. Procedure for Election of Directors; Required Vote.........4
Section 2.9. Inspectors of Elections; Opening and Closing the Polls.....5
Section 2.10. Conduct of Meetings........................................5
ARTICLE III
THE BOARD
Section 3.1. General Powers.............................................5
Section 3.2. Number; Qualifications and Tenure..........................6
Section 3.3. Regular Meetings...........................................6
Section 3.4. Special Meetings...........................................6
Section 3.5. Notice.....................................................6
Section 3.6. Action by Consent of Board.................................6
Section 3.7. Conference Telephone Meetings..............................6
Section 3.8. Quorum.....................................................6
Section 3.9. Vacancies; Increases in the Number of Directors............7
Section 3.10. Executive and Other Committees.............................7
Section 3.11. Removal....................................................7
Section 3.12. Records....................................................7
ARTICLE IV
OFFICERS
Section 4.1. Elected Officers...........................................8
Section 4.2. Election and Term of Office................................8
Section 4.3. Chairman of the Board; Chief Executive Officer.............8
Section 4.4. President..................................................8
Section 4.5. Vice Presidents............................................8
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Page
Section 4.6. Treasurer..................................................9
Section 4.7. Secretary..................................................9
Section 4.8. Removal....................................................9
Section 4.9. Vacancies..................................................9
ARTICLE V
STOCK CERTIFICATES AND TRANSFERS
Section 5.1. Stock Certificates and Transfers..........................10
Section 5.2. Lost, Stolen or Destroyed Certificates....................10
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1. Fiscal Year...............................................10
Section 6.2. Dividends.................................................10
Section 6.3. Seal......................................................10
Section 6.4. Waiver of Notice..........................................10
Section 6.5. Audits....................................................11
Section 6.6. Resignations..............................................11
ARTICLE VII
CONTRACTS, PROXIES, ETC.
Section 7.1. Contracts.................................................11
Section 7.2. Proxies...................................................11
ARTICLE VIII
AMENDMENTS
Annex A
ii
20
AMENDED AND RESTATED BYLAWS
OF
DUKE ENERGY FIELD SERVICES CORPORATION
The original Bylaws of Duke Energy Field Services Corporation
(formerly known as DEFS Holding Corp.) (the "Corporation") were adopted by the
board of directors of the Corporation (the "Board") on December 8, 1999.
These Amended and Restated Bylaws have been declared advisable
by the Board, duly adopted by the stockholders of the Corporation and duly
executed and acknowledged by the officers of the Corporation in accordance with
Section 109 of the General Corporation Law of the State of Delaware ("DGCL").
The text of the Bylaws of the Corporation is hereby amended
and restated to read in its entirety as follows:
ARTICLE I
OFFICES AND RECORDS
The Corporation shall maintain a registered office in Delaware
and may maintain such other offices and keep its books, documents and records at
such places within or without Delaware as may, from time to time, be designated
by the Board.
ARTICLE II
STOCKHOLDERS
Section 2.1. Annual Meeting. The annual meeting of the
stockholders of the Corporation shall be held on such date and at such time as
may be fixed by resolution of the Board.
Section 2.2. Special Meeting. Except as otherwise required by
law and subject to the rights of the holders of any class or series of stock
having a preference over the Common Stock, as defined in the Certificate of
Incorporation of the Corporation (the "Certificate of Incorporation"), as to
dividends or upon liquidation, special meetings of the stockholders of the
Corporation for any purpose or purposes may be called only by:
(a) the Board pursuant to a resolution stating the purpose or
purposes thereof approved by a majority of the Board, or
(b) the Chairman of the Board.
No business other than that stated in the notice shall be transacted at any
special meeting.
Section 2.3. Place of Meeting. The Board or the Chairman of
the Board, as the case may be, may designate the place of meeting for any annual
meeting or for any special meeting of the stockholders. If no designation is so
made, the place of meeting shall be the principal office of the Corporation.
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Section 2.4. Notice of Meeting. Written or printed notice,
stating the place, day and hour of the meeting and, in the case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered by the Corporation not less than ten calendar days nor more than 60
calendar days before the date of the meeting, either personally or by mail, to
each stockholder of record entitled to vote at such meeting. Holders of
Preferred Stock, as defined in the Certificate of Incorporation, shall not be
entitled to receive notice of any meeting of stockholders at which they are not
entitled to vote. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail with postage thereon prepaid, addressed to
the stockholder at such person's address as it appears on the stock transfer
books of the Corporation. Only such business shall be conducted at a special
meeting of stockholders as shall have been included in the Corporation's notice
of meeting. Meetings may be held without notice if all stockholders entitled to
vote are present, or if notice is waived by those not present in accordance with
Section 6.4 of these Bylaws. Any previously scheduled meeting of the
stockholders may be postponed, and any special meeting of the stockholders may
be canceled, by resolution of the Board upon public notice given prior to the
date previously scheduled for such meeting of stockholders.
Section 2.5. Quorum and Adjournment; Voting. Except as
otherwise provided by law or by the Certificate of Incorporation, the holders of
a majority of the voting power of all outstanding shares of the Corporation
entitled to vote generally in the election of Directors (as hereinafter defined)
(the "Voting Stock"), represented in person or by proxy, shall constitute a
quorum at a meeting of stockholders, except that when specified business is to
be voted on by a class or series of stock voting as a class, the holders of a
majority of the shares of such class or series shall constitute a quorum of such
class or series for the transaction of such business. The chairman of the
meeting or a majority of the shares so represented may adjourn the meeting from
time to time, whether or not there is such a quorum. No notice of the time and
place of adjourned meetings need be given except as required by law. The
stockholders present at a duly called meeting at which a quorum is present may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
Section 2.6. Proxies. At all meetings of stockholders, a
stockholder may vote by proxy executed in writing (or in such other manner
permitted by the DGCL) by the stockholder or by such person's duly authorized
attorney-in-fact.
Section 2.7. Notice of Stockholder Business and Nominations.
(a) Annual Meetings of Stockholders.
