CROWN ENERGY CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
August 30, 1996
TO THE SHAREHOLDERS OF CROWN ENERGY CORPORATION:
The 1996 Annual Meeting of Shareholders of Crown Energy
Corporation, a Utah corporation, will be held on Friday, August
30, 1996, at 2:30 p.m., Mountain Standard Time, in Canyon Room I
of the Red Lion Hotel, 255 South West Temple, Salt Lake City,
Utah, for the following purposes:
1. To elect a Board of Directors, comprised of four
persons, to serve until the next Annual Meeting of Shareholders
or until their respective successors shall be duly elected or
appointed.
2. To approve the appointment of Pritchett, Siler and
Hardy as the independent accountants for Crown Energy Corporation
for the 1996 fiscal year.
3. To transact such other business as may properly come
before the Meeting (or any adjournment or postponement of the
Meeting).
Only shareholders of record at the close of business on
August 1, 1996, are entitled to notice of, and to vote at, the
Meeting.
All shareholders are cordially invited to attend the Meeting
in person. Because it is important that your shares be
represented at the Meeting whether or not you are personally in
attendance, you are requested to sign, date and return the
enclosed proxy card at your earliest convenience. Shareholders
attending the Meeting may vote in person even if they have
returned proxy cards.
By Order of the Board of Directors
/s/ RICHARD S. RAWDIN
Date: August 15, 1996
Richard S. Rawdin, Secretary
YOUR VOTE IS IMPORTANT
PLEASE DATE, SIGN, AND RETURN THE ENCLOSED PROXY CARD
AS SOON AS POSSIBLE
<PAGE>
CROWN ENERGY CORPORATION
215 South State, Suite 550
Salt Lake City, Utah 84111
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 30, 1996
GENERAL INFORMATION
This Proxy Statement is furnished to shareholders of Crown
Energy Corporation, a Utah corporation (the "Company"), in
connection with the solicitation by the Company of Proxies, in
the enclosed form, for use at the 1996 Annual Meeting of
Shareholders of the Company (the "Meeting") to be held on Friday,
August 30, 1996, at 2:30 p.m., Mountain Standard Time, in Canyon
Room I of the Red Lion Hotel, 255 South West Temple, Salt Lake
City, Utah. The purposes of the Meeting are set forth in the
accompanying Notice of Annual Meeting of Shareholders.
The approximate date upon which this Proxy Statement, the
enclosed Proxy Card and the attached Notice of Annual Meeting of
Shareholders are first being sent to shareholders is August 15,
1996. The Annual Report of the Company to its shareholders,
which includes a copy of the Company's Form 10-K and the
Company's audited financial statements for the year ended
December 31, 1995, is being mailed to shareholders of the Company
concurrently with this Proxy Statement.
Proxies in the enclosed form will be effective if properly
executed, returned to the Company prior to the Meeting, and not
revoked. The common shares represented by each effective Proxy
will be voted at the Meeting in accordance with the instructions
on the Proxy Card. If no instructions are indicated on a Proxy
Card, all common shares represented by such Proxy Card will be
voted FOR each matter specified in the accompanying Notice of
Annual Meeting of Shareholders and, as to any other matters of
business which properly come before the Meeting, will be voted by
the proxy holders named thereon as directed by the present Board
of Directors.
A shareholder giving a Proxy pursuant to this solicitation
may revoke it at any time prior to its exercise by delivering to
the Secretary of the Company a written notice of revocation, or
a duly executed proxy bearing a later date, or by attending the
Meeting and voting in person (attendance at the Meeting will not,
however, constitute revocation of a Proxy without further action
by the shareholder). Any written notice revoking a Proxy should
be sent to Crown Energy Corporation, 215 South State, Suite 550,
Salt Lake City, Utah 84111, Attention: Richard S. Rawdin,
Secretary.
Only shareholders of record at the close of business on
August 1, 1996 are entitled to notice of, and to vote at, the
Meeting. At the record date, 10,932,616 of the Company's common
shares, par value $0.02 per share, were issued and outstanding.
The Bylaws of the Company provide that the presence at a meeting
of shareholders of a majority of the Company's outstanding common
shares constitutes a quorum. Therefore, the presence at the
Meeting of 5,466,308 common shares, in person or by proxy, will
be required in order to constitute a quorum for the transaction
of business. Each of the Company's common shares is entitled to
one vote upon each matter presented to shareholders at the
Meeting. No cumulative voting is authorized in connection with
the election of directors.
