UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed
by the Registrant ¨
Filed
by a Party other than the Registrant þ
Check the appropriate box:
þ
Preliminary Proxy Statement
¨ Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
¨ Definitive Proxy Statement
¨
Definitive Additional Materials
¨ Soliciting Material under § 240.14a-12
Pacific Coast Oil Trust
(Name of Registrant as Specified in its Charter)
Shipyard Capital LP
Shipyard Capital Management LLC
Carson Mitchell
Cedar Creek Partners, LLC
Eriksen Capital Management LLC
Tim Eriksen
Evergreen Capital Management LLC
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
| þ | No fee required |
| ¨ | Fee paid previously with preliminary materials |
| ¨ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
PRELIMINARY PROXY STATEMENT—SUBJECT
TO COMPLETION
PACIFIC COAST OIL TRUST
SPECIAL MEETING OF UNITHOLDERS
[MEETING DATE]
PROXY STATEMENT
OF
SHIPYARD CAPITAL LP, SHIPYARD CAPITAL MANAGEMENT
LLC,
CEDAR CREEK PARTNERS, LLC, ERIKSEN CAPITAL
MANAGEMENT LLC,
AND EVERGREEN CAPITAL MANAGEMENT LLC
(“SHIPYARD GROUP”)
[ ],
2023
Dear Unit Holder:
This proxy statement and
the enclosed GOLD proxy card (“Proxy Card”) are being furnished by Shipyard Capital LP, Shipyard Capital Management LLC,
Cedar Creek Partners LLC, Eriksen Capital Management LLC, and Evergreen Capital Management LLC (collectively, the “Shipyard Group,”
“we” or “our”) in connection with the solicitation of proxies from the holders (“Unitholders”) of
units of beneficial interest (“Units”) of the Pacific Coast Oil Trust (“PCOT” or “the Trust”), a
Delaware statutory trust governed by the Amended and Restated Trust Agreement of Pacific Coast Oil Trust, dated as of May 8, 2012, by
and among the Pacific Coast Energy Company LP (“PCEC”), The Bank of New York Mellon Trust Company, National Association (the
“Trustee”) and Wilmington Trust, National Association (the “Trust Agreement”), and by the Conveyance of Net Profits
Interests and Overriding Royalty Interest dated June 15, 2012 (the “Conveyance Agreement”), for the special meeting of Unitholders
of PCOT scheduled to be held virtually by way of a live webcast at https://web.lumiagm.com/224183521, password “[●]”
(case sensitive), on [●], [●], 2023, at [●] a.m., Central Daylight Time and at any adjournments, postponements, or
other delays thereof (the “Special Meeting”).
At the Special Meeting, you
will be asked to vote on the following proposals:
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(1) |
To remove
the Bank of New York Mellon Trust Company, N.A. as trustee of the Trust. |
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(2) |
To adopt an amendment to
Section 8.02 of the Trust Agreement requiring the Trust to bear all costs associated with calling any meeting of Unitholders that
is called by Unitholders owning of record not less than 10% of the then outstanding Units should any of the proposals submitted at
such meeting receive a majority vote in favor. |
The Special Meeting will
be conducted as a virtual meeting of Unitholders by way of a live webcast through the Lumi/AST Virtual AGM platform (the “Virtual
Platform”). You can attend the Special Meeting online at https://web.lumiagm.com/224183521 by clicking “I have a control
number” and then entering your unique 11-digit control number located on your Proxy Card and the password “[●]”
(case-sensitive). You will have the ability to submit questions during the Special Meeting via the Special Meeting website. Guests in
attendance at the Special Meeting will also be able to submit questions directly through the Virtual Platform, which may be answered
at the Trustee’s discretion during the course of the Special Meeting.
If you choose to vote at
the Special Meeting rather than through the use of the provided Proxy Card and below instructions, or should you desire to vote at the
Special Meeting after completing and submitting the Proxy Card, thereby overriding your selections contained therein, you are able to
do so through the Virtual Platform by voting on the left-hand side of the screen or as otherwise directed during the Special Meeting,
which will become available to you when the voting portion of the Special Meeting opens. Your results will be instantaneously tabulated
and included in the final report, which will become available to the Trust once the voting portion of the Special Meeting has closed.
Please read “Attending the Special Meeting” beginning on page 6 of the accompanying Proxy Statement (the “Proxy Statement”)
for detailed instructions on how to vote at the Special Meeting.
The Proxy Statement provides additional information relating to the
matters to be dealt with at the Special Meeting, including detailed instructions for the Special Meeting, and forms a part of this Notice.
The Shipyard Group recommends
that you vote “FOR” each of Proposal One and Proposal Two.
Shipyard Capital Management
LLC (“SCM”) and Cedar Creek Partners LLC (“CCP”), who together own in excess of ten percent of the outstanding
Units, called the Special Meeting pursuant to Section 8.02 of the Trust Agreement. The Shipyard Group is conducting this solicitation
and is not acting on behalf of the Trust.
The Trust has disclosed that
the close of business on Monday, May 15, 2023 (the “Record Date”) has been fixed as the record date for the determination
of Unitholders entitled to receive notice of, and to vote at, the Special Meeting. Only holders of record of Units at the close of business
on the Record Date are entitled to notice of, and to vote at, the Special Meeting. A list of Unitholders entitled to vote at the Special
Meeting will be available for inspection by any Unitholder for any purpose germane to the Special Meeting during ordinary business hours
for the ten days preceding the Special Meeting at the Trustee’s offices at 601 Travis Street, 16th Floor, Houston, Texas
77002, and also at the Special Meeting.
The
Trust has disclosed that as of the Record Date, there were [●] Units outstanding and entitled
to vote at the Special Meeting. Each Unit is entitled to one vote on all matters presented at the Special Meeting. The Units are traded
in the over-the-counter expert market under the symbol “ROYTL.”