(i) Nominations of persons for election to the Board
and the proposal of business to be considered by the stockholders may be made at
an annual meeting of stockholders (A) pursuant to the Corporation's notice of
meeting in accordance with Section 2.4 of these Bylaws, (B) by or at the
direction of the Board, or (C) by any stockholder of the Corporation who was a
stockholder of record at the time the notice provided for in this Bylaw was
delivered, who is entitled to vote at the meeting and who complies with the
notice procedures set forth in this Bylaw.
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(ii) For nominations or other business to be properly
brought before an annual meeting by a stockholder pursuant to clause (C) of
Section 2.7(a)(i) hereof, the stockholder must have given timely notice thereof
in writing to the Secretary of the Corporation and such other business must
otherwise be a proper matter for stockholder action. To be timely, a
stockholder's notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business on the
90th calendar day nor earlier than the close of business on the 120th calendar
day prior to the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that the date of the annual meeting is more
than 30 calendar days before or more than 60 calendar days after such
anniversary date, notice by the stockholder to be timely must be so delivered
not earlier than the close of business on the 120th calendar day prior to such
annual meeting and not later than the close of business on the later of the 90th
calendar day prior to such annual meeting or the 10th calendar day following the
calendar day on which public announcement of the date of such meeting is first
made by the Corporation. In no event shall the public announcement of an
adjournment of an annual meeting commence a new time period for the giving of a
stockholder's notice as described above. Such stockholder's notice shall set
forth (A) as to each person whom the stockholder proposes to nominate for
election or reelection as a Director, all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
Directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and Rule 14a-11 thereunder (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a member of the Board (a "Director") if elected); (B) as to any other
business that the stockholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (C) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is
made, (1) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (2) the class and number
of shares of the Corporation which are owned beneficially and of record by such
stockholder and such beneficial owner.
(iii) Notwithstanding anything in the second sentence
of paragraph (a)(ii) of this Bylaw to the contrary, in the event that the number
of Directors to be elected to the Board is increased and there is no public
announcement by the Corporation naming all of the nominees for Director or
specifying the size of the increased Board at least 100 calendar days prior to
the first anniversary of the preceding year's annual meeting, a stockholder's
notice required by this Bylaw shall also be considered timely, but only with
respect to nominees for any new positions created by such increase, if it shall
be delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the tenth calendar day
following the day on which such public announcement is first made by the
Corporation.
(b) Special Meetings of the Stockholders. Only such business
shall be conducted at a special meeting of stockholders as shall have been
brought before the meeting pursuant to the Corporation's notice of meeting under
Section 2.4 of these Bylaws. Nominations of persons for election to the Board
may be made at a special meeting of stockholders at which Directors are to be
elected pursuant to the Corporation's notice of meeting (i) by or at the
direction of the Board, (ii) provided that the Board has determined that
Directors shall be elected
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at such meeting, by any stockholder of the Corporation who is a stockholder of
record at the time of giving of notice provided for in this Bylaw, who shall be
entitled to vote at the meeting and who complies with the notice procedures set
forth in this Bylaw. In the event the Corporation calls a special meeting of
stockholders for the purpose of electing one or more Directors to the Board, any
stockholder may nominate a person or persons (as the case may be) for election
to such position(s) as specified in the Corporation's notice of meeting pursuant
to clause (ii) if the stockholder's notice required by paragraph (a)(ii) of this
Bylaw shall be delivered to the Secretary at the principal executive offices of
the Corporation not earlier than the close of business on the 120th calendar day
prior to such special meeting and not later than the close of business on the
later of the 90th calendar day prior to such special meeting or the tenth
calendar day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board to be
elected at such meeting. In no event shall the public announcement of an
adjournment of a special meeting commence a new time period for the giving of a
stockholder's notice as described above.
(c) General.
(i) Only such persons who are nominated in accordance
with the procedures set forth in this Bylaw shall be eligible to serve as
Directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Bylaw. Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, the chairman of the meeting shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made or proposed, as the case may be, in
accordance with the procedures set forth in this Bylaw and, if any proposed
nomination or business in not in compliance with this Bylaw, to declare that
such defective proposal or nomination shall be disregarded.
(ii) For purposes of this Bylaw, "public
announcement" shall mean disclosure in a press release reported by the Dow Jones
News Service, Associated Press or comparable national news service or in a
document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of
this Bylaw, a stockholder shall also comply with all applicable requirements of
the Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Bylaw. Nothing in this Bylaw shall be deemed to affect
any rights (A) of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or
(B) of the holders of any series of Preferred Stock to elect Directors under an
applicable Preferred Stock Designation (as defined in the Certificate of
Incorporation).
Section 2.8. Procedure for Election of Directors; Required
Vote. Election of Directors at all meetings of the stockholders at which
Directors are to be elected shall be by ballot, and, subject to the rights of
the holders of any series of Preferred Stock to elect Directors under an
applicable Preferred Stock Designation, a plurality of the votes cast thereat
shall elect Directors. Except as otherwise provided by law, the Certificate of
Incorporation, Preferred Stock Designation or these Bylaws, in all matters other
than the election of Directors, the affirmative
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vote of a majority of the voting power of the shares present in person or
represented by proxy at the meeting and entitled to vote on the matter shall be
the act of the stockholders.
Section 2.9. Inspectors of Elections; Opening and Closing the
Polls. The Board by resolution shall appoint, or shall authorize an officer of
the Corporation to appoint, one or more inspectors, which inspector or
inspectors may include individuals who serve the Corporation in other
capacities, including, without limitation, as officers, employees, agents or
representatives, to act at the meetings of stockholders and make a written
report thereof. One or more persons may be designated as alternate inspector(s)
to replace any inspector who fails to act. If no inspector or alternate has been
appointed to act or is able to act at a meeting of the stockholders, the
chairman of the meeting shall appoint one or more inspectors to act at the
meeting. Each inspector, before discharging such person's duties, shall take and
sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of such person's ability. The
inspector(s) shall have the duties prescribed by law. The chairman of the
meeting shall fix and announce at the meeting the date and time of the opening
and the closing of the polls for each matter upon which the stockholders will
vote at a meeting.
