UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment No. 1)
Filed by the Registrant |X| Filed by a Party other than the Registrant
Check the appropriate box:
[X] Preliminary Proxy
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-12
AMEN Properties, Inc.
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(Name of Registrant as Specified In Its Charter)
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AMEN Properties, Inc.
303 W. Wall Street, Suite 1700
Midland, TX 79701
To the Shareholders of AMEN Properties, Inc.:
The purpose of this letter is to formally solicit you to vote for the board's
recommendation to implement a 1 for 4 reverse stock split. Our common stock is
currently listed on the Nasdaq SmallCap Market ("Nasdaq"). Nasdaq requires that
listed stocks maintain a closing bid price in excess of $1.00 per share. On
April 9, 2002 the Company was notified that it failed to satisfy the $1.00 bid
price requirement for the prior 30-day trading period. The Company was granted a
180-day grace period, through October 7, 2002, to remedy the deficiency. On
October 7, 2002, the Company received a notification of delisting from Nasdaq.
On October 13, 2002, we appealed Nasdaq's notification of delisting, which
automatically stayed the delisting pending a hearing before the Nasdaq Listing
Qualifications Panel. The company also received a Nasdaq Staff Determination on
November 20, 2002, indicating that as of September 30, 2002, the company failed
to comply with the shareholders' equity/market value requirements for continued
listing set forth in Nasdaq Marketplace Rule 4310 (c)(2)(B). This rule requires
a listing company to maintain $2.5 million in shareholders' equity. This issue
was addressed before the Nasdaq Listing Qualifications Panel at a November 21,
2002 oral hearing. On December 17, 2002 the Company received notice from the
Nasdaq Listing Qualification Panel that our common stock would continue to be
listed on the Nasdaq SmallCap Market (under the symbol "AMENC") on the
conditions set forth in the letter, including a requirement to obtain
shareholder approval for this reverse stock split and to achieve a closing bid
price of $1.00 by February 14, 2003 and maintain this price for 10 consecutive
trading days. If approved, we believe this reverse split will serve to keep us
listed on Nasdaq and preserve liquidity for our shareholders.
Since this is the first communication between the new management and our owners,
please allow me to share a little about myself. I have primarily been in the oil
and gas royalty acquisition business since 1984 in Midland, Texas (the President
and First Lady's hometown). In recent years, I have been increasingly involved
in commercial real estate acquisition and management. We have been blessed in
most of our endeavors and have been taught valuable lessons with the ones that
have not been as financially successful.
Eric Oliver (AMEN's Chairman and Chief Executive Officer) and I brought together
a group of fellow investors to fund the Crosswalk.com Series A Preferred Stock,
which was issued in the fall of 2000. We believed in Crosswalk.com, its mission,
and its business. We believed this to be a worthwhile investment contributing to
what we feel our ultimate mission in this life is - to go and make disciples.
Obviously, many things have transpired since that first investment, all of which
lead me to be writing this letter.
Where We Have Been
To everything there is a season, a time for every purpose under heaven-
Ecclesiastes 3:1
This year has been quite a ride for AMEN Properties, Inc. (formerly
Crosswalk.com). The year started with a renewed sense of optimism, as first
quarter sales coupled with a revised expense model appeared to be establishing a
trend toward profitability. Then in late March, our auditors issued a going
concern opinion in connection with our 2001 Annual Report, which questioned our
long-term viability without additional cash infusion by the year's end. Despite
our optimism, the Company soon experienced erosion of advertiser's confidence.
These facts led our then-CEO and President to recommend we seek to sell the
company (or its assets) in an effort to save the mission while preserving
shareholder value.
Raising additional capital was going to prove difficult at best and doing so
would eliminate any inherent value in the company's Net Operating Loss (NOL)
carry forward balances (almost $30 million). Under Section 382 of the Internal
Revenue Code, the company would have lost its ability to use its NOL's since
more than a 50% change of ownership would have occurred within a three-year
period. This adverse effect coupled with weakening ad sales contributed to the
board's decision to follow the recommendation of our then-CEO and President and
solicit buyers for the company's primary asset, namely the website
crosswalk.com. As most of you are aware, in April of 2002, AMEN proceeded to
solicit bids for either the company or its assets. Salem Communications, Inc.
had the most attractive bid with an all-cash $4,100,000 offer for most of the
assets. After considering a fairness opinion, the board accepted Salem's offer
and quickly solicited you for approval of the sale. In our proxy statement, AMEN
also solicited you to vote on a new business model. This plan would seek to
preserve common shareholder value by using the company's significant NOL
position and also its proposed new management's expertise. You approved both
board recommendations by a substantial majority, along with a name change to
AMEN Properties, Inc.
AMEN completed the asset sale on October 4, 2002, which included everything
except our direct mail advertising card deck business. We have since divested
the offline card deck business to Blue Hill Media, Inc. for a $275,000 note
receivable and a 3.5% net profits interest in the business' gross margin.
Where We Are Now
Do not boast about tomorrow, for you do not know what a day may bring
forth. -Proverbs 27:1
In a nutshell, we have a tad over $3,000,000 shareholders equity on the books.
Our assets are comprised of approximately one-third cash and two-thirds real
estate. Along with this, we have NOL carry forward balances approaching $30
million.
