UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATIONProxy Statement Pursuant to Section 14(a) of
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[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the [X] Definitive Proxy Statement Commission Only (as permitted [ ] Definitive Additional Materials by Rule 14a-6(e)(2)) [ ] Soliciting Material Under Rule 14a-12 The St. Lawrence Seaway Corporation ------------------------------------------------ (Name
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CARBON ENERGY CORPORATION
(Name of Registrant as Specified Inin Its Charter)
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THE ST. LAWRENCE SEAWAY
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(4) Date Filed: CARBON ENERGY CORPORATION
320 N. Meridian Street,
1700 Broadway, Suite818 Indianapolis, Indiana 46204 ____________________________________________________________________________________________________ NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To Be Held November 3, 2004 ____________________________________________________________________________________________________1170
Denver, CO 80290July __, 2020
To the
ShareholdersStockholders ofThe St. Lawrence Seaway Corporation NOTICE IS HEREBY GIVEN that the AnnualCarbon Energy Corporation:You are cordially invited to attend a Special Meeting of
Shareholdersstockholders of Carbon Energy Corporation, a Delaware corporation (the “Company”), to be held on August __, 2020, at _____ a.m. local time. TheSt. Lawrence Seaway Corporation (the "Corporation")Special Meeting will be heldWednesday, November 3, 2004 at 10:00 a.m. (Indianapolis Time)at theColumbia Club, 121 Monument Circle, Capehart Room, 4th Floor, Indianapolis, Indianaoffices of the Company which are located at 1700 Broadway, Suite 1170, Denver, CO 80290.At the Special Meeting, you will be asked to consider and vote upon a proposal to amend the Company’s Amended and Restated Certificate of Incorporation, to reverse split the Company’s common stock, (the “Reverse Stock Split”) at a ratio of 4-for-1. If the Reverse Stock Split is approved, the Company will file with the Delaware Secretary of State a certificate of amendment to its Amended and Restated Certificate of Incorporation, at which date (the “effective time”) a stockholder owning fewer than four shares immediately prior to the effective time, would only be entitled to a fraction of a share of common stock and will be paid cash in lieu of such fraction of a share, on the basis of $1.00, (the “Cash Payment”) for each share of common stock held by the
following purposes: 1. To elect four directors. 2. To transactstockholder (the “Cashed Out Stockholders”) immediately prior to the effective time and the Cashed Out Stockholders will no longer be stockholders of the Company.The purpose of the Reverse Stock Split is to enable the Company to reduce the number of record holders of its common stock below 300, which is the level below which the Company can suspend its duty to file periodic and current reports and other information with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As described in the accompanying proxy statement, the Company’s Board of Directors has determined that the costs of being a public reporting company outweigh the benefits of being a public company. The actions the Company would take to suspend, and events that occur as a result of such actions that would have the effect of suspending the Company’s reporting obligations under the Exchange Act, and the registration of the Company’s common stock under Section 12(g) of the Exchange Act, are collectively referred to as the “Transaction”. After giving effect to the Transaction, the Company will no longer be subject to the reporting requirements under the Exchange Act or other
businessrequirements applicable to a public company, including requirements under the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).The Company anticipates that after the Reverse Stock Split its common stock will continue to trade on the Pink Non-Current platform of the OTC Markets Group.
Furthermore, after giving effect to the Transaction and as necessary to maintain the Company’s suspension of its SEC reporting obligations, the Company reserves the right to take additional actions that may
properly come before the meeting and any adjournment or adjournments thereof.be permitted under Delaware law, including further reverse stock splits.The Board of Directors has
fixeddetermined (by a unanimous vote) that thecloseReverse Stock Split is in the best interests ofbusinessthe Company’s stockholders and the specific terms of the Reverse Stock Split are fair to Cashed Out Stockholders.The Board recommends (by a unanimous vote of directors) that you vote “FOR” the adoption of the Reverse Stock Split. Please read the accompanying proxy statement carefully.
Your vote is important. Whether or not you plan to attend the Special Meeting, the Company urges you to please vote by proxy as soon as possible. If you do attend the Special Meeting and desire to vote in person, you may do so, even though you have previously voted by proxy.
Sincerely,
Patrick R. McDonald
Chief Executive OfficerCARBON ENERGY CORPORATION
1700 Broadway, Suite 1170
Denver, CO 80290NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST ____, 2020
To the Stockholders of Carbon Energy Corporation:
Notice is hereby given that a special meeting of stockholders of Carbon Energy Corporation (the “Company”), will be held on
September 17, 2004August __, 2020, at ______ a.m. local time. The Special Meeting will be held at the offices of the Company which are located at 1700 Broadway, Suite 1170, Denver, CO 80290. The Special Meeting is being held for the following purposes:
● to approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to reverse split the Company’s common stock on a 4-for-1 basis; and
to transact such other business as may properly come before the Meeting. July 15, 2020 is the record date for the determination of
shareholdersstockholders entitled to notice of and to vote at themeetingSpecial Meeting (the “Record Date”).A copy of the proposed form of amendment to the Company’s Amended and Restated Certificate of Incorporation is attached as Appendix A to the accompanying proxy statement.
Carbon Energy Corporation Patrick R. McDonald Chief Executive Officer July __, 2020
PLEASE INDICATE YOUR VOTING INSTRUCTIONS
ON THE ATTACHED PROXY CARD,AND SIGN, DATE AND RETURN THE PROXY CARD.
TO SAVE THE COST OF FURTHER SOLICITATION,
PLEASE VOTE PROMPTLY.
CARBON ENERGY CORPORATION
1700 Broadway, Suite 1170
Denver, CO 80290The accompanying proxy is solicited by the Company’s directors for voting at the Special Meeting of shareholders to be held on August __, 2020 and at all adjournments of the Special Meeting. If the proxy is executed and returned, it will be voted at the Special Meeting in accordance with any
adjournmentinstructions, and if no specification is made, the proxy will be voted for the proposal set forth in the accompanying notice of the Special Meeting. Shareholders who execute proxies may revoke them at any time before they are voted, either by writing to the Company at the address shown above oradjournments thereof. Whetherin person at the time of the Special Meeting. Additionally, any later dated proxy will revoke a previous proxy from the same shareholder. This proxy statement was posted on the Company’s website on or about July __, 2020.As of July 15, 2020, the Company had:
● 8,304,781 outstanding shares of common stock, with each common share entitled to one vote at the Special Meeting, and
● 50,000 outstanding shares of Series B preferred stock with each share entitled to 12.5 votes at the Special Meeting. Provided a quorum consisting of a majority of the shares entitled to vote is present at the meeting, in person or represented by proxy, the adoption of the proposal to come before the Special Meeting will be approved if the affirmative vote of the majority of shares present in person or represented by proxy at the Special Meeting approve the proposal. The approval of at least a majority of the Company’s unaffiliated security holders is not required to adopt the Reverse Stock Split.
Shares of the Company’s common stock represented by properly executed proxies that reflect abstentions or “broker non-votes” will be counted as present for purposes of determining the presence of a quorum at the special meeting. “Broker non-votes” represent shares held by brokerage firms in "street-name" with respect to which the broker has not received instructions from the customer or otherwise does not have discretionary voting authority. Abstentions and broker non-votes will not be counted as having voted against the proposal to be considered at the Special Meeting.
THE REVERSE STOCK SPLIT AND OTHER ASPECTS OF THE TRANSACTION HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF THE REVERSE STOCK SPLIT, ANY OTHER ASPECTS OF TRANSACTION, OR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION IN THE ATTACHED PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
2
SUMMARY TERM SHEET
The following summary term sheet highlights certain information about the Reverse Stock Split and other aspects of the Transaction, but may not contain all of the information that is important to you. For a more complete description of the Reverse Stock Split and other aspects of the Transaction, we urge you to carefully read this proxy statement.