Section 2.10. Conduct of Meetings. The Board may to the extent
not prohibited by law adopt such rules and regulations for the conduct of
meetings of stockholders as it shall deem appropriate. Except to the extent
inconsistent with such rules and regulations as adopted by the Board, the
chairman of any meeting of stockholders shall have the right and authority to
prescribe such rules, regulations and procedures and to do all such acts as, in
the judgment of such chairman, are appropriate for the proper conduct of the
meeting. Such rules, regulations or procedures, whether adopted by the Board or
prescribed by the chairman of the meeting, may to the extent not prohibited by
law include, without limitation, the following: (a) the establishment of an
agenda or order of business for the meeting; (b) rules and procedures for
maintaining order at the meeting and the safety of those present; (c)
limitations on attendance at or participation in the meeting to stockholders of
record of the Corporation, their duly authorized and constituted proxies or such
other persons as the chairman of the meeting shall determine; (d) restrictions
on entry to the meeting after the time fixed for the commencement thereof; and
(e) limitations on the time allotted to questions or comments by participants.
The date and time of the opening and closing of the polls for each matter upon
which the stockholders will vote at a meeting shall be announced at the meeting
by the person presiding over the meeting. Unless and to the extent determined by
the Board or the chairman of the meeting, meetings of stockholders shall not be
required to be held in accordance with the rules of parliamentary procedure.
ARTICLE III
THE BOARD
Section 3.1. General Powers. The business and affairs of the
Corporation shall be managed under the direction of the Board. In addition to
the powers and authorities expressly conferred upon the Board by these Bylaws,
the Board may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute, by the Certificate of Incorporation or by
these Bylaws required to be exercised or done by the stockholders. Except as
provided in the following sentence with respect to actions with respect to the
matters set forth in Annex A hereto, all decisions of the Board shall require
the affirmative vote of a majority of
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the Directors present at a meeting at which a quorum is present. So long as each
of Phillips Petroleum Company, a Delaware corporation ("Phillips"), and Duke
Energy corporation, a North Carolina corporation ("Duke"), owns, directly or
indirectly, at least 20% of the Common Stock, no action shall be taken by the
Board with respect to the matters set forth in Annex A hereto without the prior
approval of at least eight of the 11 Directors of the Board.
Section 3.2. Number; Qualifications and Tenure. The number of
the Directors shall be 11. A Director need not be a stockholder of the
Corporation.
Section 3.3. Regular Meetings. The Board shall meet at least
quarterly. The Board may, by resolution and notice to each of the Directors,
provide the time and place for the holding of additional regular meetings
without other notice than such resolution and notice to the Directors.
Section 3.4. Special Meetings. A special meeting of the Board
may be called at any time on two Business Days' prior notice at the request of
(a) the Chairman of the Board or (b) any four Directors. As used in these
Bylaws, the term "Business Day" shall mean any day on which banks are generally
open to conduct business in the State of New York. The place of any special
meeting shall be the corporate headquarters of the Corporation unless otherwise
agreed by a majority of the Directors.
Section 3.5. Notice. Written notice of all regular meetings of
the Board must be given to all Directors at least 15 days prior to the regular
meeting of the Board and two Business Days prior to any special meeting of the
Board. All notices and other communications to be given to Directors shall be
sufficiently given for all purposes hereunder if in writing and delivered by
hand, courier or overnight delivery service or three days after being mailed by
certified or registered mail, return receipt requested, with appropriate postage
prepaid, or when received in the form of a telegram or facsimile, and shall be
directed to the address or facsimile number as such Director shall designate by
notice to the Corporation. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board need be specified in the
notice of such meeting, except for amendments to these Bylaws, as provided under
Article VIII. A meeting may be held at any time without notice if all the
Directors are present or if those not present waive notice of the meeting in
accordance with Section 6.4.
Section 3.6. Action by Consent of Board. To the extent
permitted by applicable law, the Board and any committee thereof may act without
a meeting so long as all members of the Board or committee shall have executed a
written consent with respect to any Board action taken in lieu of a meeting.
Section 3.7. Conference Telephone Meetings. Members of the
Board or any committee thereof may participate in a meeting of the Board or such
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and such participation in a meeting shall constitute presence in person at such
meeting.
Section 3.8. Quorum. At least six Directors, present in
person, participating in accordance with Section 3.7 or represented by proxy,
shall constitute a quorum for the
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transaction of business, but if at any meeting of the Board there shall be less
than a quorum present, a majority of the Directors present may adjourn the
meeting from time to time without further notice. Subject to the supermajority
voting provisions of Section 3.1, the act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board.
The Directors present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough Directors
to leave less than a quorum.
Section 3.9. Vacancies; Increases in the Number of Directors.
Vacancies and newly created directorships resulting from any increase in the
authorized number of Directors may be filled by a majority of the Directors then
in office, although less than a quorum, or a sole remaining Director; and any
Director so chosen shall hold office until the next annual election and until
his successor shall be duly elected and shall qualify, unless sooner displaced.
Section 3.10. Executive and Other Committees. (a) The Board
may establish committees of the Board and, to the extent not inconsistent with
the supermajority voting provisions of Section 3.1, may delegate certain of its
responsibilities to such committees, provided that so long as each of Phillips
and Duke owns, directly or indirectly, at least 20% of the Common Stock, each
committee of the Board, other than the audit committee, shall include at least
one Director designated by Phillips who is not an Independent Director (as
hereinafter defined) and one Director designated by Duke who is not an
Independent Director.
(b) The Board shall have an audit committee comprised of three
Independent Directors, which audit committee shall establish a written audit
committee charter in accordance with the rules of the New York Stock Exchange,
Inc. (the "NYSE"), as amended from time to time. "Independent Director" shall
mean a Director meeting the independence and experience requirements, as set
forth by the NYSE as of __ , 2000 for membership on the audit committee of the
Board, with respect to each of Phillips, Duke and the Corporation.
