(LOGO) CTG Resources, Inc. - P.O. BOX 1500 -
100 COLUMBUS BOULEVARD - HARTFORD, CT 06144-1500
(860) 727-3000
December 29, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
CTG Resources, Inc. scheduled to be held on Tuesday, February 23, 1999, at
the office of the Company, 100 Columbus Boulevard, Hartford, Connecticut,
commencing at 10:30 a.m. Your Board of Directors and management look forward
to greeting personally those shareholders able to attend. Parking will be
available.
At the meeting you will be asked to elect three Directors, approve the
1999 Stock Option Plan and ratify the appointment of the Company's
independent public accountants.
You are requested to give prompt attention to these matters, which are
more fully described in the accompanying Proxy Statement. You are urged to
read the Proxy Statement carefully. Your Board of Directors recommends a
vote "FOR" Proposals 1, 2 and 3.
Regardless of the number of shares you own, it is important
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that they be represented and voted at the meeting, whether or
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not you plan to attend. Accordingly, you are requested to
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exercise your vote by (i) signing, dating and mailing the
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enclosed proxy in the postage prepaid return envelope provided
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for your convenience, or (ii) by appointing and directing your
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proxies by telephone in accordance with the instructions on the
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proxy card.
-----------
Your interest and participation in the affairs of the Company are sincerely
appreciated.
Sincerely,
BY /S/ ARTHUR C. MARQUARDT
Arthur C. Marquardt
President and Chief Executive Officer
<PAGE>
(LOGO)
CTG RESOURCES, INC.
P.O. BOX 1500, 100 COLUMBUS BOULEVARD, HARTFORD, CONNECTICUT 06144-1500
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
December 29, 1998
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of CTG Resources, Inc. will be held at
the office of the Company, 100 Columbus Boulevard, Hartford, Connecticut, on
Tuesday, February 23, 1999, at 10:30 a.m., for the following purposes:
1. To elect three Directors;
2. To approve the CTG Resources, Inc. 1999 Stock Option Plan;
3. To ratify the appointment of a firm of independent public
accountants to audit the books and records of the Company for the
fiscal year ending September 30, 1999 and;
4. To transact such other business as may properly come before the
Meeting.
The Board of Directors has fixed the close of business on December 18,
1998 as the record date for the purpose of determining the shareholders who
are entitled to notice of and to vote at the Meeting.
Admission to the Meeting will be by Admission Ticket only. If you are a
shareholder of record or an Employee Savings Plan participant and plan to
attend, please detach your Proxy from your Admission Ticket and present the
ticket for admission to the meeting. If your shares are not registered in
your own name, please advise the shareholder of record (your bank, broker,
etc.) that you wish to attend. That firm will request an Admission Ticket
for you or will provide you with evidence of your ownership that will enable
you to gain admittance to the Meeting.
BY S/ R. L. BABCOCK
Reginald L. Babcock, Vice President,
General Counsel & Secretary
Please fill in, sign, date and mail the accompanying proxy or vote by
telephone following the instructions on the proxy card, even if you expect
to be present in person at the Meeting.
<PAGE>
CTG RESOURCES, INC.
P.O. BOX 1500, 100 COLUMBUS BOULEVARD, HARTFORD, CONNECTICUT
06144-1500
PROXY STATEMENT
INTRODUCTION
At the 1997 Annual Meeting of Shareholders of Connecticut Natural Gas
Corporation ("CNG"), the shareholders of CNG approved and adopted the
Agreement and Plan of Exchange, dated as of December 20, 1996 (the "Exchange
Agreement"), by and between CNG and CTG Resources, Inc. ("CTG" or the
"Company"), then a wholly owned subsidiary of CNG, providing for, among
other things, the exchange (the "Exchange") of each outstanding share of the
common stock, par value $3.125 per share, of CNG ("CNG Common Stock") for
one share of the common stock, without par value, of CTG ("CTG Common
Stock"). The Exchange was consummated as of the close of business on March
31, 1997, and as a result thereof, the common shareholders of CNG became
shareholders of CTG and CNG became a controlled subsidiary of CTG. As used
in this proxy statement, all references to the "Company" shall be deemed to
mean and refer to CNG for all periods prior to the effectiveness of the
Exchange and to CTG and its consolidated subsidiaries for all periods from
and after the effectiveness of the Exchange. All references to the "Common
Stock" of the Company shall be deemed to mean and refer to the CNG Common
Stock and the CTG Common Stock, as appropriate.
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of the
Company for use at the Annual Meeting of Shareholders to be held on February
23, 1999. The proxy, when signed and received by the Secretary or received
by telephone as instructed on the proxy card prior to the meeting, will be
voted unless revoked. Any shareholder giving a proxy has the power to revoke
it at any time prior to voting, by giving written notice of revocation to
the Secretary, submitting a properly executed proxy of later date,
submitting a telephone proxy in accordance with the instructions at a later
date, or attending the meeting and voting in person. A written proxy will be
voted as specified thereon. Unless specifically directed otherwise, all
properly executed written proxies will be voted for the election of
directors and for the ratification of the appointment of the independent
public accountants.
If a shareholder participates in the Company's Dividend Reinvestment
Plan, any shares held in his or her account will be voted in accordance with
the proxy returned by the shareholder unless other instructions are
received.
Only shareholders of record at the close of business on December 18, 1998
will be entitled to vote at the meeting. On that date there were 8,648,029
shares of Common Stock issued and outstanding, the holders of which are
entitled to one vote per share. There is no provision in the Company's
Certificate of Incorporation for cumulative voting.
<PAGE>
Under the applicable provisions of the Connecticut Business Corporation
Act (the "CBCA"), shares entitled to vote as a separate voting group may
take action on a particular matter at the Annual Meeting only if a quorum of
those shares exists with respect to that matter. A majority of the votes
entitled to be cast on the matter by the voting group constitutes a quorum
of that voting group for action on that matter. For this purpose, only
shares of Common Stock held by those present at the Annual Meeting or for
which signed or telephoned proxies are returned will be considered to
be represented at the Annual Meeting. All shares of Common Stock
represented at the Annual Meeting will be counted without regard to
abstentions as to any particular item.
All duly executed or telephoned proxies received prior to the Annual
Meeting will be voted in accordance with the terms of such proxies. Shares
of Common Stock represented by written proxies that are returned signed but
without instructions for voting will be voted as recommended by management.
Shares of Common Stock represented by written proxies that are returned
unsigned or improperly marked will be treated as abstentions for voting
purposes and, in the case of unsigned proxies only, not counted for purposes
of determining a quorum. Abstentions and broker non-votes are not counted
in the tally of shares cast for or against a particular matter.
Assuming the presence of a quorum, the election of directors requires the
affirmative vote of a plurality of the votes cast by the holders of the
outstanding shares of Common Stock. Approval of the 1999 Stock Option Plan
requires the affirmative vote of the majority of the shares present in
person or by proxy at the meeting and entitled to vote. Ratification of the
appointment of Arthur Andersen LLP, and approval of any other matter to be
voted upon at the Annual Meeting is achieved if the votes cast by the
holders of the outstanding shares of Common Stock in favor of the proposal
exceed the votes cast against the proposal.
Any shares represented by broker proxies which are not voted with respect
to any matter will not be counted in determining whether a quorum is present
for consideration of such matter and will not be considered for purposes of
determining the tally of shares cast for or against such matter. Written
proxies marked and telephoned proxies that indicate that a shareholder
wishes to abstain from voting with respect to any matter to be voted upon at
the Annual Meeting will be counted in determining whether a quorum is
present for consideration of such matter, but will not be considered for
purposes of determining the tally of shares cast for or against such matter.
Accordingly, abstentions will have no effect on the voting for the election
of directors or the ratification of independent accountants, but abstentions
will have the effect of a negative vote on the 1999 Stock Option Plan.
The cost of solicitation of proxies will be paid by the Company. In
addition to the solicitation by use of the mail, directors, officers or
regular employees of the Company may solicit proxies personally or by
telephone or electronic means, and the Company may request persons holding
stock for others in their names or in the names of nominees to obtain
proxies from and send proxy material to their principals, and it may
reimburse such persons for their expense in so doing. The Company has
retained the firm of D.F. King & Co., Inc. to aid in the solicitation of
proxies, for which services the Company will pay a fee not exceeding $8,500,
plus out-of-pocket disbursements.
<PAGE>
The Company's Annual Report for the fiscal year ended September 30, 1998
is being mailed together with this Proxy Statement. The proxy and this
Proxy Statement were first mailed to the shareholders on or about December
29, 1998.
ITEM 1
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, and each
class of directors is elected for a three year term. At each Annual Meeting
of Shareholders, directors are elected to succeed those in the class whose
terms are expiring.
The terms of Class II directors are scheduled to expire on the date of
the Annual Meeting. Bessye Bennett, Beverly Hamilton and Harvey Levenson
have been nominated to succeed themselves as Class II directors. If elected,
they will each fill three year terms that expire at the Annual Meeting of
Shareholders to be held in 2002 or when their successors are elected and
qualified.
IT IS INTENDED THAT VOTES WILL BE CAST PURSUANT TO THE ENCLOSED PROXY FOR
THE ELECTION OF THE THREE NOMINEES SET FORTH BELOW UNLESS AUTHORITY TO VOTE
FOR ONE OR MORE OF THE NOMINEES IS WITHHELD BY SUCH PROXY, IN WHICH CASE IT
IS INTENDED THAT VOTES WILL BE CAST FOR THOSE NOMINEES, IF ANY, WITH RESPECT
TO WHOM AUTHORITY HAS NOT BEEN WITHHELD. EACH OF THE NOMINEES IS NOW A
MEMBER OF THE BOARD OF DIRECTORS. IN THE EVENT THAT ANY OF THE NOMINEES
SHOULD BECOME UNABLE OR UNWILLING TO SERVE AS A DIRECTOR, A CONTINGENCY
WHICH MANAGEMENT HAS NO REASON TO EXPECT, IT IS INTENDED THAT THE PROXY WILL
BE VOTED, UNLESS AUTHORITY IS WITHHELD, FOR THE ELECTION OF SUCH PERSON, IF
ANY, AS SHALL BE DESIGNATED BY THE BOARD OF DIRECTORS. THE PROXY CANNOT BE
VOTED FOR MORE THAN THREE NOMINEES.
BIOGRAPHICAL INFORMATION
The biographical information which follows includes the names and
photographs of the nominees for Class II directorships and of incumbent
Class I and Class III directors; the principal current occupation or
employment of each for the past five years, the number of shares of stock of
the Company reported by each as beneficially owned, directly or indirectly,
as of November 2, 1998, the year each person became a director of the
Company, the age of the director, the Board Committee(s) on which each
serves, and the principal directorships held by such persons and other
affiliations.
<PAGE>
NOMINEES FOR CLASS II DIRECTORS FOR TERMS COMMENCING IN 1999 AND EXPIRING
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IN 2002
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<TABLE>
<S> <C>
Name, Age,
Year Elected a
Director,
Shares Owned and
Board Committee
Membership Principal Occupation and Other Information
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Principal
(PHOTO) Law Offices of Bessye W. Bennett
Bloomfield, Connecticut
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BESSYE W. BENNETT, 60 Mrs. Bennett is a 1958 cum laude graduate of Radcliffe
1987 College with a B.A. Degree in Government. She also
937 Common Shares holds an M.A. in Education from Trinity College and a
Audit Committee J.D. from the University of Connecticut Law School.
Committee on She has served in the Law Department of Society for
Directors Savings as Assistant Secretary, Associate Counsel and
Assistant Vice President and from 1983 to 1984 as
General Counsel to the Connecticut State Employees
Retirement Commission. Mrs. Bennett has been engaged
in the private practice of law as a sole practitioner
from 1983 to the present except for the period 1990 to
1995 when she was a partner in the law firm of
Douglas-Bailey and Bennett. From 1985 to 1991, she
served as part-time Deputy Town Attorney for the Town
of Bloomfield and from 1992 to 1993 as Chairman of the
Connecticut Commission on Victim Services. In addition
to her law practice, Mrs. Bennett served as the
Outreach Worker for the Norwich Children First
Initiative from February 1995 to October 1995 and as
Director of the Hartford Children First Initiative
from July 1996 to July 1997. She is a corporator of
the Hartford Public Library and a member of the Board
of Overseers of The Bushnell Hall. She is also a
trustee of Hartford College for Women, Hartford
Symphony Orchestra, the YMCA, the Knox Foundation, All
Aboard! Inc. and Connecticut Womens' Hall of Fame. She
is also a director of the Trust Company of
Connecticut.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Name, Age,
Year Elected a
Director,
Shares Owned and
Board Committee
Membership Principal Occupation and Other Information
-------------------- ------------------------------------------
President
(PHOTO) ARCO Investment Management Company
Los Angeles, California
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BEVERLY L. A homeowner in Connecticut since 1980, Mrs. Hamilton
HAMILTON, 52 is a graduate of the University of Michigan where she
1982 received a B.A. with honors. She also studied at New
1,393 Common Shares York University's Graduate School of Business. Mrs.
