File Nos. 070-09389
070-09391
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
AMENDMENT NO. 2
TO FORM U-1
Application
Under the
Public Utility Holding Company Act of 1935
-----------------------------
ROANOKE GAS COMPANY
519 Kimball Avenue, N.E., Roanoke, Virginia 24016
(540) 777-4427
and
RGC RESOURCES, INC.
519 Kimball Avenue, N.E., Roanoke, Virginia 24016
(540) 777-4427
(Names of companies filing this statement and addresses
of principal executive offices)
-----------------------------
John B. Williamson, III
President and Chief Executive Officer
Roanoke Gas Company
and
RGC Resources, Inc.
519 Kimball Avenue, N.E., Roanoke, Virginia 24016
(540) 777-3810
(Name and address of Agent for Service)
-----------------------------
Copy to:
Faith M. Wilson, Esq.
Nicholas C. Conte, Esq.
Woods, Rogers & Hazlegrove, P.L.C.
First Union Tower, Suite 1400
10 South Jefferson Street
Roanoke, Virginia 24011
(540) 983-7600
<PAGE>
This Amendment No. 2 to Form U-1 Application of Roanoke Gas Company and RGC
Resources, Inc. is for the purpose of filing, under Exhibit C-1, the
Registration Statement on Form S-4 registering shares of RGC Resources, Inc.
common stock to be issued in the merger and reorganization. The Registration
Statement includes the Preliminary Proxy Statement of Roanoke Gas Company
referenced in Exhibit C-2. The Registration Statement (SEC File No. 333-67311)
and Preliminary Proxy Statement (SEC File No. 000-00367) were filed with the
Commission on November 13, 1998.
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, each of the undersigned companies has duly caused this statement to be
signed on its behalf by the undersigned thereunto duly authorized.
ROANOKE GAS COMPANY
Date: November 17, 1998 By: s/John B. Williamson, III
---------------------------------
John B. Williamson, III
President and Chief Executive
Officer
RGC RESOURCES, INC.
Date: November 17, 1998 By: s/John B. Williamson, III
---------------------------------
John B. Williamson, III
President and Chief Executive
Officer
-3-
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
Exhibit C-1 Registration Statement on Form S-4 of RGC
Resources, Inc.
Exhibit C-2 Preliminary Proxy Statement of Roanoke Gas Company
for 1999 Annual Shareholders Meeting (included in
Exhibit C-1)
<PAGE>
Exhibit C-1
As filed with the Securities and Exchange Commission on November 13, 1998
Registration No. 333-67311
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM S-4
Registration Statement
Under
The Securities Act of 1933
-----------------------------
RGC RESOURCES, INC.
(Exact name of Registrant as specified in its charter)
Virginia 6719 54-1909697
(State or other (Primary Standard (IRS Employer
Jurisdiction of Industrial Identification No.)
Incorporation or Classification
Organization) Code Number)
-----------------------------
519 Kimball Avenue, N.E., Roanoke, Virginia 24016
(540) 777-4427
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
-----------------------------
John B. Williamson, III
President and Chief Executive Officer
RGC Resources, Inc.
519 Kimball Avenue, N.E., Roanoke, Virginia 24016
(540) 777-4427
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
-----------------------------
Copy to:
Faith M. Wilson, Esq.
Nicholas C. Conte, Esq.
Woods, Rogers & Hazlegrove, P.L.C.
First Union Tower, Suite 1400
10 South Jefferson Street
Roanoke, Virginia 24011
(540) 983-7600
Approximate date of Proposed Sale to the Public: As soon as practicable
after this Registration Statement becomes effective and the effective time of
the merger of the Registrant and Roanoke Gas Company and related subsidiaries,
as described in the Proxy Statement/Prospectus.
-----------------------------
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. |_|
<PAGE>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
Proposed maximum Proposed maximum Amount of
Amount to be offering price pe aggregate offering registration
Title of each class of securities to be registered registered (1) share (2) price (2) fee (3)
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
Common Stock, $5.00 par value........................ 1,850,000 shares $19.625 $36,306,250 $3,499
===================================================================================================================================
</TABLE>
(1) Based on the number of shares of Roanoke Gas Company expected to be
outstanding at the effective time of merger of the Registrant and Roanoke
Gas Company and subsidiaries, as described in the Proxy
Statement/Prospectus.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f), based upon the average of the high and low prices
of the Common Stock of Roanoke Gas Company as reported on the Nasdaq
National Market on November 12, 1998.
(3) Pursuant to Rule 457(b), the registration fee has been reduced by $7,262,
which was paid on November 13, 1998 in connection with the filing, by
Roanoke Gas Company, of preliminary proxy materials relating to this
transaction.
-----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
===============================================================================
<PAGE>
(PRELIMINARY COPY)
December 11, 1998
Dear Shareholder:
On behalf of our Board of Directors, I cordially invite you to attend
the 1999 Annual Meeting of Shareholders of Roanoke Gas Company. The meeting will
be at 9:00 a.m. on Monday, February 8, 1999, at the Company's principal office.
An important purpose of the meeting is to vote on our holding company
proposal. As we previously announced, Roanoke Gas is proposing to restructure
its natural gas distribution operations and subsidiaries into a holding company
structure to provide us with the organizational flexibility needed in a highly
competitive environment.
The new holding company will be named RGC Resources, Inc., and Roanoke
Gas will be its most significant subsidiary. The existing utility and nonutility
subsidiaries of Roanoke Gas also will be operated as subsidiaries of Resources.
The present directors and officers of Roanoke Gas will be the directors and
officers of Resources.
The holding company proposal must be approved by the Securities and
Exchange Commission, the Virginia State Corporation Commission and the West
Virginia Public Service Commission. We also need your approval. The
reorganization cannot be completed unless the holders of more than two-thirds of
Roanoke Gas common stock vote in favor of the proposal. YOUR VOTE IS VERY
IMPORTANT TO US. Your Board of Directors has unanimously approved the proposal
and recommends that shareholders vote "FOR" the proposal.
The holding company restructuring will be implemented through a merger
in which Roanoke Gas shareholders will become holders of Resources common stock.
Specifically, you will receive in the merger one share of Resources common stock
for each full share of Roanoke Gas common stock that you own. If you hold a
fractional share of Roanoke Gas stock because of participation in the Company's
stock purchase or dividend reinvestment plans, such fractional share will be
converted in your plan account to a fractional share of Resources stock. Your
proportionate ownership interest will not change as a result of the
restructuring.
This Proxy Statement/Prospectus provides you detailed information about
the Annual Meeting and the proposed holding company structure and
reorganization. I encourage you to read this entire document carefully.
If you have any additional questions or need assistance in voting your
shares, please call either Roanoke Gas, at (540) 777-3800, or William F. Doring
and Company, Inc., which is assisting in our proxy solicitation, at
1-888-330-5111.
Thank you for your confidence in Roanoke Gas. We are very enthusiastic
about the proposal and are confident we will continue to grow and prosper as a
holding company.
Sincerely,
John B. Williamson, III
President and Chief Executive Officer
Neither the Securities and Exchange Commission nor any state securities
commission has approved of the securities to be issued under this Proxy
Statement/Prospectus or determined if this Prospectus/Proxy Statement is
accurate or adequate. Any representation to the contrary is a criminal offense.
This Proxy Statement/Prospectus is dated December 11, 1998, and
is first being mailed to shareholders on December 11, 1998
2
<PAGE>
ROANOKE GAS COMPANY
519 Kimball Avenue, N.E.
Roanoke, Virginia 24016
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 8, 1999
To the Holders of Common Stock of ROANOKE GAS COMPANY:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Roanoke Gas Company will be held at the principal office of Roanoke Gas, 519
Kimball Avenue, N.E., Roanoke, Virginia 24016, on Monday, February 8, 1999, at
9:00 a.m., Eastern Standard Time, for the purposes of:
1. Approving an Agreement and Plan of Merger and Reorganization dated as
of September 28, 1998 (a copy of which is attached as Appendix A to this Proxy
Statement/Prospectus), and the transactions contemplated thereby, to effect a
reorganization of Roanoke Gas into a holding company structure;
2. Electing three directors of Roanoke Gas, each to serve for a
three-year term; and
3. Transacting any other business properly before the Annual Meeting.
Only shareholders of record at the close of business on November 30,
1998, will be entitled to vote at the Annual Meeting.
If the Agreement and Plan of Merger and Reorganization is approved by
Roanoke Gas shareholders and the reorganization occurs, a holder of record of
Roanoke Gas common stock on the record date who dissents and does not vote "FOR"
the reorganization is entitled to receive payment in cash if that holder follows
the procedures provided in Article 15 of the Virginia Stock Corporation Act,
attached as Appendix C to this Proxy Statement/Prospectus. Further information
regarding voting rights and the business to be transacted at the Annual Meeting
is set forth in the Proxy Statement/Prospectus.
By Order of the Board of Directors
Roger L. Baumgardner
Secretary
Roanoke, Virginia
December 11, 1998
Your vote is important. Even if you plan to be present at the Annual
Meeting, please sign, date and promptly return the enclosed proxy, no matter how
small your holdings, to assure that your shares are represented. No postage is
required on the enclosed proxy if mailed within the United States. If your
shares are held by a broker, bank or nominee, it is important that you give them
your voting instructions.
You should NOT send stock certificates with your Proxy Card.
<PAGE>
TABLE OF CONTENTS
PAGE
QUESTIONS AND ANSWERS AND SUMMARY INFORMATION ABOUT THE HOLDING
COMPANY PROPOSAL AND REORGANIZATION....................1
The Companies..........................................6
The Annual Shareholders Meeting........................6
Record Date; Voting Power..............................6
Certain Considerations.................................6
Regulatory Approvals...................................7
Conditions to the Merger and Reorganization............7
Certain Other Consequences of Shareholder Approval
of the Merger and Reorganization..................7
Amendment or Termination of the Agreement of Merger
and Reorganization................................7
Comparative Shareholders' Rights.......................8
Regulation of Resources and Roanoke Gas After the
Reorganization....................................8
Statutory Dissenters' Rights...........................8
Forward-Looking Statements May Prove Inaccurate........8
THE ANNUAL SHAREHOLDERS MEETING..................................10
PROPOSAL 1 - APPROVAL OF THE AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION.............................................11
REASONS FOR THE HOLDING COMPANY STRUCTURE AND REORGANIZATION.....12
CERTAIN CONSIDERATIONS...........................................13
Future Performance of Resources Common Stock Cannot
Be Assured.......................................13
Initial Resources Common Stock Dividends Will Depend
Primarily on Dividends Paid by Roanoke Gas.......13
Subsidiary Businesses May Involve Greater Risk........14
Certain Anti-Takeover Effects.........................14
Regulation............................................15
Cautionary Statement Concerning Forward-Looking
Statements.......................................16
THE REORGANIZATION...............................................16
The Merger Agreement..................................16
Vote Required.........................................17
Regulatory Approvals..................................17
Conditions to Effectiveness of the Merger.............18
Exchange of Stock Certificates........................18
Transfer of Roanoke Gas Subsidiaries to Resources.....19
Dividend Reinvestment and Stock Purchase Plan.........19
Roanoke Gas Stock Plans...............................20
Amendment or Termination of the Merger Agreement ....20
Listing of Resources Common Stock.....................20
DIVIDEND POLICY..................................................21
CERTAIN FEDERAL INCOME TAX CONSEQUENCES..........................21
DESCRIPTION OF RESOURCES CAPITAL STOCK...........................22
INDEMNIFICATION AND LIMITATION OF LIABILITY......................24
CERTAIN DIFFERENCES IN RIGHTS OF ROANOKE GAS AND RESOURCES
SHAREHOLDERS..........................................25
BUSINESS OF ROANOKE GAS AND RESOURCES............................27
REGULATION OF RESOURCES AND ROANOKE GAS AND CERTAIN SUBSIDIARIES
AFTER THE REORGANIZATION..............................29
RIGHT OF DISSENTING SHAREHOLDERS TO RECEIVE PAYMENT FOR SHARES...30
MANAGEMENT OF RESOURCES..........................................32
LEGAL OPINION....................................................32
i
<PAGE>
EXPERTS..........................................................32
PROPOSAL 2 - ELECTION OF DIRECTORS OF ROANOKE GAS................34
SECURITY OWNERSHIP OF MANAGEMENT.................................35
BOARD OF DIRECTORS AND COMMITTEES................................36
EXECUTIVE COMPENSATION...........................................37
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS...39
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION......41
PERFORMANCE GRAPH................................................41
TRANSACTIONS WITH MANAGEMENT.....................................42
REMUNERATION OF DIRECTORS........................................42
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..........43
INDEPENDENT PUBLIC ACCOUNTANTS...................................43
OTHER MATTERS....................................................43
SHAREHOLDER PROPOSALS............................................44
WHERE YOU CAN FIND MORE INFORMATION..............................44
APPENDIX A
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION...........A-1
APPENDIX B
ARTICLES OF INCORPORATION OF RGC RESOURCES, INC...........B-1
APPENDIX C
ARTICLE 15 OF THE VIRGINIA STOCK CORPORATION ACT..........C-1
ii
<PAGE>
QUESTIONS AND ANSWERS AND SUMMARY INFORMATION ABOUT
THE HOLDING COMPANY PROPOSAL AND REORGANIZATION
The following Questions and Answers and Summary Information highlight
selected information about the holding company proposal and reorganization. They
do not contain all of the information that is important to you. You should
carefully read this entire Proxy Statement/Prospectus and the other documents to
which this Proxy Statement/Prospectus refers you to fully understand the holding
company proposal and reorganization. See "Where You Can Find More Information"
(page 44).
1. What is the holding company proposal?
Roanoke Gas is proposing a corporate reorganization into a holding
company structure in which Roanoke Gas shareholders would become shareholders of
a new holding company called RGC Resources, Inc. As a result of the
reorganization:
o Resources would become a holding company owned by the former
shareholders of Roanoke Gas;
o Resources would become the sole owner of the stock of Roanoke
Gas, Bluefield Gas Company and Diversified Energy Company;
o Commonwealth Public Service Corporation's natural gas
distribution business would be merged into Roanoke Gas;
o Roanoke Gas and Bluefield would continue to carry on their
natural gas distribution businesses as subsidiaries of
Resources; and
o Diversified would continue to carry on its nonutility propane
business as a subsidiary of Resources.
2. Why is the holding company structure being proposed?
The holding company restructuring is intended to give Roanoke Gas the
financial and regulatory flexibility to compete more effectively in the
increasingly competitive energy industry. The holding company structure would
allow the Company to selectively pursue nonutility businesses, and to act more
rapidly in an industry where unregulated competitors do not have the same
constraints as regulated entities. We also believe that a holding company
structure should provide greater opportunities for growth and enhanced values,
greater flexibility in developing new businesses, and greater flexibility
regarding the timing, method and amount of financing and acquisitions through
the separation of the utility and nonutility businesses of Roanoke Gas.
The Board of Directors of Roanoke Gas has unanimously adopted the
holding company proposal and reorganization and believes its adoption is in the
best interests of Roanoke Gas and its shareholders. The Board recommends that
you vote "FOR" the approval of the holding company proposal and reorganization
at the Annual Meeting.
1
<PAGE>
3. What will the Resources holding company structure look like?
The following chart shows our present and proposed operating structures:
PRESENT OPERATING STRUCTURE
-------------------------------------------
Shareholders
-------------------------------------------
|
|
-------------------------------------------
Roanoke Gas
-------------------------------------------
|
|
----------------------------------------------------
| |
| |
| |
---------------------- ----------------------
Diversified Bluefield
---------------------- ----------------------
|
|
----------------------
Commonwealth
----------------------
PROPOSED OPERATING STRUCTURE
--------------------------------------------
Shareholders
--------------------------------------------
|
|
--------------------------------------------
Resources
--------------------------------------------
|
|
---------------------------------------------------------
| | |
| | |
---------------------- ---------------------- ----------------------
Roanoke Gas* Bluefield Diversified
---------------------- ---------------------- ----------------------
*Commonwealth is merged into Roanoke Gas
4. What type of businesses will Resources engage in?
Resources will become the parent holding company of Roanoke Gas,
Bluefield and Diversified, which are engaged primarily in the retail
distribution of natural gas and propane to residential, commercial and
industrial customers in southwestern Virginia and southern West Virginia. In
addition, Resources will be able to selectively invest in other businesses that
could strengthen the ability of the Company to provide energy services in an
increasingly competitive marketplace.
2
<PAGE>
5. What is the reorganization?
The reorganization is the means by which the new holding company
structure will be established. It would take place in two steps. First, if
shareholders approve the holding company proposal and adopt the related
Agreement and Plan of Merger and Reorganization at the Annual Meeting, Roanoke
Gas and Resources will carry out a merger, through which Roanoke Gas
shareholders will become holders of Resources common stock, on a share-for-share
basis. As soon as practicable following the merger, Bluefield and Diversified
will be transferred to Resources so that they will be subsidiaries of the
holding company instead of Roanoke Gas, and Commonwealth will be merged into
Roanoke Gas.
6. What will I receive in the merger?
You will receive one full and fractional share of Resources common stock
in exchange for each full and fractional share of Roanoke Gas common stock you
hold on the effective date of the merger. Your proportionate ownership interest
will not change as a result of the reorganization.
7. If my shares are registered in my name, will I have to send in my
Roanoke Gas stock certificates to get new Resources certificates?
Yes, but not now. You will have to send in your Roanoke Gas stock
certificates later in order to get the Resources stock that you are entitled to
receive, as well as any dividends declared by Resources after the merger and
reorganization. HOWEVER, you should not send any stock certificates now. If the
merger is approved and becomes effective, you will automatically be sent
instructions on how to surrender your Roanoke Gas stock certificates, so that
you can receive new Resources stock certificates representing one share of
Resources common stock for each share of Roanoke Gas common stock that you owned
immediately before the merger. If you would otherwise receive a fractional share
of Resources common stock (because of participation in the Roanoke Gas Dividend
Reinvestment and Stock Purchase Plan or Restricted Stock Plan for Outside
Directors) as a result of this conversion, your plan account will be credited
with a fractional share of Resources common stock equal to the fractional share
of Roanoke Gas common stock held pursuant to the plan.
8. My shares are held in my broker's name. How do I vote on the
merger and reorganization and exchange my shares?
Copies of the Proxy Statement/Prospectus have been sent to your broker,
who will forward one to you. The broker will request instructions from you as to
how you want your shares to be voted, and the broker will vote your shares
according to your instructions. If the merger and reorganization becomes
effective, instructions on surrendering the Roanoke Gas stock held in your
brokerage account to effect the exchange of such stock for Resources common
stock will be sent to your broker.
9. When do you expect the merger and reorganization to be completed?
We are working to complete the merger and reorganization in the Spring
of 1999, provided that we have received all regulatory approvals and all other
conditions of closing set out in the Agreement and Plan of Merger and
Reorganization are satisfied.
3
<PAGE>
10. Where will my Resources common stock be traded? What will be the
ticker symbol?
Resources common stock will be traded on the Nasdaq National Market
under the ticker symbol "RGCO."
Roanoke Gas Common Stock is presently traded on the Nasdaq National
Market under the ticker symbol "RGCO." The reported closing price for Roanoke
Gas common stock on December __, 1998, was $_______. After the reorganization,
all of the Roanoke Gas common stock will be owned by Resources and will no
longer be eligible for trading and quotation on the Nasdaq National Market.
11. Will my dividends be affected?
While future dividends on Resources common stock will depend on the
earnings, financial condition and capital requirements of Resources and its
subsidiaries and the dividends Roanoke Gas and other Resources subsidiaries may
pay to Resources, the Company expects to continue the current Roanoke Gas
practice of paying an appropriate percentage of earnings to shareholders. The
long-term debt instruments of Roanoke Gas contain certain restrictions on the
payment of dividends, primarily based on cumulative net earnings of Roanoke Gas
and dividends previously paid. These restrictions will continue in effect after
the reorganization. Resources presently anticipates paying per-share common
stock dividends at least equal to the dividend most recently declared on Roanoke
Gas common stock, and paying dividends on approximately the same schedule as
dividends have been paid on Roanoke Gas common stock. The payment and amount of
dividends, however, is within the discretion of Resources' Board of Directors
based on financial and other factors and cannot be assured.
12. What are the federal income tax consequences to Roanoke Gas
shareholders?
We expect the exchange of Roanoke Gas common stock for Resources common
stock will be tax-free to Roanoke Gas shareholders for federal income tax
purposes. To review the tax consequences to shareholders in greater detail, see
pages 21 and 22. You should consult your tax advisors for a full understanding
of the tax consequences of the reorganization to you.
13. Who will manage the holding company?
The directors and officers of Roanoke Gas also will serve as the
directors and officers of Resources. John B. Williamson, III is the President
and Chief Executive Officer and a director of Resources and is the President and
Chief Executive Officer and a director of Roanoke Gas.
14. How will my participation in the Dividend Reinvestment and Stock
Purchase Plan be affected?
The Dividend Reinvestment and Stock Purchase Plan of Roanoke Gas will be
amended to become the Dividend Reinvestment and Stock Purchase Plan of
Resources. All shares of Roanoke Gas common stock held under the Plan will be
automatically exchanged for an equal number of shares of Resources common stock.
Accounts in the Plan will be credited for fractional shares. The Plan will be
continued with Resources common stock after the reorganization.
4
<PAGE>
15. What do I need to do now?
Just indicate on your proxy card how you want to vote, and sign, date
and mail it in the enclosed postage-paid return envelope as soon as possible, so
that your shares may be represented at the Annual Meeting. The meeting will take
place at 9:00 a.m. on February 8, 1999, at the Company's office at 519 Kimball
Avenue, N.E., Roanoke, Virginia 24016. Do NOT send in the certificates
representing your shares of Roanoke Gas stock until you receive a letter
informing you that the merger and reorganization has been completed and
instructing you what to do.
If you sign and send your proxy and do not indicate how you want to
vote, your proxy will be counted in favor of all the proposals.
16. What shareholder vote is required for approval of the holding
company proposal and reorganization?
Holders of record of Roanoke Gas common stock on November 30, 1998, are
entitled to vote at the Annual Meeting. More than two-thirds of the outstanding
shares of Roanoke Gas common stock must be voted "For" Proposal 1 at the Annual
Meeting in order to approve the holding company proposal and reorganization.
The proposal to approve the holding company structure is considered
"nondiscretionary," and brokers who have received no instructions from clients
do not have the authority to vote on Proposal 1. All abstentions and broker
non-votes will be counted toward the establishment of a quorum. For purposes of
determining whether the holding company proposal and reorganization has been
approved, an abstention or broker non-vote will not be counted as a vote in
favor of adoption of the holding company proposal and reorganization and, as a
result, will have the effect of a vote against Proposal 1.
17. Who can I call if I have any questions?
You are welcome to call either the Company, at (540) 777-3800, or
William F. Doring and Company, Inc., which is assisting in our proxy
solicitation, toll free at 1-888-330-5111.
5
<PAGE>
The Companies (See pages 27-28)
Roanoke Gas, a Virginia public service corporation organized in 1912,
provides natural gas service to approximately 53,625 customers in Roanoke,
Virginia and surrounding areas in Virginia. Roanoke Gas owns 100% of the
outstanding common stock of Bluefield, a West Virginia public service
corporation, which provides natural gas service to approximately 4,100 customers
located in and around Bluefield, West Virginia. Bluefield owns all of the issued
and outstanding common stock of Commonwealth, a Virginia public services
corporation, which serves approximately 925 customers in Bluefield, Virginia and
surrounding areas in Virginia. Roanoke Gas also owns 100% of the outstanding
common stock of Diversified Energy Company, a Virginia nonutility corporation,
which sells propane and propane related products and maintains a natural gas
marketing business. Roanoke Gas' principal office is located at 519 Kimball
Avenue, N.E., Roanoke, Virginia 24016 and its telephone number is (540)
777-4427.
Resources is a wholly owned subsidiary of Roanoke Gas and was
incorporated on July 31, 1998, for the purpose of accomplishing the proposed
merger and reorganization. Resources owns all of the outstanding common stock of
RGC Acquisition Corp., a Virginia corporation which was formed on August 12,
1998, also for the purpose of accomplishing the proposed merger and
reorganization. Neither Resources nor Acquisition owns any utility assets or
engages in any business, or is a "holding company" under The Public Utility
Holding Company Act of 1935. Resources' principal office is located at 519
Kimball Avenue, N.E., Roanoke, Virginia 24016 and its telephone number is (540)
777-4427.
The Annual Shareholders Meeting (See pages 10-11)
The Roanoke Gas Annual Shareholders Meeting will be held at the
Company's principal office, 519 Kimball Avenue, N.E., Roanoke, Virginia 24016,
at 9:00 a.m. on Monday, February 8, 1999. At the Annual Meeting, Roanoke Gas
shareholders will be asked to (1) approve the Agreement and Plan of Merger and
Reorganization and the transactions contemplated thereby, (2) elect three
directors of Roanoke Gas and (3) transact any other business properly before the
meeting.
Record Date; Voting Power (See page 10)
You are entitled to vote at the Annual Meeting if you were a shareholder
of record of Roanoke Gas common stock at the close of business on November 30,
1998, the Record Date.
On the Record Date, there were ______ shares of Roanoke Gas common stock
entitled to vote at the Annual Meeting. Roanoke Gas shareholders will be
entitled to one vote at the Annual Meeting for each share of Roanoke Gas common
stock held on the Record Date.
Certain Considerations (See pages 13-16)
Certain factors for your consideration in determining whether to vote
"For" the holding company proposal and the related Agreement and Plan of Merger
and Reorganization are discussed under "Proposal 1: Approval of Agreement and
Plan of Merger and Reorganization--Certain Considerations."
6
<PAGE>
Regulatory Approvals (See page 17)
Roanoke Gas and Resources have filed a joint application with the
Securities and Exchange Commission requesting approval of the holding company
proposal and reorganization under Section 10 of the federal Public Utility
Holding Company Act of 1935. Resources intends, upon consummation of the merger
and reorganization, to file a claim of exemption from all provisions of that Act
(except with respect to certain acquisitions and investment) on the basis that
Resources and its material public utility subsidiaries are predominantly
intrastate in character.
Both the Virginia State Corporation Commission and the West Virginia
Public Service Commission must approve or consent to the merger and
reorganization. On October 21, 1998, the Company filed with the Virginia and
West Virginia Commissions authorization to undertake the holding company
restructuring. Such applications currently are pending in both states.
While we currently do not anticipate any problems, there is no assurance
that we will obtain all required regulatory approvals, or that such approvals
will be granted on terms acceptable to Roanoke Gas.
Conditions to the Merger and Reorganization (See pages 17-18)
Completion of the merger and reorganization depends on the satisfaction
of certain conditions, including: (a) receipt of all required regulatory and
third party approvals and consents on acceptable terms; (b) shareholder approval
at the Annual Meeting; and (c) satisfaction of all conditions for Resources
common stock to be approved for listing on the Nasdaq National Market.
Certain Other Consequences of Shareholder Approval of the Merger and
Reorganization (See pages 19 and 20)
The Agreement and Plan of Merger and Reorganization provides that, after
the reorganization, shares of Resources common stock and Resources stock options
(instead of Roanoke Gas common stock and stock options) will be issued, granted
or awarded by Resources under all existing director, officer, employee, customer
and other stock plans of Roanoke Gas and its affiliates. These plans include the
Company's Key Employee Stock Option Plan, which has previously been approved by
Roanoke Gas shareholders, the Dividend Reinvestment and Stock Purchase Plan and
the Restricted Stock Plan for Outside Directors.
Amendment or Termination of the Agreement of Merger and Reorganization (See
page 20)
The respective Boards of Directors of Roanoke Gas, Resources,
Acquisition, Diversified, Bluefield and Commonwealth may amend any of the terms
of the Agreement and Plan of Merger and Reorganization at any time before or
after its approval by Roanoke Gas shareholders. After the Agreement is approved
by Roanoke Gas shareholders, the parties cannot amend the Agreement in a manner
that would materially and adversely affect the rights of the shareholders of
Roanoke Gas.
The Agreement and Plan of Merger and Reorganization may be terminated
and the merger and reorganization abandoned at any time before or after
shareholders approve the Agreement, if the Roanoke Gas Board of Directors
determines that the completion of the merger and reorganization would, for any
reason, be inadvisable or not in the best interests of Roanoke Gas or its
shareholders.
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Comparative Shareholders' Rights (See pages 25-27)
When the merger is completed, holders of Roanoke Gas common stock will
automatically become holders of Resources common stock, and their rights will be
governed by Resources' Articles of Incorporation and Bylaws instead of those of
Roanoke Gas.
