EXHIBIT (c)(1)
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT, dated as of March 30, 1993 and effective upon
the consummation of the Offerings (as defined herein) (the "Agreement"), by
and among Xxxxxxx X. Xxxxxxxxx, Slivy X. Xxxxxxx, Georgetown Partners Limited
Partnership, a Maryland limited partnership ("Georgetown"), Apollo Investment
Fund, L.P., a Delaware limited partnership ("Apollo"), Chemical Equity
Associates, A California Limited Partnership ("CVP"), TSG Ventures Inc., a
Delaware corporation ("TSG"), and any person who hereafter holds shares of
Class B Common Stock (as defined herein) (the "New Class B Holders").
Xx. Xxxxxxxxx, Xx. Xxxxxxx, Georgetown, Apollo, CVP, TSG and the New Class B
Holders are collectively referred to herein as the "Stockholders" and
individually as a "Stockholder."
WHEREAS, each of Apollo, CVP and TSG is the beneficial owner of
unregistered shares of common stock of Envirotest Systems Corp. (the
"Company"), which shares are subject to restrictions on resale by federal
securities law; and
WHEREAS, Georgetown is the record and beneficial holder of all of the
outstanding shares of, and options to purchase, Class B Common Stock, par
value $.01 per share, of the Company (the "Class B Common Stock"), which
shares are subject to mandatory conversion under certain circumstances as set
forth in the Restated Certificate of Incorporation of the Company (attached
hereto as Schedule I is a description of the beneficial ownership of common
stock of the Company, and options to purchase common stock of the Company, of
the parties hereto as of the effective date of this Agreement); and
WHEREAS, through its ownership of Class B Common Stock, Georgetown is
entitled to elect six of the nine directors of the Company pursuant to
Article Fifth of the Restated Certificate of Incorporation of the Company; and
WHEREAS, the Company intends to sell up to 3,910,000 shares of its Class A
Common Stock, par value $.01 per share (the "Class A Common Stock") and
$100,000,000 aggregate principal amount of ___% Senior Subordinated Notes due
2003 in concurrent underwritten public offerings (the "Offerings").
NOW, THEREFORE, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS. As used herein:
(a) "Affiliate" shall mean (i) any person directly or indirectly
controlling, controlled by, or under common control with, another person, and
(ii) a person owning or controlling 51% or more of the outstanding voting
securities of such other person.
(b) "control," with respect to any person, shall mean the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise.
(c) "person" shall mean any individual, partnership, corporation,
joint venture, association, joint-stock company, trust, unincorporated
organization, union, business association, firm, government or agency or
political subdivision thereof, or other entity.
2. RESTRICTIONS ON CLASS B DIRECTORS.
(a) Georgetown and the New Class B Holders agree that they shall
cause the Class B Common Stock to be voted such that no more than four of the
six Class B Directors (as such term is defined in the Restated Certificate of
Incorporation of the Company) shall consist of persons who are: (i) officers
or full-time employees of the Company; (ii) Xx. Xxxxxxxxx, Xx. Xxxxxxx or
their Affiliates, or officers, directors, partners or employees of their
Affiliates; or (iii) family members (including parents, spouse and children)
of either (i) or (ii).
3. CONVERSION OF CLASS B COMMON STOCK UPON CERTAIN EVENTS.
(a) Georgetown, Xx. Xxxxxxxxx, Xx. Xxxxxxx and each of the New
Class B Holders agree to provide written notice (the "Event Notice") to each
of Apollo, CVP and TSG promptly (and in any event within five (5) business
days) after the occurrence of any of the following:
(i) Xx. Xxxxxxxxx ceases to control, directly or indirectly,
the voting of a majority of the outstanding shares of Class B Common Stock
(such control is deemed to be ceased if Xx. Xxxxxxxxx dies or suffers a
severe or irreversible physical or mental disability that renders him
incapable of controlling the voting of such shares); or
(ii) Xx. Xxxxxxxxx, Xx. Xxxxxxx, members of the immediate
families of either and trusts or other entities created for estate-planning
purposes whose beneficiaries are members of their immediate families fail to
have, in the aggregate, a direct or indirect (through one or more
intermediaries or entities, in proportion to their economic interest therein)
pecuniary interest in at least five percent of the then outstanding shares of
all classes of common stock of the Company in the aggregate (the
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"Common Stock"), including, for purposes of this calculation, shares of Common
Stock issuable upon exercise of options.
