AGREEMENT AND PLAN
OF MERGER
by and between
DOMINION RESOURCES, INC.
and
CONSOLIDATED NATURAL GAS COMPANY
Dated as of February 19, 1999
TABLE OF CONTENTS
Page
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ARTICLE I
THE MERGER.............................................................1
Section 1.1 The Merger................................................1
Section 1.2 Effective Time of the Merger..............................2
ARTICLE II
TREATMENT OF SHARES....................................................2
Section 2.1 Effect of Merger on Capital Stock.........................2
Section 2.2 Exchange of Common Stock Certificates.....................3
ARTICLE III
THE CLOSING............................................................5
Section 3.1 Closing...................................................5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF DRI..................................5
Section 4.1 Organization and Qualification............................5
Section 4.2 Subsidiaries..............................................6
Section 4.3 Capitalization............................................6
Section 4.4 Authority; Non-Contravention; Statutory Approvals;
Compliance.......................................................7
Section 4.5 Reports and Financial Statements..........................8
Section 4.6 Absence of Certain Changes or Events......................9
Section 4.7 Registration Statement and Proxy Statement................9
Section 4.8 Employee Matters; ERISA...................................9
Section 4.9 Regulation as a Utility..................................10
Section 4.10 Vote Required............................................10
Section 4.11 Accounting Matters.......................................11
Section 4.12 Opinion of Financial Advisor.............................11
Section 4.13 Ownership of CNG Common Stock............................11
Section 4.14 Anti-Takeover Provisions.................................11
Section 4.15 Nuclear Operations.......................................11
Section 4.16 NRC Actions..............................................12
Section 4.17 Environmental Protection.................................12
Section 4.18 Trading Position Risk Management.........................12
Section 4.19 Litigation...............................................12
Section 4.20 Dividends................................................13
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CNG.................................13
Section 5.1 Organization and Qualification...........................13
Section 5.2 Subsidiaries.............................................13
Section 5.3 Capitalization...........................................14
Section 5.4 Authority; Non-Contravention; Statutory Approvals;
Compliance......................................................14
Section 5.5 Reports and Financial Statements.........................15
Section 5.6 Absence of Certain Changes or Events.....................16
Section 5.7 Registration Statement and Proxy Statement...............16
Section 5.8 Employee Matters; ERISA..................................16
Section 5.9 Regulation as a Utility..................................17
Section 5.10 Vote Required............................................17
Section 5.11 Accounting Matters.......................................17
Section 5.12 Opinion of Financial Advisor.............................17
Section 5.13 Ownership of DRI Common Stock............................18
Section 5.14 CNG Rights Agreement.....................................18
Section 5.15 Anti-Takeover Provisions.................................18
Section 5.16 Environmental Protection.................................18
Section 5.17 Trading Position Risk Management.........................19
Section 5.18 Litigation...............................................19
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER................................19
Section 6.1 Ordinary Course of Business..............................19
Section 6.2 Dividends................................................19
Section 6.3 Issuance of Securities...................................20
Section 6.4 Charter Documents........................................20
Section 6.5 Acquisitions.............................................20
Section 6.6 No Dispositions..........................................21
Section 6.7 Indebtedness.............................................21
Section 6.8 Capital Expenditures.....................................21
Section 6.9 Compensation, Benefits...................................22
Section 6.10 1935 Act.................................................22
Section 6.11 Accounting...............................................22
Section 6.12 Pooling..................................................22
Section 6.13 Tax-Free Status..........................................23
Section 6.14 Discharge of Liabilities.................................23
Section 6.15 Cooperation, Notification................................23
Section 6.16 Rate Matters.............................................23
Section 6.17 Third-Party Consents.....................................23
Section 6.18 No Breach, Etc...........................................24
Section 6.19 Tax-Exempt Status........................................24
Section 6.20 Transition Management....................................24
Section 6.21 Insurance................................................24
Section 6.22 Permits..................................................24
ARTICLE VII
ADDITIONAL AGREEMENTS.................................................25
