Delaware
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001-05103
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72-0496921
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(State or other jurisdiction of Incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $0.50 Par Value
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BRN
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NYSE American
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☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☒
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01
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Entry into a Material Definitive Agreement.
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●
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Director Nominations. Barnwell agreed that the Board
would nominate each of Bradley M. Tirpak, Philip J. McPherson, Douglas N. Woodrum, Robert J. Inglima, Jr., Kenneth S. Grossman, Alexander C. Kinzler and Peter J. O’Malley to stand for election to the Board at the 2021 Annual Meeting,
with each to serve a term expiring at the Company’s 2022 annual meeting of stockholders (the “2022 Annual Meeting”). The MRMP Stockholders agreed to withdraw their notice of nominees to be elected to the Board at the 2021 Annual
Meeting and to vote their shares of Barnwell common stock in favor of the election of the designated slate.
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●
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Standstill. The MRMP Stockholders agreed to observe
normal and customary standstill provisions during the period (the “Standstill Period”) beginning on January 27, 2021 until the date ten business days prior to the deadline for the submission of stockholder nominations for directors for
the Company’s 2023 annual meeting of stockholders, provided that the Company achieves a positive pre-tax profit, as defined in the Cooperation Agreement, for its fiscal year 2021 and
meets certain other conditions set forth in the Cooperation Agreement. If the Company does not achieve a positive pre-tax profit for its fiscal year 2021 (or if the Company notifies the MRMP Stockholders that it does not intend to
nominate any of Messrs. Tirpak, McPherson or Woodrum (or replacement nominees satisfactory to the MRMP Stockholders) for election to the Board at the 2022 Annual Meeting, or if the Company proposes to expand
the Board above seven members), then the Standstill Period will terminate upon the date that is ten business days prior to the deadline for the submission of stockholder nominations for directors for the 2022 Annual Meeting. The
standstill provisions provide, among other things, that the MRMP Stockholders will not (except as otherwise permitted by the Cooperation Agreement):
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o
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make, participate in or propose any tender offer, exchange offer, merger, consolidation, acquisition, business combination, recapitalization, restructuring, liquidation,
dissolution or other similar extraordinary transaction involving the Company or any of its subsidiaries or its or their securities or assets;
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o
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make any private proposal, alone or in concert with others, that would reasonably be expected to require the Company or the MRMP Stockholders to make public disclosure (of any
kind);
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o
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engage in any solicitation of proxies or become a “participant” in a contested “solicitation” of proxies, each as defined under the Securities Exchange Act of 1934, as amended,
(the “Exchange Act”) with respect to securities of the Company;
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o
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seek any additional representation on the Board, seek the removal of any member of the Board or encourage any person to submit nominees in furtherance of a contested election;
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o
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make or be the proponent of any stockholder proposal;
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o
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make any request for stockholders list materials or other books and records of the Company;
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o
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make any proposal (i) relating to any change in the number or term of directors or the filling of any vacancies on the Board; (ii) relating to any material change in the
capitalization or dividend policy of the Company; (iii) relating to any material change in the Company’s management, compensation or corporate structure; (iv) relating to any waiver, amendment or modification to the Company’s charter or
bylaws; (v) causing a class of securities of the Company to be delisted; or (vi) causing a class of equity securities of the Company to become eligible for termination of registration; or
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o
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form, join or act in concert with any other person or group, including a “group” as defined pursuant to Section 13(d) of the Exchange Act with respect to any securities of the
Company.
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●
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Voting Matters. The MRMP Stockholders agreed that,
during the Standstill Period, they would (a) be present for quorum purposes at any annual or special meeting of the Company’s stockholders and (b) vote all their shares of common stock of the Company beneficially owned by each MRMP
Stockholder (i) in favor of the slate of directors recommended by the Board, (ii) against the removal of any of the Company’s directors and (iii) in accordance with the Board’s recommendation with respect to any other matter brought to
a vote of the Company’s stockholders (unless both Institutional Shareholder Services Inc. and Glass Lewis & Co., LLC have recommended otherwise with respect to such matter and other than with respect to any publicly announced
proposals relating to a merger, acquisition, disposition of all or substantially all of the assets of the Company or other similar business combination transaction, in each case voted on at a meeting of the Company’s stockholders).
