SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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|_| Preliminary Proxy Statement
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|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-12
ATLAS AMERICA, INC.
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(Name of Registrant as Specified In Its Charter)
N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid: __________________________________________
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ATLAS AMERICA, INC.
311 Rouser Road, Moon Township, PA 15108
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MONDAY, JUNE 13, 2005
To the Stockholders of ATLAS AMERICA, INC.:
Notice is hereby given that the annual meeting of stockholders of ATLAS
AMERICA, INC., a Delaware corporation (the "Company"), will be held at The
Philadelphia Art Alliance, 251 South 18th Street, Philadelphia, Pennsylvania, on
Monday, June 13, 2005, at 9:00 a.m. (the "Meeting"), for the following purposes:
1. To amend the Company's certificate of incorporation to provide for
three classes of directors.
2. To amend the Company's certificate of incorporation to provide
that any vacancy on the Board of Directors shall be filled by the
affirmative vote of a majority of the remaining directors.
3. To amend the Company's certificate of incorporation to remove
provisions permitting removal of members of the Board of Directors
without cause and to increase the vote required.
4. To elect seven directors, two to serve in Class I until 2006,
three to serve in Class II until 2007 and two to serve in Class
III until 2008.
5. To transact such other business as may properly be brought before
the Meeting and any adjournment thereof.
Only stockholders of record on the books of the Company at the close of
business on May 13, 2005, will be entitled to notice of and to vote at the
Meeting or any adjournment thereof. A list of stockholders entitled to vote at
the Meeting will be available for inspection at the Meeting and for 10 days
prior to the Meeting at the offices of the Company, at 311 Rouser Road, Moon
Township, Pennsylvania 15108. The stock transfer books will not be closed.
THE ENCLOSED ADDRESSED ENVELOPE FOR RETURNING THE ENCLOSED PROXY
REQUIRES NO POSTAGE AND YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO ITS USE.
IF YOU PLAN TO ATTEND YOU NEED TO BRING A FORM OF PERSONAL IDENTIFICATION WITH
YOU. IF YOUR STOCK IS HELD OF RECORD BY A BANK, BROKER OR OTHER NOMINEE, YOU
ALSO NEED TO BRING AN ACCOUNT STATEMENT INDICATING THAT YOU BENEFICIALLY OWN THE
SHARES AS OF THE RECORD DATE, OR A LETTER FROM THE RECORD HOLDER INDICATING THAT
YOU BENEFICIALLY OWN THE SHARES AS OF THE RECORD DATE, AND IF YOU WISH TO VOTE
AT THE MEETING YOU MUST FIRST OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN
YOUR NAME.
By order of the Board of Directors,
Michael S. Yecies, Secretary
May 18, 2005
ATLAS AMERICA, INC.
311 Rouser Road Moon Township, PA 15108
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
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GENERAL
INTRODUCTION
The annual meeting of stockholders of Atlas America, Inc. (the
"Company") will be held on Monday, June 13, 2005, at 9:00 a.m. (the "Meeting")
at The Philadelphia Art Alliance, 251 South 18th Street, Philadelphia,
Pennsylvania for the purposes set forth in the accompanying notice. Only
stockholders of record at the close of business on May 13, 2005, will be
entitled to notice of and to vote at the Meeting.
This statement is furnished in connection with the solicitation by the
Board of Directors of the Company (the "Board") of proxies from holders of the
Company's common stock to be used at the Meeting, and at any and all
adjournments thereof. Proxies in the accompanying form, properly executed and
returned to the Company, and not revoked, will be voted at the Meeting and any
and all adjournments thereof.
This proxy statement and the accompanying form of proxy are being sent
on or about May 18, 2005, to stockholders of record as of May 13, 2005.
CHANGING OR REVOKING PROXY
If a proxy in the accompanying form is executed and returned, it may
nevertheless be revoked at any time before its exercise by:
o sending written notice of revocation so that it is received by the
Secretary of the Company at its Moon Township address shown above
on or before midnight June 12, 2005;
o submitting a later dated proxy; or
o attending the Meeting and voting in person.
COMPANY'S SHARES OUTSTANDING AND ENTITLED TO VOTE AT THE MEETING
There were 13,333,333 shares of the Company's common stock outstanding
as of the May 13, 2005 record date. Each of those shares is entitled to one vote
on each matter to be voted on at the Meeting.
QUORUM
The presence in person or by proxy of holders of the Company's
outstanding common stock representing not less than one-third of the outstanding
shares of common stock will constitute a quorum. Abstentions and shares held by
a broker as nominee (i.e., in "street name") that are represented by proxies at
the Meeting, but that the broker fails to vote on one or more matters as a
result of incomplete instructions from the beneficial owner of the shares
("broker non-votes"), also will be treated as present for quorum purposes.
VOTE REQUIRED TO APPROVE THE PROPOSALS
If a quorum is present, approval of the amendments to the Company's
certificate of incorporation will require a favorable vote of a majority of the
outstanding shares of common stock entitled to vote. The proposed amendments are
described in Proposals 1, 2 and 3 and unless all of them are approved by the
stockholders, none of them will be adopted by the Company. Consequently, a vote
against any of these proposals will have the effect of a vote against all of
them. The affirmative vote of a plurality of the shares represented at the
Meeting, in person or by proxy, will be necessary for the election of directors.
RESOURCE AMERICA HOLDS APPROXIMATELY 80.2% OF THE OUTSTANDING SHARES OF COMMON
STOCK AS OF THE RECORD DATE AND INTENDS TO VOTE SUCH SHARES "FOR" THE APPROVAL
OF THE AMENDMENTS TO THE CERTIFICATE OF INCORPORATION AND "FOR" THE ELECTION OF
THE NOMINATED DIRECTORS. Approval of all other business properly brought before
the Meeting will require a favorable vote of a majority of the shares
represented at the Meeting in person or by proxy.
Votes may be cast for or withheld from each nominee for director, and
for, against or abstain as to approval of the amendments to the certificate of
incorporation. Under applicable Delaware law, broker non-votes represented at
the meeting, but with respect to which such broker or nominee is not empowered
to vote on a particular proposal, and abstentions will have no effect on the
vote for the election of directors. Abstentions and broker non-votes will have
the effect of a vote against the proposed amendments to the certificate of
incorporation.
Any proxy not specifying to the contrary will be voted FOR the
amendments to the certificate of incorporation and FOR the election of the
nominated directors.
EXPENSES AND MANNER OF SOLICITATION
The cost of soliciting proxies for the Meeting, including the cost of
preparing, assembling and mailing this proxy statement and the accompanying form
of proxy will be borne by the Company. Proxies may be solicited by directors,
officers and regular employees of the Company either personally, by letter, or
by telephone. No director, officer, or employee who solicits proxies will be
specially compensated for soliciting such proxies. The Company expects to
reimburse banks, brokers and other persons for their reasonable out-of-pocket
expenses in handling proxy materials for beneficial owners of the Company's
common stock.
NO APPRAISAL RIGHTS
Stockholders who object to the proposals will not have appraisal,
dissenters' or similar rights under Delaware law. These rights would permit a
stockholder to seek a judicial determination of the fair value of his or her
shares and to compel the purchase of his or her shares for cash in that amount.
If the proposals described in this proxy statement are approved as described,
that approval will be binding on all stockholders, and objecting stockholders
will have no alternative other than selling their shares if they dissent from
them.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of
common stock owned, as of May 13, 2005, by (a) each person who, to the knowledge
of the Company, is the beneficial owner of more than 5% of the outstanding
shares of common stock, (b) each of the Company's present directors, (c) each of
the Company's executive officers serving during the 2004 fiscal year, and (d)
all of the Company's directors and executive officers as a group. This
2
information is reported in accordance with the beneficial ownership rules of the
Securities and Exchange Commission under which a person is deemed to be the
beneficial owner of a security if that person has or shares voting power or
investment power with respect to such security or has the right to acquire such
ownership within 60 days. Shares of common stock issuable pursuant to options or
warrants are deemed to be outstanding for purposes of computing the percentage
of the person or group holding such options or warrants but are not deemed to be
outstanding for purposes of computing the percentage of any other person. Unless
otherwise indicated in footnotes to the table, each person listed has sole
voting and dispositive power with respect to the securities owned by such
person. The address for each director and executive officer is 311 Rouser Road,
Moon Township, PA 15108. The address for Resource America, Inc. is 1845 Walnut
Street, Philadelphia, PA 19103.
Common stock
--------------------
Amount and nature of Percent of
Beneficial owner beneficial ownership class
- ---------------- ---------------------- ---------
Directors
Carlton M. Arrendell.................................................... 0 -
William R. Bagnell...................................................... 0 -
Edward E. Cohen......................................................... 10,751,333(1) 80.6%
Jonathan Z. Cohen....................................................... 10,730,333(2) 80.5%
Donald W. Delson........................................................ 0 -
Nicholas A. DiNubile.................................................... 0 -
Dennis A. Holtz......................................................... 714 *
Non-director executive officers
Frank P. Carolas........................................................ 714 *
Freddie M. Kotek........................................................ 6,914 *
Jeffrey C. Simmons...................................................... 357 *
Michael L. Staines...................................................... 0 -
Nancy J. McGurk......................................................... 0 -
All executive officers and directors as a group (12 persons)............ 10,802,032 *
Other owners of more than
5% of outstanding shares
Resource America, Inc................................................... 10,688,333 80.2%
FMR Corp. and affiliates(3)............................................. 697,100 5.2%
- ---------------
* Less than 1%.
(1) Includes 10,688,333 shares held by Resource America, for which Mr. Cohen
serves as Chairman; 3,000 shares are held by a pension plan trust in
which Mr. Cohen is the primary beneficiary; 14,950 shares held in an
individual retirement account of Betsy Z. Cohen, Mr. Cohen's wife and
27,113 shares held in trust for members of Mr. Cohen's family.
(2) Includes 10,688,333 shares held by Resource America, for which
Mr. Cohen serves as Chief Executive Officer.
(3) Based on information reported on a Schedule 13G dated February 14, 2005.
