As filed with the Securities and Exchange Commission on January 27,28, 1999
Registration No. 333-67311
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
AMENDMENT NO. 45 TO FORM S-4
Registration Statement
Under
The Securities Act of 1933
------------------------
RGC RESOURCES, INC.
(Exact name of Registrant as specified in its charter)
Virginia 6719 54-1909697
(State or other Jurisdiction (Primary Standard Industrial (IRS Employer
of Incorporation or Organization) Classification Code Number) Identification
No.)
------------------------
519 Kimball Avenue, N.E., Roanoke, Virginia 24016
(540) 777-4427
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
------------------------
John B. Williamson, III
President and Chief Executive Officer
RGC Resources, Inc.
519 Kimball Avenue, N.E., Roanoke, Virginia 24016
(540) 777-4427
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
------------------------
Copy to:
Nicholas C. Conte, Esq.
Nicole C. Daniel, Esq.
Woods, Rogers & Hazlegrove, P.L.C.
First Union Tower, Suite 1400
10 South Jefferson Street
Roanoke, Virginia 24011
(540) 983-7630
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[ROANOKE GAS COMPANY LETTERHEAD]
February 5, 1999
Dear Shareholder:
On behalf of our Board of Directors, I cordially invite you to attend the
1999 Annual Meeting of Shareholders of Roanoke Gas Company. The meeting will be
at 9:00 a.m. on Wednesday, March 31, 1999, at the principal office of Roanoke
Gas.
An important purpose of the meeting is to vote on our holding company
proposal. As we previously announced, Roanoke Gas is proposing to reorganize its
natural gas distribution operations and subsidiaries into a holding company
structure to provide us with the organizational flexibility needed in a highly
competitive environment.
The new holding company will be named RGC Resources, Inc., and Roanoke Gas
will be its most significant subsidiary. After completion of the reorganization,
shares of Resources common stock will be traded on Nasdaq under the symbol
"RGCO."
The holding company proposal must be approved by the Securities and
Exchange Commission, the Virginia State Corporation Commission and the West
Virginia Public Service Commission. We also need your approval. The
reorganization cannot be completed unless the holders of more than two-thirds of
Roanoke Gas common stock vote in favor of the proposal. YOUR VOTE IS VERY
IMPORTANT TO US. Your Board of Directors has unanimously approved the proposal
and recommends that shareholders vote "FOR" the proposal.
The holding company reorganization will be implemented through a merger in
which Roanoke Gas shareholders will become holders of Resources common stock.
Approximately 1,850,000 shares of Resources' common stock will replace Roanoke
Gas stock. Specifically, you will receive in the merger one share of Resources
common stock for each full share of Roanoke Gas common stock that you own. If
you hold a fractional share of Roanoke Gas stock because of participation in the
^stockstock purchase or dividend reinvestment plans, the fractional share will be
converted in your plan account to a fractional share of Resources stock. Your
proportionate ownership interest will not change as a result of the
restructuring.
This proxy statement/prospectus provides you detailed information about
the Annual Meeting and the proposed holding company structure and
reorganization. I encourage you to read this entire document carefully.
Consider carefully the "Risk Factors" section beginning on page 7.
If you have any additional questions or need assistance in voting your
shares, please call either Roanoke Gas, at (540) 777-3853, or William F. Doring
and Company, Inc., which is assisting in our proxy solicitation, at (888)
330-5111.
Thank you for your confidence in Roanoke Gas. We are very enthusiastic
about the proposal and are confident we will continue to grow and prosper after
the reorganization.
Sincerely,
John B. Williamson, III
President and Chief Executive Officer
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities to be issued under this
proxy statement/prospectus or determined if this proxy statement/prospectus is
accurate or adequate. Any representation to the contrary is a criminal offense.
This proxy statement/prospectus is dated February 5, 1999,
and is first being mailed to shareholders on February 5, 1999
ROANOKE GAS COMPANY
519 Kimball Avenue, N.E.
Roanoke, Virginia 24016
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 31, 1999
To the Holders of Common Stock of ROANOKE GAS COMPANY:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Roanoke
Gas Company will be held at the principal office of Roanoke Gas, 519 Kimball
Avenue, N.E., Roanoke, Virginia 24016, on Wednesday, March 31, 1999, at 9:00
a.m., Eastern Standard Time, for the purposes of:
1. Approving an Agreement and Plan of Merger and Reorganization dated
as of September 28, 1998 (a copy of which is attached as Appendix A
to this proxy statement/prospectus), and the transactions
contemplated thereby, to effect a reorganization of Roanoke Gas into
a holding company structure;
2. Electing three directors of Roanoke Gas, each to serve for a three-
year term; and
3. Transacting any other business properly before the Annual Meeting.
Only shareholders of record at the close of business on January 20, 1999,
will be entitled to vote at the Annual Meeting.
If the Agreement and Plan of Merger and Reorganization is approved by
Roanoke Gas shareholders and the reorganization occurs, a holder of record of
Roanoke Gas common stock on the record date who dissents and does not vote "FOR"
the reorganization is entitled to receive payment in cash if that holder follows
the procedures provided in Article 15 of the Virginia Stock Corporation Act,
attached as Appendix C to this proxy statement/prospectus. Further information
regarding voting rights and the business to be transacted at the Annual Meeting
is set forth in the proxy statement/prospectus.
By Order of the Board of Directors
Roger L. Baumgardner
Secretary
Roanoke, Virginia
February 5, 1999
Your vote is important. Even if you plan to be present at the Annual
Meeting, please sign, date and promptly return the enclosed proxy, no matter how
small your holdings, to assure that your shares are represented. No postage is
required on the enclosed proxy if mailed within the United States. If your
shares are held by a broker, bank or nominee, it is important that you give them
your voting instructions.
You should NOT send stock certificates with your Proxy Card.
TABLE OF CONTENTS
PAGE
QUESTIONS AND ANSWERS ABOUT THE REORGANIZATION...............................1
SUMMARY......................................................................3
The Companies .........................................................3
The Annual Shareholders Meeting........................................3
Record Date; Voting Power..............................................4
Shareholder Vote Required to Approve the Reorganization................4
The Present and Proposed Corporate Structures..........................4
Our Recommendations to Shareholders....................................5
Comparative Shareholders' Rights.......................................5
Statutory Dissenters' Rights...........................................5
Regulation of Resources and Roanoke Gas Resulting from the
Reorganization.......................................................5
Conditions to the Reorganization.......................................6
Amendment or Termination of the Agreement of Merger and Reorganization.6
RISK FACTORS.................................................................7
Business Risk from Increased Involvement in Unregulated Activities.....7
Initial Resources Common Stock Dividends Will Depend Primarily on
Dividends Paid by Roanoke Gas.......................................7
Resources May in the Future Issue Preferred Stock Which Could Have
Preferential Dividend Rights........................................7
Resources Board Empowered to Impede Takeover Attempts..................7
Business Risk from Increased Involvement in Unregulated Activities.....7
Business Activities May Be Limited as a Results of Regulatory
Changes.............................................................7
Resources Board Empowered to Impede Takeover Attempts..................8Changes.............................................................8
Regulation as a Public Utility Holding Company.........................8
THE ANNUAL SHAREHOLDERS MEETING..............................................8
PROPOSAL 1 - APPROVAL OF THE AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION........................................................10
REASONS FOR THE HOLDING COMPANY STRUCTURE AND REORGANIZATION................10
THE REORGANIZATION..........................................................12
The Agreement.........................................................12
Vote Required.........................................................13
Regulatory Approvals..................................................13
Accounting Treatment..................................................13
Conditions to Effectiveness of the Reorganization.....................14
Exchange of Stock Certificates........................................14
Transfer of Roanoke Gas Subsidiaries to Resources.....................15
Dividend Reinvestment and Stock Purchase Plan.........................15
Roanoke Gas Stock Plans...............................................15
Amendment or Termination of the Agreement ...........................16
Listing of Resources Common Stock.....................................16
Cautionary Statement Concerning Forward-Looking Statements............16
DIVIDEND POLICY.............................................................17
FEDERAL INCOME TAX CONSEQUENCES.............................................18
DESCRIPTION OF RESOURCES CAPITAL STOCK......................................19
INDEMNIFICATION AND LIMITATION OF LIABILITY.................................22
CERTAIN DIFFERENCES IN RIGHTS OF ROANOKE GAS AND RESOURCES SHAREHOLDERS.....23
BUSINESS OF ROANOKE GAS AND RESOURCES.......................................24
REGULATION OF RESOURCES AND ROANOKE GAS AND CERTAIN SUBSIDIARIES AFTER
THE REORGANIZATION....................................................26
RIGHT OF DISSENTING SHAREHOLDERS TO RECEIVE PAYMENT FOR SHARES..............28
MANAGEMENT OF RESOURCES.....................................................30
LEGAL OPINION...............................................................30
i
EXPERTS.....................................................................31
PROPOSAL 2 - ELECTION OF DIRECTORS OF ROANOKE GAS -.........................32
SECURITY OWNERSHIP OF MANAGEMENT............................................33
BOARD OF DIRECTORS AND COMMITTEES...........................................34
EXECUTIVE COMPENSATION......................................................35
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS..............37
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.................40
PERFORMANCE GRAPH...........................................................40
TRANSACTIONS WITH MANAGEMENT................................................41
REMUNERATION OF DIRECTORS...................................................41
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.....................42
INDEPENDENT PUBLIC ACCOUNTANTS..............................................42
OTHER MATTERS...............................................................43
SHAREHOLDER PROPOSALS.......................................................43
WHERE YOU CAN FIND MORE INFORMATION.........................................43
APPENDIX A
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION......................A-1
APPENDIX B
ARTICLES OF INCORPORATION OF RGC RESOURCES, INC......................B-1
APPENDIX C
ARTICLE 15 OF THE VIRGINIA STOCK CORPORATION ACT.....................C-1
ii
QUESTIONS AND ANSWERS ABOUT THE REORGANIZATION
1. What is the holding company proposal?
Roanoke Gas proposes to reorganize into a holding company structure. Its
shareholders will become shareholders of a new holding company called RGC
Resources, Inc. As a result of the reorganization:
o Resources will be a holding company owned by the former
shareholders of Roanoke Gas;
o Resources will be the sole shareholder of Roanoke Gas,
Bluefield Gas Company and Diversified Energy Company;
o Commonwealth Public Service Corporation will be merged into
Roanoke Gas.
2. Why is Roanoke Gas proposing this reorganization?
Roanoke Gas believes the reorganization will give it the financial and
regulatory flexibility to compete more effectively in the increasingly
competitive energy industry. Roanoke Gas believes that the holding company
structure will allow it to selectively pursue nonutility businesses, and to act
more rapidly in an industry where unregulated competitors do not have the same
constraints as regulated entities. We also believe that a holding company
structure should provide greater opportunities for growth and enhanced values,
greater flexibility in developing new businesses, and greater flexibility
regarding the timing, method and amount of financing and acquisitions through
the separation of utility and nonutility businesses.
3. What will I receive in the reorganization?
You will receive one share of Resources common stock in exchange for each
share of Roanoke Gas common stock you hold on the effective date of the
reorganization. Your proportionate ownership interest will not change as a
result of the reorganization.
4. When do you expect the reorganization to be completed?
We are working to complete the reorganization in the Summer of 1999,
provided that we have received all regulatory approvals and satisfied other
closing conditions.
5. Where will Resources common stock be traded? What will be the ticker
symbol?
Resources common stock will be traded on the Nasdaq National Market. It is
anticipated that it will trade under the ticker symbol "RGCO."
Roanoke Gas is presently traded on the Nasdaq National Market under the
same symbol. After the reorganization, all of the Roanoke Gas common stock will
be owned by Resources and will no longer be eligible for trading and quotation
on the Nasdaq National Market.
1
6. Who will manage the holding company?
The directors and officers of Roanoke Gas also will serve as the directors
and officers of Resources. John B. Williamson, III is the President, Chief
Executive Officer and a director of both Resources and Roanoke Gas.
7. What are the federal income tax consequences to Roanoke Gas
shareholders?
We expect the exchange of Roanoke Gas common stock for Resources common
stock to be tax-free to Roanoke Gas shareholders for federal income tax
purposes. To review the tax consequences in greater detail, see pages 18-19. You
should consult your tax advisors for a full understanding of the tax
consequences of the reorganization to you.
8. Will my dividends be affected?
No. Resources expects to continue the current Roanoke Gas practice of
paying an appropriate percentage of earnings to shareholders. However, future
dividends on Resources common stock will depend on earnings, financial condition
and capital requirements of Resources and its subsidiaries and the dividends
Roanoke Gas and other Resources' subsidiaries may pay to Resources.
9. How will my participation in the Dividend Reinvestment and Stock
Purchase Plan be affected?
The Dividend Reinvestment and Stock Purchase Plan of Roanoke Gas will be
amended to become Resources' Plan. All shares of Roanoke Gas common stock held
under the Plan will be automatically exchanged for an equal number of shares of
Resources common stock. Accounts in the Plan will be credited for fractional
shares.
10. Should I send in my stock certificates now?
No. When the reorganization is completed, you will receive written
instructions for exchanging your stock certificates.
11. If my shares are held in my broker's name, will my broker vote my
shares for me?
Yes. Your broker will request instructions from you as to how you want
your shares to be voted. The broker will then vote the shares according to your
instructions.
12. What do I need to do now?
Just indicate on your proxy card how you want to vote, and sign, date and
mail it in the enclosed postage-paid return envelope as soon as possible. The
meeting will take place at 9:00 am on Wednesday, March 31, 1999 at the Roanoke
Gas office at 519 Kimball Avenue, N.E., Roanoke, Virginia 24016.
13. Who can I call if I have any questions?
You are welcome to call Roanoke Gas at (540) 777-3800, or William F.
Doring and Company, Inc., which is assisting our proxy solicitation, toll free
at (888) 330-5111.
2
SUMMARY
This summary highlights selected information about the holding company
proposal and reorganization. It does not contain all of the information that is
important to you. You should carefully read the entire proxy
statement/prospectus and the other documents to which we have referred you. See
"Where You Can Find More Information" on pages 43-44. We have included page
references in parentheses to direct you to a more complete description of the
topics presented in this summary.
The Companies (see pages 25-26)
Roanoke Gas Company
519 Kimball Avenue, N.E.
Roanoke, Virginia 24016
(540) 777-4427
Roanoke Gas, a Virginia public service corporation organized in 1912,
provides natural gas service to approximately 53,625 customers in Roanoke,
Virginia and surrounding areas of Virginia. Roanoke Gas owns 100% of the
outstanding common stock of Bluefield Gas Company, a West Virginia public
service corporation. Bluefield provides natural gas to approximately 4,100
customers located in and around Bluefield, West Virginia. Bluefield owns all of
the outstanding common stock of Commonwealth Public Service Corporation, a
Virginia public service corporation, which serves approximately 925 customers in
Bluefield, Virginia, and surrounding areas of Virginia. Roanoke Gas also owns
100% of the outstanding common stock of Diversified Energy Company, a Virginia
nonutility corporation. Diversified sells propane and propane related products
and maintains a natural gas marketing business.
RGC Resources, Inc.
519 Kimball Avenue, N.E.
Roanoke, Virginia 24016
(540) 777-4427
Resources is a wholly owned subsidiary of Roanoke Gas and was incorporated
in Virginia on July 31, 1998, for the purpose of accomplishing the proposed
holding company reorganization. Resources does not own any assets or engage in
any business.
The Annual Shareholders Meeting (See pages 9-10)
The Roanoke Gas Annual Shareholders Meeting will be held at Roanoke Gas'
principal office, 519 Kimball Avenue, N.E., Roanoke, Virginia 24016, at 9:00
a.m. on Wednesday, March 31, 1999. At the Annual Meeting, Roanoke Gas
shareholders will be asked to:
(1) approve the Agreement and Plan of Merger and Reorganization and the
transactions contemplated thereby;
(2) elect three directors of Roanoke Gas; and
(3) transact any other business properly before the meeting.
3
Record Date; Voting Power (See page 9)
You are entitled to vote at the Annual Meeting if you were a shareholder
of record of Roanoke Gas common stock at the close of business on January 20,
1999, the Record Date.
On the Record Date, there were 1,805,006 shares of Roanoke Gas common
stock entitled to vote at the Annual Meeting. Roanoke Gas shareholders will be
entitled to one vote at the Annual Meeting for each share of Roanoke Gas common
stock held on the Record Date.
Shareholder Vote Required to Approve the Reorganization (See pages 9-10, 13)
More than two-thirds of the outstanding shares of Roanoke Gas common stock
must be voted "FOR" Proposal 1 at the Annual Meeting in order to approve the
holding company reorganization. For purposes of determining whether the holding
company reorganization has been approved, an abstention or broker non-vote will
not be counted in favor of adoption of the proposal and will have the effect of
a vote against the proposal.
The Present and Proposed Corporate Structures
PRESENT STRUCTURE
-------------------------------------------
Shareholders
-------------------------------------------
|
|
-------------------------------------------
Roanoke Gas
-------------------------------------------
|
|
----------------------------------------------------
| | |
| | |
| | |
---------------------- ---------------------- ----------------------
Diversified Resources Bluefield
---------------------- ---------------------- ----------------------
|
|
----------------------
Commonwealth
----------------------
PROPOSED HOLDING COMPANY STRUCTURE
--------------------------------------------
Shareholders
--------------------------------------------
|
|
--------------------------------------------
Resources
--------------------------------------------
|
|
---------------------------------------------------------
| | |
| | |
---------------------- ---------------------- ----------------------
Roanoke Gas* Bluefield Diversified
---------------------- ---------------------- ----------------------
*Commonwealth is merged into Roanoke Gas
4
Our Recommendations to Shareholders (See pages 10, 32)
The Roanoke Gas Board of Directors has unanimously adopted the Agreement
and Plan of Merger and Reorganization, believes the reorganization to be in the
best interests of Roanoke Gas and its shareholders, and recommends that the
holders of Roanoke Gas common stock vote "FOR" the holding company
reorganization.
In addition, the Board of Directors of Roanoke Gas recommends a vote "FOR"
all director nominees for Class B directors.
Comparative Shareholders' Rights (See pages 23-24)
When the reorganization is completed, holders of Roanoke Gas common stock
will automatically become holders of Resources common stock, and their rights
will be governed by Resources' Articles of Incorporation and Bylaws instead of
those of Roanoke Gas.
Resources' Articles of Incorporation give Resources broad corporate powers
to engage in any lawful activity for which a corporation may be formed under
Virginia law, and include indemnification, limitation of liability and
nomination and proposal submission provisions that are not included in the
Articles of Incorporation of Roanoke Gas. In addition, the Articles of
Incorporation of Resources authorize a greater number of shares of common stock
and provide that the directors of Resources may designate the rights and
preferences of preferred stock and issue preferred stock without further
approval by Resources shareholders. Other differences between the rights of
holders of Resources common stock and those of holders of Roanoke Gas common
stock are summarized in the section of this proxy statement/prospectus entitled
"Certain Differences in Rights of Roanoke Gas and Resources Shareholders"; see
also "Description of Resources Capital Stock -- Authorized Capital -- Preferred
Stock."
Statutory Dissenters' Rights (See pages 28-30 and Appendix C to this Proxy
Statement/Prospectus)
If the proposed merger is consummated, shareholders of Roanoke Gas who
comply with the requirements of Article 15 of the Virginia Stock Corporation Act
will be entitled to dissenters' rights of appraisal with respect to their shares
of Roanoke Gas common stock. See "Right of Dissenting Shareholders to Receive
Payment for Shares" and Appendix C for a description of the procedures required
to be followed to perfect such rights.
Regulation of Resources and Roanoke Gas Resulting from the Reorganization (See
pages 13, 27-28)
Roanoke Gas and Resources have filed a joint application with the SEC
requesting approval of the holding company reorganization under Section 10 of
the federal Public Utility Holding Company Act of 1935. Following the
reorganization, Resources, as the parent holding company of Roanoke Gas and
Bluefield, will not be subject to regulation by the Virginia Commission or the
West Virginia Commission. Roanoke Gas will continue to be regulated by the
Virginia Commission, and Bluefield will continue to be regulated by the West
Virginia Commission. As a result of the reorganization, Resources will become a
"public utility holding company" within the meaning of the federal Public
Utility Holding Company Act of 1935 and will file a statement with the SEC
claiming exemption from all provisions of that Act, except for certain
provisions requiring SEC approval of certain acquisitions and investments. Even
as an exempt public utility holding company, Resources will be subject to
certain regulations and restrictions. See "Risk Factors -- Regulation as a
Public Utility Holding Company."
5
Both the Virginia State Corporation Commission and the West Virginia
Public Service Commission have approved the reorganization.
Conditions to the Reorganization (See page 14)
Completion of the reorganization depends on conditions, including:
(a) receipt of all required regulatory and third party approvals and
consents on acceptable terms;
(b) shareholder approval at the Annual Meeting; and
(c) approval to list Resources on the Nasdaq National Market.
Amendment or Termination of the Agreement of Merger and Reorganization (See
page 16)
The parties generally may amend any of the terms of the Agreement and Plan
of Merger and Reorganization at any time before or after its approval by Roanoke
Gas shareholders and also after approval if the amendment does not materially
and adversely affect the rights of the shareholders of Roanoke Gas.
If the Roanoke Gas Board of Directors determines that the reorganization
would be inadvisable, or not in the best interests of Roanoke Gas or its
shareholders, the agreement may be terminated and the reorganization abandoned
at any time.
6
RISK FACTORS
In addition to the other information contained in this proxy
statement/prospectus (including the matters addressed in "Cautionary Statement
Concerning Forward-Looking Statements" on pages 16-17), the matters described
below should be considered carefully in determining whether to approve the
reorganization and the transactions contemplated thereby.
