SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14(a)-12
EVANS SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than 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
<PAGE>
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:
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<PAGE>
EVANS SYSTEMS, INC.
, 1997
Dear Shareholders:
You are cordially invited to attend the 1996 Annual Meeting of
Shareholders of Evans Systems, Inc., which will be held at the Best Western
Matagorda Hotel located at 407 Seventh Street, Bay City, Texas, on Thursday,
April 10, 1997, at 10:00 a.m., local time.
Information about the Annual Meeting, including a listing and
discussion of the matters on which the Shareholders will act, may be found in
the enclosed Notice of Annual Meeting and Proxy Statement.
We hope that you will be able to attend the Annual Meeting. However,
whether or not you anticipate attending in person, I urge you to complete, sign
and return the enclosed proxy card promptly to ensure that your shares will be
represented at the Annual Meeting. If you do attend, you will, of course, be
entitled to vote in person, and if you vote in person such vote will nullify
your proxy.
Sincerely,
Jerriel L. Evans, Sr.
Chairman of the Board, President and Chief Executive
Officer
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
READ THE ATTACHED PROXY STATEMENT CAREFULLY, AND COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
<PAGE>
EVANS SYSTEMS, INC.
POST OFFICE BOX 2480
BAY CITY, TEXAS 77404-2480
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
APRIL 10, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of EVANS
SYSTEMS, INC., a Texas corporation (the "Company"), will be held at the Best
Western Matagorda Hotel located at 407 Seventh Street, Bay City, Texas, on
Thursday, April 10, 1997, at 10:00 a.m., local time for the following purposes:
1. To elect three (3) directors to Class A of the Company's Board of
Directors to serve until the 1999 Annual Meeting of Shareholders or
until their respective successors are duly elected and qualified. The
Class A nominees are J.L. Evans, Sr., David L. Deerman, and Carl W.
Schafer.
2. To approve an amendment to the Company's Articles of Incorporation to
authorize the issuance of up to 1,500,000 shares of Preferred Stock.
3. To ratify the appointment of Price Waterhouse LLP as the Company's
independent auditors for the fiscal year ending September 30, 1997.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only Shareholders of record at the close of business on January 31,
1997, will be entitled to notice of and to vote at the Annual Meeting or at any
continuation or adjournment thereof.
By Order of the Board of Directors,
MAYBELL H. EVANS
Secretary
Bay City, Texas
, 1997
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL
MEETING YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE THAT IS PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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<PAGE>
EVANS SYSTEMS, INC.
POST OFFICE BOX 2480
720 AVENUE F NORTH
BAY CITY, TEXAS 77404-2480
-----------------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 10, 1997
-----------------------------
INTRODUCTION
This Proxy Statement is furnished to the shareholders of EVANS SYSTEMS,
INC., a Texas corporation (the "Company"), in connection with the solicitation
by the Board of Directors of the Company of proxies ("Proxies") for the Annual
Meeting of Shareholders (the "Annual Meeting") to be held at the Best Western
Matagorda Hotel located at 407 Seventh Street, Bay City, Texas, on Thursday,
April 10, 1997, at 10:00 a.m., local time, or at any adjournment or postponement
thereof. The approximate date on which this Proxy Statement and the accompanying
Proxy will be first sent or given to shareholders is February __, 1997.
RECORD DATE AND VOTING SECURITIES
The voting securities of the Company outstanding on January 31, 1997
consisted of 3,105,562 shares of common stock, $.01 par value (the "Common
Stock"), entitling the holders thereof to one vote per share. Only shareholders
of record as at that date are entitled to notice of and to vote at the Annual
Meeting or any adjournment or postponement thereof. A majority of the
outstanding shares of Common Stock present in person or by proxy is required for
a quorum.
PROXIES AND VOTING RIGHTS
Shares of Common Stock represented by Proxies, in the accompanying form
of Proxy, which are properly executed, duly returned and not revoked, will be
voted in accordance with the instructions contained therein. If no specification
is indicated on the Proxy, the shares represented thereby will be voted FOR
proposals 1 through 3 and will be voted in the proxy holders' discretion as to
other matters that may properly come before the Annual Meeting.
The execution of a Proxy will in no way affect a shareholder's right to
attend the Annual Meeting and vote in person. Any Proxy executed and returned by
a shareholder may be revoked at any time thereafter if written notice of
revocation is given to the Secretary of the Company prior to the vote to be
taken at the Annual Meeting or by execution of a subsequent Proxy which is
presented to the Annual Meeting, or if the shareholder attends the Annual
Meeting and votes by ballot, except as to any matter or matters upon which a
vote shall have been cast pursuant to the authority conferred by such Proxy
prior to such revocation. Broker "non-votes" and the shares of Common Stock as
to which a shareholder abstains are included for purposes of determining the
presence or absence of a quorum for the transaction of business at the Annual
Meeting. A broker "non-vote" occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner. Broker
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<PAGE>
"non-votes" are not counted for purposes of determining whether a proposal has
been approved and, therefore, do not have the effect of votes in opposition in
such tabulations. An abstention from voting on a matter or a Proxy instructing
that a vote be withheld has the same effect as a vote against a matter since it
is one less vote for approval.
SOLICITATION OF PROXIES
All expenses in connection with this solicitation will be borne by the
Company. It is expected that solicitations will be made primarily by mail, but
officers, directors, employees or representatives of the Company may also
solicit Proxies by telephone, telegraph or in person, without additional
compensation. The Company will, upon request, reimburse brokerage houses and
persons holding shares in the names of their nominees for their reasonable
expenses in sending solicitation material to their principals.
SECURITY OWNERSHIP
The following table sets forth information concerning ownership of the
Company's Common Stock, as of December 31, 1996, by (i) each person who is known
by the Company to be the beneficial owner of more than five percent of the
Common Stock, (ii) each of the Company's directors and nominees for director,
(iii) each executive officer named in the Summary Compensation Table; and (iv)
all current directors and executive officers of the Company as a group. Unless
otherwise indicated, the address of each person or entity listed below is the
Company's principal executive offices.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent of
Name and Address(1) Ownership(2) Class(3)
------------------- -------------------- ---------------------
<S> <C> <C>
J.L. Evans Systems, Ltd., a Texas Limited Partnership ............... 1,417,500(4) 45.6
J.L. Evans, Sr....................................................... 1,498,747(5) 48.2
Maybell H. Evans..................................................... 1,484,993(6) 47.8
Charles N. Way....................................................... 51,477(7) 1.6
Darlene E. Jones..................................................... 37,136(8) 1.1
J.L. Evans, Jr....................................................... 17,174(9) *
David L. Deerman..................................................... 38,173(10) 1.2
Carl W. Schafer...................................................... 15,000(11) *
c/o The Atlantic Foundation
16 Faber Road
Princeton, NJ 08540
Peter J. Losavio, Jr................................................. 7,500(11) *
8414 Bluebonnett Blvd., Suite 110
Baton Roughe, LA 70810
James B. Grover..................................................... 14,434(12) *
William R. Sherman................................................... 1,500(13) *
All executive officers and Directors as a group (12
persons)............................................................. 1,748,634 56.2
</TABLE>
-4-
<PAGE>
- ---------------
* less than 1%
(1) Unless otherwise indicated, the address of each beneficial owner is c/o
the Company, P.O. Box 2480, Bay City, Texas 77404-2480.
(2) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act ("Rule 13d-3") and unless otherwise indicated,
represents shares of which the beneficial owner has sole voting and
investment power.
(3) The percentage of class is calculated in accordance with Rule 13d-3 and
assumes that the beneficial owner has exercised any options or other
rights to subscribe which are exercisable within sixty (60) days and
that no other options or rights to subscribe have been exercised by
anyone else.
(4) The general partner is J.L. Evans Management, Inc. (controlled by J.L.
Evans, Sr. and Maybell H. Evans) and the limited partners are Jerriel
L. Evans, Sr., Maybell H. Evans, and their children, Darlene E. Jones,
Jerriel L. Evans, Jr., and Terry W. Evans.
(5) Includes 1,417,500 shares held by J.L. Evans Systems, Ltd., of which
Mr. Evans claims beneficial ownership.
(6) Includes 1,417,500 shares held by J.L. Evans Systems, Ltd., of which
Ms. Evans claims beneficial ownership.
(7) Includes 45,000 shares issuable to Mr. Way upon the exercise of
warrants.
(8) Includes 35,000 shares issuable to Ms. Jones upon the exercise of
warrants.
(9) Includes 14,000 shares issuable to Mr. Evans, Jr. upon the exercise of
warrants.
(10) Includes 34,000 shares issuable to Mr. Deerman upon the exercise of
options.
(11) Includes 7,500 shares issuable to each of Messrs. Schafer and Losavio
upon the exercise of options.
(12) Mr. Grover has pledged 13,567 shares to a subsidiary of the Company to
secure repayment of a note receivable in the approximate amount of
$111,000.
(13) Includes 1,500 shares issuable to Mr. Sherman upon the exercise of
options.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Article Seven of the Company's Articles of Incorporation provides for
the organization of the Board of Directors into three classes. All directors are
chosen for a full three-year term to succeed those whose terms expire. It is
proposed that three directors be elected to Class A to serve until the 1999
Annual Meeting of Shareholders and until their respective successors are elected
and shall qualify.
Unless otherwise specified, all Proxies received will be voted in
favor of the election of J.L. Evans, Sr., David L. Deerman and Carl W. Schafer
to Class A of the Board of Directors to serve until the 1999 Annual Meeting of
Shareholders. All nominees for director are currently directors of the Company.
Management has no reason to believe that any of the nominees will not remain a
candidate for election at the date of the Meeting. Should any of the nominees
not then remain a candidate, the Proxies will be voted in favor of those
nominees who remain candidates and may be voted for substitute nominees selected
by the Board of Directors. The following table and the paragraphs following the
table
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<PAGE>
set forth information regarding the current ages, terms of office and business
experience of the current and proposed directors of the Company:
<TABLE>
<CAPTION>
Expiration of Current
Term of Office as
Name Age Director
- ---- --- ---------------------
<S> <C> <C>
NOMINEES FOR ELECTION TO CLASS A OF THE BOARD OF DIRECTORS:
J.L. Evans, Sr. 57 1996
David L. Deerman 55 1996
Carl W. Schafer 60 1996
CONTINUING MEMBERS OF THE BOARD OF DIRECTORS:
CLASS B DIRECTORS:
Charles N. Way 54 1998
Darlene E. Jones 38 1998
James B. Grover 44 1998
CLASS C DIRECTORS:
Maybell H. Evans 57 1997
Peter J. Losavio, Jr. 47 1997
</TABLE>
J.L. EVANS, SR. has been a member of the Company's Board of Directors
since August, 1968. Mr. Evans is also the Chairman of the Board, President and
Chief Executive Officer of the Company. Mr. Evans founded the Company in 1968
and has served in this capacity since that time. He was born in Flint, Texas, in
1939 and subsequently moved to Woodsboro, Texas, where he graduated from
Woodsboro High School in 1957. Mr. Evans attended San Antonio Community College
where he majored in Business Administration. From 1954 to 1960, Mr. Evans owned
and operated a gasoline service station. From 1960 to 1968, Mr. Evans was
employed by Amoco Oil Company where he held various sales and managerial
positions. In 1985, he was awarded top salesman for the Kansas City Region.
Because the region comprised several states, the honor bestowed upon Mr. Evans
was very prestigious. Additionally, in 1992, Mr. Evans was selected as a
Regional Finalist for the Entrepreneur of the Year Award granted annually by
Ernst & Young and Merrill Lynch.
DAVID L. DEERMAN has been a member of the Company's Board of Directors
since December, 1992. Mr. Deerman is also the Vice Chairman of the Board and
President of ChemWay Systems, a subsidiary of the Company. He has held this
position since 1990. Mr. Deerman joined the Company in 1984 as Vice President of
The Way Energy, Inc. He was born in Bay City, Texas, in 1941. Mr. Deerman
graduated from high school in Angleton, Texas, in 1959. He attended Lamar
University in 1964 where he received a B.B.A. degree in Marketing. He
subsequently attended graduate school where his curriculum included courses in
management. Mr. Deerman was employed by International Harvester Company of
Houston, Texas, from 1964 to 1965 where his responsibilities included sales
promotion.
-6-
<PAGE>
From 1965 to 1978, Mr. Deerman was employed by Gulf Oil Company in Texas and
Oklahoma where he served successively as Analytical Coordinator, Marketing
Supervisor, Product Supply Coordinator, and Operations Manager. He assisted in
the development of Ashley Real Estate and Land Development Company in Austin,
Texas, from 1978 to 1981. Mr. Deerman served as a manager of the South Hampton
Refining Company in Silsbee, Texas, from 1981 to 1984, before joining the
Company.
CARL W. SCHAFER has been a member of the Company's Board of Directors
since December, 1992. Mr. Schafer was born in Chicago, Illinois in 1936 and
obtained his primary and secondary education in Illinois. He received his B.A.
with distinction from the University of Rochester in 1958. He served with the
U.S. Bureau of the Budget as a budget examiner (1961-1964), a legislative
analyst (1964-1966), deputy director of budget preparation (1966-1968), director
of budget preparation (1968- 1969), and as staff assistant to the U.S. House of
Representatives Appropriations Committee (1969). He served with Princeton
University as director of the budget (1969-1972), treasurer (1972-1976),
financial vice president, treasurer and chief financial officer (1976-1987). He
served as a principal of Rockefeller and Company, Inc. from 1987 to 1990. He is
currently president of the Atlantic Foundation, Princeton, New Jersey. He served
as co-chairman of the New Jersey Governor's Task Force on improving New Jersey's
Economic and Regulatory Climate from 1982 to 1983 and is currently a trustee or
director of Roadway Express, Inc., Wainoco Oil Corporation, Nutraceutix, Inc.,
Electronic Clearing House, Inc., the Paine Webber and Guardian Groups of Mutual
Funds, Harbor Branch Institution, Inc., the Jewish Guild for the Blind, the
Johnson Atelier and School of Sculpture, and Hidden Lakes Gold Mines, Ltd. He is
a member of the advisory council of Domain Partners and a member of the
International Advisory Council of William Sword and Company, Inc.
CHARLES N. WAY has been a member of the Company's Board of Directors
since March, 1982. Mr. Way is also the Vice President and Chief Financial
Officer of the Company. He has served in this capacity since 1980. Mr. Way
joined the Company in June of 1979. He was born in Houston, Texas, in 1942 and
graduated from Jessie H. Jones High School in 1961. He received a B.B.A. degree
in Accounting from Texas A&M University in 1966. He was employed with Texaco,
Inc. From 1966 to 1968 where he served as an accountant. From 1968 to 1973, Mr.
Way served as an Accounting Division Manager with Tenneco Oil Company. From 1973
to 1976, he was employed as a Controller with News, Inc. And Subsidiaries. From
1976 to 1979, Mr. Way owned and operated All-Ways Automotive Tire Service in
Houston, Texas.
DARLENE E. JONES has been a member of the Company's Board of Directors
since December, 1992. Ms. Jones is also the Treasurer and serves as the
Administrative Manager for the Company. She has held these positions since 1993.
Ms. Jones was born in San Antonio, Texas, in 1958, and graduated from Bay City
High School in 1976. She then attended and graduated in 1980 from Southwestern
University where she received a B.S. degree in Biology/Chemistry. Subsequently,
Ms. Jones completed course work involving computer systems technology. She
joined the company in 1980.
MAYBELL H. EVANS has been a member of the Company's Board of Directors
since August, 1968. Ms. Evans has been also served as the Company's Secretary
since its inception. Ms. Evans was born in Holliday, Texas in 1939 and graduated
from Sweeny High School, Sweeny, Texas in 1957. She joined the Company full time
in 1968 managing accounts receivable, collections, and corporate affairs.
PETER J. LOSAVIO, JR. has been a member of the Company's Board of
Directors since May, 1993. Mr. Losavio was born in Baton Rouge, Louisiana in
1949 and graduated from Baton Rouge High School in 1967. He received his B.S.
degree from Tulane University in 1970, majoring in chemistry, and a
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<PAGE>
masters degree in chemistry from Tulane University in New Orleans in 1973. He
graduated from Louisiana State University Law School in Baton Rouge, Louisiana
in 1975 and received a masters of laws in taxation from the University of
Florida in 1976. Mr. Losavio is a Board Certified Tax Attorney. He became a
licensed and certified public accountant in Louisiana in 1979. He completed the
certified financial planning program offered by the College for Financial
Planning in Denver, Colorado in 1987. From 1980 to present, Mr. Losavio has been
an instructor in the College of Business Administration at Louisiana State
University, teaching corporate tax, partnership taxation, Sub S, estate
planning, and tax practices and procedures. Mr. Losavio has been a co-author and
lecturer for various continuing education programs sponsored by the Society of
Louisiana Certified Public Accountants and National Business Institute. He was a
speaker at the 1990 Louisiana Advanced Tax Workshop. From 1990 to present, he
has been a member of the Ad Hoc Advisory Committee to the Commissioner of
Securities for the State of Louisiana. From 1980 to present, he has been an
assistant bar examiner. In 1980, he was Chairman of the Tax Committee for the
Society of Louisiana Certified Public Accountants.
JAMES B. GROVER has been a member of the Company's Board of Directors
since December, 1992. Mr. Grover is also the President of EDCO Environmental
Systems. He founded EDCO, Inc. In 1979, to engage in the distribution of refined
petroleum products. In 1983, EDCO became a partially-owned subsidiary of the
Company. In 1989, Mr. Grover organized EDCO Environmental Services, Inc., a
division of EDCO, and began serving as the corporation's President. In 1992,
EDCO Environmental Services, Inc. became a wholly-owned subsidiary of the
Company. It was at this time that Mr. Grover began serving the Company in the
capacity of President of EDCO Environmental Systems. Mr. Grover was born in Bay
City, Texas, in 1952, and graduated from Bay City High School in 1970. He
received a B.B.A. degree in Accounting from Texas A&M University in 1974. He
served as Second Lieutenant at Fort Benjamin Harrison, Indiana, and received
advanced training in the United States Army Finance Officers' Basic Course in
1974. He received a master's degree in Real Estate Economics from Texas A&M
University in 1975 and served as a graduate research assistant until 1976. After
attending Texas A&M University, Mr. Grover engaged in real estate development
activities before forming EDCO, Inc.
REQUIRED VOTE
Directors are elected by a plurality of the votes cast, in person or
by proxy, at the Annual Meeting. Votes withheld and broker non-votes are not
counted toward a nominees total.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE ELECTION OF EACH OF THE NOMINATED DIRECTORS.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company formally met on five (5)
occasions during the fiscal year ended September 30, 1996 ("Fiscal 1996"). From
time to time during such fiscal year, the members of the Board acted by
unanimous written consent. Each of the directors attended (or participated by
telephone conference in) more than 75% of the aggregate of such meetings of the
Board of Directors and Committees on which he served during Fiscal 1996. The
Board of Directors has authorized an Investment Committee, an Audit Committee,
and a Compensation Committee (which also functions as the Stock Option
Committee). The Investment Committee members are Charles N. Way, Darlene E.
Jones, David L. Deerman, and J.L. Evans, Sr. (Chairman). The Audit Committee
members are Carl W. Schafer (Chairman), Charles N. Way, and Peter J. Losavio,
Jr. The Compensation Committee members are Carl W. Schafer (Chairman), Charles
N. Way, and Peter J. Losavio, Jr.
-8-
<PAGE>
The Investment Committee reviews, analyzes and makes recommendations
to the Board of Directors with respect to all expenditures of the Company in
excess of $500,000. The Executive Committee held no meetings during Fiscal 1996.
The Audit Committee reviews, analyzes and makes recommendations to the Board of
Directors with respect to the Company's compensation and accounting policies,
controls and statements and coordinates with the Company's independent public
accountants. The Audit Committee held two (2) meetings during Fiscal 1996. The
Compensation Committee reviews, analyzes and makes recommendations to the Board
of Directors regarding compensation of Company directors, employees, consultants
and others, including grants of stock options. The Compensation Committee held
two (2) meetings during Fiscal 1996. The Company does not have a standing
nominating committee or a committee which serves nominating functions.
BOARD OF DIRECTORS COMPENSATION
During Fiscal 1996, each Director who is not an employee of the
Company received $1,500 for each Board of Directors' meeting attended, or $500
for each committee meeting attended which is held on a day other than a Board of
Director's meeting day. In addition, in the fiscal year ending September 30,
1997, the Company will also pay its non-employee directors a monthly retainer
fee of $500. Employees of the Company receive no additional compensation for
service as a Director. All Directors are reimbursed for their reasonable
out-of-pocket expenses incurred in connection with their duties to the Company.
During Fiscal 1996, the Company granted options to purchase 2,500
shares of Common Stock to each of Messrs. Schafer and Losavio on December 1,
1996. The options are currently exercisable and have a per share exercise price
of $5.63.
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<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning
annual and long-term compensation paid by the Company for services in all
capacities to the Company of (i) the Chief Executive Officer, and (ii) the other
four most highly compensated executive officers of the Company at September 30,
1996 who received compensation of at least $100,000 during Fiscal 1996
(collectively, the "Named Officers") for the fiscal years ended September 30,
1996, 1995 and 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------------- ----------------------
OTHER ANNUAL RESTRICTED
NAME AND COMPENSATION STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) AWARDS ($) OPTIONS(#) COMPENSATION(2)
------------------ ---- --------- -------- ------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jerriel L. Evans, Sr.
Chairman of the Board, President and 1996 $122,252 $37,934 $ -- -- -- (2)(3)
Chief Executive Officer........ 1995 120,000 5,381 240 -- -- (2)(3)
1994 120,000 69,112 1,423 -- -- (2)(3)
David L. Deerman
President, ChemWay Systems and 1996 $121,171 $106,553 $ -- -- 12,000 --
Director....................... 1994 121,171 28,483 278 -- -- --
1993 121,171 9,082 1,395 -- -- --
James B. Grover
President, EDCO Environmental and 1996 $120,000 $ -- $ -- -- -- --
Director....................... 1995 124,372 91 233 -- -- --
1994 115,269 7,527 919 -- -- --
William R. Sherman
Vice President, 1996 $ 72,100 $ 40,728 $ -- -- 1,500 --
Chem-Way Systems............... 1995 72,100 11,089 -- -- -- --
1994 -- -- -- -- -- --
</TABLE>
- ---------------------
(1) Although the officers receive certain perquisites, the value of such
perquisites did not exceed for any officer the lesser of $50,000 or 10%
of the officer's salary and bonus.
(2) In addition to the compensation for Mr. Evans set forth above, he also
receives lease income for the rental of various properties used by the
Company.
(3) The Company owns two split dollar life insurance policies whereby it
pays the premiums and Mr. J.L. Evans' estate will receive the death
benefit less the accumulated cash value, which would return to the
Company.
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<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning Options/SARs
granted during Fiscal 1996 to the Named Officers:
<TABLE>
<CAPTION>
Potential Realizable
Value of Assumed
Annual Rates of
Shares % of Total Exercise Stock Price
Underlying Granted to or Base Appreciation for
Options/SARs Employees Price Expiration Option Term(2)
Name Granted (#) in Fiscal Year ($/Share)(1) Date 5% ($) 10% ($)
- ---- ----------- -------------- ------------ ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Jerriel L. Evans, Sr........... 20,000 20.0 6.26 9/30/01 26,981 58,105
David L. Deerman............... 18,000 18.0 5.69 9/30/01 22,072 47,533
James B. Grover................ 12,000 12.0 5.69 9/30/01 14,715 31,688
William R. Sherman............. 1,500 1.5 5.69 9/30/01 1,839 3,961
</TABLE>
- ------------
(1) The exercise price of the options granted is equal to the market value
of the Company's Common Stock on the date of grant.
(2) Potential realizable value of each grant assumes that the market prices
of the underlying security appreciates at annualized rates of 5% and
10% over the term of the award. Actual gains, if any, on stock option
exercises are dependent on the future performance of common stock.
There can be no assurance that the amounts reflected on this table will
be achieved.
OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth all stock options exercised by the Named
Officers during the Fiscal 1996 and the number and value of unexercised options
held by such executive officers at fiscal year end.
<TABLE>
<CAPTION>
Value of
Number of Securities Unexercised
Underlying Unexercised In-the-money
Shares Value Options at Options at
Acquired on Realized Fiscal Year-End Fiscal Year-End($)(2)
Name Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jerriel L. Evans, Sr....... -0- -0- -0- 20,000 -0- -0-
David L. Deerman........... -0- -0- 24,000 18,000 -0- -0-
James B. Grover............ -0- -0- -0- 12,000 -0- -0-
William R. Sherman......... -0- -0- 1,500 -0- -0- -0-
</TABLE>
- ------------
1. Value realized is calculated based on the difference between the option
exercise price and the closing market price of the Company's Common
Stock on the date of exercise multiplied by the number of shares to
which the exercise relates.
2. Value of unexercised in-the-money options is calculated based on the
difference between the option exercise price and the closing price of
the Company's Common Stock at fiscal year end, multiplied by the number
of shares underlying the options. The closing price of the Company's
Common Stock as reported on the NASDAQ Stock market on September 30,
1996 was $5.95.
-11-
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Mr. Evans, Sr.
pursuant to which he is employed as the Company's President and Chief Executive
Officer. The agreement commenced on April 1, 1993 and expires on September 30,
1998, unless it terminated earlier in accordance with the agreement. Pursuant to
the agreement, Mr. Evans receives an annual base salary of $120,000 and is
entitled to receive an annual bonus in an amount equal to 7-1/2% of the net
profits of the Company, subject to the limitation set forth below. In addition,
the agreement contains a confidentiality provision and prohibits Mr. Evans from
competing with the Company's business during the term thereof.
The Company has entered into two separate employment agreements with Mr.
Deerman pursuant to which he is employed full-time as (i) the Vice-President of
Marketing, Terminal Operations and Sales of the Company's subsidiary, The Way
Energy, Inc., and (ii) the President of the Company's subsidiary, Chem-Way,
Inc., respectively. The agreements each commenced on October 1, 1992 and expire
on September 30, 1997, unless they are terminated earlier in accordance with
their respective terms. Pursuant to the agreements, Mr. Deerman will receive an
annual base salary aggregating $120,000. Mr. Deerman is also entitled to receive
bonuses to be computed at the end of each fiscal year in an amount equal to 10%
of the net profits of the terminal operations of The Way Energy, Inc. and 8% of
the net profits of Chem-Way, Inc., subject to the limitation set forth below. In
addition, the agreements each contain a confidentiality provision and prohibit
Mr. Deerman from competing with the respective businesses of The Way Energy,
Inc. and Chem-Way, Inc. during the term thereof and for a period of three years
thereafter.
The Company has entered into two separate employment agreements with Mr.
Grover pursuant to which he is employed full-time as (i) the President and
General Manager of the Company's subsidiary, EDCO Environmental Systems, Inc.,
and (ii) President and General Manager of the Company's subsidiary, EDCO, Inc.
The agreements each commenced on January 1, 1993 and expire on December 31,
1997, unless they are terminated earlier in accordance with their respective
terms. Pursuant to the agreements, Mr. Grover will receive an annual base salary
aggregating $119,000. Mr. Grover is also entitled to receive bonuses to be
computed at the end of each fiscal year in an amount equal to 10% of the net
profits of EDCO Environmental Systems, Inc. and 10% of the net profits of EDCO,
Inc., subject to the limitation set forth below. In addition, The agreements
each contain a confidentiality provision and prohibit Mr. Grover from competing
with the respective businesses of EDCO Environmental Systems, Inc. and EDCO,
Inc. during the term thereof and for a period of three years thereafter.
An addendum to the employment agreements for Messrs. Evans, Sr., Deerman
and Grover dated June 8, 1993, limits the total bonuses received by such
individuals from the Company or its subsidiaries to a maximum of 12% of the
Company's consolidated after tax net earnings.
The Company has entered into an employment agreement with Mr. Sherman
pursuant to which he is employed as the National Sales Manager of the Company's
subsidiary, Chem-Way Systems, Inc. The agreement commenced on December 5, 1994
and expires on December 4, 1997, unless it terminated earlier in accordance with
the agreement. Pursuant to the agreement, Mr. Sherman receives an annual base
salary of $72,000 and is entitled to receive an annual bonus in an amount equal
to 3% of the net profits of Chem-Way Systems, Inc. In addition, the agreement
contains a confidentiality provision and prohibits Mr. Sherman from competing
with the Company's business during the term thereof.
-12-
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "Commission"). Officers, directors and greater than ten percent
shareholders are required by the Commission's regulations to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely on review of copies of such forms furnished to the Company,
or written representations that no Form 5's were required, the Company believes
that during the Fiscal 1996, all Section 16(a) filing requirements applicable to
its officers, directors and greater than ten-percent beneficial owners were
complied with.
REPORT OF THE COMPENSATION COMMITTEE
Comprised of Carl W. Schafer, Charles N. Way, and Peter J. Losavio, Jr.
The Compensation Committee of the Board of Directors is responsible for
developing and making recommendations to the Board with respect to the Company's
executive compensation policies. This Committee Report sets forth the components
of the Company's executive officer compensation and describes the basis on which
the Fiscal 1996 compensation determinations were made by the Committee with
respect to the executive officers of the Company.
In designing its executive compensation programs, the Company follows its
belief that executive compensation should reflect the value created for
shareholders while supporting the Company's strategic goals.
The following guidelines have been implemented by the Committee:
1. Executive compensation is meaningfully related to the value
created for shareholders.
2. Executive compensation reinforces strategic performance
objectives and rewards individuals for outstanding
contributions to the Company's success.
3. Executive compensation is designed to attract and retain
quality talent, which is critical for both the short-term and
long-term success of the Company.
The Committee currently implements a compensation program based on
four components: a base salary, a bonus program related to the Company's
performance and individual performance during the relevant year, a stock benefit
program, and an Employee Stock Ownership Program. The Committee regularly
reviews the various components of the Company's executive compensation to ensure
consistency with the Company's objectives.
BASE SALARY -- The Committee, in recommending the appropriate base
salaries of the Company's executive officers, generally considers the level of
executive compensation for similar companies in the industry. In addition, the
Committee takes into account (i) the performance of the Company and the role of
the individual executive officer with respect to such performance, and (ii) the
particular executive officer's responsibilities and the long-term performance of
the executive officer in those areas of responsibility.
-13-
<PAGE>
ANNUAL INCENTIVES -- The bonus program provides direct financial
incentives in the form of annual cash bonuses to executive officers exceeding
the Company's annual goals. The Committee recommends cash bonuses based upon an
evaluation of the contributions of each individual officer during the applicable
first year.
LONG-TERM INCENTIVES -- The stock benefit program currently serves as
the Company's primary long-term incentive plan for executive officers and key
employees. The objectives of the stock benefit program are to align executive
officer compensation and shareholder return and to enable executive officers to
develop and maintain a significant, long-term stock ownership position in the
Company's Common Stock. In addition, grants of stock options to the named
executive officers and others are intended to attract, retain, and motivate
executives to improve long-term corporate performance and stock market
performance. Stock options become more valuable as the Company's stock price
increases.
EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) -- The Company's ESOP is a
defined contribution plan. Under this plan, units are awarded pursuant to a
compensation-based formula. The units are held in trust for the employee and are
paid upon plan termination or employee election. This plan benefits any Company
employee who is employed six months and is eighteen (18) years of age. Executive
officers participate in this plan.
Consistent with the Company's compensation program outlined above,
compensation for each of the named executive officers as well as other senior
executives consists of a base salary, bonus, stock options, and ESOP shares. The
base salaries for Fiscal 1996 were at levels commensurate with competitive
amounts paid to executives with comparable qualifications, experience, and
responsibilities of other companies who engaged in the same or similar business
as the Company.
The Committee believes that the compensation of the Chief Executive
Officer ("CEO") should be impacted by the Company's performance. Mr. Evans
founded the Company in 1968 and has served as the CEO since that time. During
Fiscal 1996, Mr. Evans received a base salary of $122,252 which the Committee
views as below average compared to the base salaries of Chief Executive Officers
of other companies in the same or similar business as the Company who have
comparable qualifications, experience, and responsibilities. The number of
shares granted pursuant to the Company's ESOP are not determinable in Fiscal
1996 and, therefore, are not reported here.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During Fiscal 1996, Charles N. Way served on the Compensation
Committee of the Board of Directors. Mr. Way also serves as the Vice President
of Finance and the Chief Financial Officer of the Company. Mr. Way participated
in all decisions made by the Compensation Committee not related to his personal
compensation and incentives.
Carl W. Schafer
Charles N. Way
Peter J. Losavio, Jr.
-14-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases three convenience store locations from the majority
shareholder of the Company. One ten-year lease commenced in June 1987 with
monthly lease payments of $2,500 and allows for one five-year automatic renewal
at the Company's option. The other two leases are for terms of five years and
commenced in April 1990. Each provides for a monthly lease payment of $1,800
with one automatic five-year renewal at the Company's option. The amounts paid
under these leases for Fiscal 1996 was $73,000. Future minimum lease commitments
as of September 30, 1996 are $324,000.
As of September 30, 1996, the Company rents, on a month-to-month
basis, six convenience store locations and an office facility from the majority
shareholder. Previously, the Company rented additional locations which were sold
by the shareholder to unrelated parties. The total month-to-month rents paid for
Fiscal 1996 was $104,000. If all locations continue to be rented under similar
terms for the fiscal year ending September 30, 1997, the Company would pay
approximately $104,000.
Other current assets include a note receivable from a director which
was refinanced from an earlier note and is due in quarterly installments. 13,567
shares of the Company's common stock are pledged to secure repayment. The
balance of the note receivable was approximately $116,000 at September 30, 1996.
Interest accrues at 8.5%.
From time to time, the Company makes advances to individuals who are
shareholders, directors, officers and/or employees. Such advances are usually
unsecured and accrue interest at 9%. There were no advances outstanding at
September 30, 1996.
-15-
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the percentage change in the
cumulative total shareholders' return on the Company's Common Stock against the
cumulative total return of the Composite Index and index of certain companies
selected by the Company as comparable to the Company for the period beginning
upon the Company's public offering on July 16, 1993 to September 30, 1996. The
graph assumes that the value of the investment in the Company's Common Stock at
its initial public offering price and each index was $100 on July 16, 1993, and
that all dividends, if any, were reinvested.
The chart displayed below is presented in accordance with SEC
requirements. Shareholders are cautioned against drawing any conclusions from
the data contained therein, as past results are not necessarily indicative of
future financial performance.
COMPARATIVE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG EVANS SYSTEMS, INC.
NASDAQ MARKET INDEX AND PEER GROUP INDEX
(in dollars)
[GRAPHIC OMITTED]
- -------------------------------FISCAL YEAR ENDING----------------------
COMPANY 1993 1993 1994 1995 1996
EVANS SYSTEM INC 100.00 82.22 45.56 56.11 55.56
PEER GROUP 100.00 113.31 98.69 93.75 107.66
BROAD MARKET 100.00 105.02 111.13 134.93 157.53
Assumes $100 invested on July 16, 1993
Assumes dividend reinvested
Fiscal year ending September 30, 1996
-16-
<PAGE>
(1) The companies selected to form the peer group index are: Adams
Resources and Energy; Dairy Mart Convenience Stores; E-Z Serve
Corporation; Environ Technology Corporation; FFP Partners L.P.; Kinark
Corporation; Lomak Petroleum, Inc.; Mapco, Inc.; Omega Environmental,
Inc.; Par Technology Corporation; Specialty Chemical Resources; and
Virogroup, Inc.
Note: National Convenience Stores was bought by Diamond Shamrock and later
merged with Ultarmar. Therefore, these two companies could no longer
be included in the Company's peer index group.
PROPOSAL NO. 2
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION
TO AUTHORIZE PREFERRED STOCK
The Company is currently not authorized to issue Preferred Stock. The
Board of Directors recommends an amendment to the Company's Articles of
Incorporation to authorize the issuance of up to 1,500,000 shares of Preferred
Stock. The text of the proposed amendment is attached hereto as Exhibit A and is
incorporated herein by reference.
The Board of Directors believes that the authorization of the
Preferred Stock is in the best interests of the Company and its shareholders and
believes that it is advisable to authorize such shares and have them available
in connection with possible future transactions, such as financings, strategic
alliances, corporate mergers, acquisitions, possible funding of new product
programs or businesses and other uses not presently determinable and as may be
deemed to be feasible and in the best interests of the Company. In addition, the
Board of Directors believes that it is desirable that the Company have the
flexibility to issue shares of Preferred Stock without further shareholder
action, except as otherwise provided by law.
The Preferred Stock will have such designations, preferences,
conversion rights, cumulative, relative, participating, optional or other
rights, including voting rights, qualifications, limitations for restrictions
thereof as are determined by the Board of Directors. Thus, if the Preferred
Stock Amendment is approved, the Board of Directors would be entitled to
authorize the creation and issuance of up to 1,500,000 shares of Preferred Stock
in one or more series with such limitations and restrictions as may be
determined in the Board's sole discretion, without further authorization by the
Company's stockholders. Stockholders will not have preemptive rights to
subscribe for shares of Preferred Stock.
It is not possible to determine the actual effect of the Preferred
Stock on the rights of the shareholders of the Company until the Board of
Directors determines the rights of the holders of a series of the Preferred
Stock. However, such effects might include (i) restrictions on the payment of
dividends to holders of the Common Stock; (ii) dilution of voting power to the
extent that the holders of shares of Preferred Stock are given voting rights;
(iii) dilution of the equity interests and voting power if the Preferred Stock
is convertible into Common Stock; and (iv) restrictions upon any distribution of
assets to the holders of the Common Stock upon liquidation or dissolution and
until the satisfaction of any liquidation preference granted to the holders of
Preferred Stock.
The Board of Directors is required by Texas law to make any
determination to issue shares of Preferred Stock based upon its judgment as to
the best interests of the shareholders and the Company.
-17-
<PAGE>
Although the Board of Directors has no present intention of doing so, it could
issue shares of Preferred Stock (within the limits imposed by applicable law)
that could, depending on the terms of such series, make more difficult or
discourage an attempt to obtain control of the Company by means of a merger,
tender offer, proxy contest or other means. When in the judgment of the Board of
Directors such action would be in the best interests of the shareholders and the
Company, the issuance of shares of Preferred Stock could be used to create
voting or other impediments or to discourage persons seeking to gain control of
the Company, for example, by the sale of Preferred Stock to purchasers favorable
to the Board of Directors. In addition, the Board of Directors could authorize
holders of a series of Preferred Stock to vote either separately as a class or
with the holders of Common Stock, on any merger, sale or exchange of assets by
the Company or any other extraordinary corporate transaction. The existence of
the additional authorized shares could have the effect of discouraging
unsolicited takeover attempts. The issuance of new shares could also be used to
dilute the stock ownership of a person or entity seeking to obtain control of
the Company should the Board of Directors consider the action of such entity or
person not to be in the best interests of the shareholders and the Company. Such
issuance of Preferred Stock could also have the effect of diluting the earnings
per share and book value per share of the Common Stock held by the holders of
Common Stock.
While the Company may consider effecting an equity offering of
Preferred Stock in the future for the purposes of raising additional working
capital or otherwise, the Company, as of the date hereof, has no agreements or
understandings with any third party to effect any such offering and no
assurances are given that any offering will in fact be effected.
DISSENTERS' RIGHTS
Pursuant to the Texas Business Corporation Act, the Company's
shareholders are not entitled to dissenters' rights of appraisal with respect to
the proposed amendment.
REQUIRED VOTE
The affirmative vote of the holders of a majority of outstanding
shares of Common Stock is required for approval of the proposal to amend the
Company's Articles of Incorporation to authorize the issuance of Preferred
Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF
THE PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION
PROPOSAL NO. 3
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has appointed Price Waterhouse LLP to be the
independent auditors of the Company for the fiscal year ending September 30,
1997. Price Waterhouse LLP has audited the Company's financial statements since
September 1993. Although the selection of auditors does not require
ratification, the Board of Directors has directed that the appointment of Price
Waterhouse LLP be submitted to shareholders for ratification. If shareholders do
not ratify the appointment of Price
-18-
<PAGE>
Waterhouse LLP, the Board of Directors will consider the appointment of other
certified public accountants. A representative of Price Waterhouse, LLP is
expected to be available at the Annual Meeting to make a statement if such
representative desires to do so and to respond to appropriate questions.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the Common Stock
present, in person or by proxy, is required for ratification of the appointment
of Price Waterhouse LLP as independent auditors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
RATIFICATION OF THE SELECTION OF PRICE WATERHOUSE, LLP
AS THE COMPANY'S INDEPENDENT AUDITORS.
SHAREHOLDER PROPOSALS
To the extent required by law, any shareholder proposal intended for
presentation at next year's annual shareholders' meeting must be received at the
Company's principal executive offices prior to November 1, 1997.
OTHER MATTERS
So far as it is known, there is no business other than that described
above to be presented for action by the shareholders at the forthcoming Annual
Meeting, but it is intended that Proxies will be voted upon any other matters
and proposals that may legally come before the Annual Meeting, or any
adjustments thereof, in accordance with the discretion of the persons named
therein.
The Annual Report on Form 10-K for the fiscal year ended September 30,
1996, including financial statements, has been mailed to shareholders with this
Proxy Statement. If, for any reason, you did not receive your copy of the Annual
Report, please advise the Company and a copy will be sent to you.
By Order of the Board of Directors
Maybell H. Evans,
Secretary
Bay City, Texas
, 1997
-19-
<PAGE>
EXHIBIT A
"ARTICLE FOUR.
The aggregate number of shares of stock that the Corporation shall
have authority to issue is: sixteen million five hundred thousand (16,500,000),
consisting of fifteen million (15,000,000) shares of common stock (the "Common
Stock") of the par value of one cent ($.01) each and one million five hundred
thousand (1,500,000) shares of preferred stock (the "Preferred Stock") of the
par value of one cent ($.01) each.
With respect to the Preferred Stock, the Board of Directors is
expressly authorized to provide for the issuance of all or any shares of the
Preferred Stock, in one or more series, and to fix for each such series such
voting powers, full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other special rights and
such qualifications, limitations or restrictions thereof as shall be stated and
expressed in the resolution or resolutions adopted by the Board of Directors
providing for the issue of such series and as may be permitted by the Texas
Business Corporation Act. The number of authorized shares of Preferred Stock may
be increased (but not above the number of authorized shares of the class) or
decreased (but not below the number of shares thereof then outstanding). Without
limiting the generality of the foregoing, the resolutions providing for issuance
of any series of Preferred Stock may provide that such series shall be superior
or rank equally or junior to the Preferred Stock of any other series to the
extent permitted by law. No vote of the holders of the Preferred Stock or Common
Stock shall be required in connection with the designation or the issuance of
any shares of any series of any Preferred Stock authorized by and complying with
the conditions herein, the right to have such vote being expressly waived by all
present and future holders of the capital stock of the Corporation."
-20-
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
EVANS SYSTEMS, INC.
PROXY -- ANNUAL MEETING OF SHAREHOLDERS
APRIL 10, 1997
The undersigned, a shareholder of Evans Systems, Inc., a Texas corporation
(the "Company"), does hereby constitute and appoint J.L. Evans, Sr. and Charles
N. Way and each of them, the true and lawful attorneys and proxies with full
power of substitution, for and in the name, place and stead of the undersigned,
to vote all of the shares of Common Stock of the Company that the undersigned
would be entitled to vote if personally present at the 1996 Annual Meeting of
Shareholders of the Company to be held at the Best Western Matagorda Hotel
located at 407 Seventh Street, Bay City, Texas, on Thursday, April 10, 1997, at
10:00 a.m., local time, or at any adjournment or adjournments thereof.
The undersigned hereby instructs said proxies or their substitutes as set
forth below.
1. ELECTION OF DIRECTORS:
The election of J.L. Evans, Sr., David L. Deerman and Carl W. Schafer
to Class A of the Board of Directors, to serve until the 1999 Annual
Meeting of Shareholders and until their respective successors are
elected and shall qualify.
TO WITHHOLD
AUTHORITY TO WITHHOLD AUTHORITY
TO VOTE TO VOTE FOR ANY INDIVIDUAL
FOR ALL NOMINEE(S), PRINT NAME(S)
FOR ____ NOMINEES ____ BELOW
-------------------------
-------------------------
2. AMEND ARTICLES OF INCORPORATION:
To approve an amendment to the Company's Articles of Incorporation to
authorize the issuance of up to 1,500,000 shares of Preferred Stock.
FOR _____ AGAINST _____ ABSTAIN _____
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS:
To ratify the appointment of Price Waterhouse LLP as the independent
auditors of the Company for the fiscal year ending September 30, 1997.
FOR _____ AGAINST _____ ABSTAIN _____
4. DISCRETIONARY AUTHORITY: To vote with discretionary authority with
respect to all other matters that may properly come before the Meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS HEREINBEFORE
GIVEN. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED TO ELECT THE
NOMINEES AS DIRECTORS, TO APPROVE THE AMENDMENT TO THE COMPANY'S ARTICLES OF
INCORPORATION, TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE LLP AS THE
COMPANY'S INDEPENDENT AUDITORS AND IN ACCORDANCE WITH THE DISCRETION OF THE
PROXIES OR PROXY WITH RESPECT TO ANY OTHER BUSINESS TRANSACTED AT THE ANNUAL
MEETING.
<PAGE>
The undersigned hereby revokes any proxy or proxies heretofore given
and ratifies and confirms all that the proxies appointed hereby, or any of them,
or their substitutes, may lawfully do or cause to be done by virtue hereof.
, 1997
_____________________ (L.S.)
_____________________ (L.S.)
Signature(s)
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR HEREON. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE INDICATE THE
CAPACITY IN WHICH SIGNING. WHEN SIGNING AS JOINT TENANTS, ALL PARTIES IN THE
JOINT TENANCY MUST SIGN. WHEN A PROXY IS GIVEN BY A CORPORATION, IT SHOULD BE
SIGNED WITH FULL CORPORATE NAME BY A DULY AUTHORIZED OFFICER.
PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY IN THE ENVELOPE PROVIDED
FOR THIS PURPOSE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
