<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Arabian Shield Development Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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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 the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] 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:
-----------------------------------------------------------------------
(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 15, 2000
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 Monday, May 15, 2000, at 10:00 a.m., Dallas time, in The Park Room at Holiday
Inn Dallas Central, 10650 North Central Expressway, Dallas, Texas 75231, for the
following purposes:
1. Electing four (4) directors to serve until the next annual meeting
of stockholders and until their respective successors shall have been
elected and qualified.
2. Considering and voting upon a proposal to amend the Company's
Certificate of Incorporation changing the name of the Company to "Arabian
American Development Company."
3. Considering and voting upon a proposal to amend the Company's
Certificate of Incorporation to effect a 1-for-2 reverse stock split of the
Company's outstanding common stock.
4. 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 16, 2000 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, JR., Secretary
Dallas, Texas
March 28, 2000
<PAGE> 3
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 15, 2000
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 15, 2000, 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 will be first sent to
stockholders is April 3, 2000.
ANNUAL REPORT
The Annual Report to Stockholders, covering the fiscal year ended December
31, 1999, 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 16, 2000, 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 22,269,994 shares of the Common Stock,
$.10 par value, of the Company.
<PAGE> 4
The following table sets forth, as of March 16, 2000, 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
NAME AND ADDRESS BENEFICIALLY PERCENT
OF BENEFICIAL OWNER OWNED(1) OF CLASS
- ------------------- ------------ --------
<S> <C> <C>
Harb S. Al Zuhair........................................... 1,300,000 5.8%
P.O. Box 3750
Riyadh, Saudi Arabia
Fahad Mohammed Saleh Al-Athel............................... 3,615,000(2) 16.1%
P.O. Box 61659
Riyadh, Saudi Arabia
Prince Talal Bin Abdul Aziz................................. 1,500,000 6.7%
P.O. Box 930
Riyadh, Saudi Arabia
Mohammad Salem Ben Mahfouz.................................. 1,500,000 6.7%
c/o National Commercial Bank
Jeddah, Saudi Arabia
Hatem El-Khalidi............................................ 609,000(3) 2.7%
10830 North Central Expressway
Suite 175
Dallas, Texas 75231
Kamal Adham................................................. 1,328,000 6.0%
P.O. Box 1528
Jeddah, Saudi Arabia
All directors and executive officers as a group (6
persons).................................................. 791,650(4) 3.4%
</TABLE>
- ---------------
(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 245,000 shares which Mr. Al-Athel has the right to acquire through
the exercise of a presently exercisable stock option.
(3) Includes 478,000 shares which Mr. El-Khalidi has the right to acquire
through the exercise of presently exercisable stock options. Excludes
385,000 shares owned by Ingrid El-Khalidi, Mr. El-Khalidi's wife, and
443,000 shares owned by relatives of Hatem El-Khalidi.
(4) Includes 650,000 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 443,000 shares owned by
relatives of Hatem El-Khalidi.
Based on its stock ownership records, the Company believes that as of March
16, 2000, 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.
2
<PAGE> 5
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 16, 2000. Cumulative voting for directors is not
permitted. Directors will be elected by plurality vote at the meeting, and the
four (4) 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. The affirmative vote of the
holders of a majority of the shares of the Company's Common Stock outstanding
and entitled to vote is necessary for the approval of each of the proposals to
amend the Company's Certificate of Incorporation. For matters requiring majority
approval, abstentions will have the effect of negative votes but broker
non-votes will not be treated as shares entitled to vote on such matters.
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 four
(4) 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; (2)
for the proposal to amend the Company's Certificate of Incorporation to change
the name of the Company to "Arabian American Development Company;" (3) for the
proposal to amend the Company's Certificate of Incorporation to effect a 1-for-2
reverse stock split of the Company's outstanding Common Stock; and (4) 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
PROPOSAL ONE
ELECTION OF DIRECTORS
Four (4) directors will be elected at the annual meeting. Each director
elected will serve until his successor has been elected and qualified. The four
(4) 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 an increase in
the number of positions on the Board of Directors in 1993, at the request of
Sheik Fahad 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. 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
NAME; BUSINESS EXPERIENCE; DATE OF AT MARCH 16, PERCENT
OTHER DIRECTORSHIPS AGE ELECTION 2000(1) OF CLASS
- -------------------------- --- -------- ------------------ --------
<S> <C> <C> <C> <C>
John A. Crichton.................................. 83 May 1967 17,650(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.................................. 75 April 1968 609,000(3) 2.7%
President of the Company since 1975; prior to
1975 Vice President of the Company; Chief
Executive Officer of the Company since February
1994
Mohammed O. Al-Omair.............................. 56 May 1993 60,000(4) *
(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)
Ghazi Sultan...................................... 63 Sept. 1993 60,000(5) *
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 17,000 shares which Mr. Crichton has the right to acquire through
the exercise of presently exercisable stock options.