Chair, Pension & Hamilton is President of ARCO Investment Management
Investment Committee Company, a subsidiary of Atlantic Richfield, where she
Committee on also has been a Vice President since 1991. She served
Directors as Deputy Comptroller for the City of New York for
four years. Mrs. Hamilton joined United Technologies
in 1980 and served as a Vice President from 1981 to
1987. For the previous five years she was a Vice
President of Morgan Stanley & Co., Inc. Prior to that
she was a Vice President and principal with Auerbach,
Pollak, and Richardson, a trust officer at
Manufacturers Hanover and a research analyst with ITT
Corporation. Mrs. Hamilton is a director of United
Asset Management Corp., the Stanford (University)
Management Company, the American Funds Emerging
Markets Growth Fund, Mass Mutual's Institutional and
Series Funds and The Common Fund.
President, Retired
(PHOTO) Kaman Corporation
Bloomfield, Connecticut
----------------------------------------------------
HARVEY S. Mr. Levenson holds B.A. and J.D. degrees from Drake
LEVENSON, 58 University and an L.L.M. from Georgetown University.
1990 He was an attorney with the Treasury Department,
6,643 Common Shares Washington, D.C. until 1968. From 1968 to 1982, he
Compensation practiced law at the Hartford law firm of Murtha,
Committee Cullina, Richter and Pinney. In 1996, Mr. Levenson
Chair, Executive retired as President and Chief Operating Officer of
Committee Kaman Corporation, which he joined in 1982. Mr.
Levenson is a managing member of Hamleg Enterprises,
L.L.C., a private investment company, and currently
serves as a corporator of St. Francis Hospital and
Medical Center, Hartford Hospital and The Institute
of Living.
</TABLE>
<PAGE>
CLASS III DIRECTORS WHOSE TERMS COMMENCED IN 1997 AND EXPIRE IN
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2000
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<TABLE>
<S> <C>
Name, Age,
Year Elected a
Director,
Shares Owned and
Board Committee
Membership Principal Occupation and Other Information
--------------------- ------------------------------------------
(PHOTO) Chairman and Chief Executive Officer, Retired
CTG Resources, Inc.
Hartford, Connecticut
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VICTOR H.
FRAUENHOFER, 65 Mr. Frauenhofer joined the Company in 1961 and held
1978 various positions until he was elected President in
37,792 Common Shares 1983. He was named to the additional positions of
Executive Committee Chief Executive Officer in 1987 and Chairman in 1991.
Committee on He relinquished the position of Chief Executive
Directors Officer of the Company on January 27, 1998 and retired
from the Company on July 31, 1998. He is a graduate
of Bentley College and Harvard AMP. He is Chairman of
the Board, and a director of Connecticut Natural Gas
Corporation, a subsidiary of the Company. He serves
on the Board of Directors of Spencer Turbine Company.
He is a past chairman of the New England Gas
Association and a past member of the Board of
Directors of the American Gas Association.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Name, Age,
Year Elected a
Director,
Shares Owned and
Board Committee
Membership Principal Occupation and Other Information
-------------------- ------------------------------------------
President and Chief Executive Officer
(PHOTO) CTG Resources, Inc.
Hartford, Connecticut
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ARTHUR C. Mr. Marquardt joined the Company as President and
MARQUARDT, 51 Chief Operating Officer of CTG Resources, Inc. and its
1996 subsidiaries on December 1, 1996 and became Chief
11,084 Common Shares Executive Officer on January 27, 1998. He is a
director of each of the Company's subsidiaries. From
1992 until he joined the Company in 1996, he was
Senior Vice President at the Long Island Lighting
Company's Gas Business Unit. Mr. Marquardt has had
extensive and varied business experience at Combustion
Engineering, Inc., General Electric Company, Quadrex
Corporation and Pacific Nuclear Systems, Inc. where he
was President and Chief Operating Officer. He serves
as Director of the Hartford Ballet, the Hartford
Chamber of Commerce, the Hartford Downtown Council,
Connecticut Capitol Region Growth Council, New England
Gas Association and Hartford Health Committee. He is
a member of the Millennium Management Committee and a
corporator of Hartford Hospital.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Name, Age,
Year Elected a
Director,
Shares Owned and
Board Committee
Membership Principal Occupation and Other Information
-------------------- ------------------------------------------
President and Chief Executive Officer
New Britain General Hospital
(PHOTO) New Britain, Connecticut
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Mr. Tanner is a graduate of the University of Rhode
LAURENCE A. Island and Yale University where he received a
TANNER, 52 Master's degree. Mr. Tanner joined New Britain General
1993 Hospital and its affiliated corporations as President
2,058 Common Shares and Chief Executive Officer in 1987. He also serves as
Compensation President and Chief Executive Officer of the Central
Committee Connecticut Health Alliance, which is a holding
Pension & Investment company for New Britain General Hospital and several
Committee affiliated corporations. Prior to joining New Britain
General Hospital, he was the President and Chief
Executive Officer of Bristol Hospital. Mr. Tanner is a
past Chairman of the Association for the Advancement
of Medical Instrumentation, a national organization
located in Washington, D.C. In addition, he is a
director of the New Britain Chamber of Commerce, the
Voluntary Hospitals of America, Southern New England
Chapter and the Connecticut Hospital Association. He
is a corporator of the New Britain/Berlin YMCA, The
Hospital for Special Care, the Connecticut Children's
Medical Center and the Klingberg Family Center and a
trustee of the Jerome Home of New Britain.
</TABLE>
<PAGE>
CLASS I DIRECTORS WHOSE TERMS COMMENCED IN 1998 AND EXPIRE IN 2001.
-------------------------------------------------------------------
<TABLE>
<S> <C>
Name, Age,
Year Elected a
Director,
Shares Owned and
Board Committee
Membership Principal Occupation and Other Information
-------------------- ------------------------------------------
(PHOTO) President and Chief Executive Officer, Retired
Ensign-Bickford Industries, Inc.
Simsbury, Connecticut
----------------------------------------------------
HERMAN J. FONTEYNE, 59
1993 Mr. Fonteyne received his B.S. Degree in Chemical
2,948 Common Shares Sciences from Louvain University in Belgium. After
Chair, Audit Committee serving in the Belgian Army he started his career with
Compensation Committee UCB/Fabelta in their textile manufacturing group. In
1966, he joined Monsanto in Europe where he held
numerous positions in both the Europe/Africa and
United States operations before becoming Managing
Director of Monsanto Agricultural Products Company and
Corporate Vice President. Mr. Fonteyne joined Ensign-
Bickford Industries Inc. in 1982 as its President and
Chief Executive Officer. He retired from Ensign-
Bickford Industries, Inc. in October 1998. He
currently serves on the World Affairs Council Board,
AMA General Management Council, the Board of Junior
Achievement of North Central Connecticut and the
Executive Council of the Conference Board.
(PHOTO) Principal, Mullane Enterprises
West Hartford, Connecticut
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DENIS F. MULLANE, 68 Mr. Mullane served four years with the U.S. Army in
1973 Germany following his graduation from the U.S. Military
2,202 Common Shares Academy at West Point. In 1994, Mr. Mullane retired as
Chair, Committee on Chairman after a 38 year career with Connecticut Mutual
Directors Life. He joined Connecticut Mutual in 1956 as an agent
Executive Committee and became its President in 1976 and Chief Executive
Officer in 1983. He has been active in community and
insurance industry affairs throughout his career. Mr.
Mullane is currently active with St. Francis Hospital
and Medical Center, The American Leadership Forum, the
West Point Association of Graduates and the American
College, Bryn Mawr, Pennsylvania. Mullane Enterprises
provides advice to its clients about retirement, estate
planning and charitable giving.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Name, Age,
Year Elected a
Director,
Shares Owned and
Board Committee
Membership Principal Occupation and Other Information
-------------------- ------------------------------------------
(PHOTO) Corporate Advisor
West Hartford, Connecticut
------------------------------------------------------
RICHARD J. SHIMA, 59 Mr. Shima is a graduate of Harvard University. He
1987 served as an officer in the U.S. Navy. He is a member
8,614 Common Shares of the American Academy of Actuaries, a trustee of
Executive Committee Saint Joseph College and a director of Hartford
Chair, Compensation Hospital and the Greater Hartford YMCA. He serves as a
Committee director of Enhance Financial Services Group, Inc.,
Associated Electric & Gas Insurance Services, Ltd.
(AEGIS), The Trust Company of Connecticut and the
Evergreen Mutual Funds. Mr. Shima joined Travelers
Companies in 1961 and held several positions in
corporate accounting and finance. He became Executive
Vice President for all casualty-property business in
1980, Executive Vice President and Chief Investment
Officer in 1985, and served as Vice Chairman and Chief
Investment Officer until 1991.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Name, Age,
Year Elected a
Director,
Shares Owned and
Board Committee
Membership Principal Occupation and Other Information
-------------------- ------------------------------------------
(PHOTO) Principal
Tomasso Brothers, Inc.
New Britain, Connecticut
MICHAEL W. TOMASSO, 45 ----------------------------------------------
1996
1,720 Common Shares Mr. Tomasso holds a B.A. degree from Tufts University
Pension & Investment and an M.B.A. from Babson College. Prior to his
Committee joining Tomasso Brothers in 1993, Mr. Tomasso was
Audit Committee President, CEO and a director of Geodyne Resources,
Inc. in Houston, Texas, then an affiliate of
PaineWebber, Inc. and traded on the American Stock
Exchange. Prior to joining Geodyne he was Executive
Vice President of Snyder Exploration Company. In
this position he was involved in the natural gas and
oil acquisition, development and production
businesses. He was also a member of the Board of
Directors of PaineWebber Properties. Mr. Tomasso is
on the Board of Directors of CennConn Services, the
venture capital branch of New Britain General
Hospital. He is a corporator of New Britain General
Hospital, the American Savings Bank, the Boys' and
Girls' Club of New Britain and the New Britain YMCA.
He is also a member of the Steering Committee of
Central Connecticut State University's Institute of
Industrial and Engineering Technology and an Overseer
of The Bushnell Hall.
</TABLE>
The indicated shares include shares held by spouses, children and
relatives sharing a director's home as to which beneficial ownership has
been disclaimed and in the case of Mr. Marquardt, shares held for his
account in the Company's Employee Savings Plan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors as well as persons who own more
than 10 percent of a registered class of the Company's equity securities, to
file reports of ownership and changes of ownership with the Securities and
Exchange Commission and the New York Stock Exchange. Based solely on the
Company's review of the copies of such forms received or written
representations from certain reporting persons that no reporting was
required, the Company believes during fiscal year 1998 all filing
requirements were met.
<PAGE>
BOARD COMMITTEES
The Board of Directors has an Audit Committee, a Compensation Committee,
an Executive Committee, a Pension and Investment Committee and a nominating
committee known as the Committee on Directors.
Audit Committee members are Mr. Fonteyne, Chair, Mrs. Bennett and Mr.
Tomasso. This Committee recommends to the Board of Directors a firm of
independent public accountants to audit the books and accounts of the
Company. The Committee reviews the reports prepared by the independent
public accountants and recommends to the Board any actions deemed
appropriate in connection with the reports. The Company's director of
internal audit reports annually to the Committee on internal auditing
activities and is authorized to report directly to the Committee more
frequently should the need arise. The Audit Committee held three meetings
during the most recent fiscal year.
For fiscal year 1998 Compensation Committee members were Mr. Shima,
Chair, and Messrs. Levenson, Fonteyne and Tanner. The Committee establishes
salaries and benefits for all officers of the Company and its subsidiaries,
subject to Board approval. The Committee reviews all compensation and
benefit programs offered by the Company and its subsidiaries. The
Compensation Committee met three times during the most recent fiscal year.
