<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ x ]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Virginia Gas Company
----------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
--------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------
5) Total fee paid:
--------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] 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 the filing.
1) Amount Previously Paid:
--------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------
3) Filing Party:
--------------------------------------------------------------
4) Date Filed:
--------------------------------------------------------------
<PAGE>
VIRGINIA GAS COMPANY
200 East Main Street
Abingdon, Virginia 24210
---------------------------------------------
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 1998
---------------------------------------------
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Virginia Gas Company (the "Company") to be held on June 10, 1998, at 10:00
a.m., Eastern Daylight Time, at the Omni Richmond Hotel, 100 South Twelfth
Street, Richmond, Virginia, for the following purposes:
o To elect two persons to the Board of Directors of the Company.
o To amend the certificate of incorporation of the Company to (a)
increase the number of authorized shares of common and preferred
stock, (b) delete provisions describing rights associated with the
preferred stock and vest the Board of Directors with the authority
to determine rights associated with the preferred stock, and
(c) delete provisions requiring the vote of the holders of 75%
of the issued and outstanding voting shares to (i) amend the
Company's Certificate of Incorporation or the bylaws; (ii) approve
a merger, reorganization or recapitalization of the Company; or
(iii) sell all or substantially all of the assets of the Company.
o To amend the bylaws of the Company to (a) delete provisions
requiring the vote of the holders of 75% of the issued and
outstanding voting shares to (i) amend the Company's Certificate
of Incorporation or make, repeal, alter, amend or rescind the
bylaws; (ii) approve a merger, reorganization or
recapitalization of the Company; or (iii) sell all or
substantially all of the assets of the Company, and (b) permit
holders of not less than a majority of the total voting power
of all shares of stock of the Company entitled to vote in the
election of directors to amend the bylaws.
o To ratify the appointment of Arthur Andersen, L.L.P., independent
certified public accountants, as auditors of the Company for its
1998 fiscal year.
o The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
Only those stockholders of record as of the close of business on April
29, 1998, shall be entitled to vote at the meeting.
In order that your shares may be represented at the Annual Meeting,
please date and sign the enclosed proxy card and return it promptly in the
accompanying envelope.
By Order of the Board of Directors,
Robert C. Bright
Corporate Secretary
May 11, 1998
<PAGE>
VIRGINIA GAS COMPANY
------------------------------
PROXY STATEMENT
------------------------------
Annual Meeting of Stockholders to be Held June 10, 1998
General Information
This Proxy Statement and the accompanying proxy are being furnished to
stockholders of Virginia Gas Company (the "Company") in connection with the
solicitation of the enclosed proxy by or on behalf of the Board of Directors for
use at the Annual Meeting of Stockholders to be held on June 10, 1998, at 10:00
a.m. Eastern Daylight Time, at the Omni Richmond Hotel, 100 South Twelfth
Street, Richmond, Virginia. This Proxy Statement and the accompanying proxy are
being first mailed on or about May 11, 1998.
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.
Stockholders of record as of the close of business on April 29, 1998
will be entitled to vote at the meeting. As of that date, there were
5,504,906 shares of common stock outstanding and each such share is entitled
to one vote. A quorum for the consideration of business at the Annual Meeting
consists of a majority of all outstanding shares of common stock entitled to
vote at the Annual Meeting. All elections of directors and ratification of
the appointment of accountants shall be decided by the vote of the holders of
a majority of the shares of stock present in person or by proxy at the
meeting and entitled to vote in the election or on the question. The proposed
amendments to the certificate of incorporation and bylaws of the Company
require the vote of the holders of 75% of the issued and outstanding shares
of common stock of the Company. Abstentions and broker non-votes shall not be
counted except for purposes of determining the presence of a quorum at the
meeting.
Revocability and Voting of Proxy
All stockholders, regardless of whether they expect to attend the
meeting in person, are requested to vote, date, sign and promptly return the
enclosed proxy in the accompanying envelope. This proxy is revocable at any time
prior to its use.
If no specific voting instructions are given with respect to the
matters to be voted upon, the shares represented by each signed proxy will be
voted (1) FOR the election of each of the nominees to the Company's Board of
Directors, (2) FOR the amendments to the certificate of incorporation of the
Company, (3) FOR the amendments to the bylaws, and (4) FOR the appointment
of Arthur Andersen, L.L.P., independent certified public accountants, as
auditors of the Company for its 1998 fiscal year. Management does not
1
<PAGE>
expect any matters other than the election of directors, the amendments to
the certificate of incorporation, the amendments to the bylaws and the
appointment of Arthur Andersen, L.L.P. to be presented for action at the
Annual Meeting.