Assuming we grow our equity at a 20% annualized rate, using a 10% discount
factor and 34% tax rate, one could give the NOL balance a present value of
approximately $4.5 million. Assuming equity growth of 10% and 30%, our NOL
present value calculations would give us approximately $2.4 million and $5.7
million, respectively. Adding these potential values with our shareholders
equity, we believe that AMEN has a potential intrinsic value ranging from $5.4
million to $8.7 million. If we fully utilize our NOL, our intrinsic value would
most likely be around $5.4 million, given AMEN performs along the lines of most
American corporations (the average public corporation returns approximately 12%
on equity).
As reported on a recent 8K, we were able to acquire approximately 65% of the
limited partner shares of TCTB Partners, Ltd., which owns buildings in Midland
and Lubbock, Texas. We regret not being able to deliver 100% of this partnership
but are thankful for what we compiled. We project our present holdings will
produce cash flow of around $650,000 less approximately $250,000 in public
company cost this coming year. The effect of high public company cost (audits,
listing fees, legal, etc.) is significant with our limited equity base. We hope
to grow out of this high expense relative to assets as rapidly as possible.
Where We Hope To Be
The plans of the diligent lead to profit as surely as haste leads to
poverty -Proverbs 21:5
A 20% return on equity as used in the above calculation is ambitious at best.
Berkshire Hathaway, led by Warren Buffett, the most heralded company and
business leader in America, has done approximately 25% over the past 35 years.
In the words of Buffett, we cannot promise results to you, our partner.
Eric and I are fans of Berkshire Hathaway's business model. I see the company
adhering to many of the financial tenets and disciplines of a Berkshire
Hathaway. It's somewhat embarrassing to even mention AMEN with its $3.2 million
market capitalization with Berkshire's $110 billion, but Berkshire started
modestly also.
We concur with Buffett's assessment than any asset is only worth all of its
future cash flows discounted back at some acceptable rate of interest. The only
subjective part of any asset valuation is quantifying the likelihood (risk) of
the assumed cash flows used in your modeling. That risk is easier to identify
when you are dealing in markets in which you are intimately familiar. As stated
in our new business model, we intend to focus on what we know best, oil/gas
royalties and commercial office buildings. We will however pursue other types of
property and business endeavors where we are comfortable in ascertaining the
risks associated with their future. In particular, we are interested in existing
businesses with management in place that have a stable cash flow history.
We are operating in a restrictive paradigm of not being able to access
traditional equity sources without compromising our NOL balances. We hope we can
continue to preserve our NOL base but certain things outside our control may
occur which could jeopardize this position. If a larger deal that would require
an expansion of our equity base presents itself, we would welcome sacrificing
our NOL if the value added exceeded the present value we have assigned it.
When our capital does becomes limited, we intend to place acquisitions within
limited partnerships in a structure whereby AMEN would be the general
partner/manager, while property specific equity providers would be the limited
partners. Our experience suggests finding capital is never a problem if you have
a good deal. The good deals are the elusive element.
Going forward, we have put in place an opportunity evaluation system whereby we
formulate a cash flow series with at least 10 possible outcomes. We will then
assign probability percentages to each of the outcomes. Based on the assigned
probabilities, we will arrive at weighted internal rates of return (IRR). These
returns must meet the following four criteria to warrant additional due
diligence:
1. "Unleveraged" End of Year One IRR of at least 12%
2. "Unleveraged" Project IRR of at least 15%
3. Less than 10% assigned probability of less than 5% project IRR
4. Minimum of 20% chance of at least 20% "unleveraged" IRR
The last two parameters serve to focus our attention on opportunities we can
model with limited risk but significant upside potential. By using leverage on
these minimum rates of return, we should choose opportunities that attain our
necessary return on equity targets. This risked-back return calculation seems
somewhat elementary but I am convinced most investment decisions on all levels
are made without doing one. The vast majority of deals we see do not meet all
four of these requirements. The outlook for finding deals that meet our criteria
in our primary focus area of royalties and commercial office buildings has not
been attractive in the fourth quarter of 2002. We are committed to stay patient
and not force any deals. Again, it's worth repeating, we cannot guarantee
results. We will execute our plan as best we can and pray it will bring results.
What You Can Do
Do not forget to do good and to help one another, because these are the
sacrifices that please God. Hebrews 13:16
First and foremost, Eric and I need your prayers. As I hope everyone knows, this
company remains a religious corporation with its same statement of faith. To my
knowledge, we remain the only publicly traded company with this designation.
Though our direction and business model has changed, our Kingdom based
principles haven't. AMEN has always had a commitment evidenced in its bylaws to
tithe 10% of its net profits to Kingdom purposes. Ultimately, we hope to give
you the opportunity to designate specific Christian ministries for this tithe.
Eric and I also hope and pray that any and all profits generated by AMEN will
ultimately be put to use by you for Kingdom purposes.
You can also help us in making us aware of potential acquisition prospects. If
you are aware of any opportunities that could fall within the parameters
described above, we would welcome hearing from you. We are searching for oil and
gas royalties, commercial real estate, and stabilized cash flowing businesses or
assets. Shareholders assisting in our search could prove critical to our
reaching our targets. Please drop me or Eric at note at AMEN Properties, Inc.,
303 W. Wall Street, Suite 1700, Midland, TX 79701 or email us at
jmorgan@amenproperties.com.
Conclusion
We hope AMEN Properties is now a stock with some fundamental value. For the
first time in the company's brief history, we are adding cash to the bottom line
as opposed to subtracting cash with each day that passes. We hope a healthy
growing business will ultimately translate into a healthy growing share price.
We trust that a market based on truth will portray an accurate report card of a
company's performance through its share price. We hope that you would view this
investment with the intent of being our partner for the long haul. We have
committed our investment dollars along side of yours.
