Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by Registrant (x)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
(x) Preliminary Proxy Statement
( ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
Roanoke Gas Company
(Name of Registrant as Specified in its Charter)
Roger L. Baumgardner, Corporate Secretary
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
(x) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-(j)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act Rules
14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
PRELIMINARY COPY
ROANOKE GAS COMPANY
---------------------------------------------------
519 KIMBALL AVENUE, N.E. ROANOKE, VIRGINIA 24016
---------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 27, 1997
---------------------
NOTICE is hereby given that, pursuant to its Bylaws and call of its
directors, the Annual Meeting of the Shareholders of Roanoke Gas Company will
be held at the office of the Company, 519 Kimball Avenue, N.E., Roanoke,
Virginia 24016, on Monday, January 27, 1997, at 9 a.m., Eastern Standard
Time, for the election of directors, the approval of an amendment of the
Company's Articles of Incorporation providing for classification of the Board
of Directors into three classes of directors with staggered terms of office
and implementing certain related matters, the approval of the Roanoke Gas
Company Restricted Stock Plan for Outside Directors, the appointment of
independent auditors for fiscal year 1997 and the transaction of such other
business as may properly come before the meeting. Your attention is directed
to the Proxy Statement accompanying this Notice for a more complete statement
regarding matters proposed to be acted upon at the meeting.
Only those shareholders of record as of the close of business on
November 22, 1996, shall be entitled to vote at the meeting.
You are urged to sign and date the enclosed form of proxy and return it
promptly in the enclosed self-addressed, stamped envelope. Should you decide
to attend the meeting and vote in person, you may withdraw your proxy.
By Order of the Board of Directors.
ROGER L. BAUMGARDNER
Secretary
December 13, 1996
<PAGE>
PRELIMINARY COPY
PROXY STATEMENT
--------------------
MAILED DECEMBER 13, 1996
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JANUARY 27, 1997
This Proxy Statement is furnished on December 13, 1996, in connection
with the solicitation of proxies to be used at the Annual Meeting of
Shareholders of Roanoke Gas Company (the "Company"), to be held on Monday,
January 27, 1997, at 9 a.m., Eastern Standard Time, at the office of the
Company, 519 Kimball Avenue, N.E, Roanoke, Virginia 24016.
Proxies in the form enclosed herewith are solicited by management at
the direction of the Board of Directors of the Company. If the enclosed
proxy is properly signed and returned to the Company, the shares represented
thereby will be voted at the Annual Meeting in accordance with its terms for
the election of the management nominees for the Board of Directors, for the
amendment of the Company's Articles of Incorporation to classify the Board of
Directors into three classes of directors with staggered terms of office and
implement certain related matters (the "Proposed Amendment"), for approval of
the Roanoke Gas Company Restricted Stock Plan for Outside Directors (the
"Proposed Plan"), and for the appointment of independent auditors for fiscal
year 1997. Any proxy given pursuant to this solicitation may be revoked at
any time prior to the vote of the shareholders, and an opportunity will be
given to shareholders attending the meeting to withdraw their proxies and to
vote their shares in person.
The Company's Annual Report to Shareholders for the year ended
September 30, 1996 is being sent to all shareholders concurrently with this
Proxy Statement. Said Annual Report is not to be considered a part of the
proxy solicitation material.
Voting Securities
The close of business on November 22, 1996, has been fixed as the
record date for the determination of shareholders of the Company entitled to
notice of and to vote at the Annual Meeting of Shareholders. There were
1,483,462 shares of common stock outstanding as of the foregoing record date,
and each such share is entitled to one vote. To the Company's knowledge, no
person is the beneficial owner of more than five percent of the issued and
outstanding common stock of the Company.
A majority of votes entitled to be cast on matters to be considered at
the Annual Meeting constitutes a quorum. If a share is represented for any
purpose at the Annual Meeting, it is deemed to be present for purposes of
establishing a quorum. Abstentions and shares held of record by a broker or
its nominee ("Broker Shares") which are voted on any matter are included in
determining the number of votes present or represented at the Annual Meeting.
Conversely, Broker Shares that are not voted on any matter will not be
included in determining whether a quorum is present. If a quorum is
established, directors will be elected by a plurality of the votes cast by
shares entitled to vote at the Annual Meeting. Approval of the Proposed
Amendment and the Proposed Plan requires the affirmative vote, at a meeting
at which a quorum is present, of a majority of the votes cast by the shares
that are entitled to vote. Votes that are withheld and Broker Shares that
are not voted in the election of directors and/or in connection with the
Proposed Amendment or the Proposed Plan will not be included in determining
the number of votes cast.
Security Ownership of Management
The following table sets forth, as of November 22, 1996, certain
information regarding the beneficial ownership of the common stock of the
Company by each director nominee and named executive officer and by all
director nominees 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 common stock shown
as beneficially owned by them.
<TABLE>
<CAPTION>
Shares of Common
Name of Stock Beneficially Owned
Beneficial Owner As of 11/22/96 Percent of Class
- ---------------- -------------- ----------------
<S> <C> <C>
Lynn D. Avis 9,410 1 *
Abney S. Boxley, III 3,486 *
Frank T. Ellett 5,286 *
Frank A. Farmer, Jr. 30,843 2 2.08
Wilbur L. Hazlegrove 36,271 3 2.45
J. Allen Layman 3,987 *
John H. Parrott 14,325 4 *
Thomas L. Robertson 3,901 *
S. Frank Smith 5,320 *
All Directors and Executive Officers 123,058 5 8.23
as a Group (13 persons)
- ----------------------------
</TABLE>
* Less than 1%
1 Includes 874 shares owned by son, as to which shares Mr. Avis disclaims
beneficial ownership.
2 Includes 8,457 shares owned by spouse and 818 shares owned by Mr.
Farmer's mother, for which Mr. Farmer holds power of attorney. Also
includes 5,000 shares which Mr. Farmer has the right to acquire through
the exercise of stock options.