The entire cost of soliciting Proxies for use at the Meeting
pursuant to this proxy statement will be borne by the Company.
Proxies will be solicited by use of the mails. Additionally,
directors, officers and regular employees of the Company may
solicit Proxies by telephone, telegram or personal contact. The
Company will not pay any special compensation, to any person, in
connection with the solicitation of Proxies. The cost of the
solicitation of said Proxies will include the cost of supplying
necessary copies of the solicitation materials to the beneficial
owners of those common shares which are held of record by
brokers, dealers, banks, voting trustees and their nominees,
including, upon request, the reasonable expenses which are
incurred by such record holders in mailing the solicitation
materials to beneficial owners.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information as of July 30,
1996, regarding (i) all stockholders known to the Company to be
beneficial owners of more than 5% of the outstanding common
stock; (ii) each director; and (iii) all officers and directors
of the Company as a group. Each of the persons in the table
below has sole voting power and sole dispositive power as to all
of the shares shown as beneficially owned by them except as
otherwise indicated.
<TABLE>
<S> <C> <C>
Number of Shares Percentage
Name and Address Beneficially Owner of Class
James A. Middleton 355,000(2) 3.16%
574 Chapala Drive
Pacific Palisades, Ca. 90272
Jay Mealey 2,058,051(3) 18.15%
4645 Hunters Ridge Circle
Salt Lake City, Utah 84124
Thomas W. Bachtell 2,013,448(4) 17.77%
3245 Big Spruce Way
Park City, Utah 84060
Richard S. Rawdin 450,160(5) 4.02%
P. O. Box 520982
Salt Lake City, Utah 84152
All Officers, Directors and
owners of more than 5% of the
Company's stock as a Group 4,876,659(6) 39.67%
(Includes 4 individuals)
</TABLE>
1) Based on 10,932,616 shares of the Company's Common Stock
issued and outstanding on July 30, 1996. Treated as
outstanding for the purpose of computing the percentage
ownership of each beneficial owner are common shares which
such beneficial owner had a right to acquire within 60 days
of July 30, 1996.
2) Includes 300,000 Options which are exercisable within 60
days.
3) Includes 406,000 Options which are exercisable within 60
days, as well as 110,000 shares gifted by Mr. Mealey to
Glenn Mealey as custodian for Mr. Mealey's children, Cameron
and Andrew Mealey. Mr. Mealey expressly disclaims
beneficial ownership of the aforementioned gifted shares.
4) Includes 5,000 shares held as trustee of the Nielson
Family Trust and 400,000 Options which are exercisable
within 60 days. Mr. Bachtell expressly disclaims beneficial
ownership of the aforementioned shares held by the Nielson
Family Trust.
5) Includes 254,000 Options which are exercisable within 60
days.
6) Includes 1,360,000 Options which are exercisable within
60 days and 110,000 shares gifted by Mr. Mealey and 5,000
shares held as trustee by Mr. Bachtell.
ELECTION OF DIRECTORS
A board of four directors is to be elected at the Meeting,
to hold office until the next Annual Meeting of Shareholders and
until their respective successors are duly elected and qualified.
Unless otherwise instructed, the proxy holders will vote all
Proxies received by them FOR the election of the Company's four
nominees named below. Individuals receiving the most votes will
be elected. All nominees are present members of the Board of
Directors. Each nominee has his intention to serve as a director
if elected, and it is not anticipated that any nominee will be
unable to serve as a director. However, in the event that a
nominee is unable to serve, the proxy holders will vote all
Proxies received by them for such other person as the present
Board of Directors shall designate.
Nominees
The names of the nominees, and certain information about
each of them, is set forth below.
<TABLE>
<S> <C> <C> <S> <C> <C>
Year First Elected
NAME AGE Position/Office as a Director
James A. 60 Chief Executive Officer, 1996
Middleton Chairman of the Board
of Directors
Jay Mealey 40 President, Chief Operating 1991
Officer, Treasurer
Thomas W. 45 Director 1993
Bachtell
Richard S. 38 Vice President, Director, 1992
Rawdin Secretary
</TABLE>
James A. Middleton - Chairman of the Board, Chief Executive
Officer. Mr. Middleton became Chairman and Chief Executive
Officer on February 7, 1996. Mr. Middleton was President of ARCO
Oil and Gas Company as well as Executive Vice President and a
member of the Board of Directors of Atlantic Richfield Company.