(b) Georgetown and the New Class B Holders agree to convert all of
their shares of Class B Common Stock into shares of Class A Common Stock
pursuant to the procedures set forth in the Company's Restated Certificate of
Incorporation within five (5) business days after receipt by any of them of a
written notice (the "Conversion Notice") from Apollo, CVP or TSG (to the
extent enforcement is permitted by such party pursuant to paragraph (c)
below), which notice shall (i) request such conversion under this Agreement;
(ii) represent that the party giving such notice is then able to enforce this
Agreement under the terms hereof, and (iii) set forth, in detail, such
party's record and beneficial ownership of Common Stock of the Company at the
date of such notice; PROVIDED, HOWEVER, that such conversion shall only be
required if (i) one of the events set forth in (a)(i) or (a)(ii) shall have
occurred; and (ii) a Conversion Notice with respect to such event shall have
been given not later than sixty (60) days after the giving of the Event
Notice (which 60 day period may be waived or extended in writing,
unilaterally, in the sole discretion of Xx. Xxxxxxxxx or his executor or
personal representative). Georgetown and the New Class B Holders shall have
the right to request in writing, and Apollo, CVP and TSG shall promptly
respond in writing, for confirmation that a particular transfer of Class B
Common Stock either will not dilute the pecuniary interest of the requesting
party in such shares, or will cause a dilution thereof specified in the
request.
(c) The provisions contained in Sections 2(a) and 3(b) of this
Agreement shall be enforceable only by Apollo, CVP and TSG, and shall no longer
be enforceable by Apollo, CVP or TSG, as applicable, if such entity, together
with its Affiliates, at any time, fails to "beneficially own" (as that term is
used in Rule 13d-3 under the Securities Exchange Act of 1934) unregistered
shares of Common Stock representing five percent or more of the then outstanding
Common Stock.
4. RESTRICTIVE ENDORSEMENT. Each certificate representing shares of
Class B Common Stock and options, warrants or other rights for the purchase of
Class B Common Stock now or hereafter held by Georgetown Partners or a New Class
B Holder shall be stamped with a legend in substantially the following form:
"THE SECURITES REPRESENTED BY THIS CERTIFICATE OR AGREEMENT ARE
SUBJECT TO A STOCKHOLDERS' AGREEMENT DATED AS OF MARCH ___, 1993, A
COPY OF WHICH IS ON FILE AT THE OFFICES OF THE COMPANY AND WILL BE
FURNISHED TO ANY PROSPECTIVE PURCHASERS ON REQUEST. BY ACCEPTANCE OF
THIS CERTIFICATE OR AGREEMENT, EACH HOLDER HEREOF AGREES TO BE BOUND
BY THE PROVISIONS OF THE STOCKHOLDERS' AGREEMENT."
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR AGREEMENT HAVE
BEEN ISSUED PURSUANT TO A CLAIM OF EXEMPTION FROM THE REGISTRATION OR
QUALIFICATION PROVISIONS OR FEDERAL AND STATE SECURITES LAWS AND MAY
NOT BE SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR
QUALIFICATION PROVISIONS OR APPLICABLE FEDERAL AND STATE SECURITIES
LAWS OR APPLICABLE EXEMPTIONS THEREFROM."
Georgetown and each New Class B Holder agree to deliver all certificates
for shares of Class B Common Stock and options, warrants or other rights for the
purchase of Class B Common Stock owned by such person to the Company for the
purpose of affixing such legend thereto.
(b) Each of Apollo, CVP and TSG agrees to provide written notice to
each of Georgetown, Xx. Xxxxxxxxx and Xx. Xxxxxxx promptly after the time that
Apollo, CVP or TSG, as the case may be, fails to, together with its Affiliates,
"beneficially own" (as that term is used in Rule 13d-3 under the Securities
Exchange Act of 1934) unregistered shares of Common Stock representing five
percent or more of the then outstanding Common Stock.
5. TRANSFEREES OF CLASS B COMMON STOCK. Any New Class B Holder who
acquires shares of Class B Common Stock, by accepting such shares, shall be
deemed to be a party to this Agreement and to agree to be subject to all the
terms and conditions of this Agreement as if such New Class B Holder had signed
this Agreement as a Stockholder.
6. EQUITABLE RELIEF. The parties hereto agree and declare that legal
remedies may be inadequate to enforce the provisions of this Agreement,
including but not limited to the provisions of Section 2 and 3 hereof, and that
equitable relief, including specific performance and injunctive relief, may be
used to enforce the provisions of this Agreement.
7. UNWIND. Georgetown, Xx. Xxxxxxxxx, Xx. Xxxxxxx and the New Class B
Holders agree that, if the Offerings are not consummated on or prior to June 1,
1993, they will cause the Company to restore in all respects the charter, bylaws
and common stock of the Company (including, without limitation, the number of
shares owned by each stockholder, the class of stock held, and the rights and
preferences of each class) as the same were in existence on March 25, 1993.