Business Risk from Increased Involvement in Unregulated Activities
Resources currently intends that its subsidiaries will in the future
include, in addition to Diversified, other nonutility companies that will engage
primarily in businesses that will not be regulated as public utilities by state
or federal agencies. These unregulated businesses may encounter competition not
faced by a regulated utility like Roanoke Gas and may have greater investment
risks than those involved in the regulated natural gas utility business or the
unregulated propane business. These businesses may not be successful and could
have a direct or indirect adverse effect on Resources. As is the case now, any
losses incurred by these unregulated businesses will not be recoverable in
utility rates of Roanoke Gas or Bluefield.
Initial Resources Common Stock Dividends Will Depend Primarily on Dividends Paid
by Roanoke Gas
Initially, dividends on Resources common stock will depend primarily upon
the earnings, financial condition and capital requirements of Roanoke Gas and
the dividends that Roanoke Gas pays to Resources. Resources does not now, nor
will it immediately after the reorganization, conduct directly any business
operations that generate revenues. Resources plans to obtain operating funds
from dividends paid to Resources by its subsidiaries, and possibly from sales of
securities or debt incurred by Resources. In the future, dividends from
Resources' subsidiaries other than Roanoke Gas may be a more significant source
of funds for dividend payments by Resources.
While future dividends will depend on the earnings, financial condition
and capital requirements of Roanoke Gas and Resources' other subsidiaries,
Resources currently expects to continue a policy of paying an appropriate
percentage of its earnings to shareholders. ^TheThe payment and amount of
dividends, however, is within the discretion of Resources' Board of Directors
based on financial and other factors and cannot be assured. See "Dividend
Policy."
Resources May in the Future Issue Preferred Stock Which Could Have Preferential
Dividend Rights
Although Resources has no present intention to do so, it may issue
preferred stock in the future to meet its capital requirements. Such preferred
stock could have preferential dividend rights over Resources common stock.
Business Activities May Be Limited as a Results of Regulatory Changes
Roanoke Gas' natural gas distribution operations and those of its utility
subsidiaries are subject to a high degree of regulation at the federal, state
and local levels. See "Business of Roanoke Gas and Resources." These regulations
can in certain circumstances impose limitations on operations. In addition,
these regulations are constantly evolving and may change significantly over
time. There can be no assurance that future regulatory changes will not have a
material adverse effect on Resources.
7
Resources Board Empowered to Impede Takeover Attempts
Resources' Articles of Incorporation authorize the issuance of 5,000,000
shares of Resources preferred stock. In addition, after giving effect to the
Merger, approximately 8,150,000 shares of Resources Common stock will be
authorized but unissued and not reserved for issuance. An effect of the
existence of unissued Resources Common stock and Resources preferred stock may
be to enable the Resources Board of Directors to render more difficult or
discourage a transaction to obtain control of Resources. Such shares might be
issued by the Board of Directors without shareholder approval in transactions
that might prevent or render more difficult or costly the completion of a
takeover transaction, as by diluting voting or other rights of the proposed
acquirer. In this regard, Resources' Articles grant the Board of Directors broad
power to establish the rights and preferences of the authorized and unissued
shares of Resources preferred stock, one or more classes or series of which
could be issued entitling holders to vote separately as a class on any proposed
merger or consolidation, to convert such stock into shares of Resources Common
stock or possibly other securities, to demand redemption at a specified price
under prescribed circumstances related to a change of control, or to exercise
other rights designed to impede a takeover.
Business Risk from Increased Involvement in Unregulated Activities
Resources currently intends that its subsidiaries will in the future
include, in addition to Diversified, other nonutility companies that will engage
primarily in businesses that will not be regulated as public utilities by state
or federal agencies. These unregulated businesses may encounter competition not
faced by a regulated utility like Roanoke Gas and may have greater investment
risks than those involved in the regulated natural gas utility business
7
or the unregulated propane business. These businesses may not be successful and
could have a direct or indirect adverse effect on Resources. As is the case now,
any losses incurred by these unregulated businesses will not be recoverable in
utility rates of Roanoke Gas or Bluefield.
Business Activities May Be Limited as a Results of Regulatory Changes
Roanoke Gas' natural gas distribution operations and those of its utility
subsidiaries are subject to a high degree of regulation at the federal, state
and local levels. See "Business of Roanoke Gas and Resources." These regulations
can in certain circumstances impose limitations on operations. In addition,
these regulations are constantly evolving and may change significantly over
time. There can be no assurance that future regulatory changes will not have a
material adverse effect on Resources.
Regulation as a Public Utility Holding Company
Reorganization is Subject to Receipt of Satisfactory Approvals from the
SEC. Roanoke Gas and Resources have applied to the SEC for necessary approvals
for the reorganization under Section 10 of the Public Utility Act in connection
with the reorganization. There can be no assurance that such approvals will be
received or that the terms upon which such approvals may be conditioned will be
acceptable to the Board of Directors of Roanoke Gas. If such approvals are not
received, the reorganization cannot proceed. See "The Reorganization
- --Conditions to Effectiveness of the Merger" and "-- Amendment or Termination of
the Agreement."
Resources May Be Regulated as a Non-exempt Public Utility Holding
Company. Roanoke Gas is currently exempt from all provisions of the Public
Utility Act, except for provisions requiring SEC approval of certain
acquisitions and investments. Resources intends, upon consummation of the
reorganization, to file a claim of exemption from all provisions of the Public
Utility Act on the basis that Resources and its material public utility
subsidiaries are predominantly intrastate in character. This exemption is
subject to the discretion of the SEC and must be renewed annually. The SEC may
revoke the exemption at any time if it determines that there is a substantial
question of law or fact as to whether Resources is within the parameters of the
exemption, or if it appears that the exemption may be detrimental to the public
interest. If such exemption is revoked and Resources must register as a public
utility holding company under the Public Utility Act, Resources' activities will
be subject to significant additional regulatory supervision, limitations and
restrictions by the SEC. This could materially adversely affect Resources'
operations and ability to grow and diversify its nonutility businesses. See
"Regulation of Resources and Roanoke Gas and Certain Subsidiaries After the
Reorganization."
Resources May Be Limited in the Types of Investments It Can Make. The
Public Utility Act limits the extent to which Resources and its nonutility
subsidiaries can enter into nonutility businesses. Under current law, Resources
must remain engaged primarily and predominantly in the public utility business
in the Commonwealth of Virginia. These limitations may restrict the type of
investments that Resources may make. In addition, the intrastate exemption is
only available when the company's utility subsidiaries remain predominantly
intrastate. Thus, some interstate investments may be limited.
THE ANNUAL SHAREHOLDERS MEETING
This proxy statement/prospectus is furnished as a part of the
solicitation by the Board of Directors of Roanoke Gas Company of proxies for use
at the Annual Meeting of Shareholders of Roanoke Gas to be held on March 31,
1999. At that meeting, holders of Roanoke Gas common stock will be asked to
consider and vote upon a proposal to approve and adopt the Agreement and Plan of
Merger and Reorganization and the transactions
8
contemplated thereby; elect directors; and consider such other matters as may
properly come before the Annual Meeting.
Only holders of record of the Roanoke Gas' common stock, par value $5.00
per share, on January 20, 1999 (the "Record Date"), are entitled to receive
notice of the Annual Meeting and to vote at the Annual Meeting or any
adjournments or postponements thereof. As of the close of business on the Record
Date, there were 1,805,006 shares of Roanoke Gas common stock outstanding. Each
share is entitled to one vote. To Roanoke Gas' knowledge, no person is the
beneficial owner of more than five percent of the issued and outstanding shares
of Roanoke Gas common stock. For beneficial ownership of management, see
"Security Ownership of Management."
Roanoke Gas' Annual Report to Shareholders for the year ended September
30, 1998, is being sent to all shareholders concurrently with this proxy
statement/prospectus.
Any shareholder entitled to vote may attend the Annual Meeting and vote,
whether or not such shareholder has submitted a signed proxy. All shares
represented by proxies which have been duly executed and returned will be voted
at the Annual Meeting and, where a choice has been specified in the proxies, the
shares will be voted per the specification so made. In the absence of
specifications to the contrary, such executed proxies will be voted "FOR"
Proposal 1 and "FOR" each director nominated in Proposal 2.
The proxy accompanying this proxy statement/prospectus, even if executed
and returned, may be revoked by the person executing it if it has not yet been
exercised. To revoke a proxy, the shareholder must file with the Secretary of
Roanoke Gas, at its principal executive offices, either a written revocation or
a duly executed proxy bearing a later date.
Roanoke Gas will bear the cost of soliciting proxies. In addition to the
use of the mails, proxies may be solicited personally or by telephone by
directors, officers and employees of Roanoke Gas. Such directors, officers and
employees of Roanoke Gas receive no compensation therefor other than their
regular remuneration. Also, Roanoke Gas will reimburse brokers, bank nominees
and other institutional holders for their reasonable out-of-pocket expenses in
forwarding proxy soliciting material to the beneficial owners of Roanoke Gas
common stock. In addition, Roanoke Gas has retained William F. Doring and
Company, Inc. to aid in the solicitation of proxies at a fee not to exceed
$3,000, plus reimbursement for out-of-pocket expenses incurred by that firm on
behalf of Roanoke Gas.
The proposal for approval of the holding company reorganization is
considered "non-discretionary," and brokers who have received no instructions
from their clients do not have the authority to vote on the proposal. All
abstentions and broker non-votes will be counted toward the establishment of a
quorum. For purposes of determining whether the reorganization has been
approved, an abstention or broker non-vote WILL NOT be counted as a vote in
favor of adoption of the reorganization and, as a result, will have the effect
of a vote AGAINST Proposal 1.
The affirmative vote of more than two-thirds of the outstanding shares of
Roanoke Gas common stock will be required to approve Proposal 1. Votes withheld
for the election of one or more of the nominees for director will not be
counted as votes cast for or against such individuals. The vote of a plurality
of the shares of Roanoke Gas common stock cast is required for the election of
directors under Proposal 2.
The Board of Directors of Roanoke Gas has unanimously adopted the
Agreement and Plan of Merger and Reorganization, believes the reorganization to
be in the best interests of Roanoke Gas and its shareholders, and recommends
that the holders of Roanoke Gas common stock vote "FOR" the reorganization as
discussed in Proposal 1.
9
In addition, the Board of Directors of Roanoke Gas recommends a vote "FOR"
all director nominees named in Proposal 2.
PROPOSAL 1
APPROVAL OF THE AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
The Board of Directors of Roanoke Gas unanimously believes that it is in
the best interests of Roanoke Gas and its shareholders to reorganize the
company. To effect the reorganization, Roanoke Gas will become a separate
subsidiary of a new parent holding company. The present holders of Roanoke Gas
common stock will hold the common stock of the new parent holding company.
Bluefield Gas Company and Diversified Energy Company, which are presently
subsidiaries of Roanoke Gas, also will become subsidiaries of the new holding
company. Commonwealth Public Service Corporation, a small Virginia public
utility subsidiary of Bluefield, will be merged into Roanoke Gas as part of the
reorganization.
To carry out the reorganization, Roanoke Gas has incorporated two Virginia
corporations, RGC Resources, Inc. and RGC Acquisition Corp. Each of the
corporations has a nominal amount of stock outstanding and no present business
or properties of its own. All of the currently outstanding shares of Resources
common stock, par value $5.00 per share, are owned by Roanoke Gas, and all of
the currently outstanding shares of RGC Acquisition are owned by Resources.
The respective Boards of Directors of each of Roanoke Gas, RGC
Acquisition, Resources, Diversified, Bluefield and Commonwealth have adopted the
Agreement and Plan of Merger and Reorganization. This agreement provides for the
merger of RGC Acquisition into Roanoke Gas. Roanoke Gas shareholders must
approve the reorganization proposal, and additional conditions, including
regulatory approvals, must also be satisfied. The agreement is attached to this
proxy statement/prospectus as Appendix A and is incorporated herein by
reference. After the merger of RGC Acquisition and Roanoke Gas, Roanoke Gas
would become a subsidiary of Resources through the conversion of the outstanding
shares of Roanoke Gas common stock into shares of Resources common stock.
Roanoke Gas shareholders will receive full and fractional shares of Resources
common stock equal to and in exchange for the number of full and fractional
shares of Roanoke Gas common stock held at the effective time of the merger. See
"The Reorganization -- The Agreement."
After the merger, the existing subsidiaries of Roanoke Gas, except
Commonwealth, will be transferred to Resources and will become subsidiaries of
Resources. Commonwealth will be merged into Roanoke Gas. See "The Reorganization
- --Transfer of Roanoke Gas Subsidiaries to Resources."
REASONS FOR THE HOLDING COMPANY STRUCTURE AND REORGANIZATION
The principal reasons for the proposed reorganization are to create a
structure that can more effectively address the increased competition in the
energy industry, refocus various utility activities, facilitate selective
diversification into nonutility businesses, afford further separation between
the utility and nonutility businesses and provide additional flexibility for
financing.
Roanoke Gas' natural gas business competes with other energy sources such
as fuel oil, electricity and coal. Competition is intense among these energy
sources and is based primarily on price and availability. This is particularly
true for industrial applications, where sales are at risk to price competition
in markets that may switch to residual and other fuel oils. In addition,
deregulation in the supply of natural gas has created competition among
suppliers or brokers of natural gas. Marketers are expected to attempt to
provide increasing volumes of natural gas
10
to large users within Roanoke Gas' service territories. As deregulation of the
energy industry continues, Roanoke Gas expects that competition from other fuel
sources, as well as from natural gas brokers and marketers, will intensify.
Roanoke Gas anticipates that, absent any major changes in technology, a
portion of its earnings from natural gas operations may not be required to be
reinvested in the utility business over the next ten to fifteen years. As a
regulated utility, Roanoke Gas operates under constraints of regulatory
authorities, which can limit investments by Roanoke Gas in unregulated
operations. Roanoke Gas is of the view that a holding company structure will
facilitate the deployment of a portion of its earnings that are not needed for
the utility business through investment of those earnings in nonutility
businesses. Nonutility businesses could pursue business opportunities that
potentially could enhance the financial strength and operating results of
Resources. Therefore, in the Board's view, the reorganization will increase
opportunities to broaden Roanoke Gas' financial base and thereby broaden
investment appeal by increasing access to other businesses. To the extent that
diversification succeeds in promoting employment and commerce in the areas
served by Roanoke Gas, the company and its customers and shareholders also will
benefit.
Financing of Roanoke Gas' activities is subject to approval of regulatory
authorities. After the reorganization, financing by Resources and its nonutility
subsidiaries will not require approval of regulatory authorities. This should
increase flexibility in structuring financing. Financing alternatives may also
be enhanced as a result of engaging in a greater number of businesses. The
holding company structure may also permit the structuring of loan facilities
appropriate for the individual nonutility businesses, without affecting the
capital structure of Roanoke Gas.
The holding company structure is designed to further insulate Roanoke Gas'
public utility customers and the public holders of its securities from the risks
of nonutility businesses by segregating the nonutility businesses into separate
corporations that will be direct subsidiaries of the holding company and not of
Roanoke Gas. Because nonutility businesses of the holding company will be
conducted through separate subsidiaries, any liabilities incurred by those
subsidiaries will not constitute liabilities of the utility subsidiaries. The
corporate separation also insures that all costs of a particular nonutility
subsidiary will be charged to that subsidiary and not allocated to any utility
subsidiary.
The holding company structure is intended to afford additional flexibility
for maintaining the capital ratios of Roanoke Gas at levels determined to be
appropriate by regulatory authorities. Roanoke Gas' utility rate structure is
set, from time to time, by the applicable regulatory authorities. Utility rates
are set, in part, based on allowed rates of return and cost of providing
service. A utility's capital structure may significantly influence the level of
rates of return. Therefore, the ability to adjust debt and equity levels the
components of capital structure, will help Roanoke Gas maintain stable utility
rates. One component of utility rates is cost of capital. Equity capital is the
most expensive type of capital, and if the equity component of a utility's
capital structure is too high, it may result in increased pressure to raise
rates. If the equity component is too low, it may result in increases in the
cost of debt because of increased leverage and risk, which will also tend to
increase rates. Under the holding company structure, the equity portion of the
capital ratios of the utility would be subject to adjustment from time to time
through dividends to or equity investments from the holding company. Also, under
the holding company structure, the debt portion of the capital ratios can
similarly be adjusted. Because the holding company itself is not a regulated
utility, it should have greater flexibility in making these adjustments.
Further, the holding company structure will facilitate the planning of
financings best suited to the particular needs and circumstances of the separate
businesses by enabling the capital structure of each subsidiary to be
appropriately tailored to suit its individual business.
The nonutility subsidiaries of Resources should have the flexibility to
use various financing techniques suitable for nonutility businesses without an
impact on the credit of Roanoke Gas, thus improving financing alternatives. It
is anticipated that, in the normal course:
11
o Resources, in addition to receiving dividends from its subsidiaries,
may also obtain funds through debt or equity financings;
o Roanoke Gas may obtain funds through its own financings, including the
issuance of mortgage notes and other debt instruments to third parties,
and through the issuance of additional shares of common stock to the
holding company; and
o the nonutility businesses owned by Diversified may obtain funds from
Resources, from other nonutility affiliates, or from their own outside
financings.
Any financings will depend on the financial and other conditions of the entities
involved and on the market conditions.
At the present time, Roanoke Gas has no specific diversification plans
beyond expanding the propane operation. The Board of Directors of Roanoke Gas
intends that the natural gas operations of Roanoke Gas will continue to
constitute the predominant activity of Resources for the foreseeable future.
Roanoke Gas does not expect any capital impairment of its public utilities or
any adverse affect on their levels of service as a result of the restructuring.
THE REORGANIZATION
The discussion in this proxy statement/prospectus of the Agreement and
Plan of Merger and Reorganization is subject to and qualified in its entirety to
the agreement, a copy of which is attached to this proxy statement/prospectus as
Attachment A and is incorporated herein by reference. However, all material
terms of the Agreement and Plan of Merger and Reorganization are disclosed in
this proxy statement/prospectus.
The Agreement
The Boards of Directors of Roanoke Gas, RGC Acquisition, Resources,
Diversified, Bluefield and Commonwealth have unanimously adopted the Agreement
and Plan of Merger and Reorganization. The holders of more than two-thirds of
the outstanding shares of Roanoke Gas common stock must also approve the
agreement. See "Vote Required" below.
The first step in the reorganization is the merger. In the merger:
o each share of Roanoke Gas common stock outstanding immediately prior to
the effective time of the merger will be converted into an equal number
of new shares of Resources common stock;
o Resources will become the owner of all outstanding shares of Roanoke
Gas common stock; and
o the shares of Resources common stock held by Roanoke Gas immediately
prior to the merger will be canceled.
As a result, Resources will become a holding company with Roanoke Gas as its
wholly owned subsidiary. All of the Resources common stock outstanding
immediately after the merger will be owned by the former holders of Roanoke Gas
common stock outstanding immediately prior to the merger.
Immediately after completion of the merger, Commonwealth will be merged
into Roanoke Gas, and Bluefield and Diversified will be transferred to
Resources, which will then hold both as wholly owned subsidiaries.
See "Transfer of Roanoke Gas Subsidiaries to Resources" below.
12
Debt of Roanoke Gas will continue as outstanding obligations of Roanoke
Gas after the reorganization. Resources may, however, be required to guarantee
Roanoke Gas' payment and performance of Roanoke Gas' outstanding mortgage notes.
Vote Required
Under Virginia law, the affirmative vote of the holders of record of more
than two-thirds of the outstanding shares of Roanoke Gas common stock on the
Record Date is required to approve the reorganization. Because the requirement
for Proposal 1 is the affirmative vote of more than two-thirds of the
outstanding shares, broker non-votes and abstentions will have the effect of a
"no" vote.
Regulatory Approvals
The reorganization cannot be consummated unless and until all federal and
state approvals, authorizations and consents are obtained on conditions
acceptable to the Board of Directors of Roanoke Gas.
The Public Utility Holding Company Act of 1935. Roanoke Gas and Resources
must obtain from the SEC Office of Public Utility Regulation an order approving
the reorganization. Roanoke Gas and Resources, filed a joint application on Form
U-1 with the SEC on October 16, 1998. That application currently is pending. As
a result of the reorganization, Resources will become a "public utility holding
company" under the Public Utility Act. Per the agreement and simultaneously
with the effectiveness of the reorganization, Resources will file with the SEC
an exemption statement to exempt itself and its subsidiaries from all provisions
of the Public Utility Act, except with respect to certain acquisitions and
investments, under the "intrastate" exemption provided by Section 3(a) (1).
Resources and its material public utility subsidiaries are predominantly
intrastate in character and carry on their business in Virginia, the state in
which Resources and every material subsidiary is organized. See "Risk Factors
- --Regulation as a Public Utility Holding Company;" and "Regulation of Resources
and Roanoke Gas and Certain Subsidiaries After the Reorganization."
Virginia Law. Under Virginia laws governing public utilities, any
transaction involving transfer of utility stock must be approved in advance by
the Virginia Commission. On October 21, 1998, Roanoke Gas submitted an
application seeking the Virginia Commission's approval of the merger and
reorganization and the affiliated interests arising therefrom. On January 19,
1999, the Virginia Commission issued an order approving Roanoke Gas'
application.
West Virginia Law. Under West Virginia law governing public utilities, any
transaction involving the transfer of utility stock must be approved by the West
Virginia Commission. On October 21, 1998, Bluefield Gas submitted information
requesting the West Virginia Commission's approval of the merger and
reorganization and the affiliated interests arising therefrom. On January 18,
1999, the West Virginia Commission issued a final order approving Bluefield Gas'
application.
Accounting Treatment
The accounting treatment for the reorganization will be based on
non-cash, non-taxable transactions, with resulting assets and liabilities
recorded at historical cost amounts. The merger of Commonwealth into Roanoke Gas
will result in a credit to plant account and debit to equity accounts on the
books of Bluefield. The related entry on Roanoke Gas' books will be a debit to
plant accounts and a credit to equity accounts.
The transfer of Diversified from Roanoke Gas to RGC Resources will result
in a debit to equity accounts on the books of Roanoke Gas and a credit to equity
accounts on the books of RGC Resources. The transfer of Bluefield to the books
of RGC Resources will likewise result in a debit to the equity accounts of
Roanoke Gas and a credit to the equity accounts of RGC Resources.
