FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: PETROMINERALS CORPORATION
CENTRAL INDEX KEY: 000077952
STANDARD INDUSTRIAL
CLASSIFICATION: OIL, GAS FIELD SERVICES, NB
IRS NUMBER: 952573652
STATE OF INCORPORATION: CA
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: DEF 14A
SEC ACT:
SEC FILE NUMBER: 000-04706
FILM NUMBER:
BUSINESS ADDRESS:
STREET 1: 27241 BURBANK
STREET 2:
CITY: FOOTHILL RANCH
STATE: CA
ZIP: 926102500
BUSINESS PHONE: 9495882645
MAIL ADDRESS:
STREET 1: PETROMINERALS CORPORATION
STREET 2: 27241 BURBANK
CITY: FOOTHILL RANCH
STATE: CA
ZIP: 926102500
FORMER COMPANY:
FORMER CONFORMED NAME: CALIFORNIA TIME PETROLEUM INC
DATE OF NAME CHANGE: 19731112
FORMER COMPANY:
FORMER CONFORMED NAME: TIME PETROLEUM CO
DATE OF NAME CHANGE: 19670223
FORMER COMPANY:
FORMER CONFORMED NAME: CALIFORNIA TIME PETROLEUM CO
DATE OF NAME CHANGE: 19670223
0
<PAGE>
<PAGE>
PETROMINERALS CORPORATION
27241 BURBANK
FOOTHILL RANCH, CALIFORNIA 92610-2500
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 23, 1999
TO THE SHAREHOLDERS OF PETROMINERALS CORPORATION:
The 1999 Annual Meeting of Shareholders of Petrominerals Corporation will be
held at the Irvine Marriott Hotel, 18000 Von Karman Avenue, Irvine, California
992612 on Thursday, September 23, 1999 at 10: 30 A.M. for the purpose of
considering and acting upon the following matters:
(1) To elect a Board of five (5) directors;
(2) To ratify the appointment of the accounting firm of Brown,
Armstrong, Randall, Reyes, Paulden & McCown as the Company's independent
auditors; and
(3)To transact such other business as may properly come before the meeting
or any adjournment of the meeting.
The Board of Directors has fixed the date of August 11, 1999 as the Record Date
for the Annual Meeting, and only shareholders of record at the close of business
on that date are entitled to notice of and to vote at the Annual Meeting or any
adjournment or postponement thereof.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO COMPLETE, SIGN,
AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES. YOUR PROXY WILL
NOT BE USED IF YOU ARE PRESENT AT THE ANNUAL MEETING AND DESIRE TO VOTE YOUR
SHARES PERSONALLY.
BY ORDER OF THE BOARD OF DIRECTORS
Everett L. Hodges
Secretary
August 21, 1999
Foothill Ranch, California
1
<PAGE>
PETROMINERALS CORPORATION
27241 BURBANK
FOOTHILL RANCH, CALIFORNIA 92610-2500
THE 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 23, 1999
--------------------------------
PROXY STATEMENT
This Proxy Statement and accompanying Proxy are being furnished in connection
with the solicitation by the Board of Directors of Petrominerals Corporation
("Petrominerals" or the "Company") of proxies to be voted at the 1999 Annual
Meeting of Shareholders of the Company to be held on Thursday, September 23,
1999 at 10: 30 A.M. at the Irvine Marriott Hotel, 18000 Von Karman Avenue,
Irvine, California, and at any adjournment or postponement thereof (the "Annual
Meeting"), for the purposes set forth in this Proxy Statement and the
accompanying Notice of Annual Meeting. This Proxy Statement and accompanying
Proxy are being mailed to shareholders of the Company on or about August 23,
1999.
