<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(D)(1) of the
Securities Exchange Act of 1934
and
Schedule 13D
(Amendment No.)*
...............................................................................
Mobley Environmental Services, Inc.
(Name of Subject Company [Issuer])
...............................................................................
GAP Capital, L.L.C.
Roger J. Pipes
(Bidders)
...............................................................................
Class A Common Stock, $.01 Par Value Per Share
(Title of Class of Securities)
...............................................................................
607419-10-8
(CUSIP Number of Class of Securities)
...............................................................................
Copy To:
Roger J. Pipes Jeff Sone, Esquire
GAP Capital, L.L.C. Jackson Walker L.L.P.
6310 Lemmon Avenue, Suite 202 901 Main Street, Suite 6000
Dallas, Texas 75209 Dallas, Texas 75202-3797
(214) 350-9070 (214) 953-6000
(Name, Address and Telephone Numbers of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
...............................................................................
June 11, 1999
(Date of Event which Requires Filing of Schedule 13D)
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
Transaction Valuation* Amount of Filing Fee
<S> <C>
$851,930 $171
</TABLE>
* For the purpose of calculating the fee only, this amount assumes the
purchase of 4,259,650 shares of Class A Common Stock of Mobley Environmental
Services, Inc. at $.20 per share.
[ ] Check Box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
<TABLE>
<S> <C>
Amount Previously Paid: ....................Not Applicable
Form or Registration No.: ..................Not Applicable
Filing Party: ..........................Not Applicable
Dated Filed: ..........................Not Applicable
</TABLE>
<PAGE>
1) Names of Reporting Persons, I.R.S. Identification Nos. Of Above Persons
(entities only):
GAP Capital, L.L.C.
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2) Check the Appropriate Box if a Member of a Group (See Instructions)
(A) [X]
(B) [ ]
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3) SEC Use Only..............................................................
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4) Sources of Funds (See Instructions): WC
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5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) .............................................................
- -------------------------------------------------------------------------------
6) Citizenship of Place of Organization: Texas.
- -------------------------------------------------------------------------------
7) Aggregate Amount Beneficially Owned by Each Reporting Person: 0
- -------------------------------------------------------------------------------
8) Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See
Instructions) ............................................................
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9) Percent of Class Represented by Amount in Row (7): 0%
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10) Type of Reporting Person (See Instructions) OO
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<PAGE>
1) Names of Reporting Persons, I.R.S. Identification Nos. Of Above Persons
(entities only): Roger J. Pipes, individually and as beneficiary of R.
J. Pipes Pension and Profit Sharing Plan and R. J. Pipes Money Purchase
Pension Plan
- -------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions)
(A) [X]
(B) [ ]
- -------------------------------------------------------------------------------
3) SEC Use Only..............................................................
- -------------------------------------------------------------------------------
4) Sources of Funds (See Instructions): AF
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5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) .............................................................
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6) Citizenship of Place of Organization: United States
- -------------------------------------------------------------------------------
7) Aggregate Amount Beneficially Owned by Each Reporting Person: 24,593
- -------------------------------------------------------------------------------
8) Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See
Instructions) ............................................................
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9) Percent of Class Represented by Amount in Row (7): .58%
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10) Type of Reporting Person (See Instructions) IN
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<PAGE>
1) Names of Reporting Persons, I.R.S. Identification Nos. Of Above Persons
(entities only): James A. Mobley, individually and as sole trustee for
the Allison Mobley 1995 Trust, Melissa Mobley 1995 Trust and the James
A. Mobley 1989 Subchapter S Trust
- -------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions)
(A) [X]
(B) [ ]
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3) SEC Use Only..............................................................
- -------------------------------------------------------------------------------
4) Sources of Funds (See Instructions): N/A
- -------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) .............................................................
- -------------------------------------------------------------------------------
6) Citizenship of Place of Organization: United States
- -------------------------------------------------------------------------------
7) Aggregate Amount Beneficially Owned by Each Reporting Person: 3,279,508
- -------------------------------------------------------------------------------
8) Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See
Instructions) ............................................................
- -------------------------------------------------------------------------------
9) Percent of Class Represented by Amount in Row (7): 43.5%
- -------------------------------------------------------------------------------
10) Type of Reporting Person (See Instructions) IN
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<PAGE>
1) Names of Reporting Persons, I.R.S. Identification Nos. Of Above Persons
(entities only): H. David Hughes, as co-trustee for the John Mobley
Family Trust Three and the John Mobley Family Trust Two
- -------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions)
(A) [X]
(B) [ ]
- -------------------------------------------------------------------------------
3) SEC Use Only..............................................................
- -------------------------------------------------------------------------------
4) Sources of Funds (See Instructions): N/A
- -------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) .............................................................
- -------------------------------------------------------------------------------
6) Citizenship of Place of Organization: United States
- -------------------------------------------------------------------------------
7) Aggregate Amount Beneficially Owned by Each Reporting Person: 3,279,508
- -------------------------------------------------------------------------------
8) Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See
Instructions) ............................................................
- -------------------------------------------------------------------------------
9) Percent of Class Represented by Amount in Row (7): 43.5%
- -------------------------------------------------------------------------------
10) Type of Reporting Person (See Instructions) IN
- -------------------------------------------------------------------------------
<PAGE>
1) Names of Reporting Persons, I.R.S. Identification Nos. Of Above Persons
(entities only): Lois Ann Mobley, as co-trustee for the John Mobley
Family Trust Three
- -------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions)
(A) [X]
(B) [ ]
- -------------------------------------------------------------------------------
3) SEC Use Only..............................................................
- -------------------------------------------------------------------------------
4) Sources of Funds (See Instructions): N/A
- -------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) .............................................................
- -------------------------------------------------------------------------------
6) Citizenship of Place of Organization: United States
- -------------------------------------------------------------------------------
7) Aggregate Amount Beneficially Owned by Each Reporting Person: 3,279,508
- -------------------------------------------------------------------------------
8) Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See
Instructions) ............................................................
- -------------------------------------------------------------------------------
9) Percent of Class Represented by Amount in Row (7): 43.5%
- -------------------------------------------------------------------------------
10) Type of Reporting Person (See Instructions) IN
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<PAGE>
1) Names of Reporting Persons, I.R.S. Identification Nos. Of Above Persons
(entities only): T. M. Mobley, individually and as co-trustee for the
John Mobley Family Trust Two
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2) Check the Appropriate Box if a Member of a Group (See Instructions)
(A) [X]
(B) [ ]
- -------------------------------------------------------------------------------
3) SEC Use Only..............................................................
- -------------------------------------------------------------------------------
4) Sources of Funds (See Instructions): N/A
- -------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) .............................................................
- -------------------------------------------------------------------------------
6) Citizenship of Place of Organization: United States
- -------------------------------------------------------------------------------
7) Aggregate Amount Beneficially Owned by Each Reporting Person: 3,279,508
- -------------------------------------------------------------------------------
8) Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See
Instructions) ............................................................
- -------------------------------------------------------------------------------
9) Percent of Class Represented by Amount in Row (7): 43.5%
- -------------------------------------------------------------------------------
10) Type of Reporting Person (See Instructions) IN
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<PAGE>
1) Names of Reporting Persons, I.R.S. Identification Nos. Of Above Persons
(entities only): John Mobley, as sole general partner of Pilot
Investments, Ltd.
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2) Check the Appropriate Box if a Member of a Group (See Instructions)
(A) [X]
(B) [ ]
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3) SEC Use Only..............................................................
- -------------------------------------------------------------------------------
4) Sources of Funds (See Instructions): N/A
- -------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) .............................................................
- -------------------------------------------------------------------------------
6) Citizenship of Place of Organization: United States
- -------------------------------------------------------------------------------
7) Aggregate Amount Beneficially Owned by Each Reporting Person: 3,279,508
- -------------------------------------------------------------------------------
8) Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See
Instructions) ............................................................
- -------------------------------------------------------------------------------
9) Percent of Class Represented by Amount in Row (7): 43.5%
- -------------------------------------------------------------------------------
10) Type of Reporting Person (See Instructions) IN
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<PAGE>
1) Names of Reporting Persons, I.R.S. Identification Nos. Of Above Persons
(entities only): Steven Mobley, as sole trustee for the Andrew Mobley
1995 Trust.
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2) Check the Appropriate Box if a Member of a Group (See Instructions)
(A) [X]
(B) [ ]
- -------------------------------------------------------------------------------
3) SEC Use Only..............................................................
- -------------------------------------------------------------------------------
4) Sources of Funds (See Instructions): N/A
- -------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) .............................................................
- -------------------------------------------------------------------------------
6) Citizenship of Place of Organization: United States
- -------------------------------------------------------------------------------
7) Aggregate Amount Beneficially Owned by Each Reporting Person: 3,279,508
- -------------------------------------------------------------------------------
8) Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See
Instructions) ............................................................
- -------------------------------------------------------------------------------
9) Percent of Class Represented by Amount in Row (7): 43.5%
- -------------------------------------------------------------------------------
10) Type of Reporting Person (See Instructions) IN
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<PAGE>
1) Names of Reporting Persons, I.R.S. Identification Nos. Of Above Persons
(entities only): David Mobley, as co-trustee for the David Mobley Grantor
Trust
- -------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions)
(A) [X]
(B) [ ]
- -------------------------------------------------------------------------------
3) SEC Use Only..............................................................
- -------------------------------------------------------------------------------
4) Sources of Funds (See Instructions): N/A
- -------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) .............................................................
- -------------------------------------------------------------------------------
6) Citizenship of Place of Organization: United States
- -------------------------------------------------------------------------------
7) Aggregate Amount Beneficially Owned by Each Reporting Person: 3,279,508
- -------------------------------------------------------------------------------
8) Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See
Instructions) ............................................................
- -------------------------------------------------------------------------------
9) Percent of Class Represented by Amount in Row (7): 43.5%
- -------------------------------------------------------------------------------
10) Type of Reporting Person (See Instructions) IN
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<PAGE>
1) Names of Reporting Persons, I.R.S. Identification Nos. Of Above Persons
(entities only): Robert Schleier, as co-trustee for the David Mobley
Grantor Trust and as sole trustee for the Janet Mobley GST Trust and the
Donna Mobley GST Trust.
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2) Check the Appropriate Box if a Member of a Group (See Instructions)
(A) [X]
(B) [ ]
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3) SEC Use Only..............................................................
- -------------------------------------------------------------------------------
4) Sources of Funds (See Instructions): N/A
- -------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) .............................................................
- -------------------------------------------------------------------------------
6) Citizenship of Place of Organization: United States
- -------------------------------------------------------------------------------
7) Aggregate Amount Beneficially Owned by Each Reporting Person: 3,279,508
- -------------------------------------------------------------------------------
8) Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See
Instructions) ............................................................
- -------------------------------------------------------------------------------
9) Percent of Class Represented by Amount in Row (7): 43.5%
- -------------------------------------------------------------------------------
10) Type of Reporting Person (See Instructions) IN
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<PAGE>
This Statement relates to a tender offer by GAP Capital, L.L.C., a
Texas limited liability company (the "Purchaser"), to purchase all
outstanding shares of the Class A common stock, par value $.01 per share (the
"Class A Shares"), of Mobley Environmental Services, Inc., a Delaware
corporation (the "Company"), at a purchase price of $.20 per Class A Share,
net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated June 11,
1999 (the "Offer to Purchase"), and in the related Letter of Transmittal
(which together constitute the "Offer"), copies of which are filed as
Exhibits (a)(1) and (a)(2) hereof, respectively, and which are incorporated
herein by reference.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Mobley Environmental
Services, Inc. The address of the principal executive offices of the Company
is 111 Congress Avenue, Suite 1400, Austin, Texas 78701, c/o Howard V. Rose.
(b) The exact title of the class of equity securities being sought
in the Offer is the Class A Common Stock, par value $.01 per share. The
information set forth in the Introduction to the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of the
Class A Shares; Dividends on the Class A Shares") of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) The information set forth in the Introduction and
Section 9 ("Certain Information Concerning the Purchaser") of the Offer to
Purchase, and in Schedule I thereto, is incorporated herein by reference.
(e) and (f) Neither the Purchaser nor, to the best of its
knowledge, any of the persons listed in Schedule I of the Offer to Purchase,
has during the last five years (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or
finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) None.
(b) The information set forth in the Introduction and Section 11
("Contacts with the Company; Background of the Offer") of the Offer to
Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 10 ("Source and
Amount of Funds") of the Offer to Purchase is incorporated herein by
reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a) - (e) The information set forth in the Introduction, Section 11
("Contacts with the Company; Background of the Offer") and Section 12
("Purpose of the Offer; the Tender Offer Agreement; the Lock-Up and Voting
Agreement; the Warrant") of the Offer to Purchase is incorporated herein by
reference.
(f) and (g) The information set forth in Section 7 ("Effect of the
Offer on the Market for the Class A Shares; OTC Trading; Registration under
the Exchange Act") of the Offer to Purchase is incorporated herein by
reference.
<PAGE>
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) Roger J. Pipes beneficially owns an aggregate of 24,593 Class A
Shares, or .58% of the outstanding Class A Shares of the Company.
Certain holders of the Company's shares of Class B Common Stock, par
value $.01 per share (the "Class B Shares"), have entered into a lock-up and
voting agreement with the Purchaser (the "Lock-Up and Voting Agreement"),
pursuant to which such holders of Class B Shares have agreed to vote such
shares in accordance with the terms and provisions of the Lock-Up and Voting
Agreement. In addition, pursuant to the terms of the Warrant, filed as an
Exhibit hereto, the Company issued to Purchaser a warrant to purchase from
the Company (a) 228,133 Class A Shares (being approximately equal to 4.9% of
the number of Class A Shares that, as of February 22, 1999, were issued and
outstanding on a fully diluted basis giving effect to the exercise of the
Warrant and the exercise of all securities (other than of Class B Shares)
convertible into Class A Shares) and (b) 235,861 Class B Shares (being
approximately equal to 4.9% of the number of Class B Shares that, as of
February 22, 1999, were issued and outstanding on a fully diluted basis
giving effect to the exercise of the Warrant and the exercise of all
securities convertible into Class B Shares). The exercise price per Class A
Share and Class B Share under the Warrant is equal to the Offer Price. The
Purchaser may exercise the Warrant, in whole or in part, at any time and from
time to time prior to December 31, 2003 after the occurrence of certain
events described therein.
There are no associates or majority-owned subsidiaries of Roger J.
Pipes or the Purchaser that own securities of the Company.
(b) None, with the exception of the issuance of the Warrant
described above.
The information set forth in Section 12 ("Purpose of the Offer; the
Tender Offer Agreement; the Lock-Up and Voting Agreement; the Warrant") of
the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 11 ("Contacts
with the Company; Background of the Offer") and Section 12 ("Purpose of the
Offer; the Tender Offer Agreement; the Lock-Up and Voting Agreement; the
Warrant") of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and in Section 16
("Fees and Expenses") of the Offer to Purchase is incorporated herein by
reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information
Concerning the Purchaser") of the Offer to Purchase is incorporated herein by
reference.
The incorporation by reference herein of the above-mentioned
financial information does not constitute an admission that such information
is material to a decision by a security holder of the Company as whether to
sell, tender or hold Class A Shares being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) and (c) The information set forth in Section 15 ("Certain Legal
Matters; Regulatory Matters") of the Offer to Purchase is incorporated herein
by reference.
<PAGE>
(d) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Class A Shares; OTC Trading; Registration Under the
Exchange Act") of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the
Letter of Transmittal is incorporated herein by reference in its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a) (1) Offer to Purchase, dated June 11, 1999.
(a) (2) Letter of Transmittal.
(a) (3) Letter from Purchaser to Brokers, Dealers, Banks, Trust
Companies and Other Nominees.
(a) (4) Letter from Brokers, Dealers, Banks, Trust Companies and
Other Nominees to Clients.
(a) (5) Notice of Guaranteed Delivery.
(a) (6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a) (7) Press Release issued by Company on June 4, 1999.
(b) Not applicable.
(c) (1) Tender Offer Agreement dated as of June 4, 1999 between
Purchaser and the Company. *
(c) (2) Lock-Up and Voting Agreement dated as of June 4, 1999
between Purchaser and certain stockholders of the Company.
(c) (3) Warrant to Purchase Company Common Stock dated June 4, 1999
granted by Company to the Purchaser.
(d) Not applicable.
(e) Not applicable.
(f) None.
* Schedules to this Agreement have been omitted but description of such
schedules may be found in the Agreement where referred to. The Company hereby
undertakes to provide copies of such omitted schedules to the staff of the
Securities and Exchange Commission upon request.
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: June 11, 1999
GAP CAPITAL, L.L.C.,
a Texas limited liability company
By: /s/ Roger J. Pipes
-------------------------------------
Roger J. Pipes, Manager
/s/ Roger J. Pipes
-----------------------------------------
Roger J. Pipes, Manager of GAP Capital,
L.L.C.
/s/ James A. Mobley
-----------------------------------------
James A. Mobley
ALLISON MOBLEY 1995 TRUST
By: /s/ James A. Mobley
-------------------------------------
James A. Mobley, Trustee
MELISSA MOBLEY 1995 TRUST
By: /s/ James A. Mobley
-------------------------------------
James A. Mobley, Trustee
JAMES A. MOBLEY 1989 SUBCHAPTER S TRUST
By: /s/ James A. Mobley
-------------------------------------
James A. Mobley, Trustee
<PAGE>
JOHN MOBLEY FAMILY TRUST THREE
By: /s/ Lois Ann Mobley
-------------------------------------
Lois Ann Mobley, Trustee
By: /s/ H. David Hughes
-------------------------------------
H. David Hughes, Trustee
JOHN MOBLEY FAMILY TRUST TWO
By: /s/ T. M. Mobley
-------------------------------------
T. M. Mobley, Trustee
By: /s/ H. David Hughes
-------------------------------------
H. David Hughes, Trustee
PILOT INVESTMENTS, LTD.
By: /s/ John Mobley
-------------------------------------
John Mobley, General Partner
ANDREW MOBLEY 1995 TRUST
By: /s/ Steven M. Mobley
-------------------------------------
Steven M. Mobley, Trustee
/s/ T. M. Mobley
-----------------------------------------
T. M. Mobley
DAVID MOBLEY GRANTOR TRUST
By: /s/ David Mobley
-------------------------------------
David Mobley, Trustee
By: /s/ Robert G. Schleier
-------------------------------------
Robert G. Schleier, Trustee
<PAGE>
JANET MOBLEY GST TRUST
By: /s/ Robert G. Schleier
-------------------------------------
Robert G. Schleier, Trustee
DONNA MOBLEY GST TRUST
By: /s/ Robert G. Schleier
-------------------------------------
Robert G. Schleier, Trustee
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
OF
MOBLEY ENVIRONMENTAL SERVICES, INC.
AT
$.20 NET PER SHARE
BY
GAP CAPITAL, L.L.C.
ROGER J. PIPES, MANAGER
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MONDAY, JULY 12, 1999, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER
2,662,975 CLASS A SHARES (APPROXIMATELY 51% OF THE OUTSTANDING CLASS A SHARES
ON A FULLY DILUTED BASIS EXCLUDING CLASS B SHARES SUBJECT TO THE LOCK-UP AND
VOTING AGREEMENT). THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS.
THE BOARD OF DIRECTORS OF MOBLEY ENVIRONMENTAL SERVICES, INC. (THE
"COMPANY") HAS UNANIMOUSLY APPROVED THE OFFER REFERRED TO HEREIN AND
DETERMINED THAT THE OFFER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE
STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY
ACCEPT THE OFFER AND TENDER THEIR SHARES.
---------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such
stockholder's shares of Class A common stock, par value $.01 per share, of
the Company ("Class A Shares") should either (i) complete and sign the Letter
of Transmittal or a facsimile copy thereof in accordance with the
instructions in the Letter of Transmittal, have such stockholder's signature
thereon guaranteed if required by Instruction 1 to the Letter of Transmittal,
mail or deliver the Letter of Transmittal or such facsimile and any other
required documents to the Depositary and either deliver the certificates for
such Class A Shares to the Depositary along with the Letter of Transmittal or
facsimile or deliver such Class A Shares pursuant to the procedure for
book-entry transfer set forth in Section 2 or (ii) request such stockholder's
broker, dealer, bank, trust company or other nominee to effect the
transaction for such stockholder. A stockholder having Class A Shares
registered in the name of a broker, dealer, bank, trust company or other
nominee must contact such broker, dealer, bank, trust company or other
nominee if such stockholder desires to tender such Class A Shares.
A stockholder who desires to tender Class A Shares and whose
certificates for such Class A Shares are not immediately available or who
cannot comply in a timely manner with the procedure for book-entry transfer,
or who cannot deliver all required documents to the Depositary prior to the
expiration of the Offer, may tender such Class A Shares by following the
procedure for guaranteed delivery set forth in Section 2, including the
Notice of Guaranteed Delivery.
Questions and requests for assistance or for additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may be directed to Purchaser at the address and telephone
number set forth on the back cover of this Offer to Purchase.
June 11, 1999
To the Holders of Class A Common Stock of Mobley Environmental Services, Inc.:
<PAGE>
INTRODUCTION
GAP Capital, L.L.C., a Texas limited liability company (the
"Purchaser"), hereby offers to purchase all outstanding shares of Class A
common stock, par value $.01 per share, of Mobley Environmental Services,
Inc., a Delaware corporation (the "Company"), at $.20 per share (the "Offer
Price"), net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "Offer"). The
outstanding shares of the Company's Class A common stock, par value $.01 per
share, are referred to herein collectively as "Class A Shares" and
individually as a "Class A Share."
Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of tendered Class A Shares
pursuant to the Offer. The Purchaser will pay all fees and expenses of
BankBoston, N.A., which is acting as the Depositary (the "Depositary"),
incurred in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
APPROVED THE OFFER AND DETERMINED THAT THE OFFER IS FAIR TO, AND IN THE BEST
INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT
STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR CLASS A SHARES
PURSUANT TO THE OFFER.
Harris, Webb & Garrison, the Company's financial advisor ("HWG"),
has delivered to the Board of Directors of the Company its written opinion to
the effect that, as of the date of such opinion, the $.20 per share in cash
to be offered to the holders of the Class A Shares in the Offer is fair to
such holders, from a financial point of view. Such opinion, which sets forth
the factors considered and the assumptions made by HWG, is set forth in full
as an exhibit to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9"), which is being mailed to stockholders
of the Company herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER
2,662,975 CLASS A SHARES (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT
TO CERTAIN OTHER CONDITIONS. SEE SECTIONS 1 AND 14 HEREOF.
The Offer is being made pursuant to the Tender Offer Agreement dated
as of June 4, 1999 (the "Tender Offer Agreement"), among the Purchaser and
the Company pursuant to which, the parties have agreed that effective upon
purchase and payment for the tendered Class A Shares by the Purchaser, the
Purchaser shall be entitled to designate the following number of directors on
the Company's Board of Directors: (a) in the event the Purchaser has
purchased any Class A Shares pursuant to the Offer, but less than 51% of the
outstanding Class A Shares and the Company's Class B common stock, par value
$.01 per share (the "Class B Shares"), combined on a fully diluted basis,
taking into account the convertibility of the Class B Shares that are not
subject to the Lock-Up and Voting Agreement (as defined below), the Purchaser
shall be entitled to designate one director less than the number of directors
on the Company's Board of Directors immediately prior to such designation
(e.g., if there are two directors serving immediately prior to such
designation, the Purchaser shall be entitled to designate a third director)
and (b) in the event the Purchaser has purchased a number of Class A Shares
pursuant to the Offer that represents at least 51% of the outstanding Class A
Shares and Class B Shares combined on a fully diluted basis, taking into
account the convertibility of the Class B Shares that are not subject to the
Lock-Up and Voting Agreement, the Purchaser shall be entitled to designate
the least number of directors necessary to constitute, once designated, a
majority of the Company's Board of Directors. The Company has covenanted and
agreed that the Company shall take all action necessary to cause the
Purchaser's designees to be elected or appointed to the Board of Directors,
including without limitation, increasing the number of directors, amending
its bylaws, using its reasonable best efforts to obtain resignations of
incumbent directors, and, to the extent necessary, filing with the Securities
and Exchange Commission (the "Commission") and mailing to its stockholders
the information required by Section 14(f) of the Securities Exchange Act of
1934, as amended (the "Exchange Act").
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In connection with the execution of the Tender Offer Agreement,
certain holders of Class B Shares have entered into a lock-up and voting
agreement with the Purchaser (the "Lock-Up and Voting Agreement"), pursuant
to which such stockholders have agreed to vote any and all of their Class A
Shares and Class B Shares in favor of a 50,000 to 1 reverse stock split of
the Class A Shares and the Class B Shares (the "Reverse Split") in the event
such a Reverse Split is to be voted on or otherwise approved at a meeting of
holders of Class A Shares or Class B Shares (or by written consent in lieu
thereof). The Lock-Up and Voting Agreement is more fully described in Section
12.
In order to induce the Purchaser to enter into the Tender Offer
Agreement, simultaneously with the execution of the Tender Offer Agreement,
the Company issued to Purchaser a warrant (the "Warrant"), pursuant to which
the Company granted to the Purchaser an option to acquire a certain number of
Class A Shares and Class B Shares upon the occurrence of certain events and
in accordance with certain terms and conditions set forth in the Warrant. The
Warrant is more fully described in Section 12.
The Company has represented to the Purchaser that, as of June 4,
1999, there were 4,259,650 Class A Shares issued and outstanding, 4,575,643
Class B Shares issued and outstanding and 168,000 shares subject to
outstanding stock options. According to reports of the Company filed with the
Commission, as of March 31, 1999, the Company had 84,707 Class B Shares held
in treasury.
The Tender Offer Agreement is more fully described in Section 12.
Certain federal income tax consequences of the sale of Class A Shares
pursuant to the Offer are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY
DECISION IS MADE WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the
Purchaser will accept for payment and pay for all Class A Shares validly
tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 3. Certain holders of Class B Shares have agreed
pursuant to the Lock-Up and Voting Agreement not to tender shares in
connection with the Offer. See Section 12. The term "Expiration Date" means
12:00 Midnight, New York City time, on Monday, July 12, 1999, unless and
until the Purchaser shall have extended the period of time during which the
Offer is open, in which event the term "Expiration Date" shall mean the
latest time and date at which the Offer, as so extended by the Purchaser,
shall expire.
The Offer is subject to certain conditions set forth in Section 14,
including satisfaction of the Minimum Condition. See Section 14.
Subject to the applicable rules and regulations of the Commission,
the Purchaser reserves the right to waive any other condition to the Offer in
whole or in part in its sole discretion. In addition, subject to the
applicable rules and regulations of the Commission, the Purchaser expressly
reserves the right at any time and from time to time to modify or amend the
terms of the Offer; provided that under the Tender Offer Agreement the
Purchaser has agreed that it will not, without the prior written consent of
the Company, (1) decrease or change the form of consideration payable in the
Offer, (2) decrease the number of Class A Shares sought pursuant to the
Offer, (3) impose additional conditions to the Offer or (4) broaden the scope
of the conditions of the Offer (provided that the Purchaser in its sole
discretion may waive any conditions to the Offer).
In the Tender Offer Agreement, the Purchaser has agreed, subject to
the conditions in Section 14 and its rights under the Offer, to accept for
payment tendered Class A Shares as soon as practicable after the latest of
(1) the date on which the conditions in Section 14 are fulfilled and there is
no right to terminate the Offer under Section 14 (subject to Purchaser's
rights to extend the Offer), (2) at least 2,662,975 Class A Shares have been
validly tendered and not withdrawn prior to the Expiration Date, (3) the
Class A Shares shall be held of record by fewer than 300 persons, (4) the
Company shall have filed with the Commission and not withdrawn a Form 15
deregistering the Company's Class A
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Common Stock (the "Form 15") and (5) the earliest date on which the Offer can
expire under federal law. For a description of the Purchaser's right to
extend the period of time during which the Offer is open, and to amend, delay
or terminate the Offer, see Section 12.
There can be no assurance that the Purchaser will exercise its right
to extend the Offer (other than as required by applicable law). Any
extension, waiver amendment or termination will be followed as promptly as
practicable by public announcement. In the case of an extension, Rule
14e-l(d) under the Exchange Act, requires that the announcement be issued no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date in accordance with the public
announcement requirements of Rule 14d-4(d) under the Exchange Act. Subject to
applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that any material change in the information published, sent or
given to stockholders in connection with the Offer be promptly disseminated
to stockholders in a manner reasonably designed to inform stockholders of
such change), and without limiting the manner in which the Purchaser may
choose to make any public announcement, the Purchaser will not have any
obligation to publish, advertise or otherwise communicate any such public
announcement other than by making a release to the Dow Jones News Service.
If the Purchaser extends the Offer or if the Purchaser (whether
before or after its acceptance for payment of tendered Class A Shares) is
delayed in its acceptance for payment of or payment for tendered Class A
Shares or it is unable to pay for tendered Class A Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer, the Depositary may retain tendered Class A Shares on behalf of the
Purchaser, and such tendered Class A Shares may not be withdrawn except to
the extent tendering stockholders are entitled to withdrawal rights as
described in Section 3. However, the ability of the Purchaser to delay the
payment for tendered Class A Shares that the Purchaser has accepted for
payment is limited by Rule 14e-1 under the Exchange Act, which requires that
a bidder pay the consideration offered or return the securities deposited by
or on behalf of holders of securities promptly after the termination or
withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer
or the information concerning the Offer or waives a material condition of the
Offer (including a waiver of the Minimum Condition), the Purchaser will
disseminate additional tender offer materials and extend the Offer to the
extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act.
The minimum period during which an offer must remain open following material
changes in the terms of the Offer or information concerning the Offer, other
than a change in price or a change in the percentage of securities sought,
will depend upon the facts and circumstances then existing, including the
relative materiality of the changed terms or information. With respect to a
change in price or a change in the percentage of securities sought, a minimum
period of 10 business days is generally required to allow for adequate
dissemination to stockholders.
The Company has provided the Purchaser with the Company's
stockholder lists and security position listings for the purpose of
disseminating the Offer to holders of the Class A Shares. This Offer to
Purchase, the related Letter of Transmittal and other relevant materials will
be mailed by the Purchaser to record holders of Class A Shares and will be
furnished by the Purchaser to brokers, dealers, banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder lists or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Class A Shares.
2. PROCEDURE FOR TENDERING CLASS A SHARES
VALID TENDER. For a stockholder validly to tender Class A Shares
pursuant to the Offer, either (1) a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), together with any required
signature guarantees, or an Agent's Message (as defined below) in connection
with a book-entry delivery of Class A Shares, and any other documents
required by the Letter of Transmittal, must be received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase
and either certificates for tendered Class A Shares must be received by the
Depositary at one of such addresses or such Class A Shares must be delivered
pursuant to the procedure for book-entry transfer set forth below (and a
Book-Entry Confirmation (as defined below) received by the Depositary), in
each case prior to the Expiration Date, or (2) the tendering stockholder must
comply with the guaranteed delivery procedure set forth below.
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The Depositary will establish an account with respect to the Class A
Shares at The Depository Trust Company (the "Book-Entry Transfer Facility")
for purposes of the Offer within two business days after the date of this
Offer. Any financial institution that is a participant in the Book-Entry
Transfer Facility's system may make book-entry delivery of Class A Shares by
causing the Book-Entry Transfer Facility to transfer such Class A Shares into
the Depositary's account in accordance with the Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Class
A Shares may be effected through book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility, the Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer, and any other required documents, must, in any case, be transmitted
to, and received by, the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase prior to the Expiration Date, or the
tendering stockholder must comply with the guaranteed delivery procedure
described below. The confirmation of a book-entry transfer of Class A Shares
into the Depositary's account at the Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation."
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY'S IN ACCORDANCE
WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF CLASS A SHARES, THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER.