Executive Committee members are Mr. Levenson, Chair, and Messrs. Shima,
Frauenhofer and Mullane. Pursuant to the Bylaws, the Executive Committee
has charge of all matters which may be referred to it by the Board of
Directors and generally has oversight and authority with regard to all
business of the Company when the Board of Directors is not in session;
except that it may not: (i) authorize distributions; (ii) approve or propose
to shareholders action for which Connecticut law requires shareholder
approval; (iii) fill vacancies on the Board of Directors or any Board
committee; (iv) amend the Certificate of Incorporation when the Board of
Directors is permitted to do so without shareholder approval; (v) adopt,
amend or repeal the Bylaws; (vi) approve a plan of merger not requiring
shareholder approval; (vii) authorize or approve reacquisition of shares of
Company stock, except according to a formula or method prescribed by the
Board; or (viii) authorize or approve the issuance or sale or contract for
sale of shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares unless authorized
by the Board of Directors with specifically prescribed limits. The
Executive Committee met twice during the most recent fiscal year.
The Pension and Investment Committee is composed of Mrs. Hamilton, Chair,
and Messrs. Tanner and Tomasso. The Pension and Investment Committee
oversees the financial management of all qualified and non-qualified plans
of deferred compensation, trusts relating to such plans, and similar
arrangements sponsored by the Company. The Committee recommends
contributions and amendments to such plans and has the authority to select,
remove, review the performance of, and allocate assets among managers,
trustees, insurance companies and other financial advisors as necessary to
fully discharge its duties. The Pension and Investment Committee met four
times during fiscal year 1998.
<PAGE>
The Committee on Directors is composed of Mr. Mullane, Chair, Mrs.
Bennett, Mrs. Hamilton and Mr. Frauenhofer. This Committee considers
candidates for vacancies on the Board of Directors, including written
shareholder recommendations, and recommends nominees to the Board of
Directors when the need arises. The Company's Bylaws provide that in order
for a shareholder to nominate a candidate for election as a director of the
Company, a shareholder must provide written notice to the Secretary of the
Company of such shareholder's intention to so nominate a candidate not less
than seventy days nor no more than ninety days prior to the Annual Meeting
of Shareholders (See "2000 Annual Meeting - Shareholder Proposals" below).
The Committee on Directors met four times during fiscal year 1998.
During the 1998 fiscal year the Board of Directors held eight meetings
and there were fourteen committee meetings. All directors attended at least
75 percent of the aggregate number of meetings of the Board and committees
on which they serve.
COMPENSATION OF DIRECTORS
For the first two quarters of the 1998 fiscal year, the directors' annual
retainer cash fee was $11,000 plus $800 for each Board or committee meeting
attended. A chairperson of a committee received $850 for each committee
meeting chaired in lieu of $800. Effective April 1, 1998, the directors
annual retainer was set at $10,000 in cash and 200 shares of Common Stock of
the Company. Meeting fees were not changed. A plan of deferred
compensation for services as a director is made available to directors. No
director who also is an employee of the Company receives any fees or Common
Stock of the Company for service on the Board.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Policy
The Compensation Committee's compensation program for officers of the
Company and its subsidiaries, including the Chief Executive Officer, is
designed to relate total compensation to corporate performance. Such
compensation is comprised of base salary and distributions pursuant to the
Company's Annual Incentive Plan and the Executive Restricted Stock Plan
described below. As a result, a significant percentage of an officer's total
compensation is dependent upon corporate financial performance. The program
offers total compensation opportunities which are competitive with other
leading gas utilities and which enable the Company to compete for and
recruit executive talent critical to the Company's long term success.
1998 Executive Compensation
The first component of each officer's compensation, including the Chief
Executive Officer, Mr. Marquardt, is base salary. To determine base
salaries, the Committee chiefly relies upon data for executives in similar
positions in comparable, or peer group, companies and selects as a target
the average salary of this group. Base salaries are targeted to the average
level of industry peers in recognition that the potential for additional
compensation offered by the Annual Incentive Plan and Executive Restricted
Stock Plan provides incentive to improve corporate performance and increase
shareholder value. The companies which comprise the industry peer group
generally used by the Committee are listed below in the discussion under
Corporate Performance Graph.
<PAGE>
Under the Annual Incentive Plan, cash awards are made to participants
based upon the performance of the Company in the prior fiscal year. Plan
participants are eligible for awards that are targeted amounts, stated as
percentages of salaries that range from 5 to 30 percent. The performance of
the Company in achieving specified return-on-equity goals for the regulated
and non-regulated operations, and a specified earnings-per-share goal for
consolidated operations is measured at year-end on a scale from 0 to 100
percent. This result is then applied to each officer's targeted award to
determine the actual award. Using these criteria, the overall performance
ratings for awards in 1998 with respect to performance in 1997 were below
the minimum requirements, and thus, no awards were made.
The Executive Restricted Stock Plan promotes the achievement of long term
corporate goals by providing key employees an opportunity to achieve a
greater ownership interest in the Company. Under the program, 200,000 shares
of the Common Stock of the Company have been reserved for issuance in the
form of restricted stock awards to principal officers and other key
personnel of the Company who are designated by the Board of Directors as
being eligible to participate. The vesting of all restricted share awards
under the plan is contingent upon the "total return" to shareholders over
multi-year periods as compared to a peer group of 18 gas companies whose
identities are listed below under Corporate Performance Graph. Total return
is comprised of changes in average value of the Common Stock plus dividends.
Vesting of such awards is also contingent upon continued employment. A total
of 25,520 shares were awarded to 12 individuals, effective October 1994 and
another 41,800 shares were awarded to 11 individuals effective October 1996.
Company's Performance and CEO Compensation
The foregoing principles and plans were used by the Committee and the
Board of Directors to determine Mr. Marquardt's 1998 annual compensation, as
well as compensation levels of the Company's other officers. Accordingly,
Mr. Marquardt's total compensation was determined with reference to
compensation paid by peer companies, the Company's financial performance in
1997, and the Committee's overall assessment of his individual performance,
including his efforts to diversify the Company's earnings base.
Limitation on Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended,
generally denies a publicly held corporation, such as the Company, a federal
income tax deduction for compensation in excess of $1 million per year paid
or accrued for each of its chief executive officer and four other highly
compensated executive officers. Certain "performance based" compensation is
not subject to the limitation of deductibility provided that certain
shareholder approval and independent director requirements are met.
<PAGE>
The total compensation paid or payable to each of the Company's executive
officers does not exceed $1 million per year. Therefore, the Committee does
not believe that the limitation on deductibility of executive compensation
is currently material. The Committee will continue to review the situation
in light of future events with the objective of achieving deductibility to
the extent appropriate.
Compensation Committee
Richard J. Shima, Chair
Harvey S. Levenson
Laurence A. Tanner
Herman J. Fonteyne
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As set forth above, the members of the Compensation Committee for fiscal
year 1998 were Messrs. Shima, Chair, Levenson, Fonteyne and Tanner. All
four members are non-employee directors and, except as set forth below, none
has any direct or indirect material interest in or relationship with the
Company outside of his position as director.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As part of the Company's commercial and industrial marketing program, the
Company loaned $500,000 to New Britain General Hospital in March, 1994.
Laurence Tanner is the President and Chief Executive Officer of the hospital
and a director of the Company. The proceeds of the loan were used to
purchase and install gas air conditioning equipment. The loan was to be
repayable over a five year term at 7.5 percent interest, however a portion
of the interest payment was returned to the hospital on a quarterly basis.
The foregoing terms are substantially similar to other transactions the
Company has entered into with other large gas customers. The debt was paid
in full on February 18, 1998.
To the Company's knowledge, there were no other interrelationships
involving either members of the Compensation Committee or other directors of
the Company requiring disclosure in this Proxy Statement.
SUMMARY EXECUTIVE COMPENSATION
The following table provides certain information relating to the
compensation of the two Chief Executive Officers of the company who held
that office during fiscal year 1998 and its four other highly compensated
executive officers for fiscal years 1998, 1997 and 1996.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
<S> <C> <C> <C> <C> <C> <C>
Other All
Annual LTIP Other
Fiscal Salary Bonus Comp. Payouts Comp.
Name and Principal Year ($)(a) ($) ($)(b) ($)(c) ($)(d)
Position
Victor H. Frauenhofer* 1998 285,333 0 60,590 198,990 83,500
Chairman, Chief 1997 329,967 70,036 59,095 0 114,678
Executive Officer, 1996 318,000 40,510 5,531 48,603 57,212
Retired
Arthur C. Marquardt** 1998 278,745 0 0 0 172,172
President and Chief 1997 228,551 76,731 0 0 14,953
Executive Officer 1996 0 0 0 0 0
James P. Bolduc 1998 185,833 37,850 0 0 76,297
Executive Vice 1997 180,333 64,323 0 0 63,207
President
and Chief Financial 1996 150,350 15,961 293 11,286 18,692
Officer
Anthony C. Mirabella 1998 146,250 11,355 13,988 0 42,330
Vice President- 1997 142,250 20,220 13,142 0 34,996
Operations
and Chief Engineer 1996 137,833 12,137 545 10,109 17,175
Reginald L. Babcock 1998 138,000 0 0 0 46,158
Vice President, General 1997 137,267 19,506 0 0 45,088
Counsel and
Secretary 1996 132,850 8,463 515 19,224 17,699
James P. Laurito*** 1998 141,803 20,000 0 0 13,663
Vice President 1997 0 0 0 0 0
Business Development 1996 0 0 0 0 0
</TABLE>
* Mr. Frauenhofer relinquished the title of Chief Executive Officer of
the Company on January 27, 1998 and retired from the Company July 31,
1998.
** Mr. Marquardt joined the Company during fiscal year 1997. Therefore,
information is not available for fiscal year 1996. He was elected Chief
Executive Officer on January 27, 1998.
*** Mr. Laurito joined the Company on September 15, 1997. Therefore,
information is not available for fiscal years 1996 and 1997.
<PAGE>
a) For fiscal year 1998, the amount reported in this column includes
$41,812.50 deferred at the election of Mr. Marquardt.
b) Represents amount reimbursed to the officer by the Company for the
payment of taxes resulting from such officers' participation in the
Executive Life Insurance Program.
c) For fiscal year 1998 amounts reported in this column represent the
value of restricted stock awards that vested during fiscal 1998
pursuant to the Executive Restricted Stock Plan (less unvested
dividends previously reported) calculated by the closing share
price of $23.1875 on July 31, 1998, the date of vesting. The number
and value of aggregate restricted stock holdings including
dividends reinvested as of September 30, 1998 for each of the
listed officers was as follows: Mr. Frauenhofer 0 shares, $0 value;
Mr. Marquardt 10,675 shares, $258,207 value; Mr. Bolduc 8,605
shares, $208,141 value; Mr. Mirabella 4,900 shares, $118,513 value;
Mr. Babcock 4,727 shares, $114,336 value; Mr. Laurito 0 shares, $0
value. Values are calculated based on the share price of $24.1875
on September 30, 1998, however, a portion of these restricted stock
shares were forfeited pursuant to the performance features of the
Executive Restricted Stock Plan on October 1, 1998. The total
aggregate holdings (including restricted stock shares) of each of
the listed officers as of November 2, 1998 is listed on page 19
below in the table listing beneficial ownership of Company stock.
d) For fiscal year 1998 amounts reported in this column consist of the
following: for Mr. Frauenhofer $8,385 - unvested dividends earned
on restricted stock as of September 30, 1998, $8,941 - 401(k) Plan,
$55,689 - Executive Life Insurance Plan, $10,485 - Deferred
Compensation Plan B; for Mr. Marquardt $26,007 - unvested
dividends earned on restricted stock as of September 30, 1998,
$9,779 - 401(k) Plan, $130,036 - Executive Life Insurance plan,
$197 - Deferred Compensation Plan B, $6,153 - imputed income from
interest-free advances for relocation expenses for period March 3,
1998 to October 19, 1998 when all advances repaid; for Mr. Bolduc
$25,526 - unvested dividends earned on restricted stock as of
September 30, 1998, $7,408 - 401(k) Plan, $42,356 - Executive Life
Insurance Plan, $1,007 - Deferred Compensation Plan B; for Mr.