At the Special Meeting, you will be asked to consider and vote upon a proposal to amend the Company’s Amended and Restated Certificate of Incorporation, to reverse split the Company’s common stock at a ratio of 4-for-1, (the “Reverse Stock Split”). If the Reverse Stock Split is approved, the Company will file with the Delaware Secretary of State a certificate of amendment to its Amended and Restated Certificate of Incorporation, at which date (the “effective time”) a stockholder owning fewer than four shares immediately prior to the effective time, would only be entitled to a fraction of a share of common stock and will be paid cash in lieu of such fraction of a share, on the basis of $1.00, (the “Cash Payment”) for each share of common stock held by the stockholder (the “Cashed Out Stockholder”) immediately prior to effective time and the Cashed Out Stockholders will no longer be a stockholder of the Company. As of July __, 2020, 90 shareholders that collectively owned 191 shares of the Company’s common stock owned less than four shares of common stock. If the Reverse Stock Split is approved, the Company would pay $191.00 to these Cashed Out Shareholders. The Company will use its own funds to pay the Cashed Out Stockholders.
The purpose of the Reverse Stock Split is to enable the Company to reduce the number of record holders of its common stock below 300, which is the level below which the Company can suspend its duty to file periodic and current reports and other information with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As described in this proxy statement, the Company’s Board of Directors has determined that the costs of being a public reporting company outweigh the benefits of being a public company. The actions the Company would take to suspend, and events that occur as a result of such actions that would have the effect of suspending its reporting obligations under the Exchange Act, and the registration of its common stock under Section 12(g) of the Exchange Act, are collectively referred to as the “Transaction”. After giving effect to the Transaction, the Company will no longer be subject to the reporting requirements under the Exchange Act or other requirements applicable to a public company, including requirements under the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).
The Company anticipates that after the Reverse Stock Split its common stock will trade on the Pink Non-Current platform of the OTC Markets Group.
PROPOSAL TO APPROVE A REVERSE SPLIT OF THE
COMPANY’S COMMON STOCK
Special Factors
At the Special Meeting, you will be asked to consider and vote upon a proposal to amend the Company’s Amended and Restated Certificate of Incorporation, to reverse split the Company’s common stock at a ratio of 4-for-1, (the “Reverse Stock Split”). If the Reverse Stock Split is approved the Company will file with the Delaware Secretary of State a certificate of amendment to its Amended and Restated Certificate of Incorporation, at which date (the “effective time”) a stockholder owning fewer than four shares immediately prior to the effective time, would only be entitled to a fraction of a share of common stock and will be paid cash in lieu of such fraction of a share on the basis of $1.00, (the “Cash Payment”) for each share of common stock held by the stockholder (the “Cashed Out Stockholder”) immediately prior to the effective time and the Cashed Out Stockholder will no longer be a stockholder of the Company. As of July __, 2020, 90 shareholders that collectively owned 191 shares of the Company’s common stock owned less than four shares of common stock. If the Reverse Split is approved, the Company would pay $191.00 to these Cashed Out Shareholders. The Company will use its own funds to pay the Cashed Out Stockholders. Each Cashed Out Stockholder will receive a check by mail at such Cashed Out Stockholder’s registered address as soon as practicable after the effective time. None of the Cashed Out Stockholders are officers, directors or affiliates of the Company.
The purpose of the Reverse Stock Split is to enable the Company to reduce the number of record holders of its common stock below 300, which is the level below which the Company can suspend its duty to file periodic and current reports and other information with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As described in the accompanying proxy statement, the Company’s Board of Directors has determined that the costs of being a public reporting company outweigh the benefits of being a public company. The actions the Company would take to suspend, and events that occur as a result of such actions that would have the effect of suspending its reporting obligations under the Exchange Act, and the registration of its common stock under Section 12(g) of the Exchange Act, are collectively referred to as the “Transaction”. After giving effect to the Transaction, the Company will no longer be subject to the reporting requirements under the Exchange Act or other requirements applicable to a public company, including requirements under the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).
Based upon the closing price of the Company’s common stock on July 14, 2020 three shares of its common stock were worth approximately $3.00. The Company does not know any securities broker which would accept securities worth $3.00 for deposit or which would sell securities worth $3.00 for any customer. Since a stockholder of record owning fewer than four shares immediately prior to the Reverse Stock Split will be paid $1.00 for each share held by the stockholder, the Company’s Board of Directors has determined (by a unanimous vote) that the Reverse Stock Split is in the best interests of the Company’s stockholders and the specific terms of the Reverse Stock Split are fair to the Cashed Out Stockholders.
Neither the Company nor any other person (to the knowledge of the Company) has received any report, opinion or appraisal from an outside party that is materially related to the Reverse Stock Split.
Advantages of the Reverse Stock Split
If the Reverse Stock Split occurs, there will be certain advantages to the Company’s stockholders, including the following:
● After giving effect to the Reverse Stock Split, the Company’s compliance obligations under the Exchange Act and the Sarbanes-Oxley Act will be suspended and the Company expects to realize recurring savings of approximately $675,000 per year. ● The Company will also save the significant amount of time and effort expended by its management and employees on the preparation of SEC filings and compliance with the Exchange Act and the Sarbanes-Oxley Act. Potential Disadvantages of the Reverse Stock Split
If the Reverse Stock Split occurs, there will be certain potential disadvantages to the Company’s stockholders, including the following:
● Cashed Out Stockholders will no longer have any ownership interest in the Company.
● The Company will, after giving effect to the Reverse Stock Split, cease to file annual, quarterly, current, and other reports and documents with the SEC. As a result, the Company’s stockholders will have significantly less information about its business, operations, and financial performance than they have currently.
● The Company will no longer be subject to the liability provisions of the Exchange Act or the provisions of the Sarbanes-Oxley Act.
● The Company’s officers, directors and 10% stockholders will no longer be subject to the reporting requirements of Section 16 of the Exchange Act or be subject to the prohibitions against retaining short-swing profits for trading our common stock. Persons acquiring 5% of the Company’s common stock will no longer be required to report their beneficial ownership under the Exchange Act. Other Matters
The Reverse Stock Split is being undertaken as part of the Company’s plan to
attendsuspend its duty to file periodic and current reports and other information with theannual meeting, youSEC under the Securities Exchange Act of 1934. Since the cost to the Company of reducing the record holders below 300 is $191.00 (exclusive of legal, printing and mailing costs associated with this proxy statement) the Company did not consider any alternatives to the Reverse Stock Split as a means of reducing the number of record holders of its common stock below 300.Only the Company’s officers and directors intend to solicit votes with respect to the Reverse Stock Split.
Generally, a Cashed Out Stockholder who receives cash for a fractional share as a result of the Reverse Stock Split will recognize capital gain or loss for United States federal income tax purposes based upon the amount the Cashed Out Stockholder paid for the fractional share. A stockholder who does not receive cash for a fractional share as a result of the Reverse Stock Split generally will not recognize any gain or loss for United States federal income tax purposes. The Company believes that the Reverse Stock Split generally should be treated as a tax-free “recapitalization” or other non-recognition event for federal income tax purposes in which case the Reverse Stock Split should have no material federal income tax consequences to the Company.
No ruling from the IRS or opinion of counsel has been or will be obtained regarding the United States federal income tax consequences to stockholders in connection with the Reverse Stock Split. Accordingly, each stockholder is encouraged to consult their own tax advisor as to the particular federal, state, local, foreign, and other tax consequences of the Reverse Stock Split in light of their individual circumstances.
Under Delaware law, no appraisal or dissenters’ rights are
urgedavailable tocomplete, datethe Company’s stockholders in connection with the Reverse Stock Split.No provision has been made by the Company in connection with the Reverse Stock Split to grant any of the holders of Company’s common stock or Series B preferred stock access to the corporate files of the Company or to obtain counsel or appraisal services at the expense of the Company.
A majority of the Company’s directors who are not employees of the Company have not retained an unaffiliated representative to act solely on behalf of unaffiliated security holders for purposes of negotiating the Reverse Stock Split and/or preparing a report concerning the fairness of the Reverse Stock Split.
The Company’s officers, directors and
signaffiliates intend to vote in favor of theenclosed proxyReverse Stock Split since these persons believe the Reverse Stock Split is in the best interest of the Company andreturnits stockholders.The Company anticipates that after the Reverse Stock Split its common stock will trade on the Pink Non-Current platform of the OTC Markets Group.
