<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ARABIAN SHEILD DEVELOPMENT COMPANY
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(Name of Registrant as Specified in its Charter)
ARABIAN SHEILD DEVELOPMENT COMPANY
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transactions applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rules 0-11:(1)
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4) Proposed maximum aggregate value of transaction:
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1 Set forth the amount on which the filing fee is calculated and state how
it was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
ARABIAN SHIELD DEVELOPMENT COMPANY
10830 NORTH CENTRAL EXPRESSWAY, SUITE 175
DALLAS, TEXAS 75231
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 5, 1995
To the Stockholders of ARABIAN SHIELD DEVELOPMENT COMPANY
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of Arabian
Shield Development Company (the "Company"), a Delaware corporation, will be held
on Friday, May 5, 1995, at 10:00 a.m., Dallas time, in Meeting Room One, at
Republic Towers, Tower III (Third Floor), 325 N. St. Paul, Dallas, Texas 75201,
for the following purposes:
1. Electing six (6) directors to serve until the next annual meeting
of stockholders and until their respective successors shall have been
elected and qualified; and
2. Transacting such other business as may properly come before the
meeting or any adjournment(s) thereof.
Information regarding the matters to be acted upon at the annual meeting is
contained in the Proxy Statement attached to this Notice.
Only stockholders of record at the close of business on March 20, 1995 are
entitled to notice of, or to vote at, such meeting or any adjournment(s)
thereof. A complete list of the stockholders entitled to vote at the meeting
will be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours for a period of 10 days prior to the
meeting at the corporate offices of the Company, 10830 North Central Expressway,
Suite 175, Dallas, Texas.
By Order of the Board of Directors
DREW WILSON, Secretary
Dallas, Texas
April 4, 1995
<PAGE> 3
ARABIAN SHIELD DEVELOPMENT COMPANY
10830 NORTH CENTRAL EXPRESSWAY, SUITE 175
DALLAS, TEXAS 75231
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 5, 1995
SOLICITATION OF PROXIES
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Arabian Shield Development Company (the "Company") for use at the
annual meeting of stockholders of the Company to be held at Dallas, Texas, on
May 5, 1995, and at any adjournment(s) thereof, for the purposes set forth in
the accompanying Notice of Annual Meeting of Stockholders. Solicitation of
proxies may be made in person or by mail, telephone or telegram by directors,
officers and employees of the Company. The Company may also request banking
institutions, brokerage firms, custodians, trustees, nominees and fiduciaries to
forward solicitation material to the beneficial owners of Common Stock held of
record by such persons, and the Company will reimburse the forwarding expense.
All reasonable costs of preparing, printing, assembling and mailing the form of
proxy and the material used in the solicitation thereof and all clerical and
other expenses of solicitation will be paid by the Company. The approximate date
on which this Proxy Statement and form of proxy were first sent to stockholders
is April 4, 1995.
ANNUAL REPORT
The Annual Report to Stockholders, covering the fiscal year ended December
31, 1994, is enclosed herewith. The Annual Report does not form any part of the
material for solicitation of proxies.
OUTSTANDING CAPITAL STOCK
The close of business on March 20, 1995, is the record date for
determination of stockholders entitled to notice of, and to vote at, the
meeting. The stock transfer books will not be closed. At the record date, there
were outstanding and entitled to be voted 19,878,494 shares of the Common Stock,
$.10 par value, of the Company.
The following table sets forth, as of March 20, 1995, information as to the
beneficial ownership of the Company's Common Stock by each person known by the
Company to beneficially own more than 5% of the Company's outstanding Common
Stock, by each of the Company's executive officers named in the Summary
Compensation Table set forth below and by all directors and executive officers
of the Company as a group.