CLASS A SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
The term "Agent's Message" means a message, transmitted by the
Book-Entry Transfer Facility to, and received by, the Depositary and forming
a part of a Book-Entry Confirmation, which states that the Book-Entry
Transfer Facility has received an express acknowledgment from the participant
in the Book-Entry Transfer Facility tendering the Class A Shares, which are
subject to such Book-Entry Confirmation, that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
SIGNATURE GUARANTEES. No signature guarantee is required on the
Letter of Transmittal if (1) the Letter of Transmittal is signed by the
registered holder of Class A Shares (which term, for purposes of this
Section, includes any participant in the Book-Entry Transfer Facility's
system whose name appears on a security position listing as the owner of the
Class A Shares) tendered therewith and such registered holder has not
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on the Letter of Transmittal or (2)
such Class A Shares are tendered for the account of a firm that is a member
of the Medallion Signature Guaranty Program or by any other "eligible
guaranty institution" as such term is defined in Rule 17Ad-15 under the
Exchange Act (each of the foregoing being referred to as an "Eligible
Institution"). In all other cases, all signatures on the Letters of
Transmittal must be guaranteed by an Eligible Institution. See Instructions 1
and 5 to the Letter of Transmittal. If the certificates for Class A Shares
are registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made or certificates for Class A Shares
not tendered or not accepted for payment are to be issued to a person other
than the registered holder of the certificates surrendered, the tendered
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as aforesaid. See Instruction 5 to the Letter of
Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Class A
Shares pursuant to the Offer and such stockholder's certificates for Class A
Shares are not immediately available or the procedure for book-entry transfer
cannot be completed on a timely basis or time will not permit all required
documents to reach the Depositary prior to the Expiration Date, such
stockholder's tender may be effected if all the following conditions are met:
(a) such tender is made by or through an Eligible
Institution;
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(b) a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the
Purchaser is received by the Depositary, as provided below, prior to
the Expiration Date; and
(c) the certificates for all tendered Class A Shares, in
proper form for transfer (or a Book-Entry Confirmation with respect to
such Class A Shares), together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message) and any other documents required by the
Letter of Transmittal, are received by the Depositary within three
trading days after the date of execution of such Notice of Guaranteed
Delivery. A "trading day" is any day on which the New York Stock
Exchange, Inc. (the "NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the
form set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for tendered
Class A Shares accepted for payment pursuant to the Offer will in all cases
be made only after timely receipt by the Depositary of (1) certificates for
(or a timely Book-Entry Confirmation with respect to) such tendered Class A
Shares, (2) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or
Agent's Message in connection with a book-entry transfer and (3) any other
documents required by the Letter of Transmittal. Accordingly, tendering
stockholders may be paid at different times depending upon when certificates
for tendered Class A Shares or Book-Entry Confirmations are actually received
by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE OF THE TENDERED CLASS A SHARES TO BE PAID BY THE PURCHASER,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The valid tender of Class A Shares pursuant to one of the procedures
described above will constitute a binding agreement between the tendering
stockholder and the Purchaser upon the terms and subject to the conditions of
the Offer.
APPOINTMENT. By executing a Letter of Transmittal as set forth
above, the tendering stockholder will irrevocably appoint designees of the
Purchaser as such stockholder's attorneys-in-fact and proxies in the manner
set forth in the Letter of Transmittal, each with full power of substitution,
to the full extent of such stockholder's rights with respect to the Class A
Shares tendered by such stockholder and accepted for payment by the Purchaser
and with respect to any and all other Class A Shares or other securities or
rights issued or issuable in respect of such Class A Shares on or after June
4, 1999. All such proxies shall be considered coupled with an interest in the
tendered Class A Shares. Such appointment will be effective when, and only to
the extent that, the Purchaser accepts for payment Class A Shares tendered by
such stockholder as provided herein. Upon such acceptance for payment, all
prior powers of attorney and proxies given by such stockholder with respect
to such Class A Shares or other securities or rights will, without further
action, be revoked and no subsequent powers of attorney and proxies may be
given (and, if given, will not be deemed effective). The designees of the
Purchaser will thereby be empowered to exercise voting and other rights with
respect to such Class A Shares or other securities or rights in respect of
any annual, special or adjourned meeting of the Company's stockholders, or
otherwise, as they in their sole discretion deem proper. The Purchaser
reserves the right to require that, in order for Class A Shares to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such tendered Class A Shares, the Purchaser must be able to exercise voting
and other rights with respect to such tendered Class A Shares and other
securities or rights, including voting at any meeting of stockholders then
scheduled.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Class
A Shares will be determined by the Purchaser in its sole discretion, which
determination will be final and binding. The Purchaser reserves the absolute
right to reject any or all tenders determined by it not to be in proper form
or the acceptance for payment of or payment for which may, in the opinion of
the
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Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right to waive any defect or irregularity in any tender with respect to any
particular Class A Shares, whether or not similar defects or irregularities
are waived in the case of other Class A Shares. No tender of Class A Shares
will be deemed to have been validly made until all defects or irregularities
relating thereto have been cured or waived. None of the Purchaser, the
Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter
of Transmittal and the instructions thereto) will be final and binding.
BACKUP WITHHOLDING. In order to avoid "backup withholding" of
federal income tax on payments of cash pursuant to the Offer, a stockholder
surrendering Class A Shares in the Offer must provide the Depositary with
such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding. If a
stockholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service ("IRS") may
impose a penalty on such stockholder and payment of cash to such stockholder
pursuant to the Offer may be subject to backup withholding of 31%. All
stockholders surrendering Class A Shares pursuant to the Offer should
complete and sign the main signature form and the Substitute Form W-9
included as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to the Purchaser and
the Depositary). Non-corporate foreign stockholders should complete and sign
the main signature form and a Form W-8, Certificate of Foreign Status, a copy
of which may be obtained from the Depositary, in order to avoid backup
withholding. See Instruction 9 to the Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Class A
Shares are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn pursuant to the procedures set forth below at any time prior to the
Expiration Date.
For a withdrawal to be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase and must specify the name of the person having tendered the Class
A Shares to be withdrawn, the number of Class A Shares to be withdrawn and
the name of the registered holder of the Class A Shares to be withdrawn, if
different from the name of the person who tendered the Class A Shares. If
certificates for Class A Shares have been delivered or otherwise identified
to the Depositary, then, prior to the physical release of such certificates,
the serial numbers shown on such certificates must be submitted to the
Depositary and, unless such Class A Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by
an Eligible Institution. Withdrawals of tenders of Class A Shares may not be
rescinded, and any Class A Shares properly withdrawn will thereafter be
deemed not validly tendered for any purposes of the Offer. However, withdrawn
Class A Shares may be retendered by again following one of the procedures
described in Section 2 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of
receipt) of notices of withdrawal will be determined by the Purchaser in its
sole discretion, which determination will be final and binding. None of the
Purchaser, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR CLASS A SHARES
Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
any such extension or amendment), the Purchaser will accept for payment and
will pay for all Class A Shares validly tendered prior to the Expiration Date
and not properly withdrawn in accordance with Section 3 as soon as
practicable after the later of (1) the Expiration Date and (2) the
satisfaction or waiver of the conditions set
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forth in Section 14. For a description of the Purchaser's right to terminate
the Offer and not accept for payment or pay for tendered Class A Shares or to
delay acceptance for payment or payment for tendered Class A Shares, see
Section 14.
In all cases, payment for tendered Class A Shares accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (1) certificates for such tendered Class A Shares (or timely
Book-Entry Confirmation of a transfer of such tendered Class A Shares as
described in Section 2), (2) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message) and (3) any
other documents required by the Letter of Transmittal. The consideration paid
per Class A Share to any stockholder pursuant to the Offer will be the
highest consideration paid per Class A Share to any other stockholder
pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment, and thereby purchased, Class A Shares properly tendered
to the Purchaser and not withdrawn as, if and when the Purchaser gives oral
or written notice to the Depositary of the Purchaser's acceptance for payment
of such tendered Class A Shares. Payment for Class A Shares accepted for
payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payment from the Purchaser and
transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE TENDERED CLASS A SHARES TO BE
PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY
IN MAKING SUCH PAYMENT.
If the Purchaser is delayed in its acceptance for payment of or
payment for tendered Class A Shares or is unable to accept for payment or pay
for tendered Class A Shares pursuant to the Offer for any reason, then,
without prejudice to the Purchaser's rights under the Offer (but subject to
compliance with Rule 14e-l(c) under the Exchange Act, which requires that a
tender offeror pay the consideration offered or return the tendered
securities promptly after the termination or withdrawal of a tender offer),
the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Class A Shares, any such Class A Shares may not be withdrawn except to the
extent tendering stockholders are entitled to exercise, and duly exercise,
withdrawal rights as described in Section 3.
If any tendered Class A Shares are not purchased pursuant to the
Offer because of an invalid tender or otherwise, certificates for any such
Class A Shares will be returned, without expense to the tendering stockholder
(or, in the case of Class A Shares delivered by book-entry transfer of such
Class A Shares into the Depositary's account at the Book-Entry Transfer
Facility pursuant to the procedure set forth in Section 2, such Class A
Shares will be credited to an account maintained at the Book-Entry Transfer
Facility), as promptly as practicable after the expiration or termination of
the Offer.
The Purchaser reserves the right to transfer or assign, in whole or
from time to time in part, or to any direct or indirect subsidiary of
Purchaser, the right to purchase Class A Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve the Purchaser of
its obligations under the Offer and will in no way prejudice the rights of
tendering stockholders to receive payment for Class A Shares validly tendered
and accepted for payment pursuant to the Offer.
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
Sales of Class A Shares pursuant to the Offer will be taxable
transactions for federal income tax purposes under the Internal Revenue Code
of 1986, as amended (the "Code"), and may also be taxable transactions under
applicable state, local, foreign and other tax laws. For federal income tax
purposes, a tendering stockholder will generally recognize gain or loss equal
to the difference between the amount of cash received by the stockholder
pursuant to the Offer and the aggregate tax basis in the Class A Shares
tendered by the stockholder and purchased pursuant to the Offer. Gain or loss
will be calculated separately for each block of Class A Shares tendered and
purchased pursuant to the Offer.
If tendered Class A Shares are held by a tendering stockholder as
capital assets, gain or loss recognized by the tendering stockholder will be
capital gain or loss, which will be long-term capital gain or loss if the
tendering
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stockholder's holding period for the Class A Shares exceeds one year. Under
present law, long-term capital gains recognized by a tendering individual
stockholder will generally be taxed at a maximum federal marginal tax rate of
20%.
A stockholder (other than certain exempt stockholders including,
among others, all corporations and certain foreign individuals) that tenders
Class A Shares may be subject to 31% backup withholding unless the
stockholder provides its TIN and certifies that such number is correct or
properly certifies that it is awaiting a TIN. A stockholder that does not
furnish its TIN may be subject to a penalty imposed by the IRS. Each
stockholder should complete and sign the Substitute Form W-9 included as part
of the Letter of Transmittal so as to provide the information and
certification necessary to avoid backup withholding.
If backup withholding applies to a stockholder, the Depositary is
required to withhold 31% from payments to such stockholder. Backup
withholding is not an additional tax. Rather, the amount of the backup
withholding can be credited against the federal income tax liability of the
person subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the stockholder upon filing
an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO CLASS
A SHARES RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR
OTHERWISE AS COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE
SUBJECT TO SPECIAL TAX TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS,
LIFE INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS AND FINANCIAL
INSTITUTIONS, AND MAY NOT APPLY TO A HOLDER OF CLASS A SHARES IN LIGHT OF ITS
INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE
APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX
LAWS) OF THE OFFER.
6. PRICE RANGE OF THE CLASS A SHARES; DIVIDENDS ON THE CLASS A SHARES
Prior to May 23, 1996, the Class A Shares were listed and traded on
The Nasdaq National Market. Since that date, the Class A Shares have been
quoted for trading on the OTC Bulletin Board under the symbol "MBLYA." The
following table sets forth, for each of the periods indicated, the range of
reported high and low bid quotations as reported by the OTC Bulletin Board as
stated in the Company's documents filed with the Commission ("Commission
Documents"). Such over-the-counter market quotations reflect inter-dealer
prices, without retail mark-up, markdown or commission and may not
necessarily represent actual transactions.
<TABLE>
<CAPTION>
SALES PRICE
--------------------------
LOW HIGH
--------- ----------
<S> <C> <C>
1997
First Quarter............................ $ 3/16 $ 9/32
Second Quarter........................... 7/32 19/64
Third Quarter............................ 7/32 19/64
Fourth Quarter........................... 7/32 1/4
1998
First Quarter............................ $ 7/32 $ 3/8
Second Quarter........................... 7/32 3/8
Third Quarter............................ 13/64 3/8
Fourth Quarter........................... 1/8 5/16
1999 First Quarter............................ $ 7/50 $ 7/50
Second Quarter (through June 4, 1999).... $ 7/50 $ 7/50
</TABLE>
-9-
<PAGE>
On June 4, 1999, the last full day of trading before the public
announcement of the execution of the Tender Offer Agreement, the reported
closing sale price of the Class A Shares was $.14 per Class A Share. On June
10, 1999, the last full day of trading before commencement of the Offer, the
reported closing sale price of the Class A Shares was $.14 per Class A Share.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE CLASS A
SHARES.
The Company has not paid cash dividends on the Class A Shares since
its initial public offering in September 1991 and according to the Company's
Commission Documents has no present plans to make any distributions to its
stockholders.
Pursuant to the Tender Offer Agreement, the Company has agreed not
to declare, set aside, make or pay any dividend or distribution on the Class
A Shares.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE CLASS A SHARES; OTC
TRADING; REGISTRATION UNDER THE EXCHANGE ACT
The purchase of Class A Shares pursuant to the Offer will reduce the
number of Class A Shares that might otherwise trade publicly and may reduce
the number of holders of Class A Shares, which could adversely affect the
liquidity and market value of the remaining Class A Shares held by the
stockholders other than the Purchaser. Following completion of the Offer, the
Purchaser may propose to the Company that the Company effectuate a 50,000 to
1 Reverse Split, which may further reduce the liquidity of the Class A
Shares. The Purchaser cannot predict whether the reduction in the number of
Class A Shares that might otherwise trade publicly would have an adverse or
beneficial effect on the market price for or marketability of the Class A
Shares or whether it would cause future market prices to be greater or less
than the Offer Price. See Section 12.
According to the Company, as of June 4, 1999, there were 4,259,650
Class A Shares outstanding held of record by approximately 106 holders and
4,575,643 Class B Shares outstanding held of record by 36 holders.
The Class A Shares have been quoted for trading on the OTC Bulletin
Board. The extent of the public market for the Class A Shares and continued
availability of such quotations would depend, however, upon the number of
holders of the Class A Shares remaining at such time, the interest in
maintaining a market in the Class A Shares on the part of securities firms,
the possible termination of registration under the Exchange Act, as described
below, and other factors.
The Class A Shares are currently registered under the Exchange Act.
On June 4, 1999, the Company filed with the Commission a Form 15 to
deregister the Class A Shares. Such termination of registration takes effect
90 days after such filing, or on such earlier date as the Commission may
determine; however, the Company's obligation to file certain reports with the
Commission was automatically suspended upon the filing of such Form 15.
Termination of the registration of the Class A Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to holders of Class A Shares and to the Commission and would make
certain of the provisions of the Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b), the requirement of furnishing a proxy
or information statement in connection with stockholder action and the
related requirement of an annual report to stockholders no longer applicable
to the Class A Shares. Furthermore, "affiliates" of the Company and persons
holding "restricted securities" of the Company may be deprived of the ability
to dispose of such securities pursuant to Rule 144 promulgated under the
Securities Act of 1933, as amended (the "Securities Act").
8. CERTAIN INFORMATION CONCERNING THE COMPANY
GENERAL. The Company is a Delaware corporation with its principal
executive offices at 111 Congress Avenue, Suite 1400, Austin, Texas 78701,
c/o Howard V. Rose, Esq. According to the Company's Form 10-KSB for the
fiscal year ended December 31, 1998 (the "Company Form 10-KSB"), prior to
January 20, 1997, the Company provided diverse environmental and
field-related services to industrial, governmental and commercial markets and
specialized in the collection, transportation, treatment, recycling and
management of a wide variety of non-hazardous liquid
-10-
<PAGE>
hydrocarbons, oil filters, absorbents and related materials. The Company also
provided oil field services, including transportation, marketing, storing and
disposing of various liquid materials used or produced as waste throughout
the life cycle of oil and gas wells. The Company has had no operating assets
since the sale of its oil field services business and hydrocarbon recovery
and recycling business in 1997.
FINANCIAL INFORMATION. Set forth below is certain selected
consolidated financial information with respect to the Company and its
subsidiaries excerpted or derived from the information contained in the
Company Form 10-KSB, as well as the Company's Quarterly Report on Form 10-QSB
for the three months ended March 31, 1999, which are incorporated by
reference herein. More comprehensive financial information is included in
such reports and other documents filed by the Company with the Commission,
and the following summary is qualified in its entirety by reference to such
reports and such other documents and all the financial information (including
any related notes) contained therein. Such reports and other documents should
be available for inspection and copies thereof should be obtainable in the
manner set forth below under "Available Information."
-11-
<PAGE>
MOBLEY ENVIRONMENTAL SERVICES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- -------------------------------
1998 1997 1999 1998
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Revenues........................................ $ - $ - $ - $ -
Cost of revenues................................ - - - -
------------- -------------- ------------- --------------
Gross profit................................ - - - -
------------- -------------- ------------- --------------
------------- -------------- ------------- --------------
Selling, general and administrative expenses.... 704 759 275 159
------------- -------------- ------------- --------------
Operating Loss.............................. (704) (759) (275) (159)
Gain on sale of investment securities........... - 555 22 -
Interest income................................. 330 158 66 77
Other income (expense), net..................... 15 42 12 5
------------- -------------- ------------- --------------
Loss from continuing operations before
income taxes............................. (359) (4) (175) (77)
Income taxes.................................... - - - -
------------- -------------- ------------- --------------
Loss from continuing operations............. (359) (4) (175) (77)
Discontinued operations, net of tax:
Net loss from operations of waste
management services segment.............. - (405) - -
Gain on sale of oilfield segment............ - 2,802 - -
Net gain from the earnout period of waste
management services segment.............. 607 - - -
------------- -------------- ------------- --------------
Income from discontinued operations......... 607 2,397 - -
------------- -------------- ------------- --------------
Net income.................................. 248 2,393 (175) (77)
Comprehensive income (loss):
Other comprehensive income (loss) - change
in net unrealized gains (loss) on
securities, net of tax of ($35), $15 and
$58...................................... (68) 29 112 -
------------- -------------- ------------- --------------
Comprehensive income............................ $ 180 $ 2,422 $ (63) $ (77)
------------- -------------- ------------- --------------
------------- -------------- ------------- --------------
Net income (loss) per share - basic and
assuming dilution:
Continuing operations........................... $ (0.04) $ (0.00)
Discontinuing operations........................ 0.07 0.27
------------- -------------- ------------- --------------
$ 0.03 $ 0.27 $ (0.02) $ (0.01)
------------- -------------- ------------- --------------
------------- -------------- ------------- --------------
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31, 1999
------------------------------------ -------------------
1998 1997 (UNAUDITED)
---------------- ----------------
<S> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents.......................... $ 81 $ 353 $ 527
Receivables........................................ 155 373 142
Prepaid expenses................................... 94 93 94
---------------- ---------------- -------------------
Total current assets............................ 330 819 763
Property, plant, and equipment, net.................... 188 211 186
Note receivable........................................ - 500 -
Investment securities available for sale............... 4,954 4,495 4,734
Other assets, net...................................... 359 192 335
---------------- ---------------- -------------------
$ 5,831 $ 6,217 $ 6,018
---------------- ---------------- -------------------
---------------- ---------------- -------------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable....................................... $ 61 $ 100 $ 133
Accrued expenses....................................... 413 1,041 591
---------------- ---------------- -------------------
Total current liabilities.......................... 474 1,141 724
---------------- ---------------- -------------------
Stockholders' equity:
Preferred stock $.01 par value; 2,000,000 shares
authorized, none issued......................... - - -
Common stock, $.01 par value:
Class A, 15,000,000 shares authorized;
4,259,650 shares issued and outstanding in
1998 and 1997................................. 43 43 43
Class B, 10,000,000 shares authorized;
4,660,350 shares issued and 4,575,643 shares
outstanding in 1998 and 1997.................. 47 47 47
Additional paid-in capital......................... 25,159 25,159 25,159
Accumulated deficit................................ (19,845) (20,093) (20,020)
Accumulated other comprehensive income (loss)...... (39) 29 73
Deferred compensation costs under restricted stock
agreements...................................... - (101) -
Treasury stock: 84,707 shares of Class B common
stock, at cost.................................. (8) (8) (8)
---------------- ---------------- -------------------
Total stockholders' equity...................... $ 5,357 $ 5,076 $ 5,294
Commitments and contingencies.......................... $ 5,831 $ 6,217 $ 6,018
---------------- ---------------- -------------------
---------------- ---------------- -------------------
</TABLE>
-13-
<PAGE>
AVAILABLE INFORMATION. The Company is currently subject to the
reporting requirements of the Exchange Act and, in accordance therewith, is
required to file reports and other information with the Commission relating
to its business, financial condition and other matters. Upon the filing by
the Company of its Form 15, the Company's obligation to file certain reports
with the Commission was automatically suspended. Information as of particular
dates concerning the Company's directors and officers, their remuneration,
the principal holders of the Company's securities and any material interest
of such persons in transactions with the Company is required to be disclosed
in proxy statements distributed to the Company stockholders and filed with
the Commission. Such reports, proxy statements and other information should
be available for inspection at the public reference facilities of the
Commission located at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the regional offices of the Commission located in the Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and
Seven World Trade Center, 13th Floor, New York, New York 10048. Copies should
be obtainable, by mail, upon payment of the Commission's customary charges,
by writing to the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and can be obtained electronically on the
Commission's website at http://www.sec.gov.
Except as otherwise stated in this Offer to Purchase, the
information concerning the Company contained herein has been taken from or
based upon publicly available documents on file with the Commission and other
publicly available information. Although the Purchaser does not have any
knowledge that any such information is untrue, the Purchaser does not take
any responsibility for the accuracy or completeness of such information or
for any failure by the Company to disclose events that may have occurred and
may affect the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER
PURCHASER. The Purchaser, a Texas limited liability corporation, was
organized to acquire the Company and has not conducted any unrelated
activities since its organization. The principal offices of the Purchaser are
located at 6310 Lemmon Avenue, Suite 202, Dallas, Texas 75209. The
outstanding membership interests of the Purchaser are owned by four
individuals: J.L. Williams, Gene Bishop, Mike Myers and Roger J. Pipes
(collectively, the "Investors"). The Purchaser's sole manager is Roger J.
Pipes (the "Manager").
FINANCIAL INFORMATION. Because the Purchaser was recently organized
to acquire the Company and has not conducted any unrelated activities since
its organization, selected financial information regarding the Purchaser is
unavailable. Neither the Purchaser nor the Investors are incurring debt to
finance the aggregate Offer Price; rather, the Investors' have irrevocably
committed to the Purchaser to make capital contributions to the Purchaser,
upon the satisfaction of the Minimum Condition, in an amount required by the
Purchaser to acquire the tendered Class A Shares pursuant to the Offer, which
aggregate Offer Price is estimated not to exceed approximately $1,011,000
(which assumes the conversion into Class A Shares of all Class B Shares not
subject to the Lock-Up and Voting Agreement) (the "Aggregate Offer Amount").
Further, the Investors have advanced and irrevocably committed to the
Purchaser to additionally advance to the Purchaser funds necessary to pay
fees and expenses related to the Offer, which fees and expenses are estimated
to be approximately $125,000 (the "Estimated Expenses")(the Aggregate Offer
Amount with the Estimated Expenses are referred to herein as (the "Aggregate
Transaction Amount")). Each of the Investors has certified to the Purchaser,
and its Manager, and provided additional information as they requested to
verify, that each Investor's net worth exceeds the Aggregate Transaction
Amount and that funds in excess of such Aggregate Transaction Amount are
available to such respective Investor in cash and marketable securities.
The Manager currently beneficially owns an aggregate of 24,593 Class
A Shares, or .58% of the outstanding Class A Shares. In addition, pursuant to
the terms of the Tender Offer Agreement, the Company issued to Purchaser a
Warrant to purchase from the Company (a) 228,133 Class A Shares (being
approximately equal to 4.9% of the number of Class A Shares that, as of
February 22, 1997, were issued and outstanding on a fully diluted basis
giving effect to the exercise of the Warrant and the exercise of all
securities (other than the Class B Shares) convertible into Class A Shares)
and (b) 235,861 Class B Shares (being approximately equal to 4.9% of the
number of Class B Shares that, as of February 22, 1999, were issued and
outstanding on a fully diluted basis giving effect to the exercise of the
Warrant and the exercise of all securities convertible into Class B Shares).
The exercise price per Class A Share and Class B Share under the Warrant is
equal to the Offer Price. The Purchaser may exercise the Warrant, in whole or
in part, at
-14-
<PAGE>
any time and from time to time prior to December 31, 2008 after the
occurrence of certain events described therein. The Purchaser has also
entered into the Lock-Up and Voting Agreement with certain holders of Class B
Shares, pursuant to which those holders have agreed to vote their Class A
Shares and Class B Shares in accordance with the provisions of the Lock-Up
and Voting Agreement. See Section 12.
Except as set forth above or described elsewhere in this Offer to
Purchase, neither the Purchaser nor to the best knowledge of the Purchaser,
any of the persons listed in Schedule I or any associate or majority-owned
subsidiary of the Purchaser or any of the persons so listed, beneficially
owns any equity security of the Company, and none of the Purchaser, any of
the other persons referred to above, or any of the respective directors,
executive officers or subsidiaries of any of the foregoing, has effected any
transaction in any equity security of the Company during the past 60 days.
Except as described in this Offer to Purchase, (1) there have not
been any contracts, transactions or negotiations between the Purchaser, any
of its subsidiaries or, to the best knowledge of the Purchaser, any of the
persons listed in Schedule I, on the one hand, and the Company or any to its
directors, officers or affiliates, on the other hand, that are required to be
disclosed pursuant to the rules and regulations of the Commission and (2)
neither the Purchaser nor, to the best knowledge of the Purchaser, any of the
persons listed in Schedule I has any contract, arrangement, understanding or
relationship with any person with respect to any securities of the Company.
During the last five years neither the Purchaser nor, to the best
knowledge of the Purchaser, any of the persons listed in Schedule I (a) has
been convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or (b) was a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree of final order enjoining
future violations of, or prohibiting activities subject to, Federal or state
securities laws or finding any violation of such laws. The name, business
address, present principal occupation or employment, five-year employment
history and citizenship of each of the directors and executive officers of
the Purchaser are set forth in Schedule I.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to acquire the
tendered Class A Shares pursuant to the Offer and to pay fees and expenses
related to the Offer is estimated not to exceed approximately $1,136,000. The
Purchaser expects to obtain the funds required to consummate the Offer with
funds provided through capital contributions and, in the case of fees and
expenses, advances made by its members. The members of the Purchaser expect
to fund any necessary capital contributions and advances to the Purchaser
with personal funds. See Section 9.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
The Manager and Investors have followed the business activities of
the Company for some time.
On November 11, 1998, the Manager met with John Mobley, President,
Chief Executive Officer and Chairman of the Board of the Company to present a
general outline of a proposed acquisition and reorganization of the Company.
In general, the Manager proposed a cash tender offer for all of the
outstanding Class A Shares. As part of this proposal, the Manager also
discussed with Mr. John Mobley his expectation that following the
consummation of such tender offer, the Purchaser might propose a transaction
in which the Company might deregister its registration with the Commission,
become a wholly-owned subsidiary of the Purchaser, extend loans to the
Purchaser at a market rate of interest and in which the Purchaser with the
non-tendering stockholders of the Company might form an entity to hold the
Company and seek investment opportunities. Mr. John Mobley agreed to
evaluate the proposal and have informal discussions with other Board members
to determine the level of interest of the Board.
On November 23, 1998, Mr. John Mobley requested that the Manager
deliver a general outline of his earlier proposal to Chip Cureton, Director,
Tom Mobley, Vice President and Director of the Company, and Howard Rose,
counsel to the Company. A copy of the proposal was transmitted to all such
individuals on or about November 23, 1998.
On December 2, 1998, the Manager met with Steven Mobley and John C.
Kerr of HWG to discuss possible transaction structures and procedural
transaction steps.
During the week of December 15, 1998, the Manager, Mr. Steven
Mobley, Bobby Jelks, a partner at KPMG, and Mr. John Mobley discussed certain
structural and tax ramifications of the proposed transaction.
On January 4, 1999, the Manager spoke with Mr. Rose regarding the
discussions that occurred during December 1998 and requested that Mr. Rose
ascertain what, if any, issues members of the Board might have with his prior
proposals. Mr. Rose then prepared a memorandum to the Board and set up a
meeting between the Board, the Manager and certain representatives of each.
On February 1, 1999, the Manager, Jeffrey Sone, counsel to Manager
and Purchaser, Messrs. Tom Mobley, Cureton, John Mobley and Rose met to
discuss a transaction pursuant to which the Purchaser would acquire not less
than a majority of the Class A Shares for $.20 per share and thereafter cause
the Company to become a wholly-owned subsidiary of the Purchaser. In
addition, at that time, the Manager expressed his intention to propose,
following the consummation of any such transaction resulting in the Company
becoming a wholly-owned subsidiary of the Purchaser, that the Company loan
its available cash resources, subject to repayment pursuant to a promissory
note, to Purchaser. The parties agreed that any such loan would be subject
to further negotiation and approval by the Company's Board. The Board
expressed a moderate level of interest in pursuing the transaction. The
parties agreed to proceed with further discussions. The Manager requested
general information regarding the composition of the Company's
securityholders, and the requested information was furnished by the Company
the following week.
On February 11, 1999, the Manager delivered by facsimile to all of
the members of the Board and Mr. Rose a letter outlining the terms of a
proposed business transaction calling for the acquisition by the Purchaser of
at least a majority of the outstanding Class A Shares at a cash price of $.20
per share, and requested Board approval of the proposal.
Over the next few weeks, the Manager and the Board negotiated
various terms and provisions contained in the Manager's proposal. The
proposal was revised and recirculated each time. However, on March 5, 1999,
Mr. John Mobley advised the Manager that Mr. Cureton resigned from the Board
for reasons unrelated to the proposed transaction. The remaining Board
members and the Manager then discussed the viability of continuing
negotiations and determined to do so.
On March 16, 1999, the parties met again to discuss the transaction
and the possibility of utilizing alternative structures to the one proposed
by the Manager on March 5, 1999. At the end of that meeting, a follow up
meeting was scheduled for March 23, 1999.
On March 23, 1999, the scheduled follow up meeting was held to
discuss the Manager's proposal of March 5, 1999. A consensus was ultimately
reached at the meeting, and the Manager prepared a revised letter of intent
based on the discussions. The revised letter of intent was circulated and on
March 26, 1999, the Manager received a fully-executed copy. The Tender Offer
Agreement is consistent with the terms of such letter of intent in all
material respects.
During the first two weeks of April, initial drafts of the Tender
Offer Agreement, Lock-Up and Voting Agreement and Warrant were circulated
among the parties. After financial information was delivered to the parties
by Chad Gorman on April 27, 1999, these documents were revised again.
During the last week of May 1999, revised documents were once again
circulated and negotiated and revised slightly. The documents were finalized
the first week in June 1999, and were executed on June 4, 1999.
On June 11, 1999, the Purchaser commenced the Offer.
-15-
<PAGE>
12. PURPOSE OF THE OFFER; THE TENDER OFFER AGREEMENT; THE LOCK-UP AND
VOTING AGREEMENT; THE WARRANT
PURPOSE OF THE OFFER
PURPOSE. The purpose of the Offer is to acquire control of and at
least a majority of the Class A Shares of the Company. There are currently
fewer than 300 holders of record of Class A Shares. The Company has filed
with the Commission Form 15, which filing automatically suspends the
Company's obligation to file certain reports with the Commission and
following 90 days from such filing (or such shorter period as the Commission
may determine) the termination of the Company's registration takes effect.
Accordingly, the Class A Shares will cease to be publicly traded and the
Company will no longer be subject to the reporting requirements of the
Exchange Act.
PLANS FOR THE COMPANY. The Company does not currently have any
operations. Following the completion of the Offer, the Purchaser may propose
one or more transactions with the Company, which may include the lending of
-16-
<PAGE>
funds by the Company at competitive interest rates or even the liquidation of
the Company. The Purchaser has not finalized any such plans or proposals.
