SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/ / 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 Section 240.14a-12
OEC COMPRESSION CORPORATION
(Name of Registrant as Specified In Its Charter)
DENNIS W. ESTIS
(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:
(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.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
SHAREHOLDERS PRESERVATION COMMITTEE
Dennis W. Estis Robert P. Gregory, Jr. Don E. Smith
3592 Waverly Circle Gregory & Cook, Inc. 134 Smith Lane
Destin, Florida 32541 7575 San Felipe, Ste. 350 Columbia, Mississippi 39429
Houston, Texas 77063
Charles M. Butler, III
2121 Sage Road
Houston, Texas 77057
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May 15, 2000
Dear Fellow Stockholders:
As shareholders of significant percentages of the outstanding common stock
of OEC Compression Corporation, an Oklahoma corporation, we believe that if the
Company is not the subject of a sale in the near future, management of the
Company should be changed, beginning with the Board of Directors of the Company.
During the past three years the Company has suffered a substantial decline in
its financial performance, and that decline has been reflected in a substantial
decline in the price of the Company's stock.
We have formed a Shareholders Preservation Committee that has nominated
eleven (11) individuals to be directors of the Company. Shareholders of record
on June 12, 2000, will have the opportunity to vote for the nominees of the
Preservation Committee, or the nominees of current management, at the annual
meeting of shareholders to be held on July 13, 2000.
In order to effect a change in the Company's senior management, we are
soliciting proxies that will allow us to vote in favor of our nominees for
directors of the Company. We will need your cooperation in executing a form of
proxy or, alternatively, joining in the Shareholders' Agreement currently in
place among the members of the Preservation Committee. Either course of action
will result in the appointment of Dennis Estis as the proxy holder to vote in
favor of the Preservation Committee's eleven nominees.
Please read the attached Definitive Proxy Statement carefully. It
contains information about the individuals we have nominated as directors of the
Company and the proposals we plan to introduce at the Annual Meeting. Thank you
very much.
Yours sincerely,
The Shareholders Preservation Committee
Dennis W. Estis
Robert P. Gregory, Jr.
Don E. Smith
Charles M. Butler, III
<PAGE>
SOLICITATION OF PROXIES
IN CONNECTION WITH THE ANNUAL
MEETING OF STOCKHOLDERS
OF
OEC COMPRESSION CORPORATION
AND
PROXY STATEMENT IN CONNECTION WITH
THE ANNUAL MEETING TO BE HELD
JULY 13, 2000
SOLICITATION STATEMENT
OF
SHAREHOLDERS PRESERVATION COMMITTEE
3592 Waverly Circle, Destin, Florida 32541
(850) 650-5874
The Shareholders Preservation Committee (the "Preservation Committee") is
furnishing this Proxy Statement and the accompanying BLUE proxy card in
connection with the solicitation of proxies for use at the annual meeting of
shareholders of OEC Compression Corporation ("OEC" or the "Company") to be held
at the offices of the Company on Thursday, July 13, 2000 (the "Annual Meeting"),
or at any postponement or rescheduling thereof. OEC is an Oklahoma corporation
with offices located at 2501 Cedar Springs Road, Suite 600, Dallas, Texas 75201.
The Preservation Committee is comprised of Dennis W. Estis ("Estis"), Robert P.
Gregory, Jr., Don E. Smith, and Charles M. Butler, III.
By executing a BLUE proxy card, a shareholder will designate Estis as
agent of the Company's shareholders with authority to vote in favor of the
Preservation Committee's eleven (11) nominees for director of the Company. In
the event that the Preservation Committee's nominees are not placed in
nomination and voted upon at the Annual Meeting, the proxies will allow Estis to
vote to remove the current directors of the Company, provided that the
Preservation Committee holds proxies for in excess of a majority of the shares
outstanding and entitled to vote on June 12, 2000. Upon such an occurrence, the
proxies would allow Estis to vote in favor of the Preservation Committee's
nominees to fill the vacancies created by such a removal.
The Preservation Committee requests that you sign, date and deliver the
enclosed BLUE proxy card before July 10, 2000 (the "Target Date"), by personal
delivery or by mail (using the enclosed postage prepaid envelope), to Estis,
3592 Waverly Circle, Destin Florida 32541. Copies of this Proxy Statement and
the form of proxy are being mailed by the Preservation Committee to a limited
group of shareholders of the Company on or about May 16, 2000.
The Preservation Committee is not soliciting proxies generally but only
from those shareholders known to it, most of whom have some prior relationship
with members of the Preservation Committee or the Company.
<PAGE>
According to the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, there were 28,986,711 shares of Common Stock outstanding as
of March 30, 2000. The members of the Preservation Committee together are the
beneficial owners of 9,268,463 shares, or approximately 31.9% of the outstanding
Common Stock. Estis is the beneficial owner of 5,370,487 shares, or
approximately 18.5% of the outstanding Common Stock; Mr. Gregory, 3,037,251
shares (10.5%), Mr. Smith, 716,559 shares (2.5%), and Mr. Butler, 144,166 shares
(.5%).
IMPORTANT NOTE: If your shares are held in the name of a brokerage firm,
bank or other institution, only it can execute a proxy with respect to your
shares of common stock and only upon receipt of your specific instructions.
Accordingly, you should contact the person responsible for your account and give
instructions for the proxy card to be signed representing your shares.
For assistance or further information, please contact Dennis Estis at 3592
Waverly Circle, Destin, Florida 32541, (850) 650-5874 or (318) 348-0815.
