This excerpt taken from the DUK 8-K filed Dec 15, 2006.
Section 4.1. Stock Dividend to Duke Energy; Distribution.
Prior to the Distribution Date, Spectra Energy shall issue to Duke Energy as a stock dividend such number of shares of Spectra Energy Common Stock (or Duke Energy and Spectra Energy shall take or cause to be taken such other appropriate actions to ensure that Duke Energy has the requisite number of shares of Spectra Energy Common Stock) as may be requested by Duke Energy after consultation with Spectra Energy in order to effect the Distribution, which shares as of the date of issuance shall represent (together with such shares previously held by Duke Energy) all of the issued and outstanding shares of Spectra Energy Common Stock. Subject to conditions and other terms in this ARTICLE IV and the terms in Section 2.12, Duke Energy will cause the Agent on the Distribution Date to distribute all of the outstanding shares of Spectra Energy Common Stock then owned by Duke Energy to holders of Duke Energy Common Stock (on an as if converted basis) on the Record Date, and to credit the appropriate class and number of such shares of Spectra Energy Common Stock to book entry accounts for each such holder or designated transferee or transferees of such holder of Spectra Energy Common Stock. For stockholders of Duke Energy who own Duke Energy Common Stock through a broker or other nominee, their shares of Spectra Energy Common Stock will be credited to their respective accounts by such broker or nominee. Subject to conditions and other terms in this ARTICLE IV and the terms in Section 2.12, each holder of Duke Energy Common Stock on the Record Date (or such holders designated transferee or transferees) will be entitled to receive a number or a fraction of a share of Spectra Energy Common Stock for each share of Duke Energy Common Stock held by such stockholder as provided in the defined term Distribution, which distribution ratio has previously been determined by the Board of Directors of Duke Energy. No action by any such stockholder shall be necessary for such stockholder (or such stockholders designated transferee or transferees) to receive the applicable number of shares of (and, if applicable, cash in lieu of any fractional shares) Spectra Energy Common Stock such stockholder is entitled to in the Distribution.
Section 4.2. Fractional Shares. Duke Energy stockholders who, after aggregating the number of shares of Spectra Energy Common Stock (or fractions thereof) to which such stockholder would be entitled on the Record Date, would be entitled to receive a fraction of a share of Spectra Energy Common Stock in the Distribution, will receive cash in lieu of fractional shares. Fractional shares of Spectra Energy Common Stock will not be distributed in the Distributions nor credited to book-entry accounts. The Agent shall, as soon as practicable after the Distribution Date (a) determine the number of whole shares and fractional shares of Spectra Energy Common Stock allocable to each other holder of record or beneficial owner of Duke Energy Common Stock as of close of business on the Record Date, (b) aggregate all such
fractional shares into whole shares and sell the whole shares obtained thereby in open market transactions at then prevailing trading prices on behalf of holders who would otherwise be entitled to fractional share interests, and (c) distribute to each such holder, or for the benefit of each such beneficial owner, such holder or owners ratable share of the net proceeds of such sale, based upon the average gross selling price per share of Spectra Energy Common Stock after making appropriate deductions for any amount required to be withheld for United States federal income tax purposes. Spectra Energy shall bear the cost of brokerage fees and transfer taxes incurred in connection with these sales of fractional shares, which such sales shall occur as soon after the Distribution Date as practicable and as determined by the Agent. None of Duke Energy, Spectra Energy or the applicable Agent will guarantee any minimum sale price for the fractional shares of Spectra Energy Common Stock. Neither Duke Energy nor Spectra Energy will pay any interest on the proceeds from the sale of fractional shares. The Agent will have the sole discretion to select the broker-dealers through which to sell the aggregated fractional shares and to determine when, how and at what price to sell such shares. Neither the Agent nor the selected broker-dealers will be Affiliates of Duke Energy or Spectra Energy.
Section 4.3. Actions in Connection with the Distribution.
(a) Spectra Energy shall file such amendments and supplements to the Form 10 as Duke Energy may reasonably request, and such amendments as may be necessary in order to cause the same to become and remain effective as required by Law, including filing such amendments and supplements to the Form 10 and Information Statement as may be required by the Commission or federal, state or foreign securities Laws. Duke Energy shall mail to the holders of Duke Energy Common Stock, at such time on or prior to the Distribution Date as Duke Energy shall determine, the Information Statement included in the Form 10 and Information Statement, as well as any other information concerning Spectra Energy, Spectra Energys business, operations and management, the Separation and such other matters as Duke Energy shall reasonably determine are necessary and as may be required by Law.