<TABLE>
<CAPTION>
SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY OF
OF BENEFICIAL OWNER OWNED(1) CLASS
-------------------------------------------------- ------------ -------
<S> <C> <C>
Harb S. Al Zuhair 1,565,000(2) 7.9%
P.O. Box 3750
Riyadh, Saudi Arabia
Fahad Mohammed Saleh Al-Athel 2,450,000 12.3%
P. O. Box 61659
Riyadh, Saudi Arabia
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY OF
OF BENEFICIAL OWNER OWNED(1) CLASS
--------------------------------------------------- ------------ -------
<S> <C> <C>
Prince Talal Bin Abdul Aziz 1,500,000 7.6%
P. O. Box 930
Riyadh, Saudi Arabia
Mohammad Salem Ben Mahfouz 1,500,000 7.6%
c/o National Commercial Bank
Jeddah, Saudi Arabia
Hatem El-Khalidi 156,000(3) *
10830 North Central Expressway
Suite 175
Dallas, Texas 75231
Nicholas N. Carter 30,000(4) *
P.O. Box 1636
Silsbee, Texas 77656
All directors and executive officers as a group 1,851,150(5) 9.3%
(8 persons)
</TABLE>
---------------
* Less than 1%
(1) Unless otherwise indicated, to the knowledge of the Company, all shares are
owned directly and the owner has sole voting and investment power.
(2) Includes 10,000 shares which Mr. Al Zuhair has the right to acquire through
the exercise of a presently exercisable stock option. Includes 255,000
shares owned by a private Saudi Company wholly-owned by Mr. Al Zuhair. See
"Other Matters."
(3) Includes 25,000 shares which Mr. El-Khalidi has the right to acquire through
the exercise of a presently exercisable stock option. Excludes 385,000
shares owned by Ingrid El-Khalidi, Mr. El-Khalidi's wife, and 315,000
shares owned by relatives of Hatem El-Khalidi.
(4) Includes 20,000 shares which Mr. Carter has the right to acquire through the
exercise of presently exercisable stock options.
(5) Includes 136,500 shares which certain directors and executive officers have
the right to acquire through the exercise of stock options or other rights
exercisable presently or within 60 days. Excludes 385,000 shares owned by
Ingrid El-Khalidi, the wife of Hatem El-Khalidi, the President, Chief
Executive Officer and a director of the Company, and 315,000 shares owned
by relatives of Hatem El-Khalidi.
Based on its stock ownership records, the Company believes that as of March
20, 1995, excluding its President and his wife, who reside in Saudi Arabia,
Saudi Arabian stockholders currently hold approximately 62% of the Company's
outstanding Common Stock, without giving effect to the exercise of presently
exercisable stock options held by certain of such stockholders. Accordingly, if
all or any substantial part of the Saudi Arabian stockholders were considered as
a group, they could be deemed to "control" the Company as that term is defined
in regulations promulgated by the Securities and Exchange Commission. Although
they have orally waived their rights, certain of the Company's Saudi Arabian
stockholders are parties to written agreements providing them with the right to
purchase their proportionate share of additional shares sold by the Company.
In connection with the sale of Common Stock to Sheik Al-Athel and Mr. Harb
S. Al Zuhair in 1989, the Company agreed to nominate Mr. Al Zuhair for election
to the Board of Directors. In connection with an increase in the number of
positions on the Board of Directors in 1993, at the request of Sheik Al-Athel,
the Company appointed Mohammed Al-Omair to fill one of the newly-created
vacancies. See "Nominees for Election as Directors."
2
<PAGE> 5
Several of the Company's Saudi stockholders also have been or are currently
connected with National Mining Company, the Saudi company with which the Company
jointly holds certain of its current mineral exploration licenses in Saudi
Arabia. Sheik Kamal Adham, a stockholder of the Company, is currently the Vice
Chairman of National Mining. The Company believes that Prince Khaled Bin
Abdullah Bin Abdul Rahman, formerly the President of National Mining, also has
an ownership interest in National Mining.
The management of the Company has welcomed the substantial stock investment
by its Saudi stockholders. Saudi investors have contributed vitally needed
capital to the Company since 1974. Whether the Company's Saudi stockholders will
be a continuing source of future capital is not known at this time. In
confronting the need for additional funds, management of the Company will follow
the policy of considering all potential sources consistent with prudent business
practice and the best interests of all its stockholders. In the course of
considering methods of future financing and other matters relating to the
operations of the Company, management of the Company anticipates that in the
ordinary course of business it will receive recommendations and suggestions from
its principal stockholders.
REVOCATION OF PROXY
The giving of a proxy does not preclude the right to vote in person should
the person giving the proxy so desire, and the person giving the proxy has the
power to revoke the same, at any time before it has been exercised, by notice in
writing to the Secretary of the Company.
