<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] 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-11(c) or Section 240.14a-12
National Environmental Services. Co.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
NATIONAL ENVIRONMENTAL SERVICE CO.
12331 E. 60TH STREET, TULSA, OKLAHOMA 74146
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 12, 1997
MEETING NOTICE
The Annual Meeting of the Shareholders of National Environmental Service Co., an
Oklahoma Corporation, will be held at 12331 E. 60th St., Tulsa, Oklahoma, on
June 12, 1997, at 1:00 p.m. for the purpose of considering and acting upon the
following:
(1) The election of five directors for a one year term.
(2) The ratification of the selection of Tullius Taylor Sartain & Sartain
as independent auditors to audit the financial statements to be
included in the Annual Report to Shareholders for 1997.
(3) The transaction of any other matters that properly come before the
meeting or any adjournment thereof.
Shareholders entitled to vote are invited to attend the Annual Meeting.
The Board of Directors has fixed the close of business on April 18, 1997, as the
record date for the determination of shareholders entitled to notice and to vote
at the Annual Meeting.
The Company's Proxy Statement and Annual Report are included with this notice.
Dated: May 1, 1997
/s/ LARRY G. JOHNSON
Larry G. Johnson
Vice President &
Secretary-Treasurer
REGARDLESS OF WHETHER YOU NOW EXPECT TO BE PRESENT PERSONALLY AT THE MEETING,
YOU ARE REQUESTED TO SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED SELF-ADDRESSED, POSTAGE PRE-PAID ENVELOPE.
<PAGE>
NATIONAL ENVIRONMENTAL SERVICE CO.
12331 E. 60TH STREET, TULSA OKLAHOMA 74146
ANNUAL MEETING OF SHAREHOLDERS
JUNE 12, 1997
PROXY STATEMENT
The Board of Directors solicits your proxy for use at the Annual Meeting of
National Environmental Service Co. (the "Company") to be held at 1:00 PM on
June 12, 1997 at the corporate office located at 12331 East 60th Street, Tulsa,
Oklahoma. Proxy statements and proxies were mailed to shareholders on or about
May 5, 1997. A shareholder who signs and returns a proxy may revoke it or give
special voting specifications at any time before the proxy is exercised by
writing the Secretary of the Company at its offices at 12331 E. 60th St., Tulsa,
Oklahoma, 74146, by exercising a later-dated proxy or by attending the 1997
Annual Meeting in person and giving written notice to the Secretary of the
Company. The proxy will be voted in accordance with such specifications.
Stockholders of record at the close of business on April 18, 1997 will be
entitled to vote at the Annual Meeting. The Company had 5,781,927 outstanding
shares of common stock as of the close of business on April 18, 1997. The
Company has no other voting securities outstanding. Shareholders are entitled
to one vote per share on each matter. If the accompanying form of proxy is
signed and returned, the shares will be voted for each of the nominees named
herein and for the selection of Tullius Taylor Sartain & Sartain as independent
auditors.
A shareholder may, with respect to the selection of directors (i) vote for the
election of all nominees named herein as directors, (ii) withhold authority to
vote for all such director nominees or (iii) vote for the election of all such
director nominees other than any nominee with respect to whom the shareholder
withholds authority to vote by so indicating in the appropriate space on the
proxy. Withholding authority to vote for a director nominee will not prevent
such director nominee from being elected.
A proxy submitted by a shareholder may indicate that all or a portion of the
shares represented by such proxy are not being voted by such shareholder with
respect to a particular matter. This could occur, for example, when a broker is
not permitted to vote stock held in street name on certain matters in the
absence of instructions from the beneficial owner of the stock. The shares
subject to any such proxy which are not being voted with respect to a particular
matter (the "non-voted shares") will not be considered shares present and
entitled to vote on such matter, although such shares may be considered present
and entitled to vote for purposes of determining the presence of a quorum.
Approval of each matter specified in the notice of the meeting requires the
affirmative vote of a majority, or in the case of the election of directors a
plurality, of the shares of common stock present in person or by proxy at the
Annual Meeting and entitled to vote on such matter. Accordingly, non-voted
shares with respect to such matters will not affect the determination of whether
such matters are approved or the outcome of the election of directors.