Resources' Articles of Incorporation give Resources broad corporate
powers to engage in any lawful activity for which a corporation may be formed
under Virginia law, and include certain provisions which are not included in the
Articles of Incorporation of Roanoke Gas. In addition, the Articles of
Incorporation of Resources authorize a greater number of common shares and
provide that the directors of Resources may designate the rights and preferences
of preferred stock and issue such stock without further approval by Resources
shareholders. Certain other differences between the rights of holders of
Resources common stock and those of holders of Roanoke Gas common stock are
summarized in the section of this Proxy Statement/Prospectus entitled "Certain
Differences in Rights of Roanoke Gas and Resources Shareholders.".
Regulation of Resources and Roanoke Gas After the Reorganization (See pages
29-30)
Following the merger and reorganization, Resources, as the parent
holding company of Roanoke Gas and Bluefield, will not be subject to regulation
by the Virginia Commission or the West Virginia Commission. Roanoke Gas will
continue to be regulated by the Virginia Commission, and Bluefield will continue
to be regulated by the West Virginia Commission, as before. As a result of the
merger and reorganization, Resources will become a "public utility holding
company" within the meaning of the federal Public Utility Holding Company Act of
1935 and will file a statement with the Securities and Exchange Commission
claiming exemption from all provisions of that Act (except for certain
provisions requiring Securities and Exchange Commission approval of certain
acquisitions and investments). See Certain Considerations -- Regulation."
Statutory Dissenters' Rights (See pages 30-32 and Appendix C to this Proxy
Statement/Prospectus)
Shareholders of Roanoke Gas who comply with the requirements of Article
15 of the Virginia Stock Corporation Act will, if the proposed merger is
consummated, be entitled to dissenters' rights of appraisal with respect to
their shares of Roanoke Gas common stock. See "Right of Dissenting Shareholders
to Receive Payment for Shares" in this Proxy Statement/Prospectus and Appendix C
for a description of the procedures required to be followed to perfect such
rights.
Forward-Looking Statements May Prove Inaccurate (See page 16)
We have made forward-looking statements in this document (and in
documents that are incorporated by reference) that are subject to risks and
uncertainties. Forward-looking statements include the information concerning
possible or assumed future results of operations of Resources, Roanoke Gas and
their subsidiaries. Also, when we use words such as "believes," "expects,"
"anticipates" or similar expressions, we are making forward-looking statements.
Shareholders should note that many factors, some of which are discussed
elsewhere in this document and in the documents which we incorporate by
reference, could affect the future financial results of Resources, Roanoke Gas
and their subsidiaries and could cause those results to differ materially from
those expressed in our forward-looking statements contained or incorporated by
reference in this document. For example, the Company's business is seasonal in
character and strongly influenced by weather conditions. Extreme changes in
winter heating
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degree days from the normal or mean can have significant short-term impacts on
revenues and gross margins. Other factors that could affect the Company's
operating results include:
o Its ability to obtain adequate rate relief from regulatory
authorities on a timely basis;
o Its ability to earn on a consistent basis an adequate return on
invested capital;
o Increased expenses and labor costs and availability;
o Price competition from alternative fuels;
o Volatility in the price of natural gas and propane;
o Some uncertainties in the projected rate of growth of natural gas
and propane requirements in the Company's service area;
o Deregulation or restructuring of the electric and natural gas
industries; and
o General economic conditions, both locally and nationally.
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THE ANNUAL SHAREHOLDERS MEETING
This Proxy Statement/Prospectus is furnished in connection with the
solicitation by the Board of Directors of Roanoke Gas Company ("Roanoke Gas" or
the "Company") of proxies for use at the Annual Meeting of Shareholders of
Roanoke Gas to be held on February 8, 1999. Only holders of record of the
Company's common stock, par value $5.00 per share ("Roanoke Gas Common Stock"),
on November 30, 1998 (the "Record Date"), are entitled to receive notice of the
Annual Meeting and to vote at the Annual Meeting or any adjournments or
postponements thereof.
Roanoke Gas' Annual Report to Shareholders for the year ended September
30, 1998, is being sent to all shareholders concurrently with this Proxy
Statement/Prospectus, but should not be considered part of the proxy
solicitation material.
The proxy accompanying this Proxy Statement/Prospectus, even if executed
and returned, may be revoked by the person executing it if it has not yet been
exercised. To revoke a proxy, the shareholder must file with the Secretary of
Roanoke Gas, at its principal executive offices, either a written revocation or
a duly executed proxy bearing a later date.
In addition, any shareholder entitled to vote may attend the Annual
Meeting and vote, whether or not such shareholder has submitted a signed proxy.
All shares represented by proxies which have been duly executed and returned
will be voted at the Annual Meeting and, where a choice has been specified in
the proxies, the shares will be voted in accordance with the specification so
made. In the absence of specifications to the contrary, such executed proxies
will be voted FOR Proposal 1 and FOR each director nominated in Proposal 2.
As of the close of business on the Record Date, there were _________
shares of Roanoke Gas Common Stock outstanding. Each share is entitled to one
vote. Only holders of record of Roanoke Gas Common Stock on the Record Date are
entitled to vote at the Annual Meeting or any adjournments or postponements
thereof. To Roanoke Gas' knowledge, no person is the beneficial owner of more
than five percent of the issued and outstanding shares of Roanoke Gas Common
Stock. For beneficial ownership of management, see "Security Ownership of
Management."
Roanoke Gas will bear the cost of soliciting of proxies. In addition to
the use of the mails, proxies may be solicited personally or by telephone by
directors, officers and employees of Roanoke Gas. Such directors, officers and
employees of Roanoke Gas receive no compensation therefor other than their
regular remuneration. Also, Roanoke Gas will reimburse brokers, bank nominees
and other institutional holders for their reasonable out-of-pocket expenses in
forwarding proxy soliciting material to the beneficial owners of Roanoke Gas
Common Stock. In addition, Roanoke Gas has retained William F. Doring and
Company, Inc. to aid in the solicitation of proxies at a fee not to exceed
$3,000 plus reimbursement for out-of-pocket expenses incurred by that firm on
behalf of Roanoke Gas.
The proposal for approval of the Agreement and Plan of Merger and
Reorganization (the "Merger Agreement") and holding company restructuring is
considered "non-discretionary," and brokers who have received no instructions
from their clients do not have the authority to vote on the proposal. All
abstentions and broker non-votes will be counted toward the establishment of a
quorum. For purposes of determining whether the Merger Agreement and holding
company restructuring has been approved, an abstention or broker non-vote WILL
NOT be counted as a vote in favor of adoption of the Merger Agreement and
holding company restructuring and, as a result, will have the effect of a vote
AGAINST Proposal 1.
The affirmative vote of more than two-thirds of the outstanding shares
of Roanoke Gas Common Stock will be required to approve Proposal 1. Votes
withheld in connection with the election of one or more of the
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nominees for director will not be counted as votes cast for or against such
individuals. The vote of a plurality of the shares of Roanoke Gas Common Stock
cast is required for the election of directors under Proposal 2.
The Board of Directors of Roanoke Gas has unanimously adopted the Merger
Agreement and holding company restructuring, believes the reorganization to be
in the best interests of Roanoke Gas and its shareholders, and recommends that
the holders of Roanoke Gas common stock vote FOR the Merger Agreement and
holding company restructuring as discussed in Proposal 1.
In addition, the Board of Directors of Roanoke Gas recommends a vote
"FOR" all director nominees named in Proposal 2.
PROPOSAL 1
APPROVAL OF THE AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
The Board of Directors of Roanoke Gas unanimously believes that it is in
the best interests of Roanoke Gas and its shareholders to reorganize Roanoke Gas
(the "Reorganization") so that Roanoke Gas will become a separate subsidiary of
a new parent holding company, with the present holders of Roanoke Gas Common
Stock becoming the holders of the common stock of the new parent holding
company. Bluefield Gas Company ("Bluefield") and Diversified Energy Company
("Diversified"), which are presently subsidiaries of Roanoke Gas, also will
become subsidiaries of the new holding company. Commonwealth Public Service
Corporation ("Commonwealth"), a small Virginia public utility subsidiary of
Bluefield, will be merged into Roanoke Gas as part of the Reorganization.
To carry out the Reorganization, Roanoke Gas has caused to be
incorporated two Virginia corporations, RGC Resources, Inc. ("Resources") and
RGC Acquisition Corp. ("Acquisition"), each of which now has a nominal amount of
stock outstanding and no present business or properties of its own. All of the
currently outstanding shares of Resources' common stock, par value $5.00 per
share ("Resources Common Stock"), are owned by Roanoke Gas, and all of the
currently outstanding shares of Acquisition are owned by Resources.
The respective Boards of Directors of each of Roanoke Gas, Acquisition,
Resources, Diversified, Bluefield and Commonwealth have adopted the Merger
Agreement, which provides for the merger of Roanoke Gas and Acquisition (the
"Merger"), subject to approval of Merger Agreement by Roanoke Gas shareholders
and the satisfaction of other conditions. The Merger Agreement is attached to
this Proxy Statement/Prospectus as Appendix A and is incorporated herein by
reference. As a result of the Merger, Roanoke Gas would become a subsidiary of
Resources through the conversion of the outstanding shares of Roanoke Gas Common
Stock into shares of Resources Common Stock. Roanoke Gas shareholders will
receive full and fractional shares of Resources Common Stock equal to and in
exchange for the number of full and fractional shares of Roanoke Gas Common
Stock they hold at the effective time of the Merger. See "The Reorganization --
The Merger Agreement."
After the Merger, the existing subsidiaries of Roanoke Gas, except
Commonwealth, will be transferred to Resources and will become subsidiaries of
Resources. Commonwealth will be merged into Roanoke Gas. See "The Reorganization
- --Transfer of Roanoke Gas Subsidiaries to Resources."
Roanoke Gas is subject to regulation by the Virginia State Corporation
Commission (the "Virginia Commission"), and Bluefield is subject to regulation
by the West Virginia Public Service Commission (the "West Virginia Commission").
On October 21, 1998, Roanoke Gas filed an application seeking the Virginia
Commission's approval of the Reorganization. On that same date, Bluefield filed
materials to obtain the consent of the West Virginia Commission to the
Reorganization. The applications are currently pending in each state.
Additionally, the Securities and Exchange Commission (the "SEC") Office of
Public Utility Regulation must
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approve the Reorganization. Roanoke Gas and Resources filed a joint
application with the SEC on October 16, 1998, seeking approval of the
Reorganization. Such application currently is pending. The Merger and
Reorganization cannot be consummated unless and until all of these consents are
obtained. See "Regulation of Resources and Roanoke Gas and Certain Subsidiaries
After the Reorganization."
REASONS FOR THE HOLDING COMPANY STRUCTURE AND REORGANIZATION
General
The principal reasons for the proposed reorganization are to create a
structure which can more effectively address the increased competition in the
energy industry, refocus various utility activities, facilitate selective
diversification into nonutility businesses, afford further separation between
the utility and nonutility businesses and provide additional flexibility for
financing.
The two primary reasons for restructuring are to better position Roanoke
Gas to deal effectively with the competitive environment developing within the
energy industry and to best deploy shareholders' capital both inside and outside
of the utility industry. The Board of Directors of Roanoke Gas believes these
objectives can most effectively be accomplished through the proposed
restructuring, as it provides the necessary flexibility required to meet
competitive challenges and to diversify while further insulating the utility
business from the risks of the nonutility business.
The Company's natural gas business competes with other energy sources
such as fuel oil, electricity and coal. Competition is intense among the
competing energy sources and is based primarily on price and availability. This
is particularly true for industrial applications, where sales are at risk to
price competition in markets which may switch to residual and other fuel oils.
Deregulation in the supply of natural gas has created competition also among
suppliers or brokers of natural gas. Marketers are expected to attempt to
provide increasing volumes of natural gas to large users within the Company's
service territories. As deregulation of the energy industry continues, the
Company expects that competition from other fuel sources, as well as from
natural gas brokers and marketers, will intensify.
The Company anticipates that, based on projected natural gas demand and
absent any major changes in technology, a portion of the Company's earnings from
natural gas operations may not be required to be reinvested in the utility
business over the next ten to fifteen years. The Company is of the view that a
holding company structure will facilitate the deployment of a portion of the
Company's earnings which are not needed for the utility business.
In the Board's view, the restructuring will increase opportunities to
broaden Roanoke Gas' financial base and thereby broaden investment appeal by
increasing access to other businesses. Financing alternatives may also be
enhanced as a result of engaging in a greater number of businesses. To the
extent that diversification succeeds in promoting employment and commerce in the
areas served by the Company, the Company and its customers and shareholders also
will benefit.
The holding company structure is designed to further insulate the
Company's public utility customers and the public holders of Roanoke Gas'
securities from the risks of the nonutility businesses by segregating the
nonutility businesses into separate corporations that will be direct
subsidiaries of the holding company and not of Roanoke Gas. Because nonutility
businesses of the holding company will be conducted through separate
subsidiaries, any liabilities incurred by those subsidiaries will not constitute
liabilities of the utility subsidiaries. The corporate separation also insures
that all costs of a particular nonutility subsidiary will be charged to that
subsidiary and not allocated to any utility subsidiary.
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The holding company structure is intended to afford additional
flexibility for maintaining the capital ratios of Roanoke Gas at levels
determined to be appropriate by regulatory authorities. This ability to adjust
the components of the capital structure of Roanoke Gas will help Roanoke Gas
maintain stable utility rates. One component of utility rates is cost of
capital. Equity capital is the most expensive type of capital, and if the equity
component of a utility's capital structure is too high, it may result in
increased pressure to raise rates. If the equity component is too low, it may
result in increases in the cost of debt because of increased leverage and risk,
which will also tend to increase rates. Under the holding company structure,
capital ratios of the utility would be subject to adjustment from time to time
through dividends to or equity investments from the holding company. Further,
the holding company structure will facilitate the planning of financings best
suited to the particular needs and circumstances of the separate businesses and
thus should improve financing alternatives. It is contemplated that in the
normal course Resources, in addition to receiving dividends from its
subsidiaries, will obtain funds through debt or equity financings, that Roanoke
Gas will obtain funds through its own financings (which may include the issuance
of mortgage notes and other debt instruments to third parties, as well as the
issuance of additional shares of common stock to the holding company), and that
the nonutility businesses owned by Diversified will obtain funds from Resources,
from other nonutility affiliates, or from their own outside financings. Any
financings will depend on the financial and other conditions of the entities
involved and on the market conditions.
At the present time, Roanoke Gas has no specific diversification plans
beyond expanding the propane operation. The Board of Directors of Roanoke Gas
intends that the natural gas operations of Roanoke Gas will continue to
constitute the predominant activity of Resources for the foreseeable future.
There will be no capital impairment of the Company's public utilities and no
adverse affect on the public utilities' levels of service as a result of the
restructuring.
CERTAIN CONSIDERATIONS
Future Performance of Resources Common Stock Cannot Be Assured
The purpose of the Reorganization is to establish a holding company
structure that will enhance the Company's ability to address increased
competition in the energy industry, refocus various utility activities,
facilitate selective diversification into nonutility businesses, afford further
separation between utility and nonutility business and provide additional
flexibility for financing. The Board of Directors believes the Reorganization
and holding company structure to be in the best interests of Roanoke Gas and its
shareholders. Nevertheless, the success of Resources in realizing its goals and
the future performance of Resources Common Stock cannot be assured.
Initial Resources Common Stock Dividends Will Depend Primarily on Dividends
Paid by Roanoke Gas
Resources does not now, nor will it immediately after the Merger and
Reorganization, conduct directly any business operations from which it will
derive any revenues. Resources plans to obtain funds for its own operations from
dividends paid to Resources by its subsidiaries, and possibly from sales of
securities or debt incurred by Resources. Initially, dividends on Resources
Common Stock will depend primarily upon the earnings, financial condition and
capital requirements of Roanoke Gas and the dividends that Roanoke Gas pays to
Resources. In the future, dividends from Resources' subsidiaries other than
Roanoke Gas may be a more significant source of funds for dividend payments by
Resources. In addition, although it has no present intention to do so, Resources
may issue preferred stock in the future to meet its capital requirements. See
"Description of Resources Capital Stock -- Authorized Capital -- Preferred
Stock" Such preferred stock could have preferential dividend rights over
Resources' Common Stock.
While future dividends will depend on the earnings, financial condition
and capital requirements of Roanoke Gas and Resources' other subsidiaries,
Resources expects to continue a policy of paying an appropriate percentage of
its earnings to shareholders. The long-term debt instruments of Roanoke Gas
contain certain
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restrictions on the payment of dividends primarily based on cumulative net
earnings of Roanoke Gas and dividends previously paid. These restrictions will
continue in effect after the Reorganization. Resources presently expects to pay
quarterly dividends on Resources Common Stock at least equivalent to the rate,
and on approximately the same schedule, as the dividends most recently paid on
Roanoke Gas Common Stock. The payment and amount of dividends, however, is
within the discretion of Resources Board of Directors based on financial and
other factors and cannot be assured. See "Dividend Policy."
Subsidiary Businesses May Involve Greater Risk
Roanoke Gas' principal subsidiaries are Bluefield, a regulated public
utility that provides natural gas services in southern West Virginia, and
Diversified, an unregulated nonutility corporation that sells propane and
propane related products in Virginia and West Virginia and maintains a natural
gas marketing business. Roanoke Gas will transfer these subsidiaries to
Resources as soon as practicable following the Merger. See "The Reorganization."
It is the current intention of Resources that its subsidiaries will in
the future include, in addition to Diversified, other nonutility companies that
will engage primarily in businesses which will not be regulated by state or
federal agencies that regulate public utilities. Such businesses may encounter
competitive and other factors not previously experienced by Roanoke Gas and may
have different, and perhaps greater, investment risks than those involved in the
regulated natural gas utility business of Roanoke Gas or the unregulated propane
operations of Diversified. There can be no assurance, however, that such
businesses will be successful or, if unsuccessful, that they will not have a
direct or indirect adverse effect on Resources. As is the case now, any losses
incurred by such businesses will not be recoverable in utility rates of Roanoke
Gas or Bluefield.
Consolidated earnings from Roanoke Gas public utility operations were
$2,242,393, or $1.32 per share in fiscal 1998, $1,836,696, or $1.22 per share in
fiscal 1997, and $1,974,180, or $1.36 per share in fiscal 1996, which amounts
represented 82.2%, 79.5% and 89.8% of consolidated net income of Roanoke Gas and
its subsidiaries in 1998, 1997 and 1996, respectively. Roanoke Gas' total equity
investment in public utility businesses, computed as a percentage of total
consolidated equity, was 85.5%, 86.8% and 88.2% as of September 30, 1998, 1997
and 1996, respectively.
Earnings from Roanoke Gas nonutility operations were $484,486, or $0.28
per share in fiscal 1998, $473,204, or $0.32 per share in fiscal 1997, and
$222,492, or $0.15 per share in fiscal 1996, which amounts represented 17.8%,
20.5% and 10.1% of consolidated net income of Roanoke Gas and its subsidiaries
in fiscal 1998, 1997 and 1996, respectively.
Resources intends to obtain funds to invest in nonutility subsidiaries
and other businesses from dividends it receives from Roanoke Gas, borrowings and
other financings, and dividends Resources may in the future receive from its
other subsidiaries. See "Dividend Policy." There can be no assurance that the
subsidiaries will have earnings or pay any dividends to Resources in the
foreseeable future.
Certain Anti-Takeover Effects
Resources' Articles of Incorporation authorize the issuance of 5,000,000
shares of Resources preferred stock ("Resources Preferred Stock"). In addition,
after giving effect to the Merger, approximately 8,150,000 shares of Resources
Common Stock will be authorized but unissued and not reserved for issuance. An
effect of the existence of unissued Resources Common Stock and Resources
Preferred Stock may be to enable the Resources Board of Directors to render more
difficult or discourage a transaction to obtain control of Resources. Such
shares might be issued by the Board of Directors without shareholder approval in
transactions that might prevent or render more difficult or costly the
completion of a takeover transaction, as by diluting voting or other rights of
the proposed acquirer. In this regard, Resources' Articles grant the Board of
Directors broad power to establish the
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rights and preferences of the authorized and unissued shares of Resources
Preferred Stock, one or more classes or series of which could be issued
entitling holders to vote separately as a class on any proposed merger or
consolidation, to convert such stock into shares of Resources Common Stock or
possibly other securities, to demand redemption at a specified price under
prescribed circumstances related to a change of control, or to exercise other
rights designed to impede a takeover.
The Articles and Bylaws of Resources also provide that elections for
members of the Board of Directors will be held on a staggered basis and
otherwise contain provisions relating to the nomination and election of
directors, the filling of Board vacancies and removal of directors. Further, the
Virginia Stock Corporation Act (the "Virginia Act") contains provisions designed
to protect Virginia corporations and employees from the adverse effects of
hostile corporate takeovers. These provisions currently apply to Roanoke Gas,
and will, upon completion of the Merger and Reorganization, continue to apply to
Resources. The reorganization will not affect the protections of these
provisions.
All of the foregoing reduce the possibility that a third party could
effect a change in control of Roanoke Gas and/or Resources without the support
of the incumbent directors of such entities. These provisions may have a
significant effect on the ability of shareholders of Roanoke Gas and/or
Resources to change the composition of their incumbent Boards, to effect their
policies generally and to benefit from the transactions which are opposed by the
incumbent Boards. Accordingly, these provisions may strengthen the position of
current management of Roanoke Gas and Resources. See "Description of Resources
Capital Stock -- Change in Control Provisions" and "-- Shareholder Protection
Statutes."
Regulation
The Company's natural gas distribution operations are subject to a high
degree of regulation at the federal, state and local levels. See "Business of
Roanoke Gas and Resources." These regulations can in certain circumstances
impose limitations on operations. In addition, these regulations are constantly
evolving and may change significantly over time. There can be no assurance that
future regulatory changes will not have a material adverse effect on the
Company.
Roanoke Gas and Resources have applied to the SEC for necessary
approvals under Section 10 of the federal Public Utility Holding Company Act of
1935 ("PUHCA") in connection with the Merger and Reorganization. There can be no
assurance that such approvals will be received or that the terms upon which such
approvals may be conditioned will be acceptable to the Board of Directors of
Roanoke Gas. If such approvals are not received, the Merger and Reorganization
cannot proceed. See "The Reorganization -- Conditions to Effectiveness of the
Merger" and "-- Amendment or Termination of the Merger Agreement."
Resources intends, upon consummation of the Merger and Reorganization,
to file a claim of exemption from all provision of PUHCA on the basis that
Resources and its material public utility subsidiaries are predominantly
intrastate in character. This exemption is subject to the discretion of the SEC
and must be renewed annually. The SEC may revoke the exemption at any time if it
determines that there is a substantial question of law or fact as to whether
Resources is within the parameters of the exemption, or if it appears that the
exemption may be detrimental to the public interest. If such exemption is
revoked and Resources must register as a public utility holding company under
PUHCA, Resources' activities will be subject to significant additional
regulatory supervision, limitations and restrictions by the SEC. This could
materially adversely affect Resources' operations and ability to grow and
diversify its nonutility businesses. See "Regulation of Resources and Roanoke
Gas and Certain Subsidiaries After the Reorganization."
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Cautionary Statement Concerning Forward-Looking Statements
Roanoke Gas and Resources has each made forward-looking statements in
this document (and in certain documents that are incorporated by reference in
this Proxy Statement/Prospectus) which are subject to risks and uncertainties.
These statements are based on the beliefs and assumptions of Company management,
and on information currently available to such management. Forward-looking
statements include, but are not limited to, the information concerning possible
or assumed future results of operations of Resources, Roanoke Gas and their
subsidiaries set forth under "Questions and Answers and Summary Information
About the Holding Company Proposal and Reorganization," "Reasons for the Holding
Company Structure and Reorganization" and "Dividend Policy," and statements
preceded by, followed by, or that include the words "believes," "expects,"
"anticipates," "intends," "plans," "estimates" or similar expressions.
Forward-looking statements are not guarantees of performance. They
involve risks, uncertainties and assumptions. The future results and shareholder
values following the Merger and Reorganization may differ materially from those
expressed in these forward-looking statements. Many of the factors that will
determine these results and values are beyond the ability of Resources and
Roanoke Gas to control or predict. Shareholders are cautioned not to put undue
reliance on any forward-looking statements. In addition, Resources and Roanoke
Gas do not have any intention or obligation to update forward-looking statements
after they distribute this Proxy Statement/Prospectus, even if new information,
future events or other circumstances have made them incorrect or misleading. For
those statements, Resources and Roanoke Gas claim the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
Shareholders of Resources and Roanoke Gas should understand that the
following important factors, in addition to those discussed elsewhere in this
document and the documents which are incorporated by reference into this Proxy
Statement/Prospectus, could affect the future results of the Company following
the Merger and Reorganization, and could cause results to differ materially from
those expressed in such forward-looking statements: (1) fluctuations in demand
for natural gas and propane attributable to weather; (2) difficulty in obtaining
rate increases from regulatory authorities in adequate amounts and on a timely
basis; (3) difficulty in earning on a consistent basis an adequate return on
invested capital; (4) competition from alternative fuels for industrial and
other significant customers and fluctuations in the prices of oil, which can
make oil less costly than natural gas, and potential increased future
competition resulting from continuing industry deregulation; (5) volatility in
the supply and price of natural gas and propane; (6) some uncertainty in
projected rate of growth of natural gas and propane requirements of the
Company's customers; (7) increasing expenses and labor costs and availability;
(8) deregulation or restructuring of the electric and natural gas industries;
and (9) general economic conditions both locally and nationally.
THE REORGANIZATION
The Merger Agreement
The Merger Agreement has been unanimously adopted by the Boards of
Directors of Roanoke Gas, Acquisition, Resources, Diversified, Bluefield and
Commonwealth and is subject to approval by the holders of more than two-thirds
of the outstanding shares of Roanoke Gas Common Stock. See "Vote Required"
below.
In the Merger: (1) each share of Roanoke Gas Common Stock outstanding
immediately prior to the effective time of the Merger will be converted into an
equal number of new shares of Resources Common Stock; (2) Resources will become
the owner of all outstanding shares of Roanoke Gas Common Stock; and (3) the
shares of Resources Common Stock held by Roanoke Gas immediately prior to the
Merger will be canceled. As a result, Resources will become a holding company,
and Roanoke Gas will become a wholly-owned subsidiary of Resources.
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All of the Resources Common Stock outstanding immediately after the Merger will
be owned by the former holders of Roanoke Gas Common Stock outstanding
immediately prior to the Merger.
Immediately after completion of the Merger, a Reorganization will occur,
in which: (1) Commonwealth, which currently is the Virginia public utility
subsidiary of Bluefield, will be merged into Roanoke Gas; and (2) Bluefield and
Diversified, which currently are subsidiaries of Roanoke Gas, will be
transferred to Resources and also will become wholly owned subsidiaries of
Resources. See "Transfer or Roanoke Gas Subsidiaries to Resources" below.
Debt of Roanoke Gas will remain unchanged and will continue as
outstanding obligations of Roanoke Gas after the Reorganization. Resources may,
however, be required to guarantee Roanoke Gas' payment and performance of
Roanoke Gas' outstanding mortgage notes.
Vote Required
Under Virginia law, the affirmative vote of the holders of record of
more than two-thirds of the outstanding shares of Roanoke Gas Common Stock on
the Record Date is required to approve the Merger Agreement and Reorganization.
Because the requirement for Proposal 1 is the affirmative vote of more than
two-thirds of the outstanding shares, broker non-votes and abstentions will have
the effect of a "no" vote.
Regulatory Approvals
The Merger and Reorganization cannot be consummated unless and until all
federal and state approvals, authorizations and consents are obtained on
conditions acceptable to the Board of Directors of Roanoke Gas.
The Public Utility Holding Company Act of 1935. Roanoke Gas and
Resources must obtain from the SEC Office of Public Utility Regulation an order
approving the Reorganization. A joint application of Roanoke Gas and Resources,
on Form U-1, was filed with the SEC on October 16, 1998 and currently is
pending. As a result of the Reorganization, Resources will become a "public
utility holding company" under PUHCA. Pursuant to the Merger Agreement,
simultaneously with the effectiveness of the Reorganization, Resources will file
with the SEC an exemption statement to exempt itself and its subsidiaries from
all provisions of PUHCA (except with respect to certain acquisitions and
investments) pursuant to the "intrastate" exemption provided by Section 3(a) (1)
of PUHCA. The basis for exemption is that Resources and every public utility
subsidiary thereof from which Resources derives, directly or indirectly, any
material part of its income are predominantly intrastate in character and carry
on their business in Virginia, the state in which Resources and every such
material subsidiary is organized. See "Certain Considerations -- Regulation;"
and "Regulation of Resources and Roanoke Gas and Certain Subsidiaries After the
Reorganization."
Virginia Law. Under Virginia laws governing public utilities, any
transaction involving transfer of utility stock such as will occur in the Merger
and Reorganization must be approved in advance by the Virginia Commission. On
October 21, 1998, Roanoke Gas submitted an application seeking the Virginia
Commission's approval of the Merger and Reorganization and the affiliated
interests arising therefrom. This application currently is pending.