Section 7.1 Access to Information....................................25
Section 7.2 Joint Proxy Statement and Registration Statement.........25
Section 7.3 Regulatory Matters.......................................26
Section 7.4 Shareholder Approvals....................................27
Section 7.5 Directors' and Officers' Indemnification.................27
Section 7.6 Disclosure Schedules.....................................29
Section 7.7 Public Announcements.....................................29
Section 7.8 Rule 145 Affiliates......................................29
Section 7.9 Certain Employee Agreements..............................30
Section 7.10 Incentive, Stock and Other Plans.........................30
Section 7.11 No Solicitations.........................................31
Section 7.12 DRI Board of Directors...................................32
Section 7.13 Corporate Offices........................................32
Section 7.14 Expenses.................................................32
Section 7.15 Community Support........................................33
Section 7.16 Further Assurances.......................................33
ARTICLE VIII
CONDITIONS............................................................33
Section 8.1 Conditions to Each Party's Obligation
to Effect the Merger............................................33
Section 8.2 Conditions to Obligation of CNG to Effect the Merger.....34
Section 8.3 Conditions to Obligation of DRI to Effect the Merger.....35
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER.....................................36
Section 9.1 Termination..............................................36
Section 9.2 Effect of Termination....................................39
Section 9.3 Termination Fee; Expenses................................39
Section 9.4 Amendment................................................41
Section 9.5 Waiver...................................................41
ARTICLE X
GENERAL PROVISIONS....................................................41
Section 10.1 Non-Survival of Representations, Warranties,
Covenants and Agreements........................................41
Section 10.2 Brokers.................................................41
Section 10.3 Notices.................................................42
Section 10.4 Miscellaneous...........................................43
Section 10.5 Interpretation..........................................43
Section 10.6 Counterparts; Effect....................................43
Section 10.7 Parties in Interest.....................................43
Section 10.8 Specific Performance....................................44
Section 10.9 WAIVER OF JURY TRIAL....................................44
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 19, 1999 (this
"Agreement"), by and between DOMINION RESOURCES, INC., a corporation organized
under the laws of the Commonwealth of Virginia ("DRI"), and CONSOLIDATED NATURAL
GAS COMPANY, a corporation formed under the laws of the State of Delaware
("CNG").
WHEREAS, the respective Boards of Directors of DRI and CNG have
approved the merger of CNG into DRI on the terms and conditions set forth in
this Agreement (such transaction being referred to herein as the "Merger");
WHEREAS, for accounting purposes, it is intended that the Merger
will be accounted for as a pooling of interests in accordance with generally
accepted accounting principles ("GAAP") and applicable regulations of the
Securities and Exchange Commission (the "SEC");
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a transaction described in Section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended (the "Code"), and that the
shareholders of CNG will not recognize any gain or loss as a result thereof,
except with respect to any cash received in lieu of fractional shares; and
NOW THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Pursuant to the terms and subject to the
conditions of this Agreement, at the Effective Time (as defined in Section 1.2),
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. The effects and consequences of the Merger shall be as set forth in
this Agreement and in Section 13.1-721 of the Virginia Stock Corporation Act
(the "VSCA").
Section 1.2 Effective Time of the Merger. On the Closing Date (as
defined in Section 3.1), articles of merger with respect to the Merger, in form
acceptable to DRI and CNG (the "Articles of Merger"), shall be executed and
filed by the parties hereto with the State Corporation Commission of the
Commonwealth of Virginia pursuant to Section 13.1-720 of the VSCA and a
certificate of merger, in form acceptable to DRI and CNG (the "Certificate of
Merger"), shall be executed and filed with the Secretary of State of Delaware
pursuant to Section 252 of the Delaware General Corporation Law. The Merger
shall become effective at the time that DRI and CNG shall agree as specified in
the Articles of Merger and Certificate of Merger (the time the Merger becomes
effective being hereinafter called the "Effective Time").
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of Merger on Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of any holder
of any capital stock of DRI or CNG:
(a) Cancellation of Certain Common Stock. Each share of CNG common
stock, par value $2.75 per share ("CNG Common Stock"), together with any CNG
Rights (as defined in Section 5.14) that are owned by DRI or any of its
subsidiaries (as defined in Section 4.1), shall be cancelled and shall cease to
exist, and no consideration shall be delivered in exchange therefor.