3 Includes 11,144 shares owned by spouse and 66 shares owned by daughter.
Also includes 823 shares owned by son, as to which shares Mr. Hazlegrove
disclaims beneficial ownership.
4 Includes 2,216 shares owned by spouse.
5 Includes an aggregate of 11,500 shares which executive officers have the
right to acquire through the exercise of stock options.
ELECTION OF DIRECTORS
Proposal No. 1
Increasingly in recent years, officers of the Company have been
approached by others to open discussions for acquisition of the Company. 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 the Company and
has formally acted to direct officers and individual directors to advise
those who may propose acquisition or discussions for acquisition that the
Company is not now for sale under any arrangement requiring Board approval.
The persons named below have been nominated as management nominees for
election to the Board of Directors of the Company. 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 the Company are set forth opposite the name
of each nominee. All management nominees are members of the present Board of
Directors. Proxies cannot be voted for a greater number of persons than the
number of nominees named below.
At the Annual Meeting, nine directors will be elected. If Proposal
No. 2 (described below) is adopted by the shareholders, a classified Board
will be elected so that three directors will hold office until the 1998
Annual Meeting of Shareholders, three directors will hold office until the
1999 Annual Meeting of Shareholders and three directors will hold office
until the 2000 Annual Meeting of Shareholders, and in each case until their
respective successors are elected and qualified.
If Proposal No. 2 is adopted, it is the intention of the persons named
as proxies in the accompanying form of proxy, unless otherwise instructed, to
vote for the election of each nominee set forth below for the term expiring
in the year indicated. If Proposal No. 2 is not adopted, the persons named
as proxies intend to vote, unless otherwise instructed, for the election of
each such nominee to serve for one year.
The Board of Directors recommends a vote FOR each of the nominees for
---
Director.
Year In
Which
First Elected
Name and Age As Director Principal Occupation
- ------------ ----------- --------------------
CLASS A DIRECTORS FOR ELECTION TO TERMS EXPIRING IN 1998
Abney S. Boxley, III 1994 President, W. W. Boxley Co. (Crushed stone
Age 38 supplier); Director, Valley Financial
Corporation
John H. Parrott 1983 President, John H. Parrott and Associates,
Age 69 Inc. (Construction consultants) since
1983; prior thereto, Vice President, Olver,
Incorporated (Consulting engineers and
environmental laboratories) 1986-1991
S. Frank Smith 1990 Executive Vice President, Coastal Coal
Age 48 Sales, Inc. (Marketers and sellers of coal)
CLASS B DIRECTORS FOR ELECTION TO TERMS EXPIRING IN 1999
Lynn D. Avis 1986 President, Avis Construction Co., Inc.
Age 62 (Construction Company)
J. Allen Layman 1991 President and Chief Executive Officer, R&B
Age 44 Communications, Inc. (Telecommunications)
Thomas L. Robertson 1986 President, Carilion Health System and
Age 53 Carilion Medical Center; Director, Roanoke
Electric Steel Corporation
CLASS C DIRECTORS FOR ELECTION TO TERMS EXPIRING IN 2000
Frank T. Ellett 1983 President, Virginia Truck Center, Inc.
Age 58 (Sale, lease and service of heavy trucks)
F. A. Farmer, Jr. 1979 President and Chief Executive Officer of
Age 64 the Company since Jan. 1991; Chairman of
the Board of Directors of the Company
since Jan. 1996
W. L. Hazlegrove 1979 Member, law firm of Woods, Rogers &
Age 67 Hazlegrove, P.L.C.; Vice President and
General Counsel of the Company, 1984-1994
Executive Compensation
The following table contains information with respect to the
individual compensation of the Chief Executive Officer for services in all
capacities to the Company and its subsidiaries for the fiscal years ended
September 30, 1996, 1995 and 1994. None of the Company's executive officers
other than the Chief Executive Officer received total annual compensation in
excess of $100,000 for services rendered to the Company during any of these
years.
<TABLE>
<CAPTION>
Summary Compensation Table
Name and Year Annual Compensation Long Term Compensation All Other
Principal Compensation
Position ($) (2)
Salary ($) Bonus ($) (1) Awards
Options/SARs
<S> <C> <C> <C> <C> <C>
Frank A. Farmer, Jr. 1996 158,858 11,000 5,000 5,089
President & Chief 1995 151,976 6,000 0 4,733
Executive Officer 1994 143,650 0 0 4,303
- --------------
</TABLE>
(1) Bonus paid in current year for previous year's performance.
(2) Consists entirely of the Company's contribution under the Employees'
Thrift Plan.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Potential Realized Value (1)
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term
------------------------------------------------------- ----------------------
% of Total
Number of Options Market
Securities Granted to Exercise Price on
Underlying Employees or Base Date of
Options in Fiscal Price Grant Expiration
Name Granted (#) Year ($/Share) (2) ($/Share) Date 5% ($) 10% ($)
---- ----------- -------- ----------- --------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Frank A. Farmer, Jr. 5,000 37 $15.50 $15.50 10/30/05 126,239 201,015
</TABLE>
(1) The dollar amounts under these columns are the result of calculations
at the 0%, 5% and 10% rates set by the Securities and Exchange
Commission and therefore are not intended to forecast possible future
appreciation, if any, of the Company's 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. The Company did not 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 the Company's common stock on the Nasdaq National
Market on the date of grant. Options generally expire ten years from
the date of grant.
Retirement Plan
The Company has in effect a noncontributory Retirement Plan. The costs
of benefits under the Plan, which are borne by the Company, are computed
actuarially and defrayed by earnings from the Plan's investments and/or
annual contributions of the Company. 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 the Company's
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 the
Company and are credited with at least 1,000 hours of service in a Plan year
are eligible to participate in the Plan.
It is estimated that at age 65, for Plan purposes, Mr. Farmer will
have 33 credited years of service.
The compensation covered by the Plan includes the total of all amounts
paid to a participant by the Company for personal services reported on the
participant's federal income tax withholding statement (Form W-2), up to
certain statutory limits. For 1996, these earnings are limited to $150,000.
