SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. _)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
// Preliminary Proxy Statement
// Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
// Definitive Additional Materials
// Soliciting Materials Pursuant to ss.240.14a-12
AMEN Properties, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement
if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
// Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
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pursuant to Exchange Act Rule 0-11: (set forth the amount on which the
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// Check box if any part of the fee is offset as provided by Exchange Act
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paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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Amen Properties
303 W. Wall Street, Suite 2300
Midland, Texas 79701
April 23, 2007
Dear Fellow Shareholder:
You are cordially invited to attend the 2007 Annual Meeting of Shareholders of
AMEN Properties, Inc. to be held at the Corporate Office of AMEN Properties,
Inc., 303 West Wall Street, Suite 2300, Midland, TX 79701, in the Conference
Room, at 8:30 a.m., local time, on Wednesday, May 30, 2007. The information
regarding matters to be voted upon at the Annual Meeting is set out in the
attached Notice of Annual Meeting of Shareholders and Proxy Statement.
It is important that your shares be represented at the Annual Meeting,
regardless of the number of shares you hold or whether you plan to attend the
meeting in person. I urge you to vote your shares as soon as possible. The proxy
card contains instructions on how to cast your vote.
If you have any questions, please contact Kris Oliver, Chief Financial Officer
and Secretary at (432) 684-3821.
Sincerely,
/s/ Eric L. Oliver
------------------
Eric L. Oliver
Chairman of the Board
AMEN Properties, Inc.
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AMEN PROPERTIES
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date: May 30, 2007
Time: 8:30 AM Central Daylight Time
Place: 303 West Wall Street, Suite 2300, Midland, TX 79701
Proposals:
1. To elect six directors to the Board of Directors of Amen Properties,
Inc. (the "Company) to serve one-year terms expiring at the later of
the annual meeting shareholders in 2008 or upon a successor being
elected and qualified
2. To approve and ratify an amendment to the employment agreement of
Padraig Ennis which will enable him to receive restricted Company
stock in lieu of a portion of his salary.
3. To approve and ratify an amendment to the employment agreement of John
Bick which will enable him to receive restricted Company stock in lieu
of a portion of his salary.
4. To approve and ratify an amendment to the employment agreement of
Kevin Yung which increases the scope of the businesses included in his
bonus calculation to include all current and future energy related
businesses.
5. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
Record Date: April 16, 2007
By Order of the Board of Directors
/s/ Eric L. Oliver
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Eric L. Oliver
Chairman of the Board
AMEN Properties, Inc.
April 23, 2007
YOUR VOTE IS IMPORTANT!
Whether or not you plan to attend the meeting, please complete, date, sign and
return the accompanying proxy card promptly so that we can be assured of having
a quorum present at the meeting and so that your shares may be voted in
accordance with your wishes.
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Amen Properties
303 W. Wall Street, Suite 2300
Midland, Texas 79701
Annual Meeting of Shareholders of the Company to be held on May 30, 2007
Some Questions You May Have Regarding this Proxy Statement
Q: Why am I receiving these materials?
A: The accompanying proxy is solicited on behalf of the Board of Directors of
Amen Properties, Inc. We are providing these proxy materials to you in
connection with our Annual Meeting of Shareholders, to be held at 303 West
Wall Street, Suite 2300, Midland, TX 79701, on May 30, 2007 at 8:30 a.m.,
Central Daylight Time. As a Company shareholder, you are invited to attend
the Annual Meeting and are entitled and requested to vote on the proposals
described in this proxy statement.
Q: Who may vote at the meeting?
A: You may vote all of the shares of our common stock that you owned at the
close of business on April 16, 2007, the record date. On the record date,
Amen Properties, Inc. had 2,290,589 shares of common stock outstanding and
entitled to be voted at the meeting. In addition, 333,333 shares of Common
Stock are deemed outstanding for voting purposes with respect to the 80,000
shares of Series A Preferred Stock ("Series A"), 233,317 shares of Common
Stock are deemed outstanding for voting purposes with respect to the 80,000
shares of Series B Preferred Stock ("Series B"), and 470,000 shares of
Common Stock are deemed outstanding for voting purposes with respect to the
125,000 shares of Series C Preferred Stock ("Series C"). Therefore, there
are a total of 3,327,239 voting shares as of the Record Date. You may cast
one vote for each share of common stock held by you (or deemed to be held
by you due to your ownership of preferred stock) on all matters presented
at the meeting.
Q: What proposals will be voted on at the meeting?
A: There are two Company proposals to be considered and voted on at the
meeting, which are:
1. To elect six directors to the Board of Directors of Amen Properties,
Inc. (the "Company) to serve one-year terms expiring at the later of
the annual meeting shareholders in 2008 or upon a successor being
elected and qualified.
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2. To approve and ratify an amendment to the employment agreement of
Padraig Ennis which will enable him to receive restricted Company
stock in lieu of a portion of his salary.
3. To approve and ratify an amendment to the employment agreement of John
Bick which will enable him to receive restricted Company stock in lieu
of a portion of his salary.
4. To approve and ratify an amendment to the employment agreement of
Kevin Yung which increases the scope of the businesses included in his
bonus calculation to include all current and future energy related
businesses.
Q: How does the Board of Directors recommend I vote?
A: Please see the information included in the proxy statement relating to the
proposals to be voted on. Our Board of Directors unanimously recommends
that you vote:
1. "FOR: each of the nominees to the Board of Directors
2. "FOR" approval and ratification of the amendment to the employment
agreement of Padraig Ennis
3. "FOR" approval and ratification of the amendment to the employment
agreement of John Bick
4. "FOR" approval and ratification of the amendment to the employment
agreement of Kevin Yung
Q: What happens if additional matters are presented at the annual meeting?
A: Other than the items of business described in this proxy statement, we are
not aware of any other business to be acted upon at the annual meeting. If
you grant a proxy, the persons named as proxyholders, Eric L. Oliver and
Jon Morgan, will have the discretion to vote your shares on any additional
matters properly presented for a vote at the meeting.
Q: How do I vote?
A: If your shares are registered directly in your name with our transfer
agent, American Stock Transfer, you are considered a shareholder of record
with respect to those shares and the proxy materials and proxy card are
being sent directly to you. Please carefully consider the information
contained in this proxy statement and, whether or not you plan to attend
the meeting, complete, date, sign and return the accompanying proxy card
promptly so that we can be assured of having a quorum present at the
meeting and so that your shares may be voted in accordance with your wishes
even if you later decide not to attend the annual meeting. To vote at the
meeting, please bring the enclosed proxy card, or vote using the ballot
provided at the meeting.
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If like most shareholders of the Company, you hold your shares in street
name through a stockbroker, bank or other nominee rather than directly in
your own name, you are considered the beneficial owner of shares, and the
proxy materials are being forwarded to you together with a voting
instruction card. Please carefully consider the information contained in
this proxy statement and, whether or not you plan to attend the meeting,
complete, date, sign and return the accompanying proxy card promptly as
instructed by your broker or nominee so that we can be assured of having a
quorum present at the meeting and so that your shares may be voted in
accordance with your wishes.
Q: What constitutes a quorum and why is a quorum required?
A: A quorum is required for the Company shareholders to conduct business at
the meeting. The presence at the meeting, in person or by proxy, of the
holders of a majority of the shares entitled to vote on the record date
will constitute a quorum, permitting us to conduct the business of the
meeting. Proxies received but marked as abstentions, if any, will be
included in the calculation of the number of shares considered to be
present at the meeting for quorum purposes.
Q: What if I don't vote or abstain? How are broker non-votes counted?
A: Abstentions are included in the determination of shares present for quorum
purposes. Because abstentions represent shares entitled to vote, the effect
of an abstention will be the same as a vote against a proposal. However,
abstentions will have no effect on the election of directors.
Eric L. Oliver and Jon Morgan are officers of the Company and were named by
our Board of Directors as proxy holders. They will vote all proxies, or
record an abstention or withholding, in accordance with the directions on
the proxy. If no contrary direction is given, the shares will be voted as
recommended by the Board of Directors. For beneficial shareholders, your
broker or nominee may not be permitted to exercise voting discretion with
respect to certain matters to be acted upon. If you do not give your broker
or nominee specific instructions, your shares may not be voted on those
matters and will not be considered as present and entitled to vote with
respect to those matters. Shares represented by such "broker non-votes,"
however, will be counted in determining whether there is a quorum present.
Q: If my shares are held in street name by my broker, will my broker vote my
shares for me?
A: Your broker will vote your shares only if the proposal is a matter on which
your broker has discretion to vote (such as the election of directors), or
if you provide instructions on how to vote by following the instructions
provided to you by your broker.
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Q: Can I change my vote after I have delivered my proxy?
A: Yes. You may revoke your proxy at any time before its exercise. You may
also revoke your proxy by voting in person at the Annual Meeting. If you
are a beneficial shareholder, you must contact your brokerage firm or bank
to change your vote or obtain a proxy to vote your shares if you wish to
cast your vote in person at the meeting.
Q: Who will count the votes?
A: Stockholder votes by proxy will be tabulated by ADP Investor Communication
Services.
Q: Where can I find voting results of the meeting?
A: We will announce preliminary voting results at the meeting and publish
final results in our quarterly report on Form 10-QSB for the second quarter
of fiscal year 2007 or in an earlier filed Form 8-K.
Q: Who will bear the cost for soliciting votes for the meeting?
A: We will bear all expenses in conjunction with the solicitation of the
enclosed proxy, including the charges of brokerage houses and other
custodians, nominees or fiduciaries for forwarding documents to security
owners. We may hire a proxy solicitation firm at a standard industry
compensation rate. In addition, proxies may be solicited by mail, in
person, or by telephone or fax by certain of our officers, directors and
regular employees.
Q: Whom should I call with other questions?
A: If you have additional questions about this proxy statement or the meeting
or would like additional copies of this document or our 2006 Annual Report
on Form 10-KSB, please contact: Amen Properties, Inc. 303 W. Wall Street
Suite 1700, Midland, TX 79701, Attention: Investor Relations Dept.,
Telephone: (432) 684-3821.
Q: What vote is required for approval of the proposals presented?
A: Directors are elected by a plurality of votes cast in the election of
directors. The other proposals require the affirmative vote of at least a
majority of the votes present at the meeting and entitled to be cast.
