MINING SERVICES INTERNATIONAL CORPORATION
8805 South Sandy Parkway
Sandy, UT 84070-6408
-----------------------
PROXY STATEMENT
-----------------------
Annual meeting of Shareholders
May 20, 1998
SOLICITATION OF PROXIES
This Proxy Statement is being furnished to the shareholders of Mining
Services International, a Utah Corporation (the "Company" or "MSI") in
connection with the solicitation by the Board of Directors of the Company of
proxies from holders of outstanding shares of the Company's Common Stock for use
at the Annual Meeting of Shareholders of the Company to be held Wednesday, May
20, 1998, and at any adjournment or postponement thereof (the "Annual Meeting").
This Proxy Statement, the Notice of Annual Meeting of Shareholders and the
accompanying form of proxy are first being mailed to shareholders of the Company
on or about April 20, 1998.
The Company will bear all costs and expenses relating to the
solicitation of proxies, including the costs of preparing, printing and mailing
to shareholders this Proxy Statement and accompanying material. In addition to
the solicitation of proxies by mail, the directors, officers and employees of
the Company, without receiving additional compensation therefore, may solicit
proxies personally or by telephone. Arrangements will be made with brokerage
firms and other custodians, nominees and fiduciaries for the forwarding of
solicitation materials to the beneficial owners of the shares of Common Stock
held by such persons, and the Company will reimburse such brokerage firms,
custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred by them in connection therewith.
VOTING
Record Date
The Board of Directors has fixed the close of business on April 15, 1998 as
the record date for determination of shareholders entitled to notice of and to
vote at the Annual Meeting (the "Record Date"). As of the Record Date, there
were issued and outstanding 7,353,344 shares of common stock, par value
$.001 per share. The holders of record of the shares of Common Stock on the
Record Date entitled to be voted at the Annual Meeting are entitled to cast one
vote per share on each matter submitted to a vote at the Annual Meeting.
Accordingly, a total of 7,353,344 shares are entitled to be cast on each matter
submitted to a vote at the Annual Meeting.
Proxies
Shares of the Common Stock which are entitled to be voted at the Annual
Meeting and which are represented by properly executed proxies will be voted in
accordance with the instructions indicated on such proxies. If no instructions
are indicated, such shares will be voted (i) FOR the election of each of the
five director nominees; (ii) FOR the ratification of the appointment by the
Board of Directors of Tanner + Co. to be the independent public accountant for
the company for the year ending December 31, 1998; and (iii) in the discretion
of the proxy holders as to any other matters which may properly come before the
Annual Meeting.
-1-
<PAGE>
A shareholder who has executed and returned a proxy may revoke it at any
time prior to its exercise at the Annual Meeting by executing and returning a
proxy bearing a later date, by filing with the Secretary of the Company, at the
address set forth above, a written notice of revocation bearing a later date
than the proxy being revoked, or by voting the Common Stock covered thereby in
person at the Annual Meeting.
Required Vote
A majority of the outstanding shares of the Company's common stock entitled
to vote, represented in person or properly executed proxy, is required to
constitute a quorum. Abstentions and broker non-votes, which are indications by
a broker that it does not have discretionary authority to vote on a particular
matter, will be counted as "represented" for the purpose of determining the
presence or absence of a quorum. Under Utah corporate law, once a quorum is
established, shareholder approval with respect to a particular proposal is
generally obtained when the votes cast in favor of the proposal exceed the votes
cast against such proposal. In the election of Directors, shareholders will not
be allowed to cumulate their votes. The five nominees receiving the highest vote
totals will be elected as Directors of the Company. For approval of the proposed
ratification of the independent public accountant, the votes cast in favor of
the proposal must exceed the votes cast against the proposal. Accordingly,
abstentions and broker non-votes will not have the effect of being considered as
votes cast against the nominees or the proposed ratification. ELECTION OF
DIRECTORS At the Annual Meeting five directors of the Company are to be elected
to serve until the next annual meeting of shareholders and until their
successors shall be duly elected and qualified. Each of the nominees for
director identified below is currently a director of the Company. If any of the
nominees should be unavailable to serve, which in not now anticipated, the
proxies solicited hereby will be voted for such other persons as shall be
designated by the present Board of Directors. The five nominees receiving the
highest number of votes at the Annual Meeting will be elected.