(3) Includes 478,000 shares which Mr. El-Khalidi has the right to acquire
through the exercise of presently exercisable stock options. Excludes
385,000 shares owned by Ingrid El-Khalidi, Mr. El-Khalidi's wife, and
443,000 shares owned by relatives of Hatem El-Khalidi.
(4) Includes 60,000 shares which Mr. Al-Omair has the right to acquire through
the exercise of a presently exercisable stock option.
(5) Includes 60,000 shares which Mr. Sultan has the right to acquire through the
exercise of a presently exercisable stock option.
The Board of Directors of the Company has an Audit Committee which is
currently composed of Messrs. Mohammed O. Al-Omair, Ghazi Sultan and Hatem
El-Khalidi. The Committee held one meeting during 1999. The functions performed
by the Audit Committee include (i) recommending the selection and
4
<PAGE> 7
approval of an independent auditing firm each year, (ii) reviewing and approving
the scope and performance of the annual audit of the Company and (iii)
periodically interviewing the Company's independent public accountants in order
to review the results of the audit and to analyze the strengths and weaknesses
of the Company's financial staff and systems and the adequacy of its internal
controls.
The current members of the Compensation Committee of the Board are Messrs.
Mohammed O. Al-Omair and Ghazi Sultan. The Committee held one meeting during
1999. The functions performed by the Compensation Committee include (i)
periodically reviewing the compensation paid to executive 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 three directors, Messrs. El Khalidi, Al-Omair and Sultan. The Executive
Committee held no meetings during 1999. The Executive Committee is primarily
responsible for overseeing and managing the planning and construction of the Al
Masane mining project in Saudi Arabia.
The Company's Board of Directors held five meetings during 1999. 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES FOR
DIRECTOR PRESENTED IN PROPOSAL ONE.
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, Jr., Secretary and Treasurer, and
Nicholas N. Carter, President of Texas Oil and Chemical Co. II, Inc., a
wholly-owned subsidiary of the Company ("TOCCO"). Mr. Crichton and Mr.
El-Khalidi also serve as directors of the Company. Information concerning
Messrs. Crichton and El-Khalidi is set forth under "Nominees for Election as
Directors." Mr. Wilson is 66 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 53 years old, has been President of TOCCO 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 and its subsidiaries
since 1977.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act 1934 requires the Company's
officers and directors, and persons who own more than 10% 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 10% 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, 1999, all Section
16(a) filing requirements applicable to its officers, directors and greater than
10% beneficial owners were complied with.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following information summarizes annual compensation for services in
all capacities to the Company for the fiscal years ended December 31, 1999, 1998
and 1997 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) ($) ($) ($) SARS(#) PAYOUTS($) ($)(3)
- --------------------- ---- ------- ------- ------------ ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hatem El-Khalidi, 1999 $72,000 -- -- -- -- -- $8,000
President and 1998 $72,000 -- -- -- -- -- $8,000
Chief Executive
Officer 1997 $72,000 -- -- -- -- -- $8,000
Nicholas N. Carter 1999 $84,500 $56,500 -- -- -- -- --
President, Texas 1998 $84,500 $54,021 -- -- -- -- --
Oil and Chemical Co. 1997 $84,500 $19,591 -- -- -- -- --
</TABLE>
- ---------------
(1) Except for Mr. Carter, no executive officer of the Company had total annual
salary and bonus in excess of $100,000 during the fiscal year ended December
31, 1999.
(2) Includes $57,006, $40,064 and $38,004 compensation for the fiscal years
ended December 31, 1997, December 31, 1998 and December 31, 1999,
respectively, that was deferred at the election of Mr. El-Khalidi. All
present deferred compensation owing to Mr. El-Khalidi aggregating $741,218
is considered, and future deferred compensation owing to Mr. El-Khalidi, if
any, will be considered, a demand obligation payable to Mr. El-Khalidi.
(3) Includes $8,000 in termination benefits for each of the fiscal years ended
December 31, 1997, December 31, 1998 and December 31, 1999 respectively,
that was accrued for Mr. El-Khalidi in accordance with Saudi Arabian
employment laws.
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.
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.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
THE COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") of the Board of Directors is
composed entirely of independent outside directors. The Board of Directors has
delegated to the Committee the authority to review, consider and determine the
compensation of the Company's executive officers and key employees. The
Committee also sets overall compensation policies for the Company and its wholly
owned subsidiaries.
COMPONENTS OF EXECUTIVE COMPENSATION
The Company has purposely limited the components in the compensation
program for executive officers to base salary, bonus and stock options. In
addition to these components, there are several standard benefit
6
<PAGE> 9
plans available to all employees of South Hampton Refining Company, a
wholly-owned subsidiary of TOCCO ("South Hampton").