West Virginia Law. Under West Virginia law governing public utilities,
any transaction involving the transfer of utility stock such as will occur in
the Merger and Reorganization must be consented to by the West Virginia
Commission. On October 21, 1998, Bluefield Gas submitted information requesting
the West Virginia Commission's approval of the Merger and Reorganization and the
affiliated interests arising therefrom. This application currently is pending.
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Conditions to Effectiveness of the Merger
The Merger is subject to the satisfaction of the following conditions
(in addition to approval of the Merger Agreement by the holders of Roanoke Gas
Common Stock):
(1) all necessary orders, authorizations, consents, approvals
or waivers from the Virginia Commission, the West Virginia
Commission, the SEC, and any other third parties, shall
have been received, remain in full force and effect, and
shall not include, in the sole judgment of the Board of
Directors of Roanoke Gas, unacceptable conditions; and
(2) all conditions to the listing on the Nasdaq National
Market of shares of Resources Common Stock have been
satisfied.
Following satisfaction of these conditions, the Merger will become
effective on the date and at the time of issuance by the Virginia Commission of
Articles of Merger pursuant to the Virginia Stock Corporation Act (the
"Effective Time"). Roanoke Gas cannot predict if or when the conditions to
effectiveness of the Merger will be satisfied, but Roanoke Gas currently is
working to complete the Merger and Reorganization during the Spring of 1999.
Exchange of Stock Certificates
If the Merger is effected, holders of Roanoke Gas Common Stock will
automatically be sent documents and instructions for the physical exchange of
their existing stock certificates for certificates of Resources Common Stock,
and the certificates which represent shares of Roanoke Gas Common Stock
outstanding immediately prior to the Effective Time of the Merger will no longer
represent Roanoke Gas Common Stock, all as is further described below.
Following the Effective Time, certificates representing shares of
Roanoke Gas Common Stock outstanding at the Effective Time (herein sometimes
referred to as "Roanoke Gas Certificates") will evidence only the right of the
registered holder thereof to receive, and may be exchanged for, the shares of
Resources Common Stock into which such shares of Roanoke Gas Common Stock were
converted. At the Effective Time, Resources will issue and deliver to the
transfer agent for Resources Common Stock (the "Transfer Agent"), certificates
representing the whole shares of Resources Common Stock into which outstanding
shares of Roanoke Gas Common Stock have been converted as a result of the
Merger. As promptly as practicable following the Effective Time, Resources will
send to each former shareholder of record of Roanoke Gas immediately prior to
the Effective Time written instructions and transmittal materials (a
"Transmittal Letter") for use in surrendering Roanoke Gas Certificates to the
Transfer Agent. Roanoke Gas shareholders should NOT send in their stock
certificates to the Transfer Agent until they receive a Transmittal Letter after
the Effective Time.
Resources also will send to brokers, banks and other nominee record
holders of Roanoke Gas Common Stock appropriate instructions and transmittal
materials for use in surrendering Roanoke Gas Certificates to the Transfer
Agent, so that the shares held by such record holders on behalf of beneficial
owners of Roanoke Gas Common Stock can be exchanged for the shares of Resources
Common Stock.
Upon the proper surrender and delivery to the Transfer Agent (in
accordance with Resources' instructions, and accompanied by a properly completed
Transmittal Letter) by a former shareholder of Roanoke Gas of such shareholder's
Roanoke Gas Certificate(s), and in exchange therefor, the Transfer Agent will as
soon as practicable issue, register and deliver to such shareholder a
certificate evidencing the number of shares of Resources Common Stock to which
such shareholder is entitled. Following the Effective Time, there will be no
further transfers of Roanoke Gas Stock on the stock transfer books of Roanoke
Gas nor the registration of any transfer of a Roanoke Gas Certificate by any
holder thereof. The surrender of each Roanoke Gas Certificate as described
herein must be
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made by or on behalf of the person who was the holder of record of the shares
represented by such certificate at the Effective Time.
Except as described with respect to lost or otherwise missing
certificates below, no Resources Common Stock Certificate will be delivered to
any former shareholder of Roanoke Gas unless and until such shareholder has
properly surrendered to the Transfer Agent the Roanoke Gas Certificate(s)
formerly representing his or her shares of Roanoke Gas Common Stock, together
with a properly completed Transmittal Letter in such form as shall be provided
to the shareholder by Resources for that purpose. Further, until such Roanoke
Gas Certificate(s) are so surrendered, no dividend or other distribution payable
to holders of record of Resources Common Stock as of any date subsequent to the
Effective Time will be delivered to the holder of such unsurrendered Roanoke Gas
Certificate(s). However, subject to prior escheatment under applicable law, upon
the proper surrender of such Roanoke Gas Certificate(s), the Transfer Agent will
pay to the registered holder the shares of Resources Common Stock represented by
such Roanoke Gas Certificate(s) and the amount of any dividends or distributions
which have accrued but remain unpaid with respect to such shares. Neither
Resources, Roanoke Gas nor the Transfer Agent has any obligation to pay any
interest on any dividends or distributions for any period prior to such payment.
Any shareholder of Roanoke Gas whose certificate evidencing shares of
Roanoke Gas Common Stock has been lost, destroyed, stolen or otherwise is
missing will have the right to receive a certificate representing the shares of
Resources Common Stock to which he or she is entitled in accordance with and
upon compliance with conditions imposed by the Transfer Agent or Resources
(including, without limitation, a requirement that the shareholder provide a
lost instrument indemnity or surety bond in form, substance and amount
satisfactory to the Transfer Agent and Resources).
Transfer of Roanoke Gas Subsidiaries to Resources
Bluefield, a subsidiary of Roanoke Gas, provides natural gas service to
approximately 4,100 customers located in and around Bluefield, West Virginia.
Bluefield owns all of the issued and outstanding common stock of Commonwealth, a
Virginia public service corporation, which serves approximately 925 customers in
Bluefield, Virginia and surrounding areas in Virginia. Roanoke Gas also owns
100% of the outstanding common stock of Diversified, a Virginia nonutility
corporation, which sells propane and propane related products and maintains a
natural gas marketing business.
As part of the Reorganization, Bluefield will, by noncash dividend,
transfer to Roanoke Gas all of the outstanding shares of Commonwealth, and
Commonwealth will be merged into Roanoke Gas. Roanoke Gas will then, by non-cash
dividend, transfer to Resources all of the outstanding stock of Bluefield and
Diversified. Upon completion of the Reorganization, Resources will be the parent
holding company of three corporations: Roanoke Gas (with Commonwealth merged
in), a Virginia public utility, Bluefield, a West Virginia public utility, and
Diversified, a nonutility subsidiary. See "Business of Roanoke Gas and
Resources."
It is proposed that there will be no exchange of the outstanding
mortgage notes, debentures and senior notes of Roanoke Gas in connection with
the Merger and Reorganization and that, immediately following the Merger,
Resources will have no outstanding securities other than common stock. Resources
may, however, be required to guarantee Roanoke Gas' payment and performance of
Roanoke Gas' outstanding mortgage notes. Holders of Roanoke Gas mortgage notes,
debentures and senior notes will continue as security holders of Roanoke Gas.
Dividend Reinvestment and Stock Purchase Plan
Under the Merger Agreement, shares of Roanoke Gas Common Stock held in
the Roanoke Gas Dividend Reinvestment and Stock Purchase Plan (the "DRIP") at
the Effective Time of the Merger, including uncertificated whole and fractional
shares, will automatically be converted into an equal number of shares of
Resources Common
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Stock. At the Effective Time, Resources will succeed to the DRIP as in effect
immediately prior to the Effective Time, and shares of Resources Common Stock
will be issued under the DRIP on and after the Effective Time. Resources will
file an post-effective amendment to the Roanoke Gas registration statement for
the DRIP shortly after the Effective Time. This discussion will serve as written
notice to participants in the DRIP of the Company's intent to amend the DRIP, as
described above, effective at the Effective Time of the Merger.
Roanoke Gas Stock Plans
The Merger Agreement also provides that the Roanoke Gas Key Employee
Stock Option Plan (the "Stock Option Plan"), the Roanoke Gas Restricted Stock
Plan for Outside Directors (the "Restricted Stock Plan"), as well as all other
stock, bonus or incentive plans of Roanoke Gas, will be amended to provide for
such plans to utilize Resources Common Stock instead of Roanoke Gas Common Stock
upon consummation of the Merger.
Upon consummation of the Merger, all outstanding stock options under the
Stock Option Plan will be converted into options to acquire, on the same terms
and conditions as were applicable to such stock options immediately prior to the
Merger, such number of shares of Resources Common Stock as the holders of such
options would have been entitled to receive pursuant to the Merger had such
holders exercised such stock options in full immediately prior to the Merger, at
a price per share of Resources Common Stock equal to the per share option price
originally specified in the option with respect Roanoke Gas Common Stock. Future
grants under the Stock Option Plan will be made with respect to Resources Common
Stock. Resources will file a post-effective amendment to Roanoke Gas'
registration statement for the Stock Option Plan shortly after the Effective
Time of the Merger.
All shares of Roanoke Gas restricted stock held in participant accounts
under the Restricted Stock Plan will be converted into shares of Resources
Common Stock, subject to the same vesting and other conditions as were
applicable to the shares of Roanoke Gas Common Stock held under the Restricted
Stock Plan at the time of the Merger. Future purchases under the Restricted
Stock Plan will be of Resources Common Stock.
The preceding discussion will serve as written notice to participants in
the Stock Option Plan, the Restricted Stock Plan and all other stock, bonus and
incentive plans of Roanoke Gas of the Company's intent to amend such plans, as
described above, effective at the Effective Time of the Merger.
Amendment or Termination of the Merger Agreement
The Boards of Directors of Roanoke Gas, Acquisition, Resources,
Diversified, Bluefield and Commonwealth may amend any of the terms of the Merger
Agreement at any time before or after its approval by the holders of Roanoke Gas
Common Stock and prior to the Effective Time. After the Merger Agreement is
approved by Roanoke Gas shareholders, the parties cannot amend the Agreement in
a manner that would materially and adversely affect the rights of shareholders
of Roanoke Gas.
The Merger Agreement may be terminated and the Merger abandoned at any
time before or after the shareholders of Roanoke Gas approve the Merger
Agreement and prior to the Effective Time, if the Board of Directors of Roanoke
Gas determines, in its sole judgment, that consummation of the Merger would, for
any reason, be inadvisable or not be in the best interests of Roanoke Gas or its
shareholders.
Listing of Resources Common Stock
Resources is applying to have its common stock listed on the Nasdaq
National Market. It is expected that such listing will become effective at the
Effective Time of the Merger. The ticker symbol of Resources Common Stock will
be "RGCO," and quotations will be carried in newspapers as they have been for
Roanoke Gas Common
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Stock. Following the Merger, Roanoke Gas Common Stock will no longer be
quoted or trade and will be delisted from the Nasdaq National Market.
DIVIDEND POLICY
Resources does not now, nor will it immediately after the Merger and
Reorganization, conduct directly any business operations from which it will
derive any revenues. Resources plans to initially obtain funds for its own
operations primarily from dividends paid to Resources on the stock of its
subsidiaries, and possible from sale of securities or debt incurred by
Resources. Initially, dividends on Resources Common Stock will depend primarily
upon the earnings, financial condition and capital requirements of Roanoke Gas,
and the dividends paid by Roanoke Gas to Resources. Resources presently expects
to continue Roanoke Gas' policy of paying an appropriate percentage of earnings
to shareholders. In the future, dividends from Resources' subsidiaries other
than Roanoke Gas may be a more significant source of funds for dividend payments
by Resources. In addition, although it has no present intention to do so,
Resources may issue preferred stock in the future to meet its capital
requirements. See "Description of Resources Capital Stock -- Authorized Capital
- -- Preferred Stock." Such preferred stock could have preferential dividend
rights over Resources' Common Stock.
Resources presently expects to pay quarterly dividends on Resources
Common Stock at least equal to the rate, and on approximately the same schedule
as, the dividend most recently declared by Roanoke Gas on its common stock. The
quarterly dividend most recently declared by Roanoke Gas' Board of Directors on
Roanoke Gas Common Stock was $___ per share, payable February 1, 1999, to
holders of record on January 15, 1999. The payment and amount of dividends,
however, is in the discretion of Resources Board of Directors based on financial
and other factors and cannot be assured. The amount of dividends paid by Roanoke
Gas to Resources following the Reorganization is expected to be greater than the
amount of dividends Resources pays on its common stock, as Resources will need
funds for its holding company activities.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Roanoke Gas and Resources have received an opinion from Woods, Rogers &
Hazlegrove, P.L.C., their counsel, regarding material federal income tax
consequences of the Merger to the effect that, based on certain assumptions and
factual representations:
(1) no gain or loss will be recognized by a holder of Roanoke Gas
Common Stock upon the conversion of such holder's Roanoke Gas Common Stock
solely into Resources Common Stock;
(2) the basis of shares of Resources Common Stock received by a
former holder of shares of Roanoke Gas Common Stock in the conversion described
in (1) above, in the aggregate, will equal the basis of such shareholder's
shares of Roanoke Gas Common Stock exchanged therefor, and the holding period
for such shares of Resources Common Stock will include the holding period for
shares of Roanoke Gas Common Stock exchanged therefor to the extent that such
shares of Roanoke Gas Common Stock were held as a capital asset at the Effective
Time of the Merger;
(3) no gain or loss will be recognized by Resources or Roanoke
Gas on account of the Merger or the issuance of shares of Resources Common Stock
to the former holders of shares of Roanoke Gas Common Stock pursuant to the
Merger Agreement; and
(4) a holder of Roanoke Gas Common Stock who receives cash
pursuant to the exercise of dissenters' right under Sections 13.1-729 through
13.1-741 of the Virginia Act will recognize gain or loss equal to the
difference, if any, between such shareholder's basis in the shareholder's
Roanoke Gas Common Stock and the
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amount of cash received. Such gain or loss will be eligible for capital gain or
loss treatment if the Roanoke Gas Common Stock is held by such shareholder as a
capital asset at the Effective Time.
The foregoing discussion is a general summary which does not address tax
consequences that may depend on individual circumstances and it does not cover
the tax consequences of the Merger under state, local or foreign income or other
tax laws. Each shareholder of Roanoke Gas is urged to consult with such
shareholder's own tax advisors with respect to the tax effects of the Merger on
such shareholder.
DESCRIPTION OF RESOURCES CAPITAL STOCK
The following statements with respect to Resources capital stock are
based on certain provisions of Resources' Articles of Incorporation ("Articles")
and Bylaws, as they will be in effect as of the Effective Time of the Merger. A
copy of Resources' Articles is attached as Appendix B hereto and is incorporated
herein by reference. Resources' Bylaws are substantially similar to the Bylaws
of Roanoke Gas. The Resources' Bylaws have been filed as an exhibit to the
Registration Statement of which this Proxy Statement/Prospectus is a part, and
are incorporated herein by reference.
Authorized Capital
Resources is authorized to issue up to 15,000,000 shares of capital
stock, consisting of 10,000,000 shares of common stock, $5.00 par value per
share, and 5,000,000 shares of preferred stock, no par value per share. As of
November 30, 1998, there were ______ shares of Resources Common Stock issued and
outstanding, all of which are owned by Roanoke Gas. No shares of Resources
Preferred Stock are issued and outstanding. Immediately after giving effect to
the Merger, approximately ______ shares of Resources Common Stock and no shares
of Resources Preferred Stock will be issued and outstanding. See "Certain
Considerations -- Certain Anti-Takeover Effects."
Resources Common Stock. Subject to the prior rights of the holders of
any Resources Preferred Stock, holders of Resources Common Stock are entitled to
receive such dividends as may be declared by the Board of Directors out of funds
legally available therefor and, in the event of liquidation or dissolution, to
receive the net assets of Resources remaining after payment of all liabilities
and after payment to holders of all shares of Resources Preferred Stock of the
full preferential amounts to which such holders are respectively entitled, in
proportion to their respective holdings. See "Dividend Policy."
Subject to the rights of the holders of any Resources Preferred Stock
then outstanding, all voting rights are vested in the holders of the shares of
Resources Common Stock, each share being entitled to one vote on all matters
requiring shareholder action and in the election of directors. Holders of
Resources Common Stock have no preemptive, subscription or conversion rights.
All of the outstanding shares of Resources Common Stock are fully paid and
nonassessable, and the Resources Common Shares issuable to the shareholders of
Roanoke Gas upon consummation of the Merger will, upon issuance, be fully paid
and nonassessable.
Resources Preferred Stock. The Resources Board of Directors is
authorized to issue shares of Resources Preferred Stock from time to time in one
or more series and to fix and determine the relative preferences, privileges,
limitations and rights of the shares of any series, including dividend rights
and dividend rates, voting rights, liquidation price, redemption rights and
redemption prices, sinking fund requirements and conversion rights. Each series
of Resources Preferred Stock will rank on a parity as to dividends and assets
with all other series according to the respective dividend rates and amounts
attributable upon voluntary or involuntary liquidation, dissolution or winding
up of Resources fixed for each series and without preference or priority of any
series over any other series. All shares of Resources Preferred Stock will rank,
with respect to dividends and liquidation rights, senior to the Resources Common
Stock. The ability of the Board of Directors to issue Resources Preferred Stock,
while providing flexibility in connection with possible acquisitions and other
corporate purposes, could, among other
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things, adversely affect the voting power of holders of Resources Common Stock,
and, under certain circumstances, may discourage an attempt by others to gain
control of Resources. See "Change in Control Provisions" below.
Change in Control Provisions
It is not the intent of Resources' Board of Directors to discourage
legitimate offers to enhance shareholder value. However, certain provisions of
Resources' Articles and Bylaws may have the effect of discouraging unilateral
tender offers or other attempts to take over and acquire the business of
Resources. These provisions, some of which are presently contained in Roanoke
Gas' Articles or Bylaws or otherwise apply to Roanoke Gas, might discourage a
potentially interested purchaser from attempting a unilateral takeover bid for
Resources on terms which some shareholders might favor. If they discourage
potential takeover bids, these provisions might limit the opportunity for
Resources' shareholders to sell their shares at a premium over then prevailing
market prices.
Resources' Articles (i) classify the Board into three classes, as nearly
equal in number as possible, each of which serves for three years, with one
class being elected each year; (ii) provide that directors may be removed only
for cause; (iii) provide that any vacancy on the Board of Directors or
newly-created directorships may be filled by a majority of the remaining
directors then in office, even if less than a quorum; and (iv) provide that the
number of directors may not be less than seven nor more than eleven, such
definite number within that limitation to be set by the Bylaws. Resources
Articles do not provided for cumulative voting in the election of directors. The
procedure known as cumulative voting permits shareholders to multiply the number
of votes to which they may be entitled by the total number of directors to be
elected in the same election by the holders of the class or classes of shares of
which their shares are a part and to cast their whole number of votes for one
candidate or to distribute them among any two or more candidates.
The Bylaws of Resources also include provisions setting forth specific
conditions and restrictions under which business may be transacted at meetings
of shareholders.
In addition to the foregoing, the issuance of authorized but unissued
shares of Resources Common Stock or Resources Preferred Stock in certain
instances may have an anti-takeover effect. Such shares might be issued by the
Board of Directors without shareholder approval in transactions that might
prevent or render more difficult or costly the completion of a takeover
transaction, as by diluting voting or other rights of the proposed acquirer. In
this regard, Resources' Articles grant the Board of Directors broad power to
establish the rights and preferences of the authorized and unissued preferred
stock, one or more classes or series of which could be issued entitling holders
to vote separately as a class on any proposed merger or consolidation, to
convert such stock into shares of Resources Common Stock or possibly other
securities, to demand redemption at a specified price under prescribed
circumstances related to a change of control, or to exercise other rights
designed to impede a takeover.
See "Certain Considerations" and "Certain Differences in Rights of
Roanoke Gas And Resources Shareholders."
Shareholder Protection Statutes
The Virginia Act includes two shareholder protection statutes, the
Affiliated Transactions Statute and the Control Share Acquisitions Statute,
which will apply to Resources after the Effective Time of the Merger.
The Affiliated Transactions Statute restricts certain transactions
("affiliated transactions") between a Virginia corporation having more than 300
shareholders of record and a beneficial owner of more than 10% of any class of
voting stock (an "interested shareholder"). An affiliated transaction is defined
in the Virginia Act as any of the following transactions with or proposed by an
interested shareholder: a merger; a share exchange; certain dispositions of
assets or guaranties of indebtedness other than in the ordinary course of
business; certain significant securities issuances; dissolution of the
corporation; or reclassification of the corporation's securities. Under the
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statute, an affiliated transaction generally requires the approval of a majority
of disinterested directors and two-thirds of the voting shares of the
corporation other than shares owned by an interested shareholder during a
three-year period commencing as of the date the interested shareholder crosses
the 10% threshold. This special voting provision does not apply if a majority of
disinterested directors approved the acquisition of the more than 10% interest
in advance. After the expiration of the three-year moratorium, an interested
shareholder may engage in an affiliated transaction only if it is approved by a
majority of disinterested directors or by two-thirds of the outstanding shares
held by disinterested shareholders, or if the transaction complies with certain
fair price provisions. This special voting rule is in addition to, and not in
lieu of, other voting provisions contained in the Virginia Act and the Articles
of Resources.
The Control Share Acquisitions Statute provides that, with respect to
Virginia corporations having 300 or more shareholders of record, shares acquired
in a transaction that would cause the acquiring person's aggregate voting power
to meet or exceed any of three thresholds (20%, 33-1/3% or a majority) have no
voting rights unless such rights are granted by a majority vote of the shares
not owned by the acquiring person or any officer or employee-director of the
corporation. The statute sets out a procedure whereby the acquiring person may
call a special shareholder's meeting for the purpose of considering whether
voting rights should be conferred. Acquisitions pursuant to a merger or share
exchange to which the corporation is a party and acquisitions pursuant to a
tender or exchange offer arising out of an agreement to which the corporation is
a party are exempt from the statute.
Application of the Control Share Acquisitions statute is automatic
unless a corporation "opts out" of its coverage by expressly providing in its
articles of incorporation or bylaws that the statute does not apply to
acquisitions of shares of such corporation. Resources has not "opted out" of the
statute.
Transfer Agent and Registrar
The Transfer Agent and Registrar for Resources is First Union National
Bank of North Carolina, Corporate Trust Client Services, N.C. - 1153, 1525 West
W. T. Harris Boulevard - 3C3, Charlotte, North Carolina 28288- 1153.
If the Merger is effected, Resources intends to furnish to its
shareholders annual reports containing audited financial statements and
quarterly reports containing unaudited financial information.
INDEMNIFICATION AND LIMITATION OF LIABILITY
Resources' Articles contain a provision which, subject to certain
exceptions described below, eliminates the liability of a director or officer to
Resources or to its shareholders for monetary damages for any breach of duty as
a director or officer to the full extent allowed by Virginia law. This provision
does not eliminate such liability to the extent that it is proved that the
director or officer engaged in willful misconduct or a knowing violation of
criminal law or of any federal or state securities law.
Resources' Articles also require Resources to indemnify any director or
officer who is or was a party to a proceeding, including a proceeding by or in
the right of Resources, by reason of the fact that he or she is or was such a
director or officer or is or was serving at the request of Resources as a
director, officer, employee or agent of another entity. A director or officer of
Resources is entitled to be indemnified against all liabilities and expenses
incurred by the director or officer in the proceeding, except such liabilities
and expenses as are incurred because of his or her willful misconduct or knowing
violation of the criminal law. Unless a determination has been made that
indemnification is not permissible, a director or officer also is entitled to
have Resources make advances and reimbursement for expenses prior to final
disposition of the proceeding upon receipt of a written undertaking from the
director or officer to repay the amounts advanced or reimbursed if it is
ultimately determined that he or she is
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not entitled to indemnification. The Board of Directors of Resources also has
the authority to extend to any person who is an employee or agent of Resources,
or who is or was serving at the request of Resources as a director, officer,
employee or agent of another entity, the same indemnification rights held by
directors and officers, subject to all of the accompanying conditions and
obligations.
The Virginia Act permits a court, upon application of a director or
officer, to review Resources' determination as to a director's or officer's
request for advances, reimbursement or indemnification. If it determines that
the director or officer is entitled to such advances, reimbursement or
indemnification, the court may order Resources to make advances and/or
reimbursement for expenses or to provide indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Securities Act") may be permitted to directors, officers or
persons controlling Resources pursuant to the foregoing provisions, Resources
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
CERTAIN DIFFERENCES IN RIGHTS OF ROANOKE GAS
AND RESOURCES SHAREHOLDERS
Roanoke Gas and Resources are both Virginia corporations. When the
Merger becomes effective, holders of Roanoke Gas Common Stock will become
holders of Resources Common Stock, and their rights will be governed by
Resources' Articles and Bylaws instead of those of Roanoke Gas.
Certain differences between the rights of holders of Resources Common
Stock and those of holders of Roanoke Gas Common Stock are summarized below.
This summary is qualified in its entirety by reference to the information
included in the exhibits to this Proxy Statement/Prospectus, in exhibits to the
Registration Statement of which this Proxy Statement/Prospectus is a part, and
in materials incorporated herein by reference.
Authorized Common Stock
The number of authorized shares of Roanoke Gas Common Stock and
Resources Common Stock is 3,000,000 and 10,000,000 shares, respectively. As of
the Record Date for the Annual Meeting, there were ____________ shares of
Roanoke Gas Common Stock issued and outstanding and held by _______ shareholders
of record. Approximately 1,850,000 shares of Resources Common Stock may be
issued in the Merger. The additional authorized but unissued shares of Resources
Common Stock will be available for issuance under existing dividend
reinvestment, stock purchase, bonus and incentive plans, as well as possibly for
stock splits, stock dividends, equity financings, and for other general
corporate purposes (including, possibly, acquisitions), none of which is under
current consideration. See "Capital Stock of Resources;" and "Certain
Considerations."
Authorized Preferred Stock
Roanoke Gas presently has no authorized preferred stock. There are
5,000,000 authorized shares of Resources Preferred Stock, all of which are
unissued.
The Board of Directors of Resources is authorized to issue preferred
stock in series. Resources' Articles do not establish voting rights, preferences
or other rights with respect to Resources Preferred Stock. Resources' Board of
Directors is given full authority to provide for the establishment and/or
issuance of any series of preferred stock, the designation of such series and
the preferences, limitations, and relative rights of the shares of such series,
including the following: (1) distinctive designation and number of shares
comprising such series; (2) voting rights, if any, which shares of that series
will have; (3) the rate of dividends, if any, on the shares of that series; (4)
whether the shares of that series will be redeemable, and, if so, the terms and
conditions of such redemption; (5) whether that
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series will have a sinking fund for the redemption or purchase of shares of that
series; (6) the rights to which the holders of the shares of that series will be
entitled in the event of voluntary or involuntary dissolution or liquidation;
(7) whether the shares of that series will be convertible into or exchangeable
for cash, shares of stock of any other class or any other series, indebtedness,
or other property or rights; (8) whether the issuance of any additional shares
of such series, or of any shares of any other series, will be subject to
restrictions as to issuance, or as to the powers, preferences or rights of any
such other series; and (9) any other preferences, privileges and powers in
relative, participating, optional, or other special rights and qualifications,
limitations or restrictions of such series. See "Capital Stock of Resources" and
"Certain Considerations."
Management believes that the ability to issue Resources Preferred Stock
will provide important flexibility to Resources, although there are no present
plans for such issuance.
Classified Board
As is the case with Roanoke Gas, Resources' Articles of Incorporation
and Bylaws provide (1) for the Board to determine the number of directors; and
(2) for the division of the Board into three classes with directors in each
class generally being elected for a three-year term. See "Management of
Resources."
Director Exculpation
Resources' Articles provide for the limitation or elimination of
personal liability of directors or officers of Resources to the fullest extent
permitted by the Virginia Act. In accordance with the Virginia Act, that
limitation of liability does not apply if the director or officer engaged in
willful misconduct or a knowing violation of criminal law or any federal or
state securities law. See "Indemnification and Limitation of Liability."
Roanoke Gas' Articles do not contain specific provisions limiting or
eliminating the personal liability of directors or officers of Roanoke Gas.
Accordingly, under the Virginia Act, the liability of a director or officer of
Roanoke Gas, as a director or officer of Roanoke Gas, would be the greater of
$100,000 or the amount of compensation received by the director or officer in
the twelve months preceding the act or omission giving rise to the liability.
Indemnification of Officers and Directors
Resources' Articles provide for indemnification of an officer, director,
employee or agent as set out under "Indemnification and Limitation of
Liability." Resources Articles prohibit indemnification in the case of willful
misconduct or a knowing violation of the criminal law, but permits
indemnification for gross negligence under certain circumstances.