QUORUM; VOTING
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of the Common Stock of the Company entitled to vote is
necessary to constitute a quorum at the meeting. If a quorum is not present or
represented at the meeting, the stockholders entitled to vote thereat, present
in person or represented by proxy, have the power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum is present or represented. Abstentions and broker non-votes are counted
in determining the presence of a quorum.
On all matters submitted to a vote at the meeting, or any adjournment(s)
thereof, each holder of Common Stock of the Company will be entitled to one
vote, in person or by proxy, for each share of such stock owned of record at the
close of business on March 20, 1995. Cumulative voting for directors is not
permitted. Directors will be elected by plurality vote at the meeting, and the
six (6) persons receiving the greatest number of votes at the meeting will be
elected as the directors of the Company. Neither abstentions nor broker
non-votes will affect the outcome of the election.
ACTION TO BE TAKEN UNDER THE PROXY
Proxies in the accompanying form which are properly executed and returned
will be voted at the meeting and any adjournment(s) thereof and will be voted,
unless the giver thereof specifies otherwise, (1) for the election of the six
(6) persons named in the next succeeding table as nominees for election as
directors of the Company to serve until the next annual meeting of stockholders
and until their respective successors shall have been elected and qualified; and
(2) in the transaction of such other business as may properly come before the
meeting or any adjournment(s) thereof.
Should any nominee named herein for the office of director become unwilling
to accept nomination or election, it is intended that the persons acting under
the proxy will vote for the election, in his stead, of such other person as the
management of the Company may recommend. Management has no reason to believe
that any of the nominees will be unable or unwilling to serve if elected.
Management knows of no matters, other than the foregoing, to be presented for
consideration at the meeting. If, however, any other matters properly come
before the meeting or any adjournment(s) thereof, it is the intention of the
persons named in the enclosed proxy to vote such proxy in accordance with their
judgment on any such matters.
3
<PAGE> 6
NOMINEES FOR ELECTION AS DIRECTORS
Six (6) directors will be elected at the annual meeting. Each director
elected will serve until his successor has been elected and qualified. The six
(6) persons named below are management's nominees for election as directors.
Each nominee named below is presently a director of the Company and has served
as such since the date of election indicated. In connection with the sale of
shares of Common Stock to Sheik Al-Athel and Harb S. Al Zuhair in 1989, the
Company agreed to nominate Mr. Al Zuhair for election to the Board of Directors.
In connection with an increase in the number of positions on the Board of
Directors in 1993, at the request of Sheik Al-Athel, the Company appointed
Mohammed O. Al-Omair, who had served as a director of the Company from November
1989 to March 1991, to fill one of the newly-created vacancies. The Company
entered into an agreement with Carlyle SEAG ("Carlyle") on March 27, 1995,
whereby the Company retained Carlyle as its financial advisor in connection with
the Al Masane project. As partial consideration for Carlyle's services rendered
in its role as financial advisor, Carlyle is entitled to nominate one person for
election to the Company's Board of Directors. As a result, at the next meeting
of the Board of Directors the directors will appoint the Carlyle nominee to the
Board of Directors to serve until the next annual meeting of the stockholders.