BASE SALARY
In determining base salary for the Company's executive officers, including
the Chief Executive Officer, the Committee takes into account the
responsibilities being undertaken by and the experience of an executive, in
addition to various confidential and/or subjective considerations. The Committee
also takes into consideration the fact that the Company does not maintain a
pension plan, a restricted stock plan, a supplemental retirement benefit plan, a
retirees' health plan, a short-term disability insurance plan, a group health
plan, a group life insurance plan, a long-term disability insurance plan or
Section 401(k) plan.
The Board of Directors, at its May 26, 1999 regular meeting, upon
recommendation of the Committee, approved the base salaries for those named
executive officers whose compensation is detailed in this Proxy Statement. In
addition to various confidential and/or subjective factors, the Committee took
into consideration the longevity of the named executive officer's service to the
Company as well as an assessment of his individual performance. With regard to
those executives whose compensation is detailed in this Proxy Statement, the
Committee also considered, in no particular order and with no particular weight,
such factors as overall success of the Company in meeting its annual objectives;
managing to or bettering annual operating and capital budgets; undertaking new
responsibilities; maintaining proper financial, budgetary, legal and procedural
controls; and the executive's contribution to the overall governance and
management of the Company. The Committee did not establish the relative
importance of each factor.
The Company's policy on compensation attempts to show consistent
application for all executive officers, with variations given to differences in
the level of responsibility for certain areas of corporate management, or in the
nature of the functions performed by particular individuals. The goals of the
compensation program include creating a relationship between business objectives
and performance, which will encourage the creation of value for stockholders.
Pursuit of such goals requires the establishment of compensation policies which
will enable the Company to attract, retain and reward executive officers who can
effectively contribute to the long-term success of the Company. No particular
attempt is made to differentiate the Chief Executive Officer for compensation
purposes. The Committee views the Chief Executive Officer as one member of the
senior management team and applies compensation criteria evenly among them.
BONUS
Employees of South Hampton have an opportunity to earn an annual bonus
based entirely upon the performance of the refinery. A bonus is awarded based
upon the refinery's financial performance. If minimum performance levels have
not been achieved, no bonus is earned. As a result of South Hampton's financial
performance during 1999, Mr. Carter was awarded the bonus set forth in the
Summary Compensation Table.
STOCK OPTIONS
The Committee believes that the purpose of stock options for executive
officers is to align their interests with those of the stockholders of the
Company and to create stockholder value. The Committee believes that option
grants will serve as a performance incentive to the executive officers.
In 1999, the Committee did not make use of the Company's Stock Option Plan
as an incentive to the named executive officers.
While the value realizable from exercisable options is dependent upon the
extent to which the Company's performance is reflected in the market price of
its Common Stock at any particular point in time, the decision as to whether
this value will be realized in any particular year is primarily determined by
each individual executive. Accordingly, in analyzing annual compensation levels,
the Committee does not consider gains realized during any particular year by any
executive officer as a result of individual decisions to exercise stock options
received in previous years.
7
<PAGE> 10
CEO COMPENSATION
Mr. El-Khalidi's base salary has remained unchanged for several years. The
Committee did not award Mr. El-Khalidi any bonus or stock options during 1999.
Respectfully submitted,
COMPENSATION COMMITTEE
MOHAMMED O. AL-OMAIR, Chairman
GHAZI SULTAN
PERFORMANCE GRAPH
The following graph compares the annual cumulative total stockholder return
on an investment of $100 on December 31, 1994 in the Company's Common Stock,
based on the market price of the Common Stock and assuming reinvestment of
dividends, with the cumulative total return of a similar investment in companies
on the CRSP Total Return Index for The Nasdaq Stock Market (US) and the Nasdaq
Non-Financial Stocks Index. The historical stock price performances shown on the
graph are not necessarily indicative of future price performance.
[Performance Graph]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Arabian Shield Development
Company 100 46 121 178 79 55
CRSP Total Return Index for The
Nasdaq Stock Market (US) 100 141 174 213 300 542
Nasdaq Non-Financial Stocks 100 139 169 198 290 559
</TABLE>
8
<PAGE> 11
OTHER MATTERS
The Company directly owns approximately 51% of the outstanding capital
stock of Pioche-Ely Valley Mines, Inc. ("Pioche"), a company that owns a mill
and 128 inactive mining claims covering approximately 3,500 acres located in
southeast Nevada. Mr. John A. Crichton is currently a director and President of
Pioche, and Mr. Hatem El-Khalidi is currently a director and Executive Vice
President of Pioche. The Company is providing the funds necessary to cover the
Pioche operations. During 1999 and 1998, the Company made payments of
approximately $22,100 and $11,300, respectively, for such purposes. As partial
consideration for the forgiveness of indebtedness, in July 1990 Pioche 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, 2002. As of December 31, 1999, Pioche owed the Company $169,122 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, office space and other overhead expenses in Dallas, Texas with a
company wholly-owned by Mr. John A. Crichton, Chairman of the Board of the
Company. Monthly rental on the office space is approximately $2,100. The Company
pays $1,100 per month for rent and $880 per month for personnel and other
overhead expenses pursuant to such arrangement.