This limit is indexed for cost of living after 1994.
<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>
$125,000 $32,100 $42,700 $53,400 $64,100 $64,100
150,000 39,000 52,000 65,000 78,000 78,000
175,000 39,000 52,000 65,000 78,000 78,000
200,000 39,000 52,000 65,000 78,000 78,000
- --------------
</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
Thrift 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 the
Company, is responsible for setting and administering the policies that
govern the annual compensation paid to the executive officers of the
Company, including the Chief Executive Officer.
Annual Salary. In fiscal 1996, annual salary continued to be the
primary component of compensation for executive officers of the Company.
This is based in large part on concern that external factors beyond the
control of Company 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 Company 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 its Stock Bonus Plan, the Committee approved the payment
of bonuses to the CEO and other executive officers of the Company for
outstanding performance during the fiscal year 1995. 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 Company common
stock by officers and management. The Stock Bonus Plan is administered by
the Committee, which considers recommendations from the Company's President.
The Company's bonus award proposals are subject to approval of the Board of
Directors. Under the Stock Bonus Plan, executive officers of the Company
are encouraged to own a position in the Company's 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 Company
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 1995 fiscal
year were based on the performance of the Company, which reflected an
increase in earnings during a period of reduced revenue resulting from the
warmer than normal weather, combined with an analysis of the individual
contributions of officers receiving the bonuses to the overall performance
of the Company.
The Company adopted a Key Employee Stock Option Plan, which became
effective January 1996. The Plan is intended to provide the Company's
executive officers with long-term (ten-year) incentives and rewards tied to
the price of the Company's common stock. The Committee believes that stock
options will assist the Company in attracting, maintaining and motivating
officers and other key employees of the Company, upon whose judgment,
initiative and efforts the Company depends, by providing such persons with
the opportunity to acquire an equity interest in the Company. Stock options
are used to provide executive officers additional incentive to use their
best efforts and superior performances to promote the best interest of the
Company and the shareholders.
In making its recommendation regarding the 1996 compensation of the
Chief Executive Officer, the Committee considered all of the criteria above.
Specific consideration also was given to the Chief Executive Officer's
efforts toward cost containment, the Company's improved earnings and
shareholder and customer growth in the preceding fiscal year. During 1996,
Mr. Farmer received a bonus of $11,000, which he elected to take in Company
common stock, for his performance during the fiscal year 1995. The amount
of the bonus was determined based upon Mr. Farmer's success during 1995 in
monitoring operational and capital budgets for maximum cost efficiency. The
control of costs, operational and financing, resulted in improved earnings
for the Company. Mr. Farmer also received during fiscal 1996 an option
under the Key Employee Stock Option Plan to purchase 5,000 shares of Company
common stock. The number of shares subject to the option was determined
based on the Compensation Committee's determination that 5,000 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.
Submitted by the Compensation Committee of the
Board of Directors of the Company:
Lynn D. Avis, Abney S. Boxley, III, Frank T. Ellett,
J. Allen Layman, S. Frank Smith
Performance Graph
The following graph compares the yearly percentage change and the
cumulative total of shareholder return on the Company's common stock with
the cumulative return on the Standard & Poor's 500 Composite Index (the "S&P
500") and the Edward D. Jones & Co. Natural Gas Distribution Index for the
five-year period commencing on September 30, 1991 and ending on September
30, 1996. These comparisons assume the investment of $100 in the Company's
common stock in each of the indices on September 30, 1991 and the
reinvestment of dividends.
(THE PERFORMANCE GRAPH APPEARS HERE.)
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Roanoke Gas Company $100 106 113 130 120 145
S & P 500 Composite Index $100 111 125 130 169 203
Edward Jones
Natural Gas Distribution Index $100 109 139 121 138 168
</TABLE>
Transactions with Management
The law firm of Woods, Rogers & Hazlegrove, P.L.C., of which W. L.
Hazlegrove, a director of the Company, is a member, rendered legal services
to the Company during 1996, and it is anticipated that similar legal
services will be provided by that firm to the Company in 1997.
Remuneration of Directors
Directors are compensated $6,000 per year in addition to receiving
fees for meetings of the Company's Board of Directors and of Committees of
the Board which they attend. Mr. Farmer is not compensated for attendance
at Board and Committee meetings and does 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:
<TABLE>
<CAPTION>
<S> <C>
Board of Directors $ 400
Executive Committee $ 400
Audit Committee $ 400
Compensation Committee $ 400
</TABLE>
However, the fee for any Committee meetings held the same day as a
Board meeting is $250.
Board of Directors and Committees
Audit Committee
The Audit Committee of the Board of Directors, composed of Messrs.
Boxley, Ellett, Izard, Layman, Robertson, and Smith, meets at least annually
with the Company's chief financial officer, the independent auditors of the
Company, and certain appropriate officers of the Company. The basic
functions of this Committee include reviewing significant financial
information, reviewing accounting procedures and internal controls and
recommending the selection of the Company's independent auditors. The Audit
Committee met three times during the 1996 fiscal year.
Executive Committee
The Executive Committee of the Board of Directors, which is composed
of Messrs. Hazlegrove, Ellett, Izard, and Parrott, 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 the Company's annual meeting. This Committee, which did not
meet during fiscal year 1996, will not consider proposed nominees
recommended by shareholders of the Company. 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 the Company. This Committee met twice during the 1996 fiscal
year.
Meetings of the Board and Committees
The Board of Directors met twelve times during the 1996 fiscal year.
With the exception of Messrs. Boxley and Robertson, the incumbent members of
the Board attended in fiscal year 1996, 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.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and any persons who own more
than 10% of the Company's common stock, to file reports of ownership and
changes in ownership of Company common stock with the Securities and
Exchange Commission. 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, the Company believes that in fiscal 1996
one report relating to one transaction was filed late by Frank A. Farmer,
Jr. and four reports relating to one transaction each were filed late by
John H. Parrott.
