<PAGE>
SEC File No. 333-
As filed with the Securities and Exchange Commission on October 8, 1999
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
VIRGINIA GAS COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 87-0443823
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
200 EAST MAIN STREET, ABINGDON, VIRGINIA 24210
(Address of Principal Executive Offices) (Zip Code)
VIRGINIA GAS COMPANY 1998 STOCK OPTION PLAN
(Full Title of Plan)
MICHAEL L. EDWARDS
200 East Main Street
Abingdon, Virginia 24210
(Name and address of agent for service)
(540) 676-2380
(Telephone number, including area code,
of agent for service)
WITH COPIES TO:
SUSAN E. BRYANT, ESQ. ROBERT C. BRIGHT, ESQ.
Six Forest Park Drive One Leadership Square
Post Office Box 444 211 North Robinson, Suite 1900
Farmington, CT 06034-0444 Oklahoma City, OK 73102
(860) 674-0111 (405) 236-8016
Fax: (860) 674-0011 Fax: (405) 232-1660
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
------------------------ ------------------- -------------------------- ---------------------------- ----------------
Title of Securities to Amount to be Proposed maximum Proposed maximum aggregate Amount of
be registered registered offering price per share offering price registration fee
------------------------ ------------------- -------------------------- ---------------------------- ----------------
<S> <C> <C> <C> <C>
Common Stock(1) 260,000 $ 4.125(2) $1,072,500 $ 298.16
par value $.001
per share
------------------------ ------------------- -------------------------- ---------------------------- ----------------
</TABLE>
This Registration Statement shall become effective immediately upon filing in
accordance with Section 8(a) of the Securities Act of 1933, as amended and Rule
462 of the Rules and Regulations promulgated by the Securities and Exchange
Commission under that Act.
- --------------------
(1) This Registration Statement covers any additional shares required to be
issued under the terms of the Virginia Gas Company 1998 Stock Option Plan
(Plan) in connection with any stock splits or dividends pursuant to Rule 416(a)
under the Securities Act of 1933 (1933 Act).
(2) Options to purchase 260,000 shares at an exercise price of $4.125 per share
have already been issued. No additional options may be issued under the Plan.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
All material information about the Virginia Gas Company 1998 Stock Option Plan
(Plan) required by Items 1 and 2 of Part I of this Registration Statement on
Form S-8 has been and/or will be provided to all participants in the Plan at the
time they become participants and until they exercise their options and purchase
shares of the common stock of the Registrant. Those documents and the items
incorporated by reference in Item 3 of Part II of this Registration Statement
make up the prospectus required by Section 10(a) of the 1933 Act. The Registrant
has omitted the documents containing the information about the Plan and the
shares from this Registration Statement as authorized by Rule 428 under the 1933
Act. The Registrant will also not be filing any of those documents as
prospectuses or supplements under Rule 424 of the 1933 Act as authorized by Rule
428.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by the Registrant with the Securities and Exchange
Commission are incorporated in this Registration Statement by reference:
(a) The Annual Report for Virginia Gas Company on Form 10-KSB for
the fiscal year ended December 31, 1998, filed with the Securities and
Exchange Commission on March 31, 1999 (SEC File No. 0-21523 ).
(b)(1) The Quarterly Report for Virginia Gas Company on Form 10-QSB
for the quarter ended March 31, 1999, filed with the Securities and Exchange
Commission on May 17, 1999 (SEC File No. 0-21523 ).
(b)(2) The Quarterly Report for Virginia Gas Company on Form 10-QSB
for the quarter ended June 30, 1999, filed with the Securities and Exchange
Commission on August 16, 1999 (SEC File No. 0-21523 ).
(c) The description of the Registrant's Common Stock included in the
Registration Statement on Form 8-A filed with the Securities and Exchange
Commission on October 10, 1996 (SEC File No. 0-21523) pursuant to Section 12
of the Securities Exchange Act of 1934, including any amendment or supplement
to such description that may be included in any filing by Virginia Gas
Company with the Securities and Exchange Commission that amends or updates
such description.
<PAGE>
The Registrant also incorporates by reference all documents filed by the
Registrant with the Securities and Exchange Commission under Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934 after the effective
date of this Form S-8. The Registrant incorporates all of those documents as of
the date on which they are filed with the Securities and Exchange Commission.