Mirabella $15,571 - unvested dividends earned on restricted stock
as of September 30, 1998, $7,859 - 401(k) Plan, $18,900 - Executive
Life Insurance Plan; for Mr. Babcock $14,925 - unvested dividends
earned on restricted stock as of September 30, 1998, $6,210 -
401(k) Plan, $25,023 - Executive Life Insurance Plan; for Mr.
Laurito $13,663 - Executive Life Insurance Plan.
The Executive Life Insurance Program (split dollar life insurance) is
available to officers and other key employees in conjunction with the
group term life insurance generally provided to salaried employees.
Under the program, the Company pays the entire amount of the premiums
due on the policies but is reimbursed for the aggregate amount of all
such premiums out of the proceeds of the policies upon the death of
the covered executives. The amounts set forth above represent the full
amount of the annual premium paid on behalf of the named executive
officers.
<PAGE>
For executives who were over the age of 52 at the inception of the
program, the program provides that the Company will continue to pay
the premiums for a fixed period of ten years from the inception of the
policies which, in the case of certain officers over the age of 52,
means that the Company will pay the premiums for some period of time
after the regularly scheduled retirement date of the officer. Of the
named executive officers shown in the table, only Messrs. Frauenhofer
and Mirabella were over the age of 52 at the inception of their
policies. In fiscal year 1997, the Company changed the methodology
used to report the split dollar information included in the proxy
statement due to changes that were made in the overall Executive Life
Insurance Program which insure that the Company will be reimbursed for
aggregate premiums paid.
CHANGE OF CONTROL
The Company has entered into Change of Control Employment Agreements
with its Chief Executive Officer, Mr. Marquardt and seven other officers
of the Company. The Agreements become effective upon a Change of
Control (as defined therein) and provide that for a period of three
years following a Change of Control, in the event of termination of a
covered executive's employment without cause or for good reason by the
executive, the covered executive is entitled to a lump sum severance
payment of between 2 and 3 times his or her annual salary and annual
bonus, together with three years pension credit and continued welfare
benefits. The Agreements also provide for an additional payment to make
the executives whole for any excise taxes imposed by Section 4999 of the
Internal Revenue Code on payments made to them that are contingent on a
Change of Control.
LONG TERM INCENTIVE PLAN
The Executive Restricted Stock Plan provides long term incentives to
officers and other key employees of the Company. No long term incentive
awards were granted during fiscal year 1998 to the officers named in the
Summary Compensation Table.
RETIREMENT PLANS
The Company maintains two noncontributory defined benefit retirement
plans which provide benefits for certain employees (except for employees
covered by certain collective bargaining agreements) who have completed
one year of continuous service and have met certain age requirements.
One such plan is qualified under the applicable provisions of the
Internal Revenue Code (the "Pension Plan"), and the other is a
nonqualified supplemental Officers Retirement Plan (the "Officers
Retirement Plan").
<PAGE>
Under the Pension Plan, retirement benefits are computed by
multiplying the average of the employee's five highest years of annual
pensionable earnings out of the last 15 by a specified percentage
accrual based on years of credited service. Benefits accrue at 2 percent
per year of service up to 30 years of service and thereafter an
additional 1 percent per year up to 35 years for a maximum accrual of 65
percent. Benefits paid under the Pension Plan are offset by a portion of
the employee's social security benefits. The plan provides for several
optional forms of benefit payments, including a straight life annuity,
various joint and survivor options, and a continuous and certain benefit
option. Employees are fully vested under the Pension Plan after five
years of continuous service with the Company.
The Officers' Retirement Plan operates in conjunction with and as a
supplement to the Pension Plan. The benefits payable under the Officers
Retirement Plan are calculated as continuous and certain benefits for
unmarried individuals, and as joint and survivor benefits for married
individuals. Benefits paid under the Officers Retirement Plan are based
on the highest rate of annual base salary paid to the officer at any
time throughout his or her career. For purposes of the Officers
Retirement Plan, the salary upon which benefits are based excludes
compensation received pursuant to the Annual Incentive Plan, which
amounts are reflected in the bonus category of the Summary Compensation
Table above. An officer is eligible to receive 60 percent of base salary
at age 60 and for officers with more than 25 years of service there is
an additional 1 percent accrual for each year up to 30 for a maximum
accrual of 65 percent. Such benefits are offset by 50 percent of social
security benefits payable to each participant, and by the benefits
computed under all other defined benefit pension plans to which the
officer is entitled from the Company or from previous employment. Also,
no officer's benefit (when combined with benefits under the Pension
Plan) will be less than the benefit that would be received under the
Pension Plan formula as determined without regard to the application of
any Internal Revenue Service limitations on compensation or benefits
payable from a qualified plan in determining the benefit level. In the
case of any officer who has been employed by the Company for less than
fifteen years at the time of retirement, any benefits under the Officers
Retirement Plan are adjusted in proportion that such officer's years of
service are to fifteen.
The credited years of service as of September 30, 1998, for the six
individuals named in the Summary Compensation Table are as follows: Mr.
Marquardt, 2 years; Mr. Bolduc, 30 years; Mr. Mirabella, 27 years; Mr.
Babcock, 19 years; and Mr. Laurito, 1 year. The estimated annual
benefits payable upon retirement under the plans are as follows: Mr.
Marquardt, $163,575; Mr. Bolduc, $109,903; Mr. Mirabella, $87,692; Mr.
Babcock, $77,267; Mr. Laurito $66,051. Mr. Frauenhofer retired from the
Company in July, 1998 and his annual retirement benefit is $211,860.
<PAGE>
CORPORATE PERFORMANCE GRAPH
The following graph compares the total shareholder returns produced by
the Company over the last five fiscal years to the Standard & Poor's 500
Stock Index ("S & P 500") and the "CTG Peer Group". The CTG Peer Group
consists of the following companies: Atmos Energy Corporation, Bay State
Gas Company, Colonial Gas Company, Connecticut Energy Corporation,
Energen Corporation, Indiana Energy, Inc., Laclede Gas Company, New
Jersey Resources Corporation, Northwest Natural Gas Company, NUI
Corporation, Pennsylvania Enterprises, Piedmont Natural Gas, Inc.,
Providence Energy Corporation, Public Service Company of North Carolina,
Inc., South Jersey Industries, Inc., SEMCO, Southern Union Company and
Yankee Energy Systems, Inc. Total return values for the S & P 500, the
CTG Peer Group and the Company were calculated based on cumulative
total return values assuming reinvestment of dividends.
The CTG Peer Group is the same group generally used by the
Compensation Committee in its analysis and evaluation of employee
compensation.
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG CTG RESOURCES, INC., THE S & P 500 INDEX
AND THE CTG PEER GROUP INDEX
Cumulative Total Return
-----------------------
<S> <C> <C> <C> <C> <C> <C>
9/93 9/94 9/95 9/96 9/97 9/98
CTG Resources, Inc. 100.0 77.85 77.86 91.01 92.74 101.10
Peer Group 100.0 87.12 93.59 113.36 134.66 154.79
S & P 500 100.0 103.69 134.53 161.89 227.37 247.93
</TABLE>
*$100 invested on 9/30/93 in stock or index - including reinvestment of
dividends. Fiscal year ending September 30.
<PAGE>
OWNERSHIP OF COMPANY STOCK
The following shows Common Stock beneficially owned by each of the named
officers listed in the Summary Compensation Table above and the
beneficial ownership of all directors and executive officers as a group
as of November 2, 1998.
Amount
Beneficially
Title of Class Name of Beneficial Owner Owned*
Common Stock Victor H. Frauenhofer 37,792
Common Stock Arthur C. Marquardt 11,084
Common Stock James P. Bolduc 14,505
Common Stock Anthony C. Mirabella 13,505
Common Stock Reginald L. Babcock 9,292
Common Stock James P. Laurito -0-
Amount Beneficially
Owned by all
Title of Class Executive Officers
and Directors
Common Stock 117,000
* No officer or director owns more than 1 percent of any class of
Company stock. The percentage of shares owned by all officers and
directors as a group is 1.4 percent of the Company's Common Stock.
The Company is aware of no shareholders who owned beneficially more than
5 percent of a class of its voting securities on November 2, 1998.
<PAGE>
ITEM 2 --
APPROVAL OF THE 1999 STOCK OPTION PLAN
At the Annual Meeting, the shareholders will be asked to approve the
CTG Resources, Inc. 1999 Stock Option Plan (the "Option Plan").
The Option Plan is intended to supplement the Company's Executive
Restricted Stock Plan. The Board of Directors believes that the Option
Plan is necessary to enable it to maintain an adequate equity incentive
program.
The Board adopted the Option Plan on December 18, 1998, (the
"Effective Date"). Because competition for highly qualified individuals
in the Company's industry is intense, the Board of Directors believes
that to successfully attract the best candidates, the Company must
continue to offer a competitive equity incentive program. It expects
that the Option Plan will be an important factor in attracting and
retaining the high caliber employees, directors and consultants
essential to the success of the Company and will serve an important role
in motivating employees to contribute to the Company's growth and
profitability. The proposed Option Plan is intended to ensure that the
Company will continue to have available a reasonable number of shares to
meet these goals.
In addition to enabling the Company to continue to provide necessary
incentives, the Option Plan is designed to preserve the Company's
ability to deduct in full for federal income tax purposes the
compensation recognized by its executive officers in connection with
options granted under the plan. Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), sets a limit of $1 million on the
amount of compensation paid to each of the Company's chief executive
officer and four other most highly compensated executive officers that
the Company may deduct as an expense for federal income tax purposes in
any fiscal year. In combination with other types of compensation
received by an executive officer, it is possible that option-related
compensation could cause his or her total compensation to exceed this
limit in a particular year. However, Section 162(m) of the Code exempts
certain "performance-based compensation" from this limit. To permit
compensation attributable to options granted under the Option Plan to
qualify as performance-based compensation, the Option Plan limits the
number of shares for which options may be granted in any fiscal year to
any employee, including the Company's executive officers, to 50,000.
This grant limit is subject to appropriate adjustment in the event of
certain changes in the Company's capital structure.
SUMMARY OF THE OPTION PLAN
The following summary of the Option Plan is qualified in its entirety
by the specific language of the Option Plan, a copy of which is attached
hereto as Exhibit A.
<PAGE>
GENERAL. The purpose of the Option Plan is to advance the interests
of the Company and its shareholders by providing an incentive to
attract, retain and reward the Company's employees, directors and
consultants and by motivating such persons to contribute to the
Company's growth and profitability. The Option Plan provides for the
grant to employees of incentive stock options within the meaning of
section 422 of the Code and the grant to employees, directors and
consultants of nonstatutory stock options.
SHARES SUBJECT TO PLAN. The maximum number of the authorized but
unissued or reacquired shares of Common Stock of the Company which may
be issued under the Option Plan is 500,000. However, the number of
shares available for issuance under the Option Plan, at any time, is
reduced by the number of shares which are issued upon exercise of such
options. Furthermore, in order to comply with the requirements of the
exemption under Section 162(m) of the Code for performance-based
compensation, the Option Plan provides that no employee may be granted
in any fiscal year of the Company options which in the aggregate are for
more than 50,000 shares (the "Grant Limit"). Appropriate adjustments
will be made to the shares subject to the Option Plan, the Grant Limit,
and to outstanding options upon any stock dividend, stock split, reverse
stock split, recapitalization, combination, reclassification, or similar
change in the capital structure of the Company. If any outstanding
option expires, terminates or is canceled, or if shares acquired
pursuant to an option are repurchased by the Company, the expired or
repurchased shares are returned to the Option Plan and again become
available for grant.
ADMINISTRATION. The Option Plan will be administered by the Board of
Directors or a duly appointed committee of the Board, which, in the case
of options intended to qualify for the performance-based compensation
exemption under Section 162(m) of the Code, must be comprised solely of
two or more "outside directors" within the meaning of Section 162(m)
(hereinafter referred to collectively as the "Board"). Subject to the
provisions of the Option Plan, the Board determines the persons to whom
options are to be granted, the number of shares to be covered by each
option, whether an option is to be an incentive stock option or a
nonstatutory stock option, the timing and terms of exercisability and
vesting of each option, the purchase price and the type of consideration
to be paid to the Company upon the exercise of each option, the time of
expiration of each option, and all other terms and conditions of the
options. The Board may amend, modify, extend, cancel, renew, or grant a
new option in substitution for any option, waive any restrictions or
conditions applicable to any option, and accelerate, continue, extend or
defer the exercisability or vesting of any option, including with
respect to the period following an optionee's termination of service
with the Company. The Option Plan provides, subject to certain
limitations, for indemnification by the Company of any director, officer
or employee against all reasonable expenses, including attorneys' fees,
incurred in connection with any legal action arising from such person's
action or failure to act in administering the plan. The Board will
interpret the Option Plan and options granted thereunder, and all
determinations of the Board will be final and binding on all persons
having an interest in the Option Plan or any option.