Abstentions from voting, which maybe specified on any proposal other than the
election of directors, will be included for purposes of determining whether the
requisite number of affirmative votes are received on any matters submitted to
the shareholders for a vote. Accordingly, an abstention will have the same
effect as a vote against any such matters.
SHAREHOLDER PROPOSALS
The Company knows of no shareholder proposals to be considered at the Annual
Meeting. Shareholder proposals will be eligible for consideration for inclusion
in the Proxy Statement for the 1998 Annual Meeting if they are received by the
Secretary of the Company no later than January 5, 1998 at the address set forth
above.
<PAGE>
ELECTION OF DIRECTORS
Proxy holders named on the proxy card will vote FOR the election of the nominees
listed below, unless otherwise instructed on the proxy cards that have been
signed and returned. If you do not wish your shares to be voted for particular
nominees, please identify the exceptions on the proxy card. If any of these
nominees should be unable to serve, the proxies will be voted by the proxy
holders for the election of such other person as they shall determine, in
accordance with their judgment. Directors are elected for one-year terms.
Name Age Position
- ---- --- --------
Eddy L. Patterson 55 Director, President and Chief Executive Officer
Albert A. McCutchan 56 Director and Executive Vice President
E. R. Foraker 58 Director
Jerry Danielson 55 Director
W. F. Simpson 52 Director
The business background of the Directors follows:
Eddy L. Patterson has served as President, Chief Executive Officer and a
Director of the Company since May 1989. Mr. Patterson also serves as Chairman
and a director of Lab One Analytical, Inc. ("Lab One") and as President and a
director of Fuel Recovery Systems, Inc.("FRS"), a wholly owned subsidiary of the
Company. Mr. Patterson was formerly the owner of an oil and gas production
company and a small manufacturing company.
Albert A. McCutchan has served as Executive Vice President and a Director
of the Company since May 1989. Mr. McCutchan also serves as a director of Lab
One, and as Vice President, Secretary and a director of FRS. Mr. McCutchan has
been employed in the underground tank service business for more than ten years.
Mr. E. R. Foraker has served as a Director of the Company since April 1994.
Since 1970, Mr. Foraker has served as President and Chairman of the Board of
Directors of WestAmerica Corporation ("WAC") and its predecessor corporations.
Mr. Foraker has also served as Executive Vice President and a director of both
WestAmerica Investment Company, doing business as WestAmerica Investment Group,
and its parent company, WestAmerica Investment Group, Inc. WestAmerica
Corporation engages in natural gas exploration, development and production and
oil field service contracting out of its Dewey, Oklahoma office and conducts a
stock brokerage, investment advisory and corporate finance business through
WestAmerica Investment Group, Inc., its NASD registered subsidiary, which is
located in Scottsdale, Arizona.
Mr. Jerry Danielson has served as a Director of the Company since April
1994. Since November 1975, Mr. Danielson has served as Chief Executive Officer
and Chairman of the Board of Directors of Danielson Oil Company, an independent
fuel wholesale and retail company located in Ada, Oklahoma. Since January 1990,
Mr. Danielson has also served as Chief Executive Officer and Chairman of the
Board of Directors of Danco Trucking, Ltd., a petroleum products carrier located
in Ada, Oklahoma.
Mr. W. F. Simpson has served as a director of the Company since January,
1997. He has been President of J P Emco since 1985. J P Emco is a manufacturer
of plastic automotive parts and is located in Ada, Oklahoma. Prior to 1985, Mr.
Simpson served as plant manager of the facility under the ownership of General
Tire. Previous employment included work for Goodyear Tire and Rubber and
Merrill Lynch in Akron, Ohio.
