SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential of Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
CONSUMAT ENVIRONMENTAL SYSTEMS, INC.
------------------------------------
(Name of Registrant as Specified in Its Charter)
CONSUMAT ENVIRONMENTAL SYSTEMS, INC.
------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
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.: ___________________
3) Filing Party: __________________________________________________
4) Date Filed: ____________________________________________________
<PAGE>
CONSUMAT ENVIRONMENTAL SYSTEMS, INC.
POST OFFICE BOX 9379 [ ] RICHMOND, VIRGINIA [ ] 23227
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 30, 1999
TO THE HOLDERS OF COMMON STOCK:
The Annual Meeting of Shareholders of Consumat Environmental Systems, Inc. (the
"Company"), will be held at the offices of the Company, 8407 Erle Road,
Mechanicsville, Virginia, on Wednesday, June 30, 1999, commencing at 8:30 a.m.
E.D.T., for the following purposes:
1. To elect a board of three directors to serve until the 2000 Annual
Meeting of Shareholders;
2. To ratify the selection of KPMG Peat Marwick LLP, certified public
accountants, as auditors of the Company for the 1999 fiscal year;
and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on May 20, 1999, as the
record date for the determination of shareholders entitled to notice of and to
vote at the meeting and any adjournments thereof.
The Company's Proxy Statement is submitted herewith. The Annual Report for the
fiscal year ended December 31, 1998, accompanies the Proxy Statement.
You are requested to complete, sign, date, and return the enclosed Proxy
promptly regardless of whether you expect to attend the meeting. A
self-addressed, stamped envelope is enclosed for your convenience.
IF YOU ARE PRESENT AT THE MEETING, YOU MAY VOTE IN PERSON EVEN IF YOU HAVE
ALREADY SENT IN YOUR PROXY.
By Order of the Board of Directors,
Mark E. Hills,
Corporate Secretary
June 11, 1999
<PAGE>
CONSUMAT ENVIRONMENTAL SYSTEMS, INC.
Post Office Box 9379
Richmond, Virginia 23227
PROXY STATEMENT
To Be Mailed on or about June 11, 1999, for
Annual Meeting of Shareholders To Be Held June 30, 1999
GENERAL
The accompanying proxy is solicited by and on behalf of the Board of Directors
of Consumat Environmental Systems, Inc. (the "Company"), for use at the Annual
Meeting of Shareholders of the Company to be held June 30, 1999, or any
adjournments thereof, for the purposes set forth in this Proxy Statement and the
attached Notice of Annual Meeting of Shareholders. If sufficient proxies are not
returned in response to this solicitation, supplementary solicitations also may
be made by mail or by telephone, telegraph or personal interview by directors,
officers and regular employees of the Company, none of whom will receive
additional compensation for these services. The Company reserves the right to
retain an outside proxy solicitation firm to assist in the solicitation of
proxies, but at this time does not have plans to do so. Costs of solicitation of
proxies will be borne by the Company, which will reimburse banks, brokerage
firms, and other custodians, nominees, and fiduciaries for reasonable
out-of-pocket expenses incurred by them in forwarding proxy materials to the
beneficial owners of shares held by them.
The shares represented by all properly executed proxies received by the
Corporate Secretary of the Company and not revoked as herein provided will be
voted as set forth herein unless the shareholder directs otherwise in the proxy,
in which event such shares will be voted in accordance with such directions. ANY
PROXY MAY BE REVOKED AT ANY TIME BEFORE THE SHARES TO WHICH IT RELATES ARE VOTED
EITHER BY WRITTEN NOTICE (WHICH MAY BE IN THE FORM OF A SUBSTITUTE PROXY
DELIVERED TO THE SECRETARY OF THE MEETING) OR BY ATTENDING THE MEETING AND
VOTING IN PERSON.
VOTING RIGHTS
The Board of Directors has fixed the close of business on May 20, 1999, as the
record date for the determination of shareholders entitled to notice of and to
vote at the meeting and any adjournments thereof. Each holder of record of the
Company's common stock, $1.00 par value per share (the "Common Stock"), on the
record date will be entitled to one vote for each share then registered in his
name with respect to all matters to be considered at the meeting. As of the
close of business on the record date, 1,014,400 shares of Common Stock were
outstanding and entitled to vote at the meeting. Presence in person or by proxy
of the holders of a majority of the outstanding shares of Common Stock entitled
to vote at the meeting will constitute a quorum. Shares for which the holder has
elected to abstain or to withhold the proxies' authority to vote (including
broker non-votes) on a matter will count towards a quorum, but will have no
effect on the action taken with respect to such matter.
