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99(c)(3)
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT dated as of August 12, 1998 among ENVIRONMENTAL
SYSTEMS PRODUCTS, INC., a Delaware corporation ("ESP"), STONE RIVET, INC., a
Delaware corporation and a direct wholly owned subsidiary of ESP ("Sub"), and
CHEMICAL EQUITY ASSOCIATES (the "Stockholder").
WHEREAS, the Stockholder desires that Envirotest Systems Corp., a Delaware
corporation (the "Company"), ESP and Sub enter into an Agreement and Plan of
Merger dated as of the date hereof (as the same may be amended or supplemented,
the "Merger Agreement") with respect to the merger of Sub with and into the
Company (the "Merger"); and
WHEREAS, the Stockholder is executing this Agreement as an inducement to
ESP and Sub to enter into and execute the Merger Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by ESP and
Sub of the Merger Agreement and the mutual covenants, conditions and agreements
contained herein and therein, the parties agree as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES. The Stockholder represents and
warrants to ESP and Sub as follows:
(a) The Stockholder is the record or beneficial owner of the number
of shares of Class A Common Stock of the Company (the "Company Common Stock"),
and the beneficial owner of the number of shares of Class B Common Stock and
Class C Common Stock of the Company, which are convertible into Company Common
Stock on a one-for-one basis at any time at the option of the Stockholder, each
as set forth on SCHEDULE A hereto (as may be adjusted from time to time pursuant
to Section 6, the Stockholder's "Shares"). Except for the Stockholder's Shares
and as provided on SCHEDULE B hereto, the Stockholder is not the record or
beneficial owner of any other shares of the Company's capital stock. The
Stockholder has sole voting power and sole power to issue instructions with
respect to the voting of the Stockholder's Shares, sole power of disposition,
sole power of exercise and the sole power to demand appraisal rights, in each
case with respect to all of the Stockholder's Shares, except as indicated on
said SCHEDULE A and, on the date of any Stockholders' Meeting (as defined in the
Merger Agreement), will have the sole voting power and power to issue
instructions with respect to the voting of all of the Stockholder's Shares, the
sole powers of disposition, exercise and the sole power to demand appraisal
rights, in each case with respect to all of the Stockholder's Shares, except as
described on SCHEDULE A. The Stockholder holds options to purchase shares of
Company Common Stock, Class B Common Stock and Class C Common Stock as set forth
on SCHEDULE B. Any of such Shares which are described
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on SCHEDULE B as option shares shall be deemed "Option Shares" for the purposes
of this Agreement. Any Option Shares which are exercised prior to the
termination of this Agreement and, pursuant to Section 2 hereof, the shares of
Company Common Stock which are issuable upon the conversion of the number of
shares of Class B Common Stock and Class C Common Stock set forth on SCHEDULE A
shall also be deemed to be "Owned Shares."
(b) This Agreement has been executed and delivered by the Stockholder
and constitutes the legal, valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally, and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies. To the best of the
Stockholder's knowledge, neither the execution and delivery of this Agreement
nor the consummation by the Stockholder of the transactions contemplated hereby
will result in a violation of, or a default under, or conflict with, any
contract, trust, commitment, agreement, understanding, arrangement or
restriction of any kind to which the Stockholder is a party or bound or to which
the Stockholder's Shares are subject.
(c) The Stockholder's Shares and the certificates representing such
Shares are now and at all times during the term hereof will be held by the
Stockholder, or by a nominee or custodian for the benefit of the Stockholder,
free and clear of all liens, claims, security interests, proxies, voting trusts
or agreements, understandings or arrangements or any other encumbrances
whatsoever, except for the Stockholders' Agreement, dated as of March 30, 1993
among Xxxxxxx X. Xxxxxxxxx, Slivy X. Xxxxxxx, Georgetown Partners Limited
Partnership, Apollo Investment Fund, L.P., Chemical Equity Associates and TSG
Ventures Inc. and except for any such encumbrances arising hereunder.
(d) The Stockholder understands and acknowledges that ESP is entering
into, and causing Sub to enter into, the Merger Agreement in reliance upon the
Stockholder's execution and delivery of this Agreement.
SECTION 2. PURCHASE AND SALE OF SHARES.
(a) So long as (i) the Per Share Amount (as defined in the Merger
Agreement) in the Offer (as defined in the Merger Agreement) for all Shares is
not less than $17.25 in cash (net to the seller), (ii) the conditions of the
Offer have been satisfied or waived in accordance with the terms of the Merger
Agreement, and (iii) Sub shall have accepted the Shares for payment under the
Offer, the Stockholder hereby agrees that it will tender or cause to be tendered
its Shares set forth on SCHEDULE A into the Offer prior to the expiration of the
Offer and that it will not withdraw any Shares so tendered and the Stockholder
hereby agrees to sell to Sub, and Sub hereby agrees to purchase, in each case
pursuant to, and accordance with, the terms of the Offer, all the Stockholder's
Owned Shares at a price per Share equal to the Per Share Amount.