2
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BOARD COMPENSATION AND COMMITTEES
The Company pays each member of its Board of Directors $500 for each quarterly
Board meeting which he attends. Directors are not currently reimbursed for their
expenses incurred in attending such meetings. During 1996, all Board members
attended the three Board meetings except that Mr. Griffith attended two board
meetings. Mr. Griffith resigned from the Board on June 18, 1996. On January
23, 1997, Mr. W. F. Simpson was appointed to the Board to complete the remainder
of Mr. Griffith's term. Each director a received a total of $1,500 except that
Mr. Griffith received $1,000. Mr. Simpson was not a director in 1996 and
received no Board fees. Each director also participated in one Unanimous
Consent to Action in Lieu of Board Meeting. E. R. Foraker, Jerry Danielson,
and W. F. Simpson all serve on both the Audit and Compensation Committees
formed in 1996. The primary functions of the Audit Committee are to monitor the
Company's internal accounting controls, review quarterly and annual financial
information and review the services and fees of the independent auditors. The
Audit Committee met one time during the fiscal year ended December 31, 1996.
The primary functions of the Compensation Committee are to review and approve
management's recommendations concerning compensation of executive officers and
certain other employees and to administer the Company's 1994 Employee Stock
Plan. The Compensation Committee has the authority, in its discretion, to
select the eligible officers and employees to whom options shall be granted and
the number of shares of the Company's Common Stock to be subject to such
options. The Compensation Committee met one time during the fiscal year ended
December 31, 1996. The Company has no standing nominating committee.
EXECUTIVE OFFICERS
Executive Officers that are not Directors of the Company and their business
backgrounds are as follows:
MR. LARRY G. JOHNSON, VICE PRESIDENT, SECRETARY-TREASURER AND CHIEF FINANCIAL
OFFICER, age 51, has served in these capacities since January 1, 1995. Mr.
Johnson also has served as the President of Lab One since March 1993. Mr.
Johnson has been employed by the Company since 1993. From April 1992 to January
1993, Mr. Johnson served as a consultant to the Company. From 1971 to 1991, Mr.
Johnson was employed by Broken Arrow Federal Savings and Loan and served as
President and Chief Executive Officer for 16 of those years. Mr. Johnson holds
an M.B.A. degree from the University of Tulsa.
MR. JAMES HOWELL, VICE PRESIDENT-MARKETING, age 43, received a B.S. degree from
Oklahoma State University in Agricultural Engineering. Mr. Howell has held
marketing and management positions with several national companies including
Network Security and Mosler, Inc. Mr. Howell joined the Company in 1989 as
Director of Marketing. Mr. Howell has been the Vice President-Marketing since
January 1, 1995.
MR. CHUCK NANCE, VICE PRESIDENT-OPERATIONS, age 50, has over 20 years of
experience in service station construction and underground storage tank
installation. Mr. Nance joined the Company in 1991 as a project manager and is
licensed in several states to perform all aspects of underground storage
services. Mr. Nance was named Vice President-Operations on January 1, 1995.
Prior to joining the Company, Mr. Nance was a construction manager for over
nine years with Petroleum Marketers Equipment Company, Inc.
MR. ROBERT WATSON, CONTROLLER, age 50 , received his degree, with honors, from
the University of Arkansas in 1969. With over 20 years experience as a CPA,
including seven years with the international firm of Arthur Young & Co. (now
Ernst & Young LLP), he joined NESCO in 1996. Mr. Watson was the Controller and
Corporate Secretary-Treasurer for Lake Country Beverage, Inc. from October 1986
to November 1995 and was a business consultant from November 1996 to May 1996.
Mr. Watson oversees all day to day corporate accounting functions.
3
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EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the annual and
long-term compensation for the two principal executive officers of the Company.
Because no other executive officer of the Company received cash compensation
exceeding $100,000 during the year ended December 31, 1996, no disclosure
pertaining to other executives is required or provided.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
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Name and Other Annual All Other
Principal Position Year Salary($) Bonus Compensation Compensation
- ------------------ ---- --------- ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Eddy L. Patterson, 1996 61,958 7,100 - (1)
President & Chief 1995 107,237 10,000 - (1)
Executive Officer
Albert A. McCutchan 1996 50,981 6,400 - (1)
Executive Vice President 1995 96,921 9,000 - (1)
</TABLE>
(1) Other annual compensation did not exceed the lesser of $50,000 or 10% of the
executive's annual salary and bonus for any of the executive officers.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as of April 18, 1997,
regarding the ownership of the Company's common stock by (a) all persons known
by the Company to be beneficial owners of more than 5% of such stock, (b) each
director and nominee for director of the Company, (c) each of the executive
officers of the Company named in the Summary Compensation Table, and (d) all
executive officers and directors of the Company as a group. There is no other
class of securities of the Company entitled to vote at the Annual Meeting.