With that said, AMEN may no longer be a stock for the short term. With a minimal
equity base and limitations on raising additional equity, this company is faced
with a slow "grind it out" future. It's a future I look forward to being a part
of and I thank you for the ability to serve in the capacity of one of its
leaders.
Your voting "Yes" to the matter of the reverse split would be appreciated.
Voting in the affirmative will serve to protect long-term shareholder value
through maintaining the liquidity the Nasdaq market provides.
Yours Very Truly,
Jon M. Morgan
President and Chief Operating Officer
AMEN Properties, Inc.
FORWARD-LOOKING STATEMENTS - Certain information in this letter may contain
forward-looking statements within the meaning of Section of 21e of the
Securities Exchange Act of 1934, as amended. All statements other that
statements of historical fact are "forward-looking statements" for purposes of
these provisions, including, but not limited to, any projections of earnings,
revenues or other financial items, any statements of plans or objectives of
management for future operations, any statements regarding future economic
conditions or performance, and any statement of assumptions underlying any of
the foregoing. In some cases, "forward-looking statements" can be identified by
the use of terminology such as "may," "will," "expects," "believes," "plans,"
"anticipates," "estimates," "potential," or "continue," or the negative thereof
or other comparable terminology. Although the Company believes that the
expectations reflected in its forward-looking statements are reasonable, it can
give no assurance that such expectations or any of its "forward-looking
statements" will prove to be correct, and actual results could differ materially
from those projected or assumed in the Company's "forward-looking statements."
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON January 30, 2003
AT 10:00 A.M., CENTRAL STANDARD TIME
January __, 2002
To our Stockholders:
On behalf of the Board of Directors of AMEN Properties, Inc., I am pleased to
invite you to attend a special meeting of stockholders. The Special Meeting will
be held on January 30, 2003 at 10 a.m. CST at our headquarters located at 303 W.
Wall Street, Suite 1700, Midland, TX 79701.
Details regarding admission to the Special Meeting and the business to be
conducted are more fully described in the accompanying Notice of Special Meeting
and Proxy Statement.
The purpose of the Special Meeting is to consider and act upon a proposal to
amend AMEN's certificate of incorporation to effect a reverse stock split and
any other matters that properly come before the Special Meeting. The attached
Proxy Statement, with formal notice of the Special Meeting on the first page,
describes these matters in detail. We urge you to review these materials
carefully and to use this opportunity to take part in the Company's affairs by
voting on the matters described in this Proxy Statement. We hope that you will
be able to attend the Special Meeting.
Your vote is important. Whether or not you plan to attend the Special Meeting, I
hope you will vote as soon as possible. You may vote in person or by mailing a
proxy card. Voting by written proxy will ensure your representation at the
Special Meeting if you do not attend in person. Please review the instructions
on the proxy card regarding each of these voting options.
Thank you for your ongoing support of and continued interest in AMEN Properties,
Inc.
Sincerely,
Eric Oliver
Chairman and Chief Executive Officer
AMEN PROPERTIES, INC.
303 W. Wall Street, Suite 1700
Midland, TX 79701
915-684-3821
Notice of Special Meeting of Stockholders
TIME 10:00 a.m. CST on January 30, 2003
PLACE AMEN Properties, Inc.
303 W. Wall Street, Suite 1700
Midland, TX 79701
ITEMS OF BUSINESS (1) Approval of an
amendment to AMEN's certificate of
incorporation effecting a
one-for-four reverse split of AMEN's
common stock; and
(2) Any other business that may
properly come before the Special
Meeting or any adjournment of the
Special Meeting.
RECORD DATE You are entitled to vote if you were a stockholder at the
close of business on December 27, 2002.
MEETING ADMISSION The Special Meeting will begin promptly at 10 a.m. CST
VOTING BY PROXY Please submit a proxy as
soon as possible so that your shares
can be voted at the Special Meeting
in accordance with your instructions.
You may submit your proxy by mail.
For specific instructions, refer to
the information beginning on page 7
of this Proxy Statement and the
instructions on the proxy card.
By Order of the Board of Directors,
JON MORGAN
President and Chief Operating Officer
THIS NOTICE OF MEETING AND PROXY STATEMENT AND ACCOMPANYING PROXY CARD ARE BEING
DISTRIBUTED ON OR ABOUT JANUARY __, 2003
INFORMATION CONCERNING VOTING AND PROXY SOLICITATION
General Information
The Board of Directors (the "Board") of AMEN Properties, Inc., a Delaware
corporation (sometimes referred to as the "Company" or "AMEN"), is providing
this Proxy Statement in connection with a Special Meeting of stockholders, which
will take place on January 30, 2003 and at any postponement or adjournment
thereof (the "Special Meeting"). Whether or not you plan to attend the Special
Meeting in person, please return your executed proxy card in the enclosed
postage prepaid and addressed envelope, and your shares will be voted in
accordance with your wishes.
What is the purpose of the Special Meeting?
At the Special Meeting, you will be asked to consider and vote on the matters
described in the accompanying Notice of Special Meeting, including considering
and acting upon a proposal to amend AMEN's certificate of incorporation to
effect a reverse stock split of all of the issued and outstanding shares of
AMEN's common stock at a ratio of one-for-four.
Are there other matters to be voted on at the Special Meeting?