VOTING RIGHTS
The Company's Board of Directors has fixed the close of business on June
12, 2000, as the record date for determining the shareholders of the Company
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. Only holders of record of the shares of common stock of the Company,
$0.01 par value per share (the "Common Stock"), are entitled to vote at the
Annual Meeting. Each share of Common Stock is entitled to one vote on such
matters as may properly come before the Annual Meeting or any adjournment
thereof.
REASONS FOR THE SOLICITATION
The members of the Preservation Committee have become increasingly
concerned that neither the current management nor many of the current directors
of the Company have the strategic vision required to lead the Company. Senior
management is currently engaged in negotiations to sell the Company and its
assets. The Preservation Committee believes that the Board should be
restructured to exclude certain current Board members referred to generally as
the "HACL Group Directors" in order to advance such a transaction on terms
favorable to the Company, and in the event such negotiations are not successful,
to lead the Company in going forward. The HACL Group Directors have presided
over the management and control of the Company during the last three years as
the financial position and stock price of the Company have declined drastically.
The Committee, therefore, solicits your vote in favor of the Committee's
nominees.
ELECTION OF DIRECTORS (ITEM ONE)
NOMINEES FOR DIRECTOR
NOMINATED BY SHAREHOLDERS PRESERVATION COMMITTEE
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Under the Company's Bylaws, shareholders may nominate candidates for the
Board of Directors. Estis, as Chair of the Preservation of Committee, nominated
the eleven candidates described below on April 28, 2000. After the Board
rescheduled the Annual Meeting from June 13, 2000 to July 13, 2000, Estis
renominated the eleven canidates described below on May 12, 2000.
The Preservation Committee anticipates that if these nominees are elected,
they will as the Company's Board consider fully and impartially all available
options to maximize shareholder value, subject to their fiduciary duties as
directors and general statutory standards applicable to any person serving as a
director of an Oklahoma corporation.
Set forth below are the name, age, business address, present principal
occupation and business experience for the past five years of each of the
nominees. Each nominee has consented to serve as a director.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
BENEFICIALLY PERCENT
NAME AGE BUSINESS ADDRESS OWNED (1) OF CLASS
<S> <C> <C> <C> <C>
Charles M. Butler, III 57 2121 Sage Road 144,166 (2) *
Houston, Texas 77057
Dennis W. Estis 53 106 Comanche Trail 5,370,487 (3) 18.5%
West Monroe, Louisiana 71291
David E. Fite 50 400 Travis Street, Suite 903 31,100 (4) *
Shreveport, Louisiana 71101
Robert G. Gregory 37 7575 San Felipe, Suite 350 3,037,251 (5) 10.5%
Houston, Texas 77063
Clifford S. Lewis 45 400 S. Boston, Suite 100 94,911 (6) *
Tulsa, Oklahoma 74103
Robert H. McDaniel 53 P. O. Box 591392 30,000 *
Houston, Texas 77259
James F. Reed, Jr. 55 5419 Pine Arbor -0- *
Houston, Texas 77066
James A. Rowell, Jr. 74 509 Market Street, Suite 5,000 (7) *
Shreveport, Louisiana 71101
Don E. Smith 52 134 Smith Lane 716,559 (8) 2.5%
Columbia, Mississippi 39429
Robert G. Wonish 46 1100 Louisiana, Suite 5100 -0- *
Houston, Texas 77002
D. Dale Wood 61 180 Joe Wimberley Blvd. -0- *
Wimberley, Texas 78676
</TABLE>
- ----------------------------
* Beneficially owns less than one percent of the Company Common Stock.
(1) The nominee holds sole voting and investment power over his shares, unless
otherwise indicated.
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<PAGE>
(2) Includes 29,166 shares which may be acquired by the exercise of presently
exercisable options.
(3) Includes 6,666 shares which may be acquired by the exercise of presently
exercisable options. All of Estis's shares are owned of record by The Mallard
Partnership, LP, a limited partnership controlled by him.
(4) Includes 6,100 shares owned beneficially by Mr. Fite's spouse, his minor
children, or relatives of his or his spouse living in his home.
(5) All of Mr. Robert G. Gregory's shares are owned of record by Gregory &
Cook, Inc., a Delaware corporation. Robert G. Gregory's father, Robert P.
Gregory, is the majority owner of Gregory & Cook, Inc. Robert G. Gregory is a
minority owner and has shared voting power over these shares.
(6) Includes 63,332 shares which may be acquired by the exercise of presently
exercisable options.
(7) All of Mr. Rowell's shares are owned of record by The Rowell Family Ltd.
Partnership, a limited partnership controlled by him
(8) Includes 16,666 shares which may be acquired by the exercise of presently
exercisable options. Also includes 12,000 shares that Mr. Smith owns as a
custodian for his children, pursuant to the Uniform Gift to Minors Act.
Mr. Butler has been a director of the Company since its inception in 1989.
He is a self-employed attorney and financial and regulatory consultant in
Houston. He has served as a Senior Vice President and Managing Director of
Kidder, Peabody & Co., Inc. (1983 - 88); Chairman of the Federal Energy
Regulatory Commission (1981 - 83); Administrative Assistant to Senator John
Tower (1979 - 81); and Corporate Counsel to the American Natural Service Company
(1976 - 79). Since 1990, he has served on the board of Piedmont Natural Gas
Company, Incorporated, a natural gas utility company based in North Carolina.