Proposal No. 2
APPROVAL OF AMENDMENT TO AUTHORIZE A CLASSIFIED BOARD OF DIRECTORS AND TO
IMPLEMENT CERTAIN RELATED MATTERS
General
The Company's Board of Directors has unanimously approved an amendment
to the Company's Articles of Incorproation (the "Articles") and has voted to
recommend that the Company's shareholders approve such Proposed Amendment.
If adopted, the Proposed Amendment would (i) classify the Board of Directors
into three classes, as nearly equal in number as possible, each of which,
after an interim arrangement, would serve for three years, with one class
being elected each year; (ii) provide that the number of directors may not
be less than seven nor more than eleven, the precise number to be set in the
Company's Bylaws or, if there is no Bylaw, to be nine; (iii) provide that
directors shall be removed only for cause; and (iv) provide that any vacancy
on the Board shall be filled by a majority of the remaining directors then
in office, even if less than a quorum. The Proposed Amendment is designed
to assure continuity and stability in the Board's leadership and policies,
particularly in the event of an unsolicited tender offer. The Proposed
Amendment also establishes a legal structure that encourages any potential
acquiror to negotiate with the Board rather than unilaterally attempt to
gain control of the Company. The Board believes that this approach is the
one most likely to result in long-term enhancement of shareholder value.
Although there has been no problem in the past with the continuity or
stability of the Board, the Board believes that the Proposed Amendment will
help to assure the continuity and stability of the Company's affairs and
policies in the future. If approved, the Proposed Amendment will be
effective upon the filing of Articles of Amendment with the State
Corporation Commission of Virginia, which filing will be made promptly after
the Annual Meeting.
Before voting on the Proposed Amendment, shareholders are urged to
read carefully the following sections of this Proxy Statement, which
describe the amendment and its purposes and effects, and Exhibit I hereto,
which sets forth the full text of the Proposed Amendment. The description
of the Proposed Amendment is qualified in its entirety by reference to
Exhibit II.
Adoption of the Proposed Amendment requires the affirmative vote of
more than two-thirds of the outstanding shares of the Company's common
stock. A failure to vote, either by not returning the enclosed proxy or
checking the "Abstain" box, will have the same effect as a vote against
Proposal No. 2.
Classification of the Board of Directors
The present Articles are silent on the matter of election of directors
and, accordingly, under applicable law, all directors are to be elected to
the Board annually for a term of one year. Directors of the Company are
elected by a plurality of the votes cast in an election of directors at any
annual or special meeting of the shareholders. The Company's Articles do
not permit cumulative voting for directors.
The Proposed Amendment would divide the Board into three classes, each
class to be as nearly equal in number as possible. Three directors will be
elected for a term expiring at the 1998 Annual Meeting of Shareholders,
three directors will be elected for a term expiring at the 1999 Annual
Meeting of Shareholders, and three directors will be elected for a term
expiring at the 2000 Annual Meeting of Shareholders (in each case until
their respective successors are elected and qualify). Starting with the
1998 Annual Meeting of Shareholders, one class of directors -- approximately
one-third of the Board -- will be elected each year for a three-year term.
The Proposed Amendment with respect to classifying the Board, if adopted,
will apply to every election of directors.
A classified Board will extend the time required to change the
composition of a majority of directors. Presently, a change in composition
of the Board of Directors can be made by shareholders of a majority of the
Company's stock voting at a single meeting. With a classified Board, two
annual meetings normally would be required for holders of a majority of the
Company's stock to change the composition of a majority of the Board of
Directors, since only one-third of the number of directors will be elected
at each meeting. Because of the additional time required to change the
composition of the Board, classification of the Board also may make the
removal of incumbent management more difficult.
Since the classified Board will increase the time required for a third
party to obtain control of the Company without the cooperation of the Board
of Directors, it may tend to discourage certain tender offers, including
perhaps some tender offers that some shareholders may feel would be in their
best interest. However, the Board of Directors believes that classification
of the Board will provide the Board with more time to evaluate any takeover
proposal and thus enable it to better protect the interests of the Company
and the remaining shareholders. The Board is not aware of any current
specific effort to attempt to gain control of the Company. Although the
Proposed Amendment would not impede an acquisition of the Company approved
by the Board, adoption of the Proposed Amendment may affect the ability of
the shareholders of the Company to change the composition of the incumbent
Board, to affect its policies generally and to benefit from transactions
which are opposed by the incumbent Board.
Number of Directors
Article II, Section 2 of the Company's current Bylaws provides that
the number of directors constituting the Board of Directors of the Company
shall be nine. Under Virginia law, the number of directors may be fixed or
changed from time to time by amendment of the Bylaws by the shareholders or
by the Board of Directors. The Proposed Amendment fixes in the Articles a
variable range and provides that the precise number of directors, within
that variable range, will be as from time to time designated in the Bylaws
by the Board of Directors.
This provision, together with the provisions hereafter discussed
regarding the filling of vacancies on the Board and restrictions on removal
of incumbent directors, may make it more difficult for a majority
shareholder to obtain representation quickly by enlarging the Board and
filling the directorships with its own nominees.
Removal of Directors; Filling Newly-Created Directorships and Vacancies
Currently, any director may be removed, with or without cause, by a
majority vote of the shares entitled to elect directors, and newly-created
directorships and vacancies may be filled by a plurality vote of the
shareholders or a majority vote of the Board of Directors. The Proposed
Amendment provides that a director may be removed only for cause and that
any vacancy on the Board occurring during the course of the year, including
vacancies created by an increase in the number of directors, shall be filled
by a majority vote of the remaining directors, whether or not a quorum.
Directors elected in this manner would, under Virginia law, hold office
until the next shareholders' meeting at which directors are elected, when
they would be subject to reelection by the shareholders.
These provisions are intended to prevent a majority shareholder from
destablizing the classified Board by removing directors without cause and
replacing them with its own nominees. Removal of directors only for cause
may encourage bidders to negotiate with the Board of Directors prior to
launching a takeover bid. This provision, together with the provision for
classification of the Board of Directors and the other provisions of the
Proposed Amendment, would make it more difficult and more time consuming for
shareholders to replace a majority of the directors even when the only
reason for a change may be the performance of the present directors.