The Board of Directors does not know of any other matters that may come before
the Special Meeting. Delaware law and AMEN's by-laws impose limitations on the
ability to present business items at a special meeting if those items were not
included in the notice of special meeting. Accordingly, except for procedural
matters incidental to the conduct of the meeting, it is not expected that any
other matters will come before the Special Meeting. If any other matters are
properly presented at the Special Meeting, it is the intention of the persons
named in the accompanying proxy to vote, or otherwise act, in accordance with
their judgment.
Who can vote at the Special Meeting?
In order to vote, you must have been a stockholder of record at the close of
business on December 27, 2002 (which is referred to as the "Record Date"). If
your shares are owned of record in the name of a broker or other nominee, you
should follow the voting instructions provided by your nominee.
On the record date, there were 7,968,221 shares of AMEN's common stock issued,
outstanding and entitled to vote. In addition, 1,333,333 shares of common stock,
issuable upon conversion of 80,000 shares of Series "A" preferred stock, and
933,269 shares of common stock, issuable upon conversion of 80,000 shares of
Series "B" preferred stock, are also eligible to cast votes. There are
10,234,823 voting shares as of the Record Date ("Voting Stock"). Each
share of common stock and voting preferred stock is entitled to one vote on each
matter to be voted upon.
How do I vote?
You may vote by signing your proxy card, or if your shares are held in street
name, the voting instruction card included by your broker or nominee, and
mailing it in the enclosed, postage prepaid and addressed envelope.
Any stockholder who has executed and returned a proxy and who for any reason
desires to revoke such proxy may do so at any time before the proxy is
exercised: (1) by delivering written notice prior to the Special Meeting to the
Secretary of the Company at the above address; (2) by voting the shares
represented by such proxy in person at the Special Meeting; or (3) by giving a
later dated proxy at any time before the voting at the Special Meeting.
Attendance at the Special Meeting will not, by itself, revoke a proxy.
1
Voting in Person. Even if you currently plan to attend the Special Meeting, we
recommend that you also submit your proxy so that your vote will be counted if
you later decide not to attend the Special Meeting. Shares held in street name
may be voted in person by you at the Special Meeting only if you obtain a signed
proxy from the record holder giving you the right to vote the shares.
What constitutes a quorum?
In order for business to be conducted at the Special Meeting, a quorum must be
present. A quorum consists of the holders of a majority of the shares of Voting
Stock issued and outstanding on the Record Date and entitled to vote. Shares of
Voting Stock represented in person or by proxy (including shares that abstain or
do not vote with respect to the matter to be voted upon) will be counted for
purposes of determining whether a quorum exists. If a quorum is not present, the
Special Meeting will be adjourned until a quorum is obtained.
What vote is required to approve the reverse stock split?
The affirmative vote of the holders of a majority of the shares of Voting Stock
outstanding on the Record Date is required to approve the Certificate of
Amendment to the certificate of incorporation effecting the reverse stock split.
How will votes be counted?
You may vote "FOR," "AGAINST" or "ABSTAIN." If you "ABSTAIN," it has the same
effect as a vote "AGAINST." If you sign your proxy card or broker voting
instruction card with no further instructions, your shares will be voted in
accordance with the recommendations of the Board ("FOR" the reverse stock split
and in the discretion of the proxy holders on any other matters that properly
come before the Special Meeting).
In accordance with Delaware law, if a stockholder abstains from voting on an
action, that stockholder's shares will still be counted for determining whether
the requisite number of stockholders attended the Special Meeting. If a broker
does not vote on any particular action because it does not have the authority to
do so (a "broker non-vote"), but does vote on other actions, the shares will
still be counted for determining whether the requisite number of stockholders
attended the meeting. Broker non-votes, however, are not counted as shares
present and entitled to be voted with respect to the matter on which the broker
has expressly not voted. Thus, broker non-votes will not affect the outcome of
any matters being voted on at the Special Meeting.
2
PROPOSAL 1: AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO EFFECT A REVERSE STOCK SPLIT OF AMEN'S COMMON STOCK
General Information
Our Board of Directors has unanimously adopted a resolution approving, and
recommending to our stockholders for their approval, a proposal to amend Article
Four of the AMEN's certificate of incorporation authorizing a reverse split of
the shares of our common stock at a ratio of one-for-four. The form of the
proposed amendment is annexed to this Proxy Statement as Annex A. The amendment
to the certificate of incorporation will effect the reverse stock split by
reducing the number of shares of our common stock by the ratio to be determined
by the Board of Directors, but will not increase the par value of our common
stock, and will not change the number of authorized shares of our common stock.
Reasons for the Reverse Stock Split
Listing on Nasdaq. The Board has determined that the continued listing of our
common stock on Nasdaq is in the best interests of our stockholders. If our
common stock were delisted from Nasdaq, the Board believes that the liquidity in
the trading market for our common stock would be significantly decreased which
could reduce the trading price and increase the transaction costs of trading
shares of our common stock.
Our common stock is currently listed on the Nasdaq SmallCap Market ("Nasdaq").
Nasdaq requires that listed stocks maintain a closing bid price in excess of
$1.00 per share. On April 9, 2002 the Company was notified that it failed to
satisfy the $1.00 bid price requirement for the prior 30-day trading period. The
Company was granted a 180-day grace period, through October 7, 2002, to remedy
the deficiency. On October 7, 2002, the Company received a notification of
delisting from Nasdaq. On October 13, 2002, we appealed Nasdaq's notification of
delisting, which automatically stayed the delisting pending a hearing before the
Nasdaq Listing Qualifications Panel. The company also received a Nasdaq Staff
Determination on November 20, 2002, indicating that as of September 30, 2002,
the company failed to comply with the shareholders' equity/market value
requirements for continued listing set forth in Nasdaq Marketplace Rule 4310
(c)(2)(B). This rule requires a listing company to maintain $2.5 million in
shareholders' equity. This issue was addressed before the Nasdaq Listing
Qualifications Panel at a November 21, 2002 oral hearing. On December 17, 2002
the Company received notice from the Nasdaq Listing Qualification Panel that our
common stock would continue to be listed on the Nasdaq SmallCap Market (under
the symbol AMENC) on the conditions set forth in the letter, including a
requirement to obtain shareholder approval for this reverse stock split and to
achieve a closing bid price of $1.00 by February 14, 2003 and maintain this
price for 10 consecutive trading days.