NAME and ADDRESS of AMOUNT and NATURE
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------- ----------------------- ----------------
Eddy L. Patterson 1,927,191 shares 33.3%
12331 E. 60th St.
Tulsa, Oklahoma 74146
Albert A. McCutchan 2,142,735 shares(1) 37.1%
12331 E. 60th St.
Tulsa, Oklahoma 74146
E.R. Foraker 259,354 shares(2) 4.5%
4141 North Scottsdale Road
Suite 100
Scottsdale, Arizona 85251
Jerry Danielson 11,276 shares .2%
P. O. Box 1962
Ada, Oklahoma 74820
4
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W. F. Simpson 13,806 shares .2%
201 West Kings Road
Ada, Oklahoma 74820
All directors and 4,428,044 shares 76.3%
executive officers
as a group of nine
persons
(1) Mr. McCutchan's beneficial shares of 2,142,735 shares include 207,818
shares owned by Beverly Ann McCutchan, his wife. Mr. McCutchan disclaims
beneficial ownership of such shares.
(2) Mr. Foraker's beneficial shares of 259,354 shares include 6,806
shares owned by Sandra D. Foraker, his wife and 5,090 shares owned by his
children. Mr. Foraker disclaims beneficial ownership of such shares.
Except as otherwise indicated, all of the persons named above have sole voting
and investment power with respect to the shares beneficially owned by them.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors, executive officers and shareholders who own more than 10%
of the Company's outstanding common stock to report to the Securities and
Exchange Commission their initial ownership of the Common Stock and any
subsequent changes in that ownership and to furnish the Company with a copy of
each report. The regulations of the Securities and Exchange Commission impose
specific due dates for such reports, and the Company is required to disclose in
this Proxy Statement any failure to file by these dates during and with respect
to fiscal year 1996.
To the Company's knowledge, based solely on review of the copies of the reports
furnished to the Company and written representations that no other reports were
required during and with respect to fiscal 1996, all Section 16(a) filing
requirements applicable to its officers, directors and holders of more than 10%
of its outstanding shares of Common Stock were complied with.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company paid Lab One Analytical, Inc. ("Lab One") $412,000 in 1996 and
$273,000 in 1995, for analytical laboratory testing services rendered. In 1996
and 1995, the Company purchased certain insurance coverage and office supplies
on behalf of Lab One for $5,000 and 4,000, respectively. Mr. Patterson and Mr.
McCutchan, the Company's two principal shareholders, each own 50% of the capital
stock and are directors and executive officers of Lab One. Mr. Johnson, an
executive officer of the Company, is also the President of Lab One.
During 1996, the Company borrowed funds from McCutchan Patterson Partnership, a
partnership wholly-owned by Messrs Patterson and McCutchan. On June 28, 1996,
the partnership loaned $200,085 to the Company at 9.5% per annum. The balance
owing on that loan on December 31, 1996 was $89,874.90. On November 15, 1996,
the partnership loaned $200,000.00 to the Company at 11.0% per annum. The
balance owing at December 31, 1996 was $200,000. During 1996, the Company paid
the partnership interest on these loans totaling $6883.
The Company leases its Tulsa office and warehouse space from McCutchan-Patterson
Partnership, a partnership wholly-owned by Messrs. Patterson and McCutchan. The
lease runs from July 1, 1995 through December 31, 1997 and calls for monthly
lease payments by the Company of $5,500.