(b) Conversion of CNG Common Stock. Each share of CNG Common Stock
issued and outstanding immediately prior to the Effective Time (other than
shares cancelled pursuant to Section 2.1(a)) shall be converted into the right
to receive 1.52 share(s) (the "Conversion Ratio") of duly authorized, validly
issued, fully paid and nonassessable DRI common stock, no par value ("DRI Common
Stock"). Upon such conversion, each holder of any shares of CNG Common Stock
(whether held in book entry or certificated form) shall cease to have any rights
with respect thereto, except the right to receive the shares of DRI Common Stock
to be issued in consideration therefor (and cash in lieu of fractional shares
pursuant to Section 2.2(d)) upon the conversion of such CNG Common Stock in
accordance with Section 2.2.
(c) DRI Common Stock to Remain Outstanding. Each share of DRI Common
Stock issued and outstanding immediately prior to the Effective Time shall
remain outstanding following the Effective Time.
Section 2.2 Exchange of Common Stock Certificates.
(a) Deposit with Exchange Agent. As soon as practicable after the
Effective Time, DRI shall deposit with a bank, trust company or other agent
selected by DRI (the "Exchange Agent") certificates representing shares of DRI
Common Stock required to effect the conversion of CNG Common Stock into DRI
Common Stock as provided in Section 2.1(b).
(b) Exchange Procedures. As soon as practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record of a certificate or
certificates ("Certificate") which immediately prior to the Effective Time
represented issued and outstanding shares of CNG Common Stock ("CNG Shares"),
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
actual delivery of the Certificates to the Exchange Agent) and (ii) instructions
for use in effecting the exchange of Certificates for certificates representing
shares of DRI Common Stock ("DRI Shares") or for effecting the exchange of
Certificates for DRI Shares to be held in book entry form. As soon as
practicable after the Effective Time, the Exchange Agent shall also mail to each
holder of record of CNG Shares held in book entry form ("Book Entry Shares")
instructions for use in effecting the conversion of said Book Entry Shares into
DRI Shares. Upon delivery of a Certificate to the Exchange Agent for exchange,
together with a duly executed letter of transmittal and such other documents as
the Exchange Agent shall require, or, in the case of Book Entry Shares,
compliance with the instructions for conversion thereof, the holder of such
Certificate or Book Entry Shares shall be entitled to receive in exchange
therefor that number of whole DRI Shares and the amount of cash in lieu of
fractional share interests (pursuant to Section 2.2(d)) which such holder has
the right to receive pursuant to the provisions of this Article II. In the event
of a transfer of ownership of CNG Shares which is not registered in the transfer
records of CNG, the proper number of DRI Shares will be issued to a transferee
if, in addition to the other requirements for conversion, the Exchange Agent
receives all documents required to evidence and effect such transfer and
evidence satisfactory to the Exchange Agent that any applicable stock transfer
taxes have been paid. Until delivered as contemplated by this Section 2.2, each
Certificate, and until converted as contemplated by this Section 2.2, all Book
Entry Shares, shall be deemed at any time after the Effective Time to represent
only the right to receive DRI Shares and cash in lieu of any fractional shares
of DRI Common Stock as contemplated by this Section 2.2.
(c) Distributions with Respect to Unexchanged Shares. No dividends
or other distributions declared or made after the Effective Time with respect to
DRI Shares with a record date after the Effective Time shall be paid to the
holder of any undelivered Certificate or unconverted Book Entry Shares with
respect to the DRI Shares represented thereby, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 2.2(d),
until the holder of record of such Certificate or unconverted Book Entry Shares
(or a transferee as described in Section 2.2(b)) shall have delivered such
Certificate or effected the conversion of such Book Entry Shares as contemplated
in Section 2.2(b). Subject to the effect of unclaimed property, escheat and
other applicable laws, following delivery of any such Certificate or conversion
of any such Book Entry Shares, there shall be paid to the record holder (or
transferee) of the whole DRI Shares issued in exchange or conversion therefor,
without interest, (i) at the time of such delivery, the amount of any cash
payable in lieu of a fractional share of DRI Common Stock to which such holder
(or transferee) is entitled pursuant to Section 2.2(d) and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole DRI Shares 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 delivery or conversion and a
payment date subsequent to delivery or conversion payable with respect to such
whole DRI Shares, as the case may be.
