Exhibit 1.1
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ENVIRONMENTAL SYSTEMS PRODUCTS HOLDINGS INC.
and
ENVIROSYSTEMS CORP.
--------------------------------
SUBSCRIPTION AGREEMENT
Dated as of October 15, 1998
--------------------------------
$100,000,000 Aggregate Principal Amount of
13% Senior Subordinated Notes due 2008
of Environmental Systems Products Holdings Inc.
and 2,291.268 Shares of Series A Common Stock,
Par Value $0.0001 Per Share,
of
ENVIROSYSTEMS CORP.
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THE SECURITIES OFFERED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION THEREFOR OR AN
APPLICABLE EXEMPTION FROM REGISTRATION. THE SALE, TRANSFER OR OTHER DISPOSITION
OF SUCH SECURITIES IS ALSO SUBJECT TO COMPLIANCE WITH THE CONDITIONS SPECIFIED
IN THIS SUBSCRIPTION AGREEMENT, AND NO SALE, TRANSFER OR OTHER DISPOSITION OF
SUCH SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED.
TABLE OF CONTENTS
PAGE
1. Issuance of Notes and Series A Shares . . . . . . . . . . . . . . . . . .1
1.1 The Notes and Shares . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 The Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.1 Sale and Purchase of the Notes and Shares. . . . . . . . . . . . . .2
2.2 Nature of Obligations. . . . . . . . . . . . . . . . . . . . . . . .3
2.3 Failure to Close . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.4 Purchasers' Special Rights . . . . . . . . . . . . . . . . . . . . .3
(a) Delivery Expenses . . . . . . . . . . . . . . . . . . . . . . .3
(b) Issue Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .4
(c) Public Disclosures. . . . . . . . . . . . . . . . . . . . . . .4
3. Representations and Warranties of the Issuers . . . . . . . . . . . . . .5
4. Representations of the Purchasers . . . . . . . . . . . . . . . . . . . .5
4.1 Investment Representations . . . . . . . . . . . . . . . . . . . . .5
4.2 Purchase Permitted by Applicable Laws; Legal Investment. . . . . . .6
4.3 Investment by ERISA Plans. . . . . . . . . . . . . . . . . . . . . .7
5. Conditions of Purchasers' Obligations . . . . . . . . . . . . . . . . . .8
6. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
7. Restrictions on Transfer; the Securities Act of 1933. . . . . . . . . . 10
7.1 Restrictive Legends. . . . . . . . . . . . . . . . . . . . . . . . 10
7.2 Non-Applicability of Transfer Restrictions; Removal of Legends . . 11
8. Expenses, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9. Indemnification of Purchasers . . . . . . . . . . . . . . . . . . . . . 13
10. Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12. Survival of Covenants, etc.; Successors and Assigns . . . . . . . . . . 14
13. Communications and Notices. . . . . . . . . . . . . . . . . . . . . . . 15
14. Law Governing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
15. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
16. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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SUBSCRIPTION AGREEMENT
ENVIRONMENTAL SYSTEMS PRODUCTS HOLDINGS INC.
and
ENVIROSYSTEMS CORP.
Dated as of October 15, 1998
To Each of the Purchasers Named on the Signature Pages Hereof:
Ladies and Gentlemen:
Environmental Systems Products Holdings Inc., a Delaware corporation
(the "Company"), and EnviroSystems Corp., a Delaware corporation and sole
shareholder of the Company (the "Parent"), each hereby agrees with each
Purchaser named on the signature pages hereof (such purchasers being referred to
individually as a "Purchaser" and collectively as the "Purchasers") as follows
with respect to the purchase of its securities described in Section 1.1 below:
1. ISSUANCE OF NOTES AND SERIES A SHARES.
1.1 THE NOTES AND SHARES. The Company has authorized the issuance
pursuant to this Agreement of $100,000,000 aggregate principal amount of the
Company's 13% Senior Subordinated Notes due 2008 (the "Notes") to be issued
under and entitled to the benefits of an Indenture to be substantially in the
form of Exhibit A hereto (the "Indenture") and the Parent has authorized the
issuance of 2,291.268 shares (the "Series A Shares") of Series A Common Stock,
par value $0.0001 per share (the "Series A Common Stock"), of the Parent. The
Notes will be unconditionally guaranteed on a senior subordinated basis by the
guarantors listed on Schedule A hereto (collectively, the "Guarantors" and,
together with the Company and the Parent, the "Issuers"). The Notes and the
Series A Shares will be issued on the Closing Date (as defined in Article 2
hereof). For purposes of this Agreement, (i) the term "Securities" means the
Notes, together with the guarantees thereof by the Guarantors, and the Series A
Shares and (ii) references to "Subsidiaries" or "subsidiaries" of the Parent or
the Company shall mean all subsidiaries of the Parent or the Company, including
Envirotest Systems Corp., a Delaware corporation ("Envirotest"), and the direct
and indirect subsidiaries of Envirotest and Environmen-
tal Systems Products, Inc., a Delaware Corporation ("ESP"), and the direct and
indirect subsidiaries of ESP.
1.2 THE PURCHASERS. The purchase of all of the Notes and Series A
Shares is as provided for in this Agreement.
Each of the Purchasers agrees to purchase, separately and severally,
the principal amount of Notes and the number of Series A Shares set forth below
its name on the signature pages hereto. The Purchasers shall not be obligated to
buy any of the Notes or the Series A Shares unless the Parent and the Company
shall have observed, performed, or otherwise complied with the conditions set
forth in Article 5 hereof.
2. CLOSING. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place as follows:
2.1 SALE AND PURCHASE OF THE NOTES AND SHARES. On the basis of the
representations and warranties contained or incorporated by reference herein,
(i) the Company will sell to the Purchasers, and the Purchasers will purchase
from the Company, at the Closing on October 16, 1998, or such later date as may
be agreed upon in writing by the Company, the Parent and the Purchasers (the
"Closing Date"), the aggregate principal amount of Notes set forth below the
respective names of the Purchasers on the signature pages hereto and (ii) the
Parent will sell to the Purchasers, and the Purchasers will purchase from the
Parent, on the Closing Date, the number of Series A Shares set forth below the
respective names of the Purchasers on the signature pages hereto. The purchase
price for the Notes and the number of Series A Shares set forth below the name
of each Purchaser on the signature pages hereto is the aggregate purchase price
for the Notes and the number of Series A Shares to be purchased by each
respective Purchaser.
At the Closing, the Company will deliver, against payment of the
purchase price therefor, the Notes, in the form of one or more permanent global
securities in definitive form (the "Global Securities") deposited with the
Trustee as custodian for The Depository Trust Company ("DTC") and registered in
the name of Cede & Co., as nominee for DTC. Interests in any permanent Global
Securities will be held only in book-entry form through DTC, except in the
limited circumstances described in the Offering Memorandum (as defined). The
Notes shall be dated the Closing Date, and shall be in the aggregate principal
amount to be purchased by the Purchasers. On the Closing Date, the Parent will
deliver stock certificates representing the Series A Shares to be purchased by
each Purchaser to such Purchaser or to
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such Purchaser's nominee or other designee (designated in writing to the Company
or the Parent, as applicable, at least one day prior to the Closing if different
from any such nominee or designee specified on the signature pages hereto, and
each hereinafter referred to as a "Designee"), against payment of the purchase
price therefor in immediately available funds. The Parent and the Company agree
that Credit Suisse First Boston Corporation, which is acting as placement agent
in connection with the placement of the Notes and the Series A Shares (in such
capacity, the "Placement Agent"), may, in its discretion, deduct from the
purchase price of the Notes and the Series A Shares to be remitted to the
Company or the Parent at the Closing the amount of its agreed fees as Placement
Agent. The Closing will take place at the office of Skadden, Arps, Slate,
Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022, at 9:00 a.m.,
New York time, on the Closing Date.