<PAGE>
ELIGIBILITY. Options may be granted under the Option Plan to
employees, directors and consultants of the Company or of any present or
future parent or subsidiary corporations of the Company. In addition,
options may be granted to prospective service providers in connection
with written employment offers, provided that no shares may be purchased
prior to such person's commencement of service. As of December 18, 1998,
the Company had approximately 560 employees, including 6 executive
officers, 10 directors and no consultants who would be eligible under
the Option Plan. While any eligible person may be granted a nonstatutory
stock option, only employees may be granted incentive stock options.
TERMS AND CONDITIONS OF OPTIONS. Each option granted under the Option
Plan is evidenced by a written agreement between the Company and the
optionee specifying the number of shares subject to the option and the
other terms and conditions of the option, consistent with the
requirements of the plan. The exercise price of each stock option may
not be less than the fair market value of a share of the Common Stock on
the date of grant. However, any incentive stock option granted to a
person who at the time of grant owns stock possessing more than 10
percent of the total combined voting power of all classes of stock of
the Company or any parent or subsidiary corporation of the Company (a
"Ten Percent Stockholder") must have an exercise price equal to at least
110 percent of the fair market value of a share of Common Stock on the
date of grant. As of December 18, 1998, the closing price of the
Company's Common Stock, as reported on the New York Stock Exchange, was
$25.00 per share.
The Option Plan provides that the option exercise price may be paid in
cash, by check, or in cash equivalent, by the assignment of the proceeds
of a sale or loan with respect to some or all of the shares being
acquired upon the exercise of the option, to the extent legally
permitted, by tender of shares of Common Stock owned by the optionee
having a fair market value not less than the exercise price or by means
of a promissory note if the optionee is an employee, by such other
lawful consideration as approved by the Board, or by any combination of
these. Nevertheless, the Board may restrict the forms of payment
permitted in connection with any option grant. No option may be
exercised until the optionee has made adequate provision for federal,
state, local and foreign taxes, if any, relating to the exercise of the
option.
Options will become vested and exercisable at such times or upon such
events and subject to such terms, conditions, performance criteria or
restrictions as specified by the Board. It ia the intent of the Board to
establish certain minimum vesting requirements. The maximum term of an
incentive stock option granted under the Option Plan is ten years,
provided that an incentive stock option granted to a Ten Percent
Stockholder must have a term not exceeding five years. Unless his or her
service is terminated for cause, an optionee's option generally will
remain exercisable for three months following termination of service,
provided that if termination results from the optionee's death or
disability, the option generally will remain exercisable for 12 months
following the optionee's termination of service. In addition, the right
to exercise the option will generally expire upon a termination of
service for cause. In any event the option must be exercised no later
than its expiration date. The Board, in its discretion, may provide for
longer or shorter post-service exercise periods in particular instances.
<PAGE>
Incentive stock options are nontransferable by the optionee other than
by will or by the laws of descent and distribution, and are exercisable
during the optionee's lifetime only by the optionee. Nonstatutory stock
options granted under the Option Plan may be assigned or transferred to
the extent permitted by the Board and set forth in the optionee's option
agreement.
CHANGE IN CONTROL. The Option Plan provides that in the event of a
"Change in Control" (as defined below), unless the Board determines
otherwise, any unexercisable or unvested portion of the outstanding
options will become immediately exercisable and vested in full prior to
the Change in Control. In addition, the value of all outstanding options
will be cashed out, unless the Board determines otherwise. For purposes
of the Option Plan, a "Change in Control" means the happening of any of
the following:
(a) When any "person", as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, a Subsidiary
Corporation or a Company employee benefit plan, including any trustee of
such plan acting as trustee) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing fifty percent (50%) or more of
the combined voting power of the Company's then outstanding securities;
or
(b) The occurrence of a transaction requiring shareholder approval,
and involving the sale of all or substantially all of the assets of the
Company or the merger of the Company with or into another corporation.
TERMINATION OR AMENDMENT. The Option Plan will continue in effect
until the earlier of its termination by the Board or the date on which
all shares available for issuance under the plan have been issued and
all restrictions on such shares under the terms of the plan and the
agreements evidencing options granted under the plan have lapsed,
provided that all incentive stock options must be granted within ten
years of December 18, 1998, the date on which the Board adopted the
Option Plan. The Board may terminate or amend the Option Plan at any
time. However, without shareholder approval, the Board may not amend the
Option Plan to increase the total number of shares of Common Stock
issuable thereunder, change the class of persons eligible to receive
incentive stock options, or effect any other change that would require
shareholder approval under any applicable law, regulation or rule. No
termination or amendment may adversely affect an outstanding option
without the consent of the optionee, unless the amendment is required to
preserve an option's status as an incentive stock option or is necessary
to comply with any applicable law, regulation or rule.
SUMMARY OF UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary is intended only as a general guide as to the
United States federal income tax consequences under current law of
participation in the Option Plan and does not attempt to describe all
possible federal or other tax consequences of such participation or tax
consequences based on particular circumstances.
<PAGE>
INCENTIVE STOCK OPTIONS. An optionee recognizes no taxable income for
regular income tax purposes as the result of the grant or exercise of an
incentive stock option qualifying under section 422 of the Code.
Optionees who do not dispose of their shares for two years following the
date the option was granted nor within one year following the exercise
of the option will normally recognize a long-term capital gain or loss
equal to the difference, if any, between the sale price and the purchase
price of the shares. If an optionee satisfies such holding periods upon
a sale of the shares, the Company will not be entitled to any deduction
for federal income tax purposes. If an optionee disposes of shares
within two years after the date of grant or within one year from the
date of exercise (a "disqualifying disposition"), the difference between
the fair market value of the shares on the determination date (see
discussion under "Nonstatutory Stock Options" below) and the option
exercise price (not to exceed the gain realized on the sale if the
disposition is a transaction with respect to which a loss, if sustained,
would be recognized) will be taxed as ordinary income at the time of
disposition. Any gain in excess of that amount will be a capital gain.
If a loss is recognized, there will be no ordinary income, and such loss
will be a capital loss. A capital gain or loss will be mid-term or
longterm if the optionee's holding period is more than 12 months. Any
ordinary income recognized by the optionee upon the disqualifying
disposition of the shares generally should be deductible by the Company
for federal income tax purposes, except to the extent such deduction is
limited by applicable provisions of the Code or the regulations
thereunder.
The difference between the option exercise price and the fair market
value of the shares on the determination date of an incentive stock
option (see discussion under "Nonstatutory Stock Options" below) is an
adjustment in computing the optionee's alternative minimum taxable
income and may be subject to an alternative minimum tax which is paid if
such tax exceeds the regular tax for the year. Special rules may apply
with respect to certain subsequent sales of the shares in a
disqualifying disposition, certain basis adjustments for purposes of
computing the alternative minimum taxable income on a subsequent sale of
the shares and certain tax credits which may arise with respect to
optionees subject to the alternative minimum tax.
NONSTATUTORY STOCK OPTIONS. Options not designated or qualifying as
incentive stock options will be nonstatutory stock options. Nonstatutory
stock options have no special tax status. An optionee generally
recognizes no taxable income as the result of the grant of such an
option. Upon exercise of a nonstatutory stock option, the optionee
normally recognizes ordinary income in the amount of the difference
between the option exercise price and the fair market value of the
shares on the determination date (as defined below). If the optionee is
an employee, such ordinary income generally is subject to withholding of
income and employment taxes. The "determination date" is the date on
which the option is exercised unless the shares are subject to a
substantial risk of forfeiture and are not transferable, in which case
the determination date is the earlier of (i) the date on which the
shares are transferable or (ii) the date on which the shares are not
subject to a substantial risk of forfeiture. If the determination date
is after the exercise date, the optionee may elect, pursuant to section
33(b) of the Code, to have the exercise date be the determination date
<PAGE>
by filing an election with the Internal Revenue Service no later than 30
days after the date the option is exercised. Upon the sale of stock
acquired by the exercise of a nonstatutory stock option, any gain or
loss, based on the difference between the sale price and the fair market
value on the determination date, will be taxed as capital gain or loss.
A capital gain or loss will be mid-term or long-term if the optionee's
holding period following the determination date is more than 12 months.
No tax deduction is available to the Company with respect to the grant
of a nonstatutory stock option or the sale of the stock acquired
pursuant to such grant. The Company generally should be entitled to a
deduction equal to the amount of ordinary income recognized by the
optionee as a result of the exercise of a nonstatutory stock option,
except to the extent such deduction is limited by applicable provisions
of the Code or the regulations thereunder.
VOTE REQUIRED AND BOARD OF DIRECTORS RECOMMENDATION
The affirmative vote of a majority of the votes present or represented
by proxy and entitled to vote at the Annual Meeting of Shareholders, at
which a quorum representing a majority of all outstanding shares of
Common Stock of the Company is present, either in person or by proxy, is
required for approval of this proposal. Abstentions and broker non-votes
will each be counted as present for purposes of determining the presence
of a quorum. Abstentions will have the same effect as a negative vote on
this proposal. Broker non-votes will have no effect on the outcome of
this vote.
The Board of Directors believes that adoption of the proposed Option
Plan is in the best interests of the Company and the shareholders for
the reasons stated above. THEREFORE, THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE THE OPTION PLAN.
NEW PLAN BENEFITS
No options will be granted under the Option Plan prior to its approval
by the shareholders of the Company. No grants have been made to any
officer under the Option Plan. Future grants under the Option Plan will
be made at the discretion of the Board, and, accordingly, are not yet
determinable. In addition, benefits under the Option Plan will depend on
a number of factors, including the fair market value of the Company's
Common Stock on future dates and the exercise decisions made by the
optionees. Consequently it is not possible to determine the benefits
that might be received by optionees receiving discretionary grants under
the Option Plan.
ITEM 3
APPOINTMENT OF AUDITORS
The Board of Directors has reappointed Arthur Andersen LLP as auditors
for the fiscal year ending September 30, 1999, subject to shareholder
ratification of such appointment at the Annual Meeting. In the event
that shareholders do not ratify the appointment of Arthur Andersen LLP,
the Board of Directors will consider the selection of other independent
public accountants.
<PAGE>
Arthur Andersen LLP has advised the Board of Directors that neither
such firm nor any member nor associate thereof has any financial
interest, direct or indirect, in the Company or any of its subsidiaries
or has had any connection during the past three years with the Company
or any of its subsidiaries in the capacity of promoter, underwriter,
voting trustee, director, officer or employee. A representative of such
firm is expected to be available at the Annual Meeting to respond to
appropriate questions and to be afforded the opportunity to make a
statement.
2000 ANNUAL MEETING -- SHAREHOLDER PROPOSALS
From time to time, shareholders of the Company may desire to submit
proposals which they believe should be voted upon at the Annual Meeting
or to nominate persons for election to the Board of Directors. The
Company's Bylaws provide that, in order for a shareholder to nominate a
candidate for election as a director of the Company or to propose other
business to be brought before an Annual Meeting, a shareholder must
deliver a written notice to the Secretary of the Company at the
principal executive offices of the Company not less than seventy nor
more than ninety days prior to the first anniversary of the preceding
year's Annual Meeting. In the event that the date of the Annual Meeting
is advanced by more than twenty days or delayed by more than seventy
days from such anniversary date, such written notice must be delivered
not earlier that the ninetieth day prior to the Annual Meeting and not
later than the close of business on the later of the seventieth day
prior to the Annual Meeting or the tenth day following the day on which
public announcement of the date of such meeting is first made.
Any such written notice must set forth (a) as to each person whom the
shareholder proposes to nominate for election or reelection as a
director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
including such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected; and (b)
as to any other business that the shareholder proposes to bring before
the meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such shareholder
and the beneficial owner, if any, on whose behalf the proposal is made;
and (c) as to the shareholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination or proposal is made (i)
the name and address of such shareholder, as they appear on the
Company's books, and of such beneficial owner and (ii) the class and
number of shares of the Company which are owned beneficially and of
record by such shareholder and such beneficial owner.