(d) No Fractional Shares. (i) No certificates or scrip representing
fractional shares of DRI Common Stock shall be issued upon the exchange of
Certificates or conversion of Book Entry Shares, and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
shareholder of DRI. All holders of CNG Common Stock who would otherwise be
entitled to receive a fractional share of DRI Common Stock shall receive, in
lieu thereof upon exchange or conversion of its CNG Shares, an amount of cash
determined by multiplying the fraction of a share of DRI Common Stock to which
such shareholder would otherwise be entitled by the closing sales price of DRI
Common Stock as reported under "NYSE Composite Transition Reports," in The Wall
Street Journal on the trading day immediately prior to the Effective Time. From
time to time, DRI shall, subject to Section 2.2(f) hereof, deliver to the
Exchange Agent cash in such amounts as shall be necessary to pay to the holders
of CNG Shares cash in lieu of fractional shares of DRI Common Stock.
(e) Closing of Transfer Books. From and after the Effective Time,
the stock transfer books of CNG with respect to shares of CNG Common Stock
issued and outstanding prior to the Effective Time shall be closed and no
transfer of any such shares shall thereafter be made. If, after the Effective
Time, Certificates are presented to DRI, they shall be cancelled and exchanged
for certificates representing the appropriate number of whole DRI Shares and
cash in lieu of fractional shares of DRI Common Stock as provided in this
Section 2.2.
(f) Termination of Exchange Agent. Any certificates representing DRI
Shares deposited with the Exchange Agent pursuant to Section 2.2(a) and not
exchanged or converted within six (6) months after the Effective Time pursuant
to this Section 2.2 shall be returned by the Exchange Agent to DRI, which shall
thereafter act as Exchange Agent. All funds held by the Exchange Agent for
payment to the holders of undelivered Certificates or unconverted Book Entry
Shares and unclaimed at the end of six (6) months from the Effective Time shall
be remitted to DRI, after which time any holder of undelivered Certificates or
unconverted Book Entry Shares shall look as a general creditor only to DRI for
payment of such funds which may be due to such holder, subject to applicable
law. DRI shall not be liable to any person for such shares or funds delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The closing (the "Closing") of the Merger
shall take place at the offices of LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, 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 4.1 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 4.2 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 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 4.3 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 4.4 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 Merger is 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.
(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 4.5 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 4.6 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 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 4.7 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 Merger (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 Merger and the
prospectus relating to DRI Common Stock to be issued in the Merger (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 4.8 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 4.9 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.
Section 4.10 Vote Required. (a) The approval of the Merger by a
majority of all votes cast by the holders of DRI Common Stock 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 Merger 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 4.11 Accounting Matters. DRI has not, through the date
hereof, taken or agreed to take any action that would prevent DRI from
accounting for the business combination to be effected by the Merger as a
pooling-of-interests in accordance with GAAP and applicable SEC regulations.
Section 4.12 Opinion of Financial Advisor. DRI has received the
opinion of ▇▇▇▇▇▇ Brothers Inc., dated the date hereof, to the effect that, as
of the date hereof, the Conversion Ratio is fair from a financial point of view
to the holders of DRI Common Stock.
Section 4.13 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 4.14 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 Merger or any other transaction
contemplated hereby.
Section 4.15 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 4.16 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 4.17 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 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 4.18 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 4.19 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 4.20 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.
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 5.1 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 articles of incorporation and bylaws of CNG, as in effect
on the date hereof, have been delivered to DRI.
Section 5.2 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 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 5.3 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 5.4 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 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" 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 5.5 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 5.6 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 5.7 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 or 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 Merger, 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 5.8 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 5.9 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 5.10 Vote Required. (a) The approval of the 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
Merger and the other transactions contemplated hereby.
(b) None of the shareholders of CNG are entitled to exercise any
appraisal rights in connection with the CNG Shareholders' Approval.
Section V.11 Accounting Matters. CNG has not, through the date
hereof, taken or agreed to take any action that would prevent CNG from
accounting for the business combination to be effected by the Merger as a
pooling-of-interests in accordance with GAAP and applicable SEC regulations.
Section 5.12 Opinion of Financial Advisor. CNG has received the
opinion of ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated dated the date
hereof, to the effect that, as of the date hereof, the Conversion Ratio 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 5.13 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 5.14 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 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 5.15 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 Merger or any other transaction
contemplated hereby.