This incorporation by reference will continue until the Registrant files a
post-effective amendment stating that all the securities registered in this
Registration Statement have been sold or until the Registrant files a post
effective amendment that deregisters all the securities then remaining unsold.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
None
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 102(b) of the Delaware General Corporation Law authorizes a corporation
to include in its Certificate of Incorporation a provision limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director. Such limit cannot, however,
limit a director's liability (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders; (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) for any transaction from which the director derived an improper
personal benefit or (iv) for liability resulting from the wrongful payment of
any dividend, stock purchase or redemption. The Second Amended and Restated
Articles of Incorporation of the Registrant contains such a provision.
Section 145 of the Delaware General Corporation Law authorizes a corporation to
indemnify certain persons, including officers and directors for amounts incurred
in actions related to their activities as officers and directors. Under the
authority of such provision, the Bylaws of Virginia Gas Company authorize the
Company to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative by reason of the fact
that such person is or was, at any time prior to or during which the Bylaw
provision is or was in effect, a director, officer, employee or agent of the
Company, or is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against reasonable expenses
(including attorneys' fees), judgments, fines, penalties, and amounts paid in
settlement and other liabilities actually and reasonably incurred by such person
in connection with such action, suit or proceeding to the full extent permitted
by the Delaware General Corporation Law. Such laws generally requires that the
person have acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the corporation, and with
respect to any criminal action or proceeding, had no reasonable cause to believe
the person's conduct was unlawful. The provisions of the Delaware Law and the
Bylaws of the Company are sufficiently broad that they would cover liabilities
under the 1933 Act; however,
<PAGE>
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy and is,
therefore, unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
The options issued to the employees under the Plan were issued in reliance on
the exemption from registration provided by Section 4(2) of the 1933 Act.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C>
5.1 Opinion of Susan E. Bryant, P.C.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Susan E. Bryant, P.C. (included in 5.1)
99.1 Virginia Gas Company 1998 Stock Option Plan
</TABLE>
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment to the Registration Statement) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the Registration Statement; notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of a prospectus filed with the
Securities and Exchange Commission pursuant to Rule
424(b) under the 1933 Act, if, in the aggregate, the
changes in volume and price represent no more than a
20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;
<PAGE>
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Securities and
Exchange Commission by the Registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plans annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Abingdon, Commonwealth of Virginia, on the 6th day
of October, 1999.
VIRGINIA GAS COMPANY
By: /s/ MICHAEL L. EDWARDS
-----------------------------------
Michael L. Edwards, President
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
By: /s/ MICHAEL L. EDWARDS , President, Director, October 6, 1999
-------------------------------------------------
Michael L. Edwards Chief Executive Officer
By: /s/ WILLIAM L. CLEAR , Vice President and October 6, 1999
-------------------------------------------------
William L. Clear Chief Financial Officer
By: /s/ KAREN R. EDWARDS , Director October 6, 1999
-------------------------------------------------
Karen K. Edwards
By: /s/ GLENN B. ROGERS , Chairman of the Board October 6, 1999
-------------------------------------------------
Glenn B. Rogers of Directors
By: /s/ EVERETTE G. ALLEN, JR. ,Director October 6, 1999
-------------------------------------------------
Everette G. Allen, Jr.
By: /s/ G. LEE CRENSHAW, II ,Director October 6, 1999
-------------------------------------------------
G. Lee Crenshaw, II
</TABLE>
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
5.1 Opinion of Susan E. Bryant, P.C.
23.1 Consent of Arthur Andersen, LLP
23.2 Consent of Susan E. Bryant, P.C. (included in 5.1)
99.1 Virginia Gas Company 1998 Stock Option Plan
<PAGE>
EXHIBIT 5.1
SUSAN E. BRYANT, P.C.