13
Conditions to Effectiveness of the Reorganization
In addition to approval of the agreement by Roanoke Gas shareholders, the
reorganization is subject to the satisfaction of the following conditions:
(1) the receipt of all necessary orders, authorizations, consents,
approvals or waivers from the Virginia Commission, the West
Virginia Commission, the SEC, and any other third parties.
Such approvals must remain in full force and effect, and may
not include conditions that the Board of Directors of Roanoke
Gas deems unacceptable; and
(2) listing on the Nasdaq National Market of shares of Resources
common stock.
After each of these conditions are satisfied, the reorganization will
become effective when the Virginia Commission issues Articles of Merger under
the Virginia Stock Corporation Act (the "Effective Time"). Roanoke Gas cannot
predict if or when the conditions to effectiveness of the merger will be
satisfied, but Roanoke Gas currently is working to complete the merger and
reorganization during the Summer of 1999.
Exchange of Stock Certificates
When the reorganization becomes effective, Resources will automatically
send holders of Roanoke Gas common stock documents and instructions for the
physical exchange of their existing stock certificates for certificates of
Resources common stock. Upon the Effective Time, certificates previously
representing shares of Roanoke Gas common stock will represent only the right of
the registered holder to receive shares of Resources common stock. At the
Effective Time, Resources will issue and deliver to the transfer agent
certificates representing shares of Resources common stock into which
outstanding shares of Roanoke Gas common stock have been converted. Promptly
after the Effective Time, Resources will send to each Roanoke Gas shareholder of
record immediately prior to the Effective Time written instructions and
transmittal materials for use in surrendering Roanoke Gas stock certificates to
the transfer agent. There is no time limit to exchange the shares. Roanoke Gas
shareholders should NOT send in their stock certificates to the transfer agent
until they receive the transmittal letter after the Effective Time.
Resources also will send to brokers, banks and other nominee record
holders of Roanoke Gas common stock appropriate instructions and transmittal
materials for use in surrendering Roanoke Gas stock certificates to the transfer
agent, so that the shares held by such record holders on behalf of beneficial
owners of Roanoke Gas common stock can be exchanged for the shares of Resources
common stock.
After a former shareholder of Roanoke Gas properly surrenders the
shareholder's stock certificate along with a completed transmittal letter to
the transfer agent, the transfer agent will issue, register and deliver to the
shareholder a Resources common stock certificate. The holder of record of
Roanoke Gas common stock at the Effective Time, or someone on the holder's
behalf, must surrender the Roanoke Gas certificate representing the shares.
After the Effective Time, there will be no further transfers of Roanoke Gas
stock on the stock transfer books of Roanoke Gas nor the registration of any
transfer of a Roanoke Gas certificate.
Except as described with respect to lost or otherwise missing certificates
below, the transfer agent will not deliver a Resources common stock certificate
to any former shareholder of Roanoke Gas until the shareholder properly
surrenders the shareholder's Roanoke Gas stock certificate(s) along with a
completed transmittal letter. Furthermore, Resources will not pay dividends or
distributions payable to Resources shareholders to a former Roanoke Gas
shareholder who has not surrendered his or her Roanoke Gas stock certificates.
But, subject to state abandoned property law, when the shareholder properly
surrenders such Roanoke Gas certificate(s), the transfer agent will give the
shareholder a new certificate for the shares of Resources common stock
represented by such Roanoke Gas Certificate(s) along with the amount of any
accrued but unpaid dividends or distributions with respect
14
to such shares. Neither Resources, Roanoke Gas nor the transfer agent has any
obligation to pay any interest on any dividends or distributions for any period
prior to such payment.
Any shareholder of Roanoke Gas whose certificate evidencing shares of
Roanoke Gas common stock has been lost, destroyed, stolen or otherwise is
missing will have the right to receive a certificate representing shares of
Resources common stock under any conditions imposed by the transfer agent or
Resources, which may include a requirement that the shareholder provide a lost
instrument indemnity or surety bond in form, substance and amount satisfactory
to the transfer agent and Resources.
Transfer of Roanoke Gas Subsidiaries to Resources
As part of the reorganization, Bluefield will, by noncash dividend, give
to Roanoke Gas all of the outstanding stock of Commonwealth. Commonwealth then
will be merged into Roanoke Gas. Roanoke Gas will then, by noncash dividend,
give to Resources all of the outstanding stock of Bluefield and Diversified.
After the reorganization, Resources will be the parent holding company of three
corporations: Roanoke Gas (with Commonwealth merged in), a Virginia public
utility, Bluefield, a West Virginia public utility, and Diversified, a
nonutility subsidiary. See "Business of Roanoke Gas and Resources."
Roanoke Gas is not proposing to exchange of any of its outstanding
mortgage notes, debentures and senior notes of Roanoke Gas due to the
reorganization. Immediately after the merger, Resources will have no outstanding
securities other than common stock. Resources may, however, be required to
guarantee Roanoke Gas' payment and performance of Roanoke Gas' outstanding
mortgage notes. Holders of Roanoke Gas mortgage notes, debentures and senior
notes will continue as security holders of Roanoke Gas.
Dividend Reinvestment and Stock Purchase Plan
Under the agreement, shares of Roanoke Gas common stock held in the
Roanoke Gas Dividend Reinvestment and Stock Purchase Plan at the Effective Time,
including uncertificated whole and fractional shares, will automatically be
converted into an equal number of shares of Resources common stock. At the
Effective Time, Resources will succeed to the Plan as in effect immediately
prior to the Effective Time, and shares of Resources common stock will be issued
under the Plan on and after the Effective Time. Resources will file an
post-effective amendment to the Roanoke Gas registration statement for the Plan
shortly after the Effective Time. In addition to amending the Plan to reflect
Resources as the successor to the Plan, Roanoke Gas also intends to amend the
Plan to permit purchase of shares by the plan agent in the open market and to
increase the maximum optional cash payment under the Plan to $30,000. This
discussion will serve as written notice to participants in the Plan of our
intent to amend the Plan, as described above, effective at the Effective Time of
the reorganization.
Roanoke Gas Stock Plans
The agreement also provides that the Roanoke Gas Key Employee Stock Option
Plan, the Roanoke Gas Restricted Stock Plan for Outside Directors, and all
other stock, bonus or incentive plans of Roanoke Gas will be amended to provide
for such plans to utilize Resources common stock instead of Roanoke Gas common
stock after the merger.
After the merger, all outstanding stock options under the stock option
plan will be converted into options to acquire Resources common stock. The
terms and conditions of the stock option plan will not otherwise be changed.
Future grants under the stock option plan will be made for Resources common
stock. Resources will file a post-effective amendment to Roanoke Gas'
registration statement for the stock option plan shortly after the Effective
Time.
15
All shares of Roanoke Gas restricted stock held in participant accounts
under the restricted stock plan will be converted into restricted shares of
Resources common stock. The terms and conditions of the restricted stock
plan will not otherwise be changed. Future purchases under the restricted
stock plan will be of Resources common stock.
The preceding discussion will serve as written notice to participants in
the stock option plan, the restricted stock plan and all other stock,
bonus and incentive plans of Roanoke Gas of the Company's intent to amend such
plans, as described above, effective at the Effective Time.
Amendment or Termination of the Agreement
The Boards of Directors of Roanoke Gas, RGC Acquisition, Resources,
Diversified, Bluefield and Commonwealth may amend any of the terms of the
agreement at any time before or after its approval by the holders of Roanoke Gas
common stock and prior to the Effective Time. After the agreement is approved by
Roanoke Gas shareholders, however, the parties cannot amend the agreement in a
manner that would materially and adversely affect the rights of Roanoke Gas
shareholders. Regardless of this approval, if the Board of Directors of Roanoke
Gas determines, in its sole judgment, that consummation of the merger would, for
any reason, be inadvisable or not in the best interests of Roanoke Gas or its
shareholders, the agreement may be terminated and the merger abandoned at any
time prior to the Effective Time.
Listing of Resources Common Stock
Resources is applying to have its common stock listed on the Nasdaq
National Market. It is expected that the listing will be effective at the
Effective Time of the reorganization. The ticker symbol of Resources common
stock will be "RGCO," and quotations will be carried in newspapers as they have
been for Roanoke Gas common stock. Following the reorganization, Roanoke Gas
common stock will no longer be quoted or traded and will be delisted from the
Nasdaq National Market.
Cautionary Statement Concerning Forward-Looking Statements
Roanoke Gas and Resources has each made forward-looking statements in this
document, that are subject to risks and uncertainties. Roanoke Gas and
Resources have also each made forward-looking statements in certain documents
that are incorporated by reference in this proxy statement/prospectus, that are
subject to risks and uncertainties. These statements are based on the beliefs
and assumptions of Roanoke Gas and Resources management, and on information
currently available to such management. Forward-looking statements include, but
are not limited to, the information concerning possible or assumed future
results of operations of Resources, Roanoke Gas and their subsidiaries set forth
under "Questions and Answers about the Reorganization," the "Summary," "Reasons
for the Holding Company Structure and Reorganization" and "Dividend Policy" and
statements preceded by, followed by, or that include the words "believes,"
"expects," "anticipates," "intends," "plans," "estimates" or similar
expressions.
Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. The future results and shareholder values
following the merger and reorganization may differ materially from those
expressed in these forward-looking statements. Many of the factors that will
determine these results and values are beyond the ability of Resources and
Roanoke Gas to control or predict. Shareholders are cautioned not to put undue
reliance on any forward-looking statements. In addition, Resources and Roanoke
Gas do not have any intention or obligation to update forward-looking statements
after they distribute this proxy statement/prospectus, even if new information,
future events or other circumstances have made them incorrect or misleading. For
those statements, Resources and Roanoke Gas claim the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
16
Shareholders of Resources and Roanoke Gas should understand that the
following important factors, in addition to those discussed elsewhere in this
document and the documents that are incorporated by reference into this proxy
statement/prospectus, could affect the future results of Resources and its
subsidiaries after the merger and reorganization, and could cause results to
differ materially from those expressed in such forward-looking statements:
o fluctuations in demand for natural gas and propane attributable to
weather;
o difficulty in obtaining rate increases from regulatory authorities
in adequate amounts and on a timely basis;
o difficulty in earning on a consistent basis an adequate return on
invested capital;
o competition from alternative fuels for industrial and other
significant customers and fluctuations in the prices of oil, which
can make oil less costly than natural gas, and potential increased
future competition resulting from continuing industry deregulation;
o volatility in the supply and price of natural gas and propane;
o some uncertainty in projected rate of growth of natural gas and
propane requirements of the Roanoke Gas' customers;
o increasing expenses and labor costs and availability;
o deregulation or restructuring of the electric and natural gas
industries; and
o general economic conditions, both locally and nationally.
DIVIDEND POLICY
Resources does not now, nor will it immediately after the merger and
reorganization, conduct directly any revenue generating business operations.
Resources plans to initially obtain operating funds primarily from dividends
paid to Resources on the stock of its subsidiaries, and possibly from the sale
of securities or debt incurred by Resources. Initially, dividends on Resources
common stock will depend primarily upon the earnings, financial condition and
capital requirements of Roanoke Gas, and the dividends paid by Roanoke Gas to
Resources. Resources presently expects to continue Roanoke Gas' policy of paying
an appropriate percentage of earnings to shareholders. In the future, dividends
from Resources' subsidiaries other than Roanoke Gas may be a more significant
source of funds for dividend payments by Resources. In addition, although it has
no present intention to do so, Resources may issue preferred stock in the future
to meet its capital requirements. See "Description of Resources Capital Stock --
Authorized Capital -- Preferred Stock." Such preferred stock could have
preferential dividend rights over Resources' common stock.
Resources presently expects to pay quarterly dividends on Resources common
stock at least equal to the rate, and on approximately the same schedule as, the
dividend most recently declared by Roanoke Gas on its common stock. The
quarterly dividend most recently declared by Roanoke Gas' Board of Directors on
Roanoke Gas common stock was $.27 per share, payable February 1, 1999, to
holders of record on January 15, 1999. The payment and amount of dividends,
however, is in the discretion of Resources Board of Directors based on financial
and other factors and cannot be assured. The amount of dividends paid by Roanoke
Gas to Resources following the
17
reorganization is expected to be greater than the amount of dividends Resources
pays on its common stock, as Resources will need funds for its holding company
activities.
FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Woods, Rogers & Hazlegrove, P.L.C., counsel to Roanoke
Gas and Resources, the following are the material federal income tax
consequences of the reorganization based on factual representations:
(1) under Section 354(a) of the Internal Revenue Code of 1986, no
gain or loss will be recognized by a holder of Roanoke Gas common stock upon the
conversion of such holder's Roanoke Gas common stock solely into Resources
common stock;
(2) under Section 358(a) of the Internal Revenue Code of 1986, the
basis of shares of Resources common stock received by a former holder of shares
of Roanoke Gas common stock in the conversion described in (1) above, in the
aggregate, will equal the basis of such shareholder's shares of Roanoke Gas
common stock exchanged therefor, and under Section 1223(1) of the Internal
Revenue Code of 1986, the holding period for such shares of Resources common
stock will include the holding period for shares of Roanoke Gas common stock
exchanged therefor to the extent that such shares of Roanoke Gas common stock
were held as a capital asset at the Effective Time of the merger;
(3) under Section 361(a) of the Internal Revenue Code of 1986, no
gain or loss will be recognized by Resources or Roanoke Gas on account of the
merger or the issuance of shares of Resources common stock to the former holders
of shares of Roanoke Gas common stock under the agreement; and
(4) under Section 1001(a) of the Internal Revenue Code of 1986, a
holder of Roanoke Gas common stock who receives cash with the exercise of
dissenters' rights under Sections 13.1-729 through 13.1-741 of the Virginia Act
will recognize gain or loss equal to the difference, if any, between such
shareholder's basis in the shareholder's Roanoke Gas common stock and the amount
of cash received. Such gain or loss will be eligible for capital gain or loss
treatment if the Roanoke Gas common stock is held by such shareholder as a
capital asset, as defined under Section 1221 of the Internal Revenue Code of
1986^ at the Effective Time. Generally, a capital asset is an asset acquired and
held for investment.
As used in this discussion, the term "basis" means the amount of
investment in the stock for tax purposes. Generally, under Section 1012 of the
Internal Revenue Code of 1986, the basis in stock will be the amount paid for
such stock. Stock acquired by gift, however, generally will have a basis equal
to the donor's basis under Section 1015 of the Internal Revenue Code of 1986.
Further, stock acquired by inheritance generally will have a basis equal to the
fair market of the stock at the date of the decedent's death, under Section 1014
of the Internal Revenue Code of 1986.
As used in this discussion, the term "holding period" has significance in
determining whether the gain realized upon the eventual sale of stock, which
qualifies as a capital asset, is short-term or long-term capital gain. Stock
held for more than one year, when sold for a gain, will be taxed at favorable
capital gain tax rates. Stock held for more than one year when sold at a loss,
will result in a capital loss. Stock held for one year or less, when sold at a
gain, will be taxed at ordinary income tax rates. Stock held for one year or
less, when sold at a loss, will generate an ordinary loss. This reorganization
will not affect the holding period of shares of Roanoke Gas Company as each
holder's holding period in the Roanoke Gas Company stock will be "tacked on" to
the holding period for the Resources stock.
The foregoing discussion is a general summary which does not address tax
consequences that may depend on individual circumstances, and it does not cover
the tax consequences of the reorganization under
18
state, local or foreign income or other tax laws. Each shareholder of Roanoke
Gas is urged to consult with such shareholder's own tax advisors with respect to
the tax effects of the reorganization on such shareholder.
DESCRIPTION OF RESOURCES CAPITAL STOCK
The following statements with respect to Resources capital stock are based
on material provisions of Resources' Articles of Incorporation and Bylaws, as
they will be in effect as of the Effective Time of the reorganization. A copy of
Resources' Articles is attached as Appendix B hereto and is incorporated herein
by reference. Resources' Bylaws are substantially similar to the Bylaws of
Roanoke Gas. The Resources' Bylaws have been filed as an exhibit to the
Registration Statement of which this proxy statement/prospectus is a part, and
are incorporated herein by reference.
Authorized Capital
Resources is authorized to issue up to 15,000,000 shares of capital stock,
consisting of 10,000,000 shares of common stock, $5.00 par value per share, and
5,000,000 shares of preferred stock, no par value per share. As of January 20,
1999, there were 10 shares of Resources common stock issued and outstanding, all
of which are owned by Roanoke Gas. No shares of Resources preferred stock are
issued and outstanding. Immediately after giving effect to the merger,
approximately 1,850,000 shares of Resources common stock and no shares of
Resources preferred stock will be issued and outstanding.
Resources Common Stock. Subject to the prior rights of the holders of any
Resources preferred stock, holders of Resources common stock are entitled to
receive such dividends as may be declared by the Board of Directors out of
legally available funds and, in the event of liquidation or dissolution, to
receive the net assets of Resources remaining after payment of all liabilities
and after payment to preferred stockholders. See "Dividend Policy."
Subject to the rights of any preferred stockholders, all voting rights are
vested in the Resources common stockholders. Each share of common stock is
entitled to one vote on all matters requiring shareholder action and in the
election of directors. Resources common stockholders have no preemptive,
subscription or conversion rights. All of the outstanding shares of Resources
common stock are fully paid and nonassessable, as will be those issued to the
shareholders of Roanoke Gas upon consummation of the merger.
Resources Preferred Stock. The Board of Directors of Resources is
authorized to issue preferred stock in series. Resources' Articles do not
establish voting rights, preferences or other rights with respect to Resources
preferred stock. Resources' Board of Directors is given full authority to
provide for the establishment and/or issuance of any series of preferred stock,
the designation of such series and the preferences, limitations, and relative
rights of the shares of such series, including the following:
o distinctive designation and number of shares comprising such series;
o voting rights, if any, which shares of that series will have;
o the rate of dividends, if any, on the shares of that series;
o whether the shares of that series will be redeemable, and, if so,
the terms and conditions of such redemption;
o whether that series will have a sinking fund for the redemption or
purchase of shares of that series;
19
o the rights to which the holders of the shares of that series will
be entitled in the event of voluntary or involuntary dissolution or
liquidation;
o whether the shares of that series will be convertible into or
exchangeable for cash, shares of stock of any other class or any
other series, indebtedness or other property or rights;
o whether the issuance of any additional shares of such series, or of
any shares of any other series, will be subject to restrictions as
to issuance, or as to the powers, preferences or rights of any such
other series; and
o any other preferences, privileges and powers in relative,
participating, optional, or other special rights and
qualifications, limitations or restrictions of such series.
Each series of Resources preferred stock will rank on a parity as to
dividends and assets with all other series according to the respective dividend
rates and amounts attributable upon voluntary or involuntary liquidation,
dissolution or winding up of Resources fixed for each series and without
preference or priority of any series over any other series. All shares of
Resources preferred stock will rank, with respect to dividends and liquidation
rights, senior to the Resources common stock. The ability of the Board of
Directors to issue Resources preferred stock, while providing flexibility for
possible acquisitions and other corporate purposes, could, among other things,
adversely affect the voting power of holders of Resources common stock, and,
under certain circumstances, may discourage an attempt by others to gain control
of Resources. See "Change in Control Provisions" below.
Change in Control Provisions
It is not the intent of Resources' Board of Directors to discourage
legitimate offers to enhance shareholder value. Certain provisions of Resources'
Articles listed below, however, may have the effect of discouraging unilateral
tender offers or other attempts to acquire the business of Resources. These
provisions currently apply to Roanoke Gas shareholders.
o The Board is divided into three classes, as nearly equal in number
as possible, each of which serves for three years, with one class
being elected each year.
o Directors may be removed only for cause.
o Any vacancy on the Board of Directors or newly-created directorships
may be filled by a majority of the remaining directors then in
office, even if less than a quorum.
o The number of directors may not be less than seven nor more than
eleven.
These provisions might discourage a potentially interested purchaser from
attempting a unilateral takeover bid for Resources on terms that some
shareholders might favor. If they discourage potential takeover bids, these
provisions might limit the opportunity for Resources' shareholders to sell their
shares at a premium.
In addition, Resources' Articles, like those of Roanoke Gas, do not
provide for cumulative voting in the election of directors. Cumulative voting
permits shareholders to multiply their number of votes by the total number of
directors being elected and to cast their total number of votes for one or more
candidates.
The Bylaws of Resources also include provisions setting forth specific
conditions and restrictions under which business may be transacted at meetings
of shareholders. For example, no business may be transacted at a meeting unless:
20
o such business is specified in the notice of meeting;
o otherwise brought before the meeting by or at the direction of the
Board; or
o brought before the meeting by a shareholder of record who provided
notice in writing to the President not less than 60 days nor more
than 90 days prior to the meeting.
These provisions may create an anti-takeover effect by placing restrictions on
the content of the issues to be discussed at a shareholder meeting.
In addition, the issuance of authorized but unissued shares of Resources
common stock or Resources preferred stock in certain instances may have an
anti-takeover effect. Such shares might be issued by the Board of Directors
without shareholder approval in transactions that might prevent or render more
difficult or costly the completion of a takeover transaction, such as by
diluting voting or other rights of the proposed acquirer. In this regard,
Resources' Articles grant the Board of Directors broad power to establish the
rights and preferences of the authorized and unissued preferred stock, one or
more classes or series of which could be issued entitling holders to vote
separately as a class on any proposed merger or consolidation, to convert such
stock into shares of Resources common stock or possibly other securities, to
demand redemption at a specified price under prescribed circumstances related to
a change of control, or to exercise other rights designed to impede a takeover.
See "Certain Differences in Rights of Roanoke Gas And Resources
Shareholders."
Shareholder Protection Statutes
The Virginia Act includes two shareholder protection statutes, the
Affiliated Transactions Statute and the Control Share Acquisitions Statute,
which will apply to Resources after the Effective Time.