Pursuant to applicable rules promulgated under the Exchange Act, some
shareholder proposals may be eligible for inclusion in the Company's
proxy statement distributed in connection with the next Annual Meeting
of Shareholders. To be eligible for inclusion, any such proposal must
be submitted in writing to the Secretary of the Company no later than
August 19, 1999. Shareholders interested in submitting such a proposal
are advised to contact legal counsel knowledgeable with respect to the
detailed requirements of such securities rules.
<PAGE>
OTHER MATTERS
The Board of Directors and management of the Company do not know of
any other matters that are to be presented for action at the meeting.
Should any other matter come before the meeting, however, the persons
named in the enclosed proxy will have discretionary authority to vote
all proxies with respect to such matter in accordance with their
judgment.
BY ORDER OF THE BOARD OF DIRECTORS,
BY S/ R. L. BABCOCK
REGINALD L. BABCOCK, Vice President,
General Counsel & Secretary
December 29, 1998
<PAGE>
EXHIBIT A
CTG RESOURCES, INC. 1999 STOCK OPTION PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1 ESTABLISHMENT. The CTG Resources, Inc. 1999 Stock Option Plan (the
"Plan") is hereby established effective as of December 18, 1998 (the
"Effective Date").
1.2 PURPOSE. The purpose of the Plan is to advance the interests of
the Participating Company Group and its stockholders by providing an
incentive to attract, retain and reward persons performing services for
the Participating Company Group and by motivating such persons to
contribute to the growth and profitability of the Participating Company
Group.
1.3 TERM OF PLAN. The Plan shall continue in effect until the earlier
of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the
agreements evidencing Options granted under the Plan have lapsed.
However, all Incentive Stock Options shall be granted, if at all, within
ten (10) years from the earlier of the date the Plan is adopted by the
Board or the date the Plan is duly approved by the stockholders of the
Company.
2. DEFINITIONS AND CONSTRUCTION.
2.1 DEFINITIONS. Whenever used herein, the following terms shall have
their respective meanings set forth below:
(a) "Board" means the Board of Directors of the Company. If one or
more Committees have been appointed by the Board to administer the
Plan, "Board" also means such Committee(s).
(b) "Code" means the Internal Revenue Code of 1986, as amended, and
any applicable regulations promulgated thereunder.
(c) "Committee" means the Compensation Committee or other committee
of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Unless the powers of the
Committee have been specifically limited, the Committee shall have all
of the powers of the Board granted herein, including, without
limitation, the power to amend or terminate the Plan at any time,
subject to the terms of the Plan and any applicable limitations
imposed by law.
(d) "Company" means CTG Resources, Inc., a Connecticut corporation,
or any successor corporation thereto.
(e) "Consultant" means any person, including an advisor, engaged by
a Participating Company to render services other than as an Employee
or a Director.
<PAGE>
(f) "Director" means a member of the Board or of the board of
directors of any other Participating Company.
(g) "Disability" means the permanent and total disability of the
Optionee within the meaning of Section 22(e)(3) of the Code.
(h) "Employee" means any person treated as an employee (including
an officer or a Director who is also treated as an employee) in the
records of a Participating Company and, with respect to any Incentive
Stock Option granted to such person, who is an employee for purposes
of Section 422 of the Code; provided, however, that neither service as
a Director nor payment of a director's fee shall be sufficient to
constitute employment for purposes of the Plan. The Company shall
determine in good faith and in the exercise of its discretion whether
an individual has become or has ceased to be an Employee and the
effective date of such individual's employment or termination of
employment, as the case may be. For purposes of an individual's
rights, if any, under the Plan as of the time of the Company's
determination, all such determinations by the Company shall be final,
binding and conclusive, notwithstanding that the Company or any
governmental agency subsequently makes a contrary determination.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(j) "Fair Market Value" means, as of any date, the value of a share
of Stock or other property as determined by the Board, in its sole
discretion, or by the Company, in its sole discretion, if such
determination is expressly allocated to the Company herein, subject to
the following:
(i) If, on such date, there is a public market for the Stock,
the Fair Market Value of a share of Stock shall be the closing
price of a share of Stock (or the mean of the closing bid and asked
prices of a share of Stock if the Stock is so quoted instead) as
quoted on the New York Stock Exchange or such other national or
regional securities exchange or market system constituting the
primary market for the Stock, as reported in the Wall Street
Journal or such other source as the Company deems reliable. If the
relevant date does not fall on a day on which the Stock has traded
on such securities exchange or market system, the date on which the
Fair Market Value shall be established shall be the last day on
which the Stock was so traded prior to the relevant date, or such
other appropriate day as shall be determined by the Board, in its
sole discretion.
(ii) If, on such date, there is no public market for the
Stock, the Fair Market Value of a share of Stock shall be as
determined by the Board without regard to any restriction other
than a restriction which, by its terms, will never lapse.
(k) "Incentive Stock Option" means an Option intended to be (as set
forth in the Option Agreement) and which qualifies as an incentive
stock option within the meaning of Section 422(b) of the Code.
<PAGE>
(l) "Insider" means an officer or a Director of the Company or any
other person whose transactions in Stock are subject to Section 16 of
the Exchange Act.
(m) "Nonemployee Director" means a Director of the Company who is
not an Employee.
(n) "Nonemployee Director Option" means a right to purchase Stock
(subject to adjustment as provided in Section 4.2) granted to a
Nonemployee Director pursuant to the terms and conditions of the Plan.
Nonemployee Director Options shall be Nonstatutory Stock Options.
(o) "Nonstatutory Stock Option" means an Option not intended to be
(as set forth in the Option Agreement) or which does not qualify as an
Incentive Stock Option.
(p) "Option" means a right to purchase Stock (subject to adjustment
as provided in Section 4.2) pursuant to the terms and conditions of
the Plan, including a Nonemployee Director Option. An Option may be
either an Incentive Stock Option or a Nonstatutory Stock Option.
(q) "Option Agreement" means a written agreement between the
Company and an Optionee setting forth the terms, conditions and
restrictions of the Option granted to the Optionee and any shares
acquired upon the exercise thereof.
(r) "Optionee" means a person who has been granted one or more
Options.
(s) "Parent Corporation" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.
(t) "Participating Company" means the Company or any Parent
Corporation or Subsidiary Corporation.
(u) "Participating Company Group" means, at any point in time, all
corporations collectively which are then Participating Companies.
(v) "Rule 16b-3" means Rule 16b-3 under the Exchange Act, as
amended from time to time, or any successor rule or regulation.
(w) "Section 162(m)" means Section 162(m) of the Code.
(x) "Securities Act" means the Securities Act of 1933, as amended.
(y) "Service" means an Optionee's employment or service with the
Participating Company Group, whether in the capacity of an Employee, a
Director or a Consultant. An Optionee's Service shall not be deemed to
have terminated merely because of a change in the capacity in which
the Optionee renders Service to the Participating Company Group or a
change in the Participating Company for which the Optionee renders
such Service, provided that there is no interruption or termination of
the Optionee's Service. Furthermore, an Optionee's Service with the
Participating Company Group shall not be deemed to have terminated if
the Optionee takes any military leave, sick leave, or other bona fide
leave of absence approved by the Company; provided, however, that if
any such leave exceeds ninety (90) days, on the ninety-first (91st)
<PAGE>
day of such leave any Incentive Stock Option held by the Optionee
shall cease to be treated as an Incentive Stock Option and instead
shall be treated thereafter as a Nonstatutory Stock Option unless the
Optionee's right to return to Service with the Participating Company
Group is guaranteed by statute or contract. Notwithstanding the
foregoing, unless otherwise designated by the Company or required by
law, a leave of absence shall not be treated as Service for purposes
of determining vesting under the Optionee's Option Agreement. An
Optionee's Service shall be deemed to have terminated either upon an
actual termination of Service or upon the corporation for which the
Optionee performs Service ceasing to be a Participating Company.
Subject to the foregoing, the Company, in its sole discretion, shall
determine whether an Optionee's Service has terminated and the
effective date of such termination.
(z) "Stock" means the common stock of the Company, as adjusted from
time to time in accordance with Section 4.2.
(aa) "Subsidiary Corporation" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f)
of the Code.
(bb) "Ten Percent Owner Optionee" means an Optionee who, at the
time an Option is granted to the Optionee, owns stock possessing more
than ten percent (10%) of the total combined voting power of all
classes of stock of a Participating Company within the meaning of
Section 422(b)(6) of the Code.
2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of
any provision of the Plan. Except when otherwise indicated by the
context, the singular shall include the plural and the plural shall
include the singular. Use of the term "or" is not intended to be
exclusive, unless the context clearly requires otherwise.
3. ADMINISTRATION.
3.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered by the
Board. All questions of interpretation of the Plan or of any Option
shall be determined by the Board, and such determinations shall be final
and binding upon all persons having an interest in the Plan or such
Option. Any officer of a Participating Company shall have the authority
to act on behalf of the Company with respect to any matter, right,
obligation, determination or election which is the responsibility of or
which is allocated to the Company herein, provided the officer has
apparent authority with respect to such matter, right, obligation,
determination or election.
3.2 ADMINISTRATION WITH RESPECT TO INSIDERS. With respect to
participation by Insiders in the Plan, at any time that any class of
equity security of the Company is registered pursuant to Section 12 of
the Exchange Act, the Plan shall be administered in compliance with the
requirements, if any, of Rule 16b-3.
<PAGE>
3.3 COMMITTEE COMPLYING WITH SECTION 162(m). If a Participating
Company is a "publicly held corporation" within the meaning of Section
162(m), the Board may establish a Committee of "outside directors"
within the meaning of Section 162(m) to approve the grant of any Option
which might reasonably be anticipated to result in the payment of
employee remuneration that would otherwise exceed the limit on employee
remuneration deductible for income tax purposes pursuant to Section
162(m).
3.4 POWERS OF THE BOARD. In addition to any other powers set forth in
the Plan and subject to the provisions of the Plan, the Board shall have
the full and final power and authority, in its sole discretion:
(a) to determine the persons to whom, and the time or times at
which, Options shall be granted and the number of shares of Stock to
be subject to each Option;
(b) to designate Options as Incentive Stock Options or Nonstatutory
Stock Options;
(c) to determine the Fair Market Value of shares of Stock or other
property;
(d) to determine the terms, conditions and restrictions applicable
to each Option (which need not be identical) and any shares acquired
upon the exercise thereof, including, without limitation, (i) the
exercise price of the Option, (ii) the method of payment for shares
purchased upon the exercise of the Option, (iii) the method for
satisfaction of any tax withholding obligation arising in connection
with the Option or such shares, including by the withholding or
delivery of shares of stock, (iv) the timing, terms and conditions of
the exercisability of the Option or the vesting of any shares acquired
upon the exercise thereof, (v) the time of the expiration of the
Option, (vi) the effect of the Optionee's termination of Service with
the Participating Company Group on any of the foregoing, and (vii) all
other terms, conditions and restrictions applicable to the Option or
such shares not inconsistent with the terms of the Plan;
(e) to approve one or more forms of Option Agreement;
(f) to amend, modify, extend, cancel, renew, or grant a new Option
in substitution for any Option or to waive any restrictions or
conditions applicable to any Option or any shares acquired upon the
exercise thereof;
(g) to accelerate, continue, extend or defer the exercisability of
any Option or the vesting of any shares acquired upon the exercise
thereof, including with respect to the period following an Optionee's
termination of Service with the Participating Company Group;
(h) to prescribe, amend or rescind rules, guidelines and policies
relating to the Plan, or to adopt supplements to, or alternative
versions of, the Plan, including, without limitation, as the Board
deems necessary or desirable to comply with the laws of, or to
accommodate the tax policy or custom of, foreign jurisdictions whose
citizens may be granted Options; and
<PAGE>
(i) to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Option Agreement and to make all
other determinations and take such other actions with respect to the
Plan or any Option as the Board may deem advisable to the extent
consistent with the Plan and applicable law.