Includes 64,400 shares as to which sole voting power is claimed and
697,100 shares as to which sole power to dispose or direct the
disposition is claimed. FMR Corp. is the parent holding company for
Fidelity Management & Research Company, an investment adviser registered
under Section 203 of the Investment Advisers Act of 1940. Fidelity
Management & Research Company is the beneficial owner of 632,500 shares
as a result of acting as investment adviser to various investment
companies registered under Section 8 of the Investment Company Act of
1940, and each of Edward C. Johnson 3d, FMR Corp., through its control of
Fidelity Management & Research Company, and the funds has sole power to
dispose of the 632,500 shares. The boards of trustees of the funds,
rather than Edward C. Johnson 3d nor FMR Corp., have sole voting power
with respect to the 632,500 shares. Fidelity Management Trust Company, a
wholly-owned subsidiary of FMR Corp. and bank as defined under Section
3(a)(6) of the Securities Exchange Act of 1934, beneficially owns 64,600
shares as investment manager of institutional accounts. Edward C. Johnson
3d and FMR Corp., through its control of Fidelity Management Trust
Company, each have sole dispositive power over the 64,600 shares and sole
power to direct the voting of such shares. The address for FMR Corp.,
Fidelity Management & Research Company and Fidelity Management Trust
Company is 82 Devonshire Street, Boston, MA 02109.
3
PROPOSAL 1. AMENDMENT TO COMPANY'S CERTIFICATE OF INCORPORATION TO
PROVIDE FOR A CLASSIFIED BOARD
DESCRIPTION OF THE PROPOSED AMENDMENTS
The Board has unanimously approved and recommends that the stockholders
approve certain amendments to the Company's certificate of incorporation
(collectively, the "Classified Board Amendments"). The Classified Board
Amendments are set out in Proposals 1, 2 and 3 herein (the "Classified
Proposals"), and unless all of the Classified Proposals are approved by the
stockholders, none of them shall be adopted by the Company. Consequently, a vote
against any one of the Classified Proposals will have the effect of a vote
against all of the Classified Proposals. The advantages, disadvantages and
effects of each of the Classified Proposals may be similar to the advantages,
disadvantages and effects of other Classified Proposals. As such, certain of the
discussion under any one Classified Proposal may apply to another Classified
Proposal. Stockholders are urged to carefully review all discussions under the
Classified Proposals.
Appendix A sets forth the full text of the Classified Board Amendments.
The description of the Classified Board Amendments is qualified in its entirety
by reference to Appendix A. If the Classified Board Amendments are approved, the
appropriate sections of the Company's bylaws will be amended by the Board to
conform to the amendments.
Under the existing provisions of the Company's certificate of
incorporation, directors of the Company are elected annually for terms of one
year. If the Classified Board Amendments are approved by the stockholders and,
thereafter, filed with the Secretary of State of the State of Delaware, the
Board will be classified into three classes. In that event, each of the
directors elected at the Meeting will continue to serve as a director, but the
term of office for all such directors will no longer be one year. Instead:
o Class I directors will hold office until the 2006 annual meeting;
c Class II directors will hold office until the 2007 annual meeting;
and
o Class III directors will hold office until the 2008 annual
meeting,
in each case, until their successors are duly elected and qualified (except in
cases where no successor is elected due to a reduction in the size of the
Board), or until earlier resignation, removal from office, death or incapacity.
Starting with the 2006 annual meeting, one class of directors will be elected
each year for a three-year term. At least two annual meetings, instead of one,
will be required to effect a change in control of the Board. If the proposal to
classify the Board is not approved, all of the directors elected at the Meeting
will serve for a one-year term to expire at the 2006 annual meeting. However, it
is anticipated that the proposed amendment will be adopted because Resource
America intends to vote its 10,688,333 shares, representing 80.2% of the
Company's outstanding common stock, in favor of it.
For information regarding the nominees for election to the Board at the
Meeting, see "Proposal 4," below.
If at any time the size of the Board is changed, the increase or
decrease in the number of directors would be apportioned among the three classes
to make all classes as nearly equal as possible. The Board has no present plans,
arrangements, commitments or understandings with respect to increasing or
decreasing the size of the Board or of any class of directors.
4
As discussed below in "Proposal 2," vacancies, including vacancies
created by an increase in the size of the Board, will be filled by the
affirmative vote of a majority of the entire board. A director elected to fill a
vacancy created by an increase in the size of the Board will hold office for the
remaining term of the class into which the director is placed. Any director
elected to fill a vacancy not resulting from an increase in the number of
directors will have the same remaining term as the director's predecessor.
ADVANTAGES AND DISADVANTAGES OF THE CLASSIFIED BOARD AMENDMENTS
The Board has proposed the Classified Board Amendments in light of
Resource America's announced intention to distribute its remaining interest in
the Company to Resource America's common stockholders in a tax-free spin-off. If
the spin-off is completed, the Company will no longer be majority-owned by
Resource America, its founder. The Board believes that the Classified Board
Amendments will assure the continuity and stability of the Company's management
and policies in the future, since a majority of the directors at any given time
will have prior experience as directors of the Company. Although the Company has
had no difficulty in the past in maintaining continuity because the Company had
been a wholly-owned subsidiary of Resource America until its May 2004 initial
public offering, the Board considers it advisable to provide the additional
assurance of continuity that is afforded by the classification of directors.
Resource America announced on May 2, 2005 that it has received a
favorable ruling from the Internal Revenue Service as to the tax-free nature of
the distribution for U.S. federal income tax purposes and has advised us that it
anticipates that the distribution will occur by June 30, 2005. Resource America
has sole discretion if and when to complete the distribution and we cannot
assure you that the distribution will occur by the contemplated time or at all.
The Classified Board Amendments may also have the effect of encouraging
persons seeking to acquire control of the Company, whether pursuant to
open-market purchases, negotiated purchases from large stockholders or an
unsolicited bid for all or part of the Company's common stock, to initiate such
an acquisition through arm's length negotiations with the Board. The Board
believes that it would be in a better position to protect the interests of all
the stockholders if such a scenario arose. Furthermore, the stockholders of the
Company will have a more meaningful opportunity to evaluate any such action.
It should be noted also that the classification provision will apply to
every election of directors, whether or not a change in the Board would be
beneficial to the Company and its stockholders and whether or not a majority of
the Company's stockholders believes that such a change would be desirable.
Therefore, adoption of the Classified Board Amendments may have significant
effects on the ability of the stockholders of the Company to change the
composition of the incumbent Board.
The Classified Board Amendments may discourage a third party from
making a tender offer for a portion or all of the Company's common stock, or
otherwise attempting to obtain a substantial position in the equity securities
of the Company, by preventing such third party from immediately removing and
replacing the incumbent directors. Takeovers or changes in the board of
directors of a company that are proposed and effected without prior consultation
and negotiation with the company are not necessarily detrimental to the company
and its stockholders. However, the Board feels that the benefits of seeking to
protect the ability of the Company to negotiate effectively, through directors
who have previously been elected by the stockholders as a whole and are familiar
with the Company, outweigh any disadvantage of discouraging such unsolicited
proposals.
5
The Classified Board Amendments are not in response to any specific
efforts of which the Company is aware to accumulate shares of common stock or
obtain control of the Company. The Board is recommending the adoption of the
Classified Board Amendments in order to further continuity and stability in the
leadership and policies of the Company after the spin-off by Resource America of
its controlling interest in the Company. Because of the time associated with
obtaining stockholder approval, the Company believes it is inadvisable to defer
consideration of the Classified Board Amendments until a takeover threat is
pending. Once a specific threat exists, the time required to adopt the
Classified Board Amendments or other anti-takeover measures may render their
adoption impractical before the completion of the takeover. Further, the absence
of a specific threat permits stockholders to consider the merits of the
Classified Board Amendments outside the pressured atmosphere of a takeover
threat. For these reasons, the Company believes it is prudent to consider the
Classified Board Amendments at this time.
Other than as disclosed herein, the Board does not currently
contemplate recommending the adoption of any further amendments to the
certificate of incorporation or bylaws or any other action designed to affect
the ability of third parties to take over or change control of the Company.
EXISTING ANTI-TAKEOVER PROVISIONS OF THE CERTIFICATE OF INCORPORATION, BYLAWS
AND DELAWARE LAW
The Company's certificate of incorporation authorizes 1,000,000 shares of
preferred stock, par value of $.01 per share. The preferred stock may be issued
in one or more series designated by the Board without further stockholder
approval, and will include such rights, qualifications, restrictions and
preferences as the Board may provide. The effects of the designation and
issuance of series of preferred stock on the rights of the holders of common
stock depend upon the terms of such series. However, effects may include (i)
priority over holders of common stock as to the payment of dividends; (ii)
restrictions upon any distribution of assets to the holders of the common stock
upon liquidation or dissolution and until the satisfaction of any liquidation
preference granted to the holders of preferred stock; (iii) dilution of voting
power to the extent that the holders of shares of preferred stock are given
voting rights; and (iv) possible dilution of the equity interests and voting
power if the preferred stock is convertible into common stock.
Although the Board has no present intention of doing so, it could issue
shares of preferred stock (within the limits imposed by applicable law) that
could, depending on the terms of such series, make more difficult or discourage
an attempt to obtain control of the Company by means of a merger, tender offer,
proxy contest or other means that some shareholders may deem advantageous. When
in the judgment of the Board such action would be in the best interests of the
stockholders and the Company, the issuance of shares of preferred stock could be
used to create voting or other impediments or to discourage persons seeking to
gain control of the Company, for example, by the sale of preferred stock to
purchasers favorable to the Board. In addition, the Board could authorize
holders of a series of preferred stock to vote, either separately as a class or
with the holders of common stock, on any merger, sale or exchange of assets by
the Company or any other extraordinary corporate transaction. The existence of
the additional authorized shares could have the effect of discouraging
unsolicited takeover attempts. The issuance of new shares could also be used to
dilute the stock ownership of a person or entity seeking to obtain control of
the Company.
The Company's certificate of incorporation does not currently provide
for cumulative voting by the stockholders.
6
The Company is subject to Section 203 of the Delaware General
Corporation Law (the "Anti-Takeover Law") regulating corporate takeovers. The
Anti-Takeover Law prevents certain Delaware corporations from engaging, under
certain circumstances, in a "business combination" (which includes a merger or
sale of more than 10% of the corporation's assets) with any "interested
stockholder" (a stockholder who acquired 15% or more of the corporation's
outstanding voting stock without the prior approval of the corporation's board
of directors) for three years following the date that such stockholder became an
"interested stockholder." A Delaware corporation may "opt out" of the
Anti-Takeover Law with an express provision in its original certificate of
incorporation or an express provision in its certificate of incorporation or
bylaws resulting from a stockholder's amendment approved by at least a majority
of the outstanding voting shares. The Company has not "opted out" of the
provisions of the Anti-Takeover Law, nor does the Company currently contemplate
recommending the stockholders approve an amendment to the certificate of
incorporation to provide for the "opting out" of the Anti-Takeover Law.