On the Closing Date, the Company, the Parent and the Purchasers shall
enter into a Registration Rights Agreement to be substantially in the form of
Exhibit B hereto with respect to the Notes (the "Registration Rights Agreement")
and the Parent, Alchemy Partners (Guernsey) Limited, the Purchasers and the
other securityholders therein shall enter into an Investors Agreement to be
substantially in the form of Exhibit C hereto with respect to the Series A
Shares (the "Investors Agreement") providing for the registration of the
Securities under the Securities Act of 1933, as amended (the "Securities Act").
2.2 NATURE OF OBLIGATIONS. The obligations of each Purchaser
hereunder are several and not joint and it is explicitly acknowledged by each
party hereto that no Purchaser is entering into any transaction for the purchase
of the Notes or the Series A Shares or any other securities of the Issuers
jointly with any other person, firm or corporation.
2.3 FAILURE TO CLOSE. Notwithstanding anything to the contrary in
this Agreement, if the Closing fails to occur on or before October 27, 1998 each
party hereto shall, at its election, be relieved of all further obligations
under this Agreement (unless the Closing failed to occur due to a default by
such party in its obligations hereunder) without thereby waiving any rights it
may have by reason of such nonfulfillment or failure.
2.4 PURCHASERS' SPECIAL RIGHTS.
(a) DELIVERY EXPENSES. If, for any reason, a holder of (i) any
Note or Series A Share surrenders such Note or Series A Share to the Company or
the Parent, as applicable, (ii) any Note surrenders such Note to the trustee
under
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the Indenture in accordance with the terms of the Indenture or (iii) any Series
A Share surrenders such Series A Share to the transfer agent of the Series A
Common Stock, the Company or the Parent will pay the cost (exclusive of
applicable transfer or similar taxes) of delivering to such holder or its
Designee, at the office of such holder or Designee notified to the Company at
the time of surrender of such Note or Series A Share to the Company, the Parent
or to the trustee or transfer agent referred to above, insured to such holder's
reasonable satisfaction, each Note or Series A Share issued in substitution,
replacement or exchange for the surrendered Note or Series A Share.
(b) ISSUE TAXES. The Company or the Parent will pay all
documentary, stamp and similar taxes (other than income taxes) in connection
with (i) the issuance, sale, delivery or transfer by the Company and the Parent
to the Purchasers of the Notes and Series A Shares, respectively, and (ii) the
execution and delivery of this Agreement, the Registration Rights Agreement, the
Investors Agreement and any other agreements and instruments contemplated
hereby, if any, and will hold each Purchaser and any other holder of Notes and
Series A Shares harmless against any and all liabilities with respect to all
such taxes. Neither the Company nor the Parent will be responsible for any
transfer taxes in connection with transfers of the Notes or Series A Shares by
the Purchasers and any other holder of Notes or Series A Shares. The
obligations of the Company and the Parent under this paragraph (b) shall survive
the payment, prepayment, redemption or repurchase of all such Notes and Series A
Shares and the termination of this Agreement.
(c) PUBLIC DISCLOSURES. The Parent and the Company will take
all reasonable actions necessary to keep each Purchaser's identity confidential
and will not disclose each Purchaser's identity as an investor in the Parent or
the Company in any public announcement, governmental filing or otherwise without
each such Purchaser's prior written consent unless such disclosure is required
by law, rule, regulation or by order of a court of competent jurisdiction or by
any governmental agency. If such disclosure is so required, the Parent or the
Company will give written notice to each such Purchaser describing in reasonable
detail the proposed content of such disclosure and will afford each such
Purchaser an opportunity to suggest modifications in the form and substance of
such proposed disclosure prior to making such disclosure. Notwithstanding the
foregoing, if the Parent or the Company files a registration statement pursuant
to the Registration Rights Agreement, the Parent or the Company, as the case may
be, may make all required disclosures under the Securities Act, including but
not limited to, the disclosure of the names of the beneficial owners of the
Notes or Series A Shares and the number of Notes or Series A Shares held by
such owner.
