QUESTIONS AND ANSWERS ABOUT THE MERGER

Q: WHEN AND WHERE ARE THE SPECIAL MEETINGS OF STOCKHOLDERS?

A: The special meeting of Conoco stockholders will take place on [date], 2002, at [address]. The special meeting of Phillips stockholders will take place on [date], 2002, at the Adams Building, 4th Street and Keeler Avenue, Bartlesville, Oklahoma.

Q: WHAT STOCKHOLDER APPROVALS ARE REQUIRED TO APPROVE THE MERGER?

A: For both Conoco and Phillips, the affirmative vote of a majority of the shares outstanding and entitled to vote as of the respective record dates is required to adopt the merger agreement.

As of the Conoco record date, Conoco directors and officers held and were entitled to vote less than [ ]% of the Conoco common stock outstanding.

As of the Phillips record date, Phillips directors and officers held and were entitled to vote less than [ ]% of the Phillips common stock outstanding.

Q: WHY ARE CONOCO AND PHILLIPS GOING TO MERGE?

A: We believe that the merger will provide substantial strategic and financial benefits to Conoco and Phillips and their stockholders, including:

- expanded scope and scale to succeed as a major integrated oil company in the changing marketplace,

- strategic fit and compatibility,

- strong financial position, and

- cost savings.

To review the reasons for the merger in greater detail, see pages [ ] through [ ].

Q: WHAT WILL HAPPEN IN THE MERGER?

A: Prior to entering into the merger agreement, Conoco and Phillips formed CorvettePorsche Corp. which will be renamed "ConocoPhillips" upon the completion of the merger and which we refer to as "New Parent." New Parent, in turn, formed two merger subsidiaries, Corvette Merger Corp. and Porsche Merger Corp. Corvette Merger Corp. will merge with and into Conoco and Porsche Merger Corp. will merge with and into Phillips. As a result:

- Conoco and Phillips will become wholly owned subsidiaries of New Parent, and

- former Conoco stockholders will hold approximately 43.4%, and former Phillips stockholders will hold approximately 56.6%, of the outstanding shares of New Parent common stock.

Q: WHAT WILL BE THE NAME OF THE COMBINED COMPANY AFTER THE MERGER?

A: After the completion of the merger, the name of the new public company will be "ConocoPhillips."

Q: WHAT WILL I RECEIVE FOR MY SHARES?

A: A Conoco stockholder will receive 0.4677 of a share of New Parent common stock for each share of Conoco common stock that the stockholder owns, with cash instead of any fractional shares of New Parent common stock.

A Phillips stockholder will receive one share of New Parent common stock for each share of Phillips common stock that the stockholder owns.

Example: If a Conoco stockholder currently owns 100 shares of Conoco common stock, after the merger, the stockholder will be entitled to receive 46 shares of New Parent common stock and an amount in cash equal to the value of 0.77 of a share of New Parent common stock, based on the closing price per share of New Parent common stock on the first trading day following the date on which the merger is completed.

Example: If a Phillips stockholder currently owns 100 shares of Phillips common stock, after the merger, the stockholder will be entitled to receive 100 shares of New Parent common stock.

Q: WHAT HAPPENS TO MY FUTURE DIVIDENDS?

A: Pursuant to the merger agreement, Conoco and Phillips each are prohibited from making any changes to their dividend policies prior to the completion of the merger without the consent of the other. We expect that, after the completion of the merger, New Parent will adopt a competitive dividend policy.

Q: WHAT ARE MY U.S. FEDERAL TAX CONSEQUENCES AS A RESULT OF THE MERGER?

A: We have structured the transaction so that it is anticipated that the merger of Corvette Merger Corp. with and into Conoco and the merger of Porsche Merger Corp. with and into Phillips each will be a reorganization for U.S. federal income tax purposes and/or that the mergers, taken together, will constitute an exchange described in Section 351 of the Internal Revenue Code of 1986, as amended. Conoco and Phillips will not be obligated to complete the merger unless they receive legal opinions to this effect. If each of the merger of Corvette Merger Corp. with and into Conoco and the merger of Porsche Merger Corp. with and into Phillips is a reorganization for U.S. federal income tax purposes and/or the mergers, taken together, constitute an exchange described in Section 351 of the Internal Revenue Code, Conoco stockholders and Phillips stockholders will not recognize gain or loss for U.S. federal income tax purposes in the transaction (except with respect to any cash received instead of fractional shares of New Parent common stock). You are strongly urged to consult with a tax advisor to determine the particular U.S. federal, state or local or foreign income or other tax consequences as of the merger to you.

Q: WHAT DO I NEED TO DO NOW?

A: After carefully reading and considering the information contained in this document, please complete and sign your proxy card and return it in the enclosed postage-paid envelope as soon as possible so that your shares may be represented at your special meeting. You also may submit your proxy by telephone or over the Internet by following the instructions on your proxy card.

If you sign, date and send your proxy and do not indicate how you want to vote, your proxy will be voted for the approval of the proposal.

Q: WHAT DO I DO IF I WANT TO CHANGE MY VOTE?

A: Send a later-dated, signed proxy card to your company's Secretary prior to the date of your special meeting or attend your company's special meeting in person and vote. You also may revoke your proxy by sending a notice of revocation to your company's Secretary at the address under "Summary -- The Companies" on page [ ]. You may also change or revoke your proxy by telephone or over the Internet, regardless of the procedure used to deliver your previous proxy.

Q: IF MY BROKER HOLDS MY SHARES IN "STREET NAME," WILL MY BROKER VOTE MY SHARES?

A: If you do not provide your broker with instructions on how to vote your street name shares, your broker will not be permitted to vote them on the merger proposal. You should, therefore, be sure to provide your broker with instructions on how to vote your shares. Stockholders should check the voting form provided by their brokers to see if they offer telephone or Internet voting.

If you do not give voting instructions to your broker, your votes will not be counted as voting for the merger unless you appear and vote in person at your special meeting. If your broker holds your shares and you attend the special meeting, please bring a letter from your broker identifying you as the beneficial owner of the shares and authorizing you to vote.

Q: WHAT WILL HAPPEN IF I ABSTAIN FROM VOTING OR FAIL TO VOTE?

A: An abstention or failure to vote will have the same effect as a vote against the merger.

Q: WHO ELSE MUST APPROVE THE MERGER?

A: Under the Hart-Scott-Rodino Act of 1976, as amended, Conoco and Phillips may not complete the merger until they have furnished certain information and materials to the Antitrust Division of the U.S. Department of Justice and the U.S. Federal Trade Commission and the applicable waiting period has expired or been terminated.

Completion of the merger is also subject to approval under the competition laws of the European Union, Canada and those other regulatory authorities where the failure to obtain those approvals would have a material adverse effect on New Parent after completion of the merger.

We have made or intend to make the relevant filings as soon as practicable. See "The Merger -- Regulatory Matters" on page [ ].

Q: WHEN DO YOU EXPECT TO COMPLETE THE MERGER?

A: We expect to complete the merger in the second half of 2002.

Q: SHOULD I SEND IN MY SHARE CERTIFICATES NOW?

A: No. After the merger is completed, we will send Conoco stockholders written instructions for exchanging their share certificates. The share certificates of Phillips stockholders immediately prior to the completion of the merger will be deemed to represent New Parent common stock following the merger. Phillips stockholders, however, may elect to exchange their Phillips share certificates for New Parent share certificates at their option.

Q: DO I HAVE APPRAISAL RIGHTS?

A: No. Neither the Conoco stockholders nor the Phillips stockholders will have appraisal rights under Delaware law as a result of the merger.

Q: WHO CAN HELP ANSWER MY QUESTIONS?

A: If you have any questions about the merger or if you need additional copies of this document or the enclosed proxy card, you should contact:

Conoco stockholders:

Conoco Inc.
600 North Dairy Ashford
Houston, Texas 77079
(281) 293-6800
Attention: Shareholder Relations
e-mail: shareholder.relations@conoco.com

or

Innisfree M&A Incorporated
501 Madison Avenue
New York, New York 10022
Toll free: (800) [ ]
[email: ]

Phillips stockholders:

Phillips Petroleum Company
1234 Adams Building
Bartlesville, Oklahoma 74004
(918) 661-[ ] Attention: Dale J. Billam, Secretary and Senior Counsel
[e-mail: ]

or

Georgeson Shareholder Communications, Inc. 17 State Street
New York, New York 10004
Toll free: (800) [ ]
[email: ]

Q: WHERE CAN I FIND MORE INFORMATION ABOUT THE COMPANIES?

A: You can find more information about Conoco and Phillips from various sources described under "Where You Can Find More Information" on page [ ].

THE MERGER

The merger agreement is attached as Annex A to this document. We encourage you to read the merger agreement carefully and in its entirety. It is the principal document governing the merger.

WHAT YOU WILL RECEIVE IN THE MERGER

CONOCO STOCKHOLDERS (PAGE [ ]). In the merger, each share of Conoco common stock will be converted into the right to receive 0.4677 of a share of New Parent common stock.

PHILLIPS STOCKHOLDERS (PAGE [ ]). In the merger, each share of Phillips common stock will be converted into the right to receive one share of New Parent common stock.

RECOMMENDATIONS OF THE BOARDS OF DIRECTORS

CONOCO (PAGE [ ]). At its meeting on November 18, 2001, after due consideration, the Conoco Board of Directors unanimously:

- determined that the merger agreement and the transactions contemplated by the merger agreement are advisable, fair to and in the best interests of Conoco stockholders,

- approved the merger agreement, and

- recommended that Conoco stockholders vote for the adoption of the merger agreement.

PHILLIPS (PAGE [ ]). At its meeting on November 17, 2001, after due consideration, the Phillips Board of Directors unanimously:

- determined that the merger agreement and the transactions contemplated by the merger agreement are advisable, fair to and in the best interests of Phillips stockholders,

- approved the merger agreement, and

- recommended that Phillips stockholders vote for the adoption of the merger agreement.

TO REVIEW THE BACKGROUND AND REASONS FOR THE MERGER IN GREATER DETAIL, SEE PAGES
[ ] THROUGH [ ].

FAIRNESS OPINIONS OF FINANCIAL ADVISORS

CONOCO (PAGE [ ]). In deciding to approve the merger, the Conoco Board of Directors considered the oral opinion of Morgan Stanley & Co. Incorporated delivered on November 18, 2001, and subsequently confirmed in writing, and the written opinion of Salomon Smith Barney Inc. dated November 18, 2001, that, as of the date of each opinion and subject to and based on the considerations in each opinion, the exchange ratio of 0.4677 shares of New Parent common stock for each share of Conoco common stock in the merger is fair from a financial point of view to the holders of Conoco common stock. In its analysis of the fairness of the Conoco exchange ratio, each of Morgan Stanley and Salomon Smith Barney took into account, among other considerations set forth in its opinion, the exchange ratio of one share of New Parent common stock for each share of Phillips common stock in the merger. The written opinions of Morgan Stanley and Salomon Smith Barney are attached as Annexes D and E, respectively, to this document. WE ENCOURAGE CONOCO STOCKHOLDERS TO READ EACH OF THESE OPINIONS CAREFULLY AND IN ITS ENTIRETY.

PHILLIPS (PAGE [ ]). In deciding to approve the merger, the Phillips Board of Directors considered the oral opinions of Goldman, Sachs & Co., J.P. Morgan Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, each delivered on November 17, 2001 and each subsequently confirmed in writing on November 18, 2001, as to the fairness, from a financial point of view, as of the date of each opinion, to the holders of Phillips common stock of the exchange ratio of one share of New Parent common stock for each share of Phillips common stock relative to the exchange ratio of 0.4677 of a share of New Parent common stock for each share of Conoco common stock pursuant to the merger agreement. The written opinions of Goldman Sachs, JPMorgan and Merrill Lynch are attached as Annexes F, G and H,

respectively, to this document. WE ENCOURAGE PHILLIPS STOCKHOLDERS TO READ EACH
OF THESE OPINIONS CAREFULLY AND IN ITS ENTIRETY.

INTERESTS OF DIRECTORS AND MANAGEMENT IN THE MERGER

CONOCO (PAGE [ ]). Conoco stockholders should note that some Conoco directors and officers have interests in the merger that are different in certain respects from the interests of other Conoco stockholders. As provided in the merger agreement, upon the completion of the merger, eight Conoco designees (including Archie W. Dunham, Chairman and Chief Executive Officer of Conoco) and eight Phillips designees will become members of the New Parent Board of Directors. The merger agreement also provides that Mr. Dunham will become Chairman of New Parent. Conoco, New Parent and Mr. Dunham have entered into an employment agreement that will become effective upon completion of the merger.

PHILLIPS (PAGE [ ]). Phillips stockholders should note that some Phillips directors and officers have interests in the merger that are different in certain respects from the interests of other Phillips stockholders. As provided in the merger agreement, upon the completion of the merger, eight Phillips designees (including J. J. Mulva, Chairman and Chief Executive Officer of Phillips) and eight Conoco designees will become members of the New Parent Board of Directors. The merger agreement also provides that Mr. Mulva will become Chief Executive Officer and President of New Parent. Phillips, New Parent and Mr. Mulva have entered into an employment agreement that will become effective upon completion of the merger.

CONDITIONS TO THE COMPLETION OF THE MERGER (PAGE [ ])

Each of Conoco's and Phillips' obligation to complete the merger is subject to the satisfaction or waiver of a number of conditions, including the following:

- the merger agreement is adopted by the majority of the outstanding Conoco shares and the majority of the outstanding Phillips shares entitled to vote on the adoption of the merger agreement,

- no legal prohibition on consummation of the merger is in effect,

- the applicable waiting period under U.S. antitrust laws has expired or been terminated,

- approvals have been obtained from the relevant foreign antitrust entities,

- the shares of New Parent common stock have been approved for listing on the New York Stock Exchange,

- our respective representations and warranties in the merger agreement are true and correct, to the extent set forth in the merger agreement,

- we have complied with our respective covenants and agreements in the merger agreement, to the extent set forth in the merger agreement, and

- we each receive an opinion of tax counsel to the effect that for U.S. federal income tax purposes the merger of Corvette Merger Corp. with and into Conoco, in the case of the opinion received by Conoco, and the merger of Porsche Merger Corp. with and into Phillips, in the case of the opinion received by Phillips, will constitute a reorganization and/or the mergers, taken together, will constitute an exchange described in Section 351 of the Internal Revenue Code.

TERMINATION OF THE MERGER AGREEMENT (PAGE [ ])

Conoco and Phillips can jointly agree to terminate the merger agreement at any time. Either company may also terminate the merger agreement if:

- the merger is not completed on or before May 18, 2003, so long as the failure to complete the merger before that date is not the result of the failure by the terminating company to fulfill any of its obligations under the merger agreement,

- government actions do not permit the completion of the merger, so long as the terminating company has used its reasonable best efforts to obtain all necessary governmental approvals and lift any injunctions,

- either Conoco stockholders or Phillips stockholders fail to adopt the merger agreement at a duly held special meeting of those stockholders,

- the other company's board of directors fails to recommend that its stockholders adopt the merger agreement, or changes its recommendation, or fails to call its special meeting of stockholders,

- the other company breaches or fails to perform any of its representations, warranties, covenants or other agreements contained in the merger agreement and the breach or failure cannot be cured on or before May 18, 2003, or

- prior to the receipt of the approval of its stockholders, it terminates the merger agreement in connection with a superior proposal as provided in the merger agreement.

TERMINATION FEES (PAGE [ ])

Conoco and Phillips have each agreed to pay a termination fee of $550 million to the other company if the merger agreement is terminated in the circumstances described on pages [ ] through [ ].

"NO SOLICITATION" COVENANT (PAGE [ ])

The merger agreement contains detailed provisions prohibiting Conoco and Phillips from seeking an alternative transaction. The no solicitation covenant generally prohibits Conoco and Phillips, as well as their officers, directors, subsidiaries, employees, agents and representatives, from taking any action to solicit an acquisition proposal as described on page [ ]. The merger agreement does not, however, prohibit either Conoco or Phillips or its respective Board of Directors from considering, and potentially recommending, an unsolicited bona fide written superior proposal from a third party in the circumstances described on pages [ ] through [ ].

RISK FACTORS RELATING TO THE MERGER

In addition to the other information included or incorporated by reference in this document (including the matters addressed in "Cautionary Statement Concerning Forward-Looking Statements" on page [ ]), Conoco stockholders and Phillips stockholders should consider carefully the matters described below in determining whether to vote in favor of the adoption of the merger agreement.

THE VALUE OF THE SHARES OF NEW PARENT COMMON STOCK THAT YOU RECEIVE UPON THE COMPLETION OF THE MERGER MAY BE LESS THAN THE VALUE OF YOUR SHARES OF CONOCO

COMMON STOCK OR PHILLIPS COMMON STOCK AS OF THE DATE OF THE MERGER AGREEMENT OR ON THE DATES OF THE SPECIAL MEETINGS.

Upon completion of the merger, all shares of Conoco common stock and Phillips common stock will be converted into the right to receive shares of New Parent common stock. The ratios at which the shares will be converted are fixed, and there will be no adjustment for changes in the market price of either Conoco common stock or Phillips common stock. Neither company is permitted to walk away from the merger or resolicit the vote of its stockholders solely because of changes in the market price of either company's common stock.

There may be a significant amount of time between the dates when the Conoco stockholders and Phillips stockholders vote on the merger agreement at their special meetings and the date when the merger is completed. As a result, the relative or absolute prices of shares of Conoco common stock and Phillips common stock may vary significantly between the dates of the merger agreement, this document, the special meetings and the completion of the merger. These variations may be caused by, among other factors, changes in the businesses, operations, results and prospects of our companies, market expectations of the likelihood that the merger will be completed and the timing of its completion, the prospects for our post-merger operations, the effect of any conditions or restrictions imposed on or proposed with respect to the combined company by regulators, and general market and economic conditions.

In addition, it is impossible to predict accurately the market price of the New Parent common stock to be received by Conoco stockholders and Phillips stockholders after the completion of the merger. Accordingly, the prices of Conoco common stock and Phillips common stock on the dates of the special meetings may not be indicative of their prices immediately prior to the completion of the merger or the price of New Parent common stock after the merger is completed.

THE INTEGRATION OF CONOCO AND PHILLIPS FOLLOWING THE MERGER WILL PRESENT SIGNIFICANT CHALLENGES THAT MAY RESULT IN THE COMBINED COMPANY NOT OPERATING AS EFFECTIVELY AS EXPECTED OR IN A FAILURE TO ACHIEVE THE ANTICIPATED POTENTIAL

BENEFITS OF THE MERGER.

Conoco and Phillips will face significant challenges in consolidating functions, integrating their organizations, procedures and operations in a timely and efficient manner and retaining key Conoco and Phillips personnel. The integration of Conoco and Phillips will be complex and time-consuming, and the managements of Conoco and Phillips will have to dedicate substantial effort to it. These efforts could divert management's focus and resources from other strategic opportunities and from operational matters during the integration process.

THE MERGER IS SUBJECT TO THE RECEIPT OF CONSENTS AND APPROVALS FROM GOVERNMENT ENTITIES THAT COULD DELAY COMPLETION OF THE MERGER OR IMPOSE CONDITIONS THAT COULD HAVE A MATERIAL ADVERSE EFFECT ON THE COMBINED COMPANY OR CAUSE

ABANDONMENT OF THE MERGER.

Completion of the merger is conditioned upon the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which we refer to as the HSR Act, and the receipt of consents, orders, approvals or clearances, as required, under the antitrust laws of the European Commission, Canada and those other regulatory authorities where the failure to obtain those approvals would have a material adverse effect on New Parent after completion of the merger. A substantial delay in obtaining satisfactory approvals or the imposition of unfavorable terms

or conditions in the approvals could have an adverse effect on the business, financial condition or results of operations of Conoco or Phillips, or may cause the abandonment of the merger.

ESTIMATES OF COST SAVINGS AND COST SAVING COMPONENTS ARE INHERENTLY UNCERTAIN, AND THERE CAN BE NO ASSURANCE AS TO THE ACCURACY OF THESE ESTIMATES.

The cost savings estimates are based on a number of assumptions, including that the combined company will be able to implement necessary cost saving programs such as headcount reductions, consolidation of geographically proximate facilities and elimination of duplicative administrative programs within a defined period. In addition, the cost savings estimates assume that the combined company will be able to realize merger efficiencies such as procurement economies resulting from the increased size of the combined company.

STOCKHOLDERS VOTE FOR THE ADOPTION OF THE MERGER AGREEMENT.

CONOCO RECORD DATE; SHARES ENTITLED TO VOTE; QUORUM

Only holders of record of Conoco common stock at the close of business on
[ ], the Conoco record date, are entitled to notice of and to vote at the Conoco special meeting. On the Conoco record date approximately [ ] shares of Conoco common stock were issued and outstanding and held by approximately [ ] holders of record. A quorum will be present at the Conoco special meeting if the holders of a majority of the shares of Conoco common stock outstanding and entitled to vote on the Conoco record date are present, in person or by proxy. If a quorum is not present at the Conoco special meeting, we expect that the Conoco special meeting will be adjourned to solicit additional proxies. Holders of record of Conoco common stock on the Conoco record date are entitled to one vote per share at the Conoco special meeting on the proposal to adopt the merger agreement.

VOTE REQUIRED

The adoption of the merger agreement by Conoco stockholders requires the affirmative vote of the holders of a majority of the shares outstanding and entitled to vote at the Conoco special meeting as of the Conoco record date, either in person or by proxy, voting as a single class.

VOTING BY CONOCO DIRECTORS AND EXECUTIVE OFFICERS

At the close of business on the Conoco record date, Conoco directors and executive officers owned and were entitled to vote less than [ ]% of the Conoco common stock outstanding on that date. Each Conoco director and executive officer has indicated his or her present intention to vote, or cause to be voted, the Conoco common stock owned by him or her for the adoption of the merger agreement.

VOTING OF PROXIES

All shares represented by properly executed proxies received in time for the Conoco special meeting will be voted at the Conoco special meeting in the manner specified by the stockholders giving those proxies. Properly executed proxies that do not contain voting instructions will be voted for the adoption of the merger agreement.

In addition to manually executing and returning a proxy by mail, Conoco stockholders may submit a proxy by telephone or over the Internet. If submitting a proxy by telephone or over the Internet, the stockholder should dial the toll-free number or access the Internet address, in each case, as indicated on

the stockholder's proxy card. The stockholder will then be prompted to enter the control number printed on his or her proxy card and to follow the subsequent instructions.

Conoco common stock represented at the Conoco special meeting but not voting, including Conoco common stock for which proxies have been received but for which holders of shares have abstained, will be treated as present at the Conoco special meeting for purposes of determining the presence or absence of a quorum for the transaction of all business.

Only shares affirmatively voted for the adoption of the merger agreement, including properly executed proxies that do not contain voting instructions, will be counted as favorable votes for the proposal. AN ABSTENTION OR FAILURE TO VOTE WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE ADOPTION OF THE MERGER AGREEMENT. Also, under New York Stock Exchange rules, brokers that hold shares of Conoco common stock in street name for customers that are the beneficial owners of those shares may not give a proxy to vote those shares without specific instructions from those customers. If a Conoco stockholder owns shares through a broker and attends the Conoco special meeting, the stockholder should bring a letter from that stockholder's broker identifying that stockholder as the beneficial owner of the shares and authorizing the stockholder to vote.

The persons named as proxies by a Conoco stockholder may vote for one or more adjournments of the Conoco special meeting, including adjournments to permit further solicitations of proxies. No proxy voted against the proposal to adopt the merger agreement will be voted in favor of any adjournment.

Conoco does not expect that any matter other than the proposal to adopt the merger agreement will be brought before the Conoco special meeting. If, however, other matters are properly presented at the Conoco special meeting, the persons named as proxies will vote in accordance with the recommendation of the Conoco Board of Directors.

REVOCABILITY OF PROXIES

Submitting a proxy on the enclosed form, by telephone or over the Internet does not preclude a Conoco stockholder from voting in person at the Conoco special meeting. A Conoco stockholder may revoke a proxy at any time before it is voted by filing with Conoco a duly executed revocation of proxy, by submitting a duly executed proxy or telephone or Internet proxy to Conoco with a later date or by appearing at the Conoco special meeting and voting in person. Conoco stockholders may revoke a proxy by any of these methods, regardless of the method used to deliver a stockholder's previous proxy. Attendance at the Conoco special meeting without voting will not itself revoke a proxy.

SOLICITATION OF PROXIES

Conoco and Phillips will share equally the expenses incurred in connection with the printing and mailing of this joint proxy statement/prospectus. In addition to solicitation by mail, the directors, officers and employees of Conoco and its subsidiaries, who will not be specially compensated, may solicit proxies from Conoco stockholders by telephone or other electronic means or in person. Arrangements will also be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation materials to the beneficial owners of shares held of record by these persons, and Conoco will reimburse them for their reasonable out-of-pocket expenses.

Conoco will mail a copy of this joint proxy statement/prospectus to each holder of record of Conoco common stock on the Conoco record date.

You should not send in any Conoco share certificates with your proxy card. A letter of transmittal with instructions for the surrender of your Conoco share certificates will be mailed to you as soon as practicable after completion of the merger.

Conoco has retained Innisfree M&A Incorporated to assist in the solicitation of proxies from banks, brokerage firms, nominees, institutional holders and individual investors for a fee of $50,000 plus reimbursement for expenses.

PROXIES FOR PARTICIPANTS IN CONOCO PLANS

If you are a participant or eligible beneficiary in the Thrift Plan for Employees of Conoco or the Thrift Plan for Retail Employees of Conoco, you will receive combined voting instructions for those holdings in addition to the voting instructions you will receive for your individual holdings. If you are a record holder of Conoco common stock or a participant in any eligible stock plans for employees outside the United States, you will receive a separate proxy card for each of these holdings. Please complete, sign and mail all proxy cards you receive, or submit a proxy for all of your holdings by telephone or over the Internet, to ensure that all of your shares are represented at the Conoco special meeting. An independent fiduciary for the thrift plans will direct the voting, in its discretion, of all shares held in the thrift plans for which no voting instructions are received by [ ], 2002.

THE PHILLIPS SPECIAL MEETING

We are furnishing this joint proxy statement/prospectus to Phillips stockholders as part of the solicitation of proxies by the Phillips Board of Directors for use at the Phillips special meeting.

DATE, TIME AND PLACE

Phillips will hold its special meeting on [Day], [Date], 2002, at [Time], local time, at the Adams Building, 4th Street and Keeler Avenue, Bartlesville, Oklahoma.

PURPOSE OF PHILLIPS SPECIAL MEETING

At the Phillips special meeting, we are asking holders of record of Phillips common stock to consider and vote on a proposal to adopt the merger agreement by and among Conoco, Phillips, New Parent, Corvette Merger Corp. and Porsche Merger Corp. See "The Merger" and "The Merger Agreement."

The Phillips Board of Directors has unanimously determined that the merger agreement and the transactions contemplated by the merger agreement are advisable, fair to, and in the best interests of Phillips stockholders and has approved the merger agreement.

THE PHILLIPS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT PHILLIPS

STOCKHOLDERS VOTE FOR THE ADOPTION OF THE MERGER AGREEMENT.

PHILLIPS RECORD DATE; SHARES ENTITLED TO VOTE; QUORUM

Only holders of record of Phillips common stock at the close of business on
[ ], the Phillips record date, are entitled to notice of and to vote at the Phillips special meeting. On the Phillips record date, approximately [ ] shares of Phillips common stock were issued and outstanding and held by approximately
[ ] holders of record. A quorum will be present at the Phillips special meeting if holders of a majority of the shares of Phillips common stock outstanding and entitled to vote on the Phillips record date are present, in person or by proxy. If a quorum is not present at the Phillips special meeting, we expect that the Phillips special meeting will be adjourned to solicit additional proxies. Holders of record of Phillips common stock on the Phillips record date are entitled to one vote per share at the Phillips special meeting on the proposal to adopt the merger agreement.

VOTE REQUIRED

The adoption of the merger agreement by Phillips stockholders requires the affirmative vote of the holders of a majority of the shares outstanding and entitled to vote at the Phillips special meeting as of the Phillips record date, either in person or by proxy, voting as a single class.

VOTING BY PHILLIPS DIRECTORS AND EXECUTIVE OFFICERS

At the close of business on the Phillips record date, Phillips directors and executive officers owned and were entitled to vote less than [ ]% of the Phillips common stock outstanding on that date. Each Phillips director and executive officer has indicated his or her present intention to vote, or cause to be voted, the Phillips common stock owned by him or her for the adoption of the merger agreement.

VOTING OF PROXIES

All shares represented by properly executed proxies received in time for the Phillips special meeting will be voted at the Phillips special meeting in the manner specified by the stockholders giving those proxies. Properly executed proxies that do not contain voting instructions will be voted for the adoption of the merger agreement.

In addition to manually executing and returning a proxy by mail, Phillips stockholders may submit a proxy vote by telephone [or over the Internet]. If submitting a proxy by telephone [or over the Internet], the stockholder should dial the toll-free number [or access the Internet address, in each case] as indicated

on the stockholder's proxy card. The stockholder will then be prompted to enter the control number printed on his or her proxy card and to follow the subsequent instructions.

Phillips common stock represented at the Phillips special meeting but not voting, including Phillips common stock for which proxies have been received but for which holders of shares have abstained, will be treated as present at the Phillips special meeting for purposes of determining the presence or absence of a quorum for the transaction of all business.

Only shares affirmatively voted for the adoption of the merger agreement, including properly executed proxies that do not contain voting instructions, will be counted as favorable votes for the proposals. AN ABSTENTION OR FAILURE TO VOTE WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE ADOPTION OF THE MERGER AGREEMENT. Also, under New York Stock Exchange rules, brokers that hold Phillips common stock in street name for customers that are the beneficial owners of those shares may not give a proxy to vote those shares without specific instructions from those customers. If a Phillips stockholder owns shares through a broker and attends the Phillips special meeting, the stockholder should bring a letter from that stockholder's broker identifying that stockholder as the beneficial owner of the shares and authorizing the stockholder to vote.

The persons named as proxies by a Phillips stockholder may vote for one or more adjournments of the Phillips special meeting, including adjournments to permit further solicitations of proxies. No proxy voted against the proposal to adopt the merger agreement will be voted in favor of any adjournment.

Phillips does not expect that any matter other than the proposal to adopt the merger agreement will be brought before the Phillips special meeting. If, however, other matters are properly presented at the Phillips special meeting, the persons named as proxies will vote in accordance with the recommendation of the Phillips Board of Directors.

REVOCABILITY OF PROXIES

Submitting a proxy on the enclosed form, by telephone [or over the Internet] does not preclude a Phillips stockholder from voting in person at the Phillips special meeting. A Phillips stockholder may revoke a proxy at any time before it is voted by filing with Phillips a duly executed revocation of proxy, by submitting a duly executed proxy or telephone [or Internet] proxy to Phillips with a later date or by appearing at the Phillips special meeting and voting in person. Phillips stockholders may revoke a proxy by any of these methods, regardless of the method used to deliver a stockholder's previous proxy. Attendance at the Phillips special meeting without voting will not itself revoke a proxy.

SOLICITATION OF PROXIES

Conoco and Phillips will share equally the expenses incurred in connection with the printing and mailing of this joint proxy statement/prospectus. In addition to solicitation by mail, the directors, officers and employees of Phillips and its subsidiaries, who will not be specially compensated, may solicit proxies from Phillips stockholders by telephone or other electronic means or in person. Arrangements will also be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation materials to the beneficial owners of shares held of record by these persons, and Phillips will reimburse them for their reasonable out-of-pocket expenses.

Phillips will mail a copy of this joint proxy statement/prospectus to each holder of record of Phillips common stock on the Phillips record date.

You should not send in any Phillips share certificates with your proxy card. Phillips share certificates immediately prior to the completion of merger will be deemed to represent New Parent common stock following the merger. Phillips stockholders, however, may elect to exchange their Phillips share certificates for New Parent share certificates, at their option.

Phillips has retained Georgeson Shareholder Communications, Inc. to assist in the solicitation of proxies from banks, brokerage firms, nominees, institutional holders and individual investors for a fee of $40,000 plus reimbursement for expenses.

PROXIES FOR PARTICIPANTS IN PHILLIPS SAVINGS PLANS

If you are a participant or eligible beneficiary in a Phillips savings plan, you will receive a voting instruction card from the trustee of that Phillips savings plan with respect to shares attributable to your account. Shares of Phillips common stock held by the trustees of the Phillips savings plans will be voted by the respective trustees in accordance with instructions from participants and eligible beneficiaries. Shares held in Phillips' domestic savings plans other than the Retirement Savings Plan, or RSP, for which no instructions are received, including unallocated shares in the Long-Term Stock Savings Plan, will be voted by the respective trustees in the same manner and proportion as instructed by eligible employee participants. Shares held in Phillips' international savings plans for which no instructions are received will be voted by the respective trustees in the same manner and proportion as the shares for which instructions are received. Shares held in the RSP for which no instructions are received are voted by the trustee in its discretion.

Trustees of the Phillips international savings plans, other than the Irish plan, will receive a voting instruction card to instruct the trustee of the Phillips Compensation and Benefits Trust, which we refer to as the "CBT", to vote the shares of Phillips common stock held by the CBT for which the international savings plan trustees are authorized to give voting instructions in the same manner and proportion as shares held in the plan for which Phillips international savings plan trustees receive instructions from plan participants. If you are a regular employee eligible to give voting instructions under the CBT, you will receive a voting instruction card from the trustee of the CBT. Shares of Phillips common stock held by the CBT, other than those for which the trustees of the international savings plans are authorized to give instructions, will be voted by the CBT trustee in accordance with instructions from Phillips employees in the same manner and proportion as instructed by eligible employee participants. Voting instructions to the trustees of the Phillips international savings plans and the CBT may be either in writing or by means of the respective plan's or trust's telephone [or Internet] voting procedures.

ATTENDING THE SPECIAL MEETING

If you are a holder of record and plan to attend the Phillips special meeting, please indicate this when you vote. The lower portion of the proxy card will be your admission ticket. IF YOU ARE A BENEFICIAL OWNER OF PHILLIPS COMMON STOCK HELD BY A BROKER, BANK, OR OTHER NOMINEE, YOU WILL NEED PROOF OF OWNERSHIP TO BE ADMITTED TO THE PHILLIPS SPECIAL MEETING. A recent brokerage or benefit plan statement or a letter from a bank or broker are examples of proof of ownership. If you want to vote your Phillips common stock held in nominee name in person, you must get a written proxy in your name from the broker, bank, or other nominee that holds your shares. If you are an employee, your employee I.D. badge will serve as your admission ticket.

THE MERGER

The discussion in this joint proxy statement/prospectus of the merger and the principal terms of the merger agreement dated as of November 18, 2001, by and among Conoco, Phillips, New Parent, Corvette Merger Corp. and Porsche Merger Corp., is subject to, and is qualified in its entirety by reference to, the merger agreement, a copy of which is attached as Annex A to this joint proxy statement/prospectus and is incorporated in this joint proxy statement/prospectus by reference.

GENERAL DESCRIPTION OF THE MERGER

Pursuant to the merger agreement, Porsche Merger Corp. will merge with and into Phillips and Corvette Merger Corp. will merge with and into Conoco, with each of Phillips and Conoco surviving as wholly owned subsidiaries of New Parent. In the merger, each outstanding share of Conoco common stock, par value $0.01 per share, will be converted into the right to receive 0.4677 of a share of New Parent common stock, par value $0.01 per share, and each outstanding share of Phillips common stock, par value $1.25 per share, will be converted into the right to receive one share of New Parent common stock. As a result,

- Conoco and Phillips will become wholly owned subsidiaries of New Parent, and

- former Conoco stockholders will hold approximately 43.4%, and former Phillips stockholders will hold approximately 56.6%, of the outstanding shares of New Parent common stock.

BACKGROUND TO THE MERGER

The oil and gas industry has experienced significant consolidation in recent years. Beginning with the merger of British Petroleum and Amoco Corp. in 1998, the consolidation continued with the merger of Exxon Corp. and Mobil Oil Corp. in 1999, the merger of Total Fina S.A. with Elf Aquitaine in 2000, the acquisition of Atlantic Richfield Co. by BP Amoco p.l.c. in 2000, the merger of Chevron Corporation and Texaco Inc. in 2001 and many smaller transactions.

In June 2000, Archie W. Dunham, Chairman of the Board, President and Chief Executive Officer of Conoco, contacted J.J. Mulva, Chairman of the Board and Chief Executive Officer of Phillips, regarding a possible merger of equals of the two companies. Several meetings and discussions ensued during the summer of 2000. In October 2000, Mr. Dunham proposed terms with respect to valuation, board size and composition, headquarters' location, company name and transaction structure. Mr. Dunham also proposed that he would serve as Chairman of the Board, and that Mr. Mulva would serve as President and Chief Executive Officer, of the combined company and that the two of them would be jointly responsible for the selection, responsibilities, compensation and removal of the executive officers, management structure, long-range plans, major acquisitions and divestitures and major capital structure changes. However, Conoco and Phillips could not reach agreement on key terms and discussions were terminated in late October.

Following the termination of talks between Conoco and Phillips, each of Conoco and Phillips pursued alternative strategies to grow and increase shareholder value. Conoco acquired Gulf Canada Resources Limited in July 2001, and Phillips integrated Atlantic Richfield Co.'s Alaska production assets that Phillips had acquired in April 2000 and acquired Tosco Corporation in September 2001.

Following its acquisition of Tosco, Phillips again examined a number of potential strategic business opportunities in the upstream sector. Based on management analyses, the Phillips Board of Directors concluded that a business combination with Conoco presented the best strategic opportunity for Phillips and its stockholders.

On September 10, 2001, at its regular meeting, the Phillips Board of Directors authorized Mr. Mulva to contact Mr. Dunham to initiate a discussion about a possible business combination between Phillips and Conoco.

Later in the week of September 10, 2001, Mr. Mulva's office contacted Mr. Dunham's office and a meeting between Messrs. Dunham and Mulva was scheduled for September 28, 2001.

On September 28, Mr. Dunham and Mr. Mulva met in Oklahoma City. At that meeting Mr. Mulva outlined his proposal for a business combination. Mr. Mulva also proposed that the selection of other executive officers for the combined company be from the existing executives of Conoco and Phillips on the basis of merit and that the name of the combined company be determined later. Mr. Dunham and Mr. Mulva also discussed possible headquarters and other significant locations for the combined company.

On October 8, 2001, at the regular meeting of the Phillips Board of Directors, Mr. Mulva reported on his meeting with Mr. Dunham. The Phillips Board of Directors authorized Mr. Mulva to continue to negotiate the terms of a possible merger of equals with Mr. Dunham. Throughout the period from October 3 through November 17, Mr. Mulva had regular telephone conversations with the members of the Phillips Board of Directors, advising them of the status of the merger discussions.

On October 8, 2001, Mr. Dunham met with the Conoco Executive Committee and discussed the possibility of a combination with Phillips on terms comparable to those proposed by Mr. Dunham in October of 2000. The Executive Committee was supportive of continued discussions.

On October 11, 2001, Mr. Dunham and Mr. Mulva had a follow-up conversation by telephone in which they further discussed the proposals made by Mr. Mulva at their meeting on September 28, 2001, and agreed to meet in Houston on October 16, 2001.

On October 16, 2001, Mr. Dunham and Mr. Mulva met in Houston to discuss each company's vision, strategies, long-range objectives, values and culture. At the conclusion of that meeting, Messrs. Dunham and Mulva agreed that the general counsels of each company should meet to discuss certain matters relating to Phillips' recent acquisition of Tosco about which Mr. Dunham and his management team wished to be better informed before proceeding further with the merger discussions.

On October 19, 2001, Rick A. Harrington, Senior Vice President and General Counsel of Conoco, and J. Bryan Whitworth, Executive Vice President, General Counsel and Chief Administrative Officer of Phillips met in New York. At that meeting Messrs. Harrington and Whitworth, assisted by other members of the management of each company, discussed Phillips' recent acquisition of Tosco. In addition, Messrs. Harrington and Whitworth, together with Conoco's and Phillips' respective legal advisors, also discussed Conoco's recent acquisition of Gulf Canada and various structuring and timetable issues with respect to a potential transaction.

On October 24, 2001, Mr. Dunham and Mr. Mulva spoke again by telephone and determined that they were satisfied with the reports received on the meeting between their general counsels. Mr. Dunham informed Mr. Mulva that he would discuss the proposed combination of Conoco and Phillips at the upcoming meeting of the Conoco Board of Directors on October 30 and agreed to meet again with Mr. Mulva on November 1, 2001, if the Conoco Board of Directors was favorably disposed toward proceeding to negotiate a transaction.

During the meeting of the Conoco Board of Directors on October 30, 2001, Mr. Dunham reported on his discussions with Mr. Mulva regarding the merger. The Conoco Board of Directors authorized Conoco's management to continue to negotiate the terms of a possible merger of equals with Phillips.

On November 1, 2001, Mr. Dunham and Mr. Mulva met again in Houston. At that meeting Mr. Dunham made a proposal for valuing the two companies and proposed naming the combined company "ConocoPhillips." Mr. Dunham agreed that he would delay his retirement in order to serve as Chairman, and that Mr. Mulva would serve as President and Chief Executive Officer, of the combined company. Messrs. Dunham and Mulva further discussed the appropriate division of their roles and responsibilities as Chairman and President and Chief Executive Officer, respectively, of the combined company.