Section 5.16 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 5.17 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 5.18 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.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
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:
Section 6.1 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 6.2 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 6.3 Issuance of Securities. 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, 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, (c) the issuance or sale of treasury stock to satisfy the
requirements to use the pooling of interests method of accounting for the
transaction, and (d) 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 6.4 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 6.5 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 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 6.6 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 6.7 Indebtedness. Except as 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 6.8 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 6.9 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 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 6.10 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 6.11 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 6.12 Pooling. DRI and CNG shall use their respective best
efforts, and shall cause each of their respective subsidiaries to use its best
efforts, to take such actions as may be necessary to permit the parties to
account for the Merger, and shall not and shall not permit any of their
respective subsidiaries to, take any actions that would, or would reasonably
likely to, prevent the parties from accounting for the Merger, as a pooling of
interests in accordance with GAAP and applicable SEC regulations.
Section 6.13 Tax-Free Status. Neither DRI nor CNG shall, nor shall
either permit any of its subsidiaries to, take any actions that would, or would
be reasonably likely to, adversely affect the qualification of the Merger as a
transaction described in Section 368(a)(1)(A) of the Code.
Section 6.14 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 6.15 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 6.16 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 Merger.
Section 6.17 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.
Section 6.18 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 6.19 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 6.20 Transition Management. (a) DRI and CNG shall create a
special transition management task force (the "Task Force") to be headed by
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, 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 6.21 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 6.22 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 7.1 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 7.2 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 the Registration Statement and the 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 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 Merger 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
Merger 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 7.3 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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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
Merger, 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 7.4 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
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 7.5 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
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 Merger and shall
continue in full force and effect for a period of not less than six (6) years
from the Effective Time.
Section 7.6 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 7.7 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 7.8 Rule 145 Affiliates. (a) 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 substantially in the form attached
as Exhibit A.
(b) Prior to the Closing Date, DRI shall identify in a letter to CNG
all persons who are at the Closing Date, "affiliates" of DRI, as such term is
used in Rule 145 under the Securities Act. DRI shall use its best efforts to
cause its affiliates to deliver to CNG on or prior to the Closing Date a written
agreement substantially in the form attached as Exhibit B.
Section 7.9 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 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 7.10 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"), at the election of DRI, either (A) (i) DRI and CNG shall
take such action as may be necessary so that, after the Effective Time, such
Stock Plan shall provide for the issuance only of DRI Common Stock and, with
respect to outstanding options and/or awards, provide that the holder thereof
shall be entitled to a number of shares of DRI Common Stock equal to the number
such holder would have received if such option or award had been exercised prior
to the Effective Date with appropriate adjustments to the exercise price and
(ii) DRI shall (x) take all corporate action necessary or appropriate to obtain
shareholder approval with respect to such Stock Plan to the extent such approval
is required for purposes of the Code or other applicable law, or, to the extent
DRI deems it desirable, to enable such Stock Plan to comply with Rule 16b-3
promulgated under the Exchange Act, (y) reserve for issuance under such Stock
Plan or otherwise provide a sufficient number of shares of DRI Common Stock for
delivery upon payment of benefits, grants of awards or exercise of options under
such Stock Plan and (z) as soon as practicable after the Effective Time, file
one or more registration statements under the Securities Act with respect to the
shares of DRI Common Stock subject to such Stock Plan to the extent such filing
is required under applicable law and use its best efforts to maintain the
effectiveness of such registration statement(s) (and the current status of the
prospectuses contained therein or related thereto) so long as such benefits,
grants or awards remain payable or such options remain outstanding, as the case
may be, or (B) DRI and CNG shall use their respective best efforts to take such
action as may be necessary so that, at the Effective Time, all benefits, grants
of awards and options are converted to the right to receive at the Effective
Time a number of shares of DRI Common Stock having a value equal to the fair
value of each such benefit, grant of award or option as determined in good faith
by DRI, and based on the closing sales price of DRI Common Stock as reported
under "NYSE Composit Transaction Reports" in The Wall Street Journal on the day
immediately prior to the Effective Time. With respect to those individuals who
subsequent to the 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 7.11 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 Merger, (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 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 7.12 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 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. 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 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ shall be Vice Chairman of the
DRI Board of Directors. If, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. does not become Chairman of
the DRI Board of Directors pursuant to the preceding sentence, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
shall continue as Chairman of the DRI Board of Directors. If ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇. becomes Chairman of the DRI Board of Directors, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ shall
reassume his position as Chairman of the DRI Board of Directors upon the earlier
of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.'s retirement or August 1, 2000.