The Affiliated Transactions Statute restricts certain transactions
between a Virginia corporation having more than 300 shareholders of record and
a beneficial owner of more than 10% of any class of voting stock. An affiliated
transaction is defined in the Virginia Act as any of the following transactions
with or proposed by an interested shareholder: a merger; a share exchange;
certain dispositions of assets or guaranties of indebtedness other than in the
ordinary course of business; certain significant securities issuances;
dissolution of the corporation; or reclassification of the corporation's
securities. Under the statute, an affiliated transaction generally requires the
approval of a majority of disinterested directors and two-thirds of the voting
shares of the corporation other than shares owned by an interested shareholder
during a three-year period commencing as of the date the interested shareholder
crosses the 10% threshold. This special voting provision does not apply if a
majority of disinterested directors approved the acquisition of the more than
10% interest in advance. After the expiration of the three-year moratorium, an
interested shareholder may engage in an affiliated transaction only if it is
approved by a majority of disinterested directors or by two-thirds of the
outstanding shares held by disinterested shareholders, or if the transaction
complies with certain fair price provisions. This special voting rule is in
addition to, and not in lieu of, other voting provisions contained in the
Virginia Act and the Articles of Resources.
The Control Share Acquisitions Statute provides that, with respect to
Virginia corporations having 300 or more shareholders of record, shares acquired
in a transaction that would cause the acquiring person's aggregate voting power
to meet or exceed any of three thresholds (20%, 33-1/3% or a majority) have no
voting rights unless such rights are granted by a majority vote of the shares
not owned by the acquiring person or any officer or employee-director of the
corporation. The statute sets out a procedure whereby the acquiring person may
call a special shareholder's meeting for the purpose of considering whether
voting rights should be conferred. Acquisitions as part of a merger or share
exchange to which the corporation is a party and acquisitions as part of a
tender or exchange offer arising out of an agreement to which the corporation is
a party are exempt from the statute.
21
Application of the Affiliated Transactions and Control Share Acquisitions
statutes are automatic unless a corporation takes certain steps to "opt out" of
their application. Resources has not "opted out" of the statutes.
Transfer Agent and Registrar
The transfer agent and Registrar for Resources is First Union National
Bank of North Carolina, Corporate Trust Client Services, N.C. - 1153, 1525 West
W. T. Harris Boulevard - 3C3, Charlotte, North Carolina 28288- 1153.
After the reorganization, Resources intends to furnish to its shareholders
annual reports containing audited financial statements and quarterly reports
containing unaudited financial information.
INDEMNIFICATION AND LIMITATION OF LIABILITY
Resources' Articles contain a provision that, subject to certain
exceptions described below, eliminates the liability of a director or officer to
Resources or to its shareholders for monetary damages for any breach of duty as
a director or officer to the full extent allowed by Virginia law. This provision
does not eliminate such liability to the extent that it is proved that the
director or officer engaged in willful misconduct or a knowing violation of
criminal law or of any federal or state securities law.
Resources' Articles also require Resources to indemnify any director or
officer who is or was a party to a proceeding, including a proceeding by or in
the right of Resources, by reason of the fact that he or she is or was such a
director or officer or is or was serving at the request of Resources as a
director, officer, employee or agent of another entity. A director or officer of
Resources is entitled to be indemnified against all liabilities and expenses
incurred by the director or officer in the proceeding, except such liabilities
and expenses as are incurred because of his or her willful misconduct or knowing
violation of the criminal law. Unless a determination has been made that
indemnification is not permissible, a director or officer also is entitled to
have Resources make advances and reimbursement for expenses prior to final
disposition of the proceeding upon receipt of a written undertaking from the
director or officer to repay the amounts advanced or reimbursed if it is
ultimately determined that he or she is not entitled to indemnification. The
Board of Directors of Resources also has the authority to extend to any person
who is an employee or agent of Resources, or who is or was serving at the
request of Resources as a director, officer, employee or agent of another
entity, the same indemnification rights held by directors and officers, subject
to all of the accompanying conditions and obligations.
The Virginia Act permits a court, upon application of a director or
officer, to review Resources' determination as to a director's or officer's
request for advances, reimbursement or indemnification. If it determines that
the director or officer is entitled to such advances, reimbursement or
indemnification, the court may order Resources to make advances and/or
reimbursement for expenses or to provide indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling
Resources under the foregoing provisions, Resources has been informed that in
the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
22
CERTAIN DIFFERENCES IN RIGHTS OF ROANOKE GAS
AND RESOURCES SHAREHOLDERS
Roanoke Gas and Resources are both Virginia corporations. When the
reorganization becomes effective, holders of Roanoke Gas common stock will
become holders of Resources common stock, and their rights will be governed by
Resources' Articles and Bylaws instead of those of Roanoke Gas.
Material differences between the rights of holders of Resources common
stock and those of holders of Roanoke Gas common stock are summarized below.
This summary is qualified in its entirety by reference to the information
included in the exhibits to this proxy statement/prospectus, in exhibits to the
Registration Statement of which this proxy statement/prospectus is a part, and
in materials incorporated herein by reference.
Authorized Common Stock
The number of authorized shares of Roanoke Gas common stock and Resources
common stock is 3,000,000 and 10,000,000 shares, respectively. As of the Record
Date for the Annual Meeting, there were 1,805,006 shares of Roanoke Gas common
stock issued and outstanding and held by 1,830 shareholders of record.
Approximately 1,850,000 shares of Resources common stock may be issued in the
reorganization. The additional authorized but unissued shares of Resources
common stock will be available for issuance under existing dividend
reinvestment, stock purchase, bonus and incentive plans, as well as possibly for
stock splits, stock dividends, equity financings, and for other general
corporate purposes, including, possibly, acquisitions, none of which is under
current consideration. See "Capital Stock of Resources."
Authorized Preferred Stock
Roanoke Gas presently has no authorized preferred stock. There are
5,000,000 authorized shares of Resources preferred stock, all of which are
unissued.
Management believes that the ability to issue Resources preferred stock
will provide important flexibility, although it has no present plans to issue
preferred stock.
Director and Officer Exculpation
Resources' Articles provide for the limitation or elimination of personal
liability of directors or officers of Resources to the fullest extent permitted
by the Virginia Act. Under the Virginia Act, that limitation of liability does
not apply if the director or officer engaged in willful misconduct or a knowing
violation of criminal law or any federal or state securities law. See
"Indemnification and Limitation of Liability."
Roanoke Gas' Articles do not contain specific provisions limiting or
eliminating the personal liability of directors or officers of Roanoke Gas.
Accordingly, under the Virginia Act, the liability of a director or officer of
Roanoke Gas, as a director or officer of Roanoke Gas, would be the greater of
$100,000 or the amount of compensation received by the director or officer in
the twelve months preceding the act or omission giving rise to the liability.
Indemnification of Officers and Directors
Resources' Articles provide for indemnification of an officer, director,
employee or agent as set out under "Indemnification and Limitation of
Liability." Resources Articles prohibit indemnification in the case of willful
misconduct or a knowing violation of the criminal law, but permits
indemnification for gross negligence under certain circumstances.
23
Roanoke Gas' Bylaws contain provisions indemnifying directors, officers,
employees and agents of Roanoke Gas in certain circumstances against expenses,
judgements, fines and amounts paid in settlement. The Roanoke Gas Bylaws
prohibit indemnification in the case of gross negligence or willful misconduct.
Director Nominations and Shareholder Proposals
Resources' Bylaws establish procedures in addition to the requirements
provided by statute that must be followed for shareholders to submit a proposal
to a vote of shareholders of Resources at a meeting of shareholders. Such
proposal must be made by delivering written notice to the President of Resources
not less than sixty nor more than ninety days prior to the meeting; provided,
however, that if less than seventy days' notice of the date of the meeting is
given, such written notice by the shareholder must be delivered not later than
the tenth day after the day on which such notice of the date of the meeting was
given. Notice will be deemed to have been given more than seventy days prior to
the meeting if a meeting is called on the fourth Monday of January, or if such
date falls on a legal holiday, the next business day, regardless as to when
public disclosure is made. The shareholder proposal notice must set forth:
o a brief description of the proposal and the reasons for its
submission;
o the name and address of the shareholder, as they appear on Resources'
books;
o the classes and number of shares of Resources owned by the
shareholder; and
o any material interest of the shareholder in such proposal other than
such holder's interest as a shareholder of Resources.
The chairman of the meeting will, if the facts warrant, determine that a
shareholder proposal was not made under the procedures prescribed by the
Bylaws, and the defective shareholder proposal will be disregarded.
Neither the Articles nor Bylaws of Roanoke Gas establish any procedures in
addition to the requirements provided by statute that must be followed for
shareholders to submit a proposal to a vote of the shareholders of Roanoke Gas.
BUSINESS OF ROANOKE GAS AND RESOURCES
Roanoke Gas
Roanoke Gas, a Virginia public service company, is engaged in the retail
distribution and sale of natural gas to approximately 49,000 customers in
Roanoke, Virginia and surrounding areas in Virginia. Roanoke Gas' service area
includes the cities of Roanoke and Salem, Virginia, and surrounding regions in
Virginia, including Roanoke County and portions of Bedford, Botetourt, Franklin
and Montgomery counties, Virginia. Bluefield, a West Virginia public service
corporation, is a wholly owned subsidiary of Roanoke Gas. Bluefield provides
natural gas service to approximately 4,100 customers located in and around
Bluefield, West Virginia. Bluefield's service area extends from Princeton, West
Virginia to the western most city limits of Bluefield, West Virginia. Bluefield
owns all of the issued and outstanding stock of Commonwealth, a Virginia public
service corporation, which serves approximately 925 customers in Bluefield,
Virginia and surrounding areas in Virginia. Commonwealth's service area includes
principally the Town of Bluefield, Virginia and a portion of Tazewell County,
Virginia. Unless otherwise specified, Roanoke Gas, Bluefield and Commonwealth
will be referred to in this Section as the "Natural Gas Companies." Roanoke Gas
also distributes and sells propane and propane related products to customers in
southwestern Virginia and southern West Virginia through its wholly owned
Virginia subsidiary, Diversified, which is not a regulated public utility.
24
Natural Gas Distribution Operations. As of September 30, 1998, the public
utility operations of the Natural Gas Companies served approximately 53,100
natural gas customers through an operationally integrated natural gas
distribution system. Natural gas is purchased from suppliers and distributed to
residential, commercial and large industrial users through the underground
pipeline system of the Natural Gas Companies. Of revenues from regulated gas
operations during fiscal 1998, approximately 59% was derived from residential
customers and 41% was derived from commercial and industrial customers. The
utility operations of the Natural Gas Companies served approximately 48,265
residential customers and approximately 5,317 industrial and commercial
customers in fiscal 1998.
As of September 30, 1998, the consolidated utility plant account of the
Natural Gas Companies, net of accumulated depreciation, was stated at
$47,016,086, its consolidated operating revenues on that date totaled
$51,857,052 and the consolidated net capital applicable to its common stock was
$23,650,912.
Supervision and Regulation. Natural gas distribution operations are
subject to regulation at the federal and state levels. Gas transmission between
Bluefield and Commonwealth is regulated by the Federal Energy Regulatory
Commission, which regulates the prices, terms and conditions of interstate
pipeline transportation and sales of natural gas. Roanoke Gas and Bluefield are
exempt holding companies under Section 3(a)(2) of the Public Utility Act and
annually file Forms U-3A-2 with the SEC. At the state level, Roanoke Gas and
Commonwealth are regulated by the Virginia Commission, and Bluefield is
regulated by the West Virginia Commission. The Virginia Commission and the West
Virginia Commission regulate various matters, including rates charged for
services, financings, planning and safety matters. The Virginia Commission also
grants certificates of public convenience and necessity to distribute natural
gas in the Commonwealth of Virginia. In addition, certain municipalities and
localities grant franchises for the placement of natural gas distribution
pipelines and the operation of a natural gas distribution network for Roanoke
Gas, Commonwealth and Bluefield.
Roanoke Gas and Commonwealth currently hold the only franchises and
certificates of public convenience and necessity to distribute natural gas in
their respective Virginia service areas. The franchises generally extend for
multi-year periods and are renewable by the municipalities. Certificates of
public convenience and necessity, which are issued by the Virginia Commission,
are of perpetual duration, subject to compliance with regulatory standards.
Bluefield holds the only franchise to distribute natural gas in its West
Virginia service area. The West Virginia franchises will expire on August 22,
2009. The Virginia franchises will expire on December 31, 2015. Management
anticipates that it will be able to renew these franchises upon expiration.
Natural Gas Supplies and Storage. In fiscal 1998, Roanoke Gas delivered
approximately 9.8 BCF of natural gas to its customers. The Natural Gas
Companies currently use long-term (one year or longer), mid-term (one month to
one year) and spot (less than one month) gas purchase contracts to meet its
system requirements. Roanoke Gas has an estimated current peak day firm
requirement of 94,000 decatherms of natural gas. Bluefield and Commonwealth
currently have an estimated combined current peak day firm requirement of 13,500
decatherms of natural gas.
Roanoke Gas also maintains a liquefied natural gas storage facility
located in Botetourt County, Virginia. This facility is capable of storing up to
220,000 decatherms of natural gas for use during peak winter periods. In
addition, Roanoke Gas and Bluefield have contracted for storage reserves
providing a combined total of 2.7 BCF of underground storage capacity.
Columbia Gas Transmission Corporation and Columbia Gulf Transmission
Corporation (together "Columbia") are the Company'sNatural Gas Companies' primary
transporter of natural gas. Columbia historically has delivered approximately
two-thirds of Roanoke Gas' gas supply and 100% of Bluefield's gas supply. East
Tennessee Natural Gas Company and Tennessee Gas Pipeline Company (together "East
Tennessee") are the other major source of supply for the Natural Gas Companies.
Historically, East Tennessee has delivered approximately
25
one-third of this
25
natural gas supply. The rates paid for natural gas
transportation and storage services purchased from Columbia and East Tennessee
are established by tariffs approved by the Federal Energy Regulatory Commission.
These tariffs contain flexible pricing provisions which, in some instances,
authorize these suppliers to reduce rates and charges to meet price competition.
Nonutility Subsidiary. Roanoke Gas owns 100% of the voting common stock of
Diversified, a Virginia nonpublic utility corporation headquartered in Roanoke,
Virginia. Diversified serves approximately 11,000 active propane accounts in
southwestern Virginia and southern West Virginia. Diversified's propane
distribution activities are not subject to any federal or state pricing
regulation. In addition to propane operations, Diversified maintains a natural
gas marketing business which assists large industrial customers in the purchase
of natural gas.
Additional Information. Financial and additional information regarding
Roanoke Gas and its subsidiaries is included in the 1998 Annual Report to
Shareholders delivered with this proxy statement/prospectus and in the Roanoke
Gas Annual Report on Form 10-K for the fiscal year ended September 30, 1998,
which is incorporated by reference herein. See "Where You Can Find More
Information."
Resources
Resources is a wholly owned subsidiary of Roanoke Gas and was incorporated
on July 31, 1998, for the purpose of accomplishing the proposed merger and
reorganization. Resources owns all of the outstanding common stock of RGC
Acquisition, a Virginia corporation which was formed on August 12, 1998, also
for the purpose of accomplishing the merger and reorganization. Neither
Resources nor RGC Acquisition owns any utility assets or engages in any
business, or is a holding company under the Public Utility Act.
REGULATION OF RESOURCES AND ROANOKE GAS
AND CERTAIN SUBSIDIARIES AFTER THE REORGANIZATION
Regulation of Resources
As a result of the reorganization, Resources will become a "public utility
holding company" under the Public Utility Act. Simultaneously with the
effectiveness of the reorganization, Resources will file with the SEC an
exemption statement to exempt itself and its subsidiaries from all provisions of
the Public Utility Act, except with respect to certain acquisitions and
investments, under the "intrastate" exemption in Section 3 (a) (1). To maintain
this exemption, Resources will be required to file a statement annually with the
SEC. The exemption may be revoked by the SEC if a substantial question of law or
fact exists as to whether Resources is within the parameters of the exemption,
or if it appears that the exemption may be detrimental to the public interest or
the interest of investors or consumers. If such exemption is revoked and
Resources must register as a public utility holding company under the Public
Utility Act, Resources' activities will be subject to significant additional
regulatory supervision, limitations and restrictions by the SEC. This could
materially adversely affect Resources' operations and ability to grow and
diversify its nonutility businesses and to diversify its businesses outside of
the Commonwealth of Virginia. See "Risk Factors -- Regulation as a Public
Utility Holding Company."
Resources believes that it will be exempt from all provisions of the
Public Utility Act except Section 9(a) (2). Section 9(a) (2) requires SEC
approval of the direct or indirect acquisition by Resources of five percent or
more of the voting securities of any other public utility company. There are
also presently limits on the extent to which Resources and its nonutility
subsidiaries, even if exempt under the intrastate exemption, can enter into
businesses which are not "functionally related" to the public utility business
without raising potential issues about Resources' exempt status. Therefore, even
exempt companies are limited by the Public Utility Act with respect to their
ability to diversify into nonutility businesses. SEC policies regarding the
scope of permissible nonutility
26
activities of an exempt public utility holding company are subject to change,
but under current law, Resources would be required to remain engaged primarily
and predominantly in the public utility business in the Commonwealth of
Virginia, which could limit other activities in which Resources might wish to
engage. Consequently, these limits on nonutility activities of a public holding
company could limit the ability of Resources to invest in other businesses and
pursue nonutility related business opportunities.
In 1994, the SEC issued a release soliciting the views of interested
parties on a study being conducted by its staff to develop recommendations
regarding certain Congressional concerns and the needs of those affected by
regulation under the Public Utility Act. In June 1995, the staff completed its
study and issued a report which concluded that significant changes were needed
in the current regulatory scheme. The SEC staff report viewed the Public Utility
Act as unnecessarily restrictive in many regards which could prevent companies
from responding effectively to changes now occurring in the utility industry.
Among the staff report's recommendations were three legislative options for the
SEC to offer to Congress: repeal of the Public Utility Act with legislation to
continue federal protection of consumers; unconditional repeal of the Public
Utility Act; or broadening of the SEC's authority to exempt holding companies
where state regulation is adequate. Pending legislative action, the staff report
recommended that the SEC act administratively to modernize and simplify holding
company regulation, reduce delays in current administration and minimize
regulatory overlap, including rulemaking proposals and significant changes in
the SEC's past interpretations under the Public Utility Act. One of these
proposals was a rule to exempt most energy-related diversification within
investment limitations. On March 24, 1997, Rule 58 under the Public Utility Act
was amended to exempt from the requirements of prior approval by the SEC under
Section 9(a) of the Public Utility Act the acquisition of securities of certain
varieties of "energy related companies" subject to aggregate investment limits
by registered companies.
Legislation to repeal the Public Utility Act has been introduced in
Congress from time to time. Neither Resources nor Roanoke Gas can predict
whether Congress will take any action to significantly modify the Public Utility
Act or whether the SEC will take action to further revise or modify
significantly its the Public Utility Act rules, decisions and interpretations.
Regulation of Roanoke Gas and Bluefield Gas
Following completion of the reorganization, the activities of Roanoke Gas
will continue to be subject to affirmative regulation by the Virginia
Commission, and the activities of Bluefield Gas will continue to be subject to
affirmative regulation by the West Virginia Commission. In particular,
transactions between Roanoke Gas and any other entity, including Resources,
which is an "affiliated interest" of Roanoke Gas within the meaning of the
applicable Virginia statutes is subject to prior approval by the Virginia
Commission. Similarly, any contract between Bluefield and an affiliate requires
the prior consent of the West Virginia Commission. These statutes enable the
state regulators effectively to delineate and control the allocation of holding
company assets to assure that such assets are not used in a fashion deemed
inappropriate or detrimental to the public utility system and its customers. The
Virginia Commission and the West Virginia Commission each has full authority to
investigate public utilities for purposes of determining efficiency and economy
of operation, to conduct continuing reviews and audits and to issue appropriate
directives. The Virginia Commission and the West Virginia Commission each
reviews cost allocations and, in every rate case, requires the public utility to
submit substantial data to support both rate-based components and cost
components between or among divisions, utility or nonutility.
27
RIGHT OF DISSENTING SHAREHOLDERS TO RECEIVE PAYMENT FOR SHARES
Roanoke Gas common stockholders entitled to vote on approval of Proposal 1
will be entitled to have the fair value of their shares immediately prior to the
consummation of the merger, paid in cash, together with any interest, if any, by
complying with the provisions of Article 15 of the Virginia Act. Under Article
15, the determination of the fair value of a dissenter's shares would exclude
any appreciation or depreciation in the value of such shares in anticipation of
the merger, unless the exclusion would be inequitable.
A Roanoke Gas common stockholder who desires to exercise his or her
dissenters' rights must deliver a written notice and cannot vote FOR Proposal 1.
A written notice of such holder's intent to demand payment for his or her shares
must be delivered to Roanoke Gas before the taking of the vote on approval of
the Proposal. This written notice must be in addition to and separate from
voting against, abstaining from voting, or failing to vote on approval of
Proposal 1. Voting against, abstaining from voting or failing to vote on
approval of Proposal 1 will not constitute written notice of an intent to demand
payment within the meaning of Article 15.
A Roanoke Gas common stockholder electing to exercise dissenters' rights
under Article 15 must not vote for approval of Proposal 1. Voting for approval
of Proposal 1, or delivering a proxy for the Annual Meeting, ^willwill constitute a
waiver of such holder's dissenters' rights and will nullify any written notice
of an intent to demand payment, unless the proxy specifies a vote against, or
abstaining from voting on, approval of Proposal 1.
A holder of record of Roanoke Gas common stock may assert dissenters'
rights as to less than all of the shares registered in the holder's name only if
the holder dissents with respect to all shares beneficially owned by any one
person and notifies Roanoke Gas in writing of the name and address of each
person on whose behalf the holder is asserting dissenters' rights. The rights of
a partial dissenter under Article 15 are determined as if the dissenting shares
and the holder's other shares were registered in the names of different
shareholders.