8. ARBITRATION. Any controversy arising under, out of, in connection
with, or relating to, this Agreement, and any amendment hereof, or the breach
hereof, shall be determined and settled by arbitration in New York, New York, by
a person or persons mutually agreed upon, or in the event of a disagreement as
to the selection of the arbitrator or arbitrators, in accordance with the rules
then
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obtaining of the American Arbitration Association. Any award rendered therein
shall specify the findings of fact of the arbitrators and the reasons for such
award, with the reference to and reliance on relevant law. Any such award shall
be final and binding on each and all of the parties thereto and their personal
representatives, and judgement may be entered thereon in any court having
jurisdiction thereof.
9. MISCELLANEOUS.
(a) NOTICES. Any and all notices, designations, consents, offers,
acceptances, or any other communication provided for herein shall be made by
hand delivery, first-class mail (registered or certified, return receipt
requested), telex, telecopier, or overnight air courier guaranteeing next day
delivery to the following addresses and/or telecopy numbers:
If to Xxxxxxx X. Xxxxxxxxx,
Slivy X. Xxxxxxx or
Georgetown Partners
Limited Partnership: Georgetown Partners Limited
Partnership
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
With a copy to: Akin, Gump, Strauss, Xxxxx &
Xxxx, L.L.P.
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxxxxxxx, P.C.
Telecopy: (000) 000-0000
If to Apollo: Apollo Advisors, L.P.
1999 Avenue of the Stars
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy: (000) 000-0000
and Apollo Advisors, L.P.
0000 0xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
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With a copy to: Xxxxxxxx & Xxxxx
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
If to CVP: Chemical Equity Associates
000 Xxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx Xxxxxxx
Telecopy: (000) 000-0000
With a copy to: Xxxxxxxx & Xxxxx
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
If to TSG: TSG Ventures Inc.
0000 Xxxxxxxxxx Xxxx.
00xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Cleveland A. Xxxxxxxxxx
Telecopy: (000) 000-0000
With a copy to: Xxxxx X. Xxxxxxx
Xxxxx, Xxxxx & Xxxxx
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Except as otherwise provided in this Agreement, each such notice shall be
deemed given at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and
the next business day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.
(b) AMENDMENT. The provisions of this Agreement may be amended only
by an instrument signed by all Stockholders, except that the signature of
Apollo, CVP or TSG shall not be required if such entity shall no longer be
entitled to enforce this Agreement pursuant to Section 3(c) above.
(c) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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(d) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO
CONFLICTS OF LAWS PROVISIONS.
(e) BENEFIT AND BINDING EFFECT; ASSIGNMENT. This Agreement shall
be binding upon and shall inure to the benefit of the Stockholders, and their
respective successors, executors, administrators and personal representatives
and heirs and permitted assigns. The rights and obligations of Apollo, CVP
and TSG hereunder may not be assigned, in whole or in part, except to an
Affillate. In the event that any part of this Agreement shall be held to be
invalid or unenforceable, the remaining parts hereof shall nevertheless
continue to be valid and enforceable as though the invalid portions were not
a part hereof.
(f) ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements, discussions and understandings.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement of the
day and year first above written.
/s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxxx
/s/ Slivy X. Xxxxxxx
----------------------------------------
Slivy X. Xxxxxxx
GEORGETOWN PARTNERS LIMITED PARTNERSHIP
By: DHE PARTNERS,
its general partner
By: ROCKSPRING MANAGEMENT,
its general partner
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------
Name:
Title:
APOLLO INVESTMENT FUND, L.P.
By: APOLLO ADVISORS, L.P.,
its general partner
By: APOLLO CAPITAL MANAGEMENT, INC.,
its general partner
By: /s/ [illegible]
-------------------------------
Name: [illegible]
Title: Vice President
CHEMICAL EQUITY ASSOCIATES,
A California Limited Partnership
By: CHEMICAL VENTURE PARTNERS,
its general partner
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: General Partner
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TSG VENTURES INC.
By: /s/ Xxxxxxxxx Xxxxxxxxxx
------------------------------------
Name: Xxxxxxxxx Xxxxxxxxxx
Title: Principal
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SCHEDULE I
Shares Options
------------------------------------- ----------------------
Persons Class A Class B Class C Class A Class B
------- ------- ------- ------- ------- -------
Georgetown
Partners
Limited
Partnership: 341,159 1,714,583 1,248,351
Xxxxxxx X.
Xxxxxxxxx 289,542
Slivy X.
Xxxxxxx *
Apollo
Investment
Fund, L.P. 2,026,111
Chemical Equity
Associates 2,026,111
TSG Ventures
Inc. 2,456,818
* Not yet determined.
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