SHAREHOLDERS ARE URGED, WHETHER OR NOT THEY EXPECT TO ATTEND THE ANNUAL MEETING,
TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED
ENVELOPE. Your executed Proxy may be revoked at any time before it is exercised
by filing with the Secretary of the Company, at the Company's principal
executive offices, a written notice of revocation or a duly executed Proxy
bearing a later date. The execution of the enclosed Proxy will not affect your
right to vote in person, should you find it convenient to attend the Meeting and
desire to vote in person. Attendance at the Annual Meeting will not in and of
itself constitute the revocation of a Proxy.
The purpose of the Annual Meeting is to elect five directors to serve one-year
terms until the 2000 Annual Meeting and until their respective successors shall
be elected and qualified. Unless otherwise directed in the accompanying Proxy,
the proxyholders will vote FOR the election of the five management nominees
listed under "Election of Directors." The shareholders shall also vote on the
proposal presented by the Company to approve and ratify the selection of
Independent Auditors. As to any other business, which may properly come before
the Annual Meeting, the proxyholders will vote in accordance with their best
judgment. Management of the Company does not presently know of any other such
business.
The Company intends to solicit proxies principally by the use of the mails and
will bear all expenses in connection with such solicitations. In addition, some
of the directors, officers and regular employees of the Company may, without
extra compensation, solicit proxies by telephone, telegraph and personal
interview. Arrangements have been made with banks, brokerage houses and other
custodians and nominees to forward copies of the Proxy Statement and 1998 Annual
Report to persons for whom they hold stock of the Company and to request
authority for the execution of proxies. The Company will reimburse the foregoing
persons for their reasonable expenses, upon request.
VOTING SECURITIES
On August 11, 1999, the Record Date for the determination of shareholders
entitled to notice of and to vote at the Annual Meeting, 1,059,417 shares of the
Company's common stock ("common stock") were outstanding. Shareholders are
entitled to one vote per share on all matters to be considered at the Meeting,
except that shareholders are entitled to exercise cumulative voting rights in
electing Directors. Cumulative voting rights entitle a shareholder to cast as
many votes as is equal to the number of directors to be elected, multiplied by
the number of shares owned by such shareholder. A shareholder may cast all of
such shareholder's votes as calculated above for one candidate or may distribute
the votes among two or more candidates. No shareholder shall be entitled to
cumulate votes for a candidate or candidates unless such candidate's or
candidates' names have been placed in nomination prior to the voting, and a
shareholder has given notice at the Meeting prior to the voting of shareholder's
intention to cumulate the shareholder's votes. If any one shareholder has given
such notice, all shareholders may cumulate their votes for candidates in
nomination. Unless otherwise instructed, the shares represented by proxies to
management will be voted in the discretion of management so as to elect the
maximum number of management nominees which may be elected by cumulative voting.
2
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth the specified information, as of August 11, 1999,
with respect to persons or groups beneficially owning more than 5% of the common
stock, to the extent it is known to the Company, either from Securities Exchange
Act filings, Company records or information supplied by the persons named in the
table.
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership Ownership of
Class
Everett L. Hodges 88,060 (1) 8.31%
3811 Via Del Campo
San Clemente, CA 92672
Morris V. Hodges 108,187(2) 10.21%
27241 Burbank
Foothill Ranch, CA 92610
Paul L. Howard 86,375 (3) 8.15%
2255 Huntley Circle
San Marino, CA 91108
____________________
1
The 88,060 shares beneficially held by Everett L. Hodges include
73,487 shares held of record jointly in the Everett L. Hodges and Mary M.
Hodges Trust. This amount also includes 4,175 shares held directly by Everett
L. Hodges, and 10,398 shares held of record by Energy Production & Sales Co.,
Inc. (EPS). The 88,060 shares do not include 10,052 shares held in trust for the
children and grandchild of Everett L. and Mary M. Hodges, as to which Mr. and
Mrs. Everett L. Hodges disclaim any beneficial ownership. Everett L. Hodges and
Morris V. Hodges, as a group, may be deemed to be a controlling person of
Petrominerals by virtue of their share ownership.