The Company’s Amended and Restated Certificate of Incorporation provides that the Company is presently authorized to issue 35,000,000 shares common stock. The Reverse Stock Split, if adopted, would not change the number of shares of common stock which the Company is authorized to issue. A reverse split would reduce the number of the Company’s outstanding shares, which would enable the Company to issue more shares than it
promptly so yourwould be able to issue if the Reverse Stock Split was not adopted.After giving effect to the Reverse Stock Split and as necessary to maintain the Company’s suspension of its SEC reporting obligations, the Company reserves the right to take additional actions that may be permitted under Delaware law, including further reverse stock splits.
The Company’s Board of Directors may abandon the proposed Reverse Stock Split at any time prior to its completion, whether prior to or following the Special Meeting, if it believes the Reverse Stock Split is no longer in the best interests of the Company or its stockholders.
The Company’s Board of Directors recommends that stockholders vote
can be recorded. By OrderFOR the Reverse Stock Split.INFORMATION CONCERNING CARBON ENERGY CORPORATION
Carbon Energy Corporation was incorporated in Delaware in 2007.
The Company’s address and telephone number are: 1700 Broadway, Suite 1170, Denver, Colorado, 80290, (720) 407-7043.
The Company is an independent oil and natural gas company engaged in the acquisition, exploration, development and production of oil, natural gas and natural gas liquids in the United States. The Company currently develops and operates oil and gas properties in California’s Ventura Basin.
For purposes of Schedule 13E-3 and Regulation M-A of the Securities and Exchange Commission, the Company is the “Filing Person” and the “Subject Company”.
Management
The names, titles, and ages of our executive officers and directors are shown below.
Name Age Position Patrick R. McDonald 63 Chief Executive Officer, Director Erich W. Kirsch 35 Principal Financial and Accounting Officer, Secretary and Treasurer James H. Brandi 71 Chairman of the Board John A. Bailey 50 Director David H. Kennedy 70 Director Peter A. Leidel 63 Director Edwin H. Morgens 78 Director The following information pertains to our executive officers and directors and their principal occupations and other public company directorships for at least the last five years.
Patrick R. McDonald. Mr. McDonald is Chief Executive Officer and Director of the Company and has been Chief Executive Officer since 2004. From 1998 to 2003, Mr. McDonald was Chief Executive Officer and Director of Carbon Energy Corporation, an oil and gas exploration and production company. From 1987 to 1997 Mr. McDonald was Chief Executive Officer and Director of Interenergy Corporation, a natural gas gathering, processing and marketing company. Prior to that he worked as an exploration geologist with Texaco International Exploration Company where he was responsible for oil and gas exploration efforts in the Middle East and Far East. Mr. McDonald served as Chief Executive Officer of Forest Oil Corporation from June 2012 to December 2014. Mr. McDonald is Chairman of the Board of Prairie Provident Resources (TSX: PPR), an exploration and production company based in Calgary, Alberta, Canada. Mr. McDonald received a Bachelor’s degree in both Geology and Economics from Ohio Wesleyan University and a Master’s degree in Business Administration (Finance) from New York University. Mr. McDonald is a Certified Petroleum Geologist and is a member of the American Association of the Petroleum Geologists and of the Canadian Society of Petroleum Geologists.
Erich W. Kirsch. Mr. Kirsch was appointed the Company’s Principal Financial and Accounting Officer on June 11, 2020. Mr. Kirsch has served as the Company’s Senior Vice President, Finance and Accounting since August 2019, and previously served as the Company’s Vice President, Accounting and Finance from March 2018 to August 2019 and as the Company’s Director of Financial Reporting from May 2017 to March 2018. From November 2015 to January 2017, Mr. Kirsch served as the Director of Accounting and Finance at Star Mountain Resources, Inc. From April 2013 to March 2016, Mr. Kirsch served as the Corporate Controller of Rare Element Resources Ltd.
James H. Brandi. Mr. Brandi is Chairman of the Board of Directors
/s/ Jack C. Brown ----------------------------------- JACK C. BROWN, Secretary Dated: October 1, 2004 ____________________________________________________________________________________________________
THE ST. LAWRENCE SEAWAY CORPORATION Indianapolis, Indiana ______________________________________________________ PROXY STATEMENT ______________________________________________________ GENERAL INFORMATION USE OF PROXIES This Proxy Statement is furnishedand has been a Director since 2012. Mr. Brandi was formerly a Managing Director of BNP Paribas Securities Corp., where he served from 2010 until 2011. From 2005 to 2010, Mr. Brandi was a partner of Hill Street Capital, LLC, a financial advisory and private investment firm purchased by BNP Paribas inconnection with2010. From 2001 to 2005, Mr. Brandi was a Managing Director at UBS Securities, LLC, where he was thesolicitation by the Board of Directors of The St. Lawrence Seaway Corporation (the "Corporation") of proxies to be voted at the Annual Meeting of Shareholders to be held on Wednesday, November 3, 2004, at 10:00 a.m. (Indianapolis time) at the Columbia Club, 121 Monument Circle, Capehart Room, 4th Floor, Indianapolis, Indiana. The Proxy Statement and accompanying proxy card are being mailed to shareholders on or about October 1, 2004. The principal executive officesDeputy Global Head of theCorporation are locatedEnergy and Power Groups. Prior to 2001, Mr. Brandi was a Managing Director at320 N. Meridian Street, Suite 818, Indianapolis, Indiana 46204. EachDillon, Read & Co. Inc. and later its successor firm, UBS Warburg, concentrating on transactions in the energy and consumer goods areas. Mr. Brandi currently serves as a director of OGE Energy Corp (NYSE: OGE) and had served as a member of thepersons named as proxiesboard of directors of Approach Resources, Inc. from 2007-2017.John A. Bailey. Mr. Bailey has been a Director since December 2019. Since May 2019, Mr. Bailey is a member of Yorktown Partners LLC, a manager of private equity partnerships which invest in the
accompanying proxy cardenergy industry. Mr. Bailey wasselectedpreviously employed at Voya Investment Management since June 2011 with roles in investment research and portfolio management. Mr. Bailey was a founder and Managing Partner of 1859 Partners LLC, an energy investment partnership, from March 2009 until June 2011. From December 2006 until August 2008, Mr. Bailey was a Portfolio Manager at Carlyle-Blue Wave Partners Management, LP, an investment partnership. Mr. Bailey served as a Director of LR Energy from November 2011 until its merger with Vanguard Natural Resources in October 2015. Mr. Bailey also served as a Director of Encore Acquisition Company, a NYSE-listed oil and gas exploration and production company, from May 2006 until its merger with Denbury Resources Inc. in March 2010.David H. Kennedy. Mr. Kennedy has been a Director since December 2014 and previously served as a director from February 2011 to March 2012. Mr. Kennedy is since 2005 an Executive Advisor to Cadent Energy Partners. From 2001 - 2004, Mr. Kennedy served as an advisor to RBC Energy Fund and served on the boards of several of its portfolio companies. Mr. Kennedy was a managing director of First Reserve Corporation from its founding in 1981 until 1998, serving on boards of several of its portfolio companies. From 1974 to 1981, Mr. Kennedy was employed by Price Waterhouse. Mr. Kennedy served as a director of predecessor company Carbon Energy Corporation.
Peter A. Leidel. Mr. Leidel has been a Director since 2005. Since 1997, Mr. Leidel is a founder and member of Yorktown Partners LLC, a manager of private equity partnerships which invest in the
Boardenergy industry. Mr. Leidel had previously been employed at Dillon, Read & Co. since 1983, serving as Senior Vice President until the merger ofDirectorsDillon Read with SBC Warburg in 1997. He was previously employed in corporate treasury positions at Mobil Corporation and worked for KPMG Peat Marwick and the U.S. Patent and Trademark Office. Mr. Leidel is a director of Ramaco Resources, Inc. (Nasdaq: METC), Mid Con Energy Partners, L.P. (Nasdaq: MCEP), Extraction Oil & Gas, Inc. (Nasdaq: XOG) and certain non-public companies in which Yorktown partnerships hold equity interests. Mr. Leidel served as a director of predecessor companies, Carbon Energy Corporation and Interenergy Corporation.Edwin H. Morgens. Mr. Morgens has been a Director since May 2012. Since 1967, Mr. Morgens is Chairman and Co-founder of Morgens, Waterfall, Vintiadis & Company, Inc., a New York investment firm. Mr. Morgens is a trustee of the
Corporation. AnyAmerican Museum of Natural History, an Overseer of the Weill Cornell Medical College and emeritus trustee of Cornell University.None of the Company’s officers or directors have been convicted in a criminal proceeding during the past five years (excluding traffic violations or similar misdemeanors).