Mr. Butler holds a Bachelor of Arts in economics with honors from the University
of Houston and a J.D. with honors from the University of Texas.
Mr. Estis became a director of the Company in August of 1997 in connection
with the Company's acquisition of Ouachita Energy Corporation. Prior to the
acquisition, Mr. Estis was President and Chief Executive Officer of Ouachita.
He founded Ouachita in 1976. Mr. Estis is the President of Bayland Industries,
LLC (106 Comanche Trail, West Monroe, Louisiana 71291), a construction barge
company. Mr. Estis holds a Bachelor of Science in Chemical Engineering and an
M.B.A. from Louisiana State University. His principal business address is 106
Comanche Trail, West Monroe, Louisiana 71291.
Mr. Fite is the president and sole stockholder of Fite Oil & Gas, Inc.
(400 Travis Street, Suite 903, Shreveport, Louisiana 71101), an oil and gas
production company located in Shreveport, Louisiana. He has been the sole
stockholder of that company since its inception in the early 1980s. Mr. Fite's
principal business address is 400 Travis Street, Suite 903, Shreveport,
Louisiana 71101.
Mr. Gregory is the president of Gregory & Cook, Inc. (7575 San Felipe,
Suite 350, Houston, Texas 77063), a general contractor in the oil, gas and
petrochemical industries. He has held a variety of positions since he joined
Gregory & Cook, Inc. in 1995. Mr. Gregory also serves on the board of Unified
Office Inc., an Internet-based technology services company. His principal
business address is 7575 San Felipe, Suite 350, Houston, Texas 77063.
Mr. Lewis is Chief Financial Officer and Vice President of both Hawkins
Oil & Gas, Inc. and Hawkins International, Inc (400 S. Boston, Suite 1000,
Tulsa, Oklahoma 74103). Hawkins Oil & Gas is in the oil and gas production and
distribution business. Hawkins International is an
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<PAGE>
energy development company. Mr. Lewis has served as a director of the Company
since 1989. His principal business address is 400 S. Boston, Suite 1000, Tulsa,
Oklahoma 74103.
Mr. McDaniel is a business consultant with McDaniel Enterprises (P.O. Box
591392, Houston, Texas 77259), a company that specializes in investments. He was
previously the co-owner and President of Tech-Quip, Inc., a manufacturers
representative and distributor of industrial equipment. Mr. McDaniel's principal
business address is P.O. Box 591392, Houston, Texas 77259.
Mr. Reed is the President and sole proprietor of The Reed Group (5419 Pine
Arbor, Houston, Texas 77066), a consulting firm that provides consulting
services to clients in energy-related services and products. He is also the
Chief Financial Officer and a director for Contain-Care International, Inc. (500
Mayo Shell Road, Galena Park, Texas 77547), an off-dock marine container
inspection, repair and storage company. He is a consultant in finance and
accounting matters for Champion Window, Inc. He provides strategic planning
services to CRC-Evans Pipeline International, Inc. and to United Industrial
Services, Inc. Mr. Reed is also a director of International Testing Services,
Inc., which provides non-destructive radiographic and ultrasonic inspection
services to the refinery and petrochemical market, primarily in the Texas Gulf
Coast region. Mr. Reed's principal business address is 5419 Pine Arbor, Houston,
Texas 77066.
Mr. Rowell is a Partner and Principal in PAR Minerals Corporation (509
Market Street, Suite 300, Shreveport, Louisiana 71101), an oil and gas
exploration and production company located in Shreveport, Louisiana. Prior to
1997, he was President of PAR Minerals. His principal business address is 509
Market Street, Suite 300, Shreveport, Louisiana 71101.
Mr. Smith has served as a director of the Company since June 1993 and is
currently a rancher. He also is President and principal owner of Smith Machine
Works, Inc. (214 South High School Ave., Columbia, Mississippi 39429), a
compression repair services company that repairs compressors for, among others,
the Company and is Vice-President and principal owner of Laird Construction,
Inc. (P.O. Box 563, Columbia, Mississippi 35429). Mr. Smith founded and was
President of Mid-South Compressors, Inc. and its successor in Columbia,
Mississippi from 1985 to 1996. Mid-South Compressors, Inc. became a wholly owned
subsidiary of the Company in 1993 and was merged into Equity Compressors, Inc.
another wholly owned subsidiary of the Company in 1995. Mr. Smith served as
President of Equity Compressors until December 1997. Mr. Smith's principal
business address is 134 Smith Lane, Columbia, Mississippi 39429.
Mr. Wonish is the Executive Vice President and Chief Operating Officer of
PANACO, Inc. (1100 Louisiana, Suite 5100, Houston, Texas 77002), an oil and gas
exploration and production company. Between 1997 and May 1999, he was a Senior
Vice President of PANACO. Prior to PANACO, he was an engineer with Amoco in
1975, managed field projects with Texas International Petroleum Company, was
Production Manager for Cliffs Drilling Company from 1980 to 1984. He performed
many duties for Ladd Petroleum from 1984 to 1990, culminating in the position of
District Superintendent for the Gulf Coast Region. Between 1990 and 1992, he
provided consulting services for drilling, completion and production operations
to various oil and gas exploration and production companies. He began working
for PANACO as an engineer in 1992. Mr. Wonish received his Bachelor of Science
in Mechanical
5
<PAGE>
Engineering from the University of Missouri-Rolla. His principal business
address is 1100 Louisiana, Suite 5100, Houston, Texas 77002.