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(b) In furtherance of the Stockholder's obligations under subsection
(a) above, the Stockholder agrees to convert any Shares of Class B Common Stock
or Class C Common Stock, respectively, held by the Stockholder, as set forth on
SCHEDULE A into Shares of Company Common Stock prior to the expiration of the
offer and tender such Shares into the Offer pursuant to the terms of subsection
(a) above.
SECTION 3. AGREEMENT TO VOTE SHARES. At any Stockholders' Meeting called
with respect to any of the following, and at every adjournment thereof, the
Stockholder agrees that it shall vote, with respect to, as appropriate all of
the Stockholder's Shares set forth on SCHEDULE A as to which it has power to
vote in any such vote or consent: (i) in favor of the Merger, the adoption of
and execution and delivery of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger Agreement
and (ii) against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement); (1) any extraordinary
corporate transaction, including, but not limited to a merger, consolidation or
other business combination involving the Company or any of its subsidiaries; (2)
a sale, lease or transfer of a material amount of assets of the Company or any
of its subsidiaries or a reorganization, recapitalization, dissolution or
liquidation of the Company or any of its subsidiaries; (3) (a) any change in the
majority of the Board of Directors of the Company except as contemplated by this
Agreement; (b) any material change in the present capitalization of the Company
or any amendment of the Company's Certificate of Incorporation; (c) any other
material change in the Company's corporate structure or business; or (d) any
other action, which, in the case of each of the matters referred to in clauses
(a), (b), (c) or (d) above, is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone, discourage or materially adversely
affect the consummation of the Merger or the transactions contemplated by the
Merger Agreement or this Agreement.
SECTION 4. IRREVOCABLE PROXY. THE STOCKHOLDER HEREBY, SEVERALLY AND NOT
JOINTLY, GRANTS TO, AND APPOINTS SUB AND THE PRESIDENT OF SUB AND THE TREASURER
OF SUB, IN THEIR RESPECTIVE CAPACITIES AS OFFICERS OF SUB, AND ANY INDIVIDUAL
WHO SHALL HEREAFTER SUCCEED TO ANY SUCH OFFICE OF SUB, AND ANY OTHER DESIGNEE OF
SUB, EACH OF THEM INDIVIDUALLY, SUCH HOLDER'S PROXY AND ATTORNEY-IN-FACT (WITH
FULL POWER OF SUBSTITUTION) TO VOTE OR ACT BY WRITTEN CONSENT WITH RESPECT TO
THE STOCKHOLDER'S SHARES IN ACCORDANCE WITH SECTION 3 HEREOF. THIS PROXY IS
COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE, AND THE STOCKHOLDER WILL TAKE
SUCH FURTHER ACTION OR EXECUTE SUCH OTHER INSTRUMENTS AS MAY REASONABLY BE
NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY AND HEREBY REVOKES ANY PROXY
PREVIOUSLY GRANTED BY IT WITH RESPECT TO THE STOCKHOLDER'S SHARES.
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SECTION 5. COVENANTS. The Stockholder agrees with, and covenants to, ESP
and Sub as follows: the Stockholder shall not, except as contemplated by the
terms of this Agreement, during the term of this Agreement, (i) transfer (which
term shall include, without limitation, for the purposes of this Agreement, any
sale, gift, pledge or other disposition), or consent to any transfer of, any or
all of the Stockholder's Shares or any interest therein, (ii) enter into any
contract, option or other agreement or understanding with respect to any
transfer of any or all of the Shares or any interest therein, (iii) grant any
proxy, power-of-attorney or other authorization or consent in or with respect to
the Shares other than as described in Sections 3 and 4 above in connection with
a Stockholders' Meeting to approve the Merger, (iv) deposit the Shares into a
voting trust or enter into a voting agreement or arrangement with respect to the
Shares, (v) directly or indirectly, solicit (including by way of furnishing
information) or respond to any inquiries or the making of any proposal by any
person or entity (other than ESP, Sub or any affiliate of ESP or Sub) with
respect to the Company that constitutes or could reasonably be expected to lead
to an Acquisition Proposal (as defined in the Merger Agreement), and if the
Stockholder receives any such inquiry or proposal, then it shall promptly inform
ESP and Sub of the terms and conditions, if any, of such inquiry or proposal and
the identity of the person making it, and the Stockholder will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing, or
(vi) take any other action that would in any way restrict, limit or interfere
with the performance of its obligations hereunder or the transactions
contemplated hereby; provided that the Stockholder shall be entitled to transfer
all or any portion of the Shareholder's Shares to any person or entity which
agrees in writing to be bound by the provisions of this Agreement.
SECTION 6. CERTAIN EVENTS. The Stockholder agrees that this Agreement and
the obligations hereunder shall attach to the Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of the
Shares shall pass, whether by operation of law or otherwise, including without
limitation the Stockholder's heirs, guardians, administrators or successors. In
the event of any stock split, stock dividend, merger, reorganization,
recapitalization or other change in the capital structure of the Company
affecting the Company Common Stock, or the acquisition of additional shares of
Company Common Stock or other securities or rights of the Company by the
Stockholder, the number of Shares listed on SCHEDULE A and Option Shares listed
on SCHEDULE B beside the name of the Stockholder shall be adjusted appropriately
and this Agreement and the obligations hereunder shall attach to any additional
shares of Company Common Stock or other securities or rights of the Company
issued to or acquired by the Stockholder.