The 108,187 shares beneficially held by Morris V. Hodges include 714
shares held of record jointly in the Morris V. Hodges and Kathryn M. Hodges
Trust, and 1,050 shares held directly by Morris V. Hodges. This amount also
includes 10,398 shares held of record by Sunset Pipeline and Terminalling, Inc.,
a company controlled by Mr. Hodges, and 96,025 shares held by adult the children
of Morris V. Hodges and Kathryn M. Hodges.
Everett L. Hodges for the benefit of the children and their
grandchildren, and Morris V. Hodges, as a group, may be deemed to be a
controlling person of Petrominerals by virtue of their share ownership.
The 86,375 shares beneficially held by Paul L. Howard are held in the
Howard Family Trust.
3
<PAGE>
SELECTION OF DIRECTORS
The Board of Directors proposes the election of five directors, each to hold
office for a term of one year until the 2000 Annual Meeting and until their
respective successors are elected and qualified. All of the nominees have served
as directors since the last annual meeting of shareholders. If any person other
than the nominees proposed by management is nominated for election as a
director, the persons named in the accompanying Proxy, unless otherwise
directed, may, in their discretion, vote cumulatively so as to elect the maximum
number of management nominees, which may be elected by cumulative voting. See
"Voting Securities." Although it is not anticipated that any of the nominees
will decline or be unable to serve, if that should occur, the proxy holders may,
in their discretion, vote for substitute nominees.
The following table sets forth the name, principal occupation, age and the year
in which the individual first became a director for each nominee, and all
persons nominated or chosen to become directors, together with all positions and
offices with the Company held by each such person and term or period during
which each has served, for election as a director at the annual meeting of
stockholders.
NAME AND SERVED AS A
PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
David G. Davidson (1) 74 1990
Everett L. Hodges (2) 66 1979
Morris V. Hodges (3) 64 1979
William N. Hagler (5) 66 1998
John C. McMahon 52 1998
The Board of Directors recommends a vote "FOR" the election of the nominees
listed above for election as a director.
______________________
(1) Mr. Davidson has been principally employed as President and
owner of OP&E Company since 1984. Mr. Davidson serves as a Director of Mieco,
Inc., a public company engaged in domestic and foreign petroleum trading.
(2) Mr. Everett L. Hodges served as President of the Company from
September 1987 through February 1992. For more than the past ten years, Mr.
Hodges has held a controlling interest in and has served as a director and
officer of Energy Production & Sales Co., Inc., California Oil Independents;
Inc., Coastal Petroleum Refiners, Inc. and California Tar Sands Development
Corporation, and has served as a Director of St. James Oil Corporation since
1988. Mr. Hodges has also served as the President of the Violence Research
Foundation, a non-profit foundation, since its inception in 1991. Certain of the
foregoing companies have been affiliated with the Company in various
transactions. See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS." Everett L.
Hodges and Morris V. Hodges, as a group, may be deemed to be controlling
persons.
(3) Mr. Morris V. Hodges has held a controlling interest in and
has served as a director and officer of the following companies for more than
the past ten years: Hillcrest Beverly Oil Corporation; Century Resources
Development; Kaymor Petroleum Products, Inc., Sunset Pipeline and Terminaling,
Inc., Coastal Petroleum Refiners, Inc., and CPR Transportation. Mr. Hodges has
also served as a Director of St. James Oil Corporation since 1988. Certain of
the foregoing companies have been affiliated with the Company in various
transactions. See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS." Morris V.
Hodges and Everett L. Hodges, as a group, may be deemed to be controlling
persons.
(4) Mr. Hagler has been principally employed as President and
owner of Unico, Inc., which is listed on the NASDAQ exchange, and, until just
recently, served as a
member of the Board of SABA Petroleum. He was appointed to the Board on January
29, 1998, and currently sits on the audit committee.