Mr. Middleton's areas of responsibility included ARCO Products
Company, ARCO Transportation Company, ARCO Coal Company, ARCO
Exploration and Production Technology and ARCO Aluminum, Inc.
Earlier in his career Mr. Middleton was head of the engineering
department of ARCO's Synthetic Fuels and Minerals Division and
was heavily involved in ARCO's activities in oil shale, Athabasca
oil sands, coal mining and coal conversion projects. He remains
on the Board of Directors of ARCO Chemical Company and is
Executive Vice President - Emeritus of ARCO. Mr.
Middleton also serves on the Board of Directors of Texas
Utilities Company as well as many community and civic
organizations.
Jay Mealey - President, Chief Operation Officer. Mr. Mealey
has been the President, Treasurer and a Director of the Company
since 1991. He has been employed by the Company since 1986 in
various management positions. Mr. Mealey has been actively
involved in the oil and gas exploration and production business
since 1978. Prior to employment with the Company, he was Vice
President of Ambra Oil and Gas Company and worked for Belco
Petroleum Corporation and Conoco, Inc. in their exploration
divisions. Mr. Mealey is responsible for managing the day to day
operations of the Company. He is a full-time employee and it is
anticipated that he will devote one hundred percent of his time
to the Company.
Richard S. Rawdin - Vice President, Director. Mr. Rawdin
became Vice President on September 23, 1991, and is a certified
public accountant. He is responsible for managing the financial
and accounting functions of the Company. From February, 1986, to
September, 1991, he was Controller and Vice President of Finance
for Kerry Petroleum Company, Inc. where he was responsible for
directing the financial and accounting affairs of the Company,
its two subsidiaries and six partnerships. Prior to that, he was
a Senior Consultant with Deloitte and Touche. Mr. Rawdin is a
full-time employee of the Company and it is anticipated that he
will devote one-hundred percent of his time to the Company.
Thomas W. Bachtell - Director. Mr. Bachtell devotes a
substantial amount of time to the Company in his position as
President of the Company's wholly-owned subsidiary, BuenaVentura
Resources Corporation ("BVRC"). He is also a practicing natural
resources attorney and President of the law firm of Pruitt,
Gushee & Bachtell. Mr. Bachtell's law practice focuses on
advising and assisting oil, gas and mineral companies in their
exploration and development activities in the Rocky Mountain
States. He is experienced in contract negotiation and drafting,
permitting and environmental matters, business development and
operations, and civil litigation. He has authored several papers
and drafted various statutes on mineral law matters. In addition
to his responsibilities as President of BVRC, Mr. Bachtell is
responsible for the Company's governmental and regulatory affairs
along with its natural resources legal matters.
Board Meetings and Committees
During the year ended December 31, 1995, the Board of
Directors of the Company held three meetings. No incumbent
director attended fewer than 75% of all meetings of the Board of
Directors which were held during the period he served as a
director.
During the year ended December 31, 1995, the Board of
Directors of the Company had no standing committees.
Director Compensation
It is the present policy of the Company not to pay
compensation to its Directors.
Terms and Family Relationships
All directors, other than Mr. Middleton, were elected
December 7, 1994, and shall serve until their successors are
elected and qualified. All officers serve at the pleasure of the
Board of Directors. There are no family relationships between
any of the officers and directors.
Certain Relationships and Related Transactions
During the year ended December 31, 1995, the Company
executed promissory notes payable to Mr. Thomas W. Bachtell,
Esq., a Director of the Company and President of BVRC, for loans
to the Company including accrued interest and salary payable in
the amount of $57,682 and bearing interest at the rate of 9% per
annum. The foregoing notes mature on July 1, 1997 (or earlier
upon the Company's receipt of $2,000,000 as a result of its offer
and sale of its securities).
In 1995, the Company executed a promissory note payable to
Mr. Jay Mealey, President, Chief Operating Officer, Treasurer and
a Director of the Company for amounts loaned to the Company in
the amount of $53,240 and bearing interest at a rate of 9% per
annum replacing a prior promissory note. The foregoing note
matures on July 1, 1997 (or earlier upon the Company's receipt of
$2,000,000 as a result of its offer and sale of its securities).