Attorney at Law
6 Forest Park Drive
Post Office Box 444
Farmington, CT 06034-0444
Tel: 860-674-0111
Fax: 860-674-0111
Email: [email protected]
October 6, 1999
Virginia Gas Company
200 East Main Street
Abingdon, VA 24210
Re: Registration on Form S-8
Virginia Gas Company 1998 Stock Option Plan
Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Virginia Gas Company (Company) of a Registration Statement on
Form S-8 (Registration Statement) with the Securities and Exchange Commission
covering the offering of up to 290,000 shares of the Company's Common Stock, par
value $.001 per share (Shares). The Shares will be issued on the exercise of
options issued under the Virginia Gas Company 1998 Stock Option Plan (Plan). In
connection with rendering this opinion, we have examined the Certificate of
Incorporation and Bylaws of the Company, each as amended to date; such records
of the corporate proceedings of the Company as we deemed material; the
Registration Statement; the Plan; and such other certificates, receipts, records
and documents as we considered necessary for the purposes of this opinion. As to
facts material to our opinion, we have relied upon certificates or telephonic
confirmations of public officials and certificates, documents, statements and
other information of the Company or representatives or officers thereof. In our
examination, we have assumed the genuineness of all signatures, the legal
capacity of natural persons, the authenticity of all documents submitted to us
as certified, photostatic or facsimile copies, the authenticity of the originals
of such copies and the authenticity of telephonic confirmations of public
officials and others.
Based upon the foregoing and subject to the qualifications discussed below,
it is our opinion that the Shares (excluding Shares paid for by promissory
notes or other form of credit), when paid for and issued under the terms of
the Plan, the Option Agreements, the Registration Statement and any
prospectuses included or incorporated by reference in such Registration
Statement, will be validly issued, fully paid and nonassessable.
This opinion is governed by, and must be interpreted in accordance with, the
Legal Opinion Accord (Accord) of the ABA Section of Business Law (1991). This
opinion is subject to a number of qualifications, exceptions, definitions,
limits on coverage and other limitations described in the Accord. Therefore,
this opinion should be read in conjunction with the Accord.
<PAGE>
You are furthermore advised that we are not licensed to practice law under the
laws of the State of Delaware or the Commonwealth of Virginia. Consequently, the
opinions set forth herein necessarily reflect only our understanding of the
applicability of the Delaware and Virginia General Corporation Laws, as
determined through such research and review of such laws as we have deemed
proper.
This opinion is as of the date hereof and we make no undertaking to supplement
this opinion to advise you of any changes which thereafter may be brought to our
attention or changes in laws which may hereafter occur.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
Susan E. Bryant, P.C.
/s/ SUSAN E. BRYANT
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our reports dated February 18, 1999,
included in Virginia Gas Company's Form 10-KSB for the year ended December 31,
1998, and to all references to our Firm included in this Registration Statement.
Arthur Andersen LLP
September 30, 1999
Richmond,Virginia
<PAGE>
EXHIBIT 99.1
VIRGINIA GAS COMPANY
1998 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN.
The purposes of this 1998 Stock Option Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to Employees and Consultants of the Company and its
Subsidiaries and to promote the success of the Company's business. Options
granted under this Plan may be incentive stock options (as defined under Section
422 of the Code) or nonqualified stock options, as determined by the Option
Committee at the time of grant of an option and subject to the applicable
provisions of Section 422 of the Code, as amended, and the regulations
promulgated thereunder.
2. DEFINITIONS.
As used herein, the following definitions shall apply:
2.1 OPTION COMMITTEE means the committee designated by the Board
to administer the Plan.
2.2 BOARD means the Board of Directors of the Company.
2.3 CODE means the Internal Revenue Code of 1986, as amended.
2.4 COMPANY means Virginia Gas Company, a Delaware corporation.
2.5 CONSULTANT means any consultant or advisor to the Company or
any Parent or Subsidiary and any director of the Company
whether compensated for such services or not, but not
including any Employee.
2.6 CONTINUOUS STATUS AS AN EMPLOYEE means the absence of any
interruption or termination of the employment relationship by
the Company or any Subsidiary. Continuous Status as an
Employee shall not be considered interrupted in the case of:
(i) any leave of absence approved by the Board, including sick
leave, military leave, or any other personal leave; provided,
however, that for purposes of Incentive Stock Options, such
leave is for a period of not more than 90 days, unless
reemployment upon the expiration of such leave is guaranteed
by contract or statute, or unless provided otherwise pursuant
to Company policy adopted from time to time; or (ii) in the
case of transfers between locations of the Company or between
the Company, its Subsidiaries or its successor.
2.7 EMPLOYEE means any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the
Company. The payment of a director's fee by the Company shall
not be sufficient to constitute "employment" by the Company.
2.8 EXCHANGE ACT means the Securities Exchange Act of 1934, as
amended.