During 1999, South Hampton incurred product transportation costs of
approximately $349,000 with Silsbee Trading and Transportation Corp. ("STTC"), a
private trucking and transportation carrier in which Nicholas N. Carter, the
President of TOCCO, and Richard Crain, Vice President of TOCCO, each have a 50%
equity interest. Pursuant to a lease agreement, South Hampton leases
transportation equipment from STTC at a rate of approximately $29,000 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.
PROPOSAL TWO
AMENDMENT OF CERTIFICATE OF INCORPORATION
CHANGING THE NAME OF THE COMPANY TO
"ARABIAN AMERICAN DEVELOPMENT COMPANY"
The Board of Directors has unanimously approved, subject to stockholder
approval, an amendment to the Company's Certificate of Incorporation changing
the name of the Company to "Arabian American Development Company." The full text
of the proposed amendment to the Company's Certificate of Incorporation is set
forth in Exhibit A to this Proxy Statement.
The Board of Directors believes that the amendment is advisable to better
reflect the Company's business. The Board of Directors believes that the new
corporate name will more closely reflect the strategic direction of the Company
and allow the general public to more clearly associate the company name with its
products and services.
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock outstanding and entitled to vote is necessary for the
approval of the proposed amendment to the Company's Certificate of Incorporation
changing the name of the Company to "Arabian American Development Company."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT OF THE
COMPANY'S CERTIFICATE OF INCORPORATION CHANGING THE NAME OF THE COMPANY TO
"ARABIAN AMERICAN DEVELOPMENT COMPANY."
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PROPOSAL THREE
AMENDMENT OF CERTIFICATE OF INCORPORATION
TO EFFECT A 1-FOR-2 REVERSE STOCK SPLIT
OF THE COMPANY'S OUTSTANDING COMMON STOCK
The Board of Directors has unanimously approved, subject to stockholder
approval, an amendment to the Company's Certificate of Incorporation to effect a
1-for-2 reverse stock split of the Company's outstanding Common Stock (the
"Reverse Stock Split"). Under the proposal, each two (2) shares of Common Stock
("Existing Common Stock") outstanding as of the close of business on the
effective date of the amendment (the "Effective Date") will be automatically
converted into one (1) new share of Common Stock ("New Common Stock"). The
amendment will not change the number of authorized shares of Common Stock or the
par value of the shares of Common Stock. The full text of the proposed amendment
to the Company's Certificate of Incorporation is set forth in Exhibit B to this
Proxy Statement.
No fractions of shares of New Common Stock will be issued in connection
with the Reverse Stock Split. In lieu thereof, each stockholder of record
otherwise entitled to a fraction of a share of New Common Stock will receive a
cash distribution.
If approved by the stockholders, the Reverse Stock Split will be
accomplished by the filing of a Certificate of Amendment to the Company's
Certificate of Incorporation with the Delaware Secretary of State. The Company
plans to file the Certificate of Amendment as soon as practicable if the
proposed amendment is approved at the annual meeting or at any adjournment.
Under Delaware General Corporation Law, the amendment to the Certificate of
Incorporation will become effective on the date of the filing, unless the
Company specifies otherwise.
PURPOSES OF THE PROPOSED REVERSE STOCK SPLIT
The Board of Directors believes that the proposed Reverse Stock Split is
advisable and in the best interests of the Company and its stockholders in order
to
- increase the price per share at which the outstanding Common Stock would
trade;
- permit the Company to maintain the listing of the Common Stock on The
Nasdaq National Market; and
- provide additional authorized shares of Common Stock for issuance from
time to time by the Board of Directors of the Company.
Increase in Price Per Share of Common Stock. The Company believes that an
increase in the price level of the Common Stock as a result of the Reverse Stock
Split could improve the marketability and liquidity of the Common Stock and
could encourage greater interest and trading in the Common Stock.
The current share price of the Company's shares of Common Stock may limit
their marketability and liquidity. Brokerage commissions on the sale of lower
priced stock often represents a higher percentage of the sales price than the
commissions on relatively higher priced stock. The Company believes that the
increase in the price per share could reduce this burden on the marketability
and liquidity of the Common Stock. However, there can be no assurance that the
Reverse Stock Split would cause the market price at which the Common Stock would
trade to increase by two (2) times or that any increase in such price would
substantially increase the marketability or liquidity of the Common Stock.