SECTION 7. TRANSFER. The Stockholder agrees with and covenants to ESP and
Sub that the Stockholder shall not request that the Company register the
transfer (booked as entry or otherwise) of any certificated or uncertificated
interest representing any of the securities of the Company, unless such transfer
is made in compliance with this Agreement.
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SECTION 8. VOIDABILITY. If prior to the execution hereof, the Board of
Directors of the Company shall not have duly and validly authorized and approved
by all necessary corporate action the acquisition of Company Common Stock by ESP
and Sub and other transactions contemplated by this Agreement and the Merger
Agreement, so that by the execution and delivery hereof ESP or Sub would become,
or could reasonably be expected to become, an "interested stockholder" with whom
the Company would be prevented for any period pursuant to Section 203 of the
Delaware General Corporation Law (the "DGCL") from engaging in any "business
combination" (as such terms are defined in Section 203 of the DGCL), then this
Agreement shall be void and unenforceable until such time as such authorization
and approval shall have been duly and validly obtained.
SECTION 9. STOCKHOLDER CAPACITY. No person executing this Agreement who is
a director or officer of the Company makes any agreement or understanding herein
in his capacity as such director or officer. The Stockholder signs solely in its
capacity as the record holder and beneficial owner of the Stockholder's Shares
and nothing herein shall limit or affect any actions taken by the Stockholder in
its capacity as an officer or director for the Company to the extent
specifically permitted by the Merger Agreement, including the fiduciary duties
of officers and directors in accordance with Delaware law.
SECTION 10. FURTHER ASSURANCES. The Stockholder shall, upon request of ESP
or Sub, execute and deliver any additional documents and take such further
actions as may reasonably be deemed by ESP or Sub to be necessary or desirable
to carry out the provisions hereof.
SECTION 11. TERMINATION. This Agreement, and all rights and obligations of
the parties hereunder, shall terminate upon the earlier of (a) the date upon
which the Merger Agreement is terminated by the Company, ESP or Sub for any
reason in accordance with its terms, and (b) the date that ESP or Sub shall have
purchased and paid for the Shares of the Stockholder pursuant to Section 2.
SECTION 12. MISCELLANEOUS.
(a) Capitalized terms used and not otherwise defined in this
Agreement shall have the respective meanings assigned to such terms in the
Merger Agreement.
(b) All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be deemed given if delivered
personally or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or such other address for a party as shall
be specified by like notice): (i) if to ESP or Sub, to the address set forth in
Section 9.02 of the Merger Agreement, and (ii) if to the Stockholder, to the
address set forth on SCHEDULE A hereto, or such other address as may be
specified in writing by the Stockholder.
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(c) The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
(d) This Agreement may be executed in two or more counterparts, all
of which shall be considered one and the same agreement, and shall become
effective as to the Stockholder when one or more counterparts have been signed
by each of ESP, Sub and the Stockholder and delivered to ESP, Sub and the
Stockholder.
(e) This Agreement (including the documents and instruments referred
to herein) constitutes the entire agreement, and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof.
(f) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts or laws thereof.
(g) Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in party, by
operation of law or otherwise, by any of the parties without the prior written
consent of the other parties, except by laws of descent. Any assignment in
violation of the foregoing shall be void.
(h) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstance, shall, to any event, be held by a court
of competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions herein and the application
thereof to any other circumstances, shall remain in full force and effect, shall
not in any way be affected, impaired or invalidated, and shall be enforced to
the fullest extent permitted by law.
(i) The Stockholder agrees that irreparable damage would occur and
that ESP and Sub would not have any adequate remedy at law in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that ESP and
Sub shall be entitled to an injunction or injunctions to prevent breaches by the
Stockholder of this Agreement and to enforce specifically the terms and
provisions of this Agreement.
(j) No amendment, modification or waiver in respect of this Agreement
shall be effective against any party unless it shall be in writing and signed by
such party.
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(k) Terms used herein but not otherwise defined shall have the
meanings set forth in the Merger Agreement.
IN WITNESS WHEREOF, ESP, Sub and the Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
ENVIRONMENTAL SYSTEMS PRODUCTS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Name:
Title:
STONE RIVET, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Name:
Title:
CHEMICAL EQUITY ASSOCIATES
By: Chase Capital Partners Inc. its general partner
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: General Partner
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SCHEDULE A
Stock Ownership of Envirotest Systems Corp. ("Envirotest")
Chemical Equity Associates Class A Common Stock - 0
c/o Chase Capital Partners, Inc.
000 Xxxxxxx Xxxxxx Class B Common Stock - 0
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 Class C Common Stock - 2,026,111(1)
Attn: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
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(1) Shares of Class B Common Stock of Envirotest are convertible into shares of
Class A Common Stock of Envirotest on a one-for-one basis at any time at the
holder's option.
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SCHEDULE B
Ownership of Options to Purchase Shares of
Class A Common Stock of Envirotest
None.
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