None of the Company’s officers or directors have been a party to any judicial or administrative proceeding during the past five years (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the officer or director from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.
On March 12, 2020 the Company granted shares of its restricted common stock to the following officers and directors:
Name | Shares | |||
Patrick R. McDonald | 25,000 | |||
James H. Brandi | 5,000 | |||
David H. Kennedy | 4,000 | |||
Peter A. Leidel | 4,000 | |||
Edwin H. Morgan | 4,000 |
On May 26, 2020 Patrick McDonald returned 20,286 shares of common stock to the Company in payment of his tax liability associated with his award of restricted common stock. On June 5, 2020 Mr. McDonald purchased 100 shares of common stock in the open market at a price of $3.06 per share. On July 6, 2020 Mr. McDonald purchased 939 shares of common stock in the open market at a price of $1.10 per share.
Principal Stockholders
The following table lists, as of July __, 2020, the shareholdings of (i) each person owning beneficially 5% or more of the Company’s common stock; (ii) each executive officer and director of the Company, and (iii) all officers and directors as a group. Unless otherwise indicated, each owner has sole voting and investment power over his shares of common stock. The business address for each of the Company’s officers and directors is 1700 Broadway, Suite 1170, Denver, Colorado 80290.
Name and Address of Beneficial Owner | Shares Beneficially Owned(1) | Percent of Class(2) | ||||||
5% Stockholders | ||||||||
Yorktown Energy Partners V, L.P. 410 Park Avenue, 19th Floor New York, NY 10022 | 896,916 | 10.8 | % | |||||
Yorktown Energy Partners VI, L.P. 410 Park Avenue, 19th Floor New York, NY 10022 | 896,916 | 10.8 | % | |||||
Yorktown Energy Partners IX, L.P. 410 Park Avenue, 19th Floor New York, NY 10022 | 1,111,112 | 13.4 | % | |||||
Yorktown Energy Partners XI, L.P.(3) 410 Park Avenue, 19th Floor New York, NY 10022 | 2,584,829 | 28.9 | % | |||||
Arbiter Partners QP, LP 530 Fifth Avenue 20th Floor New York, NY 10036 | 655,733 | 8.2 | % | |||||
AWM Investment Company Inc.(5) c/o Special Situation Funds 527 Madison Avenue, Suite 2600 New York, NY 10022 | 706,549 | 8.9 | % |
Executive Officers and Directors | Shares Beneficially Owned | Percent of Class(2) | ||||||
Patrick R. McDonald, Chief Executive Officer and Director(6) | 340,553 | 4.1 | % | |||||
Erich W. Kirsch, Principal Financial and Accounting Officer, Secretary and Treasurer | 51,149 | 0.6 | % | |||||
James H. Brandi, Director | 42,000 | 0.5 | % | |||||
John A. Bailey, Director(7) | 5,493,773 | 66.0 | % | |||||
David H. Kennedy, Director | 32,154 | 0.4 | % | |||||
Peter A. Leidel, Director(8) | 5,525,773 | 67.0 | % | |||||
Edwin H. Morgens, Director | 119,334 | 1.4 | % | |||||
All directors and executive officers as a group (seven persons)(9) | 6,114,963 | 68.5 | % |
* | less than 1% |
(1) | The amounts and percentages of common stock beneficially owned are reported on the bases of rules of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power, which includes the power to vote or direct the voting of such security, or investment power, which includes the power to dispose of or to direct the disposition of such security. In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person’s ownership percentage, but not for purposes of computing any other person’s percentage. Further, under the rules of the SEC, more than one person may be deemed beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest. Except as otherwise indicated in these footnotes, each of the beneficial owners has, to our knowledge, sole voting and investment power with respect to the indicated shares of common stock. |
(2) | Calculated in accordance with Rule 13d-3 under the Securities Exchange Act of 1934 based on 8,304,781 shares of our common stock issued and outstanding on July 15, 2020. Percentages are rounded to the nearest one-tenth of one percent. |
(3) | The amount reported includes 50,000 shares of Series B convertible preferred stock which currently may be converted into up to 625,000 shares of our common stock. |
(4) | Arbiter Partners QP, LP holds sole voting and investment power over these shares. Arbiter Partners Capital Management LLC acts as investment advisor on behalf of Arbiter Partners QP, LP and on behalf of certain other managed accounts none of which hold more than five percent of the common stock of the Company. |
(5) | Consists of (i) 490,186 common stock shares owned by Special Situations Fund III QP, L.P. (“SSFQP”), (ii) 144,134 common stock shares owned by Special Situations Cayman Fund, L.P. (“Cayman”), and (iii) 72,229 common stock shares owned by Special Situations Private Equity Fund L.P. (“SSPE”). AWM Investment Company, Inc., a Delaware Corporation (“AWM”) is the investment advisor to SSFQP, Cayman and SSPE. AWM holds sole voting and investment power over these shares. |
(6) | Includes (i) 24,136 shares owned by McDonald Energy, LLC over which Mr. McDonald has voting and investment power. |
(7) | Includes (i) 896,916 common stock shares owned by Yorktown Energy Partners V, L.P., (ii) 896,916 common stock shares owned by Yorktown Energy Partners VI, L.P., (iii) 1,111,112 common stock shares owned by Yorktown Energy Partners IX, L.P. and (iv) 2,584,829 (inclusive of 50,000 shares of Series B convertible preferred stock which currently may be converted into up to 625,000 shares of our common stock) common stock shares owned by Yorktown Energy Partners XI, L.P. over which Mr. Bailey and Mr. Leidel have voting and investment power. Pursuant to applicable reporting requirements, Messrs. Bailey and Leidel are reporting indirect beneficial ownership of the entire amount of our securities owned by Yorktown but they disclaim beneficial ownership of such shares. Also included are 4,000 shares owned by Mr. Bailey. |
(8) | Includes (i) 896,916 common stock shares owned by Yorktown Energy Partners V, L.P., (ii) 896,916 common stock shares owned by Yorktown Energy Partners VI, L.P., (iii) 1,111,112 common stock shares owned by Yorktown Energy Partners IX, L.P. and (iv) 2,584,829 (inclusive of 50,000 shares of Series B convertible preferred stock which currently may be converted into up to 625,000 shares of our common stock) common stock shares owned by Yorktown Energy Partners XI, L.P. over which Mr. Bailey and Mr. Leidel have voting and investment power. Pursuant to applicable reporting requirements, Messrs. Bailey and Leidel are reporting indirect beneficial ownership of the entire amount of our securities owned by Yorktown but they disclaim beneficial ownership of such shares. Also included are 36,000 shares owned by Mr. Leidel. |
(9) | The shares over which both Mr. Bailey and Mr. Leidel have voting and investment power are the same shares and the percentage of total shares has not been aggregated for purposes of these calculations. |
The following table lists, as of July 15, 2020, the shareholdings of each person owning the Company’s Series B preferred stock. Unless otherwise indicated, each owner has sole voting and investment power over the shares of preferred stock:
Name and Address of Beneficial Owner | Shares Beneficially Owned | Percent of Class | ||||||
Yorktown Energy Partners XI, L.P. | 50,000 | 100 | % |
(1) | Each Series B preferred share is currently convertible into 12.5 shares of the Company’s common stock and is currently entitled to 12.5 votes on any matter submitted to the Company’s stockholders. |
The Reverse Stock Split will have an insignificant effect on the relative voting power of the Company’s stockholders. Based on current record and beneficial owner information, the Reverse Stock Split will result in an insignificant change in the relative voting power of the Company’s directors and executive officers as a group.