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Additional Information
We are subject to the informational requirements of the Securities Exchange Act
of 1934, as amended ("Exchange Act") and are therefore required to file periodic
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission") related to our business, financial statements and
other matters. Such reports, proxy statements and other information are
available for inspection and copying at the Commission's principal office, Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, where
copies may be obtained upon payment of the fees prescribed by the Commission
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such documents may also be obtained through the Website
maintained by the Commission at http://www.sec.gov.
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PROPOSAL ONE--ELECTION OF MEMBERS OF THE BOARD OF DIRECTORS
Size of Board of Directors
Our Board of Directors currently consists of six members, all serving one-year
terms expiring at the Annual Meeting or until their successors are duly elected
and qualified.
Current Nominees
Eric L. Oliver was appointed as a director of AMEN in July 2001, and was
appointed Chairman of the Board and Chief Executive Officer on September 19,
2002. Mr. Oliver resigned as Chief Executive Officer effective March 7, 2007.
Since 1997, he has been President of SoftSearch Investment, Inc., an investment
firm in Abilene, Texas. Since 1998, he has also served as President of Midland
Map Company LLC, a company that creates hand drafted ownership maps throughout
the Permian Basin. He is on the Board of Directors of the First National Bank of
Midland, and of Love and Care Ministries, an inner city homeless initiative. Mr.
Oliver is the brother of Kris Oliver, the Company's Chief Financial Officer.
Jon M. Morgan was appointed as a director of AMEN in October 2000, and was
appointed President and Chief Operating Officer on September 19, 2002. Mr.
Morgan resigned as Chief Operating Officer and was appointed Chief Executive
Officer on March 7, 2007. Mr. Morgan has more than 18 years experience in
launching and managing successful businesses in both investment management
services and in the energy field. He is founder of several businesses including
Morgan Capital Group, Inc., the Packard Fund, and is President of J.M. Mineral &
Land Co.
Bruce E. Edgington has been director of AMEN since November 1995. From 1979
through 1988, Mr. Edgington was a registered representative with Johnston Lemon
& Co., a securities broker-dealer, where his responsibilities included the
management of retail securities accounts and administration. In 1988 he founded
and continues to be an officer, director and stockholder of DiBiasio &
Edgington, a firm engaged in providing software to investment firms and money
managers.
Earl E. Gjelde has served as an AMEN director since April 1997. From 1989
through 1993, he was Vice President of Chemical Waste Management, Inc. and from
1991 to 1993 was Vice President of Waste Management Inc. (currently WMX
Technologies, Inc.). Since 1991, Mr. Gjelde has been Managing Director, Summit
Group International, Ltd., an energy and natural resource consulting firm with
Internet based security controlled document systems and Managing Director,
Summit Energy Group, Ltd., an energy development company and since 1996, a
partner in Pipeline Power Partners, LP, a natural gas services company. From
1980 through 1989, Mr. Gjelde held various federal government positions
including Under Secretary and Chief Operating Officer of the U.S. Department of
Interior from 1985 through 1989 and Special Assistant to the Secretary, Chief
Operating Officer, U.S. Department of Energy from 1982 through 1985. He is a
member of the Board of Directors of The United States Energy Association, The
World Energy Congress, the National Wilderness Institute, Allied Technologies
Group, Inc., and publicly held Electrosource, Inc.
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Donald M. Blake, Jr. was appointed to the Board of Directors on February 26,
2003. He is Executive Vice President and Principal of Joseph J. Blake and
Associates, Inc. ("Blake and Associates"), an international commercial real
estate due diligence firm. The company founded by his grandfather specializes in
the valuation of debt and equity and assessment reports for engineering and
environmental issues concerning real property. Over the past 57 years, the firm
has served the nation's leading investors, lenders and owners of real estate.
Blake and Associates maintains operations throughout the United States, Latin
America and Japan. Mr. Blake, Jr. is a Member of the Appraisal Institute and is
active with a variety of real estate organizations such as the Mortgage Bankers
Association, Pension Real Estate Association, The Commercial Mortgage
Securitization Association and the Urban Land Institute. Former Governor Mario
Cuomo of New York appointed Mr. Blake, Jr. to the charter advisory board of the
New York State Appraisal Certification Board. The board developed the standards
and ethical standards for all licensing and certification for appraisers in
accordance with state legislation. He was also appointed to the real estate
advisory board of the business school of Babson College, Wellesley,
Massachusetts. Mr. Blake, Jr. received a BA from Hobart College, Geneva, New
York in 1979 and a MSM with a concentration in commercial real estate finance
from Florida International University, Miami, Florida in 1981.
G. Randy Nicholson was appointed to the Board of Directors on February 26, 2003.
He graduated from Abilene Christian College in 1959. From 1959 to 1971, Mr.
Nicholson was self-employed in Abilene as a CPA. In 1971, he established E-Z
Serve, Inc., a gasoline marketing company. Mr. Nicholson has served as Chairman
of the Board of Auto-Gas Systems, Inc. since 1987. AutoGas developed the
pay-at-the pump technology processing paperless credit and debit card
transactions at the fuel island. Headquartered in Abilene, Texas, AutoGas
continues to introduce innovative technological advancements in the automated
fueling industry, most recently with loyalty products such as DIGITAL REWARDS(R)
and Quantum 360sm. He joined the Board of Trustees of Abilene Christian
University in 1981. Mr. Nicholson is a member of the Texas Society of Certified
Public Accountants and was recently named an honorary member of the American
Institute of Certified Public Accountants (AICPA) having been member for 40
years. He is presently serving as Chairman of the Technology Committee for the
City of Abilene.
If elected, each director will hold office until the annual meeting of
stockholders in 2008 or until his successor is duly elected and qualified. The
election of directors will be decided by a plurality of the votes cast in such
election at the meeting by the stockholders, and accordingly, abstentions and
"broker non-votes" will have no effect on the election of directors.
Stockholders may not cumulate their votes in the election of directors. All
nominees have consented to be named in this proxy statement and to serve if
elected, but if any nominee becomes unable to serve, the persons named as
proxies may exercise their discretion to vote for a substitute nominee.
Management has no reason to believe that any of the nominees will be unable to
serve.
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Current Directors
Assuming election of all nominees above, the following is a list of persons who
will constitute the Company's Board of Directors following the meeting including
their ages and current committee assignments.
Name Age Committees
---- --- ----------
Eric L. Oliver (Chairman) 48 None
Jon Morgan (CEO) 48 None
Bruce E. Edgington 49 Compensation, Audit (Chair), Nominating
Earl E. Gjelde 62 Compensation (Chair), Nominating
Donald M. Blake, Jr. 51 Audit, Nominating (Chair)
G. Randy Nicholson 69 Compensation, Audit
Corporate Governance
Meeting Attendance
AMEN's business is managed under the direction of the Board of Directors. The
Board meets during our fiscal year to review significant developments and to act
on matters requiring Board approval. The Board of Directors held five formal
meetings and acted by unanimous written consent on other occasions during the
fiscal year ended December 31, 2006. None of the Company's directors attended
fewer than 75% of the aggregate of the total number of meetings of the Board of
Directors and their respective committee meetings held subsequent to their
election to the Board in 2006.
Board Independence
Messrs. Edgington, Gjelde, Blake and Nicholson are independent directors under
the rules of the NASDAQ Stock Market. All of the Board's standing committees
(described below) are comprised entirely of independent directors.
Board Committees
The Board of Directors has established an Audit Committee, a Compensation
Committee, and a Nominating Committee to devote attention to specific subjects
and to assist the Board in the discharge of its responsibilities. The Board
committees are currently comprised of independent directors in accordance with
the NASDAQ rules. The functions of these committees and their members as of the
date of the Annual Meeting are described below.
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Audit Committee
The Audit Committee is comprised of Messrs. Edgington (Chair), Nicholson, and
Blake, Jr. all of whom are independent directors. The Audit Committee held four
meetings during 2006. The Audit Committee, among other things, oversees the
accounting and financial reporting practices of the Company and reviews the
annual audit with the Company's independent accountants. In addition, the Audit
Committee has the sole authority and responsibility to select, evaluate, and
where appropriate, replace the independent auditors. The general
responsibilities of the Audit Committee are set forth in the Audit Committee
Charter, a copy of which was attached to the Company's 2004 Proxy Statement as
Appendix I and can also be seen on the Company's web site at
http://www.amenproperties.com. The Board has determined that no member of the
Committee meets all of the criteria needed to qualify as an "audit committee
financial expert" as defined by the Commission regulations. The Board believes
that each of the current members of the Committee has sufficient knowledge and
experience in financial matters to perform his duties on the Committee.
The Audit Committee oversees our financial reporting, internal controls and
audit functions on behalf of the Board of Directors. In fulfilling its oversight
responsibilities, the Committee has reviewed the audited consolidated financial
statements in the Annual Report on Form 10-KSB with management including
discussions of accounting principles, reasonableness of judgments, and the
clarity of financial disclosures. The Committee also reviewed with the
independent auditors their assessment of financial statements and of
management's judgments in deriving the financial statements. In addition, the
Committee has discussed with the independent auditors the matters required by
SAS 61 and the matters in the written disclosures required by the Independence
Standards Board and discussed with the independent accountant the independent
accountant's independence. The Committee also met with the independent auditors,
with and without management present, to discuss their examinations, evaluations
of our internal controls and the overall quality of our financial reporting.
Based on the review and discussions referred to above, the Committee recommended
to the Board of Directors that the audited consolidated financial statements be
included in AMEN's Annual Report on Form 10-KSB for filing with the Commission.
Nominating Committee
The Nominating Committee is comprised of Messrs. Blake, Jr., (chair), Edgington
and Gjelde, all of whom are independent directors. The Nominating Committee did
not meet during 2006. The Nominating Committee operates pursuant to a Nominating
Committee Charter which was attached to Company's 2004 Proxy Statement as
Appendix II and can also be seen on the Company's web site at
http://www.amenproperties.com.
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The Nominating Committee identifies nominees for directors of the Company by
first evaluating the current members of the Board of Directors willing to
continue in service. If any Board member does not wish to continue in service,
if the Nominating Committee decides not to nominate a member for re-election or
if the Board desires to increase the size of the Board by adding new director
positions, then the Nominating Committee establishes a pool of potential
director candidates from recommendation from the Board, senior management and
stockholders, who are then evaluated through the review process outlined below.