(c) Unless the Board shall otherwise provide, a majority of
any committee may fix the time and place of its meetings and, subject to the
supermajority voting provisions of Section 3.1, may determine its action. Notice
of such meetings shall be given to each member of the committee in the manner
provided for in Section 3.5 of these Bylaws. Subject to Section 3.10(a), the
Board shall have power at any time to fill vacancies in, to change the
membership of, or to dissolve any such committee. Nothing herein shall be deemed
to prevent the Board from appointing one or more committees consisting in whole
or in part of persons who are not Directors; provided, however, that no such
committee shall have or may exercise any authority of the Board.
Section 3.11. Removal. Any Director or the entire Board may be
removed, with or without cause, by the holders of a majority of the Voting
Stock.
Section 3.12. Records. The Board shall cause to be kept a
record containing the minutes of the proceedings of the meetings of the Board
and of the stockholders, appropriate stock books and registers and such books of
records and accounts as may be necessary for the proper conduct of the business
of the Corporation.
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ARTICLE IV
OFFICERS
Section 4.1. Elected Officers. The executive officers of the
Corporation shall be selected by, and serve at the pleasure of, the Board. Such
officers shall have the authority and duties delegated to each of them,
respectively, by the Board from time to time. The elected officers of the
Corporation shall be a Chairman of the Board, a President, a Secretary, a
Treasurer, and such other officers (including, without limitation, Executive
Vice Presidents, Senior Vice Presidents and Vice Presidents) as the Board from
time to time may deem proper. The Chairman of the Board shall be chosen from
among the Directors. All officers elected by the Board shall each have such
powers and duties as generally pertain to their respective offices, subject to
the specific provisions of this Article IV. The Board or any committee thereof
may from time to time elect, or the Chairman of the Board may appoint, such
other officers (including one or more Vice Presidents, Controllers, Assistant
Secretaries and Assistant Treasurers), as may be necessary or desirable for the
conduct of the business of the Corporation. Such other officers and agents shall
have such duties and shall hold their offices for such terms as shall be
provided in these Bylaws or as may be prescribed by the Board or such committee
or by the Chairman of the Board, as the case may be.
Section 4.2. Election and Term of Office. The elected officers
of the Corporation shall be elected annually by the Board at the regular meeting
of the Board held after the annual meeting of the stockholders. If the election
of officers shall not be held at such meeting, such election shall be held as
soon thereafter as convenient. Each officer shall hold office until such
person's successor shall have been duly elected and shall have qualified or
until such person's death or until he shall resign or be removed pursuant to
Section 4.8.
Section 4.3. Chairman of the Board; Chief Executive Officer.
The Chairman of the Board shall preside at all meetings of the stockholders and
of the Board and shall be the Chief Executive Officer of the Corporation. The
Chairman of the Board shall be responsible for the general management of the
affairs of the Corporation and shall perform all duties incidental to such
person's office which may be required by law and all such other duties as are
properly required of him by the Board. He shall make reports to the Board and
the stockholders and shall see that all orders and resolutions of the Board and
of any committee thereof are carried into effect. The Chairman of the Board may
also serve as President, if so elected by the Board. The Directors also may
elect a vice-chairman to act in the place of the Chairman upon his or her
absence or inability to act.
Section 4.4. President. The President shall act in a general
executive capacity and shall assist the Chairman of the Board in the
administration and operation of the Corporation's business and general
supervision of its policies and affairs. The President, if he is also a
director, shall, in the absence of or because of the inability to act of the
Chairman of the Board, perform all duties of the Chairman of the Board and
preside at all meetings of stockholders and of the Board.
Section 4.5. Vice Presidents. Each Executive Vice President
and Senior Vice President and any Vice President shall have such powers and
shall perform such duties as shall be assigned to him by the Board or the
Chairman of the Board.
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Section 4.6. Treasurer. (a) The Treasurer shall exercise
general supervision over the receipt, custody and disbursement of corporate
funds. The Treasurer shall cause the funds of the Corporation to be deposited in
such banks as may be authorized by the Board, or in such banks as may be
designated as depositories in the manner provided by resolution of the Board.
The Treasurer shall, in general, perform all duties incident to the office of
the Treasurer and shall have such further powers and duties and shall be subject
to such directions as may be granted or imposed from time to time by the Board
or the Chairman of the Board.
Section 4.7. Secretary. (a) The Secretary shall keep or cause
to be kept, in one or more books provided for that purpose, the minutes of all
meetings of the Board, the committees of the Board and the stockholders. The
Secretary shall see that all notices are duly given in accordance with the
provisions of these Bylaws and as required by law; shall be custodian of the
records and the seal of the Corporation and affix and attest the seal to all
stock certificates of the Corporation (unless the seal of the Corporation on
such certificates shall be a facsimile, as hereinafter provided) and affix and
attest the seal to all other documents to be executed on behalf of the
Corporation under its seal; and shall see that the books, reports, statements,
certificates and other documents and records required by law to be kept and
filed are properly kept and filed; and in general, shall perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to the Secretary by the Board or the Chairman of the Board.
(b) Assistant Secretaries shall have such of the authority and
perform such of the duties of the Secretary as may be provided in these Bylaws
or assigned to them by the Board, the Chairman of the Board or the Secretary.
Assistant Secretaries shall assist the Secretary in the performance of the
duties assigned to the Secretary, and in assisting the Secretary, each Assistant
Secretary shall for such purpose have the powers of the Secretary. During the
Secretary's absence or inability, the Secretary's authority and duties shall be
possessed by such Assistant Secretary or Assistant Secretaries as the Board or
the Chairman of the Board may designate.
Section 4.8. Removal. Any officer elected, or agent appointed,
by the Board may be removed by the affirmative vote of a majority of the Board
whenever, in its judgment, the best interests of the Corporation would be served
thereby. Any officer or agent appointed by the Chairman of the Board may be
removed by him whenever, in the judgment of the Chairman of the Board, the best
interests of the Corporation would be served thereby. No elected officer shall
have any contractual rights against the Corporation for compensation by virtue
of such election beyond the date of the election of such person's successor,
such person's death, such person's resignation or such person's removal,
whichever event shall first occur, except as otherwise provided in an employment
contract or under an employee deferred compensation plan.