(5) Mr. John C. McMahon has been employed as Vice President of
Koch Oil?s West Coast crude oil operations from January of 1978 until December
of 1998. This was a privately held company engaging in the crude oil marketing,
gathering and trading of both domestic and foreign crude oil. Mr. Mc Mahon
retired from Koch in January of 1999 after Koch Oil?s assets were sold to
E.O.T.T.
4
<PAGE>
STANDING COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
STANDING COMMITTEES. The Company has certain standing committees, each of which
is described below.
The AD-HOC COMMITTEE consists of Messrs. Morris Hodges, William Hagler and David
Davidson. This committee evaluates proposed acquisitions, mergers or other
pertinent negotiations which may come before the Board. This committee held no
meetings during the last fiscal year, as all decisions were made by a full Board
of Directors, which includes the Ad- Hoc Committee members.
The AUDIT COMMITTEE consists of Messrs. David Davidson and William Hagler. Mr.
Davidson serves as Chairman of the committee. The Audit Committee is responsible
for reviewing the scope and procedures of internal auditing work, the results of
independent audits, the accounting policies of management, and recommends to the
Board the appointment of the Company's outside auditors. This committee held no
meetings during the last fiscal year, as all decisions were made by a full Board
of Directors, which includes the Audit Committee members.
The COMPENSATION COMMITTEE consists of Mr. David Davidson. This committee
reviews and makes recommendations to the Board of Directors regarding
compensation for the Company's officers and key employees. In addition to
compensation matters, the committee determines, develops, and makes
recommendations to the Board regarding employee benefits packages, and special
stock option and stock bonus plans. This committee held no meetings during the
last fiscal year.
ATTENDANCE AT BOARD MEETINGS. During the last fiscal year, the Board of
Directors of the Company held three (3) regular and one (1) special meetings.
Attendance at such meetings of the Board was 100%.
EXECUTIVE OFFICERS
The executive officers of Petrominerals, together with the years in which such
Officers were named to their present offices, are as follows:
YEAR NAMED TO
NAME POSITION WITH COMPANY PRESENT POSITION
Morris V. Hodges (1) President & Chief Executive 1998
Officer; Chief Financial Officer
Everett L. Hodges (2) Corporate Secretary and Treasurer 1998
Each of the executive officers serves at the pleasure of the Board of Directors.
2
Mr. Morris V. Hodges was appointed to serve as President and Chief
Executive Officer on December 30, 1998.
(2) Mr. Everett L. Hodges was appointed to the position of Corporate
Secretary and Treasurer on December 30, 1998.
5
<PAGE>
SUMMARY COMPENSATION TABLE
CASH COMPENSATION
The following Summary Annual Compensation Table sets forth all cash compensation
paid, distributed or accrued for services, including salary and bonus amounts
rendered in all capacities for the Company during the fiscal year ended December
31, 1998, whose annual cash compensation exceeded $100,000 or served as Chief
Executive Officer. All other tables required to be reported have been omitted as
there has been no compensation awarded to, earned by or paid to any of the
Company's executives in any fiscal year covered by the table.
SUMMARY ANNUAL COMPENSATION TABLE
<TABLE>
<CAPTION>
Salary
-------
<S> <C> <C>
Paul L. Howard, former President,
Chief Executive Officer and Chief Financial 1998
Officer, resigned December 30, 1998 $90,000
- ------------------------------------------- -------
</TABLE>
Mr. Howard was appointed Chairman, President, Chief Executive Officer, and
Chief Financial Officer of Petrominerals Corporation on March 24, 1995.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
No Stock Options were granted during the fiscal year ended December 31, 1998
No options were exercised by any executive officer in the last fiscal year. The
Company does not have any long term incentive plans.
OTHER COMPENSATION OF EXECUTIVE OFFICERS
The Company also provided travel and entertainment expenses to its executive
officers and key employees. The aggregate amount of such compensation, as to
any executive officer or key employee, did not exceed the lesser of $25,000 or
10% of the cash compensation paid to such executive officer or key employee, nor
did the aggregate amount of such other compensation exceed 10% of the cash
compensation paid to all executive officers or key employees as a group.
