Annex A--Agreement and Plan of Merger
Amended and Restated
AGREEMENT AND PLAN
OF MERGER
by and between
DOMINION RESOURCES, INC.
and
CONSOLIDATED NATURAL GAS COMPANY
Dated as of May 11, 1999
Annex A--Agreement and Plan of Merger
TABLE OF CONTENTS
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ARTICLE I
The Merger........................................................... 1
Section I.1 The Mergers........................................... 1
Section I.2 Alternative Merger.................................... 2
Section I.3 Effective Time of the Mergers......................... 2
Section I.4 Effects of Merger..................................... 2
ARTICLE II
Treatment of Shares.................................................. 3
Section II.1 Effect on the Capital Stock of DRI.................... 3
Section II.2 Effect on Capital Stock of CNG of the Second Merger... 4
Section II.3 Exchange of Certificates.............................. 7
Section II.4 Dissenting Shares..................................... 9
ARTICLE III
The Closing.......................................................... 10
Section III.1 Closing............................................... 10
ARTICLE IV
Representations and Warranties of DRI................................ 10
Section IV.1 Organization and Qualification........................ 10
Section IV.2 Subsidiaries.......................................... 10
Section IV.3 Capitalization........................................ 11
Authority; Non-Contravention; Statutory Approvals;
Section IV.4 Compliance........................................... 11
Section IV.5 Reports and Financial Statements...................... 12
Section IV.6 Absence of Certain Changes or Events.................. 12
Section IV.7 Registration Statement and Proxy Statement............ 13
Section IV.8 Employee Matters; ERISA............................... 13
Section IV.9 Regulation as a Utility............................... 13
Section IV.10 Vote Required......................................... 14
Section IV.11 [intentionally omitted]............................... 14
Section IV.12 Opinion of Financial Advisor.......................... 14
Section IV.13 Ownership of CNG Common Stock......................... 14
Section IV.14 Anti-Takeover Provisions.............................. 14
Section IV.15 Nuclear Operations.................................... 00
Xxxxxxx XX.00 XXX Actions........................................... 14
Section IV.17 Environmental Protection.............................. 14
Section IV.18 Trading Position Risk Management...................... 15
Section IV.19 Litigation............................................ 15
Section IV.20 Dividends............................................. 15
Section IV.21 Merger Subs........................................... 15
ARTICLE V
Representations and Warranties of CNG................................ 15
Section V.1 Organization and Qualification........................ 15
Section V.2 Subsidiaries.......................................... 15
Section V.3 Capitalization........................................ 16
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Section V.4 Authority; Non-Contravention; Statutory Approvals;
Compliance........................................... 16
Section V.5 Reports and Financial Statements...................... 17
Section V.6 Absence of Certain Changes or Events.................. 17
Section V.7 Registration Statement and Proxy Statement............ 17
Section V.8 Employee Matters; ERISA............................... 18
Section V.9 Regulation as a Utility............................... 18
Section V.10 Vote Required......................................... 18
Section V.11 [intentionally omitted]............................... 18
Section V.12 Opinion of Financial Advisor.......................... 18
Section V.13 Ownership of DRI Common Stock......................... 18
Section V.14 CNG Rights Agreement.................................. 18
Section V.15 Anti-Takeover Provisions.............................. 19
Section V.16 Environmental Protection.............................. 19
Section V.17 Trading Position Risk Management...................... 19
Section V.18 Litigation............................................ 19
Section V.19 Rejection of Columbia Proposal........................ 19
ARTICLE VI
Conduct of Business Pending the Mergers.............................. 19
Section VI.1 Ordinary Course of Business........................... 20
Section VI.2 Dividends............................................. 20
Section VI.3 Issuance of Securities................................ 20
Section VI.4 Charter Documents..................................... 20
Section VI.5 Acquisitions.......................................... 20
Section VI.6 No Dispositions....................................... 21
Section VI.7 Indebtedness.......................................... 21
Section VI.8 Capital Expenditures.................................. 21
Section VI.9 Compensation, Benefits................................ 21
Section VI.10 1935 Act.............................................. 22
Section VI.11 Accounting............................................ 22
Section VI.12 [intentionally omitted]............................... 22
Section VI.13 Tax-Free Status....................................... 22
Section VI.14 Discharge of Liabilities.............................. 22
Section VI.15 Cooperation, Notification............................. 22
Section VI.16 Rate Matters.......................................... 22
Section VI.17 Third-Party Consents.................................. 22
Section VI.18 No Breach, Etc........................................ 23
Section VI.19 Tax-Exempt Status..................................... 23
Section VI.20 Transition Management................................. 23
Section VI.21 Insurance............................................. 23
Section VI.22 Permits............................................... 23
ARTICLE VII
Additional Agreements................................................ 23
Section VII.1 Access to Information................................. 23
Section VII.2 Joint Proxy Statement and Registration Statement...... 23
Section VII.3 Regulatory Matters.................................... 24
Section VII.4 Shareholder Approvals................................. 24
Section VII.5 Directors' and Officers' Indemnification.............. 25
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Section VII.6 Disclosure Schedules................................. 26
Section VII.7 Public Announcements................................. 26
Section VII.8 Rule 145 Affiliates.................................. 26
Section VII.9 Certain Employee Agreements.......................... 26
Section VII.10 Incentive, Stock and Other Plans..................... 27
Section VII.11 No Solicitations..................................... 27
Section VII.12 DRI Board of Directors............................... 28
Section VII.13 Corporate Offices.................................... 28
Section VII.14 Expenses............................................. 28
Section VII.15 Community Support.................................... 28
Section VII.16 Further Assurances................................... 28
ARTICLE VIII
Conditions........................................................... 29
Section VIII.1 Conditions to Each Party's Obligation to Effect the
Mergers............................................. 29
Section VIII.2 Conditions to Obligation of CNG to Effect the Second
Merger.............................................. 29
Section VIII.3 Conditions to Obligation of DRI to Effect the
Mergers............................................. 30
ARTICLE IX
Termination, Amendment and Waiver.................................... 30
Section IX.1 Termination.......................................... 30
Section IX.2 Effect of Termination................................ 32
Section IX.3 Termination Fee; Expenses............................ 33
Section IX.4 Amendment............................................ 34
Section IX.5 Waiver............................................... 34
ARTICLE X
General Provisions................................................... 34
Section X.1 Non-Survival of Representations, Warranties,
Covenants and Agreements............................ 34
Section X.2 Brokers.............................................. 35
Section X.3 Notices.............................................. 35
Section X.4 Miscellaneous........................................ 36
Section X.5 Interpretation....................................... 36
Section X.6 Counterparts; Effect................................. 36
Section X.7 Parties in Interest.................................. 36
Section X.8 Specific Performance................................. 36
Section X.9 WAIVER OF JURY TRIAL................................. 36
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Annex A--Agreement and Plan of Merger
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of May 11, 1999
(this "Agreement"), by and among DOMINION RESOURCES, INC., a corporation
organized under the laws of the Commonwealth of Virginia ("DRI") and
CONSOLIDATED NATURAL GAS COMPANY, a corporation organized under the laws of the
State of Delaware ("CNG").
WHEREAS, the Board of Directors of DRI has approved this Agreement and the
merger of New Sub I (as defined below) with and into DRI, with DRI as the
surviving corporation (the "First Merger"), and the Boards of Directors of DRI
and CNG have approved this Agreement and the merger of CNG with and into New
Sub II (as defined below), with New Sub II as the surviving corporation (the
"Second Merger," and together with the First Merger, the "Mergers");
WHEREAS, the Boards of Directors of DRI and CNG have also approved an
alternative "Second Merger" pursuant to which CNG would be merged with and into
DRI under certain circumstances as set forth in this Agreement; and
WHEREAS, for federal income tax purposes, it is intended that the Second
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and this
Agreement is intended to be and is adopted as a plan of reorganization for
purposes of Section 368 of the Code.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
The Merger
Section I.1 The Mergers. Subject to the terms and conditions of this
Agreement:
(a) To effectuate the transactions contemplated herein, upon receipt of any
required approvals, DRI shall cause the organization of DRI New Sub I, Inc., a
Virginia corporation ("New Sub I") and DRI New Sub II, Inc., a Delaware
corporation ("New Sub II"), the incorporation documents and bylaws of which
shall be in such forms as shall be determined by DRI and the authorized capital
stock of which shall each initially consist of 100 shares of common stock with
no par value, which shall be issued to DRI at a price of $1.00 per share. In
connection with the organization of New Sub I and New Sub II, as soon as
practicable following the creation of the merger subsidiaries, DRI shall: (a)
designate the respective directors and officers of New Sub I and New Sub II,
(b) cause the directors and officers of New Sub I and New Sub II to take such
steps as may be necessary or appropriate to complete the organization of such
Subsidiaries, (c) cause the Agreement to be approved and executed by New Sub I
and New Sub II, (d) adopt (as sole shareholder of Subsidiary) the Agreement,
and (e) cause each of New Sub I and New Sub II to perform its obligations under
the Agreement. Upon the approval and execution of this Agreement by each of New
Sub I and New Sub II as described in the preceding sentence, each such merger
Subsidiary will become a party to this Agreement.
(b) At the Effective Time of the First Merger (as defined in Section 1.3),
New Sub I will be merged with and into DRI, in accordance with the Virginia
Stock Corporation Act ("VSCA"). DRI will be the surviving corporation in the
First Merger and will continue its corporate existence under the laws of the
State of Virginia. The effects and the consequences of the First Merger are set
forth in Section 1.4(a). Throughout this Agreement, the term "DRI" refers to
DRI prior to the First Merger or to DRI as the surviving corporation in the
First Merger, as the context requires.
(c) At the Effective Time of the Second Merger (as defined in Section 1.3),
CNG will be merged with and into New Sub II in accordance with the Delaware
General Corporation Law ("DGCL"). New Sub II will be
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Annex A--Agreement and Plan of Merger
the surviving corporation in the Second Merger (the "Surviving Corporation")
and shall succeed to and assume all the rights and obligations of CNG in
accordance with the DGCL. The effects and the consequences of the Second Merger
are set forth in Section 1.4(b).
Section I.2 Alternative Merger. At the election of DRI, after consultation
with CNG, in lieu of the Second Merger described in Section 1.1 and pursuant to
the terms and subject to the conditions of this Agreement, at the Effective
Time of the Second Merger (as defined in Section 1.3), CNG shall be merged into
DRI in accordance with the laws of the Commonwealth of Virginia and the State
of Delaware. DRI shall be the surviving corporation in the Merger and shall
continue its existence under the laws of the Commonwealth of Virginia and
references herein to "Surviving Corporation" shall be deemed to refer to DRI.
The effects and consequences of the Merger shall be as set forth in this
Agreement and in Section 13.1-721 of the VSCA.
Section I.3 Effective Time of the Mergers. On the Closing Date (as defined in
Section 3.1) (a) articles of merger complying with the requirements of the
relevant provisions of the VCSA shall be executed and filed with the Clerk of
the State Corporation Commission of the State of Virginia with respect to the
First Merger and (b) a certificate of merger complying with the requirements of
the relevant provisions of the DGCL shall be executed and filed with the
Secretary of State of the State of Delaware with respect to the Second Merger.
The First Merger shall become effective upon issuance of the certificate of
merger relating thereto or upon such later time as is agreed upon by the
parties and specified in such articles of merger (the "Effective Time of the
First Merger"). The Second Merger shall become effective upon filing the
certificate of merger relating thereto or upon such later date as is agreed
upon by the parties and specified in such certificate of merger (the "Effective
Time of the Second Merger"); provided, that the Effective Time of the First
Merger will occur immediately prior to the Effective Time of the Second Merger
(it being understood that the First Merger will not be effected unless and
until all of the conditions to the Second Merger have been satisfied or waived
and the parties hereto are prepared to consummate the Second Merger). In the
event the parties effect the Alternative Merger, on the Closing Date articles
of merger complying with the requirements of the VCSA and a certificate of
merger complying with the requirements of the DGCL in forms acceptable to DRI
and CNG shall be filed with the respective offices outlined above and the
Alternative Merger shall become effective upon the completion of the filings
under the VCSA and the DGCL. In the event the parties effect the Alternative
Merger, the references herein to "Second Merger" and "Effective Time of the
Second Merger" shall refer to the Alternative Merger and the effective time of
such Alternative Merger, respectively.
Section I.4 Effects of the Merger. (a) At the Effective Time of the First
Merger, (i) the articles of incorporation of DRI, as in effect immediately
prior to the First Merger, will be the articles of incorporation of DRI, as the
surviving corporation in the First Merger, until thereafter amended as provided
by law and such articles of incorporation, and (ii) the bylaws of DRI, as in
effect immediately prior to the First Merger, will be the bylaws of DRI, as the
surviving corporation in the First Merger, until thereafter amended as provided
by law, the articles of incorporation of DRI and such bylaws. Subject to the
foregoing, the additional effects of the First Merger shall be as provided in
the applicable provisions of the VSCA and the DGCL.
(b) At the Effective Time of the Second Merger (other than the Alternative
Merger), (i) the certificate of incorporation of New Sub II, as in effect
immediately prior to the Second Merger will be the certificate of incorporation
of the Surviving Corporation until thereafter amended as provided by law and
such certificate of incorporation, and (ii) the by-laws of New Sub II, as in
effect immediately prior to the Second Merger, shall be the bylaws of the
Surviving Corporation until thereafter amended as provided by law, the
certificate of incorporation of the Surviving Corporation and such bylaws.
Subject to the foregoing, the additional effects of the Second Merger shall be
as provided in the applicable provisions of the DGCL.
(c) In the event the parties effect the Alternative Merger, at the Effective
Time of the Second Merger, (i) the articles of incorporation of DRI, as in
effect immediately prior to the Second Merger will be the certificate of
incorporation of the Surviving Corporation until thereafter amended as provided
by law and such certificate of incorporation, and (ii) the by-laws of DRI, as
in effect immediately prior to the Second Merger, shall be the bylaws of the
Surviving Corporation until thereafter amended as provided by law, the
certificate of incorporation of the Surviving Corporation and such bylaws.
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ARTICLE II
Treatment of Shares
Section II.1 Effect on the Capital Stock of DRI. As of the Effective Time of
the First Merger, by virtue of the First Merger and without any action on the
part of any holder of DRI Common Stock (as hereinafter defined):
(a) Cancellation of New Sub I Shares. Each share of common stock, without
par value, of New Sub I issued and outstanding immediately prior to the
Effective Time of the First Merger will automatically be canceled and
retired and will cease to exist, and no consideration will be delivered in
exchange therefor.
(b) Cancellation of DRI Treasury Stock. Each share of common stock,
without par value, of DRI ("DRI Common Stock") that is owned by DRI or by
CNG or any wholly-owned subsidiary of CNG will automatically be canceled
and retired and will cease to exist, and no consideration will be delivered
in exchange therefor.
(c) Conversion of DRI Common Stock. Subject to the provisions of Section
2.3(d) hereof, each issued and outstanding share of DRI Common Stock (other
than shares of DRI Common Stock to be canceled in accordance with Section
2.1(b)) will be converted into either (X) $43.00 in cash (the "DRI Cash
Consideration") or (Y) 1.0 (the "DRI Exchange Ratio") fully paid and non-
assessable shares of DRI Common Stock (the "DRI Stock Consideration" and,
together with the DRI Cash Consideration, the "DRI Merger Consideration"),
in each case as the holder thereof shall have elected or be deemed to have
elected, in accordance with Section 2.1(e).
(d) Allocation. Notwithstanding anything in this Agreement to the
contrary, the aggregate amount of cash to be issued to shareholders of DRI
as consideration in the First Merger shall be equal to $1,251,055,526 (the
"DRI Cash Amount"); provided that, the DRI Cash Amount may be increased by
DRI to an amount no greater than $1,668,400,000 in order to accommodate the
exercise by DRI of its option to change the DRI Cash Number and the DRI
Stock Number pursuant to the last sentence of this Section 2.1(d). As used
in this Agreement, the "DRI Cash Number" shall mean the aggregate number of
shares of DRI Common Stock to be converted into the right to receive the
DRI Cash Consideration in the First Merger, which will be equal to the DRI
Cash Amount divided by $43.00. The number of shares of DRI Common Stock to
be converted into the right to receive DRI Stock Consideration in the First
Merger (the "DRI Stock Number") will be equal to (x) the number of shares
of DRI Common Stock issued and outstanding immediately prior to the
Effective Time of the First Merger (ignoring for this purpose any DRI
Common Stock held as treasury shares and canceled pursuant to Section
2.1(b)) less (y) the sum of (A) the DRI Cash Number and (B) the aggregate
number of shares of DRI Common Stock to be exchanged for cash pursuant to
Section 2.3(d). DRI will have the option to change the DRI Cash Number and
the DRI Stock Number to more closely follow the actual elections of DRI
shareholders pursuant to this Section 2.1, so long as such modification to
the DRI Cash Number and the DRI Stock Number does not prevent the
conditions set forth in Sections 8.2(e) and 8.3(e) from being satisfied.