Proxy Solicitation
The entire expense of preparing, assembling, printing and mailing the
form of proxy and Proxy Statement will be paid by the Company. Such expenses may
also include the charges and expenses of banks, brokerage houses and other
custodians or fiduciaries to transmit the proxy material to the beneficial
owners of shares. Some officers and employees may solicit proxies personally, by
telephone, or by mail, and will not be additionally compensated. The Company
does not intend to cause a solicitation to be made by specially engaged
employees or other paid solicitors.
VOTING ITEM 1. ELECTION OF DIRECTORS
The Board of Directors is divided into three classes of directors,
with each serving staggered three year terms. The Board of Directors
currently consists of five directors. The two directors nominated for
election at the 1998 Annual Meeting are Glenn B. Rogers and Karen K. Edwards.
The nominees, if elected, will serve until the Annual Meeting of Stockholders
held in 2001 and until their respective successors are elected and qualifed.
To be elected as a director, each nominee must receive the favorable vote of
a majority of the shares represented and entitled to vote at the meeting.
Although all nominees currently intend to serve on the Board, if any nominee
should decline or be unable to serve, the Board will designate a substitute
nominee. The Company has no reason to believe that any nominee will decline
or be unable to serve.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE ELECTION OF THE TWO NOMINEES
Set forth below for each nominee is information regarding the nominee's
age, the period during which the nominee has served as a director, the nominee's
business experience during at least the past five years and other directorships
currently held by the nominee.
Glenn B. Rogers. Mr. Rogers, age 59, served as Senior Vice President of
Marketing and Gas Supply for United Cities Gas Company from 1987 until his
retirement in October 1997. In this position, he was responsible for the propane
operations of United Cities Gas Company. From 1979 to 1987 Mr. Rogers served
United Cities Gas Company as Group Vice President of Gas Supply, Marketing and
Rates and from 1976 to 1979 he served as Vice President of Gas Supply. Mr.
Rogers is a past president of the Southeastern Gas Association. He also serves
as a director of Vietti Food Corporation. Mr. Rogers holds a B.S. degree in
mathematics from Peabody College and a Master's degree in mathematics from
Southeast Oklahoma State College.
Karen K. Edwards. Ms. Edwards, age 40, has served as Vice President and
Director of the Company since its formation in 1987. She served as Treasurer
until September 1995 and as
2
<PAGE>
Secretary until March 1998. Ms. Edwards also serves as Vice President, Secretary
and Treasurer of Virginia Gas Exploration Company, Virginia Gas Pipeline
Company, Virginia Gas Marketing Company, Virginia Gas Storage Company and
Virginia Gas Distribution Company. She also serves as Vice President and
Secretary of Virginia Gas Propane Company. Ms. Edwards received an MBA from the
Colgate Darden Graduate School of Business at the University of Virginia and a
Bachelor's degree in Business Administration from the University of Colorado.
She is the wife of Michael L. Edwards.
Continuing Directors
Set forth below is information regarding the Company's continuing
Directors, their ages, the period during which they have served as a director,
their business experience during at least the past five years and other
directorships currently held by them.
Michael L. Edwards, age 45, has served as President, Chairman of the
Company and Director since its formation in 1987. He also serves as President of
Virginia Gas Exploration Company, Virginia Gas Pipeline Company, Virginia Gas
Marketing Company, Virginia Gas Propane Company, Virginia Gas Storage Company
and Virginia Gas Distribution Company. From 1983 to 1986 Mr. Edwards served as
Executive Vice President and Director of Petroleum Development Corporation. Mr.
Edwards is a Phi Beta Kappa graduate of the University of California, Berkeley
and he received an MBA from the Stanford University School of Business. Mr.
Edwards' term as Director expires in 1999. He is the husband of Karen K.
Edwards.
Everette G. Allen, Jr., age 57, has served as a Director of the Company
since January 1998. He has served as Chairman of Hirschler, Fleischer, Weinberg,
Cox & Allen, a law firm located in Richmond, Virginia since 1986, and has been
employed by that firm since 1970. Mr. Allen has served as a member of the Board
of Trustees for Randolph-Macon College and is a Fellow with the American College
of Trial Lawyers. He is a Phi Beta Kappa graduate of Randolph-Macon College and
a graduate of the University of Virginia Law School. Mr. Allen's term as
Director expires in 2000.