On November 2, 2001, at the instruction of Mr. Whitworth, Phillips' legal advisors sent a draft of a merger agreement to Conoco's legal advisors. Conoco and Phillips and their respective legal advisors began negotiating the merger agreement and other documents related to the proposed transaction on November 5, 2001 and negotiations continued through November 17, 2001.

On November 4, 2001, Mr. Dunham and Mr. Mulva again spoke by telephone. They agreed that the valuation of the two companies should be based on the average trading price of each company's common stock for the 20 trading days prior to signing the merger agreement. They also further discussed the governance arrangements for the combined company and agreed that Messrs. Harrington and Whitworth should propose language on this subject to be incorporated in the by-laws of the combined company and in the employment agreements to be entered into in connection with the proposed transaction. Mr. Dunham and Mr. Mulva agreed that the headquarters of the combined company would be in Houston but that the company would maintain a significant and continuing presence in Oklahoma. They also discussed procedural matters, including a timetable for the proposed transaction.

On November 6, 2001, Conoco and Phillips entered into a mutual confidentiality agreement governing the exchange of confidential information during each company's due diligence review of the other.

Beginning November 7, 2001, a team of Conoco managers led by Philip L. Frederickson, Conoco's Senior Vice President for Corporate Strategy and Business Development, and a team of Phillips' managers led by John E. Lowe, Phillips' Senior Vice President, Planning and Strategic Transactions, and John A. Carrig, Phillips' Senior Vice President and Chief Financial Officer, met in New York to discuss financial and accounting issues and potential synergies arising from combining the two companies.

On November 9, 2001, Conoco retained Morgan Stanley & Co. Incorporated and Phillips retained Goldman, Sachs & Co., as their respective financial advisors. On November 14, 2001, Conoco also retained Salomon Smith Barney Inc. and Credit Suisse First Boston Corporation as its financial advisors and Phillips also retained J.P. Morgan Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated as its financial advisors.

On November 11 and 12, 2001, teams of Conoco and Phillips management held a series of meetings in New York to discuss the operations of the various business units of their respective companies and to exchange due diligence materials covering the major business units of each company. Management representatives from each company's human resources, legal, finance and accounting, and health, safety and environmental organizations also met to exchange due diligence materials. Following these meetings, the companies continued to discuss financial and accounting issues and to perform further due diligence on each other.

On November 11 and 12, 2001, Mr. Mulva and Mr. Dunham again spoke by telephone. In these conversations, each expressed satisfaction with the progress of the meetings between their respective management teams and each agreed that they would present the final terms of the transaction for consideration by their respective boards at special meetings to be scheduled for the coming weekend.

On November 13, 2001, as contemplated by the Tax Sharing Agreement, dated as of October 27, 1998, by and among E. I. Du Pont de Nemours and Company and Conoco, entered into at the time of Du Pont's divestiture of Conoco, Conoco delivered to Du Pont tax opinions of its and Phillips' legal advisors regarding the effect of the proposed business combination between Conoco and Phillips on the tax treatment of the split-off by Du Pont of its investment in Conoco in August 1999 under Section 355 of the Code. On November 16, 2001, Du Pont advised Conoco that the foregoing opinions were acceptable to it. As a result of Du Pont's acceptance of the tax opinions, Conoco complied with the conditions precedent in the Tax Sharing Agreement to its entry into the merger agreement with Phillips.

On November 16, 2001 the Conoco Board of Directors held a special meeting in Houston at which Conoco's senior management and its financial and legal advisors were present. Senior management made presentations on the background and strategic rationale for the proposed combination with Phillips. Morgan Stanley made a presentation on the financial aspects of the transaction, and Conoco's legal advisors reviewed the terms of the proposed merger agreement and the proposed governance of the combined company and discussed various legal and regulatory issues relating to the proposed combination. Members of the Conoco compensation committee shared the highlights of their discussions regarding, and stated their support for, the new employment agreement and compensation arrangements that Conoco and New Parent would enter into with Mr. Dunham. Following further discussion, the Conoco Board of

Directors agreed to meet again on November 18 for further deliberation by the directors, pending the outcome of the special meeting of the Phillips Board of Directors scheduled for November 17, 2001.

On November 17, 2001, the Phillips Board of Directors held a special meeting in New York at which Phillips' senior management and its financial and legal advisors were present. Senior management made presentations on the background and strategic rationale for the proposed combination with Conoco. On behalf of all three financial advisors, Goldman Sachs made a presentation on the financial aspects of the transaction. Each of the three financial advisors delivered its oral opinion, subsequently confirmed in writing on November 18, 2001, that the exchange ratio of one share of New Parent common stock for each share of Phillips common stock relative to the exchange ratio of 0.4677 of a share of New Parent common stock for each share of Conoco common stock, was fair from a financial point of view to the holders of Phillips common stock. Phillips' legal advisor reviewed with the Phillips Board of Directors the terms of the proposed merger agreement and the fiduciary duties of the Phillips Board of Directors. The Phillips Board of Directors also discussed the employment agreement and compensation arrangements that Conoco and New Parent would enter into with Mr. Dunham and discussed and approved the employment agreement and other compensation arrangements that Phillips and New Parent would enter into with Mr. Mulva. Following further discussion, the Phillips Board of Directors unanimously determined that the terms of the merger agreement and the transactions contemplated by that agreement are advisable, fair to and in the best interests of Phillips and its stockholders, unanimously approved the merger agreement and the transactions contemplated by that agreement and unanimously recommended that the merger agreement be adopted by the holders of Phillips common stock.

On the evening of November 17, 2001, Phillips and Conoco and their respective legal advisors finalized the merger agreement and related documents.

On November 18, a special meeting of the Conoco Board of Directors was held. At that meeting, Morgan Stanley and Conoco's legal advisors updated the Conoco Board of Directors on developments regarding the exchange ratio, the terms of the merger agreement and other matters. In addition, Morgan Stanley delivered its oral opinion, subsequently confirmed in writing, and Salomon Smith Barney delivered its written opinion that the exchange ratio of 0.4677 shares of New Parent common stock for each share of Conoco common stock was fair from a financial point of view to the holders of Conoco common stock. The Conoco Board of Directors also discussed the employment agreement and compensation arrangements that Conoco and New Parent would enter into with Mr. Dunham. Following further discussion, the Conoco Board of Directors unanimously determined that the terms of the merger agreement and the transactions contemplated by that agreement are advisable, fair to and in the best interests of Conoco and its stockholders, approved the merger agreement and the transactions contemplated by that agreement and recommended that the merger agreement be adopted by the holders of Conoco common stock and unanimously approved the terms of the employment agreement and compensation arrangements that Conoco and New Parent would enter into with Mr. Dunham.

On November 18, 2001, the definitive agreements providing for the merger were executed. That afternoon Conoco and Phillips issued a joint press release announcing the transaction.

REASONS FOR THE MERGER

The Conoco Board of Directors and the Phillips Board of Directors believe that the complementary strategies of Conoco and Phillips, in combination with their management, personnel, technical expertise and financial strength, will create a company with capabilities and resources better positioned to succeed and grow in the new competitive energy marketplace.

We believe the merger joins two well-managed companies, providing substantial strategic and financial benefits to Conoco stockholders and Phillips stockholders. The benefits are expected to include:

- Expanded Scope and Scale to Succeed as a Major Integrated Oil Company in the Changing Marketplace. We believe that the combined company should create significant additional value for our stockholders and accelerate our growth from a strong financial and operational position.

In the upstream segment, the combined company's global scale and presence will allow for increased efficiency in core areas and delivery of legacy growth projects. The combined company will have pro forma hydrocarbon reserves at December 31, 2000 of 8.7 billion barrels of oil equivalent, or BOE, and daily production of 1.7 million BOE, based on Conoco's and Phillips' estimates for 2001 year-end production. The combined company will have numerous assets capable of long-term production, including those in Alaska, Canada, the Lower 48, the North Sea, Venezuela, Indonesia, Vietnam, China, the Timor Sea, the Middle East, Russia and the Caspian area.

In the refining and marketing segment, the combined company will operate or have equity interests in 19 refineries in the United States, the United Kingdom, Ireland, Germany, the Czech Republic and Malaysia, with a refining capacity of 2.6 million barrels a day. It will also have a strong marketing presence in the United States.

In addition to maintaining Conoco's midstream natural gas business in the United States, Canada and Trinidad, the combined company will continue Phillips' equity participation in the natural gas gathering and processing joint venture, Duke Energy Field Services. The combined company will also continue Phillips' equity participation in the chemicals and plastics joint venture, Chevron Phillips Chemical Company.

- Strategic Fit and Compatibility. We believe that the combination creates an extraordinary set of complementary capabilities, drawing on the talented management and core competencies of both Conoco and Phillips. Conoco and Phillips bring together a long history of technological innovation and leadership. The merger creates the opportunity to further apply our capabilities across a much broader asset base. As a result of the merger, the combined company will have numerous legacy asset positions in upstream areas, including those in Alaska, Canada, the lower 48 states, the North Sea, Venezuela, China, the Timor Sea, Indonesia, Vietnam, the Middle East, Russia and the Caspian area, and will become a global player in refining and marketing with operations in North America, Europe and Southeast Asia. We also will have a much broader platform for future growth in the Middle East, the Caspian Sea, West Africa and Russia. In addition, the combined company will inherit Conoco's and Phillips' shared core values and our commitment to safety, environmental responsibility, maintenance of the highest ethical standards and valuing our employees.

- Strong Financial Position. We believe that the combined company will have strong and stable earnings and cash flow as a result of its outstanding portfolio diversification and a larger relative presence in more politically stable regions of the world. The diversified portfolio base also will allow the combined company to optimize and high grade our portfolio assets to enhance the future returns from our capital investments. In addition, the combined company will have a strong balance sheet, with an expected debt-to-capitalization ratio of approximately 35 percent.

- Cost Savings. We expect the combined company to achieve annual cost savings of at least $750 million within the first full year after the completion of the merger. These savings are expected to result from more efficient exploration, production and downstream activities, and the elimination of duplicate corporate and administrative positions, programs and operating offices. A transition team led by Philip L. Frederickson, Conoco's Senior Vice President, Corporate Strategy and Business Development, and John E. Lowe, Phillips' Senior Vice President, Corporate Strategy and Development, is already at work to ensure that integration and synergy realization occurs quickly and smoothly.

RECOMMENDATION OF THE CONOCO BOARD OF DIRECTORS

At its meeting on November 18, 2001, after due consideration, the Conoco Board of Directors unanimously:

- determined that it was advisable for Conoco to enter into the merger agreement and that the merger agreement and the transactions contemplated by the merger agreement are advisable, fair to and in the best interests of Conoco stockholders;

- approved the merger agreement; and

- recommended that Conoco stockholders vote for the adoption of the merger agreement.

In approving the merger agreement and making these determinations and recommendations, the Conoco Board of Directors consulted with Conoco management as well as its outside legal counsel and financial advisors, and considered a number of factors.

The Conoco Board of Directors considered the following positive factors relating to the merger:

- the benefits of the merger described above;

- the expectation that the merger would be immediately accretive to Conoco stockholders based on consensus security analyst earnings estimates and the achievement of anticipated synergies;

- the expectation that the merger would be a tax-free transaction for U.S. federal income tax purposes and the conversion of the Conoco common stock would be tax free to Conoco stockholders;

- anticipated synergies from the transaction of $750 million per year resulting in cost savings and other benefits over time;

- the effect of the merger on the capital structure and financial ratios of Conoco;

- the terms and conditions of the merger agreement, one of which provides the Conoco Board of Directors the right to terminate the merger agreement prior to its approval by Conoco stockholders in the exercise of its fiduciary duty in connection with a superior proposal, subject to the termination fees payable by Conoco in that event;

- the proposed composition of the New Parent Board of Directors, that Archie W. Dunham, Chairman and Chief Executive Officer of Conoco, would be the Chairman of the New Parent Board of Directors and that J. J. Mulva, Chairman and Chief Executive Officer of Phillips, would be President and Chief Executive Officer of New Parent;

- the provisions included in the New Parent organizational documents that ensure that the chairman and chief executive officer positions cannot be changed for a certain period of time without a supermajority vote of the New Parent Board of Directors, and that the "ConocoPhillips" name cannot be changed without a supermajority vote of New Parent stockholders and the unanimous approval of the New Parent Board of Directors;

- the analysis and presentation of Morgan Stanley, and the opinion of Morgan Stanley delivered orally on November 18, 2001, and subsequently confirmed in writing, and the written opinion of Salomon Smith Barney dated November 18, 2001, to the effect that, as of the date of each opinion, and subject to and based on the considerations set forth in each opinion, the exchange ratio applicable to Conoco stockholders in the merger is fair from a financial point of view to the holders of Conoco common stock (the written opinions of Morgan Stanley and Salomon Smith Barney are attached as Annexes D and E, respectively, to this joint proxy statement/prospectus); and

- the potential benefits to Conoco's employees from the expanded opportunities available as part of a larger organization.

The Conoco Board of Directors considered the following negative factors relating to the merger:

- the problems inherent in merging the operations of two large companies, including the possibility that management may be distracted from regular business concerns by the need to integrate operations, unforeseen difficulties in integrating operations and systems, problems assimilating and retaining employees, and potential adverse short-term effects on operating results of the combined company; and

- the timing of receipt and the terms of approvals from appropriate government entities, including the possibility of delay in obtaining satisfactory approvals or the imposition of unfavorable terms or conditions in the approvals.

The Conoco Board of Directors also considered the following factors relating to the merger:

- the fact that the headquarters of New Parent will be in Houston, Texas, and that New Parent would have a significant and continuing presence in Oklahoma;

- the review and analysis of each of Conoco's and Phillips' business, financial condition, earnings, risks and prospects;

- the historical market prices and trading information with respect to the shares of Conoco common stock and Phillips common stock;

- the comparisons of historical financial measures for Conoco and Phillips, including earnings, return on capital and cash flow, and comparisons of historical operational measures for Conoco and Phillips;

- current industry, economic and market conditions, and the prospects of further restructuring and consolidation in the oil and gas industry;

- the interests that certain Conoco executive officers and directors may have with respect to the merger in addition to their interests as Conoco stockholders; and

- the feasibility and desirability of pursuing alternative strategies, including pursuing growth and increased stockholder value through acquisitions, such as the acquisition of Gulf Canada.

The Conoco Board of Directors believed that, overall, the potential benefits of the merger to Conoco and Conoco stockholders outweighed the risks.

This discussion of the information and factors considered by the Conoco Board of Directors in making its decision is not intended to be exhaustive but includes all material factors considered by the Conoco Board of Directors. In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the Conoco Board of Directors did not find it useful to, and did not attempt to, quantify, rank or otherwise assign relative weights to these factors. In addition, individual members of the Conoco Board of Directors may have given different weight to different factors.

THE CONOCO BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT HOLDERS OF CONOCO

COMMON STOCK VOTE FOR THE ADOPTION OF THE MERGER AGREEMENT.

RECOMMENDATION OF THE PHILLIPS BOARD OF DIRECTORS

At its meeting on November 17, 2001, after due consideration, the Phillips Board of Directors unanimously:

- determined that it was advisable for Phillips to enter into the merger agreement, and that the merger agreement and the transactions contemplated by the merger agreement are advisable, fair to and in the best interests of Phillips stockholders;

- approved the merger agreement; and

- recommended that Phillips stockholders vote for the adoption of the merger agreement.

In approving the merger agreement and making these determinations and recommendations, the Phillips Board of Directors consulted with Phillips management as well as its outside legal counsel and financial advisors, and considered a number of factors.

The Phillips Board of Directors considered the following positive factors relating to the merger:

- the benefits of the merger described above;

- the expectation that the merger would be immediately accretive to Phillips stockholders based on consensus security analyst earnings estimates and the achievement of anticipated synergies;

- the expectation that the merger would be a tax-free transaction for U.S. federal income tax purposes and the conversion of the Phillips common stock would be tax free to Phillips stockholders;

- anticipated synergies from the transaction of $750 million per year resulting in cost savings and other benefits over time;

- the effect of the merger on the capital structure and financial ratios of Phillips;

- the terms and conditions of the merger agreement, one of which provides the Phillips Board of Directors the right to terminate the merger agreement prior to its approval by Phillips stockholders in the exercise of its fiduciary duty in connection with a superior proposal, subject to the termination fees payable by Phillips in that event;

- the proposed composition of the New Parent Board of Directors, including that J. J. Mulva, Chairman and Chief Executive Officer of Phillips, would be President and Chief Executive Officer of New Parent and Archie W. Dunham, Chairman and Chief Executive Officer of Conoco, would be the Chairman of the New Parent Board of Directors;

- the provisions included in the New Parent organizational documents that ensure that the chairman and chief executive officer positions cannot be changed for a certain period of time without a supermajority vote of the New Parent Board of Directors, and that the "ConocoPhillips" name cannot be changed without a supermajority vote of New Parent stockholders and the unanimous approval of the New Parent Board of Directors;

- the analysis and presentation of Goldman Sachs on behalf of Goldman Sachs, JPMorgan and Merrill Lynch and the oral opinions of Goldman Sachs, JPMorgan and Merrill Lynch, each delivered on November 17, 2001, and each subsequently confirmed in writing on November 18, 2001, to the effect that, as of the date of each opinion, and based upon and subject to the various considerations, assumptions and limitations set forth in those opinions, the exchange ratio of one share of New Parent common stock for each share of Phillips common stock relative to the exchange ratio of 0.4677 of a share of New Parent common stock for each share of Conoco common stock pursuant to the merger agreement is fair from a financial point of view to the holders of Phillips common stock (the written opinions of Goldman Sachs, JPMorgan and Merrill Lynch are attached as Annexes F, G and H, respectively, to this joint proxy statement/prospectus); and

- the potential benefits to Phillips' employees from the expanded opportunities available as part of a larger organization.

The Phillips Board of Directors considered the following negative factors relating to the merger:

- the problems inherent in merging the operations of two large companies, including the possibility that management may be distracted from regular business concerns by the need to integrate operations, unforeseen difficulties in integrating operations and systems, problems assimilating and

retaining employees, and potential adverse short-term effects on operating results of the combined company; and

- the timing of receipt and the terms of approvals from appropriate government entities, including the possibility of delay in obtaining satisfactory approvals or the imposition of unfavorable terms or conditions in the approvals.

The Phillips Board of Directors also considered the following factors relating to the merger:

- the fact that the headquarters of New Parent will be in Houston, Texas, and that New Parent would have a significant and continuing presence in Oklahoma;

- the fact that New Parent would have a staggered board of directors;

- the review and analysis of each of Conoco's and Phillips' business, financial condition, earnings, risks and prospects;

- the historical market prices and trading information with respect to the shares of Phillips common stock and Conoco common stock;

- the comparisons of historical financial measures for Phillips and Conoco, including earnings, return on capital and cash flow, and comparisons of historical operational measures for Phillips and Conoco;

- current industry, economic and market conditions, and the prospects of further restructuring and consolidation in the oil and gas industry;

- the interests that certain Phillips executive officers and directors may have with respect to the merger in addition to their interests as Phillips stockholders; and

- the feasibility and desirability of pursuing alternative strategies, such as pursuing growth and increased stockholder value through acquisitions, such as the acquisition of ARCO's Alaska assets and the acquisition of Tosco.

The Phillips Board of Directors believed that, overall, the potential benefits of the merger to Phillips and Phillips stockholders outweighed the risks.

This discussion of the information and factors considered by the Phillips Board of Directors in making its decision is not intended to be exhaustive but includes all material factors considered by the Phillips Board of Directors. In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the Phillips Board of Directors did not find it useful to, and did not attempt to, quantify, rank or otherwise assign relative weights to these factors. In addition, individual members of the Phillips Board of Directors may have given different weight to different factors.

THE PHILLIPS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT HOLDERS OF

PHILLIPS COMMON STOCK VOTE FOR THE ADOPTION OF THE MERGER AGREEMENT.

OPINIONS OF CONOCO'S FINANCIAL ADVISORS

Pursuant to separate letter agreements, Conoco retained Morgan Stanley, Salomon Smith Barney and Credit Suisse First Boston to act as its financial advisors in connection with the merger. Conoco did not request that a fairness opinion be provided by Credit Suisse First Boston Corporation in connection with the merger.

OPINION OF MORGAN STANLEY

At the meeting of the Conoco Board of Directors on November 18, 2001, Morgan Stanley rendered its oral opinion, subsequently confirmed in writing, that as of November 18, 2001, and subject to and based on the considerations in its opinion, the exchange ratio pursuant to the merger agreement is fair

from a financial point of view to the holders of Conoco common stock. In its analysis of the fairness of the Conoco exchange ratio, Morgan Stanley took into account, among other considerations set forth in its opinion, the exchange ratio of one share of New Parent common stock for each share of Phillips common stock in the merger.

THE FULL TEXT OF MORGAN STANLEY'S OPINION, DATED AS OF NOVEMBER 18, 2001, WHICH SETS FORTH, AMONG OTHER THINGS, THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY MORGAN STANLEY IS ATTACHED AS ANNEX D TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED INTO THIS JOINT PROXY/PROSPECTUS BY REFERENCE. WE URGE YOU TO READ THIS OPINION CAREFULLY AND IN ITS ENTIRETY. MORGAN STANLEY'S OPINION IS DIRECTED TO THE BOARD OF DIRECTORS OF CONOCO, ADDRESSES ONLY THE FAIRNESS FROM A FINANCIAL POINT OF VIEW OF THE EXCHANGE RATIO PURSUANT TO THE MERGER AGREEMENT TO THE HOLDERS OF CONOCO COMMON STOCK, AND DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGER OR CONSTITUTE A RECOMMENDATION TO ANY CONOCO STOCKHOLDER AS TO HOW TO VOTE AT THE SPECIAL MEETING. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION.

In connection with rendering its opinion, Morgan Stanley, among other things:

- reviewed certain publicly available financial statements and other business and financial information of Conoco and Phillips, respectively;

- reviewed certain internal financial statements and other financial and operating data concerning Conoco and Phillips prepared by the respective managements of Conoco and Phillips;

- reviewed certain financial forecasts prepared by the respective managements of Conoco and Phillips;

- discussed with senior executives of Conoco and Phillips certain strategic, financial and operational benefits they expect to derive from the merger;

- discussed the past and current operations and financial condition and the prospects of Conoco and Phillips with senior executives of Conoco and Phillips;

- reviewed the pro forma impact of the merger on, among other things, Conoco's earnings per share, cash flow, consolidated capitalization and financial ratios;

- reviewed and considered in the analysis, information prepared by the members of the respective senior managements of Conoco and Phillips relating to the relative contributions of Conoco and Phillips to the combined company;

- reviewed the reported prices and trading activity for the Conoco common stock and the Phillips common stock;

- compared the prices and trading activity of the Conoco common stock and the Phillips common stock with that of the securities of certain other publicly traded companies comparable with Conoco and Phillips;

- reviewed the financial terms, to the extent publicly available, of certain comparable merger transactions;

- participated in certain discussions and negotiations among representatives of Conoco and Phillips and their financial and legal advisors;

- reviewed the merger agreement and certain related documents; and

- performed such other analyses and considered such other factors as deemed appropriate.

Morgan Stanley assumed and relied upon, without independent verification, the accuracy and completeness of the information supplied or otherwise made available to it for the purposes of its opinion. With respect to the financial forecasts that Morgan Stanley received from the respective managements of Conoco and Phillips, as well as information relating to certain strategic, financial and operational benefits of the merger, Morgan Stanley assumed that the information provided has been reasonably prepared on the bases reflecting the best currently available estimates and judgments of the future financial and

operational performance of Conoco and Phillips, and New Parent, respectively. Morgan Stanley did not make any independent valuation or appraisal of the assets or liabilities of Conoco or Phillips, nor was Morgan Stanley furnished with any such appraisals. Morgan Stanley assumed that the merger will be consummated in accordance with the terms set forth in the merger agreement without material modification or waiver including, among other things, that the merger will be a tax-free transaction for U.S. federal income tax purposes. The opinion of Morgan Stanley is necessarily based on financial, economic, market and other conditions as in effect on, the information made available to Morgan Stanley as of, and the financial condition of Conoco and Phillips on, November 18, 2001.

FINANCIAL ANALYSIS OF MORGAN STANLEY

The following is a summary of the material financial analyses performed by Morgan Stanley in connection with its oral opinion and the preparation of its written opinion. These summaries of financial analyses include information presented in tabular format. In order to fully understand the financial analyses used by Morgan Stanley, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses.

Historical Exchange Ratio Analysis. Morgan Stanley compared the daily closing share price of Conoco common stock to the daily closing price of Phillips common stock during the period beginning from July 13, 1999 and ending November 14, 2001, and reviewed and analyzed the historical exchange ratios implied by these comparisons.

Morgan Stanley also compared both the daily closing share price of Conoco common stock to the corresponding price of Phillips common stock and the daily last twenty-day average of Conoco common stock to the corresponding average of Phillips common stock over various periods beginning from November 14, 2000 and ending November 14, 2001, and reviewed and analyzed the historical exchange ratios implied by these comparisons. The following table presents the implied exchange ratios during the periods covered and as of November 14, 2001.

                           PHILLIPS SHARES PER CONOCO SHARE
---------------------------------------------------------------------------------------
PERIOD                                                        AVERAGE EXCHANGE RATIO(1)
------                                                        -------------------------
At November 14, 2001........................................            0.475x
Last twenty-day average.....................................            0.468
Last month average..........................................            0.467
Last 3 months average.......................................            0.488
Last 6 months average.......................................            0.498
Last 12 months average......................................            0.501

(1) Averages of exchange ratios based on daily closing prices.

As the agreed-upon exchange ratio was implied from the last twenty-day average of Conoco and Phillips common stock as of November 16, 2001, and Morgan Stanley, for purposes of its opinion, reviewed Conoco's and Phillips' stock prices until November 14, 2001, Morgan Stanley also analyzed the sensitivity to the actual exchange ratio on November 16, 2001, by examining independently both Conoco's and Phillips' stock price movements for November 15 and 16, 2001.

Historical Share Price Performance. Morgan Stanley reviewed the price performance of Conoco common stock and Phillips common stock from July 13, 1999 through November 14, 2001. Morgan Stanley also reviewed the price performance of Conoco common stock and Phillips common stock from January 1, 2001 through November 14, 2001.

Morgan Stanley compared the price performance of Conoco common stock and Phillips common stock from July 13, 1999 through November 14, 2001, with that of the S&P 500 Index. This analysis

showed that the closing market prices during the period from July 13, 1999 through November 14, 2001, appreciated as follows:

                                                              APPRECIATION
                                                              ------------
Conoco......................................................       (6.8)%
Phillips....................................................        3.2
S&P 500.....................................................      (18.1)

Morgan Stanley then compared the price performance of Conoco common stock and Phillips common stock from January 1, 2001 through November 14, 2001, with that of the S&P 500 Index. This analysis showed that the closing market prices during the period from January 1, 2001 through November 14, 2001, appreciated as follows:

                                                              APPRECIATION
                                                              ------------
Conoco......................................................     (12.3)%
Phillips....................................................      (6.1)
S&P 500.....................................................     (13.6)

Last Twelve Months Trading Analysis. Morgan Stanley reviewed the daily closing share prices of Conoco common stock and Phillips common stock over the last twelve months. The table below shows the twelve-month high and low closing prices during that period, compared with a closing price on November 14, 2001, of $25.39 per share for Conoco common stock and $53.42 per share for Phillips common stock:

                                                              NOVEMBER 14, 2000
                                                                   THROUGH
                                                              NOVEMBER 14, 2001
                                                              -----------------
                                                               HIGH       LOW
                                                              -------   -------
Conoco......................................................  $33.15    $24.13
Phillips....................................................   67.52     50.40

The range of exchange ratios implied by this range of values for Conoco common stock and Phillips common stock is between 0.357x and 0.658x.

Research Analysts' Future Price Targets Analysis. Morgan Stanley reviewed the 12-month price targets for the shares of common stock of each of Conoco and Phillips as projected by analysts from various financial institutions in recent reports. These targets reflected each analyst's estimate of the future public market trading price of Conoco common stock and Phillips common stock at the end of the particular period considered for each estimate. Morgan Stanley then arrived at the present value for these targets using an estimated equity discount rate of 10.0%.

This analysis showed the following range of values for Conoco common stock and Phillips common stock:

                                                         12-MONTH ANALYSTS' PRICE TARGET
                                                         -------------------------------
                                                            NOMINAL       PRESENT VALUE
                                                         --------------   --------------
Conoco.................................................  $28.00 - 39.00   $25.45 - 35.45
Phillips...............................................   55.00 - 72.00    50.00 - 65.45

The range of exchange ratios implied by this range of values for Conoco common stock and Phillips common stock is 0.389x to 0.709x.

Comparable Companies Analysis. Morgan Stanley calculated aggregate value, as equity value adjusted for capital structure, to earnings before interest, taxes, depreciation, amortization and exploration cost, which is referred to as EBITDAX, multiples for Conoco and Phillips for the fiscal year 2002 based on First Call consensus estimates. Morgan Stanley then compared the EBITDAX multiples obtained for Conoco and Phillips with multiples obtained for a group of selected oil and gas companies.

The selected oil and gas companies forming such group were ExxonMobil, BP, ChevronTexaco, Royal Dutch Shell, Occidental, Amerada Hess and Marathon, which is referred to as the Selected Companies. Morgan Stanley selected these companies because they are publicly traded companies with integrated oil and gas operations that for purposes of this analysis may be considered similar to those of Conoco and Phillips.

The analysis showed the following multiples:

                                                              AGGREGATE VALUE/
                                                              ESTIMATED EBITDAX
                                                              -----------------
                                                                    2002
                                                              -----------------
Conoco......................................................         5.6x
Phillips....................................................         4.8
Selected Companies Mean.....................................         5.4

Morgan Stanley then applied comparable company multiples (ranging between 4.0x and 5.0x for 2001 Aggregate Value/EBITDAX and between 4.5x and 5.5x for 2002 Aggregate Value/EBITDAX) to the corresponding Conoco and Phillips statistics based on publicly available estimates. The following table presents the range of exchange ratios implied by the resulting valuation ranges as computed by Morgan Stanley.

                                                              EXCHANGE RATIO RANGE
                                                              --------------------
Aggregate Value/2001 EBITDAX................................     0.249x - 0.490x
Aggregate Value/2002 EBITDAX................................      0.265 - 0.499

Morgan Stanley calculated price to earnings per share and price to cash flow per share multiples for Conoco and Phillips for the fiscal year ended 2002 based on First Call consensus estimates. Morgan Stanley then compared the price to earnings per share and price to cash flow per share multiples obtained for Conoco and Phillips with multiples obtained for the Selected Companies.

The analysis showed the following multiples:

                                                          PRICE/ESTIMATED   PRICE/ESTIMATED
                                                                EPS              CFPS
                                                          ---------------   ---------------
                                                               2002              2002
                                                          ---------------   ---------------
Conoco..................................................        11.4x             4.9x
Phillips................................................        11.6              4.9
Selected Companies Mean.................................        13.2              6.3

Morgan Stanley then applied comparable company multiples (ranging between 4.0x and 5.0x for 2001 Price/Cash Flow per share, between 4.5x and 5.5x for 2002 Price/Cash Flow per share, between 8.0x and 10.0x for 2001 Price/Earnings per share: and between 11.0x and 13.0x for 2002 Price/Earnings per share) to the corresponding Conoco and Phillips statistics based on publicly available estimates. The following table presents the range of exchange ratios implied by the resulting valuation ranges as computed by Morgan Stanley.

                                                              EXCHANGE RATIO RANGE
                                                              --------------------
Price/2001 Cash Flow per Share..............................     0.356x - 0.557x
Price/2002 Cash Flow per Share..............................      0.393 - 0.567
Price/2001 Earnings per Share...............................      0.383 - 0.599
Price/2002 Earnings per Share...............................      0.407 - 0.568

Morgan Stanley also calculated price to book value multiples for Conoco and Phillips. Morgan Stanley then compared the price to book value multiples obtained for Conoco and Phillips with multiples obtained for the Selected Companies.

                                                              PRICE/BOOK VALUE
                                                              ----------------
Conoco......................................................         2.4x
Phillips....................................................         1.4
Selected Companies Mean.....................................         2.2

Pro Forma Contribution Analysis. Morgan Stanley compared the pro forma contributions of each of Conoco and Phillips, based on First Call consensus estimates, to the resulting combined company. Morgan Stanley reviewed pro forma estimates of earnings, cash flow and EBITDAX for the years 2001 and 2002. The contributions made by Conoco and Phillips are consistent with the relative exchange ratios offered in the merger.

Morgan Stanley also reviewed the contributions of the pre-transaction aggregate value, the pre-transaction equity value, and proved reserves based on 2000 reported figures. The contributions made by Conoco and Phillips are consistent with the relative exchange ratios offered in the merger.

Pro Forma Earnings and Cash Flow Impact Analysis. Morgan Stanley analyzed the pro forma effects of the merger and computed the resulting accretion/dilution to the combined company's projected earnings per share and cash flow per share during 2002 and 2003, based on the relative exchange ratios offered in the merger. Such computations used earnings and cash flow projections for both Conoco and Phillips based on First Call consensus estimates, synergy estimates provided by Conoco's and Phillips' management, and certain purchase accounting adjustments.

The analysis indicated that, based on First Call estimates, the merger would be accretive to estimated earnings per share in 2002 and 2003 of both Conoco and Phillips, in each case as compared to the same estimates for Conoco and Phillips on a stand-alone basis. Based on First Call estimates, the merger would also be accretive to cashflow per share for Conoco and Phillips in 2002, and for Conoco in 2003, in each case as compared to the same estimates for Conoco and Phillips on a stand-alone basis.

Morgan Stanley also analyzed the directional impact on pro forma accretion/dilution to EPS in 2002, 2003 and 2004, for Conoco and Phillips, based on movements in crude oil prices, natural gas prices and light-oil spreads. Relative to First Call crude oil price estimates, an increase in the estimated price of crude oil reduces the accretion to EPS of both Conoco and Phillips in 2002. Any such increase would reduce accretion to EPS of Conoco to a greater degree than it would reduce accretion to EPS of Phillips. Under certain higher crude oil price scenarios, the transaction could be dilutive to Conoco's stand-alone estimated 2002 EPS. Relative to First Call crude oil price estimates, an increase in the expected crude oil price slightly increases the level of accretion to EPS for Phillips in 2003 and 2004, and reduces the level of accretion to EPS for Conoco in 2003 and 2004.

Relative to First Call natural gas price estimates, an increase in the expected natural gas price increases the accretion to Phillips stand-alone estimated EPS and decreases the accretion to Conoco's estimated stand-alone EPS for 2002, 2003 and 2004. Under certain higher natural gas price scenarios, the transaction could be dilutive in 2002 to Conoco's estimated stand-alone EPS and, under certain lower natural gas price scenarios, the transaction could be dilutive in 2003 to Phillips' estimated stand-alone EPS.

Relative to First Call light-oil spread estimates, an increase in the expected light-oil spread reduces the accretion to Phillips stand-alone estimated EPS and increases the accretion to Conoco's estimated stand-alone EPS for 2002, 2003 and 2004. Under certain lower light-oil spread scenarios, the transaction could be dilutive to Conoco's estimated stand-alone EPS in 2002 and, under certain higher light-oil spread scenarios, the transaction could be dilutive to Phillips estimated stand-alone EPS in 2003.

Potential Synergy Analysis. Morgan Stanley compared the potential synergies of this transaction to seven other recent business combinations in the oil and gas industry. These transactions are: the Chevron/

Texaco transaction, the TOTALFina/Elf transaction, the Repsol/YPF transaction, the BP Amoco/ARCO transaction, the Total/Petrofina transaction, the Exxon/Mobil transaction and the BP/Amoco transaction. The following table presents the potential synergies of these transactions relative to various statistics.

                                                       POTENTIAL PRE-TAX SYNERGIES RELATIVE TO SMALLER ENTITY
                                               -----------------------------------------------------------------------
                                 PRE-TAX                  OPERATING    S, G&A    OP. EX. &                    PRODUCED
LARGER ENTITY/SMALLER ENTITY    SYNERGIES      REVENUES   EXPENSES    EXPENSES    S, G&A       EMPLOYEES        BOE
----------------------------  --------------   --------   ---------   --------   ---------   --------------   --------
                              (IN THOUSANDS)                                                 (IN THOUSANDS)
Chevron/Texaco..............    $1,200,000       2.8%        3.3%      102.9%       3.2%        $63,121        $2.57
TOTALFina/Elf...............     1,500,000       4.1         5.2        44.7        4.7          17,647         4.10
Repsol/YPF..................       325,000       5.9        12.9        54.3       10.4          34,211         1.18
BP Amoco/ARCO...............     1,000,000       9.4        14.3       135.0       12.9          54,348         2.63
Total/Petrofina.............       370,000       2.0         2.3        41.9        2.2          25,519         4.60
Exxon/Mobil.................     2,800,000       5.0         6.3        68.5        5.7          67,470         4.60
BP/Amoco....................     2,000,000       6.0         7.9        87.9        7.2          46,029         4.24
High........................                     9.4        14.3       135.0       12.9          67,470         4.60
Median......................                     5.0         6.3        68.5        5.7          46,029         4.10
Low.........................                     2.0         2.3        41.9        2.2          17,647         1.18
Phillips/Conoco(1)..........       700,000       2.4         3.9        90.5        3.7          27,997         2.48

(1) Based on average of preliminary estimates provided by Conoco and Phillips prior to the finalization of their synergy review.

In connection with the review of the merger by the Conoco Board of Directors, Morgan Stanley performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. In arriving at its opinion, Morgan Stanley considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor considered by it. Furthermore, Morgan Stanley believes that the summary provided and the analyses described above must be considered as a whole and that selecting any portion of its analyses, without considering all of them, would create an incomplete view of the process underlying its analyses and opinion. In addition, Morgan Stanley may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions, so that the ranges of valuations resulting from any particular analysis described above should not be taken to be Morgan Stanley's view of the actual value of Conoco or Phillips.

In performing its analyses, Morgan Stanley made numerous assumptions with respect to industry performance, general business and economic condition and other matters, many of which are beyond the control of Conoco or Phillips. Any estimates contained in Morgan Stanley's analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates. The analyses performed were prepared solely as part of Morgan Stanley's analysis of the fairness from a financial point of view to the Conoco stockholders, of the relative exchange ratios pursuant to the merger agreement, and were prepared in connection with the delivery by Morgan Stanley of its opinion dated November 18, 2001 to the Conoco Board of Directors. The analyses do not purport to be appraisals or to reflect the prices at which Conoco common stock or Phillips common stock might actually trade. The exchange ratio and other terms of the merger agreement were determined through arm's length negotiations between Conoco and Phillips and were unanimously approved by the Conoco Board of Directors. Morgan Stanley provided advice to Conoco during such negotiations. However, Morgan Stanley did not recommend any specific exchange ratio or form of consideration to Conoco or that any specific exchange ratio or form of consideration constituted the only appropriate consideration for the merger.

Morgan Stanley's opinion was one of the many factors taken into consideration by the Conoco Board of Directors in making its unanimous determination to approve the merger. Morgan Stanley's analyses summarized above should not be viewed as determinative of the opinion of the Conoco Board of Directors

with respect to the value of Conoco or Phillips or of whether the Conoco Board of Directors would have been willing to agree to a different exchange ratio or form of consideration.

OPINION OF SALOMON SMITH BARNEY

Salomon Smith Barney delivered its written opinion dated November 18, 2001, to the Conoco Board of Directors to the effect that, as of such date, based upon and subject to the considerations and limitations set forth in its opinion, the exchange ratio under the merger agreement applicable to each share of Conoco common stock is fair from a financial point of view to the holders of Conoco common stock. In its analysis of this exchange ratio, Salomon Smith Barney took into account, among other considerations set forth in its opinion, the exchange ratio of one share of New Parent common stock for each share of Phillips common stock in the merger.

THE FULL TEXT OF THE SALOMON SMITH BARNEY FAIRNESS OPINION, WHICH SETS FORTH, AMONG OTHER THINGS, THE ASSUMPTIONS MADE, THE GENERAL PROCEDURES FOLLOWED, MATTERS CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN BY SALOMON SMITH BARNEY IS ATTACHED AS ANNEX E TO THIS JOINT PROXY STATEMENT/PROSPECTUS. THE SUMMARY OF SALOMON SMITH BARNEY'S OPINION SET FORTH BELOW IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION. CONOCO STOCKHOLDERS ARE URGED TO READ THIS OPINION CAREFULLY AND IN ITS ENTIRETY. THE FAIRNESS OPINION WAS PROVIDED TO THE CONOCO BOARD OF DIRECTORS FOR ITS INFORMATION AND IS DIRECTED ONLY TO THE FAIRNESS FROM A FINANCIAL POINT OF VIEW OF THE EXCHANGE

RATIO PURSUANT TO THE MERGER AGREEMENT TO THE HOLDERS OF CONOCO COMMON STOCK.