<PAGE>
PROPOSAL ONE -- ELECTION OF DIRECTORS
NOMINEES AND VOTE REQUIRED
The Company's Board of Directors presently consists of six directors, four of
whom (James W. Bohlig, D. Randolph Graham, Charles E. Horner and Peter T. Socha)
have advised the Company they will not stand for re-election. The Board has
nominated the two remaining incumbent directors and Mark E. Hills, Chief
Financial Officers and Treasurer of the Company, to serve as directors until the
2000 Annual Meeting of Shareholders or such individual's earlier resignation or
removal in accordance with the articles of incorporation or bylaws of the
Company. The nominees are identified in the table below.
Each of the nominees has consented to being named as a nominee in this Proxy
Statement and has agreed to serve if elected. Each of the nominees has furnished
to the Company the information set forth in the table below with respect to his
age and his principal occupation or employment.
It is expected that each of these nominees will be able to serve, but in the
event that any such nominee is unable to serve for any reason (which event is
not now anticipated), the proxies reserve discretion to vote or refrain from
voting for a substitute nominee or nominees. Shareholders may withhold authority
to vote for any of the nominees on the accompanying proxy.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE NOMINEES SET
FORTH BELOW. The three nominees receiving the greatest number of affirmative
votes cast at the Annual Meeting will be elected.
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION FOR LAST FIVE YEARS AND
NAME AND (AGE) SINCE OTHER INFORMATION
- -------------- ----- -----------------
<S> <C> <C>
Robert L. Massey (64) 1971 President and Chief Executive Officer of the
Company.
Alexander Y. Hoff (63) 1995 Loan Officer of American Skycorp, Inc.;
President and Chief Executive Officer of Yankee
Engineering Company (1978-1997).
Mark E. Hills (39) -- Chief Financial Officer and Treasurer.
</TABLE>
THE COMPANY BOARD MEETINGS AND ATTENDANCE
The Board of Directors held 4 meetings during the fiscal year ended December 31,
1998. All directors attended seventy-five percent or more of the meetings,
including regularly scheduled and special meetings, and the meetings of any
committees of the Board on which they served, in each case that were held in the
past fiscal year during the periods in which they were directors or served on
such committees. The Board of Directors currently has two standing committees.
The Compensation Committee consists of Messrs. Horner and Graham, and the Audit
Committee consists of Messrs. Hoff and Graham.
<PAGE>
DIRECTOR COMPENSATION AND REIMBURSEMENT
The Company reimburses the direct travel expenses of directors associated with
Board of Director activities. Each of the 4 non-employee directors of the
Company also is entitled to receive 400 shares of the Company's Common Stock for
attending the 4 meetings of the Board of Directors held in the fiscal year ended
December 31, 1998.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 1999, the number and percentage
of shares of Common Stock held by persons known to the Company to be the owners
of more than five percent of the Company's issued and outstanding Common Stock,
each of the Company's directors, the Named Officer (as defined below), and all
the Company's directors and executive officers as a group:
<TABLE>
<CAPTION>
AMOUNT
NAME AND ADDRESS OF OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP (1) OF CLASS
---------------- ------------- --------
<S> <C> <C>
Alexander Y. Hoff 11,460 1.1%
6443 Cloister Gate Drive
Baltimore, Maryland 21212
New England Waste Services, Inc. 107,318 10.6%
P.O. Box 866
Rutland, Vermont 05702
Peter T. Socha (2) 100,000 9.9%
1769-Q Jamestown Road
Williamsburg, Virginia 23185
Sirrom Investments, Inc. (3) 383,190 29.5%
500 Church Street, Suite 200
Nashville, Tennessee 37219
Robert L. Massey (4) 66,370 6.4%
9133 Cardinal Creek Drive
Mechanicsville, Virginia 23116
D. Randolph Graham (5) 38,000 3.7%
10815 Weather Vane Road
Richmond, Virginia 23233
Charles E. Horner (6) 36,100 3.5%
9471 Studley Farms Drive
Studley, Virginia 23162
<PAGE>
Mark E. Hills (7) 45,894 4.5%
10909 Spray Court
Glen Allen, Virginia 23060
Robert S. Lee (8) 49,163 4.8%
6015 Arbor View Terrace
Chester, Virginia 23831
All executive officers and 347,087 31.2%
directors as a group
(7 persons) (9)
</TABLE>
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* Beneficial ownership does not exceed one percent of the outstanding shares of
Common Stock.