G. Lee Crenshaw, II, age 39, has served as a Director of the Company
since January 1998. He has served as a Director and Senior Vice President of
Anderson & Strudwick, Inc. since 1994. From 1991 to 1994 he was employed at
Scott & Stringfellow as Vice President. Mr. Crenshaw was employed as a
stockbroker at Wheat, First Securities, Inc. from 1982 to 1991. He is a graduate
of Virginia Commonwealth University. Mr. Crenshaw's term as Director expires in
2000.
Additional Information About the Board of Directors and Committees
The Board of Directors held seven meetings during 1997. Each incumbent
director attended more than 75% of the aggregate number of meetings of the Board
of Directors and committees of the Board of Directors on which such director
served in 1997.
3
<PAGE>
Committees of the Board of Directors currently consist of an Audit
Committee, Nominating Committee and Executive Committee. The Audit Committee,
composed of Michael L. Edwards, Everette G. Allen, Jr. and G. Lee Crenshaw, II
recommends the independent public accountants to be appointed by the Board of
Directors as auditor of the Company, its subsidiaries and affiliated companies.
The Audit Committee also reviews the results, findings and recommendations of
audits performed by the independent public accountants, the significant
accounting policies of the Company and the system of internal controls. It
reports to the Board of Directors and makes such investigations as it deems
appropriate. The Audit Committee met two times during the 1997 fiscal year.
The Nominating Committee, created in March 1998, is composed of Michael
L. Edwards, Karen K. Edwards and Everette G. Allen, Jr. This committee reviews
the qualifications of persons recommended for membership to the Board of
Directors of the Company and nominates such persons for election by the
stockholders of the Company. The committee also considers nominees for directors
recommended by stockholders. Such recommendations, with relevant supporting
data, should be submitted to William L. Clear, Controller and Assistant
Secretary.
The Executive Committee, created in March 1998, is composed of Michael
L. Edwards, Everette G. Allen, Jr. and G. Lee Crenshaw, II. With certain
limitations, it functions in place of the Board during intervals between regular
Board of Directors meetings.
Compensation of Directors
Directors of the Company receive $2,500 for attending each Board of
Directors meeting.
Executive Officers
The executive officers are elected to serve annual terms at the first
Board of Directors meeting following the annual meeting of the stockholders.
Certain information concerning the Company's executive officers as of April 22,
1998 is set forth below, except that information concerning Mr. and Mrs. Edwards
is presented above.
James E. Talkington, III, age 38, has served as Vice President of the
Company since April 1998. He has been employed by the Company since 1994 as land
manager. From 1989 to 1993 Mr. Talkington was employed by Continental Reserves
Oil Company as land manager.
Bradley L. Swanson, age 51, has served as Vice President of the Company
since April 1998. He has been employed by the Company since 1987 with
responsibility for land leasing, right of way purchases, legal matters and
government relations. From 1983 to 1987 Mr. Swanson was the owner and operator
of Home Town Properties, a residential and commercial real estate firm.
G. Scott Hill, age 41, has served as Vice President of the Company
since April 1998. He has been employed by the Company since March 1997 with
responsibility for gas storage and pipeline
4
<PAGE>
operations. From 1985 to 1996 Mr. Hill was employed by Columbia Natural
Resources as a drilling engineer.
Robert C. Bright, age 55, has served as Secretary of the Company since
April 1998. He has served as President and Director of Bright & Barnes, a
Professional Corporation, a law firm located in Oklahoma City, Oklahoma since
1992. From 1979 to 1992 Mr. Bright served as President and Director of Bright &
Nichols, an Oklahoma City law firm.
Robert C. Withrow, age 50, has served as Treasurer of the Company since
April 1998. He has been employed by the Company since February 1998 as director
of finance. From 1981 to 1997 Mr. Withrow was employed as Vice President of
Finance of The Dosco Corporation. From 1979 to 1980 he was employed by American
Electric Power Company as internal audit manager. Mr. Withrow was employed by
Deloitte & Touche from 1972 to 1979 as senior auditor. He is a certified public
accountant.