In connection with the proposed spin-off by Resource America of its
controlling interest in the Company, the Board intends to make the following
changes to the Company's bylaws before the Meeting:
o Permit special meetings of stockholders to be called only by the
Chairman, Vice Chairman, Chief Executive Officer, President,
Secretary or a majority of the Board. Currently, in addition to
these persons, the Company's bylaws permit holders of at least
one-third of the voting power of the Company's outstanding capital
stock to call special meetings.
c Increase the requirements for a quorum at a stockholders meeting
from one-third of the shares to a majority. This change will make
the Company's quorum requirements consistent with the default
provisions of ss. 216(1) of the Delaware General Corporation Law
which provides that a majority of the shares entitled to vote
constitutes a quorum unless the certificate of incorporation or
bylaws provide otherwise. Absent this change, holders of as little
as 16.7% of the voting power of the Company's outstanding stock
could take action on matters submitted for stockholder vote.
The bylaw provisions that will be changed were adopted when Resource
America was the Company's sole stockholder and, the Board believes, are no
longer appropriate because Resource America will cease being the Company's
controlling stockholder.
THE BOARD HAS UNANIMOUSLY APPROVED THIS PROPOSAL AND DEEMS THIS
PROPOSAL TO BE IN THE BEST INTEREST OF THE COMPANY AND ITS STOCKHOLDERS AND
RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
PROPOSAL 2. AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO PROVIDE
THAT ANY VACANCY ON THE BOARD SHALL BE FILLED BY THE AFFIRMATIVE VOTE OF
A MAJORITY OF THE REMAINING DIRECTORS
Currently, a vacancy on the Board, including a vacancy created by an
increase in the number of directors, may be filled by the affirmative vote or
consent of the holders of at least a majority of the voting power of the
Company's outstanding common stock entitled to vote in the election of directors
and, if the vacancy is not so filled within 30 days, by a majority of the
directors then in office, even if less than a quorum. Proposal 2, if approved by
the stockholders, would amend the certificate of incorporation to provide that a
vacancy created by an increase in the number of board members could be filled
only by a majority of the directors then in office, provided that a quorum was
present; and that any other vacancy could be filled only by a majority of the
directors then in office, even if less than a quorum.
7
For a discussion of the advantages and disadvantages of Proposal 2,
including possible "anti-takeover" effects and other potential adverse
consequences to the stockholders, see "Proposal 1."
THE BOARD HAS UNANIMOUSLY APPROVED THIS PROPOSAL AND DEEMS THIS
PROPOSAL TO BE IN THE BEST INTEREST OF THE COMPANY AND ITS STOCKHOLDERS AND
RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
PROPOSAL 3. AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO REMOVE
PROVISIONS PERMITTING REMOVAL OF MEMBERS OF THE BOARD WITHOUT CAUSE AND
INCREASE THE VOTE REQUIRED
The Company's certificate of incorporation currently provides that
directors may be removed with or without cause, and the vacancy filled, by a
majority of the voting power of the Company's outstanding common stock. Proposal
3, if approved by the stockholders, would eliminate the ability of stockholders
to remove a director without cause. This amendment will make the Company's
certificate of incorporation consistent with the default provisions of Section
141(k) of the Delaware General Corporation Law which provide that, in the case
of a corporation with a classified board, stockholders may remove a director
only for cause unless the certificate of incorporation provides otherwise. In
addition, Proposal 3 would require the vote of at least two-thirds of the voting
power of the Company's outstanding common stock to remove a director. This
amendment requires a higher vote than the simple majority provided by the
Delaware General Corporation Law and the Company's current certificate of
incorporation. Coupled with the requirement that a director may only be removed
for cause, this provision would make it more difficult to remove some or all of
the members of the Board.
For a discussion of the advantages and disadvantages of Proposal 3,
including possible "anti-takeover" effects and other potential adverse
consequences to the stockholders, see "Proposal 1."
THE BOARD HAS UNANIMOUSLY APPROVED THIS PROPOSAL AND DEEMS THIS
PROPOSAL TO BE IN THE BEST INTEREST OF THE COMPANY AND ITS STOCKHOLDERS AND
RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
PROPOSAL 4. ELECTION OF DIRECTORS
DIRECTORS
The Company's bylaws provide that the number of directors shall be
fixed by resolution of the Board, provided that there shall be a minimum of one
and a maximum of 12 directors. During fiscal 2004, the Board fixed the number of
directors at seven. Currently, all directors are elected for a term of one year
or until their successors are elected and qualified. If the Classified Board
Amendments (see Proposals 1, 2 and 3 described above) are approved by the
stockholders, the Board will be divided into three classes and the directors
will be elected to hold office for terms of one, two or three years, in
accordance with the classifications indicated below and until their successors
are elected and qualified. The Board, upon the recommendation of its nominating
and governance committee, has nominated Carlton M. Arrendell, William R.
Bagnell, Edward E. Cohen, Jonathan Z. Cohen, Donald W. Delson, Nicholas A.
DiNubile and Dennis A. Holtz for election at the 2005 annual meeting.
It is the intention of the persons named in the enclosed proxy, in the
absence of a contrary direction, to vote for the election of all of the current
directors. Should any of the nominees become unable or refuse to accept
nomination or election as a director, it is intended that the persons named as
proxies will vote for the election of such other person as the nominating and
governance committee of the Board may recommend. The Board knows of no reason
why any of the nominees might be unable or refuse to accept nomination or
election.
8
CLASS I DIRECTORS WITH TERMS EXPIRING IN 2006:
WILLIAM R. BAGNELL has been a director since February 2004. Mr. Bagnell
has been involved in the energy industry in various capacities since 1990. He
has been Vice President--Energy for Planalytics, Inc. (an energy industry
software company) since March 2000 and was Director of Sales for Fisher Tank
Company (a national manufacturer of carbon and stainless steel bulk storage
tanks) from September 1998 to January 2000. Before that, he served as Manager of
Business Development for Buckeye Pipeline Partners, L.P. (a refined petroleum
products transportation company) from October 1992 until September 1998. Mr.
Bagnell served as an independent member of the managing board of Atlas Pipeline
Partners GP, LLC from its formation in November 1999 until May 2004.
NICHOLAS A. DINUBILE has been a director since February 2004. Dr.
DiNubile has been an orthopedic surgeon specializing in sports medicine since
1982. Dr. DiNubile has served as special advisor and medical consultant to the
President's Council on Physical Fitness and as Orthopedic Consultant to the
Philadelphia 76ers basketball team. Dr. DiNubile is also Clinical Assistant
Professor of the Department of Orthopedic Surgery at the Hospital of the
University of Pennsylvania.
CLASS II DIRECTORS WITH TERMS EXPIRING IN 2007:
CARLTON M. ARRENDELL has been a director since February 2004. Mr.
Arrendell has been with Investment Trust Corporation (a consultant to the
trustee of the AFL-CIO Building Investment Trust) since December 1997 and
currently serves as Chief Investment Officer.
JONATHAN Z. COHEN has been Vice Chairman of the Board since our
formation. He has been the Chief Executive Officer of Resource America since May
2004, President since October 2003 and a director since October 2002. Before
being elected Chief Executive Officer, he served as Resource America's Chief
Operating Officer from April 2002 to May 2004, Executive Vice President from
April 2001 to October 2003 and Senior Vice President from May 1999 to April
2001. Mr. Cohen has been Vice Chairman of the managing board of Atlas Pipeline
Partners GP since its formation in November 1999, a Trustee and Secretary of
RAIT Investment Trust (a publicly-traded real estate investment trust) since
1997 and its Vice Chairman since October 2003, and Chairman of the board of
directors of The Richardson Company (a sales consulting company) since October
1999. Mr. Cohen is a son of Edward E. Cohen.
DONALD W. DELSON has been a director since February 2004. Mr. Delson
has over 20 years of experience as an investment banker specializing in
financial institutions. Mr. Delson has been a Managing Director, Corporate
Finance Group, at Keefe, Bruyette & Woods, Inc. since 1997, and before that was
a Managing Director in the Corporate Finance Group at Alex. Brown & Sons from
1982 to 1997. Mr. Delson served as an independent member of the managing board
of Atlas Pipeline Partners GP from June 2003 until May 2004.
CLASS III DIRECTORS WITH TERMS EXPIRING IN 2008:
EDWARD E. COHEN has been the Chairman of the Board and the Company's
Chief Executive Officer and President since the Company's formation in September
2000. He has been Chairman of the board of directors of Resource America since
1990 and was its Chief Executive Officer from 1988 until May 2004, and President
from September 2000 until October 2003. In addition, Mr. Cohen has been Chairman
of the managing board of Atlas Pipeline Partners GP since its formation in
November 1999, a director of TRM Corporation (a publicly-traded consumer
services company) since June 1998 and Chairman of the Board of Brandywine
Construction & Management, Inc. (a property management company) since 1994. Mr.
Cohen is the father of Jonathan Z. Cohen.
9
DENNIS A. HOLTZ has been a director since February 2004. Mr. Holtz has
maintained a corporate law practice with D.A. Holtz, Esquire & Associates in
Philadelphia and New Jersey since 1988.
NON-DIRECTOR EXECUTIVE OFFICERS
The Board of Directors appoints officers each year at its annual
meeting following the annual stockholders meeting and from time to time as
necessary.
FRANK P. CAROLAS has been an Executive Vice President since January
2001 and served as a director from January 2002 until February 2004. Mr. Carolas
was a Vice President of Resource America from April 2001 until May 2004, and has
been Executive Vice President--Land and Geology and a director of Atlas
Resources, Inc. (a wholly-owned subsidiary of the Company which acts as the
managing partner of the Company's drilling partnerships) since January 2001. Mr.
Carolas is a certified petroleum geologist and has been employed by Atlas
Resources and its affiliates since 1981.
MATTHEW A. JONES has been Chief Financial Officer of the Company and of
Atlas Pipeline Partners GP since March 2005. Mr. Jones spent his last 9 years
with the Investment Banking group at Friedman Billings Ramsey, most recently as
Managing Director. For the last five years, Mr. Jones had been with FBR's Energy
Investment Banking Group. Before that, Mr. Jones was with FBR's Specialty
Finance and Real Estate Group. Previous to FBR, Mr. Jones held positions with
Nationsbank and its predecessors for 12 years in the Commercial and Real Estate
Finance division. Mr. Jones is a Chartered Financial Analyst.