TERMINATION AND CHANGE IN CONTROL ARRANGEMENTS
In July 1993, the Board of Directors adopted a severance plan for executive
officers providing that, in the event of termination of employment as a result
of a change in control of the corporation, that such executive officer would
receive severance in the amount of one year's base salary. The Plan does not
provide for any severance in the event of the resignation, retirement or
termination of any Executive Officer's employment with the Company for reasons
other than a change in control of the Company.
COMPENSATION OF DIRECTORS
During the year ended December 31, 1998, each of the three non-employee
directors who held office the entire year were paid $350 per month for a total
of $4,200 each. Mr. Howard, who became President and Chief Executive Officer on
March 24, 1995, received a $7,500 per month fee for his services. In addition,
the non-employee directors are reimbursed for reasonable expenses incurred in
connection with any meetings.
The Company did not pay any additional fees to directors for serving as members
of the Audit, Ad-Hoc or Compensation Committees during the last fiscal year.
6
<PAGE>
1993 INCENTIVE STOCK OPTION PLAN AND 1993 NON-STATUTORY STOCK OPTION PLAN
The Company has in effect two stock option plans -- the 1993 Incentive Stock
Option Plan (the "Incentive Plan") and the 1993 Non-Statutory Stock Option Plan
(the "Non-Statutory Plan")(the Incentive Plan and the Non-Statutory Plan are
sometimes collectively referred to herein as the "Plans"), which were adopted by
the Board of Directors and approved by the shareholders of the Company in 1993.
The Plans in the aggregate provide for the granting of options to purchase a
maximum of 1,200,000 shares of the Company's Common Stock to employees and
directors of the Company and its affiliates (as defined therein); however,
options which may be granted to non-employee directors are limited to a maximum
of 60,000 shares. The Plans expire on February 8, 2003.
Any of the Company's current or future employees who render, in the opinion of
the Board of Directors, the type of services which tend to contribute materially
to the success of the Company or an affiliate of the Company are eligible to
participate in the Incentive Plan. Any of the Company's current or future
employees or directors (whether or not otherwise employed by the Company) who
render, in the opinion of the Board of Directors, the type of services which
tend to contribute materially to the success of the Company or an affiliate of
the Company are eligible to participate in the Non-Statutory Plan.
The Plans are administered by the Board of Directors of the Company which has
the authority to determine the employees and directors to whom options are to be
granted, the number of shares subject to each option and the term thereof. The
Board of Directors will have the power to reduce the option price of outstanding
options (but not below the fair market value of the shares subject thereto), to
enter into agreements relating to the value of the options at the date of grant
and to make all other determinations necessary or advisable to the
administration of the Plan. With the consent of the optionee, the Board of
Directors will also have the power to substitute options with different terms
for previously granted options, or to amend the terms of any option.
The Board of Directors may delegate administration of the Plan to a committee
composed of not less than three members of the Board of Directors.
Administration of the Plan with respect to committee members, however, must
remain vested in the Board. With respect to options granted to a director, the
Board of Directors shall take action by a vote sufficient without counting the
vote of the interested director. Interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors
which authorizes the granting of options to such directors.
7
<PAGE>
1993 STOCK BONUS PLAN
In February 1993, the Board of Directors adopted the Company's 1993 Stock Bonus
Plan ("Bonus Plan"). The Bonus Plan provides for the awarding of up to 50,000
shares of the Company's Common Stock to officers and key employees of the
Company. The Plan is administered by the Board of Directors which has the
authority to determine the officers and key employees to whom stock bonuses are
to be awarded, the time or times at which stock bonuses will be awarded, and,
subject to the limits discussed below, the number of shares to be granted under
each award. The Board of Directors has the power to delegate the administration
of the Bonus Plan to a committee of the Board appointed in accordance with the
Company's Bylaws. The aggregate fair market value (determined as of the date of
grant) of the shares of Common Stock awarded to any officer or key employee
under the Bonus Plan in any one calendar year cannot exceed one-sixth of the
officer's or key employee's salary (excluding bonuses and awards under other
incentive plans maintained by the Company) for such calendar year. The Bonus
Plan terminated on February 8, 1998. No stock bonus awards were made to
officers or key employees of the Company during 1998.