Mr. Wood is a consultant with Weatherford Enterra International (515 Post
Oak Blvd. Suite 500, Houston, Texas 77027), and the owner of The Dale Wood
Company (180 Joe Wimberley Boulevard, Wimberley, Texas 78676). He previously was
the Chairman, President and Chief Executive Officer of Enterra before it merged
with Weatherford International. He is Chairman of the Board of CRC-Evans
Pipeline International, Inc. (10700 E. Independence, Tulsa, Oklahoma 74150),
which specializes in the manufacture, sale and rental of pipeline and automatic
welding equipment used in pipeline construction. He is the Chairman of the Board
of Container Care International, Inc. (500 Mayo Shell Road, Galena Park, Texas
77547), which specializes in the cleaning, repair and storage of shipping
containers. Mr. Wood serves on the Board of Drilltec Inc., a company
specializing in the manufacture and sale of thread protectors for tubular pipe
used in oil and gas production drilling. His principal business address is 180
Joe Wimberley Boulevard, Wimberley, Texas 78676.
REMOVAL OF THE INCUMBENT DIRECTORS, IF THE COMMITTEE'S NOMINEES ARE NOT PLACED
IN NOMINATION AT THE MEETING (ITEM TWO)
The Bylaws of the Company provide that the chairman of the annual meeting
can declare a director nomination to be defective if such nomination is not made
in accordance with the procedures described in the Bylaws. In such event, the
nomination is disregarded. The Bylaws of the Company also provide that any
director may be removed from office, either with or without cause, at any time
by the holders of a majority of the shares entitled to vote at any election of
directors at any shareholders' meeting. Upon the removal of a director, the
shareholders (and not the remaining directors) shall elect a director to replace
such removed director at the same shareholders' meeting at which such removal
took place or at a subsequent shareholders' meeting.
In the event that the Preservation Committee's nominees are disqualified
and not placed in nomination at the annual meeting, the Preservation Committee
asks that you vote FOR item two on the BLUE proxy card, which would allow Estis
to vote to remove the current directors of the Company. Upon such an occurrence,
the proxies would allow Estis to vote in favor of the Preservation Committee's
nominees to fill the vacancies created by such a removal; provided that the
Preservation Committee holds proxies for in excess of a majority of the shares
outstanding and entitled to vote on June 12, 2000.
DIRECTOR COMPENSATION
According to the Company's proxy statement for its 1999 annual meeting,
directors who are not also employees are paid an annual retainer fee of $6,000,
payable quarterly, plus an additional payment of $500 for each directors' and
committee meeting attended in person or via telephone conference call. From time
to time, non-employee directors have also been granted options for Common Stock
under the Director Stock Option Plan.
The Director Stock Option Plan was adopted by the Board of Directors on
March 27, 1996, and approved by the shareholders on May 29, 1996, and became
effective on the date of its
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<PAGE>
approval by the Company's stockholders. Under the Director Stock Plan,
non-qualified stock options may be issued to non-employee directors of the
Company. An aggregate of 250,000 shares of common stock are reserved for
issuance upon the exercise of options granted under the Director Stock Plan. The
Director Stock Plan provides for the automatic grant to eligible directors of an
option to purchase either (i) 50,000 shares of common stock, if such eligible
director had been an employee of the Company at any time, or (ii) 17,500 shares
of common stock, if such eligible director had never been an employee of the
Company. On each anniversary of each eligible director's election to the Board
for the term as a director which he or she is currently serving, each such
director will be granted an option to purchase 6,666 shares of common stock. In
addition, upon an eligible director's initial election or appointment to the
Board, such director will receive the grant of an option to purchase 10,000
shares of common stock. The Director Stock Plan is not subject to any of the
provisions of the Employee Retirement Income Security Act of 1974 and the
options are not considered "incentive stock options," as such term is defined in
Internal Revenue Code Section 422A.
The Preservation Committee expects that each of its nominees, if elected,
will receive the Company's regular directors' compensation and will be
indemnified for his services as a director of the Company to the same extent
indemnification is available to directors of the Company under the Company's
Articles of Incorporation. In addition, it expects that, upon election, such
nominees will be covered by the Company's officer and director liability
insurance, assuming the Company has in effect a standard officer and director
insurance policy.
INFORMATION REGARDING NOMINEES CURRENTLY SERVING AS DIRECTORS
Messrs. Butler, Estis, Lewis, and Smith currently serve on the Company
Board. Mr. Butler currently serves on the Executive, Audit and Human Resources
Committees. Mr. Lewis has been a member of the Audit Committee since May of
1999. All have attended at least 75% of the aggregate of the meetings of the
Board of Directors and the committees of the Board on which each director
served.
Messrs. Butler, Estis, Lewis and Smith have received compensation for
their service as directors, as described above under the heading "Director
Compensation." From time to time, they have been awarded options under the
Director Stock Option Plan. Mr. Butler holds options to acquire 29,166 shares
from the Company at various exercise prices ranging from $.5625 to $2.31 per
share that were granted in 1996, 1997, and 1998. Mr. Estis holds an option to
acquire 6,666 shares at an exercise price of $1.375 per share that was granted
in May 1999. Mr. Lewis holds options to acquire 63,332 shares from the Company
at various exercise prices ranging from $.5625 to $2.3125 per share that were
granted in 1996, 1997, 1998, and 1999. Mr. Smith holds an option to acquire
10,000 shares at an exercise price of $2.31 per share that was granted in May
1997 and an option to acquire 6,666 shares at an exercise of $2.188 per share
that was granted in June 1998. All options granted were for a term of forty
years.