(e) Election. Subject to allocation in accordance with the provisions of
this Section 2.1, each record holder of shares of DRI Common Stock (other
than shares to be canceled in accordance with Section 2.1(b)) issued and
outstanding immediately prior to the Election Deadline (as defined in
Section 2.3(b)(i)) will be entitled, in accordance with Section 2.3(b), (i)
to elect to receive in respect of each such share (A) DRI Cash
Consideration (a "DRI Cash Election") or (B) DRI Stock Consideration (a
"DRI Stock Election") or (ii) to indicate that such record holder has no
preference as to the receipt of DRI Cash Consideration or DRI Stock
Consideration for all such shares held by such holder (a "DRI Non-
Election"). Shares of DRI Common Stock in respect of which a DRI Non-
Election is made or as to which no election is made (collectively, "DRI
Non-Election Shares") shall be deemed by DRI to be shares in respect of
which DRI Cash Elections or DRI Stock Elections have been made, as DRI
shall determine.
(f) Allocation of DRI Cash Election Shares. In the event that the
aggregate number of shares in respect of which DRI Cash Elections have been
made (the "DRI Cash Election Shares") exceeds the DRI
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Annex A--Agreement and Plan of Merger
Cash Number, all shares of DRI Common Stock in respect of which DRI Stock
Elections have been made (the "DRI Stock Election Shares") and all DRI Non-
Election Shares will be converted into the right to receive DRI Stock
Consideration (and cash in lieu of fractional interests in accordance with
Section 2.3(d)), and DRI Cash Election Shares will be converted into the
right to receive DRI Cash Consideration or DRI Stock Consideration in the
following manner:
(i) the number of DRI Cash Election Shares covered by each Form of
Election (as defined in Section 2.3(b)(i)) to be converted into DRI
Cash Consideration will be determined by multiplying the number of DRI
Cash Election Shares covered by such Form of Election by a fraction,
(A) the numerator of which is the DRI Cash Number and (B) the
denominator of which is the aggregate number of DRI Cash Election
Shares rounded down to the nearest whole number; and
(ii) all DRI Cash Election Shares not converted into DRI Cash
Consideration in accordance with Section 2.1(f)(i) will be converted
into the right to receive DRI Stock Consideration (and cash in lieu of
fractional interests in accordance with Section 2.3(d)).
(g) Allocation of DRI Stock Election Shares. In the event that the
aggregate number of DRI Stock Election Shares exceeds the DRI Stock Number,
all DRI Cash Election Shares and all DRI Non-Election Shares (together, the
"DRI Cash Shares") will be converted into the right to receive DRI Cash
Consideration, and all DRI Stock Election Shares will be converted into the
right to receive DRI Cash Consideration or DRI Stock Consideration in the
following manner:
(i) the number of DRI Stock Election Shares covered by each Form of
Election to be converted into DRI Cash Consideration will be determined
by multiplying the number of DRI Stock Election Shares covered by such
Form of Election by a fraction, (A) the numerator of which is the DRI
Cash Number less the number of DRI Cash Shares and (B) the denominator
of which is the aggregate number of DRI Stock Election Shares, rounded
down to the nearest whole number; and
(ii) all DRI Stock Election Shares not converted into DRI Cash
Consideration in accordance with Section 2.1(g)(i) will be converted
into the right to receive DRI Stock Consideration (and cash in lieu of
fractional interests in accordance with Section 2.3(d)).
(h) No Allocation. In the event that neither Section 2.1(f) nor Section
2.1(g) is applicable, all DRI Cash Election Shares will be converted into
the right to receive DRI Cash Consideration, all DRI Stock Election Shares
will be converted into the right to receive DRI Stock Consideration (and
cash in lieu of fractional interests in accordance with Section 2.3(d)) and
DRI Non-Election Shares will be converted into the right to receive DRI
Cash Consideration or DRI Stock Consideration (and cash in lieu of
fractional interests in accordance with Section 2.3(d)) as DRI shall
determine.
(i) Computations. The Exchange Agent (as defined in Section 2.3(a)), in
consultation with DRI, will make all computations to give effect to this
Section 2.1.
(j) Cancellation of Shares. As of the Effective Time of the First Merger,
all such shares of DRI Common Stock will no longer be outstanding and
automatically be cancelled and retire and will cease to exist and each
holder of a certificate formerly representing any such shares of DRI Common
Stock (a "DRI Certificate") will cease to have any rights with respect
thereto, except the right to receive DRI Merger Consideration and any
additional cash in lieu of fractional shares of DRI Common Stock to be
issued or paid in consideration therefor upon surrender of such DRI
Certificate in accordance with Section 2.3, without interest.
Section II.2 Effect on the Capital Stock of CNG of the Second Merger. As of
the Effective Time of the Second Merger, by virtue of the Second Merger and
without any action on the part of any holder of CNG Common Stock (as
hereinafter defined):
(a) Conversion of New Sub II Shares. Each share of common stock, without
par value, of New Sub II issued and outstanding immediately prior to the
Effective Time of the Second Merger will remain outstanding unaffected by
the Second Merger, with the result that the Surviving Corporation will
remain a wholly-owned subsidiary of DRI.
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Annex A--Agreement and Plan of Merger
(b) Cancellation of CNG Treasury Stock. Each share of common stock, par
value $2.75 per share, of CNG (the "CNG Common Stock"), together with the
associated CNG Rights (as defined in Section 5.14), that is owned by CNG or
by DRI or any wholly-owned subsidiary of DRI, will automatically be
canceled and retired and cease to exist, and no consideration will be
delivered in exchange therefor. Throughout this Agreement, the term CNG
Common Stock refers to CNG Common Stock together with the associated CNG
Rights.
(c) Conversion of CNG Common Stock. Subject to the provisions of Section
2.3(d) hereof, each issued and outstanding share of CNG Common Stock (other
than shares of CNG Common Stock canceled in accordance with Section 2.2(b)
and subject to dissenter's rights under the DGCL) will be converted into
(x) $66.60 in cash (the "CNG Cash Consideration") or (y)(1) a number of
fully paid, non-assessable shares of DRI Common Stock equal to the CNG
Exchange Ratio (as defined below) plus (2) an amount in cash (the "Stock
Election Top-Up Amount") equal to 1.52 times the excess, if any, of $43.816
over the DRI Average Price (the "CNG Stock Consideration" and together with
the CNG Cash Consideration, the "CNG Merger Consideration"). The "CNG
Exchange Ratio" shall be equal to (i) $66.60 divided by the Average Price
of DRI Common Stock, if the DRI Average Price is no less than $43.816 and
(ii) 1.52, if the DRI Average Price is less than $43.816, in which case
top-up cash shall be provided pursuant to clause (y)(2) above. "DRI Average
Price" means the average of the closing prices of the DRI Common Stock on
the New York Stock Exchange for the 20 consecutive Trading Days in the
period ending five Trading Days prior to the Election Deadline. "Trading
Day" means a day on which the New York Stock Exchange, Inc. is open for
trading.
(d) Allocation. Notwithstanding anything in this Agreement to the
contrary (other than Section 2.2(j)), the number of shares of CNG Common
Stock to be converted into the right to receive the CNG Cash Consideration
in the Second Merger (the "CNG Cash Number") will be equal to (i)
38,159,060 shares of CNG Common Stock less (ii) the aggregate number of
shares of CNG Common Stock to be exchanged for cash pursuant to Section
2.3(d). The number of shares of CNG Common Stock to be converted into the
right to receive the CNG Stock Consideration in the Second Merger (the "CNG
Stock Number") will be equal to (i) the number of shares of CNG Common
Stock issued and outstanding immediately prior to the Effective Time of the
Second Merger (ignoring for this purpose any CNG Common Stock held as
treasury shares and canceled pursuant to Section 2.2(b)) less (ii) the sum
of (A) the CNG Cash Number and (B) the aggregate number of shares of CNG
Common Stock to be exchanged for cash pursuant to Section 2.3(d).
Notwithstanding anything to the contrary herein, DRI will have the option
to change the CNG Cash Number and the CNG Stock Number to more closely
follow the actual elections of CNG shareholders pursuant to this Section
2.2, so long as such modification to the CNG Cash Number and the CNG Stock
Number does not prevent the conditions set forth in Sections 8.2(e) and
8.3(e) from being satisfied.
(e) Election. Subject to allocation in accordance with the provisions of
this Section 2.2, each record holder of shares of CNG Common Stock (other
than shares to be canceled in accordance with Section 2.2(b)) issued and
outstanding immediately prior to the Election Deadline (as defined in
Section 2.3(b)(i)) will be entitled, in accordance with Section 2.3(b), (i)
to elect to receive in respect of each such share (A) CNG Cash
Consideration (a "CNG Cash Election") or (B) CNG Stock Consideration
(including the Stock Election Top-Up Amount, if any) (a "CNG Stock
Election") or (ii) to indicate that such record holder has no preference as
to the receipt of CNG Cash Consideration or CNG Stock Consideration for all
such shares held by such holder (a "CNG Non-Election"). Shares of CNG
Common Stock in respect of which a CNG Non-Election is made or as to which
no election is made (collectively, "CNG Non-Election Shares") shall be
deemed by DRI to be shares in respect of which CNG Cash Elections or CNG
Stock Elections have been made, as DRI shall determine in its sole
discretion.
(f) Allocation of CNG Cash Election Shares. In the event that the
aggregate number of shares in respect of which CNG Cash Elections have been
made (the "CNG Cash Election Shares") exceeds the CNG Cash Number, all
shares of CNG Common Stock in respect of which CNG Stock Elections have
been made (the "CNG Stock Election Shares") and all CNG Non-Election Shares
will be converted into the right to receive CNG Stock Consideration
(including the Stock Election Top-Up Amount, if any, and cash in lieu of
fractional interests in accordance with Section 2.3(d)), and CNG Cash
Election Shares will
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Annex A--Agreement and Plan of Merger
be converted into the right to receive CNG Cash Consideration or CNG Stock
Consideration in the following manner:
(i) the number of CNG Cash Election Shares covered by each Form of
Election (as defined in Section 2.3(b)(i)) to be converted into CNG
Cash Consideration will be determined by multiplying the number of CNG
Cash Election Shares covered by such Form of Election by a fraction,
(A) the numerator of which is the CNG Cash Number and (B) the
denominator of which is the aggregate number of CNG Cash Election
Shares rounded down to the nearest whole number; and
(ii) all CNG Cash Election Shares not converted into CNG Cash
Consideration in accordance with Section 2.2(f)(i) will be converted
into the right to receive CNG Stock Consideration (including the Stock
Election Top-Up Amount, if any, and cash in lieu of fractional
interests in accordance with Section 2.3(d)).
(g) Allocation of CNG Stock Election Shares. In the event that the
aggregate number of CNG Stock Election Shares exceeds the CNG Stock Number,
all CNG Cash Election Shares and all CNG Non-Election Shares (together, the
"CNG Cash Shares") will be converted into the right to receive CNG Cash
Consideration, and all CNG Stock Election Shares will be converted into the
right to receive CNG Cash Consideration or CNG Stock Consideration in the
following manner:
(i) the number of CNG Stock Election Shares covered by each Form of
Election to be converted into CNG Cash Consideration will be determined
by multiplying the number of CNG Stock Election Shares covered by such
Form of Election by a fraction, (A) the numerator of which is the CNG
Cash Number less the number of CNG Cash Shares and (B) the denominator
of which is the aggregate number of CNG Stock Election Shares, rounded
down to the nearest whole number; and
(ii) all CNG Stock Election Shares not converted into CNG Cash
Consideration in accordance with Section 2.2(g)(i) will be converted
into the right to receive CNG Stock Consideration (including the Stock
Election Top-Up Amount, if any, and cash in lieu of fractional
interests in accordance with Section 2.3(d)).
(h) No Allocation. In the event that neither Section 2.2(f) nor Section
2.2(g) is applicable, all CNG Cash Election Shares will be converted into
the right to receive CNG Cash Consideration, all CNG Stock Election Shares
will be converted into the right to receive CNG Stock Consideration
(including the Stock Election Top-Up Amount, if any, and cash in lieu of
fractional interests in accordance with Section 2.3(d)) and CNG Non-
Election Shares will be converted into the right to receive CNG Cash
Consideration or CNG Stock Consideration (including the Stock Election Top-
Up Amount, if any, and cash in lieu of fractional interests in accordance
with Section 2.3(d)) as DRI shall determine.
(i) Computations. The Exchange Agent, in consultation with DRI and CNG,
will make all computations to give effect to this Section 2.2.
(j) Adjustment Per Tax Opinion. If, after having made the calculation
under Section 2.2(d) or (h) (without giving effect to any subtraction
permitted by this Section 2.2(j)), the tax opinions referred to in Sections
8.2(e) and 8.3(e) (the "Tax Opinions") cannot be rendered (as reasonably
determined by ST&B or CG&R), as a result of the Second Merger possibly
failing to satisfy continuity-of-interest requirements under applicable
federal income tax principles relating to reorganizations described in the
Code, then DRI shall reduce, to the minimum extent necessary to enable the
Tax Opinions to be rendered, the amount of cash to be delivered with
respect to the CNG Cash Election Shares or with respect to the Stock
Election Top-Up Amount, as the case may be, and in lieu thereof shall
deliver the number of shares of DRI Common Stock having an aggregate value,
based on the DRI Average Price, equal to the amount of such reduction, and
if shares of DRI Common Stock are delivered with respect to the CNG Cash
Election Shares, DRI shall make the appropriate adjustments to the CNG Cash
Number to give effect to such reduction.
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Annex A--Agreement and Plan of Merger
Section II.3 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time of the First Merger, DRI will
enter into an agreement with such bank or trust as may be designated by DRI,
with the prior consent of CNG (the "Exchange Agent"), which will provide that
DRI will deposit with the Exchange Agent as of the Effective Time of the First
Merger, for the benefit of the holders of shares of DRI Common Stock and CNG
Common Stock for exchange in accordance with this Article II, through the
Exchange Agent, cash equal to the sum of the total aggregate DRI Cash
Consideration and CNG Cash Consideration and certificates representing the
shares of DRI Common Stock (such cash and such shares of DRI Common Stock,
together with any dividends or distributions with respect thereto with a record
date after the Effective Time of the Second Merger and any cash payable in lieu
of any fractional shares of DRI Common Stock, being hereinafter referred to as
the "Exchange Fund") issued pursuant to Sections 2.1 and 2.2 in exchange for
outstanding shares of DRI Common Stock and CNG Common Stock, as the case may
be.
(b) Exchange Procedures.
(i) Not more than 90 days nor fewer than 30 days prior to the anticipated
Closing Date as determined by DRI and CNG, the Exchange Agent will mail a form
of election (the "Form of Election") to holders of record of shares of DRI
Common Stock and to the holders of record of shares of CNG Common Stock (as of
a record date as close as practicable to the date of mailing and mutually
agreed to by CNG and DRI). In addition, the Exchange Agent will use its best
efforts to make the Form of Election available to the persons (as defined in
Section 2.3(f)) who become shareholders of DRI or CNG during the period between
such record date and the Closing Date. Any election to receive DRI Merger
Consideration contemplated by Section 2.1(e) or CNG Merger Consideration
contemplated by Section 2.2(e) will have been properly made only if the
Exchange Agent shall have received at its designated office or offices, by 5:00
p.m., New York City time, on the fifth business day immediately preceding the
Closing Date (the "Election Deadline"), a Form of Election properly completed
and accompanied by a DRI Certificate or a CNG Certificate, as the case may be
(together or as applicable, "Certificate(s)") for the shares to which such Form
of Election relates, duly endorsed in blank or otherwise acceptable for
transfer on the books of DRI or CNG, as the case may be (or an appropriate
guarantee of delivery), as set forth in such Form of Election. An election may
be revoked only by written notice received by the Exchange Agent prior to 5:00
p.m., New York City time, on the Election Deadline. In addition, all elections
shall automatically be revoked if the Exchange Agent is notified in writing by
DRI and CNG that either of the Mergers has been abandoned. If an election is so
revoked, the Certificate(s) (or guarantee of delivery, as appropriate) to which
such election relates will be promptly returned to the person submitting the
same to the Exchange Agent. DRI shall have the discretion, which it may
delegate in whole or in part to the Exchange Agent, to determine whether Forms
of Election have been properly completed, signed and submitted or revoked
pursuant to this Article II, and to disregard immaterial defects in Forms of
Election. The decision of DRI (or the Exchange Agent) in such matters shall be
conclusive and binding.
(ii) As soon as reasonably practicable after the Effective Time of the First
Merger, with respect to the First Merger, and after the Effective Time of the
Second Merger, with respect to the Second Merger (together or as applicable,
the "Effective Time"), the Exchange Agent will mail to each holder of record of
a Certificate, whose shares of DRI Common Stock or CNG Common Stock
(collectively, the "Shares") were converted into the right to receive DRI
Merger Consideration or CNG Merger Consideration (together, the "Merger
Consideration") and who failed to return a properly completed Form of Election,
(i) a letter of transmittal (which will specify that delivery will be effected,
and risk of loss and title to the Certificates will pass, only upon delivery of
the Certificates to the Exchange Agent and will be in such form and have such
other provisions as DRI and CNG may specify consistent with this Agreement) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration.
(iii) At the Effective Time, with respect to properly made elections in
accordance with Section 2.3(b)(i), and upon surrender in accordance with
Section 2.3(b)(ii) of a Certificate for cancellation to the Exchange Agent or
to such other agent or agents as may be appointed by DRI and CNG, together with
such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the holder of
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Annex A--Agreement and Plan of Merger
such Certificate will be entitled to receive in exchange therefor the Merger
Consideration that such holder has the right to receive pursuant to the
provisions of this Article II, and the Certificate so surrendered will
forthwith be canceled. In the event of a transfer of ownership of Shares that
are not registered in the transfer records of DRI or CNG, as the case may be,
payment may be issued to a person other than the person in whose name the
Certificate so surrendered is registered if such Certificate is properly
endorsed or otherwise in proper form for transfer and the person requesting
such issuance pays any transfer or other taxes required by reason of such
payment to a person other than the registered holder of such Certificate or
establishes to the satisfaction of DRI and CNG that such tax has been paid or
is not applicable. Until surrendered as contemplated by this Section 2.3, each
Certificate will be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration that the
holder thereof has the right to receive in respect of such Certificate pursuant
to the provisions of this Article II. No interest will be paid or will accrue
on any cash payable to holders of Certificates pursuant to the provisions of
this Article II.
(c) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions with respect to the shares of DRI Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of DRI Common Stock represented thereby,
and no cash payment in lieu of any fractional shares shall be paid to any such
holder pursuant to Section 2.3(d), and all such dividends, other distributions
and cash in lieu of fractional shares of DRI Common Stock shall be paid by DRI
to the Exchange Agent and shall be included in the Exchange Fund, in each case
until the surrender of such Certificate in accordance with this Article II.
Subject to the effect of unclaimed property, escheat and other applicable laws,
following surrender of any such Certificate, there shall be paid to the holder
of the Certificate representing whole shares of DRI Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of DRI Common Stock to
which such holder is entitled pursuant to Section 2.3(d), the amount of any
cash payable pursuant to the Stock Election Top-Up Amount, if applicable, 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 DRI Common
Stock and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
such surrender and with a payment date subsequent to such surrender payable
with respect to such whole shares of DRI Common Stock. DRI shall make available
to the Exchange Agent cash for the foregoing purposes.
(d) No Fractional Securities. No DRI Certificates or scrip representing
fractional shares of DRI Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional shares shall not entitle the
owner thereof to vote or to any other rights of a holder of DRI Common Stock. A
holder of Shares converted in the Mergers who would otherwise have been
entitled to a fractional share of DRI Common Stock shall be entitled to receive
a cash payment (without interest) in lieu of such fractional share in an amount
determined by multiplying (i) the fractional share interest to which such
holder would otherwise be entitled by (ii) the closing price per share of DRI
Common Stock as reported on the NYSE Composite Transaction Tape on the Closing
Date.
(e) No Further Ownership Rights in CNG Common Stock. All shares of DRI Common
Stock issued upon the surrender for exchange of Certificates in accordance with
the terms of this Article II (including any cash paid pursuant to this Article
II) shall be deemed to have been issued (and paid) in full satisfaction of all
rights pertaining to the Shares theretofore represented by such Certificates,
subject, however, to any obligation of DRI or the Surviving Corporation to pay
any dividends or make any other distributions with a record date prior to the
Effective Time which may have been authorized or made with respect to shares of
CNG Common Stock or DRI Common Stock, as the case may be, which remain unpaid
at the Effective Time, and there shall be no further registration of transfers
on the stock transfer books of (i) DRI of shares of DRI Common Stock which were
outstanding immediately prior to the Effective Time or (ii) the Surviving
Corporation of shares of CNG Common Stock which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to DRI, the Surviving Corporation or the Exchange Agent for any
reason, they shall be cancelled and exchanged as provided in this Section 2.3,
except as otherwise provided by law.
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Annex A--Agreement and Plan of Merger
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of the Certificates for six months after
the Effective Time shall be delivered by the Exchange Agent to DRI, and any
holders of the Certificates who have not theretofore complied with this Article
II shall thereafter look only to DRI for payment of their claim for such DRI
Shares or funds to which such holder may be due, subject to applicable law.
None of DRI, CNG, the Surviving Corporation or the Exchange Agent shall be
liable to any person (as defined below) in respect of any such DRI Shares or
funds from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. As used in this
Agreement, the term "person" shall mean any natural person, corporation,
general or limited partnership, limited liability company, joint venture,
trust, association or entity of any kind.
(g) Investment of Exchange Fund. The Exchange Agent will invest any cash
included in the Exchange Fund, as directed by DRI, with the prior consent of
CNG, on a daily basis. Any interest and other income resulting from such
investments will be paid to DRI.
(h) Lost Certificates. If any Certificate is lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such Certificate
to be lost, stolen or destroyed and, if required by DRI or the Surviving
Corporation, as the case may be, the posting by such person of a bond in such
reasonable amount as DRI or the Surviving Corporation, as the case may be, may
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration and, if applicable,
any cash in lieu of fractional shares, and unpaid dividends and distributions
on shares of DRI Common Stock, pursuant to this Agreement.
(i) Certain Adjustments. If, after the date hereof and on or prior to the
Closing Date, the outstanding shares of DRI Common Stock or CNG Common Stock
shall be changed into a different number of shares by reason of any
reclassification, recapitalization, split-up, combination or exchange of
shares, or any dividend payable in stock or other securities is declared
thereon with a record date within such period, or any similar event shall
occur, the Merger Consideration will be adjusted accordingly to provide to the
holders of DRI Common Stock and CNG Common Stock, respectively, the same
economic effect as contemplated by this Agreement prior to such
reclassification, recapitalization, split-up, combination, exchange or dividend
or similar event.
(j) Withholding Rights. Each of the Surviving Corporation and DRI shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of DRI Common Stock or CNG
Common Stock 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 by the Surviving
Corporation or DRI, as the case may be, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
shares of DRI Common Stock or CNG Common Stock in respect of which such
deduction and withholding was made by the Surviving Corporation or DRI, as the
case may be.
Section II.4 Dissenting Shares. (a) Notwithstanding anything in this
Agreement to the contrary and subject to the applicability of Section 262 of
the DGCL to the Second Merger, shares of CNG Common Stock (as defined below)
that are issued and outstanding immediately prior to the Effective Time of the
Second Merger and which are held by stockholders who have not voted in favor of
or consented to the Second Merger and shall have delivered a written demand for
appraisal of such shares in the time and manner provided in Section 262 of the
DGCL and shall not have failed to perfect or shall not have effectively
withdrawn or lost their rights to appraisal and payment under the DGCL (the
"Dissenting Shares") shall not be converted into the right to receive the CNG
Merger Consideration, but shall be entitled to receive the consideration as
shall be determined pursuant to Section 262 of the DGCL; provided, however,
that if any such holder shall have failed to perfect or shall have effectively
withdrawn or lost his, her or its right to appraisal and payment under the
DGCL, such holder's shares of CNG Common Stock shall thereupon be deemed to be
CNG Non-Election Shares and to have been converted, at the Effective Time of
the Second Merger, into the right to receive the CNG Merger Consideration set
forth in Section 2.2 of this Agreement, without any interest thereon.
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Annex A--Agreement and Plan of Merger
(b) The CNG shall give DRI (i) prompt notice of any demands for appraisal
pursuant to Section 262 of the DGCL received by CNG, withdrawals of such
demands and any other instruments served pursuant to the DGCL and received by
CNG and (ii) the opportunity to direct all negotiations and proceedings with
respect to demands for appraisal under the DGCL. CNG shall not, except with the
prior written consent of DRI, make any payment with respect to any such demands
for appraisal or offer to settle or settle any such demands.
ARTICLE III
The Closing
Section III.1 Closing. The closing (the "Closing") of the Mergers shall take
place at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, or such other place as may be mutually agreed upon by the
parties hereto at 10:00 A.M., local time, on the second business day
immediately following the date on which the last of the conditions set forth in
Article VIII is fulfilled or waived, or at such other time and date as CNG and
DRI shall mutually agree (the "Closing Date").
ARTICLE IV
Representations and Warranties of DRI
Except as disclosed in the DRI SEC Reports (as defined in Section 4.5) filed
prior to the date hereof or as set forth on the Disclosure Schedule delivered
by DRI to CNG prior to the execution of this Agreement (the "DRI Disclosure
Schedule"), DRI represents and warrants to CNG as follows:
Section IV.1 Organization and Qualification. DRI and each of its Significant
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, has all requisite
corporate power and authority, to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted, and is
duly qualified and in good standing to do business in each jurisdiction in
which the nature of its business or the ownership or leasing of its assets and
properties makes such qualification necessary, other than in such jurisdictions
where the failure to be so qualified and in good standing will not, when taken
together with all other such failures, have a material adverse effect on the
business, operations, properties, assets, condition (financial or otherwise),
prospects or results of operations of DRI and its subsidiaries taken as a whole
or on the consummation of this Agreement (any such material adverse effect
being hereinafter referred to as a "DRI Material Adverse Effect"). True,
accurate and complete copies of the articles of incorporation and bylaws of
DRI, as in effect on the date hereof, have been delivered to CNG. As used in
this Agreement, the term "subsidiary" with respect to any person shall mean any
corporation or other entity (including partnerships and other business
associations) in which such person directly or indirectly owns outstanding
capital stock or other voting securities having the power, under ordinary
circumstances, to elect a majority of the directors or similar members of the
governing body of such corporation or other entity, or otherwise to direct the
management and policies of such corporation or other entity. As used in this
Agreement, a "Significant Subsidiary" means any subsidiary of DRI or CNG, as
the case may be, that constitutes a "significant subsidiary" of such party
within the meaning of Rule 1-02 of Regulation S-X of the SEC.
Section IV.2 Subsidiaries. Exhibit 21 to the Annual Report of DRI on Form 10-
K for the fiscal year ended December 31, 1997 includes all subsidiaries of DRI
which as of the date of this Agreement are Significant Subsidiaries. All the
outstanding shares of capital stock of, or other equity interests in, each such
Significant Subsidiary have been duly authorized and validly issued and are
fully paid and nonassessable and are owned directly or indirectly by DRI, free
and clear of all pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens"). None of the
subsidiaries of DRI is a "public utility company", a "holding company", a
"subsidiary company" or an "affiliate" of any public utility company within the
meaning of the Public Utility Holding Company Act of 1935, as amended (the
"1935 Act"). There are no outstanding subscriptions, options, calls, contracts,
voting trusts, proxies or other
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Annex A--Agreement and Plan of Merger
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating any Significant Subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
its capital stock or obligating it to grant, extend or enter into any such
agreement or commitment. As used in this Agreement, the term "joint venture"
with respect to any person shall mean any corporation or other entity
(including partnerships and other business associations and joint ventures) in
which such person or one or more of its subsidiaries owns an equity interest
that is less than a majority of any class of the outstanding voting securities
or equity, other than equity interests held for passive investment purposes
that are less than 5% of any class of the outstanding voting securities or
equity.
Section IV.3 Capitalization. The authorized capital stock of DRI consists of
300,000,000 shares of DRI Common Stock and 20,000,000 shares of preferred
stock. As of the close of business on January 31, 1999, 193,962,097 shares of
DRI Common Stock and no shares of preferred stock were issued and outstanding.
All of the issued and outstanding shares of the capital stock of DRI are
validly issued, fully paid, nonassessable and free of preemptive rights. As of
the date hereof, there are no outstanding subscriptions, options, calls,
contracts, voting trusts, proxies or other commitments, understandings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement, obligating DRI or any of its subsidiaries to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of the capital
stock or other voting securities of DRI or obligating DRI or any of its
subsidiaries to grant, extend or enter into any such agreement or commitment.
Section IV.4 Authority; Non-Contravention; Statutory Approvals; Compliance.
(a) Authority. DRI has all requisite power and authority to enter into this
Agreement and, subject to the DRI Shareholders' Approval (as defined in Section
4.10) and the DRI Required Statutory Approvals (as defined in Section 4.4(c)),
to consummate the transactions contemplated hereby. The Board of Directors of
DRI has (a) determined that the Mergers are fair and in the best interest of
DRI and its shareholders, (b) approved and adopted this Agreement, and (c)
resolved to recommend to the holders of DRI Common Stock that they give the DRI
Shareholders' Approval. The execution and delivery of this Agreement and the
consummation by DRI of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of DRI, subject to
obtaining the DRI Shareholders' Approval. This Agreement has been duly and
validly executed and delivered by DRI and, assuming the due authorization,
execution and delivery of this Agreement by CNG, constitutes the legal, valid
and binding obligation of DRI enforceable against DRI in accordance with its
terms.
(b) Non-Contravention. The execution and delivery of this Agreement by DRI do
not and the consummation of the transactions contemplated hereby will not,
violate, conflict with or result in a breach of any provision of, or constitute
a default (with or without notice or lapse of time or both) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination, cancellation or acceleration of any material obligation
under or the loss of a material benefit under, or result in the creation of any
Lien upon any of the properties or assets (any such violation, conflict,
breach, default, right of termination, cancellation or acceleration, loss or
creation being hereinafter referred to as a "Violation") by DRI or any of its
Significant Subsidiaries under any provisions of (i) the articles of
incorporation, bylaws or similar governing documents of DRI or any of its
Significant Subsidiaries, (ii) subject to obtaining the DRI Required Statutory
Approvals and the receipt of the DRI Shareholders' Approval, any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit
or license of any court, governmental or regulatory body (including a stock
exchange or other self-regulatory body) or authority, domestic or foreign
(each, a "Governmental Authority") applicable to DRI or any of its Significant
Subsidiaries or any of their respective properties or assets, or (iii) subject
to obtaining the third-party consents or other approvals set forth in Section
4.4(b) of the DRI Disclosure Schedule (the "DRI Required Consents"), any note,
bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind to which DRI or any of its Significant Subsidiaries is now a party or by
which any of them or any of their respective properties or assets may be bound
or affected, excluding from the foregoing clauses (ii) and (iii) such
Violations as would not have, individually or in the aggregate, a DRI Material
Adverse Effect.
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Annex A--Agreement and Plan of Merger
(c) Statutory Approvals. No declaration, filing or registration with, or
notice to or authorization, consent, finding by or approval of, any
Governmental Authority is necessary for the execution and delivery of this
Agreement by DRI or the consummation by DRI of the transactions contemplated
hereby, which, if not obtained, made or given, would have, individually or in
the aggregate, a DRI Material Adverse Effect (the "DRI Required Statutory
Approvals"), it being understood that references in this Agreement to
"obtaining" such DRI Required Statutory Approvals shall mean making such
declarations, filings or registrations; giving such notice; obtaining such
consents or approvals; and having such waiting periods expire as are necessary
to avoid a violation of law.
(d) Compliance. Neither DRI nor any of its subsidiaries nor, to the best
knowledge of DRI, any of its joint ventures, is in violation of or under
investigation with respect to, or has been given notice or been charged with
any violation of, any law, statute, order, rule, regulation, ordinance or
judgment (including, without limitation, any "Environmental Laws") of any
Governmental Authority, except for violations that, individually or in the
aggregate, do not have, and, to the best knowledge of DRI, are not reasonably
likely to have, a DRI Material Adverse Effect. DRI, its subsidiaries and, to
the best knowledge of DRI, its joint ventures have all permits, licenses,
franchises and other governmental authorizations, consents and approvals
necessary to conduct their respective businesses as currently conducted
(collectively, "Permits"), except those Permits the failure to obtain which
would not have, individually or in the aggregate, a DRI Material Adverse
Effect. As used in this Agreement, the term "Environmental Laws" means any law,
statute, order, rule, regulation, ordinance or judgment relating to pollution
or protection of human health or the environment (including, without
limitation, ambient air, indoor air, surface water, ground water, land surface
or subsurface strata and natural resources) including, without limitation,
those relating to the release or threatened release of Hazardous Materials or
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials. As used in this
Agreement, the term "Hazardous Materials" means chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, materials or
constituents, petroleum or petroleum products or any other substances or
materials subject to regulation under Environmental Laws.
Section IV.5 Reports and Financial Statements. The filings required to be
made by DRI and its subsidiaries since January 1, 1996 under the Securities Act
of 1933, as amended (the "Securities Act"), the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the Federal Power Act (the "Power Act"),
the Atomic Energy Act of 1954, as amended (the "Atomic Energy Act"), the 1935
Act and applicable state laws and regulations have been filed with the SEC, the
Federal Energy Regulatory Commission (the "FERC"), the Nuclear Regulatory
Commission (the "NRC") or the applicable state regulatory authorities, as the
case may be, including all forms, statements, reports, agreements (oral or
written) and all documents, exhibits, amendments and supplements appertaining
thereto, and complied in all material respects with all applicable requirements
of the appropriate act and the rules and regulations thereunder. DRI has made
available to CNG a true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed by DRI with the SEC
under the Securities Act and the Exchange Act since January 1, 1996 and through
the date hereof (as such documents have since the time of their filing been
amended, the "DRI SEC Reports"). The DRI SEC Reports, including without
limitation any financial statements or schedules included therein, at the time
filed, and any forms, reports or other documents filed by DRI with the SEC
after the date hereof, did not and 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 therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated financial
statements and unaudited interim financial statements of DRI included in the
DRI SEC Reports (collectively, the "DRI Financial Statements") have been
prepared, and will be prepared, in accordance with GAAP (except as may be
indicated therein or in the notes thereto and except with respect to unaudited
statements as permitted by Form 10-Q under the Exchange Act) and fairly present
the consolidated financial position of DRI as of the respective dates thereof
or the consolidated results of operations and cash flows for the respective
periods then ended, as the case may be, subject, in the case of the unaudited
interim financial statements, to normal, recurring audit adjustments.
Section IV.6 Absence of Certain Changes or Events. From September 30, 1998
through the date hereof, each of DRI and each of its subsidiaries has conducted
its business only in the ordinary course of business
X-00
Xxxxx X--Xxxxxxxxx and Plan of Merger
consistent with past practice and no event has occurred which has had, and no
fact or condition exists that would have or, to the best knowledge of DRI, is
reasonably likely to have, a DRI Material Adverse Effect.
Section IV.7 Registration Statement and Proxy Statement. None of the
information supplied or to be supplied by or on behalf of DRI for inclusion or
incorporation by reference in (i) the registration statement on Form S-4 to be
filed with the SEC by DRI in connection with the issuance of shares of DRI
Common Stock in the Mergers (the "Registration Statement") will, at the time
the Registration Statement becomes effective under the Securities Act, and as
the same may be amended, at the effective time of such amendment, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, and (ii) the joint proxy in definitive form, relating to the
meetings of the shareholders of CNG and DRI to be held in connection with the
Mergers and the prospectus relating to DRI Common Stock to be issued in the
Mergers (the "Joint Proxy Statement/Prospectus") will at the date such Joint
Proxy Statement/Prospectus is mailed to such shareholders and, as the same may
be amended or supplemented, at the times of such meetings, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Registration Statement and the Joint Proxy
Statement/Prospectus will comply as to form in all material respects with the
provisions of the Securities Act and the Exchange Act and the rules and
regulations thereunder.
Section IV.8 Employee Matters; ERISA.
(a) Each "employee benefit plan" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), bonus, deferred
compensation, stock option, employment, severance, change in control or other
written agreement relating to employment, fringe benefits or perquisites for
current or former employees of DRI or any of its subsidiaries, maintained or
contributed to by DRI or any of its subsidiaries at any time during the seven-
calendar year period immediately preceding the date hereof (collectively, the
"DRI Employee Benefit Plans") is listed in Section 4.8(a) of the DRI Disclosure
Schedule.
(b) With respect to the DRI Employee Benefit Plans, individually and in the
aggregate, no event has occurred and, there exists no condition or set of
circumstances, in connection with which DRI or any of its subsidiaries could be
subject to any liability that is reasonably likely to have a DRI Material
Adverse Effect (except liability for benefits claims and funding obligations
payable in the ordinary course) under ERISA, the Code or any other applicable
law.
(c) Each DRI Employee Benefit Plan has been administered in accordance with
its terms, except for any failures to so administer any DRI Employee Benefit
Plans as would not, individually or in the aggregate, have a DRI Material
Adverse Effect. DRI, its subsidiaries and all the DRI Employee Benefit Plans
are in compliance with the applicable provisions of ERISA, the Code and all
other applicable laws and the terms of all applicable collective bargaining
agreements as they relate to the DRI Employee Benefit Plans, except for any
failures to be in such compliance as would not, individually or in the
aggregate, have a DRI Material Adverse Effect. Each DRI Employee Benefit Plan
which is intended to be qualified within the meaning of Section 401(a) of the
Code has received a favorable determination letter from the IRS and, to the
knowledge of DRI, no event has occurred and no condition exists which could
reasonably be expected to result in the revocation of any such determination.
(d) Except for all equity-based and other awards, the vesting and
exercisability of which will, by their terms, be accelerated as a result of the
transactions contemplated hereunder, no employee of DRI will be entitled to any
additional benefits or any acceleration of the time of payment or vesting of
any benefits under any DRI Employee Benefit Plan as a result of the
transactions contemplated by this Agreement.
Section IV.9 Regulation as a Utility. Neither DRI nor any subsidiary company
or affiliate of DRI is subject to regulation as a public utility or public
service company (or similar designation) by any state in the United States, by
the United States or any agency or instrumentality of the United States or by
any foreign country. As used in this Section 4.9 and in Section 5.9, the terms
"subsidiary company" and "affiliate" shall have the respective meanings
ascribed to them in the 1935 Act.
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Section IV.10 Vote Required. (a) The approval of the Mergers by a majority of
all shares of DRI Common Stock represented at a duly called meeting of such
shareholders at which a quorum is present (the "DRI Shareholders' Approval") is
the only vote of the holders of any class or series of the capital stock of DRI
required to approve this Agreement, the Mergers and the other transactions
contemplated hereby.
(b) None of the shareholders of DRI are entitled to exercise any appraisal
rights in connection with the DRI Shareholders Approval.
Section IV.11 [intentionally omitted].
Section IV.12 Opinion of Financial Advisor. DRI has received the opinion of
Xxxxxx Brothers Inc., dated the date hereof, to the effect that, as of the date
hereof, the Merger Consideration (taken as a whole) is fair from a financial
point of view to the holders of DRI Common Stock.
Section IV.13 Ownership of CNG Common Stock. DRI does not "beneficially own"
(as such term is defined in Rule 13d-3 under the Exchange Act) any shares of
CNG Common Stock.
Section IV.14 Anti-Takeover Provisions. None of the business combination
provisions of Article 13.1 of Chapter 9 of the VSCA or any similar provisions
of the VSCA or the articles of incorporation or bylaws of DRI are applicable to
the transactions contemplated by this Agreement. No other "fair price,"
"moratorium," "control share acquisition" or similar anti-takeover statute or
regulation is applicable to DRI, the Mergers or any other transaction
contemplated hereby.
Section IV.15 Nuclear Operations. To the knowledge of DRI, the operations of
DRI's and its subsidiaries' nuclear generating stations are and have at all
times been conducted in compliance with applicable health, safety, regulatory
and other legal requirements, except for those requirements the failure with
which to comply would not, individually or in the aggregate, have a DRI
Material Adverse Effect. To the knowledge of DRI, DRI's and its subsidiaries'
nuclear generating stations maintain emergency plans designed to respond to an
unplanned release therefrom of radioactive materials into the environment and
liability insurance to the extent required by law, and such further insurance
(other than liability insurance) as is consistent with DRI's view of the risks
inherent in the operation of a nuclear power facility. To the knowledge of DRI,
plans for the decommissioning of each of DRI's and its subsidiaries' nuclear
generating stations and for the short-term storage of spent nuclear fuel
conform with applicable regulatory or other legal requirements (other than
those with which the failure to comply would not, individually or in the
aggregate, have a DRI Material Adverse Effect), and such plans have at all
times been funded to the extent required by law, which is consistent with DRI's
reasonable budget projections for such plans. To the knowledge of DRI, neither
DRI nor any of its subsidiaries has incurred any liability as a result of
operating nuclear power facilities for third parties which liability,
individually or in the aggregate, would have a DRI Material Adverse Effect.
Section IV.16 NRC Actions. Neither DRI nor any of its subsidiaries has been
given written notice of or been charged with actual or potential violation of,
or is the subject of any ongoing proceeding, inquiry, special inspection,
diagnostic evaluation or other NRC action (excluding rulemakings of general
application that may affect the conduct of DRI's business regarding DRI's
nuclear power facilities) of which DRI or any of its subsidiaries has received
written notice, under the Atomic Energy Act, any applicable regulations
thereunder or the terms and conditions of any license granted to DRI or any of
its subsidiaries regarding DRI's or any of its subsidiaries' nuclear power
facilities or any third party's nuclear power facility operated by DRI or any
of its subsidiaries that would have, or DRI reasonably believes would be
reasonably likely to have, a DRI Material Adverse Effect.
Section IV.17 Environmental Protection. Except as would not have,
individually or in the aggregate, a DRI Material Adverse Effect, (A) neither
DRI nor any of its subsidiaries is in violation of, or has received any written
notice that it is subject to liability under, any Environmental Laws, (B) DRI
and its subsidiaries have, or have filed timely application for, all permits,
licenses, authorizations and approvals required under any applicable
Environmental Laws, all of which are in full force and effect, and are each in
compliance with their
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Annex A--Agreement and Plan of Merger
requirements, (C) there are no pending, or to the knowledge of DRI, threatened
administrative, regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of noncompliance, violation or potential responsibility
or liability, investigation or proceeding pursuant to any Environmental Law
against DRI or any of its subsidiaries, or to the knowledge of DRI, any of
their respective predecessors-in-interest for which DRI or any of its
subsidiaries is or may be liable and (D) there are no past or present events,
conditions or circumstances which would reasonably be expected to form the
basis of an order or other requirement to conduct responsive or corrective
action, or an action, suit or proceeding by any private party or governmental
agency, against or affecting, or requiring capital or operating expenditures
by, DRI or any of its subsidiaries, in each case pursuant to any Environmental
Laws.
Section IV.18 Trading Position Risk Management. DRI has established a risk
management committee which, from time to time, establishes risk parameters to
restrict the level of risk that DRI and its subsidiaries are authorized to take
with respect to the net position resulting from physical commodity
transactions, exchange traded futures and options and over-the-counter
derivative instruments. The risk management committee of DRI regularly monitors
the compliance of DRI and its subsidiaries with such risk parameters.
Section IV.19 Litigation. (i) There are no suits, actions or proceedings
pending or, to the best knowledge of DRI threatened against or affecting DRI or
any of its subsidiaries and (ii) there are no judgments, decrees, injunctions,
rules or orders of any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator outstanding against DRI or any
of its subsidiaries that, in each case, individually or in the aggregate, would
have, or are reasonably likely to have, a DRI Material Adverse Effect.
Section IV.20 Dividends. It is the present intention of DRI's Board of
Directors to maintain the dividends on DRI Common Stock at its current annual
rate.
Section IV.21 Merger Subs. All of the issued and outstanding shares of the
capital stock of New Sub I and New Sub II will be (a) owned directly by DRI and
(b) will be duly authorized, validly issued, full paid, nonassessable and free
of preemptive rights. New Sub I and New Sub II will be direct wholly-owned
Subsidiaries of DRI that will (a) have been formed for the sole purpose of
effecting the Mergers, (b) have no material assets, (c) engage in no other
material activities prior to the Effective Time and (d) have no Subsidiaries.
ARTICLE V
Representations and Warranties of CNG
Except as disclosed in the CNG SEC Reports (as defined in Section 5.5) filed
prior to the date hereof or as set forth on the Disclosure Schedule delivered
by CNG to DRI prior to the execution of this Agreement (the "CNG Disclosure
Schedule"), CNG represents and warrants to DRI as follows:
Section V.1 Organization and Qualification. CNG and each of its Significant
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, has all requisite
corporate power and authority, to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted, and is
duly qualified and in good standing to do business in each jurisdiction in
which the nature of its business or the ownership or leasing of its assets and
properties makes such qualification necessary, other than in such jurisdictions
where the failure to be so qualified and in good standing will not, when taken
together with all other such failures, have a material adverse effect on the
business, operations, properties, assets, condition (financial or otherwise),
prospects or results of operations of CNG and its subsidiaries taken as a whole
or on the consummation of this Agreement (any such material adverse effect
being hereinafter referred to as a "CNG Material Adverse Effect"). True,
accurate and complete copies of the certificate of incorporation and bylaws of
CNG, as in effect on the date hereof, have been delivered to DRI.
Section V.2 Subsidiaries. Exhibit 21 to the Annual Report of CNG on Form 10-K
for the fiscal year ended December 31, 1997 includes all subsidiaries of CNG
which as of the date of this Agreement are
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Significant Subsidiaries. All the outstanding shares of capital stock of, or
other equity interests in, each such Significant Subsidiary have been duly
authorized and validly issued and are fully paid and nonassessable and are
owned directly or indirectly by CNG, free and clear of all Liens. There are no
outstanding subscriptions, options, calls, contracts, voting trusts, proxies or
other commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement, obligating any Significant Subsidiary
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of its capital stock or obligating it to grant, extend or enter into any
such agreement or commitment.
Section V.3 Capitalization. The authorized capital stock of CNG consists of
400,000,000 shares of CNG Common Stock and 5,000,000 shares of preferred stock.
As of the close of business on January 31, 1999, 95,397,649 shares of CNG
Common Stock and no shares of preferred stock were issued and outstanding. All
of the issued and outstanding shares of the capital stock of CNG are validly
issued, fully paid, nonassessable and free of preemptive rights. Except for the
CNG Rights (as defined in Section 5.14), as of the date hereof, there are no
outstanding subscriptions, options, calls, contracts, voting trusts, proxies or
other commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement, obligating CNG or any of its
subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of the capital stock or other voting securities of CNG
or obligating CNG or any of its subsidiaries to grant, extend or enter into any
such agreement or commitment.
Section V.4 Authority; Non-Contravention; Statutory Approvals; Compliance.
(a) Authority. CNG has all requisite power and authority to enter into this
Agreement and, subject to the CNG Shareholders' Approval (as defined in Section
5.10) and the CNG Required Statutory Approvals (as defined in Section 5.4(c)),
to consummate the transactions contemplated hereby. The Board of Directors of
CNG has (a) determined that the Second Merger is fair and in the best interest
of CNG and its shareholders, (b) approved and adopted this Agreement, and (c)
resolved to recommend to the holders of CNG Common Stock that they give the CNG
Shareholders' Approval. The execution and delivery of this Agreement and the
consummation by CNG of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of CNG, subject to
obtaining the CNG Shareholders' Approval. This Agreement has been duly and
validly executed and delivered by CNG and, assuming the due authorization,
execution and delivery of this Agreement by DRI, constitutes the legal, valid
and binding obligation of CNG enforceable against CNG in accordance with its
terms.
(b) Non-Contravention. The execution and delivery of this Agreement by CNG do
not and the consummation of the transactions contemplated hereby will not
result in any Violation by CNG or any of its Significant Subsidiaries under any
provisions of (i) the articles of incorporation, bylaws or similar governing
documents of CNG or any of its Significant Subsidiaries, (ii) subject to
obtaining the CNG Required Statutory Approvals and the receipt of the CNG
Shareholders' Approval, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any
Governmental Authority applicable to CNG or any of its Significant Subsidiaries
or any of their respective properties or assets, or (iii) subject to obtaining
the third-party consents or other approvals disclosed in Section 5.4(b) of the
CNG Disclosure Schedule (the "CNG Required Consents"), any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to
which CNG or any of its Significant Subsidiaries is now a party or by which any
of them or any of their respective properties or assets may be bound or
affected, excluding from the foregoing clauses (ii) and (iii) such Violations
as would not have, individually or in the aggregate, a CNG Material Adverse
Effect.
(c) Statutory Approvals. No declaration, filing or registration with, or
notice to or authorization, consent, finding by or approval of, any
Governmental Authority is necessary for the execution and delivery of this
Agreement by CNG or the consummation by CNG of the transactions contemplated
hereby which if not obtained, made or given, would have, individually or in the
aggregate, a CNG Material Adverse Effect (the "CNG Required Statutory
Approvals"), it being understood that references in this Agreement to
"obtaining"
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Annex A--Agreement and Plan of Merger
such CNG Required Statutory Approvals shall mean making such declarations,
filings or registrations; giving such notice; obtaining such consents or
approvals; and having such waiting periods expire as are necessary to avoid a
violation of law.
(d) Compliance. Neither CNG nor any of its subsidiaries nor, to the best
knowledge of CNG, any of its joint ventures, is in violation of or under
investigation with respect to, or has been given notice or been charged with
any violation of, any law, statute, order, rule, regulation, ordinance or
judgment (including, without limitation, any Environmental Laws) of any
Governmental Authority, except for violations that, individually or in the
aggregate, do not have, and, to the best knowledge of CNG, are not reasonably
likely to have, a CNG Material Adverse Effect. CNG, its subsidiaries and, to
the best knowledge of CNG, its joint ventures have all Permits, except those
Permits the failure to obtain which would not have, individually or in the
aggregate, a CNG Material Adverse Effect.
Section V.5 Reports and Financial Statements. The filings required to be made
by CNG and its subsidiaries since January 1, 1996 under the Securities Act, the
Exchange Act, the Power Act, the Natural Gas Act (the "Gas Act"), the Natural
Gas Policy Act of 1978 (the "Gas Policy Act"), the 1935 Act and applicable
state laws and regulations have been filed with the SEC, the FERC or the
applicable state regulatory authorities, as the case may be, including all
forms, statements, reports, agreements (oral or written) and all documents,
exhibits, amendments and supplements appertaining thereto, and complied in all
material respects with all applicable requirements of the appropriate act and
the rules and regulations thereunder. CNG has made available to DRI a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by CNG with the SEC under the Securities Act and the
Exchange Act, since January 1, 1996 and through the date hereof (as such
documents have since the time of their filing been amended, the "CNG SEC
Reports"). The CNG SEC Reports, including without limitation any financial
statements or schedules included therein, at the time filed, and any forms,
reports or other documents filed by CNG with the SEC after the date hereof, did
not and 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 therein, in light of the circumstances under which they were made,
not misleading. The audited consolidated financial statements and unaudited
interim financial statements of CNG included in the CNG SEC Reports
(collectively, the "CNG Financial Statements") have been prepared, and will be
prepared, in accordance with GAAP (except as may be indicated therein or in the
notes thereto and except with respect to unaudited statements as permitted by
Form 10-Q under the Exchange Act) and fairly present the consolidated financial
position of CNG as of the respective dates thereof or the consolidated results
of operations and cash flows for the respective periods then ended, as the case
may be, subject, in the case of the unaudited interim financial statements, to
normal, recurring audit adjustments.
