Conocophillips Co – ‘DEFM14A’ on 2/7/02

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Definitive Proxy Solicitation Material — Merger or Acquisition   —   Schedule 14A
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Document/Exhibit                   Description                      Pages   Size 

 1: DEFM14A     Definitive Merger Proxy Materials                    226   1.18M 

Document Table of Contents

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UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A

Proxy Statement Pursuant to Section 14(A) of the Securities 
Exchange Act of 1934

Filed by the Registrant [X]                                                     

Filed by a Party other than the Registrant [ ]                                  

Check the appropriate box:                                                      

[ ]  Preliminary Proxy Statement                                                
[ ]  Confidential, for Use of the Commission Only                               
(as permitted by Rule 14a-6(e)(2))                                    
[X]  Definitive Proxy Statement                                                 
[ ]  Definitive Additional Materials                                            
[ ]  Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

Phillips Petroleum Company

--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A 
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):                              

[ ]  No fee required.                                                           

[X]  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.   

(1)  Title of each class of securities to which transaction applies:  
Common stock, par value $1.25 per share ("Common Stock")    
        ------------------------------------------------------------------------

(2)  Aggregate number of securities to which transaction applies:     
424,551,128                                                 
        ------------------------------------------------------------------------

(3)  Per unit price or other underlying value of transaction computed 
         pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):  
         $57.755 (Average of the high and low prices per share of Common Stock
on February 5, 2002, as reported on New York Stock Exchange)
        ------------------------------------------------------------------------

(4)  Proposed maximum aggregate value of transaction:                 
$24,519,950,380                                             
        ------------------------------------------------------------------------

(5)  Total fee paid:                                                  
      $2,255,836 (Calculated by multiplying $24,519,950,380 by 0.000092)
        ------------------------------------------------------------------------

[ ]  Fee paid previously with preliminary materials.                            

[X]  Check box if any part of the fee is offset as provided by Exchange Act Rule
  0-11(a)(2) and identify the filing for which the offsetting fee was paid
    previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.                   

(1)  Amount Previously Paid:                                          
$10,008,674                                                 
        ------------------------------------------------------------------------

(2)  Form, Schedule or Registration Statement No.:                    
Registration Statement on Form S-4 (File No. 333-74798)     
        ------------------------------------------------------------------------

(3)  Filing Party:                                                    
ConocoPhillips (formerly known as CorvettePorsche Corp.)    
        ------------------------------------------------------------------------

(4)  Date Filed:                                                      
December 7, 2001                                            
        ------------------------------------------------------------------------

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[CONOCO LOGO]                                                    [PHILLIPS LOGO]

To the stockholders of Conoco Inc. and Phillips Petroleum Company:    

PROPOSED MERGER OF CONOCO AND PHILLIPS

    The Boards of Directors of Conoco Inc. and Phillips Petroleum Company each
have unanimously approved a combination of the two companies to form            
ConocoPhillips. ConocoPhillips will be the third largest integrated energy      
company in the United States based on market capitalization, oil and gas        
reserves and production. It will be the fifth largest refiner and the sixth     
largest non-governmentally owned energy company worldwide based on oil and gas  
reserves.                                                                       

     Upon completion of the merger, Conoco stockholders will receive 0.4677 of a
share of ConocoPhillips common stock, par value $0.01 per share, for each share 
of Conoco common stock and Phillips stockholders will receive one share of      
ConocoPhillips common stock for each share of Phillips common stock. As a       
result, former Conoco stockholders will hold approximately 43.4%, and former    
Phillips stockholders will hold approximately 56.6%, of the outstanding shares  
of ConocoPhillips common stock. We expect that ConocoPhillips common stock will 
be listed on the New York Stock Exchange under the symbol "COP."                

 Conoco and Phillips each will hold a special meeting of stockholders to
consider and vote on this proposal. Whether or not you plan to attend your      
company's special meeting, please take the time to submit a proxy by following  
the instructions on your proxy card.                                            

The places, dates and times of the special meetings are as follows:   

                                                                [Download Table]
                                                                             
   FOR CONOCO STOCKHOLDERS:                       FOR PHILLIPS STOCKHOLDERS: 

March 12, 2002, at 10:00 a.m.                   March 12, 2002, at 10:00 a.m.
 Omni Houston Hotel Westside                          The Adams Building     
      13210 Katy Freeway                         4th Street and Keeler Avenue
     Houston, Texas 77079                        Bartlesville, Oklahoma 74004

     WE ENTHUSIASTICALLY SUPPORT THIS COMBINATION OF OUR COMPANIES AND JOIN WITH
OUR BOARDS OF DIRECTORS IN RECOMMENDING THAT YOU VOTE FOR THE ADOPTION OF THE   
MERGER AGREEMENT.                                                               

                                                                [Download Table]
                                                                          
Sincerely,                            Sincerely,                          

/s/ Archie W. Dunham                  /s/ J.J. Mulva                      
Archie W. Dunham                      J.J. Mulva                          
Chairman and Chief Executive Officer  Chairman and Chief Executive Officer
Conoco Inc.                           Phillips Petroleum Company          

     FOR A DISCUSSION OF RISK FACTORS THAT YOU SHOULD CONSIDER IN EVALUATING THE
MERGER, SEE "RISK FACTORS RELATING TO THE MERGER" BEGINNING ON PAGE 13.         

     Certain directors and officers of Conoco and Phillips, including Mr. Dunham
and Mr. Mulva, will receive substantial financial and other benefits in         
connection with the merger. For a discussion of the interests of certain persons
in the merger, see "The Merger -- Interests of Conoco Directors and Management  
in the Merger" beginning on page 54 and "The Merger -- Interests of Phillips    
Directors and Management in the Merger" beginning on page 59.                   

 Neither the Securities and Exchange Commission nor any state securities
regulator has approved or disapproved the merger and other transactions         
described in this joint proxy statement/prospectus or the ConocoPhillips common 
stock to be issued in connection with the merger, or determined if this joint   
proxy statement/prospectus is truthful or complete. Any representation to the   
contrary is a criminal offense.                                                 

This joint proxy statement/prospectus is dated February 7, 2002 and is first
being mailed to stockholders on or about February 8, 2002.

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REFERENCES TO ADDITIONAL INFORMATION

   This joint proxy statement/prospectus incorporates important business and
financial information about Conoco and Phillips from other documents that are   
not included in or delivered with this joint proxy statement/prospectus. This   
information is available to you without charge upon your written or oral        
request. You can obtain the documents incorporated by reference in this joint   
proxy statement/prospectus by requesting them in writing or by telephone or over
the Internet from the appropriate company at the following addresses:           

                                                                [Download Table]
                                                                                    
              CONOCO INC.                         PHILLIPS PETROLEUM COMPANY        
      600 NORTH DAIRY ASHFORD ROAD                   1234 ADAMS BUILDING            
          HOUSTON, TEXAS 77079                   BARTLESVILLE, OKLAHOMA 74004       
             (281) 293-6800                             (918) 661-5638              
    ATTENTION: SHAREHOLDER RELATIONS         ATTENTION: DALE J. BILLAM, SECRETARY   
E-MAIL: SHAREHOLDER.RELATIONS@CONOCO.COM              AND SENIOR COUNSEL            
                                                   E-MAIL: DJBILLA@PPCO.COM         

                   OR                                         OR                    

       INNISFREE M&A INCORPORATED         GEORGESON SHAREHOLDER COMMUNICATIONS, INC.
           501 MADISON AVENUE                          17 STATE STREET              
        NEW YORK, NEW YORK 10022                   NEW YORK, NEW YORK 10004         
       TOLL FREE: (877) 750-9499                  TOLL FREE: (866) 468-0570         
      E-MAIL: INFO@INNISFREEMA.COM        E-MAIL: PHILLIPS@GEORGESONSHAREHOLDER.COM 

   IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY MARCH 5, 2002, IN
ORDER TO RECEIVE THEM BEFORE YOUR SPECIAL MEETING.                              

See "Where You Can Find More Information" on page 125.                

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                                                                   [CONOCO LOGO]

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS 

TO BE HELD MARCH 12, 2002 

To the Stockholders of Conoco Inc.:                                             

    We will hold a special meeting of the stockholders of Conoco Inc. on March
12, 2002, at 10:00 a.m., local time, at Omni Houston Hotel Westside, 13210 Katy 
Freeway, Houston, Texas, to consider and vote on the following proposal:        

   Adopt the Agreement and Plan of Merger, dated as of November 18, 2001, by
and among Conoco, Phillips Petroleum Company, a Delaware corporation, 
    ConocoPhillips, a Delaware corporation, which we refer to as "New Parent,"
     C Merger Corp., a Delaware corporation and a wholly owned subsidiary of New
Parent, and P Merger Corp., a Delaware corporation and a wholly owned 
subsidiary of New Parent.                                             

   Pursuant to the merger agreement, P Merger Corp. will merge with and into
Phillips and C Merger Corp. will merge with and into Conoco, with each of       
Phillips and Conoco becoming wholly owned subsidiaries of New Parent. At the    
time of 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.                 

We will transact no other business at the special meeting, except for 
business properly brought before the special meeting or any adjournment or      
postponement of it by the Conoco Board of Directors.                            

    Only Conoco stockholders of record at the close of business on February 6,
2002, the record date for the special meeting, may vote at the special meeting  
and any adjournments or postponements of it. A complete list of Conoco          
stockholders of record entitled to vote at the special meeting will be available
for the 10 days before the special meeting at our executive offices for         
inspection by Conoco stockholders during ordinary business hours for proper     
purposes.                                                                       

Your vote is very important. Please sign, date and return the enclosed
proxy card as soon as possible to make sure that your shares are represented at 
the special meeting. To do so, you may complete and return the enclosed proxy   
card. If you are a stockholder of record of Conoco common stock, you also may   
cast your vote in person at the special meeting. If your shares are held in an  
account at a brokerage firm or bank, you must instruct it on how to vote your   
shares. If you do not vote or do not instruct your broker or bank how to vote,  
it will have the same effect as voting against the merger.                      

FOR MORE INFORMATION ABOUT THE MERGER DESCRIBED ABOVE AND THE OTHER   
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, PLEASE REVIEW THE            
ACCOMPANYING JOINT PROXY STATEMENT/PROSPECTUS AND THE MERGER AGREEMENT ATTACHED 
TO IT AS ANNEX A.                                                               

    THE CONOCO BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
ADOPTION OF THE MERGER AGREEMENT.                                               

                                   By Order of the Conoco Board of
              Directors,

                        /s/ E. Julia Lambeth

                    E. Julia Lambeth
                       Corporate Secretary

February 7, 2002                                                                
Houston, Texas                                                                  

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                                                                 [PHILLIPS LOGO]
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS 

TO BE HELD MARCH 12, 2002 

To the Stockholders of Phillips Petroleum Company:                              

  We will hold a special meeting of the stockholders of Phillips Petroleum
Company on March 12, 2002, at 10:00 a.m., local time, at the Adams Building, 4th
Street and Keeler Avenue, Bartlesville, Oklahoma to consider and vote on the    
following proposal:                                                             

  Adopt the Agreement and Plan of Merger dated as of November 18, 2001, by
    and among Phillips Petroleum Company, Conoco Inc., a Delaware corporation,
    ConocoPhillips, a Delaware corporation, which we refer to as "New Parent,"
     C Merger Corp., a Delaware corporation and a wholly owned subsidiary of New
Parent, and P Merger Corp., a Delaware corporation and a wholly owned 
subsidiary of New Parent.                                             

   Pursuant to the merger agreement, P Merger Corp. will merge with and into
Phillips and C Merger Corp. will merge with and into Conoco, with each of       
Phillips and Conoco becoming wholly owned subsidiaries of New Parent. At the    
time of the merger, 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, par value $0.01 per share, and each outstanding share of   
Conoco common stock, par value $.01 per share, will be converted into the right 
to receive 0.4677 of a share of New Parent common stock.                        

We will transact no other business at the special meeting, except for 
business properly brought before the special meeting or any adjournment or      
postponement of it by the Phillips Board of Directors.                          

   Only Phillips stockholders of record at the close of business on February
6, 2002, the record date for the special meeting, may vote at the special       
meeting and any adjournments or postponements of it. A complete list of Phillips
stockholders of record entitled to vote at the special meeting will be available
for the 10 days before the special meeting at the office of the Secretary for   
inspection by Phillips stockholders during ordinary business hours for proper   
purposes.                                                                       

   Your vote is very important. Please submit your proxy as soon as possible
to make sure that your shares are represented at the special meeting. To do so, 
you may complete and return the enclosed proxy card or you may be able to submit
your proxy or voting instructions by telephone. If you are a stockholder of     
record of Phillips common stock, you also may cast your vote in person at the   
special meeting. If your shares are held in an account at a brokerage firm or   
bank, you must instruct them on how to vote your shares. If you do not vote or  
do not instruct your broker or bank how to vote, it will have the same effect as
voting against the merger.                                                      

FOR MORE INFORMATION ABOUT THE MERGER DESCRIBED ABOVE AND THE OTHER   
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, PLEASE REVIEW THE            
ACCOMPANYING JOINT PROXY STATEMENT/PROSPECTUS AND THE MERGER AGREEMENT ATTACHED 
TO IT AS ANNEX A.                                                               

  THE PHILLIPS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
THE ADOPTION OF THE MERGER AGREEMENT.                                           

                                     By Order of the Phillips Board of
              Directors,

                      /s/ Dale J. Billam

                  Dale J. Billam
             Secretary

February 7, 2002                                                                
Bartlesville, Oklahoma                                                          

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TABLE OF CONTENTS 

                                                                [Download Table]

                                        PAGE
                                        ----
                                            
QUESTIONS AND ANSWERS ABOUT THE             
  MERGER.............................     1 
SUMMARY..............................     4 
     Selected Historical Financial          
       Data..........................     9 
     Selected Unaudited Pro Forma           
       Combined Financial Data.......    11 
     Comparative Per Share Data......    12 
RISK FACTORS RELATING TO THE                
  MERGER.............................    13 
CAUTIONARY STATEMENT REGARDING              
  FORWARD-LOOKING STATEMENTS.........    15 
RECENT DEVELOPMENTS..................    17 
THE CONOCO SPECIAL MEETING...........    18 
     Date, Time and Place............    18 
     Purpose of the Conoco Special          
       Meeting.......................    18 
     Conoco Record Date; Shares             
       Entitled To Vote; Quorum......    18 
     Vote Required...................    18 
     Voting by Conoco Directors and         
       Executive Officers............    18 
     Voting of Proxies...............    18 
     Revocability of Proxies.........    19 
     Solicitation of Proxies.........    19 
     Proxies for Participants in            
       Conoco Plans..................    20 
THE PHILLIPS SPECIAL MEETING.........    21 
     Date, Time and Place............    21 
     Purpose of the Phillips Special        
       Meeting.......................    21 
     Phillips Record Date; Shares           
       Entitled To Vote; Quorum......    21 
     Vote Required...................    21 
     Voting by Phillips Directors and       
       Executive Officers............    21 
     Voting of Proxies...............    21 
     Revocability of Proxies.........    22 
     Solicitation of Proxies.........    22 
     Proxies for Participants in            
       Phillips Savings Plans........    23 
     Attending the Special Meeting...    23 
THE MERGER...........................    24 
     General Description of the             
       Merger........................    24 
     Background to the Merger........    24 
     Reasons for the Merger..........    28 
     Recommendation of the Conoco           
       Board of Directors............    29 
     Recommendation of the Phillips         
       Board of Directors............    31 

                                                                [Download Table]

                                        PAGE
                                        ----
                                            
     Opinions of Conoco's Financial         
       Advisors......................    34 
     Opinions of Phillips' Financial        
       Advisors......................    46 
     Interests of Conoco Directors          
       and Management in the                
       Merger........................    54 
     Interests of Phillips Directors        
       and Management in the                
       Merger........................    59 
     Listing of New Parent Capital          
       Stock.........................    63 
     Dividends.......................    63 
     Material U.S. Federal Income Tax       
       Consequences of the Merger....    63 
     Accounting Treatment............    66 
     Regulatory Matters..............    66 
     Appraisal Rights................    68 
     Resale of New Parent Common            
       Stock.........................    68 
     Legal Proceedings Related to the       
       Merger........................    68 
THE MERGER AGREEMENT.................    69 
     The Merger......................    69 
     Merger Consideration............    69 
     Procedures for Exchange of Share       
       Certificates; Fractional             
       Shares........................    69 
     Representations and                    
       Warranties....................    70 
     Interim Operations of Conoco and       
       Phillips......................    71 
     Employee Benefit Matters........    72 
     Effect on Awards Outstanding           
       Under Stock Plans.............    73 
     "No Solicitation" Covenant......    73 
     Timing of Closing...............    74 
     Conditions to the Completion of        
       the Merger....................    74 
     Termination of the Merger              
       Agreement.....................    76 
     Termination Fees................    76 
     Other Expenses..................    77 
     Indemnification and Insurance...    78 
     Additional Agreements...........    78 
     Amendment; Extension and               
       Waiver........................    78 
DIRECTORS AND MANAGEMENT FOLLOWING          
  THE MERGER.........................    80 
     Directors.......................    80 
     Committees of the Board of             
       Directors.....................    80 
     Compensation of Directors.......    80 
     Management......................    81 

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                                                                [Download Table]

                                        PAGE
                                        ----
                                            
SECURITY OWNERSHIP OF CERTAIN               
  BENEFICIAL OWNERS AND MANAGEMENT...    82 
     Security Ownership of Certain          
       Beneficial Owners and                
       Management of Conoco..........    82 
     Security Ownership of Certain          
       Beneficial Owners and                
       Management of Phillips........    83 
COMPARATIVE STOCK PRICES AND                
  DIVIDENDS..........................    85 
UNAUDITED PRO FORMA COMBINED                
  CONDENSED FINANCIAL INFORMATION....    87 
     Notes to Unaudited Pro Forma           
       Financial Statements..........    91 
     Supplemental Schedules..........    94 
SUPPLEMENTAL OIL AND GAS                    
  DISCLOSURES........................   108 
DESCRIPTION OF NEW PARENT CAPITAL           
  STOCK..............................   110 
     Authorized Capital Stock........   110 
     Common Stock....................   110 

                                                                [Download Table]

                                        PAGE
                                        ----
                                            
     Preferred Stock.................   110 
     Rights Plan.....................   111 
COMPARISON OF STOCKHOLDER RIGHTS.....   113 
LEGAL MATTERS........................   124 
EXPERTS..............................   124 
INDEPENDENT AUDITORS.................   124 
STOCKHOLDER PROPOSALS................   124 
     Conoco..........................   124 
     Phillips........................   125 
OTHER MATTERS........................   125 
WHERE YOU CAN FIND MORE                     
  INFORMATION........................   125 
REPORT OF INDEPENDENT AUDITORS.......   F-1 
CONOCOPHILLIPS CONSOLIDATED BALANCE         
  SHEET..............................   F-2 
CONOCOPHILLIPS NOTE TO CONSOLIDATED         
  BALANCE SHEET......................   F-3 

ANNEXES 

                                                                [Download Table]
                                        
Annex A  Agreement and Plan of Merger   
Annex B  Form of Restated Certificate of
         Incorporation of New Parent    
Annex C  Form of By-laws of New Parent  
Annex D  Opinion of Morgan Stanley & Co.
         Incorporated                   
Annex E  Opinion of Salomon Smith Barney
         Inc.                           
Annex F  Opinion of Goldman, Sachs & Co.
Annex G  Opinion of J.P. Morgan         
         Securities Inc.                
Annex H  Opinion of Merrill Lynch,      
         Pierce, Fenner & Smith         
         Incorporated                   

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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 March 12,     
 2002, at Omni Houston Hotel Westside, 13210 Katy Freeway, Houston, Texas.
 The special meeting of Phillips stockholders will take place on March 12,
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 1% of the Conoco common stock outstanding.   

As of the Phillips record date, Phillips directors and officers held and
were entitled to vote less than 1% 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 28 through
29.                                                                     

Q:  WHAT WILL HAPPEN IN THE MERGER?                                             

A:  Prior to entering into the merger agreement, Conoco and Phillips formed     
    CorvettePorsche Corp., which was renamed "ConocoPhillips" and which we refer
  to as "New Parent." New Parent, in turn, formed two merger subsidiaries, C
Merger Corp. and P Merger Corp. C Merger Corp. will merge with and into 
 Conoco and P 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:  The name of the new public company will be "ConocoPhillips."                

Q:  WHAT WILL I RECEIVE FOR MY SHARES?                                          

A:  The merger is structured as a merger of equals, without a premium to the    
 stockholders of either company and with an equal number of directors from
Conoco and Phillips to comprise the New Parent Board of Directors. The  
  exchange ratio in the merger was based on the average of the market prices
per share of Conoco common stock and Phillips common stock for the 20-  
trading-day period immediately prior to the execution of the merger     
agreement. As a result:                                                 

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.                                  

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 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.                                  

In addition, each share of New Parent common stock issued will have     
attached to it a preferred stock purchase right. See "Description of New
Parent Capital Stock" beginning on page 110.                            

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 dividend policy that is
competitive with comparable companies in the energy industry.           

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 C Merger Corp. with and into Conoco and the merger of P 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, and in the unlikely event
   that Conoco or Phillips were to determine to waive the receipt of these tax
opinions, the company doing so would circulate revised materials to its 
   stockholders and would resolicit proxies from its stockholders if there are
   any material adverse changes in the U.S. federal income tax consequences to
its stockholders. If each of the merger of C Merger Corp. with and into 
Conoco and the merger of P 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. See "The
 Merger -- Material U.S. Federal Income Tax Consequences of the Merger" on
page 63.                                                                

Q:  IF I WOULD LIKE TO VOTE ON THE PROPOSAL, 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. Phillips' stockholders also may 
  submit their proxy by telephone by following the instructions on the 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 4. Phillips' stockholders may also change or revoke their
proxy by telephone, regardless of the procedure used to deliver their   
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.                                                        

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  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 66.                      

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: (877) 750-9499                                               
e-mail: info@innisfreema.com                                            

Phillips stockholders:                                                  

Phillips Petroleum Company                                              
375 Park Avenue                                                         
Suite 3702                                                              
New York, New York 10152                                                
(212) 207-9080                                                          
Attention: C. Clayton Reasor, Manager,                                  
Investor Relations                                
e-mail: ccreaso@ppco.com                                                

or                                                    
Georgeson Shareholder Communications, Inc.                              
17 State Street                                                         
New York, New York 10004                                                
Toll free: (866) 468-0570                                               

e-mail: phillips@georgesonshareholder.com                               

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 125.      

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SUMMARY 

     This summary highlights selected information from this document and may not
contain all the information that is important to you. To understand the merger  
fully and for a more complete description of the legal terms of the merger, you 
should read carefully this entire document, including the annexes, and the other
documents to which we have referred you. For information on how to obtain the   
documents that we have filed with the Securities and Exchange Commission, see   
"References to Additional Information" on the inside front cover of this        
document and "Where You Can Find More Information" on page 125. For a discussion
of the risk factors that you should consider in evaluating the merger, see "Risk
Factors Relating to the Merger" beginning on page 13.                           

Throughout this document when we use the term "New Parent," we are    
referring to the newly formed holding company ConocoPhillips (formerly known as 
CorvettePorsche Corp.). Unless the context requires otherwise, when we use the  
term "merger," we are referring to (1) the merger of C Merger Corp. with and    
into Conoco, with Conoco being the surviving corporation, and (2) the merger of 
P Merger Corp. with and into Phillips, with Phillips being the surviving        
corporation, collectively.                                                      

THE COMPANIES 

CONOCO INC.                                                                     
600 North Dairy Ashford Road                                                    
Houston, Texas 77079                                                            
(281) 293-1000                                                                  

  Conoco is an integrated, international energy company with operations in
more than 40 countries. Headquartered in Houston, Texas, Conoco and its wholly  
owned subsidiaries had approximately 20,000 employees and $27.7 billion in      
assets at September 30, 2001. For additional information about Conoco and its   
business, see "Where You Can Find More Information" on page 125.                

PHILLIPS PETROLEUM COMPANY                                                      
Phillips Building                                                               
4th Street and Keeler Avenue                                                    
Bartlesville, Oklahoma 74004                                                    
(918) 661-6600                                                                  

Phillips is an integrated petroleum company with interests around the 
world. Headquartered in Bartlesville, Oklahoma, Phillips and its wholly owned   
subsidiaries had approximately 38,600 employees and $35.4 billion in assets at  
September 30, 2001. For additional information about Phillips and its business, 
see "Where You Can Find More Information" on page 125.                          

CONOCOPHILLIPS                                                                  
600 North Dairy Ashford Road                                                    
Houston, Texas 77079                                                            
(281) 293-1000                                                                  

   Conoco and Phillips formed New Parent solely for the purpose of effecting
the merger and to date New Parent has not conducted any activities other than   
those incident to its formation, the execution of the merger agreement and the  
preparation of this document. Upon completion of the merger, Conoco and Phillips
will become wholly owned subsidiaries of New Parent and the business of New     
Parent will be the businesses currently conducted by Conoco and Phillips.       

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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 24).  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 24).  In the merger, each share of Phillips
common stock will be converted into the right to receive one share of New Parent
common stock.                                                                   

In addition, each share of New Parent common stock issued will have   
attached to it a preferred stock purchase right. See "Description of New Parent 
Capital Stock" beginning on page 110.                                           

    See "Risk Factors Relating to the Merger -- The value of the shares of New
Parent common stock that you receive upon 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" on 
page 13.                                                                        

RECOMMENDATIONS OF THE BOARDS OF DIRECTORS                                      

CONOCO (PAGE 29).  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.                                                        

     Certain directors of Conoco, including Mr. Dunham, will receive substantial
financial and other benefits in connection with the merger. For a discussion of 
certain interests of directors and officers that are different from or in       
addition to the interests of other stockholders, see "The Merger -- Interests of
Conoco Directors and Management in the Merger" on page 54.                      

PHILLIPS (PAGE 31).  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.                                                 

Certain directors of Phillips, including Mr. Mulva, will receive      
substantial financial and other benefits in connection with the merger. For a   
discussion of certain interests of directors and officers that are different    
from or in addition to the interests of other stockholders, see "The            
Merger -- Interests of Phillips Directors and Management in the Merger" on page 
59.                                                                             

TO REVIEW THE BACKGROUND AND REASONS FOR THE MERGER IN GREATER DETAIL, SEE PAGES
24 THROUGH 29.                                                                  

FAIRNESS OPINIONS OF FINANCIAL ADVISORS                                         

   CONOCO (PAGE 34).  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                                                               

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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 46).  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 54).  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. Under his prior employment agreement, upon termination  
of employment under certain conditions following stockholder approval of the    
merger, including following the appointment of Mr. Mulva as Chief Executive     
Officer of New Parent, certain cash payments and other benefits would be made to
Mr. Dunham. Mr. Dunham has agreed to forgo these benefits and to continue his   
employment and has entered into a new employment agreement that will become     
effective upon the completion of the merger. Under the new employment agreement,
Mr. Dunham will be entitled to approximately $16.1 million in cash, options to  
purchase approximately 1.3 million shares of New Parent common stock at the fair
market value of the New Parent common stock on the date of the grant and        
approximately 32,000 shares of New Parent common stock. Assuming that the merger
was completed on November 18, 2001, the date of the announcement of the merger, 
and assuming that the price of New Parent common stock would have been the same 
as the closing price, as adjusted for the exchange ratio, of Conoco common stock
on such date, the value of 32,000 shares of New Parent common stock would have  
been approximately $1.7 million as of November 18, 2001. Under his new          
employment agreement, during the term of Mr. Dunham's employment, Mr. Dunham's  
compensation and benefits will be the same as those provided to the Chief       
Executive Officer of New Parent, which, based upon Mr. Dunham's and Mr. Mulva's 
current salaries, would result in an increase in Mr. Dunham's base salary of    
$25,000 per year. See "The Merger -- Interests of Conoco Directors and          
Management in the Merger -- Employment Agreement with Archie W. Dunham"         
beginning on page 55 for a more detailed summary of the material terms of Mr.   
Dunham's prior employment agreement, the benefits Mr. Dunham is forgoing        
pursuant to such agreement and his new employment agreement.                    

   PHILLIPS (PAGE 59).  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              

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Parent and Mr. Mulva have entered into an employment agreement that will become 
effective upon completion of the merger. Under his new employment agreement, Mr.
Mulva's compensation and benefits will be the same as Mr. Dunham's while Mr.    
Dunham is Chairman, and Mr. Mulva's base salary following the merger will not be
less than that in effect immediately before completion of the merger. See "The  
Merger -- Interests of Phillips Directors and Management in the                 
Merger -- Employment Agreement with James J. Mulva" beginning on page 60 for a  
more detailed summary of the material terms of Mr. Mulva's new employment       
agreement. Mr. Mulva has received certain stock-based grants that will          
accelerate upon completion of the merger, including 250,000 restricted stock    
units granted to Mr. Mulva on November 17, 2001, that would be forfeited if the 
merger is not completed, and options granted to Mr. Mulva on November 17, 2001, 
to purchase 750,000 shares of Phillips common stock at $51.31 per share, which  
is the average of the high and low trading prices of Phillips common stock on   
November 16, 2001, and to purchase 750,000 shares of Phillips common stock at   
$64.13 per share, which is 125% of the average of the high and low trading      
prices of Phillips common stock on November 16, 2001. The 250,000 restricted    
stock units represent the right to receive shares of Phillips common stock that 
had a value at the time of grant of $12,827,500 based upon the $51.31 average of
the high and low trading prices of Phillips common stock on November 16, 2001.  
However, because the restricted stock units are not scheduled to vest or be paid
to Mr. Mulva until June 19, 2006, it is not possible to determine the actual    
value that Mr. Mulva will receive as a result of this grant. See "The           
Merger -- Interests of Phillips Directors and Management in the Merger -- Grants
of Stock Options and Restricted Stock Units to James J. Mulva" on page 61 for a 
more detailed summary of these benefits.                                        

CONDITIONS TO THE COMPLETION OF THE MERGER (PAGE 74)                            

     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 C Merger Corp. with and into
      Conoco, in the case of the opinion received by Conoco, and the merger of
P 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 76)                                   

    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,                                       

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     - 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 76)                                                      

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 under "The Merger Agreement -- Termination Fees" on     
pages 76 through 77.                                                            

"NO SOLICITATION" COVENANT (PAGE 73)                                            

  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 73. 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
under "The Merger Agreement -- No Solicitation Covenant" on pages 73 through 74.

COMPARATIVE MARKET PRICE INFORMATION (PAGE 85)                                  

 Shares of Conoco common stock are listed on the New York Stock Exchange
under the symbol "COC", and shares of Phillips common stock are listed on the   
New York Stock Exchange, the Pacific Exchange and the Toronto Stock Exchange    
under the symbol "P". The following table presents the last reported sale price 
per share of Conoco common stock and Phillips common stock, as reported on the  
New York Stock Exchange Composite Transaction reporting system on November 16,  
2001, the last full trading day prior to the public announcement of the merger, 
and on February 6, 2002, the last trading day for which this information could  
be obtained prior to the date of this document.                                 

                                                                [Download Table]

                                                             CONOCO    PHILLIPS  
                                                             COMMON     COMMON   
DATE                                                         STOCK      STOCK    
----                                                         ------  ------------
                                                                                 
November 16, 2001........................................... $24.30     $51.82   
February 6, 2002............................................  27.55      58.13   

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SELECTED HISTORICAL FINANCIAL DATA

  Conoco and Phillips are providing the following financial information to
aid you in your analysis of the financial aspects of the merger. The selected   
financial data of Conoco has been derived from the audited consolidated         
financial statements and related notes of Conoco for each of the years in the   
five-year period ended December 31, 2000, and the unaudited consolidated        
financial statements for the nine months ended September 30, 2001, and September
30, 2000. The selected financial data of Phillips has been derived from the     
audited consolidated financial statements and related notes of Phillips for each
of the years in the five-year period ended December 31, 2000, and the unaudited 
consolidated financial statements for the nine months ended September 30, 2001, 
and September 30, 2000. This information is only a summary and you should read  
it in conjunction with the historical consolidated financial statements of      
Conoco and Phillips and the related notes contained in the annual reports and   
other information that Conoco and Phillips have previously filed with the       
Securities and Exchange Commission. See "Where You Can Find More Information" on
page 125.                                                                       

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF CONOCO                       

                                                        [Enlarge/Download Table]

                                          NINE MONTHS ENDED                                             
                                            SEPTEMBER 30               YEARS ENDED DECEMBER 31          
                                          -----------------   ------------------------------------------
                                           2001      2000      2000     1999     1998     1997     1996 
                                          -------   -------   ------   ------   ------   ------   ------
                                                  MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS         
                                                                                                        
Sales and other operating revenues....... $30,345    28,468   38,737   27,039   22,796   25,796   24,230
Income before extraordinary item and                                                                    
  cumulative effect of change in                                                                        
  accounting principle...................   1,449     1,352    1,902      744      450    1,097      863
  Per common share:                                                                                     
    Basic................................    2.32      2.16     3.05     1.19      .95     2.51     1.98
    Diluted..............................    2.28      2.14     3.00     1.17      .95     2.51     1.98
Net Income...............................   1,462     1,352    1,902      744      450    1,097      863
  Per common share:                                                                                     
    Basic................................    2.34      2.16     3.05     1.19      .95     2.51     1.98
    Diluted..............................    2.30      2.14     3.00     1.17      .95     2.51     1.98
Total assets.............................  27,683    18,043   18,127   16,375   16,075   17,062   15,226
Long-term debt...........................   8,040     4,266    4,138    4,080    4,689    1,556    2,388
Cash dividends declared per common                                                                      
  share*.................................    0.57      0.57     0.76     0.71       --       --       --

---------------                                                                 

* Dividends were declared on a quarterly basis throughout 2001, 2000 and 1999.
   The first quarter dividend of 1999 of $0.14 per share was determined on a pro
rata basis covering the period from October 27, 1998, the date of Conoco's
   initial public offering, to December 31, 1998, and is equivalent to $0.19 per
share for a full quarter.                                                 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF PHILLIPS                     

                                                        [Enlarge/Download Table]

                                            NINE MONTHS ENDED                                               
                                               SEPTEMBER 30               YEARS ENDED DECEMBER 31           
                                            ------------------   ------------------------------------------ 
                                              2001      2000      2000     1999     1998     1997     1996  
                                            --------   -------   ------   ------   ------   ------   ------ 
                                                     MILLIONS OF DOLLARS EXCEPT PER SHARE AMOUNTS           
                                                                                                            
Sales and other operating revenues........  $16,741    16,578    22,690*  15,396*  13,208*  16,545*  16,991*
Income before extraordinary item and                                                                        
  cumulative effect of change in                                                                            
  accounting principle....................    1,481     1,118     1,862      609      237      959    1,303 
    Per common share:                                                                                       
    Basic.................................     5.63      4.40      7.32     2.41      .92     3.64     4.96 
    Diluted...............................     5.59      4.37      7.26     2.39      .91     3.61     4.91 
Net Income................................    1,499     1,118     1,862      609      237      959    1,303 
    Per common share:                                                                                       
    Basic.................................     5.70      4.40      7.32     2.41      .92     3.64     4.96 
    Diluted...............................     5.66      4.37      7.26     2.39      .91     3.61     4.91 
Pro forma income before extraordinary item                                                                  
  assuming the new turnaround accounting                                                                    
  method is applied retroactively**.......    1,481     1,106     1,851      609      242      971    1,307 
    Per common share:                                                                                       
    Basic.................................     5.63      4.35      7.27     2.41      .94     3.69     4.97 
    Diluted...............................     5.59      4.32      7.22     2.39      .93     3.66     4.93 
Pro forma net income assuming the new                                                                       
  turnaround accounting method is applied                                                                   
  retroactively**.........................    1,471     1,106     1,851      609      242      971    1,307 
    Per common share:                                                                                       
    Basic.................................     5.59      4.35      7.27     2.41      .94     3.69     4.97 
    Diluted...............................     5.55      4.32      7.22     2.39      .93     3.66     4.93 
Total assets..............................   35,350    20,580    20,509   15,201   14,216   13,860   13,548 
Long-term debt............................    7,838     7,509     6,622    4,271    4,106    2,775    2,555 
Mandatorily redeemable preferred                                                                            
  securities of Phillips 66 Capital Trusts                                                                  
  I and II................................      650       650       650      650      650      650      300 
Cash dividends declared per common                                                                          
  share...................................     1.04      1.02      1.36     1.36     1.36     1.34     1.25 

---------------                                                                 

* Restated to include excise taxes on the sale of petroleum products.         

** Reflects the pro forma effects of retroactive application of the change in   
accounting method for major maintenance turnarounds from the              
accrue-in-advance method to the expense-as-incurred method.               

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SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

     The following selected unaudited pro forma combined financial data has been
derived from and should be read together with the unaudited pro forma combined  
financial statements and related notes on pages 87 through 107. This information
is based on the historical consolidated balance sheets and related adjusted     
historical consolidated statements of income of Conoco and Phillips, and gives  
effect to the merger using the purchase method of accounting for business       
combinations. Conoco's historical income statements have been adjusted for the  
pro forma impact of the acquisition of Gulf Canada Resources Limited effective  
July 1, 2001, and Phillips' historical income statements have been adjusted to  
reflect the pro forma impact of the acquisition of Tosco Corporation on         
September 14, 2001. In addition, Phillips' historical income statement for 2000 
has been adjusted to reflect the pro forma impact of the acquisition of ARCO's  
Alaska businesses and the formation of the Duke Energy Field Services and       
Chevron Phillips Chemical Company joint ventures during 2000.                   

     The companies may have performed differently had they always been combined.
You should not rely on the selected unaudited pro forma combined financial data 
as being indicative of the historical results that would have been achieved had 
the companies always been combined or the future results that New Parent will   
experience after the merger.                                                    

                                                        [Enlarge/Download Table]

                                                             NINE MONTHS ENDED       YEAR ENDED    
                                                             SEPTEMBER 30, 2001   DECEMBER 31, 2000
                                                             ------------------   -----------------
                                                                   MILLIONS OF DOLLARS EXCEPT      
                                                                       PER SHARE AMOUNTS           
                                                                                                   
INCOME STATEMENT DATA                                                                              
Sales and other operating revenues..........................      $68,966               89,570     
Income before extraordinary item and cumulative effect of                                          
  change in accounting principle............................        3,581                4,535     
Income before extraordinary item and cumulative effect of                                          
  change in accounting principle per common share                                                  
     Basic..................................................         5.32                 6.76     
     Diluted................................................         5.26                 6.67     

                                                                [Download Table]

                                                             AT SEPTEMBER 30, 2001
                                                             ---------------------
                                                                                  
BALANCE SHEET DATA                                                                
Total assets................................................        $73,990       
Long-term debt..............................................         15,878       

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COMPARATIVE PER SHARE DATA

  Set forth below are net income, cash dividends and book value per common
share amounts for Conoco and Phillips on a historical basis, Conoco and Phillips
on a pro forma combined basis per Phillips common share, and Conoco and Phillips
on a pro forma combined basis per Conoco-equivalent common share.               