Section 7.13 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 7.14 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.
Section 7.15 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 7.16 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 Merger 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 Merger 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 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
Merger. The respective obligations of each party to effect the Merger 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 Merger shall have been issued and continuing in effect, and
the Merger 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 Merger pursuant to Article II shall have been approved for listing on the
NYSE, subject to official notice of issuance.
(e) Pooling. Each of DRI and CNG shall have received letters of its
independent public accountants, one dated the date the Registration Statement is
declared effective and the other dated the Closing Date, in form and substance
reasonably satisfactory to CNG and DRI, respectively, stating that the Merger
will qualify as a pooling-of-interests transaction under GAAP and applicable SEC
regulations.
(f) 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 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 8.2 Conditions to Obligation of CNG to Effect the Merger.
The obligation of CNG to effect the 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.
(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 Merger
will be treated as a non-taxable transaction described in Section 368(a)(1)(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
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 8.3 Conditions to Obligation of DRI to Effect the Merger.
The obligation of DRI to effect the 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 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 Merger
will be treated as a non-taxable transaction described in Section 368(a)(1)(A)
of the Code.
(f) CNG Required Consents. The CNG Required Consents shall have been
obtained.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 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;
(b) 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(f) 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(f) 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
Merger 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 Merger 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 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 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 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 Merger 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 Merger, (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 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 9.2 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.
Section 9.3 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 Merger 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).
(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 9.4 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 9.5 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 10.1 Non-Survival of Representations, Warranties, Covenants
and Agreements. None of the representations, warranties, covenants and
agreements in this Agreement shall survive the Merger, 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.
Section 10.2 Brokers. DRI represents and warrants that, except for
▇▇▇▇▇▇ Brothers Inc., 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 Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of DRI. CNG
represents and warrants that, except for ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
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 Merger or the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of CNG.
Section 10.3 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 mall (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:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President and General Counsel
Consolidated Natural Gas Company
CNG Tower
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to DRI, to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and General Counsel
Dominion Resources, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
McGuire, Woods, Battle & Booth LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Section 10.4 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 10.5 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 10.6 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 10.7 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 10.8 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 10.9 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.
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.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
CONSOLIDATED NATURAL GAS
COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Chairman and Chief Executive
Officer
INDEX OF DEFINED TERMS
Term Page
1935 Act ....................................................................6
affiliate ..................................................................10
Agreement ...................................................................1
Articles of Merger...........................................................2
Atomic Energy Act............................................................8
Book Entry Shares............................................................3
Business Combination........................................................37
Certificate .................................................................3
Certificate of Merger........................................................2
Closing .....................................................................5
Closing Date.................................................................5
CNG .........................................................................1
CNG Budget .................................................................19
CNG Common Stock.............................................................2
CNG Disclosure Schedule.....................................................13
CNG Employee Benefit Plans..................................................16
CNG Financial Statements....................................................15
CNG Material Adverse Effect.................................................13
CNG Required Consents.......................................................14
CNG Required Statutory Approvals............................................15
CNG Rights .................................................................18
CNG Rights Agreement........................................................18
CNG SEC Reports.............................................................15
CNG Shareholders' Approval..................................................17
CNG Shares ..................................................................3
CNG Special Meeting.........................................................27
Code ........................................................................1
Confidentiality Agreement...................................................25
Conversion Ratio.............................................................2
Disclosure Schedules........................................................29
DRI .........................................................................1
DRI Budget .................................................................19
DRI Common Stock.............................................................2
DRI Disclosure Schedule......................................................5
DRI Employee Benefit Plans..................................................10