The Reverse Stock Split may also have negative effects on liquidity. It is
possible that the reduced number of shares outstanding as a result of the
Reverse Stock Split could adversely affect the liquidity of the shares. In
addition, certain stockholders who own fewer than 100 shares of Common Stock as
a result of the Reverse Stock Split may be required to pay brokerage commissions
upon sale that are proportionately higher than the commissions paid by holders
of 100 or more shares of Common Stock. The Company believes that the possible
positive effects of the increase in price as a result of the Reverse Stock Split
should outweigh the possible negative consequences of the reduction in the
number of shares outstanding.
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Nasdaq Requirements. The Company's Common Stock is currently listed on The
Nasdaq National Market. By letter dated September 17, 1999, The Nasdaq Stock
Market notified the Company that if it failed to meet the $1.00 per share
minimum bid price requirement established by Nasdaq for continued listing, the
Company's Common Stock would be delisted on December 21, 1999. Pursuant to a
January 27, 2000 written hearing before a Nasdaq Listing Qualifications Panel,
the Company's request for continued inclusion on The Nasdaq National Market
pursuant to an exception to the minimum bid price requirement was approved. The
Panel's approval was subject to the conditions that (i) the Company effect the
Reverse Stock Split; (ii) a closing bid price of at least $1.00 per share for
the Company's Common Stock occur on or before May 2, 2000; (iii) immediately
after May 2, 2000, the closing bid price for the Company's Common Stock be at
least $1.00 per share for a minimum of ten (10) consecutive trading days; and
(iv) the Company demonstrate compliance with all requirements for continued
listing on The Nasdaq National Market.
By letter dated March 15, 2000, the Company notified The Nasdaq National
Market that the closing bid price for the Company's Common Stock had exceeded
$1.00 per share for ten (10) consecutive trading days. As a result, the Company
satisfied all requirements for continued listing on The Nasdaq National Market
and the Panel dismissed the delisting proceeding. The Board of Directors
believes that the Reverse Stock Split will assist the Company in maintaining the
Company Common Stock's continued listing on The Nasdaq National Market. The
Board of Directors believes that if the number of outstanding shares of Common
Stock is decreased, without altering the proportionate economic interests held
by individual stockholders, the trading price of the Company's Common Stock
should increase to a price which provides a greater margin for satisfaction of
the minimum bid price requirement. The Company currently meets all requirements
for continued listing requirements and believes that it will continue to do so;
however, there can be no assurance that the Company will meet all of the
continued listing requirements in the future.
While the Board of Directors believes that the Reverse Stock Split is
desirable to assist the Company in maintaining the continued listing of the
Company's Common Stock on The Nasdaq National Market, there can be no assurance
that the market price of the Company's Common Stock will increase in proportion
to the reduction in the number of outstanding shares resulting from the Reverse
Stock Split or that the Company will be able to maintain any increase in market
price for any period of time.
Increase in Number of Shares Available for Issuance. The Company's
Certificate of Incorporation authorizes the issuance of 40,000,000 shares of
Common Stock. As of March 16, 2000, there were 22,269,994 shares of Common Stock
issued and outstanding. Based upon the Company's best estimates, the number of
outstanding shares of Common Stock would be reduced as a result of the proposed
Reverse Stock Split to approximately 11,134,997 shares. The number of authorized
shares would not be changed in the Reverse Stock Split. As a result,
approximately 28,865,003 additional shares of Common Stock would be available
for issuance from time to time as the Board of Directors may deem advisable.
Increasing the number of shares of Common Stock available for issuance would
give the Company greater flexibility to issue stock for any proper purpose as
determined from time to time by the Board of Directors. The Board of Directors
does not currently have any plans, understandings, agreements or arrangements
concerning the issuance of additional shares of Company Common Stock.
EFFECTS OF THE PROPOSED REVERSE STOCK SPLIT
Effect on Stockholders. Each holder of record of shares of Existing Common
Stock as of the close of business on the Effective Date will receive one (1)
share of New Common Stock for each two (2) shares of Existing Common Stock. No
fractions of shares of New Common Stock will be issued in connection with the
Reverse Stock Split. In lieu thereof, each stockholder of record otherwise
entitled to a fraction of a share of New Common Stock will receive a cash
distribution in an amount equal to the product of the percentage represented by
such fraction of a share and the closing price of the Company's Common Stock as
reported on The Nasdaq National Market on the first trading day after the
Effective Date. Each stockholder holding less than two (2) shares of Existing
Common Stock before the Effective Time will not be a stockholder after the
Effective Time. Other than these stockholders, each other stockholder of the
Company will continue as a stockholder after the Effective Time. The
proportionate voting power and other rights of stockholders will not be affected
by the Reverse Stock Split, except to the extent that fractions of shares are
cancelled in the
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<PAGE> 14
Reverse Stock Split in exchange for cash. However, as described below, the
Reverse Stock Split will increase the number of shares available for issuance in
the future, which may result in dilution of the interests of existing
stockholders. The Reverse Stock Split also will result in some stockholders
owning "odd lots" of less than 100 shares of New Common Stock. Brokerage
commissions and other costs of transactions in odd lots may be higher,
particularly on a per-share basis, than the cost of transactions in even
multiples of 100 shares.