REASONS FOR ELECTING PRESERVATION COMMITTEE DIRECTOR NOMINEES
The Preservation Committee believes that its nominees offer precisely the
kind of experience and judgment that holders of Common Stock of the Company need
to enhance the value of their investment in OEC. In the view of the Preservation
Committee, the Company's
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history does not suggest that OEC is a well-managed company whose affairs are
overseen by a capable, independent Board of Directors. The Committee believes
that the current problems justify the step of electing truly independent
directors, even if those candidates do not have the current management's
support.
Based on the Company's disclosure contained in its proxy statement for the
1999 annual shareholder meeting, the Preservation Committee understands that
HACL, Ltd. ("HACL"), a Texas limited partnership and significant holder of the
Company's Common Stock, believes that it has the right under its October 16,
1996 Stock Purchase Agreement with the Company to require that the Company
include among its nominees for the Board a sufficient number of persons
designated by HACL such that the percentage of directors proposed to be composed
of HACL's designees is approximately proportionately equal to HACL's percentage
ownership of the outstanding Common Stock. Neither the Company nor its
stockholders are obligated under the foregoing provision to vote for or elect
HACL's nominees designated under this foregoing provision.
The Preservation Committee does not believe that the current Board of
Directors of the Company can be relied upon to exercise the sort of effective
oversight that is needed to protect adequately the interests of OEC's
shareholders.
THE COMMITTEE THEREFORE ASKS THE HOLDERS OF OEC COMMON STOCK TO VOTE FOR ITS
NOMINEES TO SERVE ON THE BOARD OF DIRECTORS.
VOTING PROCEDURES
The Company's proxy statement and proxy card will include the names of its
nominees for director. The proxy you execute and deliver on a date closest to
the date of the Annual Meeting will be your effective proxy. Thus, even if you
return a proxy to the Company using the Company's proxy card, at a later date
you can still cast your vote for any or all of our nominees by voting FOR Item
One and signing, dating your signature with a date after the earlier proxy and
returning the enclosed BLUE proxy card. See the discussion in "Revocation
Rights" below.
The presence, in person or by proxy, of the holders of shares of OEC
Common Stock entitled to cast a majority of the votes entitled to be cast at the
Annual Meeting is required to constitute a quorum for the transaction of
business at the Annual Meeting. Under applicable Oklahoma law, abstentions and
broker non-votes (i.e., shares held in street name as to which the broker, bank
or other nominee has no discretionary power to vote on a particular matter, has
received no instructions from the persons entitled to vote such shares and has
appropriately advised the Company that it lacks voting authority) are counted
for purposes of determining the presence or absence of a quorum for the
transaction of business. A plurality of the votes present, in person or by
proxy, is necessary for the election of directors. With regard to the election
of directors, votes may be cast in favor or withheld; votes that are withheld or
broker non-votes will be excluded entirely from the vote and will have no effect
on the outcome. Abstentions may not be specified in the election of directors.
A stockholder may, with respect to each other matter specified in the
notice of meeting, (i) vote "FOR," (ii) vote "AGAINST" or (iii) "ABSTAIN" from
voting. An affirmative vote of a
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majority of the shares present in person or by proxy and entitled to vote at the
Annual Meeting is required for approval of the other matters presented. Shares
represented by proxies that are marked "ABSTAIN" on such matters and proxies
relating to broker non-votes will be counted as shares present for purposes of
determining the presence of a quorum. Such shares, however, will not be treated
as shares voting and therefore will not affect the outcome of the vote on such
matters. Unless otherwise directed on the enclosed BLUE proxy card, as more
fully described below, Estis, as Chair of the Preservation Committee, will vote
FOR each of the Preservation Committee's nominees to serve as eleven of the
directors of the Company.
The accompanying BLUE proxy card will be voted at the Annual Meeting in
accordance with your instructions on the card. With regard to Item One, you may
vote FOR the election of all of our nominees, or you may withhold authority to
vote for the election of one or more of such nominees by lining through or
otherwise striking out the name of any nominee on the BLUE proxy card. It will
not be possible to use the BLUE proxy card to vote for the election of the
director candidates nominated by the Company. In the event that any of the
Preservation Committee's nominees for director are not placed in nomination and
voted upon at the Annual Meeting, voting FOR Item Two will authorize Estis to
consider and vote upon a proposal to remove any or all of the incumbent
directors of the Company.
According to the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, there were 28,986,711 shares of Common Stock outstanding as
of March 30, 2000. Based on such number and the fact that the Preservation
Committee members together own 9,215,965 shares of Common Stock (excluding
options), proxies from holders of an aggregate of at least 5,277,391 shares of
Common Stock in addition to those controlled by the Preservation Committee will
constitute an absolute majority of the shares outstanding. While only a
plurality of votes is necessary to elect a director, an absolute majority would
ensure the election of all eleven Preservation Committee nominees. Cumulative
voting is not permitted under the Company's organizational documents.
REVOCATION RIGHTS
Shareholders may revoke a proxy vote any time before the tally by (i)
executing a later proxy card, (ii) appearing at the Annual Meeting to vote or
(iii) delivering written notice of revocation to the Preservation Committee, in
care of Estis, at 3592 Waverly Circle, Destin, Florida 32541.