4. SHARES SUBJECT TO PLAN.
4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock
that may be issued under the Plan shall be an aggregate total of Five
Hundred Thousand (500,000) shares (the "Share Reserve") and shall
consist of authorized but unissued or reacquired shares of Stock or any
combination thereof. If an outstanding Option for any reason expires or
is terminated or canceled, or if shares of Stock acquired, subject to
repurchase, upon the exercise of an Option are repurchased by the
Company, the shares of Stock allocable to the unexercised portion of
such Option or such repurchased shares of Stock shall again be available
for issuance under the Plan.
4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any
stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure
of the Company, appropriate adjustments shall be made in the number and
class of shares subject to the Plan and to any outstanding Options, in
the share limit set forth in Section 4.1(h), in the Section 162(m) Grant
Limit set forth in Section 5.4 and in the exercise price per share of
any outstanding Options. If a majority of the shares which are of the
same class as the shares that are subject to outstanding Options are
exchanged for, converted into, or otherwise become (whether or not
pursuant to an Ownership Change Event, as defined in Section 8.1) shares
of another corporation (the "New Shares"), the Board may unilaterally
amend the outstanding Options to provide that such Options are
exercisable for New Shares. In the event of any such amendment, the
number of shares subject to, and the exercise price per share of, the
outstanding Options shall be adjusted in a fair and equitable manner as
determined by the Board, in its sole discretion. Notwithstanding the
foregoing, any fractional share resulting from an adjustment pursuant to
this Section 4.2 shall be rounded up or down to the nearest whole
number, as determined by the Board, and in no event may the exercise
price of any Option be decreased to an amount less than the par value,
if any, of the stock subject to the Option. The adjustments determined
by the Board pursuant to this Section 4.2 shall be final, binding and
conclusive.
5. ELIGIBILITY AND OPTION LIMITATIONS.
5.1 PERSONS ELIGIBLE FOR OPTIONS. Options may be granted only to
Employees, Consultants and Directors. For purposes of the foregoing
sentence, "Employees", "Consultants" and "Directors" shall include
prospective Employees, prospective Consultants and prospective Directors
to whom Options are granted in connection with written offers of
employment or other service relationship with the Participating Company
Group. Eligible persons may be granted more than one (1) Option.
<PAGE>
5.2 OPTION GRANT RESTRICTIONS. Any person who is not an Employee on
the effective date of the grant of an Option to such person may be
granted only a Nonstatutory Stock Option. An Incentive Stock Option
granted to a prospective Employee upon the condition that such person
become an Employee shall be deemed granted effective on the date such
person commences Service as an Employee with a Participating Company,
with an exercise price determined as of such date in accordance with
Section 6.1. A Nonemployee Director Option may be granted only to a
person who at the time of grant is a Nonemployee Director.
5.3 FAIR MARKET VALUE LIMITATION. To the extent that options
designated as Incentive Stock Options (granted under all stock option
plans of the Participating Company Group, including the Plan) become
exercisable by an Optionee for the first time during any calendar year
for stock having an aggregate Fair Market Value greater than One Hundred
Thousand Dollars ($100,000), the portion of such options which exceeds
such amount shall be treated as Nonstatutory Stock Options. For purposes
of this Section 5.3, options designated as Incentive Stock Options shall
be taken into account in the order in which they were granted, and the
Fair Market Value of stock shall be determined as of the time the option
with respect to such stock is granted. If the Code is amended to provide
for a different limitation from that set forth in this Section 5.3, such
different limitation shall be deemed incorporated herein effective as of
the date and with respect to such Options as required or permitted by
such amendment to the Code. If an Option is treated as an Incentive
Stock Option in part and as a Nonstatutory Stock Option in part by
reason of the limitation set forth in this Section 5.3, the Optionee may
designate which portion of such Option the Optionee is exercising. In
the absence of such designation, the Optionee shall be deemed to have
exercised the Incentive Stock Option portion of the Option first.
Separate certificates representing each such portion shall be issued
upon the exercise of the Option.
5.4 SECTION 162(m) GRANT LIMIT. Subject to adjustment as provided in
Section 4.2, at any such time as a Participating Company is a "publicly
held corporation" within the meaning of Section 162(m), no Employee
shall be granted one or more Options within any fiscal year of the
Company which in the aggregate are for the purchase of more than fifty
thousand (50,000) shares of Stock (the "Section 162(m) Grant Limit"). An
Option which is canceled in the same fiscal year of the Company in which
it was granted shall continue to be counted against the Section 162(m)
Grant Limit for such period.
6. TERMS AND CONDITIONS OF OPTIONS.
Options shall be evidenced by Option Agreements specifying the number
of shares of Stock covered thereby, in such form as the Board shall from
time to time establish. No Option or purported Option shall be a valid
and binding obligation of the Company unless evidenced by a fully
executed Option Agreement. Option Agreements may incorporate all or any
of the terms of the Plan by reference and shall comply with and be
subject to the following terms and conditions:
<PAGE>
6.1 EXERCISE PRICE. The exercise price for each Option shall be
established in the sole discretion of the Board; provided, however, that
(a) the exercise price per share for an Incentive Stock Option shall be
not less than the Fair Market Value of a share of Stock on the effective
date of grant of the Option, (b) the exercise price per share for a
Nonstatutory Stock Option shall be not less than the Fair Market Value
of a share of Stock on the effective date of grant of the Option, and
(c) no Incentive Stock Option granted to a Ten Percent Owner Optionee
shall have an exercise price per share less than one hundred ten percent
(110%) of the Fair Market Value of a share of Stock on the effective
date of grant of the Option. Notwithstanding the foregoing, an Option
(whether an Incentive Stock Option or a Nonstatutory Stock Option) may
be granted with an exercise price lower than the minimum exercise price
set forth above if such Option is granted pursuant to an assumption or
substitution for another option in a manner qualifying under the
provisions of Section 424(a) of the Code.
6.2 EXERCISE PERIOD. Options shall vest and be exercisable at such
time or times, or upon such event or events, and subject to such terms,
conditions, performance criteria, and restrictions as shall be
determined by the Board and set forth in the Option Agreement evidencing
such Option; provided, however, that (a) no Incentive Stock Option shall
be exercisable after the expiration of ten (10) years after the
effective date of grant of such Option, (b) no Incentive Stock Option
granted to a Ten Percent Owner Optionee shall be exercisable after the
expiration of five (5) years after the effective date of grant of such
Option, and (c) no Option granted to a prospective Employee, prospective
Consultant or prospective Director may become exercisable prior to the
date on which such person commences Service with a Participating
Company. Subject to the foregoing, unless otherwise specified by the
Board in the grant of an Option, any Option granted hereunder shall have
a term of ten (10) years from the effective date of the grant of the
Option.
6.3 PAYMENT OF EXERCISE PRICE.
(a) Forms of Consideration Authorized. Except as otherwise provided
below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by
check, or cash equivalent, (ii) by tender to the Company of shares of
Stock owned by the Optionee having a Fair Market Value (as determined
by the Company without regard to any restrictions on transferability
applicable to such stock by reason of federal or state securities laws
or agreements with an underwriter for the Company) not less than the
exercise price, (iii) by the assignment of the proceeds of a sale or
loan with respect to some or all of the shares being acquired upon the
exercise of the Option (including, without limitation, through an
exercise complying with the provisions of Regulation T as promulgated
from time to time by the Board of Governors of the Federal Reserve
System) (a "Cashless Exercise"), (iv) provided that the Optionee is an
Employee, by cash for a portion of the aggregate exercise price not
less than the par value of the shares being acquired and the
Optionee's promissory note in a form approved by the Company for the
balance of the aggregate exercise price, (v) by such other
consideration as may be approved by the Board from time to time to the
extent permitted by applicable law, or (vi) by any combination
thereof. The Board may at any time or from time to time, by adoption
of or by amendment to the standard forms of Option Agreement described
<PAGE>
in Section 7, or by other means, grant Options which do not permit all
of the foregoing forms of consideration to be used in payment of the
exercise price or which otherwise restrict one or more forms of
consideration.
(b) Tender of Stock. Notwithstanding the foregoing, an Option may
not be exercised by tender to the Company of shares of Stock to the
extent such tender of Stock would constitute a violation of the
provisions of any law, regulation or agreement restricting the
redemption of the Company's stock. Unless otherwise provided by the
Board, an Option may not be exercised by tender to the Company of
shares of Stock unless such shares either have been owned by the
Optionee for more than six (6) months or were not acquired, directly
or indirectly, from the Company.
(c) Cashless Exercise. The Company reserves, at any and all times,
the right, in the Company's sole and absolute discretion, to
establish, decline to approve or terminate any program or procedures
for the exercise of Options by means of a Cashless Exercise.
(d) Payment by Promissory Note. No promissory note shall be
permitted if the exercise of an Option using a promissory note would
be a violation of any law. Any permitted promissory note shall be on
such terms as the Board shall determine at the time the Option is
granted. The Board shall have the authority to permit or require the
Optionee to secure any promissory note used to exercise an Option with
the shares of Stock acquired upon the exercise of the Option or with
other collateral acceptable to the Company. Unless otherwise provided
by the Board, if the Company at any time is subject to the regulations
promulgated by the Board of Governors of the Federal Reserve System or
any other governmental entity affecting the extension of credit in
connection with the Company's securities, any promissory note shall
comply with such applicable regulations, and the Optionee shall pay
the unpaid principal and accrued interest, if any, to the extent
necessary to comply with such applicable regulations.
6.4 TAX WITHHOLDING. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable upon the
exercise of an Option, or to accept from the Optionee the tender of, a
number of whole shares of Stock having a Fair Market Value, as
determined by the Company, equal to all or any part of the federal,
state, local and foreign taxes, if any, required by law to be withheld
by the Participating Company Group with respect to such Option or the
shares acquired upon the exercise thereof. Alternatively or in addition,
in its sole discretion, the Company shall have the right to require the
Optionee, through payroll withholding, cash payment or otherwise,
including by means of a Cashless Exercise, to make adequate provision
for any such tax withholding obligations of the Participating Company
Group arising in connection with the Option or the shares acquired upon
the exercise thereof. The Company shall have no obligation to deliver
shares of Stock until the Participating Company Group's tax withholding
obligations have been satisfied by the Optionee.
<PAGE>
6.5 EFFECT OF TERMINATION OF SERVICE.
(a) Option Exercisability. Subject to earlier termination of the
Option as otherwise provided herein, an Option shall be exercisable
after an Optionee's termination of Service as follows:
(i) Disability. If the Optionee's Service with the
Participating Company Group is terminated because of the Disability
of the Optionee, the Option, to the extent unexercised and
exercisable on the date on which the Optionee's Service terminated,
may be exercised by the Optionee (or the Optionee's guardian or
legal representative) at any time prior to the expiration of twelve
(12) months (or such longer or shorter period of time as determined
by the Board, in its sole discretion) after the date on which the
Optionee's Service terminated, but in any event no later than the
date of expiration of the Option's term as set forth in the Option
Agreement evidencing such Option (the "Option Expiration Date").
(ii) Death. If the Optionee's Service with the Participating
Company Group is terminated because of the death of the Optionee,
the Option, to the extent unexercised and exercisable on the date
on which the Optionee's Service terminated, may be exercised by the
Optionee's legal representative or other person who acquired the
right to exercise the Option by reason of the Optionee's death at
any time prior to the expiration of twelve (12) months (or such
longer or shorter period of time as determined by the Board, in its
sole discretion) after the date on which the Optionee's Service
terminated, but in any event no later than the Option Expiration
Date. The Optionee's Service shall be deemed to have terminated on
account of death if the Optionee dies within three (3) months after
the Optionee's termination of Service.
(iii) Other Termination of Service. If the Optionee's Service
with the Participating Company Group terminates for any reason,
except Disability, death or Cause, as provided in Section 6.5(d)
below, the Option, to the extent unexercised and exercisable by the
Optionee on the date on which the Optionee's Service terminated,
may be exercised by the Optionee within three (3) months (or such
longer or shorter period of time as determined by the Board, in its
sole discretion) after the date on which the Optionee's Service
terminated, but in any event no later than the Option Expiration
Date.
(b) Extension if Exercise Prevented by Law. Notwithstanding the
foregoing, if the exercise of an Option within the applicable time
periods set forth in Section 6.5(a) is prevented by the provisions of
Section 12 below, the Option shall remain exercisable until three (3)
months after the date the Optionee is notified by the Company that the
Option is exercisable, but in any event no later than the Option
Expiration Date.