Section V.6 Absence of Certain Changes or Events. From September 30, 1998
through the date hereof, each of CNG and each of its subsidiaries has conducted
its business only in the ordinary course of business consistent with past
practice and no event has occurred which has had, and no fact or condition
exists that would have or, to the best knowledge of CNG, is reasonably likely
to have, a CNG Material Adverse Effect.
Section V.7 Registration Statement and Proxy Statement. None of the
information supplied or to be supplied by or on behalf of CNG for inclusion or
incorporation by reference in (i) the Registration Statement will, at the time
the Registration Statement becomes effective under the Securities Act, and as
the same may be amended, at the effective time of such amendment, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and (ii) the Joint Proxy Statement/Prospectus will, at the date such Joint
Proxy Statement/Prospectus is mailed to the shareholders of CNG and DRI and, as
the same may be amended or supplemented, at the times of the meetings of such
shareholders to be held in connection with the Mergers, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Registration Statement and the Joint Proxy
Statement/Prospectus will comply as to form in all material respects with the
provisions of the Securities Act and the Exchange Act and the rules and
regulations thereunder.
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Annex A--Agreement and Plan of Merger
Section V.8 Employee Matters; ERISA.
(a) Each "employee benefit plan" (as defined in Section 3(3) of ERISA),
bonus, deferred compensation, stock option, employment, severance, change in
control or other written agreement relating to employment, fringe benefits or
perquisites for current or former employees of CNG or any of its subsidiaries,
maintained or contributed to by CNG or any of its subsidiaries at any time
during the seven-calendar year period immediately preceding the date hereof
(collectively, the "CNG Employee Benefit Plans") is listed in Section 5.8(a) of
the CNG Disclosure Schedule.
(b) With respect to the CNG Employee Benefit Plans, individually and in the
aggregate, no event has occurred and, to the knowledge of CNG, there exists no
condition or set of circumstances, in connection with which CNG or any of its
subsidiaries could be subject to any liability that is reasonably likely to
have a CNG Material Adverse Effect (except liability for benefits claims and
funding obligations payable in the ordinary course) under ERISA, the Code or
any other applicable law.
(c) Each CNG Employee Benefit Plan has been administered in accordance with
its terms, except for any failures to so administer any CNG Employee Benefit
Plans as would not, individually or in the aggregate, have a CNG Material
Adverse Effect, CNG, its subsidiaries and all the CNG Employee Benefit Plans
are in compliance with the applicable provisions of ERISA, the Code and all
other applicable laws and the terms of all applicable collective bargaining
agreements as they relate to the CNG Employee Benefit Plans, except for any
failures to be in such compliance as would not, individually or in the
aggregate, have a CNG Material Adverse Effect. Each CNG Employee Benefit Plan
which is intended to be qualified within the meaning of Section 401(a) of the
Code has received a favorable determination letter from the IRS and, to the
knowledge of CNG, no event has occurred and no condition exists which could
reasonably be expected to result in the revocation of any such determination.
(d) Except for all equity-based and other awards, the vesting and
exercisability of which will, by their terms, be accelerated as a result of the
transactions contemplated hereunder, no employee of CNG will be entitled to any
additional benefits or any acceleration of the time of payment or vesting of
any benefits under any CNG Employee Benefit Plan as a result of the
transactions contemplated by this Agreement.
Section V.9 Regulation as a Utility. Neither CNG nor any subsidiary company
or affiliate of CNG is subject to regulation as a public utility or public
service company (or similar designation) by any state in the United States, by
the United States or any agency or instrumentality of the United States or by
any foreign country.
Section V.10 Vote Required. The approval of the Second Merger by a majority
of all votes entitled to be cast by the holders of CNG Common Stock (the "CNG
Shareholders' Approval"), is the only vote of the holders of any class or
series of the capital stock of CNG required to approve this Agreement, the
Second Merger and the other transactions contemplated hereby.
Section V.11 [intentionally omitted].
Section V.12 Opinion of Financial Advisor. CNG has received the opinion of
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated dated the date hereof, to
the effect that, as of the date hereof, the CNG Merger Consideration to be
received by the holders of CNG Common Stock is fair from a financial point of
view to the holders of CNG Common Stock.
Section V.13 Ownership of DRI Common Stock. CNG does not "beneficially own"
(as such term is defined in Rule 13d-3 under the Exchange Act) any shares of
DRI Common Stock.
Section V.14 CNG Rights Agreement. CNG shall take all necessary action with
respect to all of the outstanding rights to purchase common stock of CNG (the
"CNG Rights") issued pursuant to the Rights Agreement dated as of January 23,
1996 between CNG and First Chicago Trust Company of New York, as Rights Agent
(the "CNG Rights Agreement"), so that CNG, as of the time immediately prior to
the Effective
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Time, will have no obligations under the CNG Rights or the CNG Rights
Agreement, except for the payment of any redemption price, if required, and so
that the holders of the CNG Rights will have no rights under the CNG Rights or
the CNG Rights Agreement, except for the payment of any redemption price, if
required. The execution, delivery and performance of this Agreement will not
result in a distribution of, or otherwise, trigger, the CNG Rights under the
CNG Rights Agreement.
Section V.15 Anti-Takeover Provisions. None of the business combination
provisions of Section 203 of the Delaware General Corporation Law or the
certificate of incorporation or bylaws of CNG are applicable to the
transactions contemplated by this Agreement. No other "fair price,"
"moratorium," "control share acquisition" or similar anti-takeover statute or
regulation is applicable to CNG, the Second Merger or any other transaction
contemplated hereby.
Section V.16 Environmental Protection. Except as would not have, individually
or in the aggregate, a CNG Material Adverse Effect, (A) neither CNG nor any of
its subsidiaries is in violation of, or has received any written notice that it
is subject to liability under, any Environmental Laws, (B) CNG and its
subsidiaries have or have filed timely application for, all permits, licenses,
authorizations and approvals required under any applicable Environmental Laws,
all of which are in full force and effect, and are each in compliance with
their requirements, (C) there are no pending or, to the knowledge of CNG,
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance, violation or potential
responsibility or liability, investigation or proceedings pursuant to any
Environmental Law against CNG or any of its subsidiaries, or to the knowledge
of CNG, any of their respective predecessors-in-interest for which CNG or any
of its subsidiaries is or may be liable and (D) there are no past or present
events, conditions or circumstances which would reasonably be expected to form
the basis of an order or other requirement to conduct responsive or corrective
action, or an action, suit or proceeding by any private party or governmental
agency, against or affecting, or requiring capital or operating expenditures
by, CNG or any of its subsidiaries, in each case pursuant to any Environmental
Laws.
Section V.17 Trading Position Risk Management. CNG has established a risk
management department which, from time to time, establishes risk parameters to
restrict the level of risk that CNG and its subsidiaries are authorized to take
with respect to the net position resulting from physical commodity
transactions, exchange traded futures and options and over-the-counter
derivative instruments. The risk management department of CNG regularly
monitors the compliance by CNG and its subsidiaries with such risk parameters.
Section V.18 Litigation. (i) There are no suits, actions or proceedings
pending or, to the best knowledge of CNG threatened against or affecting CNG or
any of its subsidiaries and (ii) there are no judgments, decrees, injunctions,
rules or orders of any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator outstanding against CNG or any
of its subsidiaries that, in each case, individually or in the aggregate, would
have, or are reasonably likely to have, a CNG Material Adverse Effect.
Section V.19 Rejection of Columbia Proposal. The Board of Directors of CNG
has concluded that the Mergers and this Agreement are fair and in the best
interests of CNG and its stockholders and has publicly rejected the acquisition
proposal communicated by Columbia Energy Group to CNG in a letter dated May 8,
1999.
ARTICLE VI
Conduct of Business Pending the Mergers
DRI and CNG have each delivered to the other a budget for the years 1999 and
2000 (respectively, the "DRI Budget" and the "CNG Budget"), which DRI or CNG,
as the case may be, may update or otherwise modify in writing for purposes of
this Article VI only with the consent in writing of CNG or DRI, as the case may
be. After the date hereof and prior to the Effective Time or earlier
termination of this Agreement, each of DRI and CNG agrees as to itself and its
subsidiaries, except as expressly contemplated or permitted in this Agreement,
or to the extent the other party shall otherwise consent in writing, as
follows:
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Section VI.1 Ordinary Course of Business. Each of DRI and CNG shall, and each
shall cause its respective subsidiaries to, carry on their respective
businesses in the usual, regular and ordinary course consistent with past
practice and use all commercially reasonable efforts to preserve intact their
present business organizations and goodwill, preserve the goodwill and
relationships with customers, suppliers and others having business dealings
with them, subject to prudent management of workforce needs and ongoing or
planned programs relating to downsizing, re-engineering and similar programs to
the end that their goodwill and ongoing businesses shall not be impaired in any
material respect at the Effective Time.
Section VI.2 Dividends. Neither DRI nor CNG shall, nor shall either permit
any of its subsidiaries to: (a) declare or pay any dividends on or make other
distributions in respect of any of their capital stock other than (i) in the
case of subsidiaries, to such subsidiary's shareholders, (ii) regular dividends
on DRI Common Stock with usual record and payment dates not in excess of an
annual rate of $2.58 per share, and (iii) regular dividends on CNG Common Stock
with usual record and payment dates not in excess of an annual rate of $1.94
per share; (b) split, combine or reclassify any of their 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; or (c) redeem,
repurchase or otherwise acquire any shares of their capital stock other than
(but in all cases subject to Section 6.12) (i) redemptions, repurchases and
other acquisitions of shares of capital stock in the ordinary course of
business consistent with past practice including, without limitation,
repurchases, redemptions and other acquisitions in connection with the
administration of employee benefit and dividend reinvestment plans as in effect
on the date hereof in the ordinary course of the operation of such plans, (ii)
intercompany acquisitions of capital stock, (iii) purchases under DRI's
existing share repurchase program and (iv) the redemption, if required, of the
CNG Rights pursuant to the CNG Rights Agreement.
Section VI.3 Issuance of Securities. Except as provided in the DRI Budget or
the CNG Budget, as the case may be or as contemplated by this Agreement,
neither DRI nor CNG shall, nor shall either permit any of its subsidiaries to,
issue, deliver or sell, or authorize or propose the issuance, delivery or sale
of, any shares of their capital stock of any class or any securities
convertible into or exchangeable for, or any rights, warrants or options to
acquire, any such shares or convertible or exchangeable securities, other than
(a) the issuance of common stock, stock options, restricted stock or stock
appreciation or similar rights pursuant to (i) the existing Dominion Direct
Investment, Incentive Compensation Plan, Directors' Stock Compensation Plan,
Directors' Stock Accumulation Plan, Directors' Deferred Cash Compensation Plan,
Executive Deferred Compensation Plan, Employee Savings Plan, Subsidiary Savings
Plan, Hourly Employee Savings Plan and other existing plans and practices of
DRI or (ii) the existing 1991 Stock Incentive Plan, 1997 Stock Incentive Plan,
1995 Employee Stock Incentive Plan, Non-Employee Directors Restricted Stock
Plan, Dividend Reinvestment Plan, Employee Stock Ownership Plan and other
existing plans and practices of CNG, in each case consistent in kind and amount
with past practice and in the ordinary course of business under such plans
substantially in accordance with their present terms, (b) the issuance by a
subsidiary of shares of its capital stock to its shareholders and (c) the
issuance by DRI of shares of its capital stock in connection with any
acquisition permitted pursuant to Section 6.5, except that such issuance by DRI
shall not exceed an aggregate value of $800,000,000 without the prior written
consent of CNG.
Section VI.4 Charter Documents. Except as disclosed in Section 6.4 of the DRI
Disclosure Schedule or the CNG Disclosure Schedule, neither DRI nor CNG shall
amend or propose to amend its articles of incorporation or by-laws, except as
contemplated herein, in any way adverse to the other party. Notwithstanding the
foregoing, DRI may increase the number of authorized shares of DRI Common Stock
and may amend its articles of incorporation to eliminate the staggered terms of
its Board of Directors.
Section VI.5 Acquisitions. Except as disclosed in Section 6.5 of the DRI
Disclosure Schedule or the CNG Disclosure Schedule and except as provided in
the DRI Budget or the CNG Budget, as the case may be, neither DRI nor CNG
shall, nor shall either permit any of its subsidiaries to, acquire or agree to
acquire, by merging or consolidating with, 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 (i) which would, in the case of either DRI
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Annex A--Agreement and Plan of Merger
and its subsidiaries or CNG and its subsidiaries, require a vote of the
shareholders of DRI or CNG, as the case may be, or (ii) which would exceed
$100,000,000 individually or $300,000,000 in the aggregate (including, in each
case, any recourse indebtedness assumed in connection therewith) and which, in
the case of CNG have not been approved in writing by DRI, which approval shall
not be unreasonably withheld, or in the case of DRI, with respect to which DRI
has not consulted with CNG or in the case of non-energy industry related
acquisitions in excess of $2,000,000,000 in the aggregate, to which CNG has not
consented, which consent shall not be unreasonably withheld. Notwithstanding
the foregoing, neither party shall acquire any nuclear power facilities without
the prior written consent of the other party.
Section VI.6 No Dispositions. Except as disclosed in Section 6.6 of the DRI
Disclosure Schedule or the CNG Disclosure Schedule, and other than (a)
dispositions not exceeding $100,000,000 individually or $300,000,000 in the
aggregate, in the case of, on the one hand, DRI and its subsidiaries and, on
the other hand, CNG and its subsidiaries, (b) as may be required by law to
consummate the transactions contemplated hereby, (c) in the ordinary course of
business consistent with past practices, or (d) in the case of CNG, as may be
approved in writing by DRI, which approval shall not be unreasonably withheld,
or, in the case of DRI, with respect to which DRI has consulted with CNG,
neither DRI nor CNG shall, nor shall either permit any of its subsidiaries to,
sell, lease, license, encumber or otherwise dispose of, any of its assets that
are material, individually or in the aggregate, to such party and its
subsidiaries taken as a whole.
Section VI.7 Indebtedness. Except as contemplated by this Agreement or
disclosed in Section 6.7 of the DRI Disclosure Schedule or the CNG Disclosure
Schedule and except as provided in the DRI Budget or the CNG Budget, as the
case may be, neither DRI nor CNG shall, nor shall either permit any of its
subsidiaries to, incur or guarantee any indebtedness (including any debt
borrowed or guaranteed or otherwise assumed, including, without limitation, the
issuance of debt securities or warrants or rights to acquire debt) other than
(a) short-term indebtedness in the ordinary course of business consistent with
past practice, (b) long-term indebtedness in connection with the refinancing of
existing indebtedness either at its stated maturity or at a lower cost of
funds, (c) additional indebtedness aggregating in any year not more than 110%
of the amount provided therefor in the DRI Budget with respect to DRI and its
subsidiaries or in the CNG Budget with respect to CNG and its subsidiaries, and
(d) in the case of CNG, as may be approved in writing by DRI, which approval
shall not be unreasonably withheld, or, in the case of DRI, with respect to
which DRI has consulted with CNG.
Section VI.8 Capital Expenditures. Except as disclosed in Section 6.8 of the
DRI Disclosure Schedule or the CNG Disclosure Schedule or as required by law,
neither DRI nor CNG shall, nor shall either permit any of its subsidiaries to,
make any capital expenditures, other than (a) capital expenditures to repair or
replace facilities destroyed or damaged due to casualty or accident (whether or
not covered by insurance), (b) additional capital expenditures in any year of
not more than 110% of the amount provided therefor in the DRI Budget for that
year with respect to DRI and its subsidiaries and in the CNG Budget for that
year with respect to CNG and its subsidiaries, and (c) in the case of CNG, as
may be approved in writing by DRI, which approval shall not be unreasonably
withheld, or, in the case of DRI, with respect to which DRI has consulted with
CNG.
Section VI.9 Compensation, Benefits. Except as disclosed in Section 6.9 of
the CNG Disclosure Schedule or the CNG Budget, CNG shall not, nor shall it
permit any of its subsidiaries to, (i) enter into, adopt or amend (except as
may be required by applicable law), or increase the amount or accelerate the
payment or vesting of any benefit or amount payable under, any employee benefit
plan or other contract, agreement, commitment, arrangement, plan or policy
maintained by, contributed to or entered into by such party or any of its
subsidiaries, or increase, or enter into any contract, agreement, commitment or
arrangement to increase in any manner, the compensation or fringe benefits, or
otherwise to extend, expand or enhance the engagement, employment or any
related rights, of any director, officer or other employee of such party or any
of its subsidiaries, except pursuant to binding legal commitments or as a
result of normal collective bargaining processes, and except for normal
(including incentive) increases, extensions, expansions, enhancements,
amendments, replacements or adoptions in the ordinary course of business
consistent with past practice that, in
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the aggregate, do not result in a material increase in benefits or compensation
expense to such party and its subsidiaries taken as a whole or (ii) enter into
or amend any employment, severance or special pay arrangement with respect to
termination of employment or other similar contract, agreement or arrangement
with any director or officer other than in the ordinary course of business
consistent with past practice.
Section VI.10 1935 Act. None of the parties hereto shall, nor shall any such
party permit any of its Significant Subsidiaries to, except as required or
contemplated by this Agreement, engage in any activities that would cause a
change in its status, or that of its Significant Subsidiaries, under the 1935
Act.
Section VI.11 Accounting. Neither DRI nor CNG shall, nor shall either permit
any of its subsidiaries to, make any changes in their accounting methods,
except as required by law, rule, regulation or GAAP.