All of the nominees named in this Proxy Statement are current directors standing
for re-election.
The Nominating Committee reviews the credentials of potential director
candidates (including potential candidates recommended by stockholders),
conducts interviews and makes formal nominations for the election of directors.
In making its nominations, the Nominating Committee considers a variety of
factors, including the following factors: integrity, high level of education,
skills, background, independence, financial expertise, experience or knowledge
with businesses relevant to the Company's current and future business plans,
experience with business of similar size, all other relevant experience,
understanding of the Company's business and industry diversity, compatibility
with existing Board members, and such other factors as the Nominating Committee
deems appropriate in the best interests of the Company and its stockholders.
Proposed nominees are not evaluated differently depending upon who has made the
proposal. The Company has not to date paid any third party fee to assist in this
process.
The Company will consider proposed nominees whose names are submitted to the
Nominating Committee, by stockholders. Proposals made by stockholders for
nominees to be considered by the Nominating Committee with respect to an annual
stockholders meeting must be in writing and received by the Company prior to the
end of the fiscal year preceding such annual meeting.
Compensation Committee
The Compensation Committee is comprised of Messrs. Gjelde (Chair), Edgington and
Nicholson, and met one time during 2006. The Compensation Committee was
established to advise the Board and consult with management concerning the
salaries, incentives and other forms of compensation for the officers and other
employees of the Company. The committee also administers the Company's stock
option plans. The Compensation Committee operates pursuant to a Compensation
Committee Charter which can be reviewed at the Company's website at
http://www.amemproperties.com.
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Shareholder Communication
Shareholders may send other communications to the Board of Directors, a
committee thereof or an individual Director. Any such communication should be
sent in writing addressed to the Board of Directors, the specific committee or
individual Director in care of the Company's Secretary at the address on the
front of this Proxy Statement. The Company's Secretary is responsible for
determining, in consultation with other officers of the Company, counsel and
other advisers, as appropriate, which stockholder-communications will be relayed
to the Board, committee or individual Director. The Secretary may determine not
to forward any letter to the Board, committee or individual Director that does
not relate to the business of the Company.
Attendance of Directors at Annual Shareholders Meeting
The Corporation expects all Board members to attend the annual meeting of
shareholders, but from time to time, other commitments may prevent all directors
from attending each meeting. All directors attended the most recent annual
meeting of shareholders, which was held on May 17, 2006.
Director Compensation
All directors receive reimbursement of reasonable expenses incurred in attending
Board and Committee meetings but received no other compensation for the year
2006.
Board of Directors Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" EACH OF THE
NOMINEES FOR DIRECTOR SET FORTH IN THIS PROPOSAL.
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PROPOSAL TWO--APPROVAL AND RATIFICATION OF AMENDMENT TO EMPLOYMENT
AGREEMENT OF PADRAIG ENNIS
Background
Effective April 1, 2006, the Company completed the acquisition of 100% of
Priority Power Management ("Priority Power"). Priority Power is primarily
involved in providing energy management services and the Company believes that
Priority Power's business is complimentary to the retail electricity provider
business conducted by the Company's subsidiary W Power. Two of Priority Power's
key executives entered into employment agreements with Priority Power effective
June 1, 2006 - Padraig Ennis and John Bick.
Amendment to Employment Agreement
Effective June 1, 2006, the employment agreement of Mr. Ennis was amended to add
the Company and other subsidiaries as beneficiaries of the agreement, and
specify that the Company would make a portion of his quarterly salary payments
by issuing restricted common stock in lieu of cash. The equivalent shares
calculation for the quarterly payments represents a discount to the current
market value of the Common Stock. The table below shows the restricted stock
that will be issued to Mr. Ennis in lieu of the original cash payments:
--------------------------------------------------------------------------------
Portion of Quarterly Quarterly Stock
Employee Quarterly Salary Salary Paid In Stock Issuance
--------------------------------------------------------------------------------
Padraig Ennis $4,473 45% 460 shares
--------------------------------------------------------------------------------
Please see additional information on the effect of the amendment under "New Plan
Benefits" on page 16.
The stock issued in accordance with the amended employment agreement will be
restricted stock under Rule 144 of the Exchange Act. The Company does not
anticipate issuing stock pursuant to this amendment until the 2nd Quarter of
2007, assuming shareholder approval.
The amendment to the employment agreement will be substantially the form
attached to Schedule 14A filed with the Commission as Appendix I, and the final
form will be filed with the Commission after execution thereof.
Board of Directors Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" APPROVAL AND
RATIFICATION OF THE AMENDMENT TO THE EMPLOYMENT AGREEMENT OF PADRAIG ENNIS.
14
PROPOSAL THREE--APPROVAL AND RATIFICATION OF AMENDMENT TO
EMPLOYMENT AGREEMENT OF JOHN BICK
Background
Effective April 1, 2006, the Company completed the acquisition of 100% of
Priority Power Management ("Priority Power"). Priority Power is primarily
involved in providing energy management services and the Company believes that
Priority Power's business is complimentary to the retail electricity provider
business conducted by the Company's subsidiary W Power. Two of Priority Power's
key executives entered into employment agreements with Priority Power effective
June 1, 2006 - Padraig Ennis and John Bick.
Amendment to Employment Agreement
Effective June 1, 2006, the employment agreement of Mr. Bick was amended to add
the Company and other subsidiaries as beneficiaries of the agreement, and
specify that the Company would make a portion of his quarterly salary payments
by issuing restricted common stock in lieu of cash. The equivalent shares
calculation for the quarterly payments represents a discount to the current
market value of the Common Stock. The table below shows the restricted stock
that will be issued to Mr. Bick in lieu of the original cash payments:
--------------------------------------------------------------------------------
Portion of Quarterly Quarterly Stock
Employee Quarterly Salary Salary Paid In Stock Issuance
--------------------------------------------------------------------------------
John Bick $11,591 100% 2,644 shares
--------------------------------------------------------------------------------
Please see additional information on the effect of the amendment under "New Plan
Benefits" on page 16.
The stock issued in accordance with the amended employment agreement will be
restricted stock under Rule 144 of the Exchange Act. The Company does not
anticipate issuing stock pursuant to this amendment until the 2nd Quarter of
2007, assuming shareholder approval.
The amendment to the employment agreement will be substantially the form
attached to Schedule 14A filed with the Commission as Appendix II, and the final
form will be filed with the Commission after execution hereof.
Board of Directors Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" APPROVAL AND
RATIFICATION OF THE AMENDMENT TO THE EMPLOYMENT AGREEMENT OF JOHN BICK.
15
PROPOSAL FOUR--RATIFICATION OF AMENDMENT TO EMPLOYMENT AGREEMENT OF KEVIN YUNG
Background
On July 1, 2004, the Company entered into an Employment and Non-Competition
Agreement with Kevin Yung, the President of W Power & Light, a wholly-owned
subsidiary of the Company, and Chief Operating Officer of the Company. This
agreement specified that Mr. Yung would receive annual compensation of $150,000
salary plus a bonus equal to 25% of the increase in shareholder equity directly
attributable to the Company's Retail Electricity Provider (REP) business.
Since the execution of Mr. Yung's employment agreement in 2004, the Company has
expanded its presence in the electricity and energy markets beyond its REP, W
Power & Light. In particular, the 2006 purchase of Priority Power established
the Company as a leader in the energy consulting and aggregation market. In
recognition of the Company's expanded participation in the energy market and the
key role that Mr. Yung will play in those businesses, the Company amended Mr.
Yung's employment agreement effective December 5, 2006.
Amendment to Employment Agreement
As stated previously, Mr. Yung's employment agreement specified that he would
receive an annual bonus equal to 25% of the increase in the Company's
shareholder equity directly attributable to the REP business. The December 5,
2006 amendment specifies that Mr. Yung's bonus will be equal to 25% of the
increase in the Company's shareholder equity that is directly attributable to
the Company's existing or future new, acquired, or merged businesses associated
with wholesale and retail electricity and natural gas marketing and consulting
services, including but not limited to retail electricity providers (REPs),
qualified scheduling entities, gas and power aggregation, gas and power
brokering, energy services, and energy consulting. For acquired or merged energy
businesses, the basis against which the shareholder equity increase is measured
and Employee's Bonus is calculated shall be only on that portion exceeding the
expected earnings as determined by the Company and thereby included in the
purchase price of the acquired or merged business.
The Company accrued for Mr. Yung's 2006 bonus using the methodology described in
the amendment to his employment agreement. As shown in the Executive
Compensation section below, Mr. Yung's bonus for 2006 was $68,589.
The amendment to the employment agreement will be substantially the form
attached to Schedule 14A filed with the Commission as Appendix III, and the
final form will be filed with the Commission after execution hereof.
16
Board of Directors Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" RATIFICATION
OF THE AMENDMENT TO THE EMPLOYMENT AGREEMENT OF KEVIN YUNG.
New Plan Benefits
As discussed in Proposals Two and Three of this proxy statement, the employment
agreements of Padraig Ennis and John Bick are being amended effective June 1,
2006. These amendments specify that Messrs. Ennis and Bick will receive a
portion of their salary in restricted stock rather than cash. The table below
shows the total dollar value of benefits payable under these amendments:
NEW PLAN BENEFITS
Amendment to Employment Agreements of Padraig Ennis and John Bick
--------------------------------------------------------------------------------
Name and Position Dollar Value (1) Number of Restricted
Shares
--------------------------------------------------------------------------------
Jon Morgan
Chief Executive Officer - -
--------------------------------------------------------------------------------
Kevin Yung
Chief Operating Officer - -
--------------------------------------------------------------------------------
Kris Oliver
Chief Financial Officer - -
--------------------------------------------------------------------------------
Padraig Ennis
Vice President, Priority Power $169,067 29,609
--------------------------------------------------------------------------------
John Bick
Managing Principal, Priority Power $437,820 76,676
--------------------------------------------------------------------------------
Executive Group $606,887 106,285
--------------------------------------------------------------------------------
Non-Executive Director Group - -
--------------------------------------------------------------------------------
Non-Executive Officer Employee Group - -
--------------------------------------------------------------------------------
(1) Dollar value of restricted shares estimated using closing price of Company's
shares as of 12/31/2006.