<PAGE>
2.9 FAIR MARKET VALUE means, as of any date, the value of Stock
determined as follows:
(i) If the Stock is listed on any established stock
exchange or a national market system including without
limitation the National Market System of the National
Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value
shall be the closing sales price for such stock (or the
closing bid, if no sales were reported, as quoted on
such system or exchange or the exchange with the
greatest volume of trading in Stock for the last market
trading day prior to the time of determination) as
reported in the Wall Street Journal or such other
source as the Option Committee deems reliable;
(ii) If the Stock is quoted on the NASDAQ System (but not on
the National Market System thereof) or regularly quoted
by a recognized securities dealer but selling prices
are not reported, its Fair Market Value shall be the
mean between the high and low asked prices for the
Stock; or
(iii) In the absence of an established market for the Stock,
the Fair Market Value thereof shall be determined in
good faith by the Option Committee.
2.10 INCENTIVE STOCK OPTION means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of
the Code.
2.11 NONQUALIFIED STOCK OPTION means an Option not intended to
qualify as an Incentive Stock Option.
2.12 OPTION means a stock option granted pursuant to the Plan.
2.13 OPTIONED STOCK means the Stock subject to an Option.
2.14 OPTIONEE means an Employee or Consultant who receives an
Option.
2.15 PARENT means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
2.16 PLAN means this 1998 Stock Option Plan.
2.17 SHARE means a share of the Stock, as adjusted in accordance
with Section 13 of the Plan.
2.18 STOCK means the Common Stock, par value $.001 per share, of
the Company.
2.19 SUBSIDIARY means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
<PAGE>
3. STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Section 13 of the Plan, the maximum number of
shares of Stock which may be optioned and sold under the Plan is 290,000 shares.
The shares may be authorized, but unissued, or reacquired Stock. If an Option
should expire or become unexercisable for any reason without having been
exercised in full, the unpurchased Shares which were subject thereto shall,
unless the Plan shall have been terminated, become available for future grant
under the Plan.
4. ADMINISTRATION OF THE PLAN
4.1 ADMINISTRATION BY BOARD OR COMMITTEE. The Plan shall be
administered by (a) the Board or (b) the Option Committee,
which committee shall be constituted in such a manner as to
permit the Plan to comply with Rule 16b-3 promulgated under
the Exchange Act or any successor thereto ("Rule 16b-3") with
respect to a plan intended to qualify thereunder as a
discretionary plan. Once appointed, the Option Committee shall
continue to serve in its designated capacity until otherwise
directed by the Board. From time to time the Board may
increase the size of the Option Committee and appoint
additional members thereof, remove members (with or without
cause) and appoint new members in substitution therefor, fill
vacancies, however caused, and remove all members of the
Option Committee and thereafter directly administer the Plan,
all to the extent permitted by Rule 16b-3 with respect to a
plan intended to qualify thereunder as a discretionary plan.
4.2 LIMITATION ON ADMINISTRATION BY BOARD. Notwithstanding the
foregoing, the Plan shall not be administered by the Board if
(a) the Company and its officers and directors are then
subject to the requirements of Section 16 of the Exchange Act
and (b) the Board's administration of the Plan would prevent
the Plan from complying with Rule 16b-3.
4.3 MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule 16b-3,
the Plan may be administered by different bodies with respect
to directors, non-director officers and Employees who are
neither directors nor officers.
4.4 POWERS OF THE OPTION COMMITTEE. Subject to the provisions of
the Plan and, in the case of a committee, the specific duties
delegated by the Board to such committee, the Option Committee
shall have the authority, in its discretion:
(i) to determine whether and to what extent Options shall
be granted hereunder;
(ii) to select the officers, Consultants and Employees to
whom Options may from time to time be granted
hereunder;
(iii) to determine the number of shares of Stock to be
covered by each such award granted hereunder;
<PAGE>
(iv) to determine the Fair Market Value of the Stock, in
accordance with Section 2.9 of the Plan;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions of any Option
granted hereunder not inconsistent with the terms of
the Plan, including, but not limited to, the per share
exercise price for the Shares to be issued, vesting
periods, restrictions or limitations, or any vesting
acceleration or waiver of forfeiture;
(vii) to determine whether and under what circumstances an
Option may be bought-out for cash under subsection
10.4;
(viii) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with
respect to an award under this Plan shall be deferred
either automatically or at the election of the Optionee
(including providing for and determining the amount, if
any, of any deemed earnings on any deferred amount
during any deferral period); and
(ix) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of
the Stock covered by such Option shall have declined
since the date the Option was granted.