Section 4.9. Vacancies. A newly created elected office and a
vacancy in any elected office because of death, resignation or removal may be
filled by the Board for the unexpired portion of the term at any meeting of the
Board. Any vacancy in an office appointed by the Chairman of the Board because
of death, resignation or removal may be filled by the Chairman of the Board.
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ARTICLE V
STOCK CERTIFICATES AND TRANSFERS
Section 5.1. Stock Certificates and Transfers. The interest of
each stockholder of the Corporation shall be evidenced by certificates for
shares of stock in such form as the appropriate officers of the Corporation may
from time to time prescribe. The shares of the stock of the Corporation shall be
transferred on the books of the Corporation by the holder thereof in person or
by such person's attorney, upon surrender for cancellation of certificates for
at least the same number of shares, with an assignment and power of transfer
endorsed thereon or attached thereto, duly executed, with such proof of the
authenticity of the signature as the Corporation or its agents may reasonably
require. The certificates of stock shall be signed, countersigned and registered
in such manner as the Board may by resolution prescribe, which resolution may
permit all or any of the signatures on such certificates to be in facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate has ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue. Notwithstanding the foregoing
provisions regarding share certificates, the proper officers of the Corporation
may provide that some or all of any or all classes or series of the
Corporation's common or any preferred shares may be uncertificated shares.
Section 5.2. Lost, Stolen or Destroyed Certificates. No
certificate for shares of stock in the Corporation shall be issued in place of
any certificate alleged to have been lost, destroyed or stolen, except on
production of such evidence of such loss, destruction or theft and on delivery
to the Corporation of a bond of indemnity in such amount, upon such terms and
secured by such surety, as the Board or any financial officer may in its or such
person's discretion require.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1. Fiscal Year. The fiscal year of the Corporation
shall begin on the first day of January and end on the thirty-first day of
December of each year.
Section 6.2. Dividends. The Board may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and the Certificate of
Incorporation.
Section 6.3. Seal. The corporate seal, if any, shall have
inscribed thereon the words "Corporate Seal," the year of incorporation and the
word "Delaware."
Section 6.4. Waiver of Notice. Whenever any notice is required
to be given to any stockholder or Director under the provisions of the DGCL or
these Bylaws, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice. Neither the business to be
transacted at, nor the purpose of, any annual or special meeting of the
stockholders or the Board or committee thereof need be specified in any waiver
of notice of such meeting.
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Section 6.5. Audits. The accounts, books and records of the
Corporation shall be audited upon the conclusion of each fiscal year by an
independent certified public accountant selected by the Board, and it shall be
the duty of the Board to cause such audit to be done annually.
Section 6.6. Resignations. Any Director or any officer,
whether elected or appointed, may resign at any time by giving written notice of
such resignation to the Chairman of the Board or the Secretary, and such
resignation shall be deemed to be effective as of the close of business on the
date said notice is received by the Chairman of the Board of the Secretary, or
at such later time as is specified therein. No formal action shall be required
of the Board or the stockholders to make any such resignation effective.
ARTICLE VII
CONTRACTS, PROXIES, ETC.
Section 7.1. Contracts. Except as otherwise required by law,
the Certificate of Incorporation, a Preferred Stock Designation or these Bylaws,
any contracts or other instruments may be executed and delivered in the name and
on the behalf of the Corporation by such officer or officers of the Corporation
as the Board may from time to time direct. Such authority may be general or
confined to specific instances as the Board may determine. The Chairman of the
Board, the President or any Executive Vice President, Senior Vice President or
Vice President may execute bonds, contracts, deeds, leases and other instruments
to be made or executed for or on behalf of the Corporation. Subject to any
restrictions imposed by the Board, the Chairman of the Board, the President or
any Executive Vice President, Senior Vice President or Vice President of the
Corporation may delegate contractual powers to others under such person's
jurisdiction, it being understood, however, that any such delegation of power
shall not relieve such officer of responsibility with respect to the exercise of
such delegated power.
Section 7.2. Proxies. Unless otherwise provided by resolution
adopted by the Board, the Chairman of the Board, the President or any Executive
Vice President, Senior Vice President or Vice President may from time to time
appoint an attorney or attorneys or agent or agents of the Corporation, in the
name and on behalf of the Corporation, to cast the votes which the Corporation
may be entitled to cast as the holder of stock or other securities in any other
corporation, any of whose stock or other securities may be held by the
Corporation, at meetings of the holders of the stock or other securities of such
other corporation, or to consent in writing, in the name of the Corporation as
such holder, to any action by such other corporation, and may instruct the
person or persons so appointed as to the manner of casting such votes or giving
such consent, and may execute or cause to be executed in the name and on behalf
of the Corporation and under its corporate seal or otherwise, all such written
proxies or other instruments as he may deem necessary or proper in the premises.
ARTICLE VIII
AMENDMENTS
These Bylaws, including this Article VIII, may be altered,
amended or repealed and new Bylaws may be adopted (a) at any annual or special
meeting of stockholders by the affirmative vote of the holders of a majority of
the voting power of the stock issued and
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outstanding and entitled to vote thereat or (b) by the affirmative vote of a
majority of the Board; provided, however, that so long as each of Duke and
Phillips owns at least 20%, directly or indirectly, of the Common Stock, any
proposed alteration, amendment or repeal of, or the adoption of any Bylaw
inconsistent with Sections 3.1 through 3.11 or this Article VIII, by the
stockholders or the Board shall require the consent of both Duke and Phillips;
and provided, further, that, in the case of any such stockholder action at a
special meeting of stockholders, notice of the proposed alteration, amendment,
repeal or adoption of such Bylaws must be contained in the notice of such
special meeting.
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ANNEX A
SUPER-MAJORITY ITEMS
1. Compensation policies for employees of the Corporation, including
specific compensation and benefit plans and programs, to the extent
such policies are of the type that would customarily be considered by a
compensation committee of the board of directors of a comparably sized,
publicly-traded corporation; provided, however, that these policies
shall not include the hiring and firing and compensation of senior
officers and managers, evaluating their performance and planning for
their succession.
2. Entering a new line of business outside of the midstream gas gathering,
processing, marketing and transportation businesses (and directly
related activities) in the United States and Canada.