Carlyle is also entitled to nominate another person for election to the
Company's Board of Directors upon the closing of the financing for the Al Masane
project. There are presently seven (7) director positions on the Board, however
only six (6) persons are nominated for election as directors. The stockholders
entitled to vote at the annual meeting will be permitted to vote for six (6)
persons for election as directors. The seventh director position will be filled
by the Carlyle nominee. Further information with respect to each nominee is set
forth in the following table:
<TABLE>
<CAPTION>
SHARES
OF COMMON
STOCK OF THE
COMPANY
OWNED
BENEFICIALLY AT
NAME; BUSINESS EXPERIENCE; DATE OF MARCH 20, PERCENT
OTHER DIRECTORSHIPS AGE ELECTION 1995(1) OF CLASS
------------------------------------------------- ---- --------------- --------------- --------
<S> <C> <C> <C> <C>
John A. Crichton................................. 78 May 1967 63,650(2) *
Chairman of the Board of the Company since
1967; Chief Executive Officer of the Company
from 1967 to February 1994; President, Crichton
& Co. (petroleum and mining consulting and
management, Dallas, Texas)
Hatem El-Khalidi................................. 70 April 1968 156,000(3) *
President of the Company since 1975; prior to
1975 Vice President of the Company; Chief
Executive Officer of the Company since February
1994
Oliver W. Hammonds............................... 83 Jan. 1987 10,000(4) *
Attorney-at-law and private investments
Harb S. Al Zuhair................................ 56 Nov. 1989 1,565,000(5) 7.9%
Chairman and Chief Executive Officer of TETRAD
Development Co., Ltd., Riyadh, Saudi Arabia
(investments)
Mohammed O. Al-Omair............................. 51 May 1993 -0- *
(Executive Vice President, Saudi Fal Group of
Companies, Riyadh, Saudi Arabia since 1985
(investments); President, Advanced Systems
Ltd., Riyadh, Saudi Arabia since 1985
(mainframe computers)
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
SHARES
OF COMMON
STOCK OF THE
COMPANY
OWNED
BENEFICIALLY AT
NAME; BUSINESS EXPERIENCE; DATE OF MARCH 20, PERCENT
OTHER DIRECTORSHIPS AGE ELECTION 1995(1) OF CLASS
------------------------------------------------- ---- --------------- --------------- --------
<S> <C> <C> <C> <C>
Ghazi Sultan..................................... 58 Sept. 1993 -0- *
Chairman, Sultan Group of Companies, Jeddah,
Saudi, Arabia since 1987 (investments and
marble mining); Director General, Safwah
Company, Jeddah, Saudi, Arabia since 1987
(investments); Deputy Minister of Petroleum and
Mineral Resources of the Kingdom of Saudi
Arabia 1966-1987
</TABLE>
---------------
* Less than 1%
(1) Unless otherwise indicated, all shares are owned directly and the owner has
sole voting and investment power.
(2) Includes 45,000 shares which Mr. Crichton has the right to acquire through
the exercise of presently exercisable stock options.
(3) Includes 25,000 shares which Mr. El-Khalidi has the right to acquire through
the exercise of a presently exercisable stock option. Excludes 385,000
shares owned by Ingrid El-Khalidi, Mr. El-Khalidi's wife, and 315,000 shares
owned by relatives of Hatem El-Khalidi.
(4) Represents 10,000 shares which Mr. Hammonds has the right to acquire through
the exercise of a presently exercisable stock option.
(5) Includes 10,000 shares which Mr. Al Zuhair has the right to acquire through
the exercise of a presently exercisable stock option. Includes 255,000
shares owned by a private Saudi Company wholly-owned by Mr. Al Zuhair. See
"Outstanding Capital Stock" for information regarding Mr. Al Zuhair's
nomination for election to the Board of Directors.
The Board of Directors of the Company has an Audit Committee which is
currently composed of Messrs. Harb S. Al Zuhair and Ghazi Sultan. The Committee
held no meetings during 1994. The functions performed by the Audit Committee
include (i) reviewing and approving the scope of the annual audit of the Company
and (ii) periodically interviewing the Company's independent public accountants
in order to analyze the strengths and weaknesses of its financial staff and
systems and the adequacy of its internal controls.
The current members of the Compensation Committee of the Board are Messrs.
Harb S. Al Zuhair and Ghazi Sultan. The Committee held two meetings during 1994.
The functions performed by the Compensation Committee include (i) periodically
reviewing the compensation paid to officers and key employees of the Company and
making recommendations to the Board of Directors concerning such compensation
and (ii) administering the Company's Stock Option Plan.
The Board of Directors of the Company has an Executive Committee comprised
of four directors, Messrs. El-Khalidi, Al Zuhair, Al-Omair and Sultan. The
Executive Committee held one meeting during 1994. The Executive Committee is
primarily responsible for overseeing and managing construction of the Al Masane
mining project in Saudi Arabia.
The Company's Board of Directors held two meetings during 1994. Each
director attended during the year (or the part of the year that he served as a
director or a member of a committee) at least 75% of the aggregate of (i) the
total number of meetings held by the Board and (ii) the total number of meetings
held by all committees on which he served.