A beneficial holder of Roanoke Gas common stock may assert dissenters'
rights as to shares held on such holder's behalf only if such holder:
o submits to Roanoke Gas the record holder's written consent to the
dissent not later than the time the beneficial holder asserts
dissenters' rights; and
o does so with respect to all shares of which such holder is the
beneficial holder or over which such holder has the power to direct
the vote.
After the merger, Roanoke Gas will, within ten days after the Effective
Time, deliver a dissenters' notice to all holders who satisfied the foregoing
requirements. The notice will:
o state where payment demand is to be sent and where and when
certificates for dissenting shares are to be deposited;
o supply a form for demanding payment that includes the date of the
first announcement to news media of the reorganization, April 27,
1998, and requires that the person asserting dissenters' rights
certify whether or not such person acquired beneficial ownership of
such person's dissenting shares before or after such date;
o set a date by which Roanoke Gas must receive the payment demand,
which date may not be less than thirty nor more than sixty days
after the date of delivery of the dissenters' notice; and
o be accompanied by a copy of Article 15.
28
A shareholder sent a dissenters' notice must demand payment, certify that
such holder acquired beneficial ownership of such holder's dissenting shares
before, on or after April 27, 1998, and deposit the certificates representing
such holder's dissenting shares per the dissenters' notice. A shareholder who
deposits such holder's shares as described in the dissenters' notice retains all
other rights as a holder of Roanoke Gas common stock except to the extent such
rights are canceled or modified by the consummation of the merger. A shareholder
who does not demand payment and deposit his share certificates where required,
each by the date set forth in the dissenters' notice, is not entitled to payment
for such holder's shares under Article 15.
Except as provided below with respect to after-acquired shares, within
thirty days after receipt of a payment demand, Roanoke Gas must pay the
dissenter the amount that Roanoke Gas estimates to be the fair value of the
dissenter's shares, plus accrued interest. The obligation of Roanoke Gas to make
such payment may be enforced by the Circuit Court for the City of Roanoke,
Virginia, or, at the election of any dissenter residing or having its principal
office in Virginia, by the circuit court in the city or county where the
dissenter resides or has the office. The payment by Roanoke Gas will be
accompanied by:
o Roanoke Gas' balance sheet as of the end of a fiscal year ended not
more than sixteen months before the Effective Time, an income
statement for that year, a statement of changes in shareholders'
equity for that year and the latest available interim financial
statements, if any;
o an explanation of how Roanoke Gas estimated the fair value of the
dissenting shares and of how the interest was calculated;
o a statement of the dissenter's right to demand payment as described
below; and
o a copy of Article 15.
Roanoke Gas may elect to withhold payment from a dissenter who was not the
beneficial owner of the dissenting shares on April 27, 1998, in which case
Roanoke Gas will estimate the fair value of such after-acquired shares, plus
accrued interest, and will offer to pay such amount to each dissenter who agrees
to accept it in full satisfaction of such dissenter's demand. Roanoke Gas will
send with such offer an explanation of how it estimated the fair value of the
shares and of how the interest was calculated, and a statement of the
dissenter's right to demand payment as described below.
Within thirty days after Roanoke Gas makes or offers payment as described
above, a dissenter may notify Roanoke Gas in writing of the dissenter's own
estimate of the fair value of the dissenting shares and the amount of interest
due, and demand payment of such estimate, less any payment by Roanoke Gas, or
reject Roanoke Gas' offer and demand payment of such estimate.
If any such demand for payment remains unsettled, within sixty days after
receiving the payment demand, Roanoke Gas will petition the Circuit Court for
the City of Roanoke, Virginia, to determine the fair value of the shares and the
accrued interest and make all dissenters whose demands remain unsettled parties
to such proceeding, or pay each dissenter whose demand remains unsettled the
amount demanded. Each dissenter made a party to such proceeding is entitled to a
judgment for:
o the amount, if any, by which the court finds that the fair value of
the dissenting shares, plus interest, exceeds the amount paid by
Roanoke Gas; or
o the fair value, plus accrued interest, of the dissenter's
after-acquired shares for which Roanoke Gas elected to withhold
payment.
29
The court will determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court, and assess the
costs against Roanoke Gas or against any dissenters the court finds did not act
in good faith in demanding payment.
The foregoing is only a summary of the rights of a dissenting Roanoke Gas
common stock. However, all material terms of the Articles, Bylaws and Virginia
Act relating to dissenting shareholders rights have been disclosed. Any holder
of Roanoke Gas common stock who intends to dissent from the merger and
reorganization should carefully review the text of the applicable provisions of
Article 15 of the Virginia Act set forth in Attachment C to this proxy
statement/prospectus and should also consult with the holder's attorney. The
failure of a holder of Roanoke Gas common stock to follow precisely procedures
summarized above, and set forth in Attachment C, may result in loss of
dissenters' rights. No further notice of the events giving rise to dissenters'
rights or any steps associated therewith will be furnished to holders of Roanoke
Gas common stock, except as indicated above or otherwise required by law.
In general, any dissenting shareholder who perfects such holder's right to
be paid the fair value of such holder's Roanoke Gas common stock in cash will
recognize taxable gain or loss for federal income tax purposes upon receipt of
such cash. See "Federal Income Tax Consequences."
MANAGEMENT OF RESOURCES
The Articles of Resources divide Resources' Board of Directors into three
classes in the same manner as the Board of Roanoke Gas, with directors in each
class generally being elected for a three-year term. Resources' Bylaws permit
its Board of Directors to fix from time to time the number of directors in a
range of seven to eleven. Resources' Board of Directors currently is comprised
of the same persons who serve on Roanoke Gas' Board of Directors. These same
individuals will continue as directors of Resources and Roanoke Gas after the
reorganization.
Similarly, the current officers of Roanoke Gas also serve as the officers
of Resources and will continue as officers of Roanoke Gas and Resources after
the reorganization.
For further information concerning persons who are directors and officers
of Resources, see "Proposal 2: Election of Directors of Roanoke Gas" and
"Security Ownership of Management" in this proxy statement/prospectus and
"Executive Officers of the Registrant" following Part I of the Roanoke Gas
Company's Annual Report on Form 10-K for the year ended September 30, 1998,
which is incorporated by reference herein.
LEGAL OPINION
The validity of the shares of Resources common stock to be issued in the
merger will be passed upon by Woods, Rogers & Hazlegrove, P.L.C., counsel to
Roanoke Gas and Resources, 10 South Jefferson Street, Suite 1400, Roanoke,
Virginia 24011. Wilbur L. Hazlegrove, a director of Roanoke Gas and Resources,
is Of Counsel to Woods, Rogers & Hazlegrove, P.L.C. The principals of the firm
of Woods, Rogers & Hazlegrove, P.L.C. beneficially owned, as of November 30,
1998, approximately 62,000 shares of Roanoke Gas common stock.
30
EXPERTS
The 1998 consolidated financial statements incorporated in this proxy
statement/prospectus by reference from the Roanoke Gas Company's Annual Report
on Form 10-K for the year ended September 30, 1998 have been audited by Deloitte
& Touche LLP, independent auditors, as stated in their report which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
The consolidated financial statements of Roanoke Gas Company and
subsidiaries as of September 30, 1997 and for each of the years in the two-year
period ended September 30, 1997, have been included and incorporated by
reference in this Prospectus and elsewhere in the registration statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, included and incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
See "Independent Public Accountants" below.
The Board of Directors of Roanoke Gas has unanimously approved the holding
company reorganization, adopted the agreement, and believes the reorganization
to be in the best interests of Roanoke Gas and its shareholders, and recommends
that the holders of Roanoke Gas common stock vote "FOR" Proposal 1 at the Annual
Meeting.
31
PROPOSAL 2
ELECTION OF DIRECTORS OF ROANOKE GAS
Increasingly in recent years, officers of the Roanoke Gas have been
approached by others to open discussions for acquisition of Roanoke Gas. The
Board of Directors does not believe that it is obligated to shareholders to
sell, hold out for sale or engage in discussions for sale of Roanoke Gas and has
formally acted to direct officers and individual directors to advise those who
may propose acquisition or discussions for acquisition that Roanoke Gas is not
now for sale under any arrangement requiring Board approval.
Roanoke Gas' Board of Directors is divided into three classes (A, B and C)
with staggered three-year terms. The current term of office of the Class B
directors expires at the 1999 Annual Meeting. The terms of the Class C and Class
A directors will expire in 2000 and 2001, respectively.
There are three management nominees for Class B directors: Lynn D. Avis,
J. Allen Layman and Thomas L. Robertson. All nominees currently serve on the
Board and are standing for reelection.
Unless authorization is withheld, the persons named as proxies will vote
for the election of the nominees named below. Each nominee has agreed to serve
if elected. In the event any nominee shall unexpectedly be unable to serve, the
proxies will be voted for such other persons as the Board may designate. The
present principal occupation or employment and employment during the past five
years and the office, if any, held with Roanoke Gas are set forth below opposite
the name of each nominee and director. Proxies cannot be voted for a greater
number of persons than the number of nominees.
The Board of Directors recommends a vote "FOR" each of the nominees for
Class B Director.
Year In Year in
Which Which Director
First Elected Assumed Principal
Name and Age As Director Principal Occupation Occupation
NOMINEES FOR DIRECTOR
CLASS B DIRECTORS (Serving until 2002 Annual Meeting)
Lynn D. Avis 1986 President, Avis Construction Co., Inc. (Construction company) 1977
Age 64
J. Allen Layman 1991 President and Chief Executive Officer, R&B Communications, 1990
Age 46 Inc.(Telecommunications)
Thomas L. Robertson 1986 President and Chief Executive Officer, Carilion Health System 1986
Age 55 and Carilion Medical Center; Director, Roanoke Electric Steel
Corporation, 1992
32
DIRECTORS CONTINUING IN OFFICE
CLASS C DIRECTORS (Serving until 2000 Annual Meeting)
Frank T. Ellett 1983 President, Virginia Truck Center, Inc. (Sale, lease and service of 1981
Age 60 heavy trucks)
F. A. Farmer, Jr. 1979 Chairman of the Board of Directors of Roanoke Gas since January 1996
Age 66 1996; President and Chief Executive Officer of Roanoke Gas,
January 1991 to February 1998
W. L. Hazlegrove 1979 Of Counsel, law firm of Woods, Rogers & Hazlegrove, P.L.C.; 1954
Age 69 Vice President and General Counsel of Roanoke Gas, 1984-1994
CLASS A DIRECTORS (Serving until 2001 Annual Meeting)
Abney S. Boxley, III 1994 President, W. W. Boxley Co. (Crushed stone supplier); Director, 1988
Age 40 Valley Financial Corporation, 1994
S. Frank Smith 1990 Vice President, Coastal Coal Co., LLC (Marketers and sellers of 1986
Age 50 coal)
John B. Williamson, III 1993 President and CEO of Roanoke Gas; Vice President-Rates 1998
Age 44 and Finance, January 1993 to February 1998; Director
of Rates and Finance, April 1992 to January 1993
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of January 20, 1999, certain
information regarding the beneficial ownership of the common stock of Roanoke
Gas by each director, nominee and named executive officer and by all directors
and executive officers as a group. Unless otherwise noted in the footnotes to
the table, the named persons have sole voting and investment power with respect
to all outstanding shares of Roanoke Gas common stock shown as beneficially
owned by them.
33
Shares of Common
Name of Stock Beneficially Owned
Beneficial Owner As of 1/20/99(1) Percent of Class
Lynn D. Avis 9,161 .5%
Abney S. Boxley, III 4,392 .2%
Frank T. Ellett 6,539 .4%
Frank A. Farmer, Jr. 42,535(2) 2.4%
Wilbur L. Hazlegrove 35,966(3) 2%
J. Allen Layman 5,293 .3%
Thomas L. Robertson 6,108 .3%
S. Frank Smith 6,328 .4%
John B. Williamson, III 12,219(4) .7%
All Directors and Executive 147,595(5) 8.2%
Officers as a Group (12
persons)
----------------------
(1) Includes restricted shares purchased by directors under the Restricted Stock
Plan For Outside Directors.
(2) Includes 9,405 shares owned by spouse.
(3) Includes 11,144 shares owned by spouse.
(4) Includes 10,000 shares which Mr. Williamson has the right to acquire through
the exercise of stock options.
(5) Includes an aggregate of 25,000 shares which executive officers have the
right to acquire through the exercise of stock options.
BOARD OF DIRECTORS AND COMMITTEES
Audit Committee
The Audit Committee of the Board of Directors, composed of Messrs. Boxley,
Ellett, Layman, Robertson and Smith, meets at least annually with Roanoke Gas'
chief financial officer, the independent auditors of Roanoke Gas, and certain
appropriate officers of Roanoke Gas. The basic functions of this Committee
include reviewing significant financial information, reviewing accounting
procedures and internal controls and recommending the selection of Roanoke Gas'
independent auditors. The Audit Committee met three times during the 1998 fiscal
year.
Executive and Nominating Committee
The Executive and Nominating Committee of the Board of Directors, which is
composed of Messrs. Avis, Hazlegrove, Ellett and Layman, is empowered to
exercise all authority of the Board of Directors, except with respect to matters
reserved for the Board by Virginia law. Thus, in the absence of nominations by
the Board of Directors, this Committee may nominate persons as management's
nominees for election to the Board of Directors by the shareholders at Roanoke
Gas' annual meeting. The Board of Directors does not have a standing nominating
committee as such.
34
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 the Chief Executive Officer, Chief Operating Officer,
Secretary/Treasurer, Vice President - Marketing, and Assistant Vice President -
Human Resources of Roanoke Gas. This Committee met one time during the 1998
fiscal year.
Meetings of the Board and Committees
The Board of Directors met twelve times during the 1998 fiscal year. With
the exception of Mr. Robertson, the incumbent members of the Board attended in
fiscal year 1998, at least 75 percent of the aggregate of the total number of
meetings of the Board and the total number of meetings held by all Committees of
the Board on which they served. The Board held three Audit Committee meetings
and one Compensation Committee Meeting. Specifically, all Board members attended
all meetings, with the following exceptions:
o Mr. Robertson missed five Board meetings and two committee meetings.
o Mr. Hazlegrove missed three Board meetings.
o Mr. Layman missed two Board meetings.
o Mr. Smith missed one Board meeting and one committee meeting.
o Mr. Boxley missed one Board meeting.
EXECUTIVE COMPENSATION
The following table contains information with respect to the individual
compensation of the following officers for services in all capacities to Roanoke
Gas and its subsidiaries for the fiscal years ended September 30, 1998, 1997 and
1996. On February 1, 1998, Mr. Farmer retired as President and Chief Executive
Officer of Roanoke Gas. On that date, Mr. Williamson became President and Chief
Executive Officer of Roanoke Gas and Mr. Pendleton became Executive Vice
President and Chief Operating Officer of Roanoke Gas.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
------------------------------ ----------------
Name and Awards All Other
Principal Position Year Salary($) Bonus($)(1) Options/SARs Compensation($)(2)
- ------------------------- ---------- -------------- -------------- ---------------- --------------------
Frank A. Farmer, Jr. 1998 119,022 15,000 0 1,637
President and Chief 1997 169,875 20,000 8,000 7,965
Executive Officer until 1996 158,858 11,000 5,000 5,089
February 1, 1998
John B. Williamson, III 1998 111,164 7,500 3,500 4,974
President and Chief 1997 82,773 10,000 4,000 3,888
Executive Officer as of 1996 78,935 5,000 2,500 2,515
February 1, 1998
35
Arthur L. Pendleton 1998 100,332 7,500 1,500 4,519
Senior Vice President 1997 82,248 10,000 4,000 3,863
& Chief Operating 1996 79,734 5,000 2,500 2,535
Officer
- -----------------
(1) Bonus paid in current year for previous year's performance.
(2) Consists entirely of Roanoke Gas' contribution under the Employees' 401(k)
Plan.
Option Grants in Last Fiscal Year
Individual Grants
------------------------------------------------------------------ Potential Realizable
% of Total Value(1) at Assumed
Number of Options Market Annual Rates of
Securities Granted to Exercise Price on Stock Price
Underlying Employees or Base Date of Appreciation for
Options in Fiscal Price Grant Expiration Option Term
------------------------
Name Granted (#) Year ($/Share)(2) ($/Share) Date 5%($) 10%($)
- ---------------------- ------------------------- -------------- ------------------------- ----------- ------------
John B. Williamson, III 3,500 22.6% $20.625 $20.625 01/05/08 117,600 187,250
Arthur L. Pendleton 1,500 9.7% $20.625 $20.625 01/05/08 50,400 80,250
- --------------------
(1)The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the SEC and therefore are not intended to forecast
possible future appreciation, if any, of Roanoke Gas' stock price.
Additionally, these values do not take into consideration the provisions of
the options providing for nontransferability or termination of the options
following termination of employment. Roanoke Gas did not use an alternative
formula for a grant date valuation, as it is not aware of any formula which
will determine with reasonable accuracy a present value based on future
unknown or volatile factors.
(2)The exercise price of the options granted is equal to the closing sales price
of Roanoke Gas common stock on the Nasdaq National Market on the date of
grant. Options generally expire ten years from the date of grant.
Aggregate Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Value of
Number of Unexercised
Shares Unexercised in-the-money
Acquired on Value Options at fiscal options at fiscal
Name Exercise (#) Realized ($) year-end (#) year-end ($)
- ------------------- -------------- -------------- --------------------- ---------------------
Exercisable/ Exercisable/
Unexercisable Unexercisable
--------------------- ---------------------
Frank A. Farmer, Jr. 13,000 31,250 0/0 0/0
Retirement Plan
Roanoke Gas has in effect a noncontributory Retirement Plan. The costs of
benefits under the Plan, which are borne by Roanoke Gas, are computed
actuarially and defrayed by earnings from the Plan's investments and/or annual
contributions of Roanoke Gas. The Plan generally provides for the monthly
payment, at normal retirement
36
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 (1) plus (2)
minus (3) as follows:
(1) 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,
(2) .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
(3) the participant's balance, if any, from Roanoke Gas' former profit
sharing plan.
Early retirement with reduced monthly benefits is available at age 55 after ten
years' service. Provisions also are made for vesting of benefits after five
years of service and for disability and death benefits. All employees who have
completed one year of service to Roanoke Gas and are credited with at least
1,000 hours of service in a Plan year are eligible to participate in the Plan.
At age 65, for Plan purposes, Mr. Williamson and Mr. Pendleton will have
28 and 37 credited years of service, respectively. Upon his retirement on
February 1, 1998, Mr. Farmer, at age 65, had 34 credited years of service.
The compensation covered by the Plan includes the total of all amounts
paid to a participant by Roanoke Gas for personal services reported on the
participant's federal income tax withholding statement (Form W-2), up to certain
statutory limits. For 1998, these earnings are limited to $160,000. This limit
is indexed for cost of living after 1994.
Estimated Annual Pension For
Representative Years of Credited Service(1)
-----------------------------------------------------------
Highest Sixty Months
Average Compensation 15 20 25 30 35
- -------------------- == == == == ==
$125,000 $ 31,800 $42,400 $ 52,900 $ 63,500 $63,500
150,000 38,700 51,600 64,500 77,400 77,400
175,000 39,300 52,300 65,400 78,500 78,500
200,000 39,300 52,300 65,400 78,500 78,500
- -----------------
(1) The benefit amounts assume the employee is retiring at normal retirement age
(age 65). The benefit amounts listed in the table are computed as a straight
life annuity. No offset to pension benefits due to the Profit-Sharing Plan
(which has been converted into the 401(k) Plan) is reflected. Benefits are
not reduced by Social Security.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee, which is made up of five members of the Board
of Directors who are not officers or employees of Roanoke Gas, is responsible
for setting and administering the policies that govern the annual compensation
paid to the executive officers of Roanoke Gas, including the Chief Executive
Officer.
37
In fiscal 1998, annual salary continued to be the primary component of
compensation for executive officers of Roanoke Gas. This is based in large part
on concern that external factors beyond the control of Roanoke Gas executives,
such as weather and regulatory decisions, may have a significant impact on
corporate performance.
The Compensation Committee recommends, for approval by the Board of
Directors, the annual salaries of executive officers. Salaries are based on the
respective positions held by the executive officers, including their
accomplishments, level of responsibility and experience and the relationship of
such salaries to the salaries of other Roanoke Gas managers and employees. In
this regard, the Compensation 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
Compensation 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.
Under Roanoke Gas' Stock Bonus Plan, the Compensation Committee approved
the payment in fiscal 1998 of bonuses to the Chief Executive Officer and other
executive officers of Roanoke Gas for outstanding performance during the fiscal
year 1997. The Stock Bonus Plan is intended to allow the Board of Directors to
award individual or collective superior performance that has resulted in
enhanced shareholder value or returns and to encourage increased ownership of
Roanoke Gas common stock by officers and management. The Stock Bonus Plan is
administered by the Compensation Committee, which considers recommendations from
Roanoke Gas' President. Roanoke Gas' bonus award proposals are subject to
approval of the Board of Directors. Under the Stock Bonus Plan, executive
officers of Roanoke Gas are encouraged to own a position in Roanoke Gas common
stock of at least 50% of the value of their annual salary. To promote this
policy, the Plan provides that all officers with stock ownership positions below
50% of the value of their annual salaries must, unless approved by the
Compensation Committee, receive no less than 50% of any performance bonus in the
form of Roanoke Gas common stock. Bonus amounts, if any, for a fiscal year will
generally be determined in the January following that fiscal year-end. Bonus
award determinations under the Stock Bonus Plan for performance in the 1997
fiscal year were based on the performance of Roanoke Gas, combined with an
analysis of the individual contributions of officers receiving the bonuses to
the overall performance of Roanoke Gas.
Roanoke Gas adopted a Key Employee stock option plan,Stock Option Plan, which became
effective January 1996. The Plan is intended to provide Roanoke Gas' executive
officers with long-term (ten-year) incentives and rewards tied to the price of
Roanoke Gas common stock. The Compensation Committee believes that stock options
will assist Roanoke Gas in attracting, maintaining and motivating officers and
other key employees of Roanoke Gas, upon whose judgment, initiative and efforts
Roanoke Gas depends, by providing such persons with the opportunity to acquire
an equity interest in Roanoke Gas. Stock options are used to provide executive
officers additional incentive to use their best efforts and superior
performances to promote the best interest of Roanoke Gas and the shareholders.