Although a revocation is effective if delivered to the Company, the
Preservation Committee requests that either the original or copies of all
revocations of proxies solicited on BLUE proxy cards be mailed or delivered to
it as set forth above, so that it will be aware of all revocations and can more
accurately determine if and when the requisite proxies have been received. The
Preservation Committee will keep the content of all proxy cards it receives
confidential from everyone except those working directly with us and our staff
until the Annual Meeting, at which time our cards must be presented to the
Company's tabulator in order to be counted.
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SOLICITATION TO JOIN SHAREHOLDERS' AGREEMENT
As an alternative to signing and returning the enclosed BLUE proxy card, a
shareholder may execute a joinder to a shareholders' agreement that was entered
into by each member of the Preservation Committee on April 27, 2000 and which is
effective as of that date (the "Shareholders' Agreement"). The Shareholders'
Agreement is incorporated herein by reference to Exhibit 1 to the Schedule 13D
filed by the Preservation Committee on April 28, 2000, and is summarized below.
This Shareholders' Agreement covers all of the shares of Common Stock that
the members of the Preservation Committee own, as well as any additional shares
they may acquire in the future (the "Shares"). The agreement grants Estis an
IRREVOCABLE proxy to vote the Shares for the election and removal of directors
at the next annual or special meeting of shareholders. Each member of the group
also agreed not to (i) subject their Shares to any voting trust or agreement,
(ii) participate in any proxy solicitation other than as approved by Estis,
(iii) join any other "group" other than the Filing Group, (iv) act to influence
the management of the Company other than as approved by Estis or (v) assist any
other person to take any of such actions. Each member granted Estis a limited
power of attorney to execute documents in connection with exercising the powers
granted by the Shareholders' Agreement. The Shareholders' Agreement terminates
either upon written agreement of at least two-thirds of the parties thereto,
after the next election of directors, or on April 20, 2001. Shares sold in a
bona fide sale are no longer subject to the Shareholders' Agreement. The members
of the Preservation Committee have jointly filed a Schedule 13D with the SEC.
Should a shareholder decide to grant Estis a proxy by executing a joinder
to the Shareholder's Agreement, such proxy would be IRREVOCABLE. Shareholders
interested in granting Estis a proxy in this manner should contact him at 3592
Waverly Circle, Destin, Florida 32541, or by telephone: (850) 650-5874 or (318)
348-0815.
PARTICIPANTS IN THE SOLICITATION
The members of the Preservation Committee, along with the Preservation
Committee's nominees for director, are all considered participants in this proxy
solicitation under the SEC proxy rules. The SEC requires the Preservation
Committee to make certain information available to shareholders of the Company
with respect to any person who may be deemed a participant in this solicitation.
With the exception of Robert P. Gregory, Jr., all of the members of the
Preservation Committee are also nominees for the Company's Board of Directors.
The business address, principal occupation and principal business of each of the
nominees, including those nominees who are also members of the Preservation
Committee, appear above under the heading "Nominees for Director." The number of
shares of Common Stock owned, of record or beneficially, by each of such persons
is also set forth above under the same heading, "Nominees for Director."
Robert P. Gregory, Jr., the only member of the Preservation Committee who
is not also a director nominee, is a citizen of the U.S. His business address
is 7575 San Felipe, Ste. 350 Houston, Texas 77063. His residence address is
5777 Indian Circle, Houston, Texas 77057. He is Chairman and CEO of Gregory &
Cook, Inc (7575 San Felipe, Ste. 350 Houston, Texas 77063), a general contractor
in the oil, gas and petrochemical industries. He beneficially owns
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3,037,251 shares of Common Stock, over which he has shared voting power and sole
investment power. Gregory & Cook, Inc. is the owner of record of these shares.
He is the father of Robert G. Gregory, a director nominee of the Preservation
Committee.
Each member of the Preservation Committee has entered into an Agreement to
Share Expenses effective April 27, 2000. This agreement provides that each party
will pay its pro rata portion (based on its percentage of all the parties' stock
ownership in the Company) of legal, printing, solicitation and other costs
reasonably incurred in connection with the nomination of directors for election
to the Board of Directors of the Company and the solicitation of proxies in
favor of such nominees. Estis will receive all invoices for expenses, have the
invoices reviewed and approved by Robert P. Gregory, Jr., and then invoice and
collect the appropriate amounts from the other parties to the agreement.
Except as set forth above and under the heading "Solicitation To Join
Shareholders' Agreement," no participant is, or was within the past year, a
party to any contract, arrangements or understandings with any person with
respect to any securities of the registrant.
Except as set forth below under the heading "Certain Relationships and
Interest in Certain Transactions", no participant or any associate of any
participant (i) has any arrangement or understanding with any person with
respect to any future employment by the Company or its affiliates, (ii) has any
arrangement or understanding with any person with respect to any future
transactions to which the Company or any of its affiliates will or may be a
party or (iii) had during the last fiscal year any direct or indirect material
interest with respect to any, or has any such interest with respect to any
currently proposed, transaction or series of similar transactions in which the
amount involved exceeds $60,000 and to which the Company or any of its
subsidiaries was or is to be a party.
CERTAIN RELATIONSHIPS AND INTEREST IN CERTAIN TRANSACTIONS
On August 6, 1997, the Company consummated the acquisition of all of the
stock ownership of Ouachita Energy Corporation and the acquisition of
substantially all of the assets of two affiliated companies (LLC, partnership)
(collectively referred to herein as the "Ouachita Companies") for 7.6 million
shares of Common Stock and the payment in cash or assumption of debt of $24
million. Dennis Estis was the principal stockholder of the Ouachita Companies.