None of the Company’s officers, directors or affiliates currently intend to tender or sell the Company’s common stock owned or held by them to the Company.
Market for Our Common Stock
The Company has one class of common stock outstanding that is quoted on the OTCQB under the symbol CRBO.
The following table sets forth the high and low bid price per share of our common stock for the periods presented, as quoted on the OTCQB. The information reflects inter-dealer prices, without retail mark-up, mark-down or commissions and may not represent actual transactions:
Year Ended December 31, | Quarter | High | Low | |||||||
2018 | First | $ | 11.00 | $ | 9.80 | |||||
Second | $ | 12.00 | $ | 9.80 | ||||||
Third | $ | 13.00 | $ | 9.50 | ||||||
Fourth | $ | 9.25 | $ | 6.50 | ||||||
2019 | First | $ | 10.00 | $ | 9.25 | |||||
Second | $ | 10.00 | $ | 5.00 | ||||||
Third | $ | 8.00 | $ | 4.00 | ||||||
Fourth | $ | 4.00 | $ | 3.15 | ||||||
2020 | First | $ | 4.50 | $ | 3.15 | |||||
Second | $ | 4.98 | $ | 1.18 |
The limited and sporadic quotations of our common stock do not constitute an established trading market for the Company’s common stock, and there can be no assurance that an active market will develop in the future.
As of July 14, 2020:
● | the closing price of the Company’s common stock on the OTCQB was $0.95 per share. |
● | there were 310 holders of record of the Company’s common stock. The number of holders does not include the stockholders for whom shares are held in a “nominee” or “street” name; and |
● | the Company had 8,304,781 outstanding shares of common stock. |
The Company has not to date paid any cash dividends on its common stock and does not intend to pay any dividends in the foreseeable future. The payment of dividends will be within the discretion of the Board of Directors.
The terms of the Company’s loan agreements with two lenders prohibit the Company from paying dividends on the Company’s stock while amounts are owed under the loan agreements.
The provisions in the Company’s Amended and Restated Certificate of Incorporation relating to its preferred stock allow its directors to issue preferred stock with rights to multiple votes per share and dividend rights which would have priority over any dividends paid with respect to its common stock. The issuance of preferred stock with such rights may make more difficult the removal of management even if such removal would be considered beneficial to stockholders generally, and will have the effect of limiting stockholders participation in certain transactions such as mergers or tender offers if such transactions are not favored by incumbent management.
Yorktown Energy Partners
As of July 15, 2020:
● | Yorktown Energy Partners V, L.P., | |
● | Yorktown Energy Partners VI, L.P., | |
● | Yorktown Energy Partners IX, L.P., and | |
● | Yorktown Energy Partners XI, L.P. |
collectively owned 4,864,773 shares of the Company’s common stock or approximately 58.6% of the Company’s outstanding common stock.
As of July 15, 2020 Yorktown Energy Partners XI, L.P. owned 50,000 shares of the Company’s Series B preferred stock or 100% of the outstanding Series B preferred shares.
The foregoing entities are controlled by Yorktown Partners, LLC. Yorktown Partners LLC is controlled by John A. Bailey and Peter A. Leidel, both of whom are directors of the Company. The five entities named above are collectively referred to as “Yorktown”.
Neither Yorktown nor any of Yorktown’s officers, managers or members have been convicted in a criminal proceeding during the past five years (excluding traffic violations or similar misdemeanors).
Neither Yorktown nor any of Yorktown’s officers, managers or members have been a party to any judicial or administrative proceeding during the past five years (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the officer or director from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.
Yorktown is a limited liability company organized under the laws of Delaware. Yorktown’s address and telephone number are:
410 Park Avenue
19th Floor
New York, NY 10022
(212) 515-2114
14
Summary Financial Information
(In thousands, except per share amounts)
December 31, | March 31, | |||||||||||||||
2019 | 2018 | 2020 | 2019 | |||||||||||||
Current assets | 26,269 | 34,010 | 36,027 | 29,032 | ||||||||||||
Non-current assets | 271,985 | 276,881 | 272,359 | 277,032 | ||||||||||||
Current liabilities | 48,718 | 52,855 | 40,800 | 49,215 | ||||||||||||
Non-current liabilities | 173,315 | 182,001 | 175,706 | 187,259 | ||||||||||||
Stockholders’ equity (1) | 50,071 | 47,751 | 60,074 | 43,874 | ||||||||||||
Non-controlling interests | 26,150 | 28,284 | 31,806 | 25,716 | ||||||||||||
Total stockholders’ equity | 76,221 | 76,035 | 91,880 | 69,590 |
Year Ended December 31, | Three Months Ended March 31, | |||||||||||||||
2019 | 2018 | 2020 | 2019 | |||||||||||||
Gross Revenue | ||||||||||||||||
Net income (loss) before non-controlling interests and preferred shares | (1,001 | ) | 12,779 | 15,458 | (6,690 | ) | ||||||||||
Net income (loss) attributable to non-controlling Interests | (2,098 | ) | 4,375 | 5,659 | (2,590 | ) | ||||||||||
Net income (loss) attributable to controlling interests before preferred shares | 1,097 | 8,404 | 9,799 | (4,100 | ) | |||||||||||
Net income (loss) attributable to preferred shares – beneficial conversion feature | - | 1,125 | - | - | ||||||||||||
Net income attributable to preferred shares – preferred return | 300 | 224 | 75 | 75 | ||||||||||||
Net income (loss) attributable to common shares | 797 | 7,055 | 9,724 | (4,175 | ) | |||||||||||
Income (loss) per share from continuing operations | ||||||||||||||||
Basic | $ | .10 | $ | .94 | $ | 1.25 | $ | (0.54 | ) | |||||||
Diluted | $ | .10 | $ | .87 | $ | 1.20 | $ | (0.54 | ) | |||||||
Net income (loss) per share from all operations: | ||||||||||||||||
Basic | $ | .10 | $ | .94 | $ | 1.25 | $ | (0.54 | ) | |||||||
Diluted | $ | .10 | $ | .87 | $ | 1.20 | $ | (0.54 | ) | |||||||
Book value per share |
(1) | Exclusive of non-controlling interests. |
The more complete financial statements if the Company are incorporated by reference. See “Incorporation of Certain Documents by Reference” below.
Other
During the last two years, none of the Company’s directors, executive officers or 10% stockholders have entered into any transactions with the Company.
The Company has not purchased any shares of its common stock within the past two years.
15
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
In the Company’s filings with the SEC, information is sometimes incorporated by reference. This means that the Company is referring you to information that it has filed separately with the SEC. The information incorporated by reference should be considered part of this proxy statement, except for any information superseded by information contained directly in this proxy statement or in any other subsequently filed document.
This proxy statement incorporates by reference the following documents that the Company has previously filed with the SEC. They contain important information about the Company and its financial condition.
● | Annual Reports on Form 10-K for the years ended December 31, 2019 and 2018; |
● | Quarterly Report on Form 10-Q for the period ended March 31, 2020; and |
● | Current Reports on Form 8-K filed with the SEC on February 21, 2020, April 8, 2020, May 6, 2020, May 29, 2020 and June 26, 2020. |
● | Audited consolidated balance sheets as of December 31, 2019 and 2018, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2019, and the related notes to the Company’s financial statements, are contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2019; and |
● | Unaudited consolidated condensed balance sheet as of March 31, 2020, the related consolidated condensed statements of operations, stockholders’ equity, and cash flows for the three months ended March 31, 2020 and 2019, and the related notes to the Company’s financial statements, are contained in its Quarterly Report on Form 10-Q for the period ended March 31, 2020. |
The Company will send any stockholder of record as of the record date for the Special Meeting a copy of any document incorporated by reference into this proxy statement within three business days of receipt of a request. The request for any document incorporated by reference should be addressed to us at the following address: 1700 Broadway, Suite 1170, Denver, CO 80290. Documents incorporated by referenced are also are available on our website, www.carbonenergycorp.com and the SEC's website at http://www.sec.gov.