As discussed in Proposal Four of this proxy statement, the employment agreement
of Kevin Yung is being amended effective December 5, 2006 to expand the scope of
businesses to be included in his annual bonus calculation. The table below shows
the dollar value of benefits payable under this amendment:
17
NEW PLAN BENEFITS
Amendment to Employment Agreement of Kevin Yung
--------------------------------------------------------------------------------
Name and Position Annual Dollar Value (1)
--------------------------------------------------------------------------------
Jon Morgan
Chief Executive Officer -
--------------------------------------------------------------------------------
Kevin Yung $29,961
Chief Operating Officer
--------------------------------------------------------------------------------
Kris Oliver -
Chief Financial Officer
--------------------------------------------------------------------------------
Padraig Ennis
Vice President, Priority Power -
--------------------------------------------------------------------------------
John Bick
Managing Principal, Priority Power -
--------------------------------------------------------------------------------
Executive Group $29,961
--------------------------------------------------------------------------------
Non-Executive Director Group -
--------------------------------------------------------------------------------
Non-Executive Officer Employee Group -
--------------------------------------------------------------------------------
(1) Estimated impact on 2006 bonus of inclusion of Priority Power earnings in
bonus calculation. Future impacts will be based on performance of existing
business as well as the size and performance of newly acquired businesses.
18
EXECUTIVE COMPENSATION
Executive Officers
Name Age Position
---- --- --------
Eric Oliver 48 Chairman of the Board of Directors
Jon Morgan 48 President and Chief Executive Officer
Kevin Yung 44 Chief Operating Officer, President of W Power & Light
Kris Oliver 41 Chief Financial Officer
Padraig Ennis 47 Vice President, Priority Power
John Bick 40 Managing Principal, Priority Power
Jon M. Morgan was appointed as a director of AMEN in October 2000, and was
appointed President and Chief Operating Officer on September 19, 2002 and Chief
Executive Officer on March 7, 2007. Mr. Morgan has more than 18 years experience
in launching and managing successful businesses in both investment management
services and in the energy field. He is founder of several businesses including
Morgan Capital Group, Inc., the Packard Fund, and is President of J.M. Mineral &
Land Co.
Kevin Yung is the Company's Chief Operating Officer as well as President of W
Power & Light, the wholly-owned retail electricity provider he founded in 2004.
Prior to joining the Company in 2004, Mr. Yung spent 22 years in the energy
business, primarily with TXU Corporation where he left in 2002 as the Director
of Retail Commodity Management. During his tenure at TXU, Mr. Yung held a
variety of positions in the areas of engineering, business development, project
finance of independent power production and retail commodity price structuring.
Just prior to joining the Company, Mr. Yung spent two years providing financial
and risk consulting to a variety of energy consumers and providers.
Kris Oliver was appointed Chief Financial Officer of the Company on March 7,
2007. Mr. Oliver is a Certified Public Accountant and began his career in the
Audit Practice of Arthur Andersen, where he left as an Audit Senior in 1990.
After receiving an MBA in Finance from the University of Texas at Austin in
1992, Mr. Oliver spent 14 years at American Airlines / Sabre in a variety of
roles including Corporate Finance, Business Development, Marketing and Sales.
Just prior to joining the Company, Mr. Oliver was a Senior Financial Advisor
with Technology Partners International, the world's largest outsourcing advisory
firm. Mr. Oliver is the brother of Eric Oliver, the Company's Chairman of the
Board of Directors.
Padraig (Pat) Ennis is the Vice President of Priority Power. Mr. Ennis is a
veteran of the electric industry in Texas, having worked at TXU for 20 years in
a variety of roles in the Midland / Odessa area including construction,
engineering, administration and customer service. While at TXU, Mr. Ennis served
as their representative to the Oil and Gas Industry for over ten years. A
graduate of Texas Tech University, he has authored a number of energy-related
papers and been published in industry periodicals.
19
John Bick is the Managing Principal of Priority Power, where he is responsible
for strategic direction and business development. Prior to joining the Company,
Mr. Bick was Director of Strategic Business Development for TXU. In that role,
Mr. Bick was responsible for developing long term, multi-million dollar energy
management outsourcing engagements across North America. As Manager of Strategic
Accounts for TXU Electric & Gas, John was instrumental in leading the transition
of TXU's largest industrial and commercial customers from regulation to
deregulation.
Summary Compensation Table
The following table includes information concerning compensation for the one
year period ended December 31, 2006 in reference to the five members of the
Executive Team, which includes required disclosure related to our CEO and the
four most highly compensated officers of the company. The positions indicated in
the table are those held during 2006, some of which have changed in the first
quarter of 2007 as described herein.
--------------------------------------------------------------------------------
Stock Option All Other
Name/Position Salary(3) Bonus Awards Awards Comp (4) Total
--------------------------------------------------------------------------------
Eric L. Oliver (1)
Chairman and Chief
Executive Officer - - - - - -
Jon Morgan (2)
President and Chief
Operating Officer - - - - - -
Kevin Yung (5)
President, W
Power & Light $150,000 $68,589 - - - $218,589
Padraig Ennis
Vice President,
Priority Power $103,333 $30,000 - - $50,000 $183,333
John Bick
Managing
Principal,
Priority Power $70,000 - - - $71,495 $141,495
(1) Mr. Oliver became the Company's Chief Executive Officer on September
19, 2002. He did not receive any salary or bonus during 2004, 2005 or
2006, and is not currently paid a salary. He resigned the CEO position
effective March 7, 2007, at which point Jon Morgan became CEO.
(2) Mr. Morgan served as the Company's Chief Operating Officer from
September 19, 2002 through March 7, 2007, at which time he assumed the
role of Chief Executive Officer. He did not receive any salary or
bonus during 2004, 2005 or 2006, and is not currently paid a salary.
20
(3) The salary amounts for Messrs. Ennis and Bick represent the portion of
their annual salary paid by the Company after the purchase of Priority
Power effective April 1, 2006. The annual salaries of Mr. Ennis and
Mr. Bick are $140,000 and $140,000, respectively. As described in
Proposals Two and Three of this statement, Messrs. Ennis and Bick will
be entitled to receive a portion of their salary in restricted stock
upon approval of the amendments to their employment agreements.
(4) The amounts in this column represent signing bonuses paid to Messrs.
Ennis and Bick related to their employment agreements.
(5) Mr. Yung's employment agreement allows him to receive his bonus amount
in cash or in restricted shares of company stock, valued based on the
average closing price for the twenty days prior to such payment.
Mr. Yung's employment agreement has an effective date of July 1, 2004 with a
term of three years, after which the agreement automatically renews for
successive one year periods unless terminated by either party. Under the terms
of the agreement, Mr. Yung receives an annual salary of $150,000 and a bonus
equal to 25% of the increase in the Company's shareholder equity attributable to
the Company's Retail Electricity Provider business. The bonus is payable either
in cash or common stock of the Company. During the term of the agreement and for
a period of 18 months thereafter, Mr. Yung is subject to a non-compete
agreement. If Mr. Yung is terminated for any reason other than cause, he is
entitled to severance payments equal to his then-current salary for a period of
one year or the remaining term of the non-compete agreement, whichever is
greater.
Mr. Ennis' employment agreement has an effective date of June 1, 2006 with a
term of three years. Under the terms of the agreement, Mr. Ennis receives an
annual salary of $140,000 and a bonus of either $30,000 or 2% of the net income
of Priority Power, whichever is greater. During the term of the agreement and
for 18 months thereafter, Mr. Ennis is subject to a non-solicitation agreement.
If Mr. Ennis is terminated for any reason other than cause, he is entitled to
severance equal to 12 months of his then-current salary plus any bonus to which
he would have been entitled had he been employed for the entire year.
Mr. Bick's employment agreement has an effective date of June 1, 2006 with a
term of three years. Under the terms of the agreement, Mr. Bick receives an
annual salary of $140,000 and a bonus which is determined by performance targets
agreed to each year. During the term of the agreement and for a period of three
years thereafter, Mr. Bick is subject to a non-compete agreement. If Mr. Yung is
terminated for any reason other than cause, he is entitled to severance payments
equal to his then-current salary for the remainder of the agreement term unless
the Company releases him from the non-compete agreement.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values (1)
The following table sets forth information with respect to stock options held by
the executive officers named in the "Summary Compensation Table".
21
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
-------------------------------------------------------------------------------------------------
Option Awards
-------------------------------------------------------------------------------------------------
Equity Incentive
Number of Number of Plan Awards:
Securities Securities Number of
Underlying Underlying Securities
Unexercised Unexercised Underlying Option
Name Option Options Options Unexercised Exercise Option
---- Plan Exercisable Unexercisable Unearned Options Price Expiration Date
-------------------------------------------------------------------------------------------------
Eric L. Oliver A 1,671 --- --- $4.600 7/16/2011
-------------------------------------------------------------------------------------------------
B 3,523 --- --- 5.120 2/12/2012
-------------------------------------------------------------------------------------------------
Jon Morgan A 2,901 --- --- 4.252 10/24/2010
-------------------------------------------------------------------------------------------------
B 3,251 --- --- 3.880 2/20/2011
-------------------------------------------------------------------------------------------------
B 3,342 --- --- 5.120 2/12/2012
-------------------------------------------------------------------------------------------------
22
EXTERNAL AUDITOR INFORMATION
Effective September 30, 2002, Johnson Miller & Co., CPA's PC was engaged as the
independent accountant for the Company and has been selected as the Company's
principal accountants for 2007. The decision to engage Johnson Miller & Co.,
CPA's PC was approved by the Audit Committee of the Board of Directors. The
Audit Committee has delegated authority for the approval of non audit-related
services to the Chairman of the Committee.
Audit Fees: The aggregate fees paid to Johnson Miller & Co., CPA's PC for the
audit of the financial statements on Form 10-KSB and for reviews on Form 10-QSB
during 2005 was $81,982, and for 2006 was $90,644.
Audit Related Fees: None.
Tax Fees: During 2005 the Company paid its principal accountant $7,022 for tax
related matters. During 2006 the Company did not pay any fees for tax related
matters.