The pro forma combined data were derived by combining the adjusted    
historical consolidated financial information of Conoco and Phillips using the  
purchase method of accounting for business combinations as described under      
"Unaudited Pro Forma Combined Condensed Financial Information" on page 87.      
Conoco's historical income statements have been adjusted for the pro forma      
impact of the acquisition of Gulf Canada effective July 1, 2001, and Phillips'  
historical income statements have been adjusted to reflect the pro forma impact 
of the acquisition of Tosco on September 14, 2001. In addition, Phillips'       
historical income statement for 2000 has been adjusted to reflect the pro forma 
impact of the acquisition of ARCO's Alaska businesses and the formation of the  
Duke Energy Field Services and Chevron Phillips Chemical Company joint ventures 
during 2000.                                                                    

   The Conoco-equivalent common share pro forma information shows the effect
of the merger from the perspective of an owner of Conoco common stock. The      
information was computed by multiplying the New Parent pro forma information by 
the exchange ratio of 0.4677.                                                   

You should read the information below together with our historical    
financial statements and related notes contained in the annual reports and other
information that we have filed with the Securities and Exchange Commission and  
that we have incorporated by reference in this document. See "Where You Can Find
More Information" on page 125. The unaudited pro forma combined data below are  
for illustrative purposes only. The financial results may have been different   
had the companies always been combined. You should not rely on this information 
to be indicative of the historical results that would have been achieved had the
companies always been combined or the future results that New Parent will       
experience after the merger.                                                    

                                                        [Enlarge/Download Table]

                                                             NINE MONTHS ENDED      YEAR ENDED    
                                                             SEPTEMBER 30, 2001  DECEMBER 31, 2000
                                                             ------------------  -----------------
                                                                                                  
Conoco historical data, per common share                                                          
  Net income -- basic.......................................       $ 2.34               3.05      
  Net income -- diluted.....................................         2.30               3.00      
  Cash dividends............................................         0.57               0.76      
  Book value at end of period...............................        10.61               9.03      
Phillips historical data, per common share                                                        
  Net income -- basic.......................................         5.70               7.32      
  Net income -- diluted.....................................         5.66               7.26      
  Cash dividends............................................         1.04               1.36      
  Book value at end of period...............................        37.87              23.86      
Conoco and Phillips combined pro forma data per Phillips                                          
  common share                                                                                    
  Income before extraordinary item and cumulative effect of                                       
     accounting change -- basic.............................         5.32               6.76      
  Income before extraordinary item and cumulative effect of                                       
     accounting change -- diluted...........................         5.26               6.67      
  Book value at end of period...............................        44.97                 --      
Phillips and Conoco combined pro forma data per                                                   
  Conoco-equivalent common share                                                                  
  Income before extraordinary item and cumulative effect of                                       
     accounting change -- basic.............................         2.49               3.16      
  Income before extraordinary item and cumulative effect of                                       
     accounting change -- diluted...........................         2.46               3.12      
  Book value at end of period...............................        21.03                 --      

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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      
Regarding Forward-Looking Statements" on page 15), 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      

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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.                                                  

BECAUSE THE ESTIMATES OF COST SAVINGS AND COST SAVING COMPONENTS ARE INHERENTLY 
UNCERTAIN, 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. Failure to 
successfully implement necessary cost saving programs or otherwise realize      
merger efficiencies will result in lower than expected cost savings in          
connection with the merger.                                                     

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 

   This joint proxy statement/prospectus, including information incorporated
by reference in this joint proxy statement/prospectus (see "Where You Can Find  
More Information" on page 125), contains certain forward-looking statements with
respect to the financial condition, results of operations, plans, objectives,   
future performance and businesses of each of Conoco, Phillips and New Parent, as
well as certain information relating to the merger, including, without          
limitation:                                                                     

   - statements relating to the synergies and accretion to reported earnings
estimated to result from the merger;                              

 - statements relating to revenue, income and operations of the combined
company after the merger; and                                     

     - statements preceded by, followed by or that include the words "believes,"
      "expects," "anticipates," "estimates," "intends," "plans," "projects" or
similar expressions.                                              

   The managements of Conoco and Phillips believe that these forward-looking
statements are reasonable; however, you should not place undue reliance on these
statements, as they are based on our managements' current expectations and      
beliefs and are subject to a number of factors and uncertainties that could     
cause actual results to differ materially from those described in the           
forward-looking statements. The following factors, among others, could cause    
actual results to differ materially from those described in the forward-looking 
statements:                                                                     

     - the risk factors described under "Risk Factors Relating to the Merger" on
page 13;                                                          

- changes in the businesses, operations, results and prospects of our 
companies;                                                        

    - worldwide crude oil or natural gas prices, which are outside the control
of Conoco and Phillips, may be lower than expected;               

- revenues following the merger may be lower than expected;           

- expected cost savings from the merger may not be fully realized or  
realized within the expected time frame;                          

   - market expectations of the likelihood that the merger will be completed
and the timing of its completion;                                 

    - the effect of any conditions or restrictions imposed on or proposed with
respect to the combined company by regulators;                    

- the prospects of post-merger operations;                            

 - costs or difficulties related to the integration of the businesses of
Conoco and Phillips may be greater than expected;                 

   - general economic conditions, either internationally or nationally or in
       the jurisdictions in which Conoco and Phillips are doing business, may be
less favorable than expected;                                     

    - legislative or regulatory changes may adversely affect the businesses in
which Conoco and Phillips are engaged;                            

 - there may be environmental risks and liability under U.S. federal and
state and foreign environmental laws and regulations;             

- changes may occur in the securities markets; and                    

- other economic, business, competitive and/or regulatory factors may 
affect Conoco's and Phillips' businesses generally as described in
Conoco's and Phillips' filings with the Securities and Exchange   
Commission.                                                       

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     Except for their ongoing obligations to disclose material information under
U.S. federal securities laws, none of New Parent, Conoco and Phillips undertakes
any obligation to release publicly any revisions to any forward-looking         
statements, to report events or circumstances after the date of this document,  
or to report the occurrence of unanticipated events.                            

New Parent acknowledges that the safe harbor provisions of the Private
Securities Litigation Reform Act do not apply to it in connection with its      
initial public offering of New Parent common stock.                             

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RECENT DEVELOPMENTS 

  On January 24, 2002, Conoco and Phillips announced their respective 2001
fourth-quarter earnings. Conoco's fourth-quarter net income totaled $127        
million, or $0.20 per diluted share, and total revenues for the quarter were    
$8.5 billion. For the year, Conoco's net income totaled $1.6 billion, or $2.50  
per diluted share, and total revenues were $39.5 billion. Conoco also announced 
that it has set its 2002 capital budget at $2.8 billion.                        

Phillips' fourth-quarter net income totaled $162 million, or $0.42 per
diluted share, and total revenues for the quarter were $10.0 billion. For the   
year, Phillips' net income totaled $1.7 billion, or $5.63 per diluted share, and
total revenues were $26.9 billion. Phillips' capital budget of $3.5 billion for 
2002 was previously announced.                                                  

   On January 21, 2002, Phillips announced that Thomas O'Malley had resigned
from the Phillips Board of Directors, reducing the total number of Phillips     
directors to 10.                                                                

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THE CONOCO SPECIAL MEETING

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

DATE, TIME AND PLACE                                                            

    Conoco will hold the Conoco special meeting on Tuesday, March 12, 2002, at
10:00 a.m., local time, at Omni Houston Hotel Westside, 13210 Katy Freeway,     
Houston, Texas.                                                                 

PURPOSE OF THE CONOCO SPECIAL MEETING                                           

  At the Conoco special meeting, we are asking holders of record of Conoco
common stock to consider and vote on a proposal to adopt the merger agreement by
and among Conoco, Phillips, New Parent, C Merger Corp. and P Merger Corp. See   
"The Merger" on page 24 and "The Merger Agreement" on page 69.                  

  The Conoco 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 Conoco stockholders and has    
approved the merger agreement.                                                  

THE CONOCO BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT CONOCO      
STOCKHOLDERS VOTE FOR THE ADOPTION OF THE MERGER AGREEMENT.                     

     Certain directors of Conoco, including Mr. Dunham, will receive substantial
benefits in connection with the merger. For a discussion of the benefits and the
other interests of directors and officers that are different from or in addition
to the interests of other stockholders, see "The Merger -- Interests of Conoco  
Directors and Management in the Merger" on page 54.                             

CONOCO RECORD DATE; SHARES ENTITLED TO VOTE; QUORUM                             

   Only holders of record of Conoco common stock at the close of business on
February 6, 2002, the Conoco record date, are entitled to notice of and to vote 
at the Conoco special meeting. On the Conoco record date approximately          
625,865,650 shares of Conoco common stock were issued and outstanding and held  
by approximately 8,667 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 1% 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                               

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proxies. Properly executed proxies that do not contain voting instructions will 
be voted for the adoption of the merger agreement.                              

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 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 
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, facsimile, telegram 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.                                                                       

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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 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 March 6, 2002.                              

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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 Tuesday, March 12, 2002, at 10:00
a.m., local time, at the Adams Building, 4th Street and Keeler Avenue,          
Bartlesville, Oklahoma.                                                         

PURPOSE OF THE 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, C Merger Corp. and P Merger
Corp. See "The Merger" on page 24 and "The Merger Agreement" on page 69.        

    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.                     

Certain directors of Phillips, including Mr. Mulva, will receive      
substantial benefits in connection with the merger. For a discussion of the     
benefits and the other interests of directors and officers that are different   
from or in addition to the interests of other stockholders, see "The            
Merger -- Interests of Phillips Directors and Management in the Merger" on page 
59.                                                                             

PHILLIPS RECORD DATE; SHARES ENTITLED TO VOTE; QUORUM                           

     Only holders of record of Phillips common stock at the close of business on
February 6, 2002, the Phillips record date, are entitled to notice of and to    
vote at the Phillips special meeting. On the Phillips record date, approximately
409,529,241 shares of Phillips common stock were issued and outstanding and held
by approximately 54,504 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 1% 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                           
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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 by telephone. If submitting a proxy by          
telephone, the stockholder should dial the toll-free number 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 or by telephone 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 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, facsimile, telegram 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                             

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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 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.                                      

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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. (which was renamed
C Merger Corp.) and Porsche Merger Corp. (which was renamed P 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, P Merger Corp. will merge with and into
Phillips and C 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 based
on a 20-day average trading price of each company's common stock, 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. As part of its consideration of its alternative strategies, Conoco        
retained Credit Suisse First Boston on April 9, 2001, to provide certain        
financial advisory services to Conoco regarding possible transactions.          

 Following its acquisition of Tosco, Phillips again examined a number of
potential acquisitions of both large and small companies and assets and other   
strategic business opportunities in the upstream sector. None of the            
alternatives considered was as large a transaction as the merger, offered       
comparable synergies, was as financially attractive or offered as comprehensive 
and complementary a fit for Phillips as a business combination with Conoco.     
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.                                                  

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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 based on the   
average trading price of each company's common stock for the 20 trading days    
prior to signing the merger agreement. Mr. Dunham also proposed a holding       
company structure with Conoco and Phillips becoming subsidiaries of a new       
company to be named "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                          

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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 on principal legal issues, including appropriate deal     
protections, continued through November 17, 2001.                               

 On November 4, 2001, Mr. Dunham and Mr. Mulva again spoke by telephone.
They agreed, subject to due diligence and to the resolution of remaining issues,
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 and that the transaction should utilize a holding company  
structure. 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, Corporate Strategy and Development, 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. Pursuant to the terms of its April 9,   
2001 engagement Credit Suisse First Boston was entitled to be engaged by Conoco 
as a financial advisor in connection with the merger, and, in connection with   
the merger, it was asked to continue to make available its expertise on         
alternative transactions based upon work it had performed for Conoco in the     
past.                                                                           

     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. These materials included     
financial models, which were within the range of publicly available financial   
projections. (Conoco and Phillips did not subsequently exchange, directly or    
indirectly, financial modeling information.) 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                    

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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 completed preparation of the merger agreement, the    
related schedules and exhibits and the employment agreements for Messrs. Dunham 
and Mulva to put them in form for signatures.                                   

  On November 18, 2001, 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. Credit Suisse    
First Boston was not requested to provide, and did not provide, a fairness      
opinion. 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                                             

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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 -- very large oil and gas resources that can generate
revenue for many years with competitive per-unit costs. The combined
      company would have pro forma hydrocarbon reserves at December 31, 2000, of
8.4 billion barrels of oil equivalent, or BOE, of proved oil and gas
 reserves, plus 0.3 billion BOE of tar sands reserves. Pro forma daily
     production would be 1.6 million BOE (which excludes tar sands production)
   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.
      While we believe that the combined managements of Conoco and Phillips will
    be able to realize the opportunities created by the merger, we recognize
     that none of these benefits is assured. See "Risk Factors Relating to the
      Merger -- The integration of Conoco and Phillips following the merger will

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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" on page 13.                                   

 - 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 recurring
      cost savings of at least $750 million within the first full year after the
     completion of the merger. These savings exclude one-time cost savings and
     expenses associated with the merger, which have not been fully identified
   or quantified. 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. See "Risk Factors Relating to the      
      Merger -- Because the estimates of cost savings and cost saving components
     are inherently uncertain, there can be no assurance as to the accuracy of
these estimates" on page 14.                                        

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 under "-- Reasons for the
Merger" on page 28;                                               

   - the expectation that the merger would be immediately accretive (without
taking into account one-time costs or one-time savings) to Conoco 
     stockholders based on consensus security analyst earnings estimates and
the achievement of anticipated recurring 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 expectation that the merger will create a combined company with 
 strong and stable earnings and cash flow as a result of outstanding
portfolio diversification and a low debt-to-capital ratio;        

   - 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                      

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 in the exercise of its fiduciary duty in connection with a superior
 proposal, subject to the termination fee of $550 million payable by
Conoco in that event;                                             

    - the proposed composition of the New Parent Board of Directors, including
    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, which is expected to
 facilitate the integration, and assist the continuation of the best
    practices and traditions, of the two companies following the merger by
     providing the combined company with the expertise and the leadership of
both companies;                                                   

   - 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, which
provisions the Conoco Board of Directors believed would provide   
continuity and stability during the integration of the companies  
following the merger;                                             

- 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 (1) unforeseen difficulties in integrating   
    operations and systems, (2) likely employee uncertainty in the face of
potential workforce reductions and difficulties in assimilating   
  employees, and (3) 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; and

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  - the interests that certain Conoco executive officers and directors may
      have with respect to the merger in addition to their interests as Conoco
       stockholders. See "-- Interests of Conoco Directors and Management in the
Merger" on page 54.                                               

In view of the consolidating trend in the industry, and as part of its
on-going review of strategies for growth, the Conoco Board of Directors from    
time to time reviewed and discussed a variety of possible transactions,         
including acquisitions and combinations with similarly sized and bigger         
companies. More specifically, the Conoco Board of Directors considered, at a    
number of board meetings including the meeting held on November 16, 2001, the   
feasibility and desirability of pursuing alternative strategies, including      
pursuing growth and increased stockholder value through (1) a large acquisition,
such as the acquisition of Gulf Canada, (2) a series of small acquisitions and  
portfolio upgrading, (3) a transaction with a company of a similar size to      
Conoco and (4) a combination with a company much larger than Conoco. The Conoco 
Board of Directors determined that growth through a large acquisition or a      
series of small acquisitions either would not result in significant economies of
scale or synergies or may subject the company to substantial execution risks and
integration costs associated with the large number of acquisitions that would be
necessary to bring about a growth opportunity comparable to a combination with  
Phillips. A combination with a company much larger than Conoco raised concerns  
involving the possible reasons for interest by a larger company, the feasibility
of consummating the transaction given the likelihood of significant antitrust   
scrutiny and the willingness of a larger company to pay a fair premium for      
Conoco in the current economic environment facing the energy industry and to    
fairly value Conoco's emerging businesses. Ultimately, based on the anticipated 
synergies and the complementary asset basis and values, among other             
considerations, the Conoco Board of Directors determined that a merger of equals
with Phillips presented the best possibility for growth and increased           
stockholder value for the Conoco stockholders.                                  

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.                     

     Certain directors of Conoco, including Mr. Dunham, will receive substantial
financial and other benefits in connection with the merger. For a discussion of 
the benefits and the other interests of directors and officers that are         
different from or in addition to the interests of other stockholders, see       
"-- Interests of Conoco Directors and Management in the Merger" on page 54.     

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.                                                 

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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 under "-- Reasons for the
Merger" on page 28;                                               

   - the expectation that the merger would be immediately accretive (without
 taking into account one-time costs or one-time savings) to Phillips
     stockholders based on consensus security analyst earnings estimates and
the achievement of anticipated recurring 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 expectation that the merger will create a combined company with 
 strong and stable earnings and cash flow as a result of outstanding
portfolio diversification and a low debt-to-capital ratio;        

   - 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 fee of $550 million 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, which is expected to
 facilitate the integration, and assist the continuation of the best
    practices and traditions, of the two companies following the merger by
     providing the combined company with the expertise and the leadership of
both companies;                                                   

   - 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, which
provisions the Phillips Board of Directors believed would provide 
continuity and stability during the integration of the companies  
following the merger;                                             

- 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.         

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   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 (1) unforeseen difficulties in integrating   
    operations and systems, (2) likely employee uncertainty in the face of
potential workforce reductions and difficulties in assimilating   
  employees, and (3) 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; and

    - the interests that certain Phillips executive officers and directors may
have with respect to the merger in addition to their interests as 
Phillips stockholders. See "-- Interests of Phillips Directors and
Management in the Merger" on page 59.                             

The Phillips Board of Directors also considered the feasibility and   
desirability of pursuing alternative strategies, such as pursuing growth and    
increased stockholder value through acquisitions of assets or companies, such as
the acquisition of ARCO's Alaska assets and the acquisition of Tosco. The       
Phillips Board of Directors reviewed a number of potential acquisitions, both   
large and small, and other strategic business opportunities in the upstream     
sector. None of the alternatives considered was as large a transaction as the   
merger, offered comparable synergies, was as financially attractive or offered  
as comprehensive and complementary a fit for Phillips as a business combination 
with Conoco.                                                                    

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.            

Certain directors of Phillips, including Mr. Mulva, will receive      
substantial financial and other benefits in connection with the merger. For a   
discussion of the interests of directors and officers that are different        

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from or in addition to the interests of other stockholders, see "-- Interests of
Phillips Directors and Management in the Merger" on page 59.                    

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 AND MATTERS          
CONSIDERED 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 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;    

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- 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.         

                                                        [Enlarge/Download Table]

                           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.        

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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. Based
on the actual closing prices per share of Conoco common stock and Phillips      
common stock on November 15 and November 16, 2001, the agreed-upon exchange     
ratio is substantially the same as that implied by the November 14 closing      
prices.                                                                         

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:

                                                                [Download Table]

                                                              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:                                                                        

                                                                [Download Table]

                                                              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:                                                                   

                                                                [Download Table]

                                                              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. The foregoing     
analysis was unaffected by the price movements in Conoco common stock and       
Phillips common stock on November 15 and November 16, 2001.                     

    Research Analysts' Future Price Targets Analysis.  Morgan Stanley reviewed
the 12-month price targets for the shares of Conoco common stock and Phillips   
common stock as projected in recent reports by analysts from eleven financial   
institutions, in the case of Conoco, and six financial institutions, in the case
of Phillips. Such reports represent substantially all the research analysts'    
reports on Conoco and Phillips that were reasonably available and current at the
time the analyses were performed. It should be noted that not all the selected  
analysts' reports presented all the data points used in Morgan Stanley's        

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analysis. In addition, among the selected research analysts were an employee of 
Morgan Stanley and an employee of each of Salomon Smith Barney and Credit Suisse
First Boston, Conoco's other financial advisors. 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:                                                      

                                                        [Enlarge/Download Table]

                                                        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 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:                          

                                                                [Download Table]

                                                              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.                                                     

                                                                [Download Table]

                                                             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 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.         

---------------                                                                 

* First Call Corporation compiles summaries of financial forecasts published by 
various investment banking firms. The information published by First Call   
Corporation is referred to in this document as First Call estimates.        

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The analysis showed the following multiples:                          

                                                        [Enlarge/Download Table]

                                                         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.                   

                                                                [Download Table]

                                                             EXCHANGE RATIO RANGE
                                                             --------------------
                                                                                 
Price/2001 Cash Flow per Share..............................    0.356x - 0.557x  
Price/2002 Cash Flow per Share..............................     0.393 - 0.587   
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.                                                                      

                                                                [Download Table]

                                                              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 estimates, to 
the resulting combined company. Morgan Stanley reviewed pro forma estimates of  
earnings, cash flow and EBITDAX for the years 2001 and 2002.                    

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. As more fully described in the table below, Conoco and   
Phillips will contribute to the combined entity in a manner consistent with the 
participation that the Conoco stockholders and the Phillips stockholders will   
have in the ownership of ConocoPhillips, as such participation is implied by the
agreed upon exchange ratio:                                                     

                                                        [Enlarge/Download Table]

                                                                                                                 RELATIVE 
                                                                                          PRE-         PRE-      OWNERSHIP
                                  2000       EBITDAX       CASH FLOW     NET INCOME    TRANSACTION  TRANSACTION  BASED ON 
                                 PROVED   -------------  -------------  -------------   AGGREGATE     EQUITY     EXCHANGE 
                                RESERVES  2001E   2002E  2001E   2002E  2001E   2002E     VALUE        VALUE       RATIO  
                                --------  -----   -----  -----   -----  -----   -----  -----------  -----------  ---------
                                                                                                                          
Conoco.........................    42%     43      44     43      44     44      45        48           44         43.5   
Phillips.......................    58      57      56     57      56     56      55        52           56         56.5   

    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 estimates, preliminary synergy 
estimates provided by Conoco's and Phillips' management prior to finalization of
their synergy review, 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                       

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estimates for Conoco and Phillips on a stand-alone basis. Based on First Call   
estimates, the merger would also be accretive to cash flow 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.                           

                                                        [Enlarge/Download Table]

                                                                 POTENTIAL PRE-TAX SYNERGIES RELATIVE TO SMALLER ENTITY         
                                                         -----------------------------------------------------------------------
   LARGER ENTITY/     DATE TRANSACTION     PRE-TAX                  OPERATING    S, G&A    OP. EX. &                    PRODUCED
   SMALLER ENTITY        ANNOUNCED        SYNERGIES      REVENUES   EXPENSES    EXPENSES    S, G&A       EMPLOYEES        BOE   
   --------------     ----------------  --------------   --------   ---------   --------   ---------   --------------   --------
                                        (IN THOUSANDS)                                                 (IN THOUSANDS)           
                                                                                                                                
Chevron/Texaco.......    10-16-2000       $1,200,000       2.8%        3.3%      102.9%       3.2%        $63,121        $2.57  
TOTALFina/Elf........    09-13-1999        1,500,000       4.1         5.2        44.7        4.7          17,647         4.10  
Repsol/YPF...........    04-29-1999          325,000       5.9        12.9        54.3       10.4          34,211         1.18  
BP Amoco/ ARCO.......    01-01-1999        1,000,000       9.4        14.3       135.0       12.9          54,348         2.63  
Total/Petrofina......    12-01-1998          370,000       2.0         2.3        41.9        2.2          25,519         4.60  
Exxon/Mobil..........    12-01-1998        2,800,000       5.0         6.3        68.5        5.7          67,470         4.60  
BP/Amoco.............    08-11-1998        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......    11-18-2001          700,000(1)    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                                            

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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 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 AND MATTERS CONSIDERED 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 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;                                  

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

   - 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 Conoco 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'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.                                                                     

FINANCIAL ANALYSIS OF SALOMON SMITH BARNEY                                  

    The following is a summary of the material financial analyses conducted by
Salomon Smith Barney in arriving at its opinion evaluating the fairness of the  
exchange ratio and its letter dated November 18, 2001, to the Conoco Board of   
Directors. THE FINANCIAL ANALYSES PERFORMED BY SALOMON SMITH BARNEY WERE NOT    
PROVIDED OR PRESENTED TO THE CONOCO BOARD OF DIRECTORS.                         

   The summary includes information presented in tabular format. IN ORDER TO
UNDERSTAND FULLY THE FINANCIAL ANALYSES USED BY SALOMON SMITH BARNEY, THESE     
TABLES MUST BE READ TOGETHER WITH THE TEXT OF EACH SUMMARY. THE TABLES ALONE DO 
NOT CONSTITUTE A COMPLETE DESCRIPTION OF THE FINANCIAL ANALYSES. The following  
quantitative information, to the extent it is based on market data is, except as
otherwise                                                                       

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indicated, based on market data as it existed at or prior to November 15, 2001, 
and is not necessarily indicative of current or future market conditions.       

    In connection with arriving at its opinion, Salomon Smith Barney performed
three analyses of the exchange ratio: historical share price performance and    
exchange ratio analysis, a relative contribution analysis, and a comparable     
public companies valuation analysis.                                            

HISTORICAL SHARE PRICE PERFORMANCE AND EXCHANGE RATIO ANALYSIS.             

     Salomon Smith Barney derived implied historical exchange ratios by dividing
the closing price per share of Conoco stock by the closing price per share of   
Phillips stock for each trading day in the period from November 15, 2000,       
through November 15, 2001. Salomon Smith Barney calculated the implied exchange 
ratio based on market prices as of November 15, 2001, to be 0.475x. Salomon     
Smith Barney considered the average implied exchange ratio for each of the      
following calendar periods ending November 15, 2001:                            

                                                                [Download Table]
                                                                     
Last one month..............................................   0.468x
Last three months...........................................   0.488 
Last six months.............................................   0.498 
Last twelve months..........................................   0.501 

Salomon Smith Barney noted that the lowest historical implied exchange
ratio had been 0.427x on November 28, 2000, and the highest historical implied  
exchange ratio had been 0.560x on March 1, 2001.                                

RELATIVE CONTRIBUTION ANALYSIS.                                             

   Salomon Smith Barney analyzed and considered the relative contribution of
each of Conoco and Phillips to the pro forma merged entity with respect to      
certain financial data, including:                                              

- estimated net income for fiscal years 2002 and 2003 based on:       

(a) First Call estimates; and                                       

   (b) operational estimates provided by managements of each of Conoco and
         Phillips applying a set of pricing assumptions of energy products and
        as adjusted to reflect pricing of such products published by the New
     York Mercantile Exchange, which is referred to as the operational
estimates,                                                  

     - estimated earnings before interest, taxes, depreciation, amortization and
       exploration costs, which is referred to as EBITDAX, for fiscal years 2002
and 2003, based on the operational estimates; and                 

   - estimated cash flow for fiscal years 2002 and 2003, based on First Call
estimates and the operational estimates.                          

For each of the above categories, Salomon Smith Barney derived an     
approximate implied exchange ratio, or when applying financial data contained in
the operational estimates, a range of approximate implied exchange ratios set   
forth in the table below, based on each company's relative estimated            
contribution in each category and assuming 625.5 million shares and 35.7 million
options (with an average exercise price of $18.29) of Conoco outstanding and    
381.3 million shares and 9.86 million options (with an average exercise price of
$43.82) of Phillips outstanding.                                                

                                                        [Enlarge/Download Table]

                                             NET INCOME   NET INCOME     EBITDAX      EBITDAX     CASH FLOW    CASH FLOW 
                                                2002         2003         2002         2003         2002         2003    
                                             -----------  -----------  -----------  -----------  -----------  -----------
                                                                                                                         
First Call estimates........................   0.481x       0.475x         --           --         0.480x       0.460x   
Operational estimates(1).................... 0.447-0.508  0.369-0.394  0.398-0.428  0.406-0.420  0.541-0.559  0.535-0.545

---------------                                                                 
(1)Based on the operational estimates and as adjusted operational estimates     
described in paragraph (b) above.                                         

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COMPARABLE COMPANIES ANALYSIS.                                              

   Salomon Smith Barney compared financial and stock market information, and
forecasted financial information for selected publicly traded companies         
operating in the oil and gas industry that Salomon Smith Barney deemed          
appropriate for comparison with financial and forecasted financial information  
for each of Conoco and Phillips. Salomon Smith Barney divided the comparable    
companies into the following three categories based on their relative equity and
firm values: (1) super major integrated energy companies, (2) major integrated  
energy companies, and (3) mini major integrated energy companies:               

 The super major integrated energy companies considered by Salomon Smith
Barney were:                                                                    

- ExxonMobil Corporation                                              

- Royal Dutch/Shell Group                                             

- BP plc                                                              

- TotalFinaElf                                                        

- ChevronTexaco Corporation                                           

  The major integrated energy companies considered by Salomon Smith Barney
were:                                                                           

- ENI SpA                                                             

- Repsol YPF                                                          

The mini major integrated energy companies considered by Salomon Smith
Barney were:                                                                    

- USX-Marathon Group                                                  

- Amerada-Hess Corporation                                            

The forecasted financial information used by Salomon Smith Barney for 
Conoco, Phillips and the selected comparable companies for this analysis was    
based on Salomon Smith Barney's equity research estimates. Calculations were    
made based on the closing price per share of each comparable company's common   
stock on November 15, 2001.                                                     

For each of Conoco and Phillips and the selected comparable companies 
Salomon Smith Barney derived and compared, among other things:                  

- the ratio of the closing price per common share of each company on  
November 15, 2001, to:                                            

   (a) its estimated earnings per share, referred to as EPS, for 2002, and

(b) its estimated EPS for 2003; and                                 

- the ratio of the closing price per common share of each company on  
November 15, 2001, to:                                            

   (a) its estimated after tax cash flow per share, referred to as ATCFPS,
for 2002, and                                               

(b) its estimated ATCFPS for 2003.                                  

In each case the ATCFPS assumed the sum of:                           

- forward net income from continuing operations; plus                 

- estimated depreciation and amortization; plus                       

- estimated deferred taxes; plus                                      

- estimated minority interest; minus                                  

- estimated equity income.                                            

     In making these calculations, Salomon Smith Barney used financial statement
data reported as of September 30, 2001 (except in the case of the USX-Marathon  
Group, for which Salomon Smith Barney used balance sheet data as of June 30,    
2001, pro forma for the separation of the USX-Marathon Group                    

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and the USX-U.S. Steel Group, as presented in the USX Corporation definitive    
Registration Statement on Form S-4 dated September 20, 2001, filed with the     
Securities and Exchange Commission).                                            

The following table sets forth the results of the comparable companies
analysis.                                                                       

                                                        [Enlarge/Download Table]

                                        COMPARABLE COMPANIES                            
                                                 AT            CONOCO AT    PHILLIPS AT 
                                         NOVEMBER 15, 2001    NOVEMBER 15,  NOVEMBER 15,
                                           CLOSING PRICE          2001          2001    
                                        --------------------    CLOSING       CLOSING   
                                           RANGE      MEDIAN     PRICE         PRICE    
                                        -----------   ------  ------------  ------------
                                                                                        
Ratio of closing common share price of                                                  
super major comparable companies to:                                                    
  (a) Estimated EPS for 2002...........  14.7x-18.3x   17.8x      11.4x         13.9x   
  (b) Estimated EPS for 2003...........   14.2-17.4    15.4       12.7          11.9    
Ratio of closing common share price of                                                  
major comparable companies to:                                                          
  (a) Estimated EPS for 2002...........   10.5-13.4    12.0       11.4          13.9    
  (b) Estimated EPS for 2003...........   10.3-13.3    11.8       12.7          11.9    
Ratio of closing common share price of                                                  
mini major comparable companies to:                                                     
  (a) Estimated EPS for 2002...........    9.6-12.8    11.2       11.4          13.9    
  (b) Estimated EPS for 2003...........   10.2-10.7    10.4       12.7          11.9    
Ratio of closing common share price of                                                  
super major comparable companies to:                                                    
  (a) Estimated ATCFPS for 2002........    7.2-10.8     9.5        4.8           6.1    
  (b) Estimated ATCFPS for 2003........     7.0-9.9     8.6        4.9           5.7    
Ratio of closing common share price of                                                  
major comparable companies to:                                                          
  (a) Estimated ATCFPS for 2002........     3.9-5.2     4.5        4.8           6.1    
  (b) Estimated ATCFPS for 2003........     3.7-5.1     4.4        4.9           5.7    
Ratio of closing common share price of                                                  
mini major comparable companies to:                                                     
  (a) Estimated ATCFPS for 2002........     2.4-4.4     3.4        4.8           6.1    
  (b) Estimated ATCFPS for 2003........     2.1-4.1     3.1        4.9           5.7    

    Based on the ratios derived for the comparable companies and Salomon Smith
Barney's equity research estimates for Conoco and Phillips, Salomon Smith Barney
derived a reference range for the implied equity value per share of Conoco      
common stock of $25.50 to $29.50, and per share of Phillips common stock of     
$49.00 to $56.00. Based on these ranges, Salomon Smith Barney derived an implied
exchange ratio ranging from 0.455x to 0.602x.                                   

ACCRETION/DILUTION ANALYSIS.                                                

  Salomon Smith Barney analyzed and considered the impact of the merger on
the estimated EPS and estimated ATCFPS of Conoco for fiscal years 2002 and 2003,
assuming the merger is completed at the exchange ratio of 0.4677x. Estimated EPS
and estimated ATCFPS for each of Conoco and Phillips for 2002 and 2003 were     
based on First Call estimates and the operational estimates. Salomon Smith      
Barney's analysis assumed $375 million and $750 million of pre-tax cost savings 
in 2002 and 2003, respectively.                                                 

The analysis indicated that, based on First Call estimates, the merger
would be accretive to estimated EPS and estimated ATCFPS of Conoco in 2002 and  
2003 and, based on the operational estimates, the merger would be accretive to  
estimated EPS of Conoco in 2002 and 2003 and dilutive to estimated ATCFPS of    
Conoco in 2002 and 2003.                                                        

None of the foregoing analyses was affected by the price movements in 
Conoco common stock and Phillips common stock on November 16, 2001.             

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The preparation of fairness opinions is a complex process involving   
subjective judgments and is not necessarily susceptible to partial analysis or  
summary description. Salomon Smith Barney made no attempt to assign specific    
weights to particular analyses or factors it considered, but rather made        
qualitative judgments as to the significance and relevance of all the analyses  
and factors considered and determined to give its fairness opinion as described 
above. Accordingly, Salomon Smith Barney believes that its analyses, and the    
summary set forth above, must be considered as a whole and that selecting       
portions of the analyses and of the factors considered by Salomon Smith Barney  
without considering all of the analyses and factors could create a misleading or
incomplete view of the processes underlying the analyses conducted by Salomon   
Smith Barney and its opinion. With regard to the comparable companies analyses  
summarized above, Salomon Smith Barney selected comparable public companies on  
the basis of various factors, including the size and similarity of the relevant 
companies as compared to Conoco and Phillips; however, no company utilized as a 
comparison in these analyses is identical to Conoco and Phillips or the merger, 
respectively. As a result, these analyses are not purely mathematical, but also 
take into account differences in financial and operating characteristics of the 
subject companies and other factors that could affect the public trading value  
of the subject companies to which Conoco and Phillips are being compared.       

In its analyses, Salomon Smith Barney made numerous assumptions and   
considered a number of factors with respect to Conoco and Phillips, industry    
performance, general business, economic, market and financial conditions and    
other matters, many of which are beyond the control of either Conoco and        
Phillips. Any estimates contained in Salomon Smith Barney's analyses are not    
necessarily indicative of actual values or predictive of future results or      
values, which may be significantly more or less favorable than those suggested  
by these analyses. Estimates of values of companies do not purport to be        
appraisals or necessarily to reflect the prices at which companies may actually 
be sold. Because these estimates are inherently subject to uncertainty, none of 
Conoco and Phillips, the Board of Directors of Conoco, Salomon Smith Barney or  
any other person assumes responsibility if future results or actual values      
differ materially from the estimates.                                           

  Salomon Smith Barney's analyses were conducted solely as part of Salomon
Smith Barney's consideration of the fairness of the exchange ratio in the merger
for the purpose of arriving at its opinion and were not provided to the Board of
Directors of Conoco. The exchange ratio in the merger was determined through    
negotiations between Conoco and Phillips. Salomon Smith Barney did not determine
the exchange ratio or recommend any specific exchange ratio to Conoco. The      
opinion of Salomon Smith Barney was only one of the factors taken into          
consideration by the Board of Directors of Conoco in making its determination to
approve and recommend the merger agreement.                                     

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.                                  

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In the past, Morgan Stanley and its affiliates have provided financial
advisory and financing services to Conoco and Phillips and have received        
customary fees for the rendering of these services. Among other things, in 2001,
Morgan Stanley acted as financial advisor in connection with Conoco's collapse  
of its dual-class common stock structure. During 2000 and 2001, Morgan Stanley  
received approximately $1.7 million for services provided to Conoco and its     
affiliated entities. In addition, in 2001, Morgan Stanley acted as financial    
advisor in connection with Phillips' acquisitions of Tosco and Petroz N.L. In   
addition, Morgan Stanley also maintains commodity trading relationships with    
each of Conoco and Phillips.                                                    

   Salomon Smith Barney and its affiliates (including Citigroup Inc. and its
affiliates) have in the past provided, and are currently providing, financial   
advisory, investment banking and financing services to Conoco and Phillips      
unrelated to the merger for which services Salomon Smith Barney and its         
affiliates have received customary fees. Among other things, in October 2001,   
Salomon Smith Barney acted as joint bookrunner in connection with an offering by
Conoco of its $3.5 billion three-tranche investment grade debt securities. In   
addition, Salomon Smith Barney's affiliate, Citibank, N.A., has in the past     
participated and currently participates as a lender in syndicated loans to      
Conoco and Phillips. During 2000 and 2001, Salomon Smith Barney and its         
affiliates (including Citigroup Inc. and its affiliates) received in the        
aggregate approximately $20.8 million for services provided to Conoco and       
Phillips described in this paragraph. In the ordinary course of Salomon Smith   
Barney's business, it and its affiliates may actively trade or hold the         
securities of Conoco and Phillips for their own account or for the account of   
their customers and, accordingly, may at any time hold a long or short position 
in such securities.                                                             

Credit Suisse First Boston and its affiliates have provided financial 
advisory, investment banking and financing services to Conoco. Among other      
things, pursuant to a letter agreement dated April 9, 2001, Credit Suisse First 
Boston was retained to provide certain financial advisory services to Conoco    
regarding possible transactions. Credit Suisse First Boston was retained in     
connection with the merger, among other things, to continue to make available   
its expertise and to continue to advise Conoco, as needed, on possible          
transactions. Conoco did not request that a fairness opinion be provided by     
Credit Suisse First Boston in connection with the merger.                       

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 fee of $8 million
upon consummation of the merger. In addition, Conoco may pay Morgan Stanley an  
additional fee of up to $2 million, which will be determined by Conoco, in its  
sole discretion, 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   
AND MATTERS CONSIDERED 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.                                  

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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;

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 - 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;

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    - 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.                                 

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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. In preparing that presentation Goldman Sachs,      
JPMorgan and Merrill Lynch relied on common assumptions and data as set forth in
this section. Each of Goldman Sachs, JPMorgan and Merrill Lynch worked on       
developing these analyses, and coordinated its work with the other investment   
banks. Therefore, these analyses represent the joint work product of each of    
Goldman Sachs, JPMorgan and Merrill Lynch. No additional material analyses were 
performed by any of Goldman Sachs, JPMorgan and Merrill Lynch with respect to   
rendering their respective fairness opinions. On behalf of all three advisors, a
representative of Goldman Sachs delivered the joint presentation to the Phillips
Board of Directors at the special meeting in New York on November 17, 2001 and  
representatives of all three investment banks were present at the meeting to    
respond to questions and to discuss the presentation with the Phillips Board of 
Directors. Each of Goldman Sachs, JPMorgan and Merrill Lynch rendered separate  
opinions 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.         

  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:                                     

                                                                [Download Table]

                                                                  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                                                            

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

                                                        [Enlarge/Download Table]

                                              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                                              

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

                                                        [Enlarge/Download Table]

                                                                                          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    

---------------                                                                 
(1) The potential value created from the synergies was calculated at six times  
 the pre-tax synergy estimate, based upon discounted cash flow analyses of
   the estimated cash flows of the synergies as provided by the managements of
 Phillips and Conoco and assuming a range of discount rates and perpetuity
growth rates.                                                           

(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:                                                                 

                                                                [Download Table]

              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.

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The results of these analyses are as summarized as follows:           

                                                        [Enlarge/Download Table]

                                                           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.                               

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    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. During 2000 and 2001, 
the aggregate consideration received by Goldman Sachs for services provided to  
Phillips was approximately $3.4 million.                                        

 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. During 2000 and 2001, the aggregate  
consideration received by JPMorgan for services provided to Phillips was        
approximately $19.1 million.                                                    

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. During 2000 and 2001, the aggregate         
consideration received by Merrill Lynch for services provided to Phillips was   
approximately $14.0 million.                                                    

    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 fee of    
between $8 million and $10 million, the exact amount of which will be separately
determined by Phillips, in its sole discretion, for each financial advisor upon 
consummation of the merger.                                                     

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 the Conoco   
management team have agreements or arrangements that provide                    
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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" on page 80.                                               

TREATMENT OF STOCK OPTIONS AND OTHER STOCK-BASED AWARDS                     

Upon Conoco stockholder approval of the merger agreement, Conoco stock
options and other stock-based awards granted under Conoco employee and director 
stock plans that were outstanding on November 18, 2001 and not previously vested
or exercisable will become fully vested and exercisable and generally will      
remain exercisable for the remainder of their term. As of February 4, 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, all   
other Conoco executive officers and all Conoco non-employee directors, the      
vesting and exercisability of which will accelerate upon Conoco stockholder     
approval of the merger agreement, are 2,492,846, 408,427, 340,938, 157,562,     
599,204 and 0, respectively. The weighted average exercise prices of the        
unvested options held by Messrs. Dunham, McKee, Nokes, Goldman and all other    
Conoco executive officers, the vesting and exercisability of which will         
accelerate upon Conoco stockholder approval of the merger agreement, are $26.19,
$25.12, $25.99, $26.06 and $25.71, respectively. As of February 4, 2002, the    
number of shares of Conoco common stock subject to other unvested stock-based   
awards held by Messrs. Dunham, McKee, Nokes, Goldman, all other Conoco executive
officers of Conoco and all non-employee Conoco directors, the vesting and       
exercisability of which will accelerate upon Conoco stockholder approval of the 
merger agreement, are 72,022, 19,890, 19,890, 0, 0 and 38,497, 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                                        

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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" on page 80. 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.                                                                       

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     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 approximately $16.1 million. At the completion of the merger,  
Mr. Dunham will also be granted options to purchase approximately 1.3 million   
shares of New Parent common stock, at the fair market value of the New Parent   
common stock on the date of the grant, and approximately 32,000 shares of New   
Parent common stock. Assuming that the merger was completed on November 18,     
2001, the date of the announcement of the merger, and assuming that the price of
New Parent common stock would have been the same as the closing price, as       
adjusted for the exchange ratio, of Conoco common stock on such date, the value 
of 32,000 shares of New Parent common stock would have been approximately $1.7  
million as of November 18, 2001.                                                

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                                                              

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"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 the merger were completed on July 1, 2002 and the employment of Mr.
Dunham were terminated without "cause" immediately thereafter, the estimated    
cash severance that would be payable to Mr. Dunham under the agreement, plus the
value of the additional retirement benefits described above, based on certain   
assumptions and currently available information, would be approximately $13.8   
million.                                                                        

  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 fiscal 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.                                                                      

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  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, Goldman and all other executive officers of Conoco, upon a termination of
their employment by New Parent without cause, is approximately $13.8 million,   
$13.2 million, $4.5 million and $15.9 million, respectively.                    