Other Article and Bylaw Provisions
The Company's Articles and Bylaws do not currently contain any other
conventional anti-takeover provisions, and the Company has no current plans
to submit further proposals to shareholders with a possible "anti-takeover"
effect.
The Virginia Stock Corporation Act (the "Corporation Act") contains
provisions governing "affiliated transactions" designed to deter uninvited
takeovers of Virginia corporations. These provisions, with several
exceptions discussed below, require approval of material acquisition
transactions between a Virginia corporation and any holder of more than 10%
of any class of its voting shares (a "10% holder") by holders of at least
two-thirds of the remaining voting shares. Under the statute, for the three
years following the time the 10% holder crosses the 10% threshold, a
Virginia corporation cannot engage in an affiliated transaction (primarily a
merger, sale of assets or other business combination) with the 10% holder
without approval of a majority of the "disinterested directors" and two-
thirds of the voting shares of the Company other than shares owned by the
10% holder. This special voting requirement does not apply if a majority of
"disinterested directors" approved the acquisition of the more than 10%
interest in advance. After the three-year period has expired, a 10% holder
may engage in an affiliated transaction only if the transaction has been
approved by a majority of "disinterested directors" or by two-thirds of the
disinterested stockholders, or if the transaction satisfies the statute's
"fair-price" requirements.
The Corporation Act also provides that shares acquired in a
transaction that would cause the acquiring person's voting strength to cross
any of three thresholds (20%, 33 1/2%, 50%) have no voting rights unless
granted by a majority vote of shares not owned by the acquiring person or
any officer or employee-director of the Company. An acquiring person may
require the Company to hold a special meeting of shareholders to consider
the granting of voting rights within fifty days of its request.
The Board of Directors recommends a vote FOR Proposal No. 2.
---
APPROVAL OF ROANOKE GAS COMPANY RESTRICTED STOCK PLAN FOR OUTSIDE DIRECTORS
Proposal No. 3
At its meeting on September 23, 1996, the Board of Directors of the
Company adopted, subject to shareholder and Virginia State Corporation
Commission approval, the Roanoke Gas Company Restricted Stock Plan for
Outside Directors. The Proposed Plan is applicable to not more than 50,000
shares of Company common stock.
The text of the Proposed Plan is attached to this Proxy Statement as
Exhibit II. The description of the Proposed Plan set forth below is
qualified in its entirety by reference to Exhibit II. Under the Proposed
Plan, 40% of the monthly retainer fee paid to each nonemployee director of
the Company shall be paid in shares of common stock that is subject to
vesting and nontransferability restrictions (the "Restricted Stock"). The
number of shares of Restricted Stock will be calculated each month based on
the closing sales price of the Company's common stock on the Nasdaq-NMS 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. A
participant can, 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 following table indicates the minimum and maximum number of shares
of Restricted Stock which could have been purchased under the Proposed Plan
if it had been in effect for the 1996 fiscal year by all current nonemployee
directors as a group. Directors who are executive officers or employees of
the Company are not eligible to participate in the Proposed Plan.
<TABLE>
<CAPTION>
Minimum Number of Maximum Number of
Shares of Restricted Shares of Restricted
Stock 1, 2 Stock 1, 2
------------ ------------
<S> <C> <C>
Nonemployee directors
as a group (9 persons) 1,234 3,086
</TABLE>
1 Directors' retainer fee during 1996 was $500 per month.
2 Assumes purchase price of $17.50 per share, the closing sales price of
the Company's common stock on November 1, 1996. The number of shares of
Restricted Stock purchased each month will vary depending on the closing
sales prices of the Company's common stock on the Nasdaq-NMS.
The shares of Restricted Stock of the Company issued under the
Proposed 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 the Company. There is no option
to take cash in lieu of stock upon vesting of shares under the Proposed
Plan. The Restricted Stock may not be sold, transferred, assigned or
pledged by the participant until it has vested in accordance with the terms
of the Proposed 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 the Company 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 Proposed Plan, a participant, as the 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 the Company. The
Company may require 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.
The Board may at any time suspend or terminate the Proposed Plan or
amend it from time to time in such respects as the Board may deem advisable
in the best interests of the Company. In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, rights
offer, liquidation, merger or other change in or affecting the corporate
structure or capitalization of the Company, appropriate adjustments in the
number, price and kind of Restricted Stock authorized to be issued under the
Proposed Plan and in any outstanding Restricted Stock will be made.
An award of Restricted Stock will not be taxable income to the
participant, nor will the award be a deductible expense to the Company, at
the date of the award, unless the participant makes a Section 83(b) election
to have the grant taxed as compensation income at fair market value on the
date of the award. When the Restricted Stock becomes transferrable and
nonforfeitable, if no election has been made under Section 83(b), the
Restricted Stock will be subject to tax based on fair market value on the
date that is the later of (i) the date the restrictions imposed lapsed and
the shares became transferable; and (ii) six months after the date the
Restricted Stock was awarded. The Company will be entitled to a tax
deduction (i) in an amount equal to the amount of ordinary income recognized
by the participant director; and (ii) in the taxable year the participant
director recognizes the income.
The foregoing discussion of federal income tax aspects is only a
summary and based upon interpretations of the existing laws, regulations and
rulings which could be materially altered at any time.
The Proposed Plan will become effective upon approval by the
shareholders and the Virginia State Corporation Commission. The Proposed
Plan is designed to advance the interests of the Company, its shareholders
and affiliates by encouraging enabling outside directors, upon whose
judgment, initiative and effort the Company relies for the successful
conduct of its business, to acquire and retain a proprietary interest in the
Company by ownership of its stock.
Approval of the Proposed Plan requires the affirmative vote of a
majority of the votes cast by the shares that are entitled to vote at the
Annual Meeting of Shareholders. See "Voting Securities" above.