DIRECTORS STOCK COMPENSATION PLAN
On April 16, 1992, as part of its cost containment program, the Board of
Directors of the Company adopted the Directors Stock Compensation Plan (the
"Stock Compensation Plan"). The Stock Compensation Plan provides for the
granting of stock to non-employee directors of the Company in lieu of paying
director's fees in cash. The purpose of the Stock Compensation Plan was to
minimize cash outflow from the Company by compensating non-employee directors
for their services to the Company in stock rather than in cash. The maximum
number of shares provided for the Stock Compensation Plan is 18,750. In February
1994 and February 1993, a distribution of 2,075 shares and 1,050 shares was made
to each of the non-employee directors under this Plan, respectively. This Plan
terminated on February 10, 1995, at which time all the shares issued under this
Plan were distributed to non-employee directors
The Stock Compensation Plan was administered by the disinterested members of the
Board, or, in the event there were none such, the President and Chief Executive
Officer and the Secretary of the Company. The granting of stock under the Stock
Compensation Plan was according to a preset formula. Directors fees payable to
non-employee directors of the Company were set by the Board at $700 per month.
Under the Stock Compensation Plan, the eligible directors will receive stock at
a value of $700 per month, determined by the average trading price as quoted on
the NASDAQ National Market System for the calendar month immediately preceding
the month in which the directors fee is earned; provided, however, that the
valuation of the stock shall not be less than the net book value of the Company
expressed on a per share basis (but not less than $.70 per share).
APPROVAL AND SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Brown, Armstrong, Randall,
Reyes, Paulden & McCown, independent auditors, as the Company's auditors for the
fiscal year ending December 31, 1998, subject to the approval of and
ratification by the shareholders. Brown, Armstrong, Randall, Reyes, Paulden &
McCown, located in Bakersfield, California, has experience in auditing oil and
gas producing companies.
The Company expects one or more representatives of Brown, Armstrong, Randall,
Reyes, Paulden & McCown to attend the annual meeting in order to respond to any
appropriate questions.
The Board of Directors recommends a vote "For" the approval and ratification of
the appointment of Brown, Armstrong, Randall, Reyes, Paulden & McCown.
VOTE REQUIRED
Approval of the appointment of Brown, Armstrong, Randall, Reyes, Paulden &
McCown as the Company auditors requires the affirmative vote of the holders of a
majority of the shares of the Company's Common Stock present at the Meeting, in
person or by proxy, voting as a single class.
8
<PAGE>
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT
The following table lists the beneficial ownership. as of August 11, 1998, of
the Company's common stock with respect to all directors and officers as a
group.
Name of Director Number of Shares
or Number of and Nature of Percent
Persons in Group Beneficial Ownership of Class
- ------------------ --------------------- --------
John C Mc Mahon 1,875 0.18%
David G. Davidson 3,750 (1)
Everett L. Hodges 88,060 (1)(2) 8.31%
Morris V. Hodges 108,187(1)(3) 10.21%
William N. Hagler
All directors and officers as a group, including the persons named above
(4 Persons) 201,872 19.05%
________________________________
(1) Messrs. David G. Davidson, Everett L. Hodges, Morris V. Hodges and Paul L.
Howard were each granted 3,125 shares of the Company's common stock under the
Directors Stock Compensation Plan in 1994 in lieu of cash directors fees for the
period from May 1, 1992 to June 1, 1994. See "Directors Stock Compensation Plan?
(2) The 88,060 shares beneficially held by Everett L. Hodges include 73,487
shares held of record jointly in the Everett L. Hodges and Mary M. Hodges
Trust. This amount also includes 4,175 shares held directly by Everett L.