(1) Includes shares of Common Stock subject to options and/or warrants that may
be exercised within 60 days of March 31, 1999. Such shares are deemed to be
outstanding for the purposes of computing the percentage ownership of the person
or entity holding such shares, but are not deemed outstanding for purposes of
computing the percentage ownership of any other person or entity shown in the
table. Except as otherwise indicated, each director or executive officer has
sole voting and investment power with respect to the shares shown.
(2) Jointly owned by Mr. Socha and his wife, Annabelle K. Socha.
(3) Sirrom Investments, Inc., acquired 100,000 shares of the Common Stock of the
Company pursuant to the terms of a foreclosure sale with respect to shares
formerly owned by Carter Kaplan Holdings, L.L.C. Another 250,000 shares are
subject to a Stock Purchase Warrant dated March 12, 1996, that is presently
exercisable in part. Under the terms of the warrant, Sirrom is entitled to
purchase up to approximately 32% of the Common Stock of the Company on a fully
diluted basis at a price of $0.01 per share, which warrant is exercisable
beginning on and after March 31, 1998, until April 30, 2001. In connection with
additional financing in the amount of $500,000 provided by Sirrom Investments,
Inc., during 1997, and pursuant to the terms of a Third Amended and Restated
Stock Purchase Warrant dated November 15, 1998, the Company granted to Sirrom a
warrant entitling Sirrom to purchase 33,190 shares of the Common Stock of the
Company at a price of $0.25 per share. The warrant is exercisable at any time
until April 30, 2001.
(4) Includes 20,000 shares subject to an option presently exercisable.
(5) Includes 25,000 shares subject to an option presently exercisable.
(6) Includes 25,000 shares subject to an option presently exercisable.
(7) Includes 13,334 shares subject to an option presently exercisable.
(8) Includes 13,334 shares subject to an option presently exercisable.
(9) Includes 96,668 shares subject to options presently exercisable.
<PAGE>
EXECUTIVE COMPENSATION
The following table lists all compensation paid or accrued by the Company for
services in all capacities to the Company's President and Chief Executive
Officer for the years ended December 31, 1998, 1997, and 1996 (the "Named
Officer"). No other executive officer received annual compensation and/or bonus
in excess of $100,000 for such years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
------------------- COMPENSATION
------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND POSITION YEAR SALARY BONUS OPTIONS/SARS(#) COMPENSATION
----------------- ---- ------ ----- --------------- ------------
<S> <C> <C> <C> <C> <C>
Robert L. Massey, 1998 135,000 -0- 7,500 -0-
President And Chief 1997 140,307 -0- -0- -0-
Executive Officer 1996 142,805 -0- 30,000 -0-
</TABLE>
STOCK OPTION GRANTS IN 1998
The Company's stock option plan provides for the granting of both
incentive and non-qualified stock options to employees of the Company. The
following table sets forth certain information concerning the stock option
grants made to Mr. Massey during 1998.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED
OPTIONS TO EMPLOYEES EXERCISE EXPIRATION
NAME GRANTED IN 1998 PRICE DATE
---- ------- ------- ----- ----
<S> <C> <C> <C> <C>
Robert L. Massey 7,500 18.75% $0.47 2009
</TABLE>
STOCK OPTION EXERCISES IN 1998 AND YEAR-END OPTION VALUES
The following table shows certain information with respect to the
number and value of unexercised options at year-end held for the Named Officer.
No stock options were exercised during 1998 by Mr. Massey.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SHARES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
DECEMBER 31, 1998 DECEMBER 31, 1998 (1)
----------------- ---------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- -------------------------
<S> <C> <C>
Robert L. Massey 20,000/17,500 $-0-/$-0-
</TABLE>
(1) The per share exercise price of the options was above the per share market
value of the Common Stock at December 31, 1998.
CERTAIN AGREEMENTS
The Company and the Company's Chief Executive Officer, Mr. Massey, are parties
to an employment contract dated February 12, 1991. The employment contract had
an initial term of two years but is automatically renewed annually unless notice
of non-renewal is given by one of the parties. The employment contract provides
for a minimum annual base salary of $125,000 and additional benefits.
As of December 31, 1998, Mr. Massey was indebted to the Company in the amount of
$19,028 as a result of a loan made to him in December 1985. The loan does not
bear interest and is to be repaid on demand out of future bonuses, when
declared, or otherwise one year following termination of employment with the
Company.
BONUS PLAN
The Company has a bonus plan which provides for the payment of periodic bonuses
to employees. The Company did not pay cash bonuses to its officers in 1998.