William L. Clear, age 27, has served as Controller and Assistant
Secretary of the Company since April 1998. He has been employed by the
Company since March 1998 as accounting manager. From 1993 to February 1998
Mr. Clear was employed by Coopers and Lybrand L.L.P as a business assurance
senior associate specializing in audits of utility companies. He received a
B.S. in accounting from Emory & Henry College and an M.A. in accounting from
the University of Tennessee, Knoxville. Mr. Clear is a certified public
accountant.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the number and percentage of shares of
common stock held beneficially by the owners of more than five percent of the
Company's issued and outstanding common stock as of April 22, 1998 or by
directors, director nominees or officers of the Company:
<TABLE>
<CAPTION>
Amount of Percent of
Name and Address of Beneficial Owner (1) Ownership Class
- ---------------------------------------- --------- ---------
<S> <C> <C>
Dr. James T. Martin..................................... 800,058 14.53%
Tupenny House
Tuckerstown, Bermuda
Michael L. and Karen K. Edwards......................... 748,576(2) 12.76%
Michael L. Edwards...................................... 6,000 *
Karen K. Edwards........................................ 3,900 *
Allan R. Poole, II...................................... 57,000 1.04%
1032 Hanover Court
Kingsport, Tennessee 37660
G. Lee Crenshaw, II..................................... 3,600 *
707 East Main Street, 20th Floor
Richmond, Virginia 23219
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Everett G. Allen, Jr.................................... 10,000 *
Federal Reserve Bank Building
701 East Byrd Street
Richmond, Virginia 23219
James E. Talkington, III ............................... 12,000(3) *
Bradley L. Swanson...................................... 2,863 *
G. Scott Hill........................................... 3,000 *
All executive officers and directors as a group......... 846,939 14.41%
</TABLE>
* Less than 1%.
(1) Except as otherwise noted, the address of the holder is in care of the
Company.
(2) Includes 363,663 shares which may be issued to Mr. and Mrs. Edwards upon
exercise of a warrant.
(3) Includes 10,000 shares which may be issued to Mr. Talkington upon
exercise of an option.
Executive Compensation
The following table presents information concerning the annual
compensation of the executive officers of the Company whose salary and bonus
were greater than $100,000 in 1997. This table presents compensation for
services rendered in all capacities to the Company in 1997, 1996 and 1995.
Summary Compensation Table
<TABLE>
<CAPTION>
All Other
Name and Principal Position Year Salary (1) Bonus (1) Compensation (2)
- --------------------------- ---- ---------- --------- ----------------
<S> <C> <C> <C> <C>
Michael L. Edwards............................. 1997 $157,917 $ 50,000 $ 32,837
President and Chief 1996 $150,000 $ 727 $ 2,889
Executive Officer 1995 $150,000 $ --- $ 1,524
</TABLE>
(1) Amounts include cash compensation earned and received by the named
officer as well as amounts deferred under a 401(K) Savings Plan.
(2) Amounts shown include Company contributions to a 401(K) Savings Plan,
vehicle allowances and directors' fees.
Employee Stock Purchase Loans
On May 17, 1996, the Board of Directors of the Company approved a plan
whereby the Company made available to certain key employees five year
interest-free loans for the purpose of purchasing a total of 40,000 shares of
the Company's common stock at a purchase price of $6.00 per share, which was the
fair market value of the shares on that date. In the event an employee who has
been given a loan pursuant to this plan terminates his employment with the
Company at any time prior to the due date of the loan, the loan is then
immediately due and payable, with interest from the date of the loan at prime
rate plus 2%, compounded monthly. All certificates for shares issued
6
<PAGE>
under this plan to a key employee shall be held by the Company as security until
the loan is paid in full. Pursuant to this plan, on July 31, 1996, the Company
made a loan of $90,000 to Michael L. and Karen K. Edwards to purchase 15,000
shares and a loan of $90,000 to Allan R. Poole, II to purchase 15,000 shares.
Employment Agreement
On May 23, 1996, the Company entered into a ten year employment
agreement with Michael L. Edwards which provides for an annual salary of
$155,000. Mr. Edwards will also receive annual bonuses computed on the basis of
10% of the Company's pre-tax earnings on all amounts from $1,000,000 to
$1,999,999 and 15% of the Company's pre-tax earnings on all amounts in excess of
$2,000,000, provided his bonus for 1996 was $50,000. Payment of this bonus for
1996 was paid in 1997. In the event Mr. Edwards' employment is terminated by the
Company for any reason other than for cause during the term of the employment
agreement, at the election of Mr. Edwards the Company will be obligated to
purchase all or a portion of the shares held by him and/or his wife at a price
equal to 150% of the market value of the Company's shares on the date of
termination. In addition, the Company will be obligated to pay Mr. Edwards in a
lump sum all salary amounts payable to Mr. Edwards through the term of the
employment agreement plus an additional $2,000,000.