Effect on Authorized Stock and Outstanding Common Stock. Article Fourth of
the Company's Certificate of Incorporation currently authorizes the issuance of
40,000,000 shares of Common Stock. The authorized capital stock of the Company
will not be changed by reason of the proposed Reverse Stock Split. Based upon
the Company's best estimates, the number of outstanding shares of Common Stock
would be reduced as a result of the proposed Reverse Stock Split from 22,269,994
shares to approximately 11,134,997 shares, resulting in approximately 28,865,003
additional shares of Common Stock becoming available for issuance from time to
time upon such terms and for such purposes as the Board of Directors may deem
advisable. The Board of Directors does not intend to seek the approval of the
stockholders for any future issuance, unless such approval is required by law or
the rules of any quotation system or exchange on which the Common Stock is then
traded. Any future issuance of Common Stock, depending upon the circumstances,
may dilute the earnings per share, liquidation value, voting power and other
rights and interests of the then existing stockholders. The Board of Directors
does not currently have any plans, understandings, agreements or arrangements
concerning the issuance of additional shares of Company Common Stock.
Anti-Takeover Effect. Although not a factor in the decision of the Board of
Directors to propose the Reverse Stock Split, the proposed Reverse Stock Split
could have an anti-takeover effect by reducing the number of outstanding shares
of Common Stock and thereby increasing the number of shares of Common Stock
available for issuance by the Board of Directors. There are currently no plans,
understandings, agreements or arrangements concerning the issuance of additional
shares of Company Common Stock. However, the increase in the number of shares of
Common Stock available for issuance could enable the Board of Directors to
render more difficult or discourage a hostile transaction to take control of the
Company, by issuing additional shares to increase the voting power of parties
friendly to the Board of Directors or to dilute the voting power and other
rights of a proposed acquiror. The availability of this defensive strategy to
the Company could discourage unsolicited takeover attempts, thereby limiting the
opportunity for the Company's stockholders to realize a higher price for their
shares than would be generally available in the public markets. The Board of
Directors is not aware of any attempt, or contemplated attempt, to acquire
control of the Company, and this proposal is not being presented with the intent
that it be utilized as a type of anti-takeover device.
EXCHANGE OF STOCK CERTIFICATES
All stockholders of record of the Company will be required to surrender
their certificates representing shares of Existing Common Stock (the "Old
Certificates") to the Company's designated exchange agent (the "Exchange
Agent"). As soon as practicable after the Effective Date, the Company will mail
a transmittal form to each stockholder of record as the Effective Date for use
in transmitting Old Certificates to the Exchange Agent. Upon proper completion
of the transmittal form and delivery of the transmittal form with the holder's
Old Certificate to the Exchange Agent, each holder of record of shares of
Existing Common Stock will receive new certificates representing the number of
shares of New Common Stock to which the holder is entitled. Holders entitled to
a fraction of a share will receive a check in an amount equal to the product of
the percentage represented by such fraction of a share and the closing price of
the Company's Common Stock as reported on The Nasdaq National Market on the
first trading day after the Effective Date.
The Reverse Stock Split will occur at the close of business on the
Effective Date without regard to when the Old Certificates are physically
surrendered. After the Effective Date, each Old Certificate, until surrendered
and exchanged as described above, will be deemed for all corporate purposes to
evidence ownership of the resulting number of shares of New Common Stock.
Until stockholders have surrendered their Old Certificates, such holders
will not be entitled to receive (i) dividends, if any, declared or payable to
holders of record of New Common Stock or (ii) certificates
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<PAGE> 15
representing the shares of New Common Stock to which such stockholders are
entitled. Such amounts, if any, will be remitted to the stockholders entitled
thereto, without interest, at the time such Old Certificates are surrendered for
exchange.