5
<PAGE> 8
EXECUTIVE OFFICERS
Each executive officer of the Company serves for a term extending until his
successor is elected and qualified. The current executive officers of the
Company are John A. Crichton, Chairman of the Board, Hatem El-Khalidi, President
and Chief Executive Officer, Drew Wilson, Secretary and Treasurer, and Nicholas
N. Carter, President of Texas Oil and Chemical Co. II, Inc., a wholly-owned
subsidiary of the Company ("TOCCO II"). Mr. Crichton and Mr. El-Khalidi also
serve as directors of the Company. Mr. El-Khalidi was elected Chief Executive
Officer in February 1994. Information concerning Messrs. Crichton and El-Khalidi
is set forth under "Nominees for Election as Directors." Mr. Wilson, who works
for the Company on a part-time basis, is 62 years old and is a certified public
accountant. Mr. Wilson has served as Secretary and Treasurer of the Company
since November 1986, and has worked as an independent public accountant since
1975. Mr. Carter, who is 48 years old, has been President of TOCCO II and its
subsidiaries since 1987, prior to which time he served from October 1983 as
Treasurer and Controller of those companies. Mr. Carter has been employed by
TOCCO II and its subsidiaries since 1977.
Section 16(a) of the Securities Exchange Act 1934 requires the Company's
officers and 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.
Officers, directors and greater than ten percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
To the best of the Company's knowledge, during the fiscal year ended
December 31, 1994, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners were complied
with; except that Mr. Al Zuhair failed to file on a timely basis one required
report relating to one transaction and Mr. Crichton failed to file on a timely
basis three required reports relating to three transactions. These transactions
were reported by each on a year-end Form 5, which was not timely filed by Mr. Al
Zuhair.
EXECUTIVE COMPENSATION
The following information summarizes annual compensation for services in
all capacities to the Company for the fiscal years ended December 31, 1994, 1993
and 1992 of the Chief Executive Officer and the other four most highly
compensated executive officers of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ----------------------- -----------
-------------------------------- RESTRICTED SECURITIES LONG-TERM
OTHER ANNUAL STOCK UNDERLYING INCENTIVE ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS/ PLAN COMPENSATION
PRINCIPAL POSITION(1) YEAR ($)(2) ($) ($) ($) SARS(#) PAYOUTS($) ($)(5)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hatem El-Khalidi, 1994 $72,000 -- -- -- -- -- $8,000
President and Chief Executive 1993 $72,000 -- -- -- -- -- $8,000
Officer 1992 $72,000 -- -- -- 25,000(3) -- $8,000
Nicholas N. Carter, 1994 $75,269 $32,257 -- -- 20,000(4) -- --
President of TOCCO II 1993 $75,288 $ 2,500 -- -- -- -- --
1992 $70,786 $ 6,400 -- -- 10,000(3) -- --
</TABLE>
---------------
(1) No executive officer of the Company other than Mr. Carter had total annual
salary and bonus in excess of $100,000 during the fiscal year ended December
31, 1994.
(2) Includes $57,231, $45,068, and $49,621 in compensation for the fiscal years
ended December 31, 1992, December 31, 1993 and December 31, 1994,
respectively, that was deferred at the election of Mr. El-Khalidi. Includes
amounts of base salary deferred at the election of Mr. Carter pursuant to a
401(k) plan.
(3) Includes options to purchase 25,000 and 10,000 shares of the Company's
Common Stock issued to Mr. El-Khalidi and Mr. Carter, respectively, on March
20, 1992 pursuant to the Company's option replacement program which
permitted holders of outstanding options under the Company's Stock Option
6
<PAGE> 9
Plan to surrender and cancel the options held by them and to receive in
exchange new options covering an equal number of shares having an exercise
price equal to the market price of the Company's Common Stock on March 20,
1992, $1.38 per share.
(4) Includes an option to purchase 20,000 shares of the Company's Common Stock
issued to Mr. Carter on September 26, 1994 at an exercise price of $1.75 per
share, the market price of the Company's Common Stock on that date.