Certain Relationships and Related Transactions
Mr. Crenshaw, Senior Vice President of Anderson & Strudwick, Inc.
serves as a director of the Company. He receives $2,500 for each meeting of the
Board of Directors he attends.
Anderson & Strudwick Incorporated received a fee of $348,028 as a
result of the sale of the Company's common stock to Dr. Martin and has
underwritten four tax exempt bond offerings through which the Company has
borrowed $20,100,000. A fee equal to 0.25% of the outstanding principal amount
of the bonds is paid to Anderson & Strudwick Incorporated and one of its senior
officers for bondholder services. Anderson & Strudwick Incorporated received
commissions totaling $610,375 from the two bond offerings which closed during
the last two years. In addition Anderson & Strudwick Incorporated served as
underwriter for the Company's initial public offering of its common stock in
1996 for which it received fees of $735,840 and warrants exercisable for 153,300
shares at an exercise price of $9.90 per share, which are subject to a shelf
registration statement.
Mr. Bright, Secretary of the Company, is a stockholder in Bright &
Barnes, a Professional Corporation ("Bright & Barnes"), which provides
certain legal services to the Company. During 1996 and 1997 and for the three
months ended March 31, 1998, Bright & Barnes received legal fees from the
Company of approximately $204,000, $169,000 and $124,000 respectively. It is
anticipated that Bright & Barnes will continue to provide legal services to
the Company.
VOTING ITEM 2. PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION
OF THE COMPANY TO (A) INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON AND PREFERRED STOCK, (B) DELETE PROVISIONS DESCRIBING RIGHTS
7
<PAGE>
ASSOCIATED WITH THE PREFERRED STOCK AND VEST THE BOARD OF DIRECTORS
WITH THE AUTHORITY TO DETERMINE RIGHTS ASSOCIATED WITH THE
PREFERRED STOCK, AND (C) DELETE PROVISIONS REQUIRING THE VOTE OF THE HOLDERS
OF 75% OF THE ISSUED AND OUTSTANDING VOTING SHARES TO (I) AMEND THE COMPANY'S
CERTIFICATE OF INCORPORATION OR THE BYLAWS; (II) APPROVE A MERGER,
REORGANIZATION OR RECAPITALIZATION OF THE COMPANY; OR (III) SELL ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY.
The Board of Directors proposes that article 4 of the Company's
certificate of incorporation be amended to increase the number of authorized
shares of common stock of the Company from 10,000,000 shares to 100,000,000
shares and to increase the number of authorized shares of preferred stock
from 2,000 shares to 1,000,000 shares. In addition the proposed amendment
will delete the description of the designation, voting powers, and other
rights associated with the Company's Series A preferred stock which was
redeemed by the Company in 1997. The amendment will vest the Board of
Directors with the authority to determine by resolution the rights associated
with shares of preferred stock, including dividend rates, conversion prices,
voting rights, redemption prices, maturity dates and similar matters. The
purpose and general effect of the amendment is to assure that the Company has
an adequate number of shares of common and preferred stock available to raise
capital for the Company's proposed Tidewater Intrastate Pipeline project as
described in the annual report and for other future activities. The amendment
also gives the Board of Directors the flexibility to determine the rights
associated with the preferred stock in the event it is issued in the future.
The Board of Directors also proposes that article 7 of the Company's
certificate of incorporation be deleted. This article provides that the vote
of the holders of 75% of the issued and outstanding voting shares of the
Company is required to approve any amendment to the Company's Certificate of
Incorporation or bylaws; the merger, reorganization or recapitalization of
the Company; or the sale of all or substantially all of the assets of the
Company. The purpose and general effect of this amendment is to facilitate
the accomplishment of the corporate actions described in article 7 and permit
these actions to be approved by a simple majority vote.
Board of Directors Recommendation
The affirmative vote of 75% of the issued and outstanding shares of
common stock is required to approve the proposed amendments to the
certificate of incorporation of the Company. The Board believes that such
approval is important to permit the Company to raise additional capital for
its operations and to facilitate the accomplishment of corporate actions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" APPROVAL OF THE PROPOSED AMENDMENTS TO THE COMPANY'S
CERTIFICATE OF INCORPORATION.