All Other Fees: The aggregate other fees paid to Johnson Miller & Co., CPA's PC
during 2005 was $7,200. The 2005 fees mainly represent services rendered in
connection with the Company's sale of a discontinued business component. The
aggregate other fees paid to Johnson Miller & Co., CPA's PC during 2006 was
$22,263. The 2006 fees are primarily related to services rendered in connection
with the purchase of Priority Power and the disposition of TCTB assets described
below under "Certain Relationships and Related Transactions".
The Company expects that representatives of Johnson Miller & Co., CPA's PC will
be present at the Annual Meeting to respond to appropriate questions and to make
a statement if they desire to do so.
23
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Real Estate Transactions
Background
In October 2002, the Company purchased 64.9% of the limited partnership shares
of TCTB Partners, Ltd. ("TCTB"), a real estate company with holdings in Midland
and Lubbock. Eric Oliver, Chairman of Board, and Jon Morgan, Chief Executive
Officer, either directly or beneficially owned interests in TCTB. Mr. Morgan is
also President of TCTB Company, Inc., the general partner of TCTB that controls
its daily operations. Mr. Oliver sold all his LP Interest in TCTB totaling 7.94%
(which he owned beneficially through a limited partnership) to the Company, and
Mr. Morgan sold all his LP Interest in TCTB totaling 10.54% to the Company. Both
Mr. Oliver and Mr. Morgan retained their proportionate share of their interest
in TCTB Company, Inc. Other preferred and common shareholders of the Company
also sold their 21.14% total LP Interest in TCTB to the Company.
Disposition of Assets
On September 27, 2006, the Company entered into an agreement to distribute
substantially all of the assets of TCTB among its partners (the "Properties").
The Properties were subject to a lien to secure a promissory note (the "Note")
payable to Wells Fargo Bank Texas, N.A. The partners of TCTB agreed that it was
in their best interest to distribute undivided interests in the Properties to
the partners according to the sharing ratios of the Partnership. The Bank agreed
to allow TCTB to distribute the Properties to the partners of TCTB in exchange
for the payoff of the Note.
Contemporaneous with the distribution of the Properties, the Company along with
the General Partner and the other Limited Partners of TCTB (the "Selling
Partners") collectively agreed to sell 75% of their collective undivided
interest in the Properties to Hampshire Plaza Garage, LLC and S.E.S.
Investments, Ltd., unaffiliated third party purchasers for a privately
negotiated price of $9.0 million. A separate Purchase Agreement was executed
between the Buyers and TCTB dated September 29, 2006. After this transaction,
the Company owned 18.017% of the Properties and the other Selling Partners owned
their proportional remaining interests in the Properties (collectively, the
"Remaining Interests").
After the sale, TCTB, the Selling Partners and the Buyers, as all of the owners
of the Properties, entered into a Management Agreement with TCTB Management
Group, LLC ("Management") dated September 29, 2006 relating to the management of
the Properties. The Management Agreement is effective until August 31, 2007
unless earlier terminated in accordance with its terms. The owners of Management
are the Selling Partners (including the Company) and the Buyers in the same
percentages as their proportionate ownership of the Properties. Mr. Jon Morgan,
President and CEO of the Company, is the managing member of Management. Mr.
Morgan and his affiliate were among the Selling Partners and the sale of their
undivided interest in the Properties resulted in Mr. Morgan receiving a check in
the amount of $79,317. Mr. Morgan is also an owner and officer of the General
Partner of TCTB, and took actions in such capacity in connection with this
transaction in addition to acting as an officer of the Company. As an owner of
such General Partner, Mr. Morgan indirectly received an additional $5,300 from
the sale of the General Partner's interest in the Properties.
24
Contribution of Remaining Assets to New Venture
Effective March 1, 2007 the Company contributed its remaining 18.017% ownership
in the Bank of America Tower and the Century Plaza Tower to HPG Acquisition,
LLC; a Texas Limited Liability Company. The Company and the other Selling
Partners (including Mr. Morgan and his affiliates), the Buyers and affiliates of
the Buyers entered into a Contribution, Conveyance and Assumption Agreement on
March 2007 (the "Contribution Agreement"), whereby the Company and others
contributed the Remaining Interests, other property interests and cash to HPG
Acquisition LLC ("HPG") in exchange for membership interests in HPG, all
effective as of March 1, 2007. The Company's capital contribution to HPG
consisted of all of the Company's interest in the Remaining Interests and
$478,461 in cash, in exchange for which the Company received 17.8045% membership
interest in HPG. The other Selling Partners (including Mr. Morgan and his
affiliates) also contributed their remaining interests. The Contribution
Agreement provides that HPG has assumed all obligations and is entitled to all
revenue from the Remaining Interests and the other contributed properties. The
members of HPG have agreed in the Contribution Agreement to indemnify each other
with respect to matters relating to the properties owned by HPG based upon such
members' periods of ownership. The Company and the other members of HPG have
also entered into the First Amended and Restated Company Agreement of HPG
Acquisition, LLC, which governs the relative rights of the members of HPG and
names Mr. Jon Morgan, the President and Chief Executive Officer of the Company,
as the Management Member of HPG.
The properties will continue to be managed by TCTB Management LLC under the
Management Agreement. The other assets of HPG will also be managed by TCTB
Management LLC. The ownership of TCTB Management LLC is the same as ownership of
HPG, and Mr. Morgan is the Managing Member of Management LLC.
Rental Agreements
At December 31, 2006 and 2005, related parties leased office space of
approximately 32,000 square feet. The rental income received from these related
parties that is included in the real estate operations of the Company was
approximately $349,978 and $348,600 during the period then ended, respectively.
25
Preferred Stock and Warrants
The Company closed the sale and issuance of 125,000 shares of Series C Preferred
Stock and 250,000 Warrants pursuant to a Purchase Agreement on March 1, 2005
between the Company and certain accredited investors, including the Company's
President and Chief Operating Officer, Jon M. Morgan, the Company's Chief
Executive Officer, Eric Oliver and Bruce Edgington, one of the Company's
Directors.
The following table reflects the Series C issuance to the Company's officers and
directors.
Number of Preferred C
Preferred C Common Stock Voting Purchase
Shares Equivalent Equivalent Price
-------------- -------------- -------------- --------------
Eric Oliver 14,063 56,252 52,877 $ 225,008
Jon M. Morgan 14,062 56,248 52,873 224,992
Bruce Edgington 3,125 12,500 11,750 50,000
-------------- -------------- -------------- --------------
Total 31,250 125,000 117,500 $ 500,000
============== ============== ============== ==============
The following table reflects the issuance of Warrants to the Company's Officers
and Directors.
Number of Warrants Common Stock Equivalent
--------------------- -----------------------
Eric Oliver 28,126 28,126
Jon M. Morgan 28,124 28,124
Bruce Edgington 6,250 6,250
--------------------- -----------------------
Total 62,500 62,500
===================== =======================
On May 18, 2006, Jon M. Morgan and Bruce Edgington exercised their outstanding
warrants (described above) for a total exercise price of $112,496 and $25,000,
respectively. Mr. Morgan received 28,124 shares of common stock and Mr.
Edgington received 6,250 shares of common stock upon the exercise of their stock
warrants.
Purchase of Priority Power
On May 25, 2006, the Company completed its acquisition of all of the outstanding
partnership interests in Priority Power pursuant to a Securities Purchase
Agreement by and between the Company and its subsidiary, NEMA and the partners
of Priority Power dated May 18, 2006. The total purchase price was $3,730,051,
comprised of (i) $500,000 in cash, and (ii) promissory notes with the aggregate
principal amount of $3,230,051 from the Company and NEMA and payable to the
sellers.
26
There are several business relationships among Priority Power, its partners, the
Company and its subsidiaries, and their respective affiliates. The Company's
retail electricity provider subsidiary, W Power, has contractual relationships
with Priority Power with respect to providing electricity to less than 0.2% of
Priority Power's clients. Additionally certain of the selling partners of
Priority Power are customers of W Power none of which are considered significant
customers. In addition, certain of the selling partners of Priority Power were
also officers, directors or five percent or more stockholders of the Company
(and its subsidiaries) or affiliates of stockholders of the Company, including
an affiliate of Jon M. Morgan, the President and Chief Executive Officer of the
Company, Eric L. Oliver, the Chairman of the Board of Directors of the Company,
John Bick, Managing Principal of Priority Power and Padraig Ennis, Vice
President of Priority Power. Jon M. Morgan is a fifty percent owner of Anthem
Oil and Gas, Inc which was a selling limited partner of Priority Power. Mr.
Morgan also owned a one third interest in the selling general partner of
Priority Power Management, Ltd. Eric L. Oliver owned a thirty-seven and a half
percent interest in a selling limited partner of Priority Power, Oakdale
Ventures, Ltd.
Long Term Debt
The following table reflects the portion of the Company's long-term debt payable
to related parties as of December 31, 2006, all related to the notes issued by
the Company and NEMA in the Priority Power transaction described above:
Eric Oliver, Chairman $23,382
Jon Morgan, Chief Executive Officer 553,091
Padriag Ennis, VP of Priority Power 85,210
John Bick, Managing Principal of Priority Power 220,783
5% Shareholders 1,288,955
------------
------------
Total $2,171,421
============
These notes carry an annual interest rate of 7.75% and are payable on a
quarterly basis with the last payment scheduled for December 31, 2013.
Other
We may in the future enter into other transactions and agreements incident to
our business with directors, officers, principal stockholders and other
affiliates. We intend for all such transactions and agreements to be on terms no
less favorable than those obtainable from unaffiliated third parties on an
arm's-length basis. In addition, the approval of a majority of the AMEN
directors will be required for any such transactions or agreements.
27
OTHER INFORMATION
Security Ownership of Beneficial Owners and Management
Treatment of Preferred Stock. The Company's voting securities include both the
Common Stock and the Preferred Stock. The holders of the Preferred Stock are
entitled to vote together with the holders of the Common Stock as a single class
on the basis of a number of votes equal to a number of shares of Common Stock
determined in accordance with the Certificates of Designation for each series of
the Preferred Stock. Because the Preferred Stock and the Common Stock vote
together as a single class and because the Preferred Stock is convertible into
Common Stock, the beneficial ownership of the voting securities of the Company
is set forth in the following tables reflecting beneficial ownership of Common
Stock, and no separate Preferred Stock ownership tables are provided. Please
note that that number of votes held by the holders of Series B is the same as
the number of shares into which the Series B is convertible, and the number of
votes held by the holders of the Series A is approximately one-half of the
number of shares of Common Stock into which the Series A is convertible.