In February, 1995, Mr. Mealey loaned the Company an additional
$20,000, which amount was subsequently repaid by the Company.
In 1995, the Board of Directors approved the issuance of
common stock to reduce the liabilities (debt and accounts
payable) and improve the equity position of the Company. Under
this plan, restricted common stock (Rule 144) was issued at one-half
the market price to account for the three year holding
period and to be consistent with previous issuances of restricted
common stock. The Company converted a total of $181,443 of
liabilities to equity at prices ranging from $.35 (restricted
common stock at one-half market price) to $.70 (free trading
common stock at market price) per share. As part of this program
Mr. Mealey and Mr. Rich Rawdin, Vice President-Finance, Secretary
and a Director of the Company, converted salary payable of
$113,047 to 322,991 shares of restricted common stock. The
Company has the option to repurchase Mr. Mealey's 215,114 shares
at the issue price plus interest accrued at 9% per annum. Also,
as part of this program the law firm of Pruitt, Gushee &
Bachtell, of which Mr. Bachtell is president and a shareholder,
converted $33,092 to 47,273 shares of free trading common stock.
In January, 1996, the Company paid Pruitt, Gushee & Bachtell
$21,125 for services rendered in prior periods to the Company's
wholly-owned subsidiaries, Gavilan and BVRC.
EXECUTIVE COMPENSATION
There is set forth below information concerning the annual
and long-term compensation paid for services rendered in all
capacities to the Company for the fiscal years ended December 31,
1995, 1994 and 1993 by the person who was, at December 31, the
Chief Executive Officer of the Company and to any other officer
of the Company who received in excess of $100,000 in compensation
for the year ended December 31, 1995 (collectively the "Named
Officers").
The following table discloses compensation received by the
Named Officers for the three fiscal years ended December 31,
1995:
SUMMARY COMPENSATION
Annual Compensation
<TABLE>
<S> <C> <C> <C> <C>
Name and
Principal Other Annual
Position Year Salary($) Bonus($) Compensation($)
Jay Mealey,
President 1993 $78,000 $0 $0
1994 $78,000 $0 $0
1995 $78,000 $0 $0
</TABLE>
The following table provides information on options granted to
the Named Officers during the fiscal year ended December 31, 1995:
<PAGE>
OPTION GRANTS
<TABLE>
<C> <S> <C> <C> <C> <C> <C> <C>
Name Number of Securities %of Total Options Exercise or Expiration Date
Underlying Options Granted To Base Price
Granted (#) Employees in ($/Sh)
Fiscal Year
May Mealey 100,000 33.3% $.5625 May 31, 2000
per share
</TABLE>
Ten-Year Option/SAR Repricings
<TABLE>
<C> <C> <C> <C> <C> <C>
Name/Date Number of High bid Exercise New exercise Length of
options/ price of price at price ($) original
SARs repriced stock at time of option term
or amended time of repricing remaining at
repricing or date of
or amendment repricing or
amendment ($) amendment
Jay Mealey,
President,
May 31,
1995 100,000 $.5625 $.72 $.60 37 months
Jay Mealey,
President,
May 31,
1995 100,000 $.5625 $1.08 $.60 37 months
Jay Mealey,
President,
May 31,
1995 100,000 $.5625 $1.80 $.60 37 months
</TABLE>
On May 31, 1995, the Board of Directors of the Company
unanimously approved an amendment to the terms of certain options
previously awarded to Mr. Mealey, Mr. Rawdin and Mr. Bachtell (as
reflected in the table above for Mr. Mealey). It was the Board's
determination that such an amendment was in the best interests of
the Company to create incentives for and retain the services of the
recipients for the Company's future benefit. The amended terms
accounted for the adjustment for the 1:4 reverse split on January 3,
1995, reduced the exercise price of the options from an average of
$1.20 per share to $.60 per share, granted piggyback registration
rights and extended the exercise period to five years from the date
of the amendment. The amendment resulted in a reduction in the
total cost to exercise the options from $900,000 to $450,000.
SELECTION OF AUDITORS
At the Meeting, shareholders will be asked to approve the
selection, by the Board of Directors, of Pritchett, Siler and Hardy
as the independent public accountants of the Company for the 1996
fiscal year. Pritchett, Siler and Hardy audited the financial
statements of the Company for the last seven fiscal years. The
Company does not anticipate that any representatives of Pritchett,
Siler & Hardy will be present at the Meeting.