DRI Financial Statements.....................................................9
DRI Material Adverse Effect..................................................5
DRI Required Consents........................................................7
DRI Required Statutory Approvals.............................................8
DRI SEC Reports..............................................................8
DRI Shareholders' Approval..................................................10
DRI Shares ..................................................................3
DRI Special Meeting.........................................................27
Effective Time...............................................................2
Environmental Laws...........................................................8
ERISA .......................................................................9
Exchange Act.................................................................8
Exchange Agent...............................................................3
FERC ........................................................................8
Final Order ................................................................34
GAAP ........................................................................9
Gas Act ....................................................................15
Gas Policy Act..............................................................15
Governmental Authority.......................................................7
Hazardous Materials..........................................................8
HSR Act ....................................................................26
Indemnified Parties.........................................................27
Indemnified Party...........................................................27
Joint Proxy Statement/Prospectus.............................................9
Joint Proxy/Registration Statement..........................................25
Joint venture................................................................6
Liens .......................................................................6
Merger ......................................................................1
Non-terminating Party.......................................................39
NRC .........................................................................8
NYSE Composite Transition Reports............................................4
Out-of-Pocket Expenses......................................................39
Permits .....................................................................8
Power Act ...................................................................8
Registration Statement.......................................................9
Representatives.............................................................25
SEC .........................................................................1
Securities Act...............................................................8
Shareholder Disapproval.....................................................40
Significant Subsidiary.......................................................6
Stock Plan .................................................................30
Subsidiary ................................................................. 5
subsidiary company..........................................................10
Takeover Proposal...........................................................32
Target Party................................................................40
Task Force .................................................................24
Violation ....................................................................7
VSCA .........................................................................1
EXHIBIT A
[Date]
Dominion Resources, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I have been advised that as of the date hereof, I may be deemed to be
an "affiliate" of Consolidated Natural Gas Company, a Delaware corporation (the
"Company"), as such term (i) is defined for purposes of paragraphs (c) and (d)
of Rule 145 of the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), or (ii) is used in and for purposes
of Accounting Series Releases 130 and 135, as amended, of the Commission.
Pursuant to the terms of the Agreement and Plan of Merger dated as of February
19, 1999, as it may be amended, supplemented or modified from time to time (the
"Merger Agreement"), between the Company and Dominion Resources, Inc., a
Virginia corporation ("DRI"), the Company will be merged into DRI (the
"Merger"). Capitalized terms used herein but not defined herein shall have the
meanings ascribed to such terms in the Merger Agreement.
I further understand that the Merger will be treated for financial
accounting purposes as a "pooling of interests" in accordance with generally
accepted accounting principles and that the Staff of the Commission has issued
certain guidelines that should be followed to ensure the pooling of entities.
I hereby represent and warrant that, since 30 days prior to the closing
and including the date hereof, I have not sold, transferred or otherwise
disposed of any shares of Common Stock, par value $2.75 per share, of the
Company (the "Company Common Stock").
In consideration of the agreements contained herein, DRI's reliance on
this letter in connection with the consummation of the Merger and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, I hereby represent, warrant and agree that (i) I will not make any
sale, transfer or other disposition of Company Common Stock prior to the earlier
of the Effective Time or the termination of the Merger Agreement, (ii) I will
not make any sale, transfer or other disposition of Common Stock, no par value
of DRI (the "DRI Common Stock") received by me pursuant to the Merger until
after such time as results covering at least 30 days of combined operations of
the Company and DRI have been published by DRI, in the form of a quarterly
earnings report, an effective registration statement filed with the Commission,
a report to the Commission on Form 10-K, 10-Q or 8-K, or any other public filing
or announcement which includes such combined results of operations, and (iii) I
will not make any sale, transfer or other disposition of any shares of DRI
Common Stock received by me pursuant to the Merger in violation of the
Securities Act or the rules and regulations thereunder. I have been advised that
the issuance of the shares of DRI Common Stock pursuant to the Merger will have
been registered with the Commission under the Securities Act on a Registration
Statement on Form S-4. I have also been advised, however, that since I may be
deemed to be an affiliate of the Company at the time the Merger is submitted for
a vote of the shareholders of the Company, the DRI Common Stock received by me
may be disposed by me only (i) pursuant to an effective registration under the
Securities Act, (ii) in conformity with the volume and other limitations of Rule
145 promulgated by the Commission under the Securities Act, or (iii) in reliance
upon an exemption from registration that is available under the Securities Act.
I also understand that instructions will be given to DRI's transfer
agent with respect to the DRI Common Stock to be received by me pursuant to the
Merger and that there will be placed on the certificates representing such
shares of DRI Common Stock, or any substitutes therefor, a legend stating in
substance as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, APPLIES AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED
IN COMPLIANCE WITH THE REQUIREMENTS OF RULE 145 OR PURSUANT TO A
REGISTRATION STATEMENT UNDER THAT ACT OR AN EXEMPTION FROM SUCH
REGISTRATION."