Roanoke Gas' Bylaws contain provisions indemnifying directors, officers,
employees and agents of Roanoke Gas in certain circumstances against expenses,
judgements, fines and amounts paid in settlement. The Roanoke Gas Bylaws
prohibit indemnification in the case of gross negligence or willful misconduct.
Director Nominations and Shareholder Proposals
Resources' Bylaws establish procedures in addition to the requirements
provided by statute that must be followed for shareholders to submit a proposal
to a vote of shareholders of Resources at a meeting of shareholders. Such
proposal must be made by delivering written notice to the President of Resources
not less than sixty nor more than ninety days prior to the meeting; provided,
however, that if less than seventy days' notice of the date of the meeting is
given, such written notice by the shareholder must be delivered not later than
the tenth day after the day on which such notice of the date of the meeting was
given. Notice will be deemed to have been given more than seventy days prior to
the meeting if a meeting is called on the fourth Monday of January (or if such
date falls on a
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<PAGE>
legal holiday, the next business day) regardless as to when public disclosure is
made. The shareholder proposal notice must set forth (i) a brief description of
the proposal and the reasons for its submission; (ii) the name and address of
the shareholder, as they appear on Resources' books; (iii) the classes and
number of shares of Resources owned by the shareholder; and (iv) any material
interest of the shareholder in such proposal other than such holder's interest
as a shareholder of Resources. The chairman of the meeting will, if the facts
warrant, determine that a shareholder proposal was not made in accordance with
the procedures prescribed by the Bylaws, and the defective shareholder proposal
will be disregarded.
Neither the Articles nor Bylaws of Roanoke Gas establish any procedures
in addition to the requirements provided by statute that must be followed for
shareholders to submit a proposal to a vote of the shareholders of Roanoke Gas.
BUSINESS OF ROANOKE GAS AND RESOURCES
Roanoke Gas
Roanoke Gas, a Virginia public service company, is engaged in the retail
distribution and sale of natural gas to approximately 49,000 customers in
Roanoke, Virginia and surrounding areas in Virginia. Roanoke Gas' service area
includes the cities of Roanoke and Salem, Virginia and surrounding regions in
Virginia, including Roanoke County and portions of Bedford, Botetourt, Franklin
and Montgomery counties, Virginia. Bluefield, a West Virginia public service
corporation, is a wholly owned subsidiary of Roanoke Gas. Bluefield provides
natural gas service to approximately 4,100 customers located in and around
Bluefield, West Virginia. Bluefield's service area extends from Princeton, West
Virginia to the western most city limits of Bluefield, West Virginia. Bluefield
owns all of the issued and outstanding stock of Commonwealth, a Virginia public
service corporation, which serves approximately 925 customers in Bluefield,
Virginia and surrounding areas in Virginia. Commonwealth's service area includes
principally the Town of Bluefield, Virginia and a portion of Tazewell County,
Virginia. Unless otherwise specified, Roanoke Gas, Bluefield and Commonwealth
will be referred to in this Section as the "Company." Roanoke Gas also
distributes and sells propane and propane related products to customers in
southwestern Virginia and southern West Virginia through its wholly owned
Virginia subsidiary, Diversified, which is not a regulated public utility.
Natural Gas Distribution Operations. As of September 30, 1998, the
Company's public utility operations served approximately 53,100 natural gas
customers through an operationally integrated natural gas distribution system.
Natural gas is purchased from suppliers and distributed to residential,
commercial and large industrial users through the Company's underground pipeline
system. Of the Company's revenues from regulated gas operations during fiscal
1998, approximately 59% was derived from residential customers and 41% was
derived from commercial and industrial customers. The Company's utility
operations served approximately 48,265 residential customers and approximately
5,317 industrial and commercial customers in fiscal 1998.
As of September 30, 1998, the Company's consolidated net utility plant
account was stated at $47,016,086, its consolidated operating revenues on that
date totaled $51,857,052 and the consolidated net capital applicable to its
common stock was $23,650,912.
Supervision and Regulation. The Company's natural gas distribution
operations are subject to regulation at the federal and state levels. Gas
transmission between Bluefield and Commonwealth is regulated by the Federal
Energy Regulatory Commission (the "FERC"), which regulates the prices, terms and
conditions of interstate pipeline transportation and sales of natural gas.
Roanoke Gas and Bluefield are exempt holding companies under Section 3(a)(2) of
PUHCA and annually file Forms U-3A-2 with the SEC. At the state level, Roanoke
Gas and Commonwealth are regulated by the Virginia Commission, and Bluefield is
regulated by the West Virginia Commission. The Virginia Commission and the West
Virginia Commission regulate various matters, including
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<PAGE>
rates charged for services, financings, planning and safety matters. The
Virginia Commission also grants certificates of public convenience and necessity
to distribute natural gas in the Commonwealth of Virginia. In addition, certain
municipalities and localities grant franchises for the placement of natural gas
distribution pipelines and the operation of a natural gas distribution network
for Roanoke Gas, Commonwealth and Bluefield.
Roanoke Gas and Commonwealth currently hold the only franchises and
certificates of public convenience and necessity to distribute natural gas in
their respective Virginia service areas. The franchises generally extend for
multi-year periods and are renewable by the municipalities. Certificates of
public convenience and necessity, which are issued by the Virginia Commission,
are of perpetual duration, subject to compliance with regulatory standards.
Bluefield holds the only franchise to distribute natural gas in its West
Virginia service area.
Natural Gas Supplies and Storage. In fiscal 1998, Roanoke Gas delivered
approximately 9.8 BCF of natural gas to its customers. The Company currently
uses long-term (one year or longer), mid-term (one month to one year) and spot
(less than one month) gas purchase contracts to meet its system requirements.
Roanoke Gas has an estimated current peak day firm requirement of 94,000
decatherms ("DTH") of natural gas. Bluefield and Commonwealth currently have an
estimated combined current peak day firm requirement of 13,500 DTH of natural
gas.
Roanoke Gas also maintains a liquefied natural gas ("LNG") storage
facility located in Botetourt County, Virginia. This facility is capable of
storing up to 220,000 DTH of natural gas for use during peak winter periods. In
addition, the Company has contracted for storage reserves providing a combined
total of 2.7 BCF of underground storage capacity for Roanoke Gas and Bluefield.
Columbia Gas Transmission Corporation and Columbia Gulf Transmission
Corporation (together "Columbia") are the Company's primary transporter of
natural gas. Columbia historically has delivered approximately two-thirds of
Roanoke Gas' gas supply and 100% of Bluefield's gas supply. East Tennessee
Natural Gas Company and Tennessee Gas Pipeline Company (together "East
Tennessee") are the Company's other major source of supply. Historically, East
Tennessee has delivered approximately one-third of the Company's natural gas
supply. The rates paid for natural gas transportation and storage services
purchased from Columbia and East Tennessee are established by tariffs approved
by the FERC. These tariffs contain flexible pricing provisions which, in some
instances, authorize these suppliers to reduce rates and charges to meet price
competition.
Nonutility Subsidiary. Roanoke Gas owns 100% of the voting common stock
of Diversified, a Virginia nonpublic utility corporation headquartered in
Roanoke, Virginia. Diversified serves approximately 11,000 active propane
accounts in southwestern Virginia and southern West Virginia. The Company's
propane distribution activities are not subject to any federal or state pricing
regulation. In addition to propane operations, Diversified maintains a natural
gas marketing business which assists large industrial customers in the purchase
of natural gas.
Additional Information. Financial and additional information regarding
Roanoke Gas and its subsidiaries is included in the 1998 Annual Report to
Shareholders delivered with this Proxy Statement/Prospectus and in the Roanoke
Gas Annual Report on Form 10-K for the fiscal year ended September 30, 1998,
which is incorporated by reference herein. See "Where You Can Find More
Information."
Resources
Resources is a wholly owned subsidiary of Roanoke Gas and was
incorporated on July 31, 1998, for the purpose of accomplishing the proposed
Merger and Reorganization. Resources owns all of the outstanding common stock of
Acquisition, a Virginia corporation which was formed on August 12, 1998, also
for the purpose of accomplishing the Merger and Reorganization. Neither
Resources nor Acquisition owns any utility assets or engages in any business, or
is a holding company under PUHCA.
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<PAGE>
REGULATION OF RESOURCES AND ROANOKE GAS
AND CERTAIN SUBSIDIARIES AFTER THE REORGANIZATION
Regulation of Resources
As a result of the Reorganization, Resources will become a "public
utility holding company" under PUHCA. Simultaneously with the effectiveness of
the Merger, Resources will file with the SEC an exemption statement to exempt
itself and its subsidiaries from all provisions of PUHCA (except with respect to
certain acquisitions and investments) pursuant to the "intrastate" exemption in
Section 3 (a) (1) of PUHCA. To maintain this exemption, Resources will be
required to file a statement annually with the SEC. The exemption may be revoked
by the SEC if a substantial question of law or fact exists as to whether
Resources is within the parameters of the exemption, or if it appears that the
exemption may be detrimental to the public interest or the interest of investors
or consumers. If such exemption is revoked and Resources must register as a
public utility holding company under PUHCA, Resources' activities will be
subject to significant additional regulatory supervision, limitations and
restrictions by the SEC. This could materially adversely affect Resources'
operations and ability to grow and diversify its nonutility businesses. See
"Certain Considerations -- Regulation."
Resources believes that it will be exempt from all provisions of PUHCA
except Section 9(a) (2). Section 9(a) (2) requires SEC approval of the direct or
indirect acquisition by Resources of five percent or more of the voting
securities of any other public utility company. There are also presently limits
on the extent to which Resources and its nonutility subsidiaries can enter into
businesses which are not "functionally related" to the public utility business
without raising potential issues about Resources' exempt status. SEC policies
regarding the scope of permissible nonutility activities of a public utility
holding company are subject to change, but under current law, Resources would be
required to remain engaged primarily and predominantly in the public utility
business, which could limit other activities in which Resources might wish to
engage.
In 1994, the SEC issued a release soliciting the views of interested
parties on a study being conducted by its staff to develop recommendations
regarding certain Congressional concerns and the needs of those affected by
regulation under PUHCA. In June 1995, the staff completed its study and issued a
report which concluded that significant changes were needed in the current
regulatory scheme. The SEC staff report viewed PUHCA as unnecessarily
restrictive in many regards which could prevent companies from responding
effectively to changes now occurring in the utility industry. Among the staff
report's recommendations were three legislative options for the SEC to offer to
Congress: repeal of PUHCA with legislation to continue federal protection of
consumers; unconditional repeal of PUHCA; or broadening of the SEC's authority
to exempt holding companies where state regulation is adequate. Pending
legislative action, the staff report recommended that the SEC act
administratively to modernize and simplify holding company regulation, reduce
delays in current administration and minimize regulatory overlap, including
rulemaking proposals and significant changes in the SEC's past interpretations
under PUHCA. One of these proposals was a rule to exempt most energy-related
diversification within investment limitations. On March 24, 1997, Rule 58 under
PUHCA was amended to exempt from the requirements of prior approval by the SEC
under Section 9(a) of PUHCA the acquisition of securities of certain varieties
of "energy related companies" subject to aggregate investment limits by
registered companies.
Legislation to repeal PUHCA has been introduced in Congress from time to
time. Neither Resources nor Roanoke Gas can predict whether Congress will take
any action to significantly modify PUHCA or whether the SEC will take action to
further revise or modify significantly its PUHCA rules, decisions and
interpretations.
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<PAGE>
Regulation of Roanoke Gas and Bluefield
Following completion of the Merger and Reorganization, the activities of
Roanoke Gas will continue to be subject to affirmative regulation by the
Virginia Commission, and the activities of Bluefield Gas will continue to be
subject to affirmative regulation by the West Virginia Commission. In
particular, transactions between Roanoke Gas and any other entity, including
Resources, which is an "affiliated interest" of Roanoke Gas within the meaning
of the applicable Virginia statutes is subject to prior approval by the Virginia
Commission. Similarly, any contract between Bluefield and an affiliate requires
the prior consent of the West Virginia Commission. These statutes enable the
state regulators effectively to delineate and control the allocation of holding
company assets to assure that such assets are not used in a fashion deemed
inappropriate or detrimental to the public utility system and its customers. The
Virginia Commission and the West Virginia Commission each has full authority to
investigate public utilities for purposes of determining efficiency and economy
of operation, to conduct continuing reviews and audits and to issue appropriate
directives. The Virginia Commission and the West Virginia Commission each
reviews cost allocations and, in every rate case, requires the public utility to
submit substantial data to support both rate-based components and cost
components between or among divisions, utility or nonutility.
RIGHT OF DISSENTING SHAREHOLDERS TO RECEIVE PAYMENT FOR SHARES
Holders of Roanoke Gas Common Stock entitled to vote on approval of the
Merger and Reorganization will be entitled to have the fair value of each such
holder's shares of Roanoke Gas Common Stock immediately prior to the
consummation of the Merger paid to such holder in cash, together with interest,
if any, by complying with the provisions of Article 15 of the Virginia Act
("Article 15"). Under Article 15, the determination of the fair value of a
dissenter's shares would exclude any appreciation or depreciation in the value
of such shares in anticipation of the Merger, unless such exclusion would be
inequitable.
A holder of Roanoke Gas Common Stock who desires to exercise such
holder's dissenters' rights must satisfy all of the following conditions. A
written notice of such holder's intent to demand payment for such holder's
Roanoke Gas Common Stock must be delivered to Roanoke Gas before the taking of
the vote on approval of the Proposal. This written notice must be in addition to
and separate from voting against, abstaining from voting, or failing to vote on
approval of Proposal 1. Voting against, abstaining from voting or failing to
vote on approval of the Merger and Reorganization will not constitute written
notice of an intent to demand payment within the meaning of Article 15.
A holder of Roanoke Gas Common Stock electing to exercise such holder's
dissenters' rights under Article 15 must not vote for approval of the Merger and
Reorganization. Voting for approval of the Merger and Reorganization, or
delivering a proxy in connection with the Annual Meeting (unless the proxy
specifies a vote against, or abstaining from voting on, approval of the Merger
and Reorganization), will constitute a waiver of such holder's dissenters'
rights and will nullify any written notice of an intent to demand payment
submitted by such holder.
A holder of record of Roanoke Gas Common Stock may assert dissenters'
rights as to less than all of the shares registered in such holder's name only
if such holder dissents with respect to all shares beneficially owned by any one
person and notifies Roanoke Gas in writing of the name and address of each
person on whose behalf such holder is asserting dissenters' rights. The rights
of a partial dissenter under Article 15 are determined as if the shares as to
which the holder dissents and the holder's other shares were registered in the
names of different shareholders.
A beneficial holder of Roanoke Gas Common Stock may assert dissenters'
rights as to shares held on such holder's behalf only if such holder: (1)
submits to Roanoke Gas the record holder's written consent to the dissent
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<PAGE>
not later than the time the beneficial holder asserts dissenters' rights;
and (2) does so with respect to all shares of which such holder is the
beneficial holder or over which such holder has the power to direct the vote.
If the Merger is consummated, Roanoke Gas will, within ten days after
the Effective Time of the Merger, deliver a dissenters' notice to all holders
who satisfied the foregoing requirements, which will: (i) state where payment
demand is to be sent and where and when certificates for Dissenting Shares are
to be deposited; (ii) supply a form for demanding payment that includes the date
(April 27, 1998) of the first announcement to news media of the Merger and
Reorganization, and requires that the person asserting dissenters' rights
certify whether or not such person acquired beneficial ownership of such
person's Dissenting Shares before or after such date; (iii) set a date by which
Roanoke Gas must receive the payment demand, which date may not be less than
thirty nor more than sixty days after the date of delivery of the dissenters'
notice; and (iv) be accompanied by a copy of Article 15.
A shareholder sent a dissenters' notice shall demand payment, certify
that such holder acquired beneficial ownership of such holder's Dissenting
Shares before, on or after April 27, 1998, and deposit the certificates
representing such holder's Dissenting Shares in accordance with the dissenters'
notice. A shareholder who deposits such holder's shares as described in the
dissenters' notice retains all other rights as a holder of Roanoke Gas Common
Stock except to the extent such rights are canceled or modified by the
consummation of the Merger. A shareholder who does not demand payment and
deposit his share certificates where required, each by the date set forth in the
dissenters' notice, is not entitled to payment for such holder's shares under
Article 15.
Except as provided below with respect to after-acquired shares, within
thirty days after receipt of a payment demand, Roanoke Gas shall pay the
dissenter the amount that Roanoke Gas estimates to be the fair value of the
dissenter's shares, plus accrued interest. The obligation of Roanoke Gas to make
such payment may be enforced: (1) by the Circuit Court for the City of Roanoke,
Virginia; or (2) at the election of any dissenter residing or having its
principal office in Virginia, by the circuit court in the city or county where
the dissenter resides or has such office. The payment by Roanoke Gas will be
accompanied by: (1) Roanoke Gas' balance sheet as of the end of a fiscal year
ended not more than sixteen months before the Effective Time of the Merger, an
income statement for that year, a statement of changes in shareholders' equity
for that year and the latest available interim financial statements, if any; (2)
an explanation of how Roanoke Gas estimated the fair value of the Dissenting
Shares and of how the interest was calculated; (3) a statement of the
dissenter's right to demand payment as described below; and (4) a copy of
Article 15.
Roanoke Gas may elect to withhold payment from a dissenter unless the
dissenter was the beneficial owner of the Dissenting Shares on April 27, 1998,
in which case Roanoke Gas will estimate the fair value of such after-acquired
shares, plus accrued interest, and will offer to pay such amount to each
dissenter who agrees to accept it in full satisfaction of such dissenter's
demand. Roanoke Gas will send with such offer an explanation of how it estimated
the fair value of the shares and of how the interest was calculated, and a
statement of the dissenter's right to demand payment as described below.
Within thirty days after Roanoke Gas makes or offers payment as
described above, a dissenter may notify Roanoke Gas in writing of the
dissenter's own estimate of the fair value of the Dissenting Shares and the
amount of interest due, and demand payment of such estimate (less any payment by
Roanoke Gas) or reject Roanoke Gas' offer and demand payment of such estimate.
If any such demand for payment remains unsettled, within sixty days
after receiving the payment demand, Roanoke Gas will petition the Circuit Court
for the City of Roanoke, Virginia to determine the fair value of the shares and
the accrued interest and make all dissenters whose demands remain unsettled
parties to such proceeding, or pay each dissenter whose demand remains unsettled
the amount demanded. Each dissenter made a party to such proceeding is entitled
to a judgment for: (i) the amount, if any, by which the court finds that the
fair value of the Dissenting Shares, plus interest, exceeds the amount paid by
Roanoke Gas; or (ii) the fair value, plus accrued interest, of the dissenter's
after-acquired shares for which Roanoke Gas elected to withhold payment. The
court will
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determine all costs of the proceeding, including the reasonable compensation and
expenses of appraisers appointed by the court and assess the costs against
Roanoke Gas, or against all or some of the dissenters to the extent the court
finds the dissenters did not act in good faith in demanding payment.
The foregoing is only a summary of the rights of a dissenting holder of
Roanoke Gas Common Stock. Any holder of Roanoke Gas Common Stock who intends to
dissent from the Merger and Reorganization should carefully review the text of
the applicable provisions of the Virginia Act set forth in Attachment C to this
Proxy Statement/Prospectus and should also consult with such holder's attorney.
The failure of a holder of Roanoke Gas Common Stock to follow precisely the
procedures summarized above, and set forth in Attachment C, may result in loss
of dissenters' rights. No further notice of the events giving rise to
dissenters' rights or any steps associated therewith will be furnished to
holders of Roanoke Gas Common Stock, except as indicated above or otherwise
required by law.
In general, any dissenting shareholder who perfects such holder's right
to be paid the fair value of such holder's Roanoke Gas Common Stock in cash will
recognize taxable gain or loss for federal income tax purposes upon receipt of
such cash. See "Certain Federal Income Tax Consequences."
MANAGEMENT OF RESOURCES
The Articles of Resources divide Resources' Board of Directors into
three classes in the same manner as the Board of Roanoke Gas, with directors in
each class generally being elected for a three-year term. Resources' Bylaws
permit its Board of Directors to fix from time to time the number of directors
in a range of seven to eleven. Resources' Board of Directors currently is
comprised of the same persons who serve on Roanoke Gas' Board of Directors.
These same individuals will continue as directors of Resources and Roanoke Gas
after the Merger.
Similarly, the current officers of Roanoke Gas also serve as the
officers of Resources and will continue as officers of Roanoke Gas and Resources
after the Merger.
For further information concerning persons who are directors and
officers of Resources, see "Proposal 2: Election of Directors of Roanoke Gas"
and "Security Ownership of Management" in this Proxy Statement/Prospectus and
"Executive Officers of the Registrant" following Part I of the Company's Annual
Report on Form 10-K for the year ended September 30, 1998, which is incorporated
by reference herein.
LEGAL OPINION
The validity of the shares of Resources Common Stock to be issued in the
Merger will be passed upon by Woods, Rogers & Hazlegrove, P.L.C., counsel to
Roanoke Gas and Resources, 10 South Jefferson Street, Suite 1400, Roanoke,
Virginia 24011. Wilbur L. Hazlegrove, a director of Roanoke Gas and Resources,
is Of Counsel to Woods, Rogers & Hazlegrove, P.L.C. The principals of the firm
of Woods, Rogers & Hazlegrove, P.L.C. beneficially owned, as of November 30,
1998, approximately 62,000 shares of Roanoke Gas Common Stock.
EXPERTS
The 1998 consolidated financial statements and the related financial
statement schedule incorporated in this Proxy Statement/Prospectus by reference
from the Roanoke Gas Company's Annual Report on Form 10-K for the year ended
September 30, 1998 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
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The consolidated financial statement of Roanoke Gas Company and
subsidiaries as of September 30, 1997, and for each of the years in the two-year
period ended September 30, 1997, have been included and incorporated by
reference in this Prospectus and elsewhere in the registration statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, included and incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
See "Independent Public Accountants" below.
The Board of Directors of Roanoke Gas has unanimously approved the
holding company structure and adopted the Merger Agreement, believes the holding
company structure and the Merger and Reorganization to be in the best interests
of Roanoke Gas and its shareholders, and recommends that the holders of Roanoke
Gas Common Stock vote "FOR" Proposal 1 at the Annual Meeting.
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PROPOSAL 2
ELECTION OF DIRECTORS OF ROANOKE GAS
Increasingly in recent years, officers of the Roanoke Gas have been
approached by others to open discussions for acquisition of Roanoke Gas. The
Board of Directors does not believe that it is obligated to shareholders to
sell, hold out for sale or engage in discussions for sale of Roanoke Gas and has
formally acted to direct officers and individual directors to advise those who
may propose acquisition or discussions for acquisition that Roanoke Gas is not
now for sale under any arrangement requiring Board approval.
Roanoke Gas' Board of Directors is divided into three classes (A, B and
C) with staggered three-year terms. The current term of office of the Class B
directors expires at the 1999 Annual Meeting. The terms of the Class C and Class
A directors will expire in 2000 and 2001, respectively.
There are three management nominees for Class B directors: Lynn D. Avis,
J. Allen Layman and Thomas L. Robertson. All nominees currently serve on the
Board and are standing for reelection.
Unless authorization is withheld, the persons named as proxies will vote
for the election of the nominees named below. Each nominee has agreed to serve
if elected. In the event any nominee shall unexpectedly be unable to serve, the
proxies will be voted for such other persons as the Board may designate. The
present principal occupation or employment and employment during the past five
years and the office, if any, held with Roanoke Gas are set forth below opposite
the name of each nominee and director. Proxies cannot be voted for a greater
number of persons than the number of nominees.
The Board of Directors recommends a vote FOR each of the nominees for
Class B Director.
<TABLE>
<CAPTION>
Year In
Which
First Elected
Name and Age As Director Principal Occupation
<S> <C> <C> <C> <C> <C> <C>
NOMINEES FOR DIRECTOR
CLASS B DIRECTORS (Serving until 2002 Annual Meeting)
Lynn D. Avis 1986 President, Avis Construction Co., Inc. (Construction company)
Age 64
J. Allen Layman 1991 President and Chief Executive Officer, R&B Communications,
Age 46 Inc.(Telecommunications)
Thomas L. Robertson 1986 President and Chief Executive Officer, Carilion Health System
Age 55 and Carilion Medical Center; Director, Roanoke Electric Steel
Corporation
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DIRECTORS CONTINUING IN OFFICE
CLASS C DIRECTORS (Serving until 2000 Annual Meeting)
Frank T. Ellett 1983 President, Virginia Truck Center, Inc. (Sale, lease and service of
Age 60 heavy trucks)
F. A. Farmer, Jr. 1979 Chairman of the Board of Directors of Roanoke Gas since January
Age 66 1996; President and Chief Executive Officer of Roanoke Gas,
January 1991 to February 1998
W. L. Hazlegrove 1979 Of Counsel, law firm of Woods, Rogers & Hazlegrove, P.L.C.;
Age 69 Vice President and General Counsel of Roanoke Gas, 1984-1994
CLASS A DIRECTORS (Serving until 2001 Annual Meeting)
Abney S. Boxley, III 1994 President, W. W. Boxley Co. (Crushed stone supplier); Director,
Age 40 Valley Financial Corporation
S. Frank Smith 1990 Vice President, Coastal Coal Co., LLC (Marketers and sellers of
Age 50 coal)
John B. Williamson, III 1993 President and CEO of Roanoke Gas since February 1998; Vice
Age 43 President-Rates and Finance, January 1993 to February 1998;
Director of Rates and Finance, April 1992 to January 1993
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of November 30, 1998, certain
information regarding the beneficial ownership of the common stock of Roanoke
Gas by each director, nominee and named executive officer and by all directors
and executive officers as a group. Unless otherwise noted in the footnotes to
the table, the named persons have sole voting and investment power with respect
to all outstanding shares of Roanoke Gas common stock shown as beneficially
owned by them.
<TABLE>
<CAPTION>
Shares of Common
Name of Stock Beneficially Owned
Beneficial Owner As of 11/30/98(1) Percent of Class
<S> <C> <C> <C> <C> <C> <C>
Lynn D. Avis
Abney S. Boxley, III
Frank T. Ellett
Frank A. Farmer, Jr. (2)
Wilbur L. Hazlegrove (3)
J. Allen Layman
Thomas L. Robertson
S. Frank Smith
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John B. Williamson, III (4)
All Directors and Executive Officers as (5)
a Group (12 persons)
- ----------------------
</TABLE>
*Less than 1%
(1) Includes restricted shares purchased by directors pursuant to the Restricted
Stock Plan For Outside Directors. (2) Includes 9,282 shares owned by spouse.
(3) Includes 11,144 shares owned by spouse.
(4) Includes 10,000 shares which Mr. Williamson has the right to acquire through
the exercise of stock options. (5) Includes an aggregate of 26,000 shares
which executive officers have the right to acquire through the exercise
of stock options.
BOARD OF DIRECTORS AND COMMITTEES
Audit Committee
The Audit Committee of the Board of Directors, composed of Messrs.
Boxley, Ellett, Layman, Robertson and Smith, meets at least annually with
Roanoke Gas' chief financial officer, the independent auditors of Roanoke Gas,
and certain appropriate officers of Roanoke Gas. The basic functions of this
Committee include reviewing significant financial information, reviewing
accounting procedures and internal controls and recommending the selection of
Roanoke Gas' independent auditors. The Audit Committee met three times during
the 1998 fiscal year.
Executive and Nominating Committee
The Executive and Nominating Committee of the Board of Directors, which
is composed of Messrs. Avis, Hazlegrove, Ellett and Layman, is empowered to
exercise all authority of the Board of Directors, except with respect to matters
reserved for the Board by Virginia law. Thus, in the absence of nominations by
the Board of Directors, this Committee may nominate persons as management's
nominees for election to the Board of Directors by the shareholders at Roanoke
Gas' annual meeting. This Committee, which did not meet during fiscal year 1998,
will not consider proposed nominees recommended by shareholders of Roanoke Gas.
The Board of Directors does not have a standing nominating committee as such.
Compensation Committee
The Compensation Committee of the Board of Directors is composed of
Messrs. Avis, Boxley, Ellett, Layman and Smith. This Committee meets as
necessary to consider and make recommendations to the Board of Directors
concerning the salaries of certain executive officers and management employees
of Roanoke Gas. This Committee met one time during the 1998 fiscal year.
Meetings of the Board and Committees
The Board of Directors met twelve times during the 1998 fiscal year.
With the exception of Mr. Robertson, the incumbent members of the Board attended
in fiscal year 1998, at least 75 percent of the aggregate of the total number of
meetings of the Board and the total number of meetings held by all Committees of
the Board on which they served.
