EVANS
Notice of Special Meeting of Stockholders
To Be Held December 8, 1998
To the Stockholders of Evans, Inc.:
On behalf of the Board of Directors, you are cordially invited to
attend a Special Meeting of Stockholders of Evans, Inc. to be held at
9:00 a.m., Central Standard Time, on December 8, 1998 at , Chicago,
Illinois 60603.
1. To approve an amendment to the Company's Restated Certificate of
Incorporation to effect a one-for-four reverse stock split of
the Common Stock, to reduce the authorized Preferred Stock, par
value $1.00 per share from 3,000,000 shares to 1,000,000 shares
and to reduce the authorized Common Stock, par value $0.20 per
share from 8,000,000 shares to 3,000,000 shares.
2. To consider and transact such other matters as may properly come
before the meeting or any adjournments thereof.
Only stockholders of record at the close of business on October 15, 1998
are entitled to notice of and to vote at the meeting or any adjournments
thereof. A list of such stockholders will be kept at the office of the
Secretary at 36 South State Street, Chicago, Illinois, during the ten
days prior to the meeting.
By Order of the Board of Directors,
SAMUEL B. GARBER
Vice President,
General Counsel and Secretary
Chicago, Illinois
November , 1998
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN YOUR PROXY
CARD IN THE ENCLOSED SELF-ADDRESSED POSTAGE-PAID ENVELOPE REGARDLESS OF
WHETHER YOU PLAN TO ATTEND THE MEETING.
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EVANS
36 SOUTH STATE STREET
CHICAGO, ILLINOIS 60603
Proxy Statement
for
Special Meeting of Stockholders
December 8, 1998
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Evans, Inc. (the "Company")of proxies for use at
the Special Meeting of Stockholders of the Company to be held at ,
Chicago, Illinois 60603 on Tuesday, December 8, 1998 at 9:00 a.m. Central
Standard Time for the purposes set forth in the Notice of Special Meeting of
Stockholders. The approximate mailing date of this material is November , 1998.
Shares represented by valid proxies in the form enclosed which are
received prior to the Special Meeting will be voted in accordance with the
directions contained therein. Any proxy returned without specification as to any
matter will be voted in accordance with the recommendation of the Board of
Directors. A stockholder who attends the Meeting may vote in person rather than
by proxy if he so desires. A stockholder may revoke his proxy at any time
before it is exercised.
VOTING SECURITIES
The close of business on October 15, 1998 has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the Special Meeting. On such date, the Company had outstanding 5,199,845 shares
of Common Stock (not including 1,133,590 shares held in its treasury), each of
which is entitled to one vote on all matters voted upon at the Special Meeting.
Under Section 216 of the Delaware General Corporation Law and the Company's
By-laws, a majority of the shares of the Company's Common Stock, present in
person or represented by proxy, shall constitute a quorum for purposes of the
Meeting. In all matters, the affirmative vote of the majority of shares present
in person or represented by proxy at the Meeting and entitled to vote on the
subject matter shall be the act of the shareholders. Abstentions are treated as
votes against a proposal and broker non-votes have no effect on the vote.
Abstentions and broker non-votes are counted for purposes of determining a
quorum.
The Board of Directors is not aware of any matters that will come before
the Meeting other than as described above. However, if such matters are
presented, the named proxies will, in the absence of instructions to the
contrary, vote such proxies in accordance with the judgment of such named
proxies with respect to any such other matter properly coming before the
meeting.
2
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PRINCIPAL STOCKHOLDERS
The following table sets forth the Common Stock of the Company owned as
of October 15, 1998 by persons who were known by the Company to own beneficially
more than 5% of the Company's outstanding Common Stock.
Amount of
Name and Address Beneficial
of Beneficial Owner Ownership Percent
D.B. Meltzer......................................1,071,720 (1) 20.7
36 South State Street
Chicago, IL 60603
Dimensional Fund Advisors, Ltd. ....................476,400 (2) 9.2
1299 Ocean Avenue
Santa Monica, CA 90401
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(1) Including (a) 160,200 shares held in trust for benefit of Mr. Meltzer, with
the trustee and Mr. Meltzer having shared voting and investment power and
(b) an option to acquire 40,000 shares.
(2) As reported in Schedule 13D filed by said firm on May 14, 1998 with the
Securities and Exchange Commission which report reflects sole voting power
as to 133,400 shares, shared voting power as to 383,854 shares, sole
dispositive power as to 383,854 shares and shared dispositive power as to
294,957 shares.
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PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION
TO EFFECT A REVERSE STOCK SPLIT
General
The Board of Directors of the Company has adopted subject to stockholder
approval, a resolution proposing that the Company amend its Restated Certificate
of Incorporation to reduce the outstanding number of shares of Common Stock and
Preferred Stock and effect a reverse stock split (the "Reverse Stock Split")
pursuant to which each four shares of Common Stock ("Old Common Stock") will
become one share of the Company's then outstanding common stock ("New Common
Stock").
The Restated Certificate of Incorporation presently authorizes 8,000,000
shares of Common Stock, of which 5,199,845 shares were issued and outstanding on
the Record Date and 3,000,000 shares of Preferred Stock, none of which is
outstanding. In addition, as of the Record Date, shares of Common Stock were
subject to issuance upon exercise of outstanding warrants and options.
Purposes of the Reverse Stock Split
From 1973 the Company's Common Stock traded on the NASDAQ National
market. On May 29, 1998, NASDAQ notified the Company that it must initiate final
delisting proceedings since the Company was in non-compliance with the new
market value of public float requirements pursuant to NASD marketplace rule
4450(a)(2) which became effective on February 23, 1998. With such rule the
Company was required to have a market value of public float in the amount of
$5,000,000 for continued listing. The Company elected to receive an expedited,
written hearing at no prejudice to its rights for further review under Rule
4800. Subsequently on June 3, 1998 NASDAQ notified the Company that Evans Common
Stock had failed to maintain a closing bid price of greater than or equal to
$1.00 in accordance with marketplace rule 4450(a)(5) during the last thirty
consecutive days. NASDAQ recognized that this might be a temporary situation,
and no delisting action with respect to the bid price deficiency was initiated
at that time. Instead the Company was provided ninety calendar days in which to
regain compliance with marketplace rule 4450 (a)(5). During this ninety day
period the closing bid price of the Company's Common Stock closed equal to or
greater than $1.00 for ten consecutive trading days. However, subsequently the
Company's Common Stock has traded below the required $1.00 minimum closing bid
price. On June 2, 1998 the Company notified NASDAQ that it had elected to
receive an expedited, written hearing with no prejudice to its rights for
further review under rule 4800. Prior to June 19, 1998 the Company submitted
written material supporting its argument in favor of its continued listing on
NASDAQ National Market. On July 6, 1998 supplementary material was submitted to
NASDAQ indicating that Peter Cundill & Associates (Bermuda), Ltd., which was the
beneficial owner of 13.4% of the Company's Common Stock as of June 1, 1998 as
shown in Evans 1998 Proxy Statement in connection with the notice of the 1998
Annual Meeting of Stockholders, filed a 13D with the Securities and Exchange
Commission indicating that it now owned beneficially less than 10% of the
Company's outstanding Common Stock. Accordingly Peter Cundil & Associates
(Bermuda), Ltd., stock ownership in Evans would then be computed in determining
public float. On August 3, 1998, NASDAQ informed the Company that it failed to
meet the market value of public float requirement and failed to gain compliance
after being granted a ninety day grace period which expired on May 28, 1998.
Accordingly a NASDAQ panel determined to move the Company's securities to The
NASDAQ SmallCap Market effective with the close of business August 12, 1998. The
Company then asked that such decision be reviewed by a new Listing
Qualifications Panel. This hearing was held in Washington D. C. on September 11,
1998. Subsequently the Company notified NASDAQ that in order to comply with all
criteria for continued listings on The NASDAQ SmallCap Market it would propose
to shareholders to effect a Reverse Stock Split.
<PAGE>
On October 20, 1998 the NASDAQ Listing Qualifications Panel ("Panel")
determined to move the Company's listing to The NASDAQ SmallCap Market Pursuant
to the following exception. On or before December 14, 1998 the Company must
effectuate a Reverse Stock Split sufficient to bring it into compliance with the
$1.00 minimum bid price requirement for continued listing on The NASDAQ SmallCap
Market; therefore, the closing bid price must meet or exceed $1.00 per share for
a minimum of the next ten consecutive trading days. In order to fully comply
with this exception, the Company must be able to demonstrate compliance with all
requirements for continued listing on The NASDAQ SmallCap Market. In the event
the Company fails to meet any of the terms of this exception, the Company's
securities will be delisted from The NASDAQ Stock Market.
In view of the Panel's determination the Company's Board of Directors
has approved a Reverse Stock Split as a means to increase the bid price of the
Common Stock by reducing the total number of outstanding shares. The closing bid
price of the Common Stock as reported on The NASDAQ SmallCap Market on November
, 1998, the last trading day prior to the date of this Proxy Statement was
$ . The Board of Directors believes that if the bid price of the
Common Stock remains above $1.00, the Common Stock will be eligible for listing
on The NASDAQ SmallCap Market. However, there can be no assurance that, even
if the Reverse Stock Split is effective, the Common Stock will continue to
remain eligible for listing on The NASDAQ SmallCap Market.
If the Common Stock is not listed on NASDAQ, trading, if any, in the
Common stock would thereafter be conducted in the non-NASDAQ over-the-counter-
market in the so-called "pink sheets" or the NASD's "Electronic Bulletin Board."
Consequently, the liquidity of the Company's securities could be impaired, not
only in the number of shares of Common Stock that would be bought and sold, but
also through delays in the timing of transactions, reduction in security analyst
coverage of the Company and lower prices for the Common Stock than might
otherwise be attained. Consequently, investors could find it more difficult to
dispose of, or to obtain accurate quotations as to the market value of the
Company's Common stock. In addition, delisting could result, in certain
circumstances, in the Common Stock becoming characterized as a low-priced or
"penny" stock. In such event, the market liquidity for the Company's securities
could be severely affected as the Common Stock would be subject to compliance
with The Securities Enforcement and Penny Stock Reform Act of 1990. The
regulations governing low-priced, so-called "penny" stocks could limit the
ability of broker-dealers to sell the Company's Common Stock and, in turn, the
ability of stockholders to sell their Common Stock.
The Board of Directors also believes that the current low per share
price of the Common Stock has had a negative effect on the price and
marketability of existing shares and the amount and percentage (relative to
share price) of transaction costs paid by individual stockholders. Reasons for
these effects include internal policies of certain institutional investors which
prevent the purchase of low-priced stocks, the fact that many brokerage houses
do not permit low-priced stocks to be used as collateral for margin accounts or
to be purchased on margin and a variety of brokerage house policies and
practices which tend to discourage individual brokers within those firms from
dealing in low-priced stocks.
In addition, since brokers' commissions on the low-priced stocks
generally represent a higher percentage of the stock price than commissions on
higher priced stocks, the current share price of the Common Stock can result in
individual stockholders, paying transaction costs which are a higher percentage
of the share price than would be the case if the share price were substantially
higher. The Board of Directors also believes that this fact limits the
willingness of certain institutional investors to purchase the Common Stock. The
Board of Directors believes that the proposed Reverse Stock Split will enhance
the Company's flexibility in the future for financing and capitalization needs.
There can,
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however, be no assurance that any of the foregoing effects will occur. THERE CAN
BE NO ASSURANCE THAT THE TOTAL MARKET CAPITALIZATION OF THE COMMON STOCK AFTER
THE PROPOSED REVERSE STOCK SPLIT WILL BE EQUAL TO THE TOTAL MARKET
CAPITALIZATION BEFORE THE PROPOSED REVERSE STOCK SPLIT OR THAT THE MARKET PRICE
FOLLOWING THE REVERSE STOCK SPLIT WILL EITHER EXCEED OR REMAIN IN EXCESS OF THE
CURRENT MARKET PRICE.
Effectiveness of the Reverse Stock Split.
If the Reverse Stock Split is approved by the stockholders, the Reverse
Stock Split would become effective at such time as the Company files the
Certificate of Amendment with the Secretary of State of Delaware (the "Effective
Date"). Even if the Reverse Stock Split is approved by the stockholders, it is
within the discretion of the Board of Directors to not carry out the Reverse
Stock Split. Upon the filing of the Amendment, all of the Old Common Stock will
be converted into New Common Stock as set forth in the Certificate of Amendment.
The number of shares of New Common Stock will be rounded up to the nearest whole
share as fractional shares will not be issued. From and after the Effective
Date, certificates representing shares of Old Common Stock shall be deemed to
represent only the right to receive shares of New Common Stock to which an
individual stockholder is entitled.
Certificates and Fractional Shares
As soon as practicable after the Effective Date, the Company will
request all stockholders to return their stock certificates representing issued
shares of Old Common Stock outstanding on the Effective Date ("Old
Certificates") in exchange for certificates representing the number of whole
shares of New Common Stock into which the shares of Common Stock have been
converted ("New Certificates") as a result of the Reverse Stock Split. Each
stockholder will receive a letter of transmittal from the Company's transfer
agent, Harris Trust and Savings Bank ( the "Transfer Agent"), containing
instructions on how to exchange certificates. STOCKHOLDERS SHOULD NOT SUBMIT
THEIR OLD CERTIFICATES TO THE TRANSFER AGENT UNTIL THEY RECEIVE THESE
INSTRUCTIONS. In order to receive New Certificates, stockholders must surrender
their Old Certificates pursuant to the Transfer Agent's instructions, together
with the properly executed and completed letter of transmittal and such evidence
of ownership of such shares as the Company may require.
Beginning with the Effective Date, each Old Certificate until
surrendered and exchanged as described above, will be deemed for all corporate
purposes to evidence ownership of the whole number of shares of the Common Stock
into which the shares evidenced by such Old Certificates have been amended.
No fractional shares of New Common Stock will be issued as a result of
the Reverse Stock Split. In lieu of receiving fractional shares, stockholders
who hold a number of shares not evenly divisible immediately prior to the
Reverse Stock Split will be entitled to receive a whole share of New Common
Stock for any fractional share at no additional cost. The number of shares of
New Common Stock to be issued in connection with rounding up such fractional
interests is not expected by management of the Company to be material.
<PAGE>
Certain Effects of the Reverse Stock Split
The principal effect of the Reserve Stock Split will be to decrease the
number of shares of Common Stock outstanding from 5,199,845 to approximately
1,299,962, before giving effect to the rounding up of fractional shares referred
to above. In addition, the Board of Directors will take appropriate action to
proportionately adjust the number of Common Shares issuable upon exercise of
outstanding warrants and options, and to adjust the related exercise price, to
reflect the Reverse Stock Split. As a result, following the Effective Date, the
number of Common Shares issuable upon the exercise of outstanding warrants will
be reduced from 100,000 shares to 25,000 shares. The authorized number of shares
of Common Stock will be reduced to 3,000,000 shares and the authorized number of
Preferred Shares will be reduced to 1,000,000.
The shares of New Common Stock will be fully paid and non-assessable.
The relative voting and other rights of holders of the New Common Stock will not
be altered by the Reverse Stock Split. The Company does not anticipate that the
Reverse Stock Split will result in any material reduction in the number of
holders of Common Stock. Certain stockholders' Post-reverse Stock Split holdings
may include an "odd lot" number of shares. In general, it is somewhat more
difficult to purchase or sell an odd lot number of shares, and transactions in
odd lots are subject to higher commissions and other transaction costs
applicable to so-called round lots.
The Reverse Stock Split will not change the par value of shares of
Common Stock. However, under applicable Delaware law, the total capital of the
Company will not be reduced as a result of the Reverse Stock Split, even though
the aggregate par value of all issued and outstanding shares will be reduced to
one-third of the aggregate par value prior to the Reverse Stock Split.
Accordingly, the Reverse Stock Split will not change surplus available for
dividends.
Certain Federal Income Tax Consequences
The following description of certain federal income tax consequences is
based on the Internal Revenue Code of 1986, as amended (the "Code"), the
applicable Treasury Regulations promulgated thereunder, judicial authority and
current administrative rulings and practices as in effect on the date of the
Proxy Statement. This discussion is for general information only and does not
discuss consequences which may apply to special classes of taxpayers (e.g.,
nonresident aliens, broker-dealers, or insurance companies). Stockholders are
urged to consult their own tax advisors to determine the particular tax
consequences to them.
The Company has not sought and will not seek a ruling from the Internal
Revenue Service or opinion of counsel regarding the federal income tax
consequences of the Reverse Stock Split. However, the Company believes that
because the Reverse Stock Split is not part of a plan to periodically increase a
stockholders proportionate interest in the assets or earnings and profits of the
Company, the Reverse Stock Split will have the following effects:
The amendment of shares of Old Common Stock to become shares of New
Common Stock should not result in recognition of gain or loss (except in the
case of the portion of whole share of New Common Stock attributable to the
rounding up to the nearest whole number of share of New Common Stock in lieu of
fractional shares as described above). The holding period for the shares and
portions of shares of New Common Stock will include the stockholder's holding
period for its shares of Old
<PAGE>
Common Stock, provided that the shares of Old Common Stock were held as a
capital asset. The portion of the shares of New Common Stock attributable to
rounding up for fractional shares will have a holding period commencing on the
Effective Date. The adjusted basis of the shares of New Common Stock will be the
same as the adjusted basis of the shares of Old Common Stock, increased by the
income or gain attributable to the rounding up to a whole number of shares as
described herein. Shares of New Common Stock attributable to the rounding up to
the nearest whole number of shares will be treated for tax purposes as if the
fractional shares constitute a disproportionate dividend distribution. Such
stockholders should generally recognize ordinary income to the extent of
earnings and profits of the Company allocated to the portion of each share of
New Common Stock attributable to the rounding up process, and the remainder of
the gain, if any, shall be treated as received from the exchange of property.
Miscellaneous
The Board of Directors may abandon the proposed Reverse Stock Split at
any time before or after the Meeting and prior to the filing of the Amendment
related thereto if for any reason the Board of Directors deems it advisable to
do so. In addition, the Board of Directors may make any and all changes to the
applicable Amendment that it deems necessary to file the Amendment with the
Delaware Secretary of State and give effect to the Reverse Stock Split.
Recommendation and Vote
Assuming the presence of a quorum, the proposal to amend the Company's
Restated Certificate of Incorporation to effect the Reverse Stock Split requires
the approval by the holders of a majority of the outstanding shares of Common
Stock. Proxies will be voted for or against such approval in accordance with
specifications marked thereon and, if no specification is made, will be voted
FOR such approval.
The Board of Directors recommends a vote FOR the approval of the
proposal to amend the Company's Restated Certificate of Incorporation to effect
the Reverse Stock Split, the reduction of authorized shares of Common Stock and
the reduction of authorized shares of Preferred Stock.
<PAGE>
APPENDIX A
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
EVANS, INC.
The undersigned, President and Secretary of Evans, Inc., a Delaware corporation
(the "Corporation"), do hereby certify as follows:
1. The Board of Directors of EVANS, Inc. duly adopted a resolution, in
accordance with Section 242 of the General Corporation Law of the State of
Delaware, to amend the Restated Certificate of Incorporation of EVANS, INC. to
decrease the authorized shares of Common Stock from 8,000,000 shares to
3,000,000 shares, and the Preferred Stock from 3,000,000 shares to 1,000,000
shares and declaring the advisability thereof.
2. At the Special Meeting of Stockholders held on December 8, 1998, duly
called and held in accordance with the provisions of Section 222 of the
General Corporation Law of the State of Delaware, a majority of the shares
of the outstanding stock entitled to vote thereon, was voted in favor of such
amendment in accordance with Section 242 of the General Corporation Law of
the State of Delaware.
1. Article FOURTH of the Restated Certificate of Incorporation
of the Corporation is hereby amended to read in its
entirety as follows:
FOURTH: The aggregate number of shares of all classes of capital stock
which the Corporation shall have authority to issue is four million
(4,000,000) shares, of which one million (1,000,000) shares shall be
Preferred Stock, par value $1.00 per share, issuable in one or more
series, and three million (3,000,000) shares shall be Common Stock, par
value $0.20 per share.
IN WITNESS WHEREOF, we have signed this Certificate as of December ,
1998.
EVANS, INC.
By:______________________________________
Robert K. Meltzer
President and Chief Executive Officer
ATTEST:
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Samuel B. Garber
Secretary