Purpose of the Reverse Stock Split and the Exchange Ratio Range. The purpose of
the reverse stock split is to increase the market price per share of our common
stock. The Board believes that by giving effect to a reverse split, the
resulting decrease in the number of shares outstanding is likely to improve the
trading price of our common stock and improve the likelihood that we will be
allowed to maintain our listing on Nasdaq.
Potential Risks of the Reverse Stock Split
If the Board does effect a reverse stock split there can be no assurance that
the bid price of our common stock will continue at a level in proportion to the
reduction in the number of outstanding shares resulting from the reverse stock
split and that the market price of the post-split common stock can be maintained
at or above $1.00, or that our common stock will not be delisted from Nasdaq for
other reasons. The market price of our common stock will also be based on our
performance and other factors, many of which are unrelated to the number of
shares outstanding. If the reverse stock split is effected and the market price
3
of our common stock declines, the percentage decline as an absolute number and
as a percentage of our overall capitalization may be greater than would occur in
the absence of a reverse stock split. Furthermore, liquidity of our common stock
could be adversely affected by the reduced number of shares that would be
outstanding after the reverse stock split.
Potential Effects of the Reverse Stock Split
Pursuant to the reverse stock split, each holder of four (4) shares of our
common stock, par value $.01 per share, as of the Record Date of the reverse
stock split will become a holder of one (1) share of our common stock, par value
$.01 per share, after consummation of the reverse stock split.
Accounting Matters
The reverse stock split will not affect the par value of our common stock. As a
result, on the effective date of the reverse stock split, the stated par value
capital on our balance sheet attributable to our common stock will be reduced to
one-fourth (1/4) of its present amount, and the additional paid-in capital
account shall be credited with the amount by which the stated capital is
reduced. The per share net income or loss and net book value per share of our
common stock will be increased because there will be fewer shares of our common
stock outstanding.
Effect on Authorized and Outstanding Shares
We are currently authorized to issue a maximum of 20,000,000 shares of common
stock. As of the record date, there were 7,968,221 shares of our common stock
issued and outstanding, or held as treasury shares. Although the number of
authorized shares of common stock will not change as a result of the reverse
stock split, the number of shares of common stock issued and outstanding, or
held as treasury shares, will be reduced to a number that will be approximately
equal to the number of shares of our common stock issued and outstanding, or
held as treasury shares, immediately prior to the effectiveness of the reverse
stock split, divided by four. The following table sets forth the effects on
the common stock:
Number of Shares of Common Stock Before Reverse Split After Reverse Split
================================ ==================== ===================
Issued and Outstanding: 7,968,221 1,992,055
======================= ========= =========
Authorized and Reserved for Issuance: 6,238,882 1,559,720
===================================== ========= =========
Authorized but Unreserved for Issuance: 5,792,897 16,448,225
======================================= ========= ==========
Total Authorized: 20,000,000 20,000,000
================= ========== ==========
As a result of the reverse stock split, the amount of common stock outstanding
after the reverse split will represent approximately 10% of the total authorized
shares of common stock. Therefore, if the additional authorized but unreserved
shares are issued after the reverse stock split, the relative percentage of the
Company owned by current stockholders would be reduced. We do not have any
current plans, proposals or arrangements to issue any of the additional
authorized but unreserved shares. With the exception of the number of shares
issued and outstanding, or held as treasury shares, the rights and preferences
of the shares of our common stock prior and subsequent to the reverse stock
split will remain the same. Following the effective date of the reverse stock
split, it is not anticipated that our financial condition, the percentage
ownership of management, the number of our stockholders, the percentage
ownership of our holders of common stock, or any aspect of our business
would materially change as a result of the reverse stock split.
The reverse stock split will be effected simultaneously for all of our common
stock and the exchange ratio will be the same for all of our common stock. The
reverse split will affect the Series A and B preferred stock holders uniformly
in that the preferred stock will be convertible into one-fourth the number of
common stock shares. The reverse stock split will also affect all of our
stockholders uniformly and will not affect any stockholder's percentage
ownership interests in AMEN, except to the extent that the reverse stock split
results in any of our stockholders owning a fractional share. See "Fractional
Shares" below. Common stock issued pursuant to the reverse stock split will
remain fully paid and non-assessable.
Our common stock is currently registered under Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and as a result, we are
4
subject to periodic reporting and other requirements. The proposed reverse stock
split will not affect the registration of our common stock under the Exchange
Act.
Potential Odd Lots
If approved, the reverse stock split will result in some stockholders owning
"odd-lots" of less than 100 shares of our common stock. Brokerage commissions
and other costs of transactions in odd-lots are generally somewhat higher than
the costs of transactions in "round-lots" of even multiples of 100 shares.
Increase of Shares of Common Stock Available for Future Issuance
As a result of the reverse stock split, there will be a reduction in the number
of shares of our common stock issued and outstanding, or held as treasury
shares, and an associated increase in the number of authorized shares which
would be unissued and available for future issuance after the reverse stock
split. The increase in available shares could be used for any proper corporate
purpose approved by the Board including, among other purposes, future financing
transactions. We do not have any current plans, proposals or arrangements to
issue any of the additional shares to acquire any business or engage in any
investment opportunity, or to otherwise use the additional shares in any
financing transaction.
Potential Anti-Takeover Effect
Although the increased proportion of unissued authorized shares to issued shares
could, under certain circumstances, have an anti-takeover effect (for example,
by permitting issuances that would dilute the stock ownership of a person
seeking to effect a change in composition of our Board or contemplating a tender
offer or other transaction for the combination of AMEN with another company )
or that could be used to resist or frustrate a third-party transaction
providing an above-market premium that might be favored by a majority of the
independent stockholders) , the reverse stock split proposal is not being
proposed in response to any effort of which we are aware to accumulate our
shares of common stock or obtain control of us, nor is it part of a plan by
management to recommend a series of similar amendments to our Board and
stockholders. Other than the reverse stock split proposal, our Board does not
currently contemplate recommending the adoption of any other amendments to our
certificate of incorporation that could be construed to affect the ability of
third parties to take over or change the control of AMEN.
Effectiveness of the Reverse Stock Split
The reverse stock split, if approved by our stockholders, will become effective
upon the filing with the Secretary of State of the State of Delaware of a
Certificate of Amendment of our Certificate of Incorporation in substantially
the form of the Certificate of Amendment attached to this Proxy Statement as
Annex A. It is expected that such filing will take place on or shortly after the
date of the Special Meeting, assuming the stockholders approve the reverse stock
split.
Commencing upon the date of the filing of the amendment effecting the reverse
stock split with the Secretary of State of the State of Delaware, each
certificate of our common stock will be deemed for all corporate purposes to
evidence ownership of the reduced number of shares of common stock resulting
from the reverse stock split. As soon as practicable after the effective date,
stockholders will be notified as to the effectiveness of the reverse stock split
and instructed as to how and when to surrender their certificates representing
shares of common stock prior to the reverse stock split in exchange for
certificates representing shares of common stock after the reverse stock split.
We intend to use the American Stock Transfer and Trust Company as our exchange
agent in effecting the exchange of the certificates following the effectiveness
of the reverse stock split.
5
Fractional Shares
We will not issue fractional shares in connection with the reverse stock split.
Instead, any fractional share that results from the reverse stock split will be
rounded as follows; fractional shares equal to or greater than .5 will be
rounded up to the next whole share, and any fractional shares less than .5 will
be rounded down to the next whole share. We are doing this so that we may avoid
the expense and inconvenience of issuing and transferring fractional shares of
our common stock as a result of the stock split. The shares do not represent
separately bargained for consideration.
Certain Federal Income Tax Consequences
The following discussion summarizing certain federal income tax consequences is
based on the Internal Revenue Code of 1986, as amended, the applicable Treasury
Regulations promulgated thereunder, judicial authority and current
administrative rulings and practices in effect on the date of this Proxy
Statement. This discussion is for general information only and does not discuss
consequences that may apply to special classes of taxpayers (e.g., non-resident
aliens, broker-dealers, or insurance companies). Stockholders are urged to
consult their own tax advisors to determine the particular consequences to them.
The receipt of the common stock following the effective date of the reverse
stock split, including whole shares issued in lieu of fractional shares, solely
in exchange for the common stock held prior to the reverse stock split will not
generally result in a recognition of gain or loss to the stockholders. The
adjusted tax basis of a stockholder in the common stock received after the
reverse stock split will be the same as the adjusted tax basis of the common
stock held prior to the reverse stock split exchanged therefore, and the holding
period of the common stock received after the reverse stock split will include
the holding period of the common stock held prior to the reverse stock split
exchanged therefore. No gain or loss will be recognized by AMEN as a result of
the reverse stock split.
Appraisal Rights
No appraisal rights are available under the Delaware General Corporation Law or
under our certificate of incorporation or by-laws to any stockholder who
dissents from the proposal to approve the amendment to the certificate of
incorporation to effect the reverse stock split.
Recommendation
The Board of Directors unanimously recommends a vote "FOR" the amendment to
AMEN's certificate of incorporation to effect a reverse stock split.
6
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial
ownership, as of December 27, 2002 concerning:
- each beneficial owner of more than 5% of AMEN's common stock;
- beneficial ownership by all current AMEN's directors and the executive
officers as defined in Item 402(a)(2) of Regulation S-B;
- beneficial ownership by all former AMEN directors and executive
officers if they served within the last fiscal year and they currently
own a significant interest; and
- beneficial ownership by all current AMEN's directors and AMEN's
executive officers as a group
7
Name and Address of Amount and Nature of Percentage
Beneficial Owner Beneficial Ownership Beneficially Owned(1)
Dodge Jones Foundation (2)
c/o Joseph Edwin Canon
P.O. Box 176
Abilene, TX 79604 739,736 (2) 8.5%
Timothy B. Robertson
295 Bendix Road, Suite 130
Virginia Beach, VA 23452 504,000 5.9%
Steve Wike
8701 Interlachen Circle
Wilmington, NC 28411 483,880 6.1%
Eric Oliver (Current Chairman, CEO)
400 Pine Street
Abilene, TX 79601 830,774 (3) 9.7%
Jon Morgan (Current Pres., COO, Director)
303 W. Wall St., Ste. 1700
Midland, TX 79701 689,610(4) 8.0%
Bruce Edgington (Current Director)
7857 Heritage Drive
Annandale, VA 22003 689,536 (5) 8.2%
Earl E. Gjelde (Current Director)
42 Bristlecone Crt.
Chantilly, VA 20151 187,689 2.3%
Gary A. Struzik (Former Officer)
21305 Highwood Ct.
Sterling, VA 20165 143,916 (6) 1.7%
Scott Fehrenbacher (Former Officer)
2830 Barrow Pl.
Midlothian, VA 23113 135,000 (7) 1.6%
James G. Buick (Former Director)
2047 Little Heron Court
Grand Rapids, MI 49546 103,755 (8) 1.3%
William R. "Max" Carey (Former Director)
4401 Northside Prkwy, Ste. 100
Atlanta, GA 30327 88,788 (9) 1.1%
All Current Directors and Officers as a Group
(4 persons) 2,397,609 24.6%
8
(1) Unless otherwise noted, all persons named in the table have sole voting and
sole investment power with respect to all shares of common stock beneficially
owned by them, and no persons named in the table are acting as nominees for any
person or are otherwise under the control of any person or group of persons. As
used herein, "beneficial ownership" with respect to a security is defined by
Rule 13d3 under the Securities Exchange Act of 1934, as amended, as consisting
of sole or shared voting power, including the power to vote to direct the vote,
or sole or shared investment power, including the power to dispose or direct the
disposition, with respect to the security through any contract, arrangement,
understanding, relationship or otherwise, including the right to acquire such
power within 60 days from the record date of December 27, 2002. Percentage of
beneficial ownership is based on [7,968,221] shares of common stock outstanding
as of December 27, 2002. In computing the percentage ownership of a person or
group, shares of common stock that the person has a right to acquire within 60
days of December 27, 2002 are deemed outstanding. These shares, however, are not
deemed outstanding for the purpose of computing the percentage ownership of any
other person.
(2) Includes 431,513 and 308,223 shares issuable upon conversion of Series "A"
and Series "B" preferred stock, respectively. Joseph Edwin Canon is the natural
person having voting or investment control over AMEN securities owned by this
entity.
(3) Includes 307,250 shares beneficially owned by Softvest L.P. Mr. Oliver is
General Partner and lead investment officer of Softvest L.P. Also includes
308,233 and 41,086 shares issuable upon conversion of Series A preferred stock
(the Series "A"), beneficially owned by SoftOP, L.P. and Lighthouse Partners,
L.P., respectively. Mr. Oliver is General Partner of SoftOP, L.P. and a Limited
Partner of Lighthouse Partners, L.P. Also includes 154,112 shares issuable upon
conversion of Series B preferred stock (the Series "B"), beneficially owned by
SoftOP, L.P. Also includes 20,103 shares issuable upon exercise of currently
exercisable stock options.
(4) Includes 246,578 shares issuable upon conversion of the Series "A",
beneficially owned by the Jon M. Morgan Pension Plan. Mr. Morgan is trustee of
the Jon M. Morgan Pension Plan. Also includes 246,578 shares issuable upon
conversion of the Series "A", beneficially owned by J.M. Midland Land Co., Inc.
Mr. Morgan is President of J.M. Midland Land Co, Inc. Also includes 154,112
shares issuable upon conversion of the Series "B", and 37,242 shares issuable
upon exercise of currently exercisable stock options.
(5) Includes 200,000 issuable upon conversion of the Series "B", 322,160 shares
of restricted common stock and 167,376 shares issuable upon exercise of
currently exercisable stock options.
(6) Includes 141,916 shares issuable upon exercise of currently exercisable
stock options.
(7) Does not include 10,000 shares of common stock beneficially owned by
Institute for American Values Investing. Consists entirely of shares issuable
upon exercise of currently exercisable stock options.
(8) Includes 61,505 shares issuable upon exercise of currently exercisable stock
options.
(9) Includes 17,415 shares of common stock issuable to Corporate Resource
Development, Inc. Mr. Carey is Chairman and Chief Executive Officer of Corporate
Resource Development. Also includes 71373 shares issuable upon exercise of
currently exercisable stock options.
9
OTHER MATTERS
Inspector of Election
A representative of American Stock Transfer and Company, AMEN's transfer agent,
will tabulate the votes and act as the inspector of election.
Stockholder Proposals and Director Nominations
If you would like to make a proposal at AMEN's 2003 annual stockholder meeting
or any special meeting held in lieu of the 2003 annual stockholder meeting, you
must give AMEN written notice describing the proposal not less than sixty days
before the scheduled date of the annual stockholder meeting. Assuming that next
year's annual stockholder meeting is held on the same date as the 2002 annual
stockholder meeting, you must deliver the required written notice of the
proposal to the Secretary of AMEN no later than January 28, 2003.
In addition, if you would like to include a proposal in AMEN's proxy materials
relating to its 2003 annual stockholder meeting or any special meeting held in
lieu of the 2003 annual stockholder meeting, AMEN must receive the written
proposal at its executive offices no later than January 28, 2003. If AMEN's
moves the date of the annual stockholder meeting or special meeting in lieu of
the annual stockholder meeting by more than thirty days, AMEN's must receive the
written proposal a reasonable time before it begins to print and mail its proxy
materials for the meeting. Such proposals also will need to comply with
Securities and Exchange Commission regulations regarding the inclusion of
stockholder proposals in company-sponsored proxy materials.
Costs of Solicitation
AMEN will pay the cost of preparing, assembling, printing, mailing and
distributing these proxy materials. In addition to the mailing of these proxy
materials, the solicitation of proxies or votes may be made in person, by
telephone or by electronic communication by our directors, officers and
employees, who will not receive any additional compensation for these
solicitation activities. We will also reimburse brokerage houses and other
custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses
for forwarding proxy and solicitation materials to stockholders.
-----------------------------------------------------------------
Please complete, date and sign the accompanying proxy card by mail in the
postage-paid envelope provided. The signing of the Proxy card will not prevent
your attending the Special Meeting and voting in person.
Midland, Texas
January ___, 2003
10
ANNEX A
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
AMEN PROPERTIES, INC.
Pursuant to the provisions of Section 242 of the Delaware General Corporation
Law, the undersigned, AMEN Properties, Inc., a Delaware corporation (the
"Corporation") adopts the following Certificate of Amendment to its Certificate
of Incorporation:
FIRST: The name of the Corporation is: AMEN Properties, Inc.
SECOND: Article Four of the Certificate of Incorporation is hereby amended by
inserting the following after the first paragraph of Article Four:
Simultaneously with the effective date of this
Certificate of Amendment (the "Effective Date") all issued and
outstanding shares of Common Stock, par value $.01 per share
("Existing Common Stock") shall be and hereby are
automatically combined and reclassified, such that each four
shares of Existing Common Stock shall be combined and
reclassified (the "Reverse Split") as one share of issued and
outstanding Common Stock, par value $.01 per share ("New
Common Stock"). The Corporation shall not issue fractional
shares on account of the Reverse Split. Any fractional share
resulting from such change shall be rounded to the nearest
whole share in the following manner: upward if the fraction is
equal to or greater than .5, and rounded down if less than .5.
Share interests due to rounding are given solely to save
expense and inconvenience of issuing fractional shares and do
not represent bargained for consideration.
The Corporation shall, through its transfer agent,
provide certificates representing New Common Stock to holders
of Existing Common Stock in exchange for certificates
representing Existing Common Stock. From and after the
Effective Date, certificates representing shares of Existing
Common Stock are hereby canceled and shall represent only the
right of holders thereof to receive New Common Stock.
From and after the Effective Date, the term "New
Common Stock" as used in this Article four shall mean Common
Stock as provided in the Certificate of Incorporation.
THIRD: The foregoing amendment was duly approved and adopted in
accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware and the by-laws of the
Corporation at a meeting of the Board of Directors of the
Corporation on December 17, 2002, at which a quorum was present
and acting throughout. The Board of Directors previously declared
the advisability of the amendment and directed that the amendment
be submitted to the stockholders of the Corporation for approval.
FOURTH: At a special meeting of the stockholders of the Corporation held
on January 30, 2003, a majority of the shares of outstanding
Common Stock entitled to vote thereon was voted in favor of the
amendment in accordance with Section 242 of the General
Corporation Law of the State of Delaware.
FIFTH: This amendment shall be effective on the date this Certificate of
Amendment is filed and accepted by the Secretary of State of the
State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment
to the Certificate of Incorporation of AMEN
Properties, Inc. this ____ day of ________, ______.
AMEN PROPERTIES, INC.
-----------------------
By: Eric D. Boyt
Title: Chief Financial Officer and Secretary
PROXY
AMEN PROPERTIES, INC.
Proxy for Special Meeting of Stockholders
to be held on January 30, 2003
The undersigned stockholder of AMEN Properties, Inc. ("AMEN"), revoking
all prior proxies, hereby appoints Eric Oliver and Jon Morgan, or either of them
acting singly, proxies, with full power of substitution, to vote all shares of
capital stock of AMEN which the undersigned is entitled to vote at the Special
Meeting of Stockholders to be held at 303 W. Wall Street, Suite 1700, Midland,
Texas 79701, on January 30, 2003, beginning at 10:00 a.m. CST, and at any
adjournments or postponements thereof, upon the matters set forth in the Notice
of Special Meeting of Stockholders and the related proxy statement, copies of
which have been received by the undersigned, and in their discretion upon any
other business that may properly come before the Special Meeting or any
adjournments or postponements thereof. Attendance of the undersigned at the
Special Meeting or any adjournment or postponement thereof will not be deemed to
revoke this proxy unless the undersigned shall affirmatively indicate the
intention of the undersigned to vote the shares represented hereby in person
prior to the exercise of this proxy.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF
NO DIRECTION IS GIVEN WITH RESPECT TO ANY PROPOSAL SET FORTH ON THE REVERSE
SIDE, WILL BE VOTED FOR SUCH PROPOSAL OR OTHERWISE IN ACCORDANCE WITH THE
RECOMMENDATION OF THE BOARD OF DIRECTORS.
1. Approval of an amendment to AMEN's certificate of For Against
Abstain incorporation effecting a one-for-four reverse split of
AMEN's common stock; and FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Any other business that may properly come before the Special
Meeting or any adjournment of the Special Meeting
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT __
Please promptly date and sign this
proxy and mail it in the enclosed
envelope to assure representation of
your shares. No postage need be
affixed if mailed in the United
States.
Please sign exactly as your name or
names appear(s) on your stock
certificate. If you hold shares as
joint tenants, both should sign. If
the stockholder is a corporation,
please sign full corporate name by
president or other authorized
officer and, if a partnership,
please sign full partnership name by
an authorized partner or other
authorized person. If signing as
attorney, executor, administrator,
trustee or guardian, please give
full title as such.
Signature:________________ Date:___________ Signature:___________ Date:_______