DIRECTOR DEFERRED COMPENSATION                                              

Pursuant to the Conoco Deferred Compensation Plan for Non-Employee    
Directors, participants may elect that, upon a change in control of Conoco, at  
the director's election, all deferred amounts (including deferred restricted    
stock units) may be paid in full in a lump-sum payment within 60 days of the    
Change in Control. Stockholder approval of the merger will constitute a Change  
of Control under the Conoco Deferred Compensation Plan for Non-Employee         
Directors. Assuming that the merger is completed in July 2002, the estimated    
aggregate maximum amount of payments that would be payable to all of Conoco     
directors within 60 days following the Conoco stockholder approval of the merger
is approximately $2.1 million.                                                  

DIRECTOR SUPPLEMENTAL COMPENSATION                                          

    Pursuant to the merger agreement, Conoco may, but is not obligated to, pay
to any Conoco non-employee director immediately prior to the completion of the  
merger who does not become a New Parent director, an amount per Conoco          
non-employee director not in excess of three times the then-annual compensation 
for that Conoco non-employee director. Based on the current annual compensation 
provided by Conoco to Conoco non-employee directors, the estimated maximum      
amount that could be payable to each applicable Conoco non-employee director is 
approximately $300,000.                                                         

INDEMNIFICATION AND INSURANCE                                               

  The merger agreement includes provisions relating to indemnification and
insurance for directors, officers and employees of Conoco and Phillips. See "The
Merger Agreement -- Indemnification and Insurance."                             

INTERESTS OF PHILLIPS DIRECTORS AND MANAGEMENT IN THE MERGER                    

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

PHILLIPS STOCK OPTIONS, SARS AND STOCK-BASED COMPENSATION AWARDS            

  All unvested Phillips employee stock options, SARs, restricted stock and
restricted stock units that were outstanding on November 18, 2001, other than   
certain stock options and restricted stock units granted to James J. Mulva      
described below, will vest upon stockholder approval of the merger, which is    
considered a "change of control" for purposes of those awards. As of February   
28, 2002, the number of unvested stock options and SARs held by Mr. Mulva, J.A. 
Carrig, B.Z. Parker, J.B. Whitworth, all other                                  

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Phillips executive officers and all Phillips non-employee directors are expected
to be 462,891, 60,416, 99,966, 87,707, 328,281 and 0, respectively. The weighted
average price of unvested stock options and SARs held by Mr. Mulva, J.A. Carrig,
B.Z. Parker, J.B. Whitworth and all other Phillips executive officers are       
expected to be $55.09, $55.06, $53.38, $54.00, and $54.63, respectively.        

   In January 2002, Phillips concluded an exchange offer permitting eligible
holders of restricted stock (including executive officers and directors) to     
exchange that restricted stock for restricted stock units, and eligible holders 
of long-term incentive awards (including executive officers) to exchange those  
awards for long-term incentive awards to be settled in restricted stock units.  
Restricted stock units have the same economic consequences as restricted stock, 
but Phillips does not issue actual shares to the holders until the award finally
is settled, regardless of when the award vests, thus permitting the holders of  
restricted stock units, as opposed to restricted stock, an opportunity to avoid 
possible adverse tax consequences due to stockholder approval of the merger.    
93.4% of eligible shares of restricted stock and 86.5% of eligible long-term    
incentive awards were exchanged in this exchange offer.                         

 As of February 28, 2002, the number of shares underlying other unvested
stock-based awards and/or restricted stock units held by Messrs. Mulva, Carrig, 
Parker, Whitworth, all other Phillips executive officers and all Phillips       
non-employee directors are expected to be 301,020, 53,527, 72,378, 35,030,      
219,707 and 89,072, respectively.                                               

EMPLOYMENT AGREEMENT WITH JAMES J. MULVA                                    

     As of November 18, 2001, Phillips and New Parent entered into an employment
agreement with James J. Mulva under which Mr. Mulva will serve as Chief         
Executive Officer and President of New Parent beginning upon completion of the  
merger, and as Chairman of the New Parent Board of Directors, beginning when Mr.
Dunham ceases to hold that position. Unless either party gives a notice of      
nonrenewal, the initial three-year term of the agreement will be automatically  
extended by one year on each anniversary of the completion of the merger, but   
not beyond the end of the month in which Mr. Mulva attains age 65.              

     During his employment under this new agreement, Mr. Mulva will have general
responsibility for the management of New Parent as provided in the by-laws of   
New Parent, reporting directly to the New Parent Board of Directors, and he will
be a member of the New Parent Board of Directors. His services will be performed
at New Parent's headquarters in the Houston, Texas metropolitan area. He will   
have all the customary duties and responsibilities of a chief executive officer 
and president, and all of New Parent's executive officers will report directly  
to him or indirectly to him through another such executive officer who reports  
to him. While Mr. Dunham is serving as Chairman of the New Parent Board of      
Directors, Mr. Mulva will work with Mr. Dunham 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. Furthermore, while Mr. Dunham is Chairman of the New Parent 
Board of Directors, Messrs. Mulva and Dunham 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, Mr. Mulva will, in consultation
with Mr. Dunham, arrange the agenda for meetings of the New Parent Board of     
Directors, and will report to the New Parent Board of Directors and arrange for 
other executives and advisors to report to the New Parent Board of Directors.   
Until the later of October 1, 2004 and the second anniversary of completion of  
the merger, Mr. Mulva's duties and responsibilities may not be terminated or    
diminished, except by the affirmative vote of two-thirds of the members of the  
New Parent Board of Directors.                                                  

     While Mr. Dunham is Chairman, Mr. Mulva's compensation and benefits will be
the same as Mr. Dunham's. Mr. Mulva's base salary will be not less than his     
annual base salary as in effect immediately before completion of the merger,    
subject to annual review, and increased as necessary to be substantially        
consistent with competitive industry practice. In addition, Mr. Mulva will be   
awarded annual bonus opportunities substantially consistent with competitive    
industry practice. Mr. Mulva will also be                                       

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entitled to other compensation, benefits and perquisites to the extent          
applicable generally to other executives of New Parent. In connection with Mr.  
Mulva's relocation to Houston, Texas, Phillips will provide Mr. Mulva with the  
home sale assistance that he would have received, had he been eligible for such 
assistance under the Phillips Work Force Stabilization Plan.                    

If New Parent terminates Mr. Mulva's employment other than for death, 
disability or cause, or Mr. Mulva resigns for good reason, Mr. Mulva will       
receive a lump sum payment equal to three times the sum of his annual base      
salary and the average of the two highest annual bonuses paid or awarded to him 
for the last three full fiscal years, a pro-rata bonus for the year in which the
termination occurs, and the value of the additional pension benefits he would   
have received, had he continued to be employed by New Parent for an additional  
three years. In addition, he will be granted the stock options and other equity-
based awards to which he would have been entitled, had his employment continued 
for three additional years, all of his then-outstanding unvested equity-based   
awards will vest and the remaining term for exercise of his stock options will  
be not less than one year or, if shorter, until the date they would have        
expired, had his employment continued for three years. His welfare benefits will
continue for three years after the termination date or, if longer, until age 70,
and he will receive tax and financial planning benefits with related income tax 
gross-ups so long as he or his family hold New Parent stock options. In         
addition, if a future change of control of New Parent precedes or occurs within 
one year following the termination date, Mr. Mulva will have the right to cash  
out his equity-based compensation awards at the most favorable price paid in the
context of the change of control. Mr. Mulva's stock options and other equity-   
based awards will also vest upon termination of his employment at or after the  
expiration of the agreement.                                                    

 New Parent will pay Mr. Mulva's legal fees and expenses incurred in any
contest involving the employment agreement. If any payments or benefits that Mr.
Mulva receives are subject to the excise tax imposed under Section 4999 of the  
Internal Revenue Code, he will receive an additional payment to restore him to  
the after-tax position that he would have been in, if the excise tax had not    
been imposed. However, it is not expected that any such excise tax will be owed.

If the merger were completed on July 1, 2002 and the employment of Mr.
Mulva were terminated without "cause" immediately thereafter, the estimated cash
severance that would be payable to Mr. Mulva under the agreement, plus the value
of the additional retirement benefits described above, based on certain         
assumptions and currently available information, would be $13,686,522.          

GRANTS OF STOCK OPTIONS AND RESTRICTED STOCK UNITS TO JAMES J. MULVA  

 On November 17, 2001, Mr. Mulva was granted options to purchase 750,000
shares of Phillips common stock at $51.31 per share, which is the average of the
high and low trading prices of Phillips common stock on November 16, 2001, and  
options to purchase 750,000 shares of Phillips common stock at $64.13 per share,
which is 125% of the average of the high and low trading prices of Phillips     
common stock on November 16, 2001. These options will be converted into options 
for New Parent common stock when the merger is completed. Generally, the options
will vest one-third on completion of the merger, one-third on the first         
anniversary thereof, and one-third on the second anniversary thereof. If the    
merger is not completed, they will vest on November 17, 2007. The options will  
also vest upon a future change of control other than the merger, and as required
by his employment agreement in the case of certain terminations of employment.  

    Mr. Mulva was also granted, on November 17, 2001, 250,000 restricted stock
units based on shares of Phillips common stock, which will be converted into    
units based on New Parent common stock when the merger is completed. Additional 
restricted stock units representing a number of shares having a fair market     
value equal to the value of the dividends that would have been paid on the units
if they had been actual shares will be credited to Mr. Mulva under the award    
when dividends are paid on the Phillips common stock or, after the merger, New  
Parent common stock. These 250,000 restricted stock units represent the right to
receive shares of Phillips common stock that had a value at the time of grant of
$12,827,500 based upon the $51.31 average of the high and low trading prices of 
Phillips common stock on November 16, 2001. As set forth below, because the     
restricted stock units are not scheduled to vest or to be paid to               

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Mr. Mulva until some point in the future, it is not possible to determine the   
actual value that Mr. Mulva will receive as a result of this grant.             

The restricted stock units will be forfeited if the merger is not     
completed. If the merger is completed, the restricted stock units will vest on  
June 19, 2006. The units will also vest upon a future change of control other   
than the merger, upon his death or disability, and as required by his employment
agreement in the case of certain terminations of employment. When the units     
vest, Mr. Mulva will be paid the value of the units, unless he has previously   
elected to defer the payments under the Phillips Key Employee Deferred          
Compensation Plan.                                                              

EXECUTIVE SEVERANCE PLAN                                                        

Phillips maintains an Executive Severance Plan that provides for the  
payment of certain severance benefits to participants, including Phillips'      
executive officers, in the event of a termination of a participant's employment 
within two years after a change in control of Phillips either (1) by Phillips,  
other than for death, disability, transfer to another employer, retirement,     
cause, as a result of certain sales of subsidiaries or divisions, or (2) by the 
participant, within 90 days of an event constituting good reason. Stockholder   
approval of the merger will constitute a change in control of Phillips for      
purposes of this severance plan. Upon completion of the merger, the plan will be
assumed by New Parent.                                                          

 "Group one" participants in the plan, which include Phillips' Executive
Vice Presidents and Senior Vice Presidents and, until completion of the merger, 
Mr. Mulva, receive severance benefits based on three years' pay, and "group two"
participants, including Phillips' Vice Presidents, receive benefits based on two
years' pay. The severance benefits under the severance plan consist of:         

 - a lump-sum payment of three or two times the sum of the participant's
    base salary and the greater of (1) the bonus earned by the participant
     for the last fiscal year before the termination date or (2) the highest
target award for the calendar year of the termination date; and   

 - continuation of medical, dental and prescription drug coverage for 18
months after the termination date.                                

The participant will also be credited with additional years of service
under Phillips' retirement plans based upon the number of years represented by  
the above lump-sum payment, and up to one year's worth of such lump-sum payment 
will be treated as pensionable earnings.                                        

  In addition, in the event that a participant institutes any legal action
seeking to obtain or enforce any right or benefit provided by the severance     
plan, the participant is entitled to be reimbursed for all reasonable costs and 
expenses relating to such legal action, including any legal fees and expenses   
incurred by the participant, unless a court makes a determination that the      
participant's position was frivolous. Finally, if the participant relocates in  
order to secure new employment, he or she will be entitled to the home sale     
assistance benefits provided under the Phillips Work Force Stabilization Plan.  

    If any payments or benefits that a participant receives are subject to the
excise tax imposed under Section 4999 of the Internal Revenue Code, the         
participant will generally receive an additional payment to restore such        
participant to the after-tax position that the participant would have been in if
the excise tax had not been imposed, except that, if the payments or benefits   
that the participant receives do not exceed 110% of the maximum amount that the 
participant is permitted to receive without being subjected to the golden       
parachute excise taxes, no such additional payment will be made, and the amounts
payable under the severance plan will be reduced to the maximum amount          
permissible to avoid imposition of the tax. However, it is not expected that any
such excise tax will be owed.                                                   

     If the merger were completed on July 1, 2002 and the employment of Phillips
executive officers other than Mr. Mulva were terminated without cause           
immediately thereafter, the estimated cash severance that would be payable under
the severance plan, plus the value of the additional retirement benefits        
described above, based on certain assumptions and currently available           
information, to Messrs. Carrig, Parker, Whitworth, and all other Phillips       
executive officers would be $2,867,013, $3,954,556, $3,750,381, and $15,877,948,
respectively. After the completion of the merger, Mr. Mulva will not be eligible
to receive                                                                      

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any severance benefits under the severance plan because it will be superseded by
his new employment agreement with Phillips and New Parent, described above.     

INDEMNIFICATION AND INSURANCE                                               

  The merger agreement includes provisions relating to indemnification and
insurance for directors, officers and employees of Conoco and Phillips. See "The
Merger Agreement -- Indemnification and Insurance" on page 78.                  

LISTING OF NEW PARENT CAPITAL STOCK                                             

  It is a condition to the completion of the merger that New Parent common
stock issuable to Conoco and Phillips stockholders pursuant to the merger       
agreement be approved for listing on the New York Stock Exchange.               

DIVIDENDS                                                                       

Pursuant to the merger agreement, each of Conoco and Phillips are     
prohibited from making any changes to their dividend policies prior to the      
completion of the merger without the other's consent. The most recent quarterly 
dividend declared by Conoco was $0.19 per share payable on December 10, 2001.   
Conoco's current dividend is $0.76 per share of Conoco common stock on an annual
basis. The most recent quarterly dividend declared by Phillips was $0.36 per    
share payable on December 3, 2001. Phillips' current dividend is $1.44 per share
of Phillips common stock on an annual basis.                                    

     We expect that, after the completion of the merger, New Parent will adopt a
dividend policy that is competitive with comparable companies in the energy     
industry. The payment of dividends by New Parent, however, will be subject to   
approval and declaration by the New Parent Board of Directors, and will depend  
on a variety of factors, including business, financial and regulatory           
considerations.                                                                 

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER                     

The following discussion summarizes the opinions of Cravath, Swaine & 
Moore, counsel to Conoco, and Wachtell, Lipton, Rosen & Katz, counsel to        
Phillips, as to the material U.S. federal income tax consequences of the merger 
to holders of Conoco common stock and holders of Phillips common stock, which   
opinions are attached as Exhibits 8.1 and 8.2 to the registration statement on  
Form S-4 of which this joint proxy statement/prospectus forms part. See "Where  
You Can Find More Information" on page 125. This summary applies only to holders
of Conoco common stock or Phillips common stock that are U.S. holders.          

For purposes of this discussion, a U.S. holder means:                 

- a citizen or resident of the United States,                         

- a corporation or other entity taxable as a corporation created or   
   organized under the laws of the United States or any of its political
subdivisions,                                                     

     - a trust, if a U.S. court is able to exercise primary supervision over the
   administration of the trust and one or more U.S. fiduciaries have the
authority to control all substantial decisions of the trust, or   

- an estate that is subject to U.S. federal income tax on its income, 
regardless of its source.                                         

This discussion is based upon the Internal Revenue Code, Treasury     
regulations, administrative rulings and judicial decisions currently in effect, 
all of which are subject to change, possibly with retroactive effect. The       
discussion applies only to Conoco stockholders that hold their Conoco common    
stock and Phillips stockholders that hold their Phillips common stock as a      
capital asset within the meaning of Section 1221 of the Internal Revenue Code.  
Further, the discussion does not address all aspects of U.S. federal income     
taxation that may be relevant to a particular stockholder in light of his, her  
or its personal                                                                 

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investment circumstances or to stockholders subject to special treatment under  
the U.S. federal income tax laws, including:                                    

- insurance companies,                                                

- tax-exempt organizations,                                           

- dealers in securities or foreign currency,                          

- banks or trusts,                                                    

- financial institutions,                                             

- mutual funds,                                                       

   - persons that hold their Conoco common stock or Phillips common stock as
      part of a straddle, a hedge against currency risk or a constructive sale
or conversion transaction,                                        

- persons that have a functional currency other than the U.S. dollar, 

- investors in pass-through entities,                                 

  - stockholders who acquired their Conoco common stock or Phillips common
    stock through the exercise of options, or otherwise as compensation or
through a tax-qualified retirement plan, or                       

 - holders of options granted under any Conoco or Phillips benefit plan.

  THE SUMMARY DOES NOT ADDRESS ANY NON-INCOME TAX OR ANY FOREIGN, STATE OR
LOCAL TAX CONSEQUENCES OF THE MERGER. THE SUMMARY DOES NOT ADDRESS THE TAX      
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.                                                                

     Cravath, Swaine & Moore, counsel to Conoco, has delivered an opinion, dated
as of the date hereof, to Conoco as to the U.S. federal income tax consequences 
to Conoco stockholders of the transaction. The Cravath tax opinion is subject to
qualifications and is based on currently applicable law, certain factual        
representations made by New Parent, Conoco and Phillips and certain assumptions.
The Cravath tax opinion is attached as Exhibit 8.1 to the Registration Statement
on Form S-4, filed with the Securities and Exchange Commission, which includes  
this joint proxy statement/prospectus. Conoco stockholders should read the      
Cravath tax opinion in its entirety. The conclusions reached in the Cravath tax 
opinion are, in general:                                                        

- the merger of C 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,     

     - no gain or loss will be recognized by Conoco stockholders on the exchange
of Conoco common stock solely 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 will be equal to the aggregate
     adjusted basis of those stockholders' Conoco common stock 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               

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     - the holding period of New Parent common stock received in the merger by a
     Conoco stockholder, including any New Parent fractional interest deemed
received in the merger, will include the holding period of the    
    stockholder's Conoco common stock 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.                                 

Wachtell, Lipton, Rosen & Katz, counsel to Phillips, has delivered an 
opinion, dated as of the date hereof, to Phillips as to the U.S. federal income 
tax consequences to Phillips stockholders of the transaction. The Wachtell tax  
opinion is subject to qualifications and is based on currently applicable law,  
certain factual representations made by New Parent, Conoco and Phillips and     
certain assumptions. The Wachtell tax opinion is attached as Exhibit 8.2 to the 
Registration Statement on Form S-4, filed with the Securities and Exchange      
Commission, which includes this joint proxy statement/prospectus. Phillips      
stockholders should read the Wachtell tax opinion in its entirety. The          
conclusions reached in the Wachtell tax opinion are, in general:                

 - the merger of P 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,     

- no gain or loss will be recognized by Phillips stockholders on the  
   exchange of Phillips common stock solely for New Parent common stock in
the transaction,                                                    

   - the aggregate adjusted basis of the New Parent common stock received in
   the transaction by Phillips stockholders will be equal to the aggregate
     adjusted basis of those stockholders' Phillips common stock exchanged for
the New Parent common stock, and                                    

     - the holding period of New Parent common stock received in the merger by a
     Phillips stockholder will include the holding period of the stockholder's
Phillips common stock exchanged for that New Parent common stock.   

   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 C 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 P 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 New
Parent, Conoco and Phillips. Each of Cravath, Swaine & Moore and Wachtell,      
Lipton, Rosen & Katz presently intend to deliver to Conoco and Phillips,        
respectively, on the closing date of the mergers an opinion that satisfies the  
requirements set forth in this paragraph. In the unlikely event that Conoco or  
Phillips agrees to waive the condition relating to the receipt of its respective
tax opinion, the company doing so would circulate revised materials to its      
stockholders and would resolicit                                                

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proxies from its stockholders if there are any material adverse changes in the  
U.S. federal income tax consequences to its stockholders.                       

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 filed notification and report   
forms under the HSR Act with the FTC and the Antitrust Division on December 17, 
2001. On January 16, 2002, the FTC made a request for additional information and
documentary material, thereby extending the statutory waiting period until      
thirty days after Conoco and Phillips substantially comply with this request,   
unless the waiting period is terminated earlier or extended with the consent of 
Conoco and Phillips. Conoco and Phillips are continuing to work closely with the
FTC staff on their request.                                                     

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 filed a merger notification   
with the European Union antitrust authorities on February 5, 2002.              

    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    

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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.                                                  

The Competition Act (Canada) provides for the substantive review and  
regulation of mergers in Canada and establishes a regime for pre-merger         
notification and review of merger transactions that exceed certain thresholds.  
Conoco and Phillips filed an application for an Advance Ruling Certificate, or  
ARC, with the Commissioner of Competition under the Competition Act (Canada) on 
January 31, 2002. The Commissioner will conduct an investigation of the merger. 
If the Commissioner determines that the merger will not substantially lessen    
competition in any relevant market in Canada, he will issue an ARC. If the      
Commissioner issues an ARC and the merger is completed within one year from the 
date the ARC was issued, the Commissioner is prevented by the Competition Act   
from challenging the merger before the Competition Tribunal (an administrative  
body that has exclusive jurisdiction to review mergers under the Competition    
Act) solely on the basis of information that is the same or substantially the   
same as the information on the basis of which the ARC was issued. The           
Commissioner may instead issue a no-action letter stating that he does not      
intend to challenge the merger at that time; in this case, the Commissioner     
retains the authority to challenge the merger for three years after completion  
of the merger should circumstances warrant. The Commissioner may also, if he    
concludes that a merger would substantially lessen competition in any relevant  
market in Canada, apply to the Competition Tribunal to enjoin the completion of 
the merger on an interim or permanent basis. In addition to a Canadian          
competition filing, Conoco and Phillips 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 and have made or will make          
regulatory filings in those jurisdictions.                                      

  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                        

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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. The time   
for the defendants to answer or move with respect to the complaints has not yet 
elapsed. Each of Conoco and Phillips intends to defend against these lawsuits   
vigorously.                                                                     

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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.                                              

THE MERGER                                                                      

   Pursuant to the merger agreement, C Merger Corp. will merge with and into
Conoco and P 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, C Merger Corp. or P   
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, C Merger Corp. or P 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, 
Mellon Investor Services LLC, 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                                                             

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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;              

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- 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;                                          

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- 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.          

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EFFECT ON AWARDS OUTSTANDING UNDER STOCK PLANS                                  

   Pursuant to the merger agreement, each stock option and other stock-based
award of Conoco and Phillips will be converted into a stock option to acquire,  
or right in respect of, the same number of shares of New Parent common stock as 
the holder of that stock option or stock-based award would have been entitled to
receive pursuant to the merger had the holder exercised that stock option or    
stock-based award immediately prior to the completion of the merger. The        
exercise price or base price of each Conoco stock option and Conoco stock-based 
award that is converted into a New Parent stock option and New Parent           
stock-based award will be equal to the exercise price or base price of the      
applicable Conoco stock option or Conoco stock-based award divided by 0.4677.   
The exercise price or base price of each Phillips stock option and Phillips     
stock-based award that is converted into a New Parent stock option and New      
Parent stock-based award will be equal to the exercise price or base price of   
the applicable Phillips stock option or Phillips stock-based award. The terms   
and conditions of the New Parent options and stock-based awards will otherwise  
be the same as were applicable under the stock option or stock-based award of   
Conoco or Phillips, as the case may be, but taking into account any changes,    
including acceleration, provided for in the applicable stock plan of Conoco or  
Phillips, as the case may be, in any applicable award agreement or as a result  
of the merger agreement or the transactions contemplated by the merger          
agreement. All dividend equivalents credited to the account of each holder of a 
stock-based award of Conoco or Phillips as of the completion of the merger will 
remain credited to that holder's account immediately following the completion of
the merger, subject to adjustment in the same manner as provided above for the  
adjustment of stock-based awards of Conoco and Phillips.                        

All Conoco stock options, Phillips stock options and other stock-based
awards, granted, or committed to be granted, after the merger agreement was     
signed shall be on terms consistent with past practice, except that no reload   
rights may be granted, and the vesting, exercisability or lapse of restrictions 
with respect to any Conoco stock option, Phillips stock option or other         
stock-based award will not accelerate as a result of the approval or            
consummation of any transaction contemplated by the merger agreement.           

"NO SOLICITATION" COVENANT                                                      

Conoco, Phillips, their respective subsidiaries, and the directors and
officers of Conoco, Phillips and their respective subsidiaries, will not, and   
Conoco and Phillips must use their reasonable best efforts to cause their and   
their subsidiaries' employees, agents and representatives not to:               

     - initiate, solicit, encourage or knowingly facilitate any inquiries or the
      making of any proposal or offer with respect to an acquisition proposal,

     - have any discussions with or provide any confidential information or data
    to a third party relating to an acquisition proposal, or engage in any
      negotiations regarding any acquisition proposal, or knowingly facilitate
 any effort or attempt to make or implement an acquisition proposal,

  - approve or recommend, or propose publicly to approve or recommend, any
acquisition proposal or                                           

   - 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 or other similar agreement related to
any acquisition proposal.                                         

  Notwithstanding the foregoing, each of the Conoco Board of Directors and
the Phillips Board of Directors is permitted to: (1) change its recommendation  
to its stockholders or (2) engage in discussions or negotiations with, or       
provide any information to, a third party in response to an unsolicited bona    
fide written acquisition proposal for the company, if:                          

- the vote of the company's stockholders on the adoption of the merger
agreement has not been taken;                                     

 - in the case of clause (1) above, the company's board of directors, in
good faith, concludes that the acquisition proposal is a superior 
proposal, and, in the case of clause (2) above, the company's     

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   board of directors concludes in good faith that there is a reasonable
likelihood that an acquisition proposal would lead to a superior  
proposal;                                                         

- the company's board of directors, after consultation with outside   
      counsel, determines in good faith that there is a reasonable probability
       that failure to take this action would violate its fiduciary obligations;

- prior to providing any information or data to the third party, the  
      company executes a confidentiality agreement with the third party having
provisions that are at least as restrictive as the confidentiality
       agreement, dated as of November 6, 2001, between Conoco and Phillips; and

   - prior to taking any action in relation to the acquisition proposal, the
   company promptly notifies the other of the existence and the terms of
such proposal or inquiry, including the name of the third party.  

Additionally, notwithstanding the no solicitation covenant, the Conoco
Board of Directors and the Phillips Board of Directors are permitted to comply  
with applicable law (including Rule 14d-9 and Rule 14e-2 of the Securities      
Exchange Act of 1934, as amended).                                              

"Acquisition proposal" means, with respect to Conoco and Phillips, any
inquiry, proposal or offer with respect to (1) a merger, reorganization, share  
exchange, consolidation, business combination, liquidation, or similar          
transaction, (2) any purchase or sale of 20% or more of the consolidated assets 
(including stock of its subsidiaries) of such company and its subsidiaries,     
taken as a whole, or (3) any purchase or sale of, or tender or exchange offer   
for, its equity securities that, if consummated, would result in a third party  
beneficially owning securities representing 20% or more of its total voting     
power (or of the surviving parent entity in the transaction).                   

     "Superior proposal" means, with respect to Conoco and Phillips, a bona fide
proposal made by a third party that is (1) for an acquisition proposal (except  
that the references to 20% shall be 50%) involving such company and (2) is on   
terms which the Conoco Board of Directors or the Phillips Board of Directors, as
the case may be, in good faith concludes (following advice of its financial     
advisors and outside counsel) would result in a more favorable transaction to   
Conoco stockholders or Phillips stockholders, as the case may be, from a        
financial point of view and is reasonably capable of being completed.           

TIMING OF CLOSING                                                               

     The closing will occur on the first business day following the satisfaction
or waiver of the conditions set forth in the merger agreement, unless Conoco and
Phillips agree to a different date or time.                                     

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

CONDITIONS TO THE COMPLETION OF THE MERGER                                      

Each of Conoco's and Phillips' obligations to complete the merger is  
subject to the satisfaction or waiver of specified conditions before completion 
of the merger, including the following:                                         

- the adoption of the merger agreement by the affirmative vote of the 
    holders of a majority of the voting power of the outstanding shares of
Conoco common stock and Phillips common stock;                    

     - the absence of any law, order or injunction prohibiting completion of the
merger;                                                           

     - the expiration or termination of the applicable waiting periods under the
HSR Act;                                                          

- the approval of the merger by the European Commission and Canadian  
governmental entities;                                            

    - the receipt of all other governmental and regulatory consents, approvals
      and authorizations required to complete the merger, unless not obtaining
    those consents or approvals would not reasonably be expected to have a
      material adverse effect on New Parent after giving effect to the merger;

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   - the approval for listing, by the New York Stock Exchange, of the shares
      of New Parent common stock to be issued, or to be reserved for issuance,
    in connection with the merger, subject to official notice of issuance;
and                                                               

  - the declaration of effectiveness of the registration statement on Form
      S-4, of which this joint proxy statement/prospectus forms a part, by the
      Securities and Exchange Commission, and the absence of any stop order or
threatened or pending proceedings seeking a stop order.           

   Conoco's obligation to complete the merger is subject to the satisfaction
or waiver of the following additional conditions before completion of the       
merger:                                                                         

- Phillips' representations and warranties contained in the merger    
       agreement that are qualified as to materiality or material adverse effect
must be true and correct and those material representations and   
  warranties not so qualified must be true and correct in all material
respects, as of the date of completion of the merger, except for  
     representations and warranties that address matters as of another date,
which must be true and correct as of that other date,             

- Phillips must have:                                                 

           - performed or complied with all agreements and covenants required to
             be performed by it under the merger agreement that are qualified as
to materiality or material adverse effect, and        

     - performed or complied in all material respects with all other
          material agreements and covenants required to be performed by it
   under the merger agreement that are not so qualified, and

- Conoco must 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 merger of C 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.                                            

    Phillips' obligation to complete the merger is subject to the satisfaction
or waiver of the following additional conditions before completion of the       
merger:                                                                         

     - Conoco's representations and warranties contained in the merger agreement
     that are qualified as to materiality or material adverse effect must be
       true and correct and those material representations and warranties not so
    qualified must be true and correct in all material respects, as of the
date of completion of the merger, except for representations and  
    warranties that address matters as of another date, which must be true
and correct as of that other date,                                

- Conoco must have:                                                   

        - performed or complied with all agreements and covenants required to be
       performed by it under the merger agreement that are qualified as to
materiality of material adverse effect, and                 

        - performed or complied in all material respects with all other material
     agreements and covenants required to be performed by it under the
merger agreement that are not so qualified, and             

    - Phillips must 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 merger of P 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.                                            

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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                                

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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" on page 76; 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" on page 76; 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" on page 76, 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.                         

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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, 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" 
on page 80.                                                                     

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.                              

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    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.                              

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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" on page 55 and "The       
Merger -- Interests of Phillips Directors and Management in the                 
Merger -- Employment Agreement with James J. Mulva" on page 60. 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 -- Interests of
Conoco Directors and Management in the Merger" on page 54.                      

 Neither Conoco nor Phillips has yet determined which individuals, other
than Messrs. Dunham and Mulva, it will nominate to serve as directors on the New
Parent Board of Directors.                                                      

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                           

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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.                                                                       

MANAGEMENT                                                                      

     Upon completion of the merger, Mr. Dunham will serve as Chairman of the New
Parent Board of Directors and Mr. Mulva will serve as President and Chief       
Executive Officer of New Parent. As described in "The Merger -- Interests of    
Conoco Directors and Management in the Merger" on page 54 and "The              
Merger -- Interests of Phillips Directors and Management in the Merger" on page 
59, New Parent has entered into an employment agreement with each of Mr. Dunham 
and Mr. Mulva that will become effective upon completion of the merger. Under   
Mr. Dunham's new employment agreement, Mr. Dunham will serve as the Chairman of 
the New Parent Board of Directors until the later of (1) October 1, 2004, and   
(2) the second anniversary of the completion of the merger. Upon Mr. Dunham's   
retirement, Mr. Mulva will, in accordance with his employment agreement, succeed
Mr. Dunham as Chairman of the New Parent Board of Directors.                    

   As Chairman of the New Parent Board of Directors, Mr. Dunham will preside
at meetings of the New Parent Board of Directors and of New Parent stockholders.
Mr. Dunham will work with Mr. Mulva on external stakeholder relations           
(community, state, U.S. federal government and foreign government), business    
development (growth) initiatives, and the creation of an outstanding and        
cohesive New Parent Board of Directors; and will have other executive           
responsibilities as he and Mr. Mulva may agree. Mr. Dunham and Mr. Mulva 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. With respect to all other matters, Mr. Mulva    
will, in consultation with Mr. Dunham, arrange the agenda for meetings of the   
New Parent Board of Directors, and will report to the New Parent Board of       
Directors and arrange for other executives and advisors to report to the New    
Parent Board of Directors.                                                      

 Mr. Mulva, as President and Chief Executive Officer of New Parent, will
have general responsibility for the management of New Parent, reporting directly
to the New Parent Board of Directors. Mr. Mulva will have all the customary     
duties and responsibilities of a chief executive officer, and all of the New    
Parent executive officers will report directly to him or indirectly to him      
through another New Parent executive officer who reports to him.                

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF CONOCO        

The following table provides, as of February 6, 2002, information with
respect to (1) persons that are known to Conoco to beneficially own more than   
five percent of Conoco common stock and (2) the beneficial ownership of Conoco  
common stock by the following directors, nominees and executive officers of     
Conoco.                                                                         

                                                        [Enlarge/Download Table]

                                                                  COMMON STOCK       
                                                             ----------------------- 
                                                              NUMBER OF     PERCENT  
NAME AND ADDRESS                                             SHARES(1)(2)   OF CLASS 
----------------                                             ------------   -------- 
                                                                                     
FMR Corp. (Fidelity Investments)(3).........................  77,415,370        12.4%
  82 Devonshire Street                                                               
  New York, New York 10004                                                           
Richard A. Auchinleck.......................................      12,135           * 
Archie W. Dunham(4).........................................   6,674,576         1.1 
Kenneth M. Duberstein.......................................      17,612           * 
Charles C. Krulak...........................................      16,502           * 
Ruth R. Harkin(5)...........................................      22,084           * 
Frank A. McPherson..........................................      23,963           * 
William K. Reilly...........................................      24,454           * 
William R. Rhodes...........................................      64,034           * 
A.R. Sanchez, Jr. ..........................................      13,795           * 
Franklin A. Thomas..........................................      21,562           * 
Gary W. Edwards.............................................   2,180,614           * 
Robert E. McKee III(6)......................................   1,999,457           * 
Jimmy W. Nokes(7)...........................................   1,162,857           * 
Robert W. Goldman(8)........................................     675,691           * 
Rick A. Harrington..........................................     716,479           * 
Directors and executive officers as a group (18 persons)....  15,138,537         2.4 

---------------                                                                 
*  Less than one percent.                                                     

(1) Includes restricted or deferred stock units credited under the 1998 Stock   
and Performance Incentive Plan and the Deferred Compensation Plan for   
  Non-employee Directors, the following number of which may be voted or sold
  only upon passage of time: Mr. Auchinleck -- 8,135; Mr. Dunham -- 538,314;
Mr. Duberstein -- 16,182; Mr. Krulak -- 15,072; Ms. Harkin -- 6,308; Mr.
McPherson -- 7,510; Mr. Reilly -- 11,728; Mr. Rhodes -- 6,308; Mr.      
Sanchez -- 12,365; Mr. Thomas -- 8,835; Mr. Edwards -- 123,059; Mr.     
McKee -- 34,150; Mr. Nokes -- 53,139 and Mr. Harrington -- 10,627.      

(2) Includes beneficial ownership of the following number of shares of common   
    stock which may be acquired within 60 days of February 4, 2002 through stock
options awarded under compensation plans: Mr. Dunham -- 5,898,330; Mr.  
Duberstein -- 1,430; Mr. Krulak -- 1,430; Ms. Harkin -- 8,264; Mr.      
McPherson -- 8,264; Mr. Reilly -- 8,264; Mr. Rhodes -- 8,264; Mr.       
Sanchez -- 1,430; Mr. Thomas -- 8,264; Mr. Edwards -- 1,880,691; Mr.    
  McKee -- 1,839,682; Mr. Nokes -- 1,052,528; Mr. Goldman -- 632,153 and Mr.
Harrington -- 686,376.                                                  

(3) Based on disclosure provided by FMR Corp. directly to Conoco Inc. on        
    February 5, 2002, on behalf of itself and certain of its direct and indirect
   subsidiaries and Fidelity International Limited on behalf of its direct and
indirect subsidiaries (collectively "Fidelity Investments"), Fidelity   
    indirectly held 77,415,370 shares or 12.38% of shares of Conoco common stock
outstanding as of December 31, 2001.                                    

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(4) Includes 50,556 shares of Conoco common stock held in Dunham Management     
Trust, a revocable grantor trust.                                       

(5) Includes 50 shares of common stock owned by Ms. Harkin's daughter.          

(6) Includes 80,022 shares of common stock owned by the McKee Family Trust and  
1,182 shares of common stock owned by Mr. McKee's son.                  

(7) Includes 413 shares of common stock owned by Mr. Nokes's daughter.          

(8) Includes 1,471 shares of common stock owned by Mr. Goldman's wife and 245   
shares of common stock owned by Mr. Goldman's son.                      

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF PHILLIPS      

The following tables provide, as of February 6, 2002, information with
respect to (1) persons who are known to Phillips to beneficially own more than  
five percent of Phillips common stock and (2) the beneficial ownership of       
Phillips common stock by the following current directors, nominees and          
executives officers of Phillips.                                                

                                                        [Enlarge/Download Table]

                                                       SHARES OF COMMON STOCK  PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER                     BENEFICIALLY OWNED      CLASS   
------------------------------------                   ----------------------  ----------
                                                                                         
Vanguard Fiduciary Trust Company(1)...................       35,488,855           8.7%   
AXA Financial, Inc.(2)................................       26,380,491           6.4    

---------------                                                                 

(1) As of February 6, 2002, Vanguard as Trustee held 35,488,855 shares under the
 Phillips' Thrift Plan, Long-Term Stock Savings Plan ("LTSSP"), Retirement
    Savings Plan and Tosco Corporation's Capital Accumulation Plan ("Tosco CAP")
    (together the "Plans") with shared voting power. Vanguard and the Plans have
    disclaimed beneficial ownership of the shares held by Vanguard as Trustee of
the Plans. Vanguard votes shares held by the Plans which represent the  
allocated interests of participants in the manner directed by individual
   participants. Employee participants in the Thrift Plan, LTSSP and Tosco CAP
 are appointed by Phillips and Tosco as fiduciaries entitled to direct the
  Trustee as to how to vote allocated shares which are not directed in these
  plans and unallocated shares held by the Thrift Plan, LTSSP and Tosco CAP.
Such shares are allocated pro rata among employee participants accepting
   their fiduciary appointment and are voted by the Trustee as directed by the
employee fiduciaries. The Trustee votes non-directed shares of the      
Retirement Savings Plan at its discretion. The Trustee will vote other  
shares held by the Plans at its discretion only if required to do so by 
ERISA.                                                                  

  Vanguard is also the Trustee and record holder of the 27,556,573 shares in
the Compensation and Benefits Trust ("CBT"), without any voting power.  
  Vanguard has disclaimed beneficial ownership of such shares. As Trustee of
 the CBT, Vanguard will vote shares in the CBT only in accordance with the
pro rata directions of eligible domestic employees and the trustees of  
certain international stock plans of Phillips. Trust agreements for the 
Plans and CBT each provide that all voting directions of individual     
employees received by the Trustee will be held in confidence and not be 
disclosed to any person, including Phillips.                            

(2) On April 10, 2001, AXA Financial, Inc. ("Alliance"), the parent of Alliance 
Capital Management L.P. which acquired the investment advisory assets of
Sanford C. Bernstein & Co., Inc., reported that it exercised sole voting
power over 13,583,791 shares, shared voting power over 3,115,065 shares,
  sole dispositive power over 26,273,291 shares and shared dispositive power
over 107,200 shares, as of March 31, 2001. According to the Schedule 13G
  filed by Alliance with the Securities and Exchange Commission, such shares
equal 10.3% of the outstanding shares of Phillips common stock. However,
    when shares held as of February 6, 2002, by the CBT and shares issued in the
Tosco merger are included, shares held by Alliance equal only 6.4% of   
Phillips' outstanding shares.                                           

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Beneficial Ownership of Directors and Management of Phillips                    

                                                        [Enlarge/Download Table]

                                                         AMOUNT AND NATURE OF                   
                                                         BENEFICIAL OWNERSHIP                   
                                                        ----------------------                  
NAME OF BENEFICIAL OWNER                                DIRECT (1)    INDIRECT  PERCENT OF CLASS
------------------------                                -----------   --------  ----------------
                                                                                                
DIRECTORS (3)                                                                                   
Norman R. Augustine....................................      11,262                      *      
David L. Boren.........................................       6,373                      *      
Robert E. Chappell, Jr.................................      12,825                      *      
Robert M. Devlin.......................................       4,262                      *      
Larry D. Horner........................................       7,962                      *      
J.J. Mulva.............................................     560,564                      *      
J. Stapleton Roy.......................................       1,050                      *      
Randall L. Tobias......................................       9,062                      *      
Victoria J. Tschinkel..................................       8,136                      *      
Kathryn C. Turner......................................       5,168                      *      

EXECUTIVE OFFICERS                                                                              
E.L. Batchelder........................................      23,711                      *      
Rand C. Berney.........................................      41,074                      *      
John A. Carrig.........................................     102,071                      *      
Dodd W. DeCamp.........................................       5,476                      *      
John E. Lowe...........................................      29,855                      *      
Kevin O. Meyers........................................       9,463                      *      
J.C. Mihm..............................................     134,453      2,142           *      
M.J. Panatier..........................................     113,399                      *      
B.Z. Parker............................................     166,768                      *      
R.A. Ridge.............................................      67,109                      *      
J. Bryan Whitworth.....................................     143,360                      *      
All directors and executive officers as a group (21 in                                          
  group)...............................................   1,463,403      2,142        0.36%     

---------------                                                                 

*  Less than 1%                                                               

(1) Direct ownership includes shares that may be acquired under Phillips stock  
options within 60 days of the record date.                              