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3. REPRESENTATIONS AND WARRANTIES OF THE ISSUERS. Each of the
Issuers, jointly and severally, hereby makes each of the representations and
warranties to, and agreements with, each Purchaser that are set forth in Section
2 of the Placement Agreement, dated as of October 15, 1998 (the "Placement
Agreement"), among each of the Issuers and the Placement Agent relating to the
Notes and the Series A Shares and such representations and warranties as well as
the related defined terms are hereby incorporated by reference herein with the
same effect as if each such representation and warranty was set forth herein in
its entirety. No amendment to or waiver of any such representation and warranty
shall be effective for purposes of this Agreement to amend or waive such
representation or warranty as incorporated by reference herein without the prior
written consent of the Purchasers.
4. REPRESENTATIONS OF THE PURCHASERS.
4.1 INVESTMENT REPRESENTATIONS. Each of the Purchasers hereby
represents and warrants to the Issuers that:
(a) it is acquiring all of the Notes and the Series A Shares to
be acquired by it hereunder for its own account or for the account of its
Designee;
(b) it has authority to make the representations contained in
this Article 4;
(c) such Purchaser is authorized to enter into this Agreement,
the Investors Agreement and the Registration Rights Agreement and to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby;
(d) it and each Designee has received a copy of the Offering
Memorandum of the Parent and the Company dated October 15, 1998 (the "Offering
Memorandum");
(e) such Purchaser and each Designee is an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act;
(f) it is acquiring all of the Notes and Series A Shares to be
acquired by it or any Designee hereunder with no view or intention to offer for
sale any of such securities in a manner which would violate any federal or state
securities
5
laws; subject, however, to any requirement of law that the disposition of such
Purchaser's property shall at all times be and remain within such Purchaser's
control;
(g) such Purchaser has received all information it has requested
in connection with its entry into this Agreement and its purchase of the Notes
and Series A Shares, and has been given the opportunity and right to meet
representatives of the Parent and the Company and their respective subsidiaries
and to investigate and inquire into all aspects of the Parent and the Company
and the terms and conditions of the purchase of the Notes and the Series A
Shares;
(h) Each Purchaser severally represents and agrees that it will
offer and sell the Notes only in accordance with Rule 144A ("Rule 144A") or Rule
903 under the Securities Act. Accordingly, neither such Purchaser nor its
affiliates, nor any persons acting on its behalf, have engaged or will engage in
any directed selling efforts with respect to the Notes, and such Purchaser, its
affiliates and all persons acting on its behalf have complied and will comply
with the offering restrictions requirement of Regulation S; and
(i) Each Purchaser severally agrees that it and each of its
affiliates will not offer or sell the Notes by means of any form of general
solicitation or general advertising, within the meaning of Rule 502(c) under the
Securities Act, including, but not limited to (i) any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media or broadcast over television or radio, or (ii) any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising. Each Purchaser also severally agrees, with respect to resales made
in reliance on Rule 144A of any of the Notes, to deliver either with the
confirmation of such resale or otherwise prior to settlement of such resale a
notice to the effect that the resale of such Notes has been made in reliance
upon the exemption from the registration requirements of the Securities Act
provided by Rule 144A.
Each of the Purchasers acknowledges that the opinions to be delivered
at the Closing pursuant to Article 5 will be made, in part, in reliance upon the
representations of such Purchaser made in this Article 4.
The Notes and the Series A Shares being delivered pursuant to this
Agreement shall not be transferable by the Purchasers or their Designees except
upon the conditions specified in Article 7.
4.2 PURCHASE PERMITTED BY APPLICABLE LAWS; LEGAL INVESTMENT.
6
The purchase of and any payment for the Notes and the Series A Shares to be
purchased by such Purchaser hereunder is not prohibited by any law or
governmental regulation applicable to such Purchaser, shall not subject such
Purchaser to any penalty or, in the reasonable judgment of such Purchaser, other
onerous condition under or pursuant to any applicable law or governmental
regulation, and is permitted by the laws and regulations of the jurisdictions to
which such Purchaser is subject.