3. A change in auditors.
4. The following transactions:
a) Any merger, consolidation, recapitalization, acquisition,
divestiture, joint venture or alliance (or a related series of
such transactions) involving the acquisition or expenditure
(in the form of cash or otherwise) of in excess of
$200,000,000 in value to or from the Corporation;
b) Any shut-down of a facility having a fair market value in
excess of $100,000,000;
c) Entering into any sales contract or commitment that has a term
of 5 years or more and that involves annual revenues to the
Corporation in excess of 5% of the Corporation's total annual
sales revenues for the most recently completed fiscal year;
d) Liquidation or dissolution of the Corporation.
5. Any capital expenditure in excess of $200,000,000 (other than a capital
expenditure to effect any merger, consolidation, recapitalization,
acquisition, divestiture, joint venture or alliance).
6. Any borrowing in excess of $200,000,000.
7. The settlement of actions or claims against the Corporation involving
payment by the Corporation of in excess of $25,000,000, excluding
amounts covered or reimbursed by insurance.
8. Entering into transactions with either Duke or Phillips or Affiliates
of either on terms that are clearly less favorable than those terms
that are within the range of comparable transactions between
unaffiliated third parties.
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If a particular action that the Corporation proposes to take is reflected in an
operating or capital budget of the Corporation that has been approved by eight
or more directors, no further approval of such action is required before it may
be taken, notwithstanding the inclusion of such action in this Annex A.
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EXHIBIT C
Terms of PGCSI Parent Rights
1. Definitions. As used in this Exhibit C, the following terms shall
have the meanings set forth below (terms not defined herein shall have the
meanings specified therefor in the Agreement of Merger):
(a) "Agreement of Merger" means the Agreement of Merger to
which this Exhibit C is annexed.
(b) "Average Market Price" shall mean, with respect to the
Surviving Corporation Common Stock, the average of the closing prices,
as reported on the NYSE Composite Tape, on each of the first five days
of trading on the NYSE (exclusive of the pricing day).
(c) "Determination Date" shall mean the sixth day of trading
of the Surviving Corporation Common Stock on the NYSE (exclusive of the
pricing day).
(d) "Duke's Corporation Interest" shall mean the difference
between (x) the Parties' Corporation Interest and (y) Phillips'
Corporation Interest.
(e) "Enterprise Value" shall mean the sum of (x) the Parties'
Equity Value and (y) $2,400,000,000; provided that, if the Effective
Time is on or after the date two years after the consummation of the
Contribution Closing, "Enterprise Value" shall mean $5,500,000,000.
(f) "IPO" shall mean the initial offering of shares of
Surviving Corporation Common Stock to the public in a transaction
registered under the Securities Act of 1933, as amended.
(g) "NYSE" shall mean the New York Stock Exchange, Inc.
(h) "Parties' Corporation Interest" shall mean the difference
between (x) 100% and (y) the Public's Corporation Interest.
(i) "Parties' Equity Value" shall mean the product of (i) the
quotient of (x) the Parties' Corporation Interest divided by (y) the
Public's Actual Corporation Interest multiplied by (ii) the Public's
Equity Value.
(j) "PGCSI Parent" shall mean Phillips Petroleum Company.
(k) "Phillips' Corporation Interest" shall mean the quotient,
expressed as a percentage, of (x) Phillips Equity Value divided by (y)
Total Equity Value.
(l) "Phillips Enterprise Value" shall mean the product of (x)
the Enterprise Value and (y) .389.
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(m) "Phillips Equity Value" shall mean the difference between
(x) Phillips Enterprise Value and (y) $1,200,000,000.
(n) "Public's Actual Corporation Interest" shall mean the
quotient, expressed as a percentage, of (x) [___][1] divided by (y)
[___][2].
(o) "Public's Corporation Interest" shall mean the quotient,
expressed as a percentage, of (x) [___][3] divided by (y) [___][2].
(p) "Public's Equity Value" shall mean the product of (i) the
Average Market Price multiplied by (ii) the number of shares sold by
the Surviving Corporation in the IPO (which excludes shares issued to
officers and employees of the Surviving Corporation or the Company
concurrently with the IPO pursuant to compensation or benefit plans),
but excluding any shares sold pursuant to the underwriters'
over-allotment option.
(q) "Surviving Corporation Common Stock" shall mean the common
stock, par value $.01 per share, of the Surviving Corporation.
(r) "Total Equity Value" shall mean the quotient of (x) the
Public's Equity Value divided by (y) the Public's Actual Corporation
Interest.
2. Non-Transferability.
2.1 The right of PGCSI Parent to receive the Phillips
Additional Shares (as defined herein) will not be represented by
certificates.
2.2 The right of PGCSI Parent to receive the Phillips
Additional Shares may not be sold, assigned, conveyed, pledged,
hypothecated or otherwise transferred by PGCSI Parent, and Surviving
Corporation shall not record or recognize any such attempted transfer,
except by will or under the laws of descent and distribution, or
otherwise by operation of applicable law. Any such attempted sale,
assignment, conveyance, pledge, hypothecation or other transfer shall
be null and void and without effect.
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[1] equal to the number of shares of Surviving Corporation Common Stock sold by
the Surviving Corporation in the IPO (which excludes shares issued to officers
and employees of the Surviving Corporation or the Company concurrently with the
IPO pursuant to compensation or benefit plans), but excluding any shares sold
pursuant to the underwriters' over-allotment option.
[2] equal to the number of shares of Surviving Corporation Common Stock to be
outstanding immediately after the Merger (including shares to be issued pursuant
to rights received in the Merger) and the IPO, plus shares issued to officers
and employees of the Surviving Corporation or the Company concurrently with the
IPO pursuant to compensation or benefit plans, but excluding any shares sold
pursuant to the underwriters' over-allotment option.
[3] equal to the number of shares of Surviving Corporation Common Stock sold by
the Surviving Corporation in the IPO, plus any shares issued to officers and
employees of the Surviving Corporation or the Company concurrently with the IPO
pursuant to compensation or benefit plans, but excluding any shares sold
pursuant to the underwriters' over-allotment option.