Nominees for Election as Directors
Certain information with respect to each nominee is set forth below:
Edward Neff (Ted) Bagley, 85, has been associated with the investment
banking firm of Smith Barney and predecessor companies since 1971 where he is
presently a Vice President. Mr. Bagley was elected a member of the Board of
Directors in October 1983 and has served as Chairman of the Board of Directors
from 1989 to the present. Mr. Bagley is also a Director of Gentner
Communications Corporation.
Dr. Lex L. Udy, 64, has been Vice Chairman of the Company since April 1993
and Secretary since March 1995. He was a founder of the Company and has served
as a Director since 1979. From 1979 to 1984 he was Vice President of Research
for the Company with responsibility for new product development, patent
development and field test operations. From 1985 to 1993 he was President and
Chief Executive Officer for the Company. Dr. Udy obtained a B.S. degree in
Physics from the University of Utah in 1955 and a Ph.D. from the University of
Utah in Metallurgy in 1960.
Dr. John T. Day, 58, has been President and Chief Executive Officer since
April 1993. He was one of the founders of the Company and from 1979 to 1993 was
Executive Vice President with responsibility for plant design, operations,
equipment design and construction, and new product development. Dr. Day was
appointed a member of the Board of Directors on November 10, 1986 and was
appointed the Chief Executive Officer of the Company in 1993. Dr. Day obtained a
B.S. degree in Chemical Engineering from the University of Utah in 1964 and
obtained a Sc.D. degree from MIT in 1972.
-2-
<PAGE>
Stephen Fleischer, 43, has been a Director of the Company since December
1997. Since 1993, Mr. Fleischer has been involved in purchasing, restructuring
and financing (including public financing) under valued companies for his own
account. From 1990 to 1993, Mr. Fleischer was managing director, Energy
Division, Westinghouse Credit Corporation. Previously, he was vice President of
the Bank of New England and also for The First National Bank of Chicago. Mr.
Fleischer obtained a B.A. degree in Spanish and Business Administration from
Gonzaga University in 1977.
Nathan L. Wade, 69, has been a Director of the Company since June 1989.
Since 1953 Mr. Wade has been the president and principal owner of Nate Wade,
Inc., a Salt Lake City, Utah automobile dealership for new and used automobiles.
Board of Directors Meetings and Committees
There were seven (7) regular meetings of the Board of Directors held during
1997. All of the Directors attended all of the meetings or were present via
teleconferencing.
The Company presently has standing audit and compensation committees of the
Board of Directors. The audit committee periodically makes recommendations
concerning the engagement of the Company's independent public accountant and
reviews the results and independence of the accountants and the scope, adequacy
and results of the internal auditing procedures. The Company's audit committee
consists of Stephen Fleischer and Nathan L. Wade. Functions of the compensation
committee include making recommendations concerning Director and senior
management remuneration and overseeing the Company's stock option and other
compensation plans. The compensation committee consists of Nathan L. Wade,
Stephen Fleischer and Ted Bagley . All committee members attended at least 75%
of the meetings of their respective committees. Each of the committees met seven
times during the year. No separate compensation is paid for committee attendance
or assignments.
Director Compensation
During 1996 the non-employee directors received $5,000 per year as
compensation for serving on the Board. Employee Board members received no
compensation for attendance at Board Meetings.
EXECUTIVE OFFICERS
In addition to Messrs. Day and Udy, certain information is furnished
with respect to the following executive officers of the Company:
Richard M. Clayton, 57, was first employed by the Company from 1981 to
1983. Mr. Clayton joined the Company again in 1986 as Director of Marketing and
was appointed Vice President in 1991. Prior to joining the Company, Mr. Clayton
held key management and marketing positions with Texaco Petroleum Corporation
and Nitrate Services Corporation, an explosives company.
David P. Reddick, 42, has been employed by the Company since 1985 as
Director of Operations. In 1991 Mr. Reddick was appointed Vice President. Prior
to joining the Company, Mr. Reddick was associated with Cyprus Minerals in
operations management. Mr. Reddick obtained a B.S. degree in Resource Economics
from the University of California at Berkeley.
Duane W. Moss, 50, has been employed by the Company since December 1994 as
Chief Financial Officer and Legal Counsel. Prior to joining the Company, Mr.
Moss was a self-employed consultant and from 1989 to 1992 was the Secretary,
Treasurer and Chief Financial Officer of Alta Gold Co. Mr. Moss obtained a Juris
Doctorate in 1976 and a B.A. degree in Accounting in 1973 from the University of
Utah.