WHERE YOU CAN FIND MORE INFORMATION
The Company is subject to the informational requirements of the Securities Exchange Act of 1934 and files reports and other information with the SEC. Such reports and other information filed by the Company may be revokedinspected and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, as well as in the SEC’s public reference room in New York, New York. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the SEC’s public reference room. The SEC also maintains an Internet site that contains reports, proxy statements and other information about issuers, like us, who file electronically with the SEC. The address of the SEC’s web site is http://www.sec.gov.
GENERAL
The Company will bear the entire cost of solicitation, including the preparation, assembly, printing and mailing of this proxy statement, the proxy card and any additional materials requested by stockholders. The Company’s officers, directors and employees may solicit proxies by telephone or other means. Approximately $30,000 will be incurred by the person
giving itCompany to effect the Reverse Stock Split which represents estimated legal costs of $15,000 and estimated printing and mailing costs of $15,000.
Failure of a quorum to be present at the Special Meeting will necessitate adjournment and will subject the Company to additional expense.
The Company’s Board of Directors does not intend to present and does not have reason to believe that others will present any time before it is exercised by deliveringother items of business at the Special Meeting. However, if other matters are properly presented to the Secretary ofSpecial Meeting for a vote, the Corporation
either a written notice of revocation or a duly executed proxy bearing a later date, or by attending
the annual meeting and voting in person. Shares represented by a proxy, properly executed and
returned to management, and not revoked,proxies will be voted at the annual meeting.
Shares will be votedupon such matters in accordance with the directionjudgment of the shareholders as specifiedpersons acting under the proxies.
16
CARBON ENERGY CORPORATION
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS
Important Notice Regarding the Availability of Proxy Materials for the Special Stockholder’s Meeting to Be Held on the proxy. In the absence of directions,____________, 2020.
1. | This notice is not a form for voting. |
2. | This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting. |
3. | The Notice of the Special Meeting of Stockholders and related Proxy Statement are available at www.carbonenergycorp.com. |
4. | If you want to receive a paper or email copy of these documents, you must request one. There is no charge to you for requesting a copy. Please make your request for a copy as instructed below on or before ________________, 2020 to facilitate timely delivery. |
The Special Meeting of the Company’s stockholders will be voted "FOR"held at 1700 Broadway, Suite 1170, Denver, CO 80290 on ______________, 2020, at ____ a.m. Mountain Time, for the electionfollowing purposes:
to approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to reverse split the outstanding shares of the nominees
set forth below (or, in the event that any of them shall not be available for election by reason of
death or other unexpected occurrence, such other substitute nominee as the Board of Directors may
propose). Any other matters that may properly come before the meeting will be acted upon by the
persons named in the accompanying proxy in accordance with their discretion.
RECORD DATE AND VOTING SECURITIES
Company’s common stock on a 4-for-1 basis.
The Board of Directors has fixedrecommends that stockholders vote FOR the close of business on September 17, 2004 asproposal to reverse split the Company’s common stock.
_____________, 2020 is the record date for the determination of shareholdersstockholders entitled to notice of and to vote at such Special Meeting. Holders of the annual meeting
and any adjournment or adjournments thereof. As of September 17, 2004 the Corporation had 393,735
shares of Common Stock outstanding and entitled to vote. Each share of Common Stock isCompany’s common stock are entitled to one vote in personper share. Holders of the Company’s Series B preferred shares are entitled to 12.5 votes per share.
Stockholders may access the following documents at www.carbonenergycorp.com:
☐ | Notice of the Special Meeting of Stockholders; | |
☐ | Company’s Proxy Statement; | |
☐ | Proxy Card; and | |
☐ | December 31, 2019 10-K report. |
Stockholders may request a paper copy of the Proxy Materials and Proxy Card by calling 720-407-7030, or by proxy on each proposal submittedemailing the Company at the meeting. Under the Indiana Business
Corporation Law, directors are elected byproxy@carbonenergycorp.com and indicating you want a pluralitypaper copy of the votes cast by shares entitled toproxy materials and proxy card:
☐ | for this meeting only; or | |
☐ | for this meeting and all other meetings. |
If you have a stock certificate registered in your name, or if you have a proxy from a stockholder of record on ________________, 2020, you can, if desired, attend the special meeting and vote in person. Stockholders can obtain directions to the electionSpecial Stockholders’ Meeting at a meeting at which a quorum__________________.
Complete and sign the Proxy Card and mail, email or fax the Proxy Card to:
Carbon Energy Corporation
Attn: Erich Kirsch
1700 Broadway, Suite 1170
Denver, Co 80290
Email: proxy@carbonenergycorp.com
Fax: 720-407-7031
PROXY
CARBON ENERGY CORPORATION
This Proxy is present.
1
ELECTION OF DIRECTORS Thesolicited by the Company’s Board of Directorscurrently consistsThe undersigned stockholder of
four members whose terms will expire atCarbon Energy Corporation (“thenext annual meeting of shareholders or when their successors are duly elected and qualified. Directors will be elected by a pluralityCompany”) acknowledges receipt of thevotes cast at the annual meeting. Set forth in the following table are the names and ages of all nominees to the Board of Directors, all positions and offices with the Corporation held by such persons, the period during which they have served as membersNotice of theBoardSpecial Meeting ofDirectors, their business experience, and other directorships held by them in public companies. Business Experience Directors/Position Director During Last Five Years; In Corporation Age Since Other Directorships - ------------------- --- -------- -------------------------------------- Jack C. Brown 85 1959 Attorney at Law Secretary Indianapolis, Indiana since 1945. No other directorships. Joel M. Greenblatt 46 1993 Managing Partner of Gotham Capital III Chairman of the Board L.P. ("Gotham") and its predecessors since 1985. Gotham is a private investment partnership which owns securities, equity interests, distressed debt, trade claims and bonds, derivatives, and options and warrants of issuers engaged in a variety of businesses. No other Directorships. Daniel L. Nir 43 1993 Managing Partner of Gracie Capital, L.P. President and Treasurer since December, 1998. Manager of Sargeant Capital Ventures, LLC since December 1997. Managing Partner of Gotham prior thereto. No other Directorships. Edward B. Grier III 46 1993 Manager of T3 Therapeutics LLC since June 2004; Limited Partner of Gracie Capital, L.P. since January 1999; Vice President of Gotham from 1992-1994 and a limited partner of Gotham from January 1, 1995 through December 31, 1998. No other directorships. BOARD OF DIRECTORS MEETINGS; COMMITTEES During the fiscal year ended March 31, 2004 the Board of Directors held no formal meetings. Members of the Board frequently confer informally in person and by telephone and also take formal action by written consent. The Board of Directors believes that this procedure is sufficient to serve the current needs of the Corporation without undue expenses of frequent formal meetings. 2
The Board of Directors does not have any standing audit, nominating or compensation committees or committees performing similar functions. The Board of Directors believes that a nominating committee is not warranted given the size of the Board and the participation of all four directors in the consideration of nominees for director. The Board of Directors does not have a charter governing the nominating process. As all members of the Board of Directors hold officer positions with the Company, none of them are "independent" as that term is used in the SEC's proxy rules. DIRECTOR NOMINATION PROCESS The Board of Directors will consider director candidates properly recommended by stockholders.Stockholderswho wish to recommend to the Board candidates for election to the Board of Directors must do so in writing. The recommendation should be sent to the Secretary of the Company, Jack Brown, The St. Lawrence Seaway Corporation, 320 N. Meridian Street, Suite 818, Indianapolis, Indiana 46204, who will, in turn, forward the recommendation to the Board. The recommendation must set forth (i) the name and address as they appear on the Company's books of the stockholder making the recommendation and the class and number of shares of capital stock of the Company beneficially owned by such stockholder and (ii) the name of the candidate and all information relating to the candidate that is requiredto bedisclosed in solicitations of proxies for election of directors underheld on ____________, 2020, at ____ a.m., local time, at 1700 Broadway, Suite 1170, Denver, CO 80290, and hereby appoints _________________________ with thefederal proxy