4.5 EFFECT OF OPTION COMMITTEE'S DECISION. All decisions,
determinations and interpretations of the Option Committee
shall be final and binding on all Optionees and any other
holders of any Options. Neither the Board, the Option
Committee nor any member thereof shall be liable for any act,
omission, interpretation, construction or determination made
in connection with the Plan in good faith, and the members of
the Board and of the Option Committee shall be entitled to
indemnification and reimbursement by the Company in respect of
any claim, loss, damage or expense (including counsel fees)
arising therefrom to the full extent permitted by law.
5. ELIGIBILITY
5.1 EMPLOYEES AND CONSULTANTS. Nonqualified Stock Options may be
granted to Employees and Consultants. Incentive Stock Options
may be granted only to Employees. An Employee or Consultant
who has been granted an Option may, if he is otherwise
eligible, be granted an additional Option or Options.
5.2 DESIGNATION OF OPTION. Each Option shall be designated in the
written option agreement as either an Incentive Stock Option
or a Nonqualified Stock Option. However, notwithstanding such
designations, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Options designated
as Incentive Stock Options are exercisable for the first time
by any Optionee during any
<PAGE>
calendar year (under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall be
treated as Nonqualified Stock Options. For this purpose,
Incentive Stock Options shall be taken into account in the
order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the time the Option with
respect to such Shares is granted.
5.3 EFFECT ON EMPLOYMENT. The Plan shall not confer upon any
Optionee any right with respect to continuation of employment
or consulting relationship with the Company, nor shall it
interfere in any way with his right or the Company's right to
terminate his employment or consulting relationship at any
time, with or without cause, unless otherwise agreed in
writing by the Company and such Optionee.
6. TERM OF PLAN.
The Plan shall become effective upon its adoption by the Board subject
only to approval by the holders of a majority of the outstanding Shares
within 12 months after such date. Should the Plan not be approved by a
vote of stockholders as specified above, the Plan shall terminate 12
months after the effective date, all options issued prior to that
termination date shall continue in effect but without the benefits that
would accrue under the Code or the Act from such stockholder approval.
Otherwise, it shall continue in effect until ten years from the
effective date, unless extended by the Board or sooner terminated under
Section 15 of the Plan. No grants of Options will be made pursuant to
the Plan after termination of the Plan.
7. TERM OF OPTION.
The term of each Option shall be the term stated in the Option
Agreement; provided, however, that in the case of an Incentive Stock
Option, the term shall be no more than 10 years from the date of grant
thereof or such shorter term as may be provided in the Option
Agreement. However, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Option is granted, owns Stock
representing more than 10% of the voting power of all classes of stock
of the Company or any Parent or Subsidiary, the term of the Option
shall be five years from the date of grant thereof or such shorter term
as may be provided in the Option Agreement.
8. OPTION EXERCISE PRICE AND CONSIDERATION.
8.1 OPTION EXERCISE PRICE. The per share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be
such price as is determined by the Option Committee; provided,
however, that as to an Incentive Option:
(i) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing
more than 10% of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the
per Share
<PAGE>
exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant.
(ii) granted to any Employee, the per Share exercise price
shall be no less than 100% of the Fair Market Value per
Share on the date of grant.
8.2 CONSIDERATION. The consideration to be paid for the Shares to
be issued upon exercise of an Option may be paid by certified
or cashier's check. In the discretion of the Option Committee
as set forth in the Option Agreement or, except for Incentive
Options, determined at the time of exercise, payment may also
be made by any or all of the following:
(i) check,
(ii) promissory note,
(iii) other shares of the Company's capital stock which (a)
in the case of shares of the Company's capital stock
acquired upon exercise of an Option either have been
owned by the Optionee for more than six months on the
date of surrender or were not acquired, directly or
indirectly, from the Company, and (b) have a Fair
Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said
Option shall be exercised,
(iv) authorization for the Company to retain from the total
number of Shares as to which the Option is exercised
that number of Shares having a Fair Market Value on the
date of exercise equal to the exercise price for the
total number of Shares as to which the Option is
exercised,
(v) delivery of a properly executed exercise notice
together with irrevocable instructions to a broker to
promptly deliver to the Company the amount of sale or
loan proceeds required to pay the exercise price, or
(vi) such other consideration and method of payment for the
issuance of Shares to the extent permitted under
applicable laws.