In connection with its opinion, Salomon Smith Barney, among other things:

- reviewed a draft of the merger agreement dated November 16, 2001;

- discussed with certain senior officers, directors and other representatives and advisors of both Conoco and Phillips the business, operations and prospects of Conoco, Phillips and New Parent;

- examined certain publicly available business and financial information relating to Conoco and Phillips;

- examined certain financial forecasts and other information and data concerning Conoco, Phillips and New Parent provided to or discussed with Salomon Smith Barney the respective management of Conoco and Phillips;

- reviewed and discussed with the managements of Conoco and Phillips certain strategic, operational and financial benefits that they anticipate will result from the merger;

- conducted such other analyses and considered such other information and financial, economic and market criteria as deemed appropriate.

In rendering its opinion, Salomon Smith Barney assumed and relied, without independent verification, upon the accuracy and completeness of all financial and other information and data publicly available or furnished to or reviewed by or discussed with it for the purposes of its opinion and it further relied upon the assurances of managements of Conoco and Phillips that they are not aware of any facts that would make any of that information inaccurate or misleading. With respect to financial forecasts and other information and data provided to or otherwise reviewed by it, Salomon Smith Barney relied on the advice of the managements of Conoco and Phillips that such forecasts and other information and data were reasonably prepared on bases reflecting the best currently available estimates and judgments of the respective management of Conoco and Phillips as to the future performance of Conoco, Phillips and New Parent and the strategic implications and operational and financial benefits anticipated to result from the merger. Salomon Smith Barney expressed no view with respect to such forecasts and other information and data or the assumptions on which they were based. Salomon Smith Barney did not make, nor was Salomon Smith Barney furnished with, any independent evaluation or appraisal of the assets or liabilities of Conoco, Phillips or New Parent. Salomon Smith Barney's opinion relates to the relative value of Conoco and Phillips. Salomon Smith Barney did not express any opinion as to what the value of New Parent common stock will be when issued pursuant to the merger or the price at which the New Parent

common stock will trade or otherwise be transferable subsequent to the merger. Salomon Smith Barney was not asked to consider, and its opinion does not address, the relative merits of the merger as compared to any alternative business strategies that might exist for the company or the effect of any other transaction in which Conoco might engage. Salomon Smith Barney assumed that the merger will be treated as a tax-free reorganization for federal income tax purposes and that the final terms of the merger agreement will not vary materially from those set forth in the draft merger agreement delivered to it and that the merger will be consummated in accordance with the terms of the merger agreement, without waiver of any material conditions contained in the merger agreement. The opinion of Salomon Smith Barney is necessarily based on information available to it and financial, stock market and other conditions and circumstances existing and disclosed to it as of November 18, 2001. Salomon Smith Barney did not make a presentation to the Conoco Board of Directors in connection with rendering its fairness opinion. Salomon Smith Barney did not make a presentation to the Conoco Board of Directors in connection with rendering its fairness opinion.

SALOMON SMITH BARNEY'S ADVISORY SERVICES AND ITS OPINION EXPRESSED HEREIN WERE PROVIDED FOR THE INFORMATION OF THE CONOCO BOARD OF DIRECTORS IN ITS

EVALUATION OF THE MERGER AND SALOMON SMITH BARNEY'S OPINION IS NOT INTENDED TO BE AND DOES NOT CONSTITUTE A RECOMMENDATION OF THE MERGER TO THE BOARD OF DIRECTORS, CONOCO OR TO ANYONE ELSE OR A RECOMMENDATION TO ANY CONOCO STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE ON ANY MATTERS RELATING TO THE MERGER.

GENERAL

The Conoco Board of Directors selected each of Morgan Stanley, Salomon Smith Barney and Credit Suisse First Boston as its financial advisor because of their respective reputations as internationally recognized investment banking and advisory firms with substantial experience in transactions similar to the merger and because each of Morgan Stanley, Salomon Smith Barney and Credit Suisse First Boston is familiar with Conoco and its business. As part of its investment banking and financial advisory business, each of Morgan Stanley, Salomon Smith Barney and Credit Suisse First Boston is engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes.

Each of Morgan Stanley, Salomon Smith Barney and Credit Suisse First Boston provides a full range of financial advisory, financing, and brokerage services and, in the course of its normal trading and brokerage activities, may from time to time effect transactions and hold positions in securities, including derivative securities, or loans of Conoco or Phillips for its own accounts and for the accounts of its customers. Each of Morgan Stanley, Salomon Smith Barney and Credit Suisse First Boston also may provide investment banking services to New Parent and its subsidiaries in the future.

Under the terms of separate letter agreements dated November 16, 2001, November 14, 2001 and November 14, 2001, Conoco has agreed to pay each of Morgan Stanley, Salomon Smith Barney and Credit Suisse First Boston a customary fee upon consummation of the merger. Conoco has also agreed to reimburse each of Morgan Stanley, Salomon Smith Barney and Credit Suisse First Boston for its reasonable out-of-pocket expenses incurred in connection with the engagement, including attorney's fees, and to indemnify each of Morgan Stanley, Salomon Smith Barney and Credit Suisse First Boston and their respective related parties from and against certain liabilities, including liabilities under the federal securities laws.

OPINIONS OF PHILLIPS' FINANCIAL ADVISORS

On November 17, 2001, each of Goldman Sachs, JPMorgan and Merrill Lynch delivered its oral opinion to the Phillips Board of Directors, which opinions were subsequently confirmed in writing on November 18, 2001, that, as of the date of each opinion, the exchange ratio of one share of New Parent common stock for each share of Phillips common stock relative to the exchange ratio of 0.4677 of a share

of New Parent common stock for each share of Conoco common stock pursuant to the merger agreement was fair from a financial point of view to the holders of Phillips common stock.

THE FULL TEXT OF THE WRITTEN OPINIONS OF GOLDMAN SACHS, JPMORGAN AND MERRILL LYNCH, EACH DATED NOVEMBER 18, 2001, WHICH SET FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN CONNECTION WITH EACH SUCH OPINION, ARE ATTACHED AS ANNEX F, ANNEX G AND ANNEX H, RESPECTIVELY, AND ARE INCORPORATED HEREIN BY REFERENCE. EACH OF GOLDMAN SACHS, JPMORGAN AND MERRILL LYNCH PROVIDED ITS OPINION FOR THE INFORMATION AND ASSISTANCE OF THE PHILLIPS BOARD OF DIRECTORS IN CONNECTION WITH ITS CONSIDERATION OF THE TRANSACTION. NONE OF THE GOLDMAN SACHS, JPMORGAN OR MERRILL LYNCH OPINIONS IS A RECOMMENDATION AS TO HOW ANY PHILLIPS STOCKHOLDER SHOULD VOTE WITH RESPECT TO THE ADOPTION OF THE MERGER AGREEMENT. WE URGE YOU TO READ EACH OPINION IN ITS ENTIRETY.

OPINION OF GOLDMAN SACHS

In connection with its opinion, Goldman Sachs reviewed, among other things:

- the merger agreement;

- Annual Reports to Stockholders and Annual Reports on Form 10-K of Phillips for the five years ended December 31, 2000;

- Annual Reports to Stockholders and Annual Reports on Form 10-K of Conoco for the three years ended December 31, 2000;

- certain interim reports to stockholders and Quarterly Reports on Form 10-Q of Phillips and Conoco;

- certain other communications from Phillips and Conoco to their respective stockholders; and

- certain internal financial analyses and forecasts for Phillips and Conoco prepared by their respective managements, including certain cost savings and operating synergies projected by the managements of Phillips and Conoco to result from the transaction contemplated by the merger agreement.

Goldman Sachs also held discussions with members of the senior managements of Phillips and Conoco regarding their assessment of the strategic rationale for, and the potential benefits of, the transaction contemplated by the merger agreement and the past and current business operations, financial condition, and future prospects of their respective companies. In addition, Goldman Sachs:

- reviewed the reported price and trading activity for Phillips common stock and Conoco common stock;

- compared certain financial and stock market information for Phillips and Conoco with similar information for certain other companies, the securities of which are publicly traded; and

- reviewed the financial terms of certain recent business combinations in the oil and gas industry specifically and in other industries generally, and performed such other studies and analyses as it considered appropriate.

Goldman Sachs relied upon the accuracy and completeness of all of the financial, accounting and other information discussed with or reviewed by it and assumed such accuracy and completeness for purposes of rendering its opinion. In that regard, Goldman Sachs assumed with the consent of the Phillips Board of Directors that the internal financial forecasts prepared by the managements of Phillips and Conoco, including certain cost savings and operating synergies projected by the managements of Phillips and Conoco to result from the transaction contemplated by the merger agreement, were reasonably prepared on a basis reflecting the best currently available estimates and judgments of Phillips and Conoco. In addition, Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities of Phillips or Conoco or any of their subsidiaries, and Goldman Sachs was not furnished with any such evaluation or appraisal. Goldman Sachs also assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the transaction contemplated by the merger

agreement will be obtained without any adverse effect on Phillips or Conoco or their respective subsidiaries or on the contemplated benefits of the transaction contemplated by the merger agreement in any respect material to Goldman Sachs' analysis. Goldman Sachs did not express any opinion as to the price at which New Parent common stock will trade if and when such New Parent common stock is issued.

OPINION OF JPMORGAN

In arriving at its opinion, JPMorgan:

- reviewed the merger agreement;

- reviewed certain publicly available business and financial information concerning Phillips and Conoco and the industries in which they operate;

- compared the proposed financial terms of the merger with the publicly available financial terms of certain transactions involving companies JPMorgan deemed relevant and the consideration received for such companies;

- compared the financial and operating performance of Phillips and Conoco with publicly available information concerning certain other companies JPMorgan deemed relevant and reviewed the current and historical market prices of Phillips common stock and Conoco common stock and certain publicly traded securities of such other companies;

- reviewed certain internal financial analyses and forecasts prepared by the managements of Phillips and Conoco relating to their respective businesses, as well as the estimated amount and timing of the cost savings and related expenses and synergies expected to result from the merger; and

- performed such other financial studies and analyses and considered such other information as JPMorgan deemed appropriate for the purposes of its opinion.

In addition, JPMorgan held discussions with certain members of the managements of Phillips and Conoco with respect to certain aspects of the merger, and the past and current business operations of Phillips and Conoco, the financial condition and future prospects and operations of Phillips and Conoco, the effects of the merger, including the cost savings and related expenses and synergies expected to result from the merger, on the financial condition and future prospects of Phillips and Conoco, and certain other matters JPMorgan believed necessary or appropriate to its inquiry.

In giving its opinion, JPMorgan relied upon and assumed, without any obligation of independent verification, the accuracy and completeness of all information that was publicly available or was furnished to it by Phillips and Conoco or otherwise reviewed by it, and JPMorgan did not assume any responsibility or liability for such information. JPMorgan did not conduct any valuation or appraisal of any assets or liabilities, nor were any such valuations or appraisals provided to it. In relying on financial analyses and forecasts provided to it, including the cost savings and related expenses and synergies expected to result from the merger, JPMorgan assumed that they were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of Conoco and Phillips to which such analyses or forecasts relate. JPMorgan also assumed that the merger will qualify as a tax-free reorganization for United States federal income tax purposes and that the merger will be consummated as described in the merger agreement. JPMorgan relied as to all legal matters relevant to rendering its opinion upon the advice of its counsel. JPMorgan further assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained without any adverse effect on Phillips or Conoco or their respective subsidiaries or on the contemplated benefits of the transaction contemplated by the merger agreement in any respect material to its analysis and that all conditions to the merger will be satisfied in all respects material to its analysis.

JPMorgan's opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to it as of, the date of its opinion. Subsequent developments may affect its opinion, and JPMorgan does not have any obligation to update, revise, or reaffirm its opinion.

JPMorgan's opinion is limited to the fairness from a financial point of view to the holders of Phillips common stock of the exchange ratio of one share of New Parent common stock for each share of Phillips common stock relative to the exchange ratio of 0.4677 of a share of New Parent common stock for each share of Conoco common stock pursuant to the merger agreement, and JPMorgan expressed no opinion as to the underlying decision by Phillips to engage in the transaction. JPMorgan expressed no opinion as to the price at which Phillips common stock or New Parent common stock will trade at any future time.

OPINION OF MERRILL LYNCH

In arriving at its opinion, Merrill Lynch, among other things:

- reviewed certain publicly available business and financial information relating to Phillips and Conoco that Merrill Lynch deemed to be relevant;

- reviewed certain information, including financial forecasts, relating to the business, earnings, cash flow, assets, liabilities and prospects of Phillips and Conoco, as well as the amount and timing of the cost savings and related expenses and synergies expected to result from the merger, furnished to Merrill Lynch by Phillips and Conoco;

- conducted discussions with members of senior management and representatives of Phillips and Conoco concerning the matters described above, as well as their respective businesses and prospects before and after giving effect to the merger and the cost savings and related expenses and synergies expected to result from the merger;

- reviewed the market prices and valuation multiples for the shares of Phillips common stock and Conoco common stock and compared them with those of certain publicly traded companies that Merrill Lynch deemed to be relevant;

- reviewed the results of operations of Phillips and Conoco and compared them with those of certain publicly traded companies that Merrill Lynch deemed to be relevant;

- compared the proposed financial terms of the merger with the financial terms of certain other transactions which Merrill Lynch deemed to be relevant;

- participated in certain discussions among representatives of Phillips and Conoco and their financial and legal advisors;

- reviewed the potential pro forma impact of the merger;

- reviewed the merger agreement; and

- reviewed such other financial studies and analyses and took into account such other matters as Merrill Lynch deemed necessary, including Merrill Lynch's assessment of general economic, market and monetary conditions.

In preparing its opinion, Merrill Lynch assumed and relied on the accuracy and completeness of all information supplied or otherwise made available to it, discussed with or reviewed by or for it, or publicly available, and Merrill Lynch did not assume any responsibility for independently verifying such information or undertake an independent evaluation or appraisal of any of the assets or liabilities of Phillips or Conoco and was not furnished with any such evaluation or appraisal. In addition, Merrill Lynch did not assume any obligation to conduct any physical inspection of the properties or facilities of Phillips or Conoco. With respect to the financial forecast information and the cost savings and related expenses and synergies expected to result from the merger furnished to or discussed with it by Phillips or Conoco, Merrill Lynch was advised by management of Phillips and Conoco, respectively, that they have been reasonably prepared and reflect the best currently available estimates and judgment of Phillips or Conoco's management as to the expected future financial performance of Phillips or Conoco, as the case may be, and the cost savings and related expenses and synergies expected to result from the merger. Merrill Lynch made no independent investigation of any legal matters and accounting advice given to Phillips, Conoco and their

respective boards of directors, including, without limitation, advice as to the accounting and tax consequences of the merger.

Merrill Lynch's opinion was necessarily based upon market, economic and other conditions as they existed and could be evaluated on, and on the information made available to it as of, the date of its opinion. Merrill Lynch assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained without any adverse effect on Phillips or Conoco or their respective subsidiaries or on the contemplated benefits of the transaction contemplated by the merger agreement in any respect material to its analysis, and Merrill Lynch further assumed that all conditions to the merger will be satisfied in all respects material to its analysis. Merrill Lynch expressed no opinion as to the price at which Phillips common stock or New Parent common stock will trade following the announcement or consummation of the merger, as the case may be.

JOINT FINANCIAL ANALYSES OF PHILLIPS' FINANCIAL ADVISORS

The following is a summary of the material financial analyses jointly used by Goldman Sachs, JPMorgan and Merrill Lynch in connection with providing their opinions to the Phillips Board of Directors. Some of the summaries of the financial analyses include information presented in tabular format. In order to more fully understand the financial analyses used by Goldman Sachs, JPMorgan and Merrill Lynch, the tables must be read together with the full text of each summary. The tables alone are not a complete description of the financial analyses performed by Goldman Sachs, JPMorgan and Merrill Lynch. Goldman Sachs, JPMorgan and Merrill Lynch jointly prepared the presentation made to the Phillips Board of Directors.

Historical Exchange Ratio Analysis. Goldman Sachs, JPMorgan and Merrill Lynch reviewed the closing prices of Conoco common stock divided by the corresponding closing price of Phillips common stock over the period beginning with Conoco's initial public offering in October 1998 and ending on November 16, 2001. In addition, Goldman Sachs, JPMorgan and Merrill Lynch calculated the average of these historical daily exchange ratios for the twenty-day, six-month, one-year and three-year periods ended November 16, 2001. The following table presents the results of these calculations:

                                                                  AVERAGE
PERIOD                                                         EXCHANGE RATIO
------                                                         --------------
Transaction.................................................       0.4677
20-Day Average..............................................       0.4677
6-Month Average.............................................       0.4983
1-Year Average..............................................       0.5014
3-Year Average..............................................       0.5066

The transaction exchange ratio of 0.4677 would result in the holders of Phillips common stock owning approximately 57% of the outstanding common stock of the pro forma combined company following the merger.

Contribution Analysis. Goldman Sachs, JPMorgan and Merrill Lynch reviewed specific historical and future operating and financial information, including, among other things, equity market value, net income and cash flow for Phillips, Conoco and the pro forma combined company resulting from the merger based on financial data provided by the managements of Phillips and Conoco and Institutional Brokers Estimate System, or I/B/E/S, estimates. Cash flow was defined as net income adjusted for the non-cash impact of depreciation, depletion, amortization, deferred taxes, dry-hole write offs and other non- cash/non-recurring items. Goldman Sachs, JPMorgan and Merrill Lynch also analyzed the relative income statement contribution of Phillips and Conoco to the combined company on a pro forma basis before taking into account any of the possible benefits that may be realized following the merger based on actual 1998, 1999, 2000 and estimated 2001, 2002 and 2003 results, based on financial data provided by the

managements of Phillips and Conoco and I/B/E/S estimates. The following table presents the results of this analysis:

                                               PHILLIPS CONTRIBUTION TO COMBINED COMPANY
                                           --------------------------------------------------
                                                                  LAST 3 YEARS   NEXT 3 YEARS
                                           2000   2001E   2002E    AGGREGATE      AGGREGATE
                                           ----   -----   -----   ------------   ------------
Net Income...............................   50%    53%     56%         47%            58%
Cash Flow................................   54     52      56          49             57

The analysis further indicated that Phillips would contribute approximately 57% of the equity market value of the pro forma combined company as compared to the approximately 57% of the outstanding common equity of the pro forma combined company that holders of Phillips common stock would receive after the merger based on the exchange ratio of 0.4677.

Pro Forma Merger Analysis. Goldman Sachs, JPMorgan and Merrill Lynch prepared pro forma analyses of the financial impact of the transaction using I/B/E/S estimates and synergy estimates prepared by the managements of Phillips and Conoco. For each of the years 2002 and 2003, Goldman Sachs, JPMorgan and Merrill Lynch compared the earnings per share and cash flow per share of Phillips common stock, on a stand-alone basis, to the earnings per share and cash flow per share of the common stock of the combined company on a pro forma basis assuming pre-tax synergies of $750 million per year. These analyses were performed based on the closing price of Phillips and Conoco common stock on November 16, 2001. Based on these analyses, the proposed transaction would result in an increase in earnings on a per share basis when compared to Phillips' earnings per share on a stand-alone basis in the years 2002 and 2003. In addition, based on these analyses, the proposed transaction would result in an increase in cash flow on a per share basis, when compared to Phillips' cash flow per share on a stand-alone basis, in the years 2002 and 2003.

Selected Transactions Analysis. Goldman Sachs, JPMorgan and Merrill Lynch analyzed certain information relating to the proposed transaction in relation to certain publicly available information for the following five stock-for-stock transactions in the oil and gas industry:

- The British Petroleum Company p.l.c.'s combination with Amoco Corporation, completed in December 1998;

- Exxon Corporation's combination with Mobil Corporation, completed in November 1999;

- BP Amoco p.l.c.'s combination with Atlantic Richfield Company, completed in April 2000;

- Total Fina S.A.'s combination with Elf Aquitaine, completed in February 2000; and

- Chevron Corporation's combination with Texaco Inc., completed in October 2001.

Goldman Sachs, JPMorgan and Merrill Lynch calculated and compared for each of the five selected oil and gas industry transactions the synergy value split between the respective shareholders of the larger and smaller company, as compared to the corresponding synergy value split for the proposed transaction. The synergy values were determined based on both (1) the estimated dollar value of synergies publicly announced by the companies at the time of announcement of the transaction and (2) to the extent subsequently revised, the revised estimated dollar value of synergies publicly announced by the companies, other than for the Chevron/Texaco transaction for which the revised synergy value was based on then-available market estimates. The synergy value for the proposed transaction was based on estimates

prepared by the managements of Phillips and Conoco. The following table presents the results of this analysis:

                                                                                          SYNERGY VALUE SPLIT(2)
                                                  SYNERGIES    POTENTIAL VALUE   EQUITY   -----------------------
                                                 (ANNOUNCED/    CREATION FROM    SPLIT      BIGGER      SMALLER
TRANSACTION                                       REVISED)      SYNERGIES(1)      (%)      COMPANY      COMPANY
-----------                                      -----------   ---------------   ------   ----------   ----------
                                                             (DOLLAR AMOUNTS IN BILLIONS OF DOLLARS)
BP/Amoco.......................................     $ 2.0           $12.0        60/40        16%          84%
  Revised......................................       4.0            24.0        60/40        38           62
Exxon/Mobil....................................       2.8            16.5        70/30        (8)         108
  Revised......................................       7.0            42.0        70/30        40           60
BP/ARCO........................................       1.0             6.0        80/20         5           95
Total/Elf......................................       1.3             7.8        68/32        25           75
  Revised......................................       2.3            13.8        68/32        44           56
Chevron/Texaco.................................       1.2             7.2        61/39         6           94
  Revised......................................       2.1            12.6        61/39        30           70
  Mean.................................................................................        9           91
  Mean revised.........................................................................       38           62
Phillips/Conoco................................      0.75             4.5        57/43        57           43

(2) The synergy value split calculation took into account that, when analyzing the estimated proportion of the synergy value that the shareholders of the larger company would enjoy, any premium paid by the larger company to the shareholders of the smaller company would erode the synergy value available to the larger company's shareholders.

Selected Companies Analyses. Goldman Sachs, JPMorgan and Merrill Lynch reviewed and compared certain financial information as described below for Phillips and Conoco to corresponding financial information, ratios and public market multiples for the following publicly traded corporations in the oil and gas industry, which were divided into two tiers reflecting their relative market capitalization:

              SUPER MAJORS                                INTEGRATEDS
              ------------                                -----------
- Exxon Mobil Corporation                  - Amerada Hess Corporation
- Royal Dutch Petroleum Company/           - USX-Marathon Group
  Shell Transportation and Trading         - ENI SpA
  Company p.l.c.
- BP p.l.c.
- ChevronTexaco Corporation
- TotalFinaElf S.A.

Goldman Sachs, JPMorgan and Merrill Lynch also calculated and compared various financial multiples and ratios based on publicly available financial data as of November 16, 2001, information it obtained from Securities and Exchange Commission filings, Goldman Sachs Equity Research Estimates and I/B/E/S estimates. The multiples for Phillips were calculated using Phillips' closing price on November 16, 2001, and the multiples for Conoco were calculated using Conoco's closing price on November 16, 2001. The multiples for each of the selected companies were based on the most recent publicly available information.

The results of these analyses are as summarized as follows:

                                                            MARKET
                                                        CAPITALIZATION      PRICE/EARNINGS
                                                        (IN BILLIONS)       RATIO (2002E)
                                                        --------------   --------------------
Exxon Mobil...........................................       $264                21.0x
Royal Dutch/Shell.....................................        172                15.7
BP plc................................................        172                16.1
TotalFinaElf..........................................        103                14.4
ChevronTexaco.........................................         93                16.4
ENI...................................................         49                10.4
USX-Marathon..........................................          8                13.2
Amerada Hess..........................................          5                 8.9
Phillips..............................................         20                11.2
Conoco................................................         15                10.8

GENERAL

The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstance, and therefore is not readily susceptible to partial analysis. Goldman Sachs, JPMorgan and Merrill Lynch believe that selecting portions of their analyses or the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying their opinions. In arriving at their fairness determinations, Goldman Sachs, JPMorgan and Merrill Lynch considered the results of each of these analyses in their totality and did not isolate or reach separate conclusions with respect to any particular analysis. No company or transaction used in the above analyses as a comparison is directly comparable to Phillips or Conoco or the merger.

The analyses were prepared solely for the purposes of Goldman Sachs, JPMorgan and Merrill Lynch providing their opinions to the Phillips Board of Directors as to the fairness from a financial point of view to the holders of Phillips common stock as of the date of such opinions of the exchange ratio of one share of New Parent common stock for each share of Phillips common stock relative to the exchange ratio of 0.4677 of a share of New Parent common stock for each share of Conoco common stock pursuant to the merger agreement. These analyses do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by such analyses. Because such analyses are inherently subject to uncertainty, being based on numerous factors or events beyond the control of the parties or their respective advisors, none of Phillips, Conoco, Goldman Sachs, JPMorgan, Merrill Lynch or any other person assumes responsibility if future results are materially different from those forecast. As described above, the opinions of Goldman Sachs, JPMorgan and Merrill Lynch to the Phillips Board of Directors were one of many factors taken into consideration by the Phillips Board of Directors in making its determination to approve the merger agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs, JPMorgan and Merrill Lynch.

Goldman Sachs, JPMorgan and Merrill Lynch, as part of their investment banking businesses, are continually engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements, and financial analyses for estate, corporate and other purposes. Phillips selected Goldman Sachs, JPMorgan and Merrill Lynch as financial advisors because each is an internationally recognized investment banking firm that has substantial experience in transactions similar to the merger.

Goldman Sachs is familiar with Phillips having provided certain investment banking services to Phillips from time to time, including having acted as financial advisor to Phillips in connection with its acquisition of assets from Atlantic Richfield Company in April 2000, having acted as co-arranger in connection with the public offering of $200 million aggregate principal amount of Phillips' 7% Debentures due 2029 in March 1999 and the public offering of $300 million aggregate principal amount of Phillips' 6 3/8% Notes due 2009 in March 1999, and having acted as its financial advisor in connection with, and having participated in certain of the negotiations leading to, the merger agreement. Goldman Sachs has also provided certain investment banking services to Conoco from time to time, including having acted as co-manager in connection with the public offering of 191.5 million shares of Conoco's Class A Common Stock in October 1998, as co-arranger in connection with the public offering of $1.35 billion aggregate principal amount of Conoco's 5.90% Notes due 2004, $1.9 billion aggregate principal amount of Conoco's 6.95% Notes due 2029 and $750 million aggregate principal amount of Conoco's 6.35% Notes due 2009 in April 1999, and as agent for Conoco's commercial paper program.

JPMorgan is familiar with Phillips and Conoco having provided financial advisory and financing services from time to time to Phillips and Conoco, including acting as co-lead on Conoco's $4.5 billion high grade bond offering, advising and arranging the financing for Conoco's acquisition of Gulf Canada Resources Limited, advising Phillips on its joint venture with Chevron Corp. and financing Phillips' acquisition of ARCO's Alaskan assets. In addition, one of JPMorgan's commercial bank affiliates is the agent bank for certain outstanding credit facilities for Phillips and Conoco.

Merrill Lynch is familiar with Phillips and Conoco having provided financial advisory and financing services from time to time to Phillips and Conoco, including acting as financial advisor to Phillips in connection with the formation of a gathering, processing and marketing joint venture (called Duke Energy Field Services, L.L.C.) with Duke Energy Corporation, acting as co-arranger for Phillips' $6.5 billion interim credit facility in connection with the acquisition of ARCO's Alaskan assets and acting as joint book-running manager on Phillips' public offering of $1.15 billion 8.5% Notes due 2005 and $1.35 billion 8.75% Notes due 2010.

Each of Goldman Sachs, JPMorgan and Merrill Lynch provides a full range of financial advisory and securities services and, in the course of its normal trading activities, may from time to time effect transactions and hold positions in securities, including derivative securities, of Phillips or Conoco for its own accounts and for the accounts of its customers. Each of Goldman Sachs, JPMorgan and Merrill Lynch also may provide investment banking services to New Parent and its subsidiaries in the future.

Pursuant to separate letter agreements dated November 15, 2001, November 16, 2001 and November 16, 2001, Phillips engaged each of Goldman Sachs, JPMorgan and Merrill Lynch, respectively, to act as financial advisor in connection with the contemplated transaction. Pursuant to the terms of these letters, Phillips has agreed to pay each of Goldman Sachs, JPMorgan and Merrill Lynch a customary fee upon consummation of the transaction.

Phillips has agreed to reimburse each of Goldman Sachs, JPMorgan and Merrill Lynch for their reasonable out-of-pocket expenses, including attorneys' fees, and to indemnify each of Goldman Sachs, JPMorgan and Merrill Lynch against certain liabilities, including liabilities under the federal securities laws.

INTERESTS OF CONOCO DIRECTORS AND MANAGEMENT IN THE MERGER

In considering the recommendation of the Conoco Board of Directors to vote for the proposal to adopt the merger agreement, Conoco stockholders should be aware that members of the Conoco Board of Directors and members of Conoco management team have agreements or arrangements that provide them with interests in the merger that differ from those of other Conoco stockholders. The Conoco Board of Directors was aware of these agreements and arrangements during its deliberations of the merits of the merger and in determining to recommend to Conoco stockholders that they vote for the proposal to adopt the merger agreement.

GOVERNANCE STRUCTURE AND MANAGEMENT POSITIONS

The merger agreement provides for the initial composition of the New Parent Board of Directors, certain committees of the New Parent Board of Directors and selected New Parent executive officer positions. See "Directors and Management Following the Merger."

TREATMENT OF STOCK OPTIONS AND OTHER STOCK-BASED AWARDS

Upon Conoco stockholder approval of the merger agreement, outstanding Conoco stock options and other stock-based awards granted under Conoco employee and director stock plans that were not previously vested or exercisable will become fully vested and exercisable and generally will remain exercisable for the remainder of their term. As of [ ] 2002, the number of shares of Conoco common stock subject to unvested options held by Archie W. Dunham, Robert E. McKee III, Jimmy W. Nokes, Robert W. Goldman and all other Conoco executive officers and all Conoco directors (including Mr. Dunham) were [ ], [ ], [ ], [ ], and [ ], respectively. The weighted average exercise price of the unvested options held by Messrs. Dunham, McKee, Nokes, Goldman and all other Conoco executive officers and all Conoco directors (including Mr. Dunham) is $[ ], $[ ], $[ ], $[ ], and $[ ], respectively. As of [ ] 2002, the number of shares of Conoco common stock subject to other unvested stock-based awards held by Messrs. Dunham, McKee, Nokes and Goldman, all other Conoco executive officers of Conoco and all Conoco directors (including Mr. Dunham) are [ ], [ ], [ ], [ ], and [ ], respectively.

EMPLOYMENT AGREEMENT WITH ARCHIE W. DUNHAM

Conoco and Mr. Dunham are parties to an existing employment agreement. In connection with entering into the merger agreement, New Parent, Conoco and Mr. Dunham entered into a new employment agreement that contains substantially the same terms and conditions as Mr. Dunham's current employment agreement, with modifications to reflect Mr. Dunham's new responsibilities with New Parent and to provide Mr. Dunham with appropriate incentives to continue his employment with New Parent following the completion of the merger. Upon the completion of the merger, Mr. Dunham's new employment agreement will become effective and will supersede Mr. Dunham's current employment agreement. The term of Mr. Dunham's new employment agreement will commence upon the date of the completion of the merger and end on the later of October 1, 2004 and the second anniversary of the date of the completion of the merger.

During the term of Mr. Dunham's employment, Mr. Dunham will be a senior executive employee of New Parent, a member and Chairman of the New Parent Board of Directors and Chairman of the Executive Committee of the New Parent Board of Directors, and Mr. Dunham's services will be performed at New Parent's headquarters in Houston, Texas. During the term of his employment, Mr. Dunham will preside at meetings of the New Parent Board of Directors and of New Parent stockholders, will work with the Chief Executive Officer of New Parent on external stakeholder relations (community, state, federal and foreign governments), business development (growth) initiatives, and the creation of an outstanding and cohesive New Parent Board of Directors, and will have other executive responsibilities as may be agreed between Mr. Dunham and the Chief Executive Officer of New Parent.

While Mr. Dunham is Chairman of the New Parent Board of Directors, he and the Chief Executive Officer of New Parent will jointly recommend to the New Parent Board of Directors the long-range strategic plan for New Parent, major acquisitions and divestitures, and major changes to New Parent's capital structure, and, with respect to all other matters, the Chief Executive Officer will, in consultation with Mr. Dunham, arrange the agenda for meetings of, and shall report to, the New Parent Board of Directors. At the conclusion of the term of Mr. Dunham's employment, Mr. Dunham will retire from employment with New Parent and as Chairman, but shall remain a member of the New Parent Board of Directors and a member of the Executive Committee and Chairman of the Committee on Directors' Affairs of the New Parent Board of Directors until his 70th birthday (or earlier retirement from such positions), subject to being periodically re-elected to the New Parent Board of Directors by New Parent stockholders. New Parent will propose Mr. Dunham for re-election whenever his then current term as a

member of the New Parent Board of Directors is set to expire before his 70th birthday. See also "Directors and Management Following the Merger". Pursuant to Mr. Dunham's new employment agreement, Mr. Dunham's duties and responsibilities may not be terminated or diminished during the term of his employment other than pursuant to the affirmative vote of at least two-thirds of the members of the New Parent Board of Directors.

Stockholder approval of the merger will constitute a "change of control" under Mr. Dunham's current employment agreement, and the election of another individual as Chief Executive Officer will constitute "good reason" under Mr. Dunham's current employment agreement. As a result, Mr. Dunham would be permitted under the terms of Mr. Dunham's current employment agreement to terminate his employment with Conoco and receive certain compensation and benefits. In consideration for Mr. Dunham's entering into a new employment agreement, which results in substantial modifications of the terms and conditions of Mr. Dunham's continuing relationship with Conoco, in lieu of the compensation and benefits that would have been payable to Mr. Dunham under his current employment agreement had he voluntarily terminated his employment at such time, Mr. Dunham will receive, promptly following the completion of the merger, a lump sum severance payment equal to (1) the sum of his salary, deferred compensation and vacation accrued to the date of completion of the merger, (2) the salary and bonus that would have been payable to him under his current employment agreement for three years following the date of completion of the merger, based on his then current salary and an assumed annual bonus equal to the average of the two highest annual bonus awards to Mr. Dunham in the three fiscal years preceding the completion of the merger, and (3) an amount equal to the additional retirement benefit he would have accrued if he had remained employed for three years following the date of completion of the merger. In addition, Mr. Dunham will receive grants of options, restricted stock and other compensatory awards he would have received had his employment continued for three years following the date of completion of the merger, based upon grants of options and restricted stock and other compensatory awards received by Mr. Dunham in the preceding three years, and to the vesting of, and termination of restrictions on, any unvested equity or performance-based awards, and extension of the term during which these awards may be exercised by Mr. Dunham until the earlier of (x) the first anniversary of the date of completion of the merger or
(y) the date upon which the right to exercise any such award would have expired if Mr. Dunham had continued to be employed by Conoco under the terms of his current employment agreement for three years following the date of completion of the merger; provided, however, that any option grants described above will not vest until the second anniversary of the completion of the merger, subject to earlier vesting upon the occurrence of certain events as contemplated by Mr. Dunham's new employment agreement as described below and/or Conoco's customary stock option grants. Mr. Dunham will receive welfare and other benefits continuation for three years following the date of completion of the merger, and will also continue to receive at no cost to him, until the earlier of Mr. Dunham's death or the expiration or exercise of all his company stock options, the financial and tax planning and life insurance benefits afforded during employment. The foregoing payments and benefits are substantially the same as those that Mr. Dunham would have been entitled to receive under his current employment agreement except that, had he voluntarily terminated his employment at the completion of the merger, Mr. Dunham would have been entitled to receive under his current employment agreement an additional $3 million cash payment, and the new grants of options described above would have been fully vested under his current employment agreement, and not subject to a two-year cliff vesting schedule.

Mr. Dunham's new employment agreement provides that Mr. Dunham will also be entitled to receive an additional payment sufficient to compensate him for the amount of any excise tax imposed on the payments described above or otherwise pursuant to Section 4999 of the Internal Revenue Code and for any taxes imposed on that additional payment. Mr. Dunham's new employment agreement also provides that Mr. Dunham may elect, on or before March 31, 2002 (but in no event later than the date 30 days prior to the date of completion of the merger), to defer any of the payments described above under the terms of Conoco's Global Variable Compensation Deferral Plan. Assuming that the merger is completed in [July] 2002, and excluding any gross-up payments for excise taxes that may be payable under Section 4999 of the Internal Revenue Code, the estimated amount of the cash portion of the payments described above payable to Mr. Dunham at the completion of the merger is $[ ], the estimated

number of shares subject to New Parent options that will be granted to Mr. Dunham at the completion of the merger is [ ] and the estimated number of shares of New Parent common stock that will be granted to Mr. Dunham at the completion of the merger is [ ].

In general, during the term of Mr. Dunham's employment, Mr. Dunham's compensation and benefits will be, both in the aggregate and with respect to each element of compensation and benefits, the same as that provided to the Chief Executive Officer of New Parent.

Pursuant to Mr. Dunham's new employment agreement, Mr. Dunham will receive an annual base salary of not less than his annual base salary in effect immediately prior to the completion of the merger, subject to annual reviews and increases, bonuses and long-term equity-based compensation that are competitive with industry practices, and participation in the most favorable incentive, retirement, welfare and other benefits New Parent offers to New Parent senior executives, including term life insurance in an amount equal to four times Mr. Dunham's annual base salary. In no event will the annual base salary or annual bonuses (in respect of each applicable fiscal year) provided to Mr. Dunham be less than that provided to the Chief Executive Officer of New Parent. In addition, the long-term equity-based compensation provided to Mr. Dunham will be substantially the same, both in amount, exercise or strike or base price, and other terms and conditions, as those awarded to the Chief Executive Officer of New Parent.

During the term of Mr. Dunham's new employment agreement, Mr. Dunham has agreed not to terminate his employment within six months following a subsequent change of control of New Parent (as defined in Mr. Dunham's new employment agreement), other than as a result of retirement at the end of the term of Mr. Dunham's employment, for good reason (as defined in Mr. Dunham's new employment agreement) or disability. If, during the term of Mr. Dunham's employment, Mr. Dunham's employment is terminated by Mr. Dunham at any time for good reason or by New Parent at any time other than for cause (as defined in Mr. Dunham's new employment agreement) or by reason of Mr. Dunham's death or disability, then Mr. Dunham will be entitled to payments and benefits comparable to those provided to him at the completion of the merger as described above, replacing references to the completion of the merger with references to the termination of Mr. Dunham's employment; provided, that (1) the lump-sum severance payment of salary and bonus plus the additional retirement benefit accruals as described above will be based on the salary and bonus and retirement benefit accruals that Mr. Dunham would have received through the end of the term of his employment, (2) Mr. Dunham will receive a pro rata annual bonus for the year in which his termination of employment occurs, based on the annual bonus paid or awarded in respect of the fiscal year immediately preceding the date of termination of employment, (3) the grants of options, restricted stock and other compensatory awards described above will be based on those that Mr. Dunham would have received through the end of the term of his employment and (4) welfare and other benefits will be continued through the later of three years following the date of termination of his employment and the date Mr. Dunham attains age 70, which we refer to as the "benefits continuation period;" provided, that New Parent's obligation to provide these welfare benefits will cease upon Mr. Dunham's refusal to serve as a member of the New Parent Board of Directors.

If Mr. Dunham's employment is terminated under circumstances described above, Mr. Dunham will receive the following additional benefits, which we refer to as "post-employment compensation," during the benefits continuation period:
(1) continued participation in the Director's Charitable Gift Program, (2) continued participation in welfare benefit plans and fringe benefits arrangements applicable as if Mr. Dunham had remained employed, (3) continued coverage under the comprehensive security program applicable during employment (in the same manner and providing the same level of security protection as in effect on the date of the merger agreement, and in any event on a basis no less favorable than the coverage provided to the Chief Executive Officer of New Parent) and (4) continued participation in the Conoco domestic relocation policy with respect to a single relocation.

If Mr. Dunham remains employed through the expiration of the term of his employment, upon any termination of his employment thereafter, he is entitled to vesting of, and termination of restrictions on, any unvested equity or performance-based awards. In addition, upon such a termination, Mr. Dunham will

receive his post-employment compensation; provided that New Parent's obligation to provide these benefits will cease upon Mr. Dunham's refusal to serve as a member of the New Parent Board of Directors. It is contemplated that Mr. Dunham will serve as a member of the New Parent Board during the benefits continuation period.

SEVERANCE ARRANGEMENTS

Conoco's executive officers (other than Mr. Dunham) participate in the Conoco Key Employee Severance Plan. The plan provides that if the employment of a participant in the plan is terminated (i) within two years of a "Change in Control" of Conoco or (ii) after a "Potential Change in Control" of Conoco but prior to a Change in Control (whether or not a Change in Control ever occurs), in either case by Conoco other than for "cause" or by the participant for "good reason" (as such terms are defined in the plan), the participant will be entitled to:

- a lump-sum severance payment equal to one-and-one-half, two, or three times the sum of the employee's base salary, previous year's bonus, and economic equivalent of the previous year's stock option award;

- the present value of the increase in retirement benefits resulting from the crediting of an additional one-and-one-half, two, or three times the employee's number of years of age and service under the applicable retirement plan;

- 36 months of welfare benefits continuation;

- a pro rata portion of the annual bonus for which the employee is eligible in the year of termination; and

- if necessary, a gross-up payment sufficient to compensate the participant for the amount of any excise tax imposed on payments made under the plan or otherwise pursuant to Section 4999 of the Internal Revenue Code and for any taxes imposed on this additional payment.