(2)Pursuant to the exchange offer described on page 60, the following directors 
and officers exchanged a total of 479,435 shares of restricted stock for  
 restricted stock units, as follows: Norman R. Augustine -- 14,808; David L.
   Boren -- 8,134; Robert E. Chappell, Jr. -- 10,364; Larry D. Horner -- 15,174;
J.J. Mulva -- 183,868; Randall L. Tobias -- 11,801; Victoria J.           
 Tschinkel -- 12,254; Kathryn C. Turner -- 8,191; E.L. Batchelder -- 12,629;
Rand C. Berney -- 5,460; John A. Carrig -- 38,815; John E. Lowe -- 25,215;
   Kevin E. Meyers -- 23,734; J.C. Mihm -- 20,255; M.J. Panatier -- 16,112; B.Z.
Parker -- 42,244; R.A. Ridge -- 19,596 and J. Bryan Whitworth -- 10,781.  

(3) The shares stated as being beneficially owned by each director do not       
   include shares beneficially owned by the other companies on whose boards of
   directors the directors serve. Each director disclaims beneficial ownership
of all such shares.                                                     

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COMPARATIVE STOCK PRICES AND DIVIDENDS

  Conoco common stock is listed for trading on the New York Stock Exchange
under the symbol "COC" and Phillips common stock is listed for trading on the   
New York Stock Exchange under the symbol "P." The following table sets forth,   
for the periods indicated, dividends and the high and low sales prices per share
of Conoco common stock and Phillips common stock on the New York Stock Exchange 
Composite Transaction reporting system. From Conoco's initial public offering on
October 27, 1998, until October 5, 2001, when Conoco eliminated its dual capital
structure, Conoco had outstanding shares of Conoco Class A and Class B common   
stock, which were listed on the New York Stock Exchange under the symbols       
"COC.A" and "COC.B," respectively. For the periods before October 5, 2001, the  
following table sets forth the data for the Conoco Class B common stock, which  
represented over 70% of the dual-class common stock then outstanding and over   
90% of its voting power and Conoco Class A common stock. For current price      
information, you should consult publicly available sources.                     

                                                        [Enlarge/Download Table]

                                             CONOCO CLASS A                CONOCO CLASS B        
                                              COMMON STOCK                  COMMON STOCK         
                                       ---------------------------   --------------------------- 
                                                         DIVIDENDS                     DIVIDENDS 
CALENDAR PERIOD                         HIGH     LOW       PAID       HIGH     LOW       PAID    
---------------                        ------   ------   ---------   ------   ------   --------- 
                                                                                                 
1998                                                                                             
  Fourth Quarter...................... $25.75    19.38                                           
1999                                                                                             
  First Quarter.......................  25.44    19.38      0.14                                 
  Second Quarter......................  31.25    22.94      0.19                                 
  Third Quarter.......................  29.25    25.31      0.19      29.38    24.50      0.19   
  Fourth Quarter......................  29.06    20.94      0.19      28.94    20.75      0.19   
2000                                                                                             
  First Quarter.......................  27.88    18.81      0.19      28.75    19.00      0.19   
  Second Quarter......................  27.06    22.00      0.19      29.00    23.25      0.19   
  Third Quarter.......................  27.63    21.38      0.19      28.75    22.31      0.19   
  Fourth Quarter......................  29.56    24.00      0.19      29.69    24.69      0.19   
2001                                                                                             
  First Quarter.......................  30.79    25.75      0.19      31.10    26.00      0.19   
  Second Quarter......................  32.99    26.30      0.19      33.35    26.75      0.19   
  Third Quarter.......................  31.60    23.65      0.19      32.00    23.77      0.19   
  Fourth Quarter(1)                                                                              
     To October 5.....................  26.65    24.60        --(2)   26.57    24.61        --(2)

                                           CONOCO COMMON STOCK                                   
                                       ---------------------------                               
                                                         DIVIDENDS                               
                                        HIGH     LOW       PAID                                  
                                       ------   ------   ---------                               
                                                                                                 
     From October 6 to December 31....  28.80    23.97      0.19(2)                              
2002                                                                                             
  First Quarter (through February 6,                                                             
     2002)............................  29.33    27.22      0.19(3)                              

---------------                                                                 

(1) Conoco eliminated its dual capital structures on October 5, 2001.           

(2) A dividend of $0.19 per share of Conoco common stock was paid on December   
10, 2001 to holders of record on November 10, 2001.                     

(3)A dividend of $0.19 per share of Conoco common stock was declared on January 
24, 2002, payable on March 10, 2002 to holders of record on February 10,  
2002.                                                                     

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                                                                PHILLIPS COMMON STOCK   
                                                             ---------------------------
                                                                               DIVIDENDS
CALENDAR PERIOD                                               HIGH     LOW       PAID   
---------------                                              ------   ------   ---------
                                                                                        
1998                                                                                    
  First Quarter............................................. $53.25    42.81      0.34  
  Second Quarter............................................  52.00    47.13      0.34  
  Third Quarter.............................................  49.50    40.19      0.34  
  Fourth Quarter............................................  48.31    40.63      0.34  
1999                                                                                    
  First Quarter.............................................  48.44    37.69      0.34  
  Second Quarter............................................  54.69    46.44      0.34  
  Third Quarter.............................................  57.25    45.81      0.34  
  Fourth Quarter............................................  51.88    44.56      0.34  
2000                                                                                    
  First Quarter.............................................  47.13    35.94      0.34  
  Second Quarter............................................  57.69    45.50      0.34  
  Third Quarter.............................................  70.00    46.81      0.34  
  Fourth Quarter............................................  68.25    51.50      0.34  
2001                                                                                    
  First Quarter.............................................  59.00    51.70      0.34  
  Second Quarter............................................  68.00    52.78      0.34  
  Third Quarter.............................................  59.86    50.00      0.36  
  Fourth Quarter............................................  60.95    50.66      0.36  
2002                                                                                    
  First Quarter (through February 6, 2002)..................  60.70    57.30        --  

   The following table sets forth the high and low sales prices per share of
Conoco common stock and Phillips common stock on the New York Stock Exchange    
Composite Transaction reporting system on November 16, 2001, the last full      
trading day prior to the public announcement of the merger, and on February 6,  
2002, the last trading day for which this information could be calculated prior 
to the date of this joint proxy statement/prospectus:                           

                                                        [Enlarge/Download Table]

                                                       CONOCO COMMON   PHILLIPS COMMON
                                                           STOCK            STOCK     
                                                       --------------  ---------------
                                                        HIGH     LOW    HIGH     LOW  
                                                       ------   -----  ------   ------
                                                                                      
November 16, 2001..................................... $25.10   23.95  51.95    50.66 
February 6, 2002......................................  27.80   27.23  58.45    57.60 

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UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL INFORMATION 

The following unaudited pro forma financial statements combine the    
historical consolidated balance sheets and statements of income of Conoco and   
Phillips, giving effect to the merger using the purchase method of accounting.  
The business combination of Conoco and Phillips is a merger of equals. Neither  
company paid a premium in the stock-for-stock exchange ratio and neither company
anticipates dominating the New Parent Board of Directors. However, 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.        

    Conoco's historical income statements have been adjusted for the pro forma
impact of the acquisition of Gulf Canada effective July 1, 2001, and Phillips'  
historical income statements have been adjusted to reflect the pro forma impact 
of the acquisition of Tosco Corporation on September 14, 2001. In addition,     
Phillips' historical income statement for 2000 has been adjusted to reflect the 
pro forma impact of the acquisition of ARCO's Alaska businesses and the         
formation of the Duke Energy Field Services and Chevron Phillips Chemical       
Company joint ventures during 2000.                                             

   We are providing the following information to aid you in your analysis of
the financial aspects of the merger. We derived this information for the year   
ended December 31, 2000, from the audited financial statements of Conoco and    
Phillips for that year. The income statement information for the nine-month     
period ended September 30, 2001, and the balance sheet information at September 
30, 2001, were derived from the unaudited financial information of the          
companies. Conoco has provided all the information set forth herein regarding   
Conoco and its subsidiaries. Phillips has provided all the information set forth
herein regarding Phillips and its subsidiaries. Neither Conoco nor Phillips     
assumes any responsibility for the accuracy or completeness of the information  
provided by the other party. THIS INFORMATION SHOULD BE READ TOGETHER WITH OUR  
HISTORICAL FINANCIAL STATEMENTS AND RELATED NOTES CONTAINED IN THE ANNUAL       
REPORTS AND OTHER INFORMATION THAT WE HAVE FILED WITH THE SECURITIES AND        
EXCHANGE COMMISSION AND INCORPORATED BY REFERENCE IN THIS JOINT PROXY           
STATEMENT/PROSPECTUS. SEE "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE 125.    

     The unaudited pro forma combined statements of income assume the merger was
effected on January 1, 2000. The unaudited pro forma combined balance sheet     
gives effect to the merger as if it had occurred on September 30, 2001. Except  
for planned major maintenance expenditures, the accounting policies of Conoco   
and Phillips are substantially comparable.                                      

   The unaudited pro forma combined information is for illustrative purposes
only. The financial results may have been different had the companies always    
been combined. Further, the unaudited pro forma combined financial statements do
not reflect the effect of asset dispositions, if any, that may be required by   
order of regulatory authorities, restructuring charges that will be incurred to 
fully integrate and operate the combined organization more efficiently, or      
anticipated synergies resulting from the merger. The restructuring activities to
integrate the companies, noted here and on pages 14, 30 and 32, will result in  
head count reduction, asset rationalization and other activities. Because the   
plans for these activities have not yet been finalized, we are not able to      
reasonably quantify the cost for such activities. You should not rely on the pro
forma combined financial information as being indicative of the historical      
results that would have been achieved had the companies always been combined or 
the future results that ConocoPhillips will experience.                         

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CONOCOPHILLIPS
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME

                                                        [Enlarge/Download Table]

                                                            YEAR ENDED DECEMBER 31, 2000               
                                             ----------------------------------------------------------
                                               PHILLIPS        CONOCO                                  
                                                  AS             AS         PRO FORMA      PRO FORMA   
                                             ADJUSTED(A)*   ADJUSTED(B)*   ADJUSTMENTS   CONOCOPHILLIPS
                                             ------------   ------------   -----------   --------------
                                                     MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA        
                                                                                                       
REVENUES                                                                                               
Sales and other operating revenues.........    $48,896         40,674           --           89,570    
Equity in earnings of affiliated                                                                       
  companies................................        231            252          (51)(c)          432    
Other revenues.............................        275            317           --              592    
                                               -------        -------         ----          -------    
          Total Revenues...................     49,402         41,243          (51)          90,594    
                                               -------        -------         ----          -------    
COSTS AND EXPENSES                                                                                     
Purchased crude oil and products...........     30,969         24,267           --           55,236    
Production and operating expenses..........      3,817          2,624           (9)(d)        6,432    
Exploration expenses.......................        319            367           --              686    
Selling, general and administrative                                                                    
  expenses.................................        852            849           --            1,701    
Depreciation, depletion and amortization...      1,550          1,847          (98)(c)(e)      3,299   
Property impairments.......................        100              5           --              105    
Taxes other than income taxes..............      6,122          6,986           --           13,108    
Accretion on discounted liabilities........         13             --            7(f)            20    
Interest expense...........................        596            776          (96)(g)        1,276    
Foreign currency transaction losses                                                                    
  (gains)..................................         57            (22)          --               35    
Preferred dividend requirements of capital                                                             
  trusts...................................         53             --           --               53    
                                               -------        -------         ----          -------    
          Total Costs and Expenses.........     44,448         37,699         (196)          81,951    
                                               -------        -------         ----          -------    
Income before income taxes.................      4,954          3,544          145            8,643    
Provision for income taxes.................      2,385          1,654           69(h)         4,108    
                                               -------        -------         ----          -------    
INCOME BEFORE EXTRAORDINARY ITEM AND                                                                   
  CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING                                                            
  PRINCIPLE................................    $ 2,569          1,890           76            4,535    
                                               =======        =======         ====          =======    
INCOME BEFORE EXTRAORDINARY ITEM AND                                                                   
  CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING                                                            
  PRINCIPLE PER SHARE OF COMMON STOCK                                                                  
  Basic....................................    $  6.79           3.03                          6.76(k) 
  Diluted..................................       6.70           2.99                          6.67(k) 
                                               -------        -------                       -------    
AVERAGE COMMON SHARES OUTSTANDING                                                                      
                                                                   (IN THOUSANDS)                      
  Basic....................................    378,549        624,354                       670,559(k) 
  Diluted..................................    383,211        632,760                       679,813(k) 
                                               -------        -------                       -------    

---------------                                                                 

* See Supplemental Schedules beginning on page 94 for additional information.   

See Notes to Unaudited Pro Forma Financial Statements.
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CONOCOPHILLIPS
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME

                                                        [Enlarge/Download Table]

                                                        NINE MONTHS ENDED SEPTEMBER 30, 2001           
                                             ----------------------------------------------------------
                                             PHILLIPS AS     CONOCO AS      PRO FORMA      PRO FORMA   
                                             ADJUSTED(A)*   ADJUSTED(B)*   ADJUSTMENTS   CONOCOPHILLIPS
                                             ------------   ------------   -----------   --------------
                                                   MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS       
                                                                                                       
REVENUES                                                                                               
Sales and other operating revenues.........    $ 37,445         31,521          --           68,966    
Equity in earnings of affiliated                                                                       
  companies................................         106            156         (39)(c)          223    
Other revenues.............................          61            353          --              414    
                                               --------       --------        ----          -------    
          Total Revenues...................      37,612         32,030         (39)          69,603    
                                               --------       --------        ----          -------    
COSTS AND EXPENSES                                                                                     
Purchased crude oil and products...........      23,736         18,614          --           42,350    
Production and operating expenses..........       3,160          2,385          11(d)         5,556    
Exploration expenses.......................         202            261          --              463    
Selling, general and administrative                                                                    
  expenses.................................         913            627          --            1,540    
Depreciation, depletion and amortization...       1,153          1,398        (102)(c)(e)      2,449   
Property impairments.......................          23             69          --               92    
Taxes other than income taxes..............       4,272          5,143          --            9,415    
Accretion on discounted liabilities........          16             --           5(f)            21    
Interest expense...........................         350            455         (72)(g)          733    
Foreign currency transaction losses........          10             69          --               79    
Preferred dividend requirements of capital                                                             
  trusts...................................          40             --          --               40    
                                               --------       --------        ----          -------    
          Total Costs and Expenses.........      33,875         29,021        (158)          62,738    
                                               --------       --------        ----          -------    
Income before income taxes, extraordinary                                                              
  item and cumulative effect of change in                                                              
  accounting principle.....................       3,737          3,009         119            6,865    
Provision for income taxes.................       1,782          1,445          57(h)         3,284    
                                               --------       --------        ----          -------    
INCOME BEFORE EXTRAORDINARY ITEM AND                                                                   
  CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING                                                            
  PRINCIPLE................................    $  1,955          1,564          62            3,581    
                                               ========       ========        ====          =======    
INCOME BEFORE EXTRAORDINARY ITEM AND                                                                   
  CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING                                                            
  PRINCIPLE PER SHARE OF COMMON STOCK                                                                  
  Basic....................................    $   5.14           2.50                         5.32(k) 
  Diluted..................................        5.09           2.46                         5.26(k) 
                                               --------       --------                      -------    
AVERAGE COMMON SHARES OUTSTANDING                                                                      
                                                                   (IN THOUSANDS)                      
  Basic....................................     380,540        625,332                      673,008(k) 
  Diluted..................................     384,068        635,345                      681,127(k) 
                                               --------       --------                      -------    

---------------                                                                 

* See Supplemental Schedules beginning on page 94 for additional information.   

See Notes to Unaudited Pro Forma Financial Statements.
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CONOCOPHILLIPS
UNAUDITED PRO FORMA COMBINED BALANCE SHEET

                                                        [Enlarge/Download Table]

                                                              AT SEPTEMBER 30, 2001                
                                              -----------------------------------------------------
                                                                     PRO FORMA         PRO FORMA   
                                              PHILLIPS    CONOCO    ADJUSTMENTS      CONOCOPHILLIPS
                                              --------   --------   -----------      --------------
                                                               MILLIONS OF DOLLARS                 
                                                                                                   
ASSETS                                                                                             
Cash and cash equivalents.................... $   199         214         --                413    
Accounts and notes receivable................   1,568       2,061         --              3,629    
Inventories..................................   2,617       1,127        538(c)           4,282    
Deferred income taxes........................      85          41         --                126    
Prepaid expenses and other current assets....     319         900         --              1,219    
                                              -------    --------     ------             ------    
          Total Current Assets...............   4,788       4,343        538              9,669    
Investments and long-term receivables........   3,306       1,950        978(c)           6,234    
Properties, plants and equipment (net).......  23,443      17,760      1,967(c)          43,170    
Goodwill.....................................   2,366       2,982      6,327(c)          11,675    
Intangibles..................................   1,313           3      1,147(c)           2,463    
Deferred income taxes........................       7          20         --                 27    
Deferred charges and other assets............     127         625         --                752    
                                              -------    --------     ------             ------    
Total........................................ $35,350      27,683     10,957             73,990    
                                              =======    ========     ======             ======    
LIABILITIES                                                                                        
Accounts payable............................. $ 3,417       2,019         --              5,436    
Notes payable and long-term debt due within                                                        
  one year...................................      43       1,611         --              1,654    
Accrued income and other taxes...............   1,406         788        194(c)           2,388    
Other accruals...............................     839       1,660        (53)(d)          2,446    
                                              -------    --------     ------             ------    
          Total Current Liabilities..........   5,705       6,078        141             11,924    
Long-term debt...............................   7,838       8,040         --             15,878    
Accrued dismantlement, removal and                                                                 
  environmental costs........................   1,150         558       (415)(e)(f)       1,293    
Deferred income taxes........................   4,027       4,047      1,733(c)           9,807    
Employee benefit obligations.................     614         594        276(i)           1,484    
Other liabilities and deferred credits.......     938       1,020         --              1,958    
                                              -------    --------     ------             ------    
Total Liabilities............................  20,272      20,337      1,735             42,344    
COMPANY-OBLIGATED MANDATORILY REDEEMABLE                                                           
  PREFERRED SECURITIES AND MINORITY                                                                
  INTERESTS..................................     656         709         --              1,365    
TOTAL COMMON STOCKHOLDERS' EQUITY............  14,422       6,637      9,222(j)(k)       30,281    
                                              -------    --------     ------             ------    
Total........................................ $35,350      27,683     10,957             73,990    
                                              =======    ========     ======             ======    

See Notes to Unaudited Pro Forma Financial Statements.
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NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS 

(a)  Phillips' historical income statements for the year ended December 31,     
     2000, and the nine months ended September 30, 2001, have been adjusted on a
    pro forma basis to reflect the acquisition of Tosco on September 14, 2001,
     as if it had occurred on January 1, 2000. During the third quarter of 2001,
     Phillips began including excise taxes on the sales of petroleum products in
    operating revenues, with the corresponding expense included in taxes other
    than income taxes. Prior periods have been restated to reflect this change
in presentation.                                                      

     The significant pro forma adjustments that were made for the acquisition of
Tosco were:                                                           

- Estimated income statement impacts resulting from the purchase price
     allocation to the Tosco assets and liabilities -- for example increased
     depreciation due to the step-up of the property, plant and equipment to
   fair value. These preliminary purchase price allocations have not yet
been finalized;                                                   

- The conforming of Tosco's accounting policies to Phillips'; and   

  - An increase in average common shares outstanding for stock and stock
options issued in the acquisition.                              

For additional information on this transaction see the Unaudited    
Supplemental Pro Forma Information on pages 95 through 96.          

  Phillips' income statement information for the year ended December 31,
2000, has been further adjusted on a pro forma basis to reflect four
significant transactions that were consummated during 2000:         

  - The disposition of Phillips' gas gathering, processing and marketing
        business, and the simultaneous acquisition of a 30.3% equity interest in
Duke Energy Field Services on March 31, 2000;                   

     - The acquisition of ARCO's Alaska businesses, completed in two phases on
April 26 and August 1, 2000;                                    

   - The disposition of Phillips' chemicals business, and the simultaneous
 acquisition of a 50% equity interest in Chevron Phillips Chemical
Company on July 1, 2000; and                                    

- The disposition of Tosco's Avon refinery on August 31, 2000;      

as if they had occurred January 1, 2000.                            

    The significant pro forma adjustments that were made for the Duke Energy
   Field Services and Chevron Phillips Chemical Company transactions were:

  - The removal of Phillips' chemical and gas gathering, processing, and
marketing businesses from consolidation;                        

- The inclusion of Phillips' estimated 50% and 30.3% equity interest
     earnings from Chevron Phillips Chemical Company and Duke Energy Field
   Services, respectively, based on the pro forma financial results of
those two entities prior to their inception; and                

- The amortization of the basis difference between the book value of
 Phillips' contributions to Duke Energy Field Services and Chevron
Phillips Chemical Company, and its equity in the two entities.  

    The significant pro forma adjustments that were made for the acquisition
of ARCO's Alaska businesses were:                                   

  - Estimated income statement impacts resulting from the purchase price
allocation to the Alaska assets and liabilities -- for example, 
    increased depreciation due to the step-up of the property, plant and
equipment to fair-market value. These preliminary purchase price
allocations continued to be refined during 2000 and into 2001;  

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- The conforming of ARCO's accounting policies to Phillips'; and    

   - An increase in interest expense due to the debt incurred to partially
fund the acquisition.                                           

   For additional information on these four transactions see the Unaudited
Supplemental Pro Forma Information on pages 95 through 96.          

(b)  Conoco's historical income statements for the year ended December 31, 2000 
    and the nine months ended September 30, 2001 have been adjusted to reflect
the July, 2001 acquisition of Gulf Canada on Conoco under the purchase
    method of accounting. The unaudited pro forma combined statement on income
   for the year ended December 31, 2000 also gives effect to the acquisition
    of Crestar by Gulf Canada as if the acquisition had occurred on January 1,
2000.                                                                 

    The significant pro forma adjustments that were made for the acquisition
of Gulf Canada were:                                                

   -  Estimated income statement impacts resulting from the purchase price
    allocation to the Gulf Canada assets and liabilities. For example,
    increased depreciation expense due to the step-up of the property,
plant and equipment value to fair value.                      

-  The conforming of Gulf Canada's accounting policies to Conoco's  
         including conversion from Canadian GAAP to US GAAP and Canadian dollars
to U.S. dollars.                                              

   -  An increase in interest expense due to the debt incurred to fund the
acquisition.                                                  

-  Recognition of approximately $3 billion in goodwill.             

For additional information on this transaction see the Unaudited    
Supplemental Pro Forma Information on pages 100 through 103.        

(c)  The following is a preliminary estimate of the deemed purchase price for   
Conoco on a purchase accounting basis:                                

                                                                [Download Table]
                                                                      
Number of shares of New Parent common stock                           
  expected to be issued in the exchange.......         292.5   million
Multiplied by Phillips' average stock price                           
  two days before and after the announcement                          
  date........................................  X    $ 53.15          
                                                     -------          
                                                     $15,546   million
Estimated fair value of Conoco stock options                          
  expected to be exchanged for New Parent                             
  stock options...............................           327   million
Estimated transaction-related costs...........            50   million
                                                     -------          
Total.........................................       $15,923   million
                                                     =======          

  For purposes of this pro forma analysis, the above deemed purchase price
   has been allocated based on a preliminary assessment of the fair value of
   the assets and liabilities of Conoco at September 30, 2001. The pro forma
    income statement adjustments reflect the estimated effects of depreciating
   and amortizing these purchase accounting adjusted balances in properties,
plants and equipment, equity method investments, and identifiable     
intangible assets over their estimated useful lives. The preliminary  
    assessment of fair value resulted in $950 million of tradename assets with
indefinite lives and $9,309 million of goodwill, both of which will be
subject to periodic impairment testing instead of amortization.       

    We are currently planning to engage an outside appraisal firm to assist us
in finalizing the allocation of the purchase price. This preliminary  
    assessment of the fair value of the long-lived, tangible assets of Conoco,
     other than the Gulf Canada assets, was based primarily on Conoco's internal
     projections of future net cash flows from those assets, present valued at a
    9 percent discount rate. The Gulf Canada assets were valued at the amounts
recorded for that recent acquisition and are comparable with a recent 
outside appraisal. Tradename intangible assets were valued using a    
royalty-relief                                                        

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   calculation typically used by the appraisal profession. Various corporate
     real estate and technology assets were valued based on an estimate of their
    potential market value in their current state and condition. Equity method
  investments were valued based on Conoco's internal projections of future
  net cash flows from those assets, present valued at a 9 percent discount
     rate. Inventory was valued at estimated replacement costs. Employee benefit
    obligations were valued at their current funded status. See note (e) for a
   description of how asset decommissioning liabilities were adjusted in the
    pro forma analysis. All other Conoco assets and liabilities were valued on
book values, which we believe do not differ materially from their fair
values. In addition, where possible, these values were compared with  
external specialized research services for reasonableness.            

 Under the purchase method of accounting for business combinations, this
   preliminary fair value assessment resulted in goodwill of $9,309 million.
 Included in this amount is $6,067 million that offsets net deferred tax
    liabilities arising from differences between the allocated financial bases
   and historical tax bases of the Conoco net assets (due to the non-taxable
  nature of this transaction, Conoco's tax bases in its assets would carry
     over to ConocoPhillips). This goodwill reflects the anticipated benefits of
the merger that are in addition to those reflected in the tangible and
intangible assets described above. These benefits would include, for  
   example, expanded growth opportunities from a stronger financial position
and global presence, complementary capabilities and strategies, and   
synergistic cost savings. For further information, see "The           
Merger -- Reasons for the Merger" on page 28.                         

(d)  Conforms Conoco's accounting policy on planned major maintenance to        
Phillips', expensing the costs of such maintenance as incurred.       

(e)  Under Phillips' current accounting policy and current prevalent industry   
accounting practice for the acquisition of oil and gas businesses,    
     ConocoPhillips will not record an initial liability for the estimated costs
   of removing Conoco's properties, plants and equipment at the end of their
     useful lives. Instead, currently estimated total undiscounted removal costs
of $1,100 million will be accrued as an additional component of future
   depreciation, building the liability for removal over the remaining lives
of the properties, plants and equipment on a unit-of-production basis.

(f)  Includes the impact of discounting Conoco's estimated environmental        
liabilities and recording the related accretion.                      

(g)  Capitalization of interest based on the estimated fair value of Conoco's   
    qualifying assets of $1,600 million using a weighted-average interest rate
of 6 percent.                                                         

(h)  Reflects the estimated income tax effects of the pro forma adjustments to  
  Conoco's pretax income using a blended statutory tax rate of 48 percent.

(i)   Adjustment to increase Conoco's pension and other post-retirement benefit 
obligations to the estimated difference between projected benefit   
obligations and plan assets.                                        

(j)   Included in the preliminary assessment of fair value of Conoco was an     
estimated $100 million for the value of in-process research and     
      development projects. Under generally accepted accounting principles, this
      value, net of its related deferred tax liability, would be charged against
earnings immediately after consummation of the merger. Due to the   
non-recurring nature of this one-time charge, the pro forma income  
     statements do not include this charge. The after-tax effect of the charge
is reflected in the pro forma balance sheet as a reduction of common
stockholders' equity.                                               

(k)  Reflects the exchange of outstanding Conoco stock, the issuance of 292.5   
million shares of ConocoPhillips common stock, and the effect of      
     ConocoPhillips' stock options issued in the exchange to Conoco stock option
holders.                                                              

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SUPPLEMENTAL SCHEDULES

PHILLIPS AS ADJUSTED
UNAUDITED SUPPLEMENTAL PRO FORMA INFORMATION

                                                        [Enlarge/Download Table]

                                                          YEAR ENDED DECEMBER 31, 2000                           
                                ---------------------------------------------------------------------------------
                                 PHILLIPS                                                              PHILLIPS  
                                HISTORICAL   TOSCO(A)*        DEFS        ALASKA(J)    CPCHEM         AS ADJUSTED
                                ----------   ---------        ----        ---------   --------        -----------
                                                   MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA                    
                                                                                                                 
REVENUES                                                                                                         
Sales and other operating                                                                                        
  revenues....................   $ 22,690     27,155(B)       (219)(H)      1,113      (1,843)(N)        48,896  
Equity in earnings of                                                                                            
  affiliated companies........        114         --            41 (H)(I)      --          76 (N)(O)        231  
Other revenues................        278         10(B)(C)     --               4         (17)(N)           275  
                                 --------     ------          ----          -----      ------           -------  
          Total Revenues......     23,082     27,165          (178)         1,117      (1,784)           49,402  
                                 --------     ------          ----          -----      ------           -------  
COSTS AND EXPENSES                                                                                               
Purchased crude oil and                                                                                          
  products....................     12,131     20,121(B)       (63)(H)          10      (1,230)(N)        30,969  
Production and operating                                                                                         
  expenses....................      2,166      1,735(A)(B)    (46)(H)         270(K)     (308)(N)         3,817  
Exploration expenses..........        298         --           --              21          --               319  
Selling, general and                                                                                             
  administrative expenses.....        636        338           --              22        (144)(N)           852  
Depreciation, depletion and                                                                                      
  amortization................      1,179        283(A)(B)    (22)(H)         167(J)      (57)(N)         1,550  
Property impairments..........        100         --           --              --          --               100  
Taxes other than income                                                                                          
  taxes.......................      2,323      3,711           (5)(H)         113         (20)(N)         6,122  
Accretion on discounted                                                                                          
  liabilities.................         --         13(D)        --              --          --                13  
Interest expense..............        369        166(B)(E)     --              61(L)       --               596  
Foreign currency transaction                                                                                     
  losses......................         58         --           --              --          (1)(N)            57  
Preferred dividend                                                                                               
  requirements of capital                                                                                        
  trusts......................         53         --(F)        --              --          --                53  
                                 --------     ------          ----          -----      ------           -------  
          Total Costs and                                                                                        
            Expenses..........     19,313     26,367          (136)           664      (1,760)           44,448  
                                 --------     ------          ----          -----      ------           -------  
Income before income taxes....      3,769        798          (42)            453         (24)            4,954  
Provision for income taxes....      1,907        324(G)       (16)(H)         181(M)      (11)(N)         2,385  
                                 --------     ------          ----          -----      ------           -------  
          NET INCOME..........   $  1,862        474          (26)            272         (13)            2,569  
                                 ========     ======          ====          =====      ======           =======  
NET INCOME PER SHARE OF COMMON                                                                                   
  STOCK                                                                                                          
  Basic.......................   $   7.32                                                                  6.79  
  Diluted.....................       7.26                                                                  6.70  
                                 --------                                                               -------  
AVERAGE COMMON SHARES                                                                                            
  OUTSTANDING                                                                                                    
                                                                 (IN THOUSANDS)                                  
  Basic.......................    254,490                                                               378,549  
  Diluted.....................    256,326                                                               383,211  
                                 --------                                                               -------  

---------------                                                                 
* Certain amounts have been reclassified to conform to Phillips' presentation.  

See Notes to Phillips as Adjusted Unaudited Supplemental Pro Forma Information
for Year Ended December 31, 2000. 
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NOTES TO PHILLIPS AS ADJUSTED UNAUDITED SUPPLEMENTAL PRO FORMA INFORMATION
FOR YEAR ENDED DECEMBER 31, 2000

 The Phillips income statement for the year ended December 31, 2000, has
been adjusted on a pro forma basis to reflect four significant transactions as  
if they were consummated January 1, 2000:                                       

- The acquisition of Tosco Corporation (Tosco) on September 14, 2001; 

- The disposition of Phillips' gas gathering, processing and marketing
 business, and the simultaneous acquisition of a 30.3 percent equity
interest in Duke Energy Field Services (DEFS) on March 31, 2000;  

- The acquisition of Atlantic Richfield Company's Alaska businesses,  
completed in two phases on April 26, and August 1, 2000; and      

 - The disposition of Phillips' chemicals business, and the simultaneous
      acquisition of a 50 percent equity interest in Chevron Phillips Chemical
Company (CPChem) on July 1, 2000.                                 

Footnotes referenced from the statement follow:                       

The Tosco information is presented on a pro forma basis and has been  
adjusted as described below:                                                    

(A) Phillips' purchase price for Tosco (millions of dollars, except as
indicated):                                                   

                                                                [Download Table]
                                                                         
    Number of shares of Phillips common stock issued in the              
     exchange (millions)....................................        124.1
    Multiplied by Phillips' average stock price two days                 
     before and two days after the date the merger was                   
     announced..............................................  x    $55.50
                                                                   ------
                                                                   $6,886
    Fair value of Tosco stock options exchanged for 4.7                  
     million vested Phillips stock options..................          153
    Transaction-related costs...............................           42
                                                                   ------
    Purchase price..........................................       $7,081
                                                                   ------
                                                                   ------

         For purposes of this pro forma analysis, the above purchase price has
         been allocated based on a preliminary assessment of the fair value of
        the assets and liabilities acquired and was based on Tosco's balance
 sheet at June 30, 2001. Based on this pro forma analysis, the
     allocation of the purchase price would result in recording $7,729
  million of properties, plants and equipment; $1,312 million of
       identifiable intangible assets; and $2,081 million of goodwill. The
        pro forma income statement adjustments reflect the estimated effects
       of depreciating and amortizing properties, plants and equipment and
        finite-lived intangible assets over their estimated useful lives and
    the presentation of turnaround costs as production and operating
       expense. Goodwill, land and intangible assets with indefinite lives
   are not subject to amortization but are periodically tested for
impairment.                                                 

        Due to the non-taxable nature of this transaction, Tosco's tax basis
      in its assets carries over to Phillips. The difference between the
       financial and tax bases is estimated to result in $1,980 million of
  net deferred tax liabilities in the purchase price allocation.

    (B) Adjusted to reflect the disposition of Tosco's Avon refinery on August
  31, 2000, as if it had occurred January 1, 2000. The significant
         adjustments that were made for the Avon refinery were 1) the removal of
Tosco's ownership, operations and gain from the sale from     
      consolidation, and 2) a reduction in interest expense as a result of
reducing long-term debt collateralized by the refinery.       

    (C) Includes the reversal of a deferred gain on Tosco's balance sheet that
      is not subject to any future performance requirement, along with the
related amortization of the deferred gain.                    

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(D) Includes the impact of adjusting and discounting Tosco's net      
  environmental liabilities to a present value of $256 million and
     recording the corresponding 5 percent discount accretion over time.

(E)  Reflects the restatement of Tosco debt to fair value and the     
     corresponding reduction in interest expense as the resulting $122
        million premium is amortized over a weighted average effective yield
period of nine years.                                       

  (F)  Reflects the February 2001 conversion of Tosco's company-obligated,
     mandatorily redeemable, convertible preferred securities into 9.1
million shares of Tosco common stock.                       

     (G)  Reflects the 40 percent estimated federal and state income tax effects
of the pro forma adjustments to Tosco's pretax income.      

   The pro forma adjustments for the DEFS transaction include the following:

(H) Reflects the disposition and removal of Phillips' gas gathering,  
processing and marketing business from consolidated results.  

 (I)  Reflects Phillips' 30.3 percent equity interest in DEFS' earnings.

The Alaska information is presented on a pro forma basis and has been 
adjusted as described below:                                                    

   (J)  The following was the preliminary estimate of the purchase price for
ARCO Alaska:                                                

                                                                [Download Table]

                                                          MILLIONS 
                                                         OF DOLLARS
                                                         ----------
                                                                   
Base price.............................................   $ 6,475  
Estimated transaction-related costs....................        10  
Special one-time purchase of crude oil inventory.......       170  
Adjustment to purchase price based upon West Texas                 
 Intermediate crude prices exceeding $25 per barrel and            
 actual North Slope volumes sold.......................        73  
Net cash generated between January 1, 2000, and                    
 closing, retained by BP...............................      (241) 
Phillips' assumption of ARCO Alaska marine terminal                
 revenue bonds.........................................      (265) 
                                                          -------  
Adjusted cash price....................................     6,222  
Use of cash on hand to make payments to BP.............    (1,031) 
                                                          -------  
Debt incurred by Phillips to make cash payments to                 
 BP....................................................   $ 5,191  
                                                          =======  

          The purchase price was preliminarily allocated based on the fair value
of the assets and liabilities acquired. Based upon the above
preliminary estimate of the purchase price, Phillips did not
         anticipate recording goodwill related to the acquisition. The company
       expected the tax basis in the purchased assets to essentially equal
  the purchase price, so deferred tax liabilities at the time of
acquisition were expected to be minimal.                    

  (K)  Reflects Phillips' conforming of ARCO Alaska's accounting policy on
        enhanced oil recovery miscible injectants to Phillips' expensing the
costs of such injectants as incurred.                       

    (L)  Reflects additional interest expense associated with the debt used to
       finance the ARCO Alaska acquisition at an average borrowing rate of
      6.35 percent, net of additional capitalized interest on qualifying
assets under development.                                   

    (M) Reflects the 40 percent estimated federal and state income tax effects
of the pro forma adjustments to ARCO Alaska's pretax income.  

     The pro forma adjustments for the CPChem transaction include the following:

   (N)  Reflects the disposition and removal of Phillips' chemicals business
from consolidated results.                                  

  (O)  Reflects Phillips' 50 percent equity interest in CPChem's earnings.

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PHILLIPS AS ADJUSTED
UNAUDITED SUPPLEMENTAL PRO FORMA INFORMATION

                                                        [Enlarge/Download Table]

                                                              NINE MONTHS ENDED SEPTEMBER 30, 2001 
                                                             --------------------------------------
                                                              PHILLIPS                   PHILLIPS  
                                                             HISTORICAL     TOSCO*     AS ADJUSTED 
                                                             -----------   --------    ------------
                                                                      MILLIONS OF DOLLARS,         
                                                                     EXCEPT PER SHARE DATA         
                                                                                                   
REVENUES                                                                                           
Sales and other operating revenues..........................   $16,741      20,704        37,445   
Equity in earnings of affiliated companies..................       106          --           106   
Other revenues..............................................        57           4(A)         61   
                                                               -------     -------       -------   
          Total Revenues....................................    16,904      20,708        37,612   
                                                               -------     -------       -------   
COSTS AND EXPENSES                                                                                 
Purchased crude oil and products............................     8,295      15,441        23,736   
Production and operating expenses...........................     1,696       1,464(B)      3,160   
Exploration expenses........................................       202          --           202   
Selling, general and administrative expenses................       569         344           913   
Depreciation, depletion and amortization....................       952         201(B)      1,153   
Property impairments........................................        23          --            23   
Taxes other than income taxes...............................     1,928       2,344         4,272   
Accretion on discounted liabilities.........................         7           9(C)         16   
Interest expense............................................       240         110(D)        350   
Foreign currency transaction losses.........................        10          --            10   
Preferred dividend requirements of capital trusts...........        40          --(E)         40   
                                                               -------     -------       -------   
          Total Costs and Expenses..........................    13,962      19,913        33,875   
                                                               -------     -------       -------   
Income before income taxes, extraordinary item and                                                 
  cumulative effect of change in accounting principle.......     2,942         795         3,737   
Provision for income taxes..................................     1,461         321(F)      1,782   
                                                               -------     -------       -------   
INCOME BEFORE EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF                                          
  CHANGE IN ACCOUNTING PRINCIPLE............................   $ 1,481         474         1,955   
                                                               =======     =======       =======   
INCOME BEFORE EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF                                          
  CHANGE IN ACCOUNTING PRINCIPLE PER SHARE OF COMMON STOCK                                         
  Basic.....................................................   $  5.63                      5.14   
  Diluted...................................................      5.59                      5.09   
                                                               -------                   -------   
AVERAGE COMMON SHARES OUTSTANDING                                                                  
                                                                         (IN THOUSANDS)            
  Basic.....................................................   263,144                   380,540   
  Diluted...................................................   264,988                   384,068   
                                                               -------                   -------   

---------------                                                                 

* Certain amounts have been reclassified to conform to Phillips' presentation.  

See Notes to Phillips as Adjusted Unaudited Supplemental Pro Forma Information
for Nine Months Ended September 30, 2001. 

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NOTES TO PHILLIPS AS ADJUSTED UNAUDITED SUPPLEMENTAL PRO FORMA INFORMATION
FOR NINE MONTHS ENDED SEPTEMBER 30, 2001

     The Phillips income statement for the nine months ended September 30, 2001,
has been adjusted on a pro forma basis to reflect the acquisition of Tosco on   
September 14, 2001, as if it was consummated January 1, 2000. The Tosco         
information is presented on a pro forma basis and has been adjusted as described
below.                                                                          

Footnotes referenced from the statement follow:                       

    (A) Includes the reversal of a deferred gain on Tosco's balance sheet that
      is not subject to any future performance requirement, along with the
related amortization of the deferred gain.                    

(B) Reflects adjustments related to the purchase price allocation. See
Footnote (A) on page 95.                                      

    (C) Includes the impact of adjusting and discounting Tosco's environmental
  liabilities and recording the corresponding accretion over time.

(D) Reflects the restatement of Tosco debt to fair value and the      
         corresponding reduction in interest expense as the resulting premium is
amortized.                                                    

 (E) Reflects the February 2001 conversion of Tosco's company-obligated,
   mandatorily redeemable, convertible preferred securities into 9.1
million shares of Tosco common stock.                         

    (F) Reflects the estimated federal and state income tax effects of the pro
forma adjustments to Tosco's pretax income.                   

