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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 SERVICE 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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NATIONAL ENVIRONMENTAL SERVICE CO.
12331 E. 60TH STREET, TULSA, OKLAHOMA 74146
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1999
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 May
20, 1999, 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
LLP as independent auditors to audit the financial statements to be
included in the Annual Report to Shareholders for 1999.
(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 9, 1999, 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: April 16, 1999
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
MAY 20, 1999
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 May
20, 1999 at the corporate office located at 12331 East 60th Street, Tulsa,
Oklahoma. Proxy statements and proxies were mailed to shareholders on or about
April 16, 1999. 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 1999
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 9, 1999 will be
entitled to vote at the Annual Meeting. The Company had 7,888,643 outstanding
shares of common stock as of the close of business on March 31, 1999. 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.
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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 2000 Annual Meeting if they are received by the
Secretary of the Company no later than December 17, 1999 at the address set
forth above. If a shareholder, who intends to present a proposal at the
Company's 2000 Annual Meeting of Shareholders and has not sought inclusion of
the proposal in the Company's proxy materials pursuant to Rule 14a-8, fails to
provide the Company with notice of such proposal by March 2, 2000, then the
persons named in the proxies solicited by the Company's Board of Directors for
its 2000 Annual Meeting of Shareholders may exercise discretionary voting power
with respect to such proposal.
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 57 Director, Chairman and Chief Executive Officer
Albert A. McCutchan 58 Director and Executive Vice President
E. R. Foraker 60 Director
W. R. Simpson 54 Director
Dallin Bagley 60 Director
The business background of the Directors follows:
Eddy L. Patterson has served as Chairman, 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"), wholly owned subsidiaries 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. Edward. 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 ECC Energy Corporation and its predecessor corporations. Mr.
Foraker also served as President of WestAmerica Investment Group, Inc. until its
sale in 1997. ECC Energy Corporation engages in coalbed methane gas
exploration, development and production and oil field service contracting.
ECC's headquarters is located in Dewey, Oklahoma.
Mr. W. F. Simpson has served as a director of the Company since January,
1997. He has been President and co-owner of J P Emco from 1985 until 1997. J P
Emco is a manufacturer of plastic automotive parts located in Ada, Oklahoma.
Prior to 1985, Mr. Simpson served as plant manager of the facility under the
ownership of
<PAGE>
General Tire. Previous employment included work for Goodyear Tire and Rubber and
Merrill Lynch in Akron, Ohio. Mr. Simpson is currently retired.
Mr. Dallin Bagley has served as a director of the company since February,
1999. Mr. Bagley was elected to complete the term of Mr. Jerry Danielson who
resigned in November 1998 to devote himself to other business matters. Mr.
Bagley began practicing law in 1996. During the past six years Mr. Bagley has
served as Vice President of National Financial Services, Inc., a computer back-
up accounting firm for health and fitness clubs. Mr. Bagley is also currently a
director of Tunex International, a chain of automotive engine performance and
service centers, and Gentner Communications Corporation, a corporation that
provides technology, service, and educational solutions for U.S. and
international communications markets. Mr. Bagley received a Juris Doctorate in
1965 from the University of Utah College of Law.
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 compensated for special
meetings. Directors are not currently reimbursed for their expenses incurred in
attending such meetings. During 1998, there were four regular quarterly board
meetings and one special board meeting. No director attended less than 75% of
the board meetings and committee meetings for those committees on which he
served. E. R. Foraker, Jerry Danielson, and W. F. Simpson served on both the
Audit and Compensation Committees. The primary functions of the Audit Committee
are to monitor the Company's internal accounting controls, review the 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, 1998. 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, 1998. 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. James Howell, President, age 45, 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 Corporation 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 and was elected as President in June, 1998.
Mr. Larry G. Johnson, Vice President, Secretary-Treasurer and Chief Financial
Officer, age 53, 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. Chuck Nance, Vice President-Operations, age 52, 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
<PAGE>
Company, Inc.
Mr. Robert Watson, Controller, age 52, 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 1995 to May 1996. Mr. Watson oversees all day to day corporate
accounting functions.
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 $100,000 during the year ended December 31, 1998, no disclosure
pertaining to other executives is required or provided.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
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Name and Other Annual All Other
Principal Position Year Salary($) Bonus Compensation Compensation
- ------------------ ---- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Eddy L. Patterson, 1998 148,077 $25,000 - (1)
Chairman & Chief 1997 105,042 20,484 - (1)
Executive Officer 1996 61,958 7,100 - (1)
Albert A. McCutchan 1998 129,151 $20,000 - (1)
Executive vice President 1997 98,286 18,435 - (1)
1996 50,981 6,400 - (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 March 31, 1999,
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.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ----------------------- -------------------------- -----------------
<S> <C> <C>
Eddy L. Patterson 1,556,758 shares 19.7%
12331 E. 60th St.
Tulsa, Oklahoma 74146
Albert A. McCutchan 1,737,068 shares(1) 22.0%
12331 E. 60th St.
Tulsa, Oklahoma 74146
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
E.R. Foraker 269,838 shares(2) 3.4%
4141 North Scottsdale Road
Suite 100
Scottsdale, Arizona 85251
W. F. Simpson 13,806 shares .2%
201 West Kings Road
Ada, Oklahoma 74820
Dallin Bagley 1,350,000 shares 17.1%
2350 Oakhill Drive
Salt Lake City, Utah 84121
All directors and
executive officers as
a group of seventeen persons 5,018,752 shares 63.6%
</TABLE>
(1) Mr. McCutchan's beneficial shares of 1,777,068 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 269,838 shares include 6,806 shares
owned by Sandra D. Foraker, his wife and 5,000 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 1998.
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 1998, 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") $819,000 in 1998 and
$217,000 in 1997, for analytical laboratory testing services rendered. In 1998
and 1997, the Company purchased certain insurance coverage and office supplies
on behalf of Lab One for $10,000 and $10,000, respectively. Mr. Patterson and
Mr. McCutchan, the Company's two principal shareholders, each owned 50% of the
capital stock and are directors and executive officers of Lab One. Lab One was
acquired by the Company on January 30, 1998, for $75,000 cash and 225,000 shares
of the Company's common stock following the completion of an independent
appraisal of Lab One and the review and unanimous consent of the outside
directors of the company as to the transaction and the terms and conditions
thereof. Mr. Johnson, an executive officer of the Company, serves as the
President of Lab One.
The Company leased its Tulsa office and warehouse space from McCutchan-Patterson
Partnership, a partnership
<PAGE>
wholly-owned by Messrs. Patterson and McCutchan. The lease ran from July 1, 1995
through December 31, 1997 and called for monthly lease payments by the Company
of $5,500. On February 28, 1998, the Company acquired the office building,
warehouse, and lot on which the Company's corporate office is located. The
purchase price of $600,000 was established by an independent appraisal of the
property. The acquisition was approved by unanimous consent of the outside
directors of the Company after a review of the appraisal and the terms and
conditions of the purchase.
The Company performed various environmental services related to underground
storage tanks for Danielson Oil for which it received $23,000 in 1998 and
$86,000 in 1997. Danielson Oil is principally owned by Jerry Danielson, a
Director of the Company until his resignation in November, 1998.
INDEPENDENT AUDITORS
Tullius Taylor Sartain & Sartain LLP served as the Company's independent
auditors during 1998 and have been chosen for that capacity for 1999.
Representatives of Tullius Taylor Sartain and Sartain LLP 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.
<PAGE>
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 May 20, 1999, 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, W. F. Simpson. Dallin Bagley.
<TABLE>
<S> <C> <C>
FOR all nominees WITHHOLD AUTHORITY to vote (INSTRUCTION: To withhold
(except as marked For all nominees authority to vote for any individual
to the contrary at ( ) that nominee's name on nominee, write
right) ( ) the space below.)
</TABLE>
2. To ratify the of Tullius Taylor Sartain & Sartain as independent auditors
for the Company for 1999.
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:___________________________________, 1999
______________________________________________
(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.