Prior to October 19, 2005, the Key Employee Severance Plan may not be amended or terminated if such amendment would be adverse to the interests of any eligible employee, without the employee's written consent. Amounts payable under the plan will be in lieu of any payments or benefits that may be payable to the severed employee under any other plan, policy or program of Conoco relating to severance.

Stockholder approval of the merger will constitute a "Change of Control" under the Key Employee Severance Plan. Assuming that the merger is completed in
[July] 2002, and excluding any gross-up payments for excise taxes that may be payable under Section 4999 of the Internal Revenue Code, the estimated maximum amount of the cash severance payments that would be payable to Messrs. McKee, Nokes and Goldman and all other executive officers of Conoco, upon a termination of their employment by New Parent without cause, is $[ ], $[ ], $[ ], and $[ ], respectively.

CONSEQUENCES OF ANY TRANSACTION OTHER THAN THE MERGER. ACCORDINGLY, EACH CONOCO STOCKHOLDER AND PHILLIPS STOCKHOLDER IS STRONGLY URGED TO CONSULT WITH A TAX ADVISOR TO DETERMINE THE PARTICULAR FEDERAL, STATE, LOCAL OR FOREIGN INCOME OR OTHER TAX CONSEQUENCES OF THE MERGER TO THE HOLDER.

The following discussion is not binding on the Internal Revenue Service. None of Conoco, Phillips or New Parent has requested a ruling from the Internal Revenue Service with respect to any of the U.S. federal income tax consequences of the merger and, as a result, there can be no assurance that the Internal Revenue Service will not disagree with or challenge any of the conclusions described below.

We have structured the transaction so that it is anticipated that the merger of Corvette Merger Corp. with and into Conoco and the merger of Porsche Merger Corp. with and into Phillips will each be a reorganization for U.S. federal income tax purposes, and that the merger will constitute an exchange described in Section 351 of the Internal Revenue Code. Completion of the merger is conditioned upon, among other things, (1) the receipt by Conoco of a written opinion dated the closing date of Cravath,

Swaine & Moore, counsel to Conoco, to the effect that for U.S. federal income tax purposes, the merger of Corvette Merger Corp. with and into Conoco will constitute a reorganization within the meaning of Section 368(a) of the Internal Revenue Code and/or the mergers, taken together, will constitute an exchange described in Section 351 of the Internal Revenue Code and (2) the receipt by Phillips of a written opinion dated the closing date of Wachtell, Lipton, Rosen & Katz, counsel to Phillips, to the effect that for U.S. federal income tax purposes, the merger of Porsche Merger Corp. with and into Phillips will constitute a reorganization within the meaning of Section 368(a) of the Internal Revenue Code and/or the mergers, taken together, will constitute an exchange described in Section 351 of the Internal Revenue Code. Those opinions will be based upon customary assumptions and representations, including representations made by Conoco and Phillips.

Assuming the merger of Corvette Merger Corp. with and into Conoco and the merger of Porsche Merger Corp. with and into Phillips each constitutes a reorganization within the meaning of Section 368(a) of the Internal Revenue Code and/or the mergers, taken together, constitute an exchange described in Section 351 of the Internal Revenue Code:

- no gain or loss will be recognized by Conoco stockholders or Phillips stockholders on the exchange of Conoco common stock or Phillips common stock, respectively, for New Parent common stock in the transaction, except with respect to cash received by Conoco stockholders in lieu of fractional shares of New Parent common stock,

- the aggregate adjusted basis of the New Parent common stock received in the transaction by Conoco stockholders or Phillips stockholders will be equal to the aggregate adjusted basis of those stockholders' Conoco common stock or Phillips common stock, as the case may be, exchanged for the New Parent common stock reduced, in the case of a Conoco stockholder that receives cash in lieu of fractional shares of New Parent common stock, by any amount allocable to the fractional share interests in New Parent common stock for which cash is received, and

- the holding period of New Parent common stock received in the merger by a Conoco stockholder or Phillips stockholder, including, in the case of a Conoco stockholder, any New Parent fractional interest deemed received in the merger, will include the holding period of the stockholder's Conoco common stock or Phillips common stock, as the case may be, exchanged for that New Parent common stock.

The receipt of cash instead of a fractional share of New Parent common stock by a holder of Conoco common stock will result in taxable gain or loss to that Conoco stockholder for U.S. federal income tax purposes equal to the difference between the amount of cash received by the Conoco stockholder and the Conoco stockholder's adjusted tax basis in its Conoco common stock allocable to the fractional share as set forth above. The gain or loss will generally constitute capital gain or loss and will constitute long-term capital gain or loss if the holder's holding period is greater than 12 months as of the date of the merger. For non-corporate holders, this long-term capital gain generally will be taxed at a maximum U.S. federal income tax rate of 20%. The deductibility of capital losses is subject to limitation. Certain non-corporate Conoco stockholders and Phillips stockholders, as the case may be, may be subject to backup withholding at a rate not to exceed 30% on cash payments received instead of fractional shares of New Parent common stock unless they comply with certain certification requirements.

ACCOUNTING TREATMENT

The merger will be accounted for using purchase accounting. Although the business combination of Conoco and Phillips is a merger of equals, generally accepted accounting principles require that one of the two companies in the transaction be designated as the acquiror for accounting purposes. Phillips has been designated as the acquiror based on the fact that its stockholders are expected to hold more than 50% of the New Parent stock after the merger. The purchase price (based on the price of Phillips common stock two days before and after November 19, 2001) will be allocated to Conoco's identifiable assets and liabilities based on their estimated fair market values at the date of the completion of the merger, and any excess of the purchase price over those fair market values will be accounted for as goodwill. The results of

final valuations of property, plant and equipment, and intangible and other assets and the finalization of any potential plans of restructuring have not yet been completed. We may revise the allocation of the purchase price when additional information becomes available.

REGULATORY MATTERS

Certain regulatory requirements imposed by U.S. and foreign regulatory authorities must be complied with before the merger is completed. Conoco and Phillips are not aware of any material governmental consents or approvals that are required prior to the completion of the merger other than those described below. We have agreed that, if any additional governmental consents and approvals are required, we shall each use our reasonable best efforts to obtain these consents and approvals.

Under the HSR Act and the rules promulgated under it by the U.S. Federal Trade Commission, which we refer to as the FTC, the merger cannot be completed until notifications have been given and certain information has been furnished to the FTC and the Antitrust Division of the U.S. Department of Justice, which we refer to as the Antitrust Division, and the specified waiting periods have expired or been terminated. Conoco and Phillips intend to file notification and report forms under the HSR Act with the FTC and the Antitrust Division on
[ ], in which case the waiting period under the HSR Act will expire at 11:59 p.m., Eastern Time, on [ ] unless the FTC or Antitrust Division makes a request for additional information or documentary material before that time or the waiting period is terminated earlier.

At any time before or after completion of the merger, the Antitrust Division or the FTC or any state could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the completion of the merger, to rescind the merger or to seek divestiture of particular assets of Conoco or Phillips. Private parties also may seek to take legal action under the antitrust laws under certain circumstances. A challenge to the merger on antitrust grounds may be made, and, if such a challenge is made, it is possible that Conoco and Phillips will not prevail.

Completion of the merger may also require other regulatory approvals of foreign regulatory authorities. Under the laws of certain jurisdictions, the merger may not be completed unless certain filings are made with the antitrust regulatory authorities of these jurisdictions and these authorities approve or clear the merger. Conoco and Phillips each conducts business in member states of the European Union. Council Regulation (EEC) 4064/89, as amended, requires notification to and approval by the European Commission of mergers or acquisitions involving parties with aggregate worldwide sales and individual European Union sales exceeding specific thresholds before these mergers or acquisitions are implemented. Conoco and Phillips intend to file a merger notification with the European Union antitrust authorities as soon as practicable.

The European Commission must review the merger to determine whether or not it is compatible with the common market, and, accordingly, whether or not to permit it to proceed. A merger or acquisition that does not create or strengthen a dominant position that would significantly impede effective competition in the common market or in a substantial part of it shall be declared compatible with the common market and must be allowed to proceed. If, following a preliminary one-month Phase I investigation, the European Commission determines that it needs to examine the merger more closely because the merger raises serious doubts as to its compatibility with the common market, it must initiate a Phase II investigation. If it initiates a Phase II investigation, the European Commission must issue a final decision as to whether or not the merger is compatible with the common market no later than four months after the initiation of the Phase II investigation.

Conoco and Phillips intend to make a short-form pre-merger notification filing with the Commissioner of Competition under the Competition Act (Canada) as soon as practicable. Verification by the Competition Bureau of receipt of a complete notification will begin the running of a 14-day statutory waiting period. The Commissioner has the ability to require a long-form pre-merger notification to be made where he believes one is justified, in which case receipt of a complete long-form notification will begin the running of a further 42-day statutory waiting period. Conoco and Phillips may implement the

merger at the conclusion of the relevant waiting period, unless the Commissioner obtains an order from the Canadian Competition Tribunal preventing or delaying the completion of the transaction. In addition to a Canadian competition filing, Phillips and Conoco may also be required to file a notification or application for review under the Investment Canada Act, which is a foreign investment, rather than competition, law.

Conoco and Phillips conduct operations in a number of jurisdictions where other regulatory filings or approvals may be required or advisable in connection with the completion of the merger. Under the merger agreement, we are required to obtain these approvals prior to completing the merger, unless the failure to obtain the approvals would not have a material adverse effect on New Parent after completion of the merger. Conoco and Phillips are currently reviewing whether filings or approvals may be required or advisable in those jurisdictions that may be material to Conoco and Phillips. These jurisdictions include, but are not limited to, Australia, Brazil, Czech Republic and Poland.

It is possible that any of the regulatory authorities with which filings are made may seek regulatory concessions as conditions for granting approval of the merger. Under the merger agreement, each of Conoco and Phillips has agreed to use its reasonable best efforts to complete the merger, including to gain clearance from antitrust and competition authorities and to obtain other required approvals. However, neither Conoco nor Phillips nor any of their respective subsidiaries is required to hold separate or divest any of their businesses or assets, or to take, or to agree to take, any action or agree to any limitation that could reasonably be expected to have a material adverse effect on New Parent after giving effect to the merger or to impair substantially the benefits that Conoco and Phillips expected to realize from the merger at the time they entered into the merger agreement. Also, neither Conoco nor Phillips is required to agree to any divestiture, to hold separate any business or to take any other action that is not conditional on the consummation of the merger.

Prior to completing the merger, the applicable waiting period under the HSR Act must expire or be terminated, and Conoco and Phillips are required to obtain antitrust approvals from the European Commission and any other regulatory authorities if the failure to obtain antitrust approvals of those regulatory authorities would have a material adverse effect on New Parent after the completion of the merger.

Although we do not expect regulatory authorities to raise any significant objections in connection with their review of the merger, we cannot assure you that we will obtain all required regulatory approvals or that these regulatory approvals will not contain terms, conditions or restrictions that would be detrimental to New Parent after the completion of the merger.

APPRAISAL RIGHTS

Under the Delaware General Corporation Law, neither Conoco stockholders nor Phillips stockholders will have any appraisal rights as a result of the merger.

RESALE OF NEW PARENT COMMON STOCK

New Parent common stock issued in the merger will not be subject to any restrictions on transfer arising under the Securities Act of 1933, as amended, except for shares of New Parent common stock issued to any Conoco stockholder or Phillips stockholder that is, or is expected to be, an "affiliate" of Conoco or Phillips, as applicable, for purposes of Rule 145 under the Securities Act. Persons that may be deemed to be "affiliates" of Conoco or Phillips for such purposes generally include individuals or entities that control, are controlled by, or are under common control with, Conoco or Phillips, respectively, and include the directors of Conoco and Phillips, respectively. The merger agreement requires each of Conoco and Phillips to use its reasonable best efforts to cause each of its affiliates to execute a written agreement with New Parent to the effect that they will not transfer any New Parent common stock received in the merger, except pursuant to an effective registration statement under the Securities Act or in a transaction not required to be registered under the Securities Act.

This joint proxy statement/prospectus does not cover resales of New Parent common stock received by any person upon completion of the merger, and no person is authorized to make any use of this joint proxy statement/prospectus in connection with any resale.

LEGAL PROCEEDINGS RELATED TO THE MERGER

Several complaints have been filed and remain pending in the Delaware Court of Chancery naming as defendants one or more of Conoco, the directors of Conoco and Phillips. The complaints purport to be filed on behalf of holders of Conoco common stock and allege breaches of fiduciary duty by Conoco directors and, in certain complaints, aiding and abetting these breaches of fiduciary duty by Phillips, in connection with the merger of Conoco and Phillips. The plaintiffs in each case seek to enjoin completion of the merger and/or damages. No answers have been filed and no applications for preliminary relief have been made. Each of Conoco and Phillips intends to defend against these lawsuits vigorously.

THE MERGER AGREEMENT

The following summary of the merger agreement is qualified by reference to the complete text of the merger agreement, which is attached as Annex A to this joint proxy statement/prospectus and is incorporated in this joint proxy statement/prospectus by reference and attached as Annex A.

THE MERGER

Pursuant to the merger agreement, Corvette Merger Corp. will merge with and into Conoco and Porsche Merger Corp. will merge with and into Phillips, with each of Conoco and Phillips surviving as wholly owned subsidiaries of New Parent. In the merger, each outstanding share of Conoco common stock will be converted into the right to receive 0.4677 of a share of New Parent common stock, and each outstanding share of Phillips common stock will be converted into the right to receive one share of New Parent common stock.

MERGER CONSIDERATION

The merger agreement provides that each share of Conoco common stock outstanding immediately prior to the effectiveness of the merger will be converted into the right to receive 0.4677 of a share of New Parent common stock upon the effectiveness of the merger. Any shares of Conoco capital stock held by Conoco as treasury shares or owned by Conoco, New Parent, Corvette Merger Corp. or Porsche Merger Corp. will be canceled without any payment for those shares. The merger agreement provides that each share of Phillips common stock outstanding immediately prior to the effectiveness of the merger will be converted into the right to receive one share of New Parent common stock upon the effectiveness of the merger. Any shares of Phillips capital stock held by Phillips as treasury shares or owned by Phillips, New Parent, Corvette Merger Corp. or Porsche Merger Corp. will be canceled without any payment for those shares.

PROCEDURES FOR EXCHANGE OF SHARE CERTIFICATES; FRACTIONAL SHARES

Conoco stockholders and Phillips stockholders should not return share certificates with the enclosed proxy card.

As soon as reasonably practicable after the completion of the merger,
[ ], the exchange agent, will mail the following materials to each holder of record of Conoco common stock whose shares were converted into the right to receive shares of New Parent common stock:

- a letter of transmittal for use in submitting their shares to the exchange agent for exchange, and

- instructions explaining what Conoco stockholders must do to effect the surrender of Conoco share certificates in exchange for the consideration to be issued in the merger.

Conoco stockholders should complete and sign the letter of transmittal and return it to the exchange agent together with the Conoco stockholders' share certificates in accordance with the instructions.

Upon completion of the merger, each Conoco share certificate will represent only the right to receive 0.4677 of a share of New Parent common stock, with cash instead of any fractional shares of New Parent common stock. New Parent will not issue any fractional shares of New Parent common stock upon the conversion of Conoco common stock.

Phillips share certificates of Phillips stockholders immediately prior to the completion of the merger will be deemed to represent New Parent common stock upon completion of the merger. Phillips stockholders, however, may elect to exchange their Phillips share certificates for New Parent share certificates, at their option.

At or prior to the completion of the merger, New Parent will deposit with the exchange agent, in trust for the benefit of the former Conoco stockholders, New Parent share certificates and will make available to the exchange agent cash sufficient to pay to each former Conoco stockholder after the completion of the merger an amount in cash equal to the product of any fractional share interest to which the former Conoco stockholder would otherwise be entitled and the closing price for a share of New Parent common stock as reported on the New York Stock Exchange on the first trading day following the date of the completion of the merger.

No dividends or distributions with a record date after the merger will be paid to the holders of any unsurrendered Conoco share certificate, nor will those holders be paid cash for any fractional shares of New Parent common stock until their Conoco share certificates are surrendered to the exchange agent for exchange. When their Conoco share certificates are surrendered, any unpaid dividends and any cash instead of fractional shares will be paid without interest.

All shares of New Parent common stock issued upon surrender of Conoco share certificates, including any cash paid instead of any fractional shares of New Parent common stock, will be deemed to have been issued in full satisfaction of all rights relating to those shares of Conoco common stock. Each of Conoco and Phillips will remain obligated, however, to pay any dividends or make any other distributions declared or made by Conoco or Phillips on Conoco common stock or Phillips common stock, as appropriate, with a record date before the completion of the merger and that remain unpaid at the completion of the merger. If Conoco share certificates or Phillips share certificates are presented to New Parent, Conoco, Phillips or the exchange agent after the completion of the merger, they will be canceled and exchanged as described above.

REPRESENTATIONS AND WARRANTIES

Conoco and Phillips have each made a number of representations and warranties to the other regarding aspects of our respective businesses, financial condition, capitalization, corporate structure and other facts pertinent to the merger. The topics covered by these representations and warranties include the following:

- corporate organization, existence, good standing, power and authority;

- subsidiaries;

- capitalization;

- authorization, execution, delivery and performance and the enforceability of the merger agreement and the absence of conflicts or violations under organizational documents, certain agreements and applicable laws or decrees, as a result of the contemplated transactions;

- receipt of all required consents and approvals;

- filings with the Securities and Exchange Commission and the accuracy and completeness of the information contained in those filings, including the financial statements;

- the absence of undisclosed material liabilities;

- the absence of certain changes or events since September 30, 2001;

- legal proceedings;

- compliance with applicable law;

- environmental matters;

- employee benefit plans and labor matters;

- taxes;

- reorganization within the meaning of Section 368(a) of the Internal Revenue Code and/or exchange under Section 351 of the Internal Revenue Code;

- the accuracy of the information contained in this joint proxy statement and prospectus, and the compliance of this joint proxy statement and prospectus with the applicable U.S. securities laws;

- state takeover laws, rights plans;

- the receipt of fairness opinions from our respective financial advisors;

- approval by the Conoco Board of Directors and the Phillips Board of Directors;

- brokers' fees; and

- ownership of the other company's capital stock.

Many of the representations and warranties are qualified by a material adverse effect standard. A material adverse effect, with respect to either Conoco or Phillips, means a material adverse effect on (1) the business, operations, results of operations or financial condition of Conoco or Phillips, as the case may be, and its respective subsidiaries taken as a whole, or (2) the ability of Conoco or Phillips to timely consummate the transactions contemplated by the merger agreement, except, in each case, for any effect reasonably attributable to:

- general political and economic conditions (including prevailing interest rate and stock market levels) in the United States or the other countries in which it operates;

- the general state of the industries in which it operates; or

- the negotiation, announcement, execution or delivery of the merger agreement or the consummation of the transactions contemplated by the merger agreement.

INTERIM OPERATIONS OF CONOCO AND PHILLIPS

Under the merger agreement, each of Conoco and Phillips and their respective subsidiaries has agreed that, prior to completion of the merger, except as expressly contemplated or permitted by the merger agreement, it will carry on its respective business in the usual, regular and ordinary course in all material respects, substantially in the same manner as previously conducted, and will use its reasonable best efforts, among other things, to retain its key employees and to preserve intact its present lines of business and its relationships with third parties so that its ongoing businesses will not be impaired in any material respect at the completion of the merger. Each of Conoco and Phillips has also agreed that it will not, and it will not permit any of its subsidiaries to, enter into any new material line of business or incur or commit any capital expenditures or any obligations or liabilities in connection with such capital expenditures, other than as previously disclosed to the other party or in the ordinary course of business consistent with past practice.

In addition to these agreements regarding the conduct of business generally, subject to specified exceptions, each of Conoco and Phillips has agreed to specific restrictions relating to the following:

- the declaration or payment of dividends;

- the alteration of share capital, including, among other things, stock splits, combinations or reclassifications;

- the repurchase or redemption of capital stock;

- the issuance or sale of capital stock, any voting debt, stock options or other equity interests;

- the amendment of its certificate of incorporation or by-laws;

- the acquisition of material assets or other entities;

- the disposition of material assets;

- the extension of loans, advances, capital contributions or investments;

- the incurrence or guarantee of debt;

- the issuance or sale of debt securities, warrants or other rights to acquire debt securities;

- the taking of actions that would prevent or impede the merger from qualifying as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code or from qualifying as an exchange within the meaning of Section 351 of the Internal Revenue Code;

- changes in compensation of directors or executive officers of the company and its significant subsidiaries;

- changes to employee benefits;

- changes in accounting policies and procedures;

- the amendment or waiver of any standstill agreements; and

- any actions for the purpose of preventing, delaying or impeding the completion of the merger or any other transaction contemplated by the merger agreement.

EMPLOYEE BENEFIT MATTERS

After the completion of the merger, New Parent and its subsidiaries will honor the obligations under employment agreements, severance arrangements and employee and director stock plans of Conoco and Phillips and their respective subsidiaries existing as of the date of the merger agreement in accordance with their terms.

New Parent will also adopt and assume the employee and director stock plans of Conoco and Phillips effective upon completion of the merger.

Subject to obligations under applicable law, it is the intention of Conoco and Phillips to develop new benefit plans, as soon as reasonably practicable following the completion of the merger, which, among other things, (1) treat similarly situated employees on a substantially equivalent basis, taking into account all relevant factors, including duties, geographic location, tenure, qualifications and abilities, and (2) do not discriminate between employees who were covered by Conoco benefit plans, on the one hand, or Phillips benefit plans, on the other hand. It is the current intention of Conoco and Phillips that, for one year following the completion of the merger, New Parent will provide employee benefits to employees and former employees of Conoco or Phillips and their subsidiaries that are comparable in the aggregate to those provided to those employees pursuant to the benefit plans of Conoco or Phillips or their subsidiaries, respectively, in effect on the date of the merger agreement and the date of the completion of the merger.

With respect to benefit plans in which employees and former employees of Conoco or Phillips become eligible to participate after the completion of the merger, and in which such employees and former employees did not participate prior to the completion of the merger, New Parent will:

- waive all pre-existing conditions, exclusions and waiting periods under the new benefit plan with respect to applicable participation and coverage requirements, except to the extent those conditions, exclusions and waiting periods would apply under the analogous benefit plan of Conoco or Phillips, as the case may be;

- provide each employee and his or her eligible dependents with credit for any co-payments and deductibles paid prior to the completion of the merger under a benefit plan of Conoco or Phillips to the same extent that such credit was given prior to the completion of the merger under the analogous benefit plan of Conoco or Phillips, as the case may be, in satisfying any applicable deductible or out-of-pocket requirements under any new benefit plan; and

- recognize all service with Conoco and Phillips, and their respective affiliates, for all purposes (including purposes of eligibility to participate, vesting credit, entitlement to benefits, and, except with respect to defined benefit pension plans, benefit accrual) to the extent that service is taken into account under the new benefit plan, but not if such credit would result in the duplication of benefits.

TERMINATION OF THE MERGER AGREEMENT

Either Conoco or Phillips may terminate the merger agreement:

- by mutual written consent of both companies;

- if the merger is not completed on or before May 18, 2003, so long as the failure to complete the merger before that date is not the result of the failure by the terminating company to fulfill any of its obligations under the merger agreement;

- if a governmental entity takes any action permanently prohibiting the transactions contemplated by the merger agreement or fails to take any other action that is necessary to satisfy the conditions regarding the antitrust laws, the New York Stock Exchange listing, the effectiveness of the registration statement on Form S-4, of which this joint proxy statement/prospectus forms a part, and that act has become final and nonappealable;

- if either Conoco stockholders or Phillips stockholders fail to adopt the merger agreement at a duly held meeting of stockholders;

- if the other company fails to recommend that its stockholders adopt the merger agreement or changes its recommendation or fails to call its special meeting;

- if the other company breaches or fails to perform any of its representations, warranties, covenants or other agreements contained in the merger agreement and the breach or failure cannot be cured on or before May 18, 2003; or

- prior to the receipt of the approval of its stockholders, if:

- its board of directors has received a superior proposal,

- in light of the superior proposal, its board of directors has determined in good faith, after consultation with outside counsel, that it is necessary for it to withdraw or modify its approval or recommendation of the merger agreement or the merger in order to comply with its fiduciary duty,

- it has given the other company at least five business days' written notice and then reconfirmed its board of directors' determination under the immediately preceding sub-bullet after taking into account any revised proposal by the other company,

- it is not in breach of its no solicitation covenant, and

- it is not in breach of its material representations, warranties, covenants or other agreements contained in the merger agreement.

TERMINATION FEES

Conoco has agreed to pay a termination fee of $550 million to Phillips in the event that:

- (1)(a) either Conoco or Phillips terminates the merger agreement because Conoco stockholders fail to adopt the merger agreement or Conoco fails to hold the Conoco special meeting on or before May 18, 2003, or (b) Phillips terminates the merger agreement because Conoco breaches or fails to perform any of its representations, warranties, covenants or other agreements contained in the merger agreement and the breach or failure cannot be cured on or before May 18, 2003, (2) an acquisition proposal with respect to Conoco is publicly announced or otherwise communicated to Conoco management, the Conoco Board of Directors or Conoco stockholders after the date of the merger agreement and is not publicly withdrawn more than 30 days prior to the termination of the merger agreement, and (3) within 12 months of the termination, Conoco enters into a definitive agreement with respect to or completes any acquisition proposal; or

- Phillips terminates the merger agreement because the Conoco Board of Directors fails to recommend the adoption of the merger agreement to Conoco stockholders or changes its recommendation or fails to call the Conoco special meeting as required by the merger agreement; or

- prior to receipt of the approval of Conoco stockholders, Conoco terminates the merger agreement in connection with a superior proposal as described under "-- Termination of the Merger Agreement;" or

- (1) either Conoco or Phillips terminates the merger agreement because Conoco stockholders fail to adopt the merger agreement or Conoco fails to hold the Conoco special meeting on or before May 18, 2003, (2) an acquisition proposal with respect to Conoco is publicly announced or otherwise communicated to Conoco management, the Conoco Board of Directors or Conoco stockholders after the date of the merger agreement, and (3) within 12 months of the termination, Conoco enters into a definitive agreement with respect to or completes an acquisition proposal with the person who made the acquisition proposal referred to in clause (2).

Phillips has agreed to pay a termination fee of $550 million to Conoco in the event that:

- (1)(a) either Conoco or Phillips terminates the merger agreement because Phillips stockholders fail to adopt the merger agreement or Phillips fails to hold the Phillips special meeting on or before May 18, 2003, or
(b) Conoco terminates the merger agreement because Phillips breaches or fails to perform any of its representations, warranties, covenants or other agreements contained in the merger agreement and the breach or failure cannot be cured on or before May 18, 2003, (2) an acquisition proposal with respect to Phillips is publicly announced or otherwise communicated to Phillips management, the Phillips Board of Directors or Phillips stockholders after the date of the merger agreement and is not publicly withdrawn more than 30 days prior to the termination of the merger agreement, and (3) within 12 months of the termination, Phillips enters into a definitive agreement with respect to or completes any acquisition proposal; or

- Conoco terminates the merger agreement because the Phillips Board of Directors fails to recommend the adoption of the merger agreement to Phillips stockholders or changes such recommendation or fails to call the Phillips special meeting as required by the merger agreement; or

- prior to receipt of the approval of Phillips stockholders, Phillips terminates the merger agreement in connection with a superior proposal as described under "-- Termination of the Merger Agreement;" or

- (1) either Conoco or Phillips terminates the merger agreement because Phillips stockholders fail to adopt the merger agreement or Phillips fails to hold the Phillips special meeting on or before May 18, 2003, (2) an acquisition proposal with respect to Phillips is publicly announced or otherwise communicated to Phillips management, the Phillips Board of Directors or Phillips stockholders after the date of the merger agreement, and (3) within 12 months of such termination, Phillips enters into a definitive agreement with respect to or completes an acquisition proposal with the person that made the acquisition proposal referred to in clause (2).

OTHER EXPENSES

Whether or not the merger is completed, and except as provided under "-- Termination Fees," all expenses and fees incurred in connection with the merger agreement and the merger will be paid by the party incurring the expenses or fees, except that all expenses and fees incurred in connection with the filing, printing and mailing of this joint proxy statement/prospectus and the registration statement on Form S-4, of which this joint proxy statement/prospectus forms a part and all expenses and fees incurred in connection with any consultants that Conoco and Phillips shall have retained to assist in obtaining the approvals and clearances under the antitrust laws, will, in each case, be shared equally by Conoco and Phillips.

INDEMNIFICATION AND INSURANCE

The merger agreement provides that New Parent (1) will indemnify and hold harmless, and provide advancement of expenses to, all past and present directors, officers and employees of Conoco and Phillips and their subsidiaries to the same extent as such individuals are indemnified or have the right to advancement of expenses as of the date of the merger agreement and (2) will not take any action to amend, modify or repeal the provisions for indemnification of directors, officers and employees contained in Conoco's restated certificate of incorporation or by-laws or the indemnification provisions contained in Phillips' restated certificate of incorporation or by-laws for acts or omissions occurring at or prior to the completion of the merger. In addition, the merger agreement requires New Parent to maintain the current (or, in the aggregate, no less advantageous) provisions in Conoco's restated certificate of incorporation or by-laws and Phillips' restated certificate of incorporation or by-laws regarding directors', officers' and employees' liability and indemnification and directors and officers' liability (and fiduciary) insurance policies of Conoco and its subsidiaries, and Phillips and its subsidiaries, in each case, for six years following the completion of the merger.

ADDITIONAL AGREEMENTS

Each of Conoco and Phillips has agreed to cooperate with each other and to use its reasonable best efforts to take all actions and do all things necessary, proper and advisable under the merger agreement and applicable laws to complete the merger as soon as practicable. Accordingly, each has agreed to use its reasonable best efforts to:

- as promptly as practicable, prepare and file all applications, notices, petitions, filings, tax ruling requests and other documents, and to obtain all consents, waivers, licenses, orders, registrations, approvals, permits, rulings, authorizations and clearances from any third party or any domestic or foreign governmental entity necessary to complete the merger; and

- take all reasonable steps to obtain all necessary consents and required approvals, including those required under applicable antitrust laws.

Conoco and Phillips have also agreed to use their reasonable best efforts, including (1) selling, holding separate or otherwise disposing of or conducting their respective businesses in a specified manner,

or (2) agreeing to sell, hold separate or otherwise dispose of or conduct their business in a specified manner, or (3) permitting the sale, holding separate or other disposition of their assets or the conduct of their respective businesses in a specified manner, to contest and resist actions challenging the merger as illegal and laws or orders making the merger illegal or prohibiting or materially impairing or delaying the merger. However, neither Conoco nor Phillips shall be required to take any action that could reasonably be expected to have a material adverse effect on New Parent after giving effect to the merger or to impair substantially the benefits that Conoco and Phillips expected to realize from the merger at the time they entered into the merger agreement. Also, neither Phillips nor Conoco shall be required to agree to, or effect any divestiture, hold separate any business or take any other action that is not conditional on the completion of the merger.

The merger agreement provides that the executive headquarters for New Parent will be located in the Houston, Texas area and also provides for other governance related matters. See "Directors and Management Following the Merger."

AMENDMENT; EXTENSION AND WAIVER

The merger agreement may be amended by Conoco and Phillips, by action taken or authorized by their respective boards of directors at any time before or after the adoption of the merger agreement by Conoco stockholders or Phillips stockholders. After the adoption of the merger agreement, no amendment may be made that by law or in accordance with the rules of the New York Stock Exchange requires further approval by Conoco stockholders or Phillips stockholders, as the case may be, without this further approval. All amendments to the merger agreement must be in writing signed by each party.

At any time prior to the completion of the merger, Conoco and Phillips, by action taken or authorized by their respective boards of directors may, to the extent legally allowed, extend the time for performance of any obligations and waive any inaccuracies in representations and warranties or compliance with any agreements or conditions contained in the merger agreement. Any agreement to any of these extensions or waivers must be in writing.

DIRECTORS AND MANAGEMENT FOLLOWING THE MERGER

DIRECTORS

The merger agreement provides that, at the completion of the merger, the New Parent Board of Directors will consist of 16 members divided into three classes with each class serving a staggered three-year term. Initially:

- Class I will consist of five directors, two directors nominated by Conoco and three directors nominated by Phillips, who will hold office until the first annual meeting following the completion of the merger;

- Class II will consist of five directors, three directors nominated by Conoco and two directors nominated by Phillips, who will hold office until the second annual meeting following the completion of the merger; and

- Class III will consist of six directors, three directors nominated by Conoco (including Archie W. Dunham, Chairman and Chief Executive Officer of Conoco) and three directors nominated by Phillips (including J. J. Mulva, Chairman and Chief Executive Officer of Phillips), who will hold office until the third annual meeting following the completion of the merger. Conoco and Phillips will select their designees from the current members of the Conoco Board of Directors and the Phillips Board of Directors, respectively.

Messrs. Dunham and Mulva will serve as directors of New Parent. Mr. Dunham will serve as Chairman of the New Parent Board, subject to the terms of Mr. Dunham's new employment agreement, and Mr. Mulva will become the Chairman of the New Parent Board of Directors following the retirement of Mr. Dunham. For further details on the roles and responsibilities of Mr. Dunham and Mr. Mulva see "The Merger Interests of Conoco Directors and Management in the Merger -- Employment Agreement with Archie W. Dunham" and "The Merger Interests of Phillips Directors and Management in the Merger -- Employment Agreement with James J. Mulva." Conoco and Phillips have not yet selected any other directors who will be designated to serve on the New Parent Board of Directors. See also "The Merger -- Interest of Conoco Directors and Management in the Merger."

COMMITTEES OF THE BOARD OF DIRECTORS

Each of the committees of the New Parent Board of Directors initially will consist of an equal number of the directors designated by Conoco and Phillips. The New Parent Board of Directors shall have

- an Executive Committee,

- an Audit and Compliance Committee,

- a Compensation Committee,

- a Committee on Directors' Affairs, and

- a Public Policy Committee,

each consisting of at least three directors, to perform the functions traditionally performed by these committees. In addition, the New Parent Board of Directors may designate other committees, each consisting of one or more of the directors of New Parent.

COMPENSATION OF DIRECTORS

The directors may be paid their expenses, if any, of attendance at each meeting of the New Parent Board of Directors and will receive compensation for their services as directors as shall be determined by the New Parent Board of Directors. Members of the committees of the New Parent Board of Directors may be allowed like compensation for attending committee meetings.

FORMATION OF NEW PARENT; THE MERGERS

2.1 Formation of New Parent; Merger Subs. (a) Phillips and Conoco have caused New Parent to be organized under the laws of the State of Delaware and each owns 50% of the capital stock of New Parent. The authorized capital stock of New Parent consists of 100 shares of common stock, par value $.01 per share (the "New Parent Common Stock"), of which one share has been issued to Phillips and one share has been issued to Conoco. Phillips and Conoco shall take, and shall cause New Parent to take, all requisite action to cause the certificate of incorporation of New Parent to be in the form of Exhibit A (the "New Parent Charter") and the by-laws of the New Parent to be in the form of Exhibit B (the "New Parent By-Laws"), in each case, at the Effective Time.

(b) Merger Subs. Phillips and Conoco have caused New Parent to organize, and New Parent has organized, Merger Sub One and Merger Sub Two under the laws of the State of Delaware. The authorized capital stock of Merger Sub One consists of 100 shares of common stock, par value $.01 per share (the "Merger Sub One Common Stock"), all of which are validly issued, fully paid and nonassessable, and are owned by New Parent free and clear of any liens, pledges, charges, encumbrances and security interests whatsoever ("Liens"). The authorized capital stock of Merger Sub Two consists of 100 shares of common stock, par value $.01 per share (the "Merger Sub Two Common Stock"), all of which are validly issued, fully paid and nonassessable, and are owned by New Parent free and clear of any Liens.

2.2 The Mergers. Upon the terms and subject to the conditions hereof, in accordance with the DGCL, at the Effective Time:

(a) The Phillips Merger. Merger Sub One shall merge with and into Phillips, with Phillips continuing as the surviving corporation in the Phillips Merger (the "Phillips Surviving Corporation") and the separate corporate existence of Merger Sub One shall cease. As a result of the Phillips Merger, Phillips will become a wholly owned subsidiary of New Parent.

(b) The Conoco Merger. Merger Sub Two shall merge with and into Conoco, with Conoco continuing as the surviving corporation in the Conoco Merger (the "Conoco Surviving Corporation") and the separate corporate existence of Merger Sub Two shall cease.

As a result of the Conoco Merger, Conoco will become a wholly owned subsidiary of New Parent.

2.3 Effective Time of the Mergers. As soon as practicable on the Closing Date, Phillips shall file with the Secretary of State of the State of Delaware (the "Delaware Secretary") a certificate of merger with respect to the Phillips Merger (the "Phillips Certificate of Merger") and Conoco shall file with the Delaware Secretary a certificate of merger with respect to the Conoco Merger (the "Conoco Certificate of Merger," together with the Phillips Certificate of Merger, the "Certificates of Merger"), which Certificates of Merger shall be in such form as is required by, and executed and acknowledged in accordance with, the DGCL. The Mergers shall become effective at such date and time as Phillips and Conoco shall agree and shall be specified in the Certificates of Merger; provided that (i) such date and time shall be after the time of filing of the Certificates of Merger and (ii) both Mergers shall become effective at the same date and time. As used in this Agreement, the term "Effective Time" shall mean the date and time when the Mergers become effective.

2.4 Effects of the Mergers. The Mergers shall have the effects set forth in the applicable provisions of the DGCL.

2.5 Closing. Upon the terms and subject to the conditions set forth in Article VII and the termination rights set forth in Article VIII, the closing of the transactions contemplated by this Agreement (the "Closing") will take place at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York, 10019 at 10:00 A.M. on the first Business Day following the satisfaction or waiver (subject to applicable law) of the conditions (excluding conditions that, by their nature, cannot be satisfied until the Closing Date) set forth in Article VII, unless this Agreement has been theretofore terminated pursuant to its terms or unless another place, time or date is agreed to in writing by Phillips and Conoco (the date of the Closing, the "Closing Date").

2.6 Certificates of Incorporation. (a) At the Effective Time, the certificate of incorporation of the Phillips Surviving Corporation shall be amended in its entirety to read as set forth in Exhibit C, until thereafter changed or amended as provided therein or by applicable law.

(b) At the Effective Time, the certificate of incorporation of the Conoco Surviving Corporation shall be amended in its entirety to read as set forth in Exhibit D, until thereafter changed or amended as provided therein or by applicable law.

2.7 By-Laws. At the Effective Time, the by-laws of Merger Sub One shall be the by-laws of the Phillips Surviving Corporation and the by-laws of Merger Sub Two shall be the by-laws of the Conoco Surviving Corporation.

2.8 Directors and Officers. (a) The directors and officers of New Parent at the Effective Time shall be as Phillips and Conoco shall hereafter agree subject to the covenants and agreements set forth in Section 6.2.

(b) The directors of Merger Sub One immediately prior to the Effective Time shall be the directors of the Phillips Surviving Corporation and the officers of Phillips immediately prior to the Effective Time shall be the officers of the Phillips Surviving Corporation, in each case, until their respective successors are duly elected and qualified.

(c) The directors of Merger Sub Two immediately prior to the Effective Time shall be the directors of the Conoco Surviving Corporation and the officers of Conoco immediately prior to the Effective Time shall be the officers of the Conoco Surviving Corporation, in each case, until their respective successors are duly elected and qualified.

(d) Phillips and Conoco shall cause such persons as shall be mutually agreed upon by Phillips and Conoco to be appointed directors of Merger Sub One and Merger Sub Two, respectively, effective as of immediately prior to the Effective Time.

2.9 Actions of Phillips and Conoco. Phillips and Conoco, as the holders of all the outstanding shares of New Parent Common Stock, have approved this Agreement and the transactions contemplated hereby and shall cause New Parent, as the sole stockholder of each of Merger Sub One and Merger Sub Two, to adopt this Agreement. Each of Phillips and Conoco shall take all actions necessary to cause New Parent, Merger Sub One and Merger Sub Two to take any actions necessary in order to consummate the Mergers and the other transactions contemplated hereby.

2.10 Actions of New Parent. New Parent shall honor, and shall cause the Phillips Surviving Corporation and the Conoco Surviving Corporation, as applicable, to honor, in accordance with their respective terms, the obligations under the employment agreements and severance plans and arrangements listed in the Phillips Disclosure Schedule and the Conoco Disclosure Schedule, as applicable, and under the Phillips Stock Plans and the Conoco Stock Plans, as applicable, for rights and benefits arising as a result of this Agreement and the transactions contemplated hereby.