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<PAGE>
EXECUTIVE COMPENSATION
The following table contains information with respect to the individual
compensation of the following officers for services in all capacities to Roanoke
Gas and its subsidiaries for the fiscal years ended September 30, 1998, 1997 and
1996. On February 1, 1998, Mr. Farmer retired as President and Chief Executive
Officer of Roanoke Gas. On that date, Mr. Williamson became President and Chief
Executive Officer of Roanoke Gas and Mr. Pendleton became Executive Vice
President and Chief Operating Officer of Roanoke Gas.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------------ ----------------
Name and Awards All Other
Principal Position Year Salary($) Bonus($)(1) Options/SARs Compensation($)(2)
- ------------------------- ---------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Frank A. Farmer, Jr. 1998 119,022 15,000 0 1,637
President and Chief 1997 169,875 20,000 8,000 7,965
Executive Officer until 1996 158,858 11,000 5,000 5,089
February 1, 1998
John B. Williamson, III 1998 111,164 7,500 3,500 4,974
President and Chief 1997 82,773 10,000 4,000 3,888
Executive Officer as of 1996 78,935 5,000 2,500 2,515
February 1, 1998
Arthur L. Pendleton 1998 100,332 7,500 1,500 4,519
Senior Vice President 1997 82,248 10,000 4,000 3,863
& Chief Operating 1996 79,734 5,000 2,500 2,535
Officer
</TABLE>
- -----------------
(1) Bonus paid in current year for previous year's performance.
(2) Consists entirely of Roanoke Gas' contribution under the Employees' 401(k)
Plan.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants
------------------------------------------------------------------ Potential Realizable
% of Total Value(1) at Assumed
Number of Options Market Annual Rates of
Securities Granted to Exercise Price on Stock Price
Underlying Employees or Base Date of Appreciation for
Options in Fiscal Price Grant Expiration Option Term
------------------------
Name Granted (#) Year ($/Share)(2) ($/Share) Date 5%($) 10%($)
- ---------------------- ------------------------- -------------- ------------------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John B. Williamson, III 3,500 22.6% $20.625 $20.625 01/05/08 117,600 187,250
Arthur L. Pendleton 1,500 9.7% $20.625 $20.625 01/05/08 50,400 80,250
- --------------------
</TABLE>
(1) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the SEC and therefore are not intended to forecast
possible future appreciation, if any, of Roanoke Gas' stock price.
Additionally, these values do not take into consideration the provisions of
the options providing for nontransferability or termination of the options
following termination of employment. Roanoke Gas did not
37
<PAGE>
use an alternative formula for a grant date valuation, as it is not aware of
any formula which will determine with reasonable accuracy a present value
based on future unknown or volatile factors.
(2) The exercise price of the options granted is equal to the closing sales
price of Roanoke Gas Common Stock on the Nasdaq National Market on the date
of grant. Options generally expire ten years from the date of grant.
<TABLE>
<CAPTION>
Aggregate Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Value of
Number of Unexercised
Shares Unexercised in-the-money
Acquired on Value Options at fiscal options at fiscal
Name Exercise (#) Realized ($) year-end (#) year-end ($)
- ------------------- -------------- -------------- --------------------- ---------------------
Exercisable/ Exercisable/
Unexercisable Unexercisable
--------------------- ---------------------
<S> <C> <C> <C> <C>
Frank A. Farmer, Jr. 13,000 31,250 0/0 0/0
</TABLE>
Retirement Plan
Roanoke Gas has in effect a noncontributory Retirement Plan. The costs
of benefits under the Plan, which are borne by Roanoke Gas, are computed
actuarially and defrayed by earnings from the Plan's investments and/or annual
contributions of Roanoke Gas. The Plan generally provides for the monthly
payment, at normal retirement age 65, of the greater of (a) the participant's
accrued benefit as of December 31, 1988 under the formula then in effect or (b)
one-twelfth of (i) plus (ii) minus (iii): (i) 1.2% of the participant's average
compensation for his highest consecutive sixty months of service multiplied by
years of credited service up to thirty years, (ii) .65% of the participant's
average compensation for his highest consecutive sixty months of service in
excess of covered compensation (generally defined as the average of Social
Security wage bases over a participant's assumed working lifetime) multiplied by
years of credited service up to thirty years, and (iii) the participant's
balance, if any, from Roanoke Gas' former profit sharing plan. Early retirement
with reduced monthly benefits is available at age 55 after ten years' service.
Provisions also are made for vesting of benefits after five years of service and
for disability and death benefits. All employees who have completed one year of
service to Roanoke Gas and are credited with at least 1,000 hours of service in
a Plan year are eligible to participate in the Plan.
At age 65, for Plan purposes, Mr. Williamson and Mr. Pendleton will have
28 and 37 credited years of service, respectively. Upon his retirement on
February 1, 1998, Mr. Farmer, at age 65, had 34 credited years of service.
The compensation covered by the Plan includes the total of all amounts
paid to a participant by Roanoke Gas for personal services reported on the
participant's federal income tax withholding statement (Form W-2), up to certain
statutory limits. For 1998, these earnings are limited to $160,000. This limit
is indexed for cost of living after 1994.
38
<PAGE>
<TABLE>
<CAPTION>
Estimated Annual Pension For
Representative Years of Credited Service(1)
-----------------------------------------------------------------------
Highest Sixty Months
Average Compensation 15 20 25 30 35
-------------------- == == == == ==
<S> <C> <C> <C> <C> <C> <C>
$ 125,000 $ 31,800 $ 42,400 $ 52,900 $63,500 $ 63,500
150,000 38,700 51,600 64,500 77,400 77,400
175,000 39,300 52,300 65,400 78,500 78,500
200,000 39,300 52,300 65,400 78,500 78,500
</TABLE>
- -----------------
(1) The benefit amounts assume the employee is retiring at normal retirement age
(age 65). The benefit amounts listed in the table are computed as a straight
life annuity. No offset to pension benefits due to the Profit-Sharing Plan
(which has been converted into the 401(k) Plan) is reflected. Benefits are
not reduced by Social Security.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee (the "Committee"), which is made up of five
members of the Board of Directors who are not officers or employees of Roanoke
Gas, is responsible for setting and administering the policies that govern the
annual compensation paid to the executive officers of Roanoke Gas, including the
Chief Executive Officer.
In fiscal 1998, annual salary continued to be the primary component of
compensation for executive officers of Roanoke Gas. This is based in large part
on concern that external factors beyond the control of Roanoke Gas executives,
such as weather and regulatory decisions, may have a significant impact on
corporate performance.
The Committee recommends, for approval by the Board of Directors, the
annual salaries of executive officers. Salaries are based on the respective
positions held by the executive officers, including their accomplishments, level
of responsibility and experience and the relationship of such salaries to the
salaries of other Roanoke Gas managers and employees. In this regard, the
Committee reviews the Chief Executive Officer's recommendations on compensation
of the other executive officers and information concerning executive
compensation at other companies in the American Gas Association. Such other
companies are included in (but do not solely comprise) both of the peer indices
reflected in the Performance Graph below. The Committee also considers overall
corporate performance, customer service and satisfaction, relationships with
regulatory agencies and the ability to manage and maintain a competent work
force in preparing its compensation recommendations.
Pursuant to Roanoke Gas' Stock Bonus Plan, the Committee approved the
payment in fiscal 1998 of bonuses to the Chief Executive Officer and other
executive officers of Roanoke Gas for outstanding performance during the fiscal
year 1997. The Stock Bonus Plan is intended to allow the Board of Directors to
award individual or collective superior performance that has resulted in
enhanced shareholder value or returns and to encourage increased ownership of
Roanoke Gas Common Stock by officers and management. The Stock Bonus Plan is
administered by the Committee, which considers recommendations from Roanoke Gas'
President. Roanoke Gas' bonus award proposals are subject to approval of the
Board of Directors. Under the Stock Bonus Plan, executive officers of Roanoke
Gas are encouraged to own a position in Roanoke Gas Common Stock of at least 50%
of the value of their annual salary. To promote this policy, the Plan provides
that all officers with stock ownership positions below 50% of the value of their
annual salaries must, unless approved by the Committee, receive no less than 50%
of any performance bonus in the form of Roanoke Gas Common Stock. Bonus amounts,
if any, for a fiscal year will generally be determined in the January following
that fiscal year-end. Bonus award determinations under the Stock Bonus Plan for
performance in the 1997 fiscal year were based on the performance of Roanoke
39
<PAGE>
Gas, combined with an analysis of the individual contributions of officers
receiving the bonuses to the overall performance of Roanoke Gas.
Roanoke Gas adopted a Key Employee Stock Option Plan, which became
effective January 1996. The Plan is intended to provide Roanoke Gas' executive
officers with long-term (ten-year) incentives and rewards tied to the price of
Roanoke Gas Common Stock. The Committee believes that stock options will assist
Roanoke Gas in attracting, maintaining and motivating officers and other key
employees of Roanoke Gas, upon whose judgment, initiative and efforts Roanoke
Gas depends, by providing such persons with the opportunity to acquire an equity
interest in Roanoke Gas. Stock options are used to provide executive officers
additional incentive to use their best efforts and superior performances to
promote the best interest of Roanoke Gas and the shareholders.
In making its recommendation regarding Mr. Williamson's 1998
compensation as the Chief Executive Officer, the Committee considered all of the
criteria above. Specific consideration also was given to Mr. Williamson's
efforts toward cost containment, Roanoke Gas' improved earnings and shareholder
and customer growth in the preceding fiscal year. During 1998, Mr. Williamson
received a bonus of $7,500, which he elected to take in Roanoke Gas Common
Stock, for his performance during the fiscal year 1997. The amount of the bonus
was determined based upon Mr. Williamson's success during 1997 in monitoring
operational and capital budgets for maximum cost efficiency. The control of
costs, operational and financing, resulted in improved earnings for Roanoke Gas.
Mr. Williamson also received during fiscal 1998 an option under the Key Employee
Stock Option Plan to purchase 3,500 shares of Roanoke Gas Common Stock. The
number of shares subject to the option was established based on the Committee's
determination that 3,500 option shares provided a reasonable additional
incentive for the Chief Executive Officer to place added emphasis on enhancing
share value through management practices while being generally moderate in the
total grant.
Mr. Farmer retired as Chief Executive Officer of Roanoke Gas on February 1,
1998. Mr. Farmer's fiscal 1998 compensation as Chief Executive prior to his
retirement was a continuation of his salary for fiscal 1997, which originally
was based on his performance in fiscal 1996. Mr. Farmer received a bonus of
$15,000 in fiscal 1998, for performance in fiscal 1997. The amount of the bonus
was based upon the Company's improved earnings and significant customer growth
under Mr. Farmer's leadership in fiscal 1997.
Submitted by the Compensation Committee of the
Board of Directors of Roanoke Gas:
Lynn D. Avis, Abney S. Boxley, III, Frank T. Ellett,
J. Allen Layman, S. Frank Smith
40
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
John B. Williamson, III, President and Chief Executive Officer of
Roanoke Gas, serves as a director of R & B Communications, Inc. J. Allen Layman,
who is a director of Roanoke Gas and serves on the Compensation Committee of the
Board of Directors of Roanoke Gas, is President and Chief Executive Officer of R
& B Communications, Inc.
PERFORMANCE GRAPH
The following graph compares the yearly percentage change and the
cumulative total of shareholder return on Roanoke Gas Common Stock with the
cumulative return on the Standard and Poor's Utilities Index (the "S&P Utilities
Index") and the Edward Jones Natural Gas Distribution Index for the five-year
period commencing on September 30, 1993 and ending on September 30, 1998. These
comparisons assume the investment of $100 in Roanoke Gas Common Stock and each
of the indices on September 30, 1993 and the reinvestment of dividends.
[PERFORMANCE GRAPH APPEARS HERE.]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Roanoke Gas Comapny $100 115 106 129 141 161
- -------------------------------------------------------------------------------------------
S&P Utilities $100 87 111 119 136 177
- -------------------------------------------------------------------------------------------
Edward Jones Natural Gas
Distribution Index $100 87 98 117 134 150
- -------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE>
TRANSACTIONS WITH MANAGEMENT
The law firm of Woods, Rogers & Hazlegrove, P.L.C., of which W. L.
Hazlegrove, a director of Roanoke Gas, is Of Counsel, rendered legal services to
Roanoke Gas during fiscal 1998, and it is anticipated that similar legal
services will be provided by that firm to Roanoke Gas in fiscal 1999.
Effective February 1, 1998, Frank A. Farmer, Jr., retired President and
Chief Executive Officer of Roanoke Gas, entered into an agreement to provide
consulting services to Roanoke Gas. Under the agreement, Mr. Farmer will serve
as Chairman of the Board of Directors of Roanoke Gas and perform such duties and
responsibilities in connection with the business of Roanoke Gas as may be
assigned to him by the Board. During the term of the agreement, Mr. Farmer will
not accept engagements for compensation by any party that is in competition or
could reasonably expect to be in competition with Roanoke Gas. The consulting
agreement provides that Roanoke Gas will pay Mr. Farmer annual compensation in
the amount of $82,500. The consulting agreement, by its terms, terminates on
January 31, 1999, unless it is extended. The agreement also may be terminated in
the event of disability of Mr. Farmer which renders him unable to provide
services as contemplated under the agreement, or for just case.
REMUNERATION OF DIRECTORS
Directors are compensated $6,000 per year in addition to receiving fees
for meetings of Roanoke Gas' Board of Directors and of Committees of the Board
which they attend. Mr. Farmer and Mr. Williamson are not compensated for
attendance at Board and Committee meetings and do not receive $6,000 per year
for service as a Board member. The schedule of fees paid to directors for each
such meeting attended is as follows:
Board of Directors $ 400
Executive and Nominating Committee $ 400
Audit Committee $ 400
Compensation Committee $ 400
However, the fee for any Committee meetings held the same day as a Board
meeting is $250.
Restricted Stock Plan for Outside Directors
The Board of Directors of Roanoke Gas implemented the Roanoke Gas
Company Restricted Stock Plan for Outside Directors effective January 27, 1997.
The Plan is applicable to not more than 50,000 shares of Roanoke Gas Common
Stock.
Under the Plan, 40% of the monthly retainer fee paid to each nonemployee
director of Roanoke Gas is paid in shares of common stock that is subject to
vesting and nontransferability restrictions (the "Restricted Stock"). The number
of shares of Restricted Stock is calculated each month based on the closing
sales price of Roanoke Gas Common Stock on the Nasdaq National Market on the
first day of the month, if the first day of the month is a trading day, or if
not, the first trading day prior to the first day of the month. Beginning in
fiscal 1998, a participant could, subject to approval of the Board, elect to
receive up to 100% of his retainer fee for the fiscal year in Restricted Stock.
Such election cannot be revoked or amended during the fiscal year.
The shares of Restricted Stock of Roanoke Gas issued under the Plan will
vest only in the case of a participant's death, disability, retirement
(including not standing for reelection to the Board), or in the event of a
change in control of Roanoke Gas. There is no option to take cash in lieu of
stock upon vesting of shares under the Plan. The Restricted Stock may not be
sold, transferred, assigned or pledged by the participant until the shares have
42
<PAGE>
vested in accordance with the terms of the Plan. At the time the Restricted
Stock vests, a certificate for vested shares will be delivered to the
participant or the participant's beneficiary.
The shares of Restricted Stock will be forfeited to Roanoke Gas by a
participant's voluntary resignation during his term on the Board or removal for
cause as a director.
Subject to the terms of the Plan, a participant, as owner of the
Restricted Stock, has all rights of a shareholder, including but not limited to,
voting rights, the right to receive cash or stock dividends, and the right to
participate in any capital adjustment of Roanoke Gas. Roanoke Gas requires that
all dividends or other distributions paid on shares of Restricted Stock be
automatically sequestered and reinvested on an immediate or deferred basis in
additional Restricted Stock.
All directors, except Mr. Farmer and Mr. Williamson (who do not qualify
as outside directors), participated in the Plan in fiscal 1998. The directors
received, in the aggregate, 422.782 shares of Restricted Stock in fiscal 1998,
valued at approximately $8,244 (calculated using the closing price of $19.50 per
share of Roanoke Gas common stock on September 30, 1998).
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Roanoke
Gas' executive officers and directors, and any persons who own more than 10% of
Roanoke Gas' common stock, to file reports of ownership and changes in ownership
of Roanoke Gas common stock with the SEC. Based on its review of the copies of
such forms furnished to it and written representations from certain reporting
persons that no other reports are required, Roanoke Gas believes that in fiscal
1998 one report for one transaction was filed late by John S. D'Orazio and one
report for two transactions was filed late by Frank A. Farmer.
INDEPENDENT PUBLIC ACCOUNTANTS
At its meeting on July 28, 1997, the Board of Directors of Roanoke Gas,
upon recommendation of the Audit Committee, appointed Deloitte & Touche LLP as
independent accountants to audit the financial statements of Roanoke Gas and its
subsidiaries for the years ending September 30, 1998, 1999 and 2000. KPMG Peat
Marwick LLP ("KPMG") previously had served as Roanoke Gas' certifying
accountants since 1990. The Board of Directors solicited competitive bids from
accountants interested in serving as Roanoke Gas' auditor. From the bids
received, the Audit Committee recommended Deloitte & Touche LLP to the Board of
Directors. KPMG's engagement terminated after completion of the 1997 audit.
KPMG's auditors' reports on Roanoke Gas' financial statements for the
two fiscal years ended September 30, 1997, contained no adverse opinion or a
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope, or accounting principles. During Roanoke Gas' fiscal years ending
September 30, 1997 and 1996, there were no disagreements with KPMG on any matter
of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure which, if not resolved to the satisfaction of KPMG,
would have caused it to make a reference to the subject matter of the
disagreement in connection with its auditors' reports.
OTHER MATTERS
Management does not know of any matters to be presented at the Annual
Meeting of Shareholders other than the election of directors. However, if any
other matters properly come before the meeting, proxies received pursuant to
this solicitation will be voted thereon in the discretion of the proxyholder.
43
<PAGE>
SHAREHOLDER PROPOSALS
If the Reorganization is consummated, shareholder proposals intended for
inclusion in the 2000 Proxy Statement of Resources should be sent to the
Secretary of Resources at 519 Kimball Avenue, N.E., Roanoke, Virginia 24016, and
must be received by August 13, 1999.
Resources' Bylaws limit the business to be transacted at a meeting of
shareholders to that specified in the notice of the meeting, those otherwise
properly presented by the Board of Directors and those presented by a
shareholder of record of Resources so long as the shareholder gives the
President of Resources written notice of the matter not less than sixty nor more
than ninety days prior to the meeting. However, if less than seventy days notice
or prior public disclosure of the date of the meeting is given or made, notice
by the shareholders will be considered timely if it is received by the close of
business on the tenth day following the day on which such notice of the meeting
was given or the public disclosure was made. Notice is deemed to have been given
more than seventy days in advance of an annual meeting of shareholders if the
annual meeting is called on the fourth Monday of January. The shareholder's
written notice under this Bylaw provision must include certain specified
information concerning the proposal, and information as to the proponent's
ownership of Resources Common Stock. Proposals not meeting these requirements
will not be entertained at a shareholder's meeting.
If the Reorganization is not consummated, shareholder proposals intended
for inclusion in the 2000 Proxy Statement of Roanoke Gas should be sent to the
Secretary of Roanoke Gas at 519 Kimball Avenue, N.E., Roanoke, Virginia 24016,
and must be received by August 13, 1999.
See the discussion under "Certain Differences in Rights of Roanoke Gas
and Resources Shareholders -- Shareholders Proposals" in this Proxy
Statement/Prospectus.
WHERE YOU CAN FIND MORE INFORMATION
Roanoke Gas (File No. 0-367) files annual, quarterly and current
reports, proxy statements and other information with the SEC. You may read and
copy any reports, statements or other information that Roanoke Gas files at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Roanoke Gas public filings are also available to
the public from commercial document retrieval services and at the Internet World
Wide Web site maintained by the SEC at "http://www.sec.gov." Reports, proxy
statements and other information concerning Roanoke Gas may also be inspected at
the offices of the National Association of Securities Dealers, Inc., 1735 K
Street, Washington, D.C. 20006-1506. Roanoke Gas Common Stock is included for
quotation on the Nasdaq National Market under the symbol "RGCO."
Resources has filed the Registration Statement to register with the SEC
the shares of Resources Common Stock to be issued to Roanoke Gas shareholders in
the Merger. This Proxy Statement/Prospectus is a part of the Registration
Statement and constitutes a Prospectus of Resources and a Proxy Statement of
Roanoke Gas for the Annual Shareholders Meeting.
As allowed by SEC rules, this Proxy Statement/Prospectus does not
contain all the information that shareholders can find in the Registration
Statement or the exhibits to the Registration Statement.
The SEC allows Roanoke Gas to "incorporate by reference" information
into this Proxy Statement/Prospectus, which means that Roanoke Gas can disclose
important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is deemed to
be part of
44
<PAGE>
this Proxy Statement/Prospectus, except for any information superseded by
information contained directly in the Proxy Statement/Prospectus.
This Proxy Statement/Prospectus incorporates by reference the Roanoke
Gas Annual Report on Form 10-K for the year ended September 30, 1998, which has
previously been filed with the SEC. The 1998 Annual Report to Shareholders of
Roanoke Gas, which is being delivered with this Proxy Statement/Prospectus, also
is incorporated by reference in this Proxy Statement/Prospectus. These documents
contain important information about Roanoke Gas and its financial condition.
Roanoke Gas also incorporates by reference into this Proxy
Statement/Prospectus any additional documents that it may file with the SEC
between the date of this Proxy Statement/Prospectus and the date of the Annual
Meeting. These include periodic reports, such as Quarterly Reports on Form 10-Q
and Current Reports on Form 8-K.
If you are a shareholder of Roanoke Gas, you can obtain the documents
incorporated by reference from Roanoke Gas or the SEC or the SEC's Internet
World Wide Web site described above. Documents incorporated by reference are
available from Roanoke Gas without charge, excluding all exhibits unless
specifically incorporated by reference as an exhibit to this Proxy
Statement/Prospectus. Shareholders of Roanoke Gas may obtain documents
incorporated by reference in this Proxy Statement/Prospectus by requesting them
in writing or by telephone from Roanoke Gas at the following address: Roanoke
Gas Company, 519 Kimball Avenue, N.E., Roanoke, Virginia 24016, Attention: Roger
L. Roger L. Baumgardner
If you would like to request documents from Roanoke Gas, please do so by
February 1, 1999, to receive them before the Annual Meeting. If you request any
incorporated documents from us, we will mail them to you by first-class mail, or
other equally prompt means, within one business day of our receipt of your
request.
You should rely only on the information contained or incorporated by
reference in this Proxy Statement/Prospectus to vote your shares at the Roanoke
Gas Annual Meeting. Roanoke Gas and Resources have not authorized anyone to
provide you with information that is different from what is contained in this
Proxy Statement/Prospectus. This Proxy Statement/Prospectus is dated December
11, 1998. You should not assume that the information contained in the Proxy
Statement/Prospectus is accurate as of any date other than that date, and
neither the mailing of this Proxy Statement/Prospectus to shareholders nor the
issuance of Resources' securities in the Merger shall create any implication to
the contrary.
-----------------------------
Please indicate how you want to vote, and sign date and mail the
enclosed proxy promptly in the enclosed postage-paid envelope.
ROANOKE GAS COMPANY
JOHN B. WILLIAMSON, III
President and Chief Executive Officer
December 11, 1998
45
<PAGE>
Appendix A
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("Agreement") is
made as of September 28, 1998, by and among ROANOKE GAS COMPANY, a Virginia
public service corporation ("Roanoke Gas"), RGC ACQUISITION CORP., a Virginia
corporation ("Acquisition"), RGC RESOURCES, INC., a Virginia corporation
("Resources"), DIVERSIFIED ENERGY COMPANY, a Virginia corporation
("Diversified"), BLUEFIELD GAS COMPANY, a West Virginia public service
corporation ("Bluefield"), and COMMONWEALTH PUBLIC SERVICE CORPORATION, a
Virginia public service corporation ("Commonwealth"), provides as follows:
RECITALS:
A. Roanoke Gas has authorized capital stock consisting of 3,000,000
shares of common stock, $5.00 par value per share ("Roanoke Gas Common Stock"),
of which 1,794,416 shares are issued and outstanding; and
B. Acquisition has authorized capital stock consisting of 5,000 shares
of common stock ("Acquisition Common Stock"), no par value per share, of which
10 shares are issued and outstanding and owned beneficially and of record by
Resources; and
C. Resources has authorized capital stock consisting of 10,000,000
shares of common stock, $5.00 par value per share ("Resources Common Stock"), of
which 10 shares are issued and outstanding and owned beneficially and of record
by Roanoke Gas, and 5,000,000 shares of Preferred Stock, no par value per share,
none of which have been issued; and
D. Diversified has authorized capital stock consisting of 15,000 shares
of common stock, $10 par value per share ("Diversified Common Stock"), of which
11,000 shares are issued and outstanding and owned beneficially and of record by
Roanoke Gas; and
E. Bluefield has authorized capital stock consisting of 250,000 shares
of common stock, $0.20 par value per share ("Bluefield Common Stock"), of which
247,520 shares are issued and outstanding and owned beneficially and of record
by Roanoke Gas; and
F. Commonwealth has authorized capital stock consisting of 500 shares of
common stock, $100.00 par value per share ("Commonwealth Common Stock"), of
which 5 shares are issued and outstanding and owned beneficially and of record
by Bluefield; and
G. The Boards of Directors of Roanoke Gas, Acquisition and Resources
deem it advisable to merge Acquisition with and into Roanoke Gas in accordance
with the Virginia Stock Corporation Act ("Virginia Stock Corporation Act") and
this Agreement for the purpose of establishing Resources as the parent
corporation of Roanoke Gas; and
H. The Boards of Directors of the parties hereto deem it advisable to
undertake the other reorganization matters set forth herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and agreements
contained herein, the parties agree that (i) Roanoke Gas shall be merged with
and into Acquisition (the "Merger"), (ii) Roanoke Gas shall be the corporation
surviving the Merger, (iii) Commonwealth shall become a wholly owned subsidiary
of and then be
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merged into, Roanoke Gas, (iv) Bluefield and Diversified shall each become
wholly owned subsidiaries of Resources and (v) the terms and conditions of the
Merger and the other reorganization matters, the mode of carrying them into
effect, the manner of converting, exchanging and/or transferring shares of
capital stock of the parties hereto and other matters relating thereto shall be
as follows:
ARTICLE 1
THE MERGER
1.1 Articles of Merger. Subject to and in accordance with the provisions
of this Agreement, in the event this Agreement and Plan of Merger and
Reorganization is approved by the stockholders of Roanoke Gas in accordance with
the Virginia Stock Corporation Act, Articles of Merger of Roanoke Gas shall be
delivered to the Clerk's Office of the Virginia State Corporation Commission for
filing, all as provided by the Virginia Stock Corporation Act.
1.2 Effective Time. The Merger shall become effective at the time of
filing on the date on which the Articles of Merger are filed with the Clerk's
Office of the Virginia State Corporation Commission, as contemplated by Section
1.1 above, unless otherwise specified in such Articles of Merger (the "Effective
Time"). At the Effective Time, the separate existence of Acquisition shall cease
and Acquisition shall be merged with and into Roanoke Gas, which shall continue
its corporate existence as the surviving corporation (Roanoke Gas and
Acquisition being sometimes referred to herein as the "Constituent Corporations"
and Roanoke Gas, as the surviving corporation, being sometimes referred to
herein as the "Surviving Corporation"). Roanoke Gas shall succeed, without other
transfer, to all the rights and property of Acquisition and shall be subject to
all the debts and liabilities of Acquisition in the same manner as if Roanoke
Gas had itself incurred them. All rights of creditors and all liens upon the
property of each of Roanoke Gas and Acquisition shall be preserved unimpaired.
1.3 Appropriate Actions. Prior to and after the Effective Time,
Resources, Roanoke Gas and Acquisition, respectively, shall take all such
actions as may be necessary or appropriate in order to effectuate the Merger. In
this connection, Resources shall issue and pay the shares of Resources Common
Stock into which outstanding shares of Roanoke Gas Common Stock will be
converted on the basis and to the extent provided in Article 2 of this
Agreement, and shall take such other actions as are necessary to fulfill
Resources' obligations hereunder, including, without limitation, those specified
in Article 6 of this Agreement. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full title to all
properties, assets, privileges, rights, immunities and franchises of either of
the Constituent Corporations, the officers and directors of each of the
Constituent Corporations as of the Effective Time shall take all such further
action.
ARTICLE 2
TERMS OF CONVERSION AND EXCHANGE OF SHARES
2.1 Roanoke Gas Common Stock. At the Effective Time, shares of Roanoke
Gas Common Stock issued and outstanding immediately prior to the Merger shall be
automatically changed and converted into shares of Resources Common Stock, at
the ratio of one share of Resources Common Stock for each one share of Roanoke
Gas Common Stock, and such Resources Common Stock shall thereupon be issued and
fully-paid and non-assessable; provided, however, that such conversion shall not
affect shares of holders, if any, who perfect their rights as dissenting
stockholders under the Virginia Stock Corporation Act with respect to such
shares.