Section VI.12. [Intentionally Omitted].
Section VI.13 Tax-Free Status. Neither DRI nor CNG shall, nor shall either
permit any of its subsidiaries to, take any actions (including repurchasing
numbers of shares of DRI Common Stock or CNG Common Stock from holders or
former holders of CNG Common Stock) that would, or would be reasonably likely
to, adversely affect the qualification of the Second Merger as a transaction
described in Section 368(a)(1)(A) of the Code.
Section VI.14 Discharge of Liabilities. Neither DRI nor CNG shall pay,
discharge or satisfy any material claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice (which includes the payment of judgments and
settlements and the refinancing of existing indebtedness for borrowed money
either at its stated maturity or at a lower cost of funds) or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the
notes thereto) of such party included in such party's reports filed with the
SEC, or incurred in the ordinary course of business consistent with past
practice or as disclosed in Section 6.7 of the DRI Disclosure Schedule or the
CNG Disclosure Schedule.
Section VI.15 Cooperation, Notification. Each of DRI and CNG shall: (a)
confer on a regular and frequent basis with one or more representatives of the
other to discuss the general status of its ongoing operations; (b) promptly
notify the other of any significant changes in its business, properties,
assets, condition (financial or other), prospects or results of operations; (c)
advise the other of any change or event that has had or, insofar as reasonably
can be foreseen, is reasonably likely to result in, a DRI Material Adverse
Effect or a CNG Material Adverse Effect, as the case may be; and (d) promptly
provide the other with copies of all filings made by it or any of its
subsidiaries with any state or federal court, administrative agency, commission
or other Governmental Authority in connection with this Agreement and the
transactions contemplated hereby.
Section VI.16 Rate Matters. Other than currently pending rate filings, each
of DRI and CNG shall, and shall cause its subsidiaries to, discuss with the
other any changes in its or its subsidiaries' regulated rates or charges (other
than fuel and gas rates or charges), standards of service or accounting from
those in effect on the date hereof and consult with the other prior to making
any filing (or any amendment thereto), or effecting any agreement, commitment,
arrangement or consent, whether written or oral, formal or informal, with
respect thereto, and neither DRI nor CNG shall make any filing to change its
rates on file with any state regulatory authority or the FERC that would have a
material adverse effect on the benefits associated with the Mergers.
Section VI.17 Third-Party Consents. DRI shall, and shall cause its
subsidiaries to, use all commercially reasonable efforts to obtain all DRI
Required Consents. DRI shall promptly notify CNG of any failure or anticipated
failure to obtain any such consents and, if requested by CNG, shall provide
copies of all DRI Required Consents obtained by DRI to CNG. CNG shall, and
shall cause its subsidiaries to, use all commercially reasonable efforts to
obtain all CNG Required Consents. CNG shall promptly notify DRI of any failure
or anticipated failure to obtain any such consents and, if requested by DRI,
shall provide copies of all CNG Required Consents obtained by CNG to DRI.
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Annex A--Agreement and Plan of Merger
Section VI.18 No Breach, Etc. No party shall, nor shall any party permit any
of its subsidiaries to, take any action that would or is reasonably likely to
result in a material breach of any provision of this Agreement or in any of its
representations and warranties set forth in this Agreement being untrue on and
as of the Closing Date.
Section VI.19 Tax-Exempt Status. No party hereto shall, nor shall any party
permit any subsidiary to, take any action that would likely jeopardize the
qualification of the outstanding revenue bonds issued for the benefit of DRI
(or any subsidiary thereof) or for the benefit of CNG (or any subsidiary
thereof) that qualify on the date hereof under Section 142(a) of the Code as
"exempt facility bonds" or as tax-exempt industrial development bonds under
Section 103(b)(4) of the Internal Revenue Code of 1954, as amended prior to the
Tax Reform Act of 1986.
Section VI.20 Transition Management. (a) DRI and CNG shall create a special
transition management task force (the "Task Force") to be headed by Xxxxxx X.
Xxxxx, Chairman and Chief Executive Officer of DRI, and in addition, to consist
of two members nominated by CNG and two additional members nominated by DRI.
The Task Force shall report its findings to the Board of Directors of each of
DRI and CNG.
(b) The functions of the Task Force shall include (i) serving as a conduit
for the flow of information and documents between DRI and CNG as contemplated
by Section 6.15, (ii) development of transition plans, corporate organizational
and management plans, workforce combination proposals, and such other matters
as may be appropriate and (iii) otherwise assisting DRI and CNG in making an
orderly transition.
Section VI.21 Insurance. Each of DRI and CNG shall, and shall cause its
subsidiaries to, maintain with financially responsible insurance companies
insurance in such amounts and against such risks and losses as are customary
for companies engaged in their respective industries, taking into account, in
the case of DRI, DRI's methods of generating electric power and fuel sources.
Section VI.22 Permits. Each party shall, and shall cause its subsidiaries to,
use commercially reasonable efforts to maintain in effect all existing Permits
(as defined in Section 4.4) pursuant to which such party or such party's
subsidiaries operate.
ARTICLE VII
Additional Agreements
Section VII.1 Access to Information. Upon reasonable notice and during normal
business hours, each party shall, and shall cause its subsidiaries to, afford
to the officers, directors, employees, accountants, counsel, investment banker,
financial advisor and other representatives of the other (collectively,
"Representatives") reasonable access, during normal business hours throughout
the period prior to the Effective Time, to all of its properties, books,
contracts, commitments and records (including, but not limited to, tax returns)
and, during such period, each party shall, and shall cause its subsidiaries to,
furnish promptly to the other (i) a copy of each reasonably available report,
schedule and other document filed or received by it or any of its subsidiaries
pursuant to the requirements of federal or state securities laws or filed with
the SEC, the FERC, the NRC, the Department of Justice, the Federal Trade
Commission, or any other federal or any state regulatory agency or commission,
and (ii) all information concerning themselves, their subsidiaries, directors,
officers and shareholders and such matters as may be reasonably requested by
the other party in connection with any filings, applications or approvals
required or contemplated by this Agreement. All documents and information
furnished pursuant to this Section 7.1 shall be subject to the Confidentiality
Agreement between the parties (the "Confidentiality Agreement"). The party
requesting copies of any documents from any other party hereto shall be
responsible for all out-of-pocket expenses incurred by the party to whom such
request is made in complying with such request, including any cost of
reproducing and delivering any required information.
Section VII.2 Joint Proxy Statement and Registration Statement.
(a) Preparation and Filing. As promptly as reasonably practicable after the
date hereof, DRI shall, in consultation with CNG, prepare and file with the SEC
an amendment to the Registration Statement and the
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Annex A--Agreement and Plan of Merger
Joint Proxy Statement/Prospectus (together the "Joint Proxy/Registration
Statement"). DRI shall take such actions as may be reasonably required to cause
the Registration Statement, as amended, to be declared effective under the
Securities Act as promptly as practicable after such filing and shall also take
such action as may be reasonably required to cause the shares of DRI Common
Stock issuable in connection with the Mergers to be registered or to obtain an
exemption from registration under applicable state "blue sky" or securities
laws. Each of the parties shall furnish all information concerning itself that
is required or customary for inclusion in the Joint Proxy/Registration
Statement. No representation, covenant or agreement contained in this Agreement
is made by any party hereto with respect to information supplied by any other
party hereto for inclusion in the Joint Proxy/Registration Statement. The
parties shall take such actions as may be reasonably required to cause Joint
Proxy/Registration Statement to comply as to form in all material respects with
the Securities Act, the Exchange Act and the 1935 Act and the rules and
regulations thereunder. DRI shall take such action as may be reasonably
required to cause the shares of DRI Common Stock to be issued in the Mergers to
be approved for listing on the NYSE and any other stock exchanges agreed to by
the parties, each upon official notice of issuance.
(b) Letter of DRI's Accountants. DRI shall use best efforts to cause to be
delivered to DRI and CNG letters of Deloitte & Touche LLP, one dated a date
within two (2) business days before the effective date of the Registration
Statement and one dated the Closing Date, and addressed to DRI and CNG, in form
and substance reasonably satisfactory to DRI and CNG and customary in scope and
substance for "cold comfort" letters delivered by independent public
accountants in connection with registration statements and proxy statements
similar to the Joint Proxy/Registration Statement.
(c) Letter of CNG's Accountants. CNG shall use best efforts to cause to be
delivered to CNG and DRI letters of PricewaterhouseCoopers LLP, one dated a
date within two (2) business days before the effective date of the Registration
Statement and one dated the Closing Date, and addressed to CNG and DRI, in form
and substance satisfactory to CNG and DRI and customary in scope and substance
for "cold comfort" letters delivered by independent public accountants in
connection with registration statements and proxy statements similar to the
Joint Proxy/Registration Statement.
Section VII.3 Regulatory Matters.
(a) HSR Filings. Each party hereto shall file or cause to be filed with the
Federal Trade Commission and the Department of Justice any notifications
required to be filed by them or their respective "ultimate parent" companies
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and the rules and regulations promulgated thereunder with respect
to the transactions contemplated hereby. Such parties will use all commercially
reasonable efforts to make such filings promptly and shall respond promptly to
any requests for additional information made by either of such agencies.
(b) Other Regulatory Approvals. Each party hereto shall cooperate and use its
best efforts to promptly prepare and file all necessary documentation, to
effect all necessary applications, notices, petitions, filings and other
documents, and to use all commercially reasonable efforts to obtain all
necessary permits, consents, approvals and authorizations of all Governmental
Authorities and all other persons necessary or advisable to consummate the
transactions contemplated by this Agreement, including, without limitation, the
DRI Required Statutory Approvals and the CNG Required Statutory Approvals. CNG
shall have the right to review and approve in advance all characterizations of
the information relating to CNG, on the one hand, and DRI shall have the right
to review and approve in advance all characterizations of the information
relating to DRI, on the other hand, in either case, which appear in any filing
made in connection with the transactions contemplated by this Agreement or the
Mergers, such approvals not to be unreasonably withheld. DRI and CNG shall each
consult with the other with respect to the obtaining of all such necessary or
advisable permits, consents, approvals and authorizations of Governmental
Authorities and shall keep each other informed of the status thereof.
Section VII.4 Shareholder Approvals.
(a) Approval of CNG Shareholders. CNG shall, as promptly as reasonably
practicable after the date hereof (i) take all steps reasonably necessary to
call, give notice of, convene and hold a special meeting of its
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shareholders (the "CNG Special Meeting") for the purpose of securing the CNG
Shareholders' Approval, (ii) distribute to its shareholders the Joint Proxy
Statement/Prospectus in accordance with applicable federal and state law and
with its certificate of incorporation and bylaws, (iii) recommend to its
shareholders that they give the CNG Shareholders' Approval (provided that
nothing contained in this Section 7.4 shall require the Board of Directors of
CNG to take any action or refrain from taking any action that such Board
determines in good faith and with the advice of counsel as set forth in a
written, reasoned opinion would result in a breach of its fiduciary duties
under applicable law), and (iv) cooperate and consult with DRI with respect to
each of the foregoing matters.
(b) Approval of DRI Shareholders. DRI shall, as promptly as reasonably
practicable after the date hereof (i) take all steps reasonably necessary to
call, give notice of, convene and hold a special meeting of its shareholders
(the "DRI Special Meeting") for the purpose of securing the DRI Shareholders'
Approval, (ii) distribute to its shareholders the Joint Proxy
Statement/Prospectus in accordance with applicable federal and state law and
its articles of incorporation and bylaws, (iii) recommend to its shareholders
that they give the DRI Shareholders' Approval (provided that nothing contained
in this Section 7.4 shall require the Board of Directors of DRI to take any
action or refrain from taking any action that such Board determines in good
faith and with the advice of counsel as set forth in a written, reasoned
opinion would result in a breach of its fiduciary duties under applicable law),
and (iv) cooperate and consult with CNG with respect to each of the foregoing
matters.
(c) Meeting Date. The DRI Special Meeting and the CNG Special Meeting shall
be held on the same day unless otherwise agreed by DRI and CNG.
Section VII.5 Directors' and Officers' Indemnification.
(a) Indemnification. To the extent, if any, not provided by an existing right
of indemnification or other agreement or policy, from and after the Effective
Time, DRI shall, to the fullest extent provided by CNG prior to the Closing and
not prohibited by applicable law, indemnify, defend and hold harmless the
present and former directors, officers and management employees of CNG and its
subsidiaries (each an "Indemnified Party" and, collectively, the "Indemnified
Parties") against (i) all losses, expenses (including reasonable attorneys'
fees and expenses), claims, damages, costs, liabilities, judgments or (subject
to the proviso of the next succeeding sentence) amounts that are paid in
settlement of or in connection with any claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part out
of the fact that such person is or was a director, officer or management
employee of CNG or any subsidiary thereof, whether pertaining to any matter
existing or occurring at or prior to or after the Effective Time and whether
asserted or claimed prior to, at or after the Effective Time and (ii) all
liabilities based in whole or in part on, or arising in whole or in part out
of, or pertaining to this Agreement or the transactions contemplated hereby. In
the event of any such loss, expense, claim, damage, cost, liability, judgment
or settlement (whether or not arising before the Effective Time), (x) DRI shall
pay the reasonable fees and expenses of counsel selected by the Indemnified
Parties, which counsel shall be reasonably satisfactory to DRI, promptly after
statements therefor are received, and otherwise advance to the Indemnified
Parties upon request reimbursement of documented expenses reasonably incurred,
in either case, to the extent not prohibited by the laws of the Commonwealth of
Virginia, (y) DRI shall cooperate in the defense of any such matter and (z) any
determination required to be made with respect to whether an Indemnified
Party's conduct complies with the standards under applicable law or as set
forth in DRI's articles of incorporation or bylaws shall be made by independent
counsel mutually acceptable to DRI and the Indemnified Party; provided,
however, that DRI shall not be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld or delayed).
The Indemnified Parties as a group may retain only one law firm (other than
local counsel) with respect to each related matter except to the extent there
is, in the sole opinion of counsel to an Indemnified Party, under applicable
standards of professional conduct, a conflict on any significant issue between
positions of any two or more Indemnified Parties, in which case each
Indemnified Party with a conflicting position on a significant issue shall be
entitled to separate counsel. In the event any Indemnified Party is required to
bring any action to enforce rights or to collect moneys due under this
Agreement and is successful in such action, DRI shall reimburse such
Indemnified Party for all of its expenses in bringing and pursuing such action.
Each Indemnified Party shall be
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entitled to the advancement of expenses to the full extent contemplated in this
Section 7.5(a) in connection with any such action.
(b) Insurance. For a period of six (6) years after the Effective Time, DRI
shall cause to be maintained in effect the policies of directors' and officers'
liability insurance maintained by CNG; provided that DRI may substitute
therefor policies of at least the same coverage containing terms that are no
less advantageous with respect to matters occurring at or prior to the
Effective Time to the extent such liability insurance can be maintained
annually at a cost to DRI not greater than 200% of the current annual premiums
for the policies currently maintained by CNG for its directors' and officers'
liability insurance; provided further, that if such insurance cannot be so
maintained or obtained at such cost, DRI shall maintain or obtain as much of
such insurance for CNG as can be so maintained or obtained at a cost equal to
200% of the respective current annual premiums of CNG for its directors' and
officers' liability insurance and other indemnity agreements.
(c) Successors. In the event DRI or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets to any
person, then and in either such case, proper provision shall be made so that
the successors and assigns of DRI shall assume the obligations set forth in
this Section 7.5.
(d) Survival of Indemnification. To the fullest extent not prohibited by law,
from and after the Effective Time, all rights to indemnification now existing
in favor of the employees, agents, directors or officers of CNG and its
subsidiaries with respect to their activities as such prior to or at the
Effective Time, as provided in their respective articles of incorporation or
bylaws or indemnification agreements in effect on the date of such activities
or otherwise in effect on the date hereof, shall survive the Second Merger and
shall continue in full force and effect for a period of not less than six (6)
years from the Effective Time.
Section VII.6 Disclosure Schedules. On or before the date of this Agreement,
(i) CNG has delivered to DRI a schedule (the "CNG Disclosure Schedule")
accompanied by a certificate signed by the chief financial officer of CNG
stating that the CNG Disclosure Schedule is being delivered pursuant to this
Section 7.6(i) and (ii) DRI has delivered to CNG a schedule (the "DRI
Disclosure Schedule") accompanied by a certificate signed by the chief
financial officer of DRI stating that the DRI Disclosure Schedule is being
delivered pursuant to this Section 7.6(ii). The CNG Disclosure Schedule and the
DRI Disclosure Schedule are collectively referred to herein as the "Disclosure
Schedules". The Disclosure Schedules constitute an integral part of this
Agreement and modify the respective representations, warranties, covenants or
agreements of the parties hereto contained herein to the extent that such
representations, warranties, covenants or agreements expressly refer to the
Disclosure Schedules. Any and all statements, representations, warranties or
disclosures set forth in the Disclosure Schedules shall be deemed to have been
made on and as of the date of this Agreement.
Section VII.7 Public Announcements. DRI and CNG shall cooperate with each
other in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement or any of the
transactions contemplated hereby and, subject to each party's disclosure
obligations imposed by law or any applicable national securities exchange,
shall not issue any public announcement or statement prior to consultation with
the other party.