ARTICLE III

CONVERSION OF SECURITIES

3.1 Effect on Capital Stock of Phillips and Merger Sub One. At the Effective Time, by virtue of the Phillips Merger and without any action on the part of Phillips, New Parent, Merger Sub One or any holder of any shares of Phillips Common Stock:

(a) All shares of Phillips Capital Stock that are held by Phillips as treasury stock or that are owned by New Parent, Phillips, Merger Sub One or Merger Sub Two immediately prior to the Effective Time shall cease to be outstanding and shall be cancelled and retired and shall cease to exist and no consideration shall be delivered in exchange therefor.

(b) Subject to Section 3.1(a), each outstanding share of Phillips Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive one fully paid and nonassessable share of New Parent Common Stock (the "Phillips Merger Consideration"). All shares of New Parent Common Stock issued pursuant to this Section 3.1(b) shall be duly authorized and validly issued and free of preemptive rights, with no personal liability attaching to the ownership thereof.

(c) All of the shares of Phillips Common Stock converted into the right to receive New Parent Common Stock pursuant to this Section 3.1 shall cease to be outstanding and shall be cancelled and retired and shall cease to exist and, as of the Effective Time, the holders of Phillips Common Stock shall be deemed to have received shares of New Parent Common Stock (without the requirement for the surrender of any certificate previously representing any such shares of Phillips Common Stock or issuance of new certificates representing New Parent Common Stock), with each certificate representing shares of Phillips Common Stock prior to the Effective Time being deemed to represent automatically an equivalent number of shares of New Parent Common Stock.

(d) Each share of Merger Sub One Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into one share of common stock of the Phillips Surviving Corporation.

3.2 Effect on Capital Stock of Conoco and Merger Sub Two. At the Effective Time, by virtue of the Mergers and without any action on the part of Conoco, New Parent, Merger Sub Two or any holder of any shares of Conoco Common Stock:

(a) All shares of Conoco Capital Stock that are held by Conoco as treasury stock or that are owned by New Parent, Conoco, Merger Sub One or Merger Sub Two immediately prior to the Effective Time shall cease to be outstanding and shall be cancelled and retired and shall cease to exist.

(b) Subject to Sections 3.2(a) and 3.10, each outstanding share of Conoco Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive 0.4677 (the "Exchange Ratio") of a fully paid and nonassessable share of New Parent Common Stock (the "Conoco Merger Consideration"). All of such shares of New Parent Common Stock shall be duly authorized and validly issued and free of preemptive rights, with no personal liability attaching to the ownership thereof. All shares of Conoco Common Stock shall cease to be outstanding and shall be cancelled and retired and shall cease to exist, and each holder of a certificate that immediately prior to the Effective Time represented any such shares of Conoco Common Stock (a "Conoco Certificate") shall thereafter cease to have any rights with respect to such shares of Conoco Common Stock, except the right to receive the Conoco Merger Consideration to be issued in consideration therefor, any cash in lieu of fractional shares of applicable New Parent Common Stock with respect thereto to be issued in consideration therefor and any dividends or other distributions to which holders of Conoco Common Stock become entitled all in accordance with this Article III upon the surrender of such Conoco Certificate.

(c) If, between the date of this Agreement and the Effective Time, there is a reclassification, recapitalization, stock split, split-up, stock dividend, combination or exchange of shares with respect to, or rights issued in respect of, Conoco Common Stock or Phillips Common Stock, the Exchange Ratio shall be adjusted accordingly to provide to the holders of Conoco Common Stock and Phillips Common Stock the same economic effect as contemplated by this Agreement prior to such event.

(d) Each share of Merger Sub Two Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into one share of common stock of the Conoco Surviving Corporation.

3.3 Effect on New Parent Common Stock. At the Effective Time, each share of the capital stock of New Parent issued and outstanding immediately prior to the Effective Time shall remain outstanding. Immediately following the Effective Time, shares of the capital stock of New Parent owned by the Phillips Surviving Corporation or the Conoco Surviving Corporation shall be cancelled by New Parent without payment therefor.

3.4 Conoco Stock Options and Other Equity-Based Awards. (a) Each option to purchase shares of Conoco Common Stock (a "Conoco Stock Option") and each stock appreciation right with respect to shares of Conoco Common Stock (a "Conoco SAR") granted under the employee and director stock plans of Conoco (the "Conoco Stock Plans"), whether vested or unvested, that is outstanding immediately prior to the Effective Time shall cease to represent respectively a right to acquire shares of Conoco Common Stock or a stock appreciation right with respect to shares of Conoco Common Stock and shall be converted, at the Effective Time, into respectively an option to purchase shares of New Parent Common Stock (a "New Parent Stock Option") and a stock appreciation right with respect to shares of New Parent Common Stock (a "New Parent SAR"), on the same terms and conditions as were applicable under such Conoco Stock Option or Conoco SAR (but taking into account any changes thereto, including the acceleration thereof, provided for in the Conoco Stock Plans, in any award agreement or in such Conoco Stock Option or Conoco SAR by reason of this Agreement or the transactions contemplated hereby). The number of shares of New Parent Common Stock subject to each such New Parent Stock Option or New Parent SAR shall be the number of shares of Conoco Common Stock subject to each such Conoco Stock Option or Conoco SAR multiplied by the Exchange Ratio, rounded, if necessary, to the nearest whole share of New Parent Common Stock, and such New Parent Stock Option or New Parent SAR shall have an exercise price (or base price) per share (rounded to the nearest one-hundredth of a cent) equal to the per share exercise price (or base price) specified in such Conoco Stock Option or Conoco SAR divided by the Exchange Ratio; provided, however, that, in the case of any Conoco Stock Option to which Section 421 of the Code as of the Effective Time (after taking into account the effect of any accelerated vesting thereof) applies by reason of its qualification under Section 422 of the Code, the exercise price, the number of shares of New Parent Common Stock subject to such option and the terms and conditions of exercise of such option and any related SAR shall be determined in a manner consistent with the requirements of Section 424(a) of the Code.

(b) At the Effective Time, each right of any kind, contingent or accrued, to receive shares of Conoco Common Stock or benefits measured by the value of a number of shares of Conoco Common Stock, and each award of any kind consisting of shares of Conoco Common Stock, granted under the Conoco Stock Plans (including restricted stock, restricted stock units, deferred stock units and dividend equivalents), other than Conoco Stock Options or Conoco SARs (each, a "Conoco Stock-Based Award"), whether vested or unvested, which is outstanding immediately prior to the Effective Time shall cease to represent a right or award with respect to shares of Conoco Common Stock and shall be converted, at the Effective Time, into a right or award with respect to New Parent Common Stock (a "New Parent Stock-Based Award"), on the same terms and conditions as were applicable under the Conoco Stock-Based Awards (but taking into account any changes thereto, including the acceleration thereof, provided for in the Conoco Stock Plans, in any award agreement or in such Conoco Stock-Based Award by reason of this Agreement or the transactions contemplated hereby). The number of shares of New Parent Common Stock subject to each such New Parent Stock-Based Award shall be equal to the number of shares of Conoco Common Stock subject to the Conoco Stock-Based Award, multiplied by the Exchange Ratio,

rounded if necessary to the nearest whole share of New Parent Common Stock. All dividend equivalents credited to the account of each holder of a Conoco Stock-Based Award as of the Effective Time shall remain credited to such holder's account immediately following the Effective Time, subject to adjustment in accordance with the foregoing.

(c) As soon as practicable after the Effective Time, New Parent shall deliver to the holders of Conoco Stock Options, Conoco SARs and Conoco Stock-Based Awards appropriate notices setting forth such holders' rights pursuant to the respective Conoco Stock Plans and agreements evidencing the grants of such Conoco Stock Options, Conoco SARs and Conoco Stock-Based Awards, and stating that such Conoco Stock Options, Conoco SARs and Conoco Stock-Based Awards and agreements have been assumed by New Parent and shall continue in effect on the same terms and conditions (subject to the adjustments required by this Section 3.4 after giving effect to the Mergers and the terms of the Conoco Stock Plans).

(d) Prior to the Effective Time, Conoco shall take all necessary action for the adjustment of Conoco Stock Options, Conoco SARs and Conoco Stock-Based Awards under this Section 3.4. New Parent shall reserve for issuance a number of shares of New Parent Common Stock at least equal to the number of shares of New Parent Common Stock that will be subject to New Parent Stock Options, New Parent SARs and New Parent Stock-Based Awards as a result of the actions contemplated by this Section 3.4. As soon as practicable following the Effective Time, New Parent shall file a registration statement on Form S-8 (or any successor form, or if Form S-8 is not available, other appropriate forms) with respect to the shares of New Parent Common Stock subject to such New Parent Stock Options, New Parent SARs and New Parent Stock-Based Awards and shall maintain the effectiveness of such registration statement or registration statements (and maintain the current status of the prospectus or prospectuses contained therein) for so long as such New Parent Stock Options, New Parent SARs or New Parent Stock-Based Awards remain outstanding.

3.5 Phillips Stock Options and Other Equity-Based Awards. (a) Each option to purchase shares of Phillips Common Stock (a "Phillips Stock Option") and each stock appreciation right with respect to shares of Phillips Common Stock (a "Phillips SAR") granted under the employee and director stock plans of Phillips (the "Phillips Stock Plans"), whether vested or unvested, that is outstanding immediately prior to the Effective Time shall cease to represent respectively a right to acquire shares of Phillips Common Stock and shall be converted, at the Effective Time, into a New Parent Stock Option and a New Parent SAR, on the same terms and conditions as were applicable under such Phillips Stock Option or Phillips SAR (but taking into account any changes thereto, including the acceleration thereof, provided for in the Phillips Stock Plans, in any award agreement or in such Phillips Stock Option or Phillips SAR by reason of this Agreement or the transactions contemplated hereby). The number of shares of New Parent Common Stock subject to each such New Parent Stock Option or New Parent SAR shall be equal to the number of shares of Phillips Common Stock subject to each such Phillips Stock Option or Phillips SAR and such New Parent Stock Option or New Parent SAR shall have an exercise price (or base price) per share equal to the per share exercise price (or base price) specified in such Phillips Stock Option or Phillips SAR.

(b) At the Effective Time, each right of any kind, contingent or accrued, to receive shares of Phillips Common Stock or benefits measured by the value of a number of shares of Phillips Common Stock, and each award of any kind consisting of shares of Phillips Common Stock, granted under the Phillips Stock Plans (including restricted stock, restricted stock units, deferred stock units and dividend equivalents), other than Phillips Stock Options or Phillips SARs (each, a "Phillips Stock-Based Award"), whether vested or unvested, which is outstanding immediately prior to the Effective Time shall cease to represent a right or award with respect to shares of Phillips Common Stock and shall be converted, at the Effective Time, into a New Parent Stock-Based Award, on the same terms and conditions as were applicable under the Phillips Stock-Based Awards (but taking into account any changes thereto, including the acceleration thereof, provided for in the Phillips Stock Plans, in any award agreement or in such Phillips Stock-Based Award by reason of this Agreement or the transactions contemplated hereby). The number of shares of New Parent Common Stock subject to each such New Parent Stock-Based Award shall be equal to the

number of shares of Phillips Common Stock subject to the Phillips Stock-Based Award. All dividend equivalents credited to the account of each holder of a Phillips Stock-Based Award as of the Effective Time shall remain credited to such holder's account immediately following the Effective Time, subject to adjustment in accordance with the foregoing.

(c) As soon as practicable after the Effective Time, New Parent shall deliver to the holders of Phillips Stock Options, Phillips SARs and Phillips Stock-Based Awards appropriate notices setting forth such holders' rights pursuant to the respective Phillips Stock Plans and agreements evidencing the grants of such Phillips Stock Options, Phillips SARs and Phillips Stock-Based Awards and stating that such Phillips Stock Options, Phillips SARs and Phillips Stock-Based Awards and agreements have been assumed by New Parent and shall continue in effect on the same terms and conditions (subject to the adjustments required by this Section 3.5 after giving effect to the Mergers and the terms of the Phillips Stock Plans).

(d) Prior to the Effective Time, Phillips shall take all necessary action for the adjustment of Phillips Stock Options, Phillips SARs and Phillips Stock-Based Awards under this Section 3.5. New Parent shall reserve for issuance a number of shares of New Parent Common Stock at least equal to the number of shares of New Parent Common Stock that will be subject to New Parent Stock Options, New Parent SARs and New Parent Stock-Based Awards as a result of the actions contemplated by this Section 3.5. As soon as practicable following the Effective Time, New Parent shall file a registration statement on Form S-8 (or any successor form, or if Form S-8 is not available, other appropriate forms) with respect to the shares of New Parent Common Stock subject to such New Parent Stock Options, New Parent SARs and New Parent Stock-Based Awards and shall maintain the effectiveness of such registration statement or registration statements (and maintain the current status of the prospectus or prospectuses contained therein) for so long as such New Parent Stock Options, New Parent SARs and New Parent Stock-Based Awards remain outstanding.

3.6 Exchange Fund. Prior to the Effective Time, Phillips and New Parent shall appoint Mellon Investor Services LLC, or a commercial bank or trust company, or a subsidiary thereof, reasonably acceptable to Conoco, to act as exchange agent hereunder for the purpose of exchanging Conoco Certificates for the Conoco Merger Consideration (the "Exchange Agent"). At or prior to the Effective Time, New Parent shall deposit with the Exchange Agent, in trust for the benefit of holders of shares of Conoco Common Stock, certificates representing the shares of New Parent Common Stock issuable pursuant to Section 3.2 in exchange for outstanding shares of Conoco Common Stock. Following the Effective Time, New Parent agrees to make available to the Exchange Agent from time to time as needed, cash sufficient to pay any amounts required under Sections 3.8 and 3.10. Any cash and certificates representing New Parent Common Stock deposited with the Exchange Agent shall hereinafter be referred to as the "Exchange Fund."

3.7 Exchange Procedures. (a) Promptly after the Effective Time, New Parent shall cause the Exchange Agent to mail to each holder of a Conoco Certificate
(i) a letter of transmittal that shall specify that delivery shall be effected, and risk of loss and title to the Conoco Certificates shall pass, only upon proper delivery of the Conoco Certificates to the Exchange Agent, and which letter shall be in customary form and have such other provisions as Phillips or Conoco may reasonably specify (such letter to be reasonably acceptable to Phillips and Conoco prior to the Effective Time) and (ii) instructions for effecting the surrender of such Conoco Certificates in exchange for the Conoco Merger Consideration, together with any dividends and other distributions with respect thereto and any cash in lieu of fractional shares of New Parent Common Stock. Upon surrender of a Conoco Certificate to the Exchange Agent together with such letter of transmittal, duly executed and completed in accordance with the instructions thereto, and such other documents as may reasonably be required by the Exchange Agent, the holder of such Conoco Certificate shall be entitled to receive in exchange therefor (A) certificates representing shares of New Parent Common Stock representing, in the aggregate, the whole number of shares of New Parent Common Stock that such holder has the right to receive pursuant to
Section 3.2 (after taking into account all shares of Conoco Common Stock then held by such holder) and (B) a check in the amount equal to the cash that such holder has the right to receive pursuant to the provisions of this Article III,

including cash in lieu of any fractional shares of New Parent Common Stock pursuant to Section 3.10 and dividends and other distributions pursuant to
Section 3.8. Any uncertificated shares of Conoco Common Stock in book-entry form shall be deemed surrendered to the Exchange Agent at the Effective Time, and each holder thereof shall be entitled to receive (A) certificates representing shares of New Parent Common Stock representing, in the aggregate, the whole number of shares of New Parent Common Stock that such holder has the right to receive pursuant to Section 3.2 (after taking into account all shares of Conoco Common Stock then held by such holder) and (B) a check in the amount equal to the cash that such holder has the right to receive pursuant to the provisions of this Article III, including cash in lieu of any fractional shares of New Parent Common Stock pursuant to Section 3.10 and dividends and other distributions pursuant to Section 3.8. Until such time as a certificate representing New Parent Common Stock is issued to or at the direction of the holder of a surrendered Conoco Certificate, such New Parent Common Stock shall be deemed not outstanding and shall not be entitled to vote on any matter. No interest will be paid or will accrue on any cash payable pursuant to Section 3.8 or Section 3.10. In the event of a transfer of ownership of Conoco Common Stock that is not registered in the transfer records of Conoco, one or more shares of New Parent Common Stock evidencing, in the aggregate, the proper number of shares of New Parent Common Stock, a check in the proper amount of cash that such holder has the right to receive pursuant to the provisions of this Article III, including cash in lieu of any fractional shares of New Parent Common Stock pursuant to
Section 3.10 and any dividends or other distributions to which such holder is entitled pursuant to Section 3.8, may be issued with respect to such Conoco Common Stock to such a transferee if the Conoco Certificate is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid.

(b) Each certificate representing shares of Phillips Common Stock prior to the Effective Time (a "Phillips Certificate") (and each uncertificated share of Phillips Common Stock in book-entry form, if any, prior to the Effective Time) shall be deemed to represent an equivalent number of shares of New Parent Common Stock without any action on the part of the holder thereof provided, however, that if an exchange of Phillips Certificates for new certificates is required by law or applicable rule or regulation, or is requested by any holder thereof, the parties will cause New Parent to arrange for such exchange on a one-share-for-one-share basis.

3.8 Distributions with Respect to Unexchanged Shares. No dividends or other distributions with a record date after the Effective Time shall be paid to the holder of any unsurrendered Conoco Certificate with respect to the shares of New Parent Common Stock that such holder would be entitled to receive upon surrender of such Conoco Certificate, and no cash payment in lieu of fractional shares of New Parent Common Stock shall be paid to any such holder pursuant to
Section 3.10 until such holder shall surrender such Conoco Certificate in accordance with Section 3.7. Subject to the effect of applicable law, following surrender of any such Conoco Certificate, there shall be paid to the record holder thereof without interest, (a) promptly after the time of such surrender, the amount of any cash payable in lieu of fractional shares of New Parent Common Stock to which such holder is entitled pursuant to Section 3.10 and the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of New Parent Common Stock and (b) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time and a payment date subsequent to such surrender payable with respect to such shares of New Parent Common Stock.

3.9 No Further Ownership Rights in Conoco Common Stock or Phillips Common Stock. All shares of New Parent Common Stock issued and cash paid upon conversion of shares of Conoco Common Stock or Phillips Common Stock in accordance with the terms of this Article III (including any cash paid pursuant to Section 3.8 or 3.10) shall be deemed to have been issued or paid in full satisfaction of all rights pertaining to the shares of Conoco Common Stock or Phillips Common Stock.

3.10 No Fractional Shares of New Parent Common Stock. No certificates or scrip or shares of New Parent Common Stock representing fractional shares of New Parent Common Stock or book-entry credit of the same shall be issued upon the surrender for exchange of Conoco Certificates, and such fractional share interests will not entitle the owner thereof to vote or to have any rights of a stockholder of New

Parent or a holder of shares of New Parent Common Stock. For purposes of this
Section 3.10, all fractional shares to which a single record holder would be entitled shall be aggregated and calculations shall be rounded to three decimal places. Notwithstanding any other provision of this Agreement, each holder of Conoco Certificates who would otherwise have been entitled to receive a fraction of a share of New Parent Common Stock (determined after taking into account all Conoco Certificates delivered by such holder) shall receive, in lieu thereof, cash (without interest) in an amount equal to the product of (a) such fractional part of a share of New Parent Common Stock multiplied by (b) the closing price for a share of New Parent Common Stock as reported on the NYSE on the first trading day following the date on which the Effective Time occurs. As soon as practicable after the determination of the amount of cash to be paid to such former holders of Conoco Common Stock in lieu of any fractional interests, the Exchange Agent shall notify New Parent, and New Parent shall ensure that there is deposited with the Exchange Agent and shall cause the Exchange Agent to make available in accordance with this Agreement such amounts to such former holders of Conoco Common Stock.

3.11 Termination of Exchange Fund. Any portion of the Exchange Fund that remains undistributed to the holders of Conoco Certificates one year after the Effective Time shall, at New Parent's request, be delivered to New Parent or otherwise on the instruction of New Parent, and any holders of Conoco Certificates who have not theretofore complied with this Article III shall after such delivery look only to New Parent for the Conoco Merger Consideration with respect to the shares of Conoco Common Stock formerly represented thereby to which such holders are entitled pursuant to Sections 3.2 and 3.7, any cash in lieu of fractional shares of New Parent Common Stock to which such holders are entitled pursuant to Section 3.10 and any dividends or distributions with respect to shares of New Parent Common Stock to which such holders are entitled pursuant to Section 3.8. Any such portion of the Exchange Fund remaining unclaimed by holders of shares of Conoco Common Stock immediately prior to such time as such amounts would otherwise escheat to or become property of any Governmental Entity shall, to the extent permitted by law, become the property of New Parent free and clear of any claims or interest of any Person previously entitled thereto.

3.12 No Liability. None of Phillips, New Parent, Merger Sub One, Merger Sub Two, Conoco or the Exchange Agent shall be liable to any Person in respect of any Conoco Merger Consideration from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

3.13 Investment of the Exchange Fund. The Exchange Agent shall invest any cash included in the Exchange Fund as directed by New Parent, on a daily basis, provided that no such investment or loss thereon shall affect the amounts payable or the timing of the amounts payable to Conoco stockholders pursuant to Article II and the other provisions of this Article III. Any interest and other income resulting from such investments shall promptly be paid to New Parent.

3.14 Lost Certificates. If any Conoco Certificate or Phillips Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Conoco Certificate or Phillips Certificate to be lost, stolen or destroyed and, if required by New Parent, the posting by such Person of a bond in such reasonable amount as New Parent may direct as indemnity against any claim that may be made against it with respect to such Conoco Certificate or Phillips Certificate, the Exchange Agent will deliver in exchange for such lost, stolen or destroyed Conoco Certificate or Phillips Certificate, the Conoco Merger Consideration or Phillips Merger Consideration, as applicable, with respect to the shares of Conoco Common Stock or Phillips Common Stock formerly represented thereby, any cash in lieu of fractional shares of New Parent Common Stock, and unpaid dividends and distributions on shares of New Parent Common Stock deliverable in respect thereof, pursuant to this Agreement.

3.15 Withholding Rights. New Parent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign Tax law. To the extent that amounts are so withheld or paid over to or deposited with the relevant Governmental Entity by New Parent, such withheld amounts shall be treated for all purposes of this

Agreement as having been paid to the Person in respect of which such deduction and withholding was made by New Parent.

3.16 Further Assurances. At and after the Effective Time, the officers and directors of New Parent, the Phillips Surviving Corporation or the Conoco Surviving Corporation, as applicable, shall be authorized to execute and deliver, in the name and on behalf of the Phillips Surviving Corporation, Merger Sub One or Phillips, or the Conoco Surviving Corporation, Merger Sub Two or Conoco, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Phillips Surviving Corporation, Merger Sub One or Phillips, or the Conoco Surviving Corporation, Merger Sub Two or Conoco, any other actions and things necessary to vest, perfect or confirm of record or otherwise in New Parent, the Phillips Surviving Corporation or the Conoco Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets acquired or to be acquired by New Parent, the Phillips Surviving Corporation or the Conoco Surviving Corporation, as applicable, as a result of, or in connection with, the Mergers.

3.17 Stock Transfer Books. The stock transfer books of Phillips and Conoco shall be closed immediately upon the Effective Time, and there shall be no further registration of transfers of shares of Conoco Common Stock or Phillips Common Stock thereafter on the records of Conoco or Phillips. On or after the Effective Time, any Conoco Certificates or Phillips Certificates presented to the Exchange Agent, New Parent, the Phillips Surviving Corporation or the Conoco Surviving Corporation for any reason shall be converted into the right to receive the Conoco Merger Consideration or Phillips Merger Consideration, as applicable, with respect to the shares of Conoco Common Stock or Phillips Common Stock formerly represented thereby (including any cash in lieu of fractional shares of New Parent Common Stock to which the holders thereof are entitled pursuant to Section 3.10 and any dividends or other distributions to which the holders thereof are entitled pursuant to Section 3.8).

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

4.1 Representations and Warranties of Conoco. Except as disclosed in the Conoco Disclosure Schedule or in the Conoco SEC Documents filed with the SEC prior to the date of this Agreement, Conoco hereby represents and warrants to Phillips as follows:

(a) Corporate Organization. (i) Conoco is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Conoco has the corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified would not, either individually or in the aggregate, have a Material Adverse Effect on Conoco. True and complete copies of the Restated Certificate of Incorporation and By-Laws of Conoco, as in effect as of the date of this Agreement, have previously been made available by Conoco to Phillips.

(ii) Each Subsidiary of Conoco (A) is duly organized and validly existing under the laws of its jurisdiction of organization, (B) is duly qualified to do business and in good standing in all jurisdictions (whether federal, state, local or foreign) where its ownership or leasing of property or the conduct of its business requires it to be so qualified and
(C) has all requisite corporate power and authority to own or lease its properties and assets and to carry on its business as now conducted, in each case, except as would not have a Material Adverse Effect on Conoco.

(b) Capitalization. (i) The authorized capital stock of Conoco consists of (A) 4,600,000,000 shares of Conoco Common Stock, of which, as of November 15, 2001, 625,486,343 shares were issued and outstanding and 3,451,703 shares were held in treasury and (B) 250,000,000 shares of Conoco Preferred Stock, of which no shares are issued and outstanding. From November 16, 2001 to the date

of this Agreement, no shares of Conoco Capital Stock have been issued except pursuant to the Conoco Stock Plans. All issued and outstanding shares of Conoco Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. As of the date of this Agreement, except pursuant to the terms of stock options and stock issued pursuant to Conoco Stock Plans and pursuant to the Conoco Rights, Conoco does not have and is not bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of Conoco Capital Stock or any other equity securities of Conoco or any securities of Conoco representing the right to purchase or otherwise receive any shares of Conoco Capital Stock. As of November 15, 2001, no shares of Conoco Capital Stock were reserved for issuance, except for 45,000,000 shares of Conoco Common Stock reserved for issuance upon the exercise of stock options pursuant to the Conoco Stock Plans and in respect of the employee and director savings, compensation and deferred compensation plans described in the Conoco 2000 10-K, and 1,000,000 shares of Series A Junior Participating Preferred Stock reserved for issuance in connection with the Conoco Rights Agreement. Conoco has no Voting Debt issued or outstanding. As of November 15, 2001, 43,195,351 shares of Conoco Common Stock are subject to Conoco Stock Options. Since November 16, 2001, except as permitted by this Agreement, (i) no Conoco Common Stock has been issued except in connection with the exercise of issued and outstanding Conoco Stock Options and (ii) no options, warrants, securities convertible into, or commitments with respect to the issuance of, shares of Conoco Common Stock have been issued, granted or made.

(ii) Except for immaterial amounts of directors' qualifying shares in foreign Subsidiaries of Conoco, as of the date hereof Conoco owns, directly or indirectly, all of the issued and outstanding shares of capital stock or other equity ownership interests of each Significant Subsidiary of Conoco, free and clear of any Liens, and all of such shares or equity ownership interests are duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. No Significant Subsidiary of Conoco has or is bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of capital stock or any other equity security of such Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary.

(c) Authority; No Violation. (i) Conoco has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly approved by the Board of Directors of Conoco. The Board of Directors of Conoco has directed that this Agreement be submitted to Conoco stockholders at a meeting of Conoco stockholders for the purpose of adopting this Agreement (the "Conoco Stockholders Meeting"), and, except for the adoption of this Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Conoco Common Stock (the "Conoco Stockholder Approval"), no other corporate proceedings on the part of Conoco are necessary to approve this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Conoco and (assuming due authorization, execution and delivery by Phillips, New Parent, Merger Sub One and Merger Sub Two) constitutes a valid and binding obligation of Conoco, enforceable against Conoco in accordance with its terms.

(ii) Neither the execution and delivery of this Agreement by Conoco, nor the consummation by Conoco of the transactions contemplated hereby, nor compliance by Conoco with any of the terms or provisions hereof, will (A) violate any provision of the Restated Certificate of Incorporation or By- Laws of Conoco, or (B) assuming that the consents and approvals referred to in Section 4.1(d) are duly obtained, (I) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to Conoco or any of its Subsidiaries or any of their respective properties or assets or (II) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event that, with notice or lapse of time, or both, would constitute a

default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, accelerate any right or benefit provided by, or result in the creation of any Lien upon any of the respective properties or assets of Conoco or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which Conoco or any of its Subsidiaries is a party, or by which they or any of their respective properties or assets may be bound or affected, except (in the case of clause (B) above) for such violations, conflicts, breaches, losses, defaults, terminations, cancellations, accelerations or Liens that, either individually or in the aggregate, would not have a Material Adverse Effect on Conoco, the Conoco Surviving Corporation or New Parent.

(d) Consents and Approvals. Except for (i) the filing of a notification and report form under the HSR Act and the termination or expiration of the waiting period under the HSR Act, (ii) the filings under Council Regulation No. 4064/89 of the European Community, as amended (the "EC Merger Regulation"), (iii) the filings under the Canadian Investment Regulations, (iv) the filing with the SEC of a joint proxy statement/prospectus relating to the matters to be submitted to Phillips stockholders at the Phillips Stockholders Meeting and the matters to be submitted to Conoco stockholders at the Conoco Stockholders Meeting (such joint proxy statement/prospectus, and any amendments or supplements thereto, the "Joint Proxy Statement/Prospectus") and a registration statement on Form S-4 with respect to the issuance of New Parent Common Stock in the Mergers (such Form S-4, and any amendments or supplements thereto, the "Form S-4"), (v) the filing of the Certificates of Merger pursuant to the DGCL, (vi) any consents, authorizations, approvals, filings or exemptions in connection with compliance with the rules of the NYSE,
(vii) such filings and approvals as are required to be made or obtained under the securities or "Blue Sky" laws of various states in connection with the issuance of the shares of New Parent Common Stock pursuant to this Agreement (the consents, approvals, filings and registration required under or in relation to clauses (ii) through (vii) above, "Conoco Necessary Consents") and (viii) such other consents, approvals, filings and registrations the failure of which to obtain or make would not reasonably be expected to have a Material Adverse Effect on Conoco, no consents or approvals of or filings or registrations with any Governmental Entity are necessary in connection with (A) the execution and delivery by Conoco of this Agreement and (B) the consummation by Conoco of the transactions contemplated by this Agreement.

(e) Financial Reports and SEC Documents. The Conoco 2000 10-K and all other reports, registration statements, definitive proxy statements or information statements filed or to be filed by Conoco or any of its Subsidiaries subsequent to December 31, 1999 under the Securities Act or under Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act in the form filed, or to be filed, with the SEC (collectively, the "Conoco SEC Documents"), (i) complied or will comply in all material respects as to form with the applicable requirements under the Securities Act or the Exchange Act, as the case may be, and (ii) as of its filing date (except as amended or supplemented prior to the date of this Agreement), (A) did not or will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; and (B) each of the balance sheets contained in or incorporated by reference into any such Conoco SEC Document (including the related notes and schedules thereto) fairly presents or will fairly present the financial position of the entity or entities to which it relates as of its date, and each of the statements of income and changes in stockholders' equity and cash flows or equivalent statements in such Conoco SEC Documents (including any related notes and schedules thereto) fairly presents or will fairly present the results of operations, changes in stockholders' equity and changes in cash flows, as the case may be, of the entity or entities to which it relates for the periods to which it relates, in each case in accordance with GAAP consistently applied during the periods involved, except, in each case, as may be noted therein, subject to normal year-end audit adjustments in the case of unaudited statements; provided that, with respect to Gulf or GIRL only, in no event shall any non-compliance as to form, untrue statements, omissions or failures of the balance sheets or financial statements to fairly present the financial position be deemed material unless such non-compliance, untrue

statements, omissions or failures would, in the aggregate, be material with respect to Conoco and its Subsidiaries taken as a whole.

(f) Absence of Undisclosed Liabilities. Neither Conoco nor any of its Subsidiaries had at September 30, 2001, or has incurred since that date through the date hereof, any liabilities or obligations (whether absolute, accrued, contingent or otherwise) of any nature, except (i) liabilities, obligations or contingencies that (A) are accrued or reserved against in the financial statements in the Conoco 10-Q or reflected in the notes thereto or (B) were incurred in the ordinary course of business, (ii) liabilities, obligations or contingencies that (A) would not reasonably be expected to have a Material Adverse Effect on Conoco, or (B) have been discharged or paid in full prior to the date hereof, and (iii) liabilities, obligations and contingencies that are of a nature not required to be reflected in the consolidated financial statements of Conoco and its Subsidiaries prepared in accordance with GAAP consistently applied.

(g) Absence of Certain Changes or Events. Since September 30, 2001, Conoco has conducted its business only in the ordinary course, and since such date there has not been:

(i) any event, change, effect or development that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on Conoco;

(ii) prior to the date of this Agreement, any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any Conoco Capital Stock or any repurchase for value by Conoco of any Conoco Capital Stock;

(iii) prior to the date of this Agreement, any split, combination or reclassification of any Conoco Capital Stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of Conoco Capital Stock;

(iv) prior to the date of this Agreement, (A) any granting by Conoco to any director or executive officer of Conoco of any increase in compensation, except in the ordinary course of business consistent with prior practice or as was required under employment agreements included in the Conoco SEC Documents, (B) any granting by Conoco to any such director or executive officer of any increase in severance or termination pay, except as was required under any employment, severance or termination agreements included in the Conoco SEC Documents, or (C) any entry by Conoco into, or any amendment of, any employment, severance or termination agreement with any such director or executive officer; or

(v) prior to the date of this Agreement, any change in financial accounting methods, principles or practices by Conoco or any of its Subsidiaries materially affecting the consolidated assets, liabilities or results of operations of Conoco, except insofar as may have been required by a change in GAAP.

(h) Legal Proceedings. There is no suit, action or proceeding or investigation pending or, to the knowledge of Conoco, threatened, against or affecting Conoco or any of its Subsidiaries or, to the knowledge of Conoco, any basis for any such suit, action, proceeding or investigation that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Conoco, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against Conoco or its Subsidiaries having, or which would reasonably be expected to have, any such effect.

(i) Compliance with Applicable Law. Conoco and each of its Subsidiaries hold all licenses, franchises, permits and authorizations necessary for the lawful conduct of their respective businesses under and pursuant to each, and have complied in all respects with and are not in default in any material respect under any, applicable law, statute, order, rule, regulation, policy and/or guideline of any Governmental Entity relating to Conoco or any of its Subsidiaries, except where the failure to hold such license, franchise, permit or authorization or such noncompliance or default would not,

either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Conoco.

(j) Environmental Liability. Except for matters that individually or in the aggregate, would not have a Material Adverse Effect on Conoco, (i) Conoco and each of its Subsidiaries are and have been in compliance with all applicable Environmental Laws and have obtained or applied for all Environmental Permits necessary for their operations as currently conducted; (ii) there have been no Releases of any Hazardous Materials that could be reasonably likely to form the basis of any Environmental Claim against Conoco or any of its Subsidiaries; (iii) there are no Environmental Claims pending or, to the knowledge of Conoco, threatened against Conoco or any of its Subsidiaries; (iv) none of Conoco and its Subsidiaries is subject to any agreement, order, judgment, decree, letter or memorandum by or with any Governmental Entity or third party imposing any liability or obligation under any Environmental Law; and (v) none of Conoco and its Subsidiaries has retained or assumed, either contractually or by operation of law, any liability or obligation that could reasonably be expected to have formed the basis of any Environmental Claim against Conoco or any of its Subsidiaries.

(k) Employee Benefit Plans; Labor Matters. (i) There do not now exist, and to the knowledge of Conoco, there are no existing, circumstances that could reasonably be expected to result in, any Controlled Group Liability to Conoco or any of its Subsidiaries that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on Conoco. No Conoco Benefit Plan is a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA.

(ii) Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Conoco, (A) each of the Conoco Benefit Plans has been operated and administered in all material respects in accordance with applicable law and administrative rules and regulations of any Governmental Entity, including, but not limited to, ERISA and the Code, and (B) there are no pending or threatened claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations that have been asserted or instituted, and, to the knowledge of Conoco, no set of circumstances exists that may reasonably give rise to a claim or lawsuit, against the Conoco Benefit Plans, any fiduciaries thereof with respect to their duties to the Conoco Benefit Plans or the assets of any of the trusts under any of the Conoco Benefit Plans that could reasonably be expected to result in any material liability of Conoco or any of its Subsidiaries to the Pension Benefit Guaranty Corporation, the U.S. Department of the Treasury, the U.S. Department of Labor, any Conoco Benefit Plan, any participant in a Conoco Benefit Plan, or any other party.

(iii) As of the date of this Agreement, neither Conoco nor any of its Subsidiaries is a party to any material collective bargaining or other labor union contract applicable to individuals employed by Conoco or any of its Subsidiaries, and no such collective bargaining agreement or other labor union contract is being negotiated by Conoco or any of its Subsidiaries. Except as would not reasonably be expected to have a Material Adverse Effect on Conoco, (A) there is no labor dispute, strike, slowdown or work stoppage against Conoco or any of its Subsidiaries pending or, to the knowledge of Conoco, threatened against Conoco or any of its Subsidiaries and (B) no unfair labor practice or labor charge or complaint has occurred with respect to Conoco or any of its Subsidiaries.

(iv) Section 4.1(k)(iv) of the Conoco Disclosure Schedule sets forth an accurate and complete list of each Benefit Plan under which the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby could (either alone or in conjunction with any other event), result in, cause the accelerated vesting, funding or delivery of, or increase the amount or value of, any payment or benefit to any employee, officer or director of Conoco or any of its Subsidiaries, or could limit the right of Conoco or any of its Subsidiaries to amend, merge, terminate or receive a reversion of assets from any Conoco Benefit Plan or related trust or any material employment agreement or related trust.

(l) Taxes. (i) Each of Conoco and its Subsidiaries has duly and timely filed all Tax Returns required to be filed by it, and all such Tax Returns are true, complete and accurate in all respects,

except to the extent that any failure to have filed or any inaccuracies in such Tax Returns would not reasonably be expected to have a Material Adverse Effect on Conoco. Conoco and each of its Subsidiaries has paid all Taxes required to be paid by it, and has paid all Taxes that it was required to withhold from amounts owing to any employee, creditor or third party, except to the extent that any failure to pay such Taxes would not reasonably be expected to have a Material Adverse Effect on Conoco. There are no pending or, to the knowledge of Conoco, threatened audits, examinations, investigations, deficiencies, claims or other proceedings in respect of Taxes relating to Conoco or any of its Subsidiaries, except for those that would not reasonably be expected to have a Material Adverse Effect on Conoco. There are no Liens for Taxes upon the assets of Conoco or any of its Subsidiaries, other than Liens for current Taxes not yet due, Liens for Taxes that are being contested in good faith by appropriate proceedings, and Liens for Taxes that would not reasonably be expected to have a Material Adverse Effect on Conoco. Neither Conoco nor any of its Subsidiaries has requested any extension of time within which to file any Tax Returns in respect of any taxable year that have not since been filed, nor made any request for waivers of the time to assess any Taxes that are pending or outstanding, except where such request or waiver would not reasonably be expected to have a Material Adverse Effect on Conoco. The consolidated U.S. federal income Tax Returns of Conoco have been examined, or the statute of limitations has closed, with respect to all taxable years through and including 1995. Neither Conoco nor any of its Subsidiaries has any liability for Taxes of any Person (other than Conoco and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any comparable provision of U.S. state or local or foreign law), except as would not reasonably be expected to have a Material Adverse Effect on Conoco. Neither Conoco nor any of its Subsidiaries is a party to any agreement (with any Person other than Conoco and/or any of its Subsidiaries), other than the Tax Sharing Agreement, dated as of October 27, 1998, by and among E. I. du Pont de Nemours and Company and Conoco (a copy of which has been delivered to Phillips), relating to the allocation or sharing of Taxes, except as would not reasonably be expected to have a Material Adverse Effect on Conoco.

(ii) To Conoco's knowledge, Conoco has not constituted either a "distributing corporation" or a "controlled corporation" within the meaning of Section 355(a)(1)(A) of the Code in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code (A) in the two years prior to the date of this Agreement (or will constitute such a corporation in the two years prior to the Closing Date) or (B) in a distribution that otherwise constitutes part of a "plan" or "series of related transactions" within the meaning of Section 355(e) of the Code in conjunction with the Mergers.

(m) Reorganization under the Code. As of the date of this Agreement, neither Conoco nor any of its Subsidiaries has taken any action or knows of any fact that is reasonably likely to prevent the Conoco Merger or the Phillips Merger from qualifying as a "reorganization" within the meaning of
Section 368(a) of the Code or the Mergers, taken together, from qualifying as an exchange described in Section 351 of the Code.

(n) Form S-4; Joint Proxy Statement/Prospectus. None of the information to be supplied by Conoco or its Subsidiaries in the Form S-4 or the Joint Proxy Statement/Prospectus will, at the time of the mailing of the Joint Proxy Statement/Prospectus and any amendments or supplements thereto, and at the time of each of the Phillips Stockholders Meeting and the Conoco Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. The Joint Proxy Statement/Prospectus will comply, as of its mailing date, as to form in all material respects with all applicable law, including the provisions of the Securities Act and the Exchange Act, except that no representation is made by Conoco with respect to information supplied by Phillips for inclusion therein.