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3. Distribution of Phillips Additional Shares.
3.1. Phillips Additional Shares.
(a) Following the Determination Date, the Surviving
Corporation shall issue to PGCSI Parent a number of shares of the
Surviving Corporation Common Stock (which shares shall be validly
issued, fully paid and nonassessable) equal to (i) the Phillips
Corporation Interest multiplied by _______ [4], less (ii)
______________ shares [5] (the "Phillips Additional Shares").
Certificates representing the Phillips Additional Shares shall be
delivered by the Surviving Corporation to PGCSI Parent within two (2)
business days following the Determination Date.
(b) Notwithstanding the provisions of subsection 3.1(a)
hereof, the Surviving Corporation shall not issue any fractional shares
of Surviving Corporation Common Stock to PGCSI Parent. To the extent it
would otherwise be required to issue fractional shares of Surviving
Corporation Common Stock to PGCSI Parent pursuant to such subsection,
the Surviving Corporation shall in lieu thereof pay cash in an amount
equal to the fractional share percentage multiplied by the Average
Market Price. Such payment for fractional shares shall be forwarded to
PGCSI Parent simultaneously with forwarding the Phillips Additional
Shares.
3.2 Certain Adjustments. For all purposes hereof, all
calculations required to be made pursuant to this Exhibit shall be
appropriately adjusted to take into account any stock dividend, stock
split, combination of shares, or reclassification, or any merger,
consolidation, spin-off, or partial or complete liquidation of the
Surviving Corporation occurring during the period commencing on the
date hereof and terminating on the distribution of the Surviving
Corporation Common Stock pursuant hereto.
4. Notices. Except as otherwise expressly set forth herein, any notice,
request, instruction, correspondence or other document to be given thereunder by
any party to another party (herein collectively in this Section 4 called a
"Notice") shall be in writing and delivered personally or mailed by registered
or certified mail, postage prepaid and return receipt requested (except in such
case where mailing by first class mail is expressly permitted), or sent by
telecopier, as follows:
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[4] equal to the number of shares of Surviving Corporation Common Stock to be
outstanding immediately after the Merger (including shares to be issued pursuant
to rights received in the Merger) and the IPO, plus shares issued to officers
and employees of the Surviving Corporation or the Company concurrently with the
IPO pursuant to compensation or benefits plans, but excluding any shares sold
pursuant to the underwriters' over-allotment option.
[5] equal to the number of shares initially issued to PGCSI Parent in the Merger
(i.e., the same blank in 3.1(e) of Merger Agreement).
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(a) If to the Surviving Corporation, addressed to:
Duke Energy Field Services Corporation
17th Street, Suite 900
Denver, Colorado 80202
Attention: Martha B. Wyrsch
Fax No.: (303) 605-1605
With a copy to:
Duke Energy Corporation
5400 Westheimer Court, 8th Floor
Houston, Texas 77056-5310
Attention: Richard K. McGee
Fax No.: (713) 569-2491
and
Vinson & Elkins L.L.P.
1001 Fannin, Suite 2300
Houston, Texas 77002-6760
Attention: Bruce R. Bilger
Fax No.: (713) 615-5429
(b) If to PGCSI Parent, addressed to:
Phillips Petroleum Company
1266 Adams Building
Bartlesville, Oklahoma 74004
Attention: Clyde W. Lea
Fax No.: (918) 662-2301
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Andrew R. Brownstein
Fax No.: (212) 403-2000
Any Notice given by personal delivery or mail shall be effective upon actual
receipt. Any Notice given by telecopier shall be effective upon actual receipt
if received during the recipient's normal business hours, or at the beginning of
the recipient's next business day after receipt if not received during the
recipient's normal business hours. Any party may change any address to which a
Notice is to be given to it by giving a Notice of such change of address as
provided above.
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EXHIBIT D
Terms of DENG Rights
1. Definitions. As used in this Exhibit D, the following terms shall
have the meanings set forth below (terms not defined herein shall have the
meanings specified therefor in the Agreement of Merger):
(a) "Agreement of Merger" means the Agreement of Merger to
which this Exhibit D is annexed.
(b) "Average Market Price" shall mean, with respect to the
Surviving Corporation Common Stock, the average of the closing prices,
as reported on the NYSE Composite Tape, on each of the first five days
of trading on the NYSE (exclusive of the pricing day).
(c) "DENG" shall mean Duke Energy Natural Gas Corporation.
(d) "Determination Date" shall mean the sixth day of trading
of the Surviving Corporation Common Stock on the NYSE (exclusive of the
pricing day).
(e) "Duke's Corporation Interest" shall mean the difference
between (x) the Parties' Corporation Interest and (y) Phillips'
Corporation Interest.
(f) "Enterprise Value" shall mean the sum of (x) the Parties'
Equity Value and (y) $2,400,000,000; provided that, if the Effective
Time is on or after the date two years after the consummation of the
Contribution Closing, "Enterprise Value" shall mean $5,500,000,000.
(g) "IPO" shall mean the initial offering of shares of
Surviving Corporation Common Stock to the public in a transaction
registered under the Securities Act of 1933, as amended.
(h) "NYSE" shall mean the New York Stock Exchange, Inc.
(i) "Parties' Corporation Interest" shall mean the difference
between (x) 100% and (y) the Public's Corporation Interest.
(j) "Parties' Equity Value" shall mean the product of (i) the
quotient of (x) the Parties' Corporation Interest divided by (y) the
Public's Actual Corporation Interest multiplied by (ii) the Public's
Equity Value.
(k) "Phillips' Corporation Interest" shall mean the quotient,
expressed as a percentage, of (x) Phillips Equity Value divided by (y)
Total Equity Value.
(l) "Phillips Enterprise Value" shall mean the product of (x)
the Enterprise Value and (y) .389.
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(m) "Phillips Equity Value" shall mean the difference between
(x) Phillips Enterprise Value and (y) $1,200,000,000.
(n) "Public's Actual Corporation Interest" shall mean the
quotient, expressed as a percentage, of (x) [___][1] divided by (y)
[___] [2].