Unless a contrary choice is specified, Proxies received by the
Company pursuant to this solicitation will be voted FOR the
appointment of Pritchett, Siler and Hardy as the independent public
accountants of the Company for the 1996 fiscal year.
SHAREHOLDER PROPOSALS
Any proposals that shareholders of the Company desire to have
presented at the Company's 1997 Annual Meeting of Shareholders must
be received by the Company, at its principal office, no later than
April 15, 1997, or within a reasonable period of time prior to the
solicitation of proxies for such meeting. All such proposals should
be transmitted to the Company by Certified United States Mail, with
return receipt requested.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's officers and directors, and persons who own more than
ten percent of a registered class of the Company's equity
securities, to file certain reports regarding ownership of and
transactions in the Company's securities with the Securities and
Exchange Commission (the "SEC"). Such officers, directors and ten-percent
stockholders are also required by SEC rules to furnish the
Company with copies of all Section 16(a) forms that they file.
Based solely on its review of copies of such forms received by
it, the Company believes that during the fiscal year ended December
31, 1995, all Section 16(a) filing requirements applicable to its
officers, directors and ten percent shareholders were complied with.
However, Mr. Middleton (one report), Mr. Mealey (two reports), Mr.
Bachtell (one report) and Mr. Rawdin (two reports) all filed late
reports during the period.
OTHER MATTERS
The Company knows of no other matters that will be presented at
the 1996 Annual Meeting of Shareholders. If any other matter
properly comes before the Meeting, it is the intention of the
persons named as proxies on the Proxy Cards to vote all common
shares represented by such Proxy Cards in accordance with the
directions of the present Board of Directors.
By Order of the Board of Directors
/s/ RICHARD S. RAWDIN
Richard S. Rawdin
Secreta
PROXY
CROWN ENERGY CORPORATION
215 South State Street, Suite 550, Salt Lake City, UT 84111
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The Undersigned stockholder of CROWN ENERGY CORPORATION (the
"Company") hereby appoints JAMES A. MIDDLETON, JAY MEALEY, RICHARD
S. RAWDIN and THOMAS W. BACHTELL, and each of them acting
individually, as the proxy of the undersigned, with the powers the
undersigned would possess if personally present, and with full power
of substitution, to vote all shares of Common Stock of the Company
at the annual meeting of stockholders of the Company to be held on
Friday, August 30, 1996, at 2:30 p.m., Mountain Standard Time, in
Canyon Room I of the Red Lion Hotel, 255 South West Temple, Salt
Lake City, Utah, and any adjournment or postponement thereof, upon
all subjects that may properly come before the meeting, including
the matters described in the proxy statement furnished herewith,
subject to any directors indicated below.
PROPOSAL 1 -- Election of Directors:
(__) FOR all four nominees listed below.
(__) WITHHOLD AUTHORITY to vote for all four nominees for
director listed below.
(__) FOR all four nominees for director listed below, except
WITHHOLD AUTHORITY to vote for the nominee(s) whose
name(s) is (are) lined through.
Nominees: James A. Middleton, Jay Mealey, Thomas W.
Bachtell, Richard S. Rawdin
PROPOSAL 2 -- Appointment of Pritchett, Siler and Hardy as the
Independent Accountants for the Corporation.
(__) FOR (__) AGAINST (__) ABSTAIN
This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder(s). If no direction
is made, the Proxy will be voted "FOR" the nominees of the Board of
Directors in the election of directors and "FOR" the proposal to
approve all other proposals. This proxy also delegates
discretionary authority to vote with respect to any other business
which may properly come before the meeting or any adjournment or
postponement thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF
ANNUAL MEETING, THE PROXY STATEMENT FURNISHED IN CONNECTION
THEREWITH AND THE ANNUAL REPORT AND HEREBY RATIFIES ALL THAT THE
SAID DIRECTORS AND PROXIES MAY DO BY VIRTUE HEREOF.
Dated: ,1996
(Complete Date)
(Stockholder's Signature)
(Stockholder's Signature)
NOTE: Please mark, date and sign this proxy card and return
it to the address on the reverse side of this card. Please
sign as your name appears on the label. If shares are
registered in more than one name, all owners should sign. If
signing in a fiduciary or representative capacity, please give
full title and attach evidence of authority. Corporations
please sign with full corporate name by a duly authorized
officer and affix corporate seal.