2.2 Acquisition Shares. The shares of Acquisition Common Stock issued
and outstanding immediately prior to the Merger shall be automatically changed
and converted into all of the issued and outstanding shares of Common Stock of
the Surviving Corporation, which shall thereupon be issued and fully-paid and
non-
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assessable, with the effect that the number of issued and outstanding
shares of Common Stock of the Surviving Corporation shall be the same as the
number of issued and outstanding shares of Acquisition Common Stock immediately
prior to the Effective Time.
2.3 Resources Shares. Each share of Resources Common Stock issued and
outstanding immediately prior to the Merger shall be canceled.
ARTICLE 3
ARTICLES OF INCORPORATION AND BYLAWS
3.1 Roanoke Gas Articles. From and after the Effective Time, and until
thereafter amended as provided by law, the Articles of Incorporation of Roanoke
Gas as in effect immediately prior to the Merger shall be and continue to be the
Articles of Incorporation of the Surviving Corporation.
3.2 Roanoke Gas By-Laws. From and after the Effective Time, and until
thereafter amended as provided by law, the By-Laws of Roanoke Gas as in effect
immediately prior to the Merger shall be and continue to be the By-Laws of the
Surviving Corporation.
3.3 Resources Articles and Bylaws. From and after the Effective Time,
and until thereafter amended as provided by law, the Articles of Incorporation
and Bylaws of Resources as in effect immediately prior to the Merger shall be
and continue unchanged to be the Articles of Incorporation and By-Laws of
Resources.
ARTICLE 4
DIRECTORS AND OFFICERS
4.1 Roanoke Gas Directors and Officers. The persons who are directors
and officers of Roanoke Gas immediately prior to the Merger shall continue as
directors and officers, respectively, of the Surviving Corporation and shall
continue to hold office as provided in the Articles of Incorporation and Bylaws
of the Surviving Corporation. If, at or following the Effective Time, a vacancy
shall exist in the Board of Directors or in the position of any officer of the
Surviving Corporation, such vacancy may be filled in the manner provided in the
Articles of Incorporation and Bylaws of the Surviving Corporation.
4.2 Resources Directors and Officers. The persons who are directors and
officers of Resources immediately prior to the Merger shall continue as
directors and officers, respectively, of Resources and shall continue to hold
office as provided in the Articles of Incorporation and Bylaws of Resources. If,
at or following the Effective Time, a vacancy shall exist in the Board of
Directors or in the position of any officer of Resources, such vacancy may be
filled in the manner provided in the Articles of Incorporation and Bylaws of
Resources.
ARTICLE 5
STOCK CERTIFICATES
5.1 Rights of Holders of Certificates. Following the Effective Time,
certificates representing shares of Roanoke Gas Common Stock outstanding at the
Effective Time (herein sometimes referred to as "Roanoke Gas Certificates")
shall evidence only the right of the registered holder thereof to receive, and
may be exchanged for, the shares of Resources Common Stock into which such
shares of Roanoke Gas Common Stock were converted in accordance with Section
2.1. At the Effective Time, Resources shall issue and deliver, or cause to be
issued and delivered, to the transfer agent for Resources (the "Transfer Agent")
certificates representing whole shares of Resources Stock into which outstanding
shares of Roanoke Gas Stock have been converted as provided above. As
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promptly as practicable following the Effective Time, Resources shall send
or cause to be sent to each former stockholder of record of Roanoke Gas
immediately prior to the Effective Time written instructions and transmittal
materials (a "Transmittal Letter") for use in surrendering Roanoke Gas
Certificates to the Transfer Agent. Upon the proper surrender and delivery to
the Transfer Agent (in accordance with Resources' instructions, and accompanied
by a properly completed Transmittal Letter) by a former stockholder of Roanoke
Gas of such stockholder's Roanoke Gas Certificate(s), and in exchange therefor,
the Transfer Agent shall as soon as practicable, issue, register and deliver to
such stockholder a certificate evidencing the number of shares of Resources
Stock to which such stockholder is entitled pursuant to Section 2.1 above.
5.2 Outstanding Certificates. Each outstanding certificate which, prior
to the Effective Time, represented Roanoke Gas Common Stock shall be deemed for
all corporate purposes to represent only the right to receive the number of
shares of Resources Common Stock into which such Roanoke Gas Common Stock was
converted.
5.3 Stock Transfer Books. The stock transfer books for Roanoke Gas
Common Stock shall be deemed to be closed at the Effective Time and no transfer
of shares of Roanoke Gas Common Stock outstanding prior to the Effective Time
shall thereafter be made on such books. As of the Effective Time, Resources
shall establish a stock register reflecting ownership of Resources Common Stock
by former holders of record of Roanoke Gas Common Stock.
5.4 Post-Merger Rights of Holders. Following the Effective Time, the
holders of certificates representing Roanoke Gas Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to stock of the Surviving Corporation and their sole rights shall be
with respect to the Resources Common Stock into which their shares of Roanoke
Gas Common Stock shall have been converted by the Merger, subject to the rights
of any dissenting stockholders who perfect dissenters' rights under Article 13
of the Virginia Stock Corporation Act.
5.5 Unsurrendered Certificates. Subject to Section 5.6 below, no
Resources Common Stock certificate shall be delivered to any former stockholder
of Roanoke Gas unless and until such stockholder shall have properly surrendered
to the Transfer Agent the Roanoke Gas Certificate(s) formerly representing his
or her shares of Roanoke Gas Stock, together with a properly completed
Transmittal Letter in such form as shall be provided to the stockholder by
Resources for that purpose. Further, until such Roanoke Gas Certificate(s) are
so surrendered, no dividend or other distribution payable to holders of record
of Resources Stock as of any date subsequent to the Effective Time shall be
delivered to the holder of such Roanoke Gas Certificate(s). However, subject to
prior escheatment under applicable law, upon the proper surrender of such
Roanoke Gas Certificate(s), the Transfer Agent shall pay to the registered
holder of the shares of Resources Stock represented by such Roanoke Gas
Certificate(s) the amount of any such cash, dividends or distributions which
have accrued but remain unpaid with respect to such shares. Neither Resources,
Roanoke Gas nor the Transfer Agent shall have any obligation to pay any interest
on any such cash, dividends or distributions for any period prior to such
payment.
5.6 Lost, etc., Certificates. Any stockholder of Roanoke Gas whose
certificate evidencing shares of Roanoke Gas Common Stock has been lost,
destroyed, stolen or otherwise is missing shall be entitled to receive a
certificate representing the shares of Resources Common Stock to which he or she
is entitled in accordance with and upon compliance with conditions imposed by
the Transfer Agent or Resources (including, without limitation, a requirement
that the stockholder provide a lost instruments indemnity or surety bond in
form, in substance and amount satisfactory to the Transfer Agent and Resources).
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ARTICLE 6
ROANOKE GAS STOCK PLANS
Roanoke Gas and Resources shall take all actions required to provide
that, from and after the Effective Time, all director, officer, employee,
customer and other plans of Roanoke Gas or its affiliates, to the extent they
directly or indirectly utilize Roanoke Gas Common Stock, shall utilize Resources
Common Stock instead of Roanoke Gas Common Stock.
ARTICLE 7
CONDITIONS OF THE MERGER
Completion of the Merger is subject to the satisfaction of the following
conditions:
7.1 Stockholder Approval. The principal terms of this Agreement shall
have been approved by such holders of capital stock of the parties hereto as is
required by the Virginia Stock Corporation Act.
7.2 Resources Common Stock Listed. All conditions for the listing on the
NASDAQ National Market as of the Effective Time of the Resources Common Stock to
be issued and to be reserved for issuance pursuant to the Merger shall have been
satisfied.
7.3 Regulatory Approvals. All necessary orders, consents, authorization,
approvals or waivers from the Securities and Exchange Commission, the Virginia
State Corporation Commission and all other regulatory bodies, boards or
agencies, or from other third parties, shall have been received, remain in full
force and effect, and shall not include, in the sole judgment of the Board of
Directors of Roanoke Gas, unacceptable conditions.
ARTICLE 8
TRANSFER AND MERGER OF COMMONWEALTH
8.1 Dividend. Bluefield, as the holder of all of the Commonwealth Common
Stock, shall pay declares a non-cash dividend of all of the Commonwealth Common
Stock to its parent corporation, Roanoke Gas (the "Commonwealth Shares
Dividend"). The Commonwealth Shares Dividend shall, subject to receipt of all
required regulatory approvals, be paid at the Effective Time immediately
following the consummation of the Merger.
8.2 Commonwealth Merger. Immediately following the payment of the
Commonwealth Shares Dividend, Commonwealth shall be merged with and into its
parent, Roanoke Gas (the "Commonwealth Merger"), pursuant to the Articles of
Merger attached hereto as Exhibit 1.
ARTICLE 9
TRANSFER OF DIVERSIFIED AND BLUEFIELD
9.1 Dividend. Roanoke Gas, as the holder of all of the Diversified
Common Stock and as the holder of all of the Bluefield Common Stock, shall pay a
non-cash dividend of all of the Diversified Common Stock and all of Bluefield
Common Stock to Resources (the "Bluefield Shares and Diversified Shares
Dividend"). The Bluefield Shares and Diversified Shares Dividend shall, subject
to receipt of all required regulatory approvals, be paid immediately following
the payment of the Commonwealth Shares Dividend.
9.2 Effect. Immediately following the payment of the Bluefield Shares
and Diversified Shares Dividend, each of Roanoke Gas, Bluefield and Diversified
shall be wholly owned subsidiaries of Resources.
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ARTICLE 10
AMENDMENT AND TERMINATION
10.1 Amendment. The parties to this Agreement, by mutual consent of
their respective boards of directors, may amend, modify or supplement this
Agreement in such manner as may be agreed upon by them in writing at any time
before or after approval of this Agreement by the pre-Merger stockholders of
Roanoke Gas (as provided in Section 7.1 above); provided, however, that no such
amendment, modification or supplement shall, if agreed to after such approval by
the pre-Merger stockholders of Roanoke Gas, change any of the principal terms of
this Agreement in a manner which would materially and adversely affect the
rights of the stockholders of Roanoke Gas.
10.2 Termination. This Agreement may be terminated and the Merger
dividend payments and other transactions provided for by this Agreement may be
abandoned at any time, whether before or after approval of this Agreement by the
pre-Merger stockholders of Roanoke Gas, by action of the board of directors of
Roanoke Gas if such board of directors determines for any reason that the
completion of the transactions provided for herein would for any reason be
inadvisable or not in the best interests of Roanoke Gas or its stockholders.
ARTICLE 11
MISCELLANEOUS
11.1 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original hereof.
11.2 Virginia Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, Roanoke Gas, Resources, Acquisition, Bluefield,
Diversified and Commonwealth, pursuant to approval and authorization duly given
by resolutions adopted by their respective boards of directors, have each caused
this Agreement to be executed by its President or one of its Vice Presidents and
attested by its Secretary or one of its Assistant Secretaries.
Roanoke Gas:
ROANOKE GAS COMPANY, a Virginia public
service corporation
By: s/John B. Williamson, III
Its: President and CEO
Attest:
By: s/Roger L. Baumgardner
Its: Secretary
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Resources:
RGC RESOURCES, INC., a Virginia corporation
By: s/John B. Williamson, III
Its: President and CEO
Attest:
By: s/Roger L. Baumgardner
Its: Secretary
Acquisition:
RGC ACQUISITION CORP., a Virginia
corporation
By: s/John B. Williamson, III
Its: President
Attest:
By: s/Roger L. Baumgardner
Its: Secretary
Bluefield:
BLUEFIELD GAS COMPANY, a West Virginia
public service corporation
By: s/John B. Williamson, III
Its: President
Attest
By: s/Roger L. Baumgardner
Its: Secretary
Diversified:
DIVERSIFIED ENERGY COMPANY, a Virginia
corporation
By: s/John B. Williamson, III
Its: President
Attest:
By: s/Roger L. Baumgardner
Its: Secretary
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Commonwealth:
COMMONWEALTH PUBLIC SERVICE CORPORATION,
a Virginia public service corporation
By: s/John B. Williamson, III
Its: President
Attest
By: s/Roger L. Baumgardner
Its: Secretary
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Exhibit 1
ARTICLES OF MERGER
OF
COMMONWEALTH PUBLIC SERVICE CORPORATION
INTO
ROANOKE GAS COMPANY
The undersigned corporations hereby execute these Articles of Merger for
the purpose of merging Commonwealth Public Service Corporation ("Commonwealth"),
a Virginia public service corporation and wholly-owned subsidiary of Roanoke Gas
Company ("Roanoke Gas"), a Virginia public service corporation, into Roanoke Gas
in accordance with Section 13.1-719 of the Virginia Stock Corporation Act.
I. PLAN OF MERGER. The following Plan of Merger was duly approved by the
Board of Directors of Roanoke Gas in the manner prescribed by law and
shareholder approval was not required under Section 13.1-719 of the Virginia
Stock Corporation Act:
PLAN OF MERGER
A. CORPORATIONS PARTICIPATING IN MERGER
Commonwealth Public Service Corporation (the "Merging
Corporation") shall merge with and into Roanoke Gas Company. Roanoke Gas
Company shall be the surviving corporation (the "Surviving
Corporation").
B. TERMS AND CONDITIONS OF THE MERGER, CONVERSION AND CANCELLATION
OF STOCK
On the Effective Date (as hereinafter defined) of the merger of
the Merging Corporation into the Surviving Corporation (the "Merger"),
the separate existence of the Merging Corporation shall cease and each
share of stock of the Merging Corporation outstanding immediately prior
thereto shall, without any action by the holder thereof, be surrendered
and extinguished. The Surviving Corporation shall succeed to all of the
properties, rights, and other assets and shall be subject to all of the
liabilities of the Merging Corporation and the Surviving Corporation.
The stock of the Surviving Corporation outstanding on the Effective Date
shall remain unchanged by reason of the Merger.
C. ARTICLES OF INCORPORATION AND BYLAWS OF SURVIVING CORPORATION
The Articles of Incorporation and the Bylaws of the Surviving
Corporation shall not be changed by the Merger and shall continue as the
Surviving Corporation's Articles of Incorporation and Bylaws.
D. THE DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
The Directors and Officers of the Surviving Corporation at the
Effective Date of the Merger shall continue to be the Directors and
Officers of the Surviving Corporation until their successors are duly
elected and qualified.
II. SHARES ENTITLED TO VOTE. Shareholder approval is not required for
the Merger pursuant to Section 13.1-719 of the Code of Virginia.
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III. EFFECTIVE DATE. This Merger shall become effective at 11:59 p.m.
on _____________, 1999 (the "Effective Date").
IN WITNESS WHEREOF, these Articles of Merger are signed by the President
of each corporation this ______ day of ___________, 1999.
COMMONWEALTH PUBLIC SERVICE CORPORATION
By____________________________
Its ____________________________
Attest:
By: _____________________
Its: Secretary
ROANOKE GAS COMPANY
By______________________________
Its_____________________________
Attest:
By: _____________________
Its: Secretary
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Appendix B
ARTICLES OF INCORPORATION
OF
RGC RESOURCES, INC.
1. The name of the Corporation is RGC Resources, Inc.
2. The purpose of the Corporation is to engage in any lawful act or
activity not required to be specifically stated in these Articles of
Incorporation ("Articles") for which corporations may be organized under the
laws of the Commonwealth of Virginia.
3. (a) The aggregate number of shares which the Corporation is authorized
to issue and the par value per share are as follows:
Class Number of Shares Par Value
Common 10,000,000 $5.00
Preferred 5,000,000 No Par Value
(b) The Board of Directors of the Corporation (the "Board of
Directors") may, by amending these Articles by filing Articles of Amendment with
the Virginia State Corporation Commission, fix in whole or in part the
preferences, limitations and rights, within the limits set by law, of (i) any
class of shares, before the issuance of any shares of that class, or (ii) one or
more series within a class, before the issuance of any shares within that
series.
(c) The preferred stock (including any shares of preferred stock
restored to the status of authorized but unissued preferred stock undesignated
as to series pursuant to this Article 3(c)) may be divided into one or more
series and issued from time to time with such preferences, privileges,
limitations, and relative rights as shall be fixed and determined by the Board
of Directors. Without limiting the generality of the foregoing, the Board of
Directors is expressly authorized to the fullest extent permitted from time to
time by law to fix:
(i) the distinctive serial designations and the division of
shares of preferred stock into one or more series and the number of shares of a
particular series, which may be increased or decreased (but not below the number
of shares thereof then outstanding);
(ii) the rate or amount (or the method of determining the rate
or amount) and times at which, the form in which, and the preferences and
conditions under which, dividends shall be payable on shares of a particular
series, the status of such dividends as cumulative, partially cumulative, or
noncumulative, the date or dates from which dividends, if cumulative, shall
accumulate, and the status of such series as participating or nonparticipating
with shares of other classes or series;
(iii) the price or prices at which, the consideration for
which, the period or periods within which and the terms and conditions, if any,
upon which the shares of a particular series may be redeemed, in whole or in
part, at the option of the Corporation or otherwise;
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(iv) the amount or amounts and rights and preferences, if any,
to which the holders of shares of a particular series are entitled or shall have
upon any involuntary or voluntary liquidation, dissolution or winding up of the
Corporation;
(v) the rights and preferences over or otherwise in relation
to any other class or series (including other series of preferred stock), as to
the right to receive dividends and/or the right to receive payments out of the
net assets of the Corporation upon any involuntary or voluntary liquidation,
dissolution or winding up of the Corporation;
(vi) the right, if any, of the holders of a particular series,
the Corporation or another person to convert or cause conversion of shares of
such series into shares of other classes or series or into other securities,
cash, indebtedness or other property, or to exchange or cause exchange of such
shares for shares of other classes or series or other securities, cash,
indebtedness or other property, and the terms and conditions, if any, including
the price or prices or the rate or rates of conversion and exchange, and the
terms and conditions or adjustments, if any, at which such conversion or
exchange may be made or caused;
(vii) the obligation, if any, of the Corporation to redeem,
purchase or otherwise acquire, in whole or in part, shares of a particular
series for a sinking fund or otherwise, the terms and conditions thereof, if
any, including the price or prices and the nature of the consideration payable
for such shares so redeemed, purchased or otherwise acquired;
(viii)the voting rights, if any, including special,
conditional or limited voting rights, of the shares of a particular series in
addition to those required by law, including the number of votes per share and
any requirement for the approval by the holders of shares of all series of
preferred stock, or of the shares of one or more series thereof, or of both, in
an amount greater than a majority, up to such amount as is in accordance with
applicable law or these Articles, as a condition to specified corporate action
or amendments to the Articles; and
(ix) any other preferences, limitations and relative rights
which may be so determined by resolution or resolutions of the Board of
Directors.
Shares of preferred stock shall rank prior or superior to the common
stock in respect of the right to receive dividends and/or the right to receive
payments out of the net assets of the Corporation upon any involuntary or
voluntary liquidation, dissolution or winding up of the Corporation. All shares
of preferred stock redeemed, purchased or otherwise acquired by the Corporation
(including shares surrendered for conversion or exchange) shall be cancelled and
thereupon restored to the status of authorized but unissued shares of preferred
stock undesignated as to series.
(d) The holders of common stock, to the exclusion of any other class
of stock of the Corporation, have sole and full power to vote for the election
of directors and for all other purposes without limitation except only (i) as
otherwise expressly provided in the serial designation of any series of
preferred stock, (ii) as otherwise expressly provided in these Articles or (iii)
as otherwise expressly provided by the then existing laws of the Commonwealth of
Virginia. The holders of common stock will have one vote for each share of
common stock held by them. The outstanding shares of common stock, upon
dissolution, liquidation or winding up of the Corporation, entitle their holders
to share, pro rata, based on the number of shares owned, in the Corporation's
assets remaining after payment or provisions for payment of all debts and
liabilities of the Corporation, and after provisions for the outstanding shares
of any class of stock or other security having senior liquidation rights to the
common stock.
(e) No holder of shares of stock of any class of the Corporation
will have any preemptive or preferential right of subscription to any shares of
any class of stock of the Corporation, whether now or hereafter authorized, or
to any obligations of the Corporation convertible into stock of the Corporation,
issued or sold, nor any right of subscription to any thereof.
4. Subject to the rights of holders of any series of preferred stock to
elect directors under specified circumstances:
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(i) The number of directors of the Corporation, not less than
seven nor more than eleven, shall be set by the Bylaws; provided that, in the
absence of a provision in the Bylaws fixing the number of directors, the number
of directors shall be nine. The directors shall be divided into three classes
as nearly equal in number as possible, with the term of office of directors of
the first class to expire at the first annual meeting of the shareholders after
their election, that of the second class to expire at the second annual meeting
after their election, and that of the third class to expire at the third annual
meeting after their election. At each annual meeting of shareholders following
such initial classification and election, directors elected to succeed those
directors, whose terms expire shall be elected for a term of office to expire
at the third succeeding annual meeting of shareholders after their election and
shall continue in office until their respective successors are elected and
qualify. In the event of any increase or decrease in the number of directors
fixed by the Bylaws, any newly-created directorships shall be so apportioned
among the classes by the Board of Directors so as to make all classes as nearly
equal in number as possible.
(ii) Newly-created directorships resulting from an increase in
the authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office, or other cause shall be filled by the affirmative vote of a majority of
the directors then in office, whether or not a quorum. No decrease in the number
of directors constituting the Board of Directors shall shorten the term of any
incumbent director. A director may be removed from office only for cause.
5. To the full extent that the laws of the Commonwealth of Virginia, as
they now or may hereafter exist, permit the limitation or elimination of the
liability of directors or officers, no director or officer of the Corporation
shall be liable to the Corporation or its shareholders for any monetary damages.
6. (a) The Corporation shall indemnify a director or officer of the
Corporation who is or was a party to any proceeding, including a proceeding by
or in the right of the Corporation, by reason of the fact that he is or was such
a director or officer or is or was serving at the request of the Corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other profit or non-profit
enterprise against all liabilities and expenses incurred in the proceeding,
except such liabilities and expenses as are incurred because of his willful
misconduct or knowing violation of the criminal law. Unless a determination has
been made that indemnification is not permissible, the Corporation shall make
advances and reimbursement for expenses incurred by a director or officer in a
proceeding upon receipt of an undertaking from him to repay the same if it is
ultimately determined that he is not entitled to indemnification. Such
undertaking shall be an unlimited unsecured general obligation of the director
or officer and shall be accepted without reference to his ability to make
repayment. The Board of Directors is hereby empowered to contract in advance to
indemnify and advance the expenses of any director or officer. The termination
of any proceeding by judgment, order, settlement, conviction or upon a plea of
nolo contendere or its equivalent shall not, by itself, create a presumption
that the director or officer did not meet the standard of conduct entitling him
to indemnity hereunder.
(b) The Board of Directors is hereby empowered to cause the
Corporation to indemnify and make advances and reimbursement for expenses (or
contract in advance for the same) incurred by any person not specified in
paragraph (a) of this Article who was or is a party to any proceeding, by reason
of the fact that he is or was an employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other profit or non-profit enterprise, to the same extent as if
such person were specified as one to whom indemnification is granted in
paragraph (a) of this Article.
(c) The Corporation may purchase and maintain insurance to indemnify
it against the whole or any portion of the liability assumed by it in accordance
with this Article and may also procure insurance, in such amounts as the Board
of Directors may determine, on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
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enterprise, against any liability asserted against or incurred by such person in
any such capacity or arising from his status as such, whether or not the
Corporation would have power to indemnify him against such liability under the
provisions of this Article.
(d) Except as hereinafter provided, all determinations as to the
permissibility of indemnification and advances and reimbursement for expenses
(including contracts with respect thereto) shall be made by a majority vote of a
quorum consisting of directors not at the time parties to the proceeding. In the
event such a quorum cannot be obtained to make any determination as to the
permissibility of indemnification and advances and reimbursement for expenses
with respect to any claim for indemnification (including contracts with respect
thereto), or in the event there has been a change in the composition of a
majority of the Board of Directors after the date of the alleged act with
respect to which indemnification is claimed, such determination shall be made by
special legal counsel agreed upon by the Board of Directors and the proposed
indemnitee. If the Board of Directors and the proposed indemnitee are unable to
agree upon such special legal counsel, the Board of Directors and the proposed
indemnitee each shall select a nominee, and the nominees shall select such
special legal counsel.
(e) The provisions of this Article shall be applicable to all
actions, claims, suits or proceedings commenced after the adoption hereof,
whether arising from any action taken or failure to act before or after such
adoption. No amendment, modification or repeal of this Article shall diminish
the rights provided hereby or diminish the right to indemnification with respect
to any claim, issue or matter in any then pending or subsequent proceeding that
is based in any material respect on any alleged action or failure to act prior
to such amendment, modification or repeal.
(f) Except to the extent inconsistent with this Article, terms used
herein shall have the same meanings assigned them in the Indemnification Article
of the Virginia Stock Corporation Act, as now in effect or hereafter amended or
replaced. Without limitation, it is expressly understood that reference herein
to directors, officers, employees or agents shall include former directors,
officers, employees and agents and their respective heirs, executors and
administrators.
7. The Corporation's initial registered office shall be located in the
City of Roanoke at 10 South Jefferson Street, Suite 1400, Roanoke, Virginia
24011. The Corporation's initial registered agent shall be Faith M. Wilson,
whose address is the same as the Corporation's registered office and who is a
resident of Virginia and a member of the Virginia State Bar.
Dated: July 29, 1998 s/Faith M. Wilson
------------------
Incorporator
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Appendix C
ARTICLE 15 OF THE VIRGINIA STOCK CORPORATION ACT
RELATING TO DISSENTERS' RIGHTS
Section 13.1-729. DEFINITIONS. - In this article:
"Corporation" means the issuer of the shares held by a dissenter before
the corporate action, except that (i) with respect to a merger, "corporation"
means the surviving domestic or foreign corporation or limited liability company
by merger of that issuer, and (ii) with respect to a share exchange,
"corporation" means the acquiring corporation by share exchange, rather than the
issuer, if the plan of share exchange places the responsibility for dissenters'
rights on the acquiring corporation.
"Dissenter" means a shareholder who is entitled to dissent from
corporate action under Section 13.1-730 and who exercises that right when and in
the manner required by Sections 13.1-732 through 13.1-739.
"Fair value," with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
"Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.
"Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
"Beneficial shareholder" means the person who is a beneficial owner of
shares held by a nominee as the record shareholder.
"Shareholder" means the record shareholder or the beneficial
shareholder.
Section 13.1-730. RIGHT TO DISSENT. - A. A shareholder is entitled to
dissent from, and obtain payment of the fair value of his shares in the event
of, any of the following corporate actions:
1. Consummation of a plan of merger to which the corporation is a party
(i) if shareholder approval is required for the merger by Section 13.1-718 or
the articles of incorporation and the shareholder is entitled to vote on the
merger or (ii) if the corporation is a subsidiary that is merged with its parent
under Section 13.1-719;
2. Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, if the shareholder is
entitled to vote on the plan;
3. Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation if the shareholder was entitled to vote on the
sale or exchange or if the sale or exchange was in furtherance of a dissolution
on which the shareholder was entitled to vote, provided that such dissenter's
rights shall not apply in the case of (i) a sale or exchange pursuant to court
order, or (ii) a sale for cash pursuant to a plan by which all or substantially
all of the net proceeds of the sale will be distributed to the shareholders
within one year after the date of sale;
4. Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board of
directors provides that voting or nonvoting shareholders are entitled to dissent
and obtain payment for their shares.
B. A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
C. Notwithstanding any other provision of this article, with respect to
a plan of merger or share exchange or a sale or exchange of property there shall
be no right of dissent in favor of holders of shares of any class or series
which, at the record date fixed to determine the shareholders entitled to
receive notice of and to vote at the meeting at which the plan of merger or
share exchange or the sale or exchange of property is to be acted on, were (i)
listed on a national securities exchange or on the National Association of
Securities Dealers Automated Quotation System (NASDAQ) or (ii) held by at least
2,000 record shareholders, unless in either case:
1. The articles of incorporation of the corporation issuing such shares
provide otherwise;
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2. In the case of a plan of merger or share exchange, the holders of the
class or series are required under the plan of merger or share exchange to
accept for such shares anything except:
a. Cash;
b. Shares or membership interests, or shares or membership interests and
cash in lieu of fractional shares (i) of the surviving or acquiring corporation
or limited liability company or (ii) of any other corporation or limited
liability company which, at the record date fixed to determine the shareholders
entitled to receive notice of and to vote at the meeting at which the plan of
merger or share exchange is to be acted on, were either listed subject to notice
of issuance on a national securities exchange or held of record by at least
2,000 record shareholders or members; or
c. A combination of cash and shares or membership interests as set forth
in subdivisions 2a and 2b of this subsection; or
3. The transaction to be voted on is an "affiliated transaction" and is
not approved by a majority of "disinterested directors" as such terms are
defined in Section 13.1-725.