FREDDIE M. KOTEK has been an Executive Vice President since February
2004 and served as Chief Financial Officer from February 2004 until March 2005
and a director from September 2001 until February 2004. Mr. Kotek was a Senior
Vice President of Resource America from 1995 until May 2004, President of
Resource Leasing, Inc. (a wholly-owned subsidiary of Resource America) from 1995
until May 2004, and has been Chairman of Atlas Resources, Inc. since September
2001 and Chief Executive Officer and President of Atlas Resources since January
2002. Mr. Kotek was President of Resource Properties, Inc. (a wholly-owned
subsidiary of Resource America) from September 2000 to October 2001 and its
Executive Vice President from 1993 to September 2000.
NANCY J. MCGURK has been the Chief Accounting Officer since January
2001, Senior Vice President since January 2002, and served Chief Financial
Officer from January 2001 until February 2004. Ms. McGurk was a Vice President
of Resource America from 1992 until May 2004, and its Treasurer and Chief
Accounting Officer from 1989 until May 2004. Ms. McGurk has been Senior Vice
President of Atlas Resources since January 2002 and Chief Financial Officer and
Chief Accounting Officer since January 2001.
JEFFREY C. SIMMONS has been an Executive Vice President since January
2001 and was a director from January 2002 until February 2004. He has been
Executive Vice President - Operations and a director of Atlas Resources since
January 2001. Mr. Simmons was a Vice President of Resource America from April
2001 until May 2004. Mr. Simmons joined Resource America in 1986 as a senior
petroleum engineer and served in various executive positions with its energy
subsidiaries thereafter.
MICHAEL L. STAINES has been an Executive Vice President since the
Company's formation. Mr. Staines was a Senior Vice President of Resource America
from 1989 until May 2004, a director from 1989 to February 2000 and Secretary
from 1989 to October 1998. Mr. Staines has been President of Atlas Pipeline
Partners GP since January 2001 and its Chief Operating Officer and a member of
its Managing Board since its formation in November 1999.
10
OTHER SIGNIFICANT EMPLOYEES
The following sets forth certain information regarding other
significant employees of the Company:
MARCI F. BLEICHMAR, 34, has been Vice President--Marketing since
February 2004. Ms. Bleichmar has also served as Vice President--Marketing of
Atlas Resources since February 2001. From March 2000 until February 2001, Ms.
Bleichmar was director of marketing for Jacob Asset Management (a mutual fund
manager) and, from March 1998 until March 2000, was an account executive at
Bloomberg Financial Services, L.P. Before that, Ms. Bleichmar had been an
associate on the Derivatives Trading Desk of JPMorgan since 1994.
MICHAEL G. HARTZELL, 49, has been Vice President--Land Administration
since January 2002, and before that served as Senior Land Coordinator from
January 1999 to January 2002. Mr. Hartzell served as general manager of one of
the Company's field offices from January 1998 to January 1999. Mr. Hartzell has
also served as Vice President--Land Administration for Atlas Resources since
September 2001. Mr. Hartzell has been employed by Atlas Resources and its
affiliates since 1980.
JACK L. HOLLANDER, 48, has been Senior Vice President--Direct
Participation Programs since January 2002. Mr. Hollander has also been Senior
Vice President--Direct Participation Programs of Atlas Resources since January
2002, and before that served as Vice President from January 2001 until December
2001. Mr. Hollander practiced law with Rattet, Hollander & Pasternak,
concentrating in tax matters and real estate transactions, from 1990 to January
2001, and served as in-house counsel for Integrated Resources, Inc. (a
diversified financial services company) from 1982 to 1990.
DONALD R. LAUGHLIN, 56, has been Vice President--Drilling and
Production since January 2002, and before that served as Senior Drilling
Engineer since May 2001. Mr. Laughlin has also served as Vice
President--Drilling and Production for Atlas Resources since September 2001. Mr.
Laughlin has over 30 years experience as a petroleum engineer in the Appalachian
Basin, having been employed by Columbia Gas Transmission Corporation from
October 1995 to May 2001 as a Vice President, Cabot Oil & Gas Corporation from
1989 to 1995 as Manager of Drilling Operations and Technical Services, Doran &
Associates, Inc. (an industrial engineering firm) from 1977 until 1989 as Vice
President--Operations, and Columbia Gas from 1970 to 1977 as Drilling Engineer
and Gas Storage Engineer.
DIRECTOR COMPENSATION
Each of the Company's independent directors (Messrs. Arendell, Bagnell,
Delson, DiNubile and Holtz) is paid a monthly retainer of $1,000 and a fee of
$1,000 for each Board meeting attended. The chairman of a committee receives an
additional monthly retainer of $500 and other committee members receive an
additional monthly retainer of $250. In addition, each director who is not an
employee of either the Company or of Resource America annually receives deferred
units, representing a right to receive shares of the Company's common stock over
a four-year vesting period, in an amount equal to $15,000 divided by the price
per share of the Company's common stock at the time of the award.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors, and persons who own more than ten percent of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission and to
furnish the Company with copies of all such reports. Based solely on its review
of the reports received by it, or written representations from certain reporting
persons that no filings were required for those persons, the Company believes
that, during fiscal year 2004, its officers, directors and greater than ten
percent stockholders complied with all applicable filing requirements.
11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation committee of the Board during fiscal 2004 consisted of
Messrs. Delson, DiNubile and Holtz. None of such persons was an officer or
employee, or former officer or employee, of the Company or any of its
subsidiaries during fiscal 2004. No executive officer of the Company was a
director or executive officer of any entity of which any member of the
compensation committee was a director or executive officer during fiscal year
2004.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
The Board held five meetings during fiscal 2004 since the appointment
of the current board on February 9, 2004. Before that, the Company did not have
any independent Board members. Each of the directors attended at least 75% of
the meetings of the Board and all meetings of the committees on which the
director served during fiscal 2004. The Board currently consists of seven
members, five of whom are independent directors as defined by Nasdaq National
Market standards. The five independent directors are Messrs. Arendell, Bagnell,
Delson, DiNubile and Holtz.
The Company is currently, and will be until Resource America spins-off
its remaining stock in the Company, a "controlled company" as defined under
Nasdaq Marketplace Rule 4550(c)(5) because more than 50% of its voting power is
held by Resource America. As a controlled company, the Company is not required
to comply with certain Nasdaq requirements regarding independent directors,
including having adopted a formal written charter or Board resolution addressing
the director nominations process. Nevertheless, the Company complies with most
of these requirements, including having a majority of its Board be independent
directors and having its compensation and nominating committees be comprised
solely of independent directors.
The Board has established the following committees: an audit committee,
a compensation committee and a nominating and governance committee. The Board
may establish other committees from time to time to facilitate the Company's
management.
The principal functions of the audit committee are to assist the Board
of Directors in monitoring the integrity of the Company's financial statements,
the independent auditor's qualifications and independence, the performance of
the Company's independent auditors and the Company's compliance with legal and
regulatory requirements. The audit committee has the sole authority to retain
and terminate the Company's independent auditors and to approve the compensation
paid to the independent auditors. The audit committee held three meetings during
fiscal 2004. The audit committee is also responsible for overseeing the
Company's internal audit function. The audit committee is comprised solely of
independent directors, consisting of Messrs. Arrendell, Bagnell and Delson, with
Mr. Arrendell acting as the chairman. The Board has determined that Mr. Delson
is an audit committee financial expert.
The principal functions of the compensation committee are to administer
the Company's employee benefit plans (including incentive plans), annually
evaluate salary grades and ranges, establish guidelines concerning average
compensation increases, establish performance criteria for and evaluate the
performance of the Company's chief executive officer and approve compensation of
all officers and directors. The compensation committee held two meetings during
fiscal 2004. The compensation committee is comprised solely of independent
directors, consisting of Messrs. Delson, DiNubile and Holtz, with Mr. Delson
acting as the chairman.
12
The principal functions of the nominating and governance committee are
to recommend persons to be selected by the Board as nominees for election as
directors, recommend persons to be elected to fill any vacancies on the Board,
consider and recommend to the Board qualifications for the office of director
and policies concerning the term of office of directors and the composition of
the Board and consider and recommend to the Board other actions relating to
corporate governance. The nominating and governance committee held no meetings
during fiscal 2004. The nominating and governance committee is comprised solely
of independent directors, consisting Messrs. Bagnell, DiNubile and Holtz, with
Mr. Holtz acting as the chairman.
The nominating and governance committee has adopted a charter with
respect to its nominating function, a current copy of which is available on the
Company's web site at www.atlasamerica.com. The committee will consider nominees
recommended by security holders for the 2006 annual meeting of stockholders if
submitted in writing to the Secretary of the Company in accordance with the
Company's bylaws and rules promulgated by the Securities and Exchange
Commission. See "Stockholder Proposals" for information concerning nominations
by stockholders.
The Board has also established a process for stockholders to send
communications to it. Any stockholder of the Company who wishes to send a
communication to the Board should mail such communication to the Secretary of
the Company at its Moon Township address stated herein. Beneficial owners shall
include in their communication a good faith representation that they are
beneficial owners of the Company's common stock. The Secretary of the Company
will promptly forward to the Chairman of the Board any and all such stockholder
communications.
The Company does not have a formal policy regarding Board member
attendance at its annual meeting of stockholders. Because a regularly scheduled
meeting of the Board will not occur on the date of the Meeting, the Company does
not anticipate that any of its Board members will attend the Meeting other than
Messrs. Edward E. and Jonathan Z. Cohen.
REPORT OF THE AUDIT COMMITTEE
The audit committee has approved the following report:
In connection with its function to oversee and monitor the financial
reporting process of the Company, the audit committee has done the following:
o reviewed and discussed the Company's audited financial statements
for the fiscal year ended September 30, 2004 with the Company's
management;
o discussed with the Company's independent auditors those matters
which are required to be discussed by SAS 61 (Codification of
Statements on Auditing Standards, AU Sec.380); and
o received the written disclosures and the letter from the Company's
independent auditors required by Independence Standards Board
Standard No. 1 (Independence Discussion with Audit Committees) and
discussed with the independent auditors their independence.
Based on the foregoing, the audit committee recommended to the Board
that the audited financial statements be included in the Company's annual report
on Form 10-K for the fiscal year ended September 30, 2004.