REVERSE SPLIT. Following the purchase of Class A Shares by the
Purchaser pursuant to this Offer, the Purchaser may propose to the Company
that the Company effectuate a 50,000 to 1 reverse stock split of the Class A
Shares and the Class B Shares, with fractional shares paid in cash at the
Offer Price (on a pre-split basis). The effect of such a reverse stock split
may be to further reduce the number of holders of Class A Shares and Class B
Shares; however, as the Company has already filed a Form 15 with the
Commission, the Company's reporting obligations and registration status
should not be further impacted by the Reverse Split other than by making it
less likely that in the near future the number of stockholders of the Company
would rise to a level that would require the Company to re-register with the
Commission. Such a reduction may further limit the liquidity of the Class A
Shares and the Class B Shares and may have the effect of cashing out
stockholders of the Company that chose not to tender their Class A Shares
pursuant to this Offer. Assuming the Minimum Condition is met, the Purchaser,
with the Class A Shares and Class B Shares subject to the Lock-Up and Voting
Agreement, will have sufficient votes to approve the Reverse Split. See
Section 7.
Except as otherwise described in this Offer to Purchase, the
Purchaser has no current, definite plans or proposals that would relate to,
or result in, any extraordinary corporate transaction involving the Company.
The Tender Offer Agreement provides that, commencing upon the
purchase of the tendered Class A Shares pursuant to the Offer, and from time
to time thereafter, Purchaser will be entitled to designate directors to
serve on the Board of Directors of the Company as described below under "The
Tender Offer Agreement-Board of Directors."
THE TENDER OFFER AGREEMENT
The following is a summary of certain provisions of the Tender Offer
Agreement, which is filed as an Exhibit to the Tender Offer Statement on
Schedule 14D-1 filed with the Purchaser with the Commission in connection
with the Offer (the "Tender Offer Statement") and is incorporated herein by
reference. Such summary is qualified in its entirety by reference to the
Tender Offer Agreement.
THE OFFER. The Tender Offer Agreement provides for the making of the
Offer by the Purchaser. The obligation of Purchaser to accept for payment and
pay for Class A Shares tendered pursuant to the Offer is subject to the
satisfaction of the Minimum Condition and certain other conditions that are
described in Section 14. The Purchaser has agreed that, without the written
consent of the Company, no change in the Offer may be made which changes the
form of consideration to be paid or decreases the price per Class A Share or
the amount of Class A Shares sought in the Offer or which imposes conditions
to the Offer in addition to the Minimum Condition and those conditions
described in Section 14.
RECOMMENDATION. The Tender Offer Agreement states that the Board of
Directors has (i) determined that the Offer is fair to the holders of the
Class A Shares as well as fair to and in the best interests of the Company
and its stockholders, (ii) approved the Tender Offer Agreement and the
transactions contemplated thereby and (iii) resolved to recommend acceptance
of the Offer and approval and adoption of the Tender Offer Agreement by the
Company's stockholders.
INTERIM AGREEMENTS OF THE PURCHASER AND THE COMPANY. Pursuant to the
Tender Offer Agreement, the Company has covenanted and agreed that, during
the period from the date of the Tender Offer Agreement to the Effective Time,
the Company and its subsidiaries will each conduct its operations according
to its ordinary and usual course of business consistent with past practice;
that neither the Company nor any of its subsidiaries will intentionally take
or willfully omit to take any actions that results in or could reasonably be
expected to result in, a Company Material Adverse Effect (as defined in the
Tender Offer Agreement); that the Company will use its reasonable best
efforts to preserve intact the business organization of the Company and each
of its subsidiaries, to keep available the services of its and their present
officers and key employees and consultants and to maintain satisfactory
relationships with customers, agents, suppliers and other persons having
business relationships with the Company or its subsidiaries. Pursuant to the
Tender Offer Agreement, without limiting the generality of the foregoing, and
except as otherwise
-17-
<PAGE>
expressly provided in the Tender Offer Agreement, the Company covenanted and
agreed that neither the Company nor any of its subsidiaries will (a) issue,
sell or dispose of additional shares of capital stock of any class (including
the Class A Shares and Class B Shares) of the Company or any of its
subsidiaries, or securities convertible into or exchangeable for any such
shares or securities, or any rights, warrants, or options to acquire any such
shares or securities, other than Class A Shares and Class B Shares issued
upon exercise of options disclosed pursuant to the Tender Offer Agreement, in
each case in accordance with the terms so disclosed; (b) redeem, purchase or
otherwise acquire, or propose to redeem, purchase or otherwise acquire, any
of its outstanding capital stock, or other securities of the Company or any
of its subsidiaries; (c) split, combine, subdivide or reclassify any of its
capital stock or declare, set aside, make or pay any dividend or distribution
on any shares of its capital stock; (d) sell, pledge, dispose of or encumber
any of its assets, except for sales, pledges, dispositions or encumbrances in
the ordinary course of business consistent with past practices; (e) incur or
modify any indebtedness or issue or sell any debt securities, or assume,
guarantee, endorse or otherwise as an accommodation become absolutely or
contingently responsible for obligations of any other person, or make any
loans or advances, other than in the ordinary course of business consistent
with past practices; (f) adopt or amend any bonus, profit sharing,
compensation, severance, termination, stock option, pension, retirement,
deferred compensation, employment or other employee benefit agreements,
trusts, plans, funds, or other arrangements for the benefit or welfare of any
director, officer or employee, or (except for normal increases in the
ordinary course of business that are consistent with past practices and that,
in the aggregate, do not result in a material increase in benefits or
compensation expense to the Company) increase in any manner the compensation
or fringe benefits of any director, officer or employee or pay any benefit
not required by any existing plan or arrangement (including, without
limitation, the granting or vesting of stock options or stock appreciation
rights) or take any action or grant any benefit not expressly required under
the terms of any existing agreements, trusts, plans, funds or other such
arrangements or enter into any contract, agreement, commitment or arrangement
to do any of the foregoing or make or agree to make any payments to any
directors, officers, agents, contractors or employees relating to a change or
potential change in control of the Company; (g) acquire by merger,
consolidation or acquisition of stock or assets any corporation, partnership
or other business organization or division or make any investment either by
purchase of stock or securities, contributions to capital (other than to
wholly-owned subsidiaries), property transfer or purchase of any material
amount of property or assets, in any other person; (h) adopt any amendments
to their respective charters or bylaws or equivalent organizational
documents, except as required by the Tender Offer Agreement; (i) take any
action other than in the ordinary course of business and consistent with past
practices, to pay, discharge, settle or satisfy any claim, liability or
obligation (absolute or contingent, accrued or unaccrued, asserted or
unasserted or otherwise); (j) change any method of accounting or accounting
practice used by the Company or any of its subsidiaries, except for any
change required by reason of a concurrent change in generally accepted
accounting principles; (k) revalue in any respect any of its assets,
including, without limitation, writing down the value of its portfolio or
writing off notes or accounts receivable other than in the ordinary course of
business consistent with past practices; (l) authorize any new capital
expenditure or expenditures that individually, is in excess of $10,000 or, in
the aggregate, are in excess of $50,000; (m) make any tax election, settle or
compromise any federal, state or local tax liability or consent to the
extension of time for the assessment or collection of any federal, state or
local tax; (n) settle or compromise any pending or threatened suit, action or
claim material to the Company and its subsidiaries taken as a whole or
relevant to the transactions contemplated by the Tender Offer Agreement; (o)
enter into any agreement, arrangement or understanding to do any of the
foregoing actions, including any agreement, arrangement or understanding
resulting in or providing for a sale of any assets of the Company (other than
a sale of assets in the ordinary course of business and consistent with past
practice) or a merger or other liquidation, sale or disposition of the
Company; (p) voluntarily take any action or willfully omit to take any action
that could make any representation or warranty of the Company in the Tender
Offer Agreement untrue or incorrect in any material respect at any time,
including as of the date of the Tender Offer Agreement and as of the time of
consummation of the Offer, as if made as of such time.
CONFIDENTIALITY. Pursuant to the Tender Offer Agreement, the
Purchaser covenanted and agreed that the Purchaser will hold and will cause
its consultants and advisors to hold in confidence, unless compelled to
disclose by judicial or administrative process or, in the written opinion of
its legal counsel, by other requirements of law, all documents and
information concerning the Company and its subsidiaries furnished to the
Purchaser in connection with the transactions contemplated by the Tender
Offer Agreement (except to the extent that such information can be shown to
have been (i) previously known by the Purchaser from sources other than the
Company, or its directors, officers, representatives or affiliates, (ii) in
the public domain through no fault of the Purchaser or (iii) later lawfully
acquired
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or the Purchaser on a non-confidential basis from other sources who are not
known by the Purchaser to be bound by a confidentiality agreement or
otherwise prohibited from transmitting the information to the Purchaser by a
contractual, legal or fiduciary obligation) and will not release or disclose
such information to any other person, except its directors, officers, agents,
employees, consultants and advisors in connection with the Tender Offer
Agreement and the transactions contemplated thereby. The Purchaser will be
deemed to have satisfied its obligation to hold such information confidential
if it exercises the same care as it takes to preserve confidentiality for its
own similar information.
NONSOLICITATION. The Tender Offer Agreement provides that the
Company shall not, directly or indirectly, through any officer, director,
employee, representative or agent of the Company or any of its subsidiaries,
solicit or encourage (including by way of furnishing information) the
initiation of any inquiries or proposals (each an "Acquisition Proposal")
regarding a Third Party Acquisition (as defined below). Provided that nothing
in the Tender Offer Agreement shall prevent the Board of Directors if it
determines in good faith, after consultation with, and the receipt of advice
from, outside counsel, that it is required to do so in order to discharge
properly its fiduciary duties, from considering, negotiating, approving and
recommending to the stockholders of the Company an unsolicited bona fide
written Acquisition Proposal which the Board of Directors determines in good
faith (after consultation with its financial advisors and legal counsel)
would result in a transaction more favorable to the Company's stockholders
than the transaction contemplated by the Tender Offer Agreement (any
Acquisition Proposal meeting such criterion, being referred to as a "Superior
Proposal"). Provided further that nothing in the Tender Offer Agreement shall
prohibit the Company from complying with Rules 14d-9 and 14e-2 under the
Exchange Act with respect to any other tender offers. The Company must
promptly, but in no event later than 24 hours, notify the Purchaser after
receipt of any Acquisition Proposal or any request for nonpublic information
relating to the Company or any of its subsidiaries in connection with an
Acquisition Proposal or for access to the properties, books or records of the
Company or any subsidiary by any person or entity that informs the Board of
Directors that it is considering making, or has made, an Acquisition
Proposal. Such notice to the Purchaser has to be made orally and in writing
and must indicate in reasonable detail the identity of the offeror and the
terms and conditions of such proposal, inquiry or contact. If the Board of
Directors receives a request for material nonpublic information by a party
who makes an unsolicited bona fide Acquisition Proposal and the Board of
Directors determines that such proposal, if consummated pursuant to its terms
would be a Superior Proposal, then, and only in such case, the Company may,
subject to the execution of a confidentiality agreement substantially similar
to that then in effect between the Company and the Purchaser, provide such
party with access to information regarding the Company. The Tender Offer
Agreement requires that the Company immediately cease and cause to be
terminated any existing discussions or negotiations with any parties (other
than the Purchaser) conducted before the date of the Tender Offer Agreement
with respect to any Acquisition Proposal, and the Company agreed not to
release any third party from any confidentiality or standstill agreement to
which the Company is a party. The Company also agreed to ensure that the
officers, directors and employees of the Company and its subsidiaries and any
investment banker or other advisor or representative retained by the Company
are aware of these restrictions; and be responsible for any breach of this
restriction by such bankers, advisors and representatives.
ACCESS TO INFORMATION. Between the date of the Tender Offer
Agreement and the Effective Time, the Company will, and will cause its
subsidiaries, officers, directors, employees and agents upon reasonable
notice, to afford to officers, employees and agents of the Purchaser and its
affiliates and the banks, other financial institutional and investment
bankers working with the Purchaser and its respective officers, employees and
agents, complete access at all reasonable times to its officers, employees,
agents, properties, books, records and contracts, and will furnish the
Purchaser and its affiliates and the banks, other financial institutions and
investment bankers working with the Purchaser, all financial, operating and
other data and information as they reasonably request.
BOARD OF DIRECTORS. The Tender Offer Agreement provides that
effective upon purchase and payment for any tendered Class A Shares by the
Purchaser, the Purchaser shall be entitled to designate the following number
of directors on the Company's Board of Directors: (a) in the event the
Purchaser has purchased any Class A Shares pursuant to the Offer, but less
than 51% of the outstanding Class A Shares and Class B Shares combined on a
fully diluted basis, taking into account the convertibility of the Class B
Shares that are not subject to the Lock-Up and Voting Agreement, the
Purchaser shall be entitled to designate one director less than the number of
directors on the Company's Board of Directors immediately prior to such
designation (e.g., if there are two directors serving immediately prior to
such
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designation, the Purchaser shall be entitled to designate a third director)
and (b) in the event the Purchaser has purchased a number of Class A Shares
pursuant to the Offer that represents at least 51% of the outstanding Class A
Shares and Class B Shares combined on a fully diluted basis, taking into
account the convertibility of the Class B Shares that are not subject to the
Lock-Up and Voting Agreement, the Purchaser shall be entitled to designate
the least number of directors necessary to constitute, once designated, a
majority of the Company's Board of Directors. The Company covenanted and
agreed that the Company shall take all action necessary to cause the
Purchaser's designees to be elected or appointed to the Board of Directors,
including, without limitation, increasing the number of directors amending
its bylaws, using its reasonable best efforts to obtain resignations of
incumbent directors, and, to the extent necessary, filing with the Commission
and mailing to its stockholders the information required by Section 14(f) of
the Exchange Act.
The Purchaser covenanted and agreed that the Purchaser will supply
any information with respect to itself and its respective nominees, officers,
directors and affiliates required by Section 14(f) of the Exchange Act and
the rules promulgated thereunder to the Company. Upon written request by the
Purchaser, the Company will use its reasonable best efforts to cause the
designees of the Purchaser to constitute the same percentage of
representation as is on the Board of Directors after giving effect to the
Purchaser's right to designate a certain number of directors of the Company
on (1) each committee of the Board of Directors; (2) the board of directors
of each subsidiary of the Company; and (3) each committee of such
subsidiaries' boards of directors.
INDEMNIFICATION AND INSURANCE. The Purchaser has agreed that all
rights to indemnification now existing in favor of the directors or officers
of the Company and its subsidiaries as provided in their respective
certificates of incorporation or bylaws and pursuant to the contracts
disclosed in the Tender Offer Agreement will, to the extent such rights are
in accordance with applicable law, stay in effect in accordance with their
respective terms. In the event any action, suit, proceeding or investigation
relating to the Tender Offer Agreement or to the transactions contemplated by
the Tender Offer Agreement is commenced by a third party, whether before or
after the Effective Time, the Company and the Purchaser have agreed, subject
to the fiduciary duties of the Board of Directors of the Company and the
Manager of the Purchaser, to cooperate and use all reasonable efforts to
defend against and respond to such action, suit, proceeding or investigation.
BEST EFFORTS. The Tender Offer Agreement provides that the Company
and the Purchaser will each use all reasonable best efforts to consummate the
transactions contemplated by the Tender Offer Agreement.
REPRESENTATIONS AND WARRANTIES. The Tender Offer Agreement contains
various customary representations and warranties of the parties thereto
including, without limitation, representations by the Company as to corporate
power and authority to execute, deliver and consummate the Tender Offer
Agreement, undisclosed liabilities, certain changes or events concerning its
businesses, compliance with applicable law, employee benefit plans,
litigation, environmental liabilities, intellectual property rights and
material contracts.
TERMINATION. The Tender Offer Agreement may be terminated and the
Offer may be abandoned at any time prior to the purchase of the Class A
Shares pursuant to the Offer: (a) by mutual written consent of the Purchaser
and the Company; (b) by the Purchaser or the Company if any court of
competent jurisdiction or other governmental body has issued a final order,
decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the purchase of Class A Shares pursuant to the Offer
and such order, decree, ruling or other action is or has become
nonappealable; (c) by the Purchaser if due to an occurrence or circumstance
that would result in a failure to satisfy any of the conditions set forth in
Section 14 hereto the Purchaser has (i) failed to commence the Offer within
five business days following the date of the initial public announcement of
the Offer, (ii) terminated the Offer, or (iii) failed to pay for the Class A
Shares pursuant to the Offer by October 1, 1999; (d) by the Company if (i)
there has not been a breach of any material representation, warranty,
covenant, or agreement on the part of the Company, and the Purchaser has (A)
failed to commence the Offer within five business days following the date of
the initial public announcement of the Offer, (B) terminated the Offer, (C)
failed to pay for the Class A Shares pursuant to the Offer by October 1, 1999
(provided, however, that any termination pursuant to this clause C must be
made by written notice irrevocably stating the intent of the Company to
terminate the Tender Offer Agreement delivered to the Purchaser by 12:00
noon, Dallas time, on October 1, 1999), or (ii) prior to the purchase of
Class A Shares pursuant to the Offer, a person or group has made a bona fide
offer that the Board of Directors of the Company by a majority vote
determines in its good faith
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<PAGE>
judgment and in the exercise of its fiduciary duties, after consultation with
its financial advisors and based as to legal matters on the written opinion
of legal counsel, is obligated by its fiduciary duties under applicable law
to terminate the Tender Offer Agreement, provided that such termination under
this clause (ii) will not be effective until payment of the Termination Fee
(as defined below); (e) by the Purchaser prior to the purchase of Class A
Shares pursuant to the Offer, if (i) there has been a breach (which breach is
not cured or not capable of being cured prior to the earlier of (A) ten days
following notice to the Company by the Purchaser of such breach or (B) two
business days prior to the expiration date of the Offer, as extended from
time to time pursuant to the terms of the Tender Offer Agreement) of any
representation or warranty on the part of the Company having a Company
Material Adverse Effect or materially adversely affecting or delaying the
ability of the Purchaser to consummate the Offer or the Company to effectuate
the Reverse Split, (ii) there has been a breach (which breach is not cured or
not capable of being cured prior to the earlier of (A) ten days following
notice to the Company by the Purchaser of such breach or (B) two business
days prior to the expiration date of the Offer, as extended from time to time
pursuant to the terms of the Tender Offer Agreement) of any covenant or
agreement on the part of the Company resulting in a Company Material Adverse
Effect or materially adversely affecting or delaying the ability of the
Purchaser to consummate the Offer or the Company to effectuate the Reverse
Split, (iii) the Company engages in negotiations with any person or group
(other than the Purchaser) that has proposed a Third Party Acquisition with
certain excepts; (iv) the Company enters into an agreement, letter of intent
or arrangement with respect to a Third Party Acquisition, (v) the Board has
withdrawn or modified (including by amendment of the Schedule 14D-9) in a
manner adverse to the Purchaser its approval or recommendation of the Offer,
the Tender Offer Agreement or the Reverse Split or has recommended another
offer or has adopted any resolution to effect any of the foregoing, or (vi)
the Minimum Condition has not been satisfied by the expiration date of the
Offer and on or prior to such date (A) any person or group (other than the
Purchaser) has made and not withdrawn a public announcement with respect to a
Third Party Acquisition or (B) any person or group (including the Company or
any of its affiliates) other than the Purchaser has become the beneficial
owner of 9.9% (except in bona fide arbitrage transactions) or more of the
Class A Shares and Class B Shares; or (f) by the Company if (i) there has
been a breach (which breach is not cured or not capable of being cured prior
to the earlier of (A) ten days following notice to the Purchaser of such
breach or (B) two business days prior to the expiration date of the Offer, as
extended from time to time pursuant to the terms of the Tender Offer
Agreement) of any representation or warranty on the part of the Purchaser
that materially adversely affects (or materially delays) the consummation of
the Offer or (ii) there has been a material breach (which breach is not cured
or not capable of being cured prior to the earlier of (A) ten days following
notice to the Purchaser of such breach or (B) two business days prior to the
expiration date of the Offer, as extended from time to time pursuant to the
terms of the Tender Offer Agreement) of any covenant or agreement on the part
of the Purchaser that materially adversely affects (or materially delays) the
consummation of the Offer.
TERMINATION FEE. Pursuant to the Tender Offer Agreement, in the
event (A) the Purchaser terminates the Tender Offer Agreement pursuant to
clause (e)(i) through (e)(v) of the preceding paragraph or (B) the Company is
not at such time in material breach of the Tender Offer Agreement and
terminates the Tender Offer Agreement pursuant to clause (d)(ii) of the
preceding paragraph, the Company will reimburse the Purchaser and its
affiliates (not later than one business day after submission of statements
together with reasonable documentation therefor) for all out-of-pocket fees
and expenses actually incurred by any of them or on its behalf in connection
with the Offer and the proposed consummation of all transactions contemplated
by the Tender Offer Agreement (including, without limitation, costs of
advertising, filing fees and fees payable to legal counsel, financial
printers, financing sources, investment bankers, counsel to any of the
foregoing, and accountants); provided, that in the event the Purchaser or its
affiliates seek and obtain payment under these circumstances, the Company
shall not be additionally liable for consequential or speculative
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<PAGE>
damages arising from such termination. If, (i) (A) the Purchaser terminates
the Tender Offer Agreement pursuant to clause (e)(i) through (e)(v) of the
preceding paragraph or (B) if the Company terminates the Tender Offer
Agreement pursuant to clause (d)(i)(C) of the preceding paragraph and, within
nine months thereafter, the Company enters into an agreement, letter of
intent or binding arrangement with respect to a Third Party Acquisition, or a
Third Party Acquisition occurs or (ii) the Company terminates the Tender
Offer Agreement pursuant to clause (d)(ii) of the preceding paragraph, then
in either case the Company will reimburse, in cash, the Purchaser within one
business day following the execution and delivery of such agreement or letter
of intent or the entering into of such an arrangement or the occurrence of
such Third Party Acquisition, as the case may be, or simultaneously with such
termination pursuant to clause (d)(ii) of the preceding paragraph for all
out-of-pocket fees and expenses actually incurred by or on behalf of
Purchaser in connection with the Offer and the proposed consummation of all
the transactions contemplated by the Tender Offer Agreement (including,
without limitation, costs of advertising, filing fees and fees payable to
legal counsel, financial printers, financing sources, investment bankers,
counsel to any of the foregoing and accountants) not in excess of $100,000
(the "Termination Fee").
"Third Party Acquisition" means the occurrence of any of the
following events (i) the acquisition of the Company by merger or otherwise by
any person or group other than the Purchaser, or any affiliate of the
Purchaser (a "Third Party"); (ii) the acquisition by a Third Party of any
substantial portion of the business or assets of the Company and its
subsidiaries taken as a whole; (iii) the acquisition by a Third Party of 9.9%
or more of the outstanding Class A Shares or Class B Shares from the Company
or in a transaction or series of related transactions that results in a
change of control of the Company; (iv) the adoption by the Company of a plan
of liquidation or the declaration or payment of an extraordinary dividend; or
(v) the acquisition by the Company or any of its subsidiaries of more than
9.9% of the outstanding Class A Shares or Class B Shares.
COSTS AND EXPENSES. Except as discussed above, the Tender Offer
Agreement provides that all costs and expenses incurred in connection with
the transactions contemplated by the Tender Offer Agreement shall be paid by
the party incurring such costs and expenses.
APPRAISAL RIGHTS. Holders of Class A Shares do not have dissenters'
rights as a result of the Offer.
LOCK-UP AND VOTING AGREEMENT. The following is a summary of certain
provisions of the Lock-Up and Voting Agreement, which is filed as an Exhibit
to the Tender Offer Statement and is incorporated herein by reference. Such
summary is qualified in its entirety by reference to the Lock-Up and Voting
Agreement.
In connection with the execution of the Tender Offer Agreement
certain holders of Class B Shares, which in the aggregate own no Class A
Shares and 3,781,725 Class B Shares, have entered into lock-up and voting
agreements with the Purchaser pursuant to which each such stockholder has
agreed that no Stockholder shall (i) other than gifts to persons who agree to
be subject to the terms of the Lock-Up and Voting Agreement, directly or
indirectly offer for sale, sell, transfer, tender, convert, exchange, pledge,
encumber, assign or otherwise dispose of, or enter into any contract, option
or other arrangement or understanding with respect to or consent to the offer
for sale, sale, transfer, tender, conversion, exchange, pledge, encumbrance,
assignment or other disposition of, any or all of such stockholder's Class A
Shares or Class B Shares or any interest therein; (ii) except as contemplated
by the Lock-Up and Voting Agreement, grant any proxies or powers of attorney,
deposit any Class A Shares or Class B Shares into a voting trust or enter
into a voting agreement with respect to any Class A Shares or Class B Shares;
or (iii) take any action that would make any representation or warranty of
such stockholder contained in untrue or incorrect or would have the effect of
preventing or disabling such stockholder from performing such stockholder's
obligations under the Lock-Up and Voting Agreement.
Each such stockholder has further agreed at any meeting of the
holders of Class A Shares or Class B Shares, however called, or in connection
with any written consent of the holders of Class A Shares or Class B Shares,
such stockholder shall vote (or cause to be voted) the Class A Shares and
Class B Shares held of record or beneficially owned by such stockholder,
whether issued, heretofore owned or hereafter acquired, (i) in favor of a
50,000 to 1 reverse stock split of the Class A Shares and the Class B Shares,
the execution and delivery by the Company of the Tender Offer Agreement and
the approval of the terms thereof and each of the other actions contemplated
by the Tender Offer
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Agreement and the Lock-Up and Voting Agreement and any actions required in
furtherance thereof; (ii) against any action or agreement that would result
in a breach in any respect of any covenant, representation or warranty or any
other obligation or agreement of the Company under the Tender Offer Agreement
or the Lock-Up and Voting Agreement (after giving effect to any materiality
or similar qualifications contained therein); and (iii) except as otherwise
agreed to in writing in advance by Purchaser, against the following actions
(other than the transactions contemplated by the Tender Offer Agreement): (A)
any extraordinary corporate transaction, such as a merger, consolidation or
other business combination involving the Company or its subsidiaries; (B) a
sale, lease or transfer of a material amount of assets of the Company or its
subsidiaries, or a reorganization, recapitalization, dissolution or
liquidation of the Company or its subsidiaries; (C) (1) any change in a
majority of the persons who constitute the board of directors of the Company;
(2) any change in the present capitalization of the Company or any amendment
of the Company's Articles of Incorporation or Bylaws; (3) any other material
change in the Company's corporate structure or business; or (4) any other
action involving the Company or its subsidiaries which is intended, or could
reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the transactions contemplated by the Lock-Up and
Voting Agreement and the Tender Offer Agreement. Further, each such
stockholder agreed that it shall not enter into any agreement or
understanding with any Person or entity the effect of which would be
inconsistent with or violative of the foregoing provisions and agreements.
WARRANT. The following is a summary of certain provisions of the
Warrant, which is filed as an Exhibit to the Tender Offer Statement and is
incorporated herein by reference. Such summary is qualified in its entirety
by reference to the Warrant.
In order to induce the Purchaser to enter into the Tender Offer
Agreement, simultaneously with the execution of the Tender Offer Agreement,
the Company issued to Purchaser a warrant to purchase from the Company (a)
228,133 Class A Shares (being approximately equal to 4.9% of the number of
Class A Shares that, as of February 22, 1999, were issued and outstanding on
a fully diluted basis giving effect to the exercise of the Warrant and the
exercise of all securities (other than of Class B Shares) convertible into
Class A Shares) and (b) 235,861 Class B Shares (being approximately equal to
4.9% of the number of Class B Shares that, as of February 22, 1999, were
issued and outstanding on a fully diluted basis giving effect to the exercise
of the Warrant and the exercise of all securities convertible into Class B
Shares).
The exercise price per Class A Share and Class B Share under the
Warrant is equal to the Offer Price.
The Purchaser may exercise the Warrant, in whole or in part, at any
time and from time to time prior to December 31, 2003 after the occurrence of
an Exercise Event (as defined below).
An "Exercise Event" shall occur for purposes of the Warrant upon
the occurrence prior to December 31, 1999 of any of the following:
(a) the Company shall have entered into an agreement with a
Third Party pursuant to which such Third Party would acquire in excess
of 9.9% of any class of equity securities of the Company or any
substantial portion of the business or assets of the Company; or
(b) the Board of Directors of the Company or any record or
beneficial holder of more than 5% of the Class B Shares shall recommend
or not oppose any transaction with a Third Party similar to the
transactions contemplated by the Tender Offer Agreement.
13. DIVIDENDS AND DISTRIBUTIONS
Pursuant to the terms of the Tender Offer Agreement, neither the
Company nor any of its subsidiaries will issue, sell, or dispose of
additional shares of capital stock of any class (including the Class A Shares
and Class B Shares) of the Company or any of its subsidiaries, or securities
convertible into or exchangeable for any such shares or securities, or any
rights, warrants or options to acquire any such shares or securities, other
than Class A Shares and Class B Shares issued upon exercise of options
disclosed in the Tender Offer Agreement; (ii) redeem, purchase, or otherwise
acquire,
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or propose to redeem purchase, or otherwise acquire, any of its outstanding
capital stock, or other securities of the Company or any of its subsidiaries;
or (iii) split, combine, subdivide, or reclassify any of its capital stock or
declare, set aside, make, or pay any dividend or distribution on any shares
of its capital stock except for dividends or distributions to the Company and
its subsidiaries from their respective subsidiaries.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, the Purchaser
will not be required to accept for payment or (subject to any applicable
rules and regulations of the Commission, including Rule 14e-l(c) relating to
the obligation of the Purchaser to pay for or return tendered Class A Shares
promptly after the termination or withdrawal of the Offer) to pay for
tendered Class A Shares, or may terminate or amend the Offer as provided in
the Tender Offer Agreement, or may postpone the acceptance for payment of, or
payment for, tendered Class A Shares (whether or not any other tendered Class
A Shares have been accepted for payment or paid for pursuant to the Offer) if
prior to the expiration of the Offer (i) the Minimum Condition has not been
satisfied; or (ii) if at any time on or after the date of the Tender Offer
Agreement, and at any time before the time of acceptance for payment of any
such tendered Class A Shares, any of the following occurs:
(1) any of the representations or warranties of the Company
contained in the Tender Offer Agreement is not true and correct at and
as of any date prior to the expiration date of the Offer as if made at
and as of such time, except for (i) failures to be true and correct as
could not, individually or in the aggregate, reasonably be expected to
result in a Company Material Adverse Effect; or (ii) failures to comply
as are capable of being and are cured prior to the earlier of (A) ten
days after written notice from the Purchaser to the Company of such
failure or (B) two business days prior to the expiration date of the
Offer;
(2) the Company has failed to comply with any of its
obligations under the Tender Offer Agreement, except for (i) failures
to so comply as could not, individually or in the aggregate, reasonably
be expected to result in a Company Material Adverse Effect; and (ii)
failures to comply as are capable of being and are cured prior to the
earlier of (A) ten days after written notice from the Purchaser to the
Company of such failure or (B) two business days prior to the
expiration date of the Offer;
(3) the Board of Directors of the Company has withdrawn or
modified in any respect adverse to the Purchaser its recommendation of
the Offer or taken any position inconsistent with such recommendation;
(4) the Tender Offer Agreement has been terminated in
accordance with its terms;
(5) the Company has reached an agreement with the
Purchaser that the Offer be terminated or amended;
(6) any state, federal or foreign government or governmental
authority has taken any action, or proposed, sought, promulgated or
enacted, or any state, federal or foreign government or governmental
authority or court has entered, enforced or deemed applicable to the
Offer or the transactions contemplated by the Tender Offer Agreement,
any statute, rule, regulation, judgment, order or injunction that is
reasonably likely to (i) make the acceptance for payment of, the
payment for or the purchase of some or all of the tendered Class A
Shares and the Class B Shares illegal or otherwise restrict, materially
delay, prohibit consummation of or make materially more costly, the
Offer or the Reverse Split, (ii) result in a material delay in or
restrict the ability of the Purchaser, or render the Purchaser unable,
to accept for payment, pay for or purchase some or all of the tendered
Shares in the Offer or for the Company to effectuate the Reverse Split,
(iii) require the divestiture by, the Purchaser or the Company or any
of their respective subsidiaries or affiliates of all or any material
portion of the business, assets or property of any of them or any Class
A Shares or Class B Shares, or impose any material limitation on the
ability of any of them to conduct their business and own such assets,
properties and Class A Shares and Class B Shares, (iv) impose material
limitations on the ability of the Purchaser to acquire or hold or to
exercise effectively all rights of ownership of the Class A Shares or
Class B Shares, including the right to vote any Class A Shares or the
Class B Shares acquired by either of them on
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<PAGE>
all matters properly presented to the stockholders of the Company or
(v) impose any limitations on the ability of the Purchaser or any of
its respective subsidiaries or affiliates effectively to control in
any material respect the business or operations of the Company, the
Purchaser or any of their respective subsidiaries or affiliates;
(7) any change (or any condition, event or development
involving a prospective change) has occurred or been threatened in the
business, properties, assets, liabilities, capitalization,
stockholders' equity, financial condition, operations, licenses or
franchises, results of operations or prospects of the Company or any of
its subsidiaries, that could reasonably be expected to result in a
Company Material Adverse Effect;
(8) there has occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market or quotations for shares
traded thereon as reported by the Nasdaq or otherwise, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (iii)
a commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United
States, (iv) any limitation (whether or not mandatory) by any
governmental authority on the extension of credit by banks or other
financial institutions, (v) after the date of the Tender Offer
Agreement, an aggregate decline of at least 25% in the Dow Jones
Industrial Average or Standard & Poor's 500 Index or a decline in
either such index of 12 1/2% in any 24-hour period, or (vi) in the case
of any of the occurrences referred to in clauses (i) through (iv)
existing at the time of the commencement of the Offer, in the
reasonable judgment of the Purchaser, a material acceleration or
worsening thereof;
(9) any person or group other than the Purchaser and its
affiliates has entered into a definitive agreement or an agreement in
principle with the Company with respect to a tender offer or exchange
offer for any Class A Shares or Class B Shares or a merger,
consolidation or other business combination or acquisition with or
involving the Company or any of its subsidiaries; or
(10) any material approval, permit, authorization, consent or
waiting period of any domestic or foreign, governmental, administrative
or regulatory entity (federal, state, local, provincial or otherwise)
has not been obtained or satisfied on terms satisfactory to the
Purchaser in its sole discretion;
that, in the good faith judgment of the Purchaser, makes it inadvisable to
proceed with the Offer or with such acceptance for payment of, or payment
for, tendered Class A Shares or to proceed with the Reverse Split.