Additionally, the number of votes held by the holders of Series C is
approximately ninety four percent (94%) of the number of shares of Common Stock
into which the Series C is convertible. Therefore, in the footnotes to the
following ownership tables, the number of votes attributable to the ownership of
Series A and Series C is set forth in parenthesis following the number of shares
into which such Series A and Series C are convertible.
General. Unless otherwise noted, all persons named in the following ownership
tables have sole voting and sole investment power with respect to all shares of
voting stock beneficially owned by them, and no persons named in the table are
acting as nominees for any persons or otherwise under the control of any person
or group of persons. As used herein, the term "beneficial ownership" with
respect to a security means the sole or shared voting power (including the power
to vote and direct the vote) or sole or shared investment power (including the
power to dispose or direct the disposition) with respect to the security,
including a right to acquire any such power during a period of sixty (60) days
from the Record Date. Percentage of beneficial ownership is based upon 2,290,589
shares of Common Stock outstanding as of the Record Date and for the purpose of
computing the percentage ownership of certain persons or groups, the shares of
Common Stock that the person has the right to acquire within sixty (60) days of
the Record Date (whether upon conversion of the Preferred Stock, exercise of
vested stock options, exercise of warrants or otherwise), are deemed to be
outstanding as of that date. Such shares deemed to be outstanding as to one
person are not deemed outstanding for purposes of computing the percentage
ownership of any other person.
28
Security Ownership of Certain Beneficial Owners. The following table and
accompanying notes contain information about any person (including any "group")
who is known by us to be the beneficial owner of more than 5% of AMEN's Common
Stock as of the Record Date, based upon copies of Schedule 13Ds and Schedule
13Gs received by the Company but are not officers or directors of the Company.
--------------------------------------------------------------------------------
Percent
Name and Address of Beneficial Owner Amount and Nature of Beneficially
Beneficial Ownership Owned
--------------------------------------------------------------------------------
John Norwood
303 W. Wall Suite 2300
Midland, TX 79701 190,160 (a) 7.95%
--------------------------------------------------------------------------------
Frosty Gilliam, Jr.
4840 E. University, Suite 200
Odessa, TX 79762 161,299 (b) 6.73%
--------------------------------------------------------------------------------
Steve Wike
P.O. Box 10700
Wilmington, NC 28404 121,250 5.29%
--------------------------------------------------------------------------------
Moriah Investment Partners
P.O. Box 5562
Midland, TX 79704 150,000 (c) 6.15%
--------------------------------------------------------------------------------
McGraw Brothers Investments
P.O. Box 7515
Midland, TX 79708 150,000 (c) 6.15%
--------------------------------------------------------------------------------
Dodge Jones Foundation
P.O. Box 176
Abilene, TX 79604 226,358 (d) 9.14%
--------------------------------------------------------------------------------
(a) Includes 50,000 shares issuable upon conversion of Series C
(representing 47,000 votes), 25,428 shares issuable upon conversion of
Series A (representing 13,750 votes).
(b) Includes 50,000 shares issuable upon conversion of Series C
(representing 47,000 votes), 30,822 shares issuable upon conversion of
Series A (representing 16,667 votes).
(c) Represents 100,000 shares issuable upon conversion of Series C
(representing 94,000 votes) and 50,000 shares issuable upon the
exercise of outstanding warrants.
(d) Includes 107,878 shares issuable upon conversion of Series A
(representing 58,333 votes) and 77,056 shares issuable upon conversion
of Series B, owned by Dodge Jones Foundation.
Security Ownership of Management. The following table and accompanying notes
contain information about the beneficial ownership of Common Stock as of the
Record Date by each of AMEN's (a) directors and director nominees, and (b)
executive officers as defined in Item 402(a)(2) of Regulation S-B, and (c) all
of AMEN's executive officers, directors and director nominees as a group.
29
--------------------------------------------------------------------------------
Percentage
Name and Address of Beneficial Owner Amount and Nature of Beneficially
Beneficial Ownership Owned
--------------------------------------------------------------------------------
Eric Oliver (Chairman)
400 Pine Street
Abilene, TX 79601 371,611 (1) 14.68%
--------------------------------------------------------------------------------
Jon Morgan (President and CEO,
Director)
303 W. Wall St., Ste. 2300
Midland, TX 79701 308,578 (2) 12.25%
--------------------------------------------------------------------------------
Bruce Edgington (Director)
7857 Heritage Drive
Annandale, VA 22003 223,022 (3) 9.24%
--------------------------------------------------------------------------------
Earl E. Gjelde (Director)
42 Bristlecone Crt.
Keystone, CO 80435 60,052 (4) 2.56%
--------------------------------------------------------------------------------
Donald M. Blake, Jr. (Director)
298 Fifth Ave., 7th Floor
New York, NY 10001 69,403 (5) 3.02%
--------------------------------------------------------------------------------
G. Randy Nicholson (Director)
1202 Estates Drive, Ste. D
Abilene, TX 79602 10,281 (6) *
--------------------------------------------------------------------------------
Kevin Yung (COO)
303 W. Wall St., Ste. 2300
Midland, TX 79701 -- --
--------------------------------------------------------------------------------
Kris Oliver (CFO)
303 W. Wall St., Ste. 2300
Midland, TX 79701 -- --
--------------------------------------------------------------------------------
Padraig Ennis
303 W. Wall St., Ste. 2300
Midland, TX 79701 100 *
--------------------------------------------------------------------------------
John Bick
303 W. Wall St., Ste. 2300
Midland, TX 79701 2,000 *
--------------------------------------------------------------------------------
All Current Directors and
Officers as a Group 1,049,547 42.47%
--------------------------------------------------------------------------------
* - less than 1%
(1) Includes 76,813 shares beneficially owned by Softvest L.P. Mr. Oliver
is General Partner and lead investment officer of Softvest L.P. Also
includes 77,056 shares issuable upon conversion of Series A
(representing 41,667 votes) and 38,528 shares issuable upon conversion
of Series B, all beneficially owned by Softsearch, L.P. Mr. Oliver is
General Partner of Softsearch, L.P. Also includes 5,193 shares
issuable upon exercise of currently exercisable stock options. Also
includes 56,252 shares issuable upon conversion of Series C
(representing 52,877 votes) and 28,126 issuable upon exercise of
currently exercisable warrants.
30
(2) Includes 61,645 shares issuable upon conversion of the Series A
(representing 33,333 votes), beneficially owned by the Jon M. Morgan
Pension Plan. Mr. Morgan is trustee of the Jon M. Morgan Pension Plan.
Also includes 61,645 shares issuable upon conversion of the Series A
(representing 33,333 votes), beneficially owned by J.M. Mineral and
Land Co., Inc. Mr. Morgan is President of J.M. Mineral and Land Co,
Inc. Also includes 38,528 shares issuable upon conversion of the
Series B, and 9,493 shares issuable upon exercise of currently
exercisable stock options. Also includes 56,248 shares issuable upon
conversion of Series C (representing 48,430 votes).
(3) Includes 91,261 shares beneficially owned by Mr. Edgington. Also
includes 50,000 issuable upon conversion of the Series B, 63,011
shares issuable upon exercise of currently exercisable stock options.
Also includes 12,500 shares issuable upon conversion of Series C
(representing 11,750 votes).
(4) Includes 29,206 shares issuable upon conversion of the Series B, and
25,861 shares issuable upon exercise of currently exercisable stock
options.
(5) Includes 2,000 shares held in a grantor trust of which Mr. Blake, Jr.
is the trustee, and 11,181 shares issuable upon exercise of a
currently exercisable stock option.
(6) Represents shares issuable upon exercise of a currently exercisable
stock option.
(7) Kris Oliver became CFO of the Company effective March 7, 2007 and owns
no stock of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act, requires that our executive officers and
directors and persons who own more than ten percent of a registered class of
AMEN's equity securities (collectively, the "Reporting Persons") file reports of
ownership and changes in ownership with the Commission and to furnish the
Company with copies of these reports. The Company believes that all filings
required to be made by the Reporting Persons during the fiscal year ended
December 31, 2006 were made on a timely basis.
Shareholder Proposals
All stockholder proposals submitted for inclusion in the Company's Proxy
Statement and form of proxy for the Annual Meeting of Stockholder of the Company
to be held in 2008 must be received at the Company's principal executive
offices, 303 West Wall Street, Suite 2300, Midland, Texas 79701, Attention: Kris
L. Oliver, by December 22, 2007. Such proposals must also comply with the
applicable regulations of the Securities and Exchange Commission. Notice to the
Company of all other stockholder proposals (not submitted for inclusion in the
Company's Proxy Statement and form of proxy) for the 2008 Annual Meeting will
not be considered timely unless received at the Company's principal executive
offices as set forth above on or before March 7, 2007.
31
Amen Properties
303 W. Wall Street, Suite 2300
Midland, Texas 79701
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF AMEN PROPERTIES INC. FOR
THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 30, 2007
The undersigned hereby constitutes and appoints Eric L. Oliver and Jon M.
Morgan, and each of them, his true and lawful agents and proxies with full power
of substitution in each, to represent the undersigned at the Annual Meeting of
Stockholders to be held at the Corporate Office, located at 303 West Wall Street
Suite 2300, Midland, TX 79701, in the Conference Room, at 8:30 a.m., local time,
on Wednesday, May 30, 2007, and at any adjournments thereof, on all matters
coming before said meeting.
PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE: /X/
1. ELECTION OF, ERIC L. OLIVER, JON M. MORGAN, BRUCE E. EDGINGTON, EARL
E. GJELDE, DONALD M. BLAKE, JR. AND G. RANDY NICHOLSON TO THE AMEN
PROPERTIES, INC.BOARD OF DIRECTORS.
IN FAVOR OF ALL NOMINEES [ ]
WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES [ ]
IN FAVOR OF ALL NOMINEES EXCEPT THE FOLLOWING: [ ]
---------------------------------------
---------------------------------------
---------------------------------------
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided above.)