Your Board of Directors recommends a vote FOR Proposal No. 3.
---
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Proposal No. 4
Upon recommendation of the Audit Committee, the Board of Directors has
appointed KPMG Peat Marwick LLP as independent public accountants to audit
the financial statements of the Company and its subsidiaries for the year
ending September 30, 1997. This appointment is subject to approval by the
shareholders. A representative of KPMG Peat Marwick LLP is expected to
attend the meeting with the opportunity to make a statement and/or respond
to appropriate questions from shareholders. KPMG Peat Marwick LLP has
served as independent auditors of the Company since fiscal year 1990.
The Board of Directors recommends a vote FOR approval of the
---
appointment of KPMG Peat Marwick LLP as independent public accountants for
fiscal year 1997.
Other Matters
Management does not know of any matters to be presented at the Annual
Meeting of Shareholders other than those set forth above. 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.
Shareholders Proposals
Proposals of shareholders intended to be presented at the Company's
1998 Annual Meeting must be received by the Corporate Secretary of Roanoke
Gas Company at its office, 519 Kimball Avenue, N.E., Roanoke, Virginia
24016, no later than August 15, 1997, in order to be considered for
inclusion in the Company's Proxy Statement relating to that meeting.
Expenses of Solicitation
The entire expense of preparing, assembling, printing and mailing the
form of proxy and Proxy Statement will be paid by the Company. The Company
will request banks and brokers to solicit their customers who beneficially
own common stock of the Company listed in the names of nominees and will
reimburse said banks and brokers for the reasonable out-of-pocket expense of
such solicitation. In addition to the use of the mails, solicitation may be
made by employees of the Company by telephone, telegraph, cable and personal
interview. The Company does not expect to pay any compensation for the
solicitation of proxies.
By Order of the Board of Directors.
F. A. FARMER, JR.
President
December 13, 1996
The Company's Annual Report on Form 10-K for the year ended September 30,
1996 is available without charge to any shareholder requesting the same.
Written requests should be addressed to the attention of Mr. Roger L.
Baumgardner, Secretary, Roanoke Gas Company, P.O. Box 13007, Roanoke,
Virginia 24030.
<PAGE>
Exhibit I
Article Fourth of the Articles of Incorporation is amended by deleting
existing Article Fourth and substituting in lieu thereof:
"Fourth: (a) The number of directors of the Corporation,
not less than seven nor more than eleven, shall be fixed by the
Bylaws and, in the absence of a Bylaw fixing the number, shall be
nine. Upon the adoption of this Article Fourth, the directors
shall be divided into three classes (A, B and C) as nearly equal
in number as possible. The initial term of office for members of
Class A shall expire at the annual meeting of shareholders in
1998; the initial term of office for members of Class B shall
expire at the annual meeting of shareholders in 1999; and the
initial term of office for members of Class C shall expire at the
annual meeting of shareholders in 2000. 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 to hold 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 or any decrease in 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.
(b) Newly-created directorships resulting from an increase
in the 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."
<PAGE>
Exhibit II
ROANOKE GAS COMPANY
RESTRICTED STOCK PLAN
FOR OUTSIDE DIRECTORS
1. Purpose
The Roanoke Gas Company Restricted Stock Plan for Outside Directors
(the "Plan") is intended to advance the interests of Roanoke Gas Company,
its shareholders, and its affiliates by encouraging and enabling outside
directors upon whose judgment, initiative and effort the Company relies for
the successful conduct of its business, to acquire and retain a proprietary
interest in the Company by ownership of its stock.
2. Definitions
The following definitions apply to this Plan and to the Election Forms:
(a) Beneficiary or Beneficiaries means a person or persons or other
entity designated on a Beneficiary Designation Form by a
Participant to receive Company Stock under this Plan if the
Participant dies. If there is no valid designation by the
Participant, or if the designated Beneficiary or Beneficiaries
fail to survive the Participant, the Participant's Beneficiary is
the first of the following who survives the Participant: the
Participant's spouse (the person legally married to the
Participant when the Participant dies); the Participant's children
in equal shares; the Participant's other surviving issue, per
---
stirpes; the Participant's parents; and the Participant's estate.
-------
(b) Beneficiary Designation Form means a form acceptable to the
Chairman of the Committee or his designee used by a Participant
according to this Plan to name the Beneficiary or Beneficiaries
who will receive all the Company Stock under this Plan if the
Participant dies.
(c) Board means the Board of Directors of the Company.
(d) Change in Control means a change in control of a nature that would
be required to be reported (assuming such event has not been
"previously reported") in response to Item 1(a) of the Current
Report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended ("Exchange Act"); provided that, notwithstanding the
foregoing and without limitation, such a change in control shall
be deemed to have occurred at such time as (i) any Person is or
becomes the "beneficial owner" (as defined in Rule 13d-3 or Rule
13d-5 under the Exchange Act as in effect on the date hereof),
directly or indirectly, of 20% or more of the combined voting
power of the Company's voting securities; (ii) the incumbent Board
ceases for any reason to constitute at least the majority of the
Board, provided that any person becoming a director subsequent to
the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least 75% of
the directors comprising the incumbent Board (either by a specific
vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without objection
to such nomination) shall be, for purposes of this clause
(ii), considered as though such person were a member of the
incumbent Board; (iii) all or substantially all of the assets of
the Company are sold, transferred or conveyed by any means,
including, but not limited to, direct purchase or merger, if the
transferee is not controlled by the Company, control meaning the
ownership of more than 50% of the combined voting power of such
entity's voting securities; or (iv) the Company is merged or
consolidated with another corporation or entity and as a result of
such merger or consolidation less than 75% of the outstanding
voting securities of the surviving or resulting corporation or
entity shall be owned in the aggregate by the former shareholders
of the Company. Notwithstanding anything in the foregoing to the
contrary, no Change in Control shall be deemed to have occurred
for purposes of the Plan by virtue of any transaction (i) which
results in a Participant or a group of Persons which includes the
Participant, acquiring, directly or indirectly, 20% or more of the
combined voting power of the Company's voting securities; or
(ii) which results in the Company, any affiliate of the Company or
any profit-sharing plan, employee stock ownership plan or employee
benefit plan of the Company or any of its affiliates (or any
trustee of or fiduciary with respect to any such plan acting in
such capacity) acquiring, directly or indirectly, 20% or more of
the combined voting power of the Company's voting securities.