<PAGE>
PROPOSAL TWO -- RATIFICATION OF SELECTION OF AUDITORS
INTRODUCTION AND PROPOSAL
KPMG Peat Marwick LLP, independent certified public accountants, has been
selected by the Board of Directors as accountants and auditors for the Company
for the current fiscal year, subject to ratification by the Company's
shareholders. The firm has no relationship with the Company except that it has
served as its independent accountants and auditors since October 18, 1996.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Annual Meeting of Shareholders and will have an opportunity to make a statement
if they so desire and are expected to be available to respond to appropriate
questions from shareholders. In the event the shareholders do not ratify the
selection of KPMG Peat Marwick LLP, the selection of other accountants and
auditors will be considered by the Board of Directors.
Action by shareholders is not required by law in the selection of independent
auditors, but their selection is submitted by the Board of Directors in order to
give shareholders the final choice in the designation of independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE SELECTION OF KPMG PEAT
MARWICK LLP. Ratification of the selection requires the affirmative vote of a
majority of shares of Common Stock voting at the meeting.
THE COMPANY'S AUDITED FINANCIAL STATEMENTS
The Company's Audited Financial Statements are included in the accompanying
Annual Report to Shareholders, and are filed as part of the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1998.
SECTION 16(a) BENEFICAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's officers, directors, and persons who own more than 10% of a registered
class of the Company's securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC"). Based on the
representations of the Company's officers, directors, and significant
shareholders, the Company believes that all persons subject to the reporting
requirements of Section 16(a) filed the reports on a timely basis with the SEC
during the fiscal year ending December 31, 1998.
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought before
the meeting. However, if any other matters are properly presented, or if any
question arises as to whether any matter has been properly presented and is a
proper subject for shareholder action, the persons named as proxies in the
accompanying proxy intend to vote the shares represented by such proxy in
accordance with their best judgment.
<PAGE>
SHAREHOLDER PROPOSALS FOR 2000
ANNUAL MEETING OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the 2000 Annual Meeting of
Shareholders must be received by the Company at its principal executive offices
no later than February 12, 2000, for inclusion in the Company's 2000 proxy
materials. Such proposals should meet the applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
FURTHER INFORMATION
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON FROM WHOM A PROXY IS
SOLICITED BY THE BOARD OF DIRECTORS, UPON THE WRITTEN REQUEST OF ANY SUCH
PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB, INCLUDING THE
FINANCIAL STATEMENTS THERETO, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, FOR THE
COMPANY'S FISCAL YEAR ENDED DECEMBER 31, 1998. Such written requests should be
sent to the Corporate Secretary, Consumat Environmental Systems, Inc., Post
Office Box 9379, Richmond, Virginia 23227.
BY ORDER OF THE BOARD OF DIRECTORS,
Mark E. Hills
Corporate Secretary
June 11, 1999
PLEASE FILL IN, SIGN, DATE AND RETURN PROMPTLY THE ACCOMPANYING PROXY. IF YOU
ATTEND THE MEETING IN PERSON, YOU MAY WITHDRAW YOUR PROXY AND VOTE YOUR OWN
SHARES.
<PAGE>
CONSUMAT ENVIRONMENTAL SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints James K. Fishback,
George P. Fultz, and Florence M. Hurt as proxies, and each or any of them with
full power of substitution, to represent the undersigned and vote, as designated
below, all the shares of Common Stock of Consumat Environmental Systems, Inc.,
held of record by the undersigned on May 20, 1999, at the Annual Meeting of
Shareholders to be held June 30, 1999, or any adjournment thereof on each of the
following matters:
1. Election of Directors (Proposal One of the Proxy Statement).
[ ] FOR all Nominees listed below [ ] WITHHOLD AUTHORITY (except as
marked to the contrary below) (to vote for all nominees listed
below)
[Robert L. Massey, Alexander Y. Hoff, and Mark E. Hills].
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
print the name of the nominee in the space provided below.
- --------------------------------------------------------------------------------
2. To ratify the selection by the Audit Committee of the Board of
Directors of KPMG Peat Marwick LLP, independent certified public accountants, as
auditors of the Company for 1999 (Proposal Two of the proxy statement).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting. The Board of Directors has not
been notified of any such matters.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" EACH PROPOSAL. ALL JOINT OWNERS MUST SIGN.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THE REVERSE SIDE OF THIS
PROXY CARD. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
DATED ______________________ ____________________________________
SIGNATURE
- --------------------- ------------------------------------
NUMBER OF SHARES SIGNATURE (IF JOINTLY OWNED)
- --------------------------------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