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CONOCO AS ADJUSTED
UNAUDITED SUPPLEMENTAL PRO FORMA INFORMATION

                                                        [Enlarge/Download Table]

                                                          YEAR ENDED DECEMBER 31, 2000                     
                                     ----------------------------------------------------------------------
                                                      GULF CANADA                                          
                                        CONOCO       HISTORICAL(B)                 PRO FORMA      CONOCO   
                                     HISTORICAL(A)    (U.S. GAAP)    CRESTAR(C)   ADJUSTMENTS   AS ADJUSTED
                                     -------------   -------------   ----------   -----------   -----------
                                                   MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA              
                                                                                                           
REVENUES                                                                                                   
Sales and other operating                                                                                  
  revenues.........................     $38,737          1,464          473            --          40,674  
Equity in earnings of affiliates...         277            (25)          --            --             252  
Other revenues.....................         273             66           --           (22)(D)         317  
                                        -------          -----          ---          ----         -------  
          Total Revenues...........      39,287          1,505          473           (22)         41,243  
                                        -------          -----          ---          ----         -------  
COSTS AND EXPENSES                                                                                         
Purchased crude and products (Cost                                                                         
  of goods sold)...................      23,921            324           --            22(E)       24,267  
Operating expenses.................       2,215            329           80            --           2,624  
Selling, general & administrative                                                                          
  expenses.........................         794             33           22            --             849  
Exploration expenses...............         279             90           14           (16)(F)         367  
Depreciation, depletion and                                                                                
  amortization.....................       1,301            269          106           176(G)               
                                                                                       (5)(H)       1,847  
Property impairments...............          --             --           --             5(H)            5  
Taxes other than income taxes......       6,981              5           --            --           6,986  
Interest and debt expense..........         338            184           37           217(I)          776  
Foreign currency transaction losses                                                                        
  (gains)..........................          --             --           --           (22)(D)         (22) 
                                        -------          -----          ---          ----         -------  
          Total Costs and                                                                                  
            Expenses...............      35,829          1,234          259           377          37,699  
                                        -------          -----          ---          ----         -------  
Income before income taxes.........       3,458            271          214          (399)          3,544  
Provision for income taxes.........       1,556            200          102          (204)(J)       1,654  
                                        -------          -----          ---          ----         -------  
NET INCOME.........................     $ 1,902             71          112          (195)          1,890  
                                        =======          =====          ===          ====         =======  
EARNINGS PER SHARE                                                                                         
  Basic............................     $  3.05                                                      3.03  
  Diluted..........................        3.00                                                      2.99  
AVERAGE COMMON SHARES OUTSTANDING                                                                          
                                                                 (IN THOUSANDS)                            
  Basic............................     624,354                                                   624,354  
  Diluted..........................     632,760                                                   632,760  
                                        -------                                                   -------  

See Notes to Conoco as Adjusted Unaudited Supplemental Pro Forma Information
for Year Ended December 31, 2000. 

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NOTES TO THE CONOCO AS ADJUSTED UNAUDITED SUPPLEMENTAL PRO FORMA INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2000

BASIS FOR PRESENTATION                                                          

  The unaudited supplemental pro forma financial information of Conoco for
the year ended December 31, 2000 was prepared to reflect the July 1, 2001       
acquisition of Gulf Canada on Conoco under the purchase method of accounting.   
The unaudited supplemental pro forma combined statement of income was prepared  
as if the acquisition of Gulf Canada by Conoco had occurred on January 1, 2000. 
The unaudited pro forma supplemental financial information for the year ended   
December 31, 2000 also gives effect to the acquisition (that closed effective   
November 6, 2000) of Crestar by Gulf Canada as if the acquisition had occurred  
on January 1, 2000.                                                             

     The following represents Conoco's allocation of the purchase price for Gulf
Canada.                                                                         

                                                                [Download Table]
                                                                    
CALCULATION OF THE PURCHASE PRICE FOR ASSETS ACQUIRED               
  Cash paid for stock purchased.............................  $4,551
  Other purchase price costs (e.g. fees, etc.)..............      20
                                                              ------
          Total purchase price for common equity............   4,571
Plus fair market value of liabilities assumed                       
  Current and other liabilities.............................     776
  Debt......................................................   1,691
  Deferred tax..............................................   1,824
  Minority interest.........................................     552
                                                              ------
          Total liabilities and minority interest...........   4,843
                                                              ------
Total purchase price for assets acquired....................  $9,414
                                                              ======
ALLOCATION OF PURCHASE PRICE FOR ASSETS ACQUIRED                    
  Property, plant and equipment.............................  $5,396
  Goodwill..................................................   3,066
  All other assets, including intangibles...................     952
                                                              ------
Total.......................................................  $9,414
                                                              ======

Footnotes referenced from the statement follow:                       

 (A) Conoco's historical financial statements were filed with the SEC on
       Conoco's Current Report on Form 8-K/A filed on September 10, 2001 for
the year ended December 31, 2000.                             

(B) Derived from Gulf Canada's historical results for the year ended  
       December 31, 2000. The historical consolidated Statement of Income of
       Gulf Canada was prepared under Canadian GAAP and in Canadian dollars.
         The following unaudited supplemental pro forma financial information of
Gulf Canada was converted to U.S. GAAP, conformed to Conoco's 
       presentation and converted to U.S. dollars using the average exchange
rate for the year ended December 31, 2000 of .67.             

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                                                        [Enlarge/Download Table]

                                                        YEAR ENDED DECEMBER 31, 2000                          
                               -------------------------------------------------------------------------------
                                                       CANADIAN DOLLARS                           U.S. DOLLARS
                               ----------------------------------------------------------------   ------------
                               GULF CANADA                                                                    
                               HISTORICAL    CANADIAN TO         CONFORMING         GULF CANADA   GULF CANADA 
                                (CANADIAN     U.S. GAAP         PRESENTATION        HISTORICAL     HISTORICAL 
                                  GAAP)      ADJUSTMENTS        ADJUSTMENTS         (U.S. GAAP)   (U.S. GAAP) 
                               -----------   -----------        ------------        -----------   ------------
                                                                                                              
REVENUES                                                                                                      
Net oil and gas..............    $1,774          411(5,6)            --                2,185         1,464    
Equity in earnings of                                                                                         
  affiliates.................        --          (38)(5)             --                  (38)          (25)   
Other........................        24          (20)(5)             95(9)                99            66    
                                 ------         ----                ---                -----         -----    
          Total Revenues.....     1,798          353                 95                2,246         1,505    
                                 ------         ----                ---                -----         -----    
COSTS AND EXPENSES                                                                                            
Purchased crude and products                                                                                  
  (Cost of goods sold).......        --          449(6)              35(11)              484           324    
Operating....................       411           61(5,6)            19(8,10)            491           329    
Exploration..................        85           (2)(5)             52(7)               135            90    
General and administrative...        45            5(6)              --                   50            33    
Depreciation, depletion and                                                                                   
  amortization...............       579         (126)(3,5)          (52)(7)              401           269    
Taxes other than income                                                                                       
  taxes......................        --           --                  7(8)                 7             5    
Net (gain) loss on asset                                                                                      
  disposals and provision for                                                                                 
  other losses...............       (86)          (9)(1,5)           95(9)                --            --    
Pension settlement and                                                                                        
  restructuring charges......         4           22(2)             (26)(10)              --            --    
Finance charges, net.........       277           (3)(5)             --                  274           184    
Income tax expense                                                                                            
  (recovery).................       300           (1)(4)             --                  299           200    
Minority interest............        35           --                (35)(11)              --            --    
                                 ------         ----                ---                -----         -----    
          Total Costs and                                                                                     
            Expenses.........     1,650          396                 95                2,141         1,434    
                                 ------         ----                ---                -----         -----    
EARNINGS (LOSS) FOR THE                                                                                       
  YEAR.......................    $  148          (43)                --                  105            71    
                                 ======         ====                ===                =====         =====    

          The following adjustments are necessary to restate Gulf Canada's
        historical income statements from Canadian GAAP to U.S. GAAP and conform
Gulf Canada's presentation to Conoco's presentation.            

    Canadian GAAP to U.S. GAAP adjustments in Canadian dollars

      1.  Under U.S. GAAP, unrealized gains or losses arising on
                  translation of long-term liabilities in foreign funds would be
               included in earnings in the period in which they arise. The
              capitalized balance on Gulf Canada's balance sheet of such
losses was $60 million at December 31, 2000.

              2.  Additional pension and post-retirement expenses of $22 million
          for the year ended December 31, 2000 and an additional
             liability of $10 million at December 31, 2000, recognized
under U.S. GAAP.                            

             3.  U.S. GAAP requires that impaired assets (Petrovera Resources)
                 be written down to their fair value, rather than undiscounted
              future cash flows from use. Accordingly, Gulf Canada would
                  have recognized additional impairment losses of $46 million in
       2000 and $123 million in 1998, which in turn lowers
depreciation expense by $14 million in 2000.

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     4.  The related tax impacts of all U.S. GAAP adjustments.

             5.  Gulf Canada accounts for certain companies with less than 100
                percent ownership using proportionate consolidation, whereas
                 under U.S. GAAP, these companies would be accounted for under
                the equity method of accounting. There is no profit and loss
impact to these line item reclassifications.

    6.  Gulf Canada reported revenues net of purchase costs,
                  transportation costs and marketing fees. This entry is made to
         reflect revenues gross and to reflect purchase costs,
                  transportation costs and marketing fees in the individual line
               items of cost of goods sold, operating expenses and general
                 and administrative expenses, respectively. There is no profit
         and loss impact to these line item reclassifications.

    Conforming adjustments to reclassify certain amounts in Gulf
       Canada's historical financial statements to conform to Conoco's
presentation                                            

           7.  Gulf Canada reflected undeveloped leasehold amortization as
            depreciation, depletion and amortization expense whereas
         Conoco reflects undeveloped leasehold amortization as
                  exploration expense, which is consistent with U.S. oil and gas
industry practices.                         

       8.  Gulf Canada reflected property taxes as other operating
                  expenses whereas Conoco reflects property taxes as taxes other
than income taxes.                          

            9.  Gulf Canada reflected net (gain) loss on asset disposals and
             provision for other losses in a cost and expense caption.
         Conoco would reflect this activity in other revenues.

             10.  Conoco reflects pension settlements in operating costs whereas
Gulf Canada reported these costs separately.

           11.  Conoco reflects its minority interest as Purchased crude and
products, formerly Cost of goods sold.      

 The above financial information relates to the acquisition by Conoco of
Gulf Canada and was filed with the SEC on Conoco's Current Report on Form 8-K   
filed on July 31, 2001, as amended by Form 8-K/A filed September 10, 2001, and  
Current Report on Form 8-K filed October 22, 2001 and should be reviewed in     
conjunction with this financial information.                                    

      (C) Estimated income effects of the Crestar acquisition by Gulf Canada for
         the first ten months of 2000. Gulf Canada purchased Crestar effective
         November 6, 2000. The historical consolidated financial statements of
          Crestar were prepared under Canadian GAAP and in Canadian dollars. The
         Crestar statement of income for the period ended November 5, 2000 has
      been converted to U.S. GAAP using the successful efforts method of
       accounting for oil and gas properties and converted to U.S. dollars
       using the average exchange rate of approximately .69 for the period
ended November 5, 2000.                                     

     (D) Phillips reflects foreign currency transaction losses and gains as an
      individual caption, whereas Conoco reflected these transactions in
other income. This adjustment is to conform to the Phillips'
presentation.                                               

  (E) Recognition of Gulf Canada's preferred stock dividend. Gulf Canada
        reflected preferred stock in the stockholders' equity section of the
         balance sheet. Conoco reflects these shares as a minority interest as
     after the acquisition, such shares represent preferred stock of a
subsidiary.                                                 

   (F) Incremental undeveloped leasehold amortization expense based on the
       estimated fair value of the undeveloped leaseholds acquired. During
       2000, Gulf Canada recorded an impairment of undeveloped leaseholds,
        which has been reflected in the fair value allocated by Conoco as of
      June 30, 2001. This resulted in a pro forma adjustment to decrease
       amortization expense in the pro forma combined income statement for
the year ended December 31, 2000.                           

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     (G) Incremental depreciation, depletion and amortization expense for Gulf
          Canada and Crestar based on the step-up to estimated fair value of the
        assets assuming the acquisition occurred on January 1, 2000. Oil and
      gas properties are depreciated on a unit-of-production basis using
    estimated proved reserve quantities attributable to Gulf Canada.

   (H) Phillips reflects oil and gas property impairments as an individual
         caption, whereas Conoco reflected these transactions in depreciation,
    depletion and amortization. This adjustment is to conform to the
Phillips' presentation.                                     

 (I) Additional pro forma interest expense related to the borrowing of
      $4,500 million necessary to fund the Gulf Canada acquisition. This
          entry assumes that the borrowing occurred on January 1, 2000. Interest
    expense calculations are based on Conoco's $4,500 million senior
          unsecured 364-day bridge credit facility used to fund the acquisition.
       Interest expense was calculated using an effective interest rate of
     approximately 4.76 percent. This rate was based on a July 1, 2001
         LIBOR three-month rate of approximately 3.83 percent. A 1/8th percent
          change in the effective interest rate would change interest expense by
          $6 million for the year ended December 31, 2000. Conoco refinanced the
   364-day bridge credit facility of $4,500 million in the capital
markets in October 2001.                                    

   (J) Income tax benefit related to purchase price adjustments, which was
        calculated using a blended statutory rate of 43 percent for cost and
    expense items (with the exception of interest expense, which was
         calculated using a rate of 58 percent reflecting the deductibility of
interest expense in both Canada and the U.S.).              

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CONOCO AS ADJUSTED
UNAUDITED SUPPLEMENTAL PRO FORMA INFORMATION

                                                        [Enlarge/Download Table]

                                                            NINE MONTHS ENDED SEPTEMBER 30, 2001                 
                                            ---------------------------------------------------------------------
                                                                       GULF CANADA                               
                                              CONOCO HISTORICAL        (U.S. GAAP)      GULF CANADA              
                                              NINE MONTHS ENDED      SIX MONTHS ENDED    PURCHASE       CONOCO   
                                            SEPTEMBER 30, 2001(A)    JUNE 30, 2001(B)   ADJUSTMENTS   AS ADJUSTED
                                            ----------------------   ----------------   -----------   -----------
                                                         MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA              
                                                                                                                 
REVENUES                                                                                                         
Sales and other operating revenues.........        $30,345                1,176                          31,521  
Equity in earnings of affiliates...........            159                   (3)                            156  
Other revenues.............................            260                   24              69(C)          353  
                                                   -------                -----            ----         -------  
          Total Revenues...................         30,764                1,197              69          32,030  
                                                   -------                -----            ----         -------  
COSTS AND EXPENSES                                                                                               
Purchase crude and products                                                                                      
  (Cost of goods sold).....................         18,353                  250              11(D)       18,614  
Operating expenses.........................          2,150                  235                           2,385  
Selling, general and administrative                                                                              
  expenses.................................            591                   36                             627  
Exploration expenses.......................            202                   57               2(E)          261  
Depreciation, depletion and amortization...          1,223                  213              31(F)               
                                                                                            (69)(G)       1,398  
Property impairments.......................             --                   --              69(G)           69  
Taxes other than income taxes..............          5,138                    5                           5,143  
Interest and debt expense..................            277                   70             108(H)          455  
Foreign currency transaction losses........             --                   --              69(C)           69  
                                                   -------                -----            ----         -------  
          Total Costs and Expenses.........         27,934                  866             221          29,021  
                                                   -------                -----            ----         -------  
Income before taxes........................          2,830                  331            (152)          3,009  
Provision for income taxes.................          1,381                  146             (82)(I)       1,445  
                                                   -------                -----            ----         -------  
INCOME BEFORE EXTRAORDINARY ITEM AND                                                                             
  ACCOUNTING CHANGE........................        $ 1,449                  185             (70)          1,564  
                                                   =======                =====            ====         =======  
EARNINGS PER SHARE BEFORE EXTRAORDINARY                                                                          
  ITEM AND ACCOUNTING CHARGE                                                                                     
  Basic....................................        $  2.32                                                 2.50  
  Diluted..................................           2.28                                                 2.46  
                                                   -------                                              -------  
AVERAGE COMMON SHARES OUTSTANDING                                                                                
                                                                       (IN THOUSANDS)                            
  Basic....................................        625,332                                              625,332  
  Diluted..................................        635,345                                              635,345  
                                                   -------                                              -------  

See Notes to Conoco as Adjusted Unaudited Supplemental Pro Forma Information
for Nine Months Ended September 30, 2001. 

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NOTES TO THE CONOCO AS ADJUSTED UNAUDITED SUPPLEMENTAL PRO FORMA INFORMATION
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001

BASIS FOR PRESENTATION                                                          

     The unaudited pro forma combined statement of income of Conoco for the nine
months ended September 30, 2001, was prepared to reflect the July 1, 2001       
acquisition of Gulf Canada by Conoco under the purchase method of accounting.   
The unaudited pro forma combined statement of income was prepared as if the     
acquisition of Gulf Canada by Conoco had occurred on January 1, 2000.           

     See "Calculation of the Purchase Price For Assets Acquired" on page 100 for
Conoco's allocation of the purchase price for Gulf Canada.                      

Footnotes referenced from the statement follow:                       

 (A) Conoco's historical financial statements were filed with the SEC on
        Conoco's Form 10-Q dated September 30, 2001 and filed November 7, 2001
        for the nine months ended September 30, 2001. Since the acquisition of
         Gulf Canada occurred in July 2001, the income statement for the quarter
       ending September 30, 2001 includes financial results for Gulf Canada.

     (B) Derived from Gulf Canada's historical results for the six months ending
        June 30, 2001. The historical consolidated Statement of Income of Gulf
      Canada was prepared under Canadian GAAP and in Canadian dollars. The
     following unaudited supplemental pro forma financial information of
    Gulf Canada has been converted to U.S. GAAP, conformed to Conoco's
       presentation and converted to U.S. dollars using the average exchange
rate for the six month period ended June 30, 2001 of .65.     

                                                        [Enlarge/Download Table]

                                                    SIX MONTHS ENDED JUNE 30, 2001                      
                              --------------------------------------------------------------------------
                                                   CANADIAN DOLLARS                         U.S. DOLLARS
                              -----------------------------------------------------------   ------------
                              GULF CANADA                                                               
                              HISTORICAL    CANADIAN TO         CONFORMING    GULF CANADA   GULF CANADA 
                               (CANADIAN     U.S. GAAP         PRESENTATION   HISTORICAL     HISTORICAL 
                                 GAAP)      ADJUSTMENTS        ADJUSTMENTS    (U.S. GAAP)   (U.S. GAAP) 
                              -----------   -----------        ------------   -----------   ------------
                                                                                                        
REVENUES                                                                                                
Net oil and gas.............    $1,406          403(5,7)            --           1,809         1,176    
Equity in earnings of                                                                                   
  affiliates................        --           (4)(5)             --              (4)           (3)   
Other.......................         1           --                 36(10)          37            24    
                                ------          ---                ---           -----         -----    
          Total Revenues....     1,407          399                 36           1,842         1,197    
                                ------          ---                ---           -----         -----    
COSTS AND EXPENSES                                                                                      
Purchased crude and products                                                                            
  (Cost of goods sold)......        --          374(7)              11(12)         385           250    
Operating...................       308           56(5,7)            (3)(9,11)      361           235    
Exploration.................        80           (2)(5)             10(8)           88            57    
General and                                                                                             
  administrative............        51            5(7)              --              56            36    
Depreciation, depletion and                                                                             
  amortization..............       372          (34)(3,5)          (10)(8)         328           213    
Taxes other than income                                                                                 
  taxes.....................        --           --                  7(9)            7             5    
Net (gain) loss on asset                                                                                
  disposals and provision                                                                               
  for other losses..........        --          (36)(1,6)           36(10)          --            --    
Restructuring charges.......         4           --                 (4)(11)         --            --    
Finance charges, net........       110           (2)(5)             --             108            70    
Income tax expense..........       212           13(4)              --             225           146    
Minority interest...........        11           --                (11)(12)         --            --    
                                ------          ---                ---           -----         -----    
          Total Costs and                                                                               
            Expenses........     1,148          374                 36           1,558         1,012    
                                ------          ---                ---           -----         -----    
EARNINGS FOR THE PERIOD.....    $  259           25                 --             284           185    
                                ======          ===                ===           =====         =====    

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          The following adjustments are necessary to restate Gulf Canada's
        historical income statements from Canadian GAAP to U.S. GAAP and conform
Gulf Canada's presentation to Conoco's presentation.            

    Canadian GAAP to U.S. GAAP adjustments in Canadian dollars

      1.  Under U.S. GAAP, unrealized gains or losses arising on
                  translation of long-term liabilities in foreign funds would be
               included in earnings in the period in which they arise. The
              capitalized balance on Gulf Canada's balance sheet of such
losses was $75 million at June 30, 2001.    

          2.  An additional pension liability of $10 million at June 30,
2001, recognized under U.S. GAAP.           

             3.  U.S. GAAP requires that impaired assets (Petrovera Resources)
                 be written down to their fair value, rather than undiscounted
              future cash flows from use. Accordingly, Gulf Canada would
                  have recognized additional impairment losses of $46 million in
       2000 and $123 million in 1998, which in turn lowers
depreciation expense by $8 million in 2001. 

     4.  The related tax impacts of all U.S. GAAP adjustments.

             5.  Gulf Canada accounts for certain companies with less than 100
                percent ownership using proportionate consolidation, whereas
                 under U.S. GAAP, these companies would be accounted for under
                the equity method of accounting. There is no profit and loss
impact to these line item reclassifications.

              6.  Under U.S. GAAP, Gulf Canada would have been required to adopt
            SFAS No. 133, "Accounting for Derivative Instruments and
                 Hedging Activities" and SFAS No. 138, "Accounting for Certain
           Derivative Instruments and Certain Hedging Activities,"
                 effective January 1, 2001. Gulf Canada has not designated any
                 of the derivatives it held at January 1, 2001 as hedges under
            the provisions of these standards. The adoption of these
                  standards would have resulted in a pre-tax gain of $51 million
        for the period ended June 30, 2001 (exclusive of the
           cumulative effect adjustment) and the recognition of $3
               million in assets and $62 million in liabilities as of June
30, 2001.                                   

    7.  Gulf Canada reported revenues net of purchase costs,
                  transportation costs and marketing fees. This entry is made to
         reflect revenues gross and to reflect purchase costs,
                  transportation costs and marketing fees in the individual line
               items of cost of goods sold, operating expenses and general
                 and administrative expenses, respectively. There is no profit
         and loss impact to these line item reclassifications.

    Conforming adjustments to reclassify certain amounts in Gulf
       Canada's historical financial statements to conform to Conoco's
presentation                                            

           8.  Gulf Canada reflected undeveloped leasehold amortization as
            depreciation, depletion and amortization expense whereas
         Conoco reflects undeveloped leasehold amortization as
                  exploration expense, which is consistent with U.S. oil and gas
industry practices.                         

       9.  Gulf Canada reflected property taxes as other operating
                  expenses whereas Conoco reflects property taxes as taxes other
than income taxes.                          

           10.  Gulf Canada reflected net (gain) loss on asset disposals and
             provision for other losses in a cost and expense caption.
         Conoco would reflect this activity in other revenues.

             11.  Conoco reflects pension settlements in operating costs whereas
Gulf Canada reported these costs separately.

           12.  Conoco reflects its minority interest as Purchased crude and
products, formerly Cost of goods sold.      

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 The above financial information relates to the acquisition by Conoco of
Gulf Canada and was filed with the SEC on Conoco's Current Report on Form 8-K   
filed on July 31, 2001, as amended by Form 8-K/A filed September 10, 2001, and  
Current Report on Form 8-K filed October 22, 2001 and should be reviewed in     
conjunction with this financial information.                                    

   (C) Phillips reflects foreign currency transaction losses and gains as an
    individual caption, whereas Conoco reflected these transactions in
other income. This adjustment is to conform to the Phillips'  
presentation.                                                 

(D) Recognition of Gulf Canada's preferred stock dividend. Gulf Canada
      reflected preferred stock in the stockholders' equity section of the
       balance sheet. Conoco reflects these shares as a minority interest as
   after the acquisition, such shares represent preferred stock of a
subsidiary.                                                   

 (E) Incremental undeveloped leasehold amortization expense based on the
estimated fair value of the undeveloped leaseholds acquired.  

   (F) Incremental depreciation, depletion and amortization expense for Gulf
        Canada and Crestar based on the step-up to estimated fair value of the
      assets assuming the acquisition occurred on January 1, 2000. Oil and
    gas properties are depreciated on a unit-of-production basis using
  estimated proved reserve quantities attributable to Gulf Canada.

 (G) Phillips reflects oil and gas property impairments as an individual
       caption, whereas Conoco reflected these transactions in depreciation,
  depletion and amortization. This adjustment is to conform to the
Phillips' presentation.                                       

(H) Additional pro forma interest expense related to the borrowing of 
    $4,500 million necessary to fund the Gulf Canada acquisition. This
        entry assumes that the borrowing occurred on January 1, 2000. Interest
  expense calculations are based on Conoco's $4,500 million senior
        unsecured 364-day bridge credit facility used to fund the acquisition.
     Interest expense was calculated using an effective interest rate of
         approximately 4.76 percent. This rate was based on a July 1, 2001 LIBOR
        three-month rate of approximately 3.83 percent. A 1/8th percent change
    in the effective interest rate would change interest expense by $3
       million for the six months ended June 30, 2001. Conoco refinanced the
         364-day bridge credit facility of $4,500 million in the capital markets
in October 2001.                                              

 (I) Income tax benefit related to purchase price adjustments, which was
      calculated using a blended statutory rate of 43 percent for cost and
  expense items (with the exception of interest expense, which was
       calculated using a rate of 58 percent reflecting the deductibility of
interest expense in both Canada and the U.S.).                

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SUPPLEMENTAL OIL AND GAS DISCLOSURES
(UNAUDITED) 
(DOLLARS IN MILLIONS, EXCEPT PER SHARE) 

     Phillips and Conoco are providing the following unaudited, supplemental pro
forma oil and gas disclosures, prepared in accordance with FASB Statement No.   
69, "Disclosures about Oil and Gas Producing Activities," and regulations of the
U.S. Securities and Exchange Commission. While this data was developed with     
reasonable care and disclosed in good faith, it is emphasized that some of the  
data is necessarily imprecise and represents only approximate amounts because of
the subjective judgments involved in developing such information. The           
Standardized Measure projections should not be viewed as realistic estimates of 
future cash flows. Material revisions to estimates of proved reserves may occur 
in the future; development and production of the reserves may not occur in the  
periods assumed; actual prices realized are expected to vary significantly from 
those used; and actual costs also may vary.                                     

ESTIMATED PROVED RESERVES                                                       

The following pro forma estimated reserve quantities, including equity
affiliates, show the effect of the acquisition of Gulf Canada as of December 31,
2000.                                                                           

                                                        [Enlarge/Download Table]

                                                                                    GULF              
                                                          PHILLIPS     CONOCO      CANADA             
                                                         HISTORICAL  HISTORICAL  HISTORICAL  PRO FORMA
                                                         ----------  ----------  ----------  ---------
                                                                                                      
Oil (in millions of barrels)(1).........................   3,597       1,638         267       5,502  
Gas (in billion cubic feet).............................   8,534       6,053       2,800      17,387  

---------------                                                                 
(1) Oil reserves comprise oil and condensate and natural gas liquids expected to
be removed from natural gas deliveries.                                 

ESTIMATED STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS              

     The following pro forma estimated standardized measure of discounted future
net cash flows, including equity affiliates, shows the effect of the acquisition
of Gulf Canada as of December 31, 2000.                                         

     Amounts are computed using the year-end prices and costs (adjusted only for
existing contractual changes), appropriate statutory tax rates and a prescribed 
10% discount factor. Continuation of year-end economic conditions also is       
assumed. The calculation is based on estimates of proved reserves, which are    
revised over time as new data becomes available. Probable or possible reserves  
that may be proved in the future are not considered. The calculation also       
requires assumptions as to the timing of future production of proved reserves,  
and the timing and amount of future development and production costs.           

                                                        [Enlarge/Download Table]

                                                                                  GULF              
                                                        PHILLIPS     CONOCO      CANADA             
                                                       HISTORICAL  HISTORICAL  HISTORICAL  PRO FORMA
                                                       ----------  ----------  ----------  ---------
                                                                                                    
Future cash flows                                                                                   
  Revenues............................................  $110,736      67,540     17,631     195,907 
  Production costs....................................   (30,823)    (11,276)    (2,856)    (44,955)
  Development costs...................................    (7,155)     (3,143)      (914)    (11,212)
  Income tax expense..................................   (27,695)    (20,233)    (5,058)    (52,986)
                                                        --------    --------    -------    -------- 
Future net cash flows.................................    45,063      32,888      8,803      86,754 
Discounted to present value at 10% annual rate........   (24,646)    (15,112)    (3,998)    (43,756)
                                                        --------    --------    -------    -------- 
Total.................................................  $ 20,417      17,776      4,805      42,998 
                                                        ========    ========    =======    ======== 
Minority interest's share of standardized discounted                                                
  net cash flow relating to proved reserves...........  $     --          --        228         228 
                                                        ========    ========    =======    ======== 

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INFORMATION ON SYNCRUDE PROJECT NOT INCLUDED ABOVE                              

   In addition to conventional liquids and natural gas proved reserves, Gulf
Canada has a 9.03 percent interest in proven tar sands in Canada associated with
the Syncrude project. Conoco views the reserves associated with this project and
their development as an integral part of total upstream operations. However,    
U.S. Securities and Exchange Commission regulations define these reserves as    
mining related and not a part of conventional oil and gas reserves. The         
following is Gulf Canada's share of reserves and estimated standardized measure 
of discounted future net cash flows associated with the Syncrude project at     
December 31, 2000:                                                              

                                                                [Download Table]

                                                                 GULF   
                                                                CANADA  
                                                              HISTORICAL
                                                              ----------
                                                                        
Syncrude proved reserves at December 31, 2000 (in millions              
  of barrels)...............................................     284    

   The following estimate of discounted future net cash flows was calculated
using December 31, 2000 unescalated prices and costs and a discount rate of 10  
percent.                                                                        

                                                                [Download Table]

                                                                 GULF   
                                                                CANADA  
                                                              HISTORICAL
                                                              ----------
                                                                        
Syncrude estimate of discounted future net cash flows.......     $663   

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DESCRIPTION OF NEW PARENT CAPITAL STOCK 

     The following description of the material terms of the capital stock of New
Parent includes a summary of specified provisions of New Parent's restated      
certificate of incorporation and by-laws that will be in effect upon completion 
of the merger. This description is subject to the relevant provisions of        
Delaware law and is qualified by reference to New Parent's restated certificate 
of incorporation and by-laws, copies of which are attached as Annex B and C,    
respectively, to this joint proxy statement/prospectus and are incorporated in  
this joint proxy statement/prospectus by reference.                             

AUTHORIZED CAPITAL STOCK                                                        

    New Parent will be authorized to issue 2.5 billion shares of common stock,
par value $0.01 per share, and 500 million shares of preferred stock, par value 
$0.01 per share.                                                                

COMMON STOCK                                                                    

  The shares of New Parent common stock to be issued in the merger will be
duly authorized, validly issued, fully paid and nonassessable. Each holder of   
New Parent common stock will be entitled to one vote per share in the election  
of directors and on all other matters submitted to the vote of stockholders;    
provided, however, that, except as otherwise required by law, holders of New    
Parent common stock will not be entitled to vote on any amendment to New        
Parent's restated certificate of incorporation that relates solely to the terms 
of any series of New Parent preferred stock if holders of the New Parent        
preferred stock are entitled to vote on the amendment under New Parent's        
restated certificate of incorporation or Delaware law. No holder of New Parent  
common stock may cumulate votes in voting for New Parent directors.             

     Subject to the rights of the holders of any New Parent preferred stock that
may be outstanding from time to time, each share of New Parent common stock will
have an equal and ratable right to receive dividends as may be declared by the  
New Parent Board of Directors out of funds legally available for the payment of 
dividends, and, in the event of the liquidation, dissolution or winding up of   
New Parent, will be entitled to share equally and ratably in the assets         
available for distribution to New Parent stockholders. No holder of New Parent  
common stock will have any preemptive right to subscribe for any securities of  
New Parent.                                                                     

  Application will be made to list New Parent common stock on the New York
Stock Exchange under the trading symbol "COP."                                  

PREFERRED STOCK                                                                 

  New Parent's restated certificate of incorporation permits New Parent to
issue up to 500 million shares of New Parent preferred stock in one or more     
series with designations and powers, preferences, and rights, and such          
qualifications, limitations and restrictions thereof, as may be fixed by the New
Parent Board of Directors without any further action by New Parent stockholders.

 In connection with New Parent's adoption of a rights plan (as described
below), 10 million shares of New Parent preferred stock will be designated      
Series A Junior Participating Preferred Stock. New Parent Series A preferred    
stock will be issuable only in connection with the exercise of rights under the 
rights plan.                                                                    

 Each share of New Parent Series A preferred stock will be entitled to a
minimum preferential quarterly dividend payment per share of the greater of $1  
or 100 times the dividend declared per share of New Parent common stock. In the 
event of the liquidation, dissolution or winding up of New Parent, the holders  
of New Parent Series A preferred stock will be entitled to a minimum            
preferential liquidation payment per share equal to the greater of $100 (plus   
all accrued and unpaid dividends) or 100 times the liquidation payment made per 
share of New Parent common stock. Each share of New Parent Series A preferred   
stock will have 100 votes on all matters submitted to a vote of New Parent      
stockholders, voting together with the New Parent common stock. In the event of 
any merger, consolidation or other                                              
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transaction in which shares of New Parent common stock are exchanged for        
securities, cash and/or any other property, each share of New Parent Series A   
preferred stock will be entitled to receive 100 times the amount of securities, 
cash and/or other properties received per share of New Parent common stock.     
These rights will be protected by customary antidilution provisions.            

RIGHTS PLAN                                                                     

Before the effective time of the merger, New Parent will enter into a 
rights agreement. As with most rights agreements, the terms of the New Parent   
rights agreement are complex and not easily summarized, particularly as they    
relate to the acquisition of New Parent common stock and to the exercisability  
of the rights. Accordingly, this summary may not contain all of the information 
that is important to you, and is qualified in its entirety by reference to the  
form of the New Parent rights agreement which we have filed as an exhibit to the
registration statement on Form S-4 of which this joint proxy                    
statement/prospectus is a part.                                                 

Under the terms of the New Parent rights agreement, each share of New 
Parent common stock issued will have attached to it a right to purchase one     
one-hundredth of a share of New Parent Series A preferred stock. The purchase   
price per one-hundredth of a share of New Parent Series A preferred stock under 
our rights agreement will be determined prior to the effective time of the      
merger.                                                                         

Initially, the rights under the New Parent rights agreement will be   
attached to certificates representing New Parent common stock and no separate   
certificates representing the rights will be distributed. The rights will       
separate from the New Parent common stock and be represented by separate        
certificates at the earlier of (1) the first date of a public announcement that 
a person has acquired 15% or more of the outstanding New Parent common stock or 
(2) the date as may be determined by the New Parent Board of Directors after the
commencement by a person of a tender offer or exchange offer for 15% or more of 
the outstanding New Parent common stock.                                        

  After the rights separate from the New Parent common stock, certificates
representing the rights will be mailed to record holders of New Parent common   
stock. Once distributed, the rights certificates alone will represent the       
rights.                                                                         

    The rights will not be exercisable until the date the rights separate from
the New Parent common stock. The rights will expire on the tenth anniversary of 
the date of the rights agreement unless earlier redeemed or exchanged by New    
Parent.                                                                         

  If an acquiror obtains beneficial ownership of 15% or more of New Parent
common stock, then each right will be adjusted so that it will entitle the      
holder (other than the acquiror, whose rights will become void) to purchase a   
number of shares of New Parent common stock equal to two times the exercise     
price of the right.                                                             

  If an acquiror obtains beneficial ownership of 15% or more of New Parent
common stock and any of the following occurs:                                   

- New Parent merges into or consolidates with another entity,         

- an acquiring entity merges into New Parent with New Parent as the   
    surviving entity and the outstanding shares of New Parent common stock
are converted into cash, property or securities, or               

- New Parent sells more than 50% of its assets or earning power;      

then each right will entitle the holder to purchase a number of shares of common
stock of the acquiror having a then-current market value of twice the exercise  
price of the right.                                                             

   In the event of a public announcement of an acquiror obtaining beneficial
ownership of 15% or more of the outstanding shares of New Parent common stock   
(but only if the beneficial ownership of the acquiror is less than 50%), the New
Parent Board of Directors may, at its option, exchange all or a part of the     
outstanding rights for New Parent common stock at an exchange ratio of one share
of New Parent common stock per right, adjusted to reflect stock splits, stock   
dividends or similar transactions.                                              
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     The New Parent Board of Directors may, at its option, redeem the rights, in
whole but not in part, at any time prior to the time an acquiror obtains        
beneficial ownership of 15% or more of the outstanding shares of New Parent     
common stock. The redemption price will be $.01 per right, adjusted to reflect  
stock splits, stock dividends or similar transactions. New Parent may, at its   
option, pay the redemption price in cash, common stock or other consideration as
deemed appropriate by the New Parent Board of Directors.                        

     The terms of the rights may be amended by the New Parent Board of Directors
without the consent of the holders of the rights, except that, after an acquiror
obtains 15% or more of New Parent common stock, the New Parent rights agreement 
may not be amended in any manner that would adversely affect the interests of   
the rights holders.                                                             

    The New Parent rights agreement will contain rights that will have certain
anti-takeover effects. The rights will cause substantial dilution to a person or
group that attempts to acquire New Parent on terms not approved by the New      
Parent Board of Directors. However, since the rights may either be redeemed or  
otherwise made inapplicable by New Parent prior to an acquiror obtaining        
beneficial ownership of 15% or more of New Parent common stock, the rights      
should not interfere with any merger or business combination approved by the New
Parent Board of Directors prior to that occurrence. In addition, the rights     
should not interfere with a proxy contest.                                      

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COMPARISON OF STOCKHOLDER RIGHTS

Conoco, Phillips and New Parent are incorporated under the laws of the
State of Delaware. In accordance with the merger agreement, at the effective    
time of the merger, the holders of Conoco common stock and Phillips common stock
will exchange their respective shares of common stock for New Parent common     
stock. Your rights as a New Parent stockholder will be governed by Delaware law 
and New Parent's restated certificate of incorporation and by-laws of New       
Parent. The following is a comparison of the material rights of Conoco          
stockholders, Phillips stockholders and New Parent stockholders under each      
company's organizational documents and the statutory framework in Delaware.     

The forms of the New Parent restated certificate of incorporation and 
by-laws are included in this joint proxy statement/prospectus as Annex B and    
Annex C, respectively, and are incorporated herein by reference. Copies of the  
restated certificates of incorporation and by-laws of Conoco and Phillips were  
previously filed with the Securities and Exchange Commission. See "References to
Additional Information" on the inside front cover of this document and "Where   
You Can Find More Information" on page 125. The following description does not  
purport to be complete and is qualified by reference to Delaware law, and the   
restated certificates of incorporation and by-laws of Conoco, Phillips and New  
Parent.                                                                         

COMPARISON OF CERTAIN CERTIFICATE OF INCORPORATION AND BY-LAW PROVISIONS        

                                                        [Enlarge/Download Table]

PROVISION           CONOCO                 PHILLIPS               NEW PARENT           
---------           ------                 --------               ----------           
                                                                                       
AUTHORIZED CAPITAL  4,850 million, of      1,300 million, of      3,000 million, of    
STOCK               which (1) 4,600        which (1) 1,000        which (1) 2,500      
                    million are shares of  million are shares of  million, are shares  
                    common stock, par      common stock, par      of common stock, par 
                    value $0.01 per        value $1.25 per        value $0.01 per      
                    share, and (2) 250     share, and (2) 300     share, and (2) 500   
                    million are shares of  million are shares of  million are shares of
                    preferred stock, par   preferred stock, par   preferred stock, par 
                    value $0.01 per        value $1.00 per        value $0.01 per      
                    share.                 share.                 share.               

BOARD OF DIRECTORS                                                                     
SIZE OF BOARD       The board of           The board of           The board of         
                    directors must have    directors must have    directors must have  
                    at least 6 and not     at least 9 and not     at least 6 and not   
                    more than 15           more than 21           more than 20         
                    directors. The exact   directors. The exact   directors. The exact 
                    number is determined   number is fixed from   number is determined 
                    from time to time by   time to time by        from time to time by 
                    resolution adopted by  resolution of the      resolution adopted by
                    a majority of the      board of directors.    a majority of the    
                    entire board of        Phillips currently     entire board of      
                    directors. Conoco      has 11 directors.      directors. Initially,
                    currently has 10                              New Parent will have 
                    directors.                                    16 directors.        

