An angry shareholder has filed suits against Security Environmental Systems Inc. and has threatened to oust the company's board of directors.
Two lawsuits have been filed against the Huntington Beach-based waste-hauling company in Delaware Chancery Court by WNH Investments in San Marino, which owns a 38% stake in Security Environmental.
One suit claims that Security Environment violated federal securities law because it has not held an annual meeting since June 26, 1993. The second asks that a court order be issued to force the company to recognize WNH's purchase of more than a third of Security Environmental.
Ellen Batzel, the company's president, said WNH acquired its stock from Security Environmental founder Alfred Grossman, who was ousted as chairman of the board in October, and his two sons, Jonathan and Stephen.
"We are not sure that the transfer was done legally," Batzel said. The Grossmans, who had owned approximately 1.5 million of the company' 3.5 million outstanding shares, could not transfer their voting rights to WNH under terms of agreements with the company signed last year.
WNH is a newly formed company headed by David Norris. Batzel said she met with Norris last week but is unsure of his planned involvement with Security Environmental, other than seeking changes on the board. Norris has no experience in the field of hazardous waste disposal, she said.
"Based on his closeness with Stephen Grossman, I am drawing certain conclusions," she said, without elaborating.
Norris refused to comment on his relationship with the Grossman family, his lawsuit against Security Environmental or his plans for the business.
In a move likely to affect the legal battle, Security Environmental said it issued 995,000 shares of common stock last week to certain members of management and senior personnel. Batzel, who received 400,000 of those shares, said the decision to distribute new stock was originally made by the company's board of directors in November, 1993.
Security Environmental has been restructuring its management for a year, and Batzel said the board voted in November, 1993, to create compensation packages to lure new managers to the company.
The company's founding family, Alfred Grossman and his sons, all resigned or were terminated last fall as a result of the restructuring efforts of the company's new management team.
In December, Security Environmental paid $325,000 to several parties to settle various allegations of breach of waste-hauling contracts and securities law violations.
Additionally, the company has still not filed financial statements for the fiscal year ended June 30, 1994, or for subsequent quarters. Batzel has said Security Environmental--which lost $562,827 on revenue of $1.5 million for the three months ended March 31, 1994--expects to report sizable losses for the 1993 year and the first half of fiscal 1994.