2. APPROVAL AND RATIFICATION OF AMENDMENT OF EMPLOYMENT AGREEMENT OF
PADRAIG ENNIS ENABLING HIM TO RECEIVE RESTRICTED STOCK IN LIEU OF CASH
FOR A PORTION OF HIS SALARY.
IN FAVOR [ ]
AGAINST [ ]
ABSTAIN [ ]
3. APPROVAL AND RATIFICATION OF AMENDMENT OF EMPLOYMENT AGREEMENT OF JOHN
BICK ENABLING HIM TO RECEIVE RESTRICTED STOCK IN LIEU OF CASH FOR A
PORTION OF HIS SALARY.
IN FAVOR [ ]
AGAINST [ ]
ABSTAIN [ ]
32
4. APPROVAL AND RATIFICATION OF AMENDMENT OF EMPLOYMENT AGREEMENT OF
KEVIN YUNG INCREASING THE SCOPE OF THE BUSINESSES INCLUDED IN HIS
BONUS CALCULATION TO INCLUDE ALL CURRENT AND FUTURE ENERGY-RELATED
BUSINESSES.
IN FAVOR [ ]
AGAINST [ ]
ABSTAIN [ ]
5. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted IN FAVOR of the election of all of the directors named in this proxy card
and IN FAVOR of proposals 2, 3 and 4 as set forth herein.
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE ACCOMPANYING NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT FOR THE
MAY 30, 2007 ANNUAL MEETING OF STOCKHOLDERS AND THE COMPANY'S ANNUAL
REPORT ON FORM 10-KSB
Stockholder Signature(s): _______________________ _________________________
Date: _____________________________
Stockholder Printed Name(s): ____________________ _________________________
Please sign your name exactly as it appears hereon. Joint owners must each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give your full title as it appears thereon. If a corporation, please sign in
full corporate name as President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
33
APPENDIX I
AMENDMENT TO EMPLOYMENT AGREEMENT OF PADRAIG ENNIS
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This First Amendment to Employment Agreement (this "First Amendment"), is
made and entered into by and between Priority Power Management, Ltd.
("Employer") and Padraig Ennis ("Employee") effective June 1, 2006, with
reference to the following facts:
A. Employer and Employee entered into that certain Employment Agreement
effective as of June 1, 2006 (the "Original Agreement").
B. Employer is a wholly-owned subsidiary of Amen Properties, Inc. ("Amen"),
and the parties have agreed that Amen will join in this First Amendment for
the limited purposes set forth herein and in the Original Agreement, as
amended hereby (the Original Agreement, as so amended by this First
Amendment, is referred to herein as the "Amended Agreement").
C. Employer and Employee desire to amend certain provisions of the Original
Agreement as provided in and subject to the terms and conditions of this
First Amendment.
NOW, THEREFORE, FOR AND IN CONSIDERATION of the mutual promises, covenants
and agreements set forth herein and in the Original Agreement, the parties
hereto agree as follows:
1. Addition of Amen. Amen is hereby added as a party to the Amended Agreement
for the limited purposes of giving Amen the right and power to enforce the
provisions of the Amended Agreement which are or may be for the benefit of
or confer rights to Amen, and with respect to its limited obligations to
issue shares of common stock of Amen (the "Common Stock") pursuant to the
terms of the Amended Agreement.
2. Amendment of Section 1 of the Original Agreement. Section 1 of the Original
Agreement is hereby amended by adding the following to the end of said
section:
"Employer is the wholly-owned subsidiary of Amen Properties, Inc. ("Amen"),
and Employee acknowledges and agrees that he will provide services to or
for the benefit of Employer, Amen or their respective subsidiaries, at the
discretion of the Board of Directors of Amen. As used herein, the term
"Business" shall include the businesses of Employer, Amen or any such
subsidiary to which Employee provides services."
34
3. Amendment of Section 4 of the Original Agreement. Subject to approval of
the stockholders of Amen regarding the issuance of Common Stock as provided
below, Section 4 of the Original Agreement is hereby deleted in its
entirety and replaced with the following:
"(a) Salary: Employee shall be paid the sum of $140,000.00 per annum, less
appropriate withholding and deduction, payable semi-monthly on the 15th and
the last day of each month during the term hereof, prorated at the
beginning and at the termination of this Agreement, and subject to any
adjustment as the parties shall agree in writing. Any acceptance by
Employee of any payment by Employer of amounts other than as set forth
herein shall constitute the agreement of the parties to change such salary.
Such salary shall be payable in cash, except for the semi-monthly salary
payable on the last day of the month at the end of each calendar quarter (a
"Quarter-ending Salary Payment") beginning on June 30, 2007 and continuing
each quarter thereafter until the earlier of the termination of Employee's
employment under this Agreement or June 30, 2014. Each Quarter-ending
Salary Payment shall consist of (i) a cash payment equal to the
semi-monthly salary payable less the sum of $2,012.98, and (ii) the
issuance by Amen to Employee of 460 shares of common stock of Amen (the
"Common Stock") in lieu of and in satisfaction of the remaining amount of
such semi-monthly salary payment. Employee acknowledges and agrees that
Amen is not obligated to register the shares of Common Stock issued to him
under applicable securities laws, and that if such shares are not so
registered the transfer of those shares will be subject to restrictions
under applicable securities laws and the shares will not be freely
tradeable. Employee further acknowledges and agrees: that he will be
acquiring the shares of Common Stock for his own account and not with a
view to transfer or distribute the shares of Common Stock; that he has
sufficient knowledge and experience in financial and business matters, in
general, and in the Business, in particular, to be able to evaluate the
merits and risks of an investment in the Common Stock and has determined to
make such investment based upon his own evaluation and assessment (and that
of his financial legal and accounting advisors) without relying upon any
representations or evaluation by Employer, Amen or their respective
subsidiaries, officers, directors or other representatives; and that he may
be required to hold the shares of Common Stock for an indefinite period of
time and he is financially able to bear the risk thereof."
"(b) If the consolidated net income of the Employer for a calendar year is
in excess of the Benchmark (as defined below), Employee shall receive a
bonus with respect to such calendar year equal to the greater of (i)
$30,000, or (ii) an amount equal to 2% of that portion of Employer's
consolidated net income for the such calendar year which is in excess of
the Benchmark. In the event the consolidated net income of the Employer for
any calendar year is less than the Benchmark, then Employee shall receive a
bonus in an amount equal to 2% of the consolidated net income of Employer
for such year, if any. In determining the amount of such bonus, the
consolidated net income of the Employer shall be determined in accordance
with generally accepted accounting practices and principles as verified by
Amen's independent auditor. As used herein, the term "Benchmark" means
$475,100.00. The annual bonus payable pursuant to this Section 4(b) shall
be paid within ninety (90) days following the end of the calendar year with
respect to which the bonus is being calculated."
35
4. Amendment of Section 8 of the Original Agreement. Section 8 of the Original
Agreement is hereby amended to replace the term "Employer" or "Employer's"
with the phrase "Employer, Amen or their respective subsidiaries" or
"Employer's, Amen's or their respective subsidiaries'", as applicable.
5. Amendment of Section 9 of the Original Agreement. Section 9 of the Original
Agreement shall be amended to replace the word "Employer" on the second
line thereof with the phrase "Employer, Amen or their respective
subsidiaries".
5. Amendment of Section 10 of the Original Agreement. Section 10 of the
Original Agreement is hereby amended by deleting the initial paragraph and
subsections a. and b. thereof in their entirety and replacing the same with
the following:
"10. Termination. The Employee's employment hereunder may be terminated by
Employer or the Employee, as applicable, without any breach of this
Agreement, only under the following circumstances and with the following
consequences:
"a. Automatically upon Employee's death.
"b. By (i) Employer upon Employee's Permanent Disability, for Cause or for
any reason other than for Cause, and (ii) Employee for Good Reason (as
defined herein). As used herein, "Permanent Disability" shall mean
Employee's physical or mental incapacity to perform his usual duties
with such condition likely to remain continuously and permanently as
reasonably determined by the Board of Directors of Amen in good
faith."
7. Amendment of Section 11 of the Original Agreement. Section 11 of the
Original Agreement is hereby amended to replace the term "Employer" or
"Employer's" with the phrase "Employer, Amen or their respective
subsidiaries" or "Employer's, Amen's or their respective subsidiaries'", as
applicable.
8. Original Agreement. Except as expressly modified by this First Amendment,
the Original Agreement remains unchanged and in full force and effect.
36
9. Ratification and Agreement to be Bound. The parties hereto hereby ratify
and agree to be bound by the Amended Agreement.
10. Stockholder Approval. The issuance of Common Stock to Employee pursuant to
the Amended Agreement is subject to prior approval of the Amended Agreement
by the stockholders of Amen pursuant to the rules of the Nasdaq Stock
Market. Unless and until such stockholder approval is obtained, the terms
of Section 3(a) of the Amended Agreement requiring the issuance of shares
of Common Stock shall not be effective and all salary shall be paid in
cash.
11. Entire Agreement. The Amended Agreement constitutes the entire agreement of
the parties with respect to the subject matter thereof.
12. GOVERNING LAW. THIS FIRST AMENDMENT AND THE AMENDED AGREEMENT SHALL BE
GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF
THE STATE OF TEXAS.
13. Counterparts. This First Amendment may be executed in counterparts, each of
which shall be deemed an original, but all of which shall be taken together
as one document. Faxed signatures to this First Amendment shall be treated
as original signatures for all purposes.
IN WITNESS WHEREOF, the parties have executed this First Amendment as of
the date first above written.
PRIORITY POWER MANAGEMENT, LTD.
By: Priority Power Management, L.L.C.,
its General Partner
By:
Jon M. Morgan, Manager
AMEN PROPERTIES, INC.
By:
Jon M. Morgan, President
EMPLOYEE:
Padraig Ennis
37
APPENDIX II
AMENDMENT TO EMPLOYMENT AGREEMENT OF PADRAIG ENNIS
FIRST AMENDMENT TO EMPLOYMENT
AND NON-COMPETITION AGREEMENT
This First Amendment to Employment and Non-Competition Agreement (this
"First Amendment"), is made and entered into by and between Priority Power
Management, Ltd. ("Employer") and John J. Bick ("Employee") effective June 1,
2006, with reference to the following facts:
A. Employer and Employee entered into that certain Employment and
Non-Competition Agreement effective June 1, 2006 (the "Original
Agreement").