(5) Includes $8,000 in termination benefits for each of the fiscal years ended
December 31, 1992, December 31, 1993 and December 31, 1994, respectively,
that was accrued for Mr. El-Khalidi in accordance with Saudi Arabian
employment laws.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table shows information concerning options to purchase the
Company's Common Stock granted during the fiscal year ended December 31, 1994 to
the executive officers named in the Summary Compensation Table:
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OF OPTIONS/SARS
SECURITIES UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES BASE PRICE EXPIRATION
NAME GRANTED(#) IN FISCAL YEAR ($/SH) DATE
<S> <C> <C> <C> <C>
Hatem El-Khalidi........... -- -- -- --
Nicholas N. Carter......... 20,000(1) 26.7%(2) $1.75 09/26/04
</TABLE>
---------------
(1) On September 26, 1994, Mr. Carter received an option to purchase 20,000
shares of the Company's Common Stock under the Company's Stock Option Plan
having an exercise price equal to the market price of the Company's Common
Stock on September 26, 1994, $1.75 per share. The option, which is for a
term of ten years, became exercisable with respect to 10,000 shares of the
Company's Common Stock on September 26, 1994. The option will become
exercisable with respect to the remaining 10,000 shares of the Company's
Common Stock on September 26, 1996 as long as Mr. Carter remains employed by
the Company through that date.
(2) Indicates the percentage which the total number of shares represented by the
option granted to the executive officer under the Stock Option Plan bears to
the total number of shares represented by the options granted to all
employees under the Stock Option Plan during the fiscal year ended December
31, 1994.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table shows information concerning the exercise of stock
options during the fiscal year ended December 31, 1994 by the executive officers
named in the Summary Compensation Table and the estimated value of unexercised
options held by such individuals at year-end:
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FY-END (#) FY-END ($)(1)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Hatem El-Khalidi...... 0 0 25,000/0 $ 9,250/0
Nicholas N. Carter.... 0 0 30,000/0 $ 3,700/0
</TABLE>
---------------
(1) Based on the closing price of $1.75 of the Company's Common Stock on the
NASDAQ National Market System on December 30, 1994.
7
<PAGE> 10
In accordance with Saudi Arabian employment laws, the Company is required
to accrue termination benefits for Mr. El-Khalidi. The amount accrued for the
benefit of Mr. El-Khalidi is based on the number of years of service and
compensation. Accrued benefits are payable upon termination of employment.
Pursuant to the TOCCO II Phantom Stock Plan, Mr. Carter is entitled to
receive $21,205 upon termination of his employment with TOCCO II by reason of
his death, retirement, disability or termination without cause. No benefits have
been accrued for Mr. Carter under this plan during the last three fiscal years.
The Company has engaged in other transactions and entered into other
arrangements, directly or indirectly, with its officers and directors, the
primary purpose of certain of which was to provide additional compensation to
such persons. See "Other Matters."
The Company is authorized to pay its non-employee directors a fee of $200
for each Board meeting and $100 for each Committee meeting which they attend, in
addition to reimbursing them for expenses incurred in connection with their
attendance. At December 31, 1994, the payment of $2,000 in director fees to two
former directors had been deferred until the Company's cash flow improves.
OTHER MATTERS
The Company beneficially owns approximately 55%, and directly owns
approximately 46%, of the outstanding capital stock of Pioche-Ely Valley Mines,
Inc., a company that owns a mill and 132 inactive mining claims covering
approximately 3,700 acres located in southeast Nevada. Mr. John A. Crichton is
currently a director and President of Pioche-Ely Valley. The Company is
providing the funds necessary to cover the Pioche-Ely Valley operations. During
1993 and 1994, the Company made payments of approximately $27,000 and $40,000,
respectively, for such purposes. As partial consideration for the forgiveness of
indebtedness, in July 1990 Pioche-Ely Valley granted the Company an option to
purchase an additional 720,000 shares of its Common Stock at an exercise price
of $.20 per share, which option is exercisable until June 1, 1997. As of
December 31, 1994, Pioche-Ely Valley owed the Company $130,000 as a result of
advances made by the Company. The indebtedness bears no interest.