-3-
<PAGE>
EXECUTIVE COMPENSATION
Set forth below is information concerning the annual and long-term
compensation for services in all capacities to the Company and its affiliates
for the fiscal years ended December 31, 1997, 1996 and 1995 of those persons who
were, as of March 7, 1998, (i) the Chief Executive Officer and (ii) the other
executive officers whose total annual salary and bonus exceeded $100,000 during
the fiscal year ended December 31, 1997 (the "Named Executive Officers").
Compensation of Executive Officers
The following table summarizes compensation received by the Named
Executive Officers of the Company for the three fiscal years ended December 31,
1997.
<TABLE>
<S> <C> <C> <C> <C> <C>
Annual Compensation
Name and Position Other Annual All Other
Salary Bonus Compensation Compensation
Year $ $(1) $(2) $(3)
- ---------------------- ---------- ----------------- ----------------- ----------------- -----------------
Dr. John T. Day 1997 120,000 125,500 16,049 3,600
President and 1996 119,231 75,000 18,474 4,340
Chief Executive 1995 101,930 25,000 18,129 3,800
Officer
Dr. Lex Udy 1997 120,000 80,000 10,691 3,700
Vice Chairman and 1996 119,231 50,000 10,243 3,715
Secretary 1995 101,964 13,000 18,245 3,500
Duane W. Moss 1997 77,150 27,500 3,915 2,255
Chief Financial 1996 73,500 5,000 7,580 2,672
Officer and Legal 1995 69,892 5,000 4,936 -0-
Counsel
</TABLE>
(1) Includes all cash and non-cash bonuses paid on a discretionary basis by the
Compensation Committee.
(2) Includes life and disability insurance premiums
and tax services paid on behalf of Dr. Udy and Dr. Day and medical
reimbursement payments and personal mileage on company-owned
vehicles on the part of the Named Executive Officers.
(3) Includes matching contributions made by the company on behalf of the Named
Executive Officers pursuant to the Mining Services International Profit
Sharing 401(k) Plan.
Option Grants in Last Fiscal Year
No individual grants of stock options were made to the Named Executive
Officers during the fiscal year ended December 31, 1997.
Aggregated Option/SAR Exercises and Fiscal year End Option/SAR Value
The following table sets forth the aggregate value of unexercised
options to acquire shares of the Common Stock held by the Named Executive
Officers on December 31, 1997 and the value realized upon the exercise of
options during the fiscal year ended December 31, 1997.
-4-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Number of Value of Unexercised
Shares Unexercised In-the-Money Options/SARs
Acquired Options/SARs at FY-End ($)(1)
On Value At FY-End (#) Exercisable/Unexercisable
Name Exercise Realized Exercisable/Unexercisable
- --------------------------- ----------- ----------- ----------------------------- ----------------------------
Dr. Lex L. Udy 53,130 $474,520 0 0 $0 $0
(Vice Chairman, Secretary
Dr. John T. Day (CEO) 53,130 $474,520 0 0 $0 $0
Duane W. Moss 13,283 $93,454 13,283 92,981 $81,618 $518,824
(CFO and Legal Counsel)
</TABLE>
(1) Reflects the difference between the exercise price of the options granted
and the value of the Common Stock on December 31, 1997. The closing price
of the Common Stock on December 31, 1997, as reported by NASDAQ was $9.25
per share. The options granted are subject to risks of forfeiture and a
vesting schedule. In the case of Mr. Moss, 13,283 shares may vest each year
on the anniversary date of the option grant subject to Board approval.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tabulation shows as of March 7, 1998 the number of shares
of the Company's common stock, par value $0.001, owned beneficially by: (a) all
persons known to be the holders of more than five percent (5%) of the Company's
voting securities, (b) Directors, (c) named Executive Officers and (d) all
Officers and Directors of the Company as a group:
Amount and Natures of
Beneficial ownership (1)
Name and address of Beneficial Owner Shares Percent
Edward Dallin Bagley ---------------------------------------1,702,065(2) 23.2%
8 Shadow Wood Lane
Sandy, Utah 84092
Dr. Lex L. Udy* -----------------------------------------------587,014(3) 8.0%
4597 Ledgemont Drive
Salt Lake City, Utah 84124
Dr. John T. Day* ----------------------------------------------588,340 8.0%
5 Dawn Hill
Sandy, Utah 84092
Edward N. Bagley* ---------------------------------------------575,834 7.8%
8987 St. Ives Drive
Los Angeles, California 90069
Nathan L. Wade* -----------------------------------------------219,628(4) 3.0%
1207 South Main Street
Salt Lake City, Utah 84111
-5-
<PAGE>
Duane W. Moss -------------------------------------------------46,476(5) .01%
7952 So. Siesta Drive
Sandy, UT 84093
All Officers and Directors
as a group (8 persons) --------------------------------------3,742,574(6) 50.9%
- --------------------------------------------------------------------------------
(*) Director of the Company
(1) Unless otherwise indicated, each person identified in the table has sole
voting and investment power with respect to the Company's common stock
beneficially owned by such person.