Prior to the date of the
Special Meeting, you will be able to vote at [website], and this Proxy Statement will be available at that site. You may also vote prior
to the date of the Special Meeting by completing, signing, dating and returning the enclosed GOLD Proxy Card in the enclosed postage-paid
envelope. You may also vote by telephone at the number set forth on the enclosed Proxy Card. Please consult your Proxy Card for additional
information regarding these alternative methods. If your units are held in “street name,” you should instruct your bank,
broker or other nominee to vote your units in accordance with the voting instruction form that you will receive from your bank, broker
or other nominee.
We hope that you will be
able to attend the Special Meeting, and we urge you to read this Proxy Statement before you decide to vote. Even if you do not plan to
attend, please complete, sign, date and return the enclosed GOLD Proxy Card or vote online or by telephone as detailed in the prior paragraph
as promptly as possible. It is important that your units be represented at the Special Meeting, regardless of the number of units
you own.
YOUR VOTE IS IMPORTANT
All Unitholders are cordially
invited to attend the Special Meeting virtually via webcast. However, to ensure your representation at the meeting, you are urged to
complete, sign, date and return the enclosed GOLD Proxy Card as promptly as possible in the enclosed postage-paid envelope or vote online
at [websitewebsite] or by telephone at the number set forth on the enclosed Proxy Card. This will help the Trustee assure that a quorum
will be present at the meeting and avoid the additional expense of duplicate proxy solicitations. Any Unitholder attending the Special
Meeting may vote virtually even if he or she has returned the Proxy Card or voted online or by telephone prior to the Special Meeting.
If you hold your units in “street name” you should instruct your broker how to vote in accordance with the voting instruction
form that you will receive from your bank, broker or other nominee.
Your prompt action is
important. We urge you to vote the enclosed GOLD Proxy Card TODAY. Your vote is important, no matter how many or how few
units of beneficial interest you own. Please send in your Proxy Card today.
For additional information
or assistance, please contact InvestorCom LLC (“InvestorCom”), the firm assisting us in our solicitation of proxies:
InvestorCom LLC
19 Old Kings Highway S., Suite 130
Darien, CT 06820
Stockholders call toll-free: (877) 972-0090
Banks and brokers call collect: (203) 972-9300
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Very truly yours, |
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|
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Carson Mitchell |
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Managing Member, Shipyard Capital Management and |
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Tim Eriksen |
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Managing Member, Cedar Creek Partners LLC |
TABLE OF CONTENTS
ABOUT THE SHIPYARD GROUP
The
Shipyard Group consists of Shipyard Capital LP, a Delaware limited partnership, its affiliate SCM (together “Shipyard”, or
“Shipyard Capital”), CCP, a Washington limited liability company, its affiliate Eriksen Capital Management LLC, a Washington
limited liability company (“ECM” and together with CCP, “Eriksen Capital”), and Evergreen Capital Management
LLC, a Washington limited liability company (“Evergreen”).
Shipyard
Capital, founded by Carson Mitchell in 2015, Eriksen Capital, founded by Tim Eriksen in 2005, and Evergreen Capital, founded by David
Hay in 2002, are investment companies that use fundamental research to identify undervalued securities. Evergreen owns approximately
8.7% of the Units, Shipyard Capital LP owns approximately 8.3% of the Units, and Cedar Creek Partners owns approximately 4.8% of the
Units. Combined, the group owns 22% of the Units.
REASONS FOR THIS PROXY SOLICITATION
Since coming under new ownership
in 2019, the Trust’s operator, PCEC, has withheld distributions to Unitholders, which we believe is in violation of the Trust Agreement
and the Conveyance Agreement. We believe that the Trustee, The Bank of New York Mellon Trust Company N.A., has failed to take the appropriate
steps to protect Unitholders’ interests. The Shipyard Group believes that it is necessary to remove the Trustee so that a replacement
trustee can be appointed to protect Unitholders’ rights under the Trust Agreement and the Conveyance Agreement.
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING
AND THE PROPOSALS
The following questions
and answers briefly address some questions regarding the Special Meeting and the proposals. These questions and answers may not address
all questions that may be important to you as a Unitholder of the Trust. Please refer to the more detailed information contained elsewhere
in this Proxy Statement and the other documents we refer to in this Proxy Statement. All references to “we,” “us”
or “our” in this Proxy Statement refer to the Shipyard Group.
| Q: | Who is making this solicitation? |
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| A: | Proxies are being solicited by Shipyard Group, the members of which collectively own approximately
22% of the outstanding Units. Additional information about the Shipyard Group is set forth under the caption “About
The Shipyard Group.” |
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| Q: |
Why is there a Special Meeting? |
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| A: |
The Special Meeting was called by Shipyard Capital LP and CCP, who jointly own in excess of 10% of the outstanding Units, to
vote on the proposals set forth in this Proxy Statement and the enclosed GOLD Proxy Card. |
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| Q: |
Where and when is the Special
Meeting? |
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| A: |
The Special Meeting will take place only
as a virtual event via a live audiovisual webcast online at https://web.lumiagm.com/224183521. Unitholders will not be able to attend
the Special Meeting physically in person.
If you are a registered Unitholder, you received
a Proxy Card from the transfer agent, American Stock Transfer & Trust Company, LLC (“AST”). The form contains instructions
on how to attend the Special Meeting, including the URL address, along with your control number. You will need your control number
for access. If you do not have your control number, contact AST at the phone number or e-mail address below. The AST support contact
information is as follows: 1-800-937-5449, or e-mail shareholder info (AST) help@astfinancial.com
If your Trust Units are registered in the
name of your broker, bank or other agent, you are the “beneficial owner” of those Trust Units and those Trust Units are
considered as held in “street name.” If you are a beneficial owner of Trust Units registered in the name of your broker,
bank or other agent, you should have received a Proxy Card and voting instructions with these proxy materials from that organization
rather than directly from AST. Simply complete and mail the Proxy Card to ensure that your vote is counted. You may be eligible to
vote your Trust Units electronically over the Internet or by telephone. A large number of banks and brokerage firms offer Internet
and telephone voting. If your bank or brokerage firm does not offer Internet or telephone voting information, please complete and
return your Proxy Card in the self-addressed, postage-paid envelope provided. To vote in person at the virtual Special Meeting, you
must first obtain a valid legal proxy from your broker, bank or other agent and then register in advance to attend the Special Meeting.
Follow the instructions from your broker, bank or other agent included with these proxy materials, or contact your broker, bank or
other agent to request a legal proxy form.
After obtaining a valid legal
proxy from your broker, bank or other agent, to then register to attend the Special Meeting, you must submit proof of your legal
proxy reflecting the number of your Trust Units along with your name and e-mail address to American Stock Transfer & Trust Company,
LLC. Requests for registration should be directed to proxy@astfinancial.com or to facsimile number 718-765-8730. Written requests
can be mailed to:
American Stock Transfer
& Trust Company LLC
Attn: Proxy Tabulation
Department
6201 15th
Avenue
Brooklyn, NY 11219 |
Requests for registration must be labeled as
“Legal Proxy” and be received by AST no later than 5:00 p.m., Eastern Daylight Time, on [●], 2023.
You will receive a confirmation of your registration
by e-mail after AST receives your registration materials. You may attend the Special Meeting and vote your Trust Units at https://web.lumiagm.com/224183521
during the meeting. The password for the Special Meeting is “[●]” (case-sensitive). Follow the instructions provided
to vote. You are encouraged to access the meeting at least 15 minutes prior to the start time, leaving ample time for the check-in. Guests
or Unitholders that do not have a control number also may attend the Special Meeting by logging into the Virtual Platform at https://web.lumiagm.com/224183521
and following the instructions at the prompt, and may ask questions but will not be able to vote.
Even if you plan to attend the Special Meeting,
it is recommended that you vote your Trust Units in advance, so that your vote will be counted if you later decide not to attend the
Special Meeting.
| Q: |
What
matters will Unitholders vote on at the Special Meeting? |
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| A: |
Unitholders
will vote on proposals to: (1) remove The Bank of New York Mellon Trust Company, N.A. as trustee of the Trust; and (2)
adopt an amendment to Section 8.02 of the Trust Agreement requiring the Trust to bear all costs associated with calling any meeting
of Unitholders that is called by Unitholders owning of record not less than 10% of the then outstanding Units should any of the proposals
submitted at such meeting receive a majority in favor (the “Trust Agreement Amendment”). |
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| Q: |
Who
may vote at the Special Meeting? |
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| A: |
Only holders
of record of Units at the close of business on the Record Date are entitled to notice of, and to vote at, the Special Meeting. As
of the Record Date, there were [●]
outstanding Units. Each Unit is entitled to one vote on each matter to be voted upon at the Special
Meeting. |
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| Q: | How do I vote my Units registered directly in my name? |
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| A: |
You can
attend the Special Meeting online, and vote at the Special Meeting by following the instructions on the Special Meeting website
during the Special Meeting. Prior to the date of the Special Meeting, you will be able to vote at [website], and the Shipyard
Group’s Proxy Statement will be available at that site. You may also vote prior to the date of the meeting by completing, signing,
dating and returning the enclosed GOLD Proxy Card in the enclosed postage paid envelope. Please consult your Proxy Card for additional
information regarding these alternative methods. We encourage unit holders to vote immediately to ensure their vote is
counted. |
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| Q: |
How
do I vote if my Units are held in the name of my broker (street name)? |
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| A: |
If your
units are held in the name of your broker (street name), you should instruct your bank, broker or other nominee to vote your units
in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. |
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| Q: |
What
is the quorum required for the Special Meeting? |
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| A: |
The presence,
virtually or by proxy, of Unitholders who held Units representing at least a majority of the Units outstanding as of the Record Date
will constitute a quorum at the Special Meeting. Abstentions and broker non-votes will count in determining the presence of a quorum
at the Special Meeting. |
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| Q: |
What
do I need to do now? |
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| A: |
After
carefully reading and considering the information contained in this Proxy Statement, please vote your Units as soon as possible.
You may vote your Units by signing, dating and returning the enclosed GOLD Proxy Card, voting online at [website], or voting by telephone
at the number set forth on the Proxy Card. You may also vote virtually at the Special Meeting. |
| Q: |
What
if I do not vote? |
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| A: |
If you
fail to vote by mail, online, by telephone, or virtually at the Special Meeting, it may prevent a quorum from being reached. If you
return a properly signed Proxy Card but do not indicate how you want to vote, your Proxy Card will be counted toward meeting the
quorum but will not be voted FOR or AGAINST the approval of either of the proposals. |
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| Q: |
Why
am I being asked to vote on the removal of the Trustee? |
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| A: |
Since
coming under new ownership in 2019, the Trust’s operator, PCEC, has withheld distributions to Unitholders, which we believe
is in violation of the Trust Agreement and the Conveyance Agreement. We believe that the Trustee, The Bank of New York Mellon Trust
Company N.A., has failed to take the appropriate steps to protect Unitholders’ interests. The Shipyard Group believes that
it is necessary to remove the Trustee so that a replacement trustee can be appointed to protect Unitholders’ rights under the
Trust Agreement and the Conveyance Agreement.. |
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| Q: |
How
does the Shipyard Group recommend that I vote on the proposal to remove the trustee? |
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| A: |
The Shipyard
Group recommends that you vote “FOR” the removal of the Trustee at the Special Meeting. |
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| Q: |
What
is the required vote to remove the Trustee? |
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| A: |
Removal
of the Trustee requires the affirmative vote of Unitholders holding a majority of the Units represented in person or by proxy at
the Special Meeting (assuming a quorum is present). Accordingly, abstentions and broker non-votes will have the effect of votes “AGAINST”
this proposal. |
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| Q: |
What
is the Trust Agreement Amendment proposal? |
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| A: |
Currently,
if Unitholders holding at least 10% of the Outstanding Units call a meeting of Unitholders, the Unitholders who called the meeting
must bear all the costs associated with calling the meeting. The Trust Agreement Amendment proposal is a proposal to adopt an amendment
to Section 8.02 of the Trust Agreement requiring the Trust to bear all costs associated with calling any meeting of Unitholders that
is called by Unitholders owning of record not less than 10% of the then outstanding Units should any of the proposals submitted at
such meeting receive a majority vote in favor. If the Trust Agreement Amendment proposal is approved, the Trust will bear the costs
incurred by the Shipyard Group in connection with calling the Special Meeting, which is expected to be approximately $250,000. If
the proposal is not approved, the members of the Shipyard Group will bear all the costs they incurred in connection with calling
the Special Meeting. |
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| Q: |
Why
am I being asked to vote on the adoption of the Trust Agreement Amendment? |
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| A: |
The Shipyard
Group believes the benefit of adopting proposals made by Unitholders at meetings called by Unitholders, such as the proposal to remove
the Trustee at the Special Meeting, are shared by all Unitholders. Therefore, the costs associated with calling any such special
meeting, including the Special Meeting, should be shared equally by all Unitholders. Additionally, requiring the Trust to reimburse
costs borne by Unitholders in connection with calling a meeting will help facilitate future proposals from Unitholders that may be
beneficial to all Unitholders. |
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| Q: |
How
does the Shipyard Group recommend that I vote on the proposal to adopt the Trust Agreement Amendment? |
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| A: |
The Shipyard
Group recommends that you vote “FOR” the adoption of the Trust Agreement Amendment at the Special Meeting. |
| Q: |
What
is the required vote to approve the proposal to adopt the Trust Agreement Amendment? |
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| A: |
The adoption
of the Trust Agreement Amendment requires the affirmative vote of Unitholders holding at least 75% of the Units outstanding as of
the Record Date. Accordingly, abstentions and broker non-votes will have the effect of votes “AGAINST” this proposal. |
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| Q: |
How do proxies work? |
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| A: |
Giving
the Shipyard Group your proxy means that you authorize the individuals designated by the Shipyard Group (known as “proxy holders”)
to vote your Units at the Special Meeting according to the directions that you provide. Whether or not you are able to attend the
Special Meeting, we urge you to vote the enclosed GOLD Proxy Card TODAY. If you specify a choice with respect to any item
by marking the appropriate box on the Proxy Card, the Units to which that Proxy Card relates will be voted in accordance with that
specification. If no specification is made, the Units will be voted in accordance with our recommendation described in this Proxy
Statement and in the discretion of the proxy holders as to any other matters that may properly come before the Special Meeting. |
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| Q: |
What is the deadline for submitting proxies? |
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| A: |
Proxies can be submitted until the polls are closed at the Special Meeting. However, to be sure that
we receive your proxy in time to utilize it, please provide your proxy as early as possible. |
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| Q: |
May I change my vote? |
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| A: |
Yes. Even
after you have submitted your proxy, you may change your vote at any time by returning a later dated Proxy Card or voting at the
Special Meeting. Attendance at the Special Meeting will not in and of itself constitute revocation of a proxy. |
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| Q: |
Whom
do I contact if I have any questions? |
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| A: |
Please
contact InvestorCom, the firm assisting the Shipyard Group if you have any questions. |
InvestorCom LLC
19 Old Kings Highway S., Suite 130
Darien, CT 06820
Unitholders call toll-free: (877) 972-0090
Banks and brokers call collect: (203) 972-9300
SHIPYARD GROUP
c/o InvestorCom LLC
19 Old Kings Highway S., Suite 130
Darien, CT 06820
BACKGROUND OF THE SOLICITATION
Shipyard Capital and Cedar Creek have been investors
in PCOT since January 2020 and August 2021, respectively, believing the units of PCOT to be undervalued.
On October 5, 2021, Shipyard Capital filed a
Schedule 13G with the Securities and Exchange Commission (“SEC”) disclosing ownership of approximately 5.2% of the Units.
On February 17, 2022, Shipyard Capital filed
a Schedule 13G with the SEC disclosing ownership of approximately 9.7% of the Units.
On October 11, 2022, Shipyard Capital and Eriksen
Capital filed a Schedule 13D with the SEC disclosing aggregate ownership of 11.4% of the Units. The Schedule 13D conveyed our concerns
that the Trustee had failed to pursue a lawsuit against PCEC, despite what we believed was an improper assessment by the operator, PCEC,
of asset retirement obligations (“ARO”) to Unitholders, and requested that the Trustee take action against PCEC or Shipyard
Capital and Eriksen Capital would call a special meeting to present a proposal to remove the Trustee.
On October 17, 2022, the Trustee filed a Form
8-K with the SEC, responding to Shipyard Capital and Eriksen Capital’s letter of October 11 and explaining why the Trustee declined
to pursue any claims against PCEC “at this time”.
On November 3, 2022, Shipyard Capital and Eriksen
Capital filed a first amended Schedule 13D with the SEC disclosing their aggregate ownership of 12.2% of the Units. The Schedule 13D
explained in detail how we believe PCEC’s assessment of the ARO violates the Conveyance Agreement and reiterated its request that
the Trustee take action against PCEC or face a Special Meeting vote to be removed as Trustee.
On November 14, 2022, the Trustee filed a Form
8-K with the SEC, purporting to respond to the letter of November 3.
On December 12, 2022, Shipyard Capital, Eriksen
Capital, and Walter C. Keenan filed a second amended Schedule 13D with the SEC disclosing aggregate ownership of 12.8% of the Units.
Attached as Exhibit 2 to the filing was a letter from Shipyard Capital and Eriksen Capital to the Trustee explaining to the Trustee that
its letter of November 14 was nonresponsive to the substance of Shipyard Capital and Eriksen Capital’s letter of November 3. The
letter explained in further detail how we believe PCEC’s ARO assessment to the Trust was prohibited under the terms of the Conveyance
Agreement and that the Final Prospectus clearly presented the ARO as being retained by PCEC. The letter called on the Trustee to convene
a special meeting of Unitholders. The same day, Shipyard Capital LP and CCP, who together owned more than 10% of the outstanding Units,
delivered to the Trustee a written request to call a special meeting of the Unitholders.
On December 16, 2022, Evergreen Capital, Shipyard
Capital, Eriksen Capital, and Walter C. Keenan (“13D Group”) filed a third amended Schedule 13D with the SEC disclosing their
aggregate ownership of 22.5% of the Units.
On December 22, 2022, the 13D Group filed a fourth
amended Schedule 13D with the SEC, correcting Evergreen’s Unit holding to reflect recent client attrition (bringing the Shipyard
Group’s aggregate ownership to 21.4%) and attaching a letter to the Trustee recapitulating the positions previously taken in Shipyard
Capital and Eriksen Capital’s letters. On the same day, Shipyard Capital and Eriksen Capital delivered to the Trustee a revised
written request to call a special meeting of the Unitholders, reflecting changes that the Trustee had requested.
On December 29, 2022, the 13D Group received
a letter from PCEC’s counsel alleging material misstatements and omissions in the December 22 letter to the Trustee referenced
above. The 13D Group rejected the claims made by PCEC’s counsel but clarified that the reference to PCEC’s accounting is
a reference to the ARO assessment to the Trust, not to PCEC’s internal accounting, and attached as Exhibit 2 a response letter
to PCEC. On January 11, 2023 the Trustee informed the 13D Group that the special meeting request is still being evaluated.
On January 12, 2023, the 13D Group filed a fifth
amended Schedule 13D updating Evergreen’s Unit holding to reflect recent client attrition (bringing the 13D Group’s aggregate
ownership to 21.3%).
On February 24, 2023, the 13D Group and the Trustee
reached agreement on the two proposals to present for a vote of the Unitholders at the Special Meetings. The two proposals are set forth
in the sections of this Proxy Statement titled “Proposal One – Removal of Trustee” and “Proposal Two –
Adoption of Amendment to the Trust Agreement Regarding Reimbursement of Meeting Costs.”
On May 4, 2023, the Trustee filed its preliminary
Proxy Statement. On [●], 2023, the Shipyard Group filed this Proxy Statement.
PROPOSAL ONE — REMOVAL OF TRUSTEE
The Trust is a statutory trust formed in January
2012 under the Delaware Statutory Trust Act pursuant to the Trust Agreement.
Section 8.02 of the Trust
Agreement requires the Trustee to call a meeting of the Unitholders under certain circumstances at the request of Unitholders holding
at least 10% of the then outstanding Units. Section 6.04 of the Trust Agreement provides that the Trustee may be removed as trustee,
with or without cause, by the affirmative vote of the holders of a majority of the Units present in person or by proxy at a meeting held
in accordance with the requirements of Article VIII of the Trust Agreement.
Pursuant to Section 8.02
of the Trust Agreement, SCM and CCP, who together owned more than 10% of the outstanding Units, requested that the Trustee call the Special
Meeting to, among other things, present a proposal to the Unitholders to vote to remove the Trustee as trustee of the Trust. The Shipyard
Group has not nominated or otherwise proposed a successor trustee.
Pursuant to Section 6.04
of the Trust Agreement, if the requisite majority of Unitholders vote to remove the Trustee at the Special Meeting, the Trustee will
remain as trustee of the Trust, and will continue to have the rights and obligations as trustee pursuant to the Trust Agreement, until
such time that a successor trustee is approved at a subsequent duly held meeting of Unitholders called for such purpose. Under Section
6.05 of the Trust Agreement, nominees for appointment as successor trustee may be made by PCEC, the Trustee or Unitholders owning of
record at least 10% of the outstanding Units. Any successor trustee must be a bank or trust company having combined capital, surplus
and undivided profits of at least $100,000,000. In the event that a new trustee has not been approved within sixty (60) days following
the date of the Special Meeting, a successor trustee may be appointed by any State or Federal District Court having jurisdiction in New
Castle County, Delaware, upon the application of any Unitholder, PCEC or the Trustee. If a Unitholder, PCEC or the Trustee files such
an application, the court may appoint a temporary trustee at any time after such application is filed and the temporary trustee shall,
pending the final appointment of a successor trustee, have such powers and duties as the court appointing such temporary trustee shall
provide in its order of appointment, consistent with the provisions of the Trust Agreement. Any such temporary trustee need not meet
the minimum standards of capital, surplus, and undivided profits otherwise required of a successor trustee.
Required Vote
The removal of the Trustee
requires the affirmative vote of a majority of the Units represented in person or by proxy at the Special Meeting (assuming the presence
of a quorum). Accordingly, abstentions and broker non-votes will have the effect of votes against Proposal One. If the enclosed GOLD
Proxy Card is returned and you have indicated how you wish to vote, the Proxy Card will be voted in accordance with your instructions.
If no specification is made, the Units will be voted in accordance with our recommendation described in this Proxy Statement and in the
discretion of the proxy holders as to any other matters that may properly come before the Special Meeting.
The Shipyard Group recommends that you vote “FOR” Proposal
One. We intend to vote our Units “FOR” Proposal One.
PROPOSAL TWO — AMENDMENT TO THE TRUST
AGREEMENT TO REQUIRE THE TRUST TO PAY ALL COSTS ASSOCIATED WITH CALLING CERTAIN SPECIAL MEETINGS OF TRUST UNITHOLDERS
Under Section 8.02 of the
Trust Agreement, all costs associated with calling any meeting of the Unitholders shall be borne by the Trust other than a meeting of
the Unitholders called by Unitholders owning of record not less than 10% in number of the then outstanding Units, which costs shall be
borne by the Unitholders that called such meeting of Unitholders.
The Shipyard Group believes
it is appropriate that the costs of meetings called by Unitholders be shared by all Unitholders since the benefits of the proposed changes
will benefit all Unitholders. Additionally, requiring the Trust to reimburse costs borne by Unitholders in connection with calling a
meeting will help facilitate future proposals from Unitholders that may be beneficial to all Unitholders.
Accordingly, the Shipyard
Group is proposing to amend Section 8.02 of the Trust Agreement to read as follows (with additions denoted in bold font):
All costs associated
with calling any meeting of the Trust Unitholders shall be borne by the Trust other than a meeting of the Trust Unitholders called by
Trust Unitholders owning of record not less than 10% in number of the then outstanding Trust Units, which costs shall be borne by the
Trust Unitholders that called such meeting of Trust Unitholders only if every resolution voted on at such meeting fails to receive
the affirmative vote of Record Date Trust Unitholders holding a majority of the Trust Units present in person or by proxy, or if such
meeting does not achieve quorum. If the Trust Unitholders owning of record not less than 10% in number of the then outstanding Trust
Units receive a vote in favor of one or more of their proposals by Record Date Trust Unitholders holding a majority of the Trust Units
present in person or by proxy at a meeting where quorum is present, then the costs of such meeting, including all costs of the Trust
Unitholders associated with calling the meeting, will be borne by the Trust.
If Proposal Two is approved,
the Trust will bear the costs incurred by the Shipyard Group in connection with calling the Special Meeting, which costs are expected
to be approximately $250,000.
Required Vote
The adoption of the Trust
Agreement Amendment requires the affirmative vote of Unitholders holding at least 75% of the Units outstanding as of the Record Date.
Accordingly, abstentions and broker non-votes will have the effect of votes against Proposal Two. If the enclosed GOLD Proxy
Card is returned and you have indicated how you wish to vote, the Proxy Card will be voted in accordance with your instructions. If no
specification is made, the Units will be voted in accordance with our recommendation described in this Proxy Statement and in the discretion
of the proxy holders as to any other matters that may properly come before the Special Meeting.
The Shipyard Group recommends
that you vote “FOR” Proposal Two. We intend to vote our Units “FOR” Proposal Two.
EFFECT OF NEGATIVE VOTES ON PROPOSAL ONE
If the Unitholders do not
approve the proposal to remove the Trustee at the Special Meeting under Proposal One, The Bank of New York Mellon Trust Company, N.A.
will remain the trustee of the Trust.
EFFECT OF NEGATIVE VOTES ON PROPOSAL TWO
If the Unitholders fail to
approve the proposed amendment to the Trust Agreement under Proposal Two, the amendment will not take effect, and the Trust will not
be required to pay any of the costs associated with calling the Special Meeting.
SOLICITATION AND REVOCABILITY OF PROXIES
This solicitation of proxies
is made by Shipyard Group. In addition, the Shipyard Group has engaged InvestorCom (the “Proxy Solicitor”) to assist in the
solicitation of proxies for the Special Meeting, and it estimates that it will pay the Proxy Solicitor approximately [$25,000], including
the fee of the Proxy Solicitor plus certain costs and expenses. Up to [●] people may be employed by InvestorCom in connection with
the solicitation of proxies. The Shipyard Group has also agreed to indemnify the Proxy Solicitor against certain losses arising out of
its services. Representatives of the Shipyard Group, including the Proxy Solicitor, may solicit proxies personally or by telephone, telegram
or other forms of wire or facsimile communication. The Shipyard Group may also request banking institutions, brokerage firms, custodians,
nominees and fiduciaries to forward solicitation material to the beneficial owners of Units that those companies hold of record. The
Shipyard Group will pay the costs of the solicitation, including reimbursement of forwarding expenses and fees and expenses of the Proxy
Solicitor.
The Shipyard Group’s
expenses related to the solicitation of proxies are currently estimated to be approximately [●], of which approximately [●]
has been incurred to date. Such costs include, among other things, expenditures for attorneys, public relations advisors, proxy solicitors,
printing, advertising, postage and other miscellaneous expenses and fees. The entire expense of soliciting proxies by or on behalf of
the Shipyard Group is being borne by the Shipyard Group. Banks, brokerage firms, dealers, trust companies and other nominees will be
requested to forward solicitation materials to beneficial owners of Units. Should 75% of the Units outstanding as of the Record Date
vote in favor of Proposal Two at the Special Meeting, the Shipyard Group will seek reimbursement of the Special Meeting costs from the
Trust.
The Special Meeting will
be conducted as a virtual meeting of Unitholders by way of a live webcast through the Virtual Platform. You can attend the Special Meeting
online at https://web.lumiagm.com/224183521 by clicking “I have a control number” and then entering your unique 11-digit
control number located on your Proxy Card and the password “[●]” (case-sensitive). You will have the ability to submit
questions during the Special Meeting via the Special Meeting website. Guests in attendance at the Special Meeting will also be able to
submit questions directly through the Virtual Platform, which may be answered at the Trustee’s discretion during the course of
the Special Meeting. Please read “Attending the Special Meeting” below.
If you attend the Special
Meeting, you may vote virtually at the meeting. If you are not present virtually at the Special Meeting, your Units can be voted
only (1) if you have returned a properly signed Proxy Card or are represented by another proxy, (2) if you vote online at [website],
or (3) if you vote by telephone at the number set forth on the Proxy Card. You may revoke your proxy at any time before it is exercised
at the Special Meeting by (1) submitting a later-dated proxy to the Trustee by mail or online, (2) delivering written notice
of revocation of the proxy to InvestorCom, or (3) voting virtually at the Special Meeting. In the absence of any such revocation,
Units represented by the persons named on the Proxy Card will be voted at the Special Meeting. Returning your Proxy Card will not limit
your right to participate in the Special Meeting and vote your Units. Participating in the Special Meeting does not revoke your Proxy
Card unless you also vote at the Special Meeting.
ATTENDING THE SPECIAL MEETING
The Special Meeting will
be in a completely virtual format. There will be no physical Special Meeting location. The Special Meeting will be conducted by way of
a live webcast through the Virtual Platform with real-time balloting.
Instructions on Voting at the Special Meeting
Registered Unitholders and
duly appointed proxyholders will be able to attend the Special Meeting and vote in real time, provided they are connected to the Internet
and follow the instructions in this Proxy Statement. Non-registered Unitholders who have not duly appointed themselves as proxyholder
will be able to attend the Special Meeting as guests but will not be able to vote at the Special Meeting.
Non-registered Unitholders
who wish to appoint themselves to attend the Special Meeting must carefully follow the instructions in this Proxy Statement and on their
voting instruction form. Failure to obtain a valid legal proxy from your broker, bank or other agent and then to register in advance
to attend the Special Meeting will make it impossible to participate in the Special Meeting and will result in the non-registered Unitholder
only being able to attend as a guest. Guests will be able to listen to and submit written questions in the Special Meeting but will not
be able to vote.
You are encouraged to log
into the Special Meeting at least 15 minutes prior to the commencement of the Special Meeting. You may begin to log into the Special
Meeting Virtual Platform beginning at [●] a.m., Central Daylight Time, on [●], 2023. The Meeting will begin promptly at [●]
a.m., Central Daylight Time, on [●], [●], 2023.
How to Vote
You have two ways to vote
your Trust Units:
| | • | by
submitting your Proxy Card or other voting instruction form as per instructions indicated;
or |
| | | |
| | • | during the Special Meeting by online ballot, when
called for, through the Virtual Platform. |
Registered Unitholders and
non-registered Unitholders who have duly appointed themselves as proxyholder that attend the Special Meeting online will be able to vote
by completing a ballot online, when called for, during the Special Meeting through the Virtual Platform.
Guests (including non-registered
Unitholders who have not duly appointed themselves as proxyholder) can log into the Special Meeting as set out below. Guests will be
able to listen and submit written questions to the Special Meeting but will not be able to vote during the Special Meeting.
To Access and Vote at the
Special Meeting:
| | • | Step
1: Log into the Virtual Platform online at https://web.lumiagm.com/224183521 |
| | | |
| | • | Step 2: Follow these instructions: |
Registered Unitholders: Click “I
have a control number” and then enter your unique 11-digit control number and password “[●]” (case-sensitive).
The 11-digit number located on the Proxy Card received from AST is your control number. If you use your control number to log into the
Special Meeting, any vote you cast at the Special Meeting will revoke any proxy you previously submitted. If you do not wish to revoke
a previously submitted proxy, you should not vote during the Special Meeting.
Duly appointed proxyholders: Click
“I have a control number” and then enter your unique 11-digit control number and the password “[●]” (case
sensitive). Proxyholders who have been duly appointed should ensure they receive the registered Unitholder’s control number in
advance, as it is required in order to vote at the Special Meeting.
Guests: Click “Guest”
and then complete the online form.
It is your responsibility
to ensure Internet connectivity for the duration of the Special Meeting and you should allow ample time to log into the Virtual Platform
before the Special Meeting begins.
Non-Registered Unitholders Obtaining a Control
Number to Vote During the Special Meeting
If your Trust Units are registered
in the name of your broker, bank or other agent, you are a non-registered Unitholder (or “Beneficial Owner”) of those Trust
Units, which are considered to be held in “street name.” If you are a Beneficial Owner, you should have received a Proxy
Card and voting instruction form from your broker, bank or other agent rather than directly from the Trust. Simply complete and mail
the Proxy Card as instructed by your broker, bank or other agent to ensure that your vote is counted. If your broker, bank or other agent
offers Internet or telephone voting, you may vote your Trust Units using one of those methods.
To vote instead at the Special
Meeting, you must obtain a valid legal proxy from your broker, bank or other agent and register in advance with AST in order to get your
unique 11-digit control number. Follow the instructions from your broker, bank or other agent included with these proxy materials, or
contact your broker, bank or other agent to request a legal proxy form. To register to participate in the Special Meeting, you must submit
to AST proof of your legal proxy from your broker, bank or other agent reflecting the number of your Trust Units, along with your name
and e-mail address.
Requests for registration
should be directed to proxy@astfinancial.com or to facsimile number 1-718-7658730. Written requests can be mailed to:
American Stock Transfer &
Trust Company LLC
Attn: Proxy Tabulation Department
6201 15th Avenue
Brooklyn, NY 11219
Requests for registration must
be labeled as “Legal Proxy” and be received by AST no later than 5:00 p.m., Eastern Daylight Time, on [●], 2023. AST
will confirm your registration by e-mail. Non-registered Unitholders who have not duly appointed themselves as proxyholder will not be
able to vote at the Special Meeting but will be able to participate as a guest.
Submission of Questions
You may submit questions
during the Special Meeting, whether a registered Unitholder, duly appointed proxyholder or guest. Once logged into the Virtual Platform
at https://web.lumiagm.com/224183521, you may type and submit any questions you have where indicated.