The Company has performed various environmental services related to underground
storage tanks for Jack Griffith Petroleum Products, Inc. for which it received
$63,000 in 1996 and $129,000 in 1995. Jack Griffith Petroleum Products, Inc. is
principally owned by Jack A. Griffith. Mr. Griffith was a director of the
Company until his resignation on June 19, 1996.
5
<PAGE>
The Company has performed various environmental services for J P Emco for which
it received $85,000 in 1996 and $15,000 in 1995. Mr. W. F. Simpson was the
President of J P Emco at that time. Mr. Simpson was appointed as a director on
January 23, 1997 by the Board of Directors to complete the term of Jack
Griffith.
The Company performed various environmental services related to underground
storage tanks for Danielson Oil for which it received $87,000 in 1996 and
$91,000 in 1995. Danielson Oil is principally owned by Jerry Danielson, a
Director of the Company.
INDEPENDENT AUDITORS
Tullius Taylor Sartain & Sartain served as the Company's independent auditors
during 1996 and have been chosen for that capacity for 1997. Representatives of
Tullius Taylor Sartain and Sartain will be present at the Annual Meeting to
respond to appropriate questions from stockholders and to make a statement if
they desire to do so.
OTHER MATTERS
The Company will bear the cost of the proxy solicitation. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to supply solicitation materials by mail to
the beneficial owners of the Company's common stock of whom they have knowledge,
and will reimburse them for their expenses in so doing; and certain directors,
officers and employees of the Company, not employed for the purpose, may solicit
proxies, without additional remuneration therefore, by personal interview, mail,
telephone or telegraph.
MATTERS WHICH MAY COME BEFORE THE MEETING
The Board of Directors does not intend to bring any other matters before the
meeting, nor does the Board of Directors know of any matters which other persons
intend to bring before the meeting. If, however, other matters not mentioned in
this Proxy Statement properly come before the meeting, the persons named in the
accompanying Proxy Card will vote thereon in accordance with the recommendation
of the Board of Directors.
REMINDER: PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD TO ASSURE THAT ALL
OF YOUR SHARES WILL BE VOTED.
6
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NATIONAL ENVIRONMENTAL SERVICE CO.
12331 E. 60TH STREET, TULSA, OKLAHOMA 74146
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Eddy L. Patterson and Albert A. McCutchan,
and each of them, with power of substitution, as proxies, to vote all shares of
National Environmental Service Co. (the "Company") which the undersigned is
entitled to vote at the Annual Meeting of the Shareholders on June 12, 1997, at
the company's offices at 12331 E. 60th Street, Tulsa, Oklahoma at 1:00 p.m. , or
any adjournment thereof, with all the powers the undersigned would have if
personally present as specified, respecting the following matters described in
the accompanying Proxy Statement and, in their discretion, on matters which come
before the meeting.
1. To elect the following nominees as directors for a one year term: Eddy L.
Patterson, Albert A. McCutchan, E. R. Foraker, Jerry Danielson, W. F.
Simpson.
FOR all nominees WITHHOLD AUTHORITY to vote (INSTRUCTION: To withhold
(except as marked For all nominees authority to vote for any
to the contrary at individual nominee, write
right) that nominee's name on the
space below.)
----------------------------
2. To ratify the selection of Tullius Taylor Sartain & Sartain as independent
auditors for the Company for 1997.
FOR AGAINST ABSTAIN
3. To transact such other business as may properly come before the meeting or
any adjournment thereof.
(CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SHAREHOLDER SPECIFICATIONS.
UNLESS DIRECTED TO THE CONTRARY, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2.
Receipt of accompanying Notice of the meeting and Proxy Statement is hereby
acknowledged.
Date:_________________________________, 1997
___________________________________________
(Signature)
___________________________________________
___________________________________________
(Please Print Your Name)
(Please sign name as fully and exactly as it
appears opposite. When Signing in a
fiduciary or representative capacity,
please give full title as such. When more
than one owner, each owner should sign.
Proxies executed by a corporation should be
signed in full corporate name by duly
authorized officer.)
PLEASE MARK, SIGN, DATE AND MAIL TO THE COMPANY AT THE ADDRESS STATED ABOVE.