Hodges, and 10,398 shares held of record by Energy Production & Sales Co., Inc.
(EPS). The 88,060 shares do not include 10,052 shares held in trust for the
children and grandchild of Everett L. and Mary M. Hodges, as to which Mr. and
Mrs. Everett L. Hodges disclaim any beneficial ownership. Everett L. Hodges and
Morris V. Hodges, as a group, may be deemed to be a controlling person of
Petrominerals by virtue of their share ownership. See " Directors Stock
Compensation Plan."
(3) The 108,187 shares beneficially held by Morris V. Hodges includes 1,764
shares held jointly in a family trust by Morris V. and Kathryn M. Hodges. This
amount also includes 10,398 shares held of record by Sunset Pipeline and
Terminalling, Inc., a company controlled by Mr. Hodges, and 96,025 shares held
by the adult children of Morris V. Hodges and Kathryn M. Hodges for the benefit
of the children and their grandchildren. Everett L. Hodges and Morris V. Hodges,
as a group, may be deemed to be a controlling person of Petrominerals by virtue
of their share ownership. See " Directors Stock Compensation Plan. "
9
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
During the last fiscal year, the Company has been involved in various related
party transactions with certain Directors of the Company, or entities controlled
or affiliated with such individuals. The following table sets forth the
relationship, through ownership of securities, between Petrominerals and the
following individuals and entities as of May 1, 1998:
<TABLE>
<CAPTION>
Percentage
Name Beneficial Owner Owned
- ------------------------------------------- ------------------------------------- ----------
<S> <C> <C>
Petrominerals 96-1, a Limited Partnership General Partner: Petrominerals 1.00%
Limited Partners:
Paul L. Howard 23.21%
Morris V. Hodges* 17.86%
David G. Davidson 17.86%
Unrelated Parties 40.07%
-------
Total 100.00%
=======
</TABLE>
* Represents indirect ownership through his wholly-owned corporation, Kaymor
Petroleum Products, Inc.
Petrominerals 96-1 Limited Partnership
- -----------------------------------------
The Petrominerals 96-1 Limited Partnership was formed in December 1996, for the
purpose of drilling a well on the Company's Mabel Strawn oil lease. The Company
entered into a joint venture agreement with the partnership and assigned the
drill site to the joint venture.
The partnership contributed $280,000 to cover the intangible costs of drilling
the well and the Company provided the drill site and well casing under a turnkey
drilling contract. The Company also provided all of the other tangible equipment
needed to produce the well under a lease agreement. Proceeds from the working
interest will be paid 90% to Petrominerals 96-1 and 10% to the Company until
payout, and thereafter 30% to Petrominerals 96-1 and 70% to the Company. The
Company receives $2,400 per month for leased equipment until payout and $400
thereafter. The Company also receives a $350 per month management fee as general
partner.
The Company bought out all limited partners? interests for the amount of
$214,755 in April 1998, and sold all partnership assets to American Energy
Operations, Inc. thereafter.
10
<PAGE>
CERTAIN BUSINESS RELATIONSHIPS
Other than as described above, no business relationship between the Company and
any business or professional entity for which a director of the Company has
served during the last fiscal year or currently serves as an executive officer,
or in which a director of the Company has owned during the last fiscal year or
currently owns a beneficial interest or of record 10% of the Company's common
stock, has existed since the beginning of the Company's fiscal year or currently
exists. In addition, the Company did not owe at the end of its last full fiscal
year any business or professional entity for which a director of the Company
served during the last fiscal year or currently serves as an executive officer,
or in which a director of the Company served during the last fiscal year or
currently owns beneficially or of record a 10% interest, or an aggregate amount
in excess of 5 % of the Company's total assets at the end of its last fiscal
year- No director of the Company has served during the last fiscal year or
currently serves as a partner or executive officer of any investment banking
firm that performed services for the Company during me last fiscal year, or that
the Company proposes to have perform services during the current year- The
Company knows of no other relationship between any director and the Company
substantially similar in nature and scope to those described above.