The foregoing conditions are for the sole benefit of the Purchaser
and may be asserted by the Purchaser regardless of the circumstances giving
rise to any such condition or may be waived by the Purchaser in whole or in
part at any time and from time to time in its sole discretion (subject to the
terms of the Tender Offer Agreement). The failure by the Purchaser at any
time to exercise any of the foregoing rights will not be deemed a waiver of
any such right, the waiver of any such right with respect to particular facts
and circumstances will not be deemed a waiver with respect to any other facts
or circumstances and each such right will be deemed an ongoing right that may
be asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS; REGULATORY MATTERS
Based on a review of publicly available filings made by the Company
with the Commission and other publicly available information concerning the
Company, the Purchaser is not aware of any license or regulatory permit that
appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the Purchaser's
acquisition of Class A Shares as contemplated herein or of any approval or
other action, except as otherwise described in this Section 15, by any
governmental entity that would be required for the acquisition or ownership
of Class A Shares by the Purchaser as contemplated herein. Should any such
approval or other action be required, the Purchaser currently contemplates
that such approval or other action will be sought. While, except as otherwise
expressly described in this Section 15, the Purchaser does not presently
intend to delay the acceptance for payment of or payment for Class A Shares
tendered pursuant to the Offer pending the outcome of any such matter, there
can be no assurance that any such approval or other action, if needed, would
be obtained or would be obtained without
-25-
<PAGE>
substantial conditions or that failure to obtain any such approval or other
action might not result in consequences adverse to the Company's business or
that certain parts of the Company's business might not have to be disposed of
if such approvals were not obtained or such other actions were not taken.
Because of the failure of such approvals or other actions or because of
conditions to be imposed in connection with such approvals or other actions,
the Purchaser could decline to accept for payment or pay for any Class A
Shares tendered. See Section 14 for certain conditions to the Offer.
STATE TAKEOVER LAWS. A number of states throughout the United States
have enacted takeover statutes that purport, in varying degrees, to be
applicable to attempts to acquire securities of corporations that are
incorporated or have assets, stockholders, executive offices or places of
business in such states. In Edgar v. MITE Corp., the Supreme Court of the
United States held that the Illinois Business Takeover Act, which involved
state securities laws that made the takeover of certain corporations more
difficult, imposed a substantial burden on interstate commerce and therefore
was unconstitutional. In CTS Corp. v. Dynamics Corp. of America, however, the
Supreme Court of the United States held that a state may, as a matter of
corporate law and, in particular, those laws concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs
of a target corporation without prior approval of the remaining stockholders,
provided that such laws were applicable only under certain conditions.
Section 203 of the DGCL limits the ability of a Delaware corporation
to engage in business combinations with "interested stockholders" (defined as
any beneficial owner of 15% or more of the outstanding voting stock of the
corporation) unless, among other things, the corporation's board of directors
has given its prior approval to either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder." The Company's Board of Directors has approved the Tender Offer
Agreement and the Purchaser's acquisition of tendered Class A Shares pursuant
to the Offer and, therefore, Section 203 of DGCL is inapplicable to the Offer.
Based on information supplied by the Company, the Purchaser does not
believe that any state takeover statutes purport to apply to the Offer. The
Purchaser has not currently complied with any state takeover statute or
regulation. The Purchaser reserves the right to challenge the applicability
or validity of any state law purportedly applicable to the Offer and nothing
in this Offer to Purchase or any action taken in connection with the Offer is
intended as a waiver of such right. If it is asserted that any state takeover
statute is applicable to the Offer and an appropriate court does not
determine that it is inapplicable or invalid as applied to the Offer, the
Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities, and the Purchaser might be
unable to accept for payment or pay for Class A Shares tendered pursuant to
the Offer or be delayed in consummating the Offer. In such case, the
Purchaser may not be obliged to accept for payment or pay for any Class A
Shares tendered pursuant to the Offer.
ANTITRUST. The Company and the Purchaser do not believe that the
reporting requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act") require the filing by the Purchaser of a
Notification and Report Form with respect to the Offer. As such, no waiting
period under the HSR Act is applicable to the Offer. Notwithstanding the
foregoing, if the Antitrust Division or the FTC raises substantive issues in
connection with the Offer, the parties may engage in negotiations with the
relevant governmental agency concerning possible means of addressing those
issues and may agree to delay consummation of the transaction while such
negotiations continue.
The FTC and the Antitrust Division frequently scrutinize the
legality under the antitrust laws of transactions such as the Purchaser's
proposed acquisition of the Company. At any time before or after the
Purchaser's purchase of tendered Class A Shares pursuant to the Offer, the
Antitrust Division or FTC could take such action under the antitrust laws as
it deems necessary or desirable in the public interest, including seeking to
enjoin the purchase of tendered Class A Shares pursuant to the Offer or
seeking the divestiture of Class A Shares acquired by the Purchaser or the
divestiture of substantial assets of the Purchaser, or the Company or its
subsidiaries. Private parties may also bring legal action under the antitrust
laws under certain circumstances. There can be no assurance that a challenge
to the Offer on antitrust grounds will not be made or, if such a challenge is
made, of the results thereof.
APPRAISAL RIGHTS. No appraisal rights are available in connection
with the Offer.
-26-
<PAGE>
"GOING PRIVATE" TRANSACTIONS. The Commission has adopted Rule 13e-3
under the Exchange Act which is applicable to certain "going private"
transactions and which may under certain circumstances be applicable to a
combination following the purchase of Class A Shares pursuant to the Offer in
which Purchaser seeks to acquire the remaining Class A Shares or Class B
Shares not held by it. Purchaser believes, however, that Rule 13e-3 will not
be applicable. Rule 13e-3 requires, among other things, that certain
financial information concerning the Company and certain information relating
to the fairness of the proposed transaction and the consideration offered to
minority stockholders in such transaction, be filed with the Commission and
disclosed to stockholders prior to consummation of the transaction.
16. FEES AND EXPENSES
The Purchaser has retained BankBoston, N.A. to act as the Depositary
in connection with the Offer. The Depositary will receive reasonable and
customary compensation for its services, be reimbursed for certain reasonable
out-of-pocket expenses and be indemnified against certain liabilities and
expenses in connection therewith, including certain liabilities under the
federal securities laws.
The Purchaser will not pay any fees or commissions to any broker or
dealer or other person (other than the Information Agent) in connection with
the solicitation of tenders of Class A Shares pursuant to the Offer. Brokers,
dealers, banks and trust companies will be reimbursed by the Purchaser upon
request for customary mailing and handling expenses incurred by them in
forwarding material to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or
on behalf of) holders of Class A Shares in any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the laws of such jurisdiction. The Purchaser is not aware of any jurisdiction
in which the making of the Offer or the tender of Class A Shares in
connection therewith would not be in compliance with the laws of such
jurisdiction. To the extent the Purchaser becomes aware of any state law that
would limit the class of offerees in the Offer, the Purchaser will amend the
Offer and, depending on the timing of such amendment, if any, will extend the
Offer to provide adequate dissemination of such information to holders of
Class A Shares prior to the expiration of the Offer. In any jurisdiction the
securities, blue sky or other laws of which require the Offer to be made by a
licensed broker or dealer, the Offer is being made on behalf of the Purchaser
by one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser has filed with the Commission the Tender Offer
Statement pursuant to Rule 14d-3 under the Exchange Act, furnishing certain
additional information with respect to the Offer. In addition, the Company
has filed with the Commission the Schedule 14D-9 pursuant to Rule 14d-9 under
the Exchange Act, setting forth its recommendation with respect to the Offer
and the reasons for such recommendation and furnishing certain additional
related information. Such statements and schedules and any amendments
thereto, including exhibits, should be available for inspection and copies
should be obtainable in the manner set forth in Sections 8 and 9 (except that
they will not be available at the regional offices of the Commission).
GAP CAPITAL, L.L.C.
-27-
<PAGE>
SCHEDULE I
MANAGER OF THE PURCHASER
1. MANAGER OF THE PURCHASER. The name, business address, present
principal occupation or employment and five-year employment history of the
sole Manager of the Purchaser is set forth below. The business address of
such Manager is 6310 Lemmon Avenue, Suite 202, Dallas, Texas 75209. The
Manager listed below is a citizen of the United States.
<TABLE>
<CAPTION>
POSITION WITH PURCHASER; PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY; OUTSIDE DIRECTORSHIPS
- ----------------------------------- -----------------------------------------------------------------------------
<S> <C>
Roger J. Pipes Mr. Pipes has been the sole Manager of the Purchaser since its formation in
May 1999. Mr. Pipes also acts as and has been the managing partner of
Harvard Capital, L.L.C., a private company, since its formation in 1995,
and in that capacity has been engaged in investments in financial
obligations, operating companies, and real estate. From 1991 to 1994, Mr.
Pipes was the President and part owner of U.S. Recovery, Inc., which
engaged in investments in real estate, financial obligations, and operating
companies. He served as a Director of CBQ, Inc., a publicly traded
Colorado corporation, from November 19, 1998 to April 30, 1999. He is not
presently serving on the Board of any publicly traded companies, but does
serve on the Boards of operating companies in which he, Harvard Capital,
L.L.C. or U.S. Recovery, Inc. have investments. Mr. Pipes received a
degree in business for Southern Methodist University in 1975 and a Juris
Doctorate from Texas Tech School of Law in 1978. He is licensed to
practice law in the State of Texas.
</TABLE>
The Letter of Transmittal, certificates for Class A Shares and any
other required documents should be sent or delivered by each stockholder of
the Company or such stockholder's broker, dealer, bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
BankBoston, N.A.
<TABLE>
<CAPTION>
BY OVERNIGHT COURIER: BY MAIL DELIVERY: BY HAND:
<S> <C> <C>
BankBoston N.A. BankBoston, N.A. Securities Transfer and
c/o EquiServe c/o EquiServe Reporting Services, Inc.
Corporate Actions Corporate Actions c/o EquiServe
150 Royall Street, MS 45-01-40 P.O. Box 8029 100 William Street, Galleria
Canton, MA 02021 Boston, MA 02266-8029 New York, NY 10038
</TABLE>
FOR INFORMATION:
Call (781) 575-3120
-28-
<PAGE>
Questions and requests for assistance or for additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may be directed to the Purchaser at the telephone numbers
and location listed below. You may also contact your broker, dealer, bank,
trust company or other nominee for assistance concerning the Offer.
GAP Capital, L.L.C.
6310 Lemmon Avenue, Suite 202
Dallas, Texas 75209
(214) 350-9070
Attn: Roger J. Pipes, its Manager
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF CLASS A COMMON STOCK
OF
MOBLEY ENVIRONMENTAL SERVICES, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED JUNE 11, 1999
BY
GAP CAPITAL, L.L.C.
ROGER J. PIPES, MANAGER
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT NEW YORK CITY
TIME ON MONDAY, JULY 12, 1999, UNLESS EXTENDED
- -------------------------------------------------------------------------------
THE DEPOSITARY:
BankBoston, N.A.
<TABLE>
<CAPTION>
BY OVERNIGHT COURIER: BY MAIL DELIVERY: BY HAND:
<S> <C> <C>
BankBoston N.A. BankBoston N.A. Securities Transfer and
c/o EquiServe c/o EquiServe Reporting Services, Inc.
Corporate Actions Corporate Actions c/o EquiServe
150 Royall Street, MS 45-01-40 P.O. Box 8029 100 William Street, Galleria
Canton, MA 02021 Boston, MA 02266-8029 New York, NY 10038
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION
OF INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL SHOULD BE
READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates are
to be forwarded herewith or, unless an Agent's Message (as defined Section on
2 of the Offer to Purchase) is utilized, if delivery of Class A Shares (as
defined below) is to be made by book-entry transfer to an account maintained
by the Depositary at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in Section 2 of the Offer to
Purchase. Stockholders who deliver Class A Shares by book-entry transfer are
referred to herein as "Book-Entry Stockholders" and other stockholders are
referred to herein as "Certificate Stockholders." Stockholders whose
certificates for Class A Shares are not immediately available or who cannot
deliver either the certificates for, or a Book-Entry Confirmation (as defined
in Section 2 of the Offer to Purchase) with respect to, their Class A Shares
and all other documents required hereby to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) must
tender their Class A Shares in accordance with the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase. See Instruction 2.
/ / CHECK HERE IF TENDERED CLASS A SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY
PARTICIPANTS IN BOOK-ENTRY TRANSFER FACILITY MAY DELIVER CLASS A SHARES
BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
-----------------------------------------
Account Number
--------------------------------------------------------
Transaction Code Number
-----------------------------------------------
/ / CHECK HERE IF TENDERED CLASS A SHARES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
1
<PAGE>
Name(s) of Registered Owner(s)
----------------------------------------
Window Ticket Number (if any)
-----------------------------------------
Date of Execution of Notice of Guaranteed Delivery
--------------------
Name of Institution That Guaranteed Delivery
-------------------------
Account Number
--------------------------------------------------------
Transaction Code Number
-----------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF CLASS A SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON CLASS A SHARES TENDERED
CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- ------------------------------------------------------------------- ---------------------- --------------------- -------------------
TOTAL NUMBER OF
CLASS A SHARES
CERTIFICATE REPRESENTED BY NUMBER OF CLASS A
NUMBER(S)(1) CERTIFICATE(S)(1) SHARES TENDERED (2)
---------------------- --------------------- -------------------
<S> <C> <C> <C>
---------------------- --------------------- -------------------
---------------------- --------------------- -------------------
---------------------- --------------------- -------------------
---------------------- --------------------- -------------------
---------------------- --------------------- -------------------
TOTAL CLASS A SHARES
- ------------------------------------------------------------------- ---------------------- --------------------- -------------------
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Class A Shares described above are being tendered. See Instruction 4.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to GAP Capital, L.L.C.., a Texas
limited liability company (the "Purchaser"), the above described shares of
Class A common stock, par value $.01 per share (collectively, the "Class A
Shares"), of Mobley Environmental Services, Inc., a Delaware corporation (the
"Company"), pursuant to the Purchaser's offer to purchase all outstanding
Class A Shares at a price of $.20 per Class A Share, net to the seller in
cash, without interest, in accordance with the terms and conditions of the
Purchaser's Offer to Purchase dated June 11, 1999 (the "Offer to Purchase"),
and this Letter of Transmittal (which, together with any amendments or
supplements thereto or hereto, collectively constitute the "Offer"), receipt
of which is hereby acknowledged.
Upon the terms of the Offer, subject to, and effective upon,
acceptance for payment of, and payment for, the Class A Shares tendered
herewith in accordance with the terms of the Offer (including, if the Offer
is extended or amended, the terms or conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon
the order of, the Purchaser all right, title and interest in and to all the
Class A Shares that are being tendered hereby (and any and all other Class A
Shares or other securities or rights issued or issuable in respect of such
Class A Shares on or after June 4, 1999) and irrevocably constitutes and
appoints the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Class A Shares (and any such other Class A
Shares or securities or rights), with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an
interest), to (a) deliver certificates for such Class A Shares (and any such
other Class A Shares or securities or rights) or transfer ownership of such
Class A Shares (and any such other Class A Shares or securities or rights) on
the account books maintained by the Book-Entry Transfer Facility together, in
any such case, with all accompanying evidences of transfer and authenticity
to, or upon the order of, the Purchaser, (b) present such Class A Shares (and
any such other Class A Shares or securities or rights) for transfer on the
Company's books and (c) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Class A Shares (and any such other
Class A Shares or securities or rights), all in accordance with the terms of
the Offer.
All authority conferred or agreed to be conferred pursuant to this
Letter of Transmittal shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives
of the undersigned and shall not be affected by, and shall survive, the death
or incapacity of the undersigned. Except as stated in the Offer to Purchase,
this tender is irrevocable.
2
<PAGE>
The undersigned hereby irrevocably appoints Roger J. Pipes, in his
capacity as sole manager of the Purchaser, and any individual who shall
hereafter succeed to such office of Purchaser, and each of them, and any
other designees of the Purchaser, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to vote at any annual,
special or adjourned meeting of the Company's stockholders or otherwise in
such manner as each such attorney and proxy or his substitute shall in his
sole discretion deem proper with respect to, to execute any written consent
concerning any matter as each such attorney and proxy or his substitute shall
in his sole discretion deem proper with respect to, and to otherwise act as
each such attorney and proxy or substitute shall in his sole discretion deem
proper with respect to, all the Class A Shares tendered hereby that have been
accepted for payment by the Purchaser prior to the time any such action is
taken and with respect to which the undersigned is entitled to vote (and with
respect to any and all other Class A Shares or other securities or rights
issued or issuable in respect of such Class A Shares on or after June 4,
1999). This appointment is effective when, and only to the extent that, the
Purchaser accepts for payment such Class A Shares as provided in the Offer to
Purchase. This power of attorney and proxy are irrevocable and are granted in
consideration of the acceptance for payment of such Class A Shares in
accordance with the terms of the Offer. Such acceptance for payment shall,
without further action, revoke all prior powers of attorney and proxies
appointed by the undersigned at any time with respect to such Class A Shares
(and any such other Class A Shares or securities or rights) and no subsequent
powers of attorney or proxies will be appointed by the undersigned, or be
effective, with respect thereto.
The undersigned understands that the valid tender of Class A Shares
pursuant to any one of the procedures described in Section 2 of the Offer to
Purchase and in the Instructions hereto will constitute a binding agreement
between the undersigned and the Purchaser upon the terms and subject to the
conditions of the Offer.
Unless otherwise indicated herein under "Special Payment
Instructions," please issue the check for the purchase price and/or return
any certificates for Class A Shares not tendered or accepted for payment in
the name(s) of the registered holder(s) appearing under "Description of Class
A Shares Tendered." Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail the check for the purchase price and/or
return any certificates for Class A Shares not tendered or accepted for
payment (and accompanying documents, as appropriate) to the address(es) of
the registered holder(s) appearing under "Description of Class A Shares
Tendered." In the event that both the Special Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price and/or return any certificates for Class A Shares not tendered
or accepted for payment (and any accompanying documents, as appropriate) in
the name of, and deliver such check and/or return such certificates (and any
accompanying documents, as appropriate) to, the person or persons indicated.
The undersigned recognizes that the Purchaser has no obligation pursuant to
the Special Payment Instructions to transfer any Class A Shares from the name
of the registered holder thereof if the Purchaser does not accept for payment
any of the Class A Shares so tendered.
3
<PAGE>
- ------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Class A Shares not tendered or
not accepted for payment and/or the check for the purchase price of Class A
Shares accepted for payment are to be issued in the name of someone other
than the undersigned, or if Class A Shares delivered by book-entry transfer
that are not accepted for payment are to be returned by credit to an account
maintained at the Book-Entry Transfer Facility other than the account
indicated above.
Issue check and/or certificate(s) to:
Name
-------------------------------------------------------------------------
(PLEASE PRINT)
Address
----------------------------------------------------------------------
- ------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Class A Shares not tendered or
not accepted for payment and/or the check for the purchase price of Class A
Shares accepted for payment are to be sent to someone other than the
undersigned or to the undersigned at an address other than that indicated
above.
Issue check and/or certificates to:
Name
-------------------------------------------------------------------------
(PLEASE PRINT)
Address
----------------------------------------------------------------------
- ------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- ------------------------------------------------------------------------------
4
<PAGE>
- ------------------------------------------------------------------------------
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated: , 1999
-----------------------------------------------
(Must be signed by registered holder(s) as name(s) appear(s) on the
certificate(s) for the Class A Shares or on a security position listing or by
person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, please provide the
following information and see Instruction 5.)
Name(s)
----------------------------------------------------------------------
- ------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title)
--------------------------------------------------------
Address
----------------------------------------------------------------------
- ------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.
--------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED - SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
---------------------------------------------------------
Name:
------------------------------------------------------------------------
(PLEASE PRINT)
Name of Firm
-----------------------------------------------------------------
Address
----------------------------------------------------------------------
- ------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.
--------------------------------------------------
Dated: , 1999
--------------------------------------
- ------------------------------------------------------------------------------
5
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURE. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a bank,
broker, dealer, credit union, savings association or other entity that is a
member in good standing of a recognized Medallion Program approved by The
Securities Transfer Association Inc. (each such entity an "Eligible
Institution"). No signature guarantee is required on this Letter of
Transmittal (a) if this Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this document, shall include any
participant in the Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Class A Shares) of Class A Shares
tendered herewith, unless such holder(s) has completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the reverse hereof, or (b) if such Class A Shares are
tendered for the account of an Eligible Institution. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed
by stockholders either if certificates are to be forwarded herewith or,
unless an Agent's Message is utilized, if delivery of Class A Shares is to be
made pursuant to the procedures for book-entry transfer set forth in Section
2 of the Offer to Purchase. For a stockholder validly to tender Class A
Shares pursuant to the Offer, either (a) a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees (or an Agent's Message) and any other required
documents, must be received by the Depositary at one of its addresses set
forth herein prior to the Expiration Date and either (i) certificates for
tendered Class A Shares must be received by the Depositary at one of such
addresses prior to the Expiration Date or (ii) Class A Shares must be
delivered pursuant to the procedures for book-entry transfer set forth herein
and a Book-Entry Confirmation must be received by the Depositary prior to the
Expiration Date or (b) the tendering stockholder must comply with the
guaranteed delivery procedures set forth below and in Section 2 of the Offer
to Purchase.
Stockholders whose certificates for Class A Shares are not immediate
available or who cannot deliver their certificates and all other required
documents to the Depositary or complete the procedures for book-entry
transfer prior to the Expiration Date may tender their Class A Shares by
properly completing and duly executing the Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedures set forth Section 2 of the
Offer to Purchase. Pursuant to such procedures, (a) such tender must be made
by or through an Eligible Institution, (b) a properly completed and duly
executed Notice of Guaranteed Delivery substantially in the form provided by
the Purchaser must be received by the Depositary prior to the Expiration Date
and (c) the certificates for all physically delivered Class A Shares or a
Book-Entry Confirmation with respect to all tendered Class A Shares, as well
as a properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and any other documents required by
this Letter of Transmittal, must be received by the Depositary within three
New York Stock Exchange, Inc. trading days after the date of execution of the
Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF CLASS A SHARES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING
STOCKHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and
no fractional Class A Shares will be purchased. All tendering stockholders,
by execution of this Letter of Transmittal (or facsimile thereof), waive any
right to receive any notice of the acceptance of their Class A Shares for
payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Class A Shares should be listed on a
separate schedule attached hereto.
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If
fewer than all the Class A Shares evidenced by any certificate submitted are
to be tendered, fill in the number of Class A Shares that are to be tendered
in the box entitled "Number of Class A Shares Tendered." In any such case,
new certificate(s) for the remainder of the Class A Shares that were
evidenced by the old certificate(s) will be sent to the registered holder,
unless otherwise provided in the appropriate box on this Letter of
Transmittal as soon as practicable after the expiration of the Offer. All
Class A Shares represented by certificates delivered to the Depositary will
be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTERS OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS.
If this Letter of Transmittal is signed by the registered holder of the Class
A Shares tendered hereby, the signature must correspond with the name written
on the face of the certificate(s) without any change whatsoever.
If any of the Class A Shares tendered hereby are owned of record by two
or more joint owners, such owners must sign this Letter of Transmittal.
6
<PAGE>
If any tendered Class A Shares are registered in different names on
several certificates, it be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered holder(s) of
the Class A Shares listed and transmitted hereby, no endorsements of
certificates or separate stock powers are required unless payment is to be
made to or certificates for Class A Shares not tendered or accepted for
payment are to be issued to a person other than the registered holder(s).
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of certificates listed, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates. Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Class A Shares to it or its order
pursuant to the Offer. If, however, payment of the purchase price is to be
made to, or if certificates for Class A Shares not tendered or accepted for
payment are to be registered in the name of, any persons other than the
registered holder(s), or if tendered certificates are registered in the name
of any person other than the person(s) signing this Letter of Transmittal,
the amount of any stock transfer taxes (whether imposed on the registered
holder(s) or such person) payable on account of the transfer to such person
will be deducted from the purchase price unless satisfactory evidence of the
payment of such taxes or exemption therefrom is submitted.
EXCEPT PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER
OF TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name of, and/or certificates for Class A Shares not tendered or not
accepted for payment are to be returned to, a person other than the signer of
this Letter of Transmittal or if a check is to be sent and/or such
certificates are to be returned to a person other than the signer of this
Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed.
8. WAIVER OF CONDITIONS. Subject to the terms of the Offer, the
Purchaser reserves the absolute right in its sole discretion to waive any of
the specified conditions of the Offer, in whole or in part, in the case of
any Class A Shares tendered.
9. 31% BACKUP WITHHOLDING. Under U.S. Federal income tax law, a
stockholder whose tendered Class A Shares are accepted for payment is
required to provide the Depositary with such stockholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Depositary
is not provided with the correct TIN, the Internal Revenue Service may
subject the stockholder or other payee to a $50 penalty. In addition,
payments that are made to such stockholder or other payee with respect to
Class A Shares purchased pursuant to the Offer may be subject to a 31% backup
withholding.
Certain stockholders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, the stockholder must submit a Form W-8, signed under
penalties of perjury, attesting to that individual's exempt status. A Form
W-8 can be obtained from the Depositary. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
more instructions.
If backup withholding applies, the Depositary is required to withhold
31% of any payments made to the stockholder or other payee with respect to
Class A Shares purchased pursuant to the Offer. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld, provided that the
required information is given to the Internal Revenue Service. If withholding
results in an overpayment of taxes, a refund may be obtained from the
Internal Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is
checked, the stockholder or other payee must also complete the Certificate of
Awaiting Taxpayer Identification Number below in order to avoid backup
withholding. Even if the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depository will
withhold 31% on all payments made prior to the time a properly certified TIN
is provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
7
<PAGE>
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Class A Shares or of the last transferee appearing on the transfers attached
to, or endorsed on, the Class A Shares. If the Class A Shares are in more
than one name or are not in the name of the actual owner, consult the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for additional guidance on which TIN to report.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for
additional copies of the Offer to Purchase, this Letter of Transmittal, the
Notice of Guaranteed Delivery and the Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 should be directed to
the Information Agent at its address set forth below. Questions or requests
for assistance may also be directed to the Information Agent.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR FACSIMILE COPY THEREOF
(TOGETHER WITH CERTIFICATES FOR, OR A BOOK-ENTRY CONFIRMATION WITH RESPECT
TO, TENDERED CLASS A SHARES WITH ANY REQUIRED SIGNATURE GUARANTEES AND ALL
OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE
OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, PRIOR TO THE
EXPIRATION DATE.
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 - PLEASE PROVIDE YOUR TIN Social Security Number OR
FORM W-9 IN THE BOX AT RIGHT AND CERTIFY Employer Identification Number
BY SIGNING AND DATING BELOW.
Department of the Treasury
Internal Revenue Service --------------------------------------
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN)
------------------------------------------------------------------------------------------
PART 2 - CERTIFICATION - Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued for me) and
(2) I am not subject to backup withholding either because: (a) I am exempt from backup
withholding or (b) I have not been notified by the Internal Revenue Service
(the "IRS") that I am subject to the backup withholding as a result of a failure to
report all interest or dividends or (c) the IRS has notified me that I am no
longer subject to backup withholding.
- ------------------------------------------------------------------------------------------------------------------------------------
PART 3: Awaiting TIN / /
- ------------------------------------------------------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS - You must cross out item (2) above if you have been notified by the IRS that you are currently
subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you are subject to backup withholding, you received another notification from IRS that you are no longer
subject to backup withholding, do not cross out such item (2).
SIGNATURE DATE
-------------------------------------------------- -------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
8
<PAGE>
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (1) I have mailed or delivered
an application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all reportable payments made to me will be withheld,
but that such amounts will be refunded to me if I then provide a Taxpayer
Identification Number within sixty (60) days.
Signature Date
----------------------------------------- --------------------
Questions and requests for assistance or additional copies of the Offer
to Purchase, this Letter of Transmittal and other tender offer materials may
be directed to the Purchaser as set, forth below.
GAP Capital, L.L.C.
6310 Lemmon Avenue, Suite 202
Dallas, Texas 75209
(214) 350-9070
Attn: Roger J. Pipes, its Manager
9
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
OF
MOBLEY ENVIRONMENTAL SERVICES, INC.
AT
$.20 NET PER SHARE
BY
GAP CAPITAL, L.L.C.
ROGER J. PIPES, MANAGER
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, JULY 12, 1999, UNLESS
THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
June 11, 1999
To Brokers, Dealers, Banks,
Trust Companies and Other Nominees:
We are enclosing the materials listed below in connection with the
offer by GAP Capital, L.L.C., a Texas limited company (the "Purchaser"), to
purchase all outstanding shares of Class A common stock, par value $.01 per
share (the "Class A Shares"), of Mobley Environmental Services, Inc., a
Delaware corporation (the "Company"), at $.20 per Class A Share, net to the
seller in cash, without interest, upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase dated June 11, 1999
(the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any supplements or amendments thereto, collectively constitute
the "Offer").
Please furnish copies of the enclosed materials to those of your
clients for whom you hold Class A Shares registered in your name or in the
name of your nominee. Enclosed herewith are copies of the following documents:
1. Offer to Purchase;
2. Letter of Transmittal to be used by stockholders of the
Company accepting the Offer;
3. A printed form of letter that may be sent to your clients
for whose account you hold Class A Shares in your name or in the
name of a nominee, with space provided for obtaining such client's
instructions with regard to the Offer;
4. Notice of Guaranteed Delivery;
5. Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9; and
6. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE
OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JULY 12, 1999, UNLESS EXTENDED.
The Board of Directors of the Company has unanimously approved the
Offer and determined that the Offer is fair to, and in the best interests of,
the stockholders of the Company and recommends that stockholders of the
Company accept the Offer and tender their Class A Shares.
The Offer is being made pursuant to the Tender Offer Agreement dated
as of June 4, 1999 (the "Tender Offer Agreement"), among the Purchaser and
the Company pursuant to which, following the consummation of the Offer and
1
<PAGE>
the satisfaction or waiver of conditions, the Purchaser shall be entitled to
designate a certain number of directors on the Company's Board of Directors,
depending on the number of Class A Shares the Purchaser acquires pursuant to
the Offer, as more fully described in the Offer to Purchase.
In order to accept the Offer, a duly executed and properly completed
Letter of Transmittal with any required signature guarantees, or an Agent's
Message (as defined the Offer to Purchase) in connection with a book-entry
delivery of shares, and any other required documents should be sent to the
Depositary and either Class A Share certificates representing the tendered
Class A Shares should be delivered to the Depositary, or such Class A Shares
should be tendered by book-entry transfer into the Depositary's account
maintained at the Book-Entry Transfer Facility (as described in Section 2 of
the Offer to Purchase), all in accordance with the instructions set forth in
the Letter of Transmittal and the Offer to Purchase.
If holders of Class A Shares wish to tender, but it is impracticable
for them to forward their Class A Share certificates or other required
documents on or prior to the Expiration Date or comply with the book-entry
transfer procedures on a timely basis, a tender may be effected by following the
guaranteed delivery procedures specified in Section 2 of the Offer to
Purchase.
The Purchaser will not pay any fees or commissions to any broker or
dealer or other person in connection with the solicitation of tenders of
Class A Shares pursuant to the Offer. You will be reimbursed upon request for
customary mailing and handling expenses incurred by you in forwarding the
enclosed offering materials to your customers.
Questions and requests for additional copies of the enclosed
material may be directed to the Purchaser at the address and telephone number
set forth on the back cover of the enclosed Offer to Purchase.
Very truly yours,
GAP CAPITAL, L.L.C.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER
YOU OR ANY OTHER PERSON THE AGENT OF THE PURCHASER OR THE DEPOSITARY OR ANY
AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY
INFORMATION OR USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF ANY OF
THEM WITH RESPECT TO THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.
2
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
OF
MOBLEY ENVIRONMENTAL SERVICES, INC.
AT
$.20 NET PER SHARE
BY
GAP CAPITAL, L.L.C.
J. ROGER PIPES, MANAGER
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, JULY 12, 1999, UNLESS
THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated June
11, 1999 (the "Offer to Purchase"), and a related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer") relating to an offer by GAP Capital, L.L.C., a Texas
limited liability company (the "Purchaser"), to purchase all outstanding
shares of Class A common stock, par value $.01 per share (the "Class A
Shares"), of Mobley Environmental Services, Inc., a Delaware corporation (the
"Company"), at $.20 per Class A Share, net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in the
Offer. Also enclosed is the Letter to Stockholders of the Company from the
Chairman and Chief Executive Officer of the Company accompanied by the
Company's Solicitation/Recommendation Statement on Schedule 14D-9.
WE ARE THE HOLDER OF RECORD OF CLASS A SHARES HELD BY US FOR YOUR
ACCOUNT. A TENDER OF SUCH CLASS A SHARES CAN BE MADE ONLY BY US AS THE HOLDER
OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED TO TENDER CLASS
A SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to tender any or all
the Class A Shares held by us for your account, pursuant to the terms and
conditions set forth in the Offer.
Your attention is invited to the following:
1. The tender price is $.20 per Class A Share, net to the
seller in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer.
2. The Board of Directors of the Company has unanimously
approved the Offer and determined that the Offer is fair to, and in
the best interests of, the stockholders of the Company and
recommends that the stockholders of the Company accept the Offer and
tender their Class A Shares.
3. The Offer is being made for all outstanding Class A Shares.
4. The Offer is being made pursuant to the Tender Offer
Agreement dated as of June 4, 1999 (the "Tender Offer Agreement"),
among the Purchaser and the Company pursuant to which, following the
consummation of the Offer and the satisfaction or waiver of certain
conditions, the Purchaser shall be entitled to designate a certain
number of directors on the Company's Board of Directors, depending
on the number of Class A Shares the Purchaser acquires pursuant to
the Offer, as more fully described in the Offer to Purchase.
5. In connection with the execution of the Tender Offer
Agreement, certain holders of the Class B Shares
1
<PAGE>
have entered into a lock-up and voting agreement with the Purchaser
(the "Lock-Up and Voting Agreement"), pursuant to which such
stockholders have agreed to vote any and all of their Class A Shares
and Class B Shares in favor of a 50,000 to 1 reverse stock split of
the Class A Shares and Class B Shares (the "Reverse Split") in the
event such a Reverse Split is to be voted on or otherwise approved
at a meeting of holders of Class A Shares or Class B Shares and have
agreed not to tender shares pursuant to the Offer.
6. In order to induce the Purchaser to enter into the Tender
Offer Agreement, simultaneously with the execution of the Tender
Offer Agreement, the Company issued to Purchaser a warrant (the
"Warrant"), pursuant to which the Company granted to the Purchaser
an option to acquire a certain number of Class A Shares and Class B
Shares upon the occurrence of certain events and in accordance with
certain terms and conditions set forth in the Warrant.
7. The Offer is conditioned upon, among other things, there
being validly tendered and not withdrawn prior to the expiration of
the Offer 2,662,975 Class A Shares.
8. The Offer and withdrawal rights will expire at 12:00
Midnight, New York City time, on Monday, July 12, 1999, unless the
Offer is extended by the Purchaser. In all cases, payment for Class
A Shares accepted for payment pursuant to the Offer will be made
only after timely receipt by the Depositary of certificates for such
Class A Shares (or timely Book-Entry Confirmation of a transfer of
such Class A Shares as described in Section 2 of the Offer to
Purchase), a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) or an Agent's Message (as defined
in the Offer to Purchase) in connection with a book-entry delivery
and any other documents required by the Letter of Transmittal.
9. The Purchaser will pay any stock transfer taxes with
respect to the transfer and sale of Class A Shares to it or its
order pursuant to the Offer, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
If you wish to have us tender any of or all your Class A Shares,
please so instruct us by completing, executing, detaching and returning to us
the instruction form set forth below. An envelope to return your instructions
to us is enclosed. If you authorize tender of your Class A Shares, all such
Class A Shares will be tendered unless otherwise specified below. Your
instructions to us should be forwarded promptly to permit us to submit a
tender on your behalf prior to the expiration of the Offer.
The Offer is not being made to, nor will tenders be accepted from or
on behalf of, holders of Class A Shares in any jurisdiction in which the
making or acceptance of the Offer would not be in compliance with the laws of
such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
OF
MOBLEY ENVIRONMENTAL SERVICES, INC.
The undersigned acknowledges receipt of your letter enclosing the
Offer to Purchase dated June 11, 1999, of GAP CAPITAL, L.L.C., a Texas
limited liability company and the related Letter of Transmittal relating to
shares of Class A common stock, par value $.01 per share (the "Class A
Shares"), of Mobley Environmental Services, Inc., a Delaware corporation.
This will instruct you to tender the number of Class A Shares
indicated below held by you for the account of the undersigned on the terms
and conditions set forth in such Offer to Purchase and the related Letter of
Transmittal.
Dated: , 1999
-----------------------
- ----------------------------------------
NUMBER OF CLASS A SHARES TO BE TENDERED*
CLASS A SHARES
- ----------------------------------------
----------------------------------------
----------------------------------------
SIGNATURE(S)
----------------------------------------
----------------------------------------
PLEASE PRINT NAME(S)
----------------------------------------
----------------------------------------
ADDRESS (INCLUDE ZIP CODE)
----------------------------------------
----------------------------------------
AREA CODE AND TELEPHONE NO.
----------------------------------------
----------------------------------------
TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NO.
- ----------------
*Unless otherwise indicated, it will be assumed that all your Class A Shares
are to be tendered.
3
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF CLASS A COMMON STOCK
OF
MOBLEY ENVIRONMENTAL SERVICES, INC
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
As set forth in Section 2 of the Offer to Purchase (as defined below),
this form or one substantially equivalent hereto must be used to accept the
Offer (as defined below) if certificates representing shares of Class A common
stock, par value $.01 per share (the "Class A Shares"), of Mobley Environmental
Services, Inc., a Delaware corporation (the "Company"), are not immediately
available or if the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase). Such form may be delivered by hand or transmitted by telegram or
facsimile transmission or mailed to the Depositary and must include a guarantee
by an Eligible Institution (as defined in Section 2 of the Offer to Purchase).
See Section 2 of the Offer to Purchase.
THE DEPOSITARY:
BankBoston, N.A.
<TABLE>
<CAPTION>
BY OVERNIGHT COURIER: BY MAIL DELIVERY: BY HAND:
<S> <C> <C>
BankBoston N.A. BankBoston, N.A. Securities Transfer and
c/o EquiServe c/o EquiServe Reporting Services, Inc.
Corporate Actions Corporate Actions c/o EquiServe
150 Royall Street, MS 45-01-40 P.O. Box 8029 100 William Street, Galleria
Canton, MA 02021 Boston, MA 02266-8029 New York, NY 10038
</TABLE>
BY FACSIMILE:
(781) 575-2233
CONFIRMATION BY TELEPHONE:
(781) 575-3120
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY.
This form is not be used to guarantee signatures. If a signature on
a Letter of Transmittal is required to be guaranteed by an Eligible
Institution under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
1
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to GAP Capital, L.L.C., a Texas
limited liability company (the "Purchaser"), upon the terms and subject to
the conditions set forth in the Purchaser's Offer to Purchase, dated June 11,
1999 (the "Offer to Purchase"), and in the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer"), receipt of which is hereby acknowledged, Class A
Shares pursuant to the guaranteed delivery procedures set forth in Section 2
of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Class A Shares: If Class A Shares will be tendered by book-entry transfer,
---------------------
Name(s) of Record Holder(s): Account Number:
------------------- -----------------------------------------
Signature(s):
- ------------------------------------------------ --------------------------------------------
(PLEASE PRINT)
----------------------------------------------------------
Certificate Nos. (if available): Dated:
---------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
Address(es):
-----------------------------------
- ------------------------------------------------
ZIP CODE
Area Code and Tel. No.:
------------------------
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a commercial bank or trust company or savings
institution having an office or correspondent in the United States or a
member firm of a registered national securities exchange or a member of the
National Association of Securities Dealers, Inc., hereby guarantees to
deliver to the Depositary either the certificates representing the Class A
Shares tendered hereby, in proper form for transfer, or a Book-Entry
Confirmation (as defined in Section 2 of the Offer to Purchase) of a transfer
of such Class A Shares, in any such case together with a properly completed
and duly executed Letter of Transmittal, or a manually signed facsimile
thereof, with any required signature guarantees or an Agent's Message, and
any other documents required by the Letter to Transmittal within three New
York Stock Exchange, Inc. trading days after the date hereof.
Name of Firm:
----------------------- -------------------------------------
(AUTHORIZED SIGNATURE)
Address:
----------------------------
Title:
------------------------------
- -------------------------------------
ZIP CODE Dated:
------------------------------
Area Code and Tel. No.:
--------------
NOTE: DO NOT SEND CERTIFICATES FOR CLASS A SHARES WITH THIS NOTICE. CLASS A
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ------------------------------ ----------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, any one of the
individuals(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the minor
account) is the only contributor,
the minor(1)
6. Account in the name of The ward, minor or
guardian or committee incompetent person(3)
for a designated ward,
minor or incompetent
person
7. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also trustee)
b. So-called trust The actual owner(1)
account that is not a
legal or valid trust
under State law
8. Sole proprietorship The owner(4)
account
<CAPTION>
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- ----------------------------- ----------------------------
<S> <C>
9. A valid trust, estate or The legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious, charitable or The organization
educational
organization account
12. Partnership account The partnership
held in the name of
the business
13. Association, club or The organization
other tax-exempt
organization
14. A broker or The broker or nominee
registered nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district or prison)
that receives
agricultural program
payments
</TABLE>
- --------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension
trust.
NOTE: If no name is circled when there is more than one name, the number
will be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you don't know
your number, obtain Form SS-5, Application for a Social Security Number Card,
or Form SS-4, Application for Employer Identification Number, at the local
office of the Social Security Administration or the Internal Revenue Service
and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments
include the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a) or an
individual retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States
or any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government
or any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the
U.S. or a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust or a non-exempt trust described
in section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of
1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section
1441.
- Payments to partnerships not engaged in a trade or business in the
U.S. and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid
in money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include
the following:
- Payments of interest on obligations issued by individuals. Note: You
may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the payer's trade or business and you
have not provided your correct taxpayer identification number to the
payer.
- Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041(a),
6045 and 6050A.
PRIVACY ACT NOTICE. Section 6109 requires most recipients of dividend,
interest or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers must
generally withhold 20% of taxable interest, dividend and certain other
payments to a payee who does not furnish a taxpayer identification number to
a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If
you fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If
you make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Falsifying
certifications or affirmations may subject you to criminal penalties
including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE>
Austin, Texas, June 4, 1999--Mobley Environmental Services, Inc. (OTC:MBLYA)
announced that it has entered into a Tender Offer Agreement with GAP Capital,
L.L.C., a Texas limited liability company ("GAP"), pursuant to which GAP will
offer within five business days to purchase not less than 2,662,975 shares
of Mobley's Class A Common Stock (which represents in excess of 51% of the
outstanding Class A Common Stock of Mobley) at an offer price of $.20 per
share.
Mobley has also filed a Notice of Termination of Form 15 with the Securities
and Exchange Commission ("SEC"), certifying that it has less than 300
shareholders of record, which filing has the effect of suspending certain SEC
reporting requirements and following 90 days, or such shorter period
determined by the SEC, terminating Mobley's registration with the SEC.
Contact Person: Howard Rose
(512) 479-9701
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
TENDER OFFER AGREEMENT
BETWEEN
GAP CAPITAL, L.L.C.
AND
MOBLEY ENVIRONMENTAL SERVICES, INC.
June 4, 1999
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
TENDER OFFER AGREEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
THE TENDER OFFER
1.1 THE TENDER OFFER . . . . . . . . . . . . . . . . . . . . . . . -2-
1.2 COMPANY ACTIONS. . . . . . . . . . . . . . . . . . . . . . . . -4-
1.3 BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . -6-
ARTICLE II
[RESERVED]
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 ORGANIZATION AND QUALIFICATION . . . . . . . . . . . . . . . . -7-
3.2 SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . -7-
3.3 AUTHORIZED CAPITAL . . . . . . . . . . . . . . . . . . . . . . -8-
3.4 CORPORATE AUTHORIZATION. . . . . . . . . . . . . . . . . . . . -8-
3.5 APPROVALS: NO VIOLATIONS. . . . . . . . . . . . . . . . . . . -9-
3.6 SEC FILINGS FINANCIAL STATEMENTS . . . . . . . . . . . . . . . -9-
3.7 ABSENCE OF UNDISCLOSED LIABILITIES . . . . . . . . . . . . . . -10-
3.8 COMPLIANCE WITH APPLICABLE LAW . . . . . . . . . . . . . . . . -11-
3.9 TERMINATION, SEVERANCE, AND EMPLOYMENT AGREEMENTS. . . . . . . -11-
3.10 EMPLOYEE BENEFITS. . . . . . . . . . . . . . . . . . . . . . . -12-
3.11 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
3.12 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
3.13 ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . . -13-
3.14 VOTING REQUIREMENTS. . . . . . . . . . . . . . . . . . . . . . -15-
3.15 FINDERS AND INVESTMENT BANKERS, TRANSACTION EXPENSES . . . . . -15-
3.16 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
3.17 TITLE TO PROPERTIES: ENTIRE BUSINESS. . . . . . . . . . . . . -15-
3.18 INTELLECTUAL PROPERTY RIGHTS . . . . . . . . . . . . . . . . . -16-
3.19 [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
3.20 YEAR 2000 COMPLIANCE . . . . . . . . . . . . . . . . . . . . . -16-
3.21 CERTAIN MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . -16-
-i-
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND THE PURCHASER
4.1 ORGANIZATION AND QUALIFICATION . . . . . . . . . . . . . . . . -17-
4.2 ENTITY AUTHORIZATION . . . . . . . . . . . . . . . . . . . . . -17-
4.3 APPROVALS NO VIOLATIONS. . . . . . . . . . . . . . . . . . . . -18-
4.4 NO PRIOR ACTIVITIES. . . . . . . . . . . . . . . . . . . . . . -18-
4.5 INFORMATION SUPPLIED . . . . . . . . . . . . . . . . . . . . . -18-
4.6 FINANCING. . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
ARTICLE V
COVENANTS
5.1 CONDUCT OF BUSINESS OF THE COMPANY . . . . . . . . . . . . . . -19-
5.2 [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
5.3 [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
5.4 ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . -22-
5.5 NOTIFICATION OF CERTAIN MATTERS. . . . . . . . . . . . . . . . -22-
5.6 ACCESS TO INFORMATION. . . . . . . . . . . . . . . . . . . . . -23-
5.7 PUBLIC ANNOUNCEMENTS . . . . . . . . . . . . . . . . . . . . . -24-
5.8 OFFICERS' AND DIRECTORS' INDEMNIFICATION . . . . . . . . . . . -24-
5.9 EMPLOYEE OPTIONS . . . . . . . . . . . . . . . . . . . . . . . -24-
5.10 OTHER ACTIONS BY THE COMPANY . . . . . . . . . . . . . . . . . -24-
ARTICLE VI
[RESERVED]
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
7.1 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . -25-
7.2 EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . . . -27-
7.3 FEES AND EXPENSES. . . . . . . . . . . . . . . . . . . . . . . -27-
7.4 AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
7.5 WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
-ii-
<PAGE>
ARTICLE VIII
MISCELLANEOUS
8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND AGREEMENTS. . . . -28-
8.2 BROKERAGE FEES AND COMMISSIONS . . . . . . . . . . . . . . . . -29-
8.3 ENTIRE ASSIGNMENT; ASSIGNMENT. . . . . . . . . . . . . . . . . -29-
8.4 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . -29-
8.5 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
8.6 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . -31-
8.7 SPECIFIC PERFORMANCE . . . . . . . . . . . . . . . . . . . . . -31-
8.8 OTHER POTENTIAL BIDDERS. . . . . . . . . . . . . . . . . . . . -31-
8.9 DESCRIPTIVE HEADINGS, REFERENCES . . . . . . . . . . . . . . . -32-
8.10 PARTIES IN INTEREST. . . . . . . . . . . . . . . . . . . . . . -32-
8.11 BENEFICIARIES. . . . . . . . . . . . . . . . . . . . . . . . . -32-
8.12 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . -33-
8.13 OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . -33-
8.14 CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . -33-
</TABLE>
-iii-
<PAGE>
TENDER OFFER AGREEMENT
TENDER OFFER AGREEMENT, (the "AGREEMENT") dated as of June 4, 1999, by
and among GAP Capital, L.L.C., a Texas limited liability company (the
"PURCHASER"), and Mobley Environmental Services, Inc., a Delaware corporation
(the "COMPANY").
RECITALS
A. The sole Manager of the Purchaser and the Board of Directors of
the Company have unanimously determined that it is in the best interests of
the securityholders of their respective companies for the Purchaser to
acquire at least 2,577,295 shares of the Class A common stock, par value $.01
per share, of the Company (the "CLASS A COMMON STOCK").
B. To induce the Purchaser to enter into this Agreement,
simultaneously with the execution and delivery of this Agreement, the Company
has issued to the Purchaser a Warrant, dated as of the date hereof (the
"WARRANT"), pursuant to which the Company has granted to the Purchaser an
option to acquire shares of the Class A Common Stock and shares of the Class
B Common Stock (as herein defined) upon the occurrence of certain events and
in accordance with certain terms and conditions set forth in the Warrant.
C. To further induce the Purchaser to enter into this Agreement,
certain holders of the Class B Common Stock of the Company have entered into
Lockup and Voting Agreements (as hereinafter defined), with the Purchaser
pursuant to which such stockholders have agreed to vote their Class A/B
Shares (as hereinafter defined) in favor of a 50,000 to 1 reverse stock split
of the Class A Common Stock and the Class B Common Stock (the "REVERSE
SPLIT") in the event such a Reverse Split is to be voted on or otherwise
approved at a meeting of holders of Class A Common Stock or Class B Common
Stock (or by written consent in lieu thereof).
D. The Board of Directors of the Company has approved this Agreement
and the acquisition of shares of the Company pursuant to the Warrant in
accordance with the Delaware General Corporation Law (the "DGCL"). The Board
of Directors of the Company has reviewed the Lock-Up and Voting Agreement and
has approved the Company's abiding by Section 4 thereof.
THEREFORE, in consideration of the foregoing, the mutual covenants
contained in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which all parties hereby acknowledge, the parties
agree as follows:
-1-
<PAGE>
ARTICLE I
THE TENDER OFFER
1.1 THE TENDER OFFER.
(a) Provided that this Agreement has not been terminated in
accordance with ARTICLE VII and none of the events referred to in ANNEX A
(other than the events referred to in clauses (i) through (ii) of the second
paragraph of ANNEX A and clause (j) of ANNEX A) has occurred or is existing,
within five business days of the date of this Agreement, the Purchaser will
commence a tender offer (the "OFFER"), subject to the Minimum Condition
described below, to purchase a total of at least 2,662,975 shares of Class A
Common Stock (which will represent not less than 51% of the outstanding
shares of Class A Common Stock on a fully diluted basis, taking into account
the convertibility of the Class B common stock, par value $.01 per share of
the Company (the "CLASS B COMMON STOCK") that is not subject to the Lock-Up
and Voting Agreement described in SECTION 1.2(b)) at a price of $.20 per
share of Class A Common Stock (each share of Class A Common Stock being a
"CLASS A SHARE"; each share of Class B Common Stock being a "CLASS B SHARE";
and the Class A Shares and Class B Shares being collectively referred to as
the "CLASS A/B SHARES") (as such amount may be increased in accordance with
the terms of this Agreement, the "PER SHARE AMOUNT") net to the seller in
cash. The Purchaser agrees to accept for payment a total of at least
2,662,975 Class A Shares validly tendered pursuant to the Offer as soon as
legally permissible, and to pay for all such Class A Shares as promptly as
practicable, upon the terms and subject to the conditions of the Offer, as it
may be revised as permitted by this Agreement. The obligation of Purchaser
to commence the Offer will be subject only to the conditions set forth in
ANNEX A, and the obligation of Purchaser to accept for payment, purchase, and
pay for the Class A Shares tendered pursuant to the Offer will be subject to
such conditions and to the further condition that each of (i) 2,662,975
Class A Shares have been validly tendered and not withdrawn prior to the
expiration date of the Offer, (ii) the Class A Common Stock shall be held of
record by fewer than 300 persons and (iii) the Company shall have filed with
the Securities and Exchange Commission (the "SEC") and not withdrawn a Form
15 deregistering the Company's Class A Common Stock (the "FORM 15")
(collectively, the "MINIMUM CONDITION"). If the Minimum Condition is not
satisfied on any Expiration Date of the Offer, the Purchaser may, in
Purchaser's discretion, extend the Offer for a period or periods not to
exceed, in the aggregate ten business days. The Purchaser specifically
reserves the right to increase the price per share payable in the Offer, to
extend the expiration date of the Offer (unless, after August 1, 1999, all
conditions to the Offer listed on ANNEX A are fulfilled), and to make any
other changes in the terms and conditions of the Offer (provided that, unless
previously approved by the Company in writing, no change may be made that
decreases the price per Class A Share payable in the Offer, that changes the
form of consideration to be paid in the Offer, that reduces the minimum
number of Class A Shares to be purchased in the Offer, that imposes
conditions to the Offer in addition to those set forth in ANNEX A, or that
broadens the scope of such conditions). Notwithstanding the foregoing,
Purchaser (i) shall extend the Offer for any
-2-
<PAGE>
period required by any rule, regulation or interpretation of the SEC or the
staff thereof applicable to the Offer, and (ii) may, without the consent of
the Company, extend the Offer for an aggregate period of not more than ten
business days beyond the latest applicable date that would otherwise be
permitted under clause (i) of this sentence if, as of such date, all of the
offer conditions are satisfied or waived by Purchaser, but the number of
Shares validly tendered and not withdrawn pursuant to the Offer is less than
90% of the then outstanding Class A Shares on a fully diluted basis. The
parties agree that the conditions set forth in ANNEX A are for the sole
benefit of the Purchaser and may be asserted by the Purchaser regardless of
the circumstances giving rise to any such condition (including any action or
inaction by the Purchaser) or may be waived by the Purchaser, in whole or in
part, at any time and from time to time, in its sole discretion. The failure
by the Purchaser at any time to exercise any of the foregoing rights will not
be deemed a waiver of any such right, the waiver of any such right with
respect to particular facts and circumstances will not be deemed a waiver
with respect to other facts or circumstances, and each such right will be
deemed an ongoing right that may be asserted at any time and from time to
time. Any good faith determination by the Purchaser that is not demonstrated
to be unreasonable with respect to any of the foregoing conditions
(including, without limitation, the satisfaction of such conditions) will be
final and binding on all parties. The Per Share Amount will be paid net to
the seller in cash, less any required withholding taxes, on the terms and
subject to the conditions of the Offer. The Company agrees that no Class A/B
Shares held by the Company or any of its subsidiaries will be tendered in the
Offer. The Company hereby consents to the Offer and represents that (a) its
Board of Directors, at a meeting duly called and held (i) determined at such
time that the Offer is fair to the Company and its stockholders and in the
best interests of the holders of the Class A Shares; (ii) resolved at such
time to recommend acceptance of the Offer and approval and adoption of this
Agreement and the transactions contemplated by this Agreement by the
stockholders of the Company prior to such purchase; and (iii) irrevocably
approved of the Offer, this Agreement, and the transactions contemplated by
this Agreement in accordance with the DGCL and any other state or federal
statute, regulation, or rule that the Purchaser has identified, or that is
known after reasonable inquiry, to the Company requiring prior approval by
the Board of Directors of the Company of this Agreement, the Offer, or the
other transactions contemplated by this Agreement and (b) Harris, Webb &
Garrison, the Company's financial advisor (the "ADVISOR"), has delivered to
the Board of Directors of the Company its opinion that, subject to the
limitations and qualifications set forth in such opinion, the Per Share
Amount is fair from a financial point of view to the holders of the Class A
Shares.
(b) As promptly as practicable on the date of the
commencement of the Offer, the Purchaser will file with the SEC a Tender
Offer Statement on Schedule 14D-1 with respect to the Offer under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), which will
(i) reflect the execution and delivery of this Agreement; (ii) set forth the
Offer as provided for in this Agreement; and (iii) contain or incorporate by
reference a form of letter of transmittal and summary advertisement.
-3-
<PAGE>
(c) The Purchaser will promptly disseminate the offer to
purchase referred to in SECTION 1.1(b) (as amended pursuant to this
Agreement, the "OFFER TO PURCHASE" and, collectively with all other schedules
and exhibits required to be filed with the SEC, the "OFFER DOCUMENTS") to the
holders of the Class A/B Shares, reflecting the terms set forth in this
Agreement. The Offer Documents will contain the recommendation of the Board
of Directors of the Company that the holders of the Class A Shares accept the
Offer as described in SECTION 1.1(a) and may make reference to the opinion of
the Advisor referred to in SECTION 1.1(a) and include or incorporate such
opinion. The Purchaser and the Company, with respect to written information
supplied by the Company specifically for use in the Offer Documents or based
upon information pertaining to the Company in the Company Reports (as defined
in SECTION 3.6), agree promptly to correct any information in the Offer
Documents that becomes false or misleading in any material respect. Subject
to SECTION 1.2(b), the Purchaser further agrees to take all steps to cause
the Offer Documents to be disseminated to the holders of Class A/B Shares, as
and to the extent required by applicable law. The Company and its counsel
will be given an opportunity to review and comment on the Offer Documents
prior to their being filed with the SEC. The Purchaser will promptly provide
to the Company any written comments they receive from the SEC with respect to
the Offer Documents.
1.2 COMPANY ACTIONS.
(a) The Company hereby agrees to file with the SEC as soon as
practicable on the date of commencement of the Offer, and promptly mail to
its stockholders, a Solicitation/Recommendation Statement on Schedule 14D-9
(together with all schedules, amendments, and supplements, the "SCHEDULE 14D-9")
containing the recommendations of the Board of Directors of the Company
referred to in SECTION 1.2 (subject to the right of the Board of Directors of
the Company to withdraw such recommendations if it is obligated to do so by
its fiduciary obligations under applicable law) and the opinion of the
Advisor referred to in SECTION 1.1(a). The Purchaser and its counsel will be
given an opportunity to review and comment on the Schedule 14D-9 prior to its
being filed with the SEC. The Company will promptly provide to the Purchaser
any written comments it receives from the SEC with respect to the
Schedule 14D-9. The Company hereby further agrees to file with the SEC as
soon as practicable on the date of commencement of the Offer the Form 15.
(b) The Company has been advised that the persons named on
ANNEX B-1 have entered into Lockup and Voting Agreements in the form of
ANNEX B-2 (the "LOCKUP AND VOTING AGREEMENTS"). The Schedule 14D-9, at the
time it is first published, disseminated, or mailed to the stockholders of
the Company, will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading. The Company agrees
promptly to take all steps necessary to cause the Schedule 14D-9 to be
corrected to the extent requested by the Purchaser to reflect any change in
information concerning the Purchaser, or the Offer, and, as corrected, to be
filed with the SEC and disseminated to the stockholders of the Company, as
and to the extent required by applicable law.
-4-
<PAGE>
(c) In connection with the Offer, the Company will promptly
furnish the Purchaser with mailing labels, security position listings, and
any available listing or computer files containing the names and addresses of
the record holders of Class A/B Shares as of the most recent practicable date
and will furnish the Purchaser with such information and assistance
(including updated lists of security position listings and listing or
computer files) as the Purchaser or its agents may reasonably request in
order to communicate the Offer to the record and beneficial holders of Class
A/B Shares. Subject to applicable law and except for such steps as are
necessary to disseminate the Offer Documents, the Purchaser and its
affiliates will hold in confidence the information contained in any such
labels, listings, and files, will use such information only in connection
with the Offer and the transactions contemplated by this Agreement, and, if
this Agreement is terminated, will deliver to the Company all copies of such
information in its possession.
1.3 BOARD OF DIRECTORS. Effective upon the payment by the Purchaser
for Class A Shares pursuant to the Offer, the Purchaser will be entitled to
designate the following number of directors of the Company: (a) in the event
the Purchaser has purchased any Class A Shares pursuant to the Offer, but
less than 51% of the outstanding Class A/B Shares on a fully diluted basis,
taking into account the convertibility of the Class B Shares that are not
subject to the Lock-Up and Voting Agreement, the Purchaser shall be entitled
to designate one director less than the number of directors on the Board of
Directors immediately prior to such designation (e.g. if there are two
directors serving immediately prior to such designation, the Purchaser shall
be entitled to designate a third director), and (b) in the event the
Purchaser has purchased Class A/B Shares pursuant to the Offer in excess of
the amount described in SECTION 1.3(a) above, the Purchaser shall be entitled
to designate the least number of directors necessary to constitute, once
designated, a majority of the Board of Directors. The Company will at such
time cause the designees of the Purchaser to be elected to or appointed by
the Board of Directors, including, without limitation, increasing the number
of directors, amending its bylaw using its reasonable best efforts to obtain
resignations of incumbent directors, and, to the extent necessary, filing
with the SEC and mailing to its stockholders the information required by
Section 14(f) of the Exchange Act and the rules promulgated thereunder, as
promptly as possible. The Purchaser will supply any information with respect
to themselves and their respective nominees, officers, directors, and
affiliates required by Section 14(f) of the Exchange Act and such rules to
the Company. Upon written request by the Purchaser, the Company will use its
reasonable best efforts to cause the designees of the Purchaser to constitute
the same percentage of representation as is on the Board of Directors after
giving effect to this SECTION 1.3 on (i) each committee of the Board of
Directors; (ii) the board of directors of each subsidiary of the Company; and
(iii) each committee of such subsidiaries' boards of directors.
ARTICLE II
[RESERVED]
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser that:
3.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority and any
necessary governmental authority to own, operate, and lease its properties
and assets and to carry on its business as it is now being conducted, except
for failures to have such power and authority as could not reasonably be
expected to result in a Company Material Adverse Effect (as defined below).
The Company is duly qualified or licensed to do business and is in good
standing in each jurisdiction where the character of its properties owned or
leased or the nature of its activities makes such qualification or licensing
necessary, except for failures to be so qualified or licensed and in good
standing as could not, individually or in the aggregate, reasonably be
expected to result in a Company Material Adverse Effect. Copies of the
Certificate of Incorporation and Bylaws of the Company, including all
amendments, have been delivered to the Purchaser and such copies are accurate
and complete. The Certificate of Incorporation and Bylaws of the Company are
in full force and effect and, except as disclosed on SCHEDULE 3.1, the
Company is not in default of the performance, observation, or fulfillment of
any provision of its Certificate of Incorporation or Bylaws. For the
purposes of this Agreement, "COMPANY MATERIAL ADVERSE EFFECT" means any
change or effect that, individually or when taken together with all such
other changes or effects, could reasonably be expected to be materially
adverse to the condition (financial or other), business, operations,
properties assets, liabilities, prospects, or results of operations of the
Company and its subsidiaries, taken as a whole.
3.2 SUBSIDIARIES. The Company is, directly or indirectly, the record
and beneficial owner of all the outstanding shares of capital stock of each
of its subsidiaries (other than directors' qualifying shares), there are no
proxies or voting agreements with respect to any such shares, and no equity
security of any of its subsidiaries is or may become required to be issued by
reason of any options, warrants, scrip, rights to subscribe to, calls, or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any capital stock of any
subsidiary, and there are no contracts, commitments, understandings, or
arrangements by which any subsidiary is bound to issue additional shares of
its capital stock or securities convertible into or exchangeable for such
shares. All such shares directly or indirectly owned by the Company are
owned by the Company or a wholly owned subsidiary, free and clear of any
claim, lien, encumbrance, or agreement. Each subsidiary of the Company is a
corporation duly organized, validly existing, and in good standing under the
laws of its jurisdiction of incorporation and has the requisite corporate
power and authority and any necessary governmental authority to own, operate,
or lease its properties and assets and to carry on its business as it is now
being conducted, except for failures as could not, individually or in the
aggregate, reasonably be expected to result in a Company Material Adverse
Effect. Each subsidiary of the Company is duly qualified or licensed to do
business and is in good standing in each jurisdiction where the character of
its properties owned or
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leased or the nature of its activities makes such qualification or licensing
necessary, except for failures to be so qualified, licensed, or in good
standing as could not, individually or in the aggregate, reasonably be
expected to result in a Company Material Adverse Effect. Copies of the
charter documents, bylaws, or equivalent organizational documents of each
subsidiary of the Company have been delivered to the Purchaser and are
accurate and complete. Neither the Company nor any subsidiary of the Company
(a) beneficially owns any equity interests in any entities that are not
subsidiaries of the Company or (b) is party to any joint venture,
partnership, or similar arrangement.
3.3 AUTHORIZED CAPITAL. The authorized capital stock of the Company
consists solely of (i) 15,000,000 shares of Class A Common Stock, par value
$.01 per share, of which 4,259,650 shares were outstanding as of the date of
this Agreement; (ii) 10,000,000 shares of Class B Common Stock, par value
$.01 per share, of which 4,575,643 shares were outstanding as of the date of
this Agreement and (iii) 2,000,000 shares of preferred stock, par value $.01
per share, of which no shares are outstanding as of the date of this
Agreement. All of the outstanding shares of capital stock of the Company
have been duly authorized and are validly issued, fully paid, nonassessable,
and free of preemptive rights. SCHEDULE 3.3 lists each outstanding stock
option of the Company (the "EMPLOYEE OPTIONS"), the number of shares
(designated by class) covered by such Employee Options, the exercise prices,
the exercise dates, and the plan or agreement pursuant to which such Employee
Options were issued. Except as set forth above or on SCHEDULE 3.3, there are
no preemptive rights nor any outstanding subscriptions, options, warrants,
rights, convertible securities, or other agreements or commitments of any
character relating to the issued or unissued capital stock or other
securities of the Company or any of its subsidiaries. There are no voting
trusts or other understandings to which the Company or any of its
subsidiaries is a party with respect to the voting capital stock of the
Company or any of its subsidiaries.
3.4 CORPORATE AUTHORIZATION. The Company has the full corporate
power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated by this Agreement. The execution, delivery,
and performance by the Company of this Agreement and of the other
transactions contemplated by this Agreement have been duly and validly
authorized by all necessary corporate action and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated by this Agreement.
This Agreement has been duly and validly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
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3.5 APPROVALS: NO VIOLATIONS. Except for applicable requirements of
the Exchange Act, no filing with, and no permit, authorization, consent, or
approval of, any foreign or domestic public body or authority is necessary for
the consummation by the Company of the transactions contemplated by this
Agreement. Except as set forth on SCHEDULE 3.5, the execution and delivery of
this Agreement by the Company, the consummation by the Company of the
transactions contemplated by this Agreement and the compliance by the Company
with any of the provisions of this Agreement will not (a) conflict with or
result in any breach of any provision of the charters of bylaws or equivalent
organizational documents of the Company or any of its subsidiaries; (b) result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation,
or acceleration) under, any of the terms, conditions, or provisions of any note,
bond, mortgage, indenture, license, lease, contract agreement, or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which any of them or any of their properties or assets may be bound;
or (c) violate any order, writ, injunction, decree, statute, rule, or regulation
applicable to the Company, any of its subsidiaries or any of their properties or
assets; except such violations, conflicts, breaches, defaults, terminations, or
accelerations referred to in this SECTION 3.5 as could not, individually or in
the aggregate, reasonably be expected to result in a Company Material Adverse
Effect or adversely affect the ability of any party to perform its obligations
under this Agreement.
3.6 SEC FILINGS FINANCIAL STATEMENTS. The Company has timely filed
with the SEC all forms, reports, statements, and documents required to be filed
by it pursuant to the Securities Act of 1933 as amended and the rules and
regulations prompted thereunder (the "SECURITIES ACT"), and the Exchange Act,
and the rules and regulations promulgated thereunder, together with all
amendments thereto (collectively, and including, when filed, the Schedule 14D-9,
the "COMPANY REPORTS") and has otherwise complied in all material respects with
the requirements of the Securities Act and the Exchange Act. The Company has
delivered to the Purchaser accurate and complete copies of all Company Reports
and will promptly deliver to the Purchaser any Company Report filed by the
Company after the date of this Agreement. As of their respective dates, the
Company Reports did not and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which
they were or will be made, not misleading. Each of the historical consolidated
balance sheets included in or incorporated by reference into the Company Reports
as of its date and each of the historical consolidated statements of income and
earnings, stockholders' equity, and cash flows included in or incorporated by
reference into the Company Reports including any related notes and schedules)
fairly presents or will fairly present the consolidated financial condition,
results of operations, stockholders' equity, and cash flows, as the case may be,
of the Company and its subsidiaries for the periods set forth (subject, in the
case of unaudited statements, to normal year-end audit adjustments), in each
case in accordance with generally accepted accounting principles consistently
applied during the periods involved. The Company maintains a system of internal
accounting controls sufficient to provide that transactions are executed in
accordance with management's general or specific authorization, transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted
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accounting principles and to maintain accountability for assets, access to
assets is permitted only in accordance with management's general or specific
authorization, and the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the
consolidated balance sheet of the Company as of March 31, 1999, and except as
set forth in the Company Reports, neither the Company nor any of its
subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent, or otherwise, that would be required to be included on a
consolidated balance sheet of the Company and its subsidiaries as of March 31,
1999 (or disclosed in the notes thereto) prepared in accordance with generally
accepted accounting principles, and that could, individually or in the
aggregate, reasonably be expected to result in a Company Material Adverse
Effect. Since March 31, 1999, the Company and its subsidiaries have conducted
their respective businesses in a manner consistent with past practices, and
neither the Company nor any of its subsidiaries has become subject to any
liabilities or obligations that would be required to be included on a
consolidated balance sheet of the Company and its subsidiaries (or disclosed in
notes) prepared in accordance with generally accepted accounting principles and
that could, individually or in the aggregate, reasonably be expected to result
in a Company Material Adverse Effect, other than liabilities or obligations
incurred in the ordinary course of business consistent with past practices or
incurred in connection with the Offer or this Agreement and disclosed in the
Company Reports or consisting of legal, printing, accounting, and other
customary fees (but not including those of the Advisor) not exceeding $50,000 in
the aggregate and incurred in connection with the Offer or this Agreement.
3.8 COMPLIANCE WITH APPLICABLE LAW. The Company and each of its
subsidiaries currently hold and are in compliance with the terms of all
licenses, permits, and authorizations necessary for the lawful conduct of their
respective businesses, and have complied with, and, neither the Company nor any
of its subsidiaries is in violation of, or in default under, the applicable
statutes, ordinances, rules, regulations, orders, or decrees of any federal,
state, local, or foreign governmental bodies, agencies, or authorities having,
asserting, or claiming jurisdiction over it or over any part of its operations
or assets, except for violations that would not, individually or in the
aggregate, result in a Company Material Adverse Effect. The businesses of the
Company and its subsidiaries are not being and have not been conducted in
violation of any law, ordinance, or regulation of any governmental authorities
and regulatory agencies except for violations as could not, individually or in
the aggregate, reasonably be expected to result in a Company Material Adverse
Effect. No investigation or review by any governmental authorities and
regulatory agencies with respect to the Company or any of its subsidiaries is
pending or, to the best knowledge of the Company, threatened, nor, to the best
knowledge of the Company, have any governmental authorities and regulatory
agencies indicated an intention to conduct such an investigation or review, and
no fine has been levied against, or order entered with respect to, the Company
or any subsidiary by any regulatory authority.
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3.9 TERMINATION, SEVERANCE, AND EMPLOYMENT AGREEMENTS. Set forth on
SCHEDULE 3.9 is a complete and accurate list of each (a) employment, severance,
or collective bargaining agreement not terminable without liability or
obligation on 60 days' or less notice; (b) agreement with any director,
executive officer, or other key employee, agent, or contractor of the Company or
any subsidiary of the Company (i) the benefits of which are contingent, or the
terms of which are materially altered, on the occurrence of a transaction
involving the Company or any subsidiary of the Company of the nature of any of
the transactions contemplated by this Agreement or relating to an actual or
potential change in control of the Company or any of its subsidiaries or (ii)
providing any term of employment or other compensation guarantee or extending
severance benefits or other benefits after termination not comparable to
benefits available to employees, agents, or contractors generally; (c)
agreement, plan, or arrangement under which any person may receive payments that
may be subject to the tax imposed by Section 4999 of the Internal Revenue Code
of 1986 (the "CODE") or included in the determination of such person's
"parachute payment" under Section 280G of the Code; and (d) agreement or plan,
including any stock option plan, stock appreciation right plan, restricted stock
plan, or stock purchase plan, any of the benefits of which will be increased,
or the vesting of the benefits of which will be accelerated, by the occurrence
of any of the transactions contemplated by this Agreement or the value of any of
the benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. Except as disclosed on SCHEDULE 3.9, since
December 31, 1995, neither the Company nor any of its subsidiaries has entered
into or amended any employment or severance agreement with any director,
officer, or key employee, agent, or contractor, or, granted any severance or
termination pay to any officer, director, or key employee, agent, or contractor
of the Company or any of its subsidiaries.
3.10 EMPLOYEE BENEFITS. The Company does not have any "employee pension
benefit plans" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (the "PENSION PLANS"), "employee
welfare benefit plans" (as defined in Section 3(l) of ERISA), or any other
plans, arrangements, or policies relating to stock options, stock purchases,
compensation, deferred compensation, severance, fringe benefits, and other
employee benefits, in each case maintained, or contributed to, or required to be
maintained or contributed to, by the Company, or any of its subsidiaries or any
other person that, together with the Company, is or has been treated as a single
employer under Section 414(b), (c), (m), or (o) of the Code (each a "COMMONLY
CONTROLLED ENTITY") for the benefit of any current or former employees,
officers, agents, or directors (or any beneficiaries of such persons) of the
Company or any of its subsidiaries (collectively, "BENEFIT PLANS"). No Commonly
Controlled Entity has ever contributed or been required to contribute to any
"multiemployer plan" (within the meaning of ERISA). The Company is not a party
to any agreement, contract, arrangement, or plan that has resulted or would
result, separately or in the aggregate, in the payment on or before the purchase
of Class A Shares pursuant to the Offer (the "EFFECTIVE TIME") of any "excess
parachute payments" within the meaning of Section 280G of the Code. Each
individual who is paid for services in any form by the Company or any Commonly
Controlled Entity and who is treated by the Company or a Commonly Controlled
Entity as an independent contractor for federal income tax purposes (including,
without limitation, Code provisions applicable or relating to employee benefit
plans), state unemployment tax purposes, or any other purpose, is an
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independent contract for such purpose. Except where it could not reasonably be
expected to result in a Company Material Adverse Effect: (a) neither in the
Company nor any Commonly Controlled Entity has incurred any liability, and no
event has occurred that would result in any liability, to a Pension Plan or to
the Pension Benefit Guaranty Corporation that has not been fully paid; and (b)
neither the Company nor any Commonly Controlled Entity has incurred any direct
or indirect liability under, arising out of, or by operation of Title IV of
ERISA, in connection with the termination of, or withdrawal from, any Pension
Plan or other requirement plan or arrangement, and no fact or event exists that
could reasonably be expected to give rise to any such liability.
3.11 TAXES. The Company and its subsidiaries have timely filed all
federal income tax returns and reports and other material returns and reports
relating to federal, state, local, and foreign taxes required to be filed. Such
reports and returns are true, correct and complete, except for such failures to
be true, correct and complete as could not, individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect. The
Company and its subsidiaries have paid or made adequate provision for all taxes
owed except taxes that if not so paid or provided for could not reasonably be
expected to result in a Company Material Adverse Effect, and, except as
disclosed in SCHEDULE 3.11, no unpaid deficiencies in taxes or other government
charges for any period have been proposed or assessed by any government taxing
authority and, to the knowledge of the Company, no government tax authority is
threatening to propose or assess against the Company or any of its subsidiaries
any such deficiency or charge that could, individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect. The
Company and its subsidiaries have withheld or collected and paid over to the
appropriate governmental authorities or are properly holding for such payment
all failures to have so taxes required by law to be withheld or collected,
except for such withheld or collected and paid over, or to be so holding for
payment as could not, individually or in the aggregate, reasonably be expected
to result in a Company Material Adverse Effect. There are no material liens for
taxes upon the assets of the Company or its subsidiaries, other than liens for
current taxes not yet due and payable and liens for taxes that are being
contested in good faith by appropriate proceedings diligently prosecuted.
Neither the Company nor any of its subsidiaries has agreed to or is required to
make any adjustment under Section 481(a) of the Code. Neither the Company nor
any of its subsidiaries has made any election under Section 341(f) of the Code.
3.12 LITIGATION. Except as disclosed in SCHEDULE 3.12, there is no
suit, claim, action, proceeding, or investigation pending or, to the knowledge
of the Company, threatened against the Company or any of its subsidiaries or any
of their respective properties or assets before any court, regulatory agency, or
tribunal as to which an adverse determination could reasonably be considered
probable that, individually or in the aggregate, could reasonably be expected to
result in a Company Material Adverse Effect. Neither the Company nor any of its
subsidiaries is subject to any outstanding order, writ, injunction, or decree
that, individually or in the aggregate, could reasonably be expected to result
in a Company Material Adverse Effect or would prevent or delay the consummation
of the transactions contemplated by this Agreement.
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3.13 ENVIRONMENTAL MATTERS. Except for matters disclosed in SCHEDULE
3.13 and except for matters that could not reasonably be expected to result,
individually or in the aggregate with all other such matters, in liability to
the Company or any of its subsidiaries in excess of $50,000, (i) the properties,
operations and activities of the Company and its subsidiaries are in compliance
with all applicable Environmental Laws; (ii) the Company and its subsidiaries
and the properties and operations of the Company and its subsidiaries are not
subject to any existing, pending or, to the knowledge of the Company, threatened
action, suit, claim investigation, inquiry or proceeding by or before any
governmental authority under any Environmental Laws; (iii) all notices, permits,
licenses, or similar authorizations, if any, required to be obtained or filed by
the Company or any of its subsidiaries under any Environmental Laws in
connection with any aspect of the business of the Company or its subsidiaries,
including without limitation those relating to the treatment, storage, disposal
or release of a hazardous or otherwise regulated substance, have been duly
obtained or filed and will remain valid and in effect after the purchase of
Class A Shares pursuant to the Offer, and the Company and its subsidiaries are
in compliance with the terms and conditions of all such notices, permits,
licenses and similar authorizations; (iv) the Company and its subsidiaries have
satisfied and are currently in compliance with all financial responsibility
requirements applicable to their operations and imposed by any governmental
authority under any Environmental Laws, and the Company and its subsidiaries
have not received any notice of noncompliance with any such financial
responsibility requirements; (v) to the Company's knowledge, there are no
physical or environmental conditions existing on any property of the Company or
its subsidiaries or resulting from the Company's or such subsidiaries'
operations or activities, past or present, at any location, that would give rise
to any on-site or off-site remedial obligations imposed on the Company or any of
its subsidiaries under any Environmental Laws or that would impact the sole
groundwater or surface water or human health (to the extent of exposure to
hazardous substances); (vi) to the Company's knowledge, since the effective date
of the relevant requirements of applicable Environmental Laws and to the extent
required by such applicable Environmental Laws, all hazardous or otherwise
regulated substances generated by the Company and its subsidiaries have been
transported only by carriers authorized under Environmental Laws to transport
such substances and waste, and disposed of only at treatment, storage, and
disposal facilities authorized under Environmental Laws to treat, store or
dispose of such substances and wastes; (vii) there has been no exposure of any
person or property to hazardous substances or any pollutant or contaminant, nor
has there been any release of hazardous substances, or any pollutant or
contaminant, into the environment by the Company or its subsidiaries or in
connection with their properties or operations that could reasonably be expected
to give rise to any claim against the Company or any of its subsidiaries for
damages or compensation; and (viii) subject to restrictions necessary to
preserve any attorney client privilege, the Company and its subsidiaries have
made available to the Purchaser all internal and external environmental audits
and studies and all correspondence on substantial environmental matters in the
possession of the Company or its subsidiaries relating to any of the current or
former properties or operations of the Company and its subsidiaries.
For purposes of this Agreement, the term "ENVIRONMENTAL LAWS" shall mean
any and all laws, statutes, ordinances, rules, regulations, or orders of any
Governmental Entity pertaining to
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health (to the extent of exposure to hazardous substances) or the environment
currently in effect in any and all jurisdiction in which the Company and its
subsidiaries own property or conduct business, including without limitation, the
Clean Air Act as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal
Water Pollution Control Act, as amended, the Occupational Safety and Health Act
of 1970, as amended, the Resource Conservation and Recovery Act of 1976
("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Hazardous & Solid Waste Amendments Act
of 1984, as amended, the Superfund Amendments and Reauthorization Act of 1986,
as amended, the Hazardous Materials Transportation Act, as amended, the Oil
Pollution Act of 1990 ("OPA"), any state laws implementing the foregoing federal
laws, and all other environmental conservation or protection laws. For purposes
of this Agreement, the terms "hazardous substance" and "release" have the
meanings specified in CERCLA and RCRA and shall include petroleum and petroleum
products, radon and PCB's, and the term "disposal" has the meaning specified in
RCRA; PROVIDED, however, that to the extent the laws of the state in which the
property is located establish a meaning for "hazardous substance," "release" or
"disposal" that is broader than that specified in either CERCLA or RCRA, such
broader meaning shall apply.
3.14 VOTING REQUIREMENTS. The Board of Directors of the Company has
approved the Offer, this Agreement and the agreements contemplated hereby. The
Company is not subject to the restrictions of Section 203 of the DGCL pursuant
to Section 203(b)(4) of the DGCL. No vote of the holders of any class or series
of the Company's capital stock is necessary to approve this Agreement and the
transactions contemplated hereby under any applicable law, rule or regulations
or pursuant to the requirements of the Company's certificate of incorporation or
bylaws.
3.15 FINDERS AND INVESTMENT BANKERS, TRANSACTION EXPENSES. Neither the
Company nor any of its officers or directors has employed any investment banker,
business consultant, financial advisor, broker or finder in connection with the
transactions contemplated by this Agreement, except for the Advisor, or incurred
any liability for any investment banking, business consultancy, financial
advisory, brokerage or finders' fees or commissions in connection with the
transactions contemplated hereby, except for fees payable to the Advisor (as
reflected in agreements between such firms and the Company, copies of which have
been delivered to the Purchaser).
3.16 INSURANCE. The Company and each of its subsidiaries are currently
insured, and during each of the past five calendar years have been insured, for
reasonable amounts against such risks as companies engaged in a similar business
and similarly situated would, in accordance with good business practice,
customarily be insured.
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3.17 TITLE TO PROPERTIES: ENTIRE BUSINESS. The Company and its
subsidiaries have good title or a valid and subsisting leasehold interest in and
to or a valid and enforceable license to use all material assets, properties and
rights owned, used or held of use by them in the conduct of their respective
businesses, in each case, free and clear of any Liens other than Permitted
Liens. The Company and its subsidiaries own or have sufficient right to use all
assets and properties necessary to conduct their businesses in the manner in
which they are currently conducted. As used here "PERMITTED LIENS" mean: (i) a
lien of a landlord, carrier, warehouseman, mechanic, materialmen, or any other
statutory lien arising in the ordinary course of business; (ii) a lien for taxes
not yet due or being contested in good faith; (iii) with respect to the right of
the Company or its subsidiaries to use any property leased to the Company or its
subsidiaries, arises by the terms of the applicable lease; (iv) a purchase money
security interest arising in the ordinary course of business; or (v) does not
materially detract from the value of the encumbered property or asset or
materially detract from or interfere with the use of the encumbered Property or
assets in the ordinary course of business.
3.18 INTELLECTUAL PROPERTY RIGHTS. There are no registered patents,
trademarks, service marks, trade names or copyrights, or applications for or
licenses (to or from the Company or any of its subsidiaries) with respect to any
of the foregoing that are material to the Company and its subsidiaries taken as
a whole, that (a) are owned by the Company or any of its subsidiaries, or with
respect to which the Company or any of its subsidiaries has any rights, or (b)
are used, whether directly or indirectly, by the Company or any of its
subsidiaries, other than as set forth on SCHEDULE 3.18. Except as set forth in
SCHEDULE 3.18, the Company and its subsidiaries have the right to use the
trademarks and trade names set forth on such SCHEDULE 3.18 and any other
computer software and software licenses, intellectual property, proprietary
information, trade secrets, trademarks, trade names, copyrights, material and
manufacturing specifications, drawings and designs used by the Company of any of
its subsidiaries and material to the operation of the business of the Company or
any of its subsidiaries (collectively, "INTELLECTUAL PROPERTY"), without
infringing on or otherwise acting adversely to the rights or claimed rights of
any person, except to the extent such infringement or actions adverse to
another's rights or claimed rights could not reasonably be expected to have a
Company Material Adverse Effect. Except as set forth on such SCHEDULE 3.18,
neither the Company nor any of its subsidiaries is obligated to pay any royalty
on other consideration material to the Company and its subsidiaries taken as a
whole to any person in connection with the use of any Intellectual Property.
Except as set forth in such SCHEDULE 3.18 and as could not reasonably be
expected to have a Company Material Adverse Effect, to the Company's knowledge,
no other person is infringing on the rights of the Company and its subsidiaries
in any of their Intellectual Property.
3.19 [RESERVED].
3.20 YEAR 2000 COMPLIANCE. The disclosures in the Company's Annual
Report on Form 10-K for the year ending December 31, 1998 regarding, the "status
of Year 2000 Compliance" are true, complete and correct in all material respects
as if made on the date of this Agreement.
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3.21 CERTAIN MATERIAL CONTRACTS. SCHEDULE 3.21 discloses all agreements
and arrangements (whether written or oral and including all amendments thereto)
to which the Company of any of its subsidiaries is a party or a beneficiary or
by which the Company or any of its subsidiaries is bound that are material,
directly or indirectly, to the business of the Company and any of its
subsidiaries, taken as a whole (collectively, the "MATERIAL CONTRACTS"). The
Company and its subsidiaries have performed all of its obligations under each
Material Contract, and there exist no breach or default, or event that with
notice or lapse of time would constitute a breach or default under any Material
Contract except as could not reasonably be expected to have a Company Material
Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Texas and has all requisite entity power and authority
and any necessary governmental authority to carry on its business as now
conducted. The Purchaser is duly qualified or licensed to do business, and is
in good standing, in each jurisdiction where the character of its properties
owned or leased or the nature of its activities makes such qualification or
licensing necessary, except for failures to be so duly qualified or licensed and
in good standing as could not, individually or in the aggregate, reasonably be
expected to result in a Purchaser Material Adverse Effect. For the purposes of
this Agreement, "PURCHASER MATERIAL ADVERSE EFFECT" means any change or effect
that individually or when taken together with all such other changes or effect,
could reasonably be expected to be materially adverse to the condition
(financial or other), business, operations, properties, assets, liabilities,
prospects, or results of operations of the Purchaser and its subsidiaries, taken
as a whole.
4.2 ENTITY AUTHORIZATION. The Purchaser has the full entity power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated by this Agreement. The execution, delivery, and
performance by the Purchaser of this Agreement and the consummation by the
Purchaser of the transactions contemplated by this Agreement have been duly and
validly authorized by the equity holders of the Purchaser and the sole Manager
of the Purchaser and no other entity proceedings on the part of the Purchaser
are necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement. This Agreement has been duly and validly
executed and delivered by the Purchaser and constitutes a valid and binding
obligation of the Purchaser, enforceable in accordance with its terms.
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4.3 APPROVALS NO VIOLATIONS. Except for applicable requirements of the
Exchange Act, no filing with, and no permit, authorization, consent, or approval
of any foreign or domestic public body or authority is necessary for the
consummation by the Purchaser of the transactions contemplated by this
Agreement. Neither the execution and delivery of this Agreement by the
Purchaser nor the consummation by the Purchaser of the transactions contemplated
by this Agreement nor compliance by them with any of the provisions of this
Agreement will (a) conflict with or result in any breach of any provision of the
organizational documents or bylaws or regulations, as applicable, of the
Purchaser; (b) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (otherwise to any right
of termination, cancellation, or acceleration under), any of the terms,
conditions, or provisions of any note, bond, mortgage, indenture, license,
lease, contract, agreement, or other instrument or obligation to which the
Purchaser is a party or by which it or any of its properties or assets may be
bound; or (c) violate any order, writ, injunction, decree, statute, rule, or
regulation applicable to the Purchaser or any of its properties or assets;
except such violations, conflicts, breaches, defaults, terminations, or
accelerations referred to in this SECTION 4.3 as could not, individually or in
the aggregate, reasonably be expected to result in a Purchaser Material Adverse
Effect.
4.4 NO PRIOR ACTIVITIES. Except for obligations or liabilities
incurred in connection with its incorporation or organization, the Offer, or the
negotiation and consummation of this Agreement and the transactions contemplated
by this Agreement, the Purchaser has not incurred any obligations or
liabilities, nor has it engaged in any business or activities of any type or
kind whatsoever or entered into any agreements or arrangements with any person.
4.5 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by the Purchaser for inclusion or incorporation by reference in the
Offer Documents, the Schedule 14D-9, or the information statement under Section
14(f) of the Exchange Act will, in the case of the Offer Documents and the
Schedule 14D-9, at the respective times the Offer Documents and the Schedule
14D-9 are filed with the SEC or first published, sent, or given to the
stockholders of the Company, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Offer Documents will comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations promulgated thereunder (to the extent the Company or the
Purchaser is so subject at such time) except that no representation or warranty
is made by the Purchaser with respect to statements made or incorporated by
reference in the Offer Documents based on information supplied by the Company
for inclusion or incorporation by reference in the Offer Documents.
4.6 FINANCING. The Purchaser will have available to it at the time
required the funds necessary to consummate the Offer or other obligation of the
Purchaser, which funds shall not be proceeds from a loan or other obligation of
the Purchaser.
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ARTICLE V
COVENANTS
5.1 CONDUCT OF BUSINESS OF THE COMPANY.
(a) Except as expressly contemplated by this Agreement and
except in cases where, at or after such time as the designees of the
Purchaser constitute a majority of the members of the Board of Directors of
the Company and the failure to comply with the covenants set forth in this
SECTION 5.1 results from actions, or omissions to act, taken or authorized by
such designees, during the period from the date of this Agreement to the
Effective Time:
(i) Each of the Company and its subsidiaries will
conduct its business solely in the ordinary course consistent with past
practices.
(ii) Neither the Company nor any of its subsidiaries
will intentionally take or willfully omit to take any actions that results in
or could reasonably be expected to result in, a Company Material Adverse
Effect.
(iii) The Company will use its reasonable best efforts to
preserve intact the business organization of the Company and each of its
subsidiaries, to keep available the services of its and their present
officers and key employees and consultants, and to maintain satisfactory
relationships with customers, agents, reinsurers, suppliers, and other
persons having business relationships with the Company or its subsidiaries.
(a) Without limiting the provisions of SECTION 5.1(A) or as
otherwise expressly provided in this Agreement, neither the Company nor any
of its subsidiaries will:
(i) issue, sell, or dispose of additional shares of
capital stock of any class (including the Class A/B Shares) of the Company or
any of its subsidiaries, or securities convertible into or exchangeable for
any such shares or securities, or any rights, warrants or options to acquire
any such shares or securities, other than Class A/B Shares issued upon
exercise of options disclosed in SCHEDULE 3.3., in each case in accordance
with the terms disclosed on SCHEDULE 3.3;
(ii) redeem, purchase, or otherwise acquire, or propose
to redeem purchase, or otherwise acquire, any of its outstanding capital
stock, or other securities of the Company or any of its subsidiaries;
(iii) split, combine, subdivide, or reclassify any of
its capital stock or declare, set aside, make, or pay any dividend or
distribution on any shares of its capital stock except for dividends or
distributions to the Company and its subsidiaries from their respective
subsidiaries;
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(iv) sell, pledge, dispose of, or encumber any of its
assets, except for sales, pledges, dispositions, or encumbrances in the
ordinary course of business consistent with past practices or between the
Company and its subsidiaries;
(v) incur or modify any indebtedness or issue or sell
any debt securities, or assume, guarantee, endorse, or otherwise as an
accommodation become absolutely or contingently responsible for obligations
of any other person, or make any loans or advances, other than in the
ordinary course of business consistent with past practices;
(vi) adopt or amend any bonus, profit sharing,
compensation, severance, termination, stock option, pension, retirement,
deferred compensation, employment or other employee benefit agreements
trusts, plans, funds, or other arrangements for the benefit or welfare of any
director, officer, or employee, or (except for normal increases in the
ordinary course of business that are consistent with past practices and that,
in the aggregate, do not result in a material increase in benefits or
compensation expense to the Company) increase in any manner the compensation
or fringe benefits of any director, officer, or employee or pay any benefit
not required by any existing plan or arrangement (including, without
notation, the granting or vesting of stock options or stock appreciation
rights) or take any action or grant any benefit not expressly required under
the terms of any existing agreements, trusts, plans, funds, or other such
arrangements or enter into any contract, agreement, commitment, or
arrangement to do any of the foregoing; or make or agree to make any payments
to any directors, officers, agents, contractors, or employees relating to a
change or potential change in control of the Company;
(vii) acquire by merger, consolidation, or acquisition
of stock or assets any corporation, partnership, or other business
organization or division or make any investment either by purchase of stock
or securities, contributions to capital (other than to wholly-owned
subsidiaries), property transfer, or purchase of any material amount of
property or assets, in any other person;
(viii) except as required by this Agreement, adopt any
amendments to their respective charters or bylaws or equivalent
organizational documents;
(ix) take any action other than in the ordinary course
of business and consistent with past practices, to pay, discharge, settle, or
satisfy any claim, liability, or obligation (absolute or contingent, accrued
or unaccrued, asserted or unasserted, or otherwise);
(x) change any method of accounting or accounting
practice used by the Company or any of its subsidiaries, except for any
change required by reason of a concurrent change in generally accepted
accounting principles;
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(xi) revalue in any respect any of its assets,
including, without limitation, writing down the value of its portfolio or
writing off notes or accounts receivable other than in the ordinary course of
business consistent with past practices;
(xii) authorize any new capital expenditure or
expenditures that individually, is in excess of $10,000 or, in the aggregate,
are in excess of $50,000;
(xiii) make any tax election, settle or compromise any
federal, state, or local tax liability or consent to the extension of time
for the assessment or collection of any federal, state, or local tax;
(xiv) settle or compromise any pending or threatened
suit, action, or claim material to the Company and its subsidiaries taken as
a whole or relevant to the transactions contemplated by this Agreement;
(xv) enter into any agreement, arrangement, or
understanding to do any of the foregoing actions in this SECTION 5.1,
including any agreement, arrangement, or understanding resulting in or
providing for a sale of any assets of the Company (other than a sale of
assets in the ordinary course of business and consistent with past practices)
or a merger or other liquidation, sale, or disposition of the Company; or
(xvi) voluntarily take any action or willfully omit to
take any action that could make any representation or warranty in ARTICLE III
untrue or incorrect in any material respect at any time, including as of the
date of this Agreement and as of the time of consummation of the Offer, as if
made as of such time.
5.2 [RESERVED].
5.3 [RESERVED].
5.4 ADDITIONAL AGREEMENTS. Subject to the terms and conditions of
this Agreement and to the fiduciary obligations of the Board of Directors of
the Company under applicable law, each of the parties agrees to use their
respective reasonable best efforts to take, or cause to be taken, all actions
to do, or cause to be done, all things necessary, proper, or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement (including consummation of the Offer and to
cooperate with each other in connection with the foregoing, including,
without limitation, using their respective reasonable best efforts (a) to
obtain all necessary waivers, consents, and approvals from other parties to
loan agreements, leases, and other contracts, (b) to obtain all necessary
consents, approvals, and authorizations as are required to be obtained under
any federal state, or foreign law or regulations, (c) to lift or rescind any
injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated by this
Agreement, (d) to prepare and effect all necessary registrations and
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filings, and (e) to fulfill all conditions to and covenants contained in this
Agreement. If, after the Effective Time, any action is necessary to effect
the purposes of this Agreement, the proper officers and directors of each
party will take all such necessary action.
5.5 NOTIFICATION OF CERTAIN MATTERS. The Company will give prompt
notice to the Purchaser, and the Purchaser will give prompt notice to the
Company, of (a) the occurrence, or failure to occur, of any event, which
occurrence or failure could cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at any
time, (b) any material failure of the Company or the Purchaser, as the case
may be, or of any officer, director, employee, or agent of the Company or the
Purchaser, to comply with or satisfy any covenant, condition, or agreement to
be complied with or satisfied by it under this Agreement, (c) any act,
omission to act, event, or occurrence that, with notice, the passage of time,
or otherwise, could result in a Company Material Adverse Effect or a
Purchaser Material Adverse Effect, as the case may be, and (d) any contingent
liability of the Company for which it reasonably believes it will, with the
passage of time or otherwise, become liable. No such notification will
affect the representations or warranties of the parties or the conditions to
the obligations of the parties under this Agreement.
5.6 ACCESS TO INFORMATION.
(a) From the date of this Agreement to the Effective Time,
the Company will, and will cause its subsidiaries, officers, directors,
employees, and agents upon reasonable notice to, afford to officers,
employees, and agents of the Purchaser and its affiliates and the banks,
other financial institutions, and investment bankers working with the
Purchaser, and its respective officers, employees, and agents, complete
access at all reasonable times to its officers, employees, agents,
properties, books, records, and contracts, and will furnish the Purchaser and
its affiliates and the banks, other financial institutions, and investments
bankers working with the Purchaser, all financial, operating, and other data
and information as they reasonably request.
(b) The Purchaser will hold and will cause its directors,
officers, agents, employees, consultants, and advisors to hold in confidence,
unless compelled to disclose by judicial or administrative process or, in the
written opinion of its legal counsel, by other requirements of law, all
documents and information concerning the Company and its subsidiaries
furnished to such persons in connection with the transactions contemplated by
this Agreement (except to the extent that such information can be shown to
have been (i) previously known by such persons from sources other than the
Company, or its directors, officers, representatives or affiliates, (ii) in
the public domain through no fault of such persons, or (iii) later lawfully
acquired by such persons on a non-confidential basis from other sources who
are not known by the Purchaser to be bound by a confidentiality agreement or
otherwise prohibited from transmitting the information to the Purchaser by a
contractual, legal, or fiduciary obligation) and will not release or disclose
such information to any other person, except its directors, officers, agents,
employees, consultants, and advisors, in connection with this Agreement who
need to know such information. If the transactions contemplated by this
Agreement are not consummated, such confidence shall be maintained and, if
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requested by or on behalf of the Company, the Purchaser will, and will use
all reasonable efforts to cause its auditors, attorneys, financial advisors,
and other consultants, agents, and representatives to, return to the Company
or destroy all copies of written information furnished by the Company to the
Purchaser or its agents, representatives, or advisors. It is understood that
the Purchaser will be deemed to have satisfied its obligation to hold such
information confidential if it exercises the same care as it takes to
preserve confidentiality for its own similar information.
(c) No investigation pursuant to this SECTION 5.6 will affect
any representations or warranties of the parties in this Agreement or the
conditions to the obligations of the parties to this Agreement.
5.7 PUBLIC ANNOUNCEMENTS. The Purchaser on the one hand and the
Company on the other hand will consult with each other before issuing any
press release or otherwise making any public statements with respect to this
Agreement, the Offer, or the other transactions contemplated by this
Agreement, and will not issue any such press release or make any such public
statement prior to such consultation except as may be required by law or the
listing requirements of any securities exchange applicable to the Company, if
any.
5.8 OFFICERS' AND DIRECTORS' INDEMNIFICATION.
(a) The Purchaser agrees that all rights to indemnification
now existing in favor of the directors or officers of the Company and its
subsidiaries as provided in their respective certificates of incorporation or
bylaws and pursuant to the contracts listed on SCHEDULE 5.8 will to the
extent such rights are in accordance with applicable law stay in effect in
accordance with their respective terms.
(b) In the event any action, suit, proceeding, or
investigation relating to this Agreement or to the transactions contemplated
by Agreement is commenced by a third party, whether before or after the
Effective Time, the parties to this Agreement agree, subject to the fiduciary
duties of the Directors of the Company and the Manager of the Purchaser, to
cooperate and use all reasonable efforts to defend against and respond to
such action, suit, proceeding, or investigation.
5.9 EMPLOYEE OPTIONS. Except as set forth on SCHEDULE 5.9, as soon
as practicable following the date of this Agreement, the Company will take
such actions as are required to provide that each stock option to purchase
Class A/B Shares outstanding immediately prior to the consummation of the
Offer, whether or not then exercisable, will be canceled immediately prior to
the consummation of the Offer in exchange for an amount in cash payable at
the time of such cancellation equal to the product of (x) the number of Class
A/B Shares subject to such stock option and unexercised immediately prior to
the consummation of the Offer and (y) the excess of the Per Share Price to be
paid in the Offer over the per share exercise price pursuant to such stock
option.
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5.10 OTHER ACTIONS BY THE COMPANY. If any "fair price," "moratorium,"
"control share acquisition," or other form of antitakeover statute,
regulation, charter provision, or contract is or becomes applicable to the
transactions contemplated by this Agreement, the Company and the members of
the Board of Directors of the Company will use their reasonable efforts to
grant such approvals and take such actions as are necessary under such laws,
provisions, or contracts so that the transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise act to eliminate or minimize the
effects of such statute, regulation, provision or contract on the
transactions contemplated by Agreement.
ARTICLE VI
[RESERVED]
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
7.1 TERMINATION. This Agreement may be terminated and the Offer may
be abandoned at any time prior to the purchase of Class A Shares pursuant to
the Offer:
(a) by mutual written consent of the Purchaser and the
Company;
(b) by the Purchaser or the Company if any court of competent
jurisdiction or other governmental body has issued a final order, decree, or
ruling or taken any other action restraining, enjoining, or otherwise
prohibiting the purchase of Class A Shares pursuant to the Offer and such
order, decree, ruling, or other action is or has become nonappealable;
(c) by the Purchaser if due to an occurrence or circumstance
that would result in a failure to satisfy any of the conditions set forth in
ANNEX A, the Purchaser has (i) failed to commence the Offer within five
business days following the date of the initial public announcement of the
Offer, (ii) terminated the Offer, or (iii) failed to pay for the Class A
Shares pursuant to the Offer by October 1, 1999;
(d) by the Company if (i) there has not been a breach of any
material representation, warranty, covenant, or agreement on the part of the
Company, and the Purchaser has (A) failed to commence the Offer within five
business days following the date of the initial public announcement of the
Offer, (B) terminated the Offer, (C) failed to pay for the Class A Shares
pursuant to the Offer by October 1, 1999; provided, that any termination
pursuant to this clause C must be made by written notice irrevocably stating
the intent of the Company to terminate this Agreement under this SECTION
7.1(d)(i)(C) delivered to the Purchaser by 12:00 noon, Dallas time, on
October 1, 1999, or (ii) prior to the purchase of Class A Shares pursuant to
the Offer, a person or group has made a bona fide offer that the Board of
Directors of the Company by a majority vote
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determines in its good faith judgment and in the exercise of its fiduciary
duties, after consultation with its financial advisors and based as to legal
matters on the written opinion of legal counsel, is obligated by its
fiduciary duties under applicable law to terminate this Agreement, provided
that such termination under this clause (ii) will not be effective until
payment of the fee required by SECTION 7.3(b);
(e) by the Purchaser prior to the purchase of Class A Shares
pursuant to the Offer, if (i) there has been a breach (which breach is not
cured or not capable of being cured prior to the earlier of (A) ten days
following notice to the Company by the Purchaser of such breach or (B) two
business days prior to the expiration date of the Offer, as extended from
time to time pursuant to the terms of this Agreement) of any representation
or warranty on the part of the Company having a Company Material Adverse
Effect or materially adversely affecting or delaying the ability of the
Purchaser to consummate the Offer or the Company to effectuate the Reverse
Split, (ii) there has been a breach (which breach is not cured or not capable
of being cured prior to the earlier of (A) ten days following notice to the
Company by the Purchaser of such breach or (B) two business days prior to the
expiration date of the Offer, as extended from time to time pursuant to the
terms of this Agreement) of any covenant or agreement on the part of the
Company resulting in a Company Material Adverse Effect or materially
adversely affecting or delaying the ability of the Purchaser to consummate
the Offer or the Company to effectuate the Reverse Split, (iii) the Company
engages in negotiations with any person or group (other than the Purchaser)
that has proposed a Third Party Acquisition (as defined in SECTION 7.3)
except to the extent permitted by SECTION 8.8; (iv) the Company enters into
an agreement, letter of intent, or arrangement with respect to a Third Party
Acquisition, (v) the Board has withdrawn or modified (including by amendment
of the Schedule 14D-9) in a manner adverse to the Purchaser its approval or
recommendation of the Offer, this Agreement, or the Reverse Split or has
recommended another offer, or has adopted any resolution to effect any of the
foregoing, or (vi) the Minimum Condition has not been satisfied by the
expiration date of the Offer and on or prior to such date (A) any person or
group (other than the Purchaser) has made and not withdrawn a public
announcement with respect to a Third Party Acquisition or (B) any person or
group (including the Company or any of its affiliates) other than the
Purchaser has become the beneficial owner of 9.9% (except in bona fide
arbitrage transactions) or more of the Class A/B Shares; or
(f) by the Company if (i) there has been a breach (which
breach is not cured or not capable of being cured prior to the earlier of (A)
ten days following notice to the Purchaser of such breach or (B) two business
days prior to the expiration date of the Offer, as extended from time to time
pursuant to the terms of this Agreement) of any representation or warranty on
the part of the Purchaser that materially adversely affects (or materially
delays) the consummation of the Offer or (ii) there has been a material
breach (which breach is not cured or not capable of being cured prior to the
earlier of (A) ten days following notice to the Purchaser of such breach or
(B) two business days prior to the expiration date of the Offer, as extended
from time to time pursuant to the terms of this Agreement) of any covenant or
agreement on the part of the Purchaser that materially adversely affects (or
materially delays) the consummation of the Offer.
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7.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to SECTION 7.1, this Agreement will
become void and have no effect, without any liability on the part of any
party to this Agreement or its affiliates, directors, officers, or
stockholders, other than the provisions of this SECTION 7.2 and SECTIONS
5.6(b), 5.8, and 7.3. Nothing contained in this SECTION 7.2 will relieve any
party from liability for any breach of this Agreement. No termination of
this Agreement will affect any Lockup and Voting Agreement except as provided
in such Lockup and Voting Agreement.
7.3 FEES AND EXPENSES.
(a) In the event (A) the Purchaser terminates this Agreement pursuant
to SECTIONS 7.1(e)(i) through (v) or (B) the Company is not at such time in
material breach of this Agreement and terminates this Agreement pursuant to
SECTION 7.1(d)(ii), the Company will reimburse the Purchaser and its
affiliates (not later than one business day after submission of statements
together with reasonable documentation therefor) for all out-of-pocket fees
and expenses actually incurred by any of them or on its behalf in connection
with the Offer and the proposed consummation of all transactions contemplated
by this Agreement (including, without limitation, costs of advertising,
filing fees and fees payable to legal counsel, financial printers, financing
sources, investment bankers, counsel to any of the foregoing, and
accountants); provided, that in the event the Purchaser or its affiliates
seek and obtain payment under this SECTION 7.3(a), the Company shall not be
additionally liable for consequential or speculative damages arising from
such termination.
(b) If (i) (A) the Purchaser terminates this Agreement pursuant to
SECTIONS 7.1(e)(i) through (v) or (B) if the Company terminates this
Agreement pursuant to SECTION 7.1(d)(i)(C) and, within nine months after a
termination pursuant to CLAUSE (A) or CLAUSE (B), the Company enters into an
agreement, letter of intent, or binding arrangement with respect to a Third
Party Acquisition, or a Third Party Acquisition occurs or (ii) the Company
terminates this Agreement pursuant to SECTION 7.1(d)(ii), then in either case
the Company will reimburse, in cash, the Purchaser within one business day
following the execution and delivery of such agreement or letter of intent or
the entering into of such an arrangement or the occurrence of such Third
Party Acquisition, as the case may be, or simultaneously with such
termination pursuant to SECTION 7.1(d)(ii) for all out-of-pocket fees and
expenses actually incurred by or on behalf of Purchaser in connection with
the Offer and the proposed consummation of all the transactions contemplated
by this Agreement (including, without limitation, costs of advertising,
filing fees and fees payable to legal counsel, financial printers, financing
sources, investment bankers, counsel to any of the foregoing, and
accountants) not in excess of $100,000.
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For the purposes of this Agreement, "THIRD PARTY ACQUISITION" means the
occurrence of any of the following events (i) the acquisition of the Company
by merger or otherwise by any person or group other than the Purchaser, or
any affiliate of the Purchaser (a "THIRD PARTY"); (ii) the acquisition by a
Third Party of any substantial portion of the business or assets of the
Company and its subsidiaries taken as a whole; (iii) the acquisition by a
Third Party of 9.9% or more of the outstanding Class A Shares or Class B
Shares from the Company or in a transaction or series of related transactions
that results in a change of control of the Company; (iv) the adoption by the
Company of a plan of liquidation or the declaration or payment of an
extraordinary dividend; or (v) the acquisition by the Company or any of its
subsidiaries of more than 9.9% of the outstanding Class A Shares or Class B
Shares.
(c) Except as specifically provided in this SECTION 7.3 each
party will bear its own expenses in connection with this Agreement and the
transactions contemplated by this Agreement.
7.4 AMENDMENT. This Agreement may not be amended except in an
instrument in writing signed on behalf of all of the parties to this
Agreement; provided, that, after purchase of the Class A Shares pursuant to
the Offer, no amendment may be made to SECTION 5.8 without the consent of the
indemnified persons.
7.5 WAIVER. At any time prior to the Effective Time, any party to
this Agreement may (i) subject to the second provision in SECTION 7.4, extend
the time for the performance of any of the obligations or other acts of any
other party or parties to this Agreement, (ii) subject to the provision
contained in SECTION 7.4 of this Agreement, waive any inaccuracies in the
representations and warranties contained in this Agreement by any other
applicable party or in any documents, certificate, or writing delivered
pursuant to this Agreement by any other applicable party, or (iii) subject to
the provision contained in SECTION 7.4 of this Agreement, waive compliance
with any of the agreements of any other party or with any conditions to its
own obligations. Any agreement on the part of a party to this Agreement to
any such extension or waiver will be valid only if set forth in an instrument
in writing signed on behalf of such party by a duly authorized officer.
ARTICLE VIII
MISCELLANEOUS
8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND AGREEMENTS. The
representations and warranties made in this Agreement will not survive beyond
the Effective Time or the termination of this Agreement, as the case may be.
No investigation made, or information received by, any party to this
Agreement will affect any representation or warranty made by any other party
to this Agreement. The covenants and agreements of the parties to this
Agreement will survive in accordance with their terms.
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8.2 BROKERAGE FEES AND COMMISSIONS. The Company hereby represents and
warrants to the Purchaser with respect to the Company and any of its
subsidiaries, that except as disclosed in the Offer, and also except as
disclosed in the Offer, the Purchaser hereby represents and warrants to the
Company with respect to Purchaser or any of its subsidiaries that, no person
is entitled to receive from the Company, the Purchaser or any of their
subsidiaries, respectively, any investment banking, brokerage, or finder's
fee or fees in connection with this Agreement or any of the transactions
contemplated by this Agreement; notwithstanding the foregoing, all such fees
to the Advisor paid by the Company and any of its subsidiaries shall not
exceed $40,000.
8.3 ENTIRE ASSIGNMENT; ASSIGNMENT. This Agreement, together with the
Warrant, the Lock-Up and Voting Agreement, and all the Schedules and Annexes,
(a) constitutes the entire agreement between the parties with respect to the
subject matter of this Agreement and supersedes all other prior written
agreements and understandings and all prior and contemporaneous oral
agreements and understandings between the parties to this Agreement of any of
them with respect to the subject matter of this Agreement and (b) will not be
assigned by operation of law or otherwise, provided that the Purchaser may
assign its rights and obligations under this Agreement to any direct or
indirect subsidiary of the Purchaser, but no such assignment will relieve the
assigning party of its obligations under this Agreement. Any purported
assignment of this Agreement not made in accordance with this SECTION 8.3
will be null, void, and of no effect. No party to this Agreement has relied
upon any representation or warranty, oral or written, of any other party to
this Agreement or any of their officers, directors, or stockholders except
for the representations and warranties contained in this Agreement and the
Lock-Up and Voting Agreement.
8.4 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of this Agreement will nevertheless
remain in full force and effect. Upon any final judicial determination that
any term or other provision is invalid, illegal, or incapable of being
enforced, the parties to this Agreement will negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated by this Agreement be consummated to the extent possible.
8.5 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement will be in writing and will be deemed to
have been duly given when delivered in person, by cable, telegram or telex,
facsimile or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties as follows:
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(a) if to the Purchaser, to:
GAP Capital, L.L.C.,
a Texas limited liability company
6310 Lemmon Avenue, Suite 202
Dallas, Texas 75209
Attn: Joe Pipes, Manager
Fax: 214-350-9099
with a copy to:
Jackson Walker L.L.P.
901 Main Street, Suite 6000
Dallas, Texas 75202
Attention: Jeffrey M. Sone
Fax: 214-953-5822
(b) if to the Company, to:
Mobley Environmental Services, Inc.
111 Congress Avenue, Suite 1400
Austin, Texas 78701
Attention: John Mobley
Fax: 512-479-1101
with a copy to:
Brown McCarroll & Oaks Hartline
111 Congress Avenue, Suite 1400
Austin, Texas 78701
Attention: Howard V. Rose
Fax: 512-479-1101
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address will be effective only upon
receipt).
8.6 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF THE LAWS
THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
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8.7 SPECIFIC PERFORMANCE. Each of the parties to this Agreement
acknowledges and agrees that the other parties to this Agreement would be
irreparably damaged in the event any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. Accordingly, each of the parties to this Agreement agrees that
each of them will be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions of this Agreement in any action
instituted in any court of the United States or any state having subject
matter jurisdiction, in addition to any other remedy to which such party may
be entitled, at law or in equity.
8.8 OTHER POTENTIAL BIDDERS.
(a) The Company shall not, directly or indirectly, through any
officer, director, employee, representative or agent of the Company or any of
its subsidiaries, solicit or encourage (including by way of furnishing
information) the initiation of any inquires or proposals regarding a Third
Party Acquisition (any of the foregoing inquiries or proposals being referred
to herein as an "ACQUISITION PROPOSAL"). Provided that the Company and the
Board shall have complied with the first sentence of this SECTION 8.8(a),
nothing contained in this SECTION 8.8(a) or any other provision of this
Agreement shall prevent the Board if it determines in good faith, after
consultation with, and the receipt of advice from, outside counsel, that it
is required to do so in order to discharge properly its fiduciary duties,
from considering, negotiating, approving and recommending to the stockholders
of the Company an unsolicited bona fide written Acquisition Proposal which
the Board of Directors of the Company determines in good faith (after
consultation with its financial advisors and legal counsel) would result in a
transaction more favorable to the Company's stockholders than the transaction
contemplated by this Agreement (any Acquisition Proposal meeting such
criterion being referred to herein as a "SUPERIOR PROPOSAL"). The Company
acknowledges that the exercise of its rights under this SECTION 8.8 of this
Agreement may result in payment obligations under SECTION 7.3 of this
Agreement. Nothing therein shall prohibit the Company from complying with
Rules 14d-9 and 14e-2 under the Exchange Act with respect to any other tender
offers.
(b) The Company shall promptly, but in no event later than 24
hours, notify the Purchaser after receipt of any Acquisition Proposal or any
request for nonpublic information relating to the Company or any of its
subsidiaries in connection with an Acquisition Proposal or for access to the
proper books or records of the Company or any subsidiary by any person or
entity that informs the Board that it is considering making or has made, an
Acquisition Proposal. Such notice to the Purchaser shall be made orally and
in writing and shall indicate in reasonable detail the identify of the Offer
and the terms and conditions of such proposal, inquiry or contact.
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(c) If the Board receives a request for material nonpublic
information by a Party who makes an unsolicited bona fide Acquisition
Proposal and the Board determines that such proposal, if consummated pursuant
to its term would be a Superior Proposal, then, and only in such case, the
Company may, subject to the execution of a confidentiality agreement
substantially similar to that then in effect between the Company and the
Purchaser, provide such party with access to information regarding the
Company.
(d) The Company shall immediately cease and cause to be terminated
any existing discussions or negotiations with any parties (other than the
Purchaser) conducted heretofore with respect to any of the foregoing. The
Company agrees not to release any third party from any confidentiality or
standstill agreement to which the Company is a party.
(e) The Company shall ensure that the officer, directors, and
employees of the Company and its subsidiaries and any investment banker or
other advisor or representative retained by the Company are aware of the
restrictions described in this Section; and shall be responsible for any
breach of this SECTION 8.8 by such bankers, advisors and representatives.
8.9 DESCRIPTIVE HEADINGS, REFERENCES. The descriptive headings in this
Agreement are inserted for convenience of reference only and are not intended
to be part of or to affect the meaning or interpretation of this Agreement.
References in this Agreement to Sections, Annexes, and Schedules are
references to the Sections, Annexes, and Schedules of this Agreement unless
the context indicates otherwise.
8.10 PARTIES IN INTEREST. This Agreement will be binding upon and inure
solely to the benefit of each party to this Agreement, and, except as
provided in SECTIONS 5.9 and 8.11, nothing in this Agreement, express or
implied, is intended to confer upon any other person with rights to remedies
of any nature whatsoever under or by reason of this Agreement.
8.11 BENEFICIARIES. The Purchaser hereby acknowledges that SECTION 5.8
is intended to benefit the indemnified parties referred to in SECTION 5.8,
any of whom will be entitled to enforce SECTION 5.8 against the Company.
8.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, but all of
which will constitute one and the same agreement.
8.13 [RESERVED].
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8.14 CERTAIN DEFINITIONS. For the purposes of this Agreement: (a) the
term "SUBSIDIARY" means each person in which a person owns or controls,
directly or through one or more subsidiaries, 50% or more of the stock or
other interests having general voting power in the election of directors or
persons performing similar functions or more than 50% of the equity
interests; (b) the term "PERSON" will be broadly construed to include any
individual, corporation, company, partnership, trust, joint stock, company,
association, or other private or governmental entity; (c) the term "GROUP"
has the meaning given in Section 13(d)(3) of the Exchange Act; (d) the term
"AFFILIATE" has the meaning given in Rule 144(a)(1) under the Securities Act;
and (e) the term "BUSINESS DAY" has the meaning given in Rule 14d-1(c)(6)
under the Exchange Act.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREFORE, each of the parties to this Agreement has caused
this Agreement to be executed on its behalf by its duly authorized officers,
all as of the day and year first above written.
GAP Capital, L.L.C.,
a Texas limited liability company
By: /s/ Joe Pipes
----------------------------------
Joe Pipes,
its Manager
Witness:
/s/ Carl R. Arbogast
- --------------------------------
Name: Carl R. Arbogast
---------------------------
Title:
--------------------------
MOBLEY ENVIRONMENTAL SERVICES, INC.
By: /s/ John Mobley
---------------------------------
Name: John Mobley
-------------------------------
Title: Chairman
-------------------------------
Attest:
- --------------------------------
Name:
---------------------------
Title:
--------------------------
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<PAGE>
ANNEX A
Terms used in this ANNEX A have the meanings ascribed to them in the
Tender Offer Agreement dated as of June 4, 1999 (the "TENDER AGREEMENT")
Notwithstanding any other provisions of the Offer, the Purchaser will
not be required to accept for payment or (subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) relating to the obligation of
the Purchaser to pay for or return tendered Class A Shares promptly after the
termination or withdrawal of the Offer) to pay for tendered Class A Shares,
or may terminate or amend the Offer as provided in the Agreement or may
postpone the acceptance for payment of, or payment for, Class A Shares
(whether or not any other Class A Shares have been accepted for payment or
paid for pursuant to the Offer) if prior to the expiration of the Offer
(i) the Minimum Condition has not been satisfied; or (ii) if at any time on
or after the date of the Tender Agreement, and at any time before the time of
acceptance for payment of any such Class A Shares, any of the following
occurs:
(a) any of the representations or warranties of the Company
contained in the Tender Agreement is not true and correct at and as of any
date prior to the expiration date of the Offer as if made at and as of such
time, except for (i) failures to be true and correct as could not,
individually or in the aggregate, reasonable expected to result in a
Company Material Adverse Effect; or (ii) failures to comply as are capable
of being and are cured prior to the earlier of (A) ten days after written
notice from the Purchaser to the Company of such failure or (B) two
business days prior to the expiration date of the Offer.
(b) the Company has failed to comply with any of its obligations
under the Tender Agreement, except for (i) failures to so comply as could
not, individually or in the aggregate, reasonably be expected to result in
a Company Material Adverse Effect; and (ii) failures to comply as are
capable of being and are cured prior to the earlier of (A) ten days after
written notice from the Purchaser to the Company of such failure or (B) two
business days prior to the expiration date of the Offer;
(c) the Board of Directors of the Company has withdrawn or
modified in any respect adverse to the Purchaser its recommendation of the
Offer or taken any position inconsistent with such, recommendation;
(d) the Tender Agreement has been terminated in accordance with
its terms;
(e) the Company has reached an agreement with the Purchaser that
the Offer be terminated or amended;
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(f) any state, federal, or foreign government or governmental
authority has taken any action, or proposed, sought, promulgated, or
enacted, or any state, federal, or foreign government or governmental
authority or court has entered, enforced, or deemed applicable to the Offer
or the transactions contemplated by the Agreement, any statute, rule,
regulation, judgment, order, or injunction that is reasonably likely to (i)
make the acceptance for payment of, the payment for, or the purchase of,
some or all of the Class A/B Shares illegal or otherwise restrict,
materially delay, prohibit consummation of, or make materially more costly,
the Offer or the Reverse Split, (ii) result in a material delay in or
restrict the ability of the Purchaser, or render the Purchaser unable, to
accept for payment, pay for or purchase some or all of the Class A/B Shares
in the Offer or for the Company to effectuate the Reverse Split,
(iii) require the divestiture by the Purchaser, or the Company or any of
their respective subsidiaries or affiliates of all or any material portion
of the business, assets, or property of any of them or any Class A/B
Shares, or impose any material limitation on the ability of any of them to
conduct their business and own such assets, properties, and Class A/B
Shares, (iv) impose material limitations on the ability of the Purchaser to
acquire or hold or to exercise effectively all rights of ownership of the
Class A/B Shares, including the right to vote any Class A/B Shares acquired
by either of them on all matters properly presented to the Stockholders of
the Company, (v) impose any limitations on the ability of the Purchaser, or
any of its respective subsidiaries or affiliates effectively to control in
any material respect the business or operations of the Company, the
Purchaser, or any of their respective subsidiaries or affiliates;
(g) any change (or any condition, event or development involving
a prospective change) has occurred or been threatened in the business,
properties, assets, liabilities, capitalization, stockholders' equity,
financial condition, operations, licenses or franchises results of
operations, or prospects of the Company or any of its subsidiaries, that
could reasonably be expected to result in a Company Material Adverse
Effect;
(h) there has occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market or quotations for shares traded thereon
as reported by the NASDAQ or otherwise, (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory), (iii) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States, (iv) any limitation (whether or not
mandatory) by any governmental authority on the extension of credit by any
or other financial institutions, (v) after the date of the Agreement, an
aggregate decline of at least 25% in the Dow Jones Industrial Average or
Standard & Poor's 500 Index or a decline in either such index of 12 1/2% in
any 24-hour period, or (vi) in the case of any of the occurrences referred
to in clauses (i) through (iv) existing at the time of the commencement of
the Offer, in the reasonable judgment of the Purchaser, a material
acceleration or worsening thereof;
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<PAGE>
(i) any person or group other than the Purchaser and its
affiliates has entered into a definitive agreement or an agreement in
principle with the Company with respect to a tender offer or exchange offer
for any Class A/B Shares or a merger, consolidation, or other business
combination or acquisition with or involving the Company or any of its
subsidiaries; or
(j) any material approval, permit, authorization, consent, or
waiting period of any domestic or foreign, governmental, administrative, or
regulatory entity (federal, state, local, provincial or otherwise) has not
been obtained or satisfied on terms satisfactory to the Purchaser in its
sole discretion.
that, in the good faith judgment of the Purchaser, makes it inadvisable to
proceed with the Offer or with such acceptance for payment of, or payment
for, Class A Shares or to proceed with the Reverse Split.
The foregoing conditions are for the sole benefit of the Purchaser and
may be asserted by the Purchaser regardless of the circumstances giving rise
to any such condition or may be waived by the Purchaser in whole or in part
at an time and from time to time in its sole discretion (subject to the terms
of the Agreement). The failure by the Purchaser at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances
will not be deemed to waiver with respect to any other facts or circumstances,
and each such right will be deemed an ongoing right that may be asserted at any
time and from time to time.
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<PAGE>
LOCK-UP AND VOTING AGREEMENT
This Lock-Up and Voting Agreement (the "Agreement"), dated as of June 4,
1999, among GAP Capital, L.L.C., a Texas limited liability company
("Purchaser"), and the other parties hereto (each a "Stockholder," and
collectively, the "Stockholders").
W I T N E S S E T H
WHEREAS, concurrently herewith, Purchaser and Mobley Environmental
Services, Inc., a Delaware corporation (the "Company"), are entering into a
Tender Offer Agreement (as such agreement may hereafter be amended from time
to time, the "Tender Agreement"; capitalized terms used and not defined
herein have the respective meanings ascribed to them in the Tender
Agreement), pursuant to which, among other things, Purchaser will purchase
shares of the Class A Common Stock, $.01 par value per share, of the Company
(the "Class A Common Stock").