rules. The recommendation must be accompanied by the candidate's written consent to being named in the Company's proxy statement as a nominee for election to the Board and to serving as a director, if elected. Stockholders must also comply with all requirements of the Company's by-laws with respect to nomination of persons for election to the Board of Directors. The Board believes that nominees for election to the Board of Directors should possess sufficient business or financial experience and a willingness to devote the time and effort necessary to discharge the responsibilities of a director. This experience can include, but is not limited to, service on other boards of directors or active involvement with other boards of directors, as well as experience in the industries in which the Company conducts its business. The Board does not believe that nominees for election to the Board of Directors should be selected through mechanical application of specified criteria. Rather, the Board believes that the qualifications and strengths of individuals should be considered in their totality with a view to nominating persons for election to the Board of Directors whose backgrounds, integrity, and personal characteristics indicate that they will make a contribution to the Board of Directors. The Board intends to identify candidates for election to the Board of Directors through the personal knowledge and experience of the members of the Committee as well as through third-party recommendations. Candidates will be evaluated based upon their backgrounds and interviews with members of the Board. The Board does not plan to make any differences in the manner in which the Board evaluates nominees for election as a director of the Company based on whether the nominee has been recommended by a stockholder or otherwise. 3
ATTENDANCE AT ANNUAL MEETINGS OF STOCKHOLDERS The Company does not have a policy with regard to Board members' attendance at annual meetings of stockholders. One Board member attended last year's annual meeting of stockholders. STOCKHOLDER COMMUNICATION POLICY Stockholders may send communications to the Board of Directors or individual members of the Board by writing to them, care of Jack Brown, Secretary, The St. Lawrence Seaway Corporation, 320 N. Meridian Street, Suite 818, Indianapolis, Indiana 46204, who will forward the communication to the intended director or directors. If the stockholder wishes the communication to be confidential, then the communication should be provided in a form that will maintain confidentiality. COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT Based solely on a review of Forms 3 and 4 and amendments thereto, furnished to the Corporation during the fiscal year ended March 31, 2004 and Forms 5 and amendments thereto furnished to the Corporation with respect to the fiscal year ended March 31, 2004, no director, officer or beneficial owner of more than 10% of the Corporation's equity securities failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during the fiscal year ended March 31, 2004. REMUNERATION OF DIRECTORS AND OFFICERS Except as noted below, neither the Corporation's Chief Executive Officer nor any other executive officers of the Corporation (collectively the "Named Executives") received salary, bonus or other annual compensation for rendering services to the Company during the fiscal years ended March 31, 2004, 2003 and 2002. During each of the three fiscal years ended March 31, 2002, March 31, 2003, and March 31, 2004 the Corporation paid to Jack C. Brown, Secretary and a Director, a monthly fee of $500 for administrative services that he renders to the Corporation. Such fee is on a month to month arrangement. SUMMARY COMPENSATION TABLE As permitted by Item 402 of Regulation S-K, the Summary Compensation Table has been intentionally omitted as there was no compensation awarded to, earned by or paid to the Named Executives which is required to be reported in such Table for any fiscal year covered thereby. In addition, no transactions between the Corporation and a third party where the primary purpose of the transaction was to furnish compensation to a Named Executive were entered into for any fiscal year covered thereby. OPTION/SAR GRANTS IN FISCAL YEAR ENDED MARCH 31, 2004 No options or stock appreciation rights were granted in the fiscal year ended March 31, 2004. On September 20, 2002, the options originally granted to Mr. Brown on June 18, 1983 were amended by extending the expiration date thereof from September 21, 2002 to September 21, 2007. 4
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR ENDED MARCH 31, 2004 AND FISCAL YEAR-END OPTION/SAR VALUES The Corporation has a stock option plan originally adopted by shareholders on June 12, 1978, and revised and approved by shareholders on June 13, 1983, September 21, 1987 and August 28, 1992. The Corporation currently has one outstanding Stock Option Agreement entered into pursuant to the stock option plan. The options granted thereunder expire on September 21, 2007. No options were exercised during fiscal year 2004. The following table presents the value of unexercised options held by Mr. Brown at fiscal year end. There are currently no outstanding stock appreciation rights. Value of Unexercised Number of Unexercised In-the Money Shares Options/SAR's Options/SAR's Acquired Value At Fiscal Year-End At Fiscal Year-End Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable (#) ($) (#) (#) ($) ($) Jack C. Brown 0 0 15,000 0 0(1) 0 (1) Based on the closing sale price of $2.05 on March 26, 2004, the date closest to the fiscal year end on which a trade occurred. The options have an exercise price of $3.00 per share. Long-Term Incentive Plans - Awards in Fiscal Year Ended March 31, 2004 Not applicable. COMPENSATION OF DIRECTORS Directors of the Corporation receive a fee of $100 for each meeting of the Board of Directors which they attend plus reimbursement for reasonable travel expense. No fees were paid to Directors for meetings in fiscal year 2004. As discussed above, during the fiscal year ended March 31, 2004, the Corporation paid Jack C. Brown, Secretary and a Director, a monthly fee of $500 for administrative services that he renders to the Corporation. COMPENSATION COMMITTEE INTERLOCK AND INSIDER PARTICIPATION The Board of Directors does not have any standing audit, nominating or compensation committees or any other committees performing similar functions. Therefore, there are no relationships or transactions involving members of the Compensation Committee during the fiscal year ended March 31, 2004 required to be reported pursuant to Item 402(j) of Regulation S-K. 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth as of the record date the beneficial share ownership of persons who, to the knowledge of the Corporation, beneficially owned as of the record date, more than 5% of the outstanding shares of Common Stock of the Corporation, and of each director and executive officer, and of all officers and directors as a group. BENEFICIAL AMOUNT & NATURE OF PERCENT OWNER BENEFICIAL OWNERSHIP OF CLASS The Windward Group, L.L.C. 150,000(1) 30.4% 100 Jericho Quadrangle Suite 212 Jericho, NY 11753 Joel M. Greenblatt 150,000(2) 30.4% 100 Jericho Quadrangle Suite 212 Jericho, NY 11753 Daniel L. Nir 150,000(2) 30.4% Gracie Capital 527 Madison Avenue, 11th Floor New York, NY 10021 Jack C. Brown 20,456(3) 5.00% 320 N. Meridian St. Suite 818 Indianapolis, IN 46204 Edward B. Grier III -- * Gracie Capital 527 Madison Avenue, 11th Floor New York, NY 10021 All directors and officers as a group 170,456 33.5% (4 persons) - ---------------------------- * Less than 1%. (1) Includes 100,000 shares of Common Stock subject to a currently exercisable warrant expiring on September 21, 2007 issued to the Windward Group L.L.C. pursuant to a Warrant Agreement dated September 24, 1986, and amended on July 6, 1992, August 28, 1992, September 15, 1997 and September 20, 2002. (2) Includes 100,000 Shares subject to a currently exercisable warrant issued to the Windward Group L.L.C. pursuant to a Warrant Agreement dated September 24, 1986, and amended on July 6, 1992, August 28, 1992, September 15, 1997 and September 20, 2002. Ownership of Mr. Nir and Mr. Greenblatt is indirect as a result of their membership interest in The Windward Group, L.L.C. Mr. Nir and Mr. Greenblatt disclaim individual beneficial ownership of any Common Stock of the Corporation. (3) Includes 15,000 shares subject to currently exercisable stock options granted on June 11, 1983, as amended, and expiring on September 21, 2007, with a per share exercise price of $3.00. No other person or group has reported that it is the beneficial owner of more than 5% of the outstanding Common Stock of the Company. 6