QUALIFICATION OF    Directors need not be  Directors need not be  Directors need not be
DIRECTORS           stockholders.          stockholders. Any      stockholders. Any    
                                           individual is          individual is        
                                           eligible for election  eligible for election
                                           as a director,         as a director,       
                                           provided that the      provided that (1) a  
                                           individual is less     director who is also 
                                           than 70 years old.     an employee of New   
                                           Any employee who is    Parent (a) is not    
                                           also a                                      

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PROVISION             CONOCO                 PHILLIPS               NEW PARENT           
---------             ------                 --------               ----------           

                                                                                         
                                             director, including    eligible for         
                                             the Chairman of the    appointment as a     
                                             Board, must resign as  director after       
                                             a director upon        attaining the age of 
                                             retiring as an         65 and (b)           
                                             employee. A majority   automatically ceases 
                                             of the board must be   to be a director on  
                                             "independent outside   termination of       
                                             directors."            employment with New  
                                                                    Parent and (2) no    
                                                                    individual is        
                                                                    eligible for         
                                                                    appointment as a     
                                                                    director after       
                                                                    attaining the age of 
                                                                    70. These            
                                                                    restrictions do not  
                                                                    apply to Archie W.   
                                                                    Dunham, who may      
                                                                    continue to be       
                                                                    reelected as a       
                                                                    director until he is 
                                                                    70.                  
                                                                    New Parent's restated
                                                                    certificate of       
                                                                    incorporation        
                                                                    prohibits any other  
                                                                    limitation on the    
                                                                    qualification of     
                                                                    directors, other than
                                                                    as required by       
                                                                    applicable law or as 
                                                                    set forth in New     
                                                                    Parent's restated    
                                                                    certificate of       
                                                                    incorporation or as  
                                                                    set forth in a by-law
                                                                    adopted by the board 
                                                                    with respect to age  
                                                                    and cessation of     
                                                                    employment by the    
                                                                    company.             

REMOVAL OF DIRECTORS  A director may only    Delaware law provides  Same as Conoco.      
                      be removed for cause   that a director or                          
                      upon the affirmative   the entire board of                         
                      vote of the shares     directors of a                              
                      representing a         Delaware corporation                        
                      majority of the votes  may be removed, with                        
                      entitled to be cast    or without cause, by                        
                      by the Company's       the holders of a                            
                      voting stock           majority of the                             
                      (excluding any         shares then entitled                        
                      preferred stock        to vote at an                               
                      entitled to vote only  election of                                 
                      in the event of        directors.                                  
                      dividend arrearages).                                              
                      In general, unless                                                 
                      the board of                                                       
                      directors determines                                               
                      that the removal of                                                
                      the director is in                                                 
                      the best interests of                                              
                      the company (in which                                              
                      case the                                                           

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PROVISION             CONOCO                 PHILLIPS               NEW PARENT           
---------             ------                 --------               ----------           

                                                                                         
                      following definition                                               
                      does not apply),                                                   
                      "cause" is defined to                                              
                      mean (1) a felony                                                  
                      conviction, no longer                                              
                      subject to direct                                                  
                      appeal, (2) willful                                                
                      misconduct in                                                      
                      performance of duties                                              
                      to the Company, or                                                 
                      (3) mental                                                         
                      incompetence.                                                      
                      Notwithstanding the                                                
                      foregoing, directors                                               
                      elected by preferred                                               
                      stockholders,                                                      
                      pursuant to                                                        
                      provisions applicable                                              
                      in the case of                                                     
                      arrearages in                                                      
                      dividend payments or                                               
                      other defaults                                                     
                      contained in the                                                   
                      board of directors'                                                
                      resolutions                                                        
                      establishing such                                                  
                      series of preferred                                                
                      stock, may be removed                                              
                      by the preferred                                                   
                      stockholders in                                                    
                      accordance with the                                                
                      provisions of the                                                  
                      resolutions.                                                       

CUMULATIVE VOTING     None.                  None.                  None.                

CLASSES OF DIRECTORS  The board of           All directors serve    Same as Conoco.      
                      directors is           one-year terms and     Initially Class I,   
                      classified into three  are elected at each    Class II and Class   
                      classes of             annual meeting.        III directors will   
                      directors --                                  hold office until the
                      designated Class I,                           first, second and    
                      Class II and Class                            third, respectively, 
                      III. Each class                               annual meeting       
                      consists, as nearly                           following the        
                      as possible, of                               completion of the    
                      one-third of the                              merger. See          
                      total number of                               "Directors and       
                      directors                                     Management Following 
                      constituting the                              the Merger."         
                      entire board of                                                    
                      directors. Each                                                    
                      director serves for a                                              
                      three-year term.                                                   

VACANCIES ON THE      Vacancies (unless      Vacancies and newly-   Same as Conoco.      
BOARD                 they are the result    created directorships                       
                      of the action of       are filled by an                            
                      stockholders) and      individual elected by                       
                      newly-created          a majority vote of                          
                      directorships are      the remaining                               
                      filled by the          directors, even                             
                      majority vote of the   though less than a                          
                      remaining directors    quorum.                                     
                      in office, even                                                    
                      though                                                             

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PROVISION              CONOCO                 PHILLIPS               NEW PARENT           
---------              ------                 --------               ----------           

                                                                                          
                       less than a quorum,                                                
                       or by a sole                                                       
                       remaining director.                                                
                       Vacancies that result                                              
                       from the action of                                                 
                       stockholders are                                                   
                       filled by the                                                      
                       stockholders.                                                      

BOARD QUORUM AND VOTE  A majority of the      A majority of the      Same as Conoco.      
REQUIREMENTS           entire board of        total number of                             
                       directors constitutes  directors then in      Additionally, the New
                       a quorum.              office constitutes a   Parent's restated    
                                              quorum.                certificate of       
                       The affirmative vote   The affirmative vote   incorporation        
                       of a majority of       of a majority of the   prohibits any special
                       directors present at   total directors then   quorum requirements  
                       a meeting at which     in office constitutes  or any supermajority 
                       there is a quorum      action by the board    voting requirements  
                       constitutes action by  of directors.          for action by the New
                       the board of                                  Parent Board of      
                       directors.                                    Directors other than 
                                                                     those required by law
                                                                     or set forth in the  
                                                                     restated certificate 
                                                                     of incorporation,    
                                                                     which is attached as 
                                                                     Annex B to this joint
                                                                     proxy                
                                                                     statement/prospectus.

STOCKHOLDER MEETINGS                                                                      

ANNUAL MEETINGS        Date, time and place   Date, time and place   Same as Conoco.      
                       of the annual meeting  of the annual meeting                       
                       is determined by the   is determined by the                        
                       board of directors.    board of directors.                         
                                              Notice must be mailed                       
                                              to stockholders no                          
                                              less than 10 and no                         
                                              more than 60 days                           
                                              prior to the meeting.                       

SPECIAL MEETINGS       Special meetings may   Special meetings may   Same as Conoco.      
                       only be called by      only be called by a                         
                       resolution of the      resolution approved                         
                       board of directors or  by a majority of the                        
                       by the Chairman of     entire board of                             
                       the Board. The power   directors or by the                         
                       of stockholders to     Chairman or Vice                            
                       call a special         Chairman of the Board                       
                       meeting is             or by the President.                        
                       specifically denied.                                               


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PROVISION              CONOCO                 PHILLIPS               NEW PARENT           
---------              ------                 --------               ----------           

                                                                                          
QUORUM REQUIREMENTS    The presence, in       The holders of a       Same as Conoco.      
                       person or by proxy,    majority of the                             
                       of the holders of      issued and                                  
                       shares of capital      outstanding shares of                       
                       stock entitled to      common stock, present                       
                       cast a majority of     in person or by                             
                       the votes that could   proxy, constitute a                         
                       be cast at the         quorum for all                              
                       meeting by the         purposes at any                             
                       holders of all of the  meeting of                                  
                       outstanding shares of  stockholders.                               
                       capital stock                                                      
                       entitled to vote at                                                
                       the meeting                                                        
                       constitutes a quorum.                                              

ACTION BY WRITTEN      None permitted.        None permitted.        None permitted.      
CONSENT                                                                                   

NOTICE REQUIREMENTS    In general, to bring   In general, to bring   See Conoco first     
FOR STOCKHOLDER        a matter before an     a matter before an     paragraph.           
NOMINATIONS AND OTHER  annual meeting or to   annual meeting or to                        
PROPOSALS              nominate a candidate   nominate a candidate   If the annual meeting
                       for director, a        for director, a        is not within 30 days
                       stockholder must give  stockholder must give  before or after the  
                       notice of the          notice of the          anniversary date of  
                       proposed matter or     proposed matter or     the preceding annual 
                       nomination not less    nomination not less    meeting, the         
                       than 90 and not more   than 60 and not more   stockholder notice   
                       than 120 days prior    than 90 days prior to  must be received no  
                       to the first           the first anniversary  later than the later 
                       anniversary date of    date of the            of (1) 90 days prior 
                       the immediately        immediately preceding  to the anniversary   
                       preceding annual       annual meeting.        date and (2) close of
                       meeting.                                      business on the 10th 
                                              If the annual meeting  day following the day
                       If the annual meeting  is not within 30 days  on which notice of   
                       is not within 30 days  before or 60 days      the annual meeting   
                       before or after the    after the anniversary  was mailed or first  
                       anniversary date of    date of the preceding  publicly disclosed,  
                       the preceding annual   annual meeting, the    whichever first      
                       meeting, the           stockholder notice     occurs.              
                       stockholder notice     must be received no                         
                       must be received no    earlier than the 90th                       
                       later than the close   day prior to the                            
                       of business on the     annual meeting and no                       
                       10th day following     later than the close                        
                       the day on which       of business the later                       
                       notice of the annual   of (1) the 60th day                         
                       meeting was mailed or  prior to the                                
                       first publicly         anniversary date and                        
                       disclosed, whichever   (2) close of business                       
                       first occurs.          on the 10th day                             
                                              following the day on                        
                                              which notice of the                         
                                              annual meeting was                          
                                              announced publicly.                         


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PROVISION             CONOCO                 PHILLIPS               NEW PARENT     
---------             ------                 --------               ----------     

                                                                                   
CERTIFICATE TAKEOVER  Conoco's restated      Phillips' restated     Same as Conoco.
RESTRICTIONS          certificate of         certificate of                        
                      incorporation          incorporation                         
                      requires that certain  requires the                          
                      business combinations  affirmative vote of                   
                      (including mergers     75% of the                            
                      and consolidations     outstanding shares                    
                      and sales, leases and  entitled to vote for                  
                      exchanges of           a merger,                             
                      substantially all of   consolidation, sale                   
                      Conoco's assets)       or lease of all or                    
                      involving a person or  any substantial part                  
                      entity that            of the assets of                      
                      beneficially owns 15%  Phillips, or                          
                      or more of the         liquidation,                          
                      outstanding shares of  spin-off, split-off,                  
                      Conoco voting stock    split-up or any                       
                      or is an affiliate of  similar transaction                   
                      that person, which we  involving an                          
                      refer to as a related  interested person                     
                      person, must be        that beneficially                     
                      approved by (1) at     owns 10% or more of                   
                      least 80% of the       the outstanding                       
                      votes entitled to be   shares of Phillips                    
                      cast by the voting     common stock or is an                 
                      stock and (2) at       affiliate of that                     
                      least 66 2/3% of the   person. This                          
                      votes entitled to be   supermajority                         
                      cast by the voting     requirement does not                  
                      stock other than       apply if:                             
                      voting stock owned by                                        
                      the related person.    - directors who are                   
                      These supermajority      unaffiliated with                   
                      requirements do not      the interested                      
                      apply if:                person and were in                  
                                               office before the                   
                      - a majority of the      interested person                   
                        directors who are      became an                           
                        unaffiliated with      interested person                   
                        the related person     or were                             
                        and who were in        subsequently                        
                        office before the      approved by 75% of                  
                        interested person      the unaffiliated                    
                        became an              directors to become                 
                        interested person      a director, which                   
                        approve the            we refer to as the                  
                        transaction, or        continuing                          
                      - certain fair price     directors,                          
                        conditions are met     constitute a                        
                        that in general        majority of the                     
                        provide that the       entire board of                     
                        payment received by    directors, and a                    
                        the stockholders in    majority of such                    
                        the business           continuing                          
                        combination is not     directors approve                   
                        less than the          the transaction                     
                        amount the related     with the interested                 
                        person paid or         person, or                          
                        agreed to pay for    - a number of other                   
                        any shares of the      conditions are met,                 
                        company's voting       including that the                  
                                               payment received by                 
                                               stockholders must                   
                                               be at least equal                   
                                               to the highest                      
                                               price paid by the                   
                                               person for shares                   

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PROVISION       CONOCO                 PHILLIPS               NEW PARENT           
---------       ------                 --------               ----------           
                                                                                   
                  stock acquired         prior to the                              
                  within one year of     transaction.                              
                  the business                                                     
                  combination.                                                     

AMENDMENTS TO                                                                      
ORGANIZATIONAL                                                                     
DOCUMENTS                                                                          
CERTIFICATE OF  Amendments generally   See Conoco first       See Conoco first     
INCORPORATION   must be approved by    paragraph.             paragraph.           
                the board of                                                       
                directors and by a                                                 
                majority of the                                                    
                outstanding stock                                                  
                entitled to vote on                                                
                the amendment, and,                                                
                if applicable, by a                                                
                majority of the                                                    
                outstanding stock of                                               
                each class or series                                               
                entitled to vote on                                                
                the amendment as a                                                 
                class or series.                                                   

                The affirmative vote   The affirmative vote   The affirmative vote 
                of shares              of at least 80% of     of shares            
                representing not less  the voting power of    representing not less
                than 80% of the votes  all outstanding        than 80% of the votes
                entitled to be cast    shares entitled to     entitled to be cast  
                by the voting stock    vote generally for     by the voting stock  
                (excluding any         directors is required  (excluding any       
                preferred stock        to amend the           preferred stock      
                entitled to vote only  provisions that (1)    entitled to vote only
                in the event of        deny stockholders the  in the event of      
                dividend arrearages)   right to call a        dividend arrearages) 
                is required to alter,  special meeting or to  is required to alter,
                amend or adopt any     act by written         amend or adopt any   
                provision              consent and (2)        provision            
                inconsistent with or   require                inconsistent with or 
                repeal the provisions  super-majority         repeal the provisions
                that (1) control the   approval of certain    that (1) control the 
                constitution of the    business transactions  constitution of the  
                board and (2) deny     with interested        board of directors,  
                stockholders the       persons, as described  (2) deny stockholders
                right to call a        under "-- Certificate  the right to call a  
                special meeting or to  Takeover               special meeting or to
                act by written         Restrictions."         act by written       
                consent.                                      consent, (3) limit or
                                                              eliminate the        
                Additionally, the                             liability of         
                affirmative vote of                           directors to the     
                shares representing                           corporation, (4)     
                (1) not less than 80%                         establish the name of
                of the votes entitled                         the corporation as   
                to be cast by the                             "New Parent" (and, in
                voting stock                                  the case of this     
                (excluding any                                clause (4), any such 
                preferred stock                               amendment or         
                entitled to vote only                         alteration must also 
                in the event                                  be                   

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PROVISION  CONOCO                 PHILLIPS               NEW PARENT           
---------  ------                 --------               ----------           
                                                                              
           of dividend                                   recommended          
           arrearages) voting                            unanimously by the   
           together as a single                          entire board of      
           class and (2) not                             directors), and (5)  
           less than 66 2/3% of                          set the 80%          
           the votes entitled to                         supermajority        
           be cast by the voting                         threshold applicable 
           stock (excluding any                          with respect to the  
           preferred stock                               provisions above.    
           entitled to vote only                                              
           in the event of                               Additionally, the    
           dividend arrearages)                          affirmative vote of  
           not beneficially                              shares representing  
           owned, directly or                            (1) not less than 80%
           indirectly, by any                            of the votes entitled
           related person is                             to be cast by the    
           required to amend,                            voting stock         
           repeal, or adopt any                          (excluding any       
           provisions                                    preferred stock      
           inconsistent with the                         entitled to vote only
           provisions                                    in the event of      
           restricting certain                           dividend arrearages) 
           business combinations                         voting together as a 
           with related persons,                         single class and (2) 
           as described under                            not less than 66 2/3%
           "-- Certificate                               of the votes entitled
           Takeover                                      to be cast by the    
           Restrictions."                                voting stock not     
                                                         beneficially owned,  
                                                         directly or          
                                                         indirectly, by any   
                                                         related person is    
                                                         required to amend,   
                                                         repeal, or adopt any 
                                                         provisions           
                                                         inconsistent with,   
                                                         the provisions       
                                                         restricting certain  
                                                         business combinations
                                                         with related persons,
                                                         as described under   
                                                         "-- Certificate      
                                                         Takeover             
                                                         Restrictions."       

BY-LAWS    In general, Conoco's   Phillips' by-laws may  In general, New      
           by-laws may be         be altered, amended    Parent's by-laws may 
           altered, amended or    or repealed by the     be altered, amended  
           repealed by (1)        affirmative vote of a  or repealed by (1)   
           action of the board    majority of            action of the board  
           of directors or (2)    stockholders present   of directors or (2)  
           by the affirmative     in person or by        by the affirmative   
           vote of a majority of  proxy, at any annual   vote of a majority of
           votes entitled to be   meeting (or a special  votes entitled to be 
           cast by the voting     meeting called for     cast by the voting   
           stock at a meeting of  this purpose) at       stock (excluding any 
           stockholders,          which a quorum is      preferred stock      
           provided that the      present. Except for    entitled to vote only
           proposed alteration,   those by- laws         in the event of      
           amendment or repeal    adopted by the         dividend arrearages) 
           was contained in the   stockholders and       at a meeting of      
           notice of that         those by-laws as to                         
           meeting.               which the                                   

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PROVISION  CONOCO                 PHILLIPS               NEW PARENT           
---------  ------                 --------               ----------           

                                                                              
                                  power to make, alter,  stockholders,        
                                  repeal or amend is     provided that the    
                                  reserved to the        proposed alteration, 
                                  stockholders, the      amendment or repeal  
                                  board of directors     was contained in the 
                                  may also make, alter,  notice of that       
                                  repeal or amend the    meeting.             
                                  by-laws.                                    

           However, the                                  However, the         
           alteration, amendment                         alteration, amendment
           or repeal of, or the                          or repeal of, or the 
           adoption of a by-law                          adoption of a by- law
           inconsistent with any                         inconsistent with any
           of the following                              of the following     
           provisions by                                 provisions by        
           stockholder action                            stockholder action   
           requires (a) an                               requires an          
           affirmative vote of                           affirmative vote of  
           80% of the votes                              80% of the votes     
           entitled to be cast                           entitled to be cast  
           by the voting stock                           by the voting stock  
           (excluding any                                (excluding any       
           preferred stock                               preferred stock      
           entitled to vote only                         entitled to vote only
           in the event of                               in the event of      
           dividend arrearages)                          dividend arrearages):
           and (b) if there are                                               
           multiple classes of                           - provisions         
           common stock, a                               regarding special    
           majority of the votes                           meetings of        
           entitled to be cast                             stockholders,      
           by each class, voting                         - provisions         
           separately:                                   regarding prohibition
                                                           on action by       
           - provisions                                    written consent of 
           regarding special                               stockholders,      
             meetings of                                 - provisions         
             stockholders,                               regarding procedures 
           - provisions                                    for nomination of  
           regarding prohibition                           directors,         
             on action by                                - provisions         
             written consent of                          regarding business   
             stockholders,                                 properly brought   
           - provisions                                    before the annual  
           regarding procedures                            meeting of         
             for nomination of                             stockholders,      
             directors,                                  - provisions         
           - provisions                                  regarding the number,
           regarding business                              classification and 
             properly brought                              qualification of   
             before the annual                             directors,         
             meeting of                                  - procedures for     
             stockholders,                               filling vacancies on 
           - provisions                                    the board of       
           regarding the number                            directors,         
             and classification                          - provisions         
             of directors,                               regarding procedures 
           - provisions                                    for removing       
           regarding procedures                            directors,         
             for filling                                 - provisions setting 
             vacancies on the                              forth the roles and
                                                           responsibility of  
                                                           the                

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PROVISION            CONOCO                  PHILLIPS                NEW PARENT           
---------            ------                  --------                ----------           
                                                                                          
                       board of directors,                             Chairman of the    
                       and                                             Board of Directors,
                     - provisions                                      the Chief Executive
                     regarding procedures                              Officer and        
                       for removing                                    President,         
                       directors.                                    - provisions         
                                                                     regarding the        
                                                                       succession         
                                                                       arrangements and   
                                                                       modification of Mr.
                                                                       Dunham's and Mr.   
                                                                       Mulva's employment 
                                                                       contracts.         

EXCULPATION AND                                                                           
INDEMNIFICATION OF                                                                        
DIRECTORS, OFFICERS                                                                       
AND EMPLOYEES                                                                             
EXCULPATION          A director shall not    Same as Conoco.         No director shall be 
                     be personally liable                            liable to the company
                     to the company for                              or its stockholders  
                     monetary damages for                            for breach of        
                     breach of fiduciary                             fiduciary duty as a  
                     duty as a director,                             director to the      
                     except for liability:                           fullest extent that  
                                                                     the Delaware General 
                     - for any breach of                             Corporation Law or   
                     the director's duty                             other law of the     
                       of loyalty to the                             state of Delaware    
                       company or its                                permits the          
                       stockholders,                                 limitation or        
                     - for acts or                                   elimination of       
                     omissions not in good                           liability of         
                       faith or that                                 directors.           
                       involve intentional                                                
                       misconduct or                                                      
                       knowing violation                                                  
                       of law,                                                            
                     - for unlawful                                                       
                     payment of dividends                                                 
                       under Section 174                                                  
                       of the Delaware                                                    
                       General Corporation                                                
                       Law, or                                                            
                     - for any transaction                                                
                       from which the                                                     
                       directors derived                                                  
                       an improper                                                        
                       personal benefit.                                                  

                     Each of the above provisions protects Conoco, Phillips and New Parent
                     directors, as the case may be, against personal liability for        
                     monetary damages related to breaches of their fiduciary duty of care.
                     None of the above provisions eliminates the director's duty of care  
                     nor has any effect on the availability of                            

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PROVISION        CONOCO                  PHILLIPS                NEW PARENT           
---------        ------                  --------                ----------           

                                                                                      
                 equitable remedies, such as an injunction or rescission, based upon a
                 director's breach of his or her duty of care.                        

INDEMNIFICATION  In general, the         In general, the         Same as Conoco.      
                 by-laws provide for     by-laws provide for                          
                 the indemnification     indemnification, to                          
                 of any director or      the fullest extent                           
                 officer who was or is   authorized by                                
                 a party to any          Delaware law, for                            
                 threatened, pending     each individual who                          
                 or completed action     is a party to, or                            
                 by reason of his or     otherwise involved                           
                 her status as a         in, any proceeding                           
                 director or officer     because of his or her                        
                 against any expenses,   status as a director,                        
                 judgments, fines or     officer or employee                          
                 settlements actually    of Phillips.                                 
                 and reasonably                                                       
                 incurred by the         Indemnification in                           
                 director or officer,    connection with a                            
                 if the individual:      proceeding brought by                        
                                         the director, officer                        
                 - acted in good faith   or employee is                               
                   and in a manner       permitted only if the                        
                   reasonably believed   proceeding was                               
                   to be in, or not      authorized by the                            
                   opposed to, the       board of directors.                          
                   best interests of                                                  
                   the company; and      The company must                             
                 - with respect to any   advance expenses to a                        
                   criminal action,      director, officer or                         
                   had no reasonable     employee upon receipt                        
                   cause to believe      of an undertaking to                         
                   the conduct was       repay the advanced                           
                   unlawful.             amount if it is                              
                                         ultimately determined                        
                 The company will        that the individual                          
                 advance expenses to a   is not entitled to                           
                 director or officer     indemnification.                             
                 upon receipt of an                                                   
                 undertaking to repay                                                 
                 the advanced amount                                                  
                 if it is ultimately                                                  
                 determined that the                                                  
                 individual is not                                                    
                 entitled to                                                          
                 indemnification.                                                     

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LEGAL MATTERS 

 The validity of the New Parent common stock offered by this joint proxy
statement/prospectus will be passed upon for New Parent by Wayne C. Byers, Vice 
President, Treasurer and Assistant Secretary of New Parent, and Kenneth E.      
Rogers, Vice President, Secretary and Assistant Treasurer of New Parent.        

EXPERTS 

     The consolidated financial statements of Conoco as of December 31, 2000 and
1999, and for each of the three years in the period ended December 31, 2000,    
incorporated in this prospectus by reference to the Current Report on Form 8-K/A
of Conoco filed with the SEC on September 10, 2001, and the financial statement 
schedule incorporated in this prospectus by reference to the Annual Report on   
Form 10-K of Conoco for the year ended December 31, 2000, have been so          
incorporated in reliance on the reports of PricewaterhouseCoopers LLP,          
independent accountants, given on the authority of said firm as experts in      
auditing and accounting.                                                        

   The consolidated financial statements of Gulf Canada Resources Limited at
December 31, 2000 and 1999, and for each of the three years in the period ended 
December 31, 2000, incorporated in this joint proxy statement/prospectus by     
reference to Conoco's Current Report on Form 8-K/A filed with the SEC on        
September 10, 2001, have been audited by Ernst & Young LLP, independent         
chartered accountants, as set forth in their report included therein, and are   
incorporated herein by reference in reliance upon such report given on the      
authority of such firm as experts in accounting and auditing.                   

Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements and schedule of Phillips included in Phillips' Annual      
Report on Form 10-K for the year ended December 31, 2000, as amended, as set    
forth in their report, which is incorporated by reference in this joint proxy   
statement/prospectus. Phillips' financial statements and schedule are           
incorporated by reference in reliance on Ernst & Young LLP's report, given on   
their authority as experts in accounting and auditing.                          

Ernst & Young LLP have also audited the consolidated balance sheet of 
ConocoPhillips at December 4, 2001, as set forth in their report. We have       
included the ConocoPhillips balance sheet in this joint proxy                   
statement/prospectus in reliance on Ernst & Young LLP's report, given on their  
authority as experts in accounting and auditing.                                

    The consolidated financial statements of Tosco Corporation at December 31,
2000 and 1999, and for each of the years then ended, incorporated in this joint 
proxy statement/prospectus by reference to Phillips' Current Report on Form     
8-K/A filed with the SEC on October 31, 2001, have been so incorporated in      
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,  
given on the authority of said firm as experts in auditing and accounting.      

INDEPENDENT AUDITORS

     Representatives of PricewaterhouseCoopers LLP are expected to be present at
the Conoco special meeting, and representatives of Ernst & Young LLP are        
expected to be present at the Phillips special meeting. The representatives of  
the independent auditors will have the opportunity to make a statement regarding
the merger if they desire to do so, and they are expected to be available to    
respond to appropriate questions from the stockholders at their respective      
meetings.                                                                       

STOCKHOLDER PROPOSALS 

CONOCO                                                                          

  For a stockholder proposal to be included in the proxy statement for the
2002 Conoco annual meeting, including a proposal for the election of a director,
the proposal must have been received by Conoco at its principal offices no later
than November 26, 2001. Also, under Conoco's by-laws, Conoco stockholders must  
give advance notice of nominations for director or other business to be         
addressed at the                                                                

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annual meeting not later than the close of business on February 7, 2002 and not 
earlier than January 8, 2002.                                                   

PHILLIPS                                                                        

  For a stockholder proposal to be included in the proxy statement for the
2002 Phillips annual meeting, including a proposal for the election of a        
director, the proposal must have been received by Phillips at its principal     
offices no later than December 4, 2001. Also, under Phillips' by-laws, Phillips 
stockholders must give advance notice of nominations for director or other      
business to be addressed at the annual meeting not later than the close of      
business on March 8, 2002 and not earlier than February 6, 2002.                

OTHER MATTERS 

     As of the date of this joint proxy statement/prospectus, neither the Conoco
Board of Directors nor the Phillips Board of Directors knows of any matter that 
will be presented for consideration at the Conoco special meeting or the        
Phillips special meeting, respectively, other than as described in this joint   
proxy statement/prospectus.                                                     

WHERE YOU CAN FIND MORE INFORMATION 

    New Parent filed a registration statement on Form S-4 on December 7, 2001,
to register with the Securities and Exchange Commission the New Parent common   
stock to be issued to Conoco stockholders and Phillips stockholders in the      
merger. This joint proxy statement/prospectus is a part of that registration    
statement and constitutes a prospectus of New Parent in addition to being a     
joint proxy statement of Conoco and Phillips. As allowed by Securities and      
Exchange Commission rules, this joint proxy statement/prospectus does not       
contain all the information you can find in New Parent's registration statement 
or the exhibits to the registration statement. Conoco and Phillips file annual, 
quarterly and special reports, proxy statements and other information with the  
Securities and Exchange Commission. You may read and copy any reports,          
statements or other information that Conoco and Phillips file with the          
Securities and Exchange Commission at the Securities and Exchange Commission's  
public reference rooms at Public Reference Room, 450 Fifth Street, N.W., Room   
1024, Washington, D.C. 20549.                                                   

  Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
further information on the public reference rooms. These Securities and Exchange
Commission filings are also available to the public from commercial document    
retrieval services and at the Internet worldwide web site maintained by the     
Securities and Exchange Commission at http://www.sec.gov. Reports, proxy        
statements and other information concerning Conoco and Phillips may also be     
inspected at the offices of the New York Stock Exchange, which is located at 20 
Broad Street, New York, New York 10005.                                         

The Securities and Exchange Commission allows Conoco, Phillips and New
Parent to "incorporate by reference" information in this joint proxy            
statement/prospectus, which means that Conoco, Phillips and New Parent can      
disclose important information to you by referring you to other documents filed 
separately with the Securities and Exchange Commission. The information         
incorporated by reference is considered part of this joint proxy                
statement/prospectus, except for any information superseded by information      
contained directly in this joint proxy statement/prospectus or in later filed   
documents incorporated by reference in this joint proxy statement/prospectus.   

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This joint proxy statement/prospectus incorporates by reference the   
documents set forth below that Conoco and Phillips have previously filed with   
the Securities and Exchange Commission. These documents contain important       
business and financial information about Conoco and Phillips that is not        
included in or delivered with this joint proxy statement/prospectus.            

                                                                [Download Table]

CONOCO FILINGS (FILE NO. 1-14521)                          PERIOD/FILING DATE      
---------------------------------                          ------------------      
                                                                                   
Annual Report on Form 10-K................... Year ended December 31, 2000         
Quarterly Reports on Form 10-Q............... Quarters ended March 31, June 30, and
                                              September 30, 2001                   
Current Reports on Form 8-K.................. November 19, 2001                    
                                              November 16, 2001                    
                                              October 22, 2001                     
                                              October 9, 2001                      
                                              October 5, 2001                      
                                              September 24, 2001                   
                                              September 20, 2001                   
                                              September 17, 2001                   
                                              September 10, 2001 (amended)         
                                              July 31, 2001                        
                                              July 17, 2001                        
                                              May 30, 2001                         
                                              March 29, 2001                       
                                              March 29, 2001 (amended)             
                                              February 23, 2001                    
                                              February 22, 2001                    

                                                                [Download Table]

PHILLIPS FILINGS (FILE NO. 1-00720)                        PERIOD/FILING DATE      
-----------------------------------                        ------------------      
                                                                                   
Annual Report on Form 10-K, as amended....... Year ended December 31, 2000         
Quarterly Reports on Form 10-Q............... Quarters ended March 31, June 30, and
                                              September 30, 2001                   
Current Reports on Form 8-K.................. December 13, 2001                    
                                              November 19, 2001                    
                                              November 13, 2001                    
                                              October 31, 2001                     
                                              September 28, 2001                   
                                              September 18, 2001                   
                                              April 11, 2001                       
                                              February 21, 2001                    
                                              February 5, 2001                     

  This joint proxy statement/prospectus also incorporates by reference all
additional documents that may be filed by Conoco and Phillips with the          
Securities and Exchange Commission under Section 13(a), 13(c), 14 or 15(d) of   
the Exchange Act between the date of this joint proxy statement/prospectus and  
the date of the Conoco special meeting and the date of the Phillips special     
meeting, as applicable. These include periodic reports, such as Annual Reports  
on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
well as proxy statements.                                                       

    Conoco has supplied all information contained or incorporated by reference
in this joint proxy statement/prospectus relating to Conoco, and Phillips has   
supplied all information contained in or incorporated by reference in this joint
proxy statement/prospectus relating to Phillips. Conoco and Phillips have       
jointly supplied all information contained or incorporated by reference in this 
joint proxy statement/ prospectus relating to New Parent, C Merger Corp. and P  
Merger Corp.                                                                    

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     If you are a Conoco stockholder or a Phillips stockholder, we may have sent
you some of the documents incorporated by reference, but you can also obtain any
of them through Conoco or Phillips, the Securities and Exchange Commission or   
the Securities and Exchange Commission's Internet web site as described above.  
Documents incorporated by reference are available from Conoco or Phillips       
without charge, excluding all exhibits, except that, if Conoco or Phillips have 
specifically incorporated by reference an exhibit in this joint proxy           
statement/prospectus, the exhibit will also be provided without charge. You may 
obtain documents incorporated by reference in this joint proxy                  
statement/prospectus by requesting them in writing or by telephone from the     
appropriate company at the following addresses:                                 

                                                                [Download Table]
                                                                         
Conoco Inc.                                  Phillips Petroleum Company  
600 North Dairy Ashford Road                 1234 Adams Building         
Houston, Texas 77079                         4th Street and Keeler Avenue
(281) 293-6800                               Bartlesville, Oklahoma 74004
Attention: Shareholder Relations             (918) 661-5638              
                                             Attention: Secretary        

   If you would like to request documents, please do so by March 5, 2002, in
order to receive them before your special meeting.                              

You should rely only on the information contained or incorporated by  
reference in this joint proxy statement/prospectus. We have not authorized      
anyone to provide you with information that is different from what is contained 
in this joint proxy statement/prospectus. Therefore, if anyone does give you    
information of this sort, you should not rely on it. If you are in a            
jurisdiction where offers to exchange or sell, or solicitations of offers to    
exchange or purchase, the securities offered by this document or the            
solicitation of proxies is unlawful, or if you are a person to whom it is       
unlawful to direct these types of activities, then the offer presented in this  
document does not extend to you. This joint proxy statement/ prospectus is dated
February 7, 2002. You should not assume that the information contained in this  
joint proxy statement/prospectus is accurate as of any date other than that     
date. Neither the mailing of this joint proxy statement/prospectus to Conoco    
stockholders and Phillips stockholders nor the issuance of New Parent common    
stock in the merger creates any implication to the contrary.                    

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REPORT OF INDEPENDENT AUDITORS

ConocoPhillips                                                                  
The Board of Directors and Stockholders                                         

We have audited the accompanying consolidated balance sheet of        
ConocoPhillips (formerly CorvettePorsche Corp.) as of December 4, 2001. This    
balance sheet is the responsibility of the Company's management. Our            
responsibility is to express an opinion on this balance sheet based on our      
audit.                                                                          

We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform 
the audit to obtain reasonable assurance about whether the balance sheet is free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the balance sheet. An audit also      
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall balance sheet presentation. We 
believe that our audit of the balance sheet provides a reasonable basis for our 
opinion.                                                                        

     In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the consolidated financial position of ConocoPhillips at     
December 4, 2001, in conformity with accounting principles generally accepted in
the United States.                                                              

                     ERNST & YOUNG LLP

Tulsa, Oklahoma                                                                 
January 11, 2002                                                                

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CONOCOPHILLIPS
CONSOLIDATED BALANCE SHEET

                                                                [Download Table]

                                                              AT DECEMBER 4, 
                                                                   2001      
                                                              ---------------
                                                                             
ASSETS                                                                       
Cash                                                                     $200
-----------------------------------------------------------------------------
Total Assets                                                             $200
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------

STOCKHOLDERS' EQUITY                                                         
Preferred stock -- 100 shares authorized at $.01 par value;                  
  none issued or outstanding                                             $ --
Common stock -- 100 shares authorized at $.01 par value                      
     Issued (2 shares)                                                       
       Par value                                                           --
Additional paid-in capital                                                200
-----------------------------------------------------------------------------
Total Stockholders' Equity                                               $200
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------

See accompanying Note to Consolidated Balance Sheet.
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CONOCOPHILLIPS
NOTE TO CONSOLIDATED BALANCE SHEET

BASIS OF PRESENTATION                                                           

    ConocoPhillips, formerly known as CorvettePorsche Corp., (the company) was
incorporated in the state of Delaware on November 16, 2001. ConocoPhillips has  
two stockholders, Conoco Inc. (Conoco) and Phillips Petroleum Company           
(Phillips), each holding one share of the company's common stock, par value     
$.01. Phillips contributed $100 for its share on November 30, 2001, while Conoco
contributed $100 for its share on December 4, 2001. The company was formed in   
connection with the anticipated merger of Conoco and Phillips.                  

   The company has two wholly owned subsidiaries -- C Merger Corp. (formerly
known as Corvette Merger Corp.) and P Merger Corp. (formerly known as Porsche   
Merger Corp.). At the effective date of the merger, C Merger Corp. would merge  
with and into Conoco, and P Merger Corp. would merge with and into Phillips, at 
which point C Merger Corp. and P Merger Corp. would no longer exist as separate 
corporate entities, and the company's only two wholly owned subsidiaries would  
be Conoco and Phillips. Upon completion of the merger, each outstanding share of
Conoco common stock would be converted into 0.4677 of a share of the company's  
common stock, and each outstanding share of Phillips common stock would be      
converted into one share of the company's common stock. This action will        
necessitate the authorization of additional common shares of the company before 
the merger takes place.                                                         

     The consolidated balance sheet includes the accounts of the company and its
two wholly owned subsidiaries, C Merger Corp. and P Merger Corp. Intercompany   
accounts have been eliminated. Other than its formation, the company and its    
subsidiaries have not conducted any activities.                                 

The preparation of financial statements in conformity with accounting 
principles generally accepted in the United States requires management to make  
estimates and assumptions that affect the amounts reported in the consolidated  
balance sheet.                                                                  

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                                                                         ANNEX A

AGREEMENT AND PLAN OF MERGER

DATED AS OF NOVEMBER 18, 2001 

BY AND AMONG

PHILLIPS PETROLEUM COMPANY, 

CORVETTEPORSCHE CORP.,

PORSCHE MERGER CORP., 

CORVETTE MERGER CORP. 

AND 

CONOCO INC. 