HOLDERS SHOULD SUBMIT THEIR OLD CERTIFICATES ONLY AFTER THEY RECEIVE
TRANSMITTAL FORMS.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain federal income tax consequences
of the proposed Reverse Stock Split to the stockholders of the Company. THIS
SUMMARY FOCUSES ON STOCKHOLDERS WHO ARE CITIZENS OR RESIDENTS OF THE UNITED
STATES, AND HAS ONLY LIMITED APPLICATION TO CORPORATIONS, TRUSTS, ESTATES,
NON-RESIDENT ALIENS OR OTHER STOCKHOLDERS SUBJECT TO SPECIALIZED TAX TREATMENT
(INCLUDING, BUT NOT LIMITED TO, TAX-EXEMPT ORGANIZATIONS, FOREIGN PERSONS OR
INDIVIDUAL RETIREMENT ACCOUNTS). THIS DISCUSSION IS INCLUDED FOR GENERAL
INFORMATION ONLY. NO OPINION OF COUNSEL OR RULING FROM THE INTERNAL REVENUE
SERVICE OR OTHER TAX AUTHORITY HAS BEEN SOUGHT OR OBTAINED WITH RESPECT TO THE
FEDERAL, STATE OR LOCAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT.
BECAUSE OF THE COMPLEXITY OF THE INTERNAL REVENUE CODE AND BECAUSE TAX
CONSEQUENCES MAY VARY DEPENDING ON THE PARTICULAR FACTS RELATING TO EACH
STOCKHOLDER, STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE
FEDERAL, STATE, LOCAL AND FOREIGN TAX EFFECTS OF THE REVERSE STOCK SPLIT IN
LIGHT OF THEIR INDIVIDUAL CIRCUMSTANCES.
The Company believes that the proposed Reverse Stock Split will be a
tax-free recapitalization under Section 368(a)(1)(E) of the Internal Revenue
Code of 1986, as amended, to the extent that Existing Common Stock is exchanged
solely for New Common Stock. Each stockholder who receives only New Common Stock
in exchange for its Existing Common Stock will not recognize any gain or loss,
and the New Common Stock issued to each such stockholder will have an aggregate
basis for computing gain or loss equal to the aggregate basis of the Existing
Common Stock held by such stockholder immediately prior to the Reverse Stock
Split. Further, each such stockholder's holding period for the New Common Stock
should include the holding period for the Existing Common Stock exchanged
therefor, provided that such shares of Existing Common Stock were capital assets
held by such stockholder at the effective time of the Reverse Stock Split.
Some stockholders may receive both New Common Stock and cash in lieu of any
fractional shares of such New Common Stock in the Reverse Stock Split. These
stockholders will also not recognize any gain or loss to the extent that such
stockholders receive New Common Stock in exchange for the Existing Common Stock.
The New Common Stock issued to each such stockholder will have an aggregate
basis for computing gain or loss equal to the aggregate basis of the Existing
Common Stock held by such stockholder immediately prior to the Reverse Stock
Split, less the basis allocable to any fractional interest of New Common Stock
for which cash is received. Such a stockholder's holding period for the New
Common Stock received should include the holding period for the Existing Common
Stock exchanged therefor, provided that such shares of Existing Common Stock
were capital assets held by such stockholder at the effective time of the
Reverse Stock Split.
Stockholders who receive cash in lieu of fractional shares of New Common
Stock will be subject to federal income tax with respect to such cash received.
The Internal Revenue Service has ruled that, in the context of a tax-free
recapitalization, where a cash payment is made in lieu of fractional shares and
is not in the nature of separately bargained-for-consideration, the payment will
generally be treated as a distribution made in redemption of the fractional
shares. If, with respect to any particular stockholder, a cash payment is
received in lieu of fractional shares and is (i) not essentially equivalent to a
dividend, (ii) substantially disproportionate with respect to the cash
distributions (if any) received by the other stockholders or (iii) is in
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<PAGE> 16
complete redemption of all of such stockholder's New Common Stock, then such
cash payment will be treated as being made in exchange for such fractional
shares.
If any such cash payment is treated as made in exchange for the
stockholder's fractional shares, and if the shares of Existing Common Stock were
held by such stockholder as capital assets, the stockholder will recognize
capital gain or loss in an amount equal to the difference between the cash
received and the basis allocable to the fractional interest of the New Common
Stock for which such cash was received. Any such capital gain or loss will be
long-term capital gain or loss if the Existing Common Stock had a holding period
in excess of one year.
If a cash payment does not qualify as being made in exchange for the
stockholder's fractional shares, it will be treated as a dividend to the extent
that the payment is made out of the Company's earnings and profits.
APPRAISAL RIGHTS
No appraisal rights are available under the Delaware General Corporation
Law to any stockholder who dissents from the proposal to approve the Reverse
Stock Split.