Following the closing of such transaction, Mr. Estis was elected to the Board of
Directors of the Company.
Between August 1997 and until November 1998, Estis held his Company shares
for investment only. However, as a result of disagreements with management over
the direction of the Company, Estis decided to review his investment objectives
if other significant shareholders were also concerned about their investment in
the Company. Estis entered into a shareholders' agreement with certain other
shareholders and formed a "group" that was subsequently dissolved when the
agreement described below was entered into. Estis obtained proxies from two
other shareholders and delivered a letter to the Board of Directors of the
Company dated November 10, 1998 indicating that Estis was contemplating a proxy
contest to remove and replace certain
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directors and executive officers of the Company. Estis also demanded to inspect
the corporate records of the Company.
On November 10, 1998, Estis and the two other shareholders also filed a
lawsuit against the Company and certain directors and executive officers in
state court in Oklahoma County, Oklahoma. This lawsuit was never served on the
other parties. Following discussions between the Company and Estis, the parties
decided to resolve the issues raised by the November 10 letter and the lawsuit
and to avoid the necessity of a proxy contest. On December 16, the Company,
Estis and the two other shareholders entered into a Settlement Agreement. Among
other things, the Settlement Agreement (i) prohibited Estis from participating
in any proxy solicitation relating to actions that were contemplated in the
November 10 letter to the Board, (ii) required termination of the proxies
granted to him by the two other shareholders, (iii) required dismissal of the
lawsuit, (iv) provided for a broad mutual release of claims between the parties,
(v) provided for a "standstill" agreement until June 30, 1999 (subject to
extension or reinstatement as described below) prohibiting Estis from
participating in enumerated actions relating to control of the Company and (vi)
required the Company to reimburse Estis for his out-of-pocket expenses up to
$35,000. As a result of the Settlement Agreement, the HACL and Energy Investor
Groups agreed to vote in favor of Estis as a director at the 1999 annual
shareholders meeting.
The Company also agreed to use its best effort to sell or assist Estis to
sell at least one-half of his shares of Common Stock at $2.00 or more per share.
If such a sale is not completed prior to June 30, 2000, then Estis's
non-competition agreements shall be terminated. If the sale by Estis occurs
prior to December 31, 2001, then the standstill agreement described above will
be extended or reinstated, as the case may be, through December 31, 2001. As a
result of the Settlement Agreement, Estis was terminated as chief operating
officer of the Company. Upon the sale of one-half of his common stock, Estis
also agreed to resign as a director of the Company.
In January of 1998, the Company exchanged 286,976 shares of Common Stock
for the cancellation of approximately $699,000 of indebtedness owed by the
Company to Mr. Estis and an affiliated company.
In February 1999, Mr. Estis purchased an aircraft from the Company
(valued at $290,000 by independent appraisers) in exchange for delivering a yard
truck (valued at $27,000) and 175,333 shares of Common Stock (which at the time
were valued at $1.50/share) to the Company.
Mr. Estis has a note payable to the Company resulting from an arbitration
agreement settled in early 1998. The note carries an interest rate of 6.5% and
is due upon the sale of Mr. Estis's Common Stock. The amount owed (principal
and interest) as of December 31, 1999 was $251,218.38.
PAR Minerals Corporation, of which Mr. Rowell is the principal owner, has
a monthly compressor rental on multiple units from the Company for the calendar
year 1999, with rents totaling $304,632.04.
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Smith Machine Works, Inc., of which Mr. Smith is the principal owner, was
purchased from Ouachita Energy Corporation on December 31, 1997 for $285,000
plus the cost of inventory. As part of this agreement, Ouachita Energy agreed to
lease from Smith Machine Works office and yard space for $950 per month for 36
months. Smith Machine Works has provided compression repair services to the
Company during calendar year 1999. Smith Machine Works Inc. received a total of
$509,931 for such repairs. As of April 26, 2000, the Company's balance owed to
Smith Machine Works was $25,563.
PANACO, Inc., for which Mr. Wonish is an Executive Vice President and
Chief Operating Officer, has rented three compressors from the Company under two
separate contracts. The first contract, executed in June 1998, calls for rental
payments of $9,800 per month for 18 months. The second contract, executed in
July 1998, calls for rental payments of $20,500 per month for 36 months.
Fite Oil & Gas, Inc., of which Mr. Fite is the sole stockholder, obtains
contract compression service for its wells from the Company. Fite Oil & Gas,
Inc. intends to lease compression services from the Company. Currently, two
compressors are leased on a month-to-month basis for approximately $7,500 per
month.
The participants to this solicitation anticipate that if the Preservation
Committee's nominees are elected, some of the participants may be employed by
the Company, including Dennis Estis as President and Chief Executive Officer.
The table below details the recent trading history of Common Stock by
participants to this solicitation. All shares that were purchased were purchased
with the personal funds of the participant.