<PAGE>
(c) Extension if Optionee Subject to Section 16(b). Notwithstanding
the foregoing, if a sale within the applicable time periods set forth
in Section 6.5(a) of shares acquired upon the exercise of the Option
would subject the Optionee to suit under Section 16(b) of the Exchange
Act, the Option shall remain exercisable until the earliest to occur
of (i) the tenth (lOth) day following the date on which a sale of such
shares by the Optionee would no longer be subject to such suit, (ii)
the one hundred and ninetieth (19Oth) day after the Optionee's
termination of Service, or (iii) the Option Expiration Date.
(d) Termination for Cause. Except as otherwise provided in a
contract of employment or service between a Participating Company and
an Optionee, and notwithstanding any other provision of the Plan to
the contrary, if the Optionee's Service with the Participating Company
Group is terminated for Cause as defined below, the Option shall
terminate and cease to be exercisable immediately upon such
termination of Service. For purposes of this Section 6.5(d), "Cause"
shall mean any of the following: (1) the Optionee's theft, dishonesty,
or falsification of any Participating Company documents or records;
(2) the Optionee's improper use or disclosure of a Participating
Company's confidential or proprietary information; (3) any action by
the Optionee which has a detrimental effect on a Participating
Company's reputation or business; (4) the Optionee's failure or
inability to perform any reasonable assigned duties after written
notice from the Participating Company Group of, and a reasonable
opportunity to cure, such failure or inability; (5) any material
breach by the Optionee of any agreement of employment or service
between the Optionee and the Participating Company Group, which breach
is not cured pursuant to the terms of such agreement; or (6) the
Optionee's conviction (including any plea of guilty or nolo
contendere) of any criminal act which impairs the Optionee's ability
to perform his or her duties with the Participating Company Group. A
determination by the Board that the Optionee was terminated for Cause
shall be final and binding upon the Optionee for all purposes and
shall not be subject to review by any governmental agency or court of
law.
7. STANDARD FORMS OF OPTION AGREEMENT.
7.1 INCENTIVE STOCK OPTIONS. Unless otherwise provided by the Board at
the time the Option is granted, an Option designated as an "Incentive
Stock Option" shall comply with and be subject to the terms and
conditions set forth in the appropriate form of Incentive Stock Option
Agreement adopted by the Board and as amended from time to time.
7.2 NONSTATUTORY STOCK OPTIONS (Other than Nonemployee Director
Option). Unless otherwise provided by the Board at the time the Option
is granted, an Option designated as a "Nonstatutory Stock Option" (other
than a Nonemployee Director Option) shall comply with and be subject to
the terms and conditions set forth in the appropriate form of
Nonstatutory Stock Option Agreement adopted by the Board and as amended
from time to time.
<PAGE>
7.3 NONEMPLOYEE DIRECTOR OPTION. Each Nonemployee Director Option
shall comply with and be subject to the terms and conditions set forth
in the appropriate form of Nonstatutory Stock Option Agreement
(Nonemployee Director Option) adopted by the Board and as amended from
time to time.
7.4 AUTHORITY TO VARY TERMS. The Board shall have the authority from
time to time to vary the terms of any of the standard forms of Option
Agreement described in this Section 8 either in connection with the
grant or amendment of an individual Option or in connection with the
authorization of a new standard form or forms; provided, however, that
the terms and conditions of any such new, revised or amended standard
form or forms of Option Agreement are not inconsistent with the terms of
the Plan.
8. CHANGE IN CONTROL.
8.1 EFFECT OF A CHANGE IN CONTROL. In the event of a "Change in
Control" of the Company, as defined below, unless otherwise determined
by the Board prior to the occurrence of such Change in Control, the
following acceleration and valuation provisions shall apply:
(a) Any Options outstanding as of the date such Change in Control
is determined to have occurred that are not yet exercisable and vested
on such date shall become fully exercisable and vested; and
(b) The value of all outstanding Options shall be cashed out. The
amount at which such Options shall be cashed out shall be equal to the
excess of (x) the Change in Control Price (as defined below) over (y)
the exercise price of the Common Stock covered by the Option. The cash
out proceeds shall be paid to the Optionee or, in the event of the
death of an Optionee prior to payment, to the estate of the Optionee
or to a person who acquired the right to exercise the Option by
bequest or inheritance.
8.2 DEFINITION OF "CHANGE IN CONTROL". For purposes of this Section
8, a "Change in Control" means the happening of any of the following:
(a) When any "person", as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, a Subsidiary
Corporation or a Company employee benefit plan, including any trustee
of such plan acting as trustee) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent
(50%) or more of the combined voting power of the Company's then
outstanding securities; or
(b) the occurrence of a transaction requiring shareholder approval,
and involving the sale of all or substantially all of the assets of
the Company or the merger of the Company with or into another
corporation.
<PAGE>
8.3 CHANGE IN CONTROL PRICE. For purposes of this Section 8,
"Change in Control Price" shall be, as determined by the Board, (i) the
highest Fair Market Value at any time within the sixty-day period
immediately preceding the date of determination of the Change in Control
Price by the Board (the "Sixty-Day Period"), or (ii) the highest price
paid or offered, as determined by the Board, in any bona fide
transaction or bona fide offer related to the Change in Control of the
Company, at any time within the Sixty-Day Period.
9. PROVISION OF INFORMATION.
Each Optionee shall be given access to information concerning the
Company equivalent to that information generally made available to the
Company's common stockholders.
10. TRANSFERABILITY OF OPTIONS.
During the lifetime of the Optionee, an Option shall be exercisable
only by the Optionee or the Optionee's guardian or legal representative.
No Option shall be assignable or transferable by the Optionee, except by
will or by the laws of descent and distribution. Notwithstanding the
foregoing, a Nonstatutory Stock Option shall be assignable or
transferable to the extent permitted by the Board and set forth in the
Option Agreement evidencing such Option.
11. COMPLIANCE WITH SECURITIES LAW.
The grant of Options and the issuance of shares of Stock upon exercise
of Options shall be subject to compliance with all applicable
requirements of federal, state or foreign law with respect to such
securities. Options may not be exercised if the issuance of shares of
Stock upon exercise would constitute a violation of any applicable
federal, state or foreign securities laws or other law or regulations or
the requirements of any stock exchange or market system upon which the
Stock may then be listed. In addition, no Option may be exercised unless
(a) a registration statement under the Securities Act shall at the time
of exercise of the Option be in effect with respect to the shares
issuable upon exercise of the Option or (b) in the opinion of legal
counsel to the Company, the shares issuable upon exercise of the Option
may be issued in accordance with the terms of an applicable exemption
from the registration requirements of the Securities Act. The inability
of the Company to obtain from any regulatory body having jurisdiction
the authority, if any, deemed by the Company's legal counsel to be
necessary to the lawful issuance and sale of any shares hereunder shall
relieve the Company of any liability in respect of the failure to issue
or sell such shares as to which such requisite authority shall not have
been obtained. As a condition to the exercise of any Option, the Company
may require the Optionee to satisfy any qualifications that may be
necessary or appropriate, to evidence compliance with any applicable law
or regulation and to make any representation or warranty with respect
thereto as may be requested by the Company.
<PAGE>
12. INDEMNIFICATION.
In addition to such other rights of indemnification as they may have
as members of the Board or officers or employees of the Participating
Company Group, members of the Board and any officers or employees of the
Participating Company Group to whom authority to act for the Board or
the Company is delegated shall be indemnified by the Company against all
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or
any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan, or any right granted
hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as
to which it shall be adjudged in such action, suit or proceeding that
such person is liable for gross negligence, bad faith or intentional
misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person
shall offer to the Company, in writing, the opportunity at its own
expense to handle and defend the same.
13. TERMINATION OR AMENDMENT OF PLAN.
The Board may terminate or amend the Plan at any time. However,
subject to changes in applicable law, regulations or rules that would
permit otherwise, without the approval of the Company's stockholders,
there shall be (a) no increase in the maximum aggregate number of shares
of Stock that may be issued under the Plan (except by operation of the
provisions of Section 4.2), (b) no change in the class of persons
eligible to receive Incentive Stock Options, and (c) no other amendment
of the Plan that would require approval of the Company's stockholders
under any applicable law, regulation or rule. In any event, no
termination or amendment of the Plan may adversely affect any then
outstanding Option or any unexercised portion thereof, without the
consent of the Optionee, unless such termination or amendment is
required to enable an Option designated as an Incentive Stock Option to
qualify as an Incentive Stock Option or is necessary to comply with any
applicable law, regulation or rule.
IN WITNESS WHEREOF, the undersigned Vice President, General Counsel
and Secretary of the Company certifies that the foregoing CTG Resources,
Inc. 1999 Stock Option Plan was duly adopted by the Board on December
18, 1998.
/s/ REGINALD L. BABCOCK
Reginald L. Babcock
Vice President, General Counsel
and Secretary
<PAGE>
Please mark
your vote
as indicated in
this example [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
Item 1 -ELECTION FOR WITHHELD Item 2 - FOR AGAINST ABSTAIN
OF DIRECTORS DULY FOR ALL APPROVAL OF
NOMINATED: -- -- 1999 STOCK -- -- --
01 B. BENNETT, [ ] [ ] OPTION PLAN. [ ] [ ] [ ]
02 B. HAMILTON, -- -- -- -- --
03 H. LEVENSON.
WITHHELD FOR: Item 3 - THE FOR AGAINST ABSTAIN
(Write that RATIFICATION
nominee's name in OF PROPOSAL -- -- --
the space provided TO APPROVE [ ] [ ] [ ]
below). THE -- -- --
_________________ SELECTION OF
ARTHUR
ANDERSEN LLP
AS AUDITORS
FOR FISCAL
YEAR ENDED
SEPTEMBER
30, 1999.
WILL --
ATTEND [ ]
MEETING --
PLEASE SIGN EXACTLY AS NAME
APPEARS HEREON. JOINT OWNERS
SHOULD EACH SIGN. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE
FULL TITLE AS SUCH. IN THEIR
DISCRETION THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING AND AT ANY
ADJOURNMENT OR ADJOURNMENTS
THEREOF.
SIGNATURE(S) DATE _____________
________________________________
RETURN PROXY CARD IN ENCLOSED ENVELOPE AFTER COMPLETING, SIGNING AND
DATING
-----------------------------------------------------------------------
/\ FOLD AND DETACH PROXY CARD HERE /\
<PAGE>
VOTE BY TELEPHONE
QUICK *** EASY *** IMMEDIATE ***
Your telephone vote appoints the named proxies and directs them to vote
your shares in the same manner as if you marked, signed and returned
your proxy card.
- You will be asked to enter a Control Number which is located in the
box in the lower right hand corner of this form.
OPTION #1: To direct the named proxies to vote as the Board of
Directors recommends on ALL proposals: Press 1.
OPTION #2: If you choose to direct the named proxies to vote on each
proposal separately, press 0. You will hear these instructions:
Proposal 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL
nominees, press 9.
Proposal 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
Proposal 3: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
The instructions are the same for all remaining proposals.
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
PLEASE DO NOT RETURN THE ABOVE PROXY CARD IF YOU HAVE VOTED BY PHONE.
Call ** Toll Free ** On a Touch Tone Telephone
1-800-840-1208 - ANYTIME
There is NO CHARGE to you for this call.
<PAGE>
CTG RESOURCES, INC. -- PROXY FOR ANNUAL MEETING
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints V.H. Frauenhofer and A.C. Marquardt or
either of them, with power of substitution to each, attorneys for the
undersigned to vote as designated on the reverse hereof and, in their
discretion, upon such other business as may properly come before the
Meeting all shares of stock of the undersigned in CTG Resources, Inc. at
the Annual Meeting of Shareholders of the Company to be held at the
office of the Company, 100 Columbus Boulevard, Hartford, Connecticut on
the 23rd day of February, 1999, at 10:30 a.m., or any adjournment
thereof, with all the powers the undersigned would possess if personally
present thereat.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
ON THE REVERSE SIDE HEREOF. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS 1, 2 AND 3.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
<PAGE>
Admission Ticket
CTG Resources, Inc.
1999 Annual Meeting of Shareholders
Tuesday, February 23, 1999
10:30 a.m.
CTG Resources, Inc.
100 Columbus Boulevard
Hartford, Connecticut
PLEASE ADMIT Non-Transferable
<PAGE>