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Ownership Limit. Each MRMP Stockholder agreed that,
during the Standstill Period, neither it, nor its respective affiliates and controlled associates, shall acquire, or offer, seek or agree to acquire, or direct any third party in the acquisition of, any common stock of the Company or
any securities convertible into such common stock or rights or options in relation thereof, without the consent of the Board, except for acquisitions by Mr. Ned L. Sherwood and his affiliates so long as their beneficial ownership, taken
together, shall not exceed, in the aggregate, 20% of the outstanding shares of Barnwell stock that is entitled to vote at any meeting of the Company’s stockholders. (Concurrently with the execution of the Cooperation Agreement,
Alexander C. Kinzler and the Company entered into a separate letter agreement, pursuant to which, during the Standstill Period, Mr. Kinzler and his affiliates are subject to the same limitations on beneficial ownership of Barnwell’s
voting stock as those that apply to Mr. Sherwood and his affiliates under the Cooperation Agreement.)
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●
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Expense Reimbursement. The Company agreed to
reimburse the MRMP Stockholders up to $300,000 for their reasonable, documented out-of-pocket fees and expenses in connection with their election contest at the 2020 annual meeting of stockholders and the negotiation of the Cooperation
Agreement.
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Termination of Company Post-Retirement Medical Plan.
Barnwell agreed that the Board will take appropriate action, on or before March 31, 2021, to effect the termination of the Company’s Post-Retirement Medical Plan in compliance with its terms and conditions.
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●
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Chairman of the Board. Barnwell agreed that the
first regular meeting of the Board following the 2021 Annual Meeting, the Board shall appoint one of Mr. McPherson, Mr. O’Malley or Mr. Inglima as Chairman of the Board.
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●
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Equity Offerings. In the event that Barnwell raises
capital through an equity offering during the Standstill Period, Mr. Sherwood and his affiliates will be entitled to participate in such offering and acquire securities in an amount equal to their pro rata percentage ownership of the
outstanding shares of common stock of the Company.
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●
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Board Size. During the Standstill Period, Barnwell
agreed that it will not expand the size of the Board above seven members and shall not establish or maintain an executive committee or another committee with similar powers of the Board without each of Messrs. Tirpak, McPherson and
Woodrum being appointed as a member of such committee.
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●
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Mutual Non-Disparagement. Subject to customary
exceptions, the parties to the Cooperation Agreement agreed to observe normal and customary non-disparagement provisions.
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Item 8.01
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Other Events.
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Item 9.01
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Financial Statements and Exhibits.
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Exhibit No.
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Description
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10.1
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Cooperation and Support Agreement, dated as of January 27, 2021, by and among Barnwell Industries, Inc., MRMP-Managers LLC, the Ned L. Sherwood Revocable Trust, Bradley M. Tirpak
and Ned L. Sherwood
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99.1
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Press Release dated January 28, 2021
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BARNWELL INDUSTRIES, INC.
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By:
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/s/ Russell M. Gifford
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Name:
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Russell M. Gifford
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Title:
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Executive Vice President and Chief Financial Officer
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Exhibit No.
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Description
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Cooperation and Support Agreement, dated as of January 27, 2021, by and among Barnwell Industries, Inc., MRMP-Managers LLC, the Ned L. Sherwood Revocable Trust, Bradley M. Tirpak
and Ned L. Sherwood
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Press Release dated January 28, 2021
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(i)
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(ii)
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The MRMP Stockholders each agree to comply, and cause their Affiliates and
Associates to comply, with the terms of this Agreement and shall be responsible for any breach of this Agreement by any such Affiliate or Associate. As used in this Agreement, the terms “Affiliate” and “Associate” shall have the respective meaning set forth in Rule 12b-2 promulgated by the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall include all persons or entities that at any time during
the term of this Agreement become Affiliates or Associates of any person or entity referred to in this Agreement.
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(iii)
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The MRMP Stockholders, on behalf of themselves and their controlled Affiliates and Associates, hereby irrevocably withdraw their Nomination Notice and any
related materials or notices submitted to the Company in connection therewith. During the Standstill Period (as hereinafter defined), except as otherwise provided herein, the MRMP Stockholders shall not, and shall cause each of their
controlled Affiliates and Associates not to, directly or indirectly, (A) nominate or recommend for nomination any person for election at any annual or special meeting of the Company’s stockholders, (B) submit any proposal for
consideration at, or bring any other business before, any annual or special meeting of the Company’s stockholders, (C) initiate, encourage or participate in any “vote no,” “withhold” or similar campaign with respect to any annual or
special meeting of the Company’s stockholders or (D) initiate, encourage or participate in any solicitation of written consents from the Company’s stockholders. The MRMP Stockholders shall not publicly or privately encourage or support
any other stockholder, person or entity to take any of the actions described in this Section 1(b)(iii).