In making its recommendation regarding Mr. Williamson's 1998 compensation
as the Chief Executive Officer, the Compensation Committee considered all of the
criteria above. Specific consideration also was given to Mr. Williamson's
efforts toward cost containment, Roanoke Gas' improved earnings and shareholder
and customer growth in the preceding fiscal year. During 1998, Mr. Williamson
received a bonus of $7,500, which he elected to take in Roanoke Gas common
stock, for his performance during the fiscal year 1997. The amount of the bonus
was determined based upon Mr. Williamson's success during 1997 in monitoring
operational and capital budgets for maximum cost efficiency. The control of
costs, operational and financing, resulted in improved earnings for Roanoke Gas.
Mr. Williamson also received during fiscal 1998 an option under the Key Employee
Stock Option Plan to purchase 3,500 shares of Roanoke Gas common stock. The
number of shares subject to the option was established based on the Compensation
Committee's determination that 3,500 option shares provided a reasonable
additional incentive for the Chief Executive Officer to place added emphasis on
enhancing share value through management practices while being generally
moderate in the total grant.
38
Mr. Farmer retired as Chief Executive Officer of Roanoke Gas on February
1, 1998. Mr. Farmer's fiscal 1998 compensation as Chief Executive prior to his
retirement was a continuation of his salary for fiscal 1997, which originally
was based on his performance in fiscal 1996. Mr. Farmer received a bonus of
$15,000 in fiscal 1998, for performance in fiscal 1997. The amount of the bonus
was based upon Roanoke Gas' improved earnings and significant customer growth
under Mr. Farmer's leadership in fiscal 1997.
Submitted by the Compensation Committee of the
Board of Directors of Roanoke Gas:
Lynn D. Avis, Abney S. Boxley, III, Frank T. Ellett,
J. Allen Layman, S. Frank Smith
39
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
John B. Williamson, III, President and Chief Executive Officer of Roanoke
Gas, serves as a director of R & B Communications, Inc. J. Allen Layman, who is
a director of Roanoke Gas and serves on the Compensation Committee of the Board
of Directors of Roanoke Gas, is President and Chief Executive Officer of R & B
Communications, Inc.
PERFORMANCE GRAPH
The following graph compares the yearly percentage change and the
cumulative total of shareholder return on Roanoke Gas common stock with the
cumulative return on the Standard and Poor's Utilities Index and the Edward
Jones Natural Gas Distribution Index for the five-year period commencing on
September 30, 1993 and ending on September 30, 1998. These comparisons assume
the investment of $100 in Roanoke Gas common stock and each of the indices on
September 30, 1993 and the reinvestment of dividends.
[PERFORMANCE GRAPHIC APPEARS HERE]
- -------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
- -------------------------------------------------------------------------------------------
Roanoke Gas Comapny $100 115 106 129 141 161
- -------------------------------------------------------------------------------------------
S&P Utilities $100 87 111 119 136 177
- -------------------------------------------------------------------------------------------
Edward Jones Natural Gas
Distribution Index $100 87 98 117 134 150
- -------------------------------------------------------------------------------------------
40
TRANSACTIONS WITH MANAGEMENT
The law firm of Woods, Rogers & Hazlegrove, P.L.C., of which W. L.
Hazlegrove, a director of Roanoke Gas, is Of Counsel, rendered legal services to
Roanoke Gas during fiscal 1998, and it is anticipated that similar legal
services will be provided by that firm to Roanoke Gas in fiscal 1999.
Effective February 1, 1998, Frank A. Farmer, Jr., retired President and
Chief Executive Officer of Roanoke Gas, entered into an agreement to provide
consulting services to Roanoke Gas. Under the agreement, Mr. Farmer will serve
as Chairman of the Board of Directors of Roanoke Gas and perform such duties and
responsibilities as may be assigned to him by the Board. During the term of the
agreement, Mr. Farmer will not accept engagements for compensation by any party
that is in competition or could reasonably expect to be in competition with
Roanoke Gas. The consulting agreement provides that Roanoke Gas will pay Mr.
Farmer annual compensation in the amount of $82,500. The consulting agreement,
by its terms, terminates on January 31, 1999, unless it is extended. The
agreement also may be terminated in the event of disability of Mr. Farmer which
renders him unable to provide services as contemplated under the agreement, or
for just case.
REMUNERATION OF DIRECTORS
Directors are compensated $6,000 per year in addition to receiving fees
for meetings of Roanoke Gas' Board of Directors and of Committees of the Board
which they attend. Mr. Farmer and Mr. Williamson are not compensated for
attendance at Board and Committee meetings and do not receive $6,000 per year
for service as a Board member. The schedule of fees paid to directors for each
such meeting attended is as follows:
Board of Directors $ 400
Executive and Nominating Committee $ 400
Audit Committee $ 400
Compensation Committee $ 400
However, the fee for any Committee meetings held the same day as a Board
meeting is $250.
Restricted Stock Plan for Outside Directors
The Board of Directors of Roanoke Gas implemented the Roanoke Gas Company
Restricted Stock Plan for Outside Directors effective January 27, 1997. The Plan
is applicable to not more than 50,000 shares of Roanoke Gas common stock.
Under the plan, a minimum of 40% of the monthly retainer fee paid to each
nonemployee director of Roanoke Gas is paid in restricted shares of common
stock. The number of shares of restricted stock is calculated each month
based on the closing sales price of Roanoke Gas common stock on the Nasdaq
National Market on the first day of the month, if the first day of the month is
a trading day, or if not, the first trading day prior to the first day of the
month. Beginning in fiscal 1998, a participant could, subject to approval of the
Board, elect to receive up to 100% of his retainer fee for the fiscal year in
restricted stock. Such election cannot be revoked or amended during the fiscal
year.
The shares of restricted stock of Roanoke Gas issued under the plan
will vest only in the case of a participant's death, disability, retirement
(including not standing for reelection to the Board), or in the event of a
change in control of Roanoke Gas. There is no option to take cash in lieu of
stock upon vesting of shares under the plan. The restricted stock may not be
sold, transferred, assigned or pledged by the participant until the shares
41
have vested under the terms of the plan. At the time the restricted stock
vests, a certificate for vested shares will be delivered to the participant or
the participant's beneficiary.
The shares of restricted stock will be forfeited to Roanoke Gas by a
participant's voluntary resignation during his term on the Board or removal for
cause as a director.
Subject to the terms of the plan, a participant, as owner of the
restricted stock, has all rights of a shareholder, including but not limited
to, voting rights, the right to receive cash or stock dividends, and the right
to participate in any capital adjustment of Roanoke Gas. Roanoke Gas requires
that all dividends or other distributions paid on shares of restricted stock
be automatically sequestered and reinvested on an immediate or deferred basis in
additional restricted stock.
All directors, except Mr. Farmer and Mr. Williamson, who do not qualify
as outside directors, participated in the plan in fiscal 1998. The directors
received, in the aggregate, 422.782 shares of restricted stock in fiscal 1998,
valued at approximately $8,244. This value was calculated using the closing
price of $19.50 per share of Roanoke Gas common stock on September 30, 1998.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Roanoke Gas'
executive officers and directors, and any persons who own more than 10% of
Roanoke Gas' common stock, to file reports of ownership and changes in ownership
of Roanoke Gas common stock with the SEC. Based on its review of the copies of
such forms furnished to it and written representations from certain reporting
persons that no other reports are required, Roanoke Gas believes that in fiscal
1998 one report for one transaction was filed late by John S. D'Orazio and one
report for two transactions was filed late by Frank A. Farmer.
INDEPENDENT PUBLIC ACCOUNTANTS
At its meeting on July 28, 1997, the Board of Directors of Roanoke Gas,
upon recommendation of the Audit Committee, appointed Deloitte & Touche LLP as
independent accountants to audit the financial statements of Roanoke Gas and its
subsidiaries for the years ending September 30, 1998, 1999 and 2000. KPMG LLP
previously had served as Roanoke Gas' certifying accountants since 1990. The
Board of Directors solicited competitive bids from accountants interested in
serving as Roanoke Gas' auditor. From the bids received, the Audit Committee
recommended Deloitte & Touche LLP to the Board of Directors. KPMG received
notification on July 30, 1997 that their appointment as principal accountants
would be terminated upon completion of the 1997 audit. KPMG's engagement
terminated effective December 19, 1997.
KPMG's auditors' reports on Roanoke Gas' financial statements for the two
fiscal years ended September 30, 1997, contained no adverse opinion or a
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope, or accounting principles. During Roanoke Gas' fiscal years ending
September 30, 1997 and 1996 and during the subsequent interim period through
December 19, 1997, there were no disagreements with KPMG on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure which, if not resolved to the satisfaction of KPMG, would
have caused it to make a reference to the subject matter of the disagreement in
its auditors' reports.
42
OTHER MATTERS
Management does not know of any matters to be presented at the Annual
Meeting of Shareholders other than the election of directors. However, if any
other matters properly come before the meeting, proxies received under this
solicitation will be voted thereon in the discretion of the proxyholder.
SHAREHOLDER PROPOSALS
If the reorganization is consummated, shareholder proposals intended for
inclusion in the 2000 Proxy Statement of Resources should be sent to the
Secretary of Resources at 519 Kimball Avenue, N.E., Roanoke, Virginia 24016, and
must be received by August 13, 1999.
Resources' Bylaws limit the business to be transacted at a meeting of
shareholders to that specified in the notice of the meeting, those otherwise
properly presented by the Board of Directors and those presented by a
shareholder of record of Resources. Proposals not meeting the requirements of
the Bylaws will not be entertained at a shareholder's meeting.
If the reorganization is not consummated, shareholder proposals intended
for inclusion in the 2000 Proxy Statement of Roanoke Gas should be sent to the
Secretary of Roanoke Gas at 519 Kimball Avenue, N.E., Roanoke, Virginia 24016,
and must be received by August 13, 1999. If the reorganization is not
consummated, Roanoke Gas' proxies shall have discretionary authority to vote on
any shareholder proposal presented at the 2000 Annual Meeting by means other
than inclusion in Roanoke Gas' proxy statement if Roanoke Gas has not received
written notice of such proposal on or before October 27, 1999.
See the discussion under "Certain Differences in Rights of Roanoke Gas and
Resources Shareholders -- Shareholders Proposals" in this proxy
statement/prospectus.
WHERE YOU CAN FIND MORE INFORMATION
Roanoke Gas (File No. 0-367) files annual, quarterly and current reports,
proxy statements and other information with the SEC. You may read and copy any
reports, statements or other information that Roanoke Gas files at the SEC's
public reference rooms in Washington, D.C., New York, New York and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Roanoke Gas public filings are also available to the
public from commercial document retrieval services and at the Internet World
Wide Web site maintained by the SEC at "http://www.sec.gov." Reports, proxy
statements and other information concerning Roanoke Gas may also be inspected at
the offices of the National Association of Securities Dealers, Inc., 1735 K
Street, Washington, D.C. 20006-1506. Roanoke Gas common stock is included for
quotation on the Nasdaq National Market under the symbol "RGCO."
Resources has filed the Registration Statement to register with the SEC
the shares of Resources common stock to be issued to Roanoke Gas shareholders in
the merger. This proxy statement/prospectus is a part of the Registration
Statement and constitutes a prospectus of Resources and a proxy statement of
Roanoke Gas for the Annual Shareholders Meeting.
As allowed by SEC rules, this proxy statement/prospectus does not contain
all the information that shareholders can find in the Registration Statement or
the exhibits to the Registration Statement.
The SEC allows Roanoke Gas to "incorporate by reference" information into
this proxy statement/prospectus, which means that Roanoke Gas can disclose
important information to you by referring you to
43
another document filed separately with the SEC. The information incorporated by
reference is deemed to be part of this proxy statement/prospectus, except for
any information superseded by information contained directly in the proxy
statement/prospectus.
This proxy statement/prospectus incorporates by reference the Roanoke Gas
Annual Report on Form 10-K for the year ended September 30, 1998, which has
previously been filed with the SEC. The 1998 Annual Report to Shareholders of
Roanoke Gas, which is being delivered with this proxy statement/prospectus, also
is incorporated by reference in this proxy statement/prospectus. These documents
contain important information about Roanoke Gas and its financial condition.
Roanoke Gas also incorporates by reference into this proxy
statement/prospectus any additional documents that it may file with the SEC
between the date of this proxy statement/prospectus and the date of the Annual
Meeting. These include periodic reports, such as Quarterly Reports on Form 10-Q
and Current Reports on Form 8-K.
If you are a shareholder of Roanoke Gas, you can obtain the documents
incorporated by reference from Roanoke Gas or the SEC or the SEC's Internet
World Wide Web site described above. Documents incorporated by reference are
available from Roanoke Gas without charge, excluding all exhibits unless
specifically incorporated by reference as an exhibit to this proxy
statement/prospectus. Shareholders may obtain exhibits not specifically
incorporated into the proxy statement/prospectus from Roanoke Gas upon payment
of a reasonable fee which shall be limited to our reasonable expenses in
furnishing such exhibit. Shareholders of Roanoke Gas may obtain documents
incorporated by reference in this proxy statement/prospectus by requesting them
in writing or by telephone from Roanoke Gas at the following address: Roanoke
Gas Company, 519 Kimball Avenue, N.E., Roanoke, Virginia 24016, Attention: Roger
L. Baumgardner.
If you would like to request documents from Roanoke Gas, please do so by
March 24, 1999, to receive them before the Annual Meeting. If you request any
incorporated documents from us, we will mail them to you by first-class mail, or
other equally prompt means, within one business day of our receipt of your
request.
You should rely only on the information contained or incorporated by
reference in this proxy statement/prospectus to vote your shares at the Roanoke
Gas Annual Meeting. Roanoke Gas and Resources have not authorized anyone to
provide you with information that is different from what is contained in this
proxy statement/prospectus. This proxy statement/prospectus is dated February
5, 1999. You should not assume that the information contained in the proxy
statement/prospectus is accurate as of any date other than that date, and
neither the mailing of this proxy statement/prospectus to shareholders nor the
issuance of Resources' securities in the merger shall create any implication to
the contrary.
------------------------
Please indicate how you want to vote, and sign date and mail the enclosed
proxy promptly in the enclosed postage-paid envelope.
ROANOKE GAS COMPANY
JOHN B. WILLIAMSON, III
President and Chief Executive Officer
February 5, 1999
44
Appendix A
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("Agreement") is
made as of September 28, 1998, by and among ROANOKE GAS COMPANY, a Virginia
public service corporation ("Roanoke Gas"), RGC ACQUISITION CORP., a Virginia
corporation ("Acquisition"), RGC RESOURCES, INC., a Virginia corporation
("Resources"), DIVERSIFIED ENERGY COMPANY, a Virginia corporation
("Diversified"), BLUEFIELD GAS COMPANY, a West Virginia public service
corporation ("Bluefield"), and COMMONWEALTH PUBLIC SERVICE CORPORATION, a
Virginia public service corporation ("Commonwealth"), provides as follows:
RECITALS:
A. Roanoke Gas has authorized capital stock consisting of 3,000,000
shares of common stock, $5.00 par value per share ("Roanoke Gas Common Stock"),
of which 1,794,416 shares are issued and outstanding; and
B. Acquisition has authorized capital stock consisting of 5,000 shares
of common stock ("Acquisition Common Stock"), no par value per share, of which
10 shares are issued and outstanding and owned beneficially and of record by
Resources; and
C. Resources has authorized capital stock consisting of 10,000,000
shares of common stock, $5.00 par value per share ("Resources Common Stock"), of
which 10 shares are issued and outstanding and owned beneficially and of record
by Roanoke Gas, and 5,000,000 shares of Preferred Stock, no par value per share,
none of which have been issued; and
D. Diversified has authorized capital stock consisting of 15,000 shares
of common stock, $10 par value per share ("Diversified Common Stock"), of which
11,000 shares are issued and outstanding and owned beneficially and of record by
Roanoke Gas; and
E. Bluefield has authorized capital stock consisting of 250,000 shares
of common stock, $0.20 par value per share ("Bluefield Common Stock"), of which
247,520 shares are issued and outstanding and owned beneficially and of record
by Roanoke Gas; and
F. Commonwealth has authorized capital stock consisting of 500 shares of
common stock, $100.00 par value per share ("Commonwealth Common Stock"), of
which 5 shares are issued and outstanding and owned beneficially and of record
by Bluefield; and
G. The Boards of Directors of Roanoke Gas, Acquisition and Resources
deem it advisable to merge Acquisition with and into Roanoke Gas in accordance
with the Virginia Stock Corporation Act ("Virginia Stock Corporation Act") and
this Agreement for the purpose of establishing Resources as the parent
corporation of Roanoke Gas; and
H. The Boards of Directors of the parties hereto deem it advisable to
undertake the other reorganization matters set forth herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and agreements
contained herein, the parties agree that (i) Roanoke Gas shall be merged with
and into Acquisition (the "Merger"), (ii) Roanoke Gas shall be the corporation
surviving the Merger, (iii) Commonwealth shall become a wholly owned subsidiary
of and then be
A-1
merged into, Roanoke Gas, (iv) Bluefield and Diversified shall each become
wholly owned subsidiaries of Resources and (v) the terms and conditions of the
Merger and the other reorganization matters, the mode of carrying them into
effect, the manner of converting, exchanging and/or transferring shares of
capital stock of the parties hereto and other matters relating thereto shall be
as follows:
ARTICLE 1
THE MERGER
1.1 Articles of Merger. Subject to and in accordance with the provisions
of this Agreement, in the event this Agreement and Plan of Merger and
Reorganization is approved by the stockholders of Roanoke Gas in accordance with
the Virginia Stock Corporation Act, Articles of Merger of Roanoke Gas shall be
delivered to the Clerk's Office of the Virginia State Corporation Commission for
filing, all as provided by the Virginia Stock Corporation Act.
1.2 Effective Time. The Merger shall become effective at the time of
filing on the date on which the Articles of Merger are filed with the Clerk's
Office of the Virginia State Corporation Commission, as contemplated by Section
1.1 above, unless otherwise specified in such Articles of Merger (the "Effective
Time"). At the Effective Time, the separate existence of Acquisition shall cease
and Acquisition shall be merged with and into Roanoke Gas, which shall continue
its corporate existence as the surviving corporation (Roanoke Gas and
Acquisition being sometimes referred to herein as the "Constituent Corporations"
and Roanoke Gas, as the surviving corporation, being sometimes referred to
herein as the "Surviving Corporation"). Roanoke Gas shall succeed, without other
transfer, to all the rights and property of Acquisition and shall be subject to
all the debts and liabilities of Acquisition in the same manner as if Roanoke
Gas had itself incurred them. All rights of creditors and all liens upon the
property of each of Roanoke Gas and Acquisition shall be preserved unimpaired.
1.3 Appropriate Actions. Prior to and after the Effective Time,
Resources, Roanoke Gas and Acquisition, respectively, shall take all such
actions as may be necessary or appropriate in order to effectuate the Merger. In
this connection, Resources shall issue and pay the shares of Resources Common
Stock into which outstanding shares of Roanoke Gas Common Stock will be
converted on the basis and to the extent provided in Article 2 of this
Agreement, and shall take such other actions as are necessary to fulfill
Resources' obligations hereunder, including, without limitation, those specified
in Article 6 of this Agreement. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full title to all
properties, assets, privileges, rights, immunities and franchises of either of
the Constituent Corporations, the officers and directors of each of the
Constituent Corporations as of the Effective Time shall take all such further
action.
ARTICLE 2
TERMS OF CONVERSION AND EXCHANGE OF SHARES
2.1 Roanoke Gas Common Stock. At the Effective Time, shares of Roanoke
Gas Common Stock issued and outstanding immediately prior to the Merger shall be
automatically changed and converted into shares of Resources Common Stock, at
the ratio of one share of Resources Common Stock for each one share of Roanoke
Gas Common Stock, and such Resources Common Stock shall thereupon be issued and
fully-paid and non-assessable; provided, however, that such conversion shall not
affect shares of holders, if any, who perfect their rights as dissenting
stockholders under the Virginia Stock Corporation Act with respect to such
shares.
2.2 Acquisition Shares. The shares of Acquisition Common Stock issued
and outstanding immediately prior to the Merger shall be automatically changed
and converted into all of the issued and outstanding shares of Common Stock of
the Surviving Corporation, which shall thereupon be issued and fully-paid and
non-
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assessable, with the effect that the number of issued and outstanding
shares of Common Stock of the Surviving Corporation shall be the same as the
number of issued and outstanding shares of Acquisition Common Stock immediately
prior to the Effective Time.
2.3 Resources Shares. Each share of Resources Common Stock issued and
outstanding immediately prior to the Merger shall be canceled.
ARTICLE 3
ARTICLES OF INCORPORATION AND BYLAWS
3.1 Roanoke Gas Articles. From and after the Effective Time, and until
thereafter amended as provided by law, the Articles of Incorporation of Roanoke
Gas as in effect immediately prior to the Merger shall be and continue to be the
Articles of Incorporation of the Surviving Corporation.
3.2 Roanoke Gas By-Laws. From and after the Effective Time, and until
thereafter amended as provided by law, the By-Laws of Roanoke Gas as in effect
immediately prior to the Merger shall be and continue to be the By-Laws of the
Surviving Corporation.
3.3 Resources Articles and Bylaws. From and after the Effective Time,
and until thereafter amended as provided by law, the Articles of Incorporation
and Bylaws of Resources as in effect immediately prior to the Merger shall be
and continue unchanged to be the Articles of Incorporation and By-Laws of
Resources.