(b) Spectra Energy shall also prepare, file with the Commission and cause to become effective any registration statements or amendments thereof required to effect the establishment of, or amendments to, any employee benefit and other plans necessary or appropriate in connection with the transactions contemplated by this Agreement, or any of the Ancillary Agreements, including any transactions related to financings or other credit facilities. Promptly after receiving a request from Duke Energy, to the extent requested, Spectra Energy shall prepare and, in accordance with applicable Law, file with the Commission any such documentation that Duke Energy determines is necessary or desirable to effectuate the Distribution, and Duke Energy and Spectra Energy shall each use commercially reasonable efforts to obtain all necessary approvals from the Commission with respect thereto as soon as practicable.
(c) Promptly after receiving a request from Duke Energy, Spectra Energy shall prepare and file, and shall use commercially reasonable efforts to have approved and made effective, an application for the original listing on the NYSE of the Spectra Energy Common Stock to be distributed in the Distribution, subject to official notice of distribution.
(d) Nothing in this Section 4.3 shall be deemed, by itself, to create a Liability of Duke Energy for any portion of the Form 10.
Section 4.4. Sole Discretion of Duke Energy. Duke Energy shall, in its sole and absolute discretion, determine the Distribution Date and all terms of the Distribution, including the form, structure and terms of any transactions and/or offerings to effect the Distribution and the timing of and conditions to the consummation thereof. In addition, Duke Energy may, in accordance with Section 11.11, at any time prior to the Distribution Date and from time to time until the completion of the Distribution decide to abandon the Distribution or modify or change the terms of the Distribution, including by accelerating or delaying the timing of the consummation of all or part of the Distribution. None of Spectra Energy, any other member of the Spectra Energy Group, any Spectra Energy Employee or any Third-Party shall have any right or claim to require the consummation of the Separation or the Distribution, each of which shall be effected at the sole discretion of the Board of Directors of Duke Energy.
Section 4.5. Conditions to Distribution. Subject to Section 4.4, the following are conditions to the consummation of the Distribution. The conditions are for the sole benefit of Duke Energy and shall not give rise to or create any duty on the part of Duke Energy or the Board of Directors of Duke Energy to waive or not waive any such condition.
(a) The Form 10 shall have been declared effective by the Commission, with no stop order in effect with respect thereto, and the applicable Information Statement shall have been mailed to the holders of Duke Energy Common Stock as of the Record Date;
(b) With respect to the Distribution, the Spectra Energy Common Stock to be delivered in the Distribution shall have been approved for listing on the NYSE, subject to official notice of distribution;
(c) Prior to the Distribution, Duke Energy shall have obtained a private letter ruling from the Internal Revenue Service in form and substance satisfactory to Duke Energy (in its sole discretion), and such ruling shall remain in effect as of the Distribution Date, to the effect, among other things, that (i) the Internal Contributions followed by the Internal Distributions will qualify as reorganizations under Sections 355 and 368(a)(1)(D) of the Code; (ii) the Contribution followed by the Distribution qualifies as a reorganization under Sections 355 and 368(a)(1)(D) of the Code, (iii) no gain or loss will be recognized by Duke Energy on its transfer of Duke Capital LLC to Spectra Energy in exchange for Spectra Energy common stock, (iv) no gain or loss will be recognized by Spectra Energy on the Contribution, (v) no gain or loss will be recognized by (and no amount will otherwise be included in the income of) the shareholders of Duke Energy upon their receipt of Spectra Energy common stock pursuant to the Distribution; and (vi) no gain or loss will be recognized by Duke Energy pursuant to the Distribution;
(d) Prior to the Distribution, Duke Energy shall have obtained an opinion from Skadden, Arps, Slate, Meagher & Flom LLP, its tax counsel, in form and substance satisfactory to Duke Energy (in its sole discretion), substantially to the effect that the Distribution, as well as certain transactions in connection with the reorganization referenced in Section 3.1, will qualify as reorganizations for United States Federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code;
(e) Any material Governmental Approvals and other Consents necessary to consummate the Distribution or any portion thereof shall have been obtained and be in full force and effect, including the regulatory approvals listed or described on Schedule 4.5(e);
(f) No order, injunction or decree issued by any Governmental Entity of competent jurisdiction or other legal restraint or prohibition preventing the consummation of all or any portion of the Distribution shall be in effect, and no other event outside the control of Duke Energy shall have occurred or failed to occur that prevents the consummation of all or any portion of the Distribution; and
(g) The Board of Directors of Duke Energy shall have approved the Distribution, which approval may be given or withheld at its absolute and sole discretion.