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(iv)
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During the Standstill Period (as hereinafter defined), the MRMP Stockholders agree that they will (A) be present for quorum purposes at any annual or
special meeting of the Company’s stockholders, and (B) vote or cause to be voted (including in any action by written consent) all shares of the Company Common Stock beneficially owned, or deemed to be beneficially owned (as determined
under Rule 13d-3 promulgated under the Exchange Act), and entitled to vote as of the record date, by the MRMP Stockholders:
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(vi)
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On or before March 31, 2021, the Board will take appropriate action to effect the termination of the Company’s Post Retirement Medical Plan (“PRMP”) in
compliance with its terms and conditions, which include giving participants in the PRMP notice of such termination at least 60 days prior to the effective date of such termination. Approval of the applicable resolutions by the Board,
on or before March 31, 2021, to initiate such termination procedure shall be deemed to satisfy the requirements of this Section 1(b)(vi).
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(vii)
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Promptly following the 2021 Annual Meeting, the Board will consider appropriate means to raise equity capital for the Company, including, among other
means, an “at the market” (hereinafter “ATM”) offering, rights offering or similar capital raise.
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(1)
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In the event that equity capital is raised for the Company, Mr. Ned L. Sherwood and his affiliates will be entitled to participate in such offering and
acquire shares in an amount equal to their pro rata percentage ownership of the outstanding shares of the Company. For example, if Mr. Ned L. Sherwood and his affiliates own 18.2% of the Company’s outstanding shares prior to an equity
offering, they will be entitled to acquire up to 18.2% of such shares offered for new equity; provided however, that in the case of an ATM offering, Mr. Sherwood will have the right to acquire shares directly from the Company in an
amount that will maintain his (and his Affiliates’) pro rata percentage interest in the Company and the Company will sell shares directly to Mr. Sherwood (and his Affiliates) as contemplated by this paragraph.
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(viii)
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Prior to the date hereof, each of the Director Nominees has delivered to the Company a fully completed copy of the Company’s standard director and officer
questionnaire and other reasonable and customary director onboarding documentation required by the Company, and provided all other information as reasonably required by the Company to determine the eligibility of such Director Nominee
to serve as a director of the Company and the qualifications of such Director Nominee to serve on any committee of the Board, including information that could be material to a reasonable stockholder’s understanding of the independence
or lack of independence of such individual. The Company agrees that each of the Director Nominees shall (A) receive the same director compensation and be indemnified by the Company in the same manner as all other non-management
directors of the Company and (B) receive the benefit of customary directors’ and officers’ liability insurance coverage in accordance with the terms of any such insurance policy, if obtained.
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(ix)
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During the Standstill Period, the Board will not expand the size of the Board above seven members. During the Standstill Period, the Board shall not
establish or maintain an executive committee or another committee with similar powers of the Board without each of Messrs. Tirpak, McPherson and Woodrum being appointed as a member of such committee. The Company shall not take any
action to avoid or seek to avoid the observance or performance of any of the terms required to be observed or performed by the Company under this Agreement, but shall at all times in good faith take all actions that are necessary to
carry out and perform all of the provisions of this Agreement.
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(ii)
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(iii)
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engage in a “solicitation” of “proxies” (as such terms are defined under the Exchange Act), votes or written consents of stockholders or security holders
with respect to, or from the holders of, Company Securities (including a “withhold” or similar campaign), for any purpose, including, without limitation, the election or appointment of individuals to the Board or to approve or vote in
favor or against stockholder proposals, resolutions or motions, or become a “participant” (as such term is defined in Instruction 3 to Item 4 of Schedule 14A promulgated under the Exchange Act) in any contested “solicitation” of
proxies, votes or written consents for any purpose, including, without limitation, the election or appointment of directors with respect to the Company (as such terms are defined under the Exchange Act) (other than a “solicitation” or
acting as a “participant” in support of the nominees of the Board at any stockholder meeting or providing such encouragement, advice or influence that is consistent with the Board’s recommendation in connection with such director
nominees or other proposals, resolutions or motions, pursuant to this Agreement or otherwise);
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(iv)
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(v)
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(x)
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(xi)
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(b)
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Nothing in this Section 2 shall be deemed to limit the exercise in good faith by any of Director Nominees designated by the MRMP Stockholders (or their
replacement designees) of their fiduciary duties or rights in their capacity as directors of the Company or from participating in discussions and determinations of the Board.