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OEC COMMON STOCK PURCHASED OR SOLD
PURCHASED DATE OF NUMBER
PARTICIPANT NAME OR SOLD TRANSACTION OF SHARES
David E. Fite Purchased 01/26/98 2,000
Purchased 06/12/98 1,000
Purchased 06/29/98 1,000
Purchased 07/02/98 1,000
Sold 12/12/99 29,000
Don E. Smith Sold 05/22/98 20,000
Sold 05/26/98 3,000
Sold 05/27/98 5,000
Sold 05/28/98 20,000
Sold 06/03/98 16,000
Robert G. Wonish Sold 03/31/00 15,675
Sold 04/05/00 6,870
Sold 04/10/00 600
Robert H. McDaniel Purchased 01/14/98 8,000
Purchased 10/27/98 2,000
THE SOLICITATION
The entire cost of the solicitation of proxies by the Preservation
Committee will be borne by the members of the Preservation Committee. The
Preservation Committee intends, however, to seek reimbursement from the Company
for these expenses if the Preservation Committee nominees are elected to the
Board of Directors, and such reimbursement will not be submitted to a vote of
the shareholders of the Company. The Preservation Committee estimates that total
expenditures relating to such solicitation will be less than $75,000 of
which approximately $50,000 has been expended to date.
Proxies will be solicited by mail, advertisement, telephone, and in
person. Nominees and the other persons identified as Participants herein may,
without additional compensation, make solicitations through personal contact or
by telephone, and arrangements may be made with brokerage houses or other
custodians, nominees and fiduciaries to send solicitation materials to their
principals. The Preservation Committee will reimburse any such persons for their
reasonable expenses.
IMPORTANT
If your shares are registered in the name of a brokerage firm, bank, bank
nominee or other institution, only it can execute a proxy for such shares and
only after receiving your specific instructions. Accordingly, please contact the
person responsible for your account and
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instruct that person to execute the proxy card. If you have any questions or
need assistance contact:
Dennis Estis
3592 Waverly Circle, Destin, Florida 32541
Telephone: (850) 650-5874 or (318) 348-0815
AVAILABLE INFORMATION
The Securities and Exchange Commission allows a proxy solicitor to
"incorporate by reference" into a Proxy Statement. The information incorporated
by reference is considered to be a part of this Proxy Statement, except for any
information modified or superseded by information in (or incorporated by
reference in) this Proxy Statement. This Proxy Statement incorporates by
reference the document set forth below that has been previously filed with the
Securities and Exchange Commission.
OEC COMPRESSION CORPORATION, SECURITIES AND EXCHANGE COMMISSION FILINGS (FILE
NO. 005-41316)
1. Schedule 13D, filed by the Preservation Committee on April 28, 2000.
The Preservation Committee will provide, without charge, a copy or the
document incorporated by reference in this Proxy Statement (other than exhibits
to this document, unless the exhibits are specifically incorporated by reference
in such documents). You may obtain the document incorporated by reference in
this Proxy Statement by requesting it in writing or by telephone from the
Preservation Committee, c/o Dennis Estis, 3592 Waverly Circle, Destin, Florida
32541; Telephone: (850) 650-5874 or (318) 348-0815. This document is also
available online through EDGAR, which is located on the SEC's public access
website at http://www.sec.gov.
PLEASE ACT PROMPTLY -
SIGN, DATE AND MAIL THE PROXY CARD TODAY!
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OEC COMPRESSION CORPORATION
2000 ANNUAL MEETING OF SHAREHOLDERS
THIS REVOCABLE PROXY TO VOTE FOR A SLATE OF DIRECTORS AT AN ANNUAL
MEETING OF SHAREHOLDERS OF OEC COMPRESSION CORPORATION (THE "COMPANY") IS
SOLICITED BY DENNIS W. ESTIS, ROBERT P. GREGORY, JR., CHARLES M. BUTLER, III,
AND DON E. SMITH (COLLECTIVELY, THE "PRESERVATION COMMITTEE").
Each of the undersigned hereby constitutes and appoints Dennis W. Estis,
with full power of assignment and substitution, the proxy and agent of each of
the undersigned (such proxies and agents, together with each substitute
appointed by any of them, if any, collectively, the "Designated Agents") in
respect of all shares of Common Stock, par value $.01 per share, of the Company
owned by the undersigned to do any or all of the following at the annual meeting
to be held July 13, 2000, or any adjournment thereof, to which each of the
undersigned hereby consents:
ITEM ONE:
VOTE FOR all nominees listed below, WITHHOLD AUTHORITY to vote for all
except as marked to the contrary nominees listed below.
(if any).
[____] [____]
Nominees: Charles M. Butler, III, Dennis W. Estis, David E. Fite, Robert G.
Gregory, Clifford S. Lewis, Robert H. McDaniel, James F. Reed, Jr., James A.
Rowell, Jr., Don E. Smith, Robert G. Wonish, and D. Dale Wood
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, LINE THROUGH OR OTHERWISE STRIKE
OUT THE NOMINEE'S NAME IN THE ABOVE LIST).
ITEM TWO:
To consider and vote upon a proposal to remove any or all of the incumbent
directors of the Company in the event that the nominees of the Preservation
Committee are not placed in nomination and voted upon at the annual meeting of
shareholders to be held on July 13, 2000.
FOR [____] AGAINST [____] ABSTAIN [____]
Dated:
(Signature)
(Title)
(Signature if held jointly)
Please sign exactly as your name appears
hereon. When shares are held by joint
tenants, both should sign. When signing as
an attorney, executor, administrator,
trustee, guardian, corporate officer or
partner, give full title as such. If a
corporation, sign in full corporate name
by authorized officer. If a partnership,
sign in partnership name by authorized
person.
This proxy expires eleven (11) months from the date of execution.
PLEASE SIGN, DATE AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.