Section VII.8 Rule 145 Affiliates. Prior to the Closing Date, CNG shall
identify in a letter to DRI all persons who are, at the Closing Date,
"affiliates" of CNG, as such term is used in Rule 145 under the Securities Act.
CNG shall use its best efforts to cause its affiliates to deliver to DRI on or
prior to the Closing Date a written agreement in a form mutually agreeable to
DRI and CNG.
Section VII.9 Certain Employee Agreements. (a) Subject to Section 7.10, DRI
and its subsidiaries shall honor, without modification, all contracts,
agreements, collective bargaining agreements and commitments of CNG that apply
to any current or former employees or current or former directors of CNG;
provided, however, that this undertaking is not intended to prevent DRI from
enforcing such contracts, agreements, collective
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bargaining agreements and commitments in accordance with their terms or from
exercising any right to amend, modify, suspend, revoke or terminate any such
contract, agreement, collective bargaining agreement or commitment.
(b) Before undertaking any reductions in workforce following the Effective
Time, DRI will consider whether such reductions have a disproportionate effect
on employees of CNG and its subsidiaries in light of the circumstances and the
objectives to be achieved and the needs of the combined businesses of DRI and
CNG.
(c) Subject to applicable law and obligations under applicable collective
bargaining agreements, DRI shall maintain for a period of at least two (2)
years after the Closing Date, without interruption, such employee compensation,
welfare and benefit plans, programs, policies and fringe benefits as will, in
the aggregate, provide benefits to the employees or former employees of CNG and
its subsidiaries, respectively, who were employees immediately prior to the
Closing Date that are no less favorable than those provided pursuant to such
employee compensation, welfare and benefit plans, programs, policies and fringe
benefits of CNG and its subsidiaries, as in effect on the Closing Date.
Section VII.10 Incentive, Stock and Other Plans. With respect to each of
CNG's 1991 Stock Incentive Plan, 1997 Stock Incentive Plan, 1995 Employee Stock
Incentive Plan, Non-Employee Directors Restricted Stock Plan and Employee Stock
Ownership Plan and each other employee benefit plan, program or arrangement
under which the delivery of CNG Common Stock is required to be used for
purposes of the payment of benefits, grant of awards or exercise of options
(each a "Stock Plan"), DRI and CNG shall use their respective best efforts to
take such action as may be necessary so that, at the Effective Time of the
Second Merger, all benefits, grants of awards and options are converted to the
right to receive from DRI at the Effective Time cash equal to the "fair value"
at the Effective Time of each such benefit, grant of award or option. The
parties agree that "fair value" shall be determined in good faith by DRI and
CNG using recognized option valuation. With respect to those individuals who
subsequent to the Second Merger will be subject to the reporting requirements
under Section 16(a) of the Exchange Act, DRI shall administer the Stock Plans,
where applicable, in a manner that complies with Rule 16b-3 under the Exchange
Act. DRI shall obtain any shareholder approvals that may be necessary for the
deduction of any compensation payable under any Stock Plan or other
compensation arrangement.
Section VII.11 No Solicitations. No party hereto shall, and each such party
shall cause its subsidiaries not to, permit any of its Representatives to, and
shall use its best efforts to cause such persons not to, directly or
indirectly, initiate, solicit or encourage, or take any action to facilitate
the making of any offer or proposal that constitutes or is reasonably likely to
lead to any Takeover Proposal (as defined below), or, in the event of any
unsolicited Takeover Proposal, engage in negotiations or provide any
confidential information or data to any person relating to any Takeover
Proposal. Each party shall notify the other orally and in writing of any such
inquiries, offers or proposals (including, without limitation, the terms and
conditions of any such proposal and the identity of the person making it)
within 24 hours of the receipt thereof and shall give the other five (5) days'
advance notice of any agreement to be entered into with or any information to
be supplied to any person making such inquiry, offer or proposal. Each party
hereto shall immediately cease and cause to be terminated all existing
discussions and negotiations, if any, with any other persons conducted
heretofore with respect to any Takeover Proposal. Notwithstanding anything in
this Section 7.11 to the contrary, in the event of an unsolicited Takeover
Proposal, unless the DRI Shareholders' Approval and the CNG Shareholders'
Approval have both been obtained, DRI or CNG may participate in discussions or
negotiations with, furnish information to, and afford access to the properties,
books and records of such party and its subsidiaries to any person in
connection with a possible Takeover Proposal with respect to such party by such
person, if and to the extent that (A) the Board of Directors of such party has
reasonably concluded in good faith (after consultation with its financial
advisors) that the person or group making the Takeover Proposal will have
adequate sources of financing to consummate the Takeover Proposal and that the
Takeover Proposal is more favorable to such party's shareholders than the
Mergers (in the case of DRI) and the Second Merger (in the case of CNG), (B)
the Board of Directors of such party is advised in a written, reasoned opinion
of outside counsel that a failure to do so would result in a breach of its
fiduciary duties under applicable law and (C) such party has entered
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Annex A--Agreement and Plan of Merger
into a confidentiality agreement with the person or group making the Takeover
Proposal containing terms and conditions no less favorable to such party than
the Confidentiality Agreement. As used in this Section 7.11, "Takeover
Proposal" shall mean any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving any party or any of its
material subsidiaries, or any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets of, any
party or any of its material subsidiaries, other than pursuant to the
transactions contemplated by this Agreement.
Section VII.12 DRI Board of Directors. The DRI Board of Directors will take
such action as may be necessary to cause the number of directors comprising the
full Board of Directors of DRI at the Effective Time to be seventeen persons,
ten of whom shall be designated by DRI prior to the Effective Time and seven of
whom shall be designated by CNG prior to the Effective Time, to be divided as
equally as possible among classes of directors if, at the Effective Time, DRI
has a staggered Board of Directors. The Board of Directors of DRI will have at
least three committees consisting of an audit committee, an organization,
compensation and nominating committee and a finance committee and such other
committees as the Board of Directors of DRI may determine is appropriate under
the circumstances. The finance committee will be chaired by a director
nominated by CNG. In addition, CNG will have a proportionate number of
representatives on each committee. Further, if the Closing Date occurs prior to
August 1, 2000 and if Xxxxxx X. Xxxxxxxx, Xx. is then Chairman of the CNG Board
of Directors, he shall be Chairman of the DRI Board of Directors from the
Closing Date to August 1, 2000 and Xxxxxx X. Xxxxx shall be Vice Chairman of
the DRI Board of Directors. If Xxxxxx X. Xxxxxxxx, Xx. does not become Chairman
of the DRI Board of Directors pursuant to the preceding sentence, Xxxxxx X.
Xxxxx shall continue as Chairman of the DRI Board of Directors. If Xxxxxx X.
Xxxxxxxx, Xx. becomes Chairman of the DRI Board of Directors, Xxxxxx X. Xxxxx
shall reassume his position as Chairman of the DRI Board of Directors upon the
earlier of Xxxxxx X. Xxxxxxxx, Xx.'s retirement or August 1, 2000.
Section VII.13 Corporate Offices. Following the Effective Time, DRI shall
maintain its corporate offices in Richmond, Virginia but shall continue to
maintain a significant operating office in Pittsburgh, Pennsylvania.
Section VII.14 Expenses. Subject to Section 7.1 and Section 9.3, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, except
that those expenses incurred in connection with printing the Joint
Proxy/Registration Statement, as well as the filing fee relating thereto, shall
be shared equally by DRI, on the one hand, and CNG, on the other hand. In
addition, prior to the Effective Time, CNG may establish an escrow account and
pay into such account cash in an amount sufficient to permit payment from such
escrow account of any and all real estate transfer taxes that may be due from
CNG or its shareholders in connection with the transactions contemplated by
this Agreement.
Section VII.15 Community Support. DRI acknowledges that after the Effective
Time, it intends to provide charitable contributions and community support
within the service areas of the parties and their respective subsidiaries at
levels consistent with past practice.
Section VII.16 Further Assurances.
(a) Each of CNG and DRI shall, and shall cause its subsidiaries to, execute
such further documents and instruments and take such further actions as may
reasonably be requested by the other in order to consummate the Mergers and
other transactions contemplated by this Agreement, and to use its best efforts
to take or cause to be taken all actions, and to do or cause to be done all
things, necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the Mergers and the other transactions
contemplated hereby (subject to the votes of its shareholders described in
Sections 4.10 and 5.10, respectively), including fully cooperating with the
other in obtaining the CNG Required Statutory Approvals, the DRI Required
Statutory Approvals and all other approvals and authorizations of any
Governmental Authorities necessary or advisable to consummate the transactions
contemplated hereby.
(b) CNG and DRI shall be responsible for the taking of any action necessary
or advisable to obtain the CNG Required Statutory Approvals and to obtain the
DRI Required Statutory Approvals, respectively. CNG
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Annex A--Agreement and Plan of Merger
and DRI agree to cooperate in obtaining the necessary approvals from the NRC,
the FERC and the SEC under the 1935 Act, the Securities Act and the Exchange
Act and from the applicable state authorities. CNG and DRI shall each provide
the other with copies of any filings made with any Governmental Authorities in
connection with the foregoing.
ARTICLE VIII
Conditions
Section VIII.1 Conditions to Each Party's Obligation to Effect the Mergers.
The respective obligations of each party to effect the Mergers shall be subject
to the satisfaction on or prior to the Closing Date of the following
conditions, except, to the extent permitted by applicable law, that such
conditions may be waived in writing pursuant to Section 9.5:
(a) Shareholder Approvals. The CNG Shareholders' Approval and the DRI
Shareholders' Approval shall have been obtained.
(b) No Injunction. No temporary restraining order or preliminary or
permanent injunction or other order by any federal or state court
preventing consummation of the Mergers shall have been issued and
continuing in effect, and the Mergers and the other transactions
contemplated hereby shall not have been prohibited under any applicable
federal or state law or regulation.
(c) Registration Statement. The Registration Statement shall have become
effective in accordance with the provisions of the Securities Act, and no
stop order suspending such effectiveness shall have been issued and remain
in effect.
(d) Listing of Shares. The shares of DRI Common Stock issuable in the
Mergers pursuant to Article II shall have been approved for listing on the
NYSE, subject to official notice of issuance.
(e) Statutory Approvals. The DRI Required Statutory Approvals and the CNG
Required Statutory Approvals shall have been obtained at or prior to the
Effective Time, such approvals shall have become Final Orders (as
hereinafter defined), and no Final Order shall impose terms or conditions
that would have, or would be reasonably likely to have a material adverse
effect on the business, operations, properties, assets, condition
(financial or otherwise), prospects or results of operations of DRI and CNG
and their subsidiaries on a consolidated basis as if the Second Merger had
been consummated (but without giving effect to the impact of such material
adverse effect). A "Final Order" means action by the relevant regulatory
authority that has not been reversed, stayed, enjoined, set aside, annulled
or suspended, with respect to which any waiting period prescribed by law
before the transactions contemplated hereby may be consummated has expired,
and as to which all conditions to the consummation of such transactions
prescribed by law, regulation or order have been satisfied, and as to which
all opportunities for rehearing are exhausted (whether or not any appeal
thereof is pending).
Section VIII.2 Conditions to Obligation of CNG to Effect the Second Merger.
The obligation of CNG to effect the Second Merger shall be further subject to
the satisfaction, on or prior to the Closing Date, of the following conditions,
except as may be waived by CNG in writing pursuant to Section 9.5:
(a) Performance of Obligations of DRI. DRI shall have performed in all
material respects its agreements and covenants contained in or contemplated
by this Agreement required to be performed by it at or prior to the
Effective Time.
(b) Representations and Warranties. The representations and warranties of
DRI set forth in this Agreement shall be true and correct as of the date
hereof and as of the Closing Date as if made on and as of the Closing Date,
except as otherwise contemplated by this Agreement, except for such
failures of representations or warranties to be true and correct (without
giving effect to any materiality qualification or standard contained in any
such representation or warranties) which, individually or in the aggregate,
would not be reasonably likely to result in a DRI Material Adverse Effect.
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(c) Closing Certificates. CNG shall have received a certificate signed by
the Chief Executive Officer and Chief Financial Officer of DRI, dated the
Closing Date, to the effect that, to the best of each such officer's
knowledge, the conditions set forth in Section 8.2(a) and Section 8.2(b)
have been satisfied.
(d) DRI Material Adverse Effect. No DRI Material Adverse Effect shall
have occurred and there shall exist no fact or circumstance that would
have, or would be reasonably likely to have, a DRI Material Adverse Effect.
(e) Tax Opinion. CNG shall have received an opinion of counsel, in form
and substance satisfactory to CNG, dated the Closing Date, which opinion
may be based on appropriate representations of DRI and CNG that are in form
and substance reasonably satisfactory to such counsel, to the effect that
the Second Merger will be treated as a transaction described in Section
368(a) of the Code and that no gain or loss will be recognized by the
stockholders of CNG who exchange CNG Common Stock solely for DRI Common
Stock pursuant to the Second Merger (except with respect to cash received
in lieu of fractional shares).
(f) DRI Required Consents. The DRI Required Consents shall have been
obtained.
Section VIII.3 Conditions to Obligation of DRI to Effect the Mergers. The
obligation of DRI to effect the Mergers shall be further subject to the
satisfaction, on or prior to the Closing Date, of the following conditions,
except as may be waived by DRI in writing pursuant to Section 9.5:
(a) Performance of Obligations of CNG. CNG shall have performed in all
material respects its agreements and covenants contained in or contemplated
by this Agreement required to be performed by it at or prior to the
Effective Time.
(b) Representations and Warranties. The representations and warranties of
CNG set forth in this Agreement shall be true and correct in all material
respects as of the date hereof and as of the Closing Date as if made on and
as of the Closing Date, except as otherwise contemplated by this Agreement,
except for such failures of representations or warranties to be true and
correct (without giving effect to any materiality qualification or standard
contained in any such representations or warranties) which, individually or
in the aggregate, would not be reasonably likely to result in a CNG
Material Adverse Effect.
(c) Closing Certificates. DRI shall have received a certificate signed by
the Chief Executive Officer and Chief Financial Officer of CNG, dated the
Closing Date, to the effect that, to the best of each such officer's
knowledge, the conditions set forth in Section 8.3(a) and Section 8.3(b)
have been satisfied.
(d) CNG Material Adverse Effect. No CNG Material Adverse Effect shall
have occurred and there shall exist no fact or circumstance that would
have, or would be reasonably likely to have, a CNG Material Adverse Effect.
(e) Tax Opinion. DRI shall have received an opinion of counsel, in form
and substance satisfactory to DRI, dated the Closing Date, which opinion
may be based on appropriate representations of DRI and CNG that are in form
and substance reasonably satisfactory to such counsel, to the effect that
the Second Merger will be treated as a transaction described in Section
368(a) of the Code.
(f) CNG Required Consents. The CNG Required Consents shall have been
obtained.