ARTICLE 4
DIRECTORS AND OFFICERS
4.1 Roanoke Gas Directors and Officers. The persons who are directors
and officers of Roanoke Gas immediately prior to the Merger shall continue as
directors and officers, respectively, of the Surviving Corporation and shall
continue to hold office as provided in the Articles of Incorporation and Bylaws
of the Surviving Corporation. If, at or following the Effective Time, a vacancy
shall exist in the Board of Directors or in the position of any officer of the
Surviving Corporation, such vacancy may be filled in the manner provided in the
Articles of Incorporation and Bylaws of the Surviving Corporation.
4.2 Resources Directors and Officers. The persons who are directors and
officers of Resources immediately prior to the Merger shall continue as
directors and officers, respectively, of Resources and shall continue to hold
office as provided in the Articles of Incorporation and Bylaws of Resources. If,
at or following the Effective Time, a vacancy shall exist in the Board of
Directors or in the position of any officer of Resources, such vacancy may be
filled in the manner provided in the Articles of Incorporation and Bylaws of
Resources.
ARTICLE 5
STOCK CERTIFICATES
5.1 Rights of Holders of Certificates. Following the Effective Time,
certificates representing shares of Roanoke Gas Common Stock outstanding at the
Effective Time (herein sometimes referred to as "Roanoke Gas Certificates")
shall evidence only the right of the registered holder thereof to receive, and
may be exchanged for, the shares of Resources Common Stock into which such
shares of Roanoke Gas Common Stock were converted in accordance with Section
2.1. At the Effective Time, Resources shall issue and deliver, or cause to be
issued and delivered, to the transfer agent for Resources (the "Transfer Agent")
certificates representing whole shares of Resources Stock into which outstanding
shares of Roanoke Gas Stock have been converted as provided above. As
A-3
promptly as practicable following the Effective Time, Resources shall send
or cause to be sent to each former stockholder of record of Roanoke Gas
immediately prior to the Effective Time written instructions and transmittal
materials (a "Transmittal Letter") for use in surrendering Roanoke Gas
Certificates to the Transfer Agent. Upon the proper surrender and delivery to
the Transfer Agent (in accordance with Resources' instructions, and accompanied
by a properly completed Transmittal Letter) by a former stockholder of Roanoke
Gas of such stockholder's Roanoke Gas Certificate(s), and in exchange therefor,
the Transfer Agent shall as soon as practicable, issue, register and deliver to
such stockholder a certificate evidencing the number of shares of Resources
Stock to which such stockholder is entitled pursuant to Section 2.1 above.
5.2 Outstanding Certificates. Each outstanding certificate which, prior
to the Effective Time, represented Roanoke Gas Common Stock shall be deemed for
all corporate purposes to represent only the right to receive the number of
shares of Resources Common Stock into which such Roanoke Gas Common Stock was
converted.
5.3 Stock Transfer Books. The stock transfer books for Roanoke Gas
Common Stock shall be deemed to be closed at the Effective Time and no transfer
of shares of Roanoke Gas Common Stock outstanding prior to the Effective Time
shall thereafter be made on such books. As of the Effective Time, Resources
shall establish a stock register reflecting ownership of Resources Common Stock
by former holders of record of Roanoke Gas Common Stock.
5.4 Post-Merger Rights of Holders. Following the Effective Time, the
holders of certificates representing Roanoke Gas Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to stock of the Surviving Corporation and their sole rights shall be
with respect to the Resources Common Stock into which their shares of Roanoke
Gas Common Stock shall have been converted by the Merger, subject to the rights
of any dissenting stockholders who perfect dissenters' rights under Article 13
of the Virginia Stock Corporation Act.
5.5 Unsurrendered Certificates. Subject to Section 5.6 below, no
Resources Common Stock certificate shall be delivered to any former stockholder
of Roanoke Gas unless and until such stockholder shall have properly surrendered
to the Transfer Agent the Roanoke Gas Certificate(s) formerly representing his
or her shares of Roanoke Gas Stock, together with a properly completed
Transmittal Letter in such form as shall be provided to the stockholder by
Resources for that purpose. Further, until such Roanoke Gas Certificate(s) are
so surrendered, no dividend or other distribution payable to holders of record
of Resources Stock as of any date subsequent to the Effective Time shall be
delivered to the holder of such Roanoke Gas Certificate(s). However, subject to
prior escheatment under applicable law, upon the proper surrender of such
Roanoke Gas Certificate(s), the Transfer Agent shall pay to the registered
holder of the shares of Resources Stock represented by such Roanoke Gas
Certificate(s) the amount of any such cash, dividends or distributions which
have accrued but remain unpaid with respect to such shares. Neither Resources,
Roanoke Gas nor the Transfer Agent shall have any obligation to pay any interest
on any such cash, dividends or distributions for any period prior to such
payment.
5.6 Lost, etc., Certificates. Any stockholder of Roanoke Gas whose
certificate evidencing shares of Roanoke Gas Common Stock has been lost,
destroyed, stolen or otherwise is missing shall be entitled to receive a
certificate representing the shares of Resources Common Stock to which he or she
is entitled in accordance with and upon compliance with conditions imposed by
the Transfer Agent or Resources (including, without limitation, a requirement
that the stockholder provide a lost instruments indemnity or surety bond in
form, in substance and amount satisfactory to the Transfer Agent and Resources).
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ARTICLE 6
ROANOKE GAS STOCK PLANS
Roanoke Gas and Resources shall take all actions required to provide
that, from and after the Effective Time, all director, officer, employee,
customer and other plans of Roanoke Gas or its affiliates, to the extent they
directly or indirectly utilize Roanoke Gas Common Stock, shall utilize Resources
Common Stock instead of Roanoke Gas Common Stock.
ARTICLE 7
CONDITIONS OF THE MERGER
Completion of the Merger is subject to the satisfaction of the following
conditions:
7.1 Stockholder Approval. The principal terms of this Agreement shall
have been approved by such holders of capital stock of the parties hereto as is
required by the Virginia Stock Corporation Act.
7.2 Resources Common Stock Listed. All conditions for the listing on the
NASDAQ National Market as of the Effective Time of the Resources Common Stock to
be issued and to be reserved for issuance pursuant to the Merger shall have been
satisfied.
7.3 Regulatory Approvals. All necessary orders, consents, authorization,
approvals or waivers from the Securities and Exchange Commission, the Virginia
State Corporation Commission and all other regulatory bodies, boards or
agencies, or from other third parties, shall have been received, remain in full
force and effect, and shall not include, in the sole judgment of the Board of
Directors of Roanoke Gas, unacceptable conditions.
ARTICLE 8
TRANSFER AND MERGER OF COMMONWEALTH
8.1 Dividend. Bluefield, as the holder of all of the Commonwealth Common
Stock, shall pay declares a non-cash dividend of all of the Commonwealth Common
Stock to its parent corporation, Roanoke Gas (the "Commonwealth Shares
Dividend"). The Commonwealth Shares Dividend shall, subject to receipt of all
required regulatory approvals, be paid at the Effective Time immediately
following the consummation of the Merger.
8.2 Commonwealth Merger. Immediately following the payment of the
Commonwealth Shares Dividend, Commonwealth shall be merged with and into its
parent, Roanoke Gas (the "Commonwealth Merger"), pursuant to the Articles of
Merger attached hereto as Exhibit 1.
ARTICLE 9
TRANSFER OF DIVERSIFIED AND BLUEFIELD
9.1 Dividend. Roanoke Gas, as the holder of all of the Diversified
Common Stock and as the holder of all of the Bluefield Common Stock, shall pay a
non-cash dividend of all of the Diversified Common Stock and all of Bluefield
Common Stock to Resources (the "Bluefield Shares and Diversified Shares
Dividend"). The Bluefield Shares and Diversified Shares Dividend shall, subject
to receipt of all required regulatory approvals, be paid immediately following
the payment of the Commonwealth Shares Dividend.
9.2 Effect. Immediately following the payment of the Bluefield Shares
and Diversified Shares Dividend, each of Roanoke Gas, Bluefield and Diversified
shall be wholly owned subsidiaries of Resources.
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ARTICLE 10
AMENDMENT AND TERMINATION
10.1 Amendment. The parties to this Agreement, by mutual consent of
their respective boards of directors, may amend, modify or supplement this
Agreement in such manner as may be agreed upon by them in writing at any time
before or after approval of this Agreement by the pre-Merger stockholders of
Roanoke Gas (as provided in Section 7.1 above); provided, however, that no such
amendment, modification or supplement shall, if agreed to after such approval by
the pre-Merger stockholders of Roanoke Gas, change any of the principal terms of
this Agreement in a manner which would materially and adversely affect the
rights of the stockholders of Roanoke Gas.
10.2 Termination. This Agreement may be terminated and the Merger
dividend payments and other transactions provided for by this Agreement may be
abandoned at any time, whether before or after approval of this Agreement by the
pre-Merger stockholders of Roanoke Gas, by action of the board of directors of
Roanoke Gas if such board of directors determines for any reason that the
completion of the transactions provided for herein would for any reason be
inadvisable or not in the best interests of Roanoke Gas or its stockholders.
ARTICLE 11
MISCELLANEOUS
11.1 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original hereof.
11.2 Virginia Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, Roanoke Gas, Resources, Acquisition, Bluefield,
Diversified and Commonwealth, pursuant to approval and authorization duly given
by resolutions adopted by their respective boards of directors, have each caused
this Agreement to be executed by its President or one of its Vice Presidents and
attested by its Secretary or one of its Assistant Secretaries.
Roanoke Gas:
ROANOKE GAS COMPANY, a Virginia public
service corporation
By: s/John B. Williamson, III
Its: President and CEO
Attest:
By: s/Roger L. Baumgardner
Its: Secretary
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Resources:
RGC RESOURCES, INC., a Virginia corporation
By: s/John B. Williamson, III
Its: President and CEO
Attest:
By: s/Roger L. Baumgardner
Its: Secretary
Acquisition:
RGC ACQUISITION CORP., a Virginia
corporation
By: s/John B. Williamson, III
Its: President
Attest:
By: s/Roger L. Baumgardner
Its: Secretary
Bluefield:
BLUEFIELD GAS COMPANY, a West Virginia
public service corporation
By: s/John B. Williamson, III
Its: President
Attest
By: s/Roger L. Baumgardner
Its: Secretary
Diversified:
DIVERSIFIED ENERGY COMPANY, a Virginia
corporation
By: s/John B. Williamson, III
Its: President
Attest:
By: s/Roger L. Baumgardner
Its: Secretary
A-7
Commonwealth:
COMMONWEALTH PUBLIC SERVICE CORPORATION,
a Virginia public service corporation
By: s/John B. Williamson, III
Its: President
Attest
By: s/Roger L. Baumgardner
Its: Secretary
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Exhibit 1
ARTICLES OF MERGER
OF
COMMONWEALTH PUBLIC SERVICE CORPORATION
INTO
ROANOKE GAS COMPANY
The undersigned corporations hereby execute these Articles of Merger for
the purpose of merging Commonwealth Public Service Corporation ("Commonwealth"),
a Virginia public service corporation and wholly-owned subsidiary of Roanoke Gas
Company ("Roanoke Gas"), a Virginia public service corporation, into Roanoke Gas
in accordance with Section 13.1-719 of the Virginia Stock Corporation Act.
I. PLAN OF MERGER. The following Plan of Merger was duly approved by the
Board of Directors of Roanoke Gas in the manner prescribed by law and
shareholder approval was not required under Section 13.1-719 of the Virginia
Stock Corporation Act:
PLAN OF MERGER
A. CORPORATIONS PARTICIPATING IN MERGER
Commonwealth Public Service Corporation (the "Merging
Corporation") shall merge with and into Roanoke Gas Company. Roanoke Gas
Company shall be the surviving corporation (the "Surviving
Corporation").
B. TERMS AND CONDITIONS OF THE MERGER, CONVERSION AND CANCELLATION
OF STOCK
On the Effective Date (as hereinafter defined) of the merger of
the Merging Corporation into the Surviving Corporation (the "Merger"),
the separate existence of the Merging Corporation shall cease and each
share of stock of the Merging Corporation outstanding immediately prior
thereto shall, without any action by the holder thereof, be surrendered
and extinguished. The Surviving Corporation shall succeed to all of the
properties, rights, and other assets and shall be subject to all of the
liabilities of the Merging Corporation and the Surviving Corporation.
The stock of the Surviving Corporation outstanding on the Effective Date
shall remain unchanged by reason of the Merger.
C. ARTICLES OF INCORPORATION AND BYLAWS OF SURVIVING CORPORATION
The Articles of Incorporation and the Bylaws of the Surviving
Corporation shall not be changed by the Merger and shall continue as the
Surviving Corporation's Articles of Incorporation and Bylaws.
D. THE DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
The Directors and Officers of the Surviving Corporation at the
Effective Date of the Merger shall continue to be the Directors and
Officers of the Surviving Corporation until their successors are duly
elected and qualified.
II. SHARES ENTITLED TO VOTE. Shareholder approval is not required for
the Merger pursuant to Section 13.1-719 of the Code of Virginia.
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III. EFFECTIVE DATE. This Merger shall become effective at 11:59 p.m.
on _____________, 1999 (the "Effective Date").
IN WITNESS WHEREOF, these Articles of Merger are signed by the President
of each corporation this ______ day of ___________, 1999.
COMMONWEALTH PUBLIC SERVICE CORPORATION
By____________________________
Its ____________________________
Attest:
By: _____________________
Its: Secretary
ROANOKE GAS COMPANY
By______________________________
Its_____________________________
Attest:
By: _____________________
Its: Secretary
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Appendix B
ARTICLES OF INCORPORATION
OF
RGC RESOURCES, INC.
1. The name of the Corporation is RGC Resources, Inc.
2. The purpose of the Corporation is to engage in any lawful act or
activity not required to be specifically stated in these Articles of
Incorporation ("Articles") for which corporations may be organized under the
laws of the Commonwealth of Virginia.
3. (a) The aggregate number of shares which the Corporation is authorized
to issue and the par value per share are as follows:
Class Number of Shares Par Value
Common 10,000,000 $5.00
Preferred 5,000,000 No Par Value
(b) The Board of Directors of the Corporation (the "Board of
Directors") may, by amending these Articles by filing Articles of Amendment with
the Virginia State Corporation Commission, fix in whole or in part the
preferences, limitations and rights, within the limits set by law, of (i) any
class of shares, before the issuance of any shares of that class, or (ii) one or
more series within a class, before the issuance of any shares within that
series.
(c) The preferred stock (including any shares of preferred stock
restored to the status of authorized but unissued preferred stock undesignated
as to series pursuant to this Article 3(c)) may be divided into one or more
series and issued from time to time with such preferences, privileges,
limitations, and relative rights as shall be fixed and determined by the Board
of Directors. Without limiting the generality of the foregoing, the Board of
Directors is expressly authorized to the fullest extent permitted from time to
time by law to fix:
(i) the distinctive serial designations and the division of
shares of preferred stock into one or more series and the number of shares of a
particular series, which may be increased or decreased (but not below the number
of shares thereof then outstanding);
(ii) the rate or amount (or the method of determining the rate
or amount) and times at which, the form in which, and the preferences and
conditions under which, dividends shall be payable on shares of a particular
series, the status of such dividends as cumulative, partially cumulative, or
noncumulative, the date or dates from which dividends, if cumulative, shall
accumulate, and the status of such series as participating or nonparticipating
with shares of other classes or series;
(iii) the price or prices at which, the consideration for
which, the period or periods within which and the terms and conditions, if any,
upon which the shares of a particular series may be redeemed, in whole or in
part, at the option of the Corporation or otherwise;
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(iv) the amount or amounts and rights and preferences, if any,
to which the holders of shares of a particular series are entitled or shall have
upon any involuntary or voluntary liquidation, dissolution or winding up of the
Corporation;
(v) the rights and preferences over or otherwise in relation
to any other class or series (including other series of preferred stock), as to
the right to receive dividends and/or the right to receive payments out of the
net assets of the Corporation upon any involuntary or voluntary liquidation,
dissolution or winding up of the Corporation;
(vi) the right, if any, of the holders of a particular series,
the Corporation or another person to convert or cause conversion of shares of
such series into shares of other classes or series or into other securities,
cash, indebtedness or other property, or to exchange or cause exchange of such
shares for shares of other classes or series or other securities, cash,
indebtedness or other property, and the terms and conditions, if any, including
the price or prices or the rate or rates of conversion and exchange, and the
terms and conditions or adjustments, if any, at which such conversion or
exchange may be made or caused;
(vii) the obligation, if any, of the Corporation to redeem,
purchase or otherwise acquire, in whole or in part, shares of a particular
series for a sinking fund or otherwise, the terms and conditions thereof, if
any, including the price or prices and the nature of the consideration payable
for such shares so redeemed, purchased or otherwise acquired;
(viii)the voting rights, if any, including special,
conditional or limited voting rights, of the shares of a particular series in
addition to those required by law, including the number of votes per share and
any requirement for the approval by the holders of shares of all series of
preferred stock, or of the shares of one or more series thereof, or of both, in
an amount greater than a majority, up to such amount as is in accordance with
applicable law or these Articles, as a condition to specified corporate action
or amendments to the Articles; and
(ix) any other preferences, limitations and relative rights
which may be so determined by resolution or resolutions of the Board of
Directors.
Shares of preferred stock shall rank prior or superior to the common
stock in respect of the right to receive dividends and/or the right to receive
payments out of the net assets of the Corporation upon any involuntary or
voluntary liquidation, dissolution or winding up of the Corporation. All shares
of preferred stock redeemed, purchased or otherwise acquired by the Corporation
(including shares surrendered for conversion or exchange) shall be cancelled and
thereupon restored to the status of authorized but unissued shares of preferred
stock undesignated as to series.
(d) The holders of common stock, to the exclusion of any other class
of stock of the Corporation, have sole and full power to vote for the election
of directors and for all other purposes without limitation except only (i) as
otherwise expressly provided in the serial designation of any series of
preferred stock, (ii) as otherwise expressly provided in these Articles or (iii)
as otherwise expressly provided by the then existing laws of the Commonwealth of
Virginia. The holders of common stock will have one vote for each share of
common stock held by them. The outstanding shares of common stock, upon
dissolution, liquidation or winding up of the Corporation, entitle their holders
to share, pro rata, based on the number of shares owned, in the Corporation's
assets remaining after payment or provisions for payment of all debts and
liabilities of the Corporation, and after provisions for the outstanding shares
of any class of stock or other security having senior liquidation rights to the
common stock.
(e) No holder of shares of stock of any class of the Corporation
will have any preemptive or preferential right of subscription to any shares of
any class of stock of the Corporation, whether now or hereafter authorized, or
to any obligations of the Corporation convertible into stock of the Corporation,
issued or sold, nor any right of subscription to any thereof.
4. Subject to the rights of holders of any series of preferred stock to
elect directors under specified circumstances:
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(i) The number of directors of the Corporation, not less than
seven nor more than eleven, shall be set by the Bylaws; provided that, in the
absence of a provision in the Bylaws fixing the number of directors, the number
of directors shall be nine. The directors shall be divided into three classes
as nearly equal in number as possible, with the term of office of directors of
the first class to expire at the first annual meeting of the shareholders after
their election, that of the second class to expire at the second annual meeting
after their election, and that of the third class to expire at the third annual
meeting after their election. At each annual meeting of shareholders following
such initial classification and election, directors elected to succeed those
directors, whose terms expire shall be elected for a term of office to expire
at the third succeeding annual meeting of shareholders after their election and
shall continue in office until their respective successors are elected and
qualify. In the event of any increase or decrease in the number of directors
fixed by the Bylaws, any newly-created directorships shall be so apportioned
among the classes by the Board of Directors so as to make all classes as nearly
equal in number as possible.
(ii) Newly-created directorships resulting from an increase in
the authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office, or other cause shall be filled by the affirmative vote of a majority of
the directors then in office, whether or not a quorum. No decrease in the number
of directors constituting the Board of Directors shall shorten the term of any
incumbent director. A director may be removed from office only for cause.
5. To the full extent that the laws of the Commonwealth of Virginia, as
they now or may hereafter exist, permit the limitation or elimination of the
liability of directors or officers, no director or officer of the Corporation
shall be liable to the Corporation or its shareholders for any monetary damages.
6. (a) The Corporation shall indemnify a director or officer of the
Corporation who is or was a party to any proceeding, including a proceeding by
or in the right of the Corporation, by reason of the fact that he is or was such
a director or officer or is or was serving at the request of the Corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other profit or non-profit
enterprise against all liabilities and expenses incurred in the proceeding,
except such liabilities and expenses as are incurred because of his willful
misconduct or knowing violation of the criminal law. Unless a determination has
been made that indemnification is not permissible, the Corporation shall make
advances and reimbursement for expenses incurred by a director or officer in a
proceeding upon receipt of an undertaking from him to repay the same if it is
ultimately determined that he is not entitled to indemnification. Such
undertaking shall be an unlimited unsecured general obligation of the director
or officer and shall be accepted without reference to his ability to make
repayment. The Board of Directors is hereby empowered to contract in advance to
indemnify and advance the expenses of any director or officer. The termination
of any proceeding by judgment, order, settlement, conviction or upon a plea of
nolo contendere or its equivalent shall not, by itself, create a presumption
that the director or officer did not meet the standard of conduct entitling him
to indemnity hereunder.
(b) The Board of Directors is hereby empowered to cause the
Corporation to indemnify and make advances and reimbursement for expenses (or
contract in advance for the same) incurred by any person not specified in
paragraph (a) of this Article who was or is a party to any proceeding, by reason
of the fact that he is or was an employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other profit or non-profit enterprise, to the same extent as if
such person were specified as one to whom indemnification is granted in
paragraph (a) of this Article.
(c) The Corporation may purchase and maintain insurance to indemnify
it against the whole or any portion of the liability assumed by it in accordance
with this Article and may also procure insurance, in such amounts as the Board
of Directors may determine, on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
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enterprise, against any liability asserted against or incurred by such person in
any such capacity or arising from his status as such, whether or not the
Corporation would have power to indemnify him against such liability under the
provisions of this Article.