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES TO THE BOARD OF DIRECTORS. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS On June 25, 2002, the Corporation entered into a joint venture agreement under which the Corporation provided development funding in an initial amount of $750,000 to a newly-formed private limited liability company, T3 Therapeutics, LLC (the "Development Company") in exchange for a 12.5% ownership interest in the Development Company. The agreement provides for a follow-on investment of an additional $750,000 if certain preliminary FDA testing approvals are secured with a corresponding increase in the Corporation's ownership state to 25% of the Development Company. Edward B. Grier, Vice President and a Director of the Corporation, has agreed to serve as the Corporation's representative to the Development Company and has authority to act on the Corporation's behalf with respect to the business and affairs of the Development Company. Mr. Grier was named a Manager of the Development Company as of June 30, 2004. Mr. Grier has been granted an option by the Development Company to purchase up to 25 Class B Units of the Development Company at a price per unit of $6,000. The strike price of the option was calculated based on the price per unit paid by the Corporation. Due to the nature of the investment and the uncertainties inherent in the development and commercialization of the treatment protocols by the Development Company, no meaningful value can be assigned to the option. The option was exercisable upon grant and expires, to the extent it has not been exercised or sooner terminated, on June 25, 2012. If Mr. Grier resigns voluntarily as the Corporation's representative or is removed by the Corporation from that position without cause, the option shall remain exercisable for a period of one year from the date of resignation or removal, and then shall terminate. If Mr. Grier ceases to be the Corporation's representative by reason of death or disability, the option shall remain exercisable for a period of six months following his death or disability, and then shall terminate. If Mr. Grier is removed as representative for cause, the option shall immediately terminate. In addition, at the time of the Corporation's investment, Mr. Grier purchased 25 Class A Units of the Development Company from existing unitholders for $150,000, or $6,000 per Class A Unit. On September 20, 2002, the Stock Warrant held by Windward Group, L.L.C. for the purchase of 100,000 shares of common stock at $3.00 per share, which was to expire on September 21, 2002, was extended by the Board of Directors for an additional five years, such that it now expires on September 21, 2007. Mr. Nir and Mr. Greenblatt have membership interests in the Windward Group, and therefore may be deemed to beneficially own the shares underlying the Stock Warrant. However, Mr. Nir and Mr. Greenblatt disclaim individual beneficial ownership of the shares underlying the Stock Warrant. 7
ACCOUNTANT The Independent Auditor for the Corporation is the firm of Sallee & Company, Inc. which have been the accountants for the Corporation since its inception. The following aggregate fees were billed to the Corporation for professional services rendered by its Independent Auditor during the fiscal year ended March 31, 2003: 2004 2003 ---- ---- Audit Fees:...............................................................$18,221 $16,300 Audit-Related Fees:....................................................... -- -- Tax Fees:................................................................. 4,615 5,600 All Other Fees:........................................................... -- -- A representative of Sallee & Company, Inc. is expected to be present at the annual meeting and will be provided an opportunity to make a statement should he or she desire to do so and to respond to appropriate inquiries from the shareholders. The Board of Directors, acting as Audit Committee, has not adopted pre-approval policies and procedures with respect to services provided by the independent auditor, as all services are approved by the Board prior to the services being provided. SHAREHOLDER PROPOSALS If any shareholder of the Corporation intends to present a proposal for consideration at the next Annual Meeting of Shareholders and wishes to have such proposal included in the proxy statement and form of proxy distributed by the Board of Directors with respect to such meeting, such proposal must be received at the Corporation's principal executive offices, 320 N. Meridian Street, Suite 818, Indianapolis, Indiana 46204, not later than May 27, 2005. If a shareholder wishes to present a matter at the next Annual Meeting of Shareholders but does not wish to have such proposal included in the proxy statement or form of proxy distributed by the Board of Directors, notice must be received at the Corporation's principal executive offices not later than August 10, 2005. After that date, the proposal will be considered untimely and the Corporation's proxies will have discretionary voting authority with respect to such matter. OTHER MATTERS The Board of Directors of the Corporation knows of no other matters to be presented for action at the meeting. If any other matters should properly come before the meeting or any adjournment thereof, such matters will be acted upon by the persons named as proxies in the accompanying proxy according to their best judgment in the best interests of the Corporation. All expenses of the solicitation of proxies will be paid by the Corporation. Officers, Directors and regular employees of the Corporation may also solicit proxies by telephone or telegram or by special calls. The Corporation may also reimburse brokers and other persons holding stock in their names or in names of their nominees for their expenses in forwarding proxies and proxy material to the beneficial owners of the Corporation's stock. 8
The Annual Report to Shareholders, which contains financial statements for the year ended March 31, 2004 and other information concerning the operation of the Corporation, is enclosed herewith, but is not to be regarded as proxy soliciting materials. Each shareholder is urged to complete, date, sign and return the enclosed proxy card in the envelope provided for that purpose. Prompt response is helpful and your cooperation will be appreciated. By Order of the Board of Directors, /s/ Jack C. Brown ------------------------------------ JACK C. BROWN, Secretary DATED: October 1, 2004 9
THE ST. LAWRENCE SEAWAY CORPORATION Proxy for Annual Meeting of Shareholders to be Held November 3, 2004 The Proxy is Solicited on Behalf of the Board of Directors The undersigned appoints Edward B. Grier and Jack C. Brown as Proxies, and each of them, with fullpower of substitution, as Attorney and Proxy to vote all the shares of the undersigned at said Special Meeting of Stockholders and at all adjournments thereof, herebyauthorizes themratifying and confirming all that said Attorney and Proxy may do or cause torepresentbe done by virtue hereof. The above named Attorney and Proxy is instructed to vote all of the undersigned's sharesof Common Stock of The St. Lawrence Seaway Corporation owned by the undersigned on September 17, 2004 at the Annual Meeting of the Shareholdersas follows:
(1) | to approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to reverse split the Company’s common stock on a 4-for-1 basis; |
☐ FOR ☐ AGAINST ☐ ABSTAIN
to be held on November 3, 2004, and at any
adjournment thereof, on the matters and in the manner specified below.
When properly executed, this Proxy will be voted in the manner directed herein by the
undersigned Shareholder. Unless otherwise specified, the shares will be voted FOR Item 1. The shares
represented by this Proxy will be voted with respect to Item 2 in the discretion of the proxy
holders.
The Board of Directors recommends a vote FOR Item 1.
1. The following nominees will be voted for as directors: Joel M. Greenblatt, Daniel L.
Nir, Jack C. Brown, Edward B. Grier.
|_| FOR |_| WITHHOLD
(INSTRUCTION: To withhold authority for any individual nominee, write that nominee's name on the
line provided below.)
-------------------------------------------------------
(continued and to be signed on the other side)
1
2. In their discretion to vote upontransact such other business as may come before themeeting or any adjournment thereof. This proxy may be revoked at any time before it is exercised. PLEASE SIGN EXACTLY AND AS FULLY AS SHOWN ONSpecial Meeting.THIS PROXY,
CARD WhenWHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER IF NO DISCRETION IS INDICATED, THIS PROXY WILL BE VOTED IN FAVOR OF ITEM 1.Dated this ____ day of _____________, 2020.
_______________________________________
(Signature)_______________________________________
(Print Name)Please sign your name exactly as it appears on your stock certificate.
If shares are held
by joint tenants, bothjointly, each holder should sign.When signing as attorney, executor, administrator, personal representative, trusteeExecutors, trustees, and other fiduciaries should so indicate when signing.
Please Sign, Date and Return this Proxy so that your shares may be voted at the Special Meeting.
Send your proxy by regular mail, email, or
guardian, please give full title as such. Iffax to:Carbon Energy Corporation
Attn: Erich Kirsch
1700 Broadway, Suite 1170
Denver, Co 80290Email: proxy@carbonenergycorp.com
Fax: 720-407-7031
APPENDIX A
CARBON ENERGY CORPORATION
AMENDMENT TO AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
Article 4 is amended by adding the following:
4.5 Reverse Stock Split
Every four shares of this Corporation’s common stock will automatically be converted into one share of this Corporation’s common stock. Stockholders owning fewer than four shares will only be entitled to a
corporation, please signfraction of a share of common stock, will be paid cash infull corporate name by President or other authorized officer. Iflieu of such fraction of apartnership, please sign in partnership name by authorized person. Dated:______________________, 2004 Signature _____________________________________________ Signature if held jointly _____________________________ IMPORTANT: Please complete, sign, dateshare andreturn this proxy promptly inwill no longer be stockholders of theenclosed envelope. No postage is required if mailed in the United States.