(o) State Takeover Laws; Rights Plan. (i) The Board of Directors of Conoco has approved this Agreement and the transactions contemplated by this Agreement as required under any applicable state takeover laws so that any such state takeover laws will not apply to this Agreement or any of the transactions contemplated hereby.

(ii) Conoco has taken all action, if any, necessary or appropriate so that the entering into of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not result in the ability of any Person to exercise any Conoco Rights under the Conoco Rights Agreement or enable or require the Conoco Rights to separate from the shares of Conoco Common Stock to which they are attached or to be triggered or become exercisable. No "Distribution Date" or "Stock Acquisition Date" (as such terms are defined in the Conoco Rights Agreement) has occurred.

(p) Opinion of Financial Advisors. Conoco has received the opinions of Morgan Stanley & Co. Incorporated and Salomon Smith Barney Inc., dated the date hereof, to the effect that the Conoco Merger Consideration to be received by holders of Conoco Common Stock in the Conoco Merger is fair to such stockholders from a financial point of view.

(q) Board Approval. The Board of Directors of Conoco, at a meeting duly called and held, has by unanimous vote of those directors present (i) determined that this Agreement and the transactions contemplated hereby are advisable, fair to and in the best interests of Conoco stockholders, (ii) approved this Agreement and (iii) recommended that this Agreement be adopted by the holders of Conoco Common Stock.

(r) Brokers' Fees. Neither Conoco nor any of its Subsidiaries nor any of their respective officers or directors has employed any broker or finder or incurred any liability for any brokers' fees, commissions or finders' fees in connection with the transactions contemplated by this Agreement, excluding fees to be paid to Morgan Stanley & Co. Incorporated, Salomon Smith Barney Inc. and Credit Suisse First Boston Corporation.

(s) Ownership of Phillips Capital Stock. As of the date of this Agreement, Conoco does not beneficially own any shares of Phillips Capital Stock.

4.2 Representations and Warranties of Phillips. Except as disclosed in the Phillips Disclosure Schedule or in the Phillips SEC Documents filed with the SEC prior to the date of this Agreement, Phillips hereby represents and warrants to Conoco as follows:

(a) Corporate Organization. (i) Phillips is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Phillips has the corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified would not, either individually or in the aggregate, have a Material Adverse Effect on Phillips. True and complete copies of the Restated Certificate of Incorporation and By-Laws of Phillips, as in effect as of the date of this Agreement, have previously been made available by Phillips to Conoco.

(ii) Each Subsidiary of Phillips (A) is duly organized and validly existing under the laws of its jurisdiction of organization, (B) is duly qualified to do business and in good standing in all jurisdictions (whether federal, state, local or foreign) where its ownership or leasing of property or the conduct of its business requires it to be so qualified and
(C) has all requisite corporate power and authority to own or lease its properties and assets and to carry on its business as now conducted, in each case, except as would not have a Material Adverse Effect on Phillips.

(b) Capitalization. (i) The authorized capital stock of Phillips consists of (A) 1,000,000,000 shares of Phillips Common Stock, of which, as of November 15, 2001, 408,879,521 shares were issued and outstanding and 21,560,222 shares were held in treasury and (B) 300,000,000 shares of Phillips Preferred Stock, of which no shares are issued and outstanding. From November 16, 2001 to the date of this Agreement, no shares of Phillips Capital Stock have been issued except pursuant to the Phillips Stock Plans. All issued and outstanding shares of Phillips Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. As of the date of this Agreement, except pursuant to the terms of stock options and stock issued pursuant to Phillips Stock Plans and pursuant

to the Phillips Rights, Phillips does not have and is not bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of Phillips Capital Stock or any other equity securities of Phillips or any securities of Phillips representing the right to purchase or otherwise receive any shares of Phillips Capital Stock. As of November 15, 2001, no shares of Phillips Capital Stock were reserved for issuance, except for 15,671,607 shares of Phillips Common Stock reserved for issuance upon the exercise of stock options pursuant to the Phillips Stock Plans and in respect of the employee and director savings, compensation and deferred compensation plans described in the Phillips 2000 10-K and 5,000,000 shares of Series B Junior Participating Preferred Stock reserved for issuance in connection with the Phillips Rights Agreement. Phillips has no Voting Debt issued or outstanding. As of November 15, 2001, 15,671,607 shares of Phillips Common Stock are subject to Phillips Stock Options. Since November 16, 2001, except as permitted by this Agreement, (i) no Phillips Common Stock has been issued except in connection with the exercise of issued and outstanding Phillips Stock Options and (ii) no options, warrants, securities convertible into, or commitments made with respect to the issuance of, shares of Phillips Common Stock have been issued, granted or made.

(ii) Except for immaterial amounts of directors' qualifying shares in foreign Subsidiaries of Phillips, Phillips as of the date hereof owns, directly or indirectly, all of the issued and outstanding shares of capital stock or other equity ownership interests of each Significant Subsidiary of Phillips, free and clear of any Liens, and all of such shares or equity ownership interests are duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. No Significant Subsidiary of Phillips has or is bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of capital stock or any other equity security of such Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary.

(c) Authority; No Violation. (i) Phillips has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly approved by the Board of Directors of Phillips. The Board of Directors of Phillips has directed that this Agreement be submitted to Phillips's stockholders at a meeting of Phillips stockholders for the purpose of adopting this Agreement (the "Phillips Stockholders Meeting") and, except for the adoption of this Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Phillips Common Stock (the "Phillips Stockholder Approval"), no other corporate proceedings on the part of Phillips are necessary to approve this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Phillips and (assuming due authorization, execution and delivery by Conoco, New Parent, Merger Sub One and Merger Sub Two) constitutes a valid and binding obligation of Phillips, enforceable against Phillips in accordance with its terms.

(ii) Neither the execution and delivery of this Agreement by Phillips nor the consummation by Phillips of the transactions contemplated hereby, nor compliance by Phillips with any of the terms or provisions hereof, will (A) violate any provision of the Restated Certificate of Incorporation or By-Laws of Phillips, or (B) assuming that the consents and approvals referred to in Section 4.2(d) are duly obtained, (I) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to Phillips or any of its Subsidiaries or any of their respective properties or assets or (II) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event that, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, accelerate any right or benefit provided by, or result in the creation of any Lien upon any of the respective properties or assets of Phillips or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which Phillips or any of its Subsidiaries

is a party, or by which they or any of their respective properties or assets may be bound or affected, except (in the case of clause (B) above) for such violations, conflicts, breaches, losses, defaults, terminations, cancellations, accelerations or Liens that, either individually or in the aggregate, would not have a Material Adverse Effect on Phillips, the Phillips Surviving Corporation or New Parent.

(d) Consents and Approvals. Except for (i) the filing of a notification and report form under the HSR Act and the termination or expiration of the waiting period under the HSR Act, (ii) the filings under the EC Merger Regulation, (iii) the filings under the Canadian Investment Regulations, (iv) the filing with the SEC of the Joint Proxy Statement/Prospectus and the Form S-4, (v) the filing of the Certificates of Merger pursuant to the DGCL, (vi) any consents, authorizations, approvals, filings or exemptions in connection with compliance with the rules of the NYSE, (vii) such filings and approvals as are required to be made or obtained under the securities or "Blue Sky" laws of various states in connection with the issuance of the shares of New Parent Common Stock pursuant to this Agreement (the consents, approvals, filings and registration required under or in relation to clauses (ii) through (vii) above, "Phillips Necessary Consents") and (viii) such other consents, approvals, filings and registrations the failure of which to obtain or make would not reasonably be expected to have a Material Adverse Effect on Phillips, no consents or approvals of or filings or registrations with any Governmental Entity are necessary in connection with (A) the execution and delivery by Phillips of this Agreement and (B) the consummation by Phillips of the transactions contemplated by this Agreement.

(e) Financial Reports and SEC Documents. The Phillips 2000 10-K and all other reports, registration statements, definitive proxy statements or information statements filed or to be filed by Phillips or any of its Subsidiaries subsequent to December 31, 1999 under the Securities Act or under Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, in the form filed, or to be filed, with the SEC (collectively, the "Phillips SEC Documents") (i) complied or will comply in all material respects as to form with the applicable requirements under the Securities Act or the Exchange Act, as the case may be, and (ii) as of its filing date (except as amended or supplemented prior to the date of this Agreement), (A) did not or will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; and (B) each of the balance sheets contained in or incorporated by reference into any such Phillips SEC Document (including the related notes and schedules thereto) fairly presents or will fairly present the financial position of the entity or entities to which it relates as of its date, and each of the statements of income and changes in stockholders' equity and cash flows or equivalent statements in such Phillips SEC Documents (including any related notes and schedules thereto) fairly presents or will fairly present the results of operations, changes in stockholders' equity and changes in cash flows, as the case may be, of the entity or entities to which it relates for the periods to which it relates, in each case in accordance with GAAP consistently applied during the periods involved, except, in each case, as may be noted therein, subject to normal year-end audit adjustments in the case of unaudited statements; provided that, with respect to Tosco only, in no event shall any non-compliance as to form, untrue statements, omissions or failures of the balance sheets or financial statements to fairly present the financial position be deemed material unless such non-compliance, untrue statements, omissions or failures would, in the aggregate, be material with respect to Phillips and its Subsidiaries taken as a whole.

(f) Absence of Undisclosed Liabilities. Neither Phillips nor any of its Subsidiaries had at September 30, 2001, or has incurred since that date through the date hereof, any liabilities or obligations (whether absolute, accrued, contingent or otherwise) of any nature, except (i) liabilities, obligations or contingencies that (A) are accrued or reserved against in the financial statements in the Phillips 10-Q or reflected in the notes thereto or (B) were incurred in the ordinary course of business, (ii) liabilities, obligations or contingencies that (A) would not reasonably be expected to have a Material Adverse Effect on Phillips, or (B) have been discharged or paid in full prior to the date hereof, and (iii) liabilities, obligations and contingencies that are of a nature not required to be

reflected in the consolidated financial statements of Phillips and its Subsidiaries prepared in accordance with GAAP consistently applied.

(g) Absence of Certain Changes or Events. Since September 30, 2001, Phillips has conducted its business only in the ordinary course, and since such date there has not been:

(i) any event, change, effect or development that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on Phillips;

(ii) prior to the date of this Agreement, any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any Phillips Capital Stock or any repurchase for value by Phillips of any Phillips Capital Stock;

(iii) prior to the date of this Agreement, any split, combination or reclassification of any Phillips Capital Stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of Phillips Capital Stock;

(iv) prior to the date of this Agreement, (A) any granting by Phillips to any director or executive officer of Phillips of any increase in compensation, except in the ordinary course of business consistent with prior practice or as was required under employment agreements included in the Phillips SEC Documents, (B) any granting by Phillips to any such director or executive officer of any increase in severance or termination pay, except as was required under any employment, severance or termination agreements included in the Phillips SEC Documents, or (C) any entry by Phillips into, or any amendment of, any employment, severance or termination agreement with any such director or executive officer; or

(v) prior to the date of this Agreement, any change in financial accounting methods, principles or practices by Phillips or any of its Subsidiaries materially affecting the consolidated assets, liabilities or results of operations of Phillips, except insofar as may have been required by a change in GAAP.

(h) Legal Proceedings. There is no suit, action or proceeding or investigation pending or, to the knowledge of Phillips, threatened, against or affecting Phillips or any of its Subsidiaries or, to the knowledge of Phillips, any basis for any such suit, action, proceeding or investigation that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Phillips, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against Phillips or its Subsidiaries having, or which would reasonably be expected to have, any such effect.

(i) Compliance with Applicable Law. Phillips and each of its Subsidiaries hold all licenses, franchises, permits and authorizations necessary for the lawful conduct of their respective businesses under and pursuant to each, and have complied in all respects with and are not in default in any material respect under any, applicable law, statute, order, rule, regulation, policy and/or guideline of any Governmental Entity relating to Phillips or any of its Subsidiaries, except where the failure to hold such license, franchise, permit or authorization or such noncompliance or default would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Phillips.

(j) Environmental Liability. Except for matters that individually or in the aggregate, would not have a Material Adverse Effect on Phillips, (i) Phillips and each of its Subsidiaries are and have been in compliance with all applicable Environmental Laws and have obtained or applied for all Environmental Permits necessary for their operations as currently conducted; (ii) there have been no Releases of any Hazardous Materials that could be reasonably likely to form the basis of any Environmental Claim against Phillips or any of its Subsidiaries; (iii) there are no Environmental Claims pending or, to the knowledge of Phillips, threatened against Phillips or any of its Subsidiaries; (iv) none of Phillips and its Subsidiaries is subject to any agreement, order, judgment, decree, letter or memorandum by or with any Governmental Entity or third party imposing any liability or

obligation under any Environmental Law; and (v) none of Phillips and its Subsidiaries has retained or assumed, either contractually or by operation of law, any liability or obligation that could reasonably be expected to have formed the basis of any Environmental Claim against Phillips or any of its Subsidiaries.

(k) Employee Benefit Plans; Labor Matters. (i) There do not now exist, and to the knowledge of Phillips, there are no existing circumstances that could reasonably be expected to result in, any Controlled Group Liability to Phillips or any of its Subsidiaries that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on Phillips. No Phillips Benefit Plan is a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA.

(ii) Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Phillips, (A) each of the Phillips Benefit Plans has been operated and administered in all material respects in accordance with applicable law and administrative rules and regulations of any Governmental Entity, including, but not limited to, ERISA and the Code, and (B) there are no pending or threatened claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations that have been asserted or instituted, and, to the knowledge of Phillips, no set of circumstances exists that may reasonably give rise to a claim or lawsuit, against the Phillips Benefit Plans, any fiduciaries thereof with respect to their duties to the Phillips Benefit Plans or the assets of any of the trusts under any of the Phillips Benefit Plans that could reasonably be expected to result in any material liability of Phillips or any of its Subsidiaries to the Pension Benefit Guaranty Corporation, the U.S. Department of the Treasury, the U.S. Department of Labor, any Phillips Benefit Plan, any participant in a Phillips Benefit Plan, or any other party.

(iii) As of the date of this Agreement, neither Phillips nor any of its Subsidiaries is a party to any material collective bargaining or other labor union contract applicable to individuals employed by Phillips or any of its Subsidiaries, and no such collective bargaining agreement or other labor union contract is being negotiated by Phillips or any of its Subsidiaries. Except as would not reasonably be expected to have a Material Adverse Effect on Phillips, (A) there is no labor dispute, strike, slowdown or work stoppage against Phillips or any of its Subsidiaries pending or, to the knowledge of Phillips, threatened against Phillips or any of its Subsidiaries and (B) no unfair labor practice or labor charge or complaint has occurred with respect to Phillips or any of its Subsidiaries.

(iv) Section 4.2(k)(iv) of the Phillips Disclosure Schedule sets forth an accurate and complete list of each Benefit Plan under which the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby could (either alone or in conjunction with any other event), result in, cause the accelerated vesting, funding or delivery of, or increase the amount or value of, any payment or benefit to any employee, officer or director of Phillips or any of its Subsidiaries, or could limit the right of Phillips or any of its Subsidiaries to amend, merge, terminate or receive a reversion of assets from any Phillips Benefit Plan or related trust or any material employment agreement or related trust.

(l) Taxes. (i) Each of Phillips and its Subsidiaries has duly and timely filed all Tax Returns required to be filed by it, and all such Tax Returns are true, complete and accurate in all respects, except to the extent that any failure to have filed or any inaccuracies in such Tax Returns would not reasonably be expected to have a Material Adverse Effect on Phillips. Phillips and each of its Subsidiaries has paid all Taxes required to be paid by it, and has paid all Taxes that it was required to withhold from amounts owing to any employee, creditor or third party, except to the extent that any failure to pay such Taxes would not reasonably be expected to have a Material Adverse Effect on Phillips. There are no pending or, to the knowledge of Phillips, threatened audits, examinations, investigations, deficiencies, claims or other proceedings in respect of Taxes relating to Phillips or any of its Subsidiaries, except for those that would not reasonably be expected to have a Material Adverse Effect on Phillips. There are no Liens for Taxes upon the assets of Phillips or any of its Subsidiaries, other than Liens for current Taxes not yet due, Liens for Taxes that are being contested in good faith by appropriate proceedings, and Liens for Taxes that would not reasonably be expected to have a

Material Adverse Effect on Phillips. Neither Phillips nor any of its Subsidiaries has requested any extension of time within which to file any Tax Returns in respect of any taxable year that have not since been filed, nor made any request for waivers of the time to assess any Taxes that are pending or outstanding, except where such request or waiver would not reasonably be expected to have a Material Adverse Effect on Phillips. The consolidated U.S. federal income Tax Returns of Phillips have been examined, or the statute of limitations has closed, with respect to all taxable years through and including 1995. Neither Phillips nor any of its Subsidiaries has any liability for Taxes of any Person (other than Phillips and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any comparable provision of U.S. state or local or foreign law), except as would not reasonably be expected to have a Material Adverse Effect on Phillips. Neither Phillips nor any of its Subsidiaries is a party to any agreement (with any Person other than Phillips and/or any of its Subsidiaries) relating to the allocation or sharing of Taxes, except as would not reasonably be expected to have a Material Adverse Effect on Phillips.

(ii) Phillips has not constituted either a "distributing corporation" or a "controlled corporation" within the meaning of Section 355(a)(1)(A) of the Code in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code (A) in the two years prior to the date of this Agreement (or will constitute such a corporation in the two years prior to the Closing Date) or (B) in a distribution that otherwise constitutes part of a "plan" or "series of related transactions" within the meaning of Section 355(e) of the Code in conjunction with the Mergers.

(iii) To Phillips's knowledge, Conoco has not constituted either a "distributing corporation" or a "controlled corporation" within the meaning of Section 355(a)(1)(A) of the Code in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code (A) in the two years prior to the date of this Agreement (or will constitute such a corporation in the two years prior to the Closing Date) or (B) in a distribution that otherwise constitutes a "plan" or "series of related transactions" within the meaning of Section 355(e) of the Code in conjunction with the Mergers.

(m) Reorganization under the Code. As of the date of this Agreement, neither Phillips nor any of its Subsidiaries has taken any action or knows of any fact that is reasonably likely to prevent the Conoco Merger or the Phillips Merger from qualifying as a "reorganization" within the meaning of
Section 368(a) of the Code or the Mergers, taken together, from qualifying as an exchange described in Section 351 of the Code.

(n) Form S-4; Joint Proxy Statement/Prospectus. None of the information to be supplied by Phillips or its Subsidiaries in the Form S-4 or the Joint Proxy Statement/Prospectus will, at the time of the mailing of the Joint Proxy Statement/Prospectus and any amendments or supplements thereto, and at the time of each of the Phillips Stockholders Meeting and the Conoco Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. The Joint Proxy Statement/Prospectus will comply, as of its mailing date, as to form in all material respects with all applicable law, including the provisions of the Securities Act and the Exchange Act, except that no representation is made by Phillips with respect to information supplied by Conoco for inclusion therein.

(o) State Takeover Laws; Rights Plan. (i) The Board of Directors of Phillips has approved this Agreement and the transactions contemplated by this Agreement as required under any applicable state takeover laws so that any such state takeover laws will not apply to this Agreement or any of the transactions contemplated hereby.

(ii) Phillips has taken all action, if any, necessary or appropriate so that the entering into of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not result in the ability of any Person to exercise any Phillips Rights under the Phillips Rights Agreement or enable or require the Phillips Rights to separate from the shares of Phillips Common Stock to which they are attached or to be triggered or become exercisable. No "Distribution Date" or "Shares Acquisition Date" (as such terms are defined in the Phillips Rights Agreement) has occurred.

(p) Opinion of Financial Advisors. Phillips has received the opinions of Goldman, Sachs & Co., J.P. Morgan Securities Inc. and Merrill Lynch & Co., dated the date hereof, to the effect that the Phillips Merger Consideration relative to the Exchange Ratio pursuant to this Agreement is fair from a financial point of view to holders of Phillips Common Stock.

(q) Board Approval. The Board of Directors of Phillips, at a meeting duly called and held, has by unanimous vote of those directors present (i) determined that this Agreement and the transactions contemplated hereby are advisable, fair to and in the best interests of Phillips stockholders, (ii) approved this Agreement and (iii) recommended that this Agreement be adopted by the holders of Phillips Common Stock.

(r) Brokers' Fees. Neither Phillips nor any of its Subsidiaries nor any of their respective officers or directors has employed any broker or finder or incurred any liability for any brokers' fees, commissions or finders' fees in connection with the transactions contemplated by this Agreement, excluding fees to be paid to Goldman, Sachs & Co., J.P. Morgan Securities Inc. and Merrill Lynch & Co.

(s) Ownership of Conoco Capital Stock. As of the date of this Agreement, Phillips does not beneficially own any shares of Conoco Capital Stock.

ARTICLE V

COVENANTS RELATING TO CONDUCT OF BUSINESS

5.1 Covenants of Conoco. During the period from the date of this Agreement and continuing until the Effective Time, Conoco agrees as to itself and its Subsidiaries that (except (i) as expressly contemplated or permitted by this Agreement or disclosed in the Conoco Disclosure Schedule, (ii) subject to
Section 5.1(a)(iii), for transactions by GIRL and (iii) for transactions between and among Conoco and its wholly owned Subsidiaries):

(a) Ordinary Course. (i) Conoco and its Subsidiaries shall carry on their respective businesses in the usual, regular and ordinary course in all material respects, in substantially the same manner as heretofore conducted, and shall use their reasonable best efforts to keep available the services of their respective present officers and key employees, preserve intact their present lines of business, maintain their rights and franchises and preserve their relationships with customers, suppliers and others having business dealings with them to the end that their ongoing businesses shall not be impaired in any material respect at the Effective Time.

(ii) Conoco shall not, and shall not permit any of its Subsidiaries to, (A) enter into any new material line of business or (B) incur or commit to any capital expenditures or any obligations or liabilities in connection therewith other than capital expenditures and obligations or liabilities in connection therewith incurred or committed to in the ordinary course of business or contemplated by the 2001 capital budget of Conoco and previously disclosed to Phillips or by future capital budgets of Conoco approved by the Board of Directors of Conoco consistent with past practice.

(iii) Notwithstanding anything to the contrary in this Section 5.1, subject to the fiduciary duties of Conoco or its officers serving as directors of GIRL, Conoco shall cause GIRL to carry on its business in the usual, regular and ordinary course in all material respects, in substantially the same manner as heretofore conducted, and shall cause GIRL to use its reasonable best efforts to keep available the services of its present officers and key employees, preserve intact its present lines of business, maintain its rights and franchises and preserve its relationships with customers, suppliers and others having business dealings with it to the end that its ongoing businesses shall not be impaired in any material respect at the Effective Time.

(b) Dividends; Changes in Share Capital. Conoco shall not, and shall not permit any of its Subsidiaries to, and shall not propose to, (i) declare or pay any dividends on or make other distributions in respect of any of its capital stock, except (A) the declaration and payment of regular

quarterly cash dividends not in excess of $0.19 per share of Conoco Common Stock with usual record and payment dates for such dividends in accordance with past dividend practice and (B) the declaration and payment of regular dividends from a Subsidiary of Conoco to Conoco or to another Subsidiary of Conoco in accordance with past dividend practice, (ii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for, shares of its capital stock, except for any such transaction by a wholly owned Subsidiary of Conoco that remains a wholly owned Subsidiary after consummation of such transaction, or (iii) repurchase, redeem or otherwise acquire any shares of its capital stock or any securities convertible into or exercisable for any shares of its capital stock, except for the purchase from time to time by Conoco of Conoco Common Stock (and the associated Conoco Rights) in connection with the Conoco Benefit Plans in the ordinary course of business.

(c) Issuance of Securities. Conoco shall not, and shall not permit any of its Subsidiaries to, issue, deliver, sell, pledge or dispose of, or authorize or propose the issuance, delivery, sale, pledge or disposition of, any shares of its capital stock of any class, any Voting Debt or any securities convertible into or exercisable for, or any rights, warrants, calls or options to acquire, any such shares or Voting Debt, or enter into any commitment, arrangement, undertaking or agreement with respect to any of the foregoing, other than (i) the issuance of Conoco Common Stock (and the associated Conoco Rights) upon the exercise of Conoco Stock Options or Conoco SARs or the settlement of Conoco Stock-Based Awards, in each case in accordance with their present terms or pursuant to Conoco Stock Options, Conoco SARs or Conoco Stock-Based Awards granted in accordance with Section 5.1(c) of the Conoco Disclosure Schedule, (ii) issuances, sales or deliveries by a wholly owned Subsidiary of Conoco of capital stock to such Subsidiary's parent or another wholly owned Subsidiary of Conoco, (iii) pursuant to acquisitions and investments as disclosed in Section 5.1(e) or 5.1(g) of the Conoco Disclosure Schedule or the financings therefor, (iv) issuances or deliveries in accordance with the Conoco Rights Agreement, (v) sales or dispositions of capital stock of a Subsidiary of Conoco in connection with a disposition permitted pursuant to Section 5.1(f), (vi) issuances or deliveries of capital stock of Subsidiaries of Conoco in the ordinary course of business in connection with joint venture agreements existing as of the date hereof or (vii) issuances of Conoco Stock Options to the extent required pursuant to reload options that are outstanding on the date hereof.

(d) Governing Documents. Except to the extent required to comply with its obligations hereunder or with applicable law, Conoco shall not amend or propose to so amend its Restated Certificate of Incorporation or By-Laws.

(e) No Acquisitions. Other than acquisitions in the ordinary course of business that do not present a material risk of making it materially more difficult to obtain any approval or authorization required in connection with the Mergers under Regulatory Law, Conoco shall not, and shall not permit any of its Subsidiaries to, acquire or agree to acquire by merger or consolidation, or by purchasing a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets (excluding the acquisition of assets used in the operations of the business of Conoco and its Subsidiaries in the ordinary course, which assets do not constitute a business unit, division or all or substantially all of the assets of the transferor).

(f) No Dispositions. Other than dispositions referred to in the Conoco SEC Documents filed prior to the date of this Agreement, Conoco shall not, and shall not permit any of its Subsidiaries to, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets (including capital stock of Subsidiaries of Conoco), other than in the ordinary course of business and dispositions in the aggregate amount of up to $700 million per year in fair market value.

(g) Investments; Indebtedness. Conoco shall not, and shall not permit any of its Subsidiaries to (i) make any loans, advances or capital contributions to, or investments in, any other Person, other

than (A) loans or investments by Conoco or a Subsidiary of Conoco to or in Conoco or any Subsidiary of Conoco, (B) in the ordinary course of business
(provided that none of such transactions referred to in this clause (B)
presents a material risk of making it more difficult to obtain any approval or authorization required in connection with the Mergers under Regulatory Law) and (C) any capital contributions to or other obligations in respect of any joint ventures of Conoco or any of its Subsidiaries pursuant to an agreement in existence on or prior to the date of this Agreement, or (ii) except in the ordinary course, incur any indebtedness for borrowed money or guarantee any such indebtedness of another Person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of Conoco or any of its Subsidiaries, guarantee any debt securities of another Person, enter into any "keep well" or other agreement to maintain any financial statement condition of another Person (other than any wholly owned Subsidiary) or enter into any arrangement having the economic effect of any of the foregoing, other than refinancings of pre-existing indebtedness.

(h) Tax-Free Qualification. Conoco shall use its reasonable best efforts to, and to cause each of its Subsidiaries to, (i) cause the Conoco Merger to qualify as a "reorganization" within the meaning of Section 368(a) of the Code and the Mergers, taken together, to qualify as an exchange described in Section 351 of the Code and (ii) obtain the opinions of counsel referred to in Sections 7.2(c) and 7.3(c), including the execution of the officers' certificates referred to therein. Conoco shall use its reasonable best efforts not to, and shall use its reasonable best efforts not to permit any of its Subsidiaries to, take any action (including any action otherwise permitted by this Section 5.1) that would prevent or impede the Conoco Merger or the Phillips Merger from qualifying as a "reorganization" within the meaning of Section 368(a) of the Code or the Mergers, taken together, from qualifying as an exchange described in
Section 351 of the Code.

(i) Compensation. Except as required by applicable law or by the terms of any collective bargaining agreement or other binding agreement currently in effect, Conoco and its Significant Subsidiaries shall not: (A) increase the amount of compensation of, or pay any severance to, any director or officer of Conoco or any Significant Subsidiary of Conoco, except in the ordinary course of business consistent with past practice; or (B) adopt or amend or make any commitment to adopt or amend any Benefit Plan or fund or make any contribution to any Conoco Benefit Plan or any related trust or other funding vehicles, except for amendments in the ordinary course of business consistent with past practice and regularly scheduled contributions to trusts funding qualified plans.

(j) Financial Accounting Methods. Except as disclosed in Conoco SEC Documents filed prior to the date of this Agreement, or as required by a Governmental Entity, Conoco shall not change in any material respect its methods of financial accounting in effect at September 30, 2001, except as required by changes in GAAP as concurred in by Conoco's independent public accountants.

(k) Standstill. Conoco shall not, and shall not permit any of its Subsidiaries to, waive the benefits of, or commit or agree to modify in any manner, any standstill or similar covenant or agreement for the benefit of Conoco or any Subsidiary.

(l) Certain Actions. Conoco and its Subsidiaries shall not take any action or omit to take any action for the purpose of preventing, delaying or impeding the consummation of the Mergers or the other transactions contemplated by this Agreement.

5.2 Covenants of Phillips. During the period from the date of this Agreement and continuing until the Effective Time, Phillips agrees as to itself and its Subsidiaries that (except (i) as expressly contemplated or permitted by this Agreement or disclosed in the Phillips Disclosure Schedule and (ii) for transactions between and among Phillips and its wholly owned Subsidiaries):

(a) Ordinary Course. (i) Phillips and its Subsidiaries shall carry on their respective businesses in the usual, regular and ordinary course in all material respects, in substantially the same manner as heretofore conducted, and shall use their reasonable best efforts to keep available the services of their respective present officers and key employees, preserve intact their present lines of business, maintain their rights and franchises and preserve their relationships with customers, suppliers and others having

business dealings with them to the end that their ongoing businesses shall not be impaired in any material respect at the Effective Time.

(ii) Phillips shall not, and shall not permit any of its Subsidiaries to, (A) enter into any new material line of business or (B) incur or commit to any capital expenditures or any obligations or liabilities in connection therewith other than capital expenditures and obligations or liabilities in connection therewith incurred or committed to in the ordinary course of business or contemplated by the 2001 capital budget of Phillips and previously disclosed to Conoco or by future capital budgets of Phillips approved by the Board of Directors of Phillips consistent with past practice.

(b) Dividends; Changes in Share Capital. Phillips shall not, and shall not permit any of its Subsidiaries to, and shall not propose to, (i) declare or pay any dividends on or make other distributions in respect of any of its capital stock, except (A) the declaration and payment of regular quarterly cash dividends not in excess of $0.36 per share of Phillips Common Stock with usual record and payment dates for such dividends in accordance with past dividend practice and (B) the declaration and payment of regular dividends from a Subsidiary of Phillips to Phillips or to another Subsidiary of Phillips in accordance with past dividend practice,
(ii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for, shares of its capital stock, except for any such transaction by a wholly owned Subsidiary of Phillips that remains a wholly owned Subsidiary after consummation of such transaction or (iii) repurchase, redeem or otherwise acquire any shares of its capital stock or any securities convertible into or exercisable for any shares of its capital stock, except for the purchase from time to time by Phillips of Phillips Common Stock (and the associated Phillips Rights) in connection with the Phillips Benefit Plans in the ordinary course of business.

(c) Issuance of Securities. Phillips shall not, and shall not permit any of its Subsidiaries to, issue, deliver, sell, pledge or dispose of, or authorize or propose the issuance, delivery, sale, pledge or disposition of, any shares of its capital stock of any class, any Voting Debt or any securities convertible into or exercisable for, or any rights, warrants, calls or options to acquire, any such shares or Voting Debt, or enter into any commitment, arrangement, undertaking or agreement with respect to any of the foregoing, other than (i) the issuance of Phillips Common Stock (and the associated Phillips Rights) upon the exercise of Phillips Stock Options or Phillips SARs, or the settlement of Phillips Stock-Based Awards, in each case in accordance with their present terms or pursuant to Phillips Stock Options, Phillips SARs or Phillips Stock-Based Awards granted in accordance with Section 5.2(c) of the Phillips Disclosure Schedule, (ii) issuances, sales or deliveries by a wholly owned Subsidiary of Phillips of capital stock to such Subsidiary's parent or another wholly owned Subsidiary of Phillips, (iii) pursuant to acquisitions and investments as disclosed in
Section 5.2(e) or 5.2(g) of the Phillips Disclosure Schedule or the financings therefor, (iv) issuances or deliveries in accordance with the Phillips Rights Agreement, (v) sales or dispositions of capital stock of a Subsidiary of Conoco in connection with a disposition permitted pursuant to
Section 5.2(f), (vi) issuances of capital stock of Subsidiaries of Phillips in the ordinary course of business in connection with joint venture agreements existing as of the date hereof or (vii) issuances of Phillips Stock Options to the extent required pursuant to reload options that are outstanding on the date hereof.

(d) Governing Documents. Except to the extent required to comply with its obligations hereunder or with applicable law, Phillips shall not amend or propose to so amend its Restated Certificate of Incorporation or By-Laws.

(e) No Acquisitions. Other than acquisitions in the ordinary course of business that do not present a material risk of making it materially more difficult to obtain any approval or authorization required in connection with the Mergers under Regulatory Law, Phillips shall not, and shall not permit any of its Subsidiaries to, acquire or agree to acquire by merger or consolidation, or by purchasing a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or

division thereof or otherwise acquire or agree to acquire any assets (excluding the acquisition of assets used in the operations of the business of Phillips and its Subsidiaries in the ordinary course, which assets do not constitute a business unit, division or all or substantially all of the assets of the transferor).

(f) No Dispositions. Other than dispositions referred to in the Phillips SEC Documents filed prior to the date of this Agreement, Phillips shall not, and shall not permit any of its Subsidiaries to, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets (including capital stock of Subsidiaries of Phillips), other than in the ordinary course of business and dispositions in the aggregate amount of up to $1,000 million per year in fair market value.

(g) Investments; Indebtedness. Phillips shall not, and shall not permit any of its Subsidiaries to (i) make any loans, advances or capital contributions to, or investments in, any other Person, other than (A) loans or investments by Phillips or a Subsidiary of Phillips to or in Phillips or any Subsidiary of Phillips, (B) in the ordinary course of business
(provided that none of such transactions referred to in this clause (B) presents a material risk of making it more difficult to obtain any approval or authorization required in connection with the Mergers under Regulatory Law) and (C) any capital contributions to or other obligations in respect of any joint ventures of Conoco or any of its Subsidiaries pursuant to an agreement in existence on or prior to the date of this Agreement, or (ii) except in the ordinary course, incur any indebtedness for borrowed money or guarantee any such indebtedness of another Person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of Phillips or any of its Subsidiaries, guarantee any debt securities of another Person, enter into any "keep well" or other agreement to maintain any financial statement condition of another Person (other than any wholly owned Subsidiary) or enter into any arrangement having the economic effect of any of the foregoing, other than refinancings of pre-existing indebtedness.

(h) Tax-Free Qualification. Phillips shall use its reasonable best efforts to, and to cause each of its Subsidiaries to, (i) cause the Phillips Merger to qualify as a "reorganization" within the meaning of
Section 368(a) of the Code and the Mergers, taken together, to qualify as an exchange described in Section 351 of the Code and (ii) obtain the opinions of counsel referred to in Sections 7.2(c) and 7.3(c), including the execution of the officers' certificates referred to therein. Phillips shall use its reasonable best efforts not to, and shall use its reasonable best efforts not to permit any of its Subsidiaries to, take any action (including any action otherwise permitted by this Section 5.2) that would prevent or impede the Conoco Merger or the Phillips Merger from qualifying as a "reorganization" within the meaning of Section 368(a) of the Code or the Mergers, taken together, from qualifying as an exchange described in
Section 351 of the Code.

(i) Compensation. Except as required by applicable law or by the terms of any collective bargaining agreement or other binding agreement currently in effect, Phillips and its Significant Subsidiaries shall not:
(A) increase the amount of compensation of, or pay any severance to, any director or officer of Phillips or any Significant Subsidiary of Phillips, except in the ordinary course of business consistent with past practice; or (B) adopt or amend or make any commitment to adopt or amend any Benefit Plan or fund or make any contribution to any Phillips Benefit Plan or any related trust or other funding vehicles, except for amendments in the ordinary course of business consistent with past practice and regularly scheduled contributions to trusts funding qualified plans.

(j) Financial Accounting Methods. Except as disclosed in Phillips SEC Documents filed prior to the date of this Agreement, or as required by a Governmental Entity, Phillips shall not change in any material respect its methods of financial accounting in effect at September 30, 2001, except as required by changes in GAAP as concurred in by Phillips's independent public accountants.

(k) Standstill. Phillips shall not, and shall not permit any of its Subsidiaries to, waive the benefits of, or commit or agree to modify in any manner, any standstill or similar covenant or agreement for the benefit of Phillips or any Subsidiary.

(l) Certain Actions. Phillips and its Subsidiaries shall not take any action or omit to take any action for the purpose of preventing, delaying or impeding the consummation of the Mergers or the other transactions contemplated by this Agreement.

5.3 Governmental Filings. Phillips and Conoco shall (a) confer on a reasonable basis with each other and (b) report to each other (to the extent permitted by applicable law or regulation or any applicable confidentiality agreement) on operational matters. Phillips and Conoco shall file all reports required to be filed by each of them with the SEC (and all other Governmental Entities) between the date of this Agreement and the Effective Time and shall, if requested by the other party and (to the extent permitted by applicable law or regulation or any applicable confidentiality agreement) deliver to the other party copies of all such reports, announcements and publications promptly upon request.

5.4 Control of Other Party's Business. Nothing contained in this Agreement shall give Conoco, directly or indirectly, the right to control or direct Phillips's operations or give Phillips, directly or indirectly, the right to control or direct Conoco's operations prior to the Effective Time. Prior to the Effective Time, each of Phillips and Conoco shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its respective operations.

ARTICLE VI

ADDITIONAL AGREEMENTS

6.1 Preparation of Proxy Statement; Stockholders Meetings. (a) As promptly as reasonably practicable following the date hereof, Phillips and Conoco shall cooperate in preparing and each shall cause to be filed with the SEC mutually acceptable proxy materials that shall constitute the Joint Proxy Statement/Prospectus and Phillips and Conoco shall prepare, and New Parent shall file with the SEC, the Form S-4. The Joint Proxy Statement/Prospectus will be included as a prospectus in and will constitute a part of the Form S-4 as New Parent's prospectus. Each of Phillips, Conoco and New Parent shall use reasonable best efforts to have the Joint Proxy Statement/Prospectus cleared by the SEC and the Form S-4 declared effective by the SEC and to keep the Form S-4 effective as long as is necessary to consummate the Mergers and the transactions contemplated hereby. Each of Phillips, Conoco and New Parent shall, as promptly as practicable after receipt thereof, provide the other parties with copies of any written comments, and advise each other of any oral comments, with respect to the Joint Proxy Statement/Prospectus or Form S-4 received from the SEC. Phillips, Conoco and New Parent shall cooperate and provide the other parties with a reasonable opportunity to review and comment on any amendment or supplement to the Joint Proxy Statement/Prospectus and the Form S-4 prior to filing such with the SEC, and each will provide each other parties with a copy of all such filings made with the SEC. Notwithstanding any other provision herein to the contrary, no amendment or supplement (including by incorporation by reference) to the Joint Proxy Statement/Prospectus or the Form S-4 shall be made without the approval of both Phillips and Conoco, which approval shall not be unreasonably withheld or delayed; provided that, with respect to documents filed by a party hereto that are incorporated by reference in the Form S-4 or Joint Proxy Statement/Prospectus, this right of approval shall apply only with respect to information relating to the other party or its business, financial condition or results of operations; and provided, further, that Phillips, in connection with a Change in the Phillips Recommendation, and Conoco, in connection with a Change in the Conoco Recommendation, may amend or supplement the Joint Proxy Statement/Prospectus or Form S-4 (including by incorporation by reference) pursuant to a Qualifying Amendment to effect such a Change, and in such event, this right of approval shall apply only with respect to information relating to the other party or its business, financial condition or results of operations, and shall be subject to the right of each party to have its Board of Directors' deliberations and conclusions to be accurately described. Phillips will use reasonable best efforts to cause the Joint Proxy Statement/ Prospectus to be mailed to Phillips stockholders, and Conoco will use reasonable best efforts to cause the Joint Proxy Statement/Prospectus to be mailed to Conoco stockholders, in each case, as promptly as practicable after the Form S-4 is declared effective under the Securities Act. Each of Phillips, Conoco and New Parent will advise the other parties, promptly after it receives notice thereof, of the time when the

Form S-4 has become effective, the issuance of any stop order, the suspension of the qualification of the New Parent Common Stock issuable in connection with the Mergers for offering or sale in any jurisdiction, or any request by the SEC for amendment of the Joint Proxy Statement/Prospectus or the Form S-4. If, at any time prior to the Effective Time, any information relating to Phillips or Conoco, or any of their respective affiliates, officers or directors, is discovered by Phillips or Conoco and such information should be set forth in an amendment or supplement to any of the Form S-4 or the Joint Proxy Statement/Prospectus so that any of such documents would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the party hereto discovering such information shall promptly notify the other parties and, to the extent required by law, rules or regulations, an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and disseminated to the stockholders of Phillips and Conoco.