4.3 INVESTMENT BY ERISA PLANS. (a) Each of the Purchasers represent
that at least one of the following is accurate as to each source of funds to be
used by it to purchase the Securities:
(i) it is not acquiring the Securities with the assets of any
employee benefit plan which is subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or any "plan"
which is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code") (each such employee benefit plan and plan being
referred to herein as a "Benefit Plan");
(ii) the source of funds being used to acquire the Securities is
either (A) an insurance company pooled separate account, within the meaning
of Department of Labor Prohibited Transaction Class Exemption ("PTCE") 90-1
(issued January 29, 1990), or (B) a bank collective investment fund, within
the meaning of PTCE 91-38 (issued July 12, 1991) and the purchase and
holding of such Securities is exempt under either PTCE 90-1 or PTCE 91-38;
(iii) the Purchaser is an insurance company and the source of
funds being used by such Purchaser to acquire the Securities is an
"insurance company general account," as such term is defined in PTCE 95-60
(issued July 12, 1995), and such acquisition and holding of the Securities
is exempt under PTCE 95-60;
(iv) the source of funds being used by such Purchaser to acquire
the Securities constitute plan assets that are included in an "investment
fund" (within the meaning of Part V of PTCE 84-14 (issued March 13, 1994)
(the "QPAM Exemption") managed by a "qualified professional asset manager"
or "QPAM" (within the meaning of Part V of the QPAM Exemption)), which
assets when combined with the assets of all other employee benefit plans
established or maintained by the same employer or by an affiliate (within
the meaning of Section V(c)(1) of the QPAM Exemption) of such
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employer or by the same employee organization and managed by such QPAM, do
not exceed 20% of the total client assets managed by such QPAM, the
conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a person controlling or controlled by the QPAM
(applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and the acquisition
and holding of such Securities is exempt under PTCE 84-14; or
(v) another exemption from the prohibited transaction rules
applies such that the use of funds to acquire the Securities does not
constitute a non-exempt prohibited transaction in violation of Section 406
of ERISA or Section 4975 of the Code, which could be subject to a civil
penalty assessed pursuant to Section 502 of ERISA or a tax imposed under
Section 4975 of the Code.
(b) Each Purchaser, and each subsequent holder of the
Securities, covenants that it will not dispose of the Securities to be acquired
by it or any interest therein (including, without limitation, any transfer by a
change in the capacity in which such Purchaser holds its investment in such
Securities) to any person unless such person shall (i) make all warranties and
representations of such Purchaser contained in Section 4.3(a) and (ii) assume
all covenants of such Purchaser contained in this Section 4.3(b).
5. CONDITIONS OF PURCHASERS' OBLIGATIONS. The Purchasers' several
obligations to purchase and pay for the Notes and the Series A Shares to be
purchased by them hereunder are subject to the accuracy of the representations
and warranties on the part of the Issuers contained or incorporated by reference
herein, to the accuracy of the officers' certificates of the Issuers made
pursuant to the provisions hereof and the Placement Agreement, to the
performance by the Issuers on or prior to the Closing Date of their respective
obligations hereunder or incorporated by reference herein and to the
satisfaction on or prior to the Closing Date of the conditions set forth in
Section 6 of the Placement Agreement, and each Purchaser shall be entitled to
receive all letters, opinions, and certificates that the Placement Agent is
entitled to receive pursuant to Section 6 of the Placement Agreement. To the
extent that any such representations, warranties, officers' certificates or
conditions permit any person or persons to waive compliance with such
representations, warranties, officers' certificates or conditions, or require
that a document, opinion or other instrument or any event or condition be
acceptable or satisfactory to any person or persons, for purposes of this
Agreement, such representations, warranties, officers' certificates or
conditions shall be complied with only if waived by the Purchasers and
8
such document, opinion or other instrument and such events or conditions shall
be acceptable or satisfactory for purposes of this Agreement only if acceptable
or satisfactory to the Purchasers. No amendment to or waiver of such
representations, warranties, officers' certificates or conditions made pursuant
to