9. LIMITATION ON EXERCISE.
The following limitations on exercise of Options shall apply to all
Incentive Stock Options and, except to the extent waived by the Option
Committee and stated in the option agreement, to all other Options.
9.1 TERMINATION OF EMPLOYMENT. In the event of termination of an
Optionee's relationship as a Consultant (unless such
termination is for purposes of becoming an Employee of the
Company) or on termination of an Optionee's Continuous Status
as an Employee with the Company (as the case may be), such
<PAGE>
Optionee may, but only within 90 days (or, as to Options other
than Incentive Options, such longer period of time as is
determined by the Option Committee) after the date of such
termination, but in no event later than the expiration date of
the term of such Option as set forth in the Option Agreement,
exercise his Option to the extent that Optionee was entitled
to exercise it at the date of such termination. To the extent
that Optionee was not entitled to exercise the Option at the
date of such termination, or if Optionee does not exercise
such Option to the extent so entitled within the time
specified herein, the Option shall terminate.
9.2 DISABILITY OF OPTIONEE. Notwithstanding the provisions of
Section 9.1 above, in the event of termination of an
Optionee's relationship as a Consultant or Continuous Status
as an Employee as a result of his total and permanent
disability (as defined in Section 22(e)(3) of the Code),
Optionee may, but only within 12 months from the date of such
termination and in no event later than the expiration date of
the term of such Option as set forth in the option agreement,
exercise the Option to the extent otherwise entitled to
exercise it at the date of such termination. To the extent
that Optionee was not entitled to exercise the Option at the
date of termination, or if Optionee does not exercise such
Option to the extent so entitled within the time specified
herein, the Option shall terminate.
9.3 DEATH OF OPTIONEE. In the event of the death of an Optionee,
the Option may be exercised, at any time within 12 months
following the date of death (but in no event later than the
expiration date of the term of such Option as set forth in the
Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or
inheritance, but only to the extent the Optionee was entitled
to exercise the Option at the date of death. To the extent
that Optionee was not entitled to exercise the Option at the
date of termination, or if the Optionee's estate (or such
other person who acquired the right to exercise the Option)
does not exercise such Option to the extent so entitled within
the time specified herein, the Option shall terminate.
10. EXERCISE OF OPTION.
10.1 PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. An Option
shall be deemed to be exercised, and the Optionee deemed to be
a stockholder of the Shares being purchased upon exercise,
when written notice of such exercise has been given to the
Company in accordance with the terms of the Option by the
person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has
been received by the Company. Full payment may, as authorized
by the Board, consist of any consideration and method of
payment allowable under Section 8.2 of the Plan. An Option may
not be exercised for a fraction of a Share.
<PAGE>
10.2 EFFECT ON NUMBER OF SHARES. Exercise of an Option in any
manner shall result in a decrease in the number of shares
which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
10.3 RULE 16B-3. Options granted to persons subject to Section
16(b) of the Exchange Act must comply with Rule 16b-3 and
shall contain such additional conditions or restrictions as
may be required thereunder to qualify for the maximum
exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
10.4 BUY OUT PROVISIONS. The Option Committee may at any time offer
to buy out an Option previously granted for a payment in cash
or Shares, based on such terms and conditions as the Option
Committee shall establish and communicate to the Optionee at
the time that such offer is made.
11. NON-TRANSFERABILITY OF OPTIONS.
The Options may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the
laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
12. STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS.
At the discretion of the Option Committee, Optionees may satisfy
withholding tax obligations as provided in this Section. When an
Optionee incurs tax liability in connection with an Option, which tax
liability is subject to tax withholding under applicable tax laws, and
the Optionee is obligated to pay the Company an amount required to be
withheld under applicable tax laws, the Optionee may satisfy the
withholding tax obligation by electing to have the Company withhold
from the Shares to be issued upon exercise of the Option, that number
of Shares having a Fair Market Value equal to the amount required to be
withheld. The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be
determined (the "Tax Date"). All elections by an Optionee to have
Shares withheld for this purpose shall be made in writing in a form
acceptable to the Option Committee and shall be subject to the
following restrictions:
(i) the election must be made on or prior to the
applicable Tax Date;
(ii) once made, the election shall be irrevocable as to the
particular Shares of the Option as to which the
election is made;
(iii) all elections shall be subject to the consent or
disapproval of the Option Committee; and
(iv) if the Optionee is subject to Rule 16b-3, the election
must comply with the applicable provisions of Rule
16b-3 and shall be subject to such additional
<PAGE>
conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from
Section 16 of the Exchange Act with respect to Plan
transactions.