It is understood and agreed that the legend set forth above shall be
removed upon surrender of certificates bearing such legend by delivery of
substitute certificates without such legend if I shall have delivered to DRI an
opinion of counsel, in form and substance reasonably satisfactory to DRI, to the
effect that (i) the sale or disposition of the shares represented by the
surrendered certificates may be effected without registration of the offering,
sale and delivery of such shares under the Securities Act, and (ii) the shares
to be so transferred may be publicly offered, sold and delivered by the
transferee thereof without compliance with the registration provisions of the
Securities Act.
I further understand and agree that DRI is under no obligation to
register the sale, transfer or other disposition of the DRI Common Stock by me
or on my behalf under the Securities Act or to take any other action necessary
in order to make compliance with an exemption form such registration available.
Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of the Company as described in the first paragraph
of this letter, or as a waiver of any rights I may have to object to any claim
that I am such an affiliate on or after the date of this letter.
This letter agreement constitutes the complete understanding between
DRI and me concerning the subject matter hereof. Any notice required to be sent
to either party hereunder shall be sent by registered or certified mail, return
receipt requested, using the addresses set forth herein or such other address as
shall be furnished in writing by the parties. This letter agreement shall be
governed by and construed and interpreted in accordance with, the laws of the
State of New York.
If you are in agreement with the foregoing, please so indicate by
signing below and returning a copy of this letter to the undersigned, at which
time this letter shall become a binding agreement between us.
Very truly yours,
-----------------
Name:
Accepted this ___ day
of ________, 19__
DOMINION RESOURCES, INC.
By: ___________________
Name:
Title
EXHIBIT B
[Date]
Consolidated Natural Gas Company
CNG Tower
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
I have been advised that as of the date hereof, I may be deemed to be an
"affiliate" of Dominion Resources, Inc., a Virginia corporation ("DRI"), as such
term (i) is defined for purposes of paragraphs (c) and (d) of Rule 145 of the
Rules and Regulations of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended, or (ii) is used in
and for purposes of Accounting Series Releases 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Agreement and Plan of Merger, dated as
of February 19, 1999, as it may be amended, supplemented or modified from time
to time, between DRI and Consolidated Natural Gas Company ("CNG"), CNG will be
merged with and into DRI (the "Merger"). Capitalized terms used herein but not
defined herein shall have the meanings ascribed to such terms in the Merger
Agreement.
I further understand that the Merger will be treated for financial
accounting purposes as a "pooling of interests" in accordance with generally
accepted accounting principles and that the Staff of the Commission has issued
certain guidelines that should be followed to ensure the pooling of the
entities.
I hereby represent and warrant that, since 30 days prior to the closing and
including the date hereof, I have not sold, transferred or otherwise disposed of
any shares of Common Stock, no par value, of DRI ("DRI Common Stock").
In consideration of the agreements contained herein, CNG's reliance on this
letter in connection with the consummation of the Merger and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, I hereby represent, warrant and agree that I will not make any
sale, transfer, or other disposition of DRI Common Stock until after such time
as results covering at least 30 days of combined operations of DRI and CNG have
been published by DRI, in the form of a quarterly earnings report, an effective
registration statement filed with the Commission, a report to the Commission on
Form 10-K, 10-Q or 8-K, or any other public filing or announcement which
includes such combined results of operations.
Execution of this letter should not be considered an admission on my part
that I am an "affiliate" of DRI as described in the first paragraph of this
letter, or as a waiver of any rights I may have to object to any claim that I am
such an affiliate on or after the date of this letter.
This letter agreement constitutes the complete understanding between the
CNG and me concerning the subject matter hereof. Any notice required to be sent
to either party hereunder shall be sent by registered or certified mail, return
receipt requested, using the addresses set forth herein or such other address as
shall be furnished in writing by the parties. This letter agreement shall be
governed by and construed and interpreted in accordance with, the laws of the
State of New York.
If you are in agreement with the foregoing, please so indicate by signing
below and returning a copy of this letter to the undersigned, at which time this
letter shall become a binding agreement between us.
Very truly yours,
-----------------
Name:
Accepted this ___th day
of _______________, 19__
CONSOLIDATED NATURAL GAS COMPANY
By:_______________________
Name:
Title:
