As filed with the Securities and Exchange Commission on January 29, 1999
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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EVANS, SYSTEMS, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Texas
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(State or other jurisdiction of
incorporation or organization)
74-1613155
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(IRS Employer
Identification Number)
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720 Avenue F North
Bay City, Texas 77404
(409) 245-2424
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(Address, Including Zip Code, and Telephone Number of
Registrant's Principal Executive Offices)
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JERRIEL L. EVANS, SR.
President
Mailing Address: P.O. Box 2480, Bay City, Texas 77404
Physical Address: 720 Avenue F. North, Bay City, Texas 77414
Telephone number: (409) 245-2424
(Name, Address, Including Zip Code, and Telephone Number
of Agent for Service)
Copy to:
Robert H. Friedman, Esq.
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
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Approximate date of commencement of proposed sale to the
public: As soon as practicable after this Registration Statement becomes
effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. /X/
<PAGE>
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant
to Rule 434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================================
Amount Proposed Maximum Proposed Maximum
Title of Shares to to be Aggregate Price Aggregate Amount of
be Registered Registered Per Share Offering Price Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, 390,000 $15.25(1) $5,947,500.00 $1,653.41
$.01 par value
====================== ====================== ======================= ============================ =========================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended (the
"Securities Act"), based upon the per share average of high and low sales prices
of Common Stock on the Nasdaq National Market on January 28, 1999.
--------------------
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE, AND WE MAY CHANGE IT. OUR
STOCKHOLDERS MAY NOT SELL THESE SHARES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SHARES. IT IS NOT SOLICITING AN OFFER TO BUY THESE SHARES
IN ANY STATE WHERE THEY DO NOT PERMIT THE OFFER OR SALE.
SUBJECT TO COMPLETION, DATED JANUARY 29, 1999
PROSPECTUS
390,000 SHARES OF COMMON STOCK
EVANS SYSTEMS, INC.
The selling shareholders listed in this Prospectus are offering and
selling up to 390,000 shares of common stock of Evans Systems, Inc. We will not
receive any of the proceeds from such sale.
Our common stock is listed on the Nasdaq National Market under the
symbol "EVSI." The last reported bid price for the common stock on January 25,
1999 was $15.25 per share.
The selling shareholders may offer their shares of common stock through
public or private transactions in the over-the-counter markets, on or off the
United States exchanges, at prevailing market prices or at privately negotiated
prices. The selling shareholders may engage brokers or dealers who may receive
commissions or discounts from the selling shareholders. Any broker-dealer
acquiring the common stock from the selling shareholders may sell such
securities in its normal market making activities, through other brokers on a
principal or agency basis, in negotiated transactions, to its customers or
through a combination of such methods. See "Plan of Distribution." We will bear
all expenses in connection with the preparation of this Prospectus.
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This investment involves risk. See "Risk Factors" beginning at page 4.
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Neither the Securities and Exchange Commission nor any State securities
commission has determined whether this prospectus is truthful or complete. They
have not made, nor will they make, any determination as to whether anyone should
buy these securities. Any representation to the contrary is a criminal offense.
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The date of this Prospectus is , 1999.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC"). You
may read and copy any document we file at the SEC's public reference room
located at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. You
may obtain further information on the operation of the public reference room by
calling the SEC at 1- 800-SEC-0330. Our SEC filings are also available to the
public over the Internet at the SEC's website at http://www.sec.gov. You may
also request copies of such documents, upon payment of a duplicating fee, by
writing to the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Our Common
Stock is listed on the Nasdaq National Market System ("Nasdaq") under the symbol
("EVSI"). Reports and other information regarding our Nasdaq listing may be
inspected at the offices of Nasdaq at 1735 K Street, N.W., Washington, D.C.
20006 or over the Internet at Nasdaq's website at http://www.nasdaq.com.
TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION...........................................2
INCORPORATION BY REFERENCE....................................................3
ABOUT THIS PROSPECTUS.........................................................3
RISK FACTORS..................................................................4
ABOUT THE COMPANY.............................................................8
USE OF PROCEEDS...............................................................9
SELLING SHAREHOLDERS..........................................................9
TRANSFER AGENT...............................................................10
PLAN OF DISTRIBUTION.........................................................10
LEGAL MATTERS................................................................11
ADDITIONAL INFORMATION.......................................................11
<PAGE>
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information we incorporate by reference is
considered to be a part of this prospectus and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"):
(1) Our Annual Report on Form 10-K, as amended, for the year ended
September 30, 1998; and
(3) Our Application for Registration of our Common Stock on Form 8-A
dated June 18, 1993, as amended by Form 8-A/A filed July 7, 1993.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Evans Systems, Inc.
P.O. Box 2480
Bay City, Texas 77404
Attn: J.L. Evans, Jr.
(409) 245-2424
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement we filed with the
SEC. You should rely only on the information provided or incorporated by
reference in this prospectus or any related supplement. We have not authorized
anyone else to provide you with different information. The selling shareholders
will not make an offer of these shares in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
supplement is accurate as of any other date than the date on the front of this
document or any such supplement.
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<PAGE>
RISK FACTORS
The purchase of our common stock involves a high degree of risk. You
should carefully consider the following risk factors and the other information
in this Prospectus before deciding to invest in such common stock.
WORKING CAPITAL DEFICIENCY; HISTORY OF LOSSES
While our working capital was approximately $1.2 million at September
30, 1998, w e have a history of limited working capital and had a working
capital deficiency of approximately $1.7 million at September 30, 1997. In
addition, we had cash and cash equivalents of approximately $830,000 and had no
availability under our existing borrowing agreements as of September 30, 1998.
We have entered into loan agreements with financial institutions that require us
to comply with certain financial and nonfinancial covenants. As of September 30,
1998, we were in violation of certain such covenants and were not in compliance
with the borrowing base limits with one lender. We have obtained agreements from
two lenders to forbear acceleration of these loans, each of which expired on
October 31, 1998. We have received a letter of commitment from one of our
present bank lenders, pursuant to which the lender would (i) waive all previous
covenant defaults; (ii) extend the maturity of its loan balance to January 31,
2001; and (iii) assume the amounts outstanding under the other bank lender's
loans under their current terms and conditions. Under the proposed terms of this
refinancing, such bank lender would receive a first lien position on certain of
our assets and we would be required to comply with certain financial covenant
obligations, including minimum net worth, minimum earnings before interest,
taxes and depreciation, working capital ratio and fixed charge coverage ratio.
While we believe that we will be able to comply with the proposed financial
covenants during the foreseeable future, there can be no assurance that we will
be able to do so. If our efforts to secure such financing on commercially
reasonable terms are unsuccessful, there may be a materially adverse effect on
our results of operations.
Although our reported net profits were approximately $1.1 million and
$335,000 for the fiscal years ended September 30, 1996 and September 30, 1995,
respectively, we have incurred net losses of approximately $4.2 million and $4.3
million for the fiscal years ended September 30, 1998 and September 30, 1997,
respectively. We may not generate sufficient revenues to meet our expenses or to
operate profitably in the future.
SUBSTANTIAL INDEBTEDNESS
As of September 30, 1998, we had outstanding, on a consolidated basis,
approximately $12.8 million of indebtedness from continuing operations. The
potential consequences that this level of indebtedness could have on our
business and future prospects are as follows:
o Our ability to obtain any necessary financing in the future
for working capital, capital expenditures, debt service
requirements or other purposes may be limited.
o A substantial portion of our cash flow from operations, if
any, may be required to be dedicated to the payment of
principal of and interest on our indebtedness.
o We will be more highly leveraged than some of our competitors,
which may place us at a competitive disadvantage.
o Our vulnerability may be increased in the event of a downturn
in our business.
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<PAGE>
COMPETITION
We compete with other companies in petroleum marketing, convenience
store operations and environmental remediation. Each of these businesses is
highly competitive and includes competitors with significantly greater resources
and better brand-name recognition than us. We cannot be certain that we will be
able to compete successfully. The following are the competitive factors that we
believe will be significant on our various businesses:
o Gasoline profit margins have a significant impact on our
earnings. Since gasoline is essentially a commodity product,
the profit margins are often influenced by factors beyond our
control, such as volatility in the wholesale gasoline market,
and are continually influenced by competition.
o The distribution of refined petroleum products business is
extremely competitive, with narrow margins, requiring
constant, careful attention, supervision and controls.
o The environmental remediation industry is growing and will
continue to face increasing competition as more companies
enter the business.
o The high degree of competition in the convenience store
business has resulted in bankruptcies and reorganizations for
a number of companies in recent years. Key competitive factors
in convenience store operations include, among others,
location, store management, product selection, pricing, hours
of operation, store safety, cleanliness, and product
promotions and marketing.
GOVERNMENT REGULATION AND POTENTIAL LEGISLATION
The businesses we operate are subject to numerous federal, state and
local laws, regulations and ordinances. In addition, various federal, state and
local legislative and regulatory proposals are made from time to time to, among
other things, increase the minimum wage payable to employees, and increase taxes
on, and regulation of, the retail sale of certain products, such as tobacco
products and alcoholic beverages. Changes to these laws, regulations or
ordinances may adversely affect our performance by increasing our costs or
affecting our sales of certain products.
ENVIRONMENTAL ISSUES
Our operations are subject to a variety of United States, federal,
state and local laws, rules and regulations governing the storage,
transportation, manufacture, use, discharge, release and disposal of product and
contaminants into the environment or otherwise relating to the protecting of the
environment. These regulations include, among others, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the
Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), the Oil
Pollution Act of 1990 ("OPA"), the Clean Air Act of 1970, as amended (the "Clean
Air Act"), the Clean Water Act of 1972, as amended (the "Clean Water Act"), the
Toxic Substances Control Act of 1976 ("TSCA"), the Emergency Planning and
Community Right-to-Know Act ("EPCRA"), the Occupational Safety and Health
Administration Act ("OSHA"), the Texas Clean Air Act, the Louisiana
Environmental Quality Act, Louisiana Air Pollution Control Regulations, the
Texas Solid Waste Disposal Act ("TSWDA"), the Texas Water Code, and the Texas
Oil Spill Prevention and Response Act of 1991 ("OSPRA"). We incur ongoing costs
to comply with these federal, state and local environmental laws and
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<PAGE>
regulations, particularly the comprehensive regulatory programs governing
underground storage tanks used in our gasoline operations. Our failure to comply
with any applicable environmental regulations, whether or not intentional, can
give rise to fines, penalties and sanctions, including criminal charges against
employees and management, and may under certain circumstances require the
closure of such non-complying facilities.
GOVERNMENT MANDATED DEMAND FOR ENVIRONMENTAL SERVICES; LOSS OF REMEDIATION
FUNDING
The demand for our remediation services, including the installation and
removal of underground storage tanks is largely mandated by environmental
legislation, administrative rules and the decisions resulting from these laws.
Federal and State regulatory programs have established certain improvements
necessary for continued use of motor fueling facilities including a mandate that
all existing underground storage tanks be upgraded or replaced by December 22,
1998 to meet certain environmental protection requirements. Many compliance
items contain deadlines for adherence to established regulations. Any action
which postpones or terminates these deadlines may adversely affect the
anticipated volume of our business. In addition, much of our environmental
remediation work is financed with funding provided in Texas by the Texas Water
Commission through gasoline fees. The loss of remediation funds available to
tank owners/operators would also significantly affect the volume of anticipated
business for environmental work.
POTENTIAL HAZARDS
We are subject to all of the normal risks in our industry, including
potential for fires and explosions. These events could result in personal
injuries and could destroy property. These products, almost all liquids, also
have the potential to impose environmental damage if released. Our operations
are principally located along the Texas Gulf coast which is subject to natural
disasters such as hurricanes and tornadoes. The movement of a major storm
through this area could disrupt continued operations and significantly affect
our ability to generate revenues. A significant loss that is not fully covered
by insurance could have a material adverse effect on our financial position.
CONTROL BY MANAGEMENT
As of December 31, 1998, our directors and officers beneficially owned
approximately 44.4% of outstanding shares of the Common Stock, including shares
issuable upon exercise of presently exercisable warrants and options. In
addition, J.L. Evans, Sr. had the power to vote approximately 37.3% of our
outstanding shares. Accordingly, our management team in general and J.L. Evans
in particular, can influence the affairs of the company, including the election
of directors and other matters requiring shareholder approval.
DEPENDENCE ON KEY PERSONNEL
Our future success depends in large part on the continued service of
our key personnel. In particular, the loss of the services of J.L. Evans, Sr.,
Chairman of the Board, President and Chief Executive Officer, Richard Dix,
Executive Vice President and/or Richard Goeggel, Vice President and Chief
Financial Officer could have a material adverse effect on our operations. We do
maintain a key-man life insurance policy on the life of Mr. Evans in the amount
of $2.0 million with the company named as the sole beneficiary. We have
employment agreements with each of Messrs. Evans, Dix and Goeggel, which expire
in September 2001, April 2000 and June 2000, respectively. Our future success
and growth also depends on our ability to continue to attract, motivate and
retain highly qualified employees, including those with the expertise
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<PAGE>
necessary to operate our businesses. There can be no assurance that we will be
able to attract, motivate and retain such persons.
VOLATILITY OF COMMON STOCK
The market price of our Common Stock has experienced significant
volatility, with per share bids ranging from a low of approximately $.88 to a
high of approximately $16.00 over the twelve month period from January 1, 1998
to December 31, 1998. Announcements by us or our competitors, our financial
performance, developments relating to governmental regulation, general market
conditions relating to petroleum distribution and convenience store operations
or other factors that we can not predict or control may have a significant
effect on our business and on the market price of our securities.
IMPACT OF YEAR 2000 ISSUE
As with many companies, we are dependent upon complex computer systems
for many phases of our operations, including sales and distribution. Many
existing computer programs use only two digits to identify a year in the date
field. These programs were designed and developed without considering the impact
of the upcoming change in the century. If not corrected, many computer
applications could fail or create erroneous results by or at the year 2000 (that
is, read the year 2000 as "1900"). We have commenced a program intended to
timely identify, mitigate and/or pursue our compliance and the compliance of our
suppliers, creditors and financial service organizations. It is not possible, at
present to quantify the overall cost of this work, or the financial effect of
the year 2000 issue on us if it is not timely resolved. Although we presently
believe that the cost of addressing this issue will not have a material effect
on our current financial position, we cannot presently assure this.
RIGHTS OF COMMON STOCK SUBORDINATE TO PREFERRED STOCK; POSSIBLE ANTI-TAKEOVER
EFFECTS
Our Articles of Incorporation authorize the issuance of a maximum of
1,500,000 shares of preferred stock. There are no shares of preferred stock
currently issued and outstanding. However, if shares of preferred stock are
issued in the future, the terms of a series of preferred stock may be set by our
Board of Directors without approval by our shareholders. Such terms could
include, among others, preferences as to dividends, distributions on liquidation
and enhanced voting rights. The rights of the holders of the our Common Stock
will be subject to, and may be adversely affected by, the rights of the holders
of any preferred stock that may be issued in the future. The ability of our
Board of Directors to issue preferred stock could have the effect of delaying,
deferring or preventing a change of control or the removal of existing
management. As a result, it could prevent our shareholders from being paid a
premium over the market value for their shares of Common Stock.
FUTURE SALES OF SHARES COULD ADVERSELY EFFECT MARKET
The shares of Common Stock included in this prospectus will be freely
tradable without restriction under the Securities Act upon resale by the selling
shareholders. The selling shareholders are not restricted as to the price or
prices at which they may sell their shares or as to the number of shares that
they may sell at any time. We are unable to predict the effect that sales of
Common Stock made under Rule 144 or upon the registration of Common Stock may
have on the then prevailing market price of the Common Stock. Nevertheless,
sales of substantial amounts of our shares in the public market, or the
perception that such sales could occur, could materially and adversely effect
the market price of our Common Stock and could impair our ability to raise
capital through an offering of equity securities in the future.
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<PAGE>
NO CASH DIVIDENDS
We have not paid cash dividends on our Common Stock since 1993. We
currently intend to retain earnings, if any, for use in the business and do not
anticipate paying any cash dividends to our shareholders in the foreseeable
future. Additionally, the loan agreements with our lenders include restrictions
prohibiting us from paying dividends.
ABOUT THE COMPANY
Evans Systems, Inc. is a vertically integrated company engaged in the
following businesses:
o petroleum marketing;
o convenience store operations; and
o environmental remediation services.
Our petroleum marketing segment currently sells motor fuels,
lubricants, specialty petroleum products, tires and certain automotive
accessories through 157 retail outlets primarily on the Texas Gulf Coast and in
Southwestern Louisiana. We have agreements to distribute products of several
major petroleum companies. Our petroleum marketing segment also owns a petroleum
terminal and several bulk plants through which we supply motor fuel to other
wholesalers and retailers
Our convenience store operations currently includes 26 stores
throughout Southeast Texas and Louisiana. The stores merchandise a variety of
food and non-food items and most of our stores also sell petroleum on a
self-serve basis. Convenience stores are a retail service-orientated industry
which emphasizes location and convenience above price and other competitive
concerns.
We also provide environmental engineering, consulting and remediation
services through our subsidiary, EDCO Environmental Systems, Inc. These services
include the removal of leaking and outdated underground storage tanks, related
construction, the provision of soil and groundwater remediation services, the
sale and installation of underground storage tanks, fuel dispensing equipment
and automatic tank gauge systems.
In February 1998 we suspended the operations of our ChemWay subsidiary
to focus on our core lines of business. Prior to such time, ChemWay was engaged
in researching, developing, producing and marketing a line of automotive
after-market chemical products. On December 30, 1998, we completed the sale of
ChemWay to Affiliated Resources Corporation.
Our executive offices are located at 720 Avenue F North, Bay City,
Texas 77414 and our telephone number is (409) 245-2424. We were incorporated in
1968.
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<PAGE>
USE OF PROCEEDS
The shares of Common Stock offered hereby are being registered for the
account of the selling shareholders. All net proceeds from the sale of the
Common Stock will go to the shareholders who offer and sell their shares.
Accordingly, we will not receive any part of the proceeds from such sales.
SELLING SHAREHOLDERS
The selling shareholders have informed us that the name, address,
maximum number of shares of Common Stock to be sold and total number of shares
of Common Stock which each selling shareholder owns are as set forth in the
following table. The selling shareholders may sell all or part of their shares
of Common Stock registered pursuant to this Prospectus. Except as set forth
below, none of the selling shareholders has had a material relationship with us
during the past three years.
<TABLE>
<CAPTION>
Maximum
Number of Shares of Number of
Common Stock Shares to be
Beneficially Owned Offered for Shares Beneficially Owned
Name and Address(1) Prior to Offering Resale After Offering(2)
- --------------------------------- ------------------------- ------------- ------------------------------
Number Percent
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<S> <C> <C> <C> <C>
Southhills Capital Corp. 175,000 175,000 0 0
8221 Brecksville Rd., Suite 207
Brecksville, OH 44141
David Speaker 175,000 175,000 0 0
The Bridge Building, Suite 402
Rocky River, OH 44116
Dresner Capital Resources, Inc. 40,000 40,000 0 0
29 South LaSalle Street
Suite 310
Chicago, IL 60603
</TABLE>
(1) The calculation of shares of Common Stock beneficially owned was determined
in accordance with Rule 13d-3 of the Exchange Act.
(2) Assumes that all Common Stock offered by the selling shareholders is sold.
Our registration of the shares included in this prospectus does not
necessarily mean that the selling shareholders will opt to sell any of the
shares offered hereby. The shares covered by this prospectus may be sold from
time to time by the selling shareholders so long as this prospectus remains in
effect; provided, however, that the selling shareholders are first required to
contact us to confirm that this prospectus is in effect.
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<PAGE>
TRANSFER AGENT
The transfer agent and registrar for our Common Stock is Continental
Stock Transfer & Trust Company, New York, New York.
PLAN OF DISTRIBUTION
This offering is self-underwritten; neither we nor the selling
shareholders have employed an underwriter for the sale of Common Stock by the
selling shareholders. The selling shareholders will bear all expenses associated
with the sale of the Common Stock. The securities covered by this prospectus may
be sold by or for the account of the selling shareholders pursuant to this
prospectus or pursuant to Rule 144 under the Securities Act.
The selling shareholders may offer their shares of common stock
directly or through pledgees, donees, transferees or other successors in
interest at various times in one or more of the following transactions:
o On any stock exchange on which the shares of Common Stock may
be listed at the time of sale;
o In negotiated transactions;
o In the over-the-counter market; or
o In a combination of any of the above transactions.
The selling shareholders may offer their shares of Common Stock at any
of the following prices:
o Fixed prices which may be changed;
o Market prices prevailing at the time of sale;
o Prices related to such prevailing market prices; or
o At negotiated prices
If applicable law requires, we will add a supplement to this prospectus
to disclose the specific shares to be sold, the names of the selling
shareholders, the public offering prices of the shares to be sold, the names of
any agent, dealer or underwriter employed by the selling shareholders in
connection with such sale, and any applicable commission or discount with
respect to a particular offer.
The selling shareholders may effect such transactions by selling shares
to or through broker-dealers, and all such broker-dealers may receive
compensation in the form of discounts, concessions, or commissions from the
selling shareholders and/or the purchasers of shares of Common Stock for whom
such broker-dealers may act as agents or to whom they sell as principals, or
both (which compensation as to a particular broker-dealer might be in excess of
customary commissions).
Any broker-dealer acquiring Common Stock from the selling shareholders
may sell the shares either directly, in its normal market-making activities,
through or to other brokers on a principal or agency basis or to its customers.
Any such sales may be at prices then prevailing on the Nasdaq National Market or
at prices related to such prevailing market prices or at negotiated prices to
its customers or a combination of such methods. The selling shareholders and any
broker-dealers that act in connection with the sale of the Common Stock
hereunder might be deemed to be "underwriters" within the meaning of Section
2(11) of the
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Securities Act; any commissions received by them and any profit on the resale of
shares as principal might be deemed to be underwriting discounts and commissions
under the Securities Act. Any such commissions, as well as other expenses
incurred by the selling shareholders and applicable transfer taxes, are payable
by the selling shareholders.
We have not registered or qualified offers and sales of shares of the
Common Stock under the laws of any country, other than the United States. To
comply with certain states' securities laws, if applicable, the selling
shareholders will offer and sell their shares of Common Stock in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain states the selling shareholders may not offer or sell
shares of Common Stock unless we have registered or qualified such shares for
sale in such states or we have complied with an available exemption from
registration or qualification.
Any broker-dealer acquiring Common Stock offered hereby may sell such
securities either directly, in its normal market-making activities, through or
to other brokers on a principal or agency basis or to its customers. Any such
sales may be at prices then prevailing on Nasdaq, at prices related to such
prevailing market prices or at negotiated prices to its customers or a
combination of such methods. In addition and without limiting the foregoing, the
selling shareholders will be subject to applicable provisions of Regulation M
under the Exchange Act, which may limit the timing of the purchases and sales of
shares of Common Stock by the selling shareholders.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the shares of
Common Stock offered hereby have been passed upon by Olshan Grundman Frome
Rosenzweig & Wolosky LLP, 505 Park Avenue, New York, New York 10022.
ADDITIONAL INFORMATION
We have filed with the Commission a Registration Statement on Form S-3
under the Securities Act with respect to the Shares offered hereby. For further
information with respect to the Registrant and the securities offered hereby,
reference is made to the Registration Statement. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance, reference is made to the copy of
such contract or document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered will be paid by the Registrant, a protion of which
will be reimbursed by certain selling shareholders in accordance with the terms
of the purchase agreement dated as of June 1, 1998. Such expenses are as
follows:
SEC Registration Fee..................................... $ 1,653.41
Nasdaq listing expenses.................................. 7,500.00
Accounting Fees and Expenses............................. 5,000.00
Legal Fees and Expenses.................................. 10,000.00
Miscellaneous Expenses................................... 846.59
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Total.................................................... $25,000.00
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Ten of the Registrant's Articles of Incorporation eliminates
personal liability of the Registrant's directors to the Registrant or its
shareholders for monetary damages or any action taken or omitted to be taken in
the performance of his duties to the fullest extent permitted under Texas law.
Section 2.02-1 of the Texas Business Corporation Act provides as
follows:
B. A corporation may indemnify a person who was, is, or is threatened
to be made a named defendant or respondent in a proceeding because the person is
or was a director only if it is determined in accordance with Section F of this
article that the person:
(1) conducted himself in good faith;
(2) reasonably believed:
(a) in the case of conduct in his official
capacity as a director of the corporation,
that his conduct was in the corporation's
best interests; and
(b) in all other cases, that his conduct was at
least not opposed to the corporation's best
interests; and
(3) in the case of any criminal proceeding, had no
reasonable cause to believe his conduct was unlawful.
C. Except to the extent permitted by section E of this article, a
director may not be indemnified under Section B of this article in respect of a
proceeding:
(1) in which the person is found liable on the basis that
personal benefit was improperly received by him,
whether or not the benefit resulted from an action
taken in the person's official capacity; or
(2) in which the person is found liable to the corporation.
II-1
<PAGE>
D. The termination of a proceeding by judgment, order, settlement, or
conviction, or on a plea of nolo contendere or its equivalent is not of itself
determinative that the person did not meet the requirements set forth in Section
B of this article. A person shall be deemed to have been found liable in respect
of any claim, issue or matter only after the person shall have been so adjudged
by a court of competent jurisdiction after exhaustion of all appeals therefrom.
E. A person may be indemnified under Section B of this article against
judgments, penalties (including excise and similar taxes), fines, settlements,
and reasonable expenses actually incurred by the person in connection with the
proceeding, but if the person is found liable to the corporation or is found
liable on the basis that personal benefit was improperly received by the person,
the indemnification (1) is limited to reasonable expenses actually incurred by
the person in connection with the proceeding and (2) shall not be made in
respect of any proceeding in which the person shall have been found liable for
willful or intentional misconduct in the performance of his duty to the
corporation.
F. A determination of indemnification under Section B of this article
must be made:
(1) by a majority vote of a quorum consisting of directors
who at the time of the vote are not named defendants or
respondents in the proceeding;
(2) if such a quorum cannot be obtained, by a majority vote
of a committee of the board of directors, designated to
act in the matter by a majority vote of all directors,
consisting solely of two or more directors who at the
time of the vote are not named defendants or
respondents in the proceeding;
(3) by special legal counsel selected by the board of
directors or a committee of the board by vote as set
forth in Subsection (1) or (2) of this section, or, if
such a quorum cannot be obtained and such a committee
cannot be established, by a majority vote of all
directors; or
(4) by the shareholders in a vote that excludes the shares
held by directors who are named defendants or
respondents in the proceeding.
G. Authorization of indemnification and determination as to
reasonableness of expenses must be made in the same manner as the determination
that indemnification is permissible, except that if the determination that
indemnification is permissible is made by special legal counsel, authorization
of indemnification and determination as to reasonableness of expenses must be
made in the manner specified by Subsection (3) of Section F of this article for
the selection of special legal counsel. A provision contained in the articles of
incorporation, the bylaws, a resolution of shareholders or directors, or an
agreement that makes mandatory the indemnification permitted under Section B of
this article shall be deemed to constitute authorization of indemnification in
the manner required by this section even though such provision may not have been
adopted or authorized in the same manner as the determination that
indemnification is permissible.
H. A corporation shall indemnify a director against reasonable expenses
incurred by him in connection with a proceeding in which he is a named defendant
or respondent because he is or was a director if he has been wholly successful,
on the merits or otherwise, in the defense of the proceeding.
I. If, in a suit for the indemnification required by Section H of this
article, a court of competent jurisdiction determines that the director is
entitled to indemnification under that section, the court shall order
indemnification and shall award to the director the expenses incurred in
securing the indemnification.
II-2
<PAGE>
J. If, upon application of a director, a court of competent
jurisdiction determines, after giving any notice the court considers necessary,
that the director is fairly and reasonably entitled to indemnification in view
of all the relevant circumstances, whether or not he has met the requirements
set forth in Section B of this article or has been found liable in the
circumstances described by Section C of this article, the court may order the
indemnification that the court determines is proper and equitable; but if the
person is found liable to the corporation or is found liable on the basis that
personal benefit was improperly received by the person, the indemnification
shall be limited to reasonable expenses actually incurred by the person in
connection with the proceeding.
K. Reasonable expenses incurred by a director who was, is, or is
threatened to be made a named defendant or respondent in a proceeding may be
paid or reimbursed by the corporation, in advance of the final disposition of
the proceeding and without the determination specified in Section F of this
article or the authorization or determination specified in Section G of this
article, after the corporation receives a written affirmation by the director of
his good faith belief that he has met the standard of conduct necessary for
indemnification under this article and a written undertaking by or on behalf of
the director to repay the amount paid or reimbursed if it is ultimately
determined that he has not met that standard or if it is ultimately determined
that indemnification of the director against expenses incurred by him in
connection with that proceeding is prohibited by Section E of this article. A
provision contained in the articles of incorporation, the bylaws, a resolution
of shareholders or directors, or an agreement that makes mandatory the payment
or reimbursement permitted under this section shall be deemed to constitute
authorization of that payment or reimbursement.
L. The written undertaking required by Section K of this article must
be an unlimited general obligation of the director but need not be secured. It
may be accepted without reference to financial ability to make repayment.
M. A provision for a corporation to indemnify or to advance expenses to
a director who was, is, or is threatened to be made a named defendant or
respondent in a proceeding, whether contained in the articles of incorporation,
the bylaws, a resolution of shareholders or directors, an agreement, or
otherwise, except in accordance with Section R of this article, is valid only to
the extent it is consistent with this article as limited by the articles of
incorporation, if such a limitation exists.
N. Notwithstanding any other provision of this article, a corporation
may pay or reimburse expenses incurred by a director in connection with his
appearance as a witness or other participation in a proceeding at a time when he
is not a named defendant or respondent in the proceeding.
O. An officer of the corporation shall be indemnified as, and to the
same extent, provided by Sections H, I, and J of this article for a director and
is entitled to seek indemnification under those sections to the same extent as a
director. A corporation may indemnify and advance expenses to an officer,
employee, or agent of the corporation to the same extent that it may indemnify
and advance expenses to directors under this article.
P. A corporation may indemnify and advance expenses to persons who are
not or were not officers, employees, or agents of the corporation but who are or
were serving at the request of the corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, employee benefit plan, other
enterprise, or other entity to the same extent that it may indemnify and advance
expenses to directors under this article.
II-3
<PAGE>
Q. A corporation may indemnify and advance expenses to an officer,
employee, agent, or person identified in Section P of this article and who is
not a director to such further extent, consistent with law, as may be provided
by its articles of incorporation, bylaws, general or specific action of its
board of directors, or contract or as permitted or required by common law.
R. A corporation may purchase and maintain insurance or another
arrangement on behalf of any person who is or was a director, officer, employee,
or agent of the corporation or who is or was serving at the request of the
corporation as a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or any other enterprise, against any liability asserted against
him and incurred by him in such a capacity or arising out of his status as such
a person, whether or not the corporation would have the power to indemnify him
against that liability under this article. If the insurance or other arrangement
is with a person or entity that is not regularly engaged in the business of
providing insurance coverage, the insurance or arrangement may provide for
payment of a liability with respect to which the corporation would not have the
power to indemnify the person only if coverage for the additional liability has
been approved by the shareholders of the corporation. Without limiting the power
of the corporation to procure or maintain any kind of insurance or other
arrangement, a corporation may, for the benefit of persons indemnified by the
corporation, (1) create a trust fund; (2) establish any form of self-insurance;
(3) secure its indemnity obligation by grant of a security interest or other
lien on the assets of the corporation; or (4) establish a letter of credit,
guaranty, or surety arrangement. The insurance or other arrangement may be
procured, maintained, or established within the corporation or with any insurer
or other person deemed appropriate by the board of directors regardless of
whether all or part of the stock or other securities of the insurer or other
person are owned in whole or part by the corporation. In the absence of fraud,
the judgment of the board of directors as to the terms and conditions of the
insurance or other arrangement and the identity of the insurer or other person
participating in an arrangement shall be conclusive and the insurance or
arrangement to liability, on any ground, regardless of whether directors
participating in the approval are beneficiaries of the insurance or arrangement.
S. Any indemnification of or advance of expenses to a director in
accordance with this article shall be reported in writing to the shareholders
with or before the notice or waiver of notice of the next shareholders' meeting
or with or before the next submission to shareholders of a consent to action
without a meeting pursuant to Section A, Article 9.10, of this Act and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.
T. For purposes of this article, the corporation is deemed to have
requested a director to serve as a trustee, employee, agent, or similar
functionary of an employee benefit plan whenever the performance by him of his
duties to the corporation also imposes duties on or otherwise involves services
by him to the plan or participants or beneficiaries of the plan. Excise taxes
assessed on a director with respect to an employee benefit plan pursuant to
applicable law are deemed fines. Action taken or omitted by a director with
respect to an employee benefit plan in the performance of his duties for a
purpose reasonably believed by him to be in the interest of the participants and
beneficiaries of the plan is deemed to be for a purpose which is not opposed to
the best interests of the corporation.
U. The articles of incorporation of a corporation may restrict the
circumstances under which the corporation is required or permitted to indemnify
a person under Section H, I, J, O, P, or Q of this article.
II-4
<PAGE>
See Item 17 below for information regarding the position of the
Commission with respect to the effect of any indemnification for liabilities
arising under the Securities Act of 1933, as amended. The Registrant does not
maintain a directors and officers insurance policy.
ITEM 16. EXHIBITS.
EXHIBIT INDEX
EXHIBIT
5 Opinion of Olshan Grundman Frome Rosenzweig & Wolosky LLP with
respect to the securities registered hereunder.
23(a) Consent of PricewaterhouseCoopers LLP.
23(b) Consent of Olshan Grundman Frome Rosenzweig & Wolosky LLP
(included within Exhibit 5).
24(a) Powers of Attorney (included on the Signature page of
this Registration Statement).
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
a) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
b) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against each such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-6
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form S-3 and authorizes this Registration
Statement to be signed on its behalf by the undersigned, the City of Bay City,
State of Texas, on the 11th day of January 29, 1999.
EVANS SYSTEMS, INC.
(Registrant)
By: /s/ Jerriel L. Evans
----------------------------------------
Jerriel L. Evans, Chairman of the Board,
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of J.L. EVANS SR. and RICHARD DIX
his true and lawful attorneys-in-fact and agent, with full power of substitution
and resubstitution, for and in his or her name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite necessary to be done in and about the premises, as
fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent, or his
or her substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Jerriel L. Evans Chairman of the Board, President and January 29, 1999
- ------------------------- Chief Executive Officer (principal
Jerriel L. Evans, Sr. executive officer)
/s/ Richard Goeggel Chief Financial Officer (principal financial January 29, 1999
- ------------------------- and accounting officer)
Richard Goeggel
/s/ Maybell H. Evans Director January 29, 1999
- -------------------------
Maybell H. Evans
/s/ Darlene E. Jones Director January 29, 1999
- -------------------------
Darlene E. Jones
/s/ Charles N. Way Director January 29, 1999
- -------------------------
Charles N. Way
/s/ Carl W. Schafer Director January 29, 1999
- -------------------------
Carl W. Schafer
/s/ David L. Deerman Director January 29, 1999
- -------------------------
David L. Deerman
/s/ Julie H. Edwards Director January 29, 1999
- -------------------------
Julie H. Edwards
/s/ Peter J. Losavio, Jr. Director January 29, 1999
- -------------------------
Peter J. Losavio, Jr.
</TABLE>
II-7
Olshan Grundman Frome Rosenzweig & Wolosky LLP
505 Park Avenue
New York, New York 10022
January 29, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: Evans Systems, Inc.-
Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
Reference is made to the Registration Statement on Form S-3
dated the date hereof (the "Registration Statement"), filed with the Securities
and Exchange Commission by Evans Systems, Inc., a Texas corporation (the
"Company"). The Registration Statement relates to an aggregate of 390,000 shares
(the "Shares") of common stock, par value $.01 per share (the "Common Stock"),
which were previously issued by the Company to the selling shareholders named in
the Registration Statement.
We advise you that we have examined, among other things,
originals or copies certified or otherwise identified to our satisfaction of the
Certificate of Incorporation and By-laws of the Company, minutes of meetings of
the Board of Directors and stockholders of the Company and such other documents,
instruments and certificates of officers and representatives of the Company and
public officials, and we have made such examination of the law, as we have
deemed appropriate as the basis for the opinion hereinafter expressed. In making
such examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
to original documents of documents submitted to us as certified or photostatic
copies.
Based upon the foregoing, we are of the opinion that the
Shares have been duly authorized and are validly issued, fully paid and
non-assessable.
<PAGE>
Securities and Exchange Commission
January 29, 1999
Page -2-
We hereby consent to use of this opinion in the Registration
Statement and Prospectus, and to the use of our name in the Prospectus under the
caption "Legal Matters".
Very truly yours,
/s/ Olshan Grundman Frome Rosenzweig & Wolosky LLP
-----------------------------------------
OLSHAN GRUNDMAN FROME ROSENZWEIG &
WOLOSKY LLP
EXHIBIT 23(a)
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
January 13, 1999 appearing on page F-2 of Evans Systems, Inc.'s Annual Report on
Form 10-K for the year ended September 30, 1998.
/s/ PricewaterhouseCoopers LLP
- ------------------------------------
PricewaterhouseCoopers LLP
Houston, Texas
January 28, 1999