WHEREAS, following the purchase of shares of Class A Common Stock
pursuant to the Offer, the Company may effectuate a 50,000 to 1 reverse stock
split (the "Reverse Split") with respect to its Class A Common Stock and its
Class B Common Stock (as defined herein); and
WHEREAS, as an inducement and a condition to Purchaser entering into the
Tender Agreement, the Stockholders have agreed to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "owns," "owned" or "ownership" with respect to any securities
shall mean having the sole power to dispose of such securities and the sole
power to vote such securities.
(b) "Class B Common Stock" shall mean at any time the Class B common
stock, $.01 par value per share, of the Company.
(c) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
(d) "Shares" means the shares of Class A Common Stock and/or shares of
Class B Common Stock (including any options or other derivative securities
convertible into shares of Class A Common Stock or Class B Common Stock)
owned by the Stockholders as set forth on SCHEDULE I hereto AND any such
shares acquired by a Stockholder after the date hereof and prior to the
termination of this Agreement.
<PAGE>
2. PROVISIONS CONCERNING COMPANY COMMON STOCK.
(a) RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE. No
Stockholder shall (i) other than gifts to persons who agree to be subject to
the terms of this Agreement, directly or indirectly offer for sale, sell,
transfer, tender, convert, exchange, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to or consent to the offer for sale, sale,
transfer, tender, conversion, exchange, pledge, encumbrance, assignment or
other disposition of, any or all of such Stockholder's Shares or any interest
therein; (ii) except as contemplated by this Agreement, grant any proxies or
powers of attorney, deposit any Shares into a voting trust or enter into a
voting agreement with respect to any Shares; or (iii) take any action that
would make any representation or warranty of such Stockholder contained
herein untrue or incorrect or would have the effect of preventing or
disabling such Stockholder from performing such Stockholder's obligations
under this Agreement.
(b) VOTING AGREEMENT. Each Stockholder hereby agrees that during the
period commencing on the date hereof and continuing until the termination of
this Agreement, at any meeting of the holders of Class A Common Stock or
Class B Common Stock, however called, or in connection with any written
consent of the holders of Class A Common Stock or Class B Common Stock, such
Stockholder shall vote (or cause to be voted) the Shares held of record or
beneficially owned by such Stockholder, whether issued, heretofore owned or
hereafter acquired, (i) in favor of the Reverse Split, the execution and
delivery by the Company of the Tender Agreement and the approval of the terms
thereof and each of the other actions contemplated by the Tender Agreement
and this Agreement and any actions required in furtherance thereof and
hereof; (ii) against any action or agreement that would result in a breach in
any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Tender Agreement or this
Agreement (after giving effect to any materiality or similar qualifications
contained therein); and (iii) except as otherwise agreed to in writing in
advance by Purchaser, against the following actions (other than the
transactions contemplated by the Tender Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or Company Subsidiaries; (B) a sale, lease
or transfer of a material amount of assets of the Company or its
subsidiaries, or a reorganization, recapitalization, dissolution or
liquidation of the Company or its subsidiaries; (C) (1) any change in a
majority of the persons who constitute the board of directors of the Company;
(2) any change in the present capitalization of the Company or any amendment
of the Company's Articles of Incorporation or Bylaws; (3) any other material
change in the Company's corporate structure or business; or (4) any other
action involving the Company or its subsidiaries which is intended, or could
reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the transactions contemplated by this Agreement
and the Tender Agreement. Such Stockholder shall not enter into any
agreement or understanding with any Person or entity the effect of which
would be inconsistent with or violative of the provisions and agreements
contained in this Section 2.
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<PAGE>
3. OTHER COVENANTS, REPRESENTATIONS AND WARRANTIES. Each Stockholder
hereby individually as to itself represents, warrants, covenants and agrees
to and with Purchaser as follows:
(a) OWNERSHIP OF SHARES. Such Stockholder is the record owner of the
number of Shares set forth opposite such Stockholder's name on Schedule I
hereto. On the date hereof, the Shares set forth opposite such Stockholder's
name on SCHEDULE I hereto constitute all of the shares of Class A Common
Stock and Class B Common Stock or securities convertible into Class A Common
Stock and Class B Common Stock owned of record by such Stockholder. Such
Stockholder has sole voting power and sole power to issue instructions with
respect to the matters set forth in Section 2 hereof, sole power of
disposition, sole power of conversion, sole power to demand appraisal rights
and sole power to agree to all of the matters set forth in this Agreement, in
each case with respect to all of the Shares set forth opposite such
Stockholder's name on Schedule I hereto, with no limitations, qualifications
or restrictions on such rights, subject to applicable securities laws and the
terms of this Agreement.
(b) POWER; BINDING AGREEMENT. Such Stockholder has the legal
capacity, power and authority, as applicable, to enter into and perform all
of such Stockholder's obligations under this Agreement. The execution,
delivery and performance of this Agreement by such Stockholder will not
violate any other agreement to which such Stockholder is a party including,
without limitation, any voting agreement, stockholders agreement or voting
trust. This Agreement has been duly and validly executed and delivered by
such Stockholder and constitutes a valid and binding agreement of such
Stockholder, enforceable against such Stockholder in accordance with its
terms except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting creditors' rights generally. There is no beneficiary or holder of
a voting trust certificate or other interest of any trust of which such
Stockholder is trustee whose consent is required for the execution and
delivery of this Agreement or the consummation by such Stockholder of the
transactions contemplated hereby.
(c) NO CONFLICTS. (i) no filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority or any
other Person is necessary for the execution of this Agreement by such
Stockholder and the consummation by such Stockholder of the transactions
contemplated hereby and (ii) none of the execution and delivery of this
Agreement by such Stockholder, the consummation by such Stockholder of the
transactions contemplated hereby or compliance by such Stockholder with any
of the provisions hereof shall (A) conflict with or result in any breach of
any applicable organizational documents applicable to such Stockholder, (B)
result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which such
Stockholder is a party or by which such Stockholder or any of such
Stockholder's properties or assets may be bound, or (C) violate any order,
writ, injunction,
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<PAGE>
decree, judgment, order, statute, rule or regulation applicable to such
Stockholder or any of such Stockholder's properties or assets.
(d) NO ENCUMBRANCES. Except as applicable in connection with the
transactions contemplated by Section 2 hereof and except as noted on SCHEDULE
I hereto, the certificates representing such Stockholder's Shares are held by
such Stockholder, or by a nominee or custodian for the benefit of such
Stockholder, free and clear of all liens, claims, security interests,
proxies, voting trusts or agreements, or any other encumbrances whatsoever,
except for any such encumbrances arising hereunder.
(e) WAIVER OF APPRAISAL RIGHTS. Each Stockholder hereby waives any
rights of appraisal or rights to dissent from the Reverse Split that such
Stockholder may have.
(f) RELIANCE BY PURCHASER. Such Stockholder understands and
acknowledges that Purchaser is entering into the Tender Agreement in reliance
upon such Stockholder's execution and delivery of this Agreement.
(g) FURTHER ASSURANCES. From time to time, at the other party's
request and without further consideration, each party hereto shall execute
and deliver such additional documents and take all such further lawful action
as may be necessary or desirable to consummate and make effective, the
transactions contemplated by this Agreement.
4. STOP TRANSFER; CHANGES IN SHARES. Each Stockholder agrees with,
and covenants to, Purchaser that such Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of such Stockholder's Shares,
without the prior written consent of Purchaser. In the event of a stock
dividend or distribution, or any change in the Class A Common Stock or Class
B Common Stock by reason of any stock dividend, split-up, recapitalization,
combination, exchange of shares or the like, the term "Shares" shall be
deemed to refer to and include the Shares as well as all such stock dividends
and distributions and any shares into which or for which any or all of the
Shares may be changed or exchanged.
5. TERMINATION. Except as otherwise provided herein, the covenants
and agreements contained herein with respect to the Shares shall terminate
upon the earliest of (a) the consummation of the Reverse Split, (b) the
termination of the Tender Agreement and (c) the nine month anniversary of the
date hereof.
6. STOCKHOLDER CAPACITY. No person executing this Agreement who is
or becomes during the term hereof a director of the Company makes any
agreement or understanding herein in his or her capacity as such director.
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7. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement and the Tender Agreement, with
any agreements contemplated therein, constitute the entire agreement between
the parties with respect to the subject matter hereof and supersede all other
prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
(b) CERTAIN EVENTS. Each Stockholder agrees that this Agreement and
the obligations hereunder shall attach to such Stockholder's Shares and shall
be binding upon any Person to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including,
without limitation, such Stockholder's heirs, guardians, administrators or
successors. Notwithstanding any such transfer of Shares, the transferor shall
remain liable for the performance of all obligations under this Agreement of
the transferor.
(c) ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party,
provided that Purchaser may assign, in its sole discretion, its rights and
obligations hereunder to any direct or indirect wholly owned subsidiary of
Purchaser.
(d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, with
respect to any one or more Stockholders, except upon the execution and
delivery of a written agreement executed by the relevant parties hereto;
provided that Schedule I hereto may be supplemented by Purchaser by adding
the name and other relevant information concerning any stockholder of the
Company who agrees to be bound by the terms of this Agreement without the
agreement of any other party hereto, and thereafter such added stockholder
shall be treated as a "Stockholder" for all purposes of this Agreement.
(e) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram,
telex or telecopy, or by mail (registered or certified mail, postage prepaid,
return receipt requested) or by any courier service, such as Federal Express,
providing proof of delivery. All communications hereunder shall be delivered
to the respective parties at the following addresses:
-5-
<PAGE>
If to Stockholders: At the addresses set forth on Schedule I hereto
If to Purchaser: GAP Capital, L.L.C.,
a Texas limited liability company
6310 Lemmon Avenue, Suite 202
Dallas, Texas 75209
Attn: Joe Pipes, Manager
Telecopy: 214-350-9099
copy to: Jackson Walker, L.L.P.
901 Main Street, Suite 6000
Dallas, Texas 75202-3797
Attn: Jeffrey M. Sone
Telecopy: 214-953-5822
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of
any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and
this Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision or portion of any
provision had never been contained herein.
(g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement may cause the other party to sustain damages for which it
would not have an adequate remedy at law for money damages, and therefore
each of the parties hereto agrees that in the event of any such breach the
aggrieved party shall be entitled to the remedy of specific performance of
such covenants and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in equity.
(h) REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
-6-
<PAGE>
(i) NO WAIVER. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of
the parties at variance with the terms hereof, shall not constitute a waiver
by such party of its right to exercise any such or other right, power or
remedy or to demand such compliance.
(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity
who or which is not a party hereto.
(k) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO
THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
(l) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
(m) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
IN WITNESS WHEREOF, Purchaser and, by execution of counterparts to
Schedule I hereto, each Stockholder have caused this Agreement to be duly
executed as of the day and year first above written.
PURCHASER:
GAP Capital, L.L.C.,
a Texas limited liability company
By: /s/ Joe Pipes
-----------------------------
Joe Pipes,
its Manager
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<PAGE>
AGREED TO AND ACKNOWLEDGED
(with respect to Section 4):
COMPANY:
Mobley Environmental Services, Inc.,
a Delaware corporation
By: /s/ John Mobley
-----------------------------
Name: John Mobley
Title: Chairman
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<PAGE>
Schedule I to Lock-Up and Voting Agreement
May 28, 1999
ALLISON MOBLEY 1995 TRUST
James A. Mobley, Trustee
618 N. High St.
Longview, TX 75601
145,300 shares, Class B common stock of Mobley Environmental Services, Inc.,
issued to the Allison Mobley 1995 Trust by Certificate No. 112 (29,800
shares) dated December 28, 1995, and Certificate No. 134 (115,500 shares)
dated December 26, 1997.
Allison Mobley 1995 Trust
Date: May 28 , 1999 By: /s/ James A. Mobley
---------------- -----------------------------------
James A. Mobley, Trustee
<PAGE>
May 28, 1999
JAMES A. MOBLEY
618 N. High St.
Longview, TX 75601
228,976 shares, Class B common stock of Mobley Environmental Services, Inc.,
issued to James A. Mobley by Certificate No. 091 (7,771 shares) dated
December 16, 1993, Certificate No. 108 (9,067 shares) dated June 22, 1994,
Certificate No. 116 (25,800 shares) dated December 28, 1995, Certificate No.
138 (97,450 shares) dated December 26, 1996, and Certificate No. 143 (88,888
shares) dated December 18, 1997.
By: /s/ James A. Mobley
-----------------------------------
James A. Mobley
Date: May 28, 1999
---------------------------------
<PAGE>
May 28, 1999
MELISSA MOBLEY 1995 TRUST
James A. Mobley, Trustee
618 N. High St.
Longview, TX 75601
145,300 shares, Class B common stock of Mobley Environmental Services, Inc.,
issued to the Melissa Mobley 1995 Trust by Certificate No. 111 (29,800
shares) dated December 28, 1995, and Certificate No. 133 (115,500 shares)
dated December 26, 1997.
Melissa Mobley 1995 Trust
Date: May 28 , 1999 By: /s/ James A. Mobley
---------------- -----------------------------------
James A. Mobley, Trustee
<PAGE>
May 28, 1999
JAMES A. MOBLEY 1989 SUBCHAPTER S TRUST
James A. Mobley, Trustee
618 N. High St.
Longview, TX 75601
127,941 shares, Class B common stock of Mobley Environmental Services, Inc.,
issued to the James A. Mobley 1989 Subchapter S Trust by Certificate No. 010
(124,366 shares) dated October 1, 1991, and Certificate No. 063 (583 shares)
dated December 28, 1992, and Certificate No. 065 (2,992 shares) dated
December 28, 1992.
James A. Mobley 1989 Subchapter S Trust
Date: May 28 , 1999 By: /s/ James A. Mobley
---------------- -----------------------------------
James A. Mobley, Trustee
<PAGE>
May 28, 1999
JOHN MOBLEY FAMILY TRUST THREE
Lois Ann Mobley and H. David Hughes, Trustees
2801 W. 35th St.
Austin, TX 78703
253,500 shares, Class B common stock of Mobley Environmental Services, Inc.,
issued to John Mobley Family Trust Three by Certificate No. 009 (248,732
shares) dated October 1, 1991, and Certificate No. 061 (4,818 shares) dated
December 28, 1992.
John Mobley Family Trust Three
Date: 6/1 , 1999 By: /s/ Lois Ann Mobley
---------------- -----------------------------------
Lois Ann Mobley, Trustee
Date: 6/2 , 1999 By: /s/ H. David Hughes
---------------- -----------------------------------
H. David Hughes, Trustee
<PAGE>
May 28, 1999
JOHN MOBLEY FAMILY TRUST TWO
2801 W. 35th St.
Austin, TX 78703
112,236 shares, Class B common stock of Mobley Environmental Services, Inc.,
issued to John Mobley Family Trust Two by Certificate No. 105 (30,370 shares)
dated December 16, 1993, and Certificate No. 107 (61,866 shares) dated June
22, 1994.
John Mobley Family Trust Two
Date: June 1 , 1999 By: /s/ T. M. Mobley
---------------- -----------------------------------
Trustee
Date: 6-1 , 1999 By: /s/ H. David Hughes
---------------- -----------------------------------
Trustee
<PAGE>
May 28, 1999
PILOT INVESTMENTS, LTD.
2801 W. 35th St.
Austin, TX 78703
433,454 shares, Class B common stock of Mobley Environmental Services, Inc.,
issued to Pilot Investments, Ltd. by Certificate No. 151 (412,873 shares)
dated October 28, 1998, and Certificate No. 152 (20,581 shares) dated October
28, 1998.
Pilot Investments, Ltd.
By: /s/ John Mobley
-----------------------------------
Name: John Mobley
---------------------------------
Title: General Partner
--------------------------------
Date: May 31, 1999
---------------------------------
<PAGE>
May 28, 1999
ANDREW MOBLEY 1995 TRUST
Steven M. Mobley, Trustee
2205 Westover Rd.
Austin, TX 78703
145,300 shares, Class B common stock of Mobley Environmental Services, Inc.,
issued to the Andrew Mobley 1995 Trust by Certificate No. 114 (29,800
shares) dated December 28, 1995, and Certificate No. 136 (115,500 shares)
dated December 26, 1996.
Andrew Mobley 1995 Trust
Date: June 1 , 1999 By: /s/ Steven Mobley
---------------- -----------------------------------
Steven M. Mobley, Trustee
<PAGE>
May 28, 1999
T.M. (TOM) MOBLEY
609 Willow Bend
Kilgore, TX 75662
995,974 shares, Class B common stock of Mobley Environmental Services, Inc.,
issued to T.M. Mobley by Certificate No. 129 (975,392 shares) dated December
30, 1995, and Certificate No. 131 (20,582 shares) dated December 3, 1996.
/s/ T.M. Mobley
--------------------------------------
T.M. Mobley
Date: 6-2-99
---------------------------------
<PAGE>
May 28, 1999
DAVID MOBLEY GRANTOR TRUST
David Mobley and Robert Schleier, Trustees
1127 Judson Rd., Suite 240
Longview, TX 75601
511,527 shares, Class B common stock of Mobley Environmental Services, Inc.,
issued to the David Mobley Grantor Trust by Certificate No. 047 dated October
30, 1992.
David Mobley Grantor Trust
Date: 6-4-99 , 1999 By: /s/ David Mobley
---------------- -----------------------------------
David Mobley, Trustee
Date: 6/4/99 , 1999 By: /s/ Robert Schleier, Trustee
---------------- -----------------------------------
Robert Schleier, Trustee
<PAGE>
May 28, 1999
JANET MOBLEY GST TRUST
1127 Judson Rd, Suite 240
Longview, TX 75601
60,000 shares, Class B common stock of Mobley Environmental Services, Inc.,
issued to Janet Mobley GST Trust by Certificate No. 044 dated October 30,
1992.
30,000 shares, Class B common stock of Mobley Environmental Services, Inc.,
issued to Janet Mobley GST Trust by Certificate No. 146 dated December 31,
1997.
Janet Mobley GST Trust
Date: 6/4/99 By: /s/ Robert G. Schleier, Trustee
---------------- -----------------------------------
Robert G. Schleier, Trustee
<PAGE>
May 28, 1999
DONNA MOBLEY GST TRUST
1127 Judson Rd, Suite 240
Longview, TX 75601
60,000 shares, Class B common stock of Mobley Environmental Services, Inc.,
issued to Donna Mobley GST Trust by Certificate No. 045 dated October 30,
1992.
30,000 shares, Class B common stock of Mobley Environmental Services, Inc.,
issued to Donna Mobley GST Trust by Certificate No. 145 dated December 31,
1997.
Donna Mobley GST Trust
Date: 6/4/99 By: /s/ Robert G. Schleier, Trustee
---------------- -----------------------------------
Robert G. Schleier, Trustee
<PAGE>
THIS WARRANT AND THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THIS WARRANT AND SUCH SECURITIES MAY NOT BE SOLD,
MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY
TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER APPLICABLE SECURITIES
LAWS.
WARRANT
To Purchase Common Stock of
MOBLEY ENVIRONMENTAL SERVICES, INC.
1. GRANT OF WARRANT. Subject to the terms and conditions set forth
herein, Mobley Environmental Services, Inc., a Delaware corporation, (the
"Company") hereby grants GAP Capital, L.L.C., a Texas limited liability
company ("Buyer") or its registered assigns ("Holder"), this Warrant (this
"Warrant") to purchase from the Company (a) 228,133 shares of Class A Common
Stock, par value $.01 per share, of the Company (the "Class A Common Stock"),
(being approximately equal to 4.9% of the number of shares of Class A Common
Stock that, as of February 22, 1999, were issued and outstanding on a fully
diluted basis giving effect to the exercise of this Warrant and the exercise
of all securities (other than shares of Class B Common Stock (as defined))
convertible into shares of Class A Common Stock) and (b) 235,861 shares of
Class B Common Stock, par value $.01 per share, of the Company (the "Class B
Common Stock"), (being equal to 4.9% of the number of shares of Class B
Common Stock that, as of February 22, 1999, were issued and outstanding on a
fully diluted basis giving effect to the exercise of this Warrant and the
exercise of all securities convertible into shares of Class B Common Stock).
The Class A Common Stock and the Class B Common Stock are referred to
collectively as the "Common Stock." Shares of Common Stock subject to this
Warrant are referred to as the "Warrant Shares." This Warrant is being
granted in connection with, and as consideration for, the substantial expense
to be undertaken by Buyer in connection with the conduct of its due diligence
regarding the Company and in otherwise preparing for the transactions
contemplated by the Tender Offer Agreement between Buyer and the Company
dated as of the date hereof (the "Tender Agreement"). Capitalized terms not
defined herein shall have the meanings set forth in the Tender Agreement.
2. EXERCISE PRICE. The exercise price per share of the Common Stock
shall be Twenty Cents ($.20) (the "Exercise Price").
-1-
<PAGE>
3. CONDITIONS TO EXERCISE.
(a) The Holder may exercise this Warrant, in whole or in part, at any
time and from time to time prior to December 31, 2003 after the occurrence of
an Exercise Event (as defined below). Notwithstanding the expiration of the
Warrant, the Holder shall be entitled to acquire those Warrant Shares with
respect to which it has exercised the Warrant in accordance with the terms
hereof prior to the expiration of the Warrant.
(b) An "Exercise Event" shall occur for purposes of this Agreement upon
the occurrence prior to December 31, 1999 of any of the following:
(i) the Company shall have entered into an agreement with a Third
Party pursuant to which such Third Party would acquire in excess of 9.9% of
any class of equity securities of the Company or any substantial portion of
the business or assets of the Company; or
(ii) the Board of Directors of the Company or any record or
beneficial holder of more than 5% of the Class B Common Stock shall
recommend or not oppose any transaction with a Third Party similar to the
transactions contemplated by the Tender Agreement.
4. EXERCISE OF THE WARRANT; PAYMENT AND DELIVERY OF CERTIFICATES. In
order to exercise this Warrant, in whole or in part, Holder shall deliver to
the Company at its principal executive offices the following (the "Exercise
Documents"): (a) a written notice of Holder's election to exercise this
Warrant, which notice shall specify the number of shares of Common Stock to
be purchased pursuant to such exercise; (b) cash or cash equivalent payable
to the order of the Company in an amount equal to the aggregate Exercise
Price for all shares of Common Stock to be purchased pursuant to such
exercise; and (c) this Warrant, accompanied by a subscription for Common
Stock in the form of the Subscription appearing at the end of this Warrant.
Upon receipt thereof, the Company shall, as promptly as practicable, and in
any event within ten (10) days thereafter, execute or cause to be executed
and deliver to such Holder a certificate or certificates representing the
aggregate number of full shares of Common Stock issuable upon such exercise,
or if the Company has a transfer agent for its Common Stock, cause such
transfer agent to do the same. The stock certificate or certificates so
delivered shall be registered in the name of Holder, or such other name as
shall be designated in said notice.
This Warrant shall be deemed to have been exercised and such certificate
or certificates shall be deemed to have been issued, and Holder or any other
person so designated to be named therein shall be deemed to have become a
holder of record of such shares for all purposes, as of the date that the
Exercise Documents are received by the Company. Holder shall not, by virtue
of its ownership of this Warrant, be entitled to any rights of a stockholder
in the Company, either at law or in equity, until Holder delivers the
Exercise Documents in accordance with the terms of this Warrant. If the
exercise of this Warrant is for less than all of the shares of Common Stock
issuable under this
-2-
<PAGE>
Warrant, the Company will issue a new Warrant of like tenor and date for the
balance of such shares issuable hereunder to Holder.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants that:
(a) the Company has the full corporate power and authority to execute
and deliver this Warrant and to consummate the transactions contemplated by
this Warrant; the execution, delivery and performance by the Company of this
Warrant and the consummation by the Company of the transactions contemplated
by this Warrant have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Warrant or to consummate the
transactions contemplated by this Warrant; this Warrant has been duly and
validly executed and delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms; no filing with, and no permit, authorization,
consent, or approval of, any foreign or domestic public body or authority is
necessary for the consummation by the Company of the transactions
contemplated by this Warrant;
(b) the consummation by the Company of the transactions contemplated by
this Warrant and the compliance by the Company with any of the provisions of
this Warrant will not (i) conflict with or result in any breach of any
provision of the charters of bylaws or equivalent organizational documents of
the Company or any of its subsidiaries; (ii) result in a violation or breach
of, or constitute (with or without notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation, or acceleration)
under, any of the terms, conditions, or provisions of any note, bond,
mortgage, indenture, license, lease, contract agreement, or other instrument
or obligation to which the Company or any of its subsidiaries is a party or
by which any of them or any of their properties or assets may be bound; or
(iii) violate any order, writ, injunction, decree, statute, rule, or
regulation applicable to the Company, any of its subsidiaries or any of their
properties or assets;
(c) the Company has taken all necessary corporate and other action to
reserve, and at all times from the date hereof until the obligation to
deliver Common Stock upon the exercise of the Warrant terminates will have
reserved for issuance, upon exercise of the Warrant, shares of Common Stock
equal to the number of shares of Common Stock for which the Warrant may be
exercised, and the Company will take all necessary corporate action to
reserve for issuance all additional shares of Common Stock or other
securities which may be issued upon exercise of the Warrant pursuant to
Section 6 of this Agreement; and
(d) the shares of Common Stock to be issued upon due exercise of the
Warrant, including all additional shares of Common Stock or other securities
which may be issuable pursuant to Section 6 of this Agreement, upon issuance
and payment therefor pursuant hereto, shall be validly issued, fully paid and
nonassessable, and shall be delivered free and clear of all liens, claims,
charges and
-3-
<PAGE>
encumbrances of any kind whatsoever, including any preemptive rights of any
stockholder of the Company.
6. ADJUSTMENT UPON SHARE ISSUANCES, CHANGES IN CAPITALIZATION, ETC.
(a) The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary act, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may
be necessary or appropriate in order to protect the rights of Holder against
impairment.
(b) In the event of any change in Common Stock by reason of, without
limitation, a stock dividend, split-up, recapitalization, combination,
exchange of shares or similar transaction, the type and number of shares or
securities to be delivered by the Company pursuant to the Warrant shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction, so that the Holder shall receive upon exercise of
the Warrant the number and class of shares or other securities or property
that the Holder would have received if the Warrant had been exercised
immediately prior to such event, or the record date therefor, as applicable.
(c) In the event that the Company shall enter into an agreement (i) to
consolidate with or merge into any person, other than the Buyer or one of its
subsidiaries, and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any person, other
than the Buyer or one of its subsidiaries, to merge into the Company and the
Company shall be the continuing or surviving corporation, but, in connection
with such merger, the then outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities of the Company or any
other person or cash or any other property or the then outstanding shares of
Common Stock shall after such merger represent less than 50% of the
outstanding shares and share equivalents of the merged company or (iii) to
sell or otherwise transfer all or substantially all of its assets to any
person, other than the Buyer or one of its subsidiaries, then, and in each
such case, the agreement governing such transaction shall make proper
provision so that the Warrant shall, upon the consummation of any such
transaction and upon the terms and conditions set forth in this Warrant, be
converted into, or exchanged for, an option to acquire the same consideration
received by the holders of Common Stock pursuant to such a transaction had
the Warrant been exercised in full prior to the consummation of such
transaction. The provisions of this Warrant, including Sections 1, 2, 3 and
6, shall apply with appropriate adjustments to any securities for which the
Warrant becomes exercisable pursuant to this Section 6.
7. TAXES. The issuance of any shares of Common Stock or other
certificate upon the exercise of this Warrant shall be made without charge to
Holder for any tax in respect of the issuance of such certificate. The
Company shall be responsible for any applicable issue or transfer taxes.
-4-
<PAGE>
8. TRANSFER; REPLACEMENT. Subject to the provisions of the legend on
the face of this Warrant, this Warrant and all options and rights hereunder
are transferable, as to all or any part of the number of shares of Common
Stock purchasable upon its exercise, by Holder in person or by duly
authorized attorney on the books of the Company upon surrender of this
Warrant to the Company, together with written instructions (in the form of
the Form Assignment attached hereto) indicating the name and address of the
transferee and the portion of this Warrant being transferred. The Company
shall deem and treat Holder of this Warrant at any time as the absolute owner
hereof for all purposes and shall not be affected by any notice to the
contrary. If this Warrant is transferred in part, the Company shall at the
time of surrender of this Warrant, issue to the transferee a Warrant covering
the number of shares of Common Stock transferred and to the transferor a
Warrant covering the number of shares of Common Stock not transferred. Upon
receipt of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant, the Company shall issue a
new Warrant of like tenor. The term "Warrant" as used herein includes any
other warrant for which this Warrant may be exchanged. Holder, by its
acceptance hereof, consents to and agrees to be bound by and to comply with
all of the provisions of this Warrant.
9. CASH IN LIEU OF FRACTIONAL SHARES. The Company shall not be
required to issue fractional shares of Common Stock upon the exercise of this
Warrant. If Holder of this Warrant would be entitled, upon the exercise of
any rights evidenced hereby, to receive a fractional interest in a share of
Common Stock, the Company shall pay a cash adjustment for such fraction equal
to the equivalent market price for such fractional share (as determined in a
manner to be prescribed by the Board of Directors of the Company) at the
close of business on the exercise date.
10. MISCELLANEOUS.
(a) EXPENSES. Except as otherwise provided in the Tender Agreement,
each of the parties hereto shall bear and pay all costs and expenses incurred
by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own counsel.
(b) WAIVER AND AMENDMENT. Any provision of this Warrant may be waived
in writing at any time by the party that is entitled to the benefits of such
provision. This Warrant may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the Company, Buyer and the Holder (if different from Buyer).
(c) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARY; SEVERABILITY. Except
as otherwise set forth in the Tender Agreement, this Warrant (including other
documents and instruments referred to herein or therein) (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof and (ii) is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder. If any term, provision,
covenant or restriction of this Warrant is held by a court of competent
jurisdiction or a governmental entity to be invalid, void or unenforceable,
the remainder
-5-
<PAGE>
of the terms, provisions, covenants and restrictions of this Warrant shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated.
(d) GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO ANY
APPLICABLE CONFLICTS OF LAW RULES.
(e) DESCRIPTIVE HEADINGS. The descriptive headings contained herein
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Warrant.
(f) SUCCESSORS AND ASSIGNS. Neither this Warrant nor any of the
rights, interests or obligations hereunder shall be assigned by the Company
without the prior written consent of Buyer. Buyer may assign its rights,
interests or obligations under this Warrant to any person without the
Company's consent. This Warrant and the rights evidenced hereby shall inure
to the benefit of and be binding upon the successors and permitted assigns of
the Company, if any, and Holder and, shall be enforceable by any such Holder.
-6-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed.
Dated as of June 4, 1999.
Mobley Environmental Services, Inc.,
a Delaware corporation
By: /s/ John Mobley
---------------------------------
Its: Chairman
---------------------------------
ACKNOWLEDGED:
GAP Capital, L.L.C.,
a Texas limited liability company
By: /s/ Joe Pipes
---------------------------------
Joe Pipes,
its Manager
-7-
<PAGE>
SUBSCRIPTION FORM
(To be executed only upon exercise of this Warrant)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for ______________ shares of Class ____ Common Stock of Mobley
Environmental Services Inc., a Delaware corporation, and herewith makes
payment therefor, all at the price and on the terms and conditions specified
in this Warrant and requests that certificates for the shares of Common Stock
hereby purchased (and any securities or other property issuable upon such
exercise) be issued in the name of and delivered to __________________________
whose address is __________________________, and if such shares of Common
Stock shall not include all of the shares of Common Stock issuable as
provided in this Warrant, that a new Warrant of like tenor and date for the
balance of the shares of Common Stock issuable thereunder to be delivered to
the undersigned.
Dated:_________________________
By:_________________________________
Its:________________________________
Address:____________________________
____________________________________
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all the
rights of the undersigned under this Warrant with respect to the number of
shares of Common Stock set forth below:
Name & Address of Assignee Number of Shares of Common Stock
and does hereby irrevocably constitute and appoint as Attorney _______________
to register such transfer on the books of ____________________________________
maintained for the purpose, with full power of substitution in the premises.
Dated:_________________________
By:_________________________________
Its:________________________________
The Assignee named above, by acceptance of this assignment, agrees to be
bound by the terms of this Warrant with the same force and effect as if a
signatory thereto.
____________________________________
(signature)
Address:____________________________
____________________________________
Dated:_________________________