D. The right of a dissenting shareholder to obtain payment of the fair
value of his shares shall terminate upon the occurrence of any one of the
following events:
1. The proposed corporate action is abandoned or rescinded;
2. A court having jurisdiction permanently enjoins or sets aside the
corporate action; or
3. His demand for payment is withdrawn with the
written consent of the corporation.
Section 13.1-731. DISSENT BY NOMINEES AND BENEFICIAL OWNERS. - A. A
record shareholder may assert dissenters' rights as to fewer than all the shares
registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing of
the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.
B. A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
1. He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
2. He does so with respect to all shares of which he is the beneficial
shareholder or over which he has power to direct the vote.
Section 13.1-732. NOTICE OF DISSENTERS' RIGHTS. - A. If proposed
corporate action creating dissenters' rights under Section 13.1-730 is submitted
to a vote at a shareholders' meeting, the meeting notice shall state that
shareholders are or may be entitled to assert dissenters' rights under this
article and be accompanied by a copy of this article.
B. If corporate action creating dissenters' rights under Section
13.1-730 is taken without a vote of shareholders, the corporation, during the
ten-day period after the effectuation of such corporate action, shall notify in
writing all record shareholders entitled to assert dissenters' rights that the
action was taken and send them the dissenters' notice described in Section
13.1-734.
Section 13.1-733. NOTICE OF INTENT TO DEMAND PAYMENT. - A. If proposed
corporate action creating dissenters' rights under Section 13.1-730 is submitted
to a vote at a shareholders' meeting, a shareholder who wishes to assert
dissenters' rights (i) shall deliver to the corporation before the vote is taken
written notice of his intent to demand payment for his shares if the proposed
action is effectuated and (ii) shall not vote such shares in favor of the
proposed action.
B. A shareholder who does not satisfy the requirements of subsection A
of this section is not entitled to payment for his shares under this article.
Section 13.1-734. DISSENTERS' NOTICE. - A. If proposed corporate action
creating dissenters' rights under Section 13.1-730 is authorized at a
shareholders' meeting, the corporation, during the ten-day period after the
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effectuation of such corporate action, shall deliver a dissenters' notice
in writing to all shareholders who satisfied the requirements of Section
13.1-733.
B. The dissenters' notice shall:
1. State where the payment demand shall be sent and where and when
certificates for certificated shares shall be deposited;
2. Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
3. Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the proposed
corporate action and requires that the person asserting dissenters' rights
certify whether or not he acquired beneficial ownership of the shares before or
after that date;
4. Set a date by which the corporation must receive the payment demand,
which date may not be fewer than thirty nor more than sixty days after the date
of delivery of the dissenters' notice; and
5. Be accompanied by a copy of this article.
Section 13.1-735. DUTY TO DEMAND PAYMENT. - A. A shareholder sent a
dissenters' notice described in Section 13.1-734 shall demand payment, certify
that he acquired beneficial ownership of the shares before or after the date
required to be set forth in the dissenters' notice pursuant to subdivision 3 of
subsection B of Section 13.1-734, and, in the case of certificated shares,
deposit his certificates in accordance with the terms of the notice.
B. The shareholder who deposits his shares pursuant to subsection A of
this section retains all other rights of a shareholder except to the extent that
these rights are canceled or modified by the taking of the proposed corporate
action.
C. A shareholder who does not demand payment and deposits his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article.
Section 13.1-736. SHARE RESTRICTIONS. - A. The corporation may restrict
the transfer of uncertificated shares from the date the demand for their payment
is received.
B. The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder except to the
extent that these rights are canceled or modified by the taking of the proposed
corporate action.
Section 13.1-737. PAYMENT. - A. Except as provided in Section 13.1-738,
within thirty days after receipt of a payment demand made pursuant to Section
13.1-735, the corporation shall pay the dissenter the amount the corporation
estimates to be the fair value of his shares, plus accrued interest. The
obligation of the corporation under this paragraph may be enforced (i) by the
circuit court in the city or county where the corporation's principal office is
located, or, if none in this Commonwealth, where its registered office is
located or (ii) at the election of any dissenter residing or having its
principal office in the Commonwealth, by the circuit court in the city or county
where the dissenter resides or has its principal office. The court shall dispose
of the complaint on an expedited basis.
B. The payment shall be accompanied by:
1. The corporation's balance sheet as of the end of a fiscal year ending
not more than sixteen months before the effective date of the corporate action
creating dissenters' rights, an income statement for that year, a statement of
changes in shareholders' equity for that year, and the latest available interim
financial statements, if any;
2. An explanation of how the corporation estimated the fair value of the
shares and of how the interest was calculated;
3. A statement of the dissenters' right to demand payment under Section
13.1-739; and 4. A copy of this article.
Section 13.1-738. AFTER-ACQUIRED SHARES. - A. A corporation may elect to
withhold payment required by Section 13.1-737 from a dissenter unless he was the
beneficial owner of the shares on the date of the first publication by news
media or the first announcement to shareholders generally, whichever is earlier,
of the terms of the proposed corporate action, as set forth in the dissenters'
notice.
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B. To the extent the corporation elects to withhold payment under
subsection A of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
offer to pay this amount to each dissenter who agrees to accept it in full
satisfaction of his demand. The corporation shall send with its offer an
explanation of how it estimated the fair value of the shares and of how the
interest was calculated, and a statement of the dissenter's right to demand
payment under Section 13.1-739.
Section 13.1-739. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT
OR OFFER.- A. A dissenter may notify the corporation in writing of his own
estimate of the fair value of his shares and amount of interest due, and demand
payment of his estimate (less any payment under Section 13.1-737), or reject the
corporation's offer under Section 13.1-738 and demand payment of the fair value
of his shares and interest due, if the dissenter believes that the amount paid
under Section 13.1-737 or offered under Section 13.1-738 is less than the fair
value of his shares or that the interest due is incorrectly calculated.
B. A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing under subsection A
of this section within thirty days after the corporation made or offered payment
for his shares.
Section 13.1-740. COURT ACTION. - A. If a demand for payment under
Section 13.1-739 remains unsettled, the corporation shall commence a proceeding
within sixty days after receiving the payment demand and petition the circuit
court in the city or county described in subsection B of this section to
determine the fair value of the shares and accrued interest. If the corporation
does not commence the proceeding within the sixty-day period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
B. The corporation shall commence the proceeding in the city or county
where its principal office is located, or, if none in this Commonwealth, where
its registered office is located. If the corporation is a foreign corporation
without a registered office in this Commonwealth, it shall commence the
proceeding in the city or county in this Commonwealth where the registered
office of the domestic corporation merged with or whose shares were acquired by
the foreign corporation was located.
C. The corporation shall make all dissenters, whether or not residents
of this Commonwealth, whose demands remain unsettled parties to the proceeding
as in an action against their shares and all parties shall be served with a copy
of the petition. Nonresidents may be served by registered or certified mail or
by publication as provided by law.
D. The corporation may join as a party to the proceeding any shareholder
who claims to be a dissenter but who has not, in the opinion of the corporation,
complied with the provisions of this article. If the court determines that such
shareholder has not complied with the provisions of this article, he shall be
dismissed as a party.
E. The jurisdiction of the court in which the proceeding is commenced
under subsection B of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend a
decision on the question of fair value. The appraisers have the powers described
in the order appointing them, or in any amendment to it. The dissenters are
entitled to the same discovery rights as parties in other civil proceedings.
F. Each dissenter made a party to the proceeding is entitled to judgment
(i) for the amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the corporation or (ii) for
the fair value, plus accrued interest, of his after-acquired shares for which
the corporation elected to withhold payment under Section 13.1-738.
Section 13.1-741. COURT COSTS AND COUNSEL FEES. - A. The court in an
appraisal proceeding commenced under Section 13.1-740 shall determine all costs
of the proceeding, including the reasonable compensation and expenses of
appraisers appointed by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters did not act in good faith in demanding payment under
Section 13.1-739.
B. The court may also assess the reasonable fees and expenses of
experts, excluding those of counsel, for the respective parties, in amounts the
court finds equitable:
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1. Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the requirements
of Sections 13.1-732 through 13.1-739; or
2. Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses are
assessed did not act in good faith with respect to the rights provided by this
article.
C. If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, the court
may award to these counsel reasonable fees to be paid out of the amounts awarded
the dissenters who were benefitted.
D. In a proceeding commenced under subsection A of Section 13.1-737 the
court shall assess the costs against the corporation, except that the court may
assess costs against all or some of the dissenters who are parties to the
proceeding, in amounts the court finds equitable, to the extent the court finds
that such parties did not act in good faith in instituting the proceeding.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Officers and Directors.
Section 13.1-692.1 of the Code of Virginia, as amended, places a
limitation on the liability of officers and directors of a corporation in any
proceeding brought by or in the right of the corporation or brought by or on
behalf of shareholders of the corporation. The damages asserted against an
officer or director arising out of a single transaction, occurrence, or course
of conduct shall not exceed the greater of $100,000 or the amount of cash
compensation received by the officer or director from the corporation during the
12 months immediately preceding the act or omission for which liability was
imposed. The statute also authorizes the corporation, in its articles of
incorporation or, if approved by the shareholders, in its bylaws, to provide for
a different specific monetary limit on, or to eliminate entirely, liability. The
liability of an officer or director shall not be limited if the officer or
director engaged in willful misconduct or a knowing violation of the criminal
law or any federal or state securities law. Resources' Articles of Incorporation
contain a provision which eliminates, to the full extent that the laws of the
Commonwealth of Virginia permit, the liability of an officer or director of
Resources to the corporation or its shareholders for monetary damages for any
breach of duty as a director or officer.
Resources' Articles of Incorporation also require Resources to indemnify
any director or officer who is or was a party to a proceeding, including a
proceeding by or in the right of the corporation, by reason of the fact that he
is or was such a director or officer or is or was serving at the request of
Resources as a director, officer, employee or agent of another entity. Directors
and officers of Resources are entitled to be indemnified against all liabilities
and expenses incurred by the director or officer in the proceeding, except such
liabilities and expenses as are incurred because of his or her willful
misconduct or knowing violation of the criminal law. Unless a determination has
been made that indemnification is not permissible, a director or officer also is
entitled to have Resources make advances and reimbursement for expenses prior to
final disposition of the proceeding upon receipt of a written undertaking from
the director or officer to repay the amounts advanced or reimbursed if it is
ultimately determined that he or she is not entitled to indemnification. The
Board of Directors of Resources also has the authority to extend to employees,
agents, and other persons serving at the request of Resources the same
indemnification rights held by directors and officers, subject to all of the
accompanying conditions and obligations.
Virginia Code ss. 13.1-700.1 permits a court, upon application of a
director or officer, to review Resources' determination as to a director's or
officer's request for advances, reimbursement or indemnification. If it
determines that the director or officer is entitled to such advances,
reimbursement or indemnification, the court may order Resources to make advances
and/or reimbursement for expenses or to provide indemnification, in which case
the court shall also order Resources to pay the officer's or director's
reasonable expenses incurred to obtain the order. With respect to a proceeding
by or in the right of the corporation, the court may order indemnification to
the extent of the officer's or director's reasonable expenses if it determines
that, considering all the relevant circumstances, the officer or director is
entitled to indemnification even though he or she was adjudged liable, and may
also order Resources to pay the officer's and director's reasonable expenses
incurred to obtain the order.
Resources has the power to purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of Resources, or
is or was serving at the request of Resources as a director, officer, employee
or agent of another entity, against any liability asserted against or incurred
by such person, in any such capacity or arising from his or her status as such,
whether or not Resources would have the power to indemnify such person against
such liability under the Articles of Incorporation.
Roanoke Gas, the parent of Resources, maintains a directors' and
officers' legal liability insurance policy in the amount of $2,000,000, issued
by the Chubb Group Insurance Companies. The policy provides coverage up to
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100% of its face amount, subject to certain deductible or retention amounts. In
general, the policy insures (i) the Company's directors and officers against
losses by reason of their wrongful acts, and/or (ii) the Company against claims
against the directors and officers by reasons of their wrongful acts for which
the Company is required to indemnify or pay, all as such terms are defined in
the policy and subject to the terms, conditions and exclusions contained
therein.
Item 21. Exhibits and Financial Statement Schedules.
2 Agreement and Plan of Merger and Reorganization dated as of
September 28, 1998, by an among Roanoke Gas Company, RGC
Acquisition Corp., RGC Resources, Inc., Diversified Energy
Company and Commonwealth Public Service Corporation (attached as
Appendix A to the Proxy Statement/Prospectus)
3 Articles of Incorporation of RGC Resources, Inc. (attached as
Appendix B to the Proxy Statement/Prospectus)
3 Bylaws of RGC Resources, Inc.
4 Specimen copy of certificate for RGC Resources, Inc. Common
Stock, $5.00 par value
4 Article I of the Bylaws of Roanoke Gas Company (included in
Exhibit 3(b))
5 Opinion of Woods, Rogers & Hazlegrove, P.L.C. with respect to the
RGC Resources, Inc. Common Stock
8 Opinion of Woods, Rogers & Hazlegrove, P.L.C. with respect to
certain tax matters
*13 Roanoke Gas Company 1998 Annual Report to Shareholders
16 Letter of KPMG Peat Marwick LLP regarding change in accountants
(incorporated herein by reference to Exhibit 99 of Form 8-K dated
December 19, 1997)
*23 (a) Consent of Deloitte & Touche LLP
*23 (a) Consent of KPMG Peat Marwick LLP
23 (b) Consent of Woods, Rogers & Hazlegrove, P.L.C. (included in
Exhibits 5 and 8)
99 Form of Proxy
- -----------------------------
*To be filed by Amendment
Item 22. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
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(ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the
low or high end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in this Registration Statement
or any material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered hereby which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for the
purpose of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Exchange Act that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes to deliver or cause
to be delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report to security holders that is incorporated
by reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer, or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(e) The undersigned registrant hereby undertakes to respond to
request for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11 or 13 of this Form within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
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(f) The undersigned registrant hereby undertakes to supply by means
of post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Roanoke,
Commonwealth of Virginia on November 13, 1998.
RGC RESOURCES, INC.
By: s/John B. Williamson, III
John B. Williamson, III
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated as of November 13, 1998.
Signature Title
s/John B. Williamson, III President, Chief Executive
(John B. Williamson, III) Officer and Director
s/Roger L. Baumgardner Vice President, Secretary and
(Roger L. Baumgardner) Treasurer (Principal
Accounting Officer)
s/Lynn D. Avis Director
(Lynn D. Avis)
s/Abney S. Boxley, III Director
(Abney S. Boxley, III)
s/Frank T. Ellett Director
(Frank T. Ellett)
s/Frank A. Farmer, Jr. Director
(Frank A. Farmer, Jr.)
s/Wilbur L. Hazlegrove Director
(Wilbur L. Hazlegrove)
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s/J. Allen Layman Director
(J. Allen Layman)
s/Thomas L. Robertson Director
(Thomas L. Robertson)
s/S. Frank Smith Director
(S. Frank Smith)
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INDEX TO EXHIBITS
Exhibit No. Description
2 Agreement and Plan of Merger and Reorganization dated as of
September 28, 1998, by an among Roanoke Gas Company, RGC
Acquisition Corp., RGC Resources, Inc., Diversified Energy
Company and Commonwealth Public Service Corporation (attached as
Appendix A to the Proxy Statement/Prospectus)
3 Articles of Incorporation of RGC Resources, Inc. (attached as
Appendix B to the Proxy Statement/Prospectus)
3 Bylaws of RGC Resources, Inc.
4 Specimen copy of certificate for RGC Resources, Inc. Common
Stock, $5.00 par value
4 Article I of the Bylaws of Roanoke Gas Company (included in
Exhibit 3(b))
5 Opinion of Woods, Rogers & Hazlegrove, P.L.C. with respect to the
RGC Resources, Inc. Common Stock
8 Opinion of Woods, Rogers & Hazlegrove, P.L.C. with respect to
certain tax matters
*13 Roanoke Gas Company 1998 Annual Report to Shareholders
16 Letter of KPMG Peat Marwick LLP regarding change in accountants
(incorporated herein by reference to Exhibit 99 of Form 8-K dated
December 19, 1997)
*23 (a) Consent of Deloitte & Touche LLP
*23 (a) Consent of KPMG Peat Marwick LLP
23 (b) Consent of Woods, Rogers & Hazlegrove, P.L.C. (included in
Exhibits 5 and 8)
99 Form of Proxy
- -----------------------------
*To be filed by Amendment
<PAGE>
Exhibit 3(b)
BYLAWS
OF
RGC RESOURCES, INC.
<PAGE>
BYLAWS
OF
RGC RESOURCES, INC.
ARTICLE I
STOCKHOLDERS
Section 1. The stockholders of this corporation shall be those who appear
on the books of the corporation as holders of one or more shares of any class of
stock of the corporation.
Section 2. The annual meeting of the stockholders shall be held annually
on the fourth Monday in January of each year, if not a legal holiday, and if a
legal holiday, then on the next succeeding day not a legal holiday, at such
place and at such hour as may be provided by the Board of Directors or in the
stated notice of the meeting.
At such annual meetings there shall be an election of directors for the
ensuing year and the transaction of any business which may properly come before
the meeting.
If in any year the annual meeting shall not be held at the time designated
herein, a meeting shall be held as soon as practicable after the time designated
for the holding of the annual meeting and upon the same notice as required for
an annual meeting, at which time directors shall be elected and such other
business may be transacted as might have been transacted at the annual meeting.
Notice of meetings of stockholders shall be given to the extent and in the
manner required by the Virginia Stock Corporation Act, as it may be amended from
time to time hereafter (said Act being hereinafter sometimes called the "Act"),
and notice of either stockholders' meetings or directors' meetings may be waived
to the extent and in the manner provided in the Act.
Section 3. Special meetings of the stockholders may be called by the
President, the Board of Directors, or by holders of not less than one-tenth of
all the shares entitled to vote at the meeting, or otherwise as may be required
by the Articles of Incorporation.
Section 4. Any action required under the law of Virginia to be taken at a
meeting of the stockholders of the corporation, or any action which may be taken
at a meeting of the stockholders, may be taken without a meeting if a consent in
writing setting forth the action so taken shall be signed by all the
stockholders entitled to vote with respect to the subject matter thereof.
Such consent shall have the same force and effect as a unanimous vote of
stockholders and may be stated as such in any article or document filed with the
State Corporation Commission or others.
Section 5. For the purpose of determining stockholders entitled to notice
of or to vote at any meeting of stockholders, or any adjournment thereof, or
entitled to receive payment of any dividend, or in order to make a determination
of stockholders for any other proper purpose, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period, but not to
exceed in any case seventy days. In lieu of closing the stock transfer books,
the Board of Directors may fix in advance a date as the record date for any such
determination of stockholders, such date in any case to be not more than seventy
days prior to the date on which the particular action requiring such
determination of stockholders is to be taken.
Section 6. Unless otherwise provided in the Articles of Incorporation, a
majority of the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of the stockholders. If a quorum is
present, the affirmative vote of a majority of the shares represented at the
meeting and entitled to vote on
1
<PAGE>
the subject matter shall be the act of the stockholders, unless the vote of
a greater number or voting by classes is required under the applicable law of
Virginia or the Articles of Incorporation, and except that in elections of
directors those receiving the greatest numbers of votes shall be deemed elected,
even though not receiving a majority. Less than a quorum may adjourn.
Section 7. Each outstanding share, regardless of class, shall be entitled
to one vote on each matter submitted to a vote at a meeting of the stockholders,
except to the extent that the voting rights of the shares of any class or
classes are limited or denied by the Articles of Incorporation as permitted by
the Act, and except as the Articles of Incorporation may confer on the holders
of shares of any particular class or series the right to more than one vote per
share, either generally or on particular matters. Where the Articles of
Incorporation confer the right to more or less than one vote per share, any
requirement in the Act for the affirmative vote of a specified proportion of the
shares shall be deemed to refer to a like proportion of the votes eligible to be
cast.
A stockholder may vote either in person or by proxy executed in writing by
the stockholder or by his duly authorized attorney in fact and shall have one
vote for each share of stock which he is entitled to vote at such meeting. At
each election for directors, every stockholder entitled to vote at such election
shall have the right to vote in person or by proxy the number of shares owned by
him for as many persons as there are directors to be elected at that time and
for whose election he has a right to vote.
Shares of stock of other corporations owned by this corporation may be
voted in person by the President or a Vice President or by proxy executed by the
President or a Vice President; provided, however, the Board of Directors may by
resolution revoke such authority from time to time and thereby designate some
other agent, attorney-in-fact, or proxy to vote such shares.
Section 8. All meetings of the stockholders shall be presided over by the
chairman of the Board of Directors, if such office is filled, or, if there is no
such officer or in the absence or inability to act of the chairman of the Board,
by the President, or, if the chairman of the Board, if any, and the President
are absent or unable to act, by the most senior Vice President present at the
meeting, but if none of the foregoing is present and able to act, a chairman
shall be elected by the meeting. Such meetings shall be attended by the
Secretary of the corporation, who shall act as secretary of all such meetings if
present. If the Secretary is absent at any meeting, the chairman shall appoint a
secretary of the meeting. The proceedings of all such meetings shall be verified
by the signature of the secretary of the meeting and approved by the chairman.
Section 9. No business shall be transacted at any meeting of stockholders,
except such business as shall be (a) specified in the notice of meeting given as
provided in this Article; (b) otherwise brought before the meeting by or at the
direction of the Board; or (c) otherwise brought before the meeting by a
stockholder of record of the corporation entitled to vote at the meeting in
compliance with the procedure set forth in this Section. For business to be
brought before a meeting by a stockholder pursuant to (c) above, the stockholder
must have given timely notice in writing to the President of the corporation. To
be timely, a stockholder's notice shall be delivered to, or mailed and received
at, the principal executive offices of the corporation not less than sixty days
nor more than ninety days prior to the meeting; provided, however, in the event
that less than seventy days' notice or prior public disclosure of the date of
the meeting is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the tenth day
following the day on which such notice of the date of the meeting or such public
disclosure was made. Notice shall be deemed to have been given more than seventy
days in advance of an annual meeting of stockholders if the annual meeting is
called on the date indicated by Section 2 of this Article without regard to when
public disclosure thereof is made. Notice of actions to be brought before a
meeting pursuant to (c) above shall set forth, as to each matter the stockholder
proposes to bring before the meeting: (a) a brief description of the business
desired to be brought before the meeting and the reasons for bringing such
business before the meeting; and (b) as to the stockholder giving the notice,
(i) the name and address, as they appear on the corporation's books, of such
stockholder, (ii) the classes and number of shares of the corporation which are
owned of record and beneficially by such stockholder, and (iii) any material
interest of such
2
<PAGE>
stockholder in such business other than his interest as a stockholder of
the corporation. Notwithstanding anything in these Bylaws to the contrary, no
business shall be conducted on a stockholder proposal or nomination except in
accordance with the provisions set forth in this Section. The requirements of
this Section are in addition to any other requirements established by law or
these Bylaws relating to business permitted to be transacted at special
stockholders' meetings. The chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that any business was not properly brought
before the meeting in accordance with the provisions prescribed by these Bylaws
and, if he should so determine, he shall so declare to the meeting and any such
business not so properly brought before the meeting shall not be transacted.
ARTICLE II
DIRECTORS
Section 1. The business and affairs of the corporation shall be managed by
the Board of Directors, subject to any requirement of stockholder action made by
the Act or the Articles of Incorporation.
Section 2. The Board of Directors shall consist of nine members. The
number of directors may be increased or decreased from time to time within the
variable range established by the Articles. At each Annual Meeting of
Stockholders, the number of directors equal to the number of the class whose
term expires at the time of such meeting shall be elected to hold office until
the third succeeding annual meeting, and until their successors shall have been
elected and qualified. No decrease in the number of directors shall have the
effect of shortening the term of any incumbent director. The normal retirement
date for directors shall be the date of the Annual Meeting of Stockholders
succeeding the director's 70th birthday.
Section 3. Any vacancy occurring in the Board of Directors, including a
vacancy resulting from an increase in the number of directors, shall be filled
by the affirmative vote of a majority of the remaining directors, whether or not
a quorum.
Section 4. A majority of the number of directors fixed by the Bylaws shall
constitute a quorum for the transaction of business. The act of the majority of
the directors present at a meeting, at which a quorum is present, shall be the
act of the Board of Directors.
Section 5. A meeting of the Board of Directors shall be held immediately
after each annual meeting of the stockholders without other notice than is given
by these Bylaws, at which meeting there shall be elected at least a President, a
Treasurer and a Secretary, who shall hold such offices until the first meeting
of the Board following the next annual meeting of the stockholders and until
their successors are elected and qualify, unless sooner removed by the Board of
Directors.
The Board shall also annually (or from time to time as may be deemed
desirable) elect one or more Vice Presidents and any other officers and agents
or fill any vacancy as it may deem necessary, who shall hold office until others
are elected and qualify in their stead, subject to removal by the Board at any
time with or without cause.
Section 6. Meetings of the Board of Directors, regular or special, may be
held at such times and places as it may designate.
A special meeting may be called at any time by the President or by any
three elected directors.
Regular meetings of the Board of Directors may be held with or without
notice. Notice of special meetings of the Board of Directors shall be mailed or
telegraphed to each director at least three days prior to the date of the
meeting, or notice may be waived in writing before, at or subsequent to any such
meeting, and the presence of any
3
<PAGE>
director at a meeting shall be deemed a waiver of notice of such meeting.
Neither the business to be transacted at nor the purpose of any regular or
special meeting of the Board of Directors need be specified in the notice or
waiver of notice of such meeting.
Members of the Board of Directors and all committees designated by said
Board of Directors may participate in meetings of such Board or committees by
means of a conference telephone or similar communications equipment whereby all
persons participating in the meeting can hear each other, and participation by
such means shall constitute presence in person at such meeting. When such a
meeting is conducted by means of a conference telephone or similar
communications equipment, a written record shall be made of the action taken at
such meeting.
Section 7. The Board of Directors may, by resolution adopted by a majority
of the number of directors fixed by these Bylaws, designate two or more
directors to constitute an Executive Committee, which shall have and may
exercise all of the authority of the Board of Directors, except to approve an
amendment to the Articles of Incorporation or a plan of merger or consolidation
or as otherwise restricted by the Act.
Other committees with limited authority may be designated by a resolution
adopted by a majority of the directors present at a meeting at which a quorum is
present.
Section 8. The Board of Directors may appoint a Transfer Agent or a
Transfer Agent and Registrar of Transfer and may require all certificates for
each applicable class of stock to be authenticated by the Transfer Agent or by
the Transfer Agent and Registrar, as the case may be, or as the Board may
otherwise direct.
Section 9. A director may be removed from office only for cause.
Section 10. Unless otherwise provided by the Articles of Incorporation of
this corporation, any action required by the laws of Virginia to be taken at a
meeting of the directors, or any action which may be taken at a meeting of the
directors or of a committee, may be taken without a meeting if a consent in
writing, setting forth the action, shall be signed either before or after such
action by all of the directors, or all of the members of the committee, as the
case may be. Such consent shall have the same force and effect as a unanimous
vote.
ARTICLE III
OFFICERS - DUTIES AND POWERS
Section 1. The President shall be elected by the Board of Directors and
shall preside at all meetings of the Board of Directors, unless there shall be a
Chairman of the Board and such officer shall be present, in which event such
Chairman shall so preside. In the absence of the Chairman of the Board of
Directors, if any, the President and all Vice Presidents, a chairman of the
meeting shall be elected by the meeting.
The President shall ex-officio be a member of all committees, shall sign
all certificates of stock and conveyances of real estate and other instruments
in writing by law requiring the President's signature, and perform such other
duties as may be required of him from time to time by the directors, and shall
have the authority, powers and duties that are usually given such officer.
Section 2. In the case of the absence of the President or of his inability
to act, his duties shall be performed by any Vice President (in the event of
more than one Vice President, the senior Vice President present and able to act
shall be entitled to do so), who, in that event, shall execute any of the above
powers of the President.
4
<PAGE>
Section 3. The Secretary shall attend all meetings of the stockholders and
directors and Executive Committee of the corporation and keep a full and
accurate account of their proceedings in a book to be kept for that purpose.
He shall, unless and until the Board of Directors appoints another person
or corporation as the Transfer Agent as hereinabove provided, act as the
Transfer Agent of the corporation and maintain the stock books and addresses of
the stockholders of the corporation. He shall be the custodian of the corporate
seal of the corporation and shall fix and attest the seal, as authorized by the
Board of Directors or the Bylaws of this corporation, to all certificates of
stock and such other instruments requiring the seal. He shall also keep such
other books, deeds, contracts and other valuable papers belonging to the
corporation and perform such other duties as may be required of him by the
President, the Board of Directors, or the Executive Committee.