B. Employer is a wholly-owned subsidiary of Amen Properties, Inc. ("Amen"),
and the parties have agreed that Amen will join in this First Amendment for
the limited purposes set forth herein and in the Original Agreement, as
amended hereby (the Original Agreement, as so amended by this First
Amendment, is referred to herein as the "Amended Agreement").
C. Employer and Employee desire to amend certain provisions of the Original
Agreement as provided in and subject to the terms and conditions of this
First Amendment. NOW, THEREFORE, FOR AND IN CONSIDERATION of the mutual
promises, covenants and agreements set forth herein and in the Original
Agreement, the parties hereto agree as follows:
1. Addition of Amen. Amen is hereby added as a party to the Amended Agreement
for the limited purposes of giving Amen the right and power to enforce the
provisions of the Amended Agreement which are or may be for the benefit of
or confer rights to Amen, and with respect to its limited obligations to
issue shares of common stock of Amen (the "Common Stock") pursuant to the
terms of the Amended Agreement.
2. Amendment of Section 1 of the Original Agreement. Section 1 of the Original
Agreement is hereby amended by deleting the last sentence of said Section 1
and adding the following to the end of said section:
"Employer is the wholly-owned subsidiary of Amen Properties, Inc. ("Amen"),
and Employee acknowledges and agrees that he will provide services to or
for the benefit of Employer, Amen or their respective subsidiaries, at the
discretion of the Board of Directors of Amen."
3. Amendment of Section 4(a) of the Original Agreement. Subject to approval of
the stockholders of Amen regarding the issuance of Common Stock as provided
below, Section 4(a) of the Original Agreement is hereby deleted in its
entirety and replaced with the following:
38
"(a) Salary: Employee shall receive a base salary ("Base Salary") paid by
the Company at an annualized rate of $140,000.00, less appropriate
withholding and deductions, during each calendar year of the term hereof,
payable semi-monthly on the 15th and the last day of each month during the
term hereof, and subject to adjustment by the Board on an annual basis.
Such Base Salary shall be payable in cash, except for the monthly salary
(both semi-monthly payments) payable during the last month at the end of
each calendar quarter (a "Quarter-ending Salary Payment") beginning on June
30, 2007 and continuing each quarter thereafter until the earlier of the
termination of Employee's employment under this Agreement or June 30, 2014.
Each Quarter-ending Salary Payment shall consist of (i) a cash payment
equal to the monthly salary payable less the sum of $11,590.54, and (ii)
the issuance by Amen to Employee of 2,644 shares of common stock of Amen
(the "Common Stock") in lieu of and in satisfaction of the remaining amount
of such monthly salary payment. In the event the amount of Quarter-ending
Salary Payment payable in cash is not sufficient to pay the appropriate
withholding and other deductions relating to the Quarter-ending Salary
Payment, the Company shall advance on behalf of the Employee such amounts
to satisfy the withholding and deductions and any sums so advanced by the
Company shall be deducted from the next salary payment to Employee.
Employee acknowledges and agrees that Amen is not obligated to register the
shares of Common Stock issued to him under applicable securities laws, and
that if such shares are not so registered the transfer of those shares will
be subject to restrictions under applicable securities laws and the shares
will not be freely tradeable. Employee further acknowledges and agrees:
that he will be acquiring the shares of Common Stock for his own account
and not with a view to transfer or distribute the shares of Common Stock;
that he has sufficient knowledge and experience in financial and business
matters, in general, and in the Business, in particular, to be able to
evaluate the merits and risks of an investment in the Common Stock and has
determined to make such investment based upon his own evaluation and
assessment (and that of his financial legal and accounting advisors)
without relying upon any representations or evaluation by Employer, Amen or
their respective subsidiaries, officers, directors or other
representatives; and that he may be required to hold the shares of Common
Stock for an indefinite period of time and he is financially able to bear
the risk thereof."
4. Amendment of Section 5 of the Original Agreement. Section 5 of the Original
Agreement is hereby amended by adding the following to the end of said
Section 5:
39
"As used in this Section 5, the term "Company" shall include Priority Power
Management, Ltd., Amen Properties, Inc. and their respective subsidiaries."
5. Amendment of Section 6 of the Original Agreement. Section 6 of the Original
Agreement shall be amended by adding the following to the end of said
Section 6:
"(d) As used in this Section 6, the term "Company" includes Priority Power
Management, Ltd., Amen Properties, Inc. and their respective subsidiaries."
6. Original Agreement. Except as expressly modified by this First Amendment,
the Original Agreement remains unchanged and in full force and effect.
7. Ratification and Agreement to be Bound. The parties hereto hereby ratify
and agree to be bound by the Amended Agreement.
8. Stockholder Approval. The issuance of Common Stock to Employee pursuant to
the Amended Agreement is subject to prior approval of the Amended Agreement
by the stockholders of Amen pursuant to the rules of the Nasdaq Stock
Market. Unless and until such stockholder approval is obtained, the terms
of Section 3(a) of the Amended Agreement requiring the issuance of shares
of Common Stock shall not be effective and all salary shall be paid in
cash.
9. Entire Agreement. The Amended Agreement constitutes the entire agreement of
the parties with respect to the subject matter thereof.
10. GOVERNING LAW. THIS FIRST AMENDMENT AND THE AMENDED AGREEMENT SHALL BE
GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF
THE STATE OF TEXAS.
11. Counterparts. This First Amendment may be executed in counterparts, each of
which shall be deemed an original, but all of which shall be taken together
as one document. Faxed signatures to this First Amendment shall be treated
as original signatures for all purposes.
IN WITNESS WHEREOF, the parties have executed this First Amendment as of
the date first above written.
PRIORITY POWER MANAGEMENT, LTD.
By: Priority Power Management, L.L.C.,
its General Partner
40
By:
Jon M. Morgan, Manager
AMEN PROPERTIES, INC.
By:
Jon M. Morgan, President
EMPLOYEE:
John J. Bick
41
APPENDIX III
AMENDMENT TO EMPLOYMENT AGREEMENT OF KEVIN YUNG
ADDENDUM TO EMPLOYMENT AND NON-COMPETITION AGREEMENT
This Addendum (the "Addendum") references the original Employment and
Non-Competition Agreement (the "Agreement") entered into as of the 1st day of
July, 2004 (the "Effective Date"), between AMEN PROPERTIES, INC., a Delaware
corporation (together with any subsidiary of such corporation employing Employee
at any time during the term hereof, the "Company"), and KEVIN YUNG (the
"Employee"). Both Company and Employee agree to the following changes to the
Agreement, effective December 5, 2006:
A. Under section 4 of the original Agreement, entitled, "Compensation and
Related Matters", subsection (b), "Bonus", the original calculation shall
be changed to the following:
(b) Bonus. In addition to the Base Salary, the Employee shall be eligible
for an annual bonus for each completed fiscal year of the Company
during the term hereof (the "Bonus"). The amount of each Bonus shall
be equal to twenty-five percent (25%) of any increase for that fiscal
year in the consolidated stockholder equity of Amen Properties, Inc.
directly attributed to the financial results of the Company's existing
or future new, acquired, or merged businesses associated with
wholesale and retail electricity and natural gas marketing and
consulting services, including but not limited to retail electricity
providers, qualified scheduling entities, gas and power aggregation,
gas and power brokering, energy services, and energy consulting. For
acquired or merged energy businesses, the basis against which the
consolidated stockholder equity increase is measured and Employee's
Bonus is calculated shall be only on that portion exceeding the
expected earnings as determined by the Company and thereby included in
the purchase price of the acquired or merged business. All
calculations of the Bonus shall be determined by the Company's
independent accountants in accordance with generally accepted
accounting principles; provided, that if there is a decrease for any
fiscal year in such consolidated stockholder equity, the amount of
such decrease shall be subtracted from any increase in any subsequent
fiscal year and the Bonus for such subsequent fiscal year(s) shall be
calculated based upon the net increase, if any, after subtracting the
amount of such decrease. Employee and Company may, upon written
agreement by both parties and approved by the Amen Board of Directors,
choose to include or exclude certain businesses from the Bonus
calculation, or amend the Bonus calculation in other ways. Such
Bonuses shall be paid within forty-five (45) days of the end of each
fiscal year of the Company, and may be paid, at the Employee's option
upon written notice to the Company, either in cash or in shares of the
42
Company's Common Stock, $.01 par value, of Amen Properties, Inc. (the
"Company Common Stock"), having a Market Value (as defined below)
equal to the amount of the payment due, or a combination thereof;
provided, that the Company shall have the option to pay the Bonus, or
any portion thereof, in cash notwithstanding the Employee's election
of payment in shares of Company Common Stock if the Company has a good
faith belief that the issuance of such shares may cause the Company to
risk the loss of any of its net operating loss carryforward under the
Internal Revenue Code and applicable Treasury Regulations. As used
herein, (i) "Market Value" shall be $3.20 per share for the fiscal
year ended December 31, 2004 and thereafter shall be calculated using
a price per share equal to the average closing price for the Company
Common Stock on the Nasdaq Stock Market (or other exchange or
securities quotation service on which the Company Common Stock is
Publicly Traded) for twenty (20) trading days prior to the date of
issuance of the shares as payment required by this Section 4(b), and
(ii) "Publicly Traded" means a security that is listed or admitted to
unlisted trading privileges on a national securities exchange or
designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers,
Inc. ("NASD") or if sales or bid and offer quotations are reported for
that class of stock in the automated quotation system operated by the
NASD. The Employee acknowledges and agrees that the Company will not
be required to register under applicable securities laws any shares of
Company Common Stock issued to him under this Agreement, that, if
unregistered, the transfer of such stock will be restricted under
applicable securities laws, and that he understands and accepts all
risks associated with owning shares of Company Common Stock, including
without limitation those related to such restrictions on transfer.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first above written.
AMEN PROPERTIES, INC.
By:
Jon M. Morgan, President
EMPLOYEE:
Kevin H. Yung
43