In the event the election to have Shares withheld is made by an
Optionee, the Tax Date is deferred under Section 83 of the Code and no
election is filed under Section 83(b) of the Code, the Optionee shall
receive the full number of Shares with respect to which the Option is
exercised but such Optionee shall be unconditionally obligated to
tender back to the Company the proper number of Shares on the Tax Date.
13. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE.
13.1 The existence of outstanding Options shall not affect in any
way the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of
the Company, or any issue of bond, debentures, preferred or
prior preference stock ahead of or affecting the Stock or the
rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise; subject to the
following:
(i) If the Company shall effect a subdivision or
consolidation of shares or other capital
readjustment, the payment of a stock dividend, or
other increase or reduction of the number of shares
of the Stock outstanding, without receiving
compensation therefor in money, services or property,
then (a) the number, class, and per share price of
shares of Stock subject to outstanding Options
hereunder shall be appropriately adjusted in such a
manner as to entitle an Optionee to receive upon
exercise of an Option, for the same aggregate cash
consideration, the same total number and class of
shares as he would have received had he exercised his
Option and (b) the number and class of shares of
Stock then reserved for issuance under the Plan shall
be adjusted by substituting for the total number and
class of shares of Stock then reserved that number
and class of shares of Stock that would have been
received by the owner of an equal number of
outstanding shares of each class of Stock as the
result of the event requiring the adjustment.
(ii) Unless otherwise expressly provided in an option
agreement, upon a Corporate Change (as defined
below), notwithstanding any other provision of this
Plan, any and all outstanding Options not fully
vested and exercisable shall vest in full and be
immediately exercisable, and any other restrictions
on such Options including, without limitation,
requirements concerning the achievement of specific
goals shall terminate. The foregoing shall apply to
Incentive Options, unless stated to the contrary in
the option agreement, even
<PAGE>
though the effect may be to convert part of the
Option to a Nonqualified Option.
13.2 CORPORATE CHANGE. As used in this Plan, a "Corporate Change"
shall be deemed to have occurred upon, and shall mean (A) the
acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
(a "Person"), of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 80% or more
of either (i) the then outstanding shares of Stock of the
Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, that the following
transactions shall not constitute a Corporate Change; (a) any
acquisition by virtue of the conversion of preferred stock of
the Company outstanding on the effective date hereof; (b)
customary transactions with and between underwriters and
selling group members with respect to a bona fide public
offering of securities, (c) any acquisition directly from the
Company (excluding an acquisition by virtue of the exercise of
a conversion privilege), (d) any acquisition by the Company,
(e) any acquisition by any employee benefit plan(s) (or
related trust(s)) sponsored or maintained by the Company or
any corporation controlled by the Company or (f) any
acquisition by any entity pursuant to a reorganization, merger
or consolidation, if, immediately following such
reorganization, merger or consolidation the conditions
described in clauses (i), (ii) and (iii) of clause (B) of this
Section are satisfied; or (B) the approval by the stockholders
of the Company of a reorganization, merger or consolidation,
in each case, unless immediately following such
reorganization, merger or consolidation (i) more than 60% of,
respectively, the then outstanding shares of common stock (or
other equivalent securities) of the entity resulting from such
reorganization, merger or consolidation and the combined
voting power of the then outstanding voting securities of such
entity entitled to vote generally in the election of directors
(or other similar governing body) is then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Company Common Stock and Outstanding
Company Voting Securities immediately prior to such
reorganization, merger or consolidation in substantially the
same proportions as their ownership, immediately prior to such
reorganization, merger or consolidation of the Outstanding
Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding the
Company, any employee benefit plan(s) (or related trust(s)) of
the Company and/or its subsidiaries or such entity resulting
from such reorganization, merger or consolidation and any
Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or
indirectly, 80% or more of the Outstanding Company Common
Stock or Outstanding Company Voting Securities, as the case
may be) beneficially owns, directly or indirectly, 80% or more
of, respectively, the then outstanding shares of common stock
(or other equivalent
<PAGE>
securities) of the entity resulting from such reorganization,
merger or consolidation or the combined voting power of the
then outstanding voting securities of such entity entitled to
vote generally in the election of directors (or other similar
governing body) and (iii) at least a majority of the members
of the board of directors (or other similar governing body) of
the entity resulting from such reorganization, merger or
consolidation were members of the Incumbent Board (as defined
below) at the time of the execution of the initial agreement
providing for such reorganization, merger or consolidation.