(e) Committee means the Compensation Committee of the Board.
(f) Company means Roanoke Gas Company.
(g) Company Stock means the common stock, $5 par value of the Company.
(h) Compensation means a Member's Retainer Fee for the Deferral Year.
(i) Election Form means a document governed by the provisions of
Section 4 of this Plan, including the portion that is the related
Beneficiary Designation Form, that applies to all of that
Participant's shares of Restricted Stock under the Plan.
(j) Directors means those duly named members of the Board.
(k) Election Date means the date established by this Plan as the date
before which a Member must submit a valid Election Form to the
Committee. For each Plan Year, the Election Date is July 31.
However, for an individual who becomes a Member during a Plan
Year, the Election Date is the thirtieth day following the date
that he becomes a Member. Despite the two preceding sentences,
the Committee may set an earlier date as the Election Date for any
Plan Year.
(l) Employee means an individual with whom either the Company or its
affiliates has an employer-employee relationship as determined for
Federal Insurance Contribution Act purposes and Federal
Unemployment Tax Act purposes, including subsection 3401(c) of the
Internal Revenue Code and regulations promulgated under that
subsection.
(m) Members means Directors who are not simultaneously Employees.
(n) Participant means a Member during the Plan Year.
(o) Plan means the Company's Restricted Stock Plan for Outside
Directors.
(p) Plan Year means a fiscal year ending September 30 during which the
Plan is in effect and during which a Member receives a portion or
all of his Compensation in Restricted Stock hereunder.
(q) Person means person within the meaning of Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934.
(r) Restricted Stock means Company Stock issued to Participants under
the Plan and subject to the vesting and nontransferability
provision of the Plan.
(s) Retainer Fee means that portion of a Director's Compensation that
is fixed and paid without regard to his attendance at meetings.
3. Restricted Stock Payments
On the first day of each month during each Plan Year, forty percent
(40%) of a Participant's Compensation for the month shall be paid in shares
of Restricted Stock of the Company. In determining the number of shares to
be issued pursuant to the preceding sentence, the Fair Market Value of the
Restricted Stock under the Plan shall, for each calendar month, be
calculated based on the closing sales price of the Company's common stock on
the Nasdaq-NMS 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.
4. Additional Restricted Stock Election
(a) Before each Plan Year's Election Date, each Member will be
provided with an Election Form and a Beneficiary Designation Form.
Subject to approval of the Board or the Committee, a Member may
elect to receive up to 100% of his Compensation for the Plan Year
in Restricted Stock.
(b) An additional Restricted Stock election is valid when an Election
Form is completed, signed by the electing Member, received by the
Committee Chairman and approved by the Board or the Committee on
or before the Election Date.
(c) A Member may not revoke or amend an Election Form after the
Election Date for the Plan Year. Any revocation before an
Election Date is the same as a failure to submit an Election Form.
Any writing signed by a Member expressing an intention to revoke
his Election Form and delivered to a member of the Committee
before the close of business on the relevant Election Date is a
revocation.
5. Vesting
The shares of Restricted Stock of the Company issued under Section 3
and Section 4 of this Plan shall 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 the Company. There shall
be no option to take cash in lieu of stock upon vesting of shares under this
Plan.
6. Nontransferability
No share of Restricted Stock issued hereunder may be sold, transferred,
assigned, or pledged by the Participant until such share has vested in
accordance of the terms of this Plan. At the time the Restricted Stock
vests, and, if the Participant has been issued legended certificates of
Restricted Stock, upon the return of such certificates to the Company, a
certificate for such vested shares shall be delivered to the Participant (or
the Beneficiary designated by the Participant in the event of death), free
of restrictive legend (other than any required by applicable securities
laws). Notwithstanding the foregoing, no vested shares may be sold,
transferred, assigned or pledged by the Participant (or the Beneficiary)
unless six months have elapsed between the date of grant of the shares of
Restricted Stock which have vested and the date of the sale, transfer,
assignment or pledge of such vested shares.
7. Forfeiture
The shares of Restricted Stock issued under Section 3 and Section 4 of
this Plan shall be forfeited to the Company upon a Member's voluntary
resignation during his term on the Board, or removal for cause as a
Director.
8. Stock Certificates
Stock certificates representing the Restricted Stock, together with
stock powers or other instruments of assignment, each endorsed in blank,
which will permit transfer to the Company of all or any portion of the
Restricted Stock evidenced by such certificate in the event it is forfeited,
shall be deposited by the recipient with the Company.
9. Rights as Shareholder
Subject to the terms of this Plan, the Participant, as the owner of the
Restricted Stock, shall have all rights of a shareholder including, but not
limited to, voting rights, the right to receive cash or stock dividends
thereon, and the right to participate in any capital adjustment of the
Company. Any distribution with the respect to shares of Restricted Stock
other than in the form of cash shall be held by the Company, and shall be
subject to the same restrictions as the shares with respect to which such
distributions were made. The Committee may require that any or all
dividends or other distributions paid on shares of Restricted Stock shall be
automatically sequestered and may be reinvested on an immediate or deferred
basis in additional shares of Company stock, which may be subject to the
same restrictions as the Restricted Stock or such other restrictions as the
Committee may determine.
10 Claims against Participant's Restricted Stock
The shares of Restricted Stock issued pursuant to this Plan are not
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge, and any attempt to do so is
void. Moreover, the shares are not subject to attachment or legal process
for a Participant's debts or other obligations. Nothing contained in this
Plan gives any Participant any interest, lien, or claim against any specific
asset of the Company.