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TABLE OF CONTENTS 

                                                                [Download Table]

                                                                               PAGE
                                                                               ----
                                                                                   
ARTICLE I    CERTAIN DEFINITIONS..............................................  A-1
ARTICLE II   FORMATION OF NEW PARENT; THE MERGERS.............................  A-7
       2.1   Formation of New Parent; Merger Subs.............................  A-7
       2.2   The Mergers......................................................  A-7
       2.3   Effective Time of the Mergers....................................  A-7
       2.4   Effects of the Mergers...........................................  A-8
       2.5   Closing..........................................................  A-8
       2.6   Certificates of Incorporation....................................  A-8
       2.7   By-Laws..........................................................  A-8
       2.8   Directors and Officers...........................................  A-8
       2.9   Actions of Phillips and Conoco...................................  A-8
       2.10  Actions of New Parent............................................  A-8
ARTICLE III  CONVERSION OF SECURITIES.........................................  A-9
       3.1   Effect on Capital Stock of Phillips and Merger Sub One...........  A-9
       3.2   Effect on Capital Stock of Conoco and Merger Sub Two.............  A-9
       3.3   Effect on New Parent Common Stock................................ A-10
       3.4   Conoco Stock Options and Other Equity-Based Awards............... A-10
       3.5   Phillips Stock Options and Other Equity-Based Awards............. A-11
       3.6   Exchange Fund.................................................... A-12
       3.7   Exchange Procedures.............................................. A-12
       3.8   Distributions with Respect to Unexchanged Shares................. A-13
       3.9   No Further Ownership Rights in Conoco Common Stock or Phillips        
             Common Stock..................................................... A-13
       3.10  No Fractional Shares of New Parent Common Stock.................. A-13
       3.11  Termination of Exchange Fund..................................... A-14
       3.12  No Liability..................................................... A-14
       3.13  Investment of the Exchange Fund.................................. A-14
       3.14  Lost Certificates................................................ A-14
       3.15  Withholding Rights............................................... A-14
       3.16  Further Assurances............................................... A-15
       3.17  Stock Transfer Books............................................. A-15
ARTICLE IV   REPRESENTATIONS AND WARRANTIES................................... A-15
       4.1   Representations and Warranties of Conoco......................... A-15
             (a)  Corporate Organization...................................... A-15
             (b)  Capitalization.............................................. A-15
             (c)  Authority; No Violation..................................... A-16
             (d)  Consents and Approvals...................................... A-17
             (e)  Financial Reports and SEC Documents......................... A-17
             (f)  Absence of Undisclosed Liabilities.......................... A-18
             (g)  Absence of Certain Changes or Events........................ A-18
             (h)  Legal Proceedings........................................... A-18
             (i)  Compliance with Applicable Law.............................. A-18
             (j)  Environmental Liability..................................... A-19

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                                                                             PAGE
                                                                             ----
                                                                                 
           (k)  Employee Benefit Plans; Labor Matters....................... A-19
           (l)  Taxes....................................................... A-19
           (m)  Reorganization under the Code............................... A-20
           (n)  Form S-4; Joint Proxy Statement/Prospectus.................. A-20
           (o)  State Takeover Laws; Rights Plan............................ A-20
           (p)  Opinion of Financial Advisors............................... A-21
           (q)  Board Approval.............................................. A-21
           (r)  Brokers' Fees............................................... A-21
           (s)  Ownership of Phillips Capital Stock......................... A-21
     4.2   Representations and Warranties of Phillips....................... A-21
           (a)  Corporate Organization...................................... A-21
           (b)  Capitalization.............................................. A-21
           (c)  Authority; No Violation..................................... A-22
           (d)  Consents and Approvals...................................... A-23
           (e)  Financial Reports and SEC Documents......................... A-23
           (f)  Absence of Undisclosed Liabilities.......................... A-23
           (g)  Absence of Certain Changes or Events........................ A-24
           (h)  Legal Proceedings........................................... A-24
           (i)  Compliance with Applicable Law.............................. A-24
           (j)  Environmental Liability..................................... A-24
           (k)  Employee Benefit Plans; Labor Matters....................... A-25
           (l)  Taxes....................................................... A-25
           (m)  Reorganization under the Code............................... A-26
           (n)  Form S-4; Joint Proxy Statement/Prospectus.................. A-26
           (o)  State Takeover Laws; Rights Plan............................ A-26
           (p)  Opinion of Financial Advisors............................... A-27
           (q)  Board Approval.............................................. A-27
           (r)  Brokers' Fees............................................... A-27
           (s)  Ownership of Conoco Capital Stock........................... A-27
ARTICLE V  COVENANTS RELATING TO CONDUCT OF BUSINESS........................ A-27
     5.1   Covenants of Conoco.............................................. A-27
           (a)  Ordinary Course............................................. A-27
           (b)  Dividends; Changes in Share Capital......................... A-27
           (c)  Issuance of Securities...................................... A-28
           (d)  Governing Documents......................................... A-28
           (e)  No Acquisitions............................................. A-28
           (f)  No Dispositions............................................. A-28
           (g)  Investments; Indebtedness................................... A-28
           (h)  Tax-Free Qualification...................................... A-29
           (i)  Compensation................................................ A-29
           (j)  Financial Accounting Methods................................ A-29
           (k)  Standstill.................................................. A-29
           (l)  Certain Actions............................................. A-29

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                                                                               PAGE
                                                                               ----
                                                                                   
       5.2   Covenants of Phillips............................................ A-29
             (a)  Ordinary Course............................................. A-29
             (b)  Dividends, Changes in Share Capital......................... A-30
             (c)  Issuance of Securities...................................... A-30
             (d)  Governing Documents......................................... A-30
             (e)  No Acquisitions............................................. A-30
             (f)  No Dispositions............................................. A-31
             (g)  Investments; Indebtedness................................... A-31
             (h)  Tax-Free Qualification...................................... A-31
             (i)  Compensation................................................ A-31
             (j)  Financial Accounting Methods................................ A-31
             (k)  Standstill.................................................. A-31
             (l)  Certain Actions............................................. A-32
       5.3   Governmental Filings............................................. A-32
       5.4   Control of Other Party's Business................................ A-32
 ARTICLE VI  ADDITIONAL AGREEMENTS............................................ A-32
       6.1   Preparation of Proxy Statement; Stockholders Meetings............ A-32
       6.2   Governance Matters; Headquarters; Company Name................... A-33
       6.3   Access to Information............................................ A-34
       6.4   Reasonable Best Efforts.......................................... A-34
       6.5   Acquisition Proposals............................................ A-36
       6.6   Fees and Expenses................................................ A-37
       6.7   Directors' and Officers' Indemnification and Insurance........... A-37
       6.8   Employee Benefits................................................ A-38
       6.9   Public Announcements............................................. A-40
       6.10  Listing of Shares of New Parent Common Stock..................... A-40
       6.11  Rights Agreements................................................ A-40
       6.12  Affiliates....................................................... A-40
       6.13  Section 16 Matters............................................... A-41
       6.14  Dividends........................................................ A-41
ARTICLE VII  CONDITIONS PRECEDENT............................................. A-41
       7.1   Conditions to Each Party's Obligation to Effect the Mergers...... A-41
             (a)  Stockholder Approval........................................ A-41
             (b)  No Injunctions or Restraints; Illegality.................... A-41
             (c)  HSR Act; Other Approvals.................................... A-41
             (d)  NYSE Listing................................................ A-41
             (e)  Effectiveness of the Form S-4............................... A-41
       7.2   Additional Conditions to Obligations of Phillips................. A-42
             (a)  Representations and Warranties.............................. A-42
             (b)  Performance of Obligations of Conoco........................ A-42
             (c)  Tax Opinion................................................. A-42

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                                                                                PAGE
                                                                                ----
                                                                                    
        7.3   Additional Conditions to Obligations of Conoco................... A-42
              (a)  Representations and Warranties.............................. A-42
              (b)  Performance of Obligations of Phillips...................... A-42
              (c)  Tax Opinion................................................. A-42
ARTICLE VIII  TERMINATION AND AMENDMENT........................................ A-43
        8.1   Termination...................................................... A-43
        8.2   Effect of Termination............................................ A-44
        8.3   Amendment........................................................ A-45
        8.4   Extension; Waiver................................................ A-45
        8.5   Procedure for Termination........................................ A-45
ARTICLE IX  GENERAL PROVISIONS................................................. A-45
        9.1   Non-Survival of Representations, Warranties and Agreements....... A-45
        9.2   Notices.......................................................... A-46
        9.3   Interpretation................................................... A-46
        9.4   Counterparts..................................................... A-46
        9.5   Entire Agreement; No Third Party Beneficiaries................... A-46
        9.6   Governing Law.................................................... A-47
        9.7   Severability..................................................... A-47
        9.8   Assignment....................................................... A-47
        9.9   Submission to Jurisdiction; Waivers.............................. A-47
        9.10  Enforcement...................................................... A-47

LIST OF EXHIBITS

                                                                [Download Table]

EXHIBIT                               TITLE                          
-------                               -----                          
                                                                     
Exhibit A  Form of Certificate of Incorporation of New Parent        
Exhibit B  Form of By-Laws of New Parent                             
Exhibit C  Form of Certificate of Incorporation of Phillips Surviving
           Corporation                                               
Exhibit D  Form of Certificate of Incorporation of Conoco Surviving  
           Corporation                                               
Exhibit E  Form of New Parent Rights Agreement                       
Exhibit F  Form of Affiliate Agreement                               

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AGREEMENT AND PLAN OF MERGER, dated as of November 18, 2001 (this     
"Agreement"), by and among PHILLIPS PETROLEUM COMPANY, a Delaware corporation   
("Phillips"), CORVETTEPORSCHE CORP., a Delaware corporation ("New Parent"),     
PORSCHE MERGER CORP., a Delaware corporation and direct wholly owned subsidiary 
of New Parent ("Merger Sub One"), CORVETTE MERGER CORP., a Delaware corporation 
and direct wholly owned subsidiary of New Parent ("Merger Sub Two"), and CONOCO 
INC., a Delaware corporation ("Conoco").                                        

W I T N E S S E T H:

   WHEREAS, the Boards of Directors of Phillips, New Parent, Merger Sub One,
Merger Sub Two and Conoco deem it advisable and in the best interests of their  
respective corporations and stockholders that Phillips and Conoco engage in a   
business combination in a merger of equals in order to advance the long-term    
strategic business interests of Phillips and Conoco;                            

     WHEREAS, to effect such merger of equals, upon the terms and subject to the
conditions set forth herein, (i) Merger Sub One will merge with and into        
Phillips with Phillips continuing as the surviving corporation (the "Phillips   
Merger") and (ii) Merger Sub Two will merge with and into Conoco with Conoco    
continuing as the surviving corporation (the "Conoco Merger" and together with  
the Phillips Merger, the "Mergers");                                            

    WHEREAS, upon consummation of the Mergers, (i) each of Phillips and Conoco
will become a wholly owned subsidiary of New Parent, which has been formed by   
Phillips and Conoco solely for the purpose of the transactions contemplated by  
this Agreement and (ii) New Parent will change its name to ConocoPhillips; and  

WHEREAS, for U.S. federal income tax purposes, it is intended that the
Phillips Merger and the Conoco Merger shall each qualify as a "reorganization"  
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as   
amended (the "Code") and that the Mergers, taken together, shall qualify as an  
exchange described in Section 351 of the Code.                                  

NOW, THEREFORE, in consideration of the foregoing and the respective  
representations, warranties, covenants and agreements set forth in this         
Agreement, and intending to be legally bound hereby, the parties hereto agree as
follows:                                                                        

ARTICLE I 

CERTAIN DEFINITIONS 

  As used in this Agreement, the following terms shall have the respective
meanings set forth below:                                                       

"Acquisition Proposal" shall have the meaning set forth in Section    
6.5(a)(i).                                                                      

    "Affiliate Agreement" shall have the meaning set forth in Section 6.12(a).

"Agreement" shall have the meaning set forth in the preamble.         

    "Antitrust Laws" means the HSR Act, the EC Merger Regulation, the Canadian
Investment Regulations or other antitrust, competition or premerger             
notification, trade regulation law, regulation or order.                        

"beneficial ownership" or "beneficially own" shall have the meaning   
ascribed to such terms under Section 13(d) of the Exchange Act.                 

"Benefit Plan" means, with respect to any entity, any employee benefit
plan, program, policy, practice, agreement, contract or other arrangement       
providing benefits to any current or former employee, officer or director of    
such entity or any of its affiliates or any beneficiary or dependent thereof    
that is sponsored or maintained by such entity or any of its affiliates or to   
which such entity or any of its affiliates contributes or is obligated to       
contribute, whether or not written, including any "employee welfare benefit     
plan" within                                                                    

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the meaning of Section 3(1) of ERISA, any "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA (whether or not such plan is subject to    
ERISA), any employment or severance agreement, and any bonus, incentive,        
deferred compensation, vacation, stock purchase, stock option, severance, change
of control or fringe benefit plan, program or policy.                           

    "Business Day" means any day on which banks are not required or authorized
to close in the City of New York.                                               

  "Canadian Investment Regulations" means the Competition Act (Canada) and
the Investment Canada Act of 1984 (Canada).                                     

   "CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, and the rules and regulations promulgated    
thereunder.                                                                     

   "Certificates of Merger" shall have the meaning set forth in Section 2.3.

   "Change in the Conoco Recommendation" shall have the meaning set forth in
Section 6.1(b).                                                                 

     "Change in the Phillips Recommendation" shall have the meaning set forth in
Section 6.1(c).                                                                 

"Closing" shall have the meaning set forth in Section 2.5.            

"Closing Date" shall have the meaning set forth in Section 2.5.       

"Code" shall have the meaning set forth in the recitals.              

 "Confidentiality Agreement" shall have the meaning set forth in Section
6.3.                                                                            

"Conoco" shall have the meaning set forth in the preamble.            

     "Conoco 2000 10-K" means Conoco's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000, as filed with the SEC.                            

    "Conoco 10-Q" means Conoco's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2001, as filed with the SEC.                                

    "Conoco Benefit Plan" means a Benefit Plan maintained or contributed to by
Conoco or any of its Subsidiaries, or to which Conoco or any of its Subsidiaries
is required to contribute.                                                      

"Conoco Capital Stock" means the Conoco Common Stock together with the
Conoco Preferred Stock.                                                         

  "Conoco Certificate" shall have the meaning set forth in Section 3.2(b).

    "Conoco Certificate of Merger" shall have the meaning set forth in Section
2.3.                                                                            

"Conoco Common Stock" means common stock, par value $.01 per share, of
Conoco.                                                                         

 "Conoco Disclosure Schedule" means the disclosure schedule delivered by
Conoco to Phillips concurrently herewith.                                       

"Conoco Merger" shall have the meaning set forth in the recitals.     

   "Conoco Merger Consideration" shall have the meaning set forth in Section
3.2(b).                                                                         

 "Conoco Necessary Consents" shall have the meaning set forth in Section
4.1(d).                                                                         

"Conoco Preferred Stock" means the preferred stock, par value $.01, of
Conoco.                                                                         

     "Conoco Recommendation" shall have the meaning set forth in Section 6.1(b).

    "Conoco Right" means a preferred share purchase right issuable pursuant to
the Conoco Rights Agreement.                                                    

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    "Conoco Rights Agreement" means the Rights Agreement, dated as of July 29,
1999, between Conoco and Equiserve Trust Company, N.A., as successor to First   
Chicago Trust Company of New York, as rights agent, as amended.                 

"Conoco SAR" shall have the meaning set forth in Section 3.4(a).      

    "Conoco SEC Documents" shall have the meaning set forth in Section 4.1(e).

"Conoco Stock-Based Award" shall have the meaning set forth in Section
3.4(b).                                                                         

   "Conoco Stock Option" shall have the meaning set forth in Section 3.4(a).

  "Conoco Stock Plans" shall have the meaning set forth in Section 3.4(a).

   "Conoco Stockholder Approval" shall have the meaning set forth in Section
4.1(c)(i).                                                                      

   "Conoco Stockholders Meeting" shall have the meaning set forth in Section
4.1(c)(i).                                                                      

    "Conoco Surviving Corporation" shall have the meaning set forth in Section
2.2(b).                                                                         

"Conoco Termination Fee" means $550 million.                          

    "Controlled Group Liability" means any and all liabilities (a) under Title
IV of ERISA, other than for payment of premiums to the Pension Benefit Guaranty 
Corporation, (b) under Section 302 of ERISA, (c) under Sections 412 and 4971 of 
the Code, (d) for violation of the continuation coverage requirements of Section
601 et seq. of ERISA and Section 4980B of the Code or the group health          
requirements of Sections 9801 et seq. of the Code and Sections 701 et seq. of   
ERISA, and (e) under corresponding or similar provisions of foreign laws or     
regulations.                                                                    

"Delaware Secretary" shall have the meaning set forth in Section 2.3. 

"DGCL" means the General Corporation Law of the State of Delaware.    

"DOJ" means the Antitrust Division of the U.S. Department of Justice. 

    "EC Merger Regulation" shall have the meaning set forth in Section 4.1(d).

"Effective Time" shall have the meaning set forth in Section 2.3.     

 "Environmental Claims" means, in respect of any person, (i) any and all
administrative, regulatory or judicial actions, suits, orders, decrees, suits,  
demands, directives, claims, liens, investigations, proceedings or notices of   
noncompliance or violation by any person, alleging potential presence or Release
of, or exposure to, any Hazardous Materials at any location, whether or not     
owned, operated, leased or managed by such person, (ii) circumstances forming   
the basis of any actual or alleged violation of, or liability under, any        
Environmental Law or (iii) any and all indemnification, cost recovery,          
compensation or injunctive relief resulting from the presence or Release of, or 
exposure to, any Hazardous Materials.                                           

     "Environmental Laws" means all applicable federal, state, local and foreign
laws (including international conventions, protocols and treaties), common law, 
rules, regulations, orders, decrees, judgments, binding agreements or           
Environmental Permits issued, promulgated or entered into, by or with any       
Governmental Entity, relating to pollution, Hazardous Materials, natural        
resources or the protection, investigation or restoration of the environment.   

"Environmental Permits" means all permits, licenses, registrations and
other governmental authorizations required under applicable Environmental Laws. 

"ERISA" means the Employee Retirement Income Security Act of 1974, as 
amended, and the rules and regulations promulgated thereunder.                  

   "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.                               

"Exchange Agent" shall have the meaning set forth in Section 3.6.     

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"Exchange Fund" shall have the meaning set forth in Section 3.6.      

"Exchange Ratio" shall have the meaning set forth in Section 3.2(b).  

"Expenses" means all out-of-pocket expenses (including all fees and   
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its affiliates) incurred by a party hereto or on its behalf  
in connection with or related to the authorization, preparation, negotiation,   
execution and performance of this Agreement and the transactions contemplated   
hereby, including the preparation, printing, filing and mailing of the Joint    
Proxy Statement/Prospectus and the Form S-4 and the solicitation of stockholder 
approvals and all other matters related to the transactions contemplated hereby 
and thereby.                                                                    

"Form S-4" shall have the meaning set forth in Section 4.1(d)(iv).    

"FTC" means the U.S. Federal Trade Commission.                        

"GAAP" means U.S. generally accepted accounting principles.           

   "Governmental Entity" means any supranational, national, state, municipal
or local government, foreign or domestic, any instrumentality, subdivision,     
court, administrative agency or commission or other authority thereof, or any   
quasi-governmental or private body exercising any regulatory, taxing, importing 
or other governmental or quasi-governmental authority.                          

"GIRL" means Gulf Indonesia Resources Limited, a corporation formed in
Canada.                                                                         

"Gulf" means Conoco Canada Resources Limited, a corporation formed in 
Canada.                                                                         

"Hazardous Materials" means any petroleum or petroleum products,      
radioactive materials or wastes, asbestos, polychlorinated biphenyls and any    
chemical, material, substance or waste, in each case that is prohibited, limited
or regulated pursuant to any Environmental Law.                                 

   "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.               

"IRS" means the Internal Revenue Service.                             

"Joint Proxy Statement/Prospectus" shall have the meaning set forth in
Section 4.1(d)(iv).                                                             

    "knowledge" or "known" means, with respect to any entity, the knowledge of
such entity's executive officers after reasonable inquiry.                      

"Liens" shall have the meaning set forth in Section 2.1(b).           

 "Material Adverse Effect" means, with respect to any entity, a material
adverse effect on (a) the business, operations, results of operations or        
financial condition of such entity and its Subsidiaries taken as a whole or (b) 
the ability of such entity to timely consummate the transactions contemplated by
this Agreement, except, in each case, for any such effect reasonably            
attributable to (i) general political and economic conditions (including        
prevailing interest rate and stock market levels) in the United States or the   
other countries in which such entity operates, (ii) the general state of the    
industries in which such entity operates or (iii) other than with respect to    
Sections 4.1(c)(ii), 4.1(d), 4.2(c)(ii), 4.2(d), 6.4(a) or 7.1(c), the          
negotiation, announcement, execution, delivery or consummation of the           
transactions contemplated by, or in compliance with, this Agreement.            

"Merger Sub One" shall have the meaning set forth in the preamble.    

   "Merger Sub One Common Stock" shall have the meaning set forth in Section
2.1(b).                                                                         

"Merger Sub Two" shall have the meaning set forth in the preamble.    

   "Merger Sub Two Common Stock" shall have the meaning set forth in Section
2.1(b).                                                                         

"Mergers" shall have the meaning set forth in the recitals.           

"New Parent" shall have the meaning set forth in the preamble.        

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"New Parent Common Stock" shall have the meaning set forth in Section 
2.1(a).                                                                         

   "New Parent Rights Agreement" shall have the meaning set forth in Section
6.11(c).                                                                        

"New Parent SAR" shall have the meaning set forth in Section 3.4(a).  

"New Parent Stock Option" shall have the meaning set forth in Section 
3.4(a).                                                                         

    "New Parent Stock-Based Award" shall have the meaning set forth in Section
3.4(b).                                                                         

"New Plans" shall have the meaning set forth in Section 6.8(b).       

"Newco Employees" shall have the meaning set forth in Section 6.8(a). 

"NYSE" means the New York Stock Exchange, Inc.                        

    "other party" means, with respect to Phillips, Conoco, and with respect to
Conoco, Phillips.                                                               

"Person" means an individual, corporation, limited liability company, 
partnership, association, trust, unincorporated organization, other entity or   
group (as defined in the Exchange Act).                                         

"Phillips" shall have the meaning set forth in the preamble.          

  "Phillips 2000 10-K" means Phillips's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000, as filed with the SEC.                     

"Phillips 10-Q" means Phillips's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2001, as filed with the SEC.                        

   "Phillips Benefit Plan" means a Benefit Plan maintained or contributed to
by Phillips or a Subsidiary of Phillips, or to which Phillips or any Subsidiary 
of Phillips is required to contribute.                                          

    "Phillips Capital Stock" means the Phillips Common Stock together with the
Phillips Preferred Stock.                                                       

    "Phillips Certificate" shall have the meaning set forth in Section 3.7(b).

"Phillips Certificate of Merger" shall have the meaning set forth in  
Section 2.3.                                                                    

   "Phillips Common Stock" means common stock, par value $1.25 per share, of
Phillips.                                                                       

   "Phillips Disclosure Schedule" means the disclosure schedule delivered by
Phillips to Conoco concurrently herewith.                                       

"Phillips Merger" shall have the meaning set forth in the recitals.   

     "Phillips Merger Consideration" shall have the meaning set forth in Section
3.1(b).                                                                         

   "Phillips Necessary Consents" shall have the meaning set forth in Section
4.2(d).                                                                         

   "Phillips Preferred Stock" means the preferred stock, par value $1.00 per
share, of Phillips.                                                             

"Phillips Recommendation" shall have the meaning set forth in Section 
6.1(c).                                                                         

   "Phillips Right" means a preferred share purchase right issuable pursuant
to the Phillips Rights Agreement.                                               

    "Phillips Rights Agreement" means the Rights Agreement, dated as of August
1, 1999, between Phillips and ChaseMellon Shareholder Services, L.L.C., as      
rights agent.                                                                   

"Phillips SAR" shall have the meaning set forth in Section 3.5(a).    

"Phillips SEC Documents" shall have the meaning set forth in Section  
4.2(e).                                                                         

     "Phillips Stock Option" shall have the meaning set forth in Section 3.5(a).

    "Phillips Stock Plans" shall have the meaning set forth in Section 3.5(a).

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  "Phillips Stock-Based Award" shall have the meaning set forth in Section
3.5(b).                                                                         

     "Phillips Stockholder Approval" shall have the meaning set forth in Section
4.2(c)(i).                                                                      

     "Phillips Stockholders Meeting" shall have the meaning set forth in Section
4.2(c)(i).                                                                      

"Phillips Surviving Corporation" shall have the meaning set forth in  
Section 2.2(a).                                                                 

"Phillips Termination Fee" means $550 million dollars.                

    "Qualifying Amendment" means an amendment or supplement to the Joint Proxy
Statement/Prospectus or Form S-4 (including by incorporation by reference) to   
the extent it contains (i) a Change in the Phillips Recommendation or a Change  
in the Conoco Recommendation (as the case may be), (ii) a statement of the      
reasons of the Board of Directors of Phillips or Conoco (as the case may be) for
making such Change in the Phillips Recommendation or Change in the Conoco       
Recommendation (as the case may be) and (iii) additional information reasonably 
related to the foregoing.                                                       

  "Regulatory Law" means the HSR Act, and all other U.S. federal and state
and foreign, if any, statutes, rules, regulations, orders, decrees,             
administrative and judicial doctrines and other laws that are designed or       
intended to prohibit, restrict or regulate (a) mergers, acquisitions or other   
business combinations, (b) foreign investment, or (c) actions having the purpose
or effect of monopolization or restraint of trade or lessening of competition.  

     "Release" means any actual or threatened release, spill, emission, leaking,
dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching  
or migration into the environment.                                              

     "Required Approvals" shall have the meaning set forth in Section 6.4(a)(i).

"SEC" means the U.S. Securities and Exchange Commission.              

"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.                                   

  "Significant Subsidiary" shall have the meaning ascribed to such term in
Rule 1-02 of Regulation S-X of the SEC.                                         

   "Subsidiary" shall have the meaning ascribed to such term in Rule 1-02 of
Regulation S-X of the SEC.                                                      

    "Superior Proposal" means, with respect to Phillips or Conoco, as the case
may be, a bona fide written proposal made by a Person other than a party hereto 
that is (a) for an Acquisition Proposal (except that references in the          
definition of "Acquisition Proposal" to "20%" shall be "50%") involving such    
party and (b) is on terms which its Board of Directors in good faith concludes  
(following receipt of the advice of its financial advisors and outside counsel),
taking into account, among other things, all legal, financial, regulatory and   
other aspects of the proposal and the Person making the proposal, (i) would, if 
consummated, result in a transaction that is more favorable to its stockholders 
(in their capacities as stockholders), from a financial point of view, than the 
transactions contemplated by this Agreement and (ii) is reasonably capable of   
being completed.                                                                

  "Tosco" means Tosco Corporation, a Nevada corporation and a wholly owned
subsidiary of Phillips.                                                         

"Tosco Merger Agreement" shall have the meaning set forth in Section  
6.8(a).                                                                         

   "Tax Return" means any return, report or similar statement (including any
attached schedules) required to be filed with respect to any Tax, including any 
information return, claim for refund, amended return or declaration of estimated
Tax.                                                                            

  "Taxes" means any and all U.S. federal, state or local, foreign or other
taxes of any kind (together with any and all interest, penalties, additions to  
tax and additional amounts imposed with respect thereto) imposed by any taxing  
authority, including taxes or other charges on or with respect to income,       
franchises, windfall or other profits, gross receipts, property, sales, use,    
capital stock, payroll, employment, social                                      

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security, workers' compensation, unemployment compensation, or net worth, and   
taxes or other charges in the nature of excise, withholding, ad valorem or value
added.                                                                          

"Termination Date" shall have the meaning set forth in Section 8.1(b).

"Voting Debt" means any bonds, debentures, notes or other indebtedness
having the right to vote on any matters on which holders of capital stock of the
same issuer may vote.                                                           

ARTICLE II

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.                            

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   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.                                           

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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.                                                          

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      (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,                 

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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                    

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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, 

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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                                                              

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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                                             

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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                                         

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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

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   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        

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     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,                                                 

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   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,              

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    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.                                     

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         (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                                                              

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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                                                   

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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 

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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                                                      

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  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                                                    

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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.                                              
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          (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

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    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          

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    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                                                         

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    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                                                       

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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.                                           

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          (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                                                            

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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    

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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                                                                    
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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                                                                          
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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   

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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                                                                  
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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                                                                   

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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.                                             

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    (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").                                    

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(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                    

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    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.                                                               

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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.                  

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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   

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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,                                                     

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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.                                                      

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     (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.                                                               

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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

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                                                                         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,       

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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                                                   

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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.                                                                      

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     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                          

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    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%                               
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     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                                                              

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   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.         

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                                                                         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                                                        

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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             

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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                                         

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(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.                                                      

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     (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              

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(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                  

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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.                          

     Section 3. Voting Securities Owned by the Corporation.  Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating  
to securities owned by the Corporation may be executed in the name of and on    
behalf of the Corporation by the President or any Vice President or any other   
officer authorized to do so by the Board of Directors and any such officer may, 
in the name of and on behalf of the Corporation, take all such action as any    
such officer may deem advisable to vote in person or by proxy at any meeting of 
security holders of any corporation in which the Corporation may own securities 
and at any such meeting shall possess and may exercise any and all rights and   
power incident to the ownership of such securities and which, as the owner      
thereof, the Corporation might have exercised and possessed if present. The     
Board of Directors may, by resolution, from time to time confer like powers upon
any other person or persons.                                                    

   Section 4. Chairman of the Board of Directors.  The Chairman of the Board
of Directors shall preside at meetings of the Board and of the Corporation's    
stockholders. The Chairman shall work with the Chief Executive Officer on       
external stakeholder relations (community, state, federal and foreign           
governments), business development (growth) initiatives, and the creation of an 
outstanding and cohesive Board of Directors; and shall have such other executive
responsibilities as the Chairman and the Chief Executive Officer may agree. The 
Chairman and the Chief Executive Officer shall jointly recommend to the Board of
Directors the long-range strategic plan for the Corporation, major acquisitions 
and divestitures, and major changes to the Corporation's capital structure. With
respect to all other matters, the Chief Executive Officer shall, in consultation
with the Chairman, arrange the agenda for meetings of the Board, and shall      
report to the Board and arrange for other executives and advisors to report to  
the Board.                                                                      

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     Section 5. Chief Executive Officer; President.  The Chief Executive Officer
shall have general responsibility for the management of the Corporation as      
provided in these By-laws, reporting directly to the Board of Directors. The    
Chief Executive Officer shall have all the customary duties and responsibilities
of such office, and all of the Corporation's executive officers shall report    
directly to him or indirectly to him through another such executive officer who 
reports to him. The Chief Executive Officer shall also be the President. While  
Archie Dunham is serving as Chairman of the Board, the Chief Executive Officer  
shall work with the Chairman on external stakeholder relations (community,      
state, federal and foreign governments), business development (growth)          
initiatives, and the creation of an outstanding and cohesive Board of Directors.
Furthermore, while Archie Dunham is Chairman of the Board, the Chief Executive  
Officer and the Chairman shall jointly recommend to the Board of Directors the  
long-range strategic plan for the Corporation, major acquisitions and           
divestitures, and major changes to the Corporation's capital structure. With    
respect to all other matters, the Chief Executive Officer shall, in consultation
with the Chairman, arrange the agenda for meetings of the Board, and shall      
report to the Board and arrange for other executives and advisors to report to  
the Board.                                                                      

    Section 6. Vice Presidents.  At the request of the Chief Executive Officer
or in the Chief Executive Officer's absence or in the event of the Chief        
Executive Officer's inability or refusal to act (and if there be no Chairman of 
the Board), the Vice President, or the Vice Presidents if there is more than one
(in the order designated by the Board of Directors), shall perform the duties of
the Chief Executive Officer, and when so acting, shall have all the powers of   
and be subject to all the restrictions upon the Chief Executive Officer. Each   
Vice President shall perform such other duties and have such other powers as the
Board of Directors from time to time may prescribe. If there be no Chairman of  
the Board and no Vice President, the Board of Directors shall designate the     
officer of the Corporation who, in the absence of the Chief Executive Officer or
in the event of the inability or refusal of the Chief Executive Officer to act, 
shall perform the duties of the Chief Executive Officer, and when so acting,    
shall have all the powers of and be subject to all the restrictions upon the    
Chief Executive Officer.                                                        

     Section 7. Secretary.  The Secretary shall attend all meetings of the Board
of Directors and all meetings of stockholders and record all the proceedings    
thereat in a book or books to be kept for that purpose; the Secretary shall also
perform like duties for committees of the Board of Directors when required. The 
Secretary shall give, or cause to be given, notice of all meetings of the       
stockholders and special meetings of the Board of Directors, and shall perform  
such other duties as may be prescribed by the Board of Directors, the Chairman  
of the Board or the Chief Executive Officer, under whose supervision the        
Secretary shall be. If the Secretary shall be unable or shall refuse to cause to
be given notice of all meetings of the stockholders and special meetings of the 
Board of Directors, and if there be no Assistant Secretary, then either the     
Board of Directors or the President may choose another officer to cause such    
notice to be given. The Secretary shall have custody of the seal of the         
Corporation and the Secretary or any Assistant Secretary, if there be one, shall
have authority to affix the same to any instrument requiring it and when so     
affixed, it may be attested by the signature of the Secretary or by the         
signature of any such Assistant Secretary. The Board of Directors may give      
general authority to any other officer to affix the seal of the Corporation and 
to attest to the affixing by such officer's signature. The Secretary shall see  
that all books, reports, statements, certificates and other documents and       
records required by law to be kept or filed are properly kept or filed, as the  
case may be.                                                                    

Section 8. Treasurer.  The Treasurer shall have the custody of the    
corporate funds and securities and shall keep full and accurate accounts of     
receipts and disbursements in books belonging to the Corporation and shall      
deposit all moneys and other valuable effects in the name and to the credit of  
the Corporation in such depositories as may be designated by the Board of       
Directors. The Treasurer shall disburse the funds of the Corporation as may be  
ordered by the Board of Directors, taking proper vouchers for such              
disbursements, and shall render to the President and the Board of Directors, at 
its regular meetings, or when the Board of Directors so requires, an account of 
all transactions as Treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, the Treasurer shall give the Corporation 
a bond in such sum and with such surety or sureties as shall be satisfactory to 
the Board of Directors for the faithful performance of the duties of the office 
of the Treasurer and for the restoration to                                     

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the Corporation, in case of the Treasurer's death, resignation, retirement or   
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in the Treasurer's possession or under the Treasurer's control    
belonging to the Corporation.                                                   

    Section 9. Assistant Secretaries.  Assistant Secretaries, if there be any,
shall perform such duties and have such powers as from time to time may be      
assigned to them by the Board of Directors, the President, any Vice President,  
if there be one, or the Secretary, and in the absence of the Secretary or in the
event of the Secretary's disability or refusal to act, shall perform the duties 
of the Secretary, and when so acting, shall have all the powers of and be       
subject to all the restrictions upon the Secretary.                             

   Section 10. Assistant Treasurers.  Assistant Treasurers, if there be any,
shall perform such duties and have such powers as from time to time may be      
assigned to them by the Board of Directors, the President, any Vice President,  
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of the Treasurer's disability or refusal to act, shall perform the duties 
of the Treasurer, and when so acting, shall have all the powers of and be       
subject to all the restrictions upon the Treasurer. If required by the Board of 
Directors, an Assistant Treasurer shall give the Corporation a bond in such sum 
and with such surety or sureties as shall be satisfactory to the Board of       
Directors for the faithful performance of the duties of the office of Assistant 
Treasurer and for the restoration to the Corporation, in case of the Assistant  
Treasurer's death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in the Assistant    
Treasurer's possession or under the Assistant Treasurer's control belonging to  
the Corporation.                                                                

    Section 11. Other Officers.  Such other officers as the Board of Directors
may choose shall perform such duties and have such powers as from time to time  
may be assigned to them by the Board of Directors. The Board of Directors may   
delegate to any other officer of the Corporation the power to choose such other 
officers and to prescribe their respective duties and powers.                   

Section 12. Succession Arrangements.                                  

   (a) Notwithstanding any other provision of these By-Laws, the election of
individuals to the positions of Chairman of the Board and Chief Executive       
Officer shall be as specifically provided for in the Employment Agreements      
between the Corporation and Archie Dunham and James J. Mulva, dated as of       
November 18, 2001 (the "Employment Agreements"), and (1) the election of any    
other individual to such positions, or (2) the removal or replacement of Archie 
Dunham or James J. Mulva from one or more of those positions, shall require a   
two-thirds vote of the entire Board of Directors.                               

     (b) Any amendment to, modification or termination by the Company of, either
of the Employment Agreements by the Corporation and any amendment, alteration or
repeal of, or the adoption of any provision inconsistent with, Section 4, 5 or  
12 of this Article IV by the Board of Directors, shall require a two-thirds vote
of the entire Board of Directors.                                               

    (c) This Section 12 will terminate at the earlier of (1) the first date on
which neither Archie Dunham nor James J. Mulva remains employed under the       
relevant Employment Agreement and (2) the later of (A) the second anniversary of
the closing date of the merger contemplated by the Agreement and Plan of Merger 
dated as of November 18, 2001, by and among Phillips Petroleum Company,         
CorvettePorsche Corp., Porsche Merger Corp., Corvette Merger Corp. and Conoco   
Inc. and (B) October 1, 2004.                                                   

ARTICLE V 

STOCK 

Section 1. Uncertificated and Certificated Shares; Form of            
Certificates.  Effective at such time as the President or any Vice President or 
the Treasurer of the Corporation, if so authorized by resolution of the Board of
Directors, designates in writing to the Corporate Secretary and any transfer    
agents of the Corporation with respect to any class of stock of the Corporation,
the shares of such class shall be uncertificated shares, provided that the      
foregoing shall not apply to shares represented by a certificate until          

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such certificate is surrendered to the Corporation, and provided further that   
upon request every holder of uncertificated shares shall be entitled, to the    
extent provided in Section 158 of the Delaware General Corporation Law, to have 
a certificate signed, in the name of the Corporation by the Chairman of the     
Board of Directors, President or a Vice President and by the Treasurer or an    
Assistant Treasurer, or the Secretary or an Assistant Secretary of the          
Corporation, certifying the number of shares owned by such stockholder in the   
Corporation.                                                                    

   Section 2. Signatures.  Any or all of the signatures on a certificate may
be a facsimile. In case any officer, transfer agent or registrar who has signed 
or whose facsimile signature has been placed upon a certificate shall have      
ceased to be such officer, transfer agent or registrar before such certificate  
is issued, it may be issued by the Corporation with the same effect as if such  
person were such officer, transfer agent or registrar at the date of issue.     

Section 3. Lost Certificates.  The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the  
Corporation alleged to have been lost, stolen or destroyed, upon the making of  
an affidavit of that fact by the person claiming the certificate of stock to be 
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the   
issuance thereof, require the owner of such lost, stolen or destroyed           
certificate, or the owner's legal representative, to advertise the same in such 
manner as the Board of Directors shall require and/or to give the Corporation a 
bond in such sum as it may direct as indemnity against any claim that may be    
made against the Corporation with respect to the certificate alleged to have    
been lost, stolen or destroyed or the issuance of such new certificate.         

  Section 4. Transfers.  Stock of the Corporation shall be transferable in
the manner prescribed by law and in these By-Laws. Transfers of stock shall be  
made on the books of the Corporation only by the person named as the holder     
thereof on the stock records of the Corporation by such person's attorney       
lawfully constituted in writing, and in the case of shares represented by a     
certificate upon the surrender of the certificate therefor, which shall be      
canceled before a new certificate shall be issued. No transfer of stock shall be
valid as against the Corporation for any purpose until it shall have been       
entered in the stock records of the Corporation by an entry showing from and to 
whom transferred. To the extent designated by the President or any Vice         
President or the Treasurer of the Corporation, the Corporation may recognize the
transfer of fractional uncertificated shares, but shall not otherwise be        
required to recognize the transfer of fractional shares.                        

Section 5. Record Date.                                               

   (a) In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment       
thereof, the Board of Directors may fix a record date, which record date shall  
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which record date shall not be more than sixty   
(60) nor less than ten (10) days before the date of such meeting. If no record  
date is fixed by the Board of Directors, the record date for determining        
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next        
preceding the day on which the meeting is held. A determination of stockholders 
of record entitled to notice of or to vote at a meeting of stockholders shall   
apply to any adjournment of the meeting; provided, however, that the Board of   
Directors may fix a new record date for the adjourned meeting.                  

   (b) In order that the Corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any    
rights or the stockholders entitled to exercise any rights in respect of any    
change, conversion or exchange of stock, or for the purpose of any other lawful 
action, the Board of Directors may fix a record date, which record date shall   
not precede the date upon which the resolution fixing the record date is        
adopted, and which record date shall be not more than sixty (60) days prior to  
such action. If no record date is fixed, the record date for determining        
stockholders for any such purpose shall be at the close of business on the day  
on which the Board of Directors adopts the resolution relating thereto.         

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   Section 6. Record Owners.  The Corporation shall be entitled to recognize
the exclusive right of a person registered on its books as the owner of shares  
to receive dividends, and to vote as such owner, and to hold liable for calls   
and assessments a person registered on its books as the owner of shares, and    
shall not be bound to recognize any equitable or other claim to or interest in  
such share or shares on the part of any other person, whether or not it shall   
have express or other notice thereof, except as otherwise required by law.      

ARTICLE VI

NOTICES 

Section 1. Notices.  Whenever written notice is required by law, the  
Certificate of Incorporation or these By-Laws, to be given to any director,     
member of a committee or stockholder, such notice may be given by mail,         
addressed to such director, member of a committee or stockholder, at such       
person's address as it appears on the records of the Corporation, with postage  
thereon prepaid, and such notice shall be deemed to be given at the time when   
the same shall be deposited in the United States mail. Notice may also be given 
personally, or by telegram, telex, cable or electronic transmission to the      
extent permitted by applicable law.                                             

    Section 2. Waivers of Notice.  Whenever any notice is required by law, the
Certificate of Incorporation or these By-Laws, to be given to any director,     
member of a committee or stockholder, a waiver thereof in writing, signed by the
person or persons entitled to said notice or by electronic transmission, whether
before or after the time stated therein, shall be deemed equivalent thereto.    
Attendance of a person at a meeting, present in person or represented by proxy, 
shall constitute a waiver of notice of such meeting, except where the person    
attends the meeting for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully  
called or convened.                                                             

ARTICLE VII 

GENERAL PROVISIONS

     Section 1. Dividends.  Dividends upon the capital stock of the Corporation,
subject to the requirements of the Delaware General Corporation Law and the     
provisions of the Certificate of Incorporation, if any, may be declared by the  
Board of Directors at any regular or special meeting of the Board of Directors  
(or any action by written consent in lieu thereof in accordance with Section 6  
of Article III hereof), and may be paid in cash, in property, or in shares of   
the Corporation's capital stock. Before payment of any dividend, there may be   
set aside out of any funds of the Corporation available for dividends such sum  
or sums as the Board of Directors from time to time, in its absolute discretion,
deems proper as a reserve or reserves to meet contingencies, or for equalizing  
dividends, or for repairing or maintaining any property of the Corporation, or  
for any proper purpose, and the Board of Directors may modify or abolish any    
such reserve.                                                                   

     Section 2. Disbursements.  All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or 
persons as the Board of Directors may from time to time designate.              

    Section 3. Fiscal Year.  The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.                                        

     Section 4. Corporate Seal.  The corporate seal shall have inscribed thereon
the name of the Corporation, the year of its organization and the words         
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile   
thereof to be impressed or affixed or reproduced or otherwise.                  

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ARTICLE VIII

INDEMNIFICATION 

   Section 1. Power to Indemnify in Actions, Suits or Proceedings other than
Those by or in the Right of the Corporation.  Subject to Section 3 of this      
Article VIII, the Corporation shall indemnify any person who was or is a party  
or is threatened to be made a party to any threatened, pending or completed     
action, suit or proceeding, whether civil, criminal, administrative or          
investigative (other than an action by or in the right of the Corporation) by   
reason of the fact that such person is or was a director or officer of the      
Corporation, or is or was a director or officer of the Corporation serving at   
the request of the Corporation as a director or officer, employee or agent of   
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person  
in connection with such action, suit or proceeding if such person acted in good 
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action 
or proceeding, had no reasonable cause to believe such person's conduct was     
unlawful. The termination of any action, suit or proceeding by judgment, order, 
settlement, conviction, or upon a plea of nolo contendere or its equivalent,    
shall not, of itself, create a presumption that the person did not act in good  
faith and in a manner which such person reasonably believed to be in or not     
opposed to the best interests of the Corporation, and, with respect to any      
criminal action or proceeding, had reasonable cause to believe that such        
person's conduct was unlawful.                                                  

     Section 2. Power to Indemnify in Actions, Suits or Proceedings by or in the
Right of the Corporation. Subject to Section 3 of this Article VIII, the        
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in 
the right of the Corporation to procure a judgment in its favor by reason of the
fact that such person is or was a director or officer of the Corporation, or is 
or was a director or officer of the Corporation serving at the request of the   
Corporation as a director, officer, employee or agent of another corporation,   
partnership, joint venture, trust, employee benefit plan or other enterprise    
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit 
if such person acted in good faith and in a manner such person reasonably       
believed to be in or not opposed to the best interests of the Corporation;      
except that no indemnification shall be made in respect of any claim, issue or  
matter as to which such person shall have been adjudged to be liable to the     
Corporation unless and only to the extent that the Court of Chancery or the     
court in which such action or suit was brought shall determine upon application 
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.     