ARTICLE IX
Termination, Amendment and Waiver
Section IX.1 Termination. This Agreement may be terminated at any time prior
to the Closing Date, whether before or after approval by the shareholders of
the respective parties hereto contemplated by this Agreement:
(a) by mutual written consent of the Boards of Directors of DRI and CNG;
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(x) by DRI or CNG, by written notice to the other, if the Effective Time
shall not have occurred on or before January 31, 2000; provided, however,
that such date shall automatically be extended to July 31, 2000 if, on
January 31, 2000: (i) the condition set forth in Section 8.1(e) has not
been satisfied or waived; (ii) the other conditions to the consummation of
the transactions contemplated hereby are then capable of being satisfied;
and (iii) any approvals required by Section 8.1(e) that have not yet been
obtained are being pursued with diligence; provided further, that the right
to terminate this Agreement under this Section 9.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before the termination date;
(c) by DRI or CNG, by written notice to the other party, if the DRI
Shareholders' Approval shall not have been obtained at a duly held DRI
Special Meeting, including any adjournments thereof, or the CNG
Shareholders' Approval shall not have been obtained at a duly held CNG
Special Meeting, including any adjournments thereof;
(d) by DRI or CNG, if any state or federal law, order, rule or regulation
is adopted or issued, that has the effect, as supported by the written,
reasoned opinion of outside counsel for such party, of prohibiting the
Mergers or causing a DRI Material Adverse Effect or CNG Material Adverse
Effect, or if any court of competent jurisdiction in the United States or
any State shall have issued an order, judgment or decree permanently
restraining, enjoining or otherwise prohibiting the Mergers or causing a
DRI Material Adverse Effect or CNG Material Adverse Effect, and such order,
judgment or decree shall have become final and nonappealable;
(e) by CNG, upon two (2) days' prior notice to DRI, if, as a result of a
tender offer by a party other than DRI or any of its affiliates or any
written offer or proposal with respect to a merger, sale of a material
portion of its assets or other business combination (each, a "Business
Combination") by a party other than DRI or any of its affiliates, the Board
of Directors of CNG determines in good faith that the fiduciary obligations
of such directors under applicable law require that such tender offer or
other written offer or proposal be accepted; provided, however, that (i)
(A) the Board of Directors of CNG has reasonably concluded in good faith
(after consultation with its financial advisors) that the person or group
proposing the Business Combination will have adequate sources of financing
to consummate the Business Combination and that the Business Combination is
more favorable to CNG's shareholders than the Second Merger and (B) the
Board of Directors of CNG shall have been advised in a written, reasoned
opinion by outside counsel that, notwithstanding a binding commitment to
consummate an agreement of the nature of this Agreement entered into in the
proper exercise of their applicable fiduciary duties, and notwithstanding
all concessions that may be offered by DRI in negotiations entered into
pursuant to clause (ii) below, such fiduciary duties would also require the
directors to reconsider such commitment as a result of such tender offer or
such written offer or proposal and (ii) prior to any such termination, CNG
shall, and shall cause its respective financial and legal advisors to,
negotiate with DRI to make such adjustments in the terms and conditions of
this Agreement as would enable CNG to proceed with the transactions
contemplated herein; provided further, that DRI and CNG acknowledge and
affirm that, notwithstanding anything in this Section 9.1(e) to the
contrary, DRI and CNG intend this Agreement to be an exclusive agreement
and, accordingly, nothing in this Agreement is intended to constitute a
solicitation of an offer or proposal for a Business Combination, it being
acknowledged and agreed that any such offer or proposal would interfere
with the strategic advantages and benefits that DRI and CNG expect to
derive from the Second Merger and other transactions contemplated hereby;
(f) by DRI, upon two (2) days' prior notice to CNG, if, as a result of a
tender offer by a party other than CNG or any of its affiliates or any
written offer or proposal with respect to a Business Combination by a party
other than CNG or any of its affiliates, the Board of Directors of DRI
determines in good faith that the fiduciary obligations of such directors
under applicable law require that such tender offer or other written offer
or proposal be accepted; provided, however, that (i) (A) the Board of
Directors of DRI has reasonably concluded in good faith (after consultation
with its financial advisors) that the person or group proposing the
Business Combination will have adequate sources of financing to consummate
the Business Combination and that the Business Combination is more
favorable to DRI's shareholders than the Mergers
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Annex A--Agreement and Plan of Merger
and (B) the Board of Directors of DRI shall have been advised in a written,
reasoned opinion by outside counsel that, notwithstanding a binding
commitment to consummate an agreement of the nature of this Agreement
entered into in the proper exercise of their applicable fiduciary duties,
and notwithstanding all concessions that may be offered by CNG in
negotiations entered into pursuant to clause (ii) below, such fiduciary
duties would also require the directors to reconsider such commitment as a
result of such tender offer or such written offer or proposal and (ii)
prior to any such termination, DRI shall, and shall cause its respective
financial and legal advisors to, negotiate with CNG to make such
adjustments in the terms and conditions of this Agreement as would enable
DRI to proceed with the transactions contemplated herein; provided further,
that DRI and CNG acknowledge and affirm that, notwithstanding anything in
this Section 9.1(f) to the contrary, DRI and CNG intend this Agreement to
be an exclusive agreement and, accordingly, nothing in this Agreement is
intended to constitute a solicitation of an offer or proposal for a
Business Combination, it being acknowledged and agreed that any such offer
or proposal would interfere with the strategic advantages and benefits that
DRI and CNG expect to derive from the Mergers and other transactions
contemplated hereby;
(g) by CNG, by written notice to DRI, if (i) there exist breaches of the
representations and warranties of DRI made herein as of the date hereof
which breaches, individually or in the aggregate, would or would be
reasonably likely to result in a DRI Material Adverse Effect, and such
breaches shall not have been remedied within twenty (20) days after receipt
by DRI of notice in writing from CNG, specifying the nature of such
breaches and requesting that they be remedied, (ii) DRI (and/or its
appropriate subsidiaries) shall not have in all material respects performed
and complied with its agreements and covenants contained in Section 6.2
(Dividends), Section 6.3 (Issuance of Securities) and Section 6.7
(Indebtedness) or shall have failed to perform and comply with, in all
material respects, its other agreements and covenants hereunder and such
failure to perform or comply with shall not have been remedied within
twenty (20) days after receipt by DRI of a notice in writing from CNG,
specifying the nature of such failure and requesting that it be remedied;
or (iii) the Board of Directors of DRI or any committee thereof (A) shall
withdraw or modify in any manner adverse to CNG its approval or
recommendation of this Agreement or the Mergers, (B) shall fail to reaffirm
such approval or recommendation upon CNG's request, (C) shall approve or
recommend any acquisition of DRI or a material portion of DRI's assets or
any tender offer for shares of capital stock of DRI, in each case, by a
party other than CNG or any of its affiliates or (D) shall resolve to take
any of the actions specified in clause (A), (B) or (C).
(h) by DRI, by written notice to CNG, if (i) there exist breaches of the
representations and warranties of CNG made herein as of the date hereof
which breaches, individually or in the aggregate, would or would be
reasonably likely to result in a CNG Material Adverse Effect, and such
breaches shall not have been remedied within twenty (20) days after receipt
by CNG of notice in writing from DRI, specifying the nature of such
breaches and requesting that they be remedied, (ii) CNG (and/or its
appropriate subsidiaries) shall not have in all material respects performed
and complied with its agreements and covenants contained in Section 6.2
(Dividends), Section 6.3 (Issuance of Securities) and Section 6.7
(Indebtedness) or shall have failed to perform and comply with, in all
material respects, its other agreements and covenants hereunder and such
failure to perform or comply with shall not have been remedied within
twenty (20) days after receipt by CNG of a notice in writing from DRI,
specifying the nature of such failure and requesting that it be remedied;
or (iii) the Board of Directors of CNG or any committee thereof (A) shall
withdraw or modify in any manner adverse to DRI its approval or
recommendation of this Agreement or the Second Merger, (B) shall fail to
reaffirm such approval or recommendation upon DRI's request, (C) shall
approve or recommend any acquisition of CNG or a material portion of CNG's
assets or any tender offer for shares of capital stock of CNG, in each
case, by a party other than DRI or any of its affiliates or (D) shall
resolve to take any of the actions specified in clause (A), (B) or (C).
Section IX.2 Effect of Termination. In the event of termination of this
Agreement by either DRI or CNG pursuant to Section 9.1, there shall be no
liability on the part of either DRI or CNG or their respective officers or
directors hereunder, except that Section 7.14 and Section 9.3 and the agreement
contained in the second to the last sentence of Section 7.1 shall survive any
such termination.
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Section IX.3 Termination Fee; Expenses.
(a) Expenses Payable upon Breach. If this Agreement is terminated pursuant to
one (but not both) of Section 9.1(g)(i) or (ii) or Section 9.1(h)(i) or (ii),
then (i) the breaching party (the "Nonterminating Party") shall promptly (but
not later than five business days after receipt of notice of the amount due
from the other party) pay to the terminating party an amount equal to all
documented out-of-pocket expenses and fees incurred by such terminating party
(including, without limitation, fees and expenses payable to all legal,
accounting, financial, public relations and other professional advisors arising
out of, in connection with or related to the Mergers or the transactions
contemplated by this Agreement) not to exceed $25 million in the aggregate
("Out-of-Pocket Expenses"); provided, however, that, if this Agreement is
terminated by a party as a result of a willful breach or failure to perform or
comply with agreements and covenants by the Nonterminating Party, the
Nonterminating Party shall in addition to the other parties' Out-of-Pocket
Expenses, be liable to the other party for such party's actual damages as a
result of such breach.
(b) Termination Fee Payable upon Acceptance of a Proposal. If this Agreement
is terminated pursuant to one of Section 9.1(e) or Section 9.1(f) but not the
other on the basis of a good faith determination made as provided in such
Section 9.1(e) or Section 9.1(f) that the fiduciary obligations of the
directors of the terminating party under applicable law require acceptance of a
tender offer or other written offer or proposal with respect to a Business
Combination and such terminating party (or an affiliate thereof) enters into an
agreement (whether or not such agreement is embodied in a definitive manner) to
consummate a Business Combination with a third party within two (2) years of
such termination, then the terminating party shall promptly (but not later than
five (5) business days after receipt of notice of the amount due from the other
party), but prior to entering into such agreement with the third party, pay to
the other party an amount equal to Out-of-Pocket Expenses plus $200 million.
(c) Termination Fee In Certain Other Events. If this Agreement is terminated
(i) pursuant to Section 9.1(g)(iii) or Section 9.1(h)(iii), or (ii)(x) pursuant
to Section 9.1(b), (y) following a failure of the shareholders of CNG or DRI to
grant the necessary approvals described in Section 4.10 or Section 5.10, as the
case may be (a "Shareholder Disapproval"), or (z) as a result of a material
breach of Section 7.4, and in the case of a termination pursuant to clause (ii)
hereof, at the time of such termination (or, in the case of any termination
following a Shareholder Disapproval, prior to the shareholder meeting at which
such Shareholder Disapproval occurred), there shall have been a third-party
tender offer for shares of, or a third-party offer or proposal with respect to
a Business Combination involving, CNG or DRI (as the case may be, the "Target
Party") or the affiliates thereof which, at the time of such termination (or of
the meeting of the Target Party's shareholders, as the case may be) shall not
have been (A) rejected by the Target Party and its Board of Directors and (B)
withdrawn by the third party, then promptly (but not later than five business
days after receipt of notice of the amount due from the other party) after the
termination of this Agreement (1) if DRI is the Target Party or the termination
is pursuant to Section 9(g)(iii), DRI shall pay to CNG a termination fee equal
to $200 million plus Out-of-Pocket Expenses and (2) if CNG is the Target Party
or the termination is pursuant to Section 9(h)(iii), CNG shall pay to DRI a
termination fee equal to $200 million plus Out-of-Pocket Expenses; provided,
however, that no such amounts shall be payable if and to the extent the party
to make such payment shall have paid such amounts pursuant to Section 9.3(a) or
Section 9.3(b). Notwithstanding any of the foregoing, the $200 million
termination fee plus Out-of-Pocket Expenses shall not be payable by DRI or CNG
in the event that this Agreement is terminated pursuant to Section 9.1(c)
following a Shareholder Disapproval on the part of the DRI or CNG stockholders,
as the case may be, even if at the time of such termination there was a third-
party tender offer for shares of, or a third-party offer or proposal with
respect to a Business Combination involving the applicable Target Party, unless
the Board of Directors of the applicable Target Party (i) withdraws, amends or
otherwise modifies in any manner adverse to DRI or CNG, as the case may be, its
approval or recommendation of this Agreement or the Mergers, (ii) fails to
reaffirm its approval or recommendation with respect to this Agreement or the
Mergers upon the request of DRI or CNG, as the case may be, (iii) approves or
recommends any acquisition of the Target Party or a material portion of the
Target Party's assets or any tender offer for shares of capital stock of the
Target Party, in each case, by a party other than DRI or CNG, as the case may
be, or (iv) resolves to take any of the actions specified in clause (i), (ii)
or (iii); provided, that the $200 million termination fee plus Out-of-Pocket
Expenses shall be payable by DRI or CNG, as the case may be, whether or
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not the Target Party takes any of the actions set forth in clauses (i), (ii) or
(iii), if the applicable Target Party enters into an agreement (whether or not
such agreement is embodied in a definitive manner) to consummate a Business
Combination or effects a Business Combination with a third party within two (2)
years of such termination pursuant to Section 9.1(c). The parties acknowledge
and agree that for purposes of the foregoing sentence, "Business Combination"
shall mean with respect to DRI or CNG, as the case may be, (i) a merger,
reorganization, consolidation, share exchange, business combination,
recapitalization or similar transaction involving such party as a result of
which either (A) such party's stockholders prior to such transaction (by virtue
of their ownership of such party's shares) in the aggregate cease to own at
least 60% of the voting securities of the entity surviving or resulting from
such transaction (or the ultimate parent entity thereof) or, regardless of the
percentage of voting securities held by such stockholders, if any person or
entity shall beneficially own, directly or indirectly, at least 40% of the
voting securities of such ultimate parent entity, or (B) the individuals
comprising the board of directors of such party prior to such transaction do
not constitute a majority of the board of directors of such ultimate parent
entity, (ii) a sale, lease, exchange, transfer or other disposition of at least
40% of the assets of such party and its Subsidiaries, taken as whole, in a
single transaction or a series of related transactions (other than a pro rata
spin-off to such party's stockholders), or (iii) the acquisition, directly or
indirectly, by any person or entity of beneficial ownership of 40% or more of
the common stock of such party whether by merger, consolidation, share
exchange, business combination, tender or exchange offer or otherwise.
(d) Expenses. The parties agree that the agreements contained in this Section
9.3 are an integral part of the transactions contemplated by this Agreement and
constitute liquidated damages and not a penalty. If one party fails to promptly
pay to the other any fees due hereunder, such defaulting party shall pay the
costs and expenses (including legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on the amount of any unpaid fee at the
publicly announced prime rate of Citigroup, N.A. in effect from time to time
from the date such fee was required to be paid.
Section IX.4 Amendment. This Agreement may be amended by the parties hereto
pursuant to action of the respective Boards of Directors of each of DRI and
CNG, at any time before or after approval hereof by the shareholders of DRI and
CNG and prior to the Effective Time, but after such approvals, no such
amendment shall (a) alter or change the amount or kind of shares, rights or any
of the proceedings of the exchange and/or conversion under Article II, or (b)
alter or change any of the terms and conditions of this Agreement if any of the
alterations or changes, alone or in the aggregate, would materially and
adversely affect the rights of holders of CNG Common Stock, except for
alterations or changes that could otherwise be adopted by the Board of
Directors of DRI and/or CNG, without the further approval of such shareholders,
as applicable. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
Section IX.5 Waiver. At any time prior to the Effective Time, the parties
hereto may (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 to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by a duly
authorized officer of each party.
ARTICLE X
General Provisions
Section X.1 Non-Survival of Representations, Warranties, Covenants and
Agreements. None of the representations, warranties, covenants and agreements
in this Agreement shall survive the Mergers, except the covenants and
agreements contained in this Section 10.1 and in Article II (Treatment of
Shares), the second to the last sentence of Section 7.1 (Access to
Information), Section 7.5 (Directors' and Officers' Indemnification), Section
7.9 (Certain Employee Agreements), Section 7.10 (Incentive, Stock and Other
Plans), Section 7.12 (DRI Board of Directors), Section 7.13 (Corporate
Offices), Section 7.14 (Expenses), Section 7.15 (Community Support) and Section
10.7 (Parties in Interest), each of which shall survive in accordance with its
terms.
X-00
Xxxxx X--Xxxxxxxxx and Plan of Merger
Section X.2 Brokers. DRI represents and warrants that, except for Xxxxxx
Brothers Inc.and Xxxxxx Xxxxxxx Xxxx Xxxxxx, its investment banking firms, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Mergers or the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
DRI. CNG represents and warrants that, except for Xxxxxxx Lynch, Pierce, Xxxxxx
& Xxxxx Incorporated, its investment banking firm, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Mergers or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of CNG.
Section X.3 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given (a) if delivered personally, or (b) if
sent by overnight courier service (receipt confirmed in writing), or (c) if
delivered by facsimile transmission (with receipt confirmed), or (d) five days
after being mailed by registered or certified mail (return receipt requested)
to the parties, in each case to the following addresses (or at such other
address for a party as shall be specified by like notice):
(i) If to CNG, to:
Xxxxxxx X. Xxxxxxxx
Senior Vice President and General Counsel
Consolidated Natural Gas Company
CNG Tower
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Fax: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxx
Fax: (000) 000-0000
(ii) If to DRI, to:
Xxxxx X. Xxxxxx
Vice President and General Counsel
Dominion Resources, Inc.
000 Xxxxxxxx XXxxxx
Xxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Fax: (000) 000-0000
and
McGuire, Woods, Battle & Booth LLP
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
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Annex A--Agreement and Plan of Merger
Section X.4 Miscellaneous. This Agreement (including the documents and
instruments referred to herein): (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof other than the Confidentiality Agreement; and (b) shall not be assigned
by operation of law or otherwise. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts executed in and to be fully performed in such State, without giving
effect to its conflicts of laws statutes, rules or principles. The invalidity
or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect. The parties hereto shall negotiate in
good faith to replace any provision of this Agreement so held invalid or
unenforceable with a valid provision that is as similar as possible in
substance to the invalid or unenforceable provision.
Section X.5 Interpretation. When reference is made in this Agreement to
Articles, Sections or Exhibits, such reference shall be to an Article, Section
or Exhibit of this Agreement, as the case may be, unless otherwise indicated.
The table of contents and headings contained in this Agreement are for
reference purposes 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." Whenever "or" is used in this Agreement it
shall be construed in the nonexclusive sense.
Section X.6 Counterparts; Effect. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section X.7 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and, except for rights of
Indemnified Parties as set forth in Section 7.5 (Directors' and Officers'
Indemnification), nothing in this Agreement, express or implied, is intended to
confer upon any person any rights or remedies of any nature whatsoever under or
by reason of this Agreement.
Section X.8 Specific Performance. 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 or were otherwise
breached. It is accordingly agreed that the parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
Section X.9 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
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Annex A--Agreement and Plan of Merger
IN WITNESS WHEREOF, DRI and CNG have caused this Agreement to be signed by
their respective officers thereunto duly authorized as of the date first above
written.
DOMINION RESOURCES, INC.
/s/ Xxxx. X. Xxxxx
By: _________________________________
Name:Xxxx. X. Xxxxx
Title:Chairman and Chief
Executive Officer
CONSOLIDATED NATURAL GAS COMPANY
/s/ Xxxxxx X. Xxxxxxxx, Xx.
By: _________________________________
Name:Xxxxxx X. Xxxxxxxx, Xx.
Title:Chairman and Chief
Executive Officer
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