The "Incumbent Board" shall mean individuals who as of the
effective date hereof constitute the Company's Board of
Directors; provided, however, that any individual becoming a
director subsequent to such date whose election, or nomination
for election by the Company's stockholders, was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either (i) an
actual or threatened election contest (as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act), or an actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Company's Board of Directors or (ii) a plan or agreement to
replace a majority of the members of the Board of Directors
then comprising the Incumbent Board.
13.3 COMPLIANCE WITH RULE 16b-3. The Company intends that this
Section 13 shall comply with the requirements of Rule 16b-3
and any future rules promulgated in substitution therefor
under the Exchange Act during the term of the Plan. Should any
provision of this Section not be necessary to comply with the
requirements of Rule 16b-3 or should any additional provisions
be necessary for this Section to comply with the requirements
of Rule 16b-3, the Board of Directors may amend the Plan to
add to or modify the provisions of the Plan accordingly.
13.4 NO ADJUSTMENT UPON ISSUANCE OF SHARES. Except as otherwise
provided in this Plan, the issue by the Company of shares of
stock of any class, or securities convertible into shares of
stock of any class, for cash or property, or for labor or
services either upon direct sale or upon the exercise of
rights or warrants to subscribe therefor, or upon conversion
of shares or obligations of the Company convertible into such
shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to,
the number, class, or price of shares of Stock then subject to
outstanding Options.
14. TIME OF GRANTING OPTIONS.
The date of grant of an Option shall, for all purposes, be the date on
which the Option Committee makes the determination granting such
Option, or such other date as is determined by the Option Committee.
Notice of the determination shall be given to each
<PAGE>
Employee or Consultant to whom an Option is so granted within a
reasonable time after the date of such grant.
15. AMENDMENT AND TERMINATION OF THE PLAN.
15.1 AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or discontinue the Plan, but no amendment,
alteration, suspension or discontinuation shall be made which
would impair the rights of any Optionee under any grant
theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3
under the Exchange Act or with Section 422 of the Code (or any
other applicable law or regulation, including the applicable
requirements of the NASD or an established stock exchange),
the Company shall obtain stockholder approval of any Plan
amendment in such a manner and to such a degree as required.
15.2 EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already
granted and such Options shall remain in full force and effect
as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Board,
which agreement must be in writing and signed by the Optionee
and the Company.
16. CONDITIONS UPON ISSUANCE OF SHARES.
16.1 COMPLIANCE WITH LAWS. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option
and the issuance and delivery of such Shares pursuant thereto
shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended,
the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon
which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with
respect to such compliance.
16.2 REPRESENTATIONS AND WARRANTIES. As a condition to the exercise
of an Option, the Company may require the person exercising
such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for
investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the
Company, such a representation is required by any of the
aforementioned relevant provisions of law.
17. RESERVATION OF SHARES.
The Company, during the term of this Plan, will at all times reserve
and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.
18 INFORMATION TO OPTIONEES.
<PAGE>
The Company shall provide to each Optionee, during the period for which
such Optionee has one or more Options outstanding, copies of all annual
reports and other information which are generally provided to all
stockholders of the Company. The Company shall not be required to
provide such information to persons whose duties in connection with the
Company assure their access to equivalent information.
19 GOVERNING LAW; CONSTRUCTION.
All rights and obligations under the Plan shall be governed by, and the
Plan shall be construed in accordance with, the laws of the
Commonwealth of Virginia without regard to the principles of conflicts
of laws. Titles and headings to Sections herein are for purposes of
reference only, and shall in no way limit, define or otherwise affect
the meaning or interpretation of any provisions of the Plan.
THIS 1998 STOCK OPTION PLAN OF VIRGINIA GAS COMPANY WAS ADOPTED BY ITS BOARD OF
DIRECTORS ON JUNE 10, 1998.