Carlton M. Arendell, Chairman
William R. Bagnell
Donald W. Delson
13
AUDIT COMMITTEE CHARTER
The Board has adopted a written charter for the audit committee, a copy
of which is included as Appendix B to this proxy statement.
AUDIT FEES
The aggregate fees billed by the Company's independent auditors, Grant
Thornton LLP, for professional services rendered since the Company's initial
public offering for the audit of its annual financial statements for the fiscal
year ended September 30, 2004, for the reviews of the financial statements
included in its quarterly reports on Form 10-Q and for services that are
normally provided by the independent auditors in connection with statutory or
regulatory filings or engagements during such fiscal year were $275,800.
AUDIT-RELATED FEES
The aggregate fees billed by Grant Thornton LLP for audit-related
services were $135,200 for the fiscal year ended September 30, 2004 and
primarily related to services rendered in connection with our initial public
offering.
TAX FEES
Grant Thornton LLP billed no fees for tax services rendered to the
Company for the fiscal year ended September 30, 2004.
ALL OTHER FEES
Grant Thornton LLP billed no fees for other services rendered to the
Company for the fiscal year ended September 30, 2004.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
The audit committee, on at least an annual basis, reviews audit and
non-audit services performed by Grant Thornton LLP as well as the fees charged
by Grant Thornton LLP for such services. The Company's policy is that all audit
and non-audit services must be pre-approved by the audit committee. All of such
services and fees were pre-approved during fiscal 2004.
OTHER MATTERS
Upon the recommendation of the audit committee, approved by the Board,
Grant Thornton LLP served as the Company's independent auditors during fiscal
year 2004. The audit committee anticipates that Grant Thornton LLP will be
re-appointed as the Company's independent auditors for fiscal year 2005. The
Company does not anticipate that a representative of Grant Thornton LLP will be
present at the Meeting.
14
EXECUTIVE OFFICER COMPENSATION
During fiscal 2004, the Company did not directly compensate its
executive officers. Rather, Resource America allocated the compensation of these
individuals between activities on behalf of the Company and activities on behalf
of Resource America based upon an estimate of the time spent by such persons on
activities for the Company and for Resource America, and the Company reimbursed
Resource America for the compensation allocated to it. Resource America also
similarly allocated compensation to Atlas Pipeline Partners for the individuals
named in the following table, and Atlas Pipeline Partners reimbursed Resource
America for such amounts. The following table sets forth the compensation
allocated to the Company and Atlas Pipeline Partners for the Company's chief
executive officer and each of its four other most highly compensated executive
officers for fiscal 2004. The Board believes these allocations are reasonable.
SUMMARY COMPENSATION TABLE
Annual Long-term
compensation compensation
------------ ------------
Restricted stock All other
Name and principal position Salary Bonus(1) awards(2) compensation(3)
- --------------------------- ------ ----- ---------------- ---------------
Edward E. Cohen
Chairman of the Board,
Chief Executive Officer and President.............$401,000 $385,000 $209,924 $995,441
Jonathan Z. Cohen
Vice Chairman of the Board........................$256,400 $192,500 $ 3,363 $561,909
Freddie M. Kotek
Executive Vice President and
Chief Financial Officer...........................$267,500 $250,000 $ 51,564 $ 6,500
Frank P. Carolas
Executive Vice President..........................$192,500 $ 75,000 $ 5,798 $ 81,357
Jeffrey C. Simmons
Executive Vice President..........................$192,500 $ 75,000 $102,083 $ 81,357
- ------------------
(1) Bonuses in any fiscal year are generally based upon the Company's
performance in the prior fiscal year and the individual's contribution to
that performance. From time to time, the Company may award bonuses in a
fiscal year reflecting an individual's performance during that fiscal year.
(2) Reflects allocations of shares to employee accounts that were made in
fiscal 2004 under Resource America's 1989 Employee Stock Ownership Plan
("ESOP") to reconcile shares held to shares which should have been
allocated to those accounts in prior years. Share allocations under the
ESOP have been valued at the closing price of Resource America's common
stock on the dates of the respective grants. At September 30, 2004, the
number of restricted shares held and the value of those restricted shares
(in the aggregate and valued at the closing market price of Resource
America's common stock at September 30, 2004) are: Mr. E. Cohen - 73,683
shares ($1,738,182); Mr. J. Cohen - 588 shares ($13,871), Mr. Kotek -
18,431 shares ($434,787); Mr. Carolas - 512 shares ($12,078); and Mr.
Simmons - 27,111 shares ($639,548). Cash dividends, as and when authorized
by Resource America's board of directors, have been and will continue to be
paid to the ESOP on the restricted shares.
(3) Reflects matching payments Resource America made under its 401(k) Plan and
grants of phantom units under the Atlas Pipeline Partners, L.P. Long Term
Incentive Plan, except the amount for Mr. E. Cohen includes $59,500 of
accrued obligations under a Supplemental Employment Retirement Plan
established by the Company in May 2004 in connection with an employment
agreement between Mr. E. Cohen and the Company. See "Employment Agreement."
The phantom unit grants under the Atlas Pipeline Partners Long Term
Incentive Plan entitle the recipient, upon vesting, to receive one common
unit or its then fair market value in cash and include distribution
equivalent rights. The number of phantom units held and the value of those
phantom units, valued at the closing market price of Atlas Pipeline
Partners common units on the date of the grant, are: Mr. E. Cohen - 25,000
phantom units ($931,500); Mr. J. Cohen - 15,000 phantom units ($558,900);
Mr. Carolas - 2,000 phantom units ($74,520); and Mr. Simmons - 2,000
phantom units ($74,520).
15
OPTION/SARS GRANTS AND EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
Neither the Company nor Resource America granted any stock options or
stock appreciation rights to the named executive officers in fiscal 2004.
The following table sets forth the aggregated option exercises during
fiscal 2004, together with the number of unexercised options and their value on
September 30, 2004, held by the executive officers listed in the Summary
Compensation Table under the Resource America plans described in note 8 of the
notes to consolidated financial statements included in the Company's Form 10-K
for fiscal 2004. No stock appreciation rights were exercised or held by the
named executive officers in fiscal 2004.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Number of
securities underlying
unexercised Value of unexercised
options at FY-end in-the-money options at
Shares acquired exercisable/ FY-end exercisable/
Name on exercise Value realized unexercisable unexercisable(1)
- ---- ----------- -------------- -------------------- -----------------------
Edward E. Cohen 0 $ 0 450,000/0 $5,252,700/$0
Jonathan Z. Cohen 0 0 458,750/86,250 $6,047,137/$1,331,929
Freddie M. Kotek 0 0 76,995/22,500 $1,216,243/$332,152
Frank P. Carolas 0 0 21,375/8,125 $253,471/$118,547
Jeffrey C. Simmons 0 0 19,375/8,125 $237,291/$118,547
- ---------------
(1) Value is calculated by subtracting the total exercise price from the fair
market value of the securities underlying the options at September 30,
2004.
EMPLOYMENT AGREEMENT
The Company has an employment agreement with Edward E. Cohen, who
currently serves as its Chairman, Chief Executive Officer and President. The
agreement requires him to devote such time to the Company as is reasonably
necessary to the fulfillment of his duties, although it permits him to invest
and participate in outside business endeavors. The agreement provides for
initial base compensation of $350,000 per year, which may be increased by the
compensation committee based upon its evaluation of Mr. Cohen's performance. Mr.
Cohen is eligible to receive incentive bonuses and stock option grants and to
participate in all employee benefit plans in effect during his period of
employment. The agreement has a term of three years and, until notice to the
contrary, the term is automatically extended so that on any day on which the
agreement is in effect it has a then-current three-year term.
The agreement provides for a Supplemental Executive Retirement Plan, or
SERP, pursuant to which Mr. Cohen will receive an annual retirement benefit
equal to the product of:
o 6.5% multiplied by
o his base salary as of the time Mr. Cohen's employment with the
Company ceases, multiplied by
o the number of years (or portions thereof) which Mr. Cohen is
employed by the Company.
16
The maximum benefit under the SERP is limited to 65% of his final base salary.
The benefit is guaranteed to his estate for 10 years if he should die before
receiving 10 years' of SERP benefits. If there is a change of control (other
than in connection with the proposed spin-off of Resource America's remaining
ownership interest in the Company to Resource America's stockholders by means of
a tax-free distribution) and his employment with the Company is terminated, or
if the Company terminates his employment without cause, then the SERP benefit
will be the greater of the accrued benefit pursuant to the above formula, or 35%
of his final base salary.
The agreement provides the following regarding termination and
termination benefits:
o upon termination of employment due to death, Mr. Cohen's estate
will receive an amount equal to his final base salary multiplied
by the number of years (or portion thereof) that he shall have
worked for the Company (but not to be greater than three years'
base salary or less than one year's base salary);
o the Company may terminate Mr. Cohen's employment if he is disabled
for 180 days consecutive days during any 12-month period. If his
employment is terminated due to disability, he will receive his
base salary and benefits for three years, and such three year
period will be deemed a portion of his employment term for
purposes of accruing SERP benefits;
o the Company may terminate his employment without cause upon 30
days' written notice or upon a change of control after providing
at least 30 days' written notice. Mr. Cohen may terminate his
employment for good reason or upon a change in control. Good
reason is defined as a reduction in Mr. Cohen's base pay, a
demotion, a material reduction in his duties, relocation, his
failure to be elected to the Board or a material breach of the
agreement by the Company. If employment is terminated by the
Company without cause, by Mr. Cohen for good reason or by either
party in connection with a change of control, he will be entitled
to any amounts then owed to him plus either:
- severance benefits under the Company's then current severance
policy, if any, or;
- if Mr. Cohen signs a release, 36 months of continued health
insurance coverage and a lump sum payment equal to three years
of his average compensation (which the Company defines as the
average of the three highest years of total compensation that he
shall have earned under the agreement, or if the agreement is
less than three years old, the highest total compensation in any
year or portion thereof);
o Mr. Cohen may terminate the agreement without cause with 60 days
notice to us, and if he does so after January 1, 2006, and signs a
release, he will receive a severance benefit equal to one-half of
one year's base salary then in effect; and
o the Company may terminate Mr. Cohen's employment for cause
(defined as a felony conviction or conviction of a crime involving
fraud, embezzlement or moral turpitude, intentional and continual
failure to perform his material duties after notice, or violation
of confidentiality obligations) in which case he will receive only
accrued amounts then owed to him.