(2) Includes shares held in the name of Mr. Bagley's spouse. Pursuant to an
agreement signed on behalf of Mr. Bagley and his spouse, the shares
included in this table are voted by the management of the Company
(3) Includes shares owned solely by Dr. Udy's wife and shares in a family
limited partnership.
(4) Includes shares held by a partnership of which Mr. Wade is a partner,
shares held in an IRA account for the benefit of Mr. Wade's spouse and
shares held by Mr. Wade's family members residing in his home.
(5) Includes options for 13,283 shares which are presently exercisable or will
become exercisable within 60 days.
(6) Includes shares owned by Mr. Bagley and his spouse which are voted by
Company's management by agreement.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors and persons who own more than ten per cent of a registered class
of the Company's stock, to file reports of initial ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC"). Executive
officers, directors and persons who own more than ten per cent of the Company's
stock, are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file. Based solely on a review of the copies of such
forms furnished to the Company and written representations from the Company's
executive officers and directors, the Company noted that all required forms,
including amendments thereto, were timely filed during the past fiscal year.
Certain Relationships and Related Transactions
On July 19, 1994 the Company loaned John T. Day and Lex L. Udy $242,000 and
$227,375, respectively, at LIBOR 30 day rate plus 1% adjusted annually for a
term of five years. Interest is payable annually with the principal due on the
date of maturity. On June 12, 1995 and on August 23, 1996 the Company loaned
Richard M. Clayton a total amount of $67,000; on August 23, 1996 the Company
loaned David P. Reddick $67,250 and on June 12, 1995 and August 23, 1996 the
Company loaned Duane W. Moss a total amount of $64,503. The loans were made at
LIBOR one-year rate plus one percent adjusted annually for a term of thirty
months commencing, for each vice president, from the date of their first loan.
Interest is payable annually with principal and accrued interest due on the date
of maturity. The loans were approved by the Board of Directors for the purpose
of loaning the officers sufficient funds to exercise their respective stock
options granted to them pursuant to the 1988 MSI Stock Option Plan. The loans
were paid in 1997 through the surrender of shares valued at fair market value
owned by the individuals (see Note 7 to the Company's financial statements).
-6-
<PAGE>
RATIFICATION OF SELECTION OF AUDITOR
The Audit Committee has recommended, and the Board of Directors has
selected, the firm of Tanner +Co., independent certified public accountants, to
audit the financial statements of the Company for the year ending December 31,
1998. Tanner + Co. has audited the financial statements of the Company since
1993. Representatives of Tanner + Co. are expected to be present at the Annual
Meeting of Shareholders, will have an opportunity to make a statement, if they
desire to do so, and are expected to be available to respond to appropriate
questions.
The Board of Directors unanimously recommends that the shareholders
vote FOR ratification of the appointment of Tanner +Co. as the Company's
independent public accountant.
OTHER MATTERS
As of the date of this Proxy Statement, management knows of no other
matters to be presented at the Annual Meeting. If any further business should
properly come before the meeting, the persons named as proxies in the
accompanying form will vote on such business in accordance with their best
judgment.
PROPOSALS OF SHAREHOLDERS
Proposals which shareholders intend to present at the annual meeting to
be held in 1999 must be received by Lex L. Udy, Secretary, at the Company's
executive offices, 8805 South Sandy Parkway, Sandy, UT 84070-6408, no later than
December 31, 1998.
ADDITIONAL INFORMATION
The Company will provide without charge to any person from whom a Proxy
is solicited by the Board of Directors, upon the written request of such person,
a copy of the Company's 1997 Annual Report on Form 10-K, including the financial
statements and schedules thereto (as well as exhibits thereto, if specifically
requested), required to be filed with the SEC. Written requests for such
information should be directed as set forth below:
THE CORPORATE SECRETARY
MINING SERVICES INTERNATIONAL CORPORATION
8805 S. Sandy Parkway
Sandy, UT 84070-6408
-7-