(b) Conoco shall duly take all lawful action to call, give notice of, convene and hold the Conoco Stockholders Meeting as soon as practicable on a date determined in accordance with the mutual agreement of Phillips and Conoco for the purpose of obtaining the Conoco Stockholder Approval and, subject to
Section 6.5 and Section 8.5, shall take all lawful action to solicit the Conoco Stockholder Approval. The Board of Directors of Conoco shall recommend the adoption of the plan of merger contained in this Agreement by the Conoco stockholders to the effect as set forth in Section 4.1(q) (the "Conoco Recommendation"), and shall not, unless Phillips makes a Change in the Phillips Recommendation, (i) withdraw, modify or qualify (or propose to withdraw, modify or qualify) in any manner adverse to Phillips the Conoco Recommendation or (ii) take any action or make any statement in connection with the Conoco Stockholders Meeting inconsistent with the Conoco Recommendation (collectively, a "Change in the Conoco Recommendation"); provided, however, that Conoco and the Board of Directors of Conoco may take any action permitted under Section 6.5, 8.1(i) or
8.5. Notwithstanding any Change in the Conoco Recommendation pursuant to Section 6.5, this Agreement shall be submitted to the Conoco stockholders at the Conoco Stockholders Meeting for the purpose of obtaining the Conoco Stockholder Approval, and nothing contained herein shall be deemed to relieve Conoco of such obligation.

(c) Phillips shall duly take all lawful action to call, give notice of, convene and hold the Phillips Stockholders Meeting as soon as practicable on a date determined in accordance with the mutual agreement of Phillips and Conoco for the purpose of obtaining the Phillips Stockholder Approval and, subject to
Section 6.5 and Section 8.5, shall take all lawful action to solicit the Phillips Stockholder Approval. The Board of Directors of Phillips shall recommend the adoption of the plan of merger contained in this Agreement by the Phillips stockholders to the effect as set forth in Section 4.2(q) (the "Phillips Recommendation"), and shall not, unless Conoco makes a Change in the Conoco Recommendation, (i) withdraw, modify or qualify (or propose to withdraw, modify or qualify) in any manner adverse to Conoco the Phillips Recommendation or (ii) take any action or make any statement in connection with the Phillips Stockholders Meeting inconsistent with the Phillips Recommendation (collectively, a "Change in the Phillips Recommendation"); provided, however, that Phillips and the Board of Directors of Phillips may take any action permitted under Section 6.5, 8.1(i) or 8.5. Notwithstanding any Change in the Phillips Recommendation pursuant to Section 6.5, this Agreement shall be submitted to the Phillips stockholders at the Phillips Stockholders Meeting for the purpose of obtaining the Phillips Stockholder Approval, and nothing contained herein shall be deemed to relieve Phillips of such obligation.

6.2 Governance Matters; Headquarters; Company Name. (a) Phillips and Conoco shall take, and shall cause New Parent to take, all requisite action to, effective as of the Effective Time, (i) expand the New Parent Board of Directors such that it consists of 16 members, (ii) cause the New Parent Board of Directors to consist of eight current Phillips directors nominated by Phillips and eight current Conoco directors nominated by Conoco, (iii) cause each committee of the New Parent Board of Directors to consist of an equal number of directors nominated by Conoco and Phillips and (iv) cause Archie Dunham to be appointed Chairman of the New Parent Board, subject to the terms of his employment agreement entered into pursuant to Section 6.2(c). Immediately following the Effective Time, James J. Mulva shall become Chief Executive Officer of New Parent, and, subject to the terms of his employment agreement

entered into pursuant to Section 6.2(c), James J. Mulva shall become the Chairman of the Board following the retirement of Archie Dunham.

(b) The New Parent Board of Directors shall be divided into three classes, Class I, Class II and Class III. Two directors nominated by Conoco and three directors nominated by Phillips shall comprise Class I and shall hold office until the first annual meeting of the New Parent Board following the Closing Date. Three directors nominated by Conoco and two directors nominated by Phillips shall comprise Class II and shall hold office until the second annual meeting of the New Parent Board following the Closing Date. Three directors nominated by Conoco (one of whom shall be Archie Dunham) and three directors nominated by Phillips (one of whom shall be James J. Mulva) shall comprise Class III and shall hold office until the third annual meeting of the New Parent Board following the Closing Date.

(c) Concurrently with entering into this Agreement, Phillips and Conoco shall cause New Parent to enter into employment agreements, effective as of the Effective Time, with the executives of Phillips and Conoco in the forms mutually satisfactory to both parties. All other officers of New Parent shall be elected by the Board of Directors of New Parent.

(d) As soon as reasonably practicable following the Effective Time, the executive headquarters for Phillips and New Parent shall be moved to the Houston, Texas area.

(e) Immediately upon consummation of the Mergers, New Parent shall change its name to ConocoPhillips.

6.3 Access to Information. Upon reasonable notice, each of Phillips and Conoco shall (and shall cause its Subsidiaries to) afford to the officers, employees, accountants, counsel, financial advisors and other representatives of the other party reasonable access during normal business hours, during the period prior to the Effective Time, to all its properties, books, contracts, commitments, records, officers and employees and, during such period, each of Phillips and Conoco shall (and shall cause its Subsidiaries to) furnish promptly to the other party (a) a copy of each report, schedule, registration statement and other document filed, published, announced or received by it during such period pursuant to the requirements of U.S. federal or state securities laws or the HSR Act, as applicable (other than documents that such party hereto is not permitted to disclose under applicable law), and (b) all other information concerning it and its business, properties and personnel as such other party may reasonably request; provided, however, that any party hereto may restrict the foregoing access to the extent that (i) any law, treaty, rule or regulation of any Governmental Entity applicable to such party or any contract requires such party or its Subsidiaries to restrict or prohibit access to any such properties or information, (ii) counsel for such party advises that such information should not be disclosed in order to ensure compliance with the Antitrust Laws, (iii) the information is subject to the attorney-client privilege, work product doctrine or any other applicable privilege concerning pending or legal proceedings or government investigations, or (iv) the information is subject to confidentiality obligations to a third party. The parties hereto shall hold any information obtained pursuant to this Section 6.3 in confidence in accordance with, and shall otherwise be subject to, the provisions of the confidentiality agreement dated November 6, 2001, between Phillips and Conoco (the "Confidentiality Agreement"), which Confidentiality Agreement shall continue in full force and effect. Any investigation by either Phillips or Conoco shall not affect the representations and warranties of the other party.

6.4 Reasonable Best Efforts. (a) Subject to the terms and conditions of this Agreement, each party hereto will use its reasonable best efforts to take, or cause to be taken, all actions, and do, or cause to be done, all things necessary, proper or advisable under this Agreement and applicable laws and regulations to consummate the Mergers and the other transactions contemplated by this Agreement as soon as practicable after the date hereof, including (i) preparing and filing as promptly as practicable all documentation to effect all necessary applications, notices, petitions, filings, ruling requests, and other documents and to obtain as promptly as practicable all Conoco Necessary Consents or Phillips Necessary Consents, as appropriate, and all other consents, waivers, licenses, orders, registrations, approvals, permits, rulings, authorizations and clearances necessary or advisable to be obtained from any third party and/or any Governmental Entity in order to consummate the Mergers or any of the other transactions

contemplated by this Agreement (collectively, the "Required Approvals") and (ii) taking all reasonable steps as may be necessary to obtain all such Necessary Consents and the Required Approvals. In furtherance and not in limitation of the foregoing, each of Phillips and Conoco agrees (i) to make, as promptly as practicable, (A) an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated hereby, (B) appropriate filings with the European Commission, if required, in accordance with applicable Regulatory Laws, and (C) all other necessary filings with other Governmental Entities relating to the Mergers, and, to supply as promptly as practicable any additional information or documentation that may be requested pursuant to such laws or by such Governmental Entities and to use reasonable best efforts to cause the expiration or termination of the applicable waiting periods under the HSR Act and the receipt of Required Approvals under such other laws or from such authorities as soon as practicable and (ii) not to extend any waiting period under the HSR Act or enter into any agreement with the FTC or the DOJ not to consummate the transactions contemplated by this Agreement, except with the prior written consent of the other parties hereto (which shall not be unreasonably withheld or delayed). Notwithstanding anything to the contrary in this Agreement, neither Phillips nor Conoco nor any of their respective Subsidiaries shall be required to hold separate (including by trust or otherwise) or to divest any of their respective businesses or assets, or to take or agree to take any action or agree to any limitation, in any such case, that could reasonably be expected to have a Material Adverse Effect on New Parent after giving effect to the Mergers or to substantially impair the benefits to Phillips and Conoco expected, as of the date hereof, to be realized from consummation of the Mergers, and neither Phillips or Conoco shall be required to agree to or effect any divestiture, hold separate any business or take any other action that is not conditional on the consummation of the Mergers.

(b) Each of Phillips and Conoco shall, in connection with the efforts referenced in Section 6.4(a) to obtain all Required Approvals, use its reasonable best efforts to (i) cooperate in all respects with each other in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private party, (ii) subject to applicable law, permit the other party to review in advance any proposed written communication between it and any Governmental Entity, (iii) promptly inform each other of (and, at the other party's reasonable request, supply to such other party) any communication (or other correspondence or memoranda) received by such party from, or given by such party to, the DOJ, the FTC or any other Governmental Entity and of any material communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated hereby, and
(iv) consult with each other in advance to the extent practicable of any meeting or conference with the DOJ, the FTC or any other Governmental Entity or, in connection with any proceeding by a private party, with any other Person, and to the extent permitted by the DOJ, the FTC or such other applicable Governmental Entity or other Person, and to the extent (i) such party has not been advised by its counsel that such information should not be disclosed in order to ensure compliance with the Antitrust Laws and (ii) the relevant document or information is not subject to the attorney-client privilege, work product doctrine or any other applicable privilege concerning pending or legal proceedings or government investigations, give the other party the opportunity to attend and participate in such meetings and conferences.

(c) In furtherance and not in limitation of the covenants of the parties contained in Sections 6.4(a) and 6.4(b), if any administrative or judicial action or proceeding, including any proceeding by a private party, is instituted (or threatened to be instituted) challenging any transaction contemplated by this Agreement as violative of any Regulatory Law, or if any statute, rule, regulation, executive order, decree, injunction or administrative order is enacted, entered, promulgated or enforced by a Governmental Entity that would make the Mergers or the other transactions contemplated hereby illegal or would otherwise prohibit or materially impair or delay the consummation of the Mergers or the other transactions contemplated hereby, each of Phillips and Conoco shall cooperate in all respects with each other and use its respective reasonable best efforts, including, subject to Section 6.4(a), selling, holding separate or otherwise disposing of or conducting their business in a specified manner, or agreeing to sell, hold separate or otherwise dispose of or conduct their business in a specified manner or permitting the sale, holding separate or other disposition of, any assets of Phillips, Conoco or their respective Subsidiaries or the

conducting of their business in a specified manner, to contest and resist any such action or proceeding and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the Mergers or the other transactions contemplated by this Agreement and to have such statute, rule, regulation, executive order, decree, injunction or administrative order repealed, rescinded or made inapplicable so as to permit consummation of the transactions contemplated by this Agreement. Notwithstanding the foregoing or any other provision of this Agreement, nothing in this Section 6.4 shall limit either Phillips's or Conoco's right to terminate this Agreement pursuant to Section 8.1(b), 8.1(c), 8.1(i) or 8.5 so long as such party hereto has up to then complied with its obligations under this Section 6.4.

(d) Each party hereto and its respective Board of Directors shall, if any state takeover statute or similar statute becomes applicable to this Agreement, the Mergers or any other transactions contemplated hereby, take all action reasonably necessary to ensure that the Mergers and the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated hereby and otherwise to minimize the effect of such statute or regulation on this Agreement, the Mergers and the other transactions contemplated hereby.

6.5 Acquisition Proposals. (a) Each of Phillips and Conoco agrees that neither it nor any of its Subsidiaries nor any of the officers and directors of it or its Subsidiaries shall, and that it shall use its reasonable best efforts to cause its and such Subsidiaries' employees, agents and representatives (including any investment banker, attorney or accountant retained by it or any of its Subsidiaries) not to, directly or indirectly, (i) initiate, solicit, encourage or knowingly facilitate any inquiries or the making of any proposal or offer with respect to, or a transaction to effect, a merger, reorganization, share exchange, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving it, or any purchase or sale of 20% or more of the consolidated assets (including stock of its Subsidiaries) of it and its Subsidiaries, taken as a whole, or any purchase or sale of, or tender or exchange offer for, its equity securities that, if consummated, would result in any Person (or the stockholders of such Person) beneficially owning securities representing 20% or more of its total voting power (or of the surviving parent entity in such transaction) (any such proposal, offer or transaction (other than a proposal or offer made by the other party or an affiliate thereof), an "Acquisition Proposal"), (ii) have any discussion with or provide any confidential information or data to any Person relating to an Acquisition Proposal, or engage in any negotiations concerning an Acquisition Proposal, or knowingly facilitate any effort or attempt to make or implement an Acquisition Proposal, (iii) approve or recommend, or propose publicly to approve or recommend, any Acquisition Proposal or (iv) approve or recommend, or propose to approve or recommend, or execute or enter into, any letter of intent, agreement in principle, merger agreement, acquisition agreement, option agreement or other similar agreement or propose publicly or agree to do any of the foregoing related to any Acquisition Proposal.

(b) Notwithstanding anything in this Agreement to the contrary, each of Phillips and Conoco (and its respective Board of Directors) shall be permitted to (i) comply with applicable law (including Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act), (ii) effect a Change in the Phillips Recommendation or a Change in the Conoco Recommendation, as the case may be, or
(iii) engage in discussions or negotiations with, or provide any information to, any Person in response to an unsolicited bona fide written Acquisition Proposal by any such Person, if and only to the extent that, in any such case referred to in clause (ii) or (iii) above, (A) in the case of Phillips, the vote at the Phillips Stockholders Meeting on the adoption of this Agreement shall not have been taken, or in the case of Conoco, the vote at the Conoco Stockholders Meeting on the adoption of this Agreement shall not have been taken, (B) (I) in the case of clause (ii) above, it has received an unsolicited bona fide written Acquisition Proposal from a third party and its Board of Directors concludes in good faith that such Acquisition Proposal constitutes a Superior Proposal and
(II) in the case of clause (iii) above, its Board of Directors concludes in good faith that there is a reasonable likelihood that such Acquisition Proposal would lead to a Superior Proposal, (C) its Board of Directors, after consultation with outside counsel, determines in good faith that there is a reasonable probability that the failure to take such action would be inconsistent with its fiduciary

duties under applicable law, (D) prior to providing any information or data to any Person in connection with an Acquisition Proposal by any such Person, its Board of Directors receives from such Person an executed confidentiality agreement having provisions that are at least as restrictive as the Confidentiality Agreement, and (E) prior to providing any information or data to any Person or entering into discussions or negotiations with any Person, it notifies the other party promptly of such inquiries, proposals or offers received by, any such information requested from, or any such discussions or negotiations sought to be initiated or continued with, any of its representatives indicating, in connection with such notice, the name of such Person and the material terms and conditions of any inquiries, proposals or offers. Each of Phillips and Conoco agrees that it will promptly keep the other party reasonably informed of the status and terms of any inquiries, proposals or offers and the status and terms of any discussions or negotiations, including the identity of the Person making such inquiry, proposal or offer. Each of Phillips and Conoco agrees that it will, and will cause its officers, directors and representatives to, immediately cease and cause to be terminated any activities, discussions or negotiations existing as of the date of this Agreement with any Person (other than the parties hereto) conducted heretofore with respect to any Acquisition Proposal. Each of Phillips and Conoco agrees that it will use reasonable best efforts to promptly inform its directors, officers, key employees, agents and representatives of the obligations undertaken in this Section 6.5. Nothing in this Section 6.5 shall (x) permit Phillips or Conoco to terminate this Agreement (except as specifically provided in Article VIII) or (y) affect or limit any other obligation of Phillips or Conoco under this Agreement (including the provisions of Sections 6.1(b) and 6.1(c)). Except as required by law or its certificate of incorporation or by-laws, neither Phillips nor Conoco shall submit any Acquisition Proposal other than the Mergers and the transactions contemplated by this Agreement to a vote of its stockholders.

6.6 Fees and Expenses. Subject to Section 8.2, whether or not the Mergers are consummated, all Expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party hereto incurring such Expenses, except (i) Expenses incurred in connection with the filing, printing and mailing of the Joint Proxy Statement/Prospectus and Form S-4 and
(ii) Expenses incurred in connection with any consultants that Phillips and Conoco shall have agreed to retain to assist in obtaining the approvals and clearances under the Antitrust Laws, which, in each case, shall be shared equally by Phillips and Conoco. The parties hereto shall cooperate with each other in preparing, executing and filing any Tax Returns.

6.7 Directors' and Officers' Indemnification and Insurance. (a) Following the Effective Time, New Parent and the Conoco Surviving Corporation shall (i) jointly and severally indemnify and hold harmless, and provide advancement of expenses to, all past and present directors, officers and employees of Conoco and its Subsidiaries (in all of their capacities) (A) to the same extent such individuals are indemnified or have the right to advancement of expenses as of the date of this Agreement by Conoco pursuant to the Restated Certificate of Incorporation and By-Laws of Conoco and indemnification agreements, if any, in existence on the date hereof with, or for the benefit of, any directors, officers and employees of Conoco and its Subsidiaries and (B) without limitation to subclause (A) above, to the fullest extent permitted by law, in each case for acts or omissions occurring at or prior to the Effective Time (including for acts or omissions occurring in connection with the approval of this Agreement and the consummation of the transactions contemplated hereby), (ii) include and cause to be maintained in effect in the Certificate of Incorporation and By-Laws of the Conoco Surviving Corporation (or any successor to the Conoco Surviving Corporation) for a period of six years after the Effective Time, provisions regarding elimination of liability of directors, indemnification of officers, directors and employees and advancement of expenses that are, in the aggregate, no less advantageous to the intended beneficiaries than the corresponding provisions contained in the current Restated Certificate of Incorporation and By-Laws of Conoco and (iii) cause to be maintained for a period of six years after the Effective Time the current policies of directors' and officers' liability insurance and fiduciary liability insurance maintained by Conoco (provided that New Parent (or any successor thereto) may substitute therefor one or more policies of at least the same coverage and amounts containing terms and conditions that are, in the aggregate, no less advantageous to the insured) with respect to claims arising from facts or events that occurred on or before the Effective Time; provided, however, that in no event shall the Conoco Surviving Corporation be

required to expend in any one year an amount in excess of 200% of the annual premiums currently paid by Conoco for such insurance; and, provided further that if the annual premiums of such insurance coverage exceed such amount, the Conoco Surviving Corporation shall obtain a policy with the greatest coverage available for a cost not exceeding such amount. Notwithstanding any foregoing provision to the contrary, the treatment of past and present directors, officers, and employees of Conoco and its Subsidiaries with respect to elimination of liability, indemnification, advancement of expenses and liability insurance under this Section 6.7(a) shall be, in the aggregate, no less advantageous to the intended beneficiaries thereof than the corresponding treatment of the past and present directors, officers and employees of Phillips and its Subsidiaries under Section 6.7(b).

(b) Following the Effective Time, New Parent and the Phillips Surviving Corporation shall (i) jointly and severally indemnify and hold harmless, and provide advancement of expenses to, all past and present directors, officers and employees of Phillips and its Subsidiaries (in all of their capacities) (A) to the same extent such individuals are indemnified or have the right to advancement of expenses as of the date of this Agreement by Phillips pursuant to the Restated Certificate of Incorporation and By-Laws of Phillips and indemnification agreements, if any, in existence on the date hereof with, or for the benefit of, any directors, officers and employees of Phillips and its Subsidiaries and (B) without limitation to subclause (A) above, to the fullest extent permitted by law, in each case for acts or omissions occurring at or prior to the Effective Time (including for acts or omissions occurring in connection with the approval of this Agreement and the consummation of the transactions contemplated hereby), (ii) include and cause to be maintained in effect in the Certificate of Incorporation and By-Laws of the Phillips Surviving Corporation (or any successor to the Phillips Surviving Corporation) for a period of six years after the Effective Time, provisions regarding elimination of liability of directors, indemnification of officers, directors and employees and advancement of expenses that are, in the aggregate, no less advantageous to the intended beneficiaries than the corresponding provisions contained in the current Restated Certificate of Incorporation and By-Laws of Phillips and (iii) cause to be maintained for a period of six years after the Effective Time the current policies of directors' and officers' liability insurance and fiduciary liability insurance maintained by Phillips (provided that New Parent (or any successor thereto) may substitute therefor one or more policies of at least the same coverage and amounts containing terms and conditions that are, in the aggregate, no less advantageous to the insured) with respect to claims arising from facts or events that occurred on or before the Effective Time; provided, however, that in no event shall the Phillips Surviving Corporation be required to expend in any one year an amount in excess of 200% of the annual premiums currently paid by Phillips for such insurance; and, provided further that if the annual premiums of such insurance coverage exceed such amount, the Phillips Surviving Corporation shall obtain a policy with the greatest coverage available for a cost not exceeding such amount. Notwithstanding any foregoing provision to the contrary, the treatment of past and present directors, officers, and employees of Phillips and its Subsidiaries with respect to elimination of liability, indemnification, advancement of expenses and liability insurance under this Section 6.7(b) shall be, in the aggregate, no less advantageous to the intended beneficiaries thereof than the corresponding treatment of the past and present directors, officers and employees of Conoco and its Subsidiaries under Section 6.7(a).

(c) The obligations of New Parent, the Conoco Surviving Corporation and the Phillips Surviving Corporation under this Section 6.7 shall not be terminated or modified in such a manner as to adversely affect any indemnitee to whom this
Section 6.7 applies without the consent of such affected indemnitee (it being expressly agreed that the indemnitees to whom this Section 6.7 applies shall be third-party beneficiaries of this Section 6.7).

6.8 Employee Benefits. (a) From and after the Effective Time, the Conoco Benefit Plans and the Phillips Benefit Plans in effect as of the date of this Agreement and at the Effective Time shall remain in effect with respect to employees and former employees of Conoco or Phillips and their Subsidiaries (the "Newco Employees"), respectively, covered by such plans at the Effective Time, until such time as New Parent shall otherwise determine, subject to applicable laws and the terms of such plans. Prior to the Closing Date, Phillips and Conoco shall cooperate in reviewing, evaluating and analyzing the Conoco Benefit Plans and the Phillips Benefit Plans with a view towards developing appropriate new Benefit Plans

for Newco Employees. It is the intention of Phillips and Conoco, to the extent permitted by applicable laws, to develop new Benefit Plans, as soon as reasonably practicable after the Effective Time, which, among other things, (i) treat similarly situated employees on a substantially equivalent basis, taking into account all relevant factors, including duties, geographic location, tenure, qualifications and abilities and (ii) do not discriminate between Newco Employees who were covered by Conoco Benefit Plans, on the one hand, and those covered by Phillips Benefit Plans on the other, at the Effective Time. It is the current intention of Phillips and Conoco that, for one year following the Effective Time, New Parent shall provide employee benefits under Benefit Plans to Newco Employees that are substantially comparable in the aggregate to those provided to such persons pursuant to the Benefit Plans of Conoco or Phillips (or their Subsidiaries), respectively, in effect on the date hereof and at the Effective Time; provided, that the foregoing shall not be interpreted to prevent the harmonization of benefits provided to Tosco Employees (as that term is defined in the Agreement and Plan of Merger, dated as of February 4, 2001, among Phillips, Ping Acquisition Corp. and Tosco Corporation (the "Tosco Merger Agreement") with the benefits provided to other Phillips employees as and when permitted by Section 6.8 of the Tosco Merger Agreement. Nothing herein shall prohibit any changes to the Conoco Benefit Plans or the Phillips Benefit Plans that may be (i) required by applicable laws (including any applicable qualification requirements of Section 401(a) of the Code), (ii) necessary as a technical matter to reflect the transactions contemplated hereby or (iii) required for New Parent to provide for or permit investment in its securities. Nothing in this Section 6.8 shall be interpreted as preventing New Parent from amending, modifying or terminating any Conoco Benefit Plan or Phillips Benefit Plan or other contract, arrangement, commitment or understanding, in accordance with its terms and applicable laws.

(b) With respect to any Benefit Plans in which any Newco Employees who are employees of Conoco or Phillips (or their Subsidiaries) prior to the Effective Time first become eligible to participate on or after the Effective Time, and in which such Newco Employees did not participate prior to the Effective Time (the "New Plans"), New Parent shall: (A) waive all pre-existing conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to the Newco Employees and their eligible dependents under any New Plans in which such employees may be eligible to participate after the Effective Time, except to the extent such pre-existing conditions, exclusions or waiting periods would apply under the analogous Conoco Benefit Plan or Phillips Benefit Plan, as the case may be; (B) provide each Newco Employee and their eligible dependents with credit for any co-payments and deductibles paid prior to the Effective Time under a Conoco Benefit Plan or Phillips Benefit Plan (to the same extent that such credit was given under the analogous Benefit Plan prior to the Effective Time) in satisfying any applicable deductible or out-of-pocket requirements under any New Plans in which such employees may be eligible to participate after the Effective Time; and (C) recognize all service of the Newco Employees with Phillips and Conoco, and their respective affiliates, for all purposes (including, purposes of eligibility to participate, vesting credit, entitlement to benefits, and, except with respect to defined benefit pension plans, benefit accrual) in any New Plan in which such employees may be eligible to participate after the Effective Time, to the extent such service is taken into account under the applicable New Plan; provided that the foregoing shall not apply to the extent it would result in duplication of benefits.

(c) The provisions in any Phillips Benefit Plan or Conoco Benefit Plan providing for the issuance, transfer or grant of any capital stock of Phillips or Conoco (including any stock-based compensation awards) shall be amended, effective as of the Effective Time, to provide for, respectively, the issuance, transfer or grant of capital stock of New Parent, and each of Phillips and Conoco shall ensure that, following the Effective Time, no holder of a Phillips Stock Option, Phillips SAR or Phillips Stock-Based Award and no holder of a Conoco Stock Option, Conoco SAR or Conoco Stock-Based Award, or any participant in any Phillips Stock Plan or Conoco Stock Plan or any other Phillips Benefit Plan or Conoco Benefit Plan shall have any right thereunder to acquire any capital stock (including any stock-based compensation awards) of Phillips or Conoco. Without limitation of the generality of the foregoing, New Parent shall adopt and assume each of the Phillips Stock Plans and the Conoco Stock Plans effective as of the Effective Time.

(d) Phillips shall take all steps necessary to amend the trust established under the Grantor Trust Agreement, dated as of June 1, 1998, between Phillips and Wachovia Bank, N.A. so that neither the execution of this Agreement nor the consummation of any of the transactions contemplated hereby will be considered a "Change of Control" as defined in such trust agreement.

(e) Conoco shall take all steps necessary to amend the trust established under the Rabbi Trust Agreement, dated December 17, 1999, between Conoco and U.S. Trust Company, National Association so that neither the execution of this Agreement nor the consummation of any of the transactions contemplated hereby will be considered a "Change of Control" as defined in such trust agreement.

6.9 Public Announcements. Phillips and Conoco shall, unless otherwise required by applicable law or by obligations pursuant to any listing agreement with or rules of any securities exchange, consult with the other party before issuing, and provide the other party the opportunity to review and comment upon, any press release or, to the extent practical, otherwise making any public statement with respect to this Agreement or the transactions contemplated hereby. In addition to the foregoing, except as required by applicable law and to the extent disclosed in or consistent with the Joint Proxy Statement/Prospectus in accordance with the provisions of Section 6.1, neither Phillips nor Conoco shall issue any press release or otherwise make any public statement or disclosure concerning the other party or the other party's business, financial condition or results of operations without the consent of the other party, which consent shall not be unreasonably withheld or delayed.

6.10 Listing of Shares of New Parent Common Stock. New Parent shall use its reasonable best efforts to cause the shares of New Parent Common Stock to be issued in the Mergers and the shares of New Parent Common Stock to be reserved for issuance upon exercise of the Conoco Stock Options, Conoco Converted Options, Phillips Stock Options or Phillips Converted Options to be approved for listing on the NYSE, subject to official notice of issuance, prior to the Closing Date.

6.11 Rights Agreements. (a) The Board of Directors of Phillips shall take all action to the extent necessary (including amending the Phillips Rights Agreement) in order to render the Phillips Rights inapplicable to the Mergers and the other transactions contemplated by this Agreement. Except in connection with the foregoing sentence and to effect its obligations under this Agreement, the Board of Directors of Phillips shall not, without the prior written consent of Conoco, (i) amend the Phillips Rights Agreement or (ii) take any action with respect to, or make any determination under, the Phillips Rights Agreement, including a redemption of the Phillips Rights, in each case in order to facilitate any Acquisition Proposal with respect to Phillips.

(b) The Board of Directors of Conoco shall take all action to the extent necessary (including amending the Conoco Rights Agreement) in order to render the Conoco Rights inapplicable to the Mergers and the other transactions contemplated by this Agreement. Except in connection with the foregoing sentence, the Board of Directors of Conoco shall not, without the prior written consent of Phillips, (i) amend the Conoco Rights Agreement or (ii) take any action with respect to, or make any determination under, the Conoco Rights Agreement, including a redemption of the Conoco Rights, in each case in order to facilitate any Acquisition Proposal with respect to Conoco.

(c) Prior to the Effective Time, New Parent shall adopt a stockholder rights plan, in substantially the form set forth in Exhibit E (the "New Parent Rights Agreement") with a Record Date (as defined in the New Parent Rights Agreement) prior to the Effective Time.

6.12 Affiliates. (a) Promptly following the date of mailing of Joint Proxy Statement/Prospectus, Conoco shall deliver to Phillips a letter identifying all Persons who, in the judgment of Conoco, may be deemed at the time this Agreement is submitted for Conoco Stockholders Approval, "affiliates" of Conoco for purposes of Rule 145 under the Securities Act and applicable SEC rules and regulations, and such list shall be updated as necessary to reflect changes from the date thereof. Conoco shall use reasonable best efforts to cause each Person identified on such list to deliver to New Parent not later than ten days prior to the Effective Time, a written agreement substantially in the form attached as Exhibit F hereto (an "Affiliate Agreement").

(b) Promptly following the date of mailing of Joint Proxy Statement/Prospectus, Phillips shall deliver to Conoco a letter identifying all Persons who, in the judgment of Phillips, may be deemed at the time this Agreement is submitted for Phillips Stockholders Approval, "affiliates" of Phillips for purposes of Rule 145 under the Securities Act and applicable SEC rules and regulations, and such list shall be updated as necessary to reflect changes from the date thereof. Phillips shall use reasonable best efforts to cause each Person identified on such list to deliver to New Parent not later than ten days prior to the Effective Time, an Affiliate Agreement.

6.13 Section 16 Matters. Prior to the Effective Time, Phillips and Conoco shall take all such steps as may be required to cause any dispositions of Conoco Common Stock or Phillips Common Stock (including derivative securities with respect to Conoco Common Stock or Phillips Common Stock) or acquisitions of New Parent Common Stock (including derivative securities with respect to New Parent Common Stock) resulting from the transactions contemplated by Article II or Article III by each individual who is subject to the reporting requirements of
Section 16(a) of the Exchange Act with respect to Phillips and Conoco or will become subject to such reporting requirements with respect to New Parent, to be exempt under Rule 16b-3 promulgated under the Exchange Act.

6.14 Dividends. After the date of this Agreement, each of Phillips and Conoco shall coordinate with the other the declaration of any dividends in respect of Phillips Common Stock and Conoco Common Stock and the record dates and payment dates relating thereto, it being the intention of the parties hereto that holders of Conoco Common Stock or Phillips Common Stock shall not receive two dividends, or fail to receive one dividend, for any quarter, including the quarter in which the Effective Time occurs, with respect to their shares of Conoco Common Stock and/or shares of Phillips Common Stock and any shares of New Parent Common Stock any such holder receives in exchange therefor in the Mergers.

ARTICLE VII

CONDITIONS PRECEDENT

7.1 Conditions to Each Party's Obligation to Effect the Mergers. The obligations of each of Phillips and Conoco to effect the Mergers are subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions:

(a) Stockholder Approval. (i) Conoco shall have obtained the Conoco Stockholder Approval and (ii) Phillips shall have obtained the Phillips Stockholder Approval.

(b) No Injunctions or Restraints; Illegality. No law shall have been adopted or promulgated, and no temporary restraining order, preliminary or permanent injunction or other order issued by a court or other Governmental Entity of competent jurisdiction shall be in effect, having the effect of making the Mergers illegal or otherwise prohibiting consummation of the Mergers.

(c) HSR Act; Other Approvals. (i) The waiting period (and any extension thereof) applicable to the Mergers under the HSR Act shall have been terminated or shall have expired, (ii) all approvals in connection with the EC Merger Regulation and the Canadian Investment Regulations (other than approvals under the Canadian Investment Regulations which by their terms cannot be satisfied until after the Closing) shall have been obtained and (iii) all other approvals required under the Antitrust Laws shall have been obtained, except where the failure to obtain such other approvals would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on New Parent after giving effect to the Mergers.

(d) NYSE Listing. The shares of New Parent Common Stock to be issued in the Mergers and such other shares of New Parent Common Stock to be reserved for issuance in connection with the Mergers shall have been approved for listing on the NYSE, subject to official notice of issuance.

(e) Effectiveness of the Form S-4. The Form S-4 shall have been declared effective by the SEC under the Securities Act and no stop order suspending the effectiveness of the Form S-4 shall

have been issued by the SEC and no proceedings for that purpose shall have been initiated or threatened by the SEC.

7.2 Additional Conditions to Obligations of Phillips. The obligations of Phillips to effect the Mergers are subject to the satisfaction, or waiver by Phillips, on or prior to the Closing Date, of the following additional conditions:

(a) Representations and Warranties. Each of the representations and warranties of Conoco set forth in this Agreement that are qualified as to materiality or Material Adverse Effect shall be true and correct and those material representations and warranties not so qualified shall be true and correct in all material respects, as of the Closing Date as though made on and as of the Closing Date (except to the extent that such representations and warranties speak as of another date, in which case such representations and warranties shall be true and correct as of such other date); and Phillips shall have received a certificate of an executive officer of Conoco to such effect.

(b) Performance of Obligations of Conoco. Conoco shall have performed or complied with all agreements and covenants required to be performed by it under this Agreement at or prior to the Closing Date that are qualified as to materiality or Material Adverse Effect and shall have performed or complied in all material respects with all other material agreements and covenants required to be performed by it under this Agreement at or prior to the Closing Date that are not so qualified; and Phillips shall have received a certificate of an executive officer of Conoco to such effect.

(c) Tax Opinion. Phillips shall have received from Wachtell, Lipton, Rosen & Katz, counsel to Phillips, a written opinion dated the Closing Date to the effect that for U.S. federal income tax purposes the Phillips Merger will constitute a "reorganization" within the meaning of Section 368(a) of the Code and/or the Mergers, taken together, will constitute an exchange described in Section 351 of the Code. In rendering such opinion, counsel to Phillips shall be entitled to rely upon customary assumptions and representations reasonably satisfactory to such counsel, including representations set forth in certificates of officers of Phillips and Conoco.

7.3 Additional Conditions to Obligations of Conoco. The obligations of Conoco to effect the Mergers are subject to the satisfaction, or waiver by Conoco, on or prior to the Closing Date, of the following additional conditions:

(a) Representations and Warranties. Each of the representations and warranties of Phillips set forth in this Agreement that are qualified as to materiality or Material Adverse Effect shall be true and correct and those material representations and warranties not so qualified shall be true and correct in all material respects, as of the Closing Date as though made on and as of the Closing Date (except to the extent that such representations and warranties speak as of another date, in which case such representations and warranties shall be true and correct as of such other date); and Conoco shall have received a certificate of an executive officer of Phillips to such effect.

(b) Performance of Obligations of Phillips. Phillips shall have performed or complied with all agreements and covenants required to be performed by it under this Agreement at or prior to the Closing Date that are qualified as to materiality or Material Adverse Effect and shall have performed or complied in all material respects with all other material agreements and covenants required to be performed by it under this Agreement at or prior to the Closing Date that are not so qualified; and Conoco shall have received a certificate of an executive officer of Phillips to such effect.

(c) Tax Opinion. Conoco shall have received from Cravath, Swaine & Moore, counsel to Conoco, a written opinion dated the Closing Date to the effect that for U.S. federal income tax purposes the Conoco Merger will constitute a "reorganization" within the meaning of Section 368(a) of the Code and/or the Mergers, taken together, will constitute an exchange described in Section 351 of the Code. In rendering such opinion, counsel to Conoco shall be entitled to rely upon customary assumptions and representations reasonably satisfactory to such counsel, including representations set forth in certificates of officers of Phillips and Conoco.

ARTICLE VIII

TERMINATION AND AMENDMENT

8.1 Termination. This Agreement may be terminated at any time prior to the Effective Time and, except as specifically provided below, whether before or after the Phillips Stockholders Meeting or the Conoco Stockholders Meeting:

(a) by mutual written consent of Phillips and Conoco;

(b) by either Phillips or Conoco, if the Effective Time shall not have occurred on or before the date 18 months from the date of this Agreement (the "Termination Date"); provided, however, that the right to terminate this Agreement under this Section 8.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement (including such party's obligations set forth in Section 6.4) has been the primary cause of, or resulted in, the failure of the Effective Time to occur on or before the Termination Date;

(c) by either Phillips or Conoco, if any Governmental Entity (i) shall have issued an order, decree or ruling or taken any other action (which the parties hereto shall have used their reasonable best efforts to resist, resolve or lift, as applicable, in accordance with Section 6.4) permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling or other action shall have become final and nonappealable or (ii) shall have failed to issue an order, decree or ruling or to take any other action that is necessary to fulfill the conditions set forth in Sections 7.1(c), 7.1(d) or 7.1(e), as applicable, and such denial of a request to issue such order, decree, ruling or the failure to take such other action shall have become final and nonappealable (which order, decree, ruling or other action the parties hereto shall have used their reasonable best efforts to obtain, in accordance with Section 6.4); provided, however, that the right to terminate this Agreement under this Section 8.1(c) shall not be available to any party hereto whose failure to comply with Section 6.4 has been the primary cause of, or resulted in, such action or inaction;

(d) by either Phillips or Conoco, if either the Phillips Stockholder Approval or the Conoco Stockholder Approval has not been obtained by reason of the failure to obtain the required vote at the Phillips Stockholders Meeting or the Conoco Stockholders Meeting, as applicable;

(e) by Phillips, if Conoco shall have (i) failed to make the Conoco Recommendation or effected a Change in the Conoco Recommendation, whether or not permitted by the terms hereof, or (ii) materially breached its obligations under this Agreement by reason of a failure to call the Conoco Stockholders Meeting in accordance with Section 6.1;

(f) by Conoco, if Phillips shall have (i) failed to make the Phillips Recommendation or effected a Change in the Phillips Recommendation, whether or not permitted by the terms hereof, or (ii) materially breached its obligations under this Agreement by reason of a failure to call the Phillips Stockholders Meeting in accordance with Section 6.1;

(g) by Phillips, if Conoco shall have breached or failed to perform any of its representations, warranties, covenants or other agreements contained in this Agreement, such that the conditions set forth in Sections 7.2(a) or 7.2(b) are not capable of being satisfied on or before the Termination Date;

(h) by Conoco, if Phillips shall have breached or failed to perform any of its representations, warranties, covenants or other agreements contained in this Agreement, such that the conditions set forth in Section 7.3(a) or 7.3(b) are not capable of being satisfied on or before the Termination Date; or

(i) by Phillips or Conoco, prior to receipt of Phillips Stockholder Approval or Conoco Stockholder Approval, as appropriate, in accordance with
Section 8.5; provided, however, that it shall have complied with all provisions thereof, including the notice provisions.

8.2 Effect of Termination. (a) In the event of termination of this Agreement by either Conoco or Phillips as provided in Section 8.1, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of any party hereto or their respective officers or directors, except with respect to Section 4.1(r), Section 4.2(r), the second sentence of Section 6.3, Section 6.6, this Section 8.2 and Article IX, which provisions shall survive such termination; provided that, notwithstanding anything to the contrary contained in this Agreement, neither Phillips nor Conoco shall be relieved or released from any liabilities or damages arising out of its willful and material breach of this Agreement.