Pursuant to a sharing arrangement, the Company and its subsidiaries share
personnel and office space in the northern part of Dallas, Texas with Dallas
Resources, Inc., together with other overhead expenses on such space. Monthly
rental on the office space is approximately $1,800. The Company pays Dallas
Resources, Inc. $1,000 per month for rent and $500 per month for personnel and
other overhead expenses pursuant to such arrangement. Mr. John A. Crichton,
Chairman of the Board of the Company, owns 100% of the outstanding capital stock
of Dallas Resources, Inc.
During 1994, South Hampton Refining Company, a wholly-owned subsidiary of
TOCCO II ("South Hampton"), incurred product transportation costs of
approximately $290,000 with Silsbee Trading and Transportation Corp. ("STTC"), a
private trucking and transportation carrier in which Nicholas N. Carter, the
President of TOCCO II, and Richard Crain, Vice President of TOCCO II, each have
a 50% equity interest. Pursuant to a lease agreement, South Hampton leases
transportation equipment from STTC at a rate of approximately $25,000 per month,
subject to adjustment. Under the lease arrangement, STTC provides the
transportation equipment and all normal maintenance on such equipment and South
Hampton provides the drivers, fuel, management of transportation operations and
insurance on the transportation equipment. Approximately 90% of STTC's income
will be derived from such lease arrangement. The Company believes that the terms
of the lease arrangement are no less favorable in any material respect than
those which could be obtained from an unaffiliated third party. The lease
agreement is currently operating on a month-to-month basis while renewal options
are being evaluated.
On July 1, 1992, South Hampton entered into an agreement with STTC whereby
STTC will assist South Hampton in maintaining its refinery throughput rate by
providing feedstock inventory for pipeline fill on its eight-inch pipeline. The
cost to South Hampton for STTC providing feedstock inventory availability is
one-half cent per gallon. The volume of feedstock STTC will carry for this
purpose is 453,600 gallons, which is the capacity of the pipeline. Under the
terms of this agreement, South Hampton must compensate STTC for any loss in the
market value of the feedstock while the agreement is in effect. At the
termination of this agreement,
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South Hampton will purchase the inventory from STTC at the then current market
value, which will be no less than $.4735 per gallon. This agreement is on a
month-to-month basis. During 1994, a total of $103,212 was paid to STTC under
this agreement.
The Refining Company is indebted to Saudi Fal Holding Group, a company
owned by Sheik Al-Athel, a stockholder of the Company, in the amount of
$1,500,000 as a result of the draw down by Den norske Bank AS of a letter of
credit provided by Saudi Fal Holding Group for its guarantee of TOCCO II's
letter of credit facility. Mohammed O. Al-Omair, a director of the Company, is
an executive officer of the Fal Group of Companies which owns all of the capital
stock of Saudi Fal Holding Group.
As of December 31, 1994, the Company was indebted to Sheik Kamal Adham, a
stockholder of the Company and Vice Chairman of National Mining Company, the
Company with which the Company jointly holds its exploration licenses in Saudi
Arabia, in the amount of $168,279, such amount representing loans made by Sheik
Adham to the Company. The indebtedness bears no interest and is payable on
demand.
The Company has had discussions with Chevron Chemical Company regarding the
Company's proposal to purchase feedstock from an Aromax plant to be built in
Jubail, Saudi Arabia by Chevron Chemical and Saudi Venture Capital Group. The
Company and some Saudi joint venture partners, including Harb S. Al Zuhair,
Sheik Kamal Adham, Prince Talal, Sheik Al-Athel, Ghazi Sultan, Mohammed Salem
Ben Mahfouz and Mohammed O. Al-Omair, contemplate building a processing plant
next to the Aromax plant in Saudi Arabia. As proposed, the Company would have a
twenty-five percent interest in the joint venture. Planning has begun toward the
construction and operation of the Aromax plant and the joint venture's
processing plant. Construction is estimated to be completed in late 1996. The
Company will begin applying to the Saudi government for a license for the
project when the Aromax project receives final approval from the Saudi
government.
In January 1994, John A. Crichton, Chairman of the Board of the Company,
exercised an option to purchase 14,000 shares of the Company's Common Stock at
$1.00 per share. The shares were issued in exchange for cancellation of
outstanding indebtedness. The market price of the Company's Common Stock on the
date of grant, January 21, 1992, was $1.50 per share. In December 1994, $30,000
in deferred compensation owed by the Company to Mr. Crichton was offset against
the same amount owed to the Company by companies owned by Mr. Crichton.