In the event that any amounts payable to Mr. Cohen upon termination
become subject to any excise tax imposed under Section 4999 of the Internal
Revenue Code, the Company must pay him an additional sum such that the net
amounts retained by him, after payment of excise, income and withholding taxes,
equals the termination amounts payable, unless Mr. Cohen's employment terminates
because of his death or disability.
17
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In the ordinary course of its business operations, the Company has
ongoing relationships with several related entities and persons:
The Company conducts exploration, development and other of its
activities through, and a substantial portion of the Company's revenue is
attributable to, energy limited partnerships (the "Partnerships"). The Company
serves as general partner of the Partnerships and assumes customary rights and
obligations for the Partnerships. As the general partner, the Company is liable
for partnership liabilities and can be liable to limited partners if it breaches
its responsibilities with respect to the operations of the Partnerships. The
Company is entitled to receive management fees, reimbursement for administrative
costs incurred, and to share in the Partnerships' revenue, and costs and
expenses according to the respective Partnership agreements.
The Company reimburses Resource America for all direct and indirect
costs of services provided. For the year ended September 30, 2004, such
reimbursements were approximately $1.1 million, representing the allocable
portion of the personnel costs of RAI employees, including executives, for time
spent on the Company's business.
Until April 1996, Edward E. Cohen, the Company's Chairman of the Board,
Chief Executive Officer and President, was of counsel to Ledgewood. Mr. Cohen
receives certain debt service payments from Ledgewood related to the termination
of his affiliation with Ledgewood and its redemption of his interest. The
Company paid Ledgewood $490,400 during fiscal 2004 for legal services rendered
to it.
Until March 2005, Matthew A. Jones, the Company's Chief Financial
Officer, was a Managing Director of Friedman, Billings, Ramsey & Co., Inc.,
which acted as an underwriter in connection with the Company's initial public
officering in May 2004, receiving underwriting discounts and commissions and
expense reimbursements of $1,852,544. In addition, FBR acted as an underwriter
of the April and July 2004 public offerings of Atlas Pipeline Partners, L.P.,
receiving underwriting discounts and commissions of $1,339,528 and $427,200,
respectively, and FBR provided advisory services to Atlas Pipeline Partners in
connection with its acquisition of ETC Oklahoma Pipeline, Ltd. in April 2005,
receiving a fee and expense reimbursements of $767,205.
As part of the Company's initial public offering and the proposed
subsequent spin-off of the Company by Resource America, the Company entered into
a master separation and distribution agreement with Resource America which
contains the key provisions related to its separation from Resource America and
the distribution of its shares to Resource America's common stockholders. The
master separation and distribution agreement, together with the registration
rights agreement, the tax matters agreement, and the transition services
agreement, govern various interim and ongoing relationships between the Company
Resource America following the completion of the Company's initial public
offering. As required by the master separation and distribution agreement, the
Company distributed the net proceeds of its initial public offering to Resource
America in the form of special dividend.
MASTER SEPARATION AND DISTRIBUTION AGREEMENT
Overview. The master separation and distribution agreement contains the
key provisions relating to the separation of the Company's business from
Resource America's other businesses and sets forth certain covenants the Company
has agreed to until the distribution by Resource America to its stockholders of
the shares of the Company's common stock held by Resource America.
18
Covenants. The Company has agreed that, for so long as Resource America
beneficially owns at least 50% of the Company's outstanding common stock, the
Company will:
o not take any action which would limit the ability of Resource
America or its transferee to transfer its shares of the Company's
common stock; and
o not take any actions that could reasonably result in Resource
America being in breach of or in default under any contract or
agreement.
Auditors and Audits; Annual Statements and Accounting. The Company has
agreed that, for so long as Resource America is required to consolidate the
Company's results of operations and financial position with that of Resource
America or account for its investment in the Company on the equity method of
accounting, the Company will not change its independent auditors without
Resource America's prior written consent (which will not be unreasonably
withheld), and the Company will use its best efforts to enable its independent
auditors to complete their audit of the Company's financial statements in a
timely manner so to permit timely filing of Resource America's financial
statements. The Company has also agreed to provide to Resource America and its
independent auditors all information required for Resource America to meet its
schedule for the filing and distribution of its financial statements and to make
available to Resource America and its independent auditors all documents
necessary for its annual audit as well as access to the responsible Company
personnel so that Resource America and its independent auditors may conduct
their audits relating to the Company's financial statements. The Company has
also agreed to adhere to certain specified Resource America accounting policies
and to notify and consult with Resource America regarding any changes to the
Company's accounting principles and estimates used in the preparation of the
Company's financial statements.
Indemnification. Under the master separation and distribution
agreement, the Company and Resource America will indemnify and release each
other as follows:
o The Company has agreed to indemnify and hold harmless Resource
America and its affiliates and their respective officers,
directors, employees, agents, successors and assigns against any
payments, losses, liabilities, damages, claims and expenses
arising out of or relating to the Company's past, present and
future assets, businesses and operations and other assets,
businesses operated or managed by the Company or persons
previously associated with the Company.
o Resource America will similarly indemnify the Company and its
affiliates and the respective officers, directors, employees,
agents, successors and assigns of the Company and its affiliates
for Resource America's past, present and future assets, businesses
and operations, except for assets, businesses and operations for
which the Company has agreed to indemnify Resource America.
o The Company has agreed to indemnify Resource America and its
affiliates against all liabilities arising out of any material
untrue statements and omissions in any prospectus and any related
registration statement filed with the Securities and Exchange
Commission relating to the Company's initial public offering or
any other primary offering of the Company's common stock or its
other securities prior to the date of the distribution or other
similar transaction. However, the Company's indemnification of
Resource America does not apply to information relating to
Resource America, excluding information relating to the Company.
Resource America has agreed to indemnify the Company for this
information.
19
o Except for the rights and obligations of Resource America and the
Company, which relate to the agreements between Resource America
and the Company concerning its initial public offering or the
distribution, the Company will release Resource America and some
of its subsidiaries and affiliates and their respective officers,
directors, employees, agents, successors and assigns for all
losses for any and all past actions and failures to take actions
relating to Resource America's and the Company's assets,
businesses and operations. Resource America will similarly release
the Company.
o All indemnification amounts will be reduced by any insurance
proceeds and other offsetting amounts recovered by the party
entitled to indemnification.
In addition, the transition services agreement, the registration rights
agreement and the tax matters agreement referred to below provide for
indemnification between the Company and Resource America relating to the
substance of those agreements.
Access to Information. Under the master separation and distribution
agreement, the Company and Resource America are obligated to provide each other
access to information as follows:
o Subject to applicable confidentiality obligations and other
restrictions, the Company and Resource America will give each
other any information within each other's possession that the
requesting party reasonably needs to comply with requirements
imposed on the requesting party by a governmental authority, for
use in any proceeding or to satisfy audit, accounting or similar
requirements, or to comply with its obligations under the master
separation and distribution agreement or any ancillary agreement.
o For so long as Resource America is required to consolidate the
Company's results of operations and financial position with its
own or account for its investment in the Company on the equity
method of accounting, the Company will provide to Resource
America, at no charge, all financial and other data and
information that Resource America determines is necessary or
advisable in order to prepare its financial statements and reports
or filings with any governmental authority, including copies of
all quarterly and annual financial information and other reports
and documents the Company intends to file with the SEC before such
filings (as well as final copies upon filing), and copies of the
Company's budgets and financial projections.
o The Company will consult with Resource America regarding the
timing and content of the Company's earnings releases and
cooperate fully (and cause the Company's independent auditors to
cooperate fully) with Resource America in connection with any of
its public filings.
o The Company and Resource America will use reasonable efforts to
make available to each other's past and present directors,
officers, other employees and agents as witnesses in any legal,
administrative or other proceedings in which the other party may
become involved.
o The company providing information, consultant or witness services
under the master separation and distribution agreement will be
entitled to reimbursement from the other for reasonable expenses
incurred in providing this assistance.
o The Company and Resource America will each agree to hold in strict
confidence all information concerning or belonging to the other
for a period of up to three years.
20
Employee Matters. Effective as of the closing of the Company's initial
public offering, the Company hired specified persons who were previously
employed by Resource America and assumed all compensation and employee benefit
liabilities relating to them. All of these people were involved in the Company's
business and portions of their salaries had historically been allocated to the
Company.
The Distribution. The master separation and distribution agreement
provides that Resource America has sole discretion to determine if and when the
distribution will occur and all terms of the distribution. Resource America does
not intend to make the distribution unless it receives:
o a ruling by the Internal Revenue Service and/or an opinion from
its tax counsel that the distribution will qualify as a
reorganization pursuant to which no gain or loss will be
recognized by Resource America or its stockholders for U.S.
federal income tax purposes under Sections 355, 368(a)(1)(D) and
related provisions of the Internal Revenue Code; and
o any government approvals and material consents necessary to
consummate the distribution.
Expenses. In general, Resource America and the Company will each be
responsible for their own costs (including all associated third-party costs)
incurred in connection with the transactions contemplated by the master
separation and distribution agreement.
REGISTRATION RIGHTS AGREEMENT
Registration Rights. In the event the distribution is not completed and
Resource America does not divest itself of all of its shares of the Company's
common stock, Resource America could not freely sell all these shares without
registration under the Securities Act of 1933 or a valid exemption under it.
Accordingly, the registration rights agreement provides Resource America with
registration rights relating to the shares of the Company's common stock which
it holds. These registration rights generally become effective when Resource
America informs the Company that it no longer intends to complete the
distribution. Under the registration rights agreement, Resource America has the
right to require the Company to register for offer and sale all or a portion of
the common stock it holds.
Demand Rights. Resource America may request registration under the
Securities Act of all or any portion of the shares covered by the registration
rights agreement and the Company will be obligated to register the shares as
requested by Resource America. The maximum number of demand registrations that
the Company is required to effect is five. Resource America will designate the
terms of each offering affected pursuant to a demand registration, which may
take any form, including a shelf registration, a convertible registration, or an
exchange registration.
The Company has the right, which may be exercised once in any 12-month
period, to postpone the filing or effectiveness of any demand registration for
up to 90 days if the Board determines in good faith that such registration would
reasonably be expected to have a material adverse effect on any then-active
proposals to engage in material transactions.
21
Piggyback Rights. If the Company at any time intends to file a
registration statement in connection with a public offering of any of the
Company's securities on a form and in a manner that would permit the
registration for offer and sale of the Company's common stock held by Resource
America, Resource America has the right to include its shares in that offering.