(b) If (i) (A) (I) either Conoco or Phillips terminates this Agreement pursuant to Section 8.1(d) (provided that the basis for such termination is the failure to obtain the Conoco Stockholder Approval) or pursuant to Section 8.1(b) without the vote at the Conoco Stockholders Meeting on the adoption of this Agreement being taken or (II) Phillips terminates this Agreement pursuant to
Section 8.1(g), (B) at any time after the date of this Agreement an Acquisition Proposal with respect to Conoco shall have been publicly announced or otherwise communicated to the senior management, Board of Directors or stockholders of Conoco and such Acquisition Proposal shall not have been publicly withdrawn more than 30 days prior to the termination of this Agreement and (C) within twelve months of such termination Conoco or any of its Subsidiaries enters into any definitive agreement with respect to, or consummates, any Acquisition Proposal,
(ii) Phillips shall terminate this Agreement pursuant to Section 8.1(e), (iii) Conoco shall terminate this Agreement pursuant to Section 8.1(i) or (iv) (A) (I) either Conoco or Phillips terminates this Agreement pursuant to Section 8.1(d) (provided that the basis for such termination is the failure to obtain the Conoco Stockholder Approval) or pursuant to Section 8.1(b) without the vote at the Conoco Stockholders Meeting on the adoption of this Agreement being taken or
(II) Phillips terminates this Agreement pursuant to Section 8.1(g), (B) at any time after the date of this Agreement an Acquisition Proposal with respect to Conoco shall have been publicly announced or otherwise communicated to the senior management, Board of Directors or stockholders of Conoco and (C) within twelve months of the termination of this Agreement, Conoco or any of its Subsidiaries enters into a definitive agreement with respect to, or consummates, an Acquisition Proposal with the Person (or an affiliate thereof) that publicly announced or otherwise communicated the Acquisition Proposal referred to in clause (B), then Conoco shall promptly, but in no event later than one Business Day after the date of such termination (or in the case of clause (i) or (iv) above, if later, the date Conoco or its Subsidiary enters into such agreement with respect to, or consummates, such Acquisition Proposal), pay Phillips an amount equal to the Conoco Termination Fee, by wire transfer of immediately available funds.

(c) If (i) (A) (I) either Conoco or Phillips terminates this Agreement pursuant to Section 8.1(d) (provided that the basis for such termination is the failure to obtain the Phillips Stockholder Approval) or pursuant to Section 8.1(b) without the vote at the Phillips Stockholders Meeting on the adoption of this Agreement being taken or (II) Conoco terminates this Agreement pursuant to
Section 8.1(h), (B) at any time after the date of this Agreement an Acquisition Proposal with respect to Phillips shall have been publicly announced or otherwise communicated to the senior management, Board of Directors or stockholders of Phillips and such Acquisition Proposal shall not have been publicly withdrawn more than 30 days prior to the termination of this Agreement and (C) within twelve months of such termination Phillips or any of its Subsidiaries enters into any definitive agreement with respect to, or consummates, any Acquisition Proposal, (ii) Conoco shall terminate this Agreement pursuant to Section 8.1(f), (iii) Phillips shall terminate this Agreement pursuant to Section 8.1(i) or (iv) (A) (I) either Conoco or Phillips terminates this Agreement pursuant to Section 8.1(d) (provided that the basis for such termination is the failure to obtain the Phillips Stockholder Approval) or pursuant to Section 8.1(b) without the vote at the Phillips Stockholders Meeting on the adoption of this Agreement being taken or (II) Conoco terminates this Agreement pursuant to Section 8.1(h), (B) at any time after the date of this Agreement an Acquisition Proposal with respect to Phillips shall have been publicly announced or otherwise communicated to the senior management, Board of Directors or stockholders of Phillips and (C) within twelve months of the termination of this Agreement, Phillips or any of its Subsidiaries enters into a definitive agreement with respect to, or consummates, an Acquisition Proposal with the Person (or an affiliate thereof) that publicly announced or otherwise communicated the Acquisition Proposal referred to in clause (B), then Phillips shall promptly, but in no event later than one Business Day after the date of

such termination (or in the case of clause (i) or (iv) above, if later, the date Phillips or its Subsidiary enters into such agreement with respect to, or consummates, such Acquisition Proposal), pay Conoco an amount equal to the Phillips Termination Fee, by wire transfer of immediately available funds.

(d) The parties hereto acknowledge that the agreements contained in this
Section 8.2 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, neither Phillips or Conoco would enter into this Agreement; accordingly, if any party fails promptly to pay any amount due pursuant to this Section 8.2, and, in order to obtain such payment, the other party commences a suit that results in a judgment against such party for the fee set forth in this Section 8.2, such party shall pay to the other party its costs and expenses (including attorneys' fees and expenses) in connection with such suit, together with interest on the amount of the fee at the prime rate of Citibank, N.A. in effect on the date such payment was required to be made, notwithstanding the provisions of Section 6.6. The parties hereto agree that any remedy or amount payable pursuant to this Section 8.2 shall not preclude any other remedy or amount payable hereunder, and shall not be an exclusive remedy, for any willful and material breach of any representation, warranty, covenant or agreement contained in this Agreement.

8.3 Amendment. This Agreement may be amended by the parties hereto, by action taken or authorized by their respective Boards of Directors, at any time before or after the Phillips Stockholder Approval or the Conoco Stockholder Approval, but, after any such approval, no amendment shall be made which by law or in accordance with the rules of any relevant stock exchange requires further approval by such stockholders without such further approval. This Agreement may not be amended, except by an instrument in writing signed on behalf of each of the parties hereto.

8.4 Extension; Waiver. At any time prior to the Effective Time, the parties hereto, by action taken or authorized by their respective Boards of Directors, may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party hereto. The failure of any party hereto to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights.

8.5 Procedure for Termination. Each of Conoco or Phillips may terminate this Agreement pursuant to Section 8.1(i) only if (i) the Conoco Board or Phillips Board, as appropriate, has received a Superior Proposal, (ii) in light of such Superior Proposal a majority of the disinterested directors of Conoco or Phillips, as appropriate, has determined in good faith, after consultation with outside counsel, that it is necessary for it to withdraw or modify its approval or recommendation of this Agreement or the Mergers in order to comply with its fiduciary duty under applicable law, (iii) Conoco or Phillips, as appropriate, has notified the other party in writing of the determinations described in clause (ii) above, (iv) at least five business days following receipt by the other party of the notice referred to in clause (iii) above, and taking into account any revised proposal made by Conoco or Phillips, as appropriate, since receipt of the notice referred to in clause (iii) above, such Superior Proposal remains a Superior Proposal and a majority of the disinterested directors of Conoco or Phillips, as appropriate, has again made the determinations referred to in clause (ii) above, (v) Conoco or Phillips, as appropriate, is in compliance with Section 6.5 and (vi) Conoco or Phillips, as appropriate, is not at such time entitled to terminate this Agreement pursuant to Section 8.1(h) or
(g), as appropriate.

ARTICLE IX

GENERAL PROVISIONS

9.1 Non-Survival of Representations, Warranties and Agreements. None of the representations, warranties, covenants and other agreements in this Agreement or in any instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants, agreements and other provisions, shall survive the Effective Time, except for those covenants,

agreements and other provisions contained herein that by their terms apply or are to be performed in whole or in part after the Effective Time and this Article IX.

9.2 Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given when received. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

(i) if to Phillips:

Phillips Petroleum Company
Phillips Building
Fourth and Keeler
Bartlesville, Oklahoma 74004

Attention: General Counsel

with a copy to:

Wachtell, Lipton, Rosen & Katz 51 West 52nd Street
New York, New York 10019

Attention: Andrew R. Brownstein, Esq.

(ii) if to Conoco to:

Conoco Inc.
600 North Dairy Ashford Road Houston, Texas 77079

Attention: General Counsel

with a copy to:

Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019

Attention: Richard Hall, Esq.

9.3 Interpretation. When a reference is made in this Agreement to Articles, Sections, Exhibits or Schedules, such reference shall be to an Article or Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". In addition, each Section of this Agreement is qualified by the matters set forth in the related Section of the Phillips Disclosure Schedule and the Conoco Disclosure Schedule, as the case may be, and by such matters set forth any place else in this Agreement or in the Phillips Disclosure Schedule or the Conoco Disclosure Schedule the applicability of such qualification to the Section of this Agreement is reasonably apparent.

9.4 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties hereto need not sign the same counterpart.

9.5 Entire Agreement; No Third Party Beneficiaries. (a) This Agreement, the Confidentiality Agreement and the Exhibits and disclosure schedules and the other agreements and instruments of the parties hereto delivered in connection herewith constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties hereto with respect to the subject matter hereof.

(b) This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, other than
Section 6.7 (which is intended to be for the benefit of the Persons covered thereby) and Sections 3.4 and 3.5 (which are intended to be for the benefit of the holders of Conoco Stock Options, Conoco SARs and Conoco Stock-Based Awards and Phillips Stock Options, Phillips SARs and Phillips Stock-Based Awards).

9.6 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware (without giving effect to choice of law principles thereof).

9.7 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party hereto. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

9.8 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto, in whole or in part (whether by operation of law or otherwise), without the prior written consent of the other parties hereto, and any attempt to make any such assignment without such consent shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns.

9.9 Submission to Jurisdiction; Waivers. Each of Phillips and Conoco irrevocably agrees that any legal action or proceeding with respect to this Agreement or for recognition and enforcement of any judgment in respect hereof brought by the other party hereto or its successors or assigns may be brought and determined in the Chancery or other Courts of the State of Delaware, and each of Phillips and Conoco hereby irrevocably submits with regard to any such action or proceeding for itself and in respect to its property, generally and unconditionally, to the exclusive jurisdiction of the aforesaid courts and to accept service of process in any manner permitted by such courts. Each of Phillips and Conoco hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to lawfully serve process, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise),
(c) to the fullest extent permitted by applicable law, that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper and (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts and (d) any right to a trial by jury.

9.10 Enforcement. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms. It is accordingly agreed that the parties hereto shall be entitled to specific performance of the terms hereof, this being in addition to any other remedy to which they are entitled at law or in equity.

IN WITNESS WHEREOF, Phillips Petroleum Company, CorvettePorsche Corp., Porsche Merger Corp., Corvette Merger Corp. and Conoco Inc. have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above.

PHILLIPS PETROLEUM COMPANY

By: /s/ J.J. MULVA
  ------------------------------------
    Name: J. J. Mulva
    Title: Chairman and Chief
    Executive Officer

CORVETTEPORSCHE CORP.

By: /s/ RICK A. HARRINGTON
  ------------------------------------
    Name: Rick A. Harrington
    Title: Chairman

PORSCHE MERGER CORP.

By: /s/ J. BRYAN WHITWORTH
  ------------------------------------
    Name: J. Bryan Whitworth
    Title: Chairman

CORVETTE MERGER CORP.

By: /s/ RICK A. HARRINGTON
  ------------------------------------
    Name: Rick A. Harrington
    Title: Chairman

CONOCO INC.

By: /s/ ARCHIE W. DUNHAM
  ------------------------------------
    Name: Archie W. Dunham
    Title: Chairman, President and
           Chief Executive Officer

ANNEX B

FORM OF

RESTATED CERTIFICATE OF INCORPORATION

OF

NEW PARENT

FIRST: The name of the Corporation is ConocoPhillips (hereinafter the "Corporation").

SECOND: The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at that address is The Corporation Trust Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the "DGCL").

FOURTH: A. Authorized Shares. The total number of shares of stock that the Corporation shall have authority to issue is 3,000,000,000 (three billion) of which (i) 2,500,000,000 (two billion, five hundred million) shares shall be shares of Common Stock, par value $.01 per share (the "Common Stock"), and (ii) 500,000,000 (five hundred million) shares shall be shares of Preferred Stock, par value $.01 per share (the "Preferred Stock"). The number of authorized shares of any of the Preferred Stock or the Common 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 in voting power of the stock of the Corporation entitled to vote thereon irrespective of the provisions of
Section 242(b)(2) of the DGCL (or any successor provision thereto), and no vote of the holders of any of the Preferred Stock or the Common Stock voting separately as a class shall be required therefor.

B. Preferred Stock. The Board of Directors is hereby expressly authorized, by resolution or resolutions, to provide, out of the unissued shares of Preferred Stock, for series of Preferred Stock and, with respect to each such series, to fix the number of shares constituting such series and the designation of such series, and the voting powers, preferences and relative, participating, optional or other special rights, if any, and any qualifications, limitations or restrictions thereof, of the shares of such series. The voting powers, preferences and relative, participating, optional and other special rights, if any, of each series of Preferred Stock, and any qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding.

C. Common Stock.

(1) Subject to the rights of the holders of Preferred Stock, and subject to any other provisions of this Restated Certificate of Incorporation ("Certificate of Incorporation"), holders of Common Stock shall be entitled to receive such dividends and other distributions in cash, stock of any corporation or property of the Corporation as may be declared thereon by the Board of Directors from time to time out of assets or funds of the Corporation legally available therefor and shall share equally on a per share basis in all such dividends and other distributions.

(2)(a) At every meeting of the stockholders of the Corporation every holder of Common Stock shall be entitled to one vote in person or by proxy for each share of Common Stock standing in his or her name on the transfer books of the Corporation in connection with the election of directors and all other matters submitted to a vote of stockholders; provided, however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any Certificate of Designation relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series,

to vote thereon pursuant to this Certificate of Incorporation (including any Certificate of Designation relating to any series of Preferred Stock) or pursuant to the DGCL.

(b) The affirmative vote of shares representing not less than 80% of the votes entitled to be cast by the Voting Stock shall be required to alter, amend or adopt any provision inconsistent with or repeal Article FIFTH, Article SEVENTH or Article NINTH or any provision of this paragraph (C)(2)(b), and the affirmative vote of shares representing not less than 80% of the votes entitled to be cast by the Voting Stock, acting on the unanimous recommendation of the entire Board of Directors, shall be required to alter, amend or adopt any provision inconsistent with or repeal Article FIRST. "Voting Stock" shall mean the then outstanding shares of capital stock entitled to vote generally on the election of directors and shall exclude any class or series of capital stock only entitled to vote in the event of dividend arrearages thereon, whether or not at the time of determination there are any such dividend arrearages.

(c) Every reference in this Certificate of Incorporation to a majority or other proportion of shares, or a majority or other proportion of the votes of shares, of Voting Stock shall refer to such majority or other proportion of the votes to which such shares of Voting Stock are entitled.

(d) At any meeting of stockholders, the presence in person or by proxy of the holders of shares of capital stock entitled to cast a majority of all the votes which could be cast at such meeting by the holders of all of the outstanding shares of capital stock of the Corporation entitled to vote at such meeting shall constitute a quorum.

(3) In the event of any dissolution, liquidation or winding up of the affairs of the Corporation, whether voluntary or involuntary, after payment in full of the amounts required to be paid to the holders of Preferred Stock, the remaining assets and funds of the Corporation shall be distributed pro rata to the holders of Common Stock. For purposes of this paragraph (C)(3), the voluntary sale, conveyance, lease, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the assets of the Corporation or a consolidation or merger of the Corporation with one or more other corporations or other entities (whether or not the Corporation is the corporation surviving such consolidation or merger) shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary.

(4)(a) All rights to vote and all voting power (including, without limitation thereto, the right to elect directors) shall be vested exclusively in the holders of Common Stock, except as otherwise expressly provided in this Certificate of Incorporation, in a Certificate of Designation with respect to any Preferred Stock or as otherwise expressly required by applicable law.

(b) No stockholder shall be entitled to exercise any right of cumulative voting.

FIFTH: A. The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors. The total number of directors constituting the entire Board shall be not less than six nor more than twenty as determined from time to time by resolution adopted by affirmative vote of a majority of the entire Board of Directors. The directors shall be divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. Each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected and until his successor shall be elected and shall qualify, subject however, to prior death, resignation or removal from office. Notwithstanding the immediately preceding sentence: the Class I directors in office immediately following the Merger Effective Time shall have an initial term ending on the date of the first annual meeting held after the date on which the mergers provided for in the Agreement and Plan of Merger dated as of November 18, 2001, by and among Phillips Petroleum Company, the Corporation, Porsche Merger Corp., Corvette Merger Corp. and Conoco Inc. became effective (the "Merger Effective Time"); the Class II directors in office immediately following the Merger Effective Time shall have an initial term ending on the date of the second annual meeting held after the Merger Effective Time; and the Class III directors in office immediately following the Merger Effective Time shall have an initial term ending on the date of the third annual meeting held after the Merger

Effective Time. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director. A director shall hold office until the annual meeting at which his term expires and until his successor shall be elected and shall qualify, subject, however, to prior death, resignation or removal from office. Unless otherwise required by law, any vacancy on the Board of Directors may be filled only by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, or by stockholders if such vacancy was caused by the action of stockholders (in which event such vacancy may not be filled by the directors or a majority thereof).

Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his predecessor.

Notwithstanding the foregoing, whenever the holders of outstanding shares of one or more series of Preferred Stock are entitled to elect a director or directors of the Corporation separately as a series or together with one or more other series pursuant to a resolution of the Board of Directors providing for the establishment of such series, such director or directors shall not be classified pursuant to or be subject to the foregoing provisions of this Article FIFTH, and the election, term of office, removal and filling of vacancies in respect of such director or directors shall be governed by the resolution of the Board of Directors so providing for the establishment of such series and by applicable law.

B. Any director or the entire Board of Directors may only be removed for cause, such removal to be by the affirmative vote of the shares representing at least a majority of the votes entitled to be cast by the Voting Stock. Unless the Board of Directors has made a determination that removal is in the best interests of the Corporation (in which case the following definition shall not apply), "cause" for removal of a director shall be deemed to exist only if (i) the director whose removal is proposed has been convicted, or when a director is granted immunity to testify when another has been convicted, of a felony by a court of competent jurisdiction and such conviction is no longer subject to direct appeal; (ii) such director has been found by the affirmative vote of a majority of the Directors then in office at any regular or special meeting of the Board of Directors called for that purpose, or by a court of competent jurisdiction to have been guilty of willful misconduct in the performance of his duties to the Corporation in a matter of substantial importance to the Corporation; or (iii) such director has been adjudicated by a court of competent jurisdiction to be mentally incompetent, which mental incompetency directly affects his ability as a director of the Corporation. Notwithstanding the foregoing, whenever holders of outstanding shares of one or more series of Preferred Stock are entitled to elect directors of the Corporation pursuant to the provisions applicable in the case of arrearages in the payment of dividends or other defaults contained in the resolution or resolutions of the Board of Directors providing for the establishment of any such series, any such director of the Corporation so elected may be removed in accordance with the provisions of such resolution or resolutions.

C. There shall be no limitation on the qualification of any person to be a director or on the ability of any director to vote on any matter brought before the Board or any Board committee, except (i) as required by applicable law, (ii) as set forth in this Certificate of Incorporation or (iii) any By-Law adopted by the Board of Directors with respect to the eligibility for election as a director upon reaching a specified age or, in the case of employee directors, with respect to the qualification for continuing service of directors upon ceasing employment from the Corporation.

D. Except as (i) required by applicable law or (ii) set forth in this Certificate of Incorporation, at all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors.

E. The following provisions are inserted for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

(1) The By-Laws of the Corporation may be adopted, altered, amended or repealed (i) by the affirmative vote of the shares representing a majority of the votes entitled to be cast by the Voting Stock; provided, however, that any proposed alteration, amendment or repeal of, or the adoption of any By-Law inconsistent with, Section 3, 7, 10 or 11 of Article II of the By-Laws or Section 1, 2 or 11 of Article III of the By-Laws or Section 4, 5 or 12 of Article IV of the By-Laws (in each case, as in effect on the date hereof), or the alteration, amendment or the repeal of, or the adoption of any provision inconsistent with this sentence, by the stockholders shall require the affirmative vote of shares representing not less than 80% of the votes entitled to be cast by the Voting Stock; and provided, further, however, 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 the new By-Law or By-Laws must be contained in the notice of such special meeting, or (ii) by action of the Board of Directors of the Corporation except as otherwise specified in Section 12 of Article IV of the By-Laws.

(2) In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the DGCL, this Certificate of Incorporation, and any By-Laws adopted by the stockholders; provided, however, that no By-Laws hereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such By-Laws had not been adopted.

SIXTH: Meetings of stockholders may be held within or without the State of Delaware, as the By-Laws may provide. The books of the Corporation may be kept (subject to any provision contained in the DGCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation.

SEVENTH: Any action required or permitted to be taken by the stockholders of the Corporation may be effected only at a duly called annual or special meeting of such holders and may not be effected by a consent in writing by such holders in lieu of such a meeting. Except as otherwise required by law, special meetings of stockholders of the Corporation for any purpose or purposes may be called only by the Board of Directors pursuant to a resolution stating the purpose or purposes thereof or by the Chairman of the Board of Directors of the Corporation and any power of stockholders to call a special meeting is specifically denied. No business other than that stated in the notice of such meeting shall be transacted at any special meeting.

EIGHTH: A. Subject to Section 253 of the DGCL, in addition to any affirmative vote that may be required by law, this Certificate of Incorporation or the By-Laws of the Corporation, and except as otherwise expressly provided in paragraph (B) of this Article EIGHTH:

(i) any merger or consolidation of the Corporation or any subsidiary of the Corporation with or into (A) any Related Person or (B) any Person that is an Affiliate of a Related Person; or

(ii) any sale, lease, exchange, transfer or other disposition by the Corporation to any Related Person or any Affiliate of any Related Person of all or substantially all of the assets of the Corporation; or

(iii) Any reclassification of securities (including any reverse stock split) or recapitalization of the Corporation for which the approval of shareholders of the Corporation is otherwise required, or any merger, consolidation or share exchange of the Corporation with any of its subsidiaries for which the approval of shareholders of the Corporation is otherwise required, which has the effect, either directly or indirectly, of increasing by more than 1% the proportionate share of the Common Stock or Voting Stock Beneficially Owned by any Related Person or any Affiliate of any Related Person; or

(iv) any dissolution of the Corporation voluntarily caused or proposed by or on behalf of a Related Person or any Affiliate of any Related Person, shall require the affirmative vote of shares

representing (x) not less than 80% of the votes entitled to be cast by the Voting Stock and (y) not less than 66 2/3% of the votes entitled to be cast by the Voting Stock not Beneficially Owned, directly or indirectly, by any Related Person, with respect to such Business Combination. Such affirmative vote shall be required, notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law, elsewhere in this Certificate of Incorporation, in the By-Laws of the Corporation or in any agreement with any national securities exchange or otherwise.

B. The provisions of paragraph (A) shall not be applicable to any particular Business Combination, and such Business Combination shall require only such affirmative vote as is required by law, the By-Laws of the Corporation and any other provision of the Certificate of Incorporation, if all of the conditions specified in either of the following paragraphs (B)(i) and (B)(ii) are met:

(i) the cash, property, securities or other consideration to be received per share by each holder of any outstanding class or series of Voting Stock in the Business Combination is, with respect to each such class or series, either (A) the same in form and amount per share as the highest consideration paid by the Related Person in a tender or exchange offer in which such Related Person acquired at least 50% of the outstanding stock of such class or series of Voting Stock and which was consummated not more than one year prior to the date of such Business Combination, or if earlier, the entering into of a definitive agreement providing therefor or (B) not less in amount (as to cash) or Fair Market Value (as to consideration other than cash) as of the date of the determination of the Highest Per Share Price (as to property, securities or other consideration) than the Highest Per Share Price applicable to such class or series of shares of Voting Stock; provided that, in the event of any Business Combination in which the Corporation survives, any shares retained by the holders thereof shall constitute consideration other than cash for purposes of this paragraph (B)(i); or

(ii) a majority of the Continuing Directors shall have expressly approved such Business Combination either in advance of or subsequent to such Related Person's having become a Related Person.

In the case of any Business Combination with a Related Person to which paragraph (B)(ii) above does not apply, a majority of the Continuing Directors, promptly following the request of a Related Person, shall determine the Highest Per Share Price for each class or series of stock of the Corporation. Such determination shall be announced not less than five days prior to the meeting at which holders of shares vote on the Business Combination. Such determination shall be final, unless the Related Person becomes the Beneficial Owner of additional shares of Common Stock after the date of the earlier determination, in which case the Continuing Directors shall make a new determination as to the Highest Per Share Price for each class or series of shares prior to the consummation of the Business Combination.

A Related Person shall be deemed to have acquired a share at the time that such Related Person became the Beneficial Owner thereof. With respect to shares owned by Affiliates, Associates and other Persons whose ownership is attributable to a Related Person, if the price paid by such Related Person for such shares is not determinable by a majority of the Continuing Directors, the price so paid shall be deemed to be the higher of (i) the price paid upon the acquisition thereof by the Affiliate, Associate or other Person or (ii) the Share Price of the shares in question at the time when the Related Person became the Beneficial Owner thereof.

C. For purposes of this Article EIGHTH and notwithstanding anything to the contrary set forth in this Certificate of Incorporation:

(i) The term "Affiliate," used to indicate a relationship to a specified Person, shall mean a Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.

(ii) The term "Associate," used to indicate a relationship with a specified Person, shall mean (A) any corporation, partnership, limited liability company, association, joint venture or other organization (other than the Corporation or any wholly owned subsidiary of the Corporation) of which such specified Person is an officer or partner or is, directly or indirectly, the Beneficial Owner of 10%

or more of any class of equity securities; (B) any trust or other estate in which such specified Person has a beneficial interest of 10% or more or as to which such specified Person serves as trustee or in a similar fiduciary capacity; (C) any Person who is a director or officer of such specified Person or any of its parents or subsidiaries (other than the Corporation or any wholly owned subsidiary of the Corporation); and (D) any relative or spouse of such specified Person or of any of its Associates, or any relative of any such spouse, who has the same home as such specified Person or such Associate.

(iii) A Person shall be a "Beneficial Owner" of any stock (A) which such Person or any of its Affiliates or Associates beneficially owns, directly or indirectly; or (B) which such Person or any of its Affiliates or Associates has, directly or indirectly, (1) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (2) the right to vote pursuant to any agreement, arrangement or understanding; or (C) which is beneficially owned, directly or indirectly, by any other Person, with which such Person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of such stock; or (D) of which such Person would be the Beneficial Owner pursuant to the terms of Rule 13d-3 of the Exchange Act, as in effect on September 30, 1998. Stock shall be deemed "Beneficially Owned" by the Beneficial Owner or Owners thereof.

(iv) The term "Business Combination" shall mean any transaction which is referred to in any one or more of clauses (i) through (iv) of paragraph (A) of this Article EIGHTH.

(v) The term "Continuing Director" shall mean, with respect to a Business Combination with a Related Person, any director of the Corporation who is unaffiliated with the Related Person and was a director prior to the time that the Related Person became a Related Person, and any successor of a Continuing Director who is unaffiliated with the Related Person and is recommended or nominated to succeed a Continuing Director by a majority of the Continuing Directors. Without limiting the generality of the foregoing, a director shall be deemed to be affiliated with a Related Person if such director (A) is an officer, director, employee or general partner of such Related Person; (B) is an Affiliate or Associate of such Related Person;
(C) is a relative or spouse of such Related Person or of any such officer, director, general partner, Affiliate or Associate; (D) performs services, or is a member, employee, greater than 5% stockholder or other equity owner of any organization (other than the Corporation and its subsidiaries) which performs services for such Related Person or any Affiliate of such Related Person, or is a relative or spouse of any such Person; or (E) was nominated for election as a director by such Related Person.

(vi) The term "Fair Market Value" shall mean, in the case of securities, the average of the closing sales prices during the 30-day period immediately preceding the date in question of such security on the principal United States securities exchange registered under the Exchange Act on which such security is listed (or the composite tape therefor) or, if such securities are not listed on any such exchange, the average of the last reported sales price (if so reported) or the closing bid quotations with respect to such security during the 30-day period preceding the date in question on the New York Stock Exchange or, if no such quotations are available, the fair market value on the date in question of such security as determined in good faith by a majority of the Continuing Directors; and in the case of property other than cash or securities, the fair market value of such property on the date in question as determined in good faith by a majority of the Continuing Directors.

(vii) The term "Highest Per Share Price" shall mean, with respect to a Related Person, the highest price that can be determined to have been paid or agreed to be paid for any share or shares of any class or series of Voting Stock by such Related Person in a transaction that either (1) resulted in such Related Person's Beneficially Owning 15% or more of such class or series of Voting Stock outstanding or (2) was effected at a time when such Related Person Beneficially Owned 15% or more of such class or series of Voting Stock outstanding, in either case occurring not more than one year

prior to the date of the Business Combination. In determining the Highest Per Share Price, appropriate adjustment will be made to take into account
(w) distributions paid or payable in stock, (x) subdivisions of outstanding stock, (y) combinations of shares of stock into a smaller number of shares and (z) similar events.

(viii) The term "Person" shall mean any individual, corporation, limited liability company, association, partnership, joint venture, trust, estate or other entity or organization.

(ix) The term "Related Person" shall mean any Person (other than the Corporation or any subsidiary of the Corporation and other than any profit sharing, employee ownership or other employee benefit plan of the Corporation or any subsidiary of the corporation or any trustee of or fiduciary with respect to any such plan when acting in such capacity) who or which (A) is the Beneficial Owner of 15% or more of any class or series of Voting Stock outstanding; or (B) is an Affiliate of the Corporation and at any time within the two-year period immediately prior to the date in question was the Beneficial Owner of 15% or more of any class or series of Voting Stock outstanding. For the purposes of determining whether a Person is a Related Person, the number of shares of any class or series deemed to be outstanding shall include shares of such class or series of which the Person is deemed the Beneficial Owner, but shall not include any other shares which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, otherwise.

D. Nothing contained in this Article EIGHTH shall be construed to relieve any Related Person from any fiduciary obligation imposed by law.

E. Notwithstanding any other provision of this Certificate of Incorporation (and notwithstanding that a lesser percentage may be specified by law), the affirmative vote of shares representing (x) not less than 80% of the votes entitled to be cast by the Voting Stock voting together as a single class and (y) not less than 66 2/3% of the votes entitled to be cast by the Voting Stock not Beneficially Owned, directly or indirectly, by any Related Person shall be required to amend or repeal, or adopt any provisions inconsistent with, this Article EIGHTH.

NINTH: To the fullest extent that the DGCL or any other law of the State of Delaware as it exists or as it may hereafter be amended permits the limitation or elimination of the liability of directors, no director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. No amendment to or repeal of this Article NINTH shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.

ANNEX C

FORM OF

BY-LAWS

OF

NEW PARENT
(HEREINAFTER CALLED THE "CORPORATION")

ARTICLE I

OFFICES

Section 1. Registered Office. The registered office of the Corporation shall be in the City of Wilmington, County of New Castle, State of Delaware.

Section 2. Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 1. Place and Time of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors. Subject to applicable law, the Board of Directors may elect to postpone any previously scheduled meeting of stockholders.

Section 2. Annual Meetings. The annual meetings of stockholders for the election of directors shall be held on such date and at such time as shall be designated from time to time by the Board of Directors. Any other proper business may be transacted at the annual meeting of stockholders.

Section 3. Special Meetings. Unless otherwise required by law or by the certificate of incorporation of the Corporation, as amended and restated from time to time (including any certificates of designation with respect to any Preferred Stock, the "Certificate of Incorporation"), special meetings of stockholders, for any purpose or purposes, may only be called by the Board of Directors pursuant to a resolution stating the purpose or purposes thereof or by the Chairman, if there be one, and any power of stockholders to call a special meeting is specifically denied. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. Only such business shall be conducted at a special meeting as shall be specified in the notice of meeting (or any supplement thereto).

Section 4. Adjournments. Any meeting of the stockholders may be adjourned by the chairman of the meeting or by the stockholders or their proxies in attendance, from time to time, to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 5. Quorum. Unless otherwise required by law or the Certificate of Incorporation, the presence in person or by proxy of the holders of shares of capital stock entitled to cast a majority of the votes which could be cast at such meeting by the holders of all the outstanding shares of capital stock entitled to vote at such meeting shall constitute a quorum at all meetings of the stockholders for the

transaction of business. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, in the manner provided in Section 4, until a quorum shall be present or represented.

Section 6. Voting. Unless otherwise provided by law, the Certificate of Incorporation or these By-Laws or any rule or regulation of any stock exchange or regulatory body applicable to the Corporation, any question brought before any meeting of stockholders, other than the election of directors, shall be decided by the affirmative vote of the holders of a majority of the votes of shares of capital stock present in person or represented by proxy at the meeting and entitled to vote on the question, voting as a single class. Every reference in these By-Laws to a majority or other proportion of shares, or a majority or other proportion of the votes of shares, of capital stock shall refer to such majority or other proportion of the votes to which such shares of capital stock are entitled as provided in the Certificate of Incorporation. Votes of stockholders entitled to vote at a meeting of stockholders may be cast in person or by proxy but no proxy shall be voted on or after three years from its date, unless such proxy provides for a longer period. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of stockholders, in such officer's discretion, may require that any votes cast at such meeting shall be cast by written ballot.

Section 7. No Action by Consent of Stockholders in Lieu of Meeting. Any action required or permitted to be taken by the stockholders of the Corporation may be effected only at a duly called annual or special meeting of such holders and may not be effected by a consent in writing by such holders in lieu of such a meeting.

Section 8. List of Stockholders Entitled to Vote. The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of at least ten (10) days prior to the meeting, as required by applicable law. Subject to applicable law, the list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder of the Corporation who is present.

Section 9. Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 8 of this Article II or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders.

Section 10. Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided in the Certificate of Incorporation of the Corporation with respect to the right of holders of Preferred Stock of the Corporation to nominate and elect a specified number of directors in certain circumstances. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 10 and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 10.

In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred and twenty (120) days prior to the anniversary date of the immediately preceding annual meeting

of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the later of (i) ninety (90) days prior to the anniversary date of the immediately preceding annual meeting of stockholders and
(ii) the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs.

To be in proper written form, a stockholder's notice to the Secretary must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to
Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder,
(iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.

No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 10. If the chairman of the annual meeting determines that a nomination was not made in accordance with the foregoing procedures, the chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

Section 11. Business at Annual Meetings. No business may be transacted at an annual meeting of stockholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the annual meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 11 and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 11.

In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred and twenty (120) days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the later of (i) ninety (90) days prior to the anniversary date of the immediately preceding annual meeting of stockholders and
(ii) the close of business on the tenth

(10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs.

To be in proper written form, a stockholder's notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

No business shall be conducted at the annual meeting of stockholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 11; provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 11 shall be deemed to preclude discussion by any stockholder of any such business. If the chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

Section 12. Conduct of Meetings. The Board of Directors of the Corporation may adopt by resolution such rules and regulations for the conduct of the meetings of the stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of any meeting of the 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 of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) the determination of when the polls shall open and close for any given matter to be voted on at the meeting; (iii) rules and procedures for maintaining order at the meeting and the safety of those present; (iv) 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; (v) restrictions on entry to the meeting after the time fixed for the commencement thereof; (vi) limitations on the time allotted to questions or comments by participants; and (vii) policies and procedures with respect to the adjournment of such meeting.

ARTICLE III

DIRECTORS

Section 1. Number, Classification and Qualification of Directors. (a) The Board of Directors shall consist initially of 16 members with the exact number of directors to be determined from time to time by the Board of Directors. The directors shall be divided into three (3) classes, designated Class I, Class II and Class III, as provided in the Certificate of Incorporation. Any director may resign at any time upon written notice to the Corporation. Directors need not be stockholders. Subject to applicable law, any person shall be eligible for election as a director; provided that (i) in the case of a director who is also an employee of the Corporation, subject to Section 12 of Article IV and the employment agreements referred to therein, any person (A) who shall have attained the age of 65 shall be ineligible for election or appointment as a director and (B) who ceases to be an employee of the Corporation shall be disqualified from continued service as a director and such person's term of office as a director shall automatically terminate and (ii) otherwise, any person who shall have attained the age of 70 shall be ineligible for election or appointment as a director.

(b) There shall be no limitation on the qualification of any person to be a director or on the ability of any director to vote on any matter brought before the Board or any Board committee, except (i) as required by applicable law, (ii) as set forth in the Certificate of Incorporation or (iii) as set forth in the foregoing Section 1(a) of this Article III or (iv) in any By-Law adopted by the Board of Directors with respect to the eligibility for election as a director upon reaching a specified age or, in the case of employee directors, with respect to the qualification for continuing service of directors upon cessation of employment with the Corporation.

Section 2. Vacancies. Unless otherwise required by law or the Certificate of Incorporation, vacancies arising through death, resignation, removal, an increase in the number of directors or otherwise may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, or by the stockholders if such vacancy resulted from the action of stockholders (in which event such vacancy may not be filled by the directors or a majority thereof), and the directors so chosen shall hold office until the next election for such class and until their successors are duly elected and qualified, or until their earlier death, resignation or removal.

Section 3. Duties and Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws required to be exercised or done by the stockholders.

Section 4. Meetings. The Board of Directors may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board of Directors may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors. Special meetings of the Board of Directors may be called by the Chairman, if there be one, the President, or by any director. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than forty-eight (48) hours before the time of the meeting, by telephone, telegram, facsimile transmission or other electronic transmission not less than twenty-four (24) hours before the time of the meeting, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances.

Section 5. Quorum. Except as otherwise required by law or the Certificate of Incorporation, at all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting of the time and place of the adjourned meeting, until a quorum shall be present.

Section 6. Actions by Written Consent of the Board. Unless otherwise provided in the Certificate of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all the members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions as are filed with the minutes of proceedings of the Board of Directors or committee.

Section 7. Meetings by Means of Conference Telephone. Unless otherwise provided in the Certificate of Incorporation, members of the Board of Directors of the Corporation, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this
Section 7 shall constitute presence in person at such meeting.

Section 8. Standing Committees. (a) The Board of Directors, by resolution adopted by a majority of the entire Board, shall appoint from among its members
(i) an Executive Committee, (ii) an Audit and Compliance Committee, (iii) a Compensation Committee, (iv) a Committee on Directors' Affairs and

(v) a Public Policy Committee (together, the "Standing Committees") each consisting of three (3) (or such greater number as the Board of Directors may designate) directors, to perform the functions traditionally performed by such Board committees.

(b) The Executive Committee shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers which may require it, in each case, to the fullest extent permitted by applicable law.

(c) The Committee on Directors' Affairs shall meet at the discretion of the Committee Chairman and have the following powers and duties: (i) evaluating and recommending director candidates to the Board of Directors, (ii) recommending committee assignments to the Board of Directors, (iii) assessing the performance of the Board of Directors, (iv) recommending director compensation and benefits policy for the Corporation, and (v) periodically reviewing the Corporation's corporate governance profile. Only persons recommended by the Committee on Directors' Affairs shall be eligible for nomination by the Board of Directors for election as directors or to fill a vacancy, but if the Board of Directors does not approve of one or more of the persons recommended by the Committee on Directors' Affairs, the Committee shall submit a recommendation of other persons by the date specified by the Board of Directors.

Section 9. Committees. The Board of Directors may designate one or more other committees (in addition to the Standing Committees), each such other committee to consist of one or more of the directors of the Corporation. With respect to all Board committees, the Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. With respect to all Board committees, in the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. Any Board committee, to the extent permitted by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Each Board committee shall keep regular minutes and report to the Board of Directors when required.

Section 10. Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and shall receive such compensation for their services as directors as shall be determined by the Board of Directors. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of Board committees may be allowed like compensation for attending committee meetings.

Section 11. Removal. A director may only be removed for cause, such removal to be by the affirmative vote of the shares representing a majority of the votes entitled to be cast by the Voting Stock. For purposes of these By-Laws, Voting Stock shall mean the then outstanding shares of capital stock entitled to vote generally in the election of directors and shall exclude any class or series of capital stock only entitled to vote in the event of dividend arrearages thereon, whether or not at the time of determination there are any dividend arrearages. Unless the Board of Directors has made a determination that removal is in the best interests of the Corporation (in which case the following definition shall not apply), "cause" for removal of a director shall be deemed to exist only if (i) the director whose removal is proposed has been convicted, or when a director is granted immunity to testify when another has been convicted, of a felony by a court of competent jurisdiction and such conviction is no longer subject to direct appeal; (ii) such director has been found by the affirmative vote of a majority of the directors then in office at any regular or special meeting of the Board of Directors called for that purpose, or by a court of competent jurisdiction to have been guilty of willful misconduct in the performance of his duties to the Corporation in a matter of substantial importance to the Corporation; or (iii) such director has been

adjudicated by a court of competent jurisdiction to be mentally incompetent, which mental incompetency directly affects his ability as a director of the Corporation. Notwithstanding the foregoing, whenever holders of outstanding shares of one or more series of Preferred Stock are entitled to elect directors of the Corporation pursuant to the provisions applicable in the case of arrearages in the payment of dividends or other defaults contained in the resolution or resolutions of the Board of Directors providing for the establishment of any such series, any such director of the Corporation so elected may be removed in accordance with the provisions of such resolution or resolutions.

ARTICLE IV

OFFICERS

Section 1. General. The officers of the Corporation shall be chosen by the Board of Directors and shall be a Chief Executive Officer; President, a Secretary and a Treasurer. The Board of Directors, in its discretion, also may choose a Chairman of the Board (who must be a director) and one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers; provided that for so long as the Employment Agreements are in effect, the Board of Directors, subject to their fiduciary duties, shall elect the Chairman of the Board as specified therein. Any number of offices may be held by the same person, unless otherwise prohibited by law or the Certificate of Incorporation. The officers of the Corporation need not be stockholders of the Corporation nor, except in the case of the Chairman of the Board, need such officers be directors of the Corporation.

Section 2. Election. The Board of Directors, at its first meeting held after each annual meeting of stockholders, shall elect the officers of the Corporation who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors; and all officers of the Corporation shall hold office until their successors are chosen and qualified, or until their earlier death, resignation or removal. Subject to Section 12 of this Article IV, any officer elected by the Board of Directors may be removed at any time by the affirmative vote of the Board of Directors. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors.