proxy2010.htm
SCHEDULE
14A INFORMATION
PROXY
STATEMENT PURSUANT TO SECTION 14(a)
OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed
by the Registrant /X/
Filed
by a Party other than the Registrant / /
Check
the Appropriate Box:
/ /Preliminary
Proxy Statement
/ /Confidential
for Use of Commission Only
/x
/Definitive Proxy Statement
/ /Definitive
Additional Materials
/ /Soliciting
Materials Pursuant to Sec.240.14a-11(c) or Sec.240.14a-12
____________________________
TENGASCO, INC.
______________________________________________
(Name
of Registrant as Specified in its Charter)
_____________________________________________________________________________________________
(Name
of person(s) Filing Proxy Statement if other than Registrant)
Payment
of Filing Fee (Check the appropriate box)
/x
/ No Fee Required
/ /
$125 per Exchange Act Rules-O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
/ /
Fee computed on table below per Exchange Act Rules14A-6(i)(4) and
O-11.
1) Title of each class of securities to
which each transaction applies:
________________________________________________________________________________________
2) Aggregate number of securities to
which transaction applies:
_________________________________________________________________________________________
3) Per unit price or other underlying
value of transaction computed pursuant to Exchange Act Rule O-11 (Set forth the
amount on which the filing fee is calculated and state how it was
determined)
________________________________________________________________________________________
4) Proposed maximum aggregate value of
transaction.
________________________________________________________________________________________
5) Total fee paid.
_________________________________________________________________________________________
/
/ Fee paid previously by written preliminary materials.
/
/ check box if any part of the fee is offset as provided by Exhange Act Rule
O-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1)
Amount Previously Paid
2)
Form Schedule or Registration Statement No.:
3)
Filing Party:
4)
Date Filed: April 30, 2010
TENGASCO,
INC.
11121
Kingston Pike, Suite E
KNOXVILLE,
TENNESSEE 37934
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON
June
21, 2010
TO THE
STOCKHOLDERS:
Notice is hereby given that the 2010
annual meeting of stockholders (the "Annual Meeting") of Tengasco, Inc. (the
"Company") has been called for and will be held at the Homewood Suites by
Hilton, 10935 Turkey Drive, Knoxville, Tennessee 37922 at 9:00 A.M., local time,
on Monday, June 21, 2010 for the following purposes:
1. To
elect Jeffrey R. Bailey, Matthew K. Behrent, John A. Clendening, Carlos P. Salas
and Peter E. Salas to the Board of Directors to hold office until their
successors shall have been elected and qualify;
2. To
ratify the appointment by the Board of Directors of Rodefer Moss & Co, PLLC
to serve as the independent certified public accountants for the current fiscal
year; and
3. To
consider and transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
The Board of Directors has fixed the
close of business on April 14, 2010 as the record date for the determination of
the stockholders entitled to receive notice and to vote at the Annual Meeting or
any adjournments thereof. The list of stockholders entitled to vote at the
Annual Meeting will be available for examination by any stockholder at the
Company's offices at 11121 Kingston Pike, Suite E, Knoxville TN 37934, for ten
(10) days prior to June 21, 2010.
By Order of the Board of
Directors
Jeffrey R. Bailey, Chief Executive
Officer
Dated:
April 30, 2010
WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING, PLEASE FILL IN, SIGN AND DATE THE PROXY SUBMITTED HEREWITH AND RETURN
IT IN THE ENCLOSED STAMPED ENVELOPE. THE GRANTING OF SUCH PROXY WILL
NOT AFFECT YOUR RIGHT TO REVOKE SUCH PROXY IN PERSON SHOULD YOU LATER DECIDE TO
ATTEND THE MEETING. THE ENCLOSED PROXY IS BEING SOLICITED BY THE BOARD OF
DIRECTORS.
INTERNET AVAILABILITY OF
PROXY MATERIALS
This Notice of Annual Meeting and Proxy
Statement along with the form of proxy card and the Company’s Annual Report on
Form 10-K for the year ended December 31, 2009 will be available on the
Company’s website at www.tengasco.com/proxymaterials beginning on the first day
these materials are mailed to shareholders which is anticipated to be April 30,
2010.
TENGASCO,
INC.
PROXY
STATEMENT
GENERAL
This proxy statement is furnished by
the Board of Directors of Tengasco, Inc., a Tennessee corporation (sometimes the
“Company” or “Tengasco”), with offices located at 11121 Kingston Pike, Suite E,
Knoxville TN 37934, in connection with the solicitation of proxies to be used at
the annual meeting of stockholders of the Company to be held on June 21, 2010
and at any adjournments thereof (the “Annual Meeting”). This proxy statement
will be mailed to stockholders beginning approximately April 30,
2010.
You may vote in person at the Annual
Meeting or you may vote by proxy. We recommend that you vote by proxy even if
you plan to attend the Annual Meeting. If your share ownership is recorded
directly, you will receive a proxy card. Voting instructions are included on the
proxy card. If your share ownership is beneficial (that is, your
shares are held in the name of a bank, broker or other nominee referred to as in
“street name”), your broker will issue you a voting instruction form that you
use to instruct them how to vote your shares. Your broker must follow your
voting instructions. Although most brokers and nominees offer mail, telephone
and internet voting, availability and specific procedures will depend on their
voting arrangements.
If a proxy is properly executed and
returned, the shares represented thereby will be voted as instructed on the
proxy. Any proxy may be revoked by a stockholder prior to its exercise upon
written notice to the Chief Executive Officer of the Company, or by a
stockholder voting in person at the Annual Meeting. Unless instructions to the
contrary are indicated, proxies will be voted FOR the election of the directors
named therein and FOR the ratification of the selection by the Audit Committee
of the Board of Directors of Rodefer Moss & Co, PLLC, as the independent
certified public accountants of the Company.
A copy of the Company’s Annual Report
on Form 10-K of the Company for the fiscal year ended December 31, 2009 ("Fiscal
2009"), which contains financial statements audited by the Company's independent
certified public accountants accompanies this proxy statement.
The cost of preparing, assembling and
mailing this notice of meeting, proxy statement, the enclosed Annual Report on
Form 10-K and proxy will be borne by the Company. In addition to solicitation of
the proxies by use of the mails, some of the officers and regular employees of
the Company, without extra remuneration, may solicit proxies personally or by
telephone, fax transmission or e-mail. The Company may also request brokerage
houses, nominees, custodians and fiduciaries to forward soliciting material to
the beneficial owners of the common stock. The Company will reimburse such
persons for their expenses in forwarding soliciting material.
VOTING SECURITIES AND
PRINCIPAL
HOLDERS
The Board of Directors has fixed the
close of business on April 14, 2010 as the record date (the "Record Date") for
the determination of stockholders entitled to notice of, and to vote at the
Annual Meeting. Only stockholders on the Record Date will be able to vote at the
Annual Meeting.
As of the Record Date, 59,816,661
shares of the Company's common stock, $.001 par value per share are outstanding,
and each share will be entitled to one (1) vote, with no shares having
cumulative voting rights. Holders of shares of common stock are entitled to vote
on all matters. Unless otherwise indicated herein, a majority of the votes
represented by shares present or represented at the Annual Meeting is required
for approval of each matter that will be submitted to the
stockholders.
Management knows of no business other
than that specified in Items 1 and 2 of the Notice of Annual Meeting that will
be presented for consideration at the Annual Meeting. If any other matter is
properly presented, it is the intention of the persons named in the enclosed
proxy to vote in accordance with their best judgment.
The following table sets forth the
share holdings of those persons who own more than 5% of the Company's common
stock as of April 14, 2010 with these computations being based upon 59,816,661
shares of common stock being outstanding as of that date and as to each
shareholder, as it may pertain, assumes the exercise of options or warrants
granted or held by such shareholder as of April 14, 2010.
Five Percent
Stockholders1
|
Name
and Address
|
Title
|
Number
of Shares
Beneficially Owned
|
Percent of Class
|
|
Dolphin
Offshore
Partners,
L.P.
c/o
Dolphin Asset
Management
Corp.
129
East 17th
Street
New
York, NY 10003
|
Stockholder
|
|
35.3%
|
1
Unless otherwise stated, all shares of Common Stock are directly held with sole
voting and dispositive power.
2
Consists of 20,839,492 shares held directly by Dolphin Offshore Partners, L.P.
(“Dolphin”) and 218,000 shares held directly by Peter E. Salas, and a vested,
fully exercisable option to purchase 125,000 shares granted to Mr. Salas who is
the Chairman of the Company’s Board of Directors and is the sole shareholder and
controlling person of Dolphin Management, Inc., the general partner of
Dolphin.
PROPOSAL
NO. 1:
ELECTION
OF DIRECTORS
GENERAL
Article III, paragraph number 2 of the
Company's Bylaws provides that the number of directors of the Company shall be a
minimum of three and a maximum of ten. The members of the Board of Directors are
each elected for a one-year term or until their successors are elected and
qualify with a plurality of votes cast in favor of their election. Five nominees
are put forth before the stockholders for election to the Board of Directors at
the Annual Meeting. All of the nominees are presently directors of the Company
and Mr. Jeffrey R. Bailey, one of the director-nominees is also presently the
Chief Executive Officer of the Company.
The directors will serve until the next
annual meeting of stockholders and thereafter until their successors shall have
been elected and qualified.
Unless authority is withheld, the
proxies in the accompanying form will be voted in favor of the election of the
nominees named above as directors. If any nominee should subsequently become
unavailable for election, the persons voting the accompanying proxy may in their
discretion vote for a substitute.
BOARD
OF DIRECTORS
The Board of Directors has the
responsibility for establishing broad corporate policies and for the overall
performance of the Company. Although only one member of the Board is
involved in day-to-day operating details, the other members of the Board are
kept informed of the Company's business by various reports and documents sent to
them as well as by operating and financial reports made at Board
meetings. The Board of Directors held seven meetings in Fiscal
2009. All directors who are up for re-election attended at least 75%
of the aggregate number of meetings of the Board of Directors and of the
committees on which such directors served during Fiscal 2009. Although it has no
formal policy requiring attendance, the Company encourages all of its directors
to attend the annual meeting of stockholders. All of the Company’s
directors attended last year’s Annual Meeting and it is anticipated that all of
the director-nominees will attend this year’s Annual Meeting.
There is no understanding or
arrangement between any director and any other persons pursuant to which such
individual was or is to be selected as a director or nominee of the
Company.
The Company’s Chief Executive Officer
serves as a Director, but does not serve as Chairman of the Board of
Directors. The Company has determined that dividing the functions of
CEO and Chairman between two individuals, while placing the CEO on the Board has
the dual beneficial effects of assisting both the CEO in making operational
decisions as he is expected to do in the ongoing operation of the Company with
accessability to the guidance of the Board,
while
allowing the Board to more effectively oversee the business risk without any
additional influence from the CEO, if he were also serving as board
chairman.
Identification of
Director-Nominees
The following table sets forth the
names of all current director-nominees.
|
Name
|
Positions Held
|
Date
of Initial Election
or Designation
|
|
|
|
|
|
Jeffrey
R. Bailey
|
Director;
Chief
Executive Officer
|
2/28/03-8/11/04;
10/21/04
7/17/02
|
|
Matthew
K. Behrent
|
Director
|
3/27/07
|
|
John
A. Clendening
|
Director
|
2/28/03
|
|
Carlos
P. Salas
|
Director
|
8/12/04
|
|
Peter
E. Salas
|
Director;
Chairman
of the Board
|
10/8/02
10/21/04
|
Background of
Directors
The following is a brief account of the
experience, for at least the past five (5) years, of each nominee for
director.
Jeffrey R. Bailey is 52 years old. He
graduated in 1980 from New Mexico Institute of Mining and Technology with a B.S.
degree in Geological Engineering. Upon graduation he joined Gearhart Industries
as a field engineer working in Texas, New Mexico, Kansas, Oklahoma and Arkansas.
Gearhart Industries later merged with Halliburton Company. In 1993, after 13
years working in various field operations and management roles primarily focused
on reservoir evaluation, log analysis and log data acquisition he assumed a
global role with Halliburton as a petrophysics instructor in Fort Worth, Texas.
His duties were to teach Halliburton personnel and customers around the world
log analysis and competition technology and to review analytical reservoir
problems. In this role Mr. Bailey had the opportunity to review reservoirs in
Europe, Latin America, Asia Pacific and the Middle East developing a special
expertise in carbonate reservoirs. In 1997, he became technical manager for
Halliburton in Mexico focusing on finding engineering solutions to the
production challenges of large carbonate reservoirs in Mexico. He joined the
Company as its Chief Geological Engineer on March 1, 2002. The experience,
qualifications, attributes, and skills gained by Mr. Bailey in these oil and gas
exploration and production industry positions directly apply to the operations
of the Company and lead to the conclusion that Mr. Bailey should serve as a
Director of the Company. Mr. Bailey was elected as President of
the Company on July 17, 2002 and is presently the Company’s Chief
Executive
Officer.
He was elected as a Director on February 28, 2003 and served as a Director until
August 11, 2004. He was again elected to the Company’s Board of Directors on
October 21, 2004.
Matthew
K. Behrent is 40 years old. He currently is an Executive Vice President,
Corporate Development at EDCI Holdings, Inc (NasdaqCM: EDCI), a company engaged
in the manufacture and distribution of CD's and DVD's. Before joining EDCI in
June, 2005, Mr. Behrent was an investment banker, working as a Vice-President at
Revolution Partners, a technology focused investment bank in Boston, from March
2004 until June 2005 and as an associate in Credit Suisse First Boston
Corporation's technology mergers and acquisitions group from June 2000 until
January 2003. From June 1998 to May 2000, Mr. Behrent practiced law with Cleary,
Gottlieb, Steen & Hamilton in New York, advising financial sponsors and
corporate clients in connection with financings and mergers and acquisitions
transactions. Mr. Behrent received his J.D. from Stanford Law School in 1997,
and his B.A. in Political Science and Political Theory from Hampshire College in
1992. He became a Director of the Company on March 27, 2007. The experience,
qualifications, attributes, and skills gained by Mr. Behrent in these
sophisticated legal and financial positions directly apply to and support the
financial oversight of the Company’s operations and lead to the conclusion that
Mr. Behrent should serve as a Director of the Company.
Dr. John A. Clendening is 78 years old.
He received B.S. (1958), M.S. (1960) and Ph. D. (1970) degrees in
geology from West Virginia University. He was employed as a Palynologist-Coal
Geologist at the West Virginia Geological Survey from 1960 until 1968. He joined
Amoco in 1968 and remained with Amoco as a senior geological associate until
1992. Dr. Clendening has served as President and other offices of the American
Association of Stratigraphic Palynologists and the Society of Organic
Petrologists. From 1992-1998 he was engaged in association with Laird
Exploration Co., Inc. of Houston, Texas, directing exploration and production in
south central Kentucky. In 1999, he purchased all the assets of Laird
Exploration in south central Kentucky and operates independently. While with
Amoco Dr. Clendening was instrumental in Amoco's acquisition in the early 1970's
of large land acreage holdings in Northeast Tennessee, based upon his geological
studies and recommendations. His work led directly to the discovery of what is
now the Company’s Paul Reed # 1 well. He further recognized the area
to have significant oil and gas potential and is credited with discovery of the
field that is now known as the Company's Swan Creek Field. Dr. Clendening
previously served as a Director of the Company from September 1998 to August
2000. He was again elected as a Director of the Company on February 28, 2003.
The experience, qualifications, attributes, and skills gained by Dr. Clendening
in the science of geology and the oil and gas exploration and production
industry as reflected in his extensive career fully and directly apply to the
operations of the Company and lead to the conclusion that Dr. Clendening should
serve as a Director of the Company.
Carlos P. Salas is 38 years old. He is
a principal of Dolphin Advisors, L.L.C., which manages a private-equity
investment fund focused on middle-market opportunities. Before joining Dolphin
Advisors, Mr. Salas led corporate finance and mergers and acquisitions advisory
assignments for middle-market clients as an investment banker with Donaldson,
Lufkin & Jenrette ("DLJ") in Los Angeles and later with Credit Suisse First
Boston Corporation when the
latter
acquired DLJ. Prior to joining DLJ in 1999, Mr. Salas practiced law with Cleary,
Gottlieb, Steen & Hamilton in New York, advising financial sponsors and
corporate clients in connection with financings and cross-border mergers and
acquisitions transactions. Mr. Salas received his J.D. from The University of
Chicago and his B.A. in Philosophy from New York University. He was elected to
the Company’s Board of Directors on August 12, 2004. Mr. Salas also serves on
the boards of William Controls, Inc. and Telenetics Corporation. The experience,
qualifications, attributes, and skills gained by Mr. Salas in these
sophisticated legal and financial positions directly apply to and support the
financial oversight of the Company’s operations and lead to the conclusion that
Mr. Salas should serve as a Director of the Company.
Peter E. Salas is 55 years
old. He has been President of Dolphin Asset Management Corp. and its
related companies since he founded it in 1988. Prior to establishing
Dolphin, he was with J.P. Morgan Investment Management, Inc. for ten years,
becoming Co-manager, Small Company Fund and Director-Small Cap
Research. He received an A.B. degree in Economics from Harvard in
1976. Mr. Salas was elected to the Board of Directors on October 8,
2002. Mr. Salas also serves on the boards of Williams Controls, Inc. and
Southwall Technologies, Inc. The business experience, attributes, and skills
gained by Mr. Salas in these sophisticated financial positions, together with
his service as director of other public companies and his capacity as
controlling person of the Company’s largest shareholder directly apply to and
support his qualification as a director, and lead to the conclusion that Mr.
Salas should serve as a Director of the Company.
Director
Independence
The Rules of the NYSE Amex (the “NYSE
Amex Rules”) require that a majority of the members of the Company’s Board of
Directors be independent in that they are not officers of the Company and are
free of any relationship that would interfere with the exercise of their
independent judgment. The NYSE Amex Rules also require that the Company’s Board
of Directors’ Audit Committee be comprised of at least three members all of whom
qualify as independent under the criteria set forth in Rule 10 A-3 of the
Securities Exchange Act of 1934. The Board of Directors has determined that
three of the five director-nominees, Matthew K. Behrent, John A. Clendening and
Carlos P. Salas, are independent as defined by the NYSE AMEX Rules, Section
10A(m)(3) of the Securities Exchange Act of 1934 and the rules and regulations
of the Securities and Exchange Commission. In reaching its determination, the
Board of Directors reviewed certain categorical independence standards it has
adopted to provide assistance in the determination of director independence. The
categorical standards are set forth below and provide that a director will not
qualify as an independent director under the AMEX Rules if:
|
|
·
|
The
Director is, or has been during the last three years, an employee or an
officer of the Company or any of its
affiliates;
|
· The
Director has received, or has an immediate family member3 who has received, during any twelve
consecutive months in the last three years any compensation from the Company in
excess of $120,000, other than compensation for service on the Board of
Directors, compensation to an immediate family member who is an employee other
than an executive officer, compensation received as an interim executive officer
or benefits under a tax-qualified retirement plan, or non-discretionary
compensation;
|
|
·
|
The
Director is a member of the immediate family of an individual who is, or
has been in any of the past three years, employed by the Company or any of
its affiliates as an executive
officer;
|
|
|
·
|
The
Director, or an immediate family member, is a partner in, or controlling
shareholder or an executive officer of, any for-profit business
organization to which the Company made, or received, payments (other than
those arising solely from investments in the Company’s securities) that
exceed 5% of the Company’s or business organization’s consolidated gross
revenues for that year, or $200,000, whichever is more, in any of the past
three years;
|
|
|
·
|
The
Director, or an immediate family member, is employed as an executive
officer of another entity where at any time during the most recent three
fiscal years any of the Company’s executives serve on that entity’s
compensation committee; or
|
|
|
·
|
The
Director, or an immediate family member, is a current partner of the
Company’s outside auditors, or was a partner or employee of the Company’s
outside auditors who worked on the Company’s audit at any time during the
past three years.
|
The
following additional categorical standards were employed by the Board in
determining whether a director qualified as independent to serve on the Audit
Committee and provide that a director will not qualify if:
|
|
·
|
The
Director directly or indirectly accepts any consulting, advisory, or other
compensatory fee from the Company or any of its subsidiaries;
or
|
|
|
·
|
The
Director is an affiliated person4 of the Company or any of its
subsidiaries.
|
Committees
3 Under
these categorical standards “immediate family member” includes a person’s
spouse, parents, children, siblings, mother-in-law, father-in-law,
brother-in-law, sister-in-law, son-in-law, daughter-in-law, and anyone who
resides in such person’s home.
4 For
purposes of this categorical standard, an “affiliated person of the Company”
means a person that directly or indirectly through intermediaries controls, or
is controlled by, or is under common control with the Company. A person will not
be considered to be in control of the Company, and therefore not an affiliate of
the Company, if he is not the beneficial owner, directly or indirectly of more
than 10% of any class of voting securities of the Company and he is not an
executive officer of the Company. Executive officers of an affiliate of the
Company as well as a director who is also an employee of an affiliate of the
Company will be deemed to be affiliates of the
Company.
The
Company’s Board has operating audit, nomination and governance and
compensation/stock option committees.
Audit
Committee
In Fiscal 2009, director-nominees John
A. Clendening, Carlos P. Salas and Matthew K. Behrent were the members of the
Audit Committee. Mr. Behrent was the Chairman of the Committee and the Board of
Directors determined that Mr. Behrent was an “audit committee financial expert”
as defined by applicable Securities and Exchange Commission (“SEC”)
regulations. Each of the members of the Audit Committee met the
independence and experience requirements of the NYSE AMEX Rules, the applicable
Securities Laws, and the regulations and rules promulgated by the
SEC.
The Audit
Committee adopted an Audit Committee Charter during fiscal 2001. In 2004, the
Board adopted an amended Audit Committee Charter, a copy of which is available
on the Company’s internet website, www.tengasco.com. The Audit Committee reviews
and reassesses the Audit Committee Charter annually.
The Audit
Committee's functions are:
|
|
·
|
To
review with management and the Company’s independent auditors the scope of
the annual audit and quarterly statements, significant financial reporting
issues and judgments made in connection with the preparation of the
Company’s financial statements;
|
|
|
·
|
To
review major changes to the Company’s auditing and accounting principles
and practices suggested by the independent
auditors;
|
|
|
·
|
To
monitor the independent auditor's relationship with the
Company;
|
|
|
·
|
To
advise and assist the Board of Directors in evaluating the independent
auditor's examination;
|
|
|
·
|
To
supervise the Company's financial and accounting organization and
financial reporting;
|
|
|
·
|
To
nominate, for approval of the Board of Directors, a firm of certified
public accountants whose duty it is to audit the financial records of the
Company for the fiscal year for which it is appointed;
and
|
|
|
·
|
To
review and consider fee arrangements with, and fees charged by, the
Company’s independent auditors.
|
The Audit
Committee met five (5) times in Fiscal 2009 with the Company’s auditors,
including discussing the audit of the Company’s year end financial statements.
It is intended that if elected as directors in 2010 Messrs. Clendening and Salas
will continue to serve as members of the Audit Committee along with Mr. Behrent
who will serve as the Chairman of the Committee and as its designated financial
expert.
Audit Committee Report
The Audit Committee has:
|
|
I.
|
Reviewed
and discussed the Company’s unaudited financial statements for the first
three quarters of Fiscal 2009 and the Company’s audited financial
statements for the year ended December 31, 2009 with the management of the
Company and the Company’s independent
auditors;
|
|
|
II.
|
Discussed
with the Company’s independent auditors the matters required to be
discussed by Statement of Auditing Standards No. 61, as the same was in
effect on the date of the Company’s financial statements;
and
|
|
|
III.
|
Received
the written disclosures and the letter from the Company’s independent
accountant required by applicable requirements of the Public
Company Accounting Oversight Board regarding the independent accountant’s
communications with the audit committee concerning independence, and has
discussed with the independent accountant the independent accountant’s
independence.
|
Based on the foregoing materials and
discussions, the Audit Committee recommended to the Board of Directors that the
unaudited financial statements for each of the first three quarters of Fiscal
2009 be included in the Quarterly Reports on Form 10-Q for those quarters and
that the audited financial statements for the year ended December 31, 2009 be
included in the Company’s Annual Report on Form 10-K for the year ended December
31, 2009.
Members of the Audit
Committee
Matthew K. Behrent
John A. Clendening
Carlos P. Salas
Nomination and Governance
Committee
In Fiscal 2009, the members of the
Nomination and Governance Committee were director-nominees Carlos P. Salas, John
Clendening and Matthew K. Behrent with Mr. Salas acting as Chairman. As stated
above, the Company believes that each member of the Committee was independent as
that term is defined under the NYSE Amex Rules. The Committee met one time in
Fiscal 2009. The Committee, among other duties, determines the slate of director
candidates to be presented for election at the Company’s annual meeting of
shareholders. Although the Company does not have a nominating committee charter,
the Company’s Board of Directors has adopted procedures for annual director
nominations by the Nomination and Governance Committee. Those procedures provide
that the qualifications that should be met by any person recommended as a
nominee for a position on the Company’s Board of Directors should include one or
more of the following: a background or experience in oil and gas exploration,
production, transportation, geology, construction, finance or in another
business, government service, or profession that would reasonably enable the
nominee to provide seasoned and reputable service to the shareholders of the
Company in the performance of the duties of a member of the Board of
Directors. In addition to these qualifications, a nominee must be
willing to serve without a right to receive compensation for such service. The
Committee has not paid fees to any third party to identify, evaluate or to
assist in identifying or evaluating, potential nominees, but may do so in the
future if it determines it necessary
Neither the Committee nor the Board has
any policy regarding the consideration of “diversity” in identifying nominees
for director. The Company has no separate policy with regard to the
consideration of any director candidates recommended by security holders.
However, the Nomination Committee will consider director candidates recommended
by security holders provided that such nominations are timely made as set forth
hereinafter under the heading “Stockholders Proposals”. Any person recommended
by a security holder to serve on the Board of Directors is considered upon the
same terms as candidates recommended by any other person. To date, the Company
has not received any recommendations from shareholders requesting that the
Nomination and Governance Committee consider a candidate for inclusion among the
Committee’s slate of nominees in the Company’s proxy statement.
Among the nominating procedures adopted
are the following:
|
|
·
|
Any
shareholder, officer, or director may recommend for nomination any person
for the slate of candidates for membership on the Company’s Board of
Directors to be presented to the shareholders at the Company’s annual
meeting of shareholders. Such recommendations must be furnished in writing
addressed to the Company’s Board of Directors at the Company’s principal
offices. All such nominations will be furnished to the Nomination
Committee which may conduct interviews, investigations or make other
determinations as to the qualifications of such recommended
persons.
|
|
|
·
|
Any
then-current members of the Board of Directors desiring to stand for
re-election may be placed on the slate of directors for re-election
without further inquiry as to their
qualifications.
|
|
|
·
|
The
Nomination Committee will meet to determine the slate of candidates for
the Board in such a manner and at such a time so as not to delay either
the mailing of the proxy statement to the Company’s shareholders or the
annual meeting of shareholders. At such meeting, each recommended person
including directors standing for re-election shall be subject to
affirmative vote of half or more of the members of the Nomination
Committee for inclusion on the slate of
nominees.
|
|
|
·
|
The
adopted procedures apply only to the determination of the slate of
directors to be presented for election at the annual meeting of the
shareholders. Any vacancies on the Board of Directors following the annual
meeting of shareholders may be filled in the manner currently applicable
under the Company’s Charter, Bylaws, and applicable state
law.
|
|
|
·
|
The
procedures adopted may be amended from time to time by the Board of
Directors or by the Nomination Committee, in order to comply with any
applicable provision or interpretation of any rule, statute, or stock
exchange rule of the exchange on which the Company’s stock may be
listed
|
The nomination procedures adopted are
posted on the Company’s internet website at www.tengasco.com. In the event of
any such amendment to the procedures, the Company intends to disclose the
amendments on the Company's internet website within five business days following
such amendment.
The Nomination Committee determined the
slate of candidates for the Board of Directors presented for election at this
year’s Annual Meeting.
The other function of this Committee is
to oversee the Company’s compliance with the corporate governance requirements
of the SEC and the NYSE Amex Rules.
Compensation/Stock Option
Committee
The members of the Compensation/Stock
Option Committee in Fiscal 2009 were director-nominees John A. Clendening,
Matthew K. Behrent and Carlos P. Salas with Mr. Clendening acting as
Chairman. Messrs. Clendening, Behrent and Salas all meet the current
independence standards established by the NYSE Amex Rules.
The Board
of Directors has adopted a charter for the Compensation/Stock Option Committee
which is available at the Company’s internet website, www.tengasco.com.
The Compensation/Stock Option
Committee’s functions, in conjunction with the Board of Directors, are to
provide recommendations with respect to general and specific compensation
policies and practices of the Company for directors, officers and other
employees of the Company. The Compensation/Stock Option Committee
expects to periodically review the approach to executive compensation and to
make changes as competitive conditions and other circumstances warrant and will
seek to ensure the Company's compensation philosophy is
consistent
with the Company's best interests and is properly implemented. The Committee
determines or recommends to the Board of Directors for determination the
specific compensation of the Company’s Chief Executive Officer and all of the
Company’s other officers. Although the Committee may seek the input of the
Company’s Chief Executive Officer in determining the compensation of the
Company’s other executive officers, the Chief Executive Officer may not be
present during the voting or deliberations with respect to his compensation. The
Committee may not delegate any of its responsibilities unless it is to a
subcommittee formed by the Committee, but only if such subcommittee consists
entirely of directors who meet the independence requirements of the NYSE Amex
Rules.
The Compensation/Stock Option Committee
is also charged with administering the Tengasco, Inc. Stock Incentive Plan (the
“Stock Incentive Plan”). The Compensation/Stock Option Committee has
complete discretionary authority with respect to the awarding of options and
Stock Appreciation Rights (“SARs”), under the Stock Incentive Plan, including,
but not limited to, determining the individuals who shall receive options and
SARs; the times when they shall receive them; whether an option shall be an
incentive or a non-qualified stock option; whether an SAR shall be granted
separately, in tandem with or in addition to an option; the number of shares to
be subject to each option and SAR; the term of each option and SAR; the date
each option and SAR shall become exercisable; whether an option or SAR shall be
exercisable in whole, in part or in installments and the terms relating to such
installments; the exercise price of each option and the base price of each SAR;
the form of payment of the exercise price; the form of payment by the Company
upon the exercise of an SAR; whether to restrict the sale or other disposition
of the shares of common stock acquired upon the exercise of an option or SAR; to
subject the exercise of all or any portion of an option or SAR to the
fulfillment of a contingency, and to determine whether such contingencies have
been met; with the consent of the person receiving such option or SAR, to cancel
or modify an option or SAR, provided such option or SAR as modified would be
permitted to be granted on such date under the terms of the Stock Incentive
Plan; and to make all other determinations necessary or advisable for
administering the Plan.
The Compensation/Stock Option Committee
met five (5) times in Fiscal 2009. The Committee has the authority to retain a
compensation consultant or other advisors to assist it in the evaluation of
compensation and has the sole authority to approve the fees and other terms of
retention of such consultants and advisors and to terminate their services. To
date, the Committee has not retained any such consultants or advisors to assist
it, although it may do so in the future if it deems it necessary.
Compensation/Stock Option Committee
Interlocking
And Insider
Participation
No interlocking relationship existed or
exists between any member of the Company's Compensation/Stock Option Committee
and any member of the compensation committee of any other company, nor has any
such interlocking relationship existed in the past. No member or nominee of the
Compensation/Stock Option Committee is an officer or an employee of the
Company.
Section 16(a) Beneficial
Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s executive
officers, directors and persons who beneficially own more than 10% of the
Company’s Common Stock to file initial reports of ownership and reports of
changes in ownership with the SEC no later than the second business day after
the date on which the transaction occurred unless certain exceptions apply. In
fiscal 2009, the Company, its officers and directors and its shareholders owning
more than 10% of its common stock were not delinquent in filing of any of their
Form 3, 4, and 5 reports.
Family and Other
Relationships
There are no family relationships
between any of the present directors or executive officers of the Company except
that Carlos P. Salas, a Director of the Company, is the cousin of Peter E.
Salas, also a director of the Company. Mr. Carlos P. Salas is also one of seven
members of Dolphin Advisors, LLC which serves as the managing general partner of
Dolphin Direct Equity Partners, L.P., a private company investment fund that is
not a shareholder of the Company. The majority owner of Dolphin Advisors, LLC is
Dolphin Management, Inc., the sole shareholder of which is Peter E. Salas.
Dolphin Management, Inc. is also the managing partner of Dolphin Offshore
Partners, L.P. which directly owns 20,839,492 shares of the Company’s common
stock. Peter E. Salas is the controlling person of Dolphin Offshore Partners;
L.P. Carlos P. Salas has no direct or indirect ownership interest in Dolphin
Offshore Partners, L.P. The Board of Directors in making its determination that
Carlos P. Salas is an independent director considered all of these factors. See
above, “Director Independence”. There are no family relationships between any of
the other Directors or executive officers of the Company.
Involvement
in Certain Legal Proceedings
To the knowledge of management, no
director, executive officer or affiliate of the Company or owner of record or
beneficially of more than 5% of the Company's common stock is a party adverse to
the Company or has a material interest adverse to the Company in any
proceeding.
To the knowledge of management, during
the past ten years, unless specifically indicated below with respect to any
numbered item, no present director, executive officer or person nominated to
become a director or an executive officer of the Company:
|
|
(1)
|
Filed
a petition under the federal bankruptcy laws or any state insolvency law,
nor had a receiver, fiscal agent or similar officer appointed by a court
for the business or property of such person, or any partnership in which
he or she was a general partner at or within two years before the time of
such filing, or any corporation or business association of which he or she
was an executive officer at or within two years before the time of such
filing; provided however that the Company’s Chief Financial Officer
Michael J. Rugen during 2007 through mid 2009 was Vice President of
Accounting
|
|
|
and
Finance for Nighthawk Oilfield Services in Houston, Texas (Nighthawk);
Nighthawk filed for bankruptcy protection under Chapter 7 of the
bankruptcy laws on July 10, 2009 and such fact was affirmatively
disclosed to management before Mr. Rugen was appointed to the
position of Chief Financial Officer of the Company in September, 2009, and
management determined that the circumstances surrounding bankruptcy filing
did not disclose any reason to question the integrity or qualifications of
Mr. Rugen for the position of Chief Financial Officer of the
Company.
|
|
|
(2)
|
Was
convicted in a criminal proceeding or named the subject of a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
|
|
|
(3)
|
Was
the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining him or her from or otherwise limiting the
following activities: (a) acting as a futures commission merchant,
introducing broker, commodity trading advisor, commodity pool operator,
floor broker, leverage transaction merchant, any other person regulated by
the Commodity Futures Trading Commission, or an associated person of any
of the foregoing, or as an investment adviser, underwriter, broker or
dealer in securities, or as an affiliated person, director or employee of
any investment company, bank, savings and loan association or insurance
company, or engaging in or continuing any conduct or practice in
connection with such activity; (b) engaging in any type of business
practice; or (c) engaging in any activity in connection with the purchase
or sale of any security or commodity or in connection with any violation
of federal or state securities laws or federal commodities
laws;
|
|
|
(4)
|
Was
the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any Federal or State authority barring,
suspending or otherwise limiting him or her for more than 60 days from
engaging inany activity described in paragraph 3(a) above, or being
associated with any persons engaging in any such
activity;
|
|
|
(5)
|
Was
found by a court of competent jurisdiction in a civil action or by the SEC
to have violated any federal or state securities law, and the judgment in
such civil action or finding by the SEC has not been subsequently
reversed, suspended, or vacated;
|
|
|
(6)
|
Was
found by a court of competent jurisdiction in a civil action or
by the Commodity Futures Trading Commission (“CFTC”) to have
violated any federal commodities law, and the judgment in such
civil action or finding by the CFTC has not been subsequently
reversed, suspended, or
vacated;
|
|
|
(7)
|
Was
the subject of, or a party to, any federal or state judicial or
administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated, relating to an alleged violation of: (i)
any federal or state securities or commodities law or regulation; (ii) any
law or regulation respecting financial institutions or insurance companies
including but not limited to a temporary or permanent injunction, order of
disgorgement or restitution, civil money penalty or temporary or permanent
cease and desist order, or removal or prohibition order; or (iii) any law
or regulation prohibiting mail or wire fraud or fraud in connection with
any business entity; or
|
|
|
(8)
|
Was
the subject of, or a party to, any sanction or order, not subsequently
reversed, suspended or vacated, of any self-regulatory organization (as
defined in Section 3(a)(26) of the Exchange Act [15 U.S.C. 78c(a)(26)],
any registered entity (as defined in Section 1(a)(29) of the Commodity
Exchange Act [7 U.S.C. 1(a)(29)], or any equivalent exchange, association,
entity or organization that has disciplinary authority over its members or
persons associated with a member.
|
Stockholder Communications
with the Board of Directors
Stockholders may communicate with the
Board of Directors of the Company by writing to: Cary V. Sorensen, Secretary,
Tengasco, Inc., 11121 Kingston Pike, Suite E, Knoxville TN 37934 or by e-mail:
to: csorensen@tengasco.com
Subject: Communication to Board of Directors. All letters and e-mails will be
answered, if possible, and will be distributed to board members as appropriate.
Notwithstanding the foregoing, the Company has the authority to discard or
disregard any communication, which is unduly hostile, threatening, illegal or
otherwise inappropriate or to take any other appropriate actions with respect to
such communications.
SECURITY
OWNERSHIP OF DIRECTORS AND OFFICERS
|
Name and Address
|
Title
|
Number
of Shares
|
Percent
of
|
|
|
|
|
|
|
Jeffrey
R. Bailey
|
Director;
Chief
Executive
Officer
|
|
Less
than 1%
|
|
Matthew
K. Behrent
|
Director
|
|
Less
than 1%
|
|
John
A. Clendening
|
Director
|
|
Less
than 1%
|
|
Michael
J. Rugen
|
Chief
Financial
Officer
|
0
|
Less
than 1%
|
|
Carlos
P. Salas
|
Director
|
|
Less
than 1%
|
|
Peter
E. Salas
|
Director;
Chairman
of the Board
|
|
35.3%
|
|
Cary
V. Sorensen
|
Vice
President;
General
Counsel;
Secretary
|
|
Less
than 1%
|
|
Charles
P. McInturff
|
Vice
President
|
|
Less
than 1%
|
|
All
Officers and Director-Nominees As a group
|
|
|
37.1%
|
5Unless
otherwise stated, all shares of common stock are directly held with sole voting
and dispositive power. The shares set forth in the table are as of April 14,
2010.
6Calculated
pursuant to Rule 13d-3(d) under the Securities Exchange Act of 1934 based upon
59,816,661 shares of common stock being outstanding as of the record date, April
14, 2010. Shares not outstanding that are subject to options or warrants
exercisable by the holder thereof within 60 days of April 14, 2010 are deemed
outstanding for the purposes of calculating the number and percentage owned by
such stockholder, but not deemed outstanding for the purpose of calculating the
percentage of any other person. Unless otherwise noted, all shares listed as
beneficially owned by a stockholder are actually
outstanding.
7Consists
of 136,287 shares held directly and vested, fully exercisable options to
purchase 40,000 shares, and does not include 1,250,000 stock appreciation
rights.
8Consists
of 33,000 shares held directly and vested, fully exercisable options to purchase
75,000 shares.
9Consists
of 406,500 shares held directly and vested, fully exercisable options to
purchase 95,000 shares.
10Consists
of 64,000 shares held directly and vested, fully exercisable options to purchase
125,000 shares.
11Consists
of 218,000 shares held directly, vested, fully exercisable options to purchase
125,000 shares and 20,839,492 shares held directly by Dolphin Offshore Partners,
L.P. (“Dolphin”). Peter E. Salas is the sole shareholder of and controlling
person of Dolphin Management, Inc. which is the general partner of
Dolphin.
12Consists
of 40,000 shares held directly and vested, fully exercisable options to purchase
15,000 shares and does not include 400,000 stock appreciation
rights.
13Consists
of vested, fully exercisable options to purchase 240,000
shares.
14Consists
of 897,787 shares held directly by management, 20,839,492 shares held by Dolphin
and vested, fully exercisable options to purchase 715,000
shares.
Change in
Control
To the knowledge of the Company’s
management, there are no present arrangements or pledges of the Company’s
securities which may result in a change in control of the Company.
EXECUTIVE
COMPENSATION
Executive Officer
Compensation
The
following table sets forth a summary of all compensation awarded to, earned or
paid to, the Company's Chief Executive Officer, Chief Financial Officer and
other executive officers whose compensation exceeded $100,000 during fiscal
years ended December 31, 2009 and December 31, 2008.
|
SUMMARY
COMPENSATION TABLE
|
|
|
|
Salary
|
Bonus
|
|
All
Other Compensation 16
|
Total
|
|
|
|
|
|
|
|
|
|
Name
and Principal Position
|
Year
|
($)
|
($)
|
($)
|
($)
|
($)
|
|
Jeffrey
R. Bailey,
Chief
Executive Officer
|
2009
|
$ 189,750
|
$ -
|
$ -
|
$ 5,955
|
$ 195,705
|
|
|
2008
|
$ 189,750
|
$ 81,830
|
$
-
|
$ -
|
$ 271,580
|
|
|
|
|
|
|
|
|
|
Michael
J. Rugen,
Chief
Financial Officer 17
|
2009
|
$ 40,385
|
$ -
|
$
155,866
|
$
29
|
$ 196,280
|
|
|
|
|
|
|
|
|
|
Mark
A. Ruth, former
Chief
Financial Officer 18
|
2009
|
$ 126,606
|
$ -
|
$ -
|
$
88
|
$ 126,694
|
|
|
2008
|
$ 131,670
|
$ 45,325
|
$ -
|
$
-
|
$ 176,995
|
|
|
|
|
|
|
|
|
|
Cary
V. Sorensen,
General
Counsel
|
2009
|
$ 137,940
|
$ -
|
$
-
|
$ 4,361
|
$ 142,301
|
|
|
2008
|
$ 137,940
|
$ 61,554
|
$
-
|
$ -
|
$ 199,494
|
|
|
|
|
|
|
|
|
|
Charles
P. McInturff,
Vice
President
|
2009
|
$ 92,500
|
$ -
|
$
-
|
$ 5,027
|
$ 97,527
|
|
|
2008
|
$ 92,500
|
$ 22,719
|
$ 167,910
|
$ -
|
$ 283,129
|
15
The amounts represented in this
column are equal to the aggregate grant date fair value of the award computed in
accordance with FASB ASC Topic 718, Compensation-Stock Compensation, in
connection with options granted under the Tengasco, Inc. Stock Incentive Plan.
See Note 15 to the Consolidated Financial Statements included in the Company's
Annual Report on Form 10K for the year ended December 31, 2009 for information
on the relevant valuation assumptions. 2008 amounts have been revised
to reflect the aggregate grant date fair value of the award computed in
accordance with FASB ASC Topic 718, Compensation-Sock
Compensation.
16
The amounts in this column
consist of Tengasco's matching contributions to its 401 (k) plan and the portion
of company-wide group term life insurance premiums allocable to these named
executive officers.
17 Mr.
Rugen's annual salary in 2009 was $150,000. The amount reflected in
the salary column for 2009 represents Mr. Rugen's prorated
salary.
18
Mr. Ruth's annual salary in 2009
was $131,670. The amount reflected in the salary column for 2009
represents Mr. Ruth's prorated salary.
Outstanding
Equity Awards at Fiscal Year-End
|
|
OPTION
AWARDS
|
|
|
Number
of securities underlying unexercised options
|
Number
of securities underlying unexercised options
|
|
|
|
|
(#)
|
(#)
|
Option
exercise price
|
|
|
Name
|
exercisable
|
|
($)
|
Option
expiration date
|
|
|
|
|
|
|
|
Jeffrey
R. Bailey
|
1,250,000
|
-
|
$ 0.27
|
4/21/2010
|
|
|
20,000
|
-
|
$ 0.58
|
1/19/2011
|
|
|
20,000
|
-
|
$ 0.81
|
12/14/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
J. Rugen
|
-
|
400,000
|
$ 0.50
|
9/27/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cary
V. Sorensen
|
400,000
|
-
|
$ 0.27
|
4/21/2010
|
|
|
15,000
|
-
|
$ 0.58
|
1/19/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
P. McInturff
|
160,000
|
240,000
|
$ 0.57
|
2/1/2013
|
|
|
|
|
|
|
Employment
Contracts
There are presently no employment
contracts relating to any member of management. However, depending upon the
Company's operations and requirements, the Company may offer long-term contracts
to other executive officers or key employees in the future.
19 Mr.
Rugen's 400,000 unexercisable options will vest 80,000 options per year on
9/27/2010, 9/27/2011, 9/27/2012, 9/27/2013, and 9/27/2014. Mr. McInturff's
240,000 unexercisable options will vest 80,000 per year on 2/1/2010 2/1/2011,
and 2/1/2012.
Compensation of
Directors
The Board of Directors has resolved to
compensate members of the Board of Directors for attendance at meetings at the
rate of $250 per day, together with direct out-of-pocket expenses incurred in
attendance at the meetings, including travel. The Directors, however, have
waived such fees due to them as of this date for prior meetings.
Members
of the Board of Directors may also be requested to perform consulting or other
professional services for the Company from time to time. The Board of
Directors has reserved to itself the right to review all directors' claims for
compensation on an ad hoc basis.
Board
members may receive fees from the Company for their services as
director. They may also from time to time be granted stock
options under the Tengasco, Inc. Stock Incentive Plan. A separate plan to issue
cash and/or shares of stock to independent directors for service on the various
committees of the Board of Directors was authorized by the Board of Directors
and approved by the Company’s shareholders. A copy of the Plan is posted at the
Company’s website at www.tengasco.com. No award was made to any independent
director under this plan in Fiscal 2009.
|
DIRECTOR
COMPENSATION FOR FISCAL 2009
|
|
|
Fees
earned or paid in cash
|
Option
awards compensation 20
|
Total
|
|
Name
|
($)
|
($)
|
($)
|
|
|
|
|
|
|
Matthew
K. Behrent
|
$ 15,000
|
$ 12,888
|
$ 27,888
|
|
|
|
|
|
|
John
A. Clendening
|
$ 15,000
|
$ 12,888
|
$ 27,888
|
|
|
|
|
|
|
Carlos
P. Salas
|
$ 15,000
|
$ 12,888
|
$ 27,888
|
|
|
|
|
|
|
Peter
E. Salas
|
$ 15,000
|
$ 12,888
|
$ 27,888
|
20 The
amounts represented in this column are equal to the aggregate grant date fair
value of the
award
computed in accordance with FASB ASC Topic 718, Compensation-Stock
Compensation,
in
connection with options granted under the Tengasco, Inc. Stock Incentive
Plan. See Note 15
to
the Consolidated Financial Statements included in the Company's Annual Report on
Form 10K
for
the year ended December 31, 2009 for information on the relevant valuation
assumptions.
As
of December 31, 2009, Mr. Behrent held 50,000 unexercised options.
As
of December 31, 2009, Mr. Clendening held 70,000 unexercised
options.
As
of December 31, 2009, Mr. Carlos Salas held 150,000 unexercised
options.
As
of December 31, 2009, Mr. Peter Salas held 100,000 unexercised
options.
CERTAIN
TRANSACTIONS
There have been no material
transactions, series of similar transactions or currently proposed transactions
during Fiscal 2008 and 2009, to which the Company or any of its subsidiaries was
or is to be a party, in which the amount involved exceeds the lesser of $120,000
or one percent of the average of the Company’s total assets at year-end for its
last two completed fiscal years in which any director or executive officer or
any security holder who is known to the Company to own of record or beneficially
more than 5% of the Company's common stock, or any member of the immediate
family of any of the foregoing persons, had a material interest.
Review, Approval or
Ratification of Transactions with Related Parties21
The Company’s Board of Directors has
adopted a written Related Party Transactions Approval Policy which is posted on
the Company’s website at www.tengasco.com. It is the Company’s
preference to avoid entering into a material related-party transaction if a
transaction with a non-related party is available on an equally timely and
equally beneficial basis. However, if a Related Party Transaction appears to be
in the Company’s best interest then it will be approved or ratified if the Board
of Directors expressly finds that the terms of the transaction are comparable to
or more beneficial to the Company than those that could be obtained in arm’s
length dealings with an unrelated third party; or, the transaction is approved
by the majority of disinterested members of the Company’s Board of
Directors.
Parent of
Issuer
The
Company has no parent.
21 A
“Related Party” is any director or executive officer of the Company, any nominee
for director, any shareholder known to be the beneficial owner of more than 5%
of any class of the Company’s voting stock, and any Immediate Family Member of
any such Party. “Immediate Family Member” means any child, stepchild, parent,
stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law of a person, and any person
(other than a tenant or an employee) sharing the household of such
person.
BOARD
RECOMMENDATION AND VOTE REQUIRED
For Proposal No. 1 regarding the
election of directors, votes may be cast in favor of all nominees, may be
withheld with regard to all nominees or may be withheld only with regard to
nominees specified by the stockholder. Directors will be elected by a plurality
of the votes of the shares of the Company's common stock present in person or
represented by proxy, and entitled to vote on the election of directors at a
meeting at which a quorum is present. Abstentions are tabulated in determining
the votes present at a meeting. Consequently, an abstention has the same effect
as a vote against a director-nominee, as each abstention would be one less vote
in favor of a director nominee. If a broker indicates on the proxy that it does
not have discretionary authority as to certain shares to vote on a particular
matter (i.e., a “broker non-vote”), those shares will not be considered as
present and entitled to vote with respect to that matter. The Board of Directors
recommends that stockholders vote "FOR" the nominees set forth above. Unless
marked to the contrary, proxies received will be voted FOR the nominees set
forth above.
PROPOSAL
NO. 2
RATIFICATION
OF SELECTION OF
RODEFER
MOSS & CO, PLLC AS INDEPENDENT AUDITORS
The Board of Directors has selected the
firm of Rodefer Moss & Co, PLLC (“Rodefer Moss”) of Knoxville, Tennessee,
independent certified public accountants, to audit the accounts for the Company
for fiscal year ending December 31, 2010 ("Fiscal 2010"). Rodefer Moss has
audited the Company's financial statements for the past five (5) fiscal
years. The Company is advised that neither Rodefer Moss nor any of
its partners has any material direct or indirect relationship with the Company.
The Board of Directors considers Rodefer Moss to be well qualified for the
function of serving as the Company's auditors. Tennessee Law does not require
the approval of the selection of auditors by the Company's stockholders, but in
view of the importance of the financial statement to stockholders, the Board of
Directors deems it desirable that they pass upon its selection of auditors. In
the event the stockholders disapprove of the selection, the Board of Directors
will consider the selection of other auditors.
AUDIT AND NON-AUDIT
FEES
The following table presents the fees
for professional audit services rendered by the Company’s current independent
accountants, Rodefer Moss, for the audit of the Company’s annual consolidated
financial statements for the fiscal years ended December 31, 2009 and December
31, 2008, and fees for other services rendered by Rodefer Moss during those
periods:
|
AUDIT
AND NON-AUDIT FEES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
|
|
|
|
|
Audit
Fees
|
$ 147,351
|
|
$ 106,000
|
|
|
|
|
|
|
Audit-Related
Fees
|
9,787
|
|
54,148
|
|
|
|
|
|
|
Tax
Fees
|
-
|
|
-
|
|
|
|
|
|
|
All
Other Fees
|
-
|
|
-
|
|
|
|
|
|
|
Total
Fees
|
$ 157,138
|
|
$ 160,148
|
Audit fees include fees related to the
services rendered in connection with the annual audit of the Company’s
consolidated financial statements, the quarterly reviews of the Company’s
quarterly reports on Form 10-Q and the reviews of and other services related to
registration statements and other offering memoranda.
Audit-related fees are for assurance
and related services by the principal accountants that are reasonably related to
the performance of the audit or review of the Company’s financial
statements.
Tax Fees include (i) tax compliance,
(ii) tax advice, (iii) tax planning and (iv) tax reporting.
All Other Fees includes fees for all
other services provided by the principal accountants not covered in the other
categories such as litigation support, etc.
All of the services for 2008 and 2009
were performed by the full-time, permanent employees of Rodefer
Moss.
All of the 2009 services described
above were approved by the Audit Committee pursuant to the SEC rule that
requires audit committee pre-approval of audit and non-audit services provided
by the Company’s independent auditors. The Audit Committee considered whether
the provisions of such services, including non-audit services, by Rodefer Moss
were compatible with maintaining its independence and concluded they
were.
BOARD
RECOMMENDATION AND VOTE REQUIRED
The Board of Directors recommends that
you vote in favor of the above proposal to ratify the appointment of Rodefer
Moss & Co, PLLC as independent auditors of the Company for Fiscal
2010. A representative of Rodefer Moss & Co, PLLC is expected to
be present at the Annual Meeting with the opportunity to make a statement if he
desires to do so, and is expected to be available to respond to appropriate
questions.
Ratification will require the
affirmative vote of a majority of the shares present and voting at the meeting
in person or by proxy. In the event ratification is not provided, the Audit
Committee and the Board of Directors will review the future selection of the
Company's independent auditors.
Unless otherwise directed by the
stockholder giving the proxy, the proxy will be voted for the ratification of
the selection by the Board of Directors of Rodefer Moss & Co, PLLC as the
Company's independent certified public accountants for Fiscal 2010. Shares voted
as abstaining will count as votes cast. If a broker indicates on the proxy that
it does not have discretionary authority as to certain shares to vote on a
particular matter (i.e., a “broker non-vote”), those shares will not be
considered as present and entitled to vote with respect to that matter. An
abstention from voting by a stockholder present in person or by proxy at the
meeting has the same legal effect as a vote "against" Proposal No. 2 because it
represents a share present or represented at the meeting and entitled to vote,
thereby increasing the number of affirmative votes required to approve this
proposal.
STOCKHOLDERS' PROPOSALS
Proposals of stockholders intended to
be presented at the 2011annual meeting must be received in writing, by the Chief
Executive Officer of the Company at its offices by December 31, 2010 in order to
be considered for inclusion in the Company's proxy statement relating to that
meeting.
SEC rules and regulations provide that
if the date of the Company's 2011 Annual Meeting is advanced or delayed more
than 30 days from the date of the 2010 Annual Meeting, stockholder proposals
intended to be included in the proxy materials for the 2011 Annual Meeting must
be received by the Company within a reasonable time before the Company begins to
print and mail the proxy materials for the 2011 Annual Meeting. Upon
determination by the Company that the date of the 2011 Annual Meeting will be
advanced or delayed by more than 30 days from the date of the 2010 Annual
Meeting, the Company will disclose such change in the earliest possible
Quarterly Report on Form 10-Q.
By Order of the Board of
Directors
Cary V. Sorensen, Secretary
TENGASCO,
INC.
THIS
PROXY IS SOLICITED ON BEHALF
OF
THE BOARD OF DIRECTORS
The undersigned hereby appoints Jeffrey
R. Bailey and Cary V. Sorensen as proxies (the "Proxies"), each with power of
substitution and re-substitution, to vote all shares of Common Stock, $.001 par
value per share, of Tengasco, Inc. (the "Company") held of record by the
undersigned on April 14, 2010 at the Annual Meeting of stockholders to be held
at the Homewood Suites by Hilton, 10935 Turkey Drive, Knoxville, Tennessee, on
Monday, June 21, 2010, at 9:00 A.M. local time, or at any adjournments thereof,
as directed below, and in their discretion on all other matters coming before
the meeting or any adjournments thereof.
Please
mark boxes / / in blue or black ink.
1. Election
of Directors: Jeffrey R. Bailey, Matthew K. Behrent, John A. Clendening, Carlos
P. Salas and Peter E. Salas.
(Mark only one of the two boxes for
this item)
|
|
/ /
|
VOTE
FOR all nominees named above except those who may be named on these two
lines:
|
____________________________________________________________
____________________________________________________________
(OR)
|
|
/ /
|
VOTE
WITHHELD as to all nominees named
above.
|
2. Proposal
to ratify appointment of Rodefer Moss & Co, PLLC as the Company's
independent certified public accountants for Fiscal 2010:
FOR / / AGAINST / / ABSTAIN / /
|
3.
|
In
their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the
meeting.
|
When properly executed, this Proxy will
be voted as directed. If no direction is made, this Proxy will be voted "FOR"
Proposals 1 and 2.
Please mark, date, and sign and return
this Proxy promptly in the enclosed envelope.
Please sign exactly as name appears
hereon. When shares are held by joint tenants, both should
sign. When signing as attorney or executor, administrator, trustee or
guardian, please give your full title as such. If a corporation,
please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by
authorized person.
Dated: _______________________,
2010
X ____________________________Signature
X
_____________________________
Print Name(s)
X ____________________________Signature, if held jointly