Expenses. The Company is responsible for the registration expenses in
connection with the performance of its obligations under the registration rights
agreement. Resource America is responsible for all of the fees and expenses of
counsel to Resource America and any applicable underwriting discounts or
commissions.
Duration. The registration rights will remain in effect with respect to
Resource America's shares of the Company's common stock until:
o the shares have been sold pursuant to an effective registration
statement under the Securities Act;
o the shares have been sold to the public pursuant to Rule 144 under
the Securities Act (or any successor provision);
o the shares have been otherwise transferred, new certificates for
them not bearing a legend restricting further transfer have been
delivered by our company, and subsequent public distribution of
the shares does not require registration or qualification of them
under the Securities Act or any similar state law;
o the shares have ceased to be outstanding; or
o in the case of shares held by a transferee of Resource America,
when the shares become eligible for sale pursuant to Rule 144(k)
under the Securities Act (or any successor provision).
TAX MATTERS AGREEMENT
Allocation of Taxes. The tax matters agreement governs the respective
rights, responsibilities, and obligations of Resource America and the Company
with respect to tax liabilities and benefits, tax attributes, tax contests and
other matters regarding income taxes, non-income taxes and related tax returns.
In general, under the tax matters agreement:
o Resource America is responsible for any U.S. federal income taxes
of the affiliated group for U.S. federal income tax purposes of
which Resource America is the common parent. For periods beginning
after the Company's initial public offering, the Company is
responsible for any U.S. federal income taxes attributable to it
or any of its subsidiaries.
o Resource America is responsible for any U.S. state or local income
taxes reportable on a consolidated, combined or unitary return
that includes Resource America or one of its subsidiaries, on the
one hand, and the Company or any of its subsidiaries, on the other
hand. However, in the event that the Company or one of its
subsidiaries is included in such a group for U.S. state or local
income tax purposes for periods (or portions thereof) beginning
after the Company's initial public offering, the Company is
responsible for its portion of such income tax liability as if the
Company and its subsidiaries had filed a separate tax return that
included it and its subsidiaries for that period (or portion of a
period).
22
o Resource America is responsible for any U.S. state or local income
taxes reportable on returns that include only Resource America and
its subsidiaries (excluding the Company and its subsidiaries), and
the Company are responsible for any U.S. state or local income
taxes filed on returns that include only it and its subsidiaries.
o Resource America and the Company are each responsible for any
non-income taxes attributable to their respective businesses for
all periods.
Resource America is primarily responsible for preparing and filing any
tax return with respect to the Resource America affiliated group for U.S.
federal income tax purposes and with respect to any consolidated, combined or
unitary group for U.S. state or local income tax purposes that includes Resource
America or any of its subsidiaries. The Company generally is responsible for
preparing and filing any tax returns that include only it and its subsidiaries.
The Company generally has exclusive authority to control tax contests
with respect to tax returns that include only it and its subsidiaries. Resource
America generally has exclusive authority to control tax contests related to any
tax returns of the Resource America affiliated group for U.S. federal income tax
purposes and with respect to any consolidated, combined or unitary group for
U.S. state or local income tax purposes that includes Resource America or any of
its subsidiaries.
Disputes arising between Resource America and the Company relating to
matters covered by the tax matters agreement are subject to resolution through
specific dispute resolution provisions described in the tax matters agreement.
The tax matters agreement also assigns responsibilities for
administrative matters, such as the filing of returns, payment of taxes due,
retention of records and conduct of audits, examinations or similar proceedings.
In addition, the tax matters agreement provides for cooperation and information
sharing with respect to taxes.
Preservation of the Tax-free Status of the Distribution. The Company
has agreed to certain restrictions that are intended to preserve the tax-free
status of the distribution, including restrictions on the Company's:
o issuance or sale of stock or other securities (including
securities convertible into stock but excluding certain
compensatory arrangements); and
o sales of assets outside the ordinary course of business.
The Company generally has agreed to indemnify Resource America and its
affiliates against any and all tax-related liabilities that may be incurred by
them relating to the distribution to the extent such liabilities are caused by
the Company's actions. This indemnification applies even if Resource America has
permitted the Company to take an action that would otherwise have been
prohibited under the tax-related covenants as described above.
23
TRANSITION SERVICES AGREEMENT
The transition services agreement governs the provision by Resource
America to the Company and by the Company to Resource America of support
services, such as:
o cash management and debt service administration;
o accounting and tax;
o investor relations;
o payroll and human resources administration;
o legal;
o information technology;
o data processing;
o real estate management; and
o other general administrative functions.
The Company had Resource America will pay each other a fee for these
services equal to their fair market value. The fee will be payable monthly in
arrears, 15 days after the close of each month. The Company has also agreed to
pay or reimburse each other for any out-of-pocket payments, costs and expenses
associated with these services.
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
the Company's common stock with the cumulative total return of two other stock
market indices: the Nasdaq United States Composite and the S&P Small-Cap 600
Energy Index.
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE IPO*
[GRAPHIC OMITTED]
Nasdaq U.S. S&P Small-Cap Atlas
composite 600 Energy Index America Inc.
- --------------------------------------------------------------------------------
05/11/2004 100.00 100.00 100.00
06/10/2004 103.43 105.92 113.56
07/09/2004 100.62 116.31 110.42
08/10/2004 93.80 111.00 114.11
09/30/2004 98.25 127.47 120.01
Fiscal Year Ended September 30
* Total return since the Company's initial public offering. Assumes $100 was
invested on May 11, 2004 in the Company's common stock or in the indicated
index and that cash dividends were reinvested as received.
24
OTHER MATTERS
As of the date of this proxy statement, the Board does not intend to
present and has not been informed that any other person intends to present any
other matters for action at the Meeting. However, if other matters do properly
come before the Meeting, it is the intention of the persons named as proxies to
vote upon them in accordance with their best judgment.
Except as hereinabove stated, all shares represented by valid proxies
received will be voted in accordance with the provisions of the proxy.
ANNUAL REPORT AND REPORT ON FORM 10-K
The Company's 2004 Annual Report to Stockholders including the
financial statements and management's discussion and analysis of financial
condition and results of operations for the year ended September 30, 2004, is
being sent to stockholders of record as of May 13, 2005 with this proxy
statement. Stockholders of record as of May 13, 2005, and beneficial owners of
the Company's common stock on that date, may obtain from the Company, without
charge, a copy of the Company's most recent Annual Report on Form 10-K filed
with the Securities and Exchange Commission, exclusive of the exhibits thereto,
by a request therefor in writing. Such requests should be directed to the
Company, at its Moon Township address stated herein, and to the attention of the
Secretary. Beneficial owners shall include in their written requests a good
faith representation that they were beneficial owners of the Company's common
stock on May 13, 2005.
STOCKHOLDER PROPOSALS
Rule 14a-8 of the Securities Exchange Act of 1934 establishes the
eligibility requirements and the procedures that must be followed for a
stockholder's proposal to be included in a public company's proxy materials.
Under the rule, proposals submitted for inclusion in the Company's 2006 proxy
materials must be received by Atlas America, Inc. at 311 Rouser Road, Moon
Township, PA 15108, Attention: Secretary, on or before the close of business on
January 13, 2006. Proposals must comply with all the requirements of Rule 14a-8.
A stockholder who wishes to present a matter for action at the
Company's 2006 annual meeting, but chooses not to do so under Rule 14a-8, must
deliver to the Secretary of the Company on or before February 13, 2006, a notice
containing the information required by the advance notice and other provisions
of the Company's bylaws. A copy of the bylaws may be obtained by directing a
written request to Atlas America, Inc., 311 Rouser Road, Moon Township, PA
15108, Attention: Secretary.
25
APPENDIX A
PROPOSED AMENDMENTS TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
FIFTH: Directors. The following provisions are inserted for the
management of the business and the conduct of the affairs of the Corporation,
and for further definition, limitation and regulation of the powers
of the Corporation and of its directors and stockholders:
o o o
(c) Classified Board of Directors. The directors shall be divided into
three classes, designated Class I and Class II. Each class shall consist, as
nearly as may be possible, of one-third of the total number of directors
constituting the entire Board of Directors. The initial division of the Board of
Directors into classes shall be made by the decision of the affirmative vote of
a majority of the entire Board of Directors. The term of the initial Class I
directors shall terminate on the date of the 2006 annual meeting; the term of
the initial Class II directors shall terminate on the date of the 2007 annual
meeting; and the term of the initial Class III directors shall terminate on the
date of the 2008 annual meeting. At each succeeding annual meeting of
stockholders beginning in 2006, successors to the class of directors whose term
expires at that annual meeting shall be elected for a three-year term. If the
number of directors is changed, any increase or decrease shall be apportioned
among the classes so as to maintain the number of directors in each class as
nearly equal as possible, and any additional director of any class elected to
fill a vacancy resulting from an increase in such class shall hold office for a
term that shall coincide with the remaining term of that class, but in no case
will a decrease in the number of directors shorten the term of any incumbent
director. As used in this Amended and Restated Certificate of Incorporation, the
term "entire Board of Directors" means the total number of directors which the
Corporation would have if there were no vacancies.
(d) Vacancies; Removal. Subject to the terms of any one or more classes
or series of Preferred Stock, any vacancy on the Board of Directors that results
from a increase in the number of directors may be filled only by a majority of
the Board of Directors then in office, provided that a quorum is present, and
any other vacancy occurring on the Board of Directors may be filled only by a
majority of the Board of Directors then in office, even if less than a quorum,
or by a sole remaining director. Any director of any class elected to fill a
vacancy resulting from an increase in the number of directors of such class
shall hold office for a term that shall coincide with the remaining term of that
class. Any director elected to fill a vacancy not resulting from an increase in
the number of directors shall have the same remaining term as that of his
predecessor. Subject to the rights, if any, of the holders of shares of
Preferred Stock then outstanding, any or all of the directors of the Corporation
may be removed from office at any time, but only for cause, by the affirmative
vote of the holders of at least 66 2/3% of the voting power of the Corporation's
then outstanding capital stock entitled to vote generally in the election of
directors. Notwithstanding the foregoing, whenever the holders of any one or
more classes or series of Preferred Stock issued by the Corporation shall have
the right, voting separately by class or series, to elect directors at an annual
or special meeting of stockholders, the election, term of office, filing of
vacancies and other features of such directorships shall be governed by the
terms of this Amended and Restated Certificate of Incorporation applicable
thereto, and such directors so elected shall not be divided into classes
pursuant to this Article FIFTH unless expressly provided by such term.