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(c)
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“Pre-tax Profit” is hereby defined for purposes of this Agreement as the Company’s “loss/income before income taxes” with respect to its fiscal year 2021
financial results as reported on its Consolidated Statement of Operations in its Form 10-K filed with the Securities & Exchange Commission (“SEC”) with a clean auditors’ report in accordance with US GAAP and modified by excluding
the following:
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(i)
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Non-cash charges relating to impairments, write-downs or write-offs of oil and gas asset values;
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(ii)
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Payments made to the MRMP Stockholders pursuant to this Agreement or otherwise, other than compensation and reimbursements paid to directors of the
Company;
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(iii)
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All costs incurred by the Company for fiscal 2021 with regard to responding to or otherwise addressing the Nomination Notice received from the MRMP
Stockholders, including without limitation legal costs, proxy solicitation costs and public relations costs, not in excess of $150,000 in the aggregate; and
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(iv)
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All costs incurred in the preparation of and filing of an S-3 Registration Statement or other actions taken to permit the raising of equity capital for
the Company as contemplated in paragraph 1(b)(vii), hereof, not in excess of $200,000 in the aggregate.
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5.
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Termination.
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(b)
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by mutual written agreement of the Parties; or
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(c)
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by either Party, by written notice of such termination, if the other Party shall have materially breached this Agreement, which breach remains uncured
after being provided a reasonable opportunity to cure such breach;
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8.
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Severability.
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If to the Company: |
Barnwell Industries, Inc.
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1100 Alakea Street, Suite 2900 | |
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Honolulu, Hawaii | |
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Attention:
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Alexander C. Kinzler
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Email:
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akinzler@brninc.com
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With a copy (which shall not constitute notice) to:
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Stroock & Stroock & Lavan LLP | |
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180 Maiden Lane | |
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New York, NY 10038 | |
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Attention: | Christopher J. Doyle |
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Email: | cdoyle@stroock.com |
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and |
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Skadden, Arps, Slate, Meagher & Flom LLP | |
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One Manhattan West
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New York, New York 10001 | |
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Attention: | Richard J. Grossman |
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Email: | richard.grossman@skadden.com |
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If to the MRMP Stockholders: | Ned L. Sherwood | |
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151 Terrapin Point | |
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Vero Beach, Florida 32963 | |
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With a copy (which shall not constitute notice) to: | Thompson Hine LLP | |
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3900 Key Center | |
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127 Public Square | |
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Cleveland, Ohio 44114
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Attention: | Derek D. Bork |
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Email: | derek.bork@thompsonhine.com |
11.
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Counterparts.
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BARNWELL INDUSTRIES, INC.
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By:
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/s/ Alexander C. Kinzler
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Name:
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Alexander C. Kinzler
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Title:
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President, Chief Executive Officer,
Chief Operating Officer and General
Counsel
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MRMP-MANAGERS LLC
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By:
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/s/ Ned L. Sherwood
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Name:
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Ned L. Sherwood
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Title:
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Investment Manager
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NED L. SHERWOOD REVOCABLE TRUST
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By:
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/s/ Ned L. Sherwood
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Name:
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Ned L. Sherwood
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Title:
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Trustee
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/s/ Bradley M. Tirpak
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BRADLEY M. TIRPAK
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/s/ Ned L. Sherwood
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NED L. SHERWOOD
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BARNWELL INDUSTRIES, INC. |
P R E S S
RELEASE
1100 Alakea Street, Suite 2900
Honolulu, Hawaii 96813
Telephone (808) 531-8400
Fax (808) 531-7181
Website: www.brninc.com
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CONTACT:
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Alexander C. Kinzler
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BARNWELL INDUSTRIES, INC. |
P R E S S
RELEASE
1100 Alakea Street, Suite 2900
Honolulu, Hawaii 96813
Telephone (808) 531-8400
Fax (808) 531-7181
Website: www.brninc.com
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CONTACT:
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Alexander C. Kinzler
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