11. Amendment or Termination
The Board may at any time suspend or terminate the Plan or may amend it
from time to time in such respects as the Board may deem advisable in order
that the Restricted Stock issued hereunder may conform to any changes in the
law or any other respect with which the Board may deem to be in the best
interests of the Company. No such suspension, termination or amendment of
the Plan shall require approval of the shareholders unless shareholder
approval is required by applicable law or stock exchange requirements.
12. Notices
Notices and elections under this Plan must be in writing. A notice or
election is deemed delivered if it is delivered personally or if it is
mailed by registered or certified mail to the person at his last known
business address.
13. Waiver
The waiver of a breach of any provision in this Plan does not operate
as and may not be construed as a waiver of any later breach.
14. Construction
This Plan is created, adopted, and maintained according to the laws of
the Commonwealth of Virginia (except its choice-of-law rules). It is
governed by those laws in all respects. Headings and captions are only for
convenience; they do not have substantive meaning. If a provision of this
Plan is not valid or not enforceable, that fact in no way affects the
validity or enforceability of any other provision. Use of the one gender
includes all, and the singular and plural include each other.
15. Adjustments For Changes in Capitalization
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, rights offer, liquidation, dissolution,
merger, consolidation, spin off, sale of assets, payment of an extraordinary
cash dividend, or any other change in or affecting the corporate structure
or capitalization of the Company, the Committee shall make appropriate
adjustments in the number, price or kind of shares of Restricted Stock
authorized to be issued under this Plan, and in any outstanding shares of
Restricted Stock issued hereunder.
16. Withholding Taxes
Whenever the Company is required to issue or transfer shares of
Restricted Stock under this Plan, the Company shall have the right to
require the recipient of such Restricted Stock to remit to the Company an
amount sufficient to satisfy any federal, state or local withholding tax
liability prior to the delivery of any certificate for such shares.
Whenever under the Plan payments are to be made in cash, such payments shall
be net of an amount sufficient to satisfy any federal, state or local
withholding tax liability.
17. Indemnification
The Company shall indemnify and hold harmless each person who is or has
been a member of the Committee, or of the Board of Directors, against and
from any and all loss, expense, liability, or costs (including reasonable
attorneys' fees) that may be imposed upon or reasonably incurred by him in
connection with or resulting from any claim, action, suit or proceedings to
which he may be a party or in which he may be involved by reason of any
action taken or failure to act under the Plan, and against and from any and
all amounts paid by him in settlement thereof with the Company's approval or
paid by him in satisfaction of a final judgment against him in such action,
suit, or proceedings, provided he shall give the Company an opportunity, at
its own expense to handle and defend the same before he undertakes to handle
defense on his own behalf. The right of indemnification herein set forth
shall not be exclusive of any other rights of indemnification to which such
person may be entitled under the Company's Articles of Incorporation, or
code or regulations, as a matter of law, or otherwise, or any power that the
Company may have to indemnify him or to hold him harmless. It is the
Company's intention that all expenses incurred in connection with the
administration of the Plan shall be borne by the Company rather than by any
member of the Committee or the Board of Directors.
18. Effective Date of the Plan
The Plan is subject to approval by the shareholders of the Company.
The Plan will become effective on the date so approved.
19. Shares Subject to the Plan
The aggregate number of shares of Company Stock which may be issued in
respect to Restricted Stock shall not exceed 50,000 shares. All shares
distributed pursuant to the Plan shall consist of authorized but unissued
shares of the Company.
20. Power of the Committee
The Committee shall have authority to interpret conclusively the
provisions of the Plan, to adopt such rules and regulations for carrying out
the Plan as it may deem advisable, to decide conclusively all questions of
fact arising in the application of the Plan, and to make all other
determinations necessary or advisable for the administration of the Plan.
All decisions and acts of the Committee shall be final and binding upon all
affected Plan Participants.
21. Miscellaneous
Transactions under this Plan are intended to comply with Rule 16b-3 (or
its successor), as amended from time to time, promulgated pursuant to the
Securities Exchange Act of 1934. Therefore, to the extent any provision of
the Plan or action by a person administering the Plan fails to so comply, it
shall be deemed null and void ab initio to the extent permitted by law and
-- ------
deemed advisable by the Committee.
As evidence of its adoption and approval of this Plan and approval of
the terms and conditions of each Participant transaction hereunder, the
Board has caused this document to be executed on its behalf, and on behalf
of the Company, this 23rd day of September, 1996.
---- ---------
By s/F. A. Farmer
-----------------------------------
Chairman of the Board
and President of Roanoke
Gas Company
<PAGE>
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 Albert W. Buckley and Robert W. Woody,
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 22,
1996, at the Annual Meeting of Shareholders of Roanoke Gas Company to be
held on January 27, 1997, and any adjournments thereof, as follows:
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as marked to vote for all
to the contrary below) nominees listed below
Lynn D. Avis, Abney S. Boxley, III, Frank T. Ellett, F.A. Farmer,
Jr., W.L. Hazlegrove, J. Allen Layman, John H. Parrott, Thomas L.
Robertson, S. Frank Smith.
INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the lines below:
------------------------------------------------------------------
------------------------------------------------------------------
(Over)
<PAGE>
2. APPROVAL OF AN AMENDMENT OF THE ARTICLES OF INCORPORATION
CLASSIFYING THE BOARD OF DIRECTORS AND IMPLEMENTING CERTAIN
RELATED MATTERS, all as more fully set forth in the Proxy
Statement dated December 13, 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVAL OF ROANOKE GAS COMPANY RESTRICTED STOCK PLAN FOR OUTSIDE
DIRECTORS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL TO APPROVE THE APPOINTMENT OF KPMG PEAT MARWICK LLP as
independent auditors for the fiscal year 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Upon such other business as may properly come before the meeting
and any adjournments thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF
NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR PROPOSAL NOS. 1, 2, 3
---
AND 4 ABOVE.
The undersigned hereby acknowledges receipt of the Proxy Statement
dated December 13, 1996.
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.)
<PAGE>