VOTING ITEM 3. AMENDMENT OF THE BYLAWS OF THE COMPANY (A) TO
DELETE PROVISIONS REQUIRING THE VOTE OF THE HOLDERS OF 75% OF THE ISSUED AND
OUTSTANDING VOTING SHARES TO (I) AMEND THE COMPANY'S CERTIFICATE OF
INCORPORATION OR MAKE, REPEAL, ALTER AMEND OR RESCIND THE BYLAWS; (II)
APPROVE A MERGER, REORGANIZATION OR RECAPITALIZATION OF THE CORPORATION; OR
(III) SELL ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY AND (B) TO
PROVIDE THAT THE BYLAWS MAY BE AMENDED BY HOLDERS OF NOT LESS THAN A MAJORITY
OF THE TOTAL VOTING POWER OF ALL VOTING SHARES ENTITLED TO VOTE IN THE
ELECTION OF DIRECTORS, CONSIDERED AS ONE CLASS.
The Board of Directors of the Company proposes that the last
sentence of Section 2.7 of the bylaws be deleted. This sentence provides
that the vote of the holders of 75% of the issued and outstanding voting
shares is required to approve: (i) any amendment to the Company's Certificate
of Incorporation or bylaws; (ii) the merger, reorganization or
recapitalization of the Company; or (iii) the sale of all or substantially
all of the assets of the Company. The purpose and general effect of this
amendment is to facilitate the accomplishment of corporate actions and to
eliminate inconsistencies between the bylaws and the certificate of
incorporation as proposed to be amended in Voting Item 2 above.
The Board of Directors also proposes that Section 9.1 of the bylaws
be amended. This section presently requires that the vote of holders of 75%
of the issued and outstanding shares of the Company entitled to vote shall be
required to make, repeal, alter, amend or rescind any of the provisions of the
bylaws. The Board of Directors proposes that Section 9.1 be amended to read as
follows:
"Section 9.1 Amendment. The Stockholders may make, repeal, alter,
amend or rescind any of the provisions of these Bylaws by the vote
of the holders of not less than a majority of the total voting power
of all shares of stock of the Corporation entitled to vote in the
election of directors, considered for purposes of this Article IX as
one class."
The purpose and general effect of this amendment is to permit the
amendment of the bylaws by a simple majority vote of the stockholders.
Board of Directors Recommendation
The affirmative vote of 75% of the issued and outstanding shares of
common stock is required to approve the proposed amendments to the bylaws of
the Company. The Board of Directors believes that such approval is important to
facilitate the accomplishment of corporate actions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE PROPOSED AMENDMENTS TO THE COMPANY'S BYLAWS.
VOTING ITEM 4. APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation by the Audit Committee, has
approved and recommended the appointment of Arthur Andersen, L.L.P., independent
public accountants, as auditors to examine the Company's financial statements
for 1998. Neither such firm nor any of its associates has any relationship with
the Company except in their capacity as auditors. The persons named in the
accompanying proxy will vote in accordance with the choice specified thereon,
or, if no choice is properly indicated, in favor of the designation of Arthur
Andersen, L.L.P. as auditors of the Company.
A representative of Arthur Andersen, L.L.P. is expected to attend the
Annual Meeting and to be available to respond to appropriate questions raised
during the Annual Meeting. The representative will also have an opportunity to
make a statement during the meeting if the
8
<PAGE>
representative so desires.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
In January, 1996 the Company retained Arthur Andersen L.L.P. as its
independent public accountants. Another auditor had served in this capacity
since 1992. There were no disagreements with the former auditors on any matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedures at the time of the change with respect to the
Company's financial statement which, if not resolved to the former auditors'
satisfaction, would have caused them to make reference to the subject matter of
the disagreement in connection with their reports. The former auditors' reports
did not contain an adverse opinion or disclaimer of opinion and were not
modified as to uncertainty, audit scope or accounting principles. Prior to
retaining Arthur Andersen, L.L.P., the Company had not consulted with Arthur
Andersen L.L.P. regarding accounting principles.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPOINTMENT OF ARTHUR ANDERSEN, L.L.P., INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS, AS AUDITORS OF THE COMPANY FOR ITS 1998 FISCAL YEAR.