(d) Except as hereinafter provided, all determinations as to the
permissibility of indemnification and advances and reimbursement for expenses
(including contracts with respect thereto) shall be made by a majority vote of a
quorum consisting of directors not at the time parties to the proceeding. In the
event such a quorum cannot be obtained to make any determination as to the
permissibility of indemnification and advances and reimbursement for expenses
with respect to any claim for indemnification (including contracts with respect
thereto), or in the event there has been a change in the composition of a
majority of the Board of Directors after the date of the alleged act with
respect to which indemnification is claimed, such determination shall be made by
special legal counsel agreed upon by the Board of Directors and the proposed
indemnitee. If the Board of Directors and the proposed indemnitee are unable to
agree upon such special legal counsel, the Board of Directors and the proposed
indemnitee each shall select a nominee, and the nominees shall select such
special legal counsel.
(e) The provisions of this Article shall be applicable to all
actions, claims, suits or proceedings commenced after the adoption hereof,
whether arising from any action taken or failure to act before or after such
adoption. No amendment, modification or repeal of this Article shall diminish
the rights provided hereby or diminish the right to indemnification with respect
to any claim, issue or matter in any then pending or subsequent proceeding that
is based in any material respect on any alleged action or failure to act prior
to such amendment, modification or repeal.
(f) Except to the extent inconsistent with this Article, terms used
herein shall have the same meanings assigned them in the Indemnification Article
of the Virginia Stock Corporation Act, as now in effect or hereafter amended or
replaced. Without limitation, it is expressly understood that reference herein
to directors, officers, employees or agents shall include former directors,
officers, employees and agents and their respective heirs, executors and
administrators.
7. The Corporation's initial registered office shall be located in the
City of Roanoke at 10 South Jefferson Street, Suite 1400, Roanoke, Virginia
24011. The Corporation's initial registered agent shall be Faith M. Wilson,
whose address is the same as the Corporation's registered office and who is a
resident of Virginia and a member of the Virginia State Bar.
Dated: July 29, 1998 s/Faith M. Wilson
------------------
Incorporator
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Appendix C
ARTICLE 15 OF THE VIRGINIA STOCK CORPORATION ACT
RELATING TO DISSENTERS' RIGHTS
Section 13.1-729. DEFINITIONS. - In this article:
"Corporation" means the issuer of the shares held by a dissenter before
the corporate action, except that (i) with respect to a merger, "corporation"
means the surviving domestic or foreign corporation or limited liability company
by merger of that issuer, and (ii) with respect to a share exchange,
"corporation" means the acquiring corporation by share exchange, rather than the
issuer, if the plan of share exchange places the responsibility for dissenters'
rights on the acquiring corporation.
"Dissenter" means a shareholder who is entitled to dissent from
corporate action under Section 13.1-730 and who exercises that right when and in
the manner required by Sections 13.1-732 through 13.1-739.
"Fair value," with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
"Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.
"Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
"Beneficial shareholder" means the person who is a beneficial owner of
shares held by a nominee as the record shareholder.
"Shareholder" means the record shareholder or the beneficial
shareholder.
Section 13.1-730. RIGHT TO DISSENT. - A. A shareholder is entitled to
dissent from, and obtain payment of the fair value of his shares in the event
of, any of the following corporate actions:
1. Consummation of a plan of merger to which the corporation is a party
(i) if shareholder approval is required for the merger by Section 13.1-718 or
the articles of incorporation and the shareholder is entitled to vote on the
merger or (ii) if the corporation is a subsidiary that is merged with its parent
under Section 13.1-719;
2. Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, if the shareholder is
entitled to vote on the plan;
3. Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation if the shareholder was entitled to vote on the
sale or exchange or if the sale or exchange was in furtherance of a dissolution
on which the shareholder was entitled to vote, provided that such dissenter's
rights shall not apply in the case of (i) a sale or exchange pursuant to court
order, or (ii) a sale for cash pursuant to a plan by which all or substantially
all of the net proceeds of the sale will be distributed to the shareholders
within one year after the date of sale;
4. Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board of
directors provides that voting or nonvoting shareholders are entitled to dissent
and obtain payment for their shares.
B. A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
C. Notwithstanding any other provision of this article, with respect to
a plan of merger or share exchange or a sale or exchange of property there shall
be no right of dissent in favor of holders of shares of any class or series
which, at the record date fixed to determine the shareholders entitled to
receive notice of and to vote at the meeting at which the plan of merger or
share exchange or the sale or exchange of property is to be acted on, were (i)
listed on a national securities exchange or on the National Association of
Securities Dealers Automated Quotation System (NASDAQ) or (ii) held by at least
2,000 record shareholders, unless in either case:
1. The articles of incorporation of the corporation issuing such shares
provide otherwise;
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2. In the case of a plan of merger or share exchange, the holders of the
class or series are required under the plan of merger or share exchange to
accept for such shares anything except:
a. Cash;
b. Shares or membership interests, or shares or membership interests and
cash in lieu of fractional shares (i) of the surviving or acquiring corporation
or limited liability company or (ii) of any other corporation or limited
liability company which, at the record date fixed to determine the shareholders
entitled to receive notice of and to vote at the meeting at which the plan of
merger or share exchange is to be acted on, were either listed subject to notice
of issuance on a national securities exchange or held of record by at least
2,000 record shareholders or members; or
c. A combination of cash and shares or membership interests as set forth
in subdivisions 2a and 2b of this subsection; or
3. The transaction to be voted on is an "affiliated transaction" and is
not approved by a majority of "disinterested directors" as such terms are
defined in Section 13.1-725.
D. The right of a dissenting shareholder to obtain payment of the fair
value of his shares shall terminate upon the occurrence of any one of the
following events:
1. The proposed corporate action is abandoned or rescinded;
2. A court having jurisdiction permanently enjoins or sets aside the
corporate action; or
3. His demand for payment is withdrawn with the
written consent of the corporation.
Section 13.1-731. DISSENT BY NOMINEES AND BENEFICIAL OWNERS. - A. A
record shareholder may assert dissenters' rights as to fewer than all the shares
registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing of
the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.
B. A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
1. He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
2. He does so with respect to all shares of which he is the beneficial
shareholder or over which he has power to direct the vote.
Section 13.1-732. NOTICE OF DISSENTERS' RIGHTS. - A. If proposed
corporate action creating dissenters' rights under Section 13.1-730 is submitted
to a vote at a shareholders' meeting, the meeting notice shall state that
shareholders are or may be entitled to assert dissenters' rights under this
article and be accompanied by a copy of this article.
B. If corporate action creating dissenters' rights under Section
13.1-730 is taken without a vote of shareholders, the corporation, during the
ten-day period after the effectuation of such corporate action, shall notify in
writing all record shareholders entitled to assert dissenters' rights that the
action was taken and send them the dissenters' notice described in Section
13.1-734.
Section 13.1-733. NOTICE OF INTENT TO DEMAND PAYMENT. - A. If proposed
corporate action creating dissenters' rights under Section 13.1-730 is submitted
to a vote at a shareholders' meeting, a shareholder who wishes to assert
dissenters' rights (i) shall deliver to the corporation before the vote is taken
written notice of his intent to demand payment for his shares if the proposed
action is effectuated and (ii) shall not vote such shares in favor of the
proposed action.
B. A shareholder who does not satisfy the requirements of subsection A
of this section is not entitled to payment for his shares under this article.
Section 13.1-734. DISSENTERS' NOTICE. - A. If proposed corporate action
creating dissenters' rights under Section 13.1-730 is authorized at a
shareholders' meeting, the corporation, during the ten-day period after the
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effectuation of such corporate action, shall deliver a dissenters' notice
in writing to all shareholders who satisfied the requirements of Section
13.1-733.
B. The dissenters' notice shall:
1. State where the payment demand shall be sent and where and when
certificates for certificated shares shall be deposited;
2. Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
3. Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the proposed
corporate action and requires that the person asserting dissenters' rights
certify whether or not he acquired beneficial ownership of the shares before or
after that date;
4. Set a date by which the corporation must receive the payment demand,
which date may not be fewer than thirty nor more than sixty days after the date
of delivery of the dissenters' notice; and
5. Be accompanied by a copy of this article.
Section 13.1-735. DUTY TO DEMAND PAYMENT. - A. A shareholder sent a
dissenters' notice described in Section 13.1-734 shall demand payment, certify
that he acquired beneficial ownership of the shares before or after the date
required to be set forth in the dissenters' notice pursuant to subdivision 3 of
subsection B of Section 13.1-734, and, in the case of certificated shares,
deposit his certificates in accordance with the terms of the notice.
B. The shareholder who deposits his shares pursuant to subsection A of
this section retains all other rights of a shareholder except to the extent that
these rights are canceled or modified by the taking of the proposed corporate
action.
C. A shareholder who does not demand payment and deposits his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article.
Section 13.1-736. SHARE RESTRICTIONS. - A. The corporation may restrict
the transfer of uncertificated shares from the date the demand for their payment
is received.
B. The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder except to the
extent that these rights are canceled or modified by the taking of the proposed
corporate action.
Section 13.1-737. PAYMENT. - A. Except as provided in Section 13.1-738,
within thirty days after receipt of a payment demand made pursuant to Section
13.1-735, the corporation shall pay the dissenter the amount the corporation
estimates to be the fair value of his shares, plus accrued interest. The
obligation of the corporation under this paragraph may be enforced (i) by the
circuit court in the city or county where the corporation's principal office is
located, or, if none in this Commonwealth, where its registered office is
located or (ii) at the election of any dissenter residing or having its
principal office in the Commonwealth, by the circuit court in the city or county
where the dissenter resides or has its principal office. The court shall dispose
of the complaint on an expedited basis.
B. The payment shall be accompanied by:
1. The corporation's balance sheet as of the end of a fiscal year ending
not more than sixteen months before the effective date of the corporate action
creating dissenters' rights, an income statement for that year, a statement of
changes in shareholders' equity for that year, and the latest available interim
financial statements, if any;
2. An explanation of how the corporation estimated the fair value of the
shares and of how the interest was calculated;
3. A statement of the dissenters' right to demand payment under Section
13.1-739; and 4. A copy of this article.
Section 13.1-738. AFTER-ACQUIRED SHARES. - A. A corporation may elect to
withhold payment required by Section 13.1-737 from a dissenter unless he was the
beneficial owner of the shares on the date of the first publication by news
media or the first announcement to shareholders generally, whichever is earlier,
of the terms of the proposed corporate action, as set forth in the dissenters'
notice.
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B. To the extent the corporation elects to withhold payment under
subsection A of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
offer to pay this amount to each dissenter who agrees to accept it in full
satisfaction of his demand. The corporation shall send with its offer an
explanation of how it estimated the fair value of the shares and of how the
interest was calculated, and a statement of the dissenter's right to demand
payment under Section 13.1-739.
Section 13.1-739. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT
OR OFFER.- A. A dissenter may notify the corporation in writing of his own
estimate of the fair value of his shares and amount of interest due, and demand
payment of his estimate (less any payment under Section 13.1-737), or reject the
corporation's offer under Section 13.1-738 and demand payment of the fair value
of his shares and interest due, if the dissenter believes that the amount paid
under Section 13.1-737 or offered under Section 13.1-738 is less than the fair
value of his shares or that the interest due is incorrectly calculated.
B. A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing under subsection A
of this section within thirty days after the corporation made or offered payment
for his shares.
Section 13.1-740. COURT ACTION. - A. If a demand for payment under
Section 13.1-739 remains unsettled, the corporation shall commence a proceeding
within sixty days after receiving the payment demand and petition the circuit
court in the city or county described in subsection B of this section to
determine the fair value of the shares and accrued interest. If the corporation
does not commence the proceeding within the sixty-day period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
B. The corporation shall commence the proceeding in the city or county
where its principal office is located, or, if none in this Commonwealth, where
its registered office is located. If the corporation is a foreign corporation
without a registered office in this Commonwealth, it shall commence the
proceeding in the city or county in this Commonwealth where the registered
office of the domestic corporation merged with or whose shares were acquired by
the foreign corporation was located.
C. The corporation shall make all dissenters, whether or not residents
of this Commonwealth, whose demands remain unsettled parties to the proceeding
as in an action against their shares and all parties shall be served with a copy
of the petition. Nonresidents may be served by registered or certified mail or
by publication as provided by law.
D. The corporation may join as a party to the proceeding any shareholder
who claims to be a dissenter but who has not, in the opinion of the corporation,
complied with the provisions of this article. If the court determines that such
shareholder has not complied with the provisions of this article, he shall be
dismissed as a party.
E. The jurisdiction of the court in which the proceeding is commenced
under subsection B of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend a
decision on the question of fair value. The appraisers have the powers described
in the order appointing them, or in any amendment to it. The dissenters are
entitled to the same discovery rights as parties in other civil proceedings.
F. Each dissenter made a party to the proceeding is entitled to judgment
(i) for the amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the corporation or (ii) for
the fair value, plus accrued interest, of his after-acquired shares for which
the corporation elected to withhold payment under Section 13.1-738.
Section 13.1-741. COURT COSTS AND COUNSEL FEES. - A. The court in an
appraisal proceeding commenced under Section 13.1-740 shall determine all costs
of the proceeding, including the reasonable compensation and expenses of
appraisers appointed by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters did not act in good faith in demanding payment under
Section 13.1-739.
B. The court may also assess the reasonable fees and expenses of
experts, excluding those of counsel, for the respective parties, in amounts the
court finds equitable:
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1. Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the requirements
of Sections 13.1-732 through 13.1-739; or
2. Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses are
assessed did not act in good faith with respect to the rights provided by this
article.
C. If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, the court
may award to these counsel reasonable fees to be paid out of the amounts awarded
the dissenters who were benefitted.
D. In a proceeding commenced under subsection A of Section 13.1-737 the
court shall assess the costs against the corporation, except that the court may
assess costs against all or some of the dissenters who are parties to the
proceeding, in amounts the court finds equitable, to the extent the court finds
that such parties did not act in good faith in instituting the proceeding.
C-5
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Officers and Directors.
Section 13.1-692.1 of the Code of Virginia, as amended, places a
limitation on the liability of officers and directors of a corporation in any
proceeding brought by or in the right of the corporation or brought by or on
behalf of shareholders of the corporation. The damages asserted against an
officer or director arising out of a single transaction, occurrence, or course
of conduct shall not exceed the greater of $100,000 or the amount of cash
compensation received by the officer or director from the corporation during the
12 months immediately preceding the act or omission for which liability was
imposed. The statute also authorizes the corporation, in its articles of
incorporation or, if approved by the shareholders, in its bylaws, to provide for
a different specific monetary limit on, or to eliminate entirely, liability. The
liability of an officer or director shall not be limited if the officer or
director engaged in willful misconduct or a knowing violation of the criminal
law or any federal or state securities law. Resources' Articles of Incorporation
contain a provision which eliminates, to the full extent that the laws of the
Commonwealth of Virginia permit, the liability of an officer or director of
Resources to the corporation or its shareholders for monetary damages for any
breach of duty as a director or officer.
Resources' Articles of Incorporation also require Resources to indemnify
any director or officer who is or was a party to a proceeding, including a
proceeding by or in the right of the corporation, by reason of the fact that he
is or was such a director or officer or is or was serving at the request of
Resources as a director, officer, employee or agent of another entity. Directors
and officers of Resources are entitled to be indemnified against all liabilities
and expenses incurred by the director or officer in the proceeding, except such
liabilities and expenses as are incurred because of his or her willful
misconduct or knowing violation of the criminal law. Unless a determination has
been made that indemnification is not permissible, a director or officer also is
entitled to have Resources make advances and reimbursement for expenses prior to
final disposition of the proceeding upon receipt of a written undertaking from
the director or officer to repay the amounts advanced or reimbursed if it is
ultimately determined that he or she is not entitled to indemnification. The
Board of Directors of Resources also has the authority to extend to employees,
agents, and other persons serving at the request of Resources the same
indemnification rights held by directors and officers, subject to all of the
accompanying conditions and obligations.
Virginia Code Section 13.1-700.1 permits a court, upon application of a
director or officer, to review Resources' determination as to a director's or
officer's request for advances, reimbursement or indemnification. If it
determines that the director or officer is entitled to such advances,
reimbursement or indemnification, the court may order Resources to make advances
and/or reimbursement for expenses or to provide indemnification, in which case
the court shall also order Resources to pay the officer's or director's
reasonable expenses incurred to obtain the order. With respect to a proceeding
by or in the right of the corporation, the court may order indemnification to
the extent of the officer's or director's reasonable expenses if it determines
that, considering all the relevant circumstances, the officer or director is
entitled to indemnification even though he or she was adjudged liable, and may
also order Resources to pay the officer's and director's reasonable expenses
incurred to obtain the order.
Resources has the power to purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of Resources, or
is or was serving at the request of Resources as a director, officer, employee
or agent of another entity, against any liability asserted against or incurred
by such person, in any such capacity or arising from his or her status as such,
whether or not Resources would have the power to indemnify such person against
such liability under the Articles of Incorporation.
II-1
Roanoke Gas, the parent of Resources, maintains a directors' and officers'
legal liability insurance policy in the amount of $2,000,000, issued by the
Chubb Group Insurance Companies. The policy provides coverage up to 100% of its
face amount, subject to certain deductible or retention amounts. In general, the
policy insures:
o the Company's directors and officers against losses by reason of
their wrongful acts, and/or
o the Company against claims against the directors and officers by
reasons of their wrongful acts for which the Company is required to
indemnify or pay, all as such terms are defined in the policy and
subject to the terms, conditions and exclusions contained therein.
Item 21. Exhibits and Financial Statement Schedules.
*2 Agreement and Plan of Merger and Reorganization dated as of
September 28, 1998, by an among Roanoke Gas Company, RGC
Acquisition Corp., RGC Resources, Inc., Diversified Energy
Company and Commonwealth Public Service Corporation (attached as
Appendix A to the proxy statement/prospectus)
*3(a) Articles of Incorporation of RGC Resources, Inc. (attached as
Appendix B to the proxy statement/prospectus)
*3(b) Bylaws of RGC Resources, Inc.
*4(a) Specimen copy of certificate for RGC Resources, Inc. common
stock, $5.00 par value
*4(b) Article I of the Bylaws of Roanoke Gas Company (included in
Exhibit 3(b))
*5 Opinion of Woods, Rogers & Hazlegrove, P.L.C. with respect to the
RGC Resources, Inc. common stock
8*8 Opinion of Woods, Rogers & Hazlegrove, P.L.C. with respect to
certain tax matters
*13 Roanoke Gas Company 1998 Annual Report to Shareholders
*16 Letter of KPMG Peat Marwick LLP regarding change in accountants
(incorporated herein by reference to Exhibit 99 of Form 8-K dated
December 19, 1997)
23*23 (a) Consent of Deloitte & Touche LLP
23*23 (b) Consent of KPMG Peat Marwick LLP
23*23 (c) Consent of Woods, Rogers & Hazlegrove, P.L.C. (included in
Exhibits 5 and 8)
*99 Form of Proxy
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*Previously filed
II-2
Item 22. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in this Registration Statement or
any material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered hereby which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or
II-3
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
(e) The undersigned registrant hereby undertakes to respond to request for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by means of
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(g)(1) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
(g)(2) The undersigned registrant undertakes that every prospectus (i)
that is filed pursuant to paragraph (g)(1) immediately preceding, or (ii) that
purports to meet the requirements of section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415 (Section 230.415
of this chapter), will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective, and that, for
purposes 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.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, has duly caused
this Amendment No. 45 to Registration Statement No. 333-67311 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Roanoke,
Commonwealth of Virginia on January 27,28, 1999.
RGC RESOURCES, INC.
By: s/John B. Williamson, III
John B. Williamson, III
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 45 to Registration Statement No. 333-67311 has been signed by the following
persons in the capacities indicated as of January 27,28, 1999.
Signature Title
s/John B. Williamson, III President, Chief Executive
(John B. Williamson, III) Officer and Director
(Principal Executive Officer)
s/Roger L. Baumgardner Vice President, Secretary and
(Roger L. Baumgardner) Treasurer (Principal
Accounting Officer)
(Principal Financial Officer)
s/Lynn D. Avis Director
(Lynn D. Avis)
s/Abney S. Boxley, III Director
(Abney S. Boxley, III)
s/Frank T. Ellett Director
(Frank T. Ellett)
s/Frank A. Farmer, Jr. Director
(Frank A. Farmer, Jr.)
s/Wilbur L. Hazlegrove Director
(Wilbur L. Hazlegrove)
II-5
s/J. Allen Layman Director
(J. Allen Layman)
s/Thomas L. Robertson Director
(Thomas L. Robertson)
s/S. Frank Smith Director
(S. Frank Smith)
II-6
INDEX TO EXHIBITS
Exhibit No. Description
*2 Agreement and Plan of Merger and Reorganization dated as of
September 28, 1998, by an among Roanoke Gas Company, RGC
Acquisition Corp., RGC Resources, Inc., Diversified Energy
Company and Commonwealth Public Service Corporation (attached as
Appendix A to the proxy statement/prospectus)
*3(a) Articles of Incorporation of RGC Resources, Inc. (attached as
Appendix B to the proxy statement/prospectus)
*3(b) Bylaws of RGC Resources, Inc.
*4(a) Specimen copy of certificate for RGC Resources, Inc. common
stock, $5.00 par value
*4(b) Article I of the Bylaws of Roanoke Gas Company (included in
Exhibit 3(b))
*5 Opinion of Woods, Rogers & Hazlegrove, P.L.C. with respect to the
RGC Resources, Inc. common stock
8*8 Opinion of Woods, Rogers & Hazlegrove, P.L.C. with respect to
certain tax matters
13 Roanoke Gas Company 1998 Annual Report to Shareholders
*16 Letter of KPMG Peat Marwick LLP regarding change in accountants
(incorporated herein by reference to Exhibit 99 of Form 8-K dated
December 19, 1997)
23*23 (a) Consent of Deloitte & Touche LLP
23*23 (b) Consent of KPMG Peat Marwick LLP
23*23 (c) Consent of Woods, Rogers & Hazlegrove, P.L.C. (included in
Exhibits 5 and 8)
*99 Form of Proxy
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*Previously filed