On February 17, 1994, the Board of Directors approved the consolidation of
two notes payable by Hatem El-Khalidi, President of the Company, in the amounts
of $99,000 and $27,000 which matured on December 31, 1993 and January 31, 1994,
respectively, into one note for $126,000 having a December 31, 1995 maturity
date and bearing interest at the rate of six percent per annum.
In April 1994, the Company received $50,000 from a 1993 sale of its Common
Stock at $1.00 per share to a company controlled by Harb S. Al-Zuhair, a
director of the Company, pursuant to a partial exercise of an option to purchase
300,000 shares of the Company's Common Stock at $1.00 per share. The market
price of the Company's Common Stock on March 23, 1993, the date the option was
granted, was $2.25 per share.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected Price Waterhouse LLP to audit and report on the
financial statements of the Company and the Al Masane project for the current
fiscal year. Representatives of Price Waterhouse LLP are expected to be present
at the annual meeting with an opportunity to make a statement if they so desire,
and they are expected to be available to respond to appropriate questions.
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STOCKHOLDERS' PROPOSALS
Any proposal by a stockholder of the Company intended to be presented at
the 1995 annual meeting of stockholders, which is currently scheduled for May 7,
1996, must be received by the Company at its principal executive office no later
than December 1, 1995 for inclusion in the Company's Proxy Statement and form of
proxy. Any such proposal must also comply with the other requirements of the
proxy solicitation rules of the Securities and Exchange Commission.
By Order of the Board of Directors
DREW WILSON, Secretary
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDING DECEMBER 31, 1994, UPON THE WRITTEN REQUEST
OF ANY PERSON WHO WAS A STOCKHOLDER (OF RECORD OR BENEFICIALLY) AT THE CLOSE OF
BUSINESS ON MARCH 20, 1995. REQUESTS FOR SUCH REPORT SHOULD BE DIRECTED TO THE
COMPANY AT 10830 NORTH CENTRAL EXPRESSWAY, SUITE 175, DALLAS, TEXAS 75231,
ATTENTION: LETTY EDES.
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<TABLE>
<CAPTION>
ARABIAN SHIELD DEVELOPMENT COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
<S> <C>
The undersigned hereby (1) acknowledges receipt of the Notice of Annual Meeting of Stockholders
of ARABIAN SHIELD DEVELOPMENT COMPANY (the "Company") to be held on May 5, 1995, and the Proxy
Statement in connection therewith, and (2) appoints John A. Crichton and Hatem El-Khalidi, and
each of them (acting jointly, or if only one be present, then by that one alone), his attorneys
and proxies, with full power of substitution to each, to vote all shares of Common Stock of the
Company of the undersigned at said meeting and at any adjournment thereof, as follows:
P 1. ELECTION OF DIRECTORS
R
O / / FOR all nominees listed below (except as marked to the contrary)
X
Y / / WITHHOLD AUTHORITY to vote for all nominees listed below
(Instruction: To withhold authority to vote for any individual nominee, strike a line
through the nominee's name in the list below.)
J. A. Crichton, H. El-Khalidi, O. W. Hammonds, H. S. Al Zuhair,
M. O. Al-Omair and G. Sultan
P ARABIAN SHIELD DEVELOPMENT COMPANY (Continued from other side)
R
O 2. IN THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY
X ADJOURNMENT THEREOF.
Y THIS PROXY WILL BE VOTED AS DIRECTED ABOVE. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL 1.
IMPORTANT: You are encouraged to attend this meeting in person, but if you cannot do so, please
complete, date and sign this proxy and mail it promptly in the enclosed return envelope.
</TABLE>
DATED , 1995
----------------------------
----------------------------
PLEASE SIGN HERE
Please date this proxy and
sign your name exactly as it
appears hereon. Where there
is more than one owner, each
should sign. When signing as
an agent, attorney,
administrator, executor,
guardian or trustee, please
add your title as such. If
executed by a corporation,
the proxy should be signed
by a duly authorized officer
who should indicate his
title. Please date, sign and
mail this proxy as soon as
possible. No postage is
required if mailed in the
United States.