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 the Company's common stock with the Securities and Exchange
Commission. Based solely upon a review of the forms furnished to the Company
and the representations made by the reporting persons to the Company during
and with respect to its most recent fiscal year, the Company believes that
during 1997 its directors, officers and 10% stockholders complied with all
filing requirements under Section 16(a) of the Securities Exchange Act except
that Michael L. Edwards and Karen K. Edwards filed Statements of Changes in
Beneficial Ownership of Securities late with respect to one transaction each.
Stockholder Proposals
Stockholder proposals submitted for inclusion in the proxy statement
for the 1999 Annual Meeting must comply with the requirements of the Securities
and Exchange Commission. A stockholder proposal generally will be voted on only
if the stockholder or the stockholder's representative attends the Annual
Meeting and presents the proposal. Proposals of stockholders intended to be
presented at the Company's 1999 Annual Meeting must be received by the Secretary
of Virginia Gas Company, 200 East Main Street, Abingdon, Virginia 24210, no
later than January 11, 1999, in order to be considered for inclusion in the
Company's Proxy Statement related to that meeting.
Any other proposal which a stockholder desires to be presented for
action at an Annual
9
<PAGE>
Meeting must be received at the principal executive offices of the Company not
later than the close of business on the tenth day following the day on which
notice of the date of the annual meeting was mailed. The stockholder's notice
must include a brief description of the business desired to be brought before
the annual meeting and the reasons for conducting such business at the annual
meeting, the stockholder's name and address, the number of shares owned, and
disclosure of any material interest of the stockholder in such business.
Other Matters
Management does not know of any matters to be presented at the Annual
Meeting of Stockholders 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.
Annual Report on Form 10-KSB
Copies of the Company's Annual Report on Form 10-KSB as filed with the
Securities and Exchange Commission will be furnished without charge upon written
request of any stockholder of record. Requests for this report should be
directed to Angela Funk, Virginia Gas Company, 200 East Main Street, Abingdon,
Virginia 24210.
By Order of the Board of Directors
Robert C. Bright
Corporate Secretary
May 11, 1998
The Company's Annual Report on Form 10-KSB for the year ended December
31, 1997 is available without charge to any stockholder requesting the same.
Written requests should be addressed to the attention of Angela Funk, Virginia
Gas Company, 200 East Main Street, Abingdon, Virginia 24210.
10
<PAGE>
VIRGINIA GAS COMPANY
Proxy Solicited on Behalf of the Board of Directors
for Annual Meeting of Stockholders to be Held June 10, 1998
The undersigned, having received the Annual Report to Stockholders and
the accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement dated May 11, 1998, hereby appoints Michael L. Edwards and Karen
K. Edwards as proxies, with full power of substitution, to vote all shares
of stock of the Company held by the undersigned on April 29, 1998 which are
entitled to be voted at the Annual Meeting of Stockholders to be held at
the Omni-Richmond Hotel, 100 South Twelfth Street, Richmond, Virginia on
June 10, 1998 at 10:00 a.m. and any adjournments thereof, on all matters
coming before said meeting as shown on the reverse side of this card. The
undersigned acknowledges receipt of the 1997 Annual Report and the Notice
of Meeting and Proxy Statement dated May 11, 1998.
Please mark your votes as in this example using dark ink only. /X/
The Board of Directors recommends a vote "FOR" Proposals 1, 2, 3 and 4.
Item No. 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
Glenn B. Rogers, Karen K. Edwards
(INSTRUCTION: To withhold authority to vote for any individual nominee,
print that nominee's name below)
------------------------------
Item No. 2 To amend the certificate of incorporation of the Company as
described in the Proxy Statement dated May 11, 1998.
/ / FOR / / AGAINST / / ABSTAIN
Item No. 3 To amend the bylaws of the Company as described in the Proxy
Statement dated May 11, 1998.
/ / FOR / / AGAINST / / ABSTAIN
Item No. 4 To ratify the appointment of Arthur Andersen, L.L.P.,
independent certified public accountants, as auditors of the
Company for its 1998 fiscal year.
/ / FOR / / AGAINST / / ABSTAIN
Item No. 5 In their discretion, on any other business which may
properly come before the meeting.
The shares represented by this proxy will be voted as specified, if no
choice is specified such shares will be voted "FOR" Proposals 1, 2, 3 and 4.
Place an X here if you plan to attend the meeting. / /
Date: __________________________, 1998
______________________________________
Signature
______________________________________
Signature
Note: Please mark, date and sign as your
name appears above and promptly return
in the prepaid return envelope provided.
When signing as attorney, administrator,
executor, guardian or trustee, please
give full title as such.