Section 4. The Treasurer shall have the custody of all monies and
securities of the corporation and shall deposit the same in the name and to the
credit of the corporation in such depositories as may be designated by the Board
of Directors. He shall keep a full and accurate account of the receipts and
disbursements of the corporation in books belonging to the corporation, and
shall disburse the funds of the corporation by check or other warrant to be
signed as prescribed by resolution of the Board of Directors. All books and
papers in his care shall be open to the inspection of the President or any
director, as well as of any person whom the President or Board of Directors may
appoint to examine such books and papers. He shall render such reports to the
President or Board of Directors as may be required of him and shall perform
such other duties as may be incident to his office or as may be required of him
by the Board of Directors.
He may be required by the directors at any time to give bond as the
directors may designate.
Section 5. Any person elected by the Board of Directors as an assistant to
an officer, for example, an Assistant Secretary, shall, unless otherwise
restricted by the Board of Directors and in all cases subordinate to the officer
himself, have and exercise all of the rights, duties, functions and powers of
such officer.
Section 6. In the event of the absence of any officer of the corporation
or his disqualification or inability to act where provision therefor is not
expressly made by these Bylaws, the President may by written order, or the Board
of Directors may by resolution, delegate the powers of such officer to any other
officer or employee of the corporation.
Section 7. Any officer or agent may be removed, with or without cause, at
any time whenever the Board of Directors in its absolute discretion shall
consider that the best interests of the corporation would be served thereby. Any
officer or agent appointed otherwise than by the Board of Directors may be
removed, with or without cause, at any time either by the Board of Directors or
by any officer having authority to appoint whenever the Board of Directors of
such appointing officer in its or his absolute discretion shall consider that
the best interests of the corporation will be served thereby.
ARTICLE IV
SEAL
Section 1. The seal of this corporation shall be as the impression made
below:
5
<PAGE>
ARTICLE V
CHECKS, DRAFTS, NOTES, ETC.
Section 1. All checks, drafts, notes and orders for the payment of money
issued by the corporation shall be signed by such person or persons as the Board
of Directors may fromtime to time designate, and any endorsement of such paper
in the ordinary course of business shall be similarly made.
ARTICLE VI
NOTICE
Section 1. Any notice mailed by the corporation to any director or
stockholder shall be sufficient service of such notice when deposited in the
United States mail, addressed to such stockholder or director at the address
furnished by such stockholder or director to the corporation or its Transfer
Agent, in the event an outside Transfer Agent has been appointed, with postage
thereon prepaid.
ARTICLE VII
STOCK, NOTES, BONDS AND DEBENTURES
Section 1. The shares of the corporation shall be evidenced by
certificates of each class of stock issued in numerical order, signed by the
President or a Vice President and the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer, or any other officer authorized by these
Bylaws or a resolution of the Board of Directors, and may (but need not) be
sealed with the seal of the corporation or a facsimile thereof. The signatures
of the officers upon a certificate may be facsimiles if the certificate is
countersigned by a Transfer Agent or registered by a Registrar other than the
corporation itself or an employee of the corporation.
Section 2. On any bond, note or debenture issued by the corporation which
is countersigned or otherwise authenticated by the signature of a trustee, the
signatures of the officers of the corporation and its seal may be facsimiles.
Section 3. In case any officer who has signed or whose facsimile signature
has been placed upon a stock certificate or a bond, note or debenture shall have
ceased to be such officer before such certificate or other such document is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of its issue.
Section 4. Transfers of stock shall be made only upon the books of the
corporation (whether maintained by the corporation or by a Transfer Agent, in
the event one is appointed) and only by the person named in the certificate or
by attorney lawfully constituted in writing and, subject to the provisions of
Section 6 hereof, only upon surrender of the certificate therefor. The Board of
Directors may by resolution make reasonable regulations for the transfer of
stock.
Section 5. Registered stockholders only shall be entitled to be treated by
the corporation as the holders in fact of the stock standing in their respective
names, and the corporation shall not be bound to recognize any equitable or
other claim to or interest in any shares on the part of any other person whether
or not it shall have express or other notice thereof, except as expressly
provided by the laws of Virginia.
6
<PAGE>
Section 6. In case of loss or destruction of any certificate of stock,
another may be issued in its place upon proof of such loss or destruction, and
upon the giving of a satisfactory bond of indemnity to the corporation in such
sum as the directors may provide, not exceeding double the value of the stock.
ARTICLE VIII
BOOKS AND RECORDS
Section 1. The Board of Directors shall determine from time to time
whether, and, if allowed, when and under what conditions and regulations, the
accounts and books of the corporation (except such as may by statute be
specifically open to inspection), or any of them, shall be open to the
inspection of the stockholders, and the stockholders' rights in this respect are
and shall be restricted and limited accordingly.
ARTICLE IX
AMENDMENT OF BYLAWS
Section 1. These Bylaws may be altered, amended or repealed and new Bylaws
may be adopted by the Board of Directors; but Bylaws made or adopted by the
Board of Directors may be repealed or changed and new Bylaws made by the
stockholders, and the stockholders may prescribe that any Bylaw made by them
shall not be altered, amended or repealed by the directors.
7
<PAGE> Exhibit 4(a)
[SPECIMEN STOCK CERTIFICATE OF RGC RESOURCES, INC.]
A Virginia Corporation
No. ____ _____ Share
RGC Resources, Inc.
Common Stock, par value $5.00 per share
This certifies that ________________________ is the owner of
___________________ shares of the Capital Stock of RGC Resources, Inc.
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this ________ day of ___________________ A.D., ____.
s/John B. Williamson, III s/Roger L. Baumgardner
President Secretary
SHARES _______ EACH
<PAGE>
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE
WHATEVER.
For Value Received, _____ hereby sell, assign and transfer unto
__________________________ ___________________________________________ Shares of
the Capital Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint ____________________
__________________________________________ Attorney to transfer the said Stock
on the books of the within named Corporation with full power of substitution in
the premises.
Dated ____________________, _____
In presence of
- --------------------------------- -----------------------------------
CERTIFICATE
FOR
-------
SHARES
of the
CAPITAL STOCK
of
RGC Resources, Inc.
(Common Stock, par value $5.00 per share)
ISSUED TO
------------------------
DATE
------------------------
<PAGE> Exhibit 5
[WOODS, ROGERS & HAZLEGROVE, P.L.C. LETTERHEAD]
WOODS, ROGERS
& HAZLEGROVE PLC
Attorneys at Law
FAITH M. WILSON
540 983-7633
INTERNET: [email protected]
November 13, 1998
Board of Directors
Roanoke Gas Company
P.O. Box 13007
Roanoke, Virginia 24030-3007
In re: Registration Statement on Form S-4 with respect to
1,850,000 shares of Common Stock of Roanoke Gas
Company (the "Company")
Gentlemen:
We have acted as counsel for you in connection with preparation of the
registration statement on Form S-4 (the "Registration Statement"), pursuant to
the provisions of the Securities Act of 1933, as amended, being filed with the
Securities and Exchange Commission on November 13, 1998, or as soon thereafter
as possible, in respect of 1,850,000 shares of Company Common Stock, and as
such, have examined the same and the exhibits being filed therewith.
We are generally familiar with your corporate affairs, including your
organization and the conduct of the corporate proceedings relating thereto. We
also have examined such of your corporate records as we have deemed necessary as
the basis for this opinion. Based upon the foregoing, it is our opinion that:
i. The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the
Commonwealth of Virginia.
ii. The 1,850,000 shares of Company Common Stock which are the
subject of the Registration Statement have been duly and validly
authorized, and when issued pursuant to proper resolution of the
Board of Directors of the Company and upon the terms as set forth
in the Registration Statement, will be legally issued, fully paid
and non-assessable.
<PAGE>
Board of Directors
RGC Resources, Inc.
November 13, 1998
Page 2
The foregoing opinion is contingent upon the Registration Statement
becoming effective. We consent to its use as an exhibit to the Registration
Statement and to reference to this firm in the Prospectus, the Registration
Statement and any amendments thereto.
Very truly yours,
s/Woods, Rogers & Hazlegrove, P.L.C.
WOODS, ROGERS & HAZLEGROVE, P.L.C.
<PAGE>
Exhibit 8
[WOODS, ROGERS & HAZLEGROVE, P.L.C. LETTERHEAD]
WOODS, ROGERS
& HAZLEGROVE PLC
Attorneys at Law
November 13, 1998
Roanoke Gas Company
519 Kimball Avenue, N.E.
Roanoke, Virginia 24016
RGC Resources, Inc.
519 Kimball Avenue, N.E.
Roanoke, Virginia 24016
Ladies and Gentlemen:
We have acted as counsel to Roanoke Gas Company, a Virginia public
service corporation ("RGC"), and RGC Resources, Inc., a Virginia corporation
(the "Holding Company"), in connection with a planned corporate restructuring
(the "Reorganization"), in which RGC will become a subsidiary of the Holding
Company, and the current holders of the outstanding shares of RGC common stock,
par value $5.00 per share ("RGC Common Stock"), will become holders of all the
outstanding shares of the Holding Company's common stock, par value $5.00 per
share ("Holding Company Common Stock"). The Reorganization and related
transactions are more fully described in the Form S-4 Registration Statement of
the Holding Company filed with the Securities and Exchange Commission (the
"Registration Statement"), to which this opinion is an exhibit, and in the Proxy
Statement/Prospectus (the "Prospectus") comprising a part of the Registration
Statement. The Reorganization will be effected pursuant to an Agreement and Plan
of Merger and Reorganization (the "Merger Agreement") dated as of September 28,
1998, attached as Appendix A to the Prospectus. Capitalized terms used herein
and not otherwise defined shall have the meanings specified in the Merger
Agreement.
In connection with this opinion, we have assumed, with your consent,
that (1) the Reorganization will be effected in accordance with the Merger
Agreement and the laws of the Commonwealth of Virginia and in the manner
described in the Registration Statement, (2) all the provisions of the Merger
Agreement will be complied with, (3) the Merger Agreement and the Prospectus
describe the entire transaction and all related transactions, (4) the facts and
representations made to us in certificates from the Holding Company and RGC,
dated November 13, 1998 executed by a duly appointed officer of each
corporation, are true and correct, and (5) there will be no change in any of the
facts or representations material to this opinion between the date of this
opinion and the Effective Time.
1
<PAGE>
Based upon and subject to the foregoing, we hereby confirm to you our
opinion as set forth under the heading "Certain Federal Income Tax Consequences"
in the Prospectus, subject to the limitations set forth therein. We hereby
consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to us under the heading "Certain Federal Income
Tax Consequences" in the Prospectus, Registration Statement and any amendments
thereto. In giving such consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
s/Woods, Rogers & Hazlegrove, P.L.C.
WOODS, ROGERS & HAZLEGROVE, P.L.C.
2
<PAGE>
Exhibit 99
(PRELIMINARY COPY)
PROXY
ROANOKE GAS COMPANY
519 Kimball Avenue, N.E.
Roanoke, Virginia 24016
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints John H. Parrott and W. Bolling Izard, or
either of them, with full power of substitution, to vote all common stock of
Roanoke Gas Company held of record by the undersigned as of November 30, 1998,
at the Annual Meeting of Shareholders of Roanoke Gas Company to be held on
February 8, 1999, and at any adjournments thereof, as follows:
1. APPROVAL OF AGREEMENT AND PLAN OF MERGER AND REORGANIZATION dated
September 28, 1998, and the transactions contemplated thereby, to effect
a reorganization of Roanoke Gas Company into a holding company
structure.
2. ELECTION OF CLASS B DIRECTORS (Serving until 2002 Annual Meeting):
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed
contrary below) below
Lynn D. Avis, J. Allen Layman, Thomas L. Robertson
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the line below:
- ------------------------------------------------------------------------------
3. Upon such other business as may properly come before the meeting and
any adjournments thereof.
(Over)
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO CHOICE
IS SPECIFIED, THE PROXY WILL BE VOTED FOR NO. 1 AND 2 ABOVE.
The undersigned hereby acknowledges receipt of the Proxy Statement dated
December 11, 1998.
Dated:
-----------------------------------------
- ------------------------------------------------
Signature of Shareholder
Please sign your name(s) exactly as shown imprinted hereon. Executors,
administrators, trustees and other fiduciaries, and persons signing on behalf of
corporations or partnerships, should so indicate when signing. (This proxy is
revocable at any time prior to exercise hereof.)
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROANOKE
GAS COMPANY'S UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT FOR THE
QUARTER ENDED JUNE 30, 1998, AS SET FORTH IN THE COMPANY'S QUARTERLY REPORT ON
FORM 10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 001
<NAME> RGC Resources, Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 45,878,189
<OTHER-PROPERTY-AND-INVEST> 6,191,252
<TOTAL-CURRENT-ASSETS> 14,174,308
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 837,571
<TOTAL-ASSETS> 67,081,320
<COMMON> 8,861,795
<CAPITAL-SURPLUS-PAID-IN> 8,629,787
<RETAINED-EARNINGS> 9,719,102
<TOTAL-COMMON-STOCKHOLDERS-EQ> 27,210,684
0
0
<LONG-TERM-DEBT-NET> 20,700,000
<SHORT-TERM-NOTES> 1,295,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 5,313
<OTHER-ITEMS-CAPITAL-AND-LIAB> 17,870,323
<TOT-CAPITALIZATION-AND-LIAB> 67,081,320
<GROSS-OPERATING-REVENUE> 59,688,847
<INCOME-TAX-EXPENSE> 1,444,120
<OTHER-OPERATING-EXPENSES> 53,450,652
<TOTAL-OPERATING-EXPENSES> 54,894,772
<OPERATING-INCOME-LOSS> 4,794,075
<OTHER-INCOME-NET> 146,425
<INCOME-BEFORE-INTEREST-EXPEN> 4,940,500
<TOTAL-INTEREST-EXPENSE> 2,159,436
<NET-INCOME> 2,781,064
0
<EARNINGS-AVAILABLE-FOR-COMM> 2,781,064
<COMMON-STOCK-DIVIDENDS> 1,752,765
<TOTAL-INTEREST-ON-BONDS> 695,931
<CASH-FLOW-OPERATIONS> 8,795,317
<EPS-PRIMARY> 1.70
<EPS-DILUTED> 1.70
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROANOKE
GAS COMPANY'S UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT FOR THE
QUARTER ENDED JUNE 30, 1998, AS SET FORTH IN THE COMPANY'S QUARTERLY REPORT ON
FORM 10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 001
<NAME> RGC Resources, Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 0
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 0
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 0
<COMMON> 0
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 0
<TOTAL-COMMON-STOCKHOLDERS-EQ> 0
0
0
<LONG-TERM-DEBT-NET> 0
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 0
<TOT-CAPITALIZATION-AND-LIAB> 0
<GROSS-OPERATING-REVENUE> 0
<INCOME-TAX-EXPENSE> 0
<OTHER-OPERATING-EXPENSES> 0
<TOTAL-OPERATING-EXPENSES> 0
<OPERATING-INCOME-LOSS> 0
<OTHER-INCOME-NET> 0
<INCOME-BEFORE-INTEREST-EXPEN> 0
<TOTAL-INTEREST-EXPENSE> 0
<NET-INCOME> 0
0
<EARNINGS-AVAILABLE-FOR-COMM> 0
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROANOKE
GAS COMPANY'S UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT FOR THE
QUARTER ENDED JUNE 30, 1998, AS SET FORTH IN THE COMPANY'S QUARTERLY REPORT ON
FORM 10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 002
<NAME> Roanoke Gas Company
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 41,299,457
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 11,142,997
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 3,114,320
<TOTAL-ASSETS> 55,556,774
<COMMON> 8,861,795
<CAPITAL-SURPLUS-PAID-IN> 6,585,934
<RETAINED-EARNINGS> 8,149,345
<TOTAL-COMMON-STOCKHOLDERS-EQ> 23,594,074
0
0
<LONG-TERM-DEBT-NET> 17,770,000
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 5,313
<OTHER-ITEMS-CAPITAL-AND-LIAB> 14,254,387
<TOT-CAPITALIZATION-AND-LIAB> 55,556,774
<GROSS-OPERATING-REVENUE> 45,850,656
<INCOME-TAX-EXPENSE> 905,102
<OTHER-OPERATING-EXPENSES> 41,224,130
<TOTAL-OPERATING-EXPENSES> 42,129,232
<OPERATING-INCOME-LOSS> 3,721,424
<OTHER-INCOME-NET> 41,311
<INCOME-BEFORE-INTEREST-EXPEN> 3,762,735
<TOTAL-INTEREST-EXPENSE> 1,836,066
<NET-INCOME> 1,926,669
0
<EARNINGS-AVAILABLE-FOR-COMM> 1,926,669
<COMMON-STOCK-DIVIDENDS> 1,752,765
<TOTAL-INTEREST-ON-BONDS> 695,931
<CASH-FLOW-OPERATIONS> 6,412,382
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 1.18
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROANOKE
GAS COMPANY'S UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT FOR THE
QUARTER ENDED JUNE 30, 1998, AS SET FORTH IN THE COMPANY'S QUARTERLY REPORT ON
FORM 10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 002
<NAME> Roanoke Gas Company
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 4,165,457
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 11,276,997
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 3,114,320
<TOTAL-ASSETS> 55,556,774
<COMMON> 8,861,795
<CAPITAL-SURPLUS-PAID-IN> 6,585,934
<RETAINED-EARNINGS> 8,149,345
<TOTAL-COMMON-STOCKHOLDERS-EQ> 23,597,074
0
0
<LONG-TERM-DEBT-NET> 17,700,000
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 5,313
<OTHER-ITEMS-CAPITAL-AND-LIAB> 14,254,387
<TOT-CAPITALIZATION-AND-LIAB> 55,556,774
<GROSS-OPERATING-REVENUE> 45,850,656
<INCOME-TAX-EXPENSE> 905,102
<OTHER-OPERATING-EXPENSES> 41,224,130
<TOTAL-OPERATING-EXPENSES> 42,129,232
<OPERATING-INCOME-LOSS> 3,721,424
<OTHER-INCOME-NET> 41,311
<INCOME-BEFORE-INTEREST-EXPEN> 3,762,735
<TOTAL-INTEREST-EXPENSE> 1,836,066
<NET-INCOME> 1,926,669
0
<EARNINGS-AVAILABLE-FOR-COMM> 1,926,669
<COMMON-STOCK-DIVIDENDS> 1,752,765
<TOTAL-INTEREST-ON-BONDS> 695,931
<CASH-FLOW-OPERATIONS> 6,412,382
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 1.18
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROANOKE
GAS COMPANY'S UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT FOR THE
QUARTER ENDED JUNE 30, 1998, AS SET FORTH IN THE COMPANY'S QUARTERLY REPORT ON
FORM 10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 003
<NAME> Bluefield Gas Company
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 3,598,074
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 1,177,514
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 57,211
<TOTAL-ASSETS> 4,832,799
<COMMON> 49,704
<CAPITAL-SURPLUS-PAID-IN> 220,564
<RETAINED-EARNINGS> 1,430,381
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,700,649
0
0
<LONG-TERM-DEBT-NET> 1,300,000
<SHORT-TERM-NOTES> 876,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 956,150
<TOT-CAPITALIZATION-AND-LIAB> 4,832,799
<GROSS-OPERATING-REVENUE> 5,988,945
<INCOME-TAX-EXPENSE> 101,200
<OTHER-OPERATING-EXPENSES> 5,544,861
<TOTAL-OPERATING-EXPENSES> 5,646,061
<OPERATING-INCOME-LOSS> 342,884
<OTHER-INCOME-NET> (1,798)
<INCOME-BEFORE-INTEREST-EXPEN> 341,086
<TOTAL-INTEREST-EXPENSE> 197,400
<NET-INCOME> 143,686
0
<EARNINGS-AVAILABLE-FOR-COMM> 143,686
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 895,444
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROANOKE
GAS COMPANY'S UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT FOR THE
QUARTER ENDED JUNE 30, 1998, AS SET FORTH IN THE COMPANY'S QUARTERLY REPORT ON
FORM 10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 003
<NAME> Bluefield Gas Company
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,598,074
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 1,177,514
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 57,211
<TOTAL-ASSETS> 4,832,799
<COMMON> 49,704
<CAPITAL-SURPLUS-PAID-IN> 220,564
<RETAINED-EARNINGS> 1,430,381
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,700,649
0
0
<LONG-TERM-DEBT-NET> 1,300,000
<SHORT-TERM-NOTES> 876,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 956,150
<TOT-CAPITALIZATION-AND-LIAB> 4,832,799
<GROSS-OPERATING-REVENUE> 5,988,945
<INCOME-TAX-EXPENSE> 101,200
<OTHER-OPERATING-EXPENSES> 5,544,861
<TOTAL-OPERATING-EXPENSES> 5,646,061
<OPERATING-INCOME-LOSS> 342,884
<OTHER-INCOME-NET> (1,798)
<INCOME-BEFORE-INTEREST-EXPEN> 341,086
<TOTAL-INTEREST-EXPENSE> 197,400
<NET-INCOME> 143,686
0
<EARNINGS-AVAILABLE-FOR-COMM> 143,686
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 895,444
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROANOKE
GAS COMPANY'S UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT FOR THE
QUARTER ENDED JUNE 30, 1998, AS SET FORTH IN THE COMPANY'S QUARTERLY REPORT ON
FORM 10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 004
<NAME> Diversified Energy Company
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 0
<OTHER-PROPERTY-AND-INVEST> 6,133,922
<TOTAL-CURRENT-ASSETS> 1,407,449
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 393,983
<TOTAL-ASSETS> 7,935,354
<COMMON> 196,421
<CAPITAL-SURPLUS-PAID-IN> 833,622
<RETAINED-EARNINGS> 2,995,034
<TOTAL-COMMON-STOCKHOLDERS-EQ> 4,025,117
0
0
<LONG-TERM-DEBT-NET> 1,700,000
<SHORT-TERM-NOTES> 419,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,791,237
<TOT-CAPITALIZATION-AND-LIAB> 7,935,354
<GROSS-OPERATING-REVENUE> 7,575,518
<INCOME-TAX-EXPENSE> 396,050
<OTHER-OPERATING-EXPENSES> 6,529,995
<TOTAL-OPERATING-EXPENSES> 6,926,045
<OPERATING-INCOME-LOSS> 649,473
<OTHER-INCOME-NET> 99,899
<INCOME-BEFORE-INTEREST-EXPEN> 749,372
<TOTAL-INTEREST-EXPENSE> 126,108
<NET-INCOME> 623,264
0
<EARNINGS-AVAILABLE-FOR-COMM> 623,264
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 1,217,963
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROANOKE
GAS COMPANY'S UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT FOR THE
QUARTER ENDED JUNE 30, 1998, AS SET FORTH IN THE COMPANY'S QUARTERLY REPORT ON
FORM 10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 004
<NAME> Diversified Energy Company
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 0
<OTHER-PROPERTY-AND-INVEST> 6,133,922
<TOTAL-CURRENT-ASSETS> 1,407,449
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 393,983
<TOTAL-ASSETS> 7,935,354
<COMMON> 196,421
<CAPITAL-SURPLUS-PAID-IN> 833,622
<RETAINED-EARNINGS> 2,995,034
<TOTAL-COMMON-STOCKHOLDERS-EQ> 4,025,117
0
0
<LONG-TERM-DEBT-NET> 1,700,000
<SHORT-TERM-NOTES> 419,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,791,237
<TOT-CAPITALIZATION-AND-LIAB> 7,935,354
<GROSS-OPERATING-REVENUE> 7,575,518
<INCOME-TAX-EXPENSE> 396,050
<OTHER-OPERATING-EXPENSES> 6,529,995
<TOTAL-OPERATING-EXPENSES> 6,926,045
<OPERATING-INCOME-LOSS> 649,473
<OTHER-INCOME-NET> 99,899
<INCOME-BEFORE-INTEREST-EXPEN> 749,372
<TOTAL-INTEREST-EXPENSE> 126,108
<NET-INCOME> 623,264
0
<EARNINGS-AVAILABLE-FOR-COMM> 623,264
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 1,217,963
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROANOKE
GAS COMPANY'S UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT FOR THE
QUARTER ENDED JUNE 30, 1998, AS SET FORTH IN THE COMPANY'S QUARTERLY REPORT ON
FORM 10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 005
<NAME> Commonwealth Public Service Corporation
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 1,063,883
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> (63,824)
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 20,663
<TOTAL-ASSETS> 1,020,722
<COMMON> 500
<CAPITAL-SURPLUS-PAID-IN> 37,241
<RETAINED-EARNINGS> 625,904
<TOTAL-COMMON-STOCKHOLDERS-EQ> 663,645
0
0
<LONG-TERM-DEBT-NET> 0
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 357,077
<TOT-CAPITALIZATION-AND-LIAB> 1,020,722
<GROSS-OPERATING-REVENUE> 1,463,234
<INCOME-TAX-EXPENSE> 41,768
<OTHER-OPERATING-EXPENSES> 1,339,003
<TOTAL-OPERATING-EXPENSES> 1,380,771
<OPERATING-INCOME-LOSS> 82,463
<OTHER-INCOME-NET> (181)
<INCOME-BEFORE-INTEREST-EXPEN> 82,282
<TOTAL-INTEREST-EXPENSE> 690
<NET-INCOME> 81,592
0
<EARNINGS-AVAILABLE-FOR-COMM> 81,592
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 269,528
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROANOKE
GAS COMPANY'S UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT FOR THE
QUARTER ENDED JUNE 30, 1998, AS SET FORTH IN THE COMPANY'S QUARTERLY REPORT ON
FORM 10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 005
<NAME> Commonwealth Public Service Corporation
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,063,883
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> (63,824)
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 20,663
<TOTAL-ASSETS> 1,020,722
<COMMON> 500
<CAPITAL-SURPLUS-PAID-IN> 37,241
<RETAINED-EARNINGS> 625,904
<TOTAL-COMMON-STOCKHOLDERS-EQ> 663,645
0
0
<LONG-TERM-DEBT-NET> 0
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 357,077
<TOT-CAPITALIZATION-AND-LIAB> 1,020,722
<GROSS-OPERATING-REVENUE> 1,463,234
<INCOME-TAX-EXPENSE> 41,768
<OTHER-OPERATING-EXPENSES> 1,339,003
<TOTAL-OPERATING-EXPENSES> 1,380,771
<OPERATING-INCOME-LOSS> 82,463
<OTHER-INCOME-NET> (181)
<INCOME-BEFORE-INTEREST-EXPEN> 82,282
<TOTAL-INTEREST-EXPENSE> 690
<NET-INCOME> 81,592
0
<EARNINGS-AVAILABLE-FOR-COMM> 81,592
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 269,528
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROANOKE
GAS COMPANY'S UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT FOR THE
QUARTER ENDED JUNE 30, 1998, AS SET FORTH IN THE COMPANY'S QUARTERLY REPORT ON
FORM 10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 006
<NAME> RGC Acquisition Corp.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 0
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 0
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 0
<COMMON> 0
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 0
<TOTAL-COMMON-STOCKHOLDERS-EQ> 0
0
0
<LONG-TERM-DEBT-NET> 0
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 0
<TOT-CAPITALIZATION-AND-LIAB> 0
<GROSS-OPERATING-REVENUE> 0
<INCOME-TAX-EXPENSE> 0
<OTHER-OPERATING-EXPENSES> 0
<TOTAL-OPERATING-EXPENSES> 0
<OPERATING-INCOME-LOSS> 0
<OTHER-INCOME-NET> 0
<INCOME-BEFORE-INTEREST-EXPEN> 0
<TOTAL-INTEREST-EXPENSE> 0
<NET-INCOME> 0
0
<EARNINGS-AVAILABLE-FOR-COMM> 0
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROANOKE
GAS COMPANY'S UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT FOR THE
QUARTER ENDED JUNE 30, 1998, AS SET FORTH IN THE COMPANY'S QUARTERLY REPORT ON
FORM 10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 006
<NAME> RGC Acquisition Corp.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 0
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 0
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 0
<COMMON> 0
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 0
<TOTAL-COMMON-STOCKHOLDERS-EQ> 0
0
0
<LONG-TERM-DEBT-NET> 0
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 0
<TOT-CAPITALIZATION-AND-LIAB> 0
<GROSS-OPERATING-REVENUE> 0
<INCOME-TAX-EXPENSE> 0
<OTHER-OPERATING-EXPENSES> 0
<TOTAL-OPERATING-EXPENSES> 0
<OPERATING-INCOME-LOSS> 0
<OTHER-INCOME-NET> 0
<INCOME-BEFORE-INTEREST-EXPEN> 0
<TOTAL-INTEREST-EXPENSE> 0
<NET-INCOME> 0
0
<EARNINGS-AVAILABLE-FOR-COMM> 0
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
