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:
/ / 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 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:
-2-
<PAGE>
EVANS SYSTEMS, INC.
March 5, 1998
Dear Shareholders:
You are cordially invited to attend the 1997 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, Monday, April 6, 1998, 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 &
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 6, 1998
--------------------------
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 in Bay City, Texas,
on Monday, April 6, 1998, at 10:00 a. m., local time for the following
purpose(s):
1. To re-elect Peter J. Losavio, Maybell H. Evans and Julie H. Edwards
to the Board of Directors.
2. To ratify and approve the appointment of Price Waterhouse, LLP as
independent auditors for the current fiscal year.
3. 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 February 20,
1998 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
March 5, 1998
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.
2
<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 6, 1998
--------------------------
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
Monday, April 6, 1998, 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 mailed to shareholders is March 5, 1998.
RECORD DATE AND VOTING SECURITIES
The voting securities of the Company outstanding on January 22, 1998
consisted of 3,163,573 shares of common stock, $.01 par value (the "Common
Stock"), entitling the holders thereof to one vote per share. Only shareholders
of record as of February 20, 1998 will be 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 and 2 and will be voted in the proxy holder's 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
3
<PAGE>
voting power with respect to that item and has not received instructions from
the beneficial owner. Broker "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, 1997, 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.
<TABLE>
<CAPTION>
Amount and
Nature of
Name And Address(1) Beneficial Ownership(2) Percent Of Class(3)
------------------- ----------------------- -------------------
<S> <C> <C>
J. L. Evans Systems, Ltd., a Texas Limited Partnership 1,388,200(4) 43.8%
J. L. Evans, Sr. 1,478,662(5) 46.7%
Maybell H. Evans 1,457,215(6) 46.0%
Charles N. Way 33,877(7) 1%
Darlene E. Jones 28,750(8) *
J. L. Evans, Jr. 12,869(9) *
David L. Deerman 20,663(10) *
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 Bluebonnet Blvd., Suite 110
Baton Rouge, LA 70810
All executive officers and Directors as a group (10 persons) 1,666,336 52.6%
</TABLE>
- --------------------------
* less than 1%
4
<PAGE>
(1) Unless otherwise indicated, the address of each beneficial owner is
c/o the Company, Post Office 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 of December 31, 1997 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).
(5) Includes 1,388,200 shares held by J. L. Evans Systems, Ltd., of
which Mr. Evans claims beneficial ownership.
(6) Includes 1,388,200 shares held by J. L. Evans Systems, Ltd., of
which Ms. Evans claims beneficial ownership.
(7) Includes 24,750 shares issuable to Mr. Way upon the exercise of
warrants.
(8) Includes 21,800 shares issuable to Ms. Jones upon the exercise of
warrants.
(9) Includes 4,875 shares issuable to Mr. Evans, Jr. upon the exercise
of warrants.
(10) Includes 20,000 shares issuable to Mr. Deerman upon the exercise of
options.
(11) Includes 7,500 shares issuable to Messrs. Schafer and Losavio 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 two directors be elected to Class C to serve until the 2000 Annual
Meeting of Shareholders and until their respective successors are elected and
shall qualify. In addition, during Fiscal 1997, one director was elected to fill
a vacancy in Class B. It is proposed that such director be re-elected to Class B
to serve until the 1998 Annual Meeting of Shareholders.
Unless otherwise specified, all Proxies received will be voted in
favor of the election of Peter J. Losavio and Maybell H. Evans to Class C of the
Board of Directors to serve until the 2000 Annual Meeting of Shareholders and
Julie H. Edwards to Class B of the Board of Directors to serve until the 1998
Annual Meeting of Shareholders. All nominees for directors 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.
5
<PAGE>
Information Concerning Nominees And Current Directors
The following table and the paragraphs following the table set forth
information regarding the current ages, terms of office and business experience
of the nominees and current directors of the Company:
<TABLE>
<CAPTION>
Expiration Of
Current Term Of
Name Age Officer As Director
---- --- -------------------
<S> <C> <C>
Nominees For Election Of Class C Of The Board Of Directors
Peter J. Losavio 48 1997
Maybell H. Evans 58 1997
Nominee For Election Of Class B Of The Board Of Directors
Julie H. Edwards 39 1997
Continuing Members Of The Board Of Directors
Class A Directors
J. L. Evans, Sr. 58 1999
David L. Deerman 56 1999
Carl W. Schafer 61 1999
Class B Directors
Darlene E. Jones 39 1998
</TABLE>
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 Bachelor of
Science degree in chemistry from Tulane University in 1970, and his Masters
degree in chemistry from Tulane University 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 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 served as assistant bar examiner. In 1980, he was
Chairman of the Tax Committee for the Society of Louisiana Certified Public
Accountants.
Maybell H. Evans has been a member of the Company's Board of
Directors since August 1968. Ms. Evans has also served as the Company's
Secretary since its inception. Ms. Evans was born in
6
<PAGE>
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.
Julie H. Edwards has been a member of the Company's Board of
Directors since December 1997. Ms. Edwards was born in Charleston, West Virginia
in 1959 and earned her Bachelor of Science degree in geology and geophysics from
Yale University in 1980. Ms. Edwards earned her Masters degree in Business
Administration/Finance from Wharton Graduate School in 1985. Ms. Edwards was
employed with Smith Barney, Harris Upham & Co. from 1984 to 1991 and served as
Vice President of Corporate Finance with Smith Barney, Harris Upham & Co. from
1988 to 1991. Since 1991, Mrs. Edwards has been employed with Wainco Oil
Corporation as Senior Vice President of Finance and Chief Financial Officer.
Jerriel L. Evans, Sr. has been a member of the Company's Board of
Directors since August 1968. Mr. Evans is also 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 Vice Chairman of the Board
and President of ChemWay Systems, Inc., 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 his Bachelor of Business
Administration 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. 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
Lane 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
Bachelor of Arts 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 Representative Appropriations Committee (1969). He served
with Princeton University as director of the budget (1969), treasurer
(1972-1976), financial vice president, treasurer and chief financial officer
(1976-1987). He served as a principal of Rockefeller and Company,
7
<PAGE>
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., Wainco
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.
Darlene E. Jones has been a member of the Company's Board of
Directors since December 1992. Ms. Jones is also 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 Bachelor of Science degree in Biology/Chemistry.
Subsequently, Ms. Jones completed course work involving computer systems
technology. She joined the Company in 1980.
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 nominee's total.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE ELECTION OF EACH OF THE NOMINATED DIRECTORS.
Board Meeting And Committees
The Board of Directors of the Company formally met on four (4)
occasions during the fiscal year ended September 30, 1997 ("Fiscal 1997"). From
time to time during such fiscal year, the members of the Board also 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 1997. 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 J. L. Evans, Sr. (Chairman),
Darlene E. Jones, and David L. Deerman. The Audit Committee members are Carl W.
Schafer (Chairman) and Peter J. Losavio, Jr.. The Compensation Committee members
are Peter J. Losavio, Jr. (Chairman) and Carl W. Schafer.
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 Investment Committee held no meetings
during Fiscal 1997. The Audit Committee reviews, analyses, and makes
recommendations to the Board of Directors with respect to the Company's
compensation and accounting policies, controls and statements, and consults with
the Company's independent public accountants. The Audit Committee held three (3)
meetings during Fiscal 1997. 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
8
<PAGE>
Committee held two (2) meetings during Fiscal 1997. The Company does not have a
standing nominating committee or a committee, which serves nomination functions.
Executive Officers
The Company's executive officers, as well as additional information
with respect to such persons is set forth below. Information with respect to
executive officers of the Company who are also directors is set forth in
"Information Concerning Nominees and Current Directors" above.
Name Age Position
- ---- --- --------
Larry Miller 53 Vice President and Chief Financial Officer
Jerry L. Evans, Jr. 32 Vice President of Human Resources and Investor
Relations
Larry Miller, has been the Vice President and Chief Financial
Officer since joining the Company in September 1997. Mr. Miller was born in
Houston, Texas, in 1944. After graduating from the University of Houston in 1967
with his Bachelor of Business Administration degree, Mr. Miller joined the
Houston accounting firm of Deloitte & Touche (1967 - 1972) where he earned his
Certified Public Accounting certificate in 1968. From 1973 to 1995, Mr. Miller
worked for KG Men's Stores in Denver, Colorado as Executive Vice President and
Chief Financial Officer.
Jerry L. Evans, Jr. is Vice President of Human Resources & Investor
Relations and has been with the Company since 1985. Mr. Evans was born in San
Antonio, Texas in 1965 and graduated from Bay City High School in 1983. Mr.
Evans attended both Wharton Junior College and Southwest Texas State University,
where he focused on Communications and Political Science. In addition to his
Company duties, Mr. Evans has served as Chairman of the Matagorda County
Republican Party (1986 - 1994), (Bay City) City Councilman (1989 - 1991),
Chairman of the Home Rule Charter Commission (1987 - 1995), as a member of the
Houston Galveston Community Review Board (1991), and as a member of the Board of
Directors of the Texas Petroleum Marketers and Convenience Store Association
(1997). Mr. Evans was made Vice President of Human Resources and Investor
Relations in 1993.
There are no family relationships between any Directors and
executive officers of the Company except that Jerriel L. Evans, Sr. and Maybell
H. Evans are husband and wife and Jerry L. Evans, Jr. and Darlene E. Jones are
their son and daughter, respectively.
Board Of Directors Compensation
During Fiscal 1997, 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 Fiscal 1997, the Company also paid
its non-employee directors a monthly retainer fee of $500 and granted each of
them an option to purchase 2,500 shares of the Company's Common Stock at an
exercise price of $1.625 per share. These options shall expire on December 19,
2002. 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.
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
9
<PAGE>
Officer, and (ii) the other most highly compensated executive officers of the
Company at September 30, 1997 who received compensation of at least $100,000
during Fiscal 1997 (collectively, the "Named Officers") for the fiscal year
ended September 30, 1997, 1996, and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
------------------------------------ ----------------------------
Other Annual Restricted
Name and Compensation Stock All Other
Principal Position Year Salary($) Bonus($) ($)(1) Awards($) Options(#) Compensation(2)
------------------ ---- --------- -------- ------ --------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Jerriel L. Evans, Sr.
Chairman of the Board, 1997 125,093 -0- --- --- --- ---(2)(3)
President and 1996 122,252 37,934 --- 1,210 --- ---(2)(3)
Chief Executive Officer 1995 120,000 5,381 240 292 --- ---(2)(3)
David L. Deerman
President, 1997 132,278 -0- --- 830 4,000 ---(3)
ChemWay Systems and 1996 121,171 106,553 --- 1,035 12,000 ---(3)
Director 1995 121,171 28,483 --- 278 --- ---(3)
James B. Grover(4)
President, 1997 114,390 -0- --- --- --- ---
EDCO Environmental 1996 120,000 -0- --- --- --- ---
and Director 1995 124,372 91 233 --- --- ---
</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. See "Certain Relationships and Related
Transactions."
(3) The Company owns two split dollar life insurance policies whereby it
pays the premiums and Mr. J. L. Evan's estate will receive the death
benefit less the accumulated cash value, which would return to the
Company. Yearly premiums for Mr. Evans' life insurance policies was
$2,580 annually for fiscal 1997, 1996 and 1995. The Company also
paid premiums for Mr. Deerman's life insurance policy which
aggregated 3,907 annually for fiscal 1997, 1996 and 1995.
(4) Mr. Grover retired as an officer and director of the Company in July
1997.
10
<PAGE>
Option/SAR Grants In Last Fiscal Year
The Company did not grant any options or stock appreciation rights
("SARs") to the Named Officers during Fiscal 1997.
Option Exercises And Fiscal Year-end Option Values
No stock options were exercised by the Named Officers during Fiscal
1997. None of the Named Officers has held or exercised separate SARs. The
following table sets forth certain information regarding unexercised options
held by each of the Named Officers at September 30, 1997.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-money
Options at Options at
Fiscal Year-End Fiscal Year-End($)(2)
------------------------------------- ----------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
Jerriel L. Evans, Sr. -0- 35,000 -0- 10,850
David L. Deerman 20,000 12,000 -0- 3,720
James B. Grover -0- -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, 1997 was $2.625.
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
September 30, 1998, unless it terminated earlier in accordance with the
agreement. Pursuant to the agreement, Mr. Evans receives an annual base salary
of $125,093 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 ChemWay
Systems, Inc., respectively. The agreements each commenced on October 1, 1992
and expired on September 30, 1997. Mr. Deerman is currently being compensated
pursuant to the terms of the expired agreements while a new agreement is being
negotiated. Pursuant to the agreements, Mr. Deerman receives an annual base
salary aggregating $132,278. 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 ChemWay Systems, Inc., subject to the limitations 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 ChemWay Systems, Inc., during the term thereof and for a period of
three years thereafter.
An addendum to the employment agreements for Mr. Evans and Mr.
Deerman dated June 8, 1993, limits the total bonuses received from the Company
or its subsidiaries to a maximum of 12% of the Company's consolidated after tax
net earnings.
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 1997, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with.
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REPORT OF THE COMPENSATION COMMITTEE
Comprised of Peter J. Losavio, Jr. (Chairman) and Carl W. Schafer.
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 1997 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 stockholders 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 stockholders.
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: (i) a base salary, (ii) a bonus program related to the
Company's performance and individual performance during the relevant year, (iii)
a stock benefit program, and (iv) a 401(k) Plan. 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.
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 Company's
executive officers 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.
13
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Employee 401(K) Plan - The Company's 401(k) Plan is an employee
directed contribution plan. Under this plan, the company matches employee
contributions to the plan at a rate of $.50 for every dollar ($1.00) contributed
up to 5% of an employee's annual compensation. This plan benefits any Company
employee who is employed one year and is twenty-one (21) 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
executive consists of a base salary, bonus, stock options, and 401(k) shares.
The base salaries for fiscal 1997 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 1997, Mr. Evans received a base salary of $125,093, 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, experiences, and responsibilities.
Carl W. Schafer
Peter J. Losavio. Jr.
14
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases three convenience store locations from Jerriel
Evans, Sr. One ten-year lease commenced in June 1987 with monthly lease payments
of $2,500 and allows for one five-year automatic renewal 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 Company has exercised its renewal options
on each of these leases. The amounts paid under these leases for Fiscal 1997 was
$ 73,000. Future minimum lease commitments at September 30, 1997 were $ 251,000.
As of September 30, 1997, the Company rents, on a month-to-month
basis, six convenience store locations and an office facility from Jerriel
Evans, Sr. Previously, the Company rented additional locations which were sold
by Mr. Evans to unrelated parties. The total month-to-month rents paid to Mr.
Evans for these locations during Fiscal 1997 was $ 104,000. If all locations
continue to be rented under similar terms for the fiscal year ending September
30, 1998, the Company would pay approximately $104,000.
As of September 30, 1997, James Grover, a former director of the
Company, was indebted to the Company in an aggregate amount of $111,000. The
loan matured in October 1997, however, it is still outstanding and continues to
bear interest at rate of 8.5% per annum. Mr. Grover has pledged 13,567 shares of
the Company's common stock to secure repayment.
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%. Except as described above, there were no
advances outstanding at September 30, 1997.
15
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PERFORMANCE GRAPH
Set forth is a line graph comparing the percentage change in the
cumulative total stockholders' return on the Company 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, 1997. The
graph assumes that the value of the investment in the Company's Common Stock as
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. Stockholders 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)
- -------------------------------FISCAL YEAR ENDING-------------------------------
COMPANY 1993 1993 1994 1995 1996 1997
EVANS SYSTEMS INC. 100 82.22 45.56 56.11 55.56 24.51
PEER GROUP 100 111.77 99.64 97.08 114.94 124.37
BROAD MARKET 100 105.02 111.13 134.93 157.53 214.12
[GRAPH OMITTED]
(1) The companies selected to form the peer group index are:
Adams Resources & Energy, Dairy Mart Conv. Class B, E-Z Serve Corp.,
Environ Technology Corp., FFP Partners, L. P., Kinark Corp., Lomak Petroleum,
Inc., Mapco, Inc., PAR Technology, Corp., Specialty Chemical RSCS, Uni-Marts,
Inc., and Virogroup, Inc. (NEW).
Note: National Convenience Stores was bought by Diamond Shamrock and later
merged with Ultramar. Therefore, these two companies could no longer
be included in the Company's peer index group.
16
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-------------------------------
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT 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,
1998. 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 Waterhouse, LLP the Board of Directors
will consider the appointment of other certified public accounts. 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 affirmation 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 APPOINTMENT 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 shareholder's meeting must be received at the
Company's principal executive offices prior to November 5, 1998.
17
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OTHER MATTERS
So far as it is known, there is no business other than that
described 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 desecration of the persons named
therein.
The Annual Report on Form 10-K for the fiscal year ended September
30, 1997, 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
March 5, 1998
18
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
EVANS SYSTEMS, INC.
Proxy -- Annual Meeting Of Shareholders
April 6, 1998
The undersigned, a shareholder of Evans Systems, Inc., a Texas
corporation (the "Company"), does hereby constitute and appoint J.L. Evans, Sr.
and Darlene E. Jones 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 1997 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 Monday, April 6, 1998,
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 Peter J. Losavio and Maybell H. Evans to Class
C of the Board of Directors, to serve until the 2000 Annual
Meeting of Shareholders and Julie H. Edwards to Class B of the
Board of Directors, to serve until the 2000 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. 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, 1998.
FOR _____ AGAINST _____ ABSTAIN _____
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 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.
, 1998
_____________________ (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.