(o) "Public's Corporation Interest" shall mean the quotient,
expressed as a percentage, of (x) [___] [3] divided by (y) [___] [2].
(p) "Public's Equity Value" shall mean the product of (i) the
Average Market Price multiplied by (ii) the number of shares sold by
the Surviving Corporation in the IPO (which excludes shares issued to
officers and employees of the Surviving Corporation or the Company
concurrently with the IPO pursuant to compensation or benefit plans),
but excluding any shares sold pursuant to the underwriters'
over-allotment option.
(q) "Surviving Corporation Common Stock" shall mean the common
stock, par value $.01 per share, of the Surviving Corporation.
(r) "Total Equity Value" shall mean the quotient of (x) the
Public's Equity Value divided by (y) the Public's Actual Corporation
Interest.
2. Non-Transferability.
2.1 The right of DENG to receive the Duke Additional Shares
(as defined herein) will not be represented by certificates.
2.2 The right of DENG to receive the Duke Additional Shares
may not be sold, assigned, conveyed, pledged, hypothecated or otherwise
transferred by DENG, and Surviving Corporation shall not record or
recognize any such attempted transfer, except by will or under the laws
of descent and distribution, or otherwise by operation of applicable
law. Any such attempted sale, assignment, conveyance, pledge,
hypothecation or other transfer shall be null and void and without
effect.
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[1] equal to the number of shares of Surviving Corporation Common Stock sold by
the Surviving Corporation in the IPO (which excludes shares issued to officers
and employees of the Surviving Corporation or the Company concurrently with the
IPO pursuant to compensation or benefit plans), but excluding any shares sold
pursuant to the underwriters' over-allotment option.
[2] equal to the number of shares of Surviving Corporation Common Stock to be
outstanding immediately after the Merger (including shares to be issued pursuant
to rights received in the Merger) and the IPO, plus shares issued to officers
and employees of the Surviving Corporation or the Company concurrently with the
IPO pursuant to compensation or benefit plans, but excluding any shares sold
pursuant to the underwriters' over-allotment option.
[3] equal to the number of shares of Surviving Corporation Common Stock sold by
the Surviving Corporation in the IPO, plus any shares issued to officers and
employees of the Surviving Corporation or the Company concurrently with the IPO
pursuant to compensation or benefit plans, but excluding any shares sold
pursuant to the underwriters' over-allotment option.
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3. Distribution of Duke Additional Shares.
3.1. Duke Additional Shares.
(a) Following the Determination Date, the Surviving
Corporation shall issue to DENG a number of shares of the Surviving
Corporation Common Stock (which shares shall be validly issued, fully
paid and nonassessable) equal to (i) the Duke Corporation Interest
multiplied by _______ [4], less (ii) ______________ shares [5] (the
"Duke Additional Shares"). Certificates representing the Duke
Additional Shares shall be delivered by the Surviving Corporation to
DENG within two (2) business days following the Determination Date.
(b) Notwithstanding the provisions of subsection 3.1(a)
hereof, the Surviving Corporation shall not issue any fractional shares
of Surviving Corporation Common Stock to DENG. To the extent it would
otherwise be required to issue fractional shares of Surviving
Corporation Common Stock to DENG pursuant to such subsection, the
Surviving Corporation shall in lieu thereof pay cash in an amount equal
to the fractional share percentage multiplied by the Average Market
Price. Such payment for fractional shares shall be forwarded to DENG
simultaneously with forwarding the Duke Additional Shares.
3.2 Certain Adjustments. For all purposes hereof, all
calculations required to be made pursuant to this Exhibit shall be
appropriately adjusted to take into account any stock dividend, stock
split, combination of shares, or reclassification, or any merger,
consolidation, spin-off, or partial or complete liquidation of the
Surviving Corporation occurring during the period commencing on the
date hereof and terminating on the distribution of the Surviving
Corporation Common Stock pursuant hereto.
4. Notices. Except as otherwise expressly set forth herein, any notice,
request, instruction, correspondence or other document to be given thereunder by
any party to another party (herein collectively in this Section 4 called a
"Notice") shall be in writing and delivered personally or mailed by registered
or certified mail, postage prepaid and return receipt requested (except in such
case where mailing by first class mail is expressly permitted), or sent by
telecopier, as follows:
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[4] equal to the number of shares of Surviving Corporation Common Stock to be
outstanding immediately after the Merger (including shares to be issued pursuant
to rights received in the Merger) and the IPO, plus shares issued to officers
and employees of the Surviving Corporation or the Company concurrently with the
IPO pursuant to compensation or benefits plans, but excluding any shares sold
pursuant to the underwriters' over-allotment option.
[5] equal to the number of shares initially issued to DENG in the Merger (i.e.,
the same blank in 3.1(f) of Merger Agreement).
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(a) If to the Surviving Corporation, addressed to:
Duke Energy Field Services Corporation
17th Street, Suite 900
Denver, Colorado 80202
Attention: Martha B. Wyrsch
Fax No.: (303) 605-1605
With a copy to:
Duke Energy Corporation
5400 Westheimer Court, 8th Floor
Houston, Texas 77056-5310
Attention: Richard K. McGee
Fax No.: (713) 569-2491
and
Vinson & Elkins L.L.P.
1001 Fannin, Suite 2300
Houston, Texas 77002-6760
Attention: Bruce R. Bilger
Fax No.: (713) 615-5429
(b) If to DENG, addressed to:
Duke Energy Natural Gas Corporation
5400 Westheimer Court, 8th Floor
Houston, Texas 77056-5310
Attention: Richard K. McGee
Fax No.: (713) 569-2491
With a copy to:
Vinson & Elkins L.L.P.
1001 Fannin, Suite 2300
Houston, Texas 77002-6760
Attention: Bruce R. Bilger
Fax No.: (713) 615-5429
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Any Notice given by personal delivery or mail shall be effective upon actual
receipt. Any Notice given by telecopier shall be effective upon actual receipt
if received during the recipient's normal business hours, or at the beginning of
the recipient's next business day after receipt if not received during the
recipient's normal business hours. Any party may change any address to which a
Notice is to be given to it by giving a Notice of such change of address as
provided above.
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