INDEBTEDNESS OF MANAGEMENT
During the Company's last fiscal year, no executive officer, director, any
member of the immediate family or any of those persons, any corporation or
organization for which any of those persons serve as an executive officer or
partner or which they own directly or indirectly 10% or more of its equity
securities, or any trust or other estate in which any of the Company's executive
officers or directors have a substantial beneficial interest or for which they
serve as a trustee or in a similar capacity, has owed the Company at any time
since the beginning of its last fiscal year more than $60,000.
SECTION 16 COMPLIANCE
Based upon a review of the original and amended Forms 3 and 4 furnished to the
Company during its last fiscal year and the original and amended Forms 5
furnished to the Company with regard to its last fiscal year, the Company does
not know of any person who failed to file on a timely basis any reports required
by Section 16(a) of the Securities Exchange Act of 1934, as amended.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
From time to time the shareholders of the Company submit proposals which they
believe should be voted upon by the shareholders. The Securities and Exchange
Commission has adopted regulations, which govern the inclusion of such proposals
in the Company's annual proxy materials. All such proposals must be submitted to
the Corporate Secretary not later than April 24, 1999, in order to be considered
for inclusion in the Company's 1999 proxy materials.
OTHER BUSINESS
The Company does not intend to present any other business for action at the
Annual Meeting and does not know of any other business intended to be presented
by others. Should any other matters come before the meeting, the Proxies will be
voted by the persons authorized therein, or their substitutes, in accordance
with their best judgment on such matters.
11
<PAGE>
ANNUAL REPORT ON FORM 10-K
The Company's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1998, as filed with the Securities and Exchange Commission, is being mailed
concurrently with the mailing of this Proxy Statement to shareholders of record
on or about August 11, 1998. The cost of furnishing such Annual Report on Form
10-K and of making this proxy solicitation will be borne by the Company. Copies
of exhibits to the Annual Report on Form 10-KSB are available, but a reasonable
handling fee will be charged to the requesting shareholder. Each written request
must set forth a good faith representation that, as of the record date, the
person making the request is a beneficial owner of the Company's Common Stock
and entitled to vote at the Annual Meeting. Shareholders should direct their
written request to the Company, Attention: Corporate Secretary, 27241 Burbank,
Foothill Ranch, California 92610-2500
BY ORDER OF THE BOARD OF DIRECTORS
/S/ Everett L. Hodges, Secretary
Dated: August 23, 1999
12
<PAGE>
PETROMINERALS CORPORATION
27241 BURBANK
FOOTHILL RANCH, CALIFORNIA 92610-2500
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Morris V. Hodges and Everett L. Hodges as
Proxies, each with power to appoint his substitute, and hereby authorizes them
to represent and to vote as designated below, all the shares of common stock
of Petrominerals Corporation held of record by the undersigned on August 11,
1999, at the Annual Meeting of Shareholders to be held on September 23, 1999,
or any adjournment or postponement thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHODER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE NOTED
FOR THE PROPOSAL, AND IN ACCORDANCE WITH THE BEST JUDGMENT OF THE PROXIES ON ANY
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING.
1. ELECTION OF DIRECTORS
NOMINEES: WILLIAM N. HAGLER, MORRIS V. HODGES, DAVID G. DAVIDSON, EVERETT L.
HODGES AND JOHN C. MCMAHON (INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominee's name in the space below.)
FOR all nominees listed above WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees
listed above
2. TO APPROVE AND RATIFY THE SELECTION OF BROWN, ARMSTRONG RANDALL, & REYES AS
THE CORPORATION'S INDEPENDENT AUDITORS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT OF THE MEETING.
Dated: ____________________________
Signature: ____________________________
(Signature if held jointly): ____________________________
Please sign exactly as name appears in type. When the shares are held by joint
tenants are held by Joint tenants both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