Questions pertinent to Special
Meeting matters will be answered during the Special Meeting, subject to time constraints and at management’s discretion. Questions
regarding personal matters or questions that are not pertinent to Special Meeting matters will not be answered.
If you encounter any difficulties
with the Virtual Platform on the day of the Special Meeting, please go to https://go.lumiglobal.com/faq for frequently asked questions
and click on the support button for assistance. Support will be available starting at 8:00 a.m., Central Daylight Time, on [●],
2023 and will remain available until the Special Meeting has finished.
VOTING AND QUORUM
The only outstanding voting
securities of the Trust are the Units. Only Unitholders as of the close of business on the Record Date are entitled to vote at the Special
Meeting. As of the close of business on the Record Date, there were 38,583,158 Units outstanding and entitled to be voted at the Special
Meeting.
Each outstanding Unit is
entitled to one vote. The presence, in person, virtually or by proxy, of Unitholders who, on the Record Date, held Units representing
at least a majority of the Units outstanding as of the Record Date will constitute a quorum at the Special Meeting.
If you hold your Units in
“street name,” you should instruct your broker how to vote in accordance with your voting instruction form. If you do not
submit your Proxy Card, do not instruct your broker how to vote your Units or do not vote virtually at the Special Meeting, you will
not be counted toward a quorum.
Abstentions and broker non-votes
will count in determining the presence of a quorum at the Special Meeting. A broker non-vote occurs if a broker or other nominee attending
the meeting in person or submitting a Proxy Card does not have discretionary authority to vote on a particular item and has not received
voting instructions with respect to that item.
ADDITIONAL INFORMATION
Unitholder Proposals
The Trust does not hold annual
meetings of Unitholders. Accordingly, the Trust does not publish a date by which Unitholders must make proposals for inclusion in an
annual meeting. Unitholders, or groups of Unitholders owning not less than 10% of the then outstanding Units, may call meetings of Unitholders
pursuant to the terms of the Trust Agreement to approve any appropriate matter.
Where You Can Find More Information
The Units of the Trust are
traded on the expert market under the symbol “ROYTL.” The Trust files annual, quarterly and special reports and other information
with the Securities and Exchange Commission (the “SEC”). The Trust is currently delinquent in its SEC filings. The Trust’s
most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2018, is available to the public over the
internet at the SEC’s website at http://www.sec.gov. This Proxy Statement and the enclosed GOLD Proxy Card are available
at [website].
Additional Proposals
According to the Trust Agreement,
no additional proposals are allowed at the Special Meeting.
Interests of Participants in the Solicitation
This solicitation is being
conducted by the Shipyard Group. The information in this Proxy Statement about any “participants” in the solicitation by
the Shipyard Group was provided by that participant. Except as described in this Proxy Statement, no associates of the participants beneficially
own any Units. None of the participants or any of their respective associates owns any Units of record that such person or entity does
not own beneficially. None of the participants or any of their respective associates beneficially own any other securities of the Trust.
Certain Information Regarding the Trust
Based on publicly available
information, the principal executive office of the Trustee is located at 601 Travis Street, 16th Floor, Houston, Texas 77002.
The Trust is subject to the
periodic reporting requirements of the Exchange Act and is required to file reports, proxy statements and other information with the
SEC. The SEC maintains a website (www.sec.gov) where reports, proxy and information statements and other information regarding issuers
and others that file electronically with the SEC may be obtained free of charge.
Except as otherwise stated
in this Proxy Statement, the information in this Proxy Statement concerning the Trust or Trustee has been taken from or is based upon
documents and records on file with the SEC and other publicly available information. Although the Shipyard Group has no knowledge that
would indicate that statements relating to the Trust or Trustee contained in this Proxy Statement that are made in reliance upon publicly
available information are inaccurate or incomplete, the Shipyard Group was not involved in the preparation of such information and is
not in a position to verify such information and statements. All information relating to any person other than the participants is based
only on the knowledge of the Shipyard Group.
Miscellaneous Information Concerning the Participants
Except as described in this
Proxy Statement, no participant or any of such participant’s associates beneficially owns (within the meaning of Rule 13d-3 under
the Exchange Act), directly or indirectly, any other securities of the Trust or any of its subsidiaries. Furthermore, except as disclosed
in this Proxy Statement, no participant or any of such participant’s associates is either a party to any transaction or series
of similar transactions in the last fiscal year, or any currently proposed transaction or series of similar transactions (1) to which
the Trust or any of its subsidiaries was or is to be a party; (2) in which the amount involved exceeds $120,000; and (3) in which such
participant or associate had or will have a direct or indirect material interest. None of the participants have been convicted in a criminal
proceeding during the past 10 years.
Except as disclosed in this
Proxy Statement, no participant or any of such participant’s associates has entered into any arrangement or understanding with
any person with respect to (1) any future employment with the Trust or its affiliates, or (2) any future transactions to which the Trust
or any of its affiliates will or may be a party.
Except as disclosed in this
Proxy Statement, there are no contracts, arrangements or understandings by any of the participants or any of such participant’s
associates within the past year with any person with respect to any of the Trust’s securities, including, but not limited to, joint
ventures, loan or option arrangements, puts or calls, guarantees against loss or guarantees of profit, division of losses or profits,
or the giving or withholding of proxies.
Except as disclosed in this
Proxy Statement, no participant nor any of such participant’s associates has any substantial interest, direct or indirect, by security
holdings or otherwise, in any matter to be acted upon at the Special Meeting.
The principal business address
of Shipyard is 1477 Ashford Avenue, #2006, San Juan, PR 00907. The principal business address of CCP is 8695 Glendale Road, Custer, WA
98240. The principal business address of Evergreen is 1412 112th Ave NE. Suite 100 Bellevue, WA 98004.
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