RECOMMENDATION AND VOTE
The proposed Reverse Stock Split must be approved by the affirmative vote
of the holders of a majority of the shares of the Company's Common Stock
outstanding and entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT OF THE
COMPANY'S CERTIFICATE OF INCORPORATION TO EFFECT A 1-FOR-2 REVERSE STOCK SPLIT
OF THE COMPANY'S OUTSTANDING COMMON STOCK.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected Grant Thornton LLP to audit and report on the
financial statements of the Company for the current fiscal year. Representatives
of Grant Thornton 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.
STOCKHOLDERS' PROPOSALS
A stockholder who intends to have a proposal considered for inclusion in
the Company's proxy materials for presentation at the 2000 annual meeting of
stockholders, which is currently scheduled for May 11, 2001, must submit the
proposal to the Company at its principal executive office no later than December
1, 2000. Any such proposal must also comply with the other requirements of the
proxy solicitation rules of the Securities and Exchange Commission. A
stockholder who intends to present a proposal at the 2001 annual meeting of
stockholders without inclusion of such proposal in the Company's proxy materials
is required to provide notice of such proposal to the Company at its principal
executive office no later than February 16, 2001. If the stockholder does not
comply with the requirements of applicable rules of the Securities and Exchange
Commission, the Company may exercise discretionary voting authority granted
under any proxy which is executed and returned to the Company on any matter that
may properly come before the 2001 annual meeting of stockholders.
By Order of the Board of Directors
DREW WILSON, JR., Secretary
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999, UPON THE WRITTEN REQUEST
OF ANY PERSON WHO WAS A STOCKHOLDER (OF RECORD OR BENEFICIALLY) AT THE CLOSE OF
BUSINESS ON MARCH 16, 2000. REQUESTS FOR SUCH REPORT SHOULD BE DIRECTED TO THE
COMPANY AT 10830 NORTH CENTRAL EXPRESSWAY, SUITE 175, DALLAS, TEXAS 75231,
ATTENTION: SECRETARY.
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<PAGE> 17
EXHIBIT A
Text of Article First of the Company's Certificate of Incorporation as
currently in effect:
"FIRST. The name of the corporation is Arabian Shield Development
Company."
Text of Article First of the Company's Certificate of Incorporation as
proposed to be amended:
"FIRST. The name of the corporation is "Arabian American Development
Company."
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<PAGE> 18
EXHIBIT B
RESOLVED, that Article Fourth of the Company's Certificate of Incorporation
is hereby amended by adding at the end of Article Fourth the following
provisions:
REVERSE STOCK SPLIT
At 5:00 p.m. (Eastern time) on the effective date of the amendment adding
this paragraph to Article Fourth ("Effective Date"), each two (2) outstanding
shares of the corporation's common stock, par value $.10 per share, held of
record as of 5:00 p.m. (Eastern time) on the Effective Date shall be and hereby
are automatically reclassified and converted, without further action, into one
(1) share of the corporation's common stock, par value $.10 per share. No scrip
or fractions of shares shall be issued as a result of this amendment to Article
Fourth. In lieu of receiving fractions of shares, each stockholder of record
otherwise entitled to receive a fraction of a share of common stock as a result
of this amendment to Article Fourth shall be entitled to receive cash in an
amount equal to the product of the percentage represented by such fraction of a
share and the closing price of the corporation's common stock as reported on The
Nasdaq National Market on the first trading day after the Effective Date. This
amendment to Article Fourth shall not affect the number of authorized shares of
common stock or the par value per share of the common stock.
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<PAGE> 19
ARABIAN SHIELD DEVELOPMENT COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P R O X Y
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 15, 2000, 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 designated below.
Please complete, date, sign and mail this Proxy promptly in the enclosed
envelope. No postage is required for mailing in the United States.
-----------
SEE REVERSE
SIDE
-----------
<PAGE> 20
ARABIAN SHIELD DEVELOPMENT COMPANY
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
[ ]
<TABLE>
<S> <C> <C> <C>
FOR WITHHELD FOR ALL 2. The proposal to
1. Election of Directors, Nominees: ALL ALL EXCEPT amend the Company's
J.A. Crichton, H. El-Khalidi, M. O. Al-Omair, [ ] [ ] [ ] ------- Certificate of
G. Sultan Nominee Incorporation to FOR AGAINST ABSTAIN
Exception change the Company's [ ] [ ] [ ]
name to
"Arabian American
Development
Company."
IN THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE 3. The proposal to
MEETING OR ANY ADJOURNMENT THEREOF. THIS PROXY WILL BE VOTED AS DIRECTED ABOVE. amend the Company's
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3. Certificate of
Incorporation to FOR AGAINST ABSTAIN
effect a 1-for-2 [ ] [ ] [ ]
reverse stock split
of the Company's
outstanding Common
Stock.
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.
SIGNATURE(S) DATE
----------------------- -----------
SIGNATURE(S) DATE
----------------------- -----------
IMPORTANT: 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.
</TABLE>