 Section 3. Authorization of Indemnification.  Any indemnification under
this Article VIII (unless ordered by a court) shall be made by the Corporation  
only as authorized in the specific case upon a determination that               
indemnification of the director or officer is proper in the circumstances       
because such person has met the applicable standard of conduct set forth in     
Section 1 or Section 2 of this Article VIII, as the case may be. Such           
determination shall be made, with respect to a person who is a director or      
officer at the time of such determination, (i) by a majority vote of the        
directors who are not parties to such action, suit or proceeding, even though   
less than a quorum, or (ii) by a committee of such directors designated by a    
majority vote of such directors, even though less than a quorum, or (iii) if    
there are no such directors, or if such directors so direct, by independent     
legal counsel in a written opinion or (iv) by the stockholders. Such            
determination shall be made, with respect to former directors and officers, by  
any person or persons having the authority to act on the matter on behalf of the
Corporation. To the extent, however, that a present or former director or       
officer of the Corporation has been successful on the merits or otherwise in    
defense of any action, suit or proceeding described above, or in defense of any 
claim, issue or matter therein, such person shall be indemnified against        
expenses (including attorneys' fees) actually and reasonably incurred by such   
person in connection therewith, without the necessity of authorization in the   
specific case.                                                                  

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 Section 4. Good Faith Defined.  For purposes of any determination under
Section 3 of this Article VIII, a person shall be deemed to have acted in good  
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the Corporation, or, with respect to any criminal action  
or proceeding, to have had no reasonable cause to believe such person's conduct 
was unlawful, if such person's action is based on good faith reliance on the    
records or books of account of the Corporation or another enterprise, or on     
information supplied to such person by the officers of the Corporation or       
another enterprise in the course of their duties, or on the advice of legal     
counsel for the Corporation or another enterprise or on information or records  
given or reports made to the Corporation or another enterprise by an independent
certified public accountant or by an appraiser or other expert selected with    
reasonable care by the Corporation or another enterprise. The term "another     
enterprise" as used in this Section 4 shall mean any other corporation or any   
partnership, joint venture, trust, employee benefit plan or other enterprise of 
which such person is or was serving at the request of the Corporation as a      
director, officer, employee or agent. The provisions of this Section 4 shall not
be deemed to be exclusive or to limit in any way the circumstances in which a   
person may be deemed to have met the applicable standard of conduct set forth in
Section 1 or 2 of this Article VIII, as the case may be.                        

Section 5. Indemnification by a Court.  Notwithstanding any contrary  
determination in the specific case under Section 3 of this Article VIII, and    
notwithstanding the absence of any determination thereunder, any director or    
officer may apply to the Court of Chancery in the State of Delaware for         
indemnification to the extent otherwise permissible under Sections 1 and 2 of   
this Article VIII. The basis of such indemnification by a court shall be a      
determination by such court that indemnification of the director or officer is  
proper in the circumstances because such person has met the applicable standards
of conduct set forth in Section 1 or 2 of this Article VIII, as the case may be.
Neither a contrary determination in the specific case under Section 3 of this   
Article VIII nor the absence of any determination thereunder shall be a defense 
to such application or create a presumption that the director or officer seeking
indemnification has not met any applicable standard of conduct. Notice of any   
application for indemnification pursuant to this Section 5 shall be given to the
Corporation promptly upon the filing of such application. If successful, in     
whole or in part, the director or officer seeking indemnification shall also be 
entitled to be paid the expense of prosecuting such application.                

     Section 6. Expenses Payable in Advance.  Expenses incurred by a director or
officer in defending any civil, criminal, administrative or investigative       
action, suit or proceeding shall be paid by the Corporation in advance of the   
final disposition of such action, suit or proceeding upon receipt of an         
undertaking by or on behalf of such director or officer to repay such amount if 
it shall ultimately be determined that such person is not entitled to be        
indemnified by the Corporation as authorized in this Article VIII.              

Section 7. Nonexclusivity of Indemnification and Advancement of       
Expenses.  The indemnification and advancement of expenses provided by or       
granted pursuant to this Article VIII shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be 
entitled under the Certificate of Incorporation, any By-Law, agreement, vote of 
stockholders or disinterested directors or otherwise, both as to action in such 
person's official capacity and as to action in another capacity while holding   
such office, it being the policy of the Corporation that indemnification of the 
persons specified in Sections 1 and 2 of this Article VIII shall be made to the 
fullest extent permitted by law. The provisions of this Article VIII shall not  
be deemed to preclude the indemnification of any person who is not specified in 
Section 1 or 2 of this Article VIII but whom the Corporation has the power or   
obligation to indemnify under the provisions of the Delaware General Corporation
Law, or otherwise.                                                              

    Section 8. Insurance.  The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director or officer of the Corporation, 
or is or was a director or officer of the Corporation serving at the request of 
the Corporation as a director, officer, employee or agent of another            
corporation, partnership, joint venture, trust, employee benefit plan or other  
enterprise against any liability asserted against such person and incurred by   
such person in any such capacity, or arising out of such person's status as     
such, whether or not the Corporation would have the power or the obligation to  
indemnify such person against such liability under the provisions of this       
Article VIII.                                                                   

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Section 9. Certain Definitions.  For purposes of this Article VIII,   
references to "the Corporation" shall include, in addition to the resulting     
corporation, any constituent corporation (including any constituent of a        
constituent) absorbed in a consolidation or merger which, if its separate       
existence had continued, would have had power and authority to indemnify its    
directors or officers, so that any person who is or was a director or officer of
such constituent corporation, or is or was a director or officer of such        
constituent corporation serving at the request of such constituent corporation  
as a director, officer, employee or agent of another corporation, partnership,  
joint venture, trust, employee benefit plan or other enterprise, shall stand in 
the same position under the provisions of this Article VIII with respect to the 
resulting or surviving corporation as such person would have with respect to    
such constituent corporation if its separate existence had continued. For       
purposes of this Article VIII, references to "fines" shall include any excise   
taxes assessed on a person with respect to an employee benefit plan; and        
references to "serving at the request of the Corporation" shall include any     
service as a director, officer, employee or agent of the Corporation which      
imposes duties on, or involves services by, such director or officer with       
respect to an employee benefit plan, its participants or beneficiaries; and a   
person who acted in good faith and in a manner such person reasonably believed  
to be in the interest of the participants and beneficiaries of an employee      
benefit plan shall be deemed to have acted in a manner "not opposed to the best 
interests of the Corporation" as referred to in this Article VIII.              

   Section 10. Survival of Indemnification and Advancement of Expenses.  The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Article VIII shall, unless otherwise provided when authorized or ratified, 
continue as to a person who has ceased to be a director or officer and shall    
inure to the benefit of the heirs, executors and administrators of such a       
person.                                                                         

Section 11. Limitation on Indemnification.  Notwithstanding anything  
contained in this Article VIII to the contrary, except for proceedings to       
enforce rights to indemnification (which shall be governed by Section 5 of this 
Article VIII), the Corporation shall not be obligated to indemnify any director 
or officer in connection with a proceeding (or part thereof) initiated by such  
person unless such proceeding (or part thereof) was authorized or consented to  
by the Board of Directors of the Corporation.                                   

    Section 12. Indemnification of Employees and Agents.  The Corporation may,
to the extent authorized from time to time by the Board of Directors, provide   
rights to indemnification and to the advancement of expenses to employees and   
agents of the Corporation similar to those conferred in this Article VIII to    
directors and officers of the Corporation.                                      

ARTICLE IX

AMENDMENTS

    Section 1. Amendments.  These By-Laws may be altered, amended or repealed,
in whole or in part, and new By-Laws may be adopted (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 these By-Laws or Section 1, 2 or 11 of Article III of these 
By-Laws or Section 4, 5 or 12 of Article IV of these By-Laws or 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 
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   
meeting, or (ii) by action of the Board of Directors of the Corporation. The    
provisions of this Section 1 are subject to any contrary provisions and any     
provisions requiring a greater vote that are set forth in the Certificate of    
Incorporation and in Section 12 of Article IV of these By-Laws.                 

    Section 2. Entire Board of Directors.  As used in these By-Laws generally,
the term "entire Board of Directors" means the total number of directors which  
the Corporation would have if there were no vacancies.                          

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                                                                         ANNEX D

[MORGAN STANLEY LETTERHEAD]                                                     

                                                               NOVEMBER 18, 2001

Board of Directors                                                              
Conoco Inc.                                                                     
600 North Dairy Ashford Road                                                    
Houston, TX 77079                                                               

Members of the Board:                                                           

   We understand that Phillips Company ("Phillips"), Conoco Inc. ("Conoco"),
ConocoPhillips Corp., a Delaware corporation ("New Parent"), Phillips Merger    
Corp., a direct wholly owned subsidiary of New Parent ("Merger Sub One"), and   
Conoco Merger Corp., a direct wholly owned subsidiary of New Parent ("Merger Sub
Two"), propose to enter into an Agreement and Plan of Merger, substantially in  
the form of the draft dated November 16, 2001 (the "Merger Agreement"), which   
provides, among other things, for the merger of Merger Sub One with and into    
Phillips (the "Phillips Merger") and the merger of Merger Sub Two with and into 
Conoco (the "Conoco Merger", and together with the Phillips Merger, the         
"Mergers"). Pursuant to the Mergers, Phillips and Conoco will become wholly     
owned subsidiaries of New Parent. We understand that pursuant to the Phillips   
Merger, each issued and outstanding share of common stock, par value $1.25 per  
share, of Phillips ("Phillips Common Stock"), other than shares of Phillips     
Common Stock owned by Phillips, New Parent, Merger Sub One or Merger Sub Two,   
will be converted into the right to receive one fully paid and nonassessable    
share of common stock, par value $.01 per share, of New Parent ("New Parent     
Common Stock"), and that pursuant to the Conoco Merger, each issued and         
outstanding share of common stock, par value $.01 per share, of Conoco ("Conoco 
Common Stock"), other than shares of Conoco Common Stock owned by Conoco, New   
Parent, Merger Sub One or Merger Sub Two, will be converted into the right to   
receive 0.4677 (the "Exchange Ratio") fully paid and nonassessable shares of New
Parent Common Stock. The terms and conditions of the Mergers are more fully set 
forth in the Merger Agreement.                                                  

 You have asked for our opinion as to whether the Exchange Ratio is fair
from a financial point of view to holders of the Conoco Common Stock.           

For purposes of the opinion set forth herein, we have:                

     (i)  reviewed certain publicly available financial statements and
other business and financial information of Porsche and Conoco,       
respectively;                                                         

  (ii)  reviewed certain internal financial statements and other
    financial and operating data concerning Porsche and Conoco prepared by the
respective managements of Phillips and Conoco;                        

          (iii)  reviewed certain financial forecasts prepared by the respective
managements of Phillips and Conoco;                                   

         (iv)  discussed with senior executives of Phillips and Conoco certain
  strategic, financial and operational benefits they expect to derive from
the Mergers;                                                          

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

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

        (vii)  reviewed and considered in the analysis, information prepared
    by the members of the respective senior managements of Phillips and Conoco
relating to the relative contributions of Phillips and Conoco to the  
combined company.                                                     

     (viii)  reviewed the reported prices and trading activity for the
Phillips Common Stock and the Conoco Common Stock;                    

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         (ix)  compared the prices and trading activity of the Phillips Common
  Stock and the Conoco Common Stock with that of the securities of certain
other publicly-traded companies comparable with Phillips and Conoco;  

        (x)  reviewed the financial terms, to the extent publicly available,
of certain comparable merger transactions;                            

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

       (xii)  reviewed the Merger Agreement and certain related documents;
and                                                                   

   (xiii)  performed such other analyses and considered such other
factors as we have deemed appropriate.                                

We have assumed and relied upon without independent verification the  
accuracy and completeness of the information supplied or otherwise made         
available to us by Phillips and Conoco for the purposes of this opinion. With   
respect to the financial forecasts that we received from the respective         
managements of Phillips and Conoco, as well as information relating to certain  
strategic, financial and operational benefits anticipated from the Mergers, we  
have assumed that they have been reasonably prepared on bases reflecting the    
best currently available estimates and judgments of the future financial        
performance of Phillips and Conoco, and New Parent, respectively. In addition,  
we have assumed that the Mergers 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 Mergers will be treated as tax-free     
reorganizations and/or exchanges, each pursuant to the Internal Revenue Code of 
1986. We have not made any independent valuation or appraisal of the assets or  
liabilities of Phillips and Conoco, nor have we been furnished with any such    
appraisals. Our opinion is necessarily based on financial, economic, market and 
other conditions as in effect on, and the information made available to us as   
of, and the financial condition of Phillips and Conoco on, the date hereof.     

    In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to a business combination or other
extraordinary transaction, involving Conoco, nor did we negotiate with any      
party, other than Phillips in connection with such a business combination or    
other extraordinary transaction.                                                

   We have acted as financial advisor to the Board of Directors of Conoco in
connection with this transaction and will receive a fee for our services,       
including a transaction fee, which is contingent upon the consummation of the   
Mergers. In the past, Morgan Stanley & Co. Incorporated and its affiliates have 
provided financial advisory and financing services for Phillips and Conoco and  
have received fees for the rendering of these services. In addition, Morgan     
Stanley maintains commodity trading relationships with both Phillips and Conoco.

  It is understood that this letter is for the information of the Board of
Directors of Conoco and may not be used for any other purpose without our prior 
written consent. In addition, this opinion does not in any manner address the   
merits of the underlying decision by Conoco to engage in the Mergers or the     
prices at which the New Parent Common Stock will trade following consummation of
the Mergers, and Morgan Stanley expresses no opinion or recommendation as to how
the stockholders of Conoco should vote at the stockholders' meeting held in     
connection with the Mergers.                                                    

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    Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the Exchange Ratio is fair from a financial point of view to holders
of the Conoco Common Stock.                                                     

                     Very truly yours,

                                     MORGAN STANLEY & CO. INCORPORATED

                           By: /s/ MICHAEL DICKMAN
                                            ------------------------------------
                           Michael Dickman
                             Managing Director

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                                                                         ANNEX E

[SALOMON LOGO]                                                                  

November 18, 2001                                                               

The Board of Directors                                                          
Conoco Inc.                                                                     
600 North Dairy Ashford Road                                                    
Houston, Texas 77079                                                            

Ladies and Gentlemen:                                                           

   You have requested our opinion as to the fairness, from a financial point
of view, to the holders of shares of common stock, par value $.01 per share of  
Conoco Inc. (the "Company") (the "Company Common Stock") of the Exchange Ratio  
(as defined below) in connection with the proposed Company Merger (as defined   
below) contemplated by the Agreement and Plan of Merger (including the Exhibits 
thereto, the "Agreement") to be entered into by and among the Company, Phillips 
Petroleum Company ("Phillips"), CorvettePorsche Corp., a newly formed           
corporation equally owned by Phillips and the Company ("New Parent"), Porsche   
Merger Corp., a direct wholly owned subsidiary of New Parent ("Merger Sub One") 
and Corvette Merger Corp., a direct wholly owned subsidiary of New Parent       
("Merger Sub Two").                                                             

   As more specifically set forth in the Agreement, and subject to the terms
and conditions thereof, Merger Sub One will merge with and into Phillips with   
Phillips continuing as the surviving corporation (the "Phillips Merger") and    
Merger Sub Two will merge with and into the Company with the Company continuing 
as the surviving corporation (the "Company Merger" and together with the        
Phillips Merger the "Mergers") and upon consummation of the Mergers each of     
Phillips and the Company will become wholly owned subsidiaries of New Parent. In
the Phillips Merger, each outstanding share of common stock, par value $1.25 per
share of Phillips ("Phillips Common Stock") (other than Phillips Common Stock   
held by Phillips as treasury stock or that is owned by New Parent, Phillips,    
Merger Sub One or Merger Sub Two) will be converted into the right to receive   
one share of common stock, par value $.01 per share of New Parent ("New Parent  
Common Stock"). In the Company Merger, each outstanding share of Company Common 
Stock (other than Company Common Stock held by the Company as treasury stock or 
that is owned by New Parent, the Company, Merger Sub One or Merger Sub Two) will
be converted into the right to receive 0.4677 shares (the "Exchange Ratio") of  
New Parent Common Stock.                                                        

In arriving at our opinion, we reviewed a draft of the Agreement dated
November 16, 2001 and held discussions with certain senior officers, directors  
and other representatives and advisors of the Company and certain senior        
officers and other representatives and advisors of Phillips concerning the      
businesses, operations and prospects of the Company, Phillips and New Parent. We
examined certain publicly available business and financial information relating 
to the Company and Phillips as well as certain financial forecasts and other    
information and data for the Company, Phillips and New Parent which were        
provided to or otherwise discussed with us by the managements of the Company and
Phillips, including information relating to certain strategic implications and  
operational and financial benefits anticipated to result from the Mergers. In   
addition to the foregoing, we conducted such other analyses and examinations and
considered such other information and financial, economic and market criteria as
we deemed appropriate in arriving at our opinion.                               

   In rendering our opinion, we have 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 otherwise reviewed by
or discussed with us and have further relied upon the assurances of managements 
of the Company and Phillips that they are not aware of any facts that would make
any of such information inaccurate or misleading. With respect to financial     
forecasts and other information and data provided to or otherwise reviewed by or
discussed with us, we have been advised by the managements                      

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[SALOMON LOGO]                                                                  

The Board of Directors                                         November 18, 2001
Conoco Inc.                                                                     

of the Company 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 managements of the Company and        
Phillips as to the future financial performance of the Company, Phillips and New
Parent and the strategic implications and operational and financial benefits    
anticipated to result from the Mergers. We express no view with respect to such 
forecasts and other information and data or the assumptions on which they were  
based. We have assumed, with your consent, that the Mergers will be treated as a
tax-free reorganization for federal income tax purposes. We have not made or    
been provided with an independent evaluation or appraisal of the assets or      
liabilities (contingent or otherwise) of the Company, Phillips or New Parent nor
have we made any physical inspection of the properties or assets of the Company,
Phillips or New Parent. Representatives of the Company have advised us, and we  
have assumed, that the final terms of the Agreement will not vary materially    
from those set forth in the draft reviewed by us. We have further assumed that  
the Mergers will be consummated in accordance with the terms of the Agreement,  
without waiver of any of the material conditions precedent to the Mergers       
contained in the Agreement.                                                     

 Our opinion, as set forth herein, relates to the relative values of the
Company and Phillips. We are not expressing any opinion as to what the value of 
the New Parent Common Stock will be when issued in the Mergers or the price at  
which the New Parent Common Stock will trade or otherwise be transferable       
subsequent to the Mergers. We were not requested to consider, and our opinion   
does not address, the relative merits of the Company Merger as compared to any  
alternative business strategies that might exist for the Company or the effect  
of any other transaction in which the Company might engage. Our opinion         
necessarily is based upon information available to us and financial, stock      
market and other conditions and circumstances existing and disclosed to us as of
the date hereof.                                                                

     Salomon Smith Barney Inc. will receive a fee for its services in connection
with the Mergers, all of which is contingent upon the consummation of the       
Mergers. We have in the past provided and are currently providing investment    
banking services to the Company and Phillips unrelated to the Mergers, for which
services we have received and may receive compensation. In the ordinary course  
of our business, we and our affiliates may actively trade or hold the securities
of the Company and Phillips for our own account or for the account of our       
customers and, accordingly, may at any time hold a long or short position in    
such securities. Salomon Smith Barney Inc. and its affiliates (including        
Citigroup Inc. and its affiliates) may maintain relationships with the Company, 
Phillips and New Parent and their respective affiliates.                        

     Our advisory services and the opinion expressed herein are provided for the
information of the Board of Directors of the Company in its evaluation of the   
Company Merger and our opinion is not intended to be and does not constitute a  
recommendation of the Company Merger to the Board of Directors, the Company or  
to anyone else or a recommendation to any stockholder as to how such stockholder
should vote on any matters relating to the Company Merger.                      

Based upon and subject to the foregoing, our experience as investment 
bankers, our work as described above and other factors we deemed relevant, we   
are of the opinion that, as of the date hereof, the Exchange Ratio is fair, from
a financial point of view, to the holders of Company Common Stock.              

                     Very truly yours,

                              [/s/ Salomon Smith Barney]

                             SALOMON SMITH BARNEY INC.

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                                                                         ANNEX F

[GOLDMAN SACHS LETTERHEAD]

PERSONAL AND CONFIDENTIAL                                                       

November 18, 2001                                                               

Board of Directors                                                              
Phillips Petroleum Company                                                      
4th & Keeler                                                                    
Bartlesville, OK 74004                                                          

Ladies and Gentlemen:                                                           

     You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding Common Shares, par value $1.25 per share 
(the "Phillips Common Stock"), of Phillips Petroleum Company ("Phillips") of the
Phillips Exchange Ratio (as defined below) relative to the Conoco Exchange Ratio
(as defined below) pursuant to the Agreement and Plan of Merger, dated as of    
November 18, 2001 (the "Agreement"), by and among CorvettePorsche Corp.         
("Parent"), Phillips, Conoco Inc. ("Conoco"), Porsche Merger Corp. ("Phillips   
Merger Sub") and Corvette Merger Corp. ("Conoco Merger Sub"). Pursuant to the   
Agreement, (i) Phillips Merger Sub will merge with and into Phillips and        
Phillips shall remain as the surviving corporation, (ii) Conoco Merger Sub will 
merge with and into Conoco and Conoco shall remain as the surviving corporation 
and (iii) Phillips and Conoco shall become wholly owned subsidiaries of Parent. 
The holder of each issued and outstanding share of Phillips Common Stock will be
entitled to receive one share of Common Stock, par value $0.01 per share        
("Parent Common Stock"), of Parent (the "Phillips Exchange Ratio"), and the     
holder of each issued and outstanding share of Common Stock, par value $0.01 per
share (the "Conoco Common Stock"), of Conoco will be entitled to receive 0.4677 
shares of Parent Common Stock (the "Conoco Exchange Ratio").                    

Goldman, Sachs & Co., as part of its investment banking business, is  
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. We are 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 Agreement. We also have 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-manager 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. Goldman, Sachs & Co.  
provides a full range of financial advisory and securities services             

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Board of Directors                                                              
Phillips Petroleum Company                                                      
November 18, 2001                                                               
Page  Two                                                                       

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 account and for the accounts of   
customers. Goldman, Sachs & Co. also may provide investment banking services to 
Parent and its subsidiaries in the future.                                      

    In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Shareholders 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 shareholders and 
Quarterly Reports on Form 10-Q of Phillips and Conoco; certain other            
communications from Phillips and Conoco to their respective stockholders or     
shareholders; 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 Agreement (the        
"Synergies"). We also have held discussions with members of the senior          
management of Phillips and Conoco regarding their assessment of the strategic   
rationale for, and the potential benefits of, the transaction contemplated by   
the Agreement and the past and current business operations, financial condition 
and future prospects of their respective companies. In addition, we have        
reviewed the reported price and trading activity for the Phillips Common Stock  
and the 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, 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 we considered appropriate.                                      

    We have relied upon the accuracy and completeness of all of the financial,
accounting and other information discussed with or reviewed by us and have      
assumed such accuracy and completeness for purposes of rendering this opinion.  
In that regard, we have assumed with your consent that the internal financial   
forecasts prepared by the managements of Phillips and Conoco, including the     
Synergies, have been reasonably prepared on a basis reflecting the best         
currently available estimates and judgments of Phillips and Conoco. In addition,
we have not made an independent evaluation or appraisal of the assets and       
liabilities of Phillips or Conoco or any of their subsidiaries and we have not  
been furnished with any such evaluation or appraisal. We also have assumed that 
all governmental, regulatory or other consents and approvals necessary for the  
consummation of the transaction contemplated by the 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 Agreement in any respect material to our analysis. We are expressing no     
opinion herein as to the price at which the Parent Common Stock will trade if   
and when such Parent Common Stock is issued. Our advisory services and the      
opinion expressed herein are provided for the information and assistance of the 
Board of Directors of Phillips in connection with its consideration of the      
transaction contemplated by the Agreement and such opinion does not constitute a
recommendation as to how any holder of Phillips Common Stock should vote with   
respect to such transaction.                                                    

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Board of Directors                                                              
Phillips Petroleum Company                                                      
November 18, 2001                                                               
Page  Three                                                                     

   Based upon and subject to the foregoing and based upon such other matters
as we consider relevant, it is our opinion that as of the date hereof the       
Phillips Exchange Ratio relative to the Conoco Exchange Ratio pursuant to the   
Agreement is fair from a financial point of view to the holders of Phillips     
Common Stock.                                                                   

Very truly yours,                                                               

/S/ GOLDMAN SACHS & CO.                                                         

GOLDMAN, SACHS & CO.                                                            

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                                                                         Annex G

[JP Morgan Logo]
                                                               November 18, 2001

The Board of Directors                                                          
Phillips Petroleum Company                                                      
3A4 Phillips Building                                                           
4th & Keeler                                                                    
Bartlesville, Oklahoma 74004                                                    

Members of the Board of Directors:                                              

     You have requested our opinion as to the fairness from a financial point of
view to the holders of common stock, par value $1.25 per share (the "Phillips   
Common Stock"), of Phillips Petroleum Company ("Phillips") of the Phillips      
Exchange Ratio (as defined below) relative to the Conoco Exchange Ratio (as     
defined below) pursuant to the Agreement (as defined below). Phillips, Conoco   
Inc. ("Conoco"), CorvettePorsche Corp., a newly formed holding company          
("Parent"), and two wholly-owned subsidiaries of Parent, Porsche Merger Corp.   
("Phillips Merger Sub") and Corvette Merger Corp. ("Conoco Merger Sub"), propose
to enter into an Agreement and Plan of Merger, dated as of November 18, 2001    
(the "Agreement"), which provides, among other things, that (i) Phillips Merger 
Sub will merge (the "Phillips Merger") with and into Phillips in a transaction  
in which each outstanding share of Phillips Common Stock, other than any shares 
of Phillips Common Stock owned by Phillips, Parent, Phillips Merger Sub or      
Conoco Merger Sub, all of which shall be canceled, will be converted into the   
right to receive one (the "Phillips Exchange Ratio") share of common stock, par 
value $0.01 per share, of Parent (the "Parent Common Stock") and (ii) Conoco    
Merger Sub will merge (the "Conoco Merger" and, together with the Phillips      
Merger, the "Transaction") with and into Conoco in a transaction in which each  
outstanding share of common stock, par value $0.01 per share, of Conoco (the    
"Conoco Common Stock"), other than any shares of Conoco Common Stock owned by   
Conoco, Parent, Phillips Merger Sub or Conoco Merger Sub, all of which shall be 
canceled, will be converted into the right to receive 0.4677 (the "Conoco       
Exchange Ratio") shares of Parent Common Stock.                                 

In arriving at our opinion we have (i) reviewed the Agreement; (ii)   
reviewed certain publicly available business and financial information          
concerning Phillips and Conoco and the industries in which they operate; (iii)  
compared the proposed financial terms of the Transaction with the publicly      
available financial terms of certain transactions involving companies we deemed 
relevant and the consideration received for such companies; (iv) compared the   
financial and operating performance of Phillips and Conoco with publicly        
available information concerning certain other companies we deemed relevant and 
reviewed the current and historical market prices of the Phillips Common Stock  
and Conoco Common Stock and certain publicly traded securities of such other    
companies; (v) 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 Transaction (the     
"Synergies"); and (vi) performed such other financial studies and analyses and  
considered such other information as we deemed appropriate for the purpose of   
this opinion.                                                                   

In addition, we have held discussions with certain members of the     
management of Phillips and Conoco with respect to certain aspects of the        
Transaction, 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 Transaction, including the Synergies, on the     
financial condition and future prospects of Phillips and Conoco, and certain    
other matters we believed necessary or appropriate to our inquiry.              

In giving our opinion, we have 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 us by Phillips and  
Conoco or otherwise reviewed by us, and we have not assumed any responsibility  
or                                                                              
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liability therefor. We have not conducted any valuation or appraisal of any     
assets or liabilities, nor have any such valuations or appraisals been provided 
to us. In relying on financial analyses and forecasts provided to us, including 
the Synergies, we have assumed that they have been reasonably prepared based on 
assumptions reflecting the best currently available estimates and judgements by 
management as to the expected future results of operations and financial        
condition of Conoco and Phillips to which such analyses or forecasts relate. We 
have also assumed that the Transaction will qualify as a tax-free reorganization
for United States federal income tax purposes and that the transactions         
contemplated by the Agreement will be consummated as described in the Agreement.
We have relied as to all legal matters relevant to rendering our opinion upon   
the advice of our counsel. We have further assumed that all governmental,       
regulatory or other consents and approvals necessary for the consummation of the
Transaction will be obtained without any adverse effect on Phillips or Conoco or
their respective subsidiaries or on the contemplated benefits of the            
transactions contemplated by the Agreement in any respect material to our       
analysis and that all conditions to the Transaction will be satisfied in all    
respects material to our analysis.                                              

   Our opinion is necessarily based on economic, market and other conditions
as in effect on, and the information made available to us as of, the date       
hereof. It should be understood that subsequent developments may affect this    
opinion and that we do not have any obligation to update, revise, or reaffirm   
this opinion. Our opinion is limited to the fairness from a financial point of  
view to the holders of Phillips Common Stock of the Phillips Exchange Ratio     
relative to the Conoco Exchange Ratio pursuant to the Agreement and we express  
no opinion as to the underlying decision by Phillips to engage in the           
Transaction. We are expressing no opinion herein as to the price at which       
Phillips Common Stock or Parent Common Stock will trade at any future time.     

     We have acted as financial adviser to Phillips with respect to the proposed
Transaction and will receive a fee from Phillips for our services, which is     
contingent upon the consummation of the Transaction. We have also 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. One of our  
commercial bank affiliates is the Agent bank for certain outstanding credit     
facilities for Phillips and Conoco. We may also provide financial advisory and  
financing services to Phillips and Conoco and/or affiliates in the future. In   
the ordinary course of our businesses, we and our affiliates may actively trade 
the debt and equity securities of Phillips or Conoco for our own account or for 
the accounts of customers and, accordingly, we may at any time hold long or     
short positions in such securities.                                             

    On the basis of and subject to the foregoing, it is our opinion that as of
the date hereof the Phillips Exchange Ratio relative to the Conoco Exchange     
Ratio pursuant to the Agreement is fair from a financial point of view to the   
holders of Phillips Common Stock.                                               

     This letter is provided to the Board of Directors of Phillips in connection
with and for the purpose of its evaluation of the Transaction. This opinion does
not constitute a recommendation to any stockholder of Phillips as to how such   
stockholder should vote with respect to the Phillips Merger or any other matter.
This opinion may not be disclosed, referred to, or communicated (in whole or in 
part) to any third party for any purpose whatsoever except with our prior       
written approval. This opinion may be reproduced in full in any proxy or        
information statement mailed to shareholders of Phillips but may not otherwise  
be disclosed publicly in any manner without our prior written approval.         

Very truly yours,                                                               

J.P. MORGAN SECURITIES INC.                                                     

/S/ J.P. MORGAN SECURITIES INC.                                                 

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                                                                         ANNEX H

[MERRILL LYNCH LOGO]                                                            
                                                  INVESTMENT BANKING

                                             CORPORATE AND
                                             INSTITUTIONAL
                                            CLIENT GROUP

                                                  ONE HOUSTON CENTER
                                             1221 MCKINNEY
                                          SUITE 2700
                                                    HOUSTON, TEXAS 77010
                                            713 759 2500
                                                FAX 713 759 2580

                                                               November 18, 2001

Board of Directors                                                              
Phillips Petroleum Company                                                      
Fourth and Keeler                                                               
Bartlesville, OK 74004                                                          

Members of the Board of Directors:                                              

Phillips Petroleum Company ("Phillips"), Conoco Inc. ("Conoco"),      
CorvettePorsche Corp., a newly formed holding company ("Parent"), and two       
wholly-owned subsidiaries of Parent, Porsche Merger Corp. ("Phillips Merger     
Sub") and Corvette Merger Corp. ("Conoco Merger Sub"), propose to enter into an 
Agreement and Plan of Merger, dated as of November 18, 2001 (the "Agreement"),  
which provides, among other things, that (i) Phillips Merger Sub will merge (the
"Phillips Merger") with and into Phillips in a transaction in which each        
outstanding share of common stock, par value $1.25 per share, of Phillips (the  
"Phillips Common Stock"), other than any shares of Phillips Common Stock owned  
by Phillips, Parent, Phillips Merger Sub or Conoco Merger Sub, all of which     
shall be canceled, will be converted into the right to receive one (the         
"Phillips Exchange Ratio") share of common stock, par value $.01 per share, of  
Parent (the "Parent Common Stock") and (ii) Conoco Merger Sub will merge (the   
"Conoco Merger" and, together with the Phillips Merger, the "Transaction") with 
and into Conoco in a transaction in which each outstanding share of common      
stock, par value $.01 per share, of Conoco (the "Conoco Common Stock"), other   
than any shares of Conoco Common Stock owned by Conoco, Parent, Phillips Merger 
Sub or Conoco Merger Sub, all of which shall be canceled, will be converted into
the right to receive 0.4677 (the "Conoco Exchange Ratio") shares of Parent      
Common Stock.                                                                   

You have asked us whether, in our opinion, the Phillips Exchange Ratio
relative to the Conoco Exchange Ratio pursuant to the Agreement is fair from a  
financial point of view to the holders of Phillips Common Stock.                

  In arriving at the opinion set forth below, we have, among other things:

(1)   Reviewed certain publicly available business and financial      
      information relating to Phillips and Conoco that we deemed to be
relevant;                                                 

     (2)   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 Transaction ("Expected Synergies"), furnished to us
by Phillips and Conoco;                                   

(3)   Conducted discussions with members of senior management and     
   representatives of Phillips and Conoco concerning the matters
     described in clauses 1 and 2 above, as well as their respective

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[MERRILL LYNCH LOGO]                                                            

    businesses and prospects before and after giving effect to the
Transaction and the Expected Synergies;                   

    (4)   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 we deemed to be
relevant;                                                 

(5)   Reviewed the results of operations of Phillips and Conoco and   
           compared them with those of certain publicly traded companies that we
deemed to be relevant;                                    

 (6)   Compared the proposed financial terms of the Transaction with the
         financial terms of certain other transactions which we deemed to be
relevant;                                                 

     (7)   Participated in certain discussions among representatives of Phillips
and Conoco and their financial and legal advisors;        

(8)   Reviewed the potential pro forma impact of the Transaction;     

(9)   Reviewed the Agreement; and                                     

(10)  Reviewed such other financial studies and analyses and took into
      account such other matters as we deemed necessary, including our
     assessment of general economic, market and monetary conditions.

  In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,     
discussed with or reviewed by or for us, or publicly available, and we have not 
assumed any responsibility for independently verifying such information or      
undertaken an independent evaluation or appraisal of any of the assets or       
liabilities of Phillips or Conoco or been furnished with any such evaluation or 
appraisal. In addition, we have not assumed 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 Expected Synergies        
furnished to or discussed with us by Phillips or Conoco, we have been 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's or Conoco's management as to the expected future financial           
performance of Phillips or Conoco, as the case may be, and the Expected         
Synergies. We have made no independent investigation of any legal matters and   
accounting advice given to such parties and their respective boards of          
directors, including, without limitation, advice as to the accounting and tax   
consequences of the Transaction.                                                

     Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on, and on the information made available to 
us as of, the date hereof. We have assumed that all governmental, regulatory or 
other consents and approvals necessary for the consummation of the Transaction  
will be obtained without any adverse effect on Phillips or Conoco or their      
respective subsidiaries or on the contemplated benefits of the transactions     
contemplated by the Agreement in any respect material to our analysis, and we   
have further assumed that all conditions to the Transaction will be satisfied in
all respects material to our analysis.                                          

We are acting as financial advisor to Phillips in connection with the 
Transaction and will receive a fee from Phillips for our services, which is     
contingent upon the consummation of the Transaction. In addition, Phillips has  
agreed to indemnify us for certain liabilities arising out of our engagement. We
have, in the past, provided financial advisory and financing services to        
Phillips and Conoco and/or their affiliates and may continue to do so and have  
received, and may receive, fees for the rendering of such services. In addition,
in the ordinary course of our business, we may actively trade the shares of     
Phillips Common Stock and other securities of Phillips, as well as the shares of
Conoco Common Stock and other securities                                        

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[MERRILL LYNCH LOGO]                                                            

of Conoco, for our own account and for the accounts of customers and,           
accordingly, may at any time hold a long or short position in such securities.  

This opinion is for the use and benefit of the Board of Directors of  
Phillips. Our opinion does not address the merits of the underlying decision by 
Phillips to engage in the Transaction and does not constitute a recommendation  
to any stockholder of Phillips as to how such stockholder should vote on the    
proposed Phillips Merger or any matter related thereto.                         

We are not expressing any opinion herein as to the prices at which the
shares of Phillips Common Stock or the Parent Common Stock will trade following 
the announcement or consummation of the Transaction, as the case may be.        

   On the basis of, and subject to the foregoing, we are of the opinion that
as of the date hereof the Phillips Exchange Ratio relative to the Conoco        
Exchange Ratio pursuant to the Agreement is fair from a financial point of view 
to the holders of Phillips Common Stock.                                        

             Very truly yours,

                                         MERRILL LYNCH, PIERCE, FENNER & SMITH
                                        INCORPORATED

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[PHILLIPS 66 LOGO]
PROXY                                                               PROXY       

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS 

PHILLIPS PETROLEUM COMPANY

Special Meeting March 12, 2002

The undersigned hereby appoints J. MULVA, J. CARRIG and J. LOWE as proxy holders
with power of substitution, or, if all do not act on a matter, those who do act,
to vote all stock which the undersigned could vote at the Company's Special     
Stockholders' Meeting to be held at the Adams Building, 4th Street and Keeler   
Avenue, Bartlesville, Oklahoma, on March 12, 2002 at 10:00 local time, and at   
any adjournment thereof, in the manner stated herein as to the following matters
and in their discretion on any other matters that come before the meeting, all  
as described in the Notice and Proxy Statement.                                 

THIS PROXY IS CONTINUED ON THE REVERSE SIDE 
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY 

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-- FOLD AND DETACH HERE --

YOUR VOTE IS IMPORTANT! 
YOU CAN VOTE IN ONE OF TWO WAYS:

TELEPHONE                                               
1-800-840-1208                                                

Use any touch-tone telephone in the                                             
United States, Puerto Rico or                                                   
Canada, to vote your proxy. Have                                                
your proxy card in hand when you                                                
call. You will be prompted to enter                                             
your control number, located on the                                             
reverse side, and then follow the                                               
directions given.                                                               

OR                                                    

MAIL                                                    

Mark, sign and date                                                     
your proxy card                                                     
and                                                       
return it in the                                                      
enclosed postage-paid                                                       
envelope.                                                       

IF YOU VOTE YOUR PROXY BY TELEPHONE,
YOU DO NOT NEED TO MAIL BACK YOUR PROXY CARD. 

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This Proxy will be voted or not voted as you direct below. In the absence of such direction,       Please mark your    [X]       
it will be voted FOR Proposal 1.                                                                   vote as indicated             
                                                                                                   in this example               

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COMPANY RECOMMENDS A VOTE FOR: Proposal 1 to adopt the Agreement and Plan of Merger, dated as of    FOR      AGAINST    ABSTAIN  
November 18, 2001, by and among Phillips Petroleum Company, Conoco Inc., a Delaware corporation,     [ ]        [ ]        [ ]   
ConocoPhillips, a Delaware corporation, which we refer to as "New Parent," C Merger Corp.,                                       
a Delaware corporation and a wholly owned subsidiary of New Parent, and P Merger Corp., a Delaware                               
corporation and a wholly owned subsidiary of New Parent.                                                                         

Pursuant to the merger agreement, upon completion of the merger, each share of                                                   
Phillips Petroleum Company common stock will be converted into one share of New                                                  
Parent common stock and each share of Conoco Inc. common stock will be converted                                                 
into 0.4677 of a share of New Parent common stock.                                                                               

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                                                                               I PLAN TO ATTEND THE SPECIAL MEETING        [ ]   

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                 Please mark, date, sign and return this proxy card promptly. To
          vote in accordance with the Company's recommendations no
boxes need be checked.                        

                 Dated ___________________________________________________, 2002

                 _______________________________________________________________

                 _______________________________________________________________

          Signature(s) of Stockholder(s)

              Your signature(s) on the proxy form should be exactly the same
              as the name(s) imprinted hereon. Persons signing as executors,
               administrators, trustees, or in similar capabilities, should so
indicate.                                       

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[UP ARROW] FOLD AND DETACH HERE [UP ARROW]

IF YOU WISH TO VOTE BY TELEPHONE IN THE UNITED STATES, PUERTO RICO OR CANADA,   
PLEASE FOLLOW THE INSTRUCTIONS BELOW. IF YOU VOTE BY TELEPHONE, PLEASE DO NOT   
RETURN YOUR CARD BY MAIL.                                                       

HAVE YOUR VOTING DIRECTION CARD IN HAND.                                        

TO VOTE BY PHONE THROUGH OUR TABULATOR, MELLON INVESTOR SERVICES LLC:           

-    On a touch-tone telephone call Toll Free 1-800-840-1208 -- 24 hours a day  
-- 7 days a week.                                                     

-    Enter your eleven-digit Control Number which is indicated below.           

-    To vote as the Board of Directors recommends, press 1.                     
To vote AGAINST, press 9;                                             
To ABSTAIN, press 0.                                                  

THANK YOU FOR VOTING

[PHILLIPS 66 LOGO]    Phillips Petroleum Company Special                        
 Meeting March 12, 2002 Admission Ticket