A-4
APPENDIX B
AUDIT COMMITTEE CHARTER
ATLAS AMERICA, INC.
MISSION STATEMENT
The Audit Committee is appointed by the Board of Directors to assist the Board
in fulfilling its oversight duties and in this capacity:
o Is responsible for appointing the Company's independent auditors
and exercising oversight thereof; Is delegated the authority to
receive funds and engage advisors as needed;
o Shall monitor the integrity and ensure the transparency of the
Company's financial reporting processes and systems of internal
controls regarding finance, accounting and regulatory compliance;
Shall ensure the independence and monitor the performance of the
Company's independent auditors and internal auditing department;
o Shall provide an avenue of communication among the independent
auditors, management, the internal auditing department and the
Board of Directors; and
o To effectively perform his or her role, each Committee member will
obtain an understanding of the responsibilities of Audit Committee
membership.
COMMITTEE COMPOSITION
The Audit Committee and its members shall meet all applicable requirements of
the securities exchange on which the corporation is listed, or shall have
received an exemption therefrom.
The Audit Committee will consist of at least three members of the Board of
Directors, appointed by either the Board of Directors or the Nominating
Committee of the Board.
Each committee member will be both independent and financially literate. At
least one member shall be designated as the "financial expert," as defined by
applicable legislation and regulation. No committee member shall simultaneously
serve on the audit committees of more than two other public companies.
MEETINGS
The committee will meet at least four times a year, with authority to convene
additional meetings, as circumstances require. All committee members are
expected to attend each meeting, in person or via tele- or video-conference. The
committee will invite members of management, auditors or others to attend
meetings and provide pertinent information, as necessary. It will meet
separately, periodically, with management, external auditors and internal
auditors, as necessary. It will also meet periodically in executive session.
Meeting agendas will be prepared and provided in advance to members, along with
appropriate briefing materials.
B-1
ROLES AND RESPONSIBILITIES
The committee will carry out the following responsibilities:
Financial Statements
1. Review significant accounting and reporting issues and understand their
impact on the financial statements. These issues include:
o Complex or unusual transactions and highly judgmental areas
o Major issues regarding accounting principles and financial
statement presentations, including any significant changes in the
Company's selection or application of accounting principles
o The effect of regulatory and accounting initiatives, as well as
off-balance sheet structures, on the financial statements of the
Company
2. Review analyses prepared by management and/or the independent auditor
setting forth significant financial reporting issues and judgments made
in connection with the preparation of the financial statements,
including analyses of the effects of alternative GAAP methods on the
financial statements.
3. Review with management and the external auditors the results of the
audit, including any difficulties encountered. This review will include
any restrictions on the scope of the independent auditor's activities
or on access to requested information, and any significant
disagreements with management.
4. Discuss the annual audited financial statements and quarterly financial
statements with management and the external auditors prior to filing or
distribution. The review should include discussions with management and
independent auditors of significant issues regarding accounting
principles, practices, and judgments.
5. Review disclosures made by CEO and CFO during the Forms 10-K and 10-Q
certification process about significant deficiencies, if any, in the
design or operation of internal controls or any fraud that involves
management or other employees who have a significant role in the
Company's internal controls.
6. Review earnings press releases (particularly use of "pro-forma," or
"adjusted" non-GAAP information), as well as financial information and
earnings guidance, if any, provided to analysts and rating agencies.
This review may be general (i.e., the types of information to be
disclosed and the type of presentations to be made). The Audit
Committee Chairman and the independent auditors should each indicate
their approval to management prior to the issuance of earnings press
releases. The Audit Committee Chairman and the external auditors will
confer, as necessary, prior to providing such approval.
Internal Control
1. Consider the effectiveness of the Company's internal control system,
including information technology security and control and compliance
with the reporting requirements of The Sarbanes-Oxley Act.
2. Understand the scope of internal and external auditors' review of
internal control over financial reporting, and obtain reports on
significant findings and recommendations, together with management's
responses.
B-2
3. In consultation with management and independent accountants, verify
that the CEO and CFO have certified that they disclosed to the
independent auditors and to the Audit Committee all significant
deficiencies, if any, in the design or operation of internal controls
that could affect the Company's ability to record, process, summarize
and report financial data, any material weaknesses in the internal
controls, and fraud - whether or not material - that involved
management or other employees who have a significant role in the
Company's internal control.
4. Analyze any internal control deficiencies, management or employee fraud
identified by the CEO/CFO certification process or by the Disclosure
Committee.
Internal Audit
1. Review the effectiveness of the internal audit function, including the
audit risk assessment audit schedule and approach, recommendation
follow-up matrix, staffing and organizational structure of the internal
audit function.
2. Ensure there are no unjustified restrictions or limitations, and review
and concur in the appointment, replacement or dismissal of the internal
auditors.
3. On a periodic basis, as necessary, meet separately with internal audit
to discuss any matters that the committee or internal audit believes
should be discussed privately.
4. Review with management and internal audit compliance with the Audit
Committee charter.
External Audit
1. Review the external auditors' audit scope and approach, including
coordination; if any, of audit effort with internal audit.
2. Review the performance of the external auditors, and exercise final
approval on the appointment or discharge of the auditors. In performing
this review, the committee will:
o Review a report, if any, describing any material issues raised by
the most recent internal quality-control review, or peer review,
of the independent auditor, or by any inquiry or investigation by
governmental or professional authorities, within the preceding
five years, respecting one or more independent audits carried out
by the firm, and any steps taken to deal with any such issues; and
(to assess the auditor's independence) all relationships between
the independent auditor and the Company.
o Take into account the opinions of management and internal audit.
o Present its conclusions with respect to the external auditor to
the Board.
3. Ensure the rotation of the lead audit partner every five years and
other audit partners every seven years, and consider whether there
should be regular rotation of the audit firm itself.
4. Conform with all applicable laws and regulations regarding the hiring
of any employees or former employees of the independent auditors.
5. Review and discuss with the independent accountants, as may be required
by law or regulation, (1) all critical accounting policies and
practices to be used, (2) all alternative treatments of financial
information within GAAP that have been discussed with management,
ramifications or the use of such alternative disclosures and
treatments, and the treatment preferred by the independent accountant,
and, (3) other material written communications between the independent
accountant and management, such as any management letter or schedule of
unadjusted differences.
B-3
6. Review and pre-approve all audit and permitted non-audit services
provided by the independent accountants. The Audit Committee has
delegated to the Chairman of the Committee the authority to grant such
pre-approvals. All pre-approvals granted by the Chairman of the
committee shall be presented to and reviewed by the full Committee at
its next regularly scheduled meeting.
7. Resolve any financial reporting disagreements between the independent
accountant and management.
Reporting Responsibilities
1. Report to the Board of Directors, as necessary, about committee
activities and issues that arise with respect to the quality or
integrity of the Company's financial statements, and Company's
compliance with legal or regulatory requirements, the performance and
independence of the Company's independent auditors, and the performance
of the internal audit function.
2. Prepare an annual Audit Committee report for inclusion in the Company's
Annual Proxy Statement, describing the committee's composition,
responsibilities and how they were discharged, and any other
information required by rule, including approval of non-audit services.
Other Committee Responsibilities
1. Review and assess the adequacy of the Audit Committee charter
periodically, requesting Board approval for proposed changes, and
ensure appropriate disclosure as may be required by law or regulation.
Ensure that the charter is included within the Company's proxy
statement once every three years.
2. Institute and oversee special investigations as needed. The Audit
Committee has the authority to engage independent counsel and other
advisors, as they determine necessary to carry out their duties, and
obtain appropriate funding, as determined by the Audit committee, for
compensating such advisors as well as the accounting firm for its audit
services.
3. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of all activities.
4. Review the effectiveness of the system for monitoring compliance with
laws and regulations (for example, IRS, SEC, NASDAQ) and the results of
management's investigation and follow-up of any instances of
noncompliance.
5. Establish procedures for: (1) The receipt, retention, and treatment of
complaints received by the listed issuer regarding accounting, internal
accounting controls or auditing matters; and (2) the confidential,
anonymous submission by employees of the listed issuer of concerns
regarding questionable accounting or auditing matters.
B-4
ATLAS AMERICA, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF ATLAS AMERICA, INC.
The undersigned hereby constitutes and appoints Edward E. Cohen and
Jonathan Z. Cohen, or either of them, as and for his proxies, each with the
power to appoint such proxy's substitute, and hereby authorizes them, or either
of them, to vote all of the shares of common stock of Atlas America, Inc. held
of record by the undersigned on May 13, 2005 at the Annual Meeting of
Stockholders of Atlas America, Inc. to be held Monday, June 13, 2005 and at any
and all adjournments thereof as follows:
I plan to attend the
meeting |_|
1. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO PROVIDE FOR A CLASSIFIED BOARD.
|_| FOR |_| AGAINST |_| ABSTAIN
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO PROVIDE THAT ANY VACANCY ON THE BOARD SHALL BE FILLED BY THE
AFFIRMATIVE VOTE OF A MAJORITY OF THE REMAINING DIRECTORS.
|_| FOR |_| AGAINST |_| ABSTAIN
3. PROPOSAL TO APPROVE THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO REMOVE PROVISIONS PERMITTING REMOVAL OF MEMBERS OF THE BOARD
WITHOUT CAUSE AND INCREASE THE VOTE REQUIRED.
|_| FOR |_| AGAINST |_| ABSTAIN
4. ELECTION OF DIRECTORS
Election of Class I Directors. The nominees for Class I directors are:
(11) William R. Bagnell
(12) Nicholas A. DiNubile
Election of Class II Directors: The nominees for Class II directors are:
(21) Carlton M. Arrendell
(22) Jonathan Z. Cohen
(23) Donald W. Delson
Election of Class III Directors: The nominees for Class III directors are:
(31) Edward E. Cohen
(32) Dennis A. Holtz
|_|FOR ALL NOMINEES |_| WITHHOLD AUTHORITY |_| FOR ALL EXCEPT:
FOR ALL NOMINEES
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This proxy, when properly executed, will be voted in the manner specified above
by the named proxies. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
PROPOSALS TO AMEND THE CERTIFICATE OF INCORPORATION AND FOR ALL NOMINEES LISTED.
Please sign exactly as your name appears on this proxy card. When shares are
held by joint tenants, both should sign. When signing as an attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Dated: , 2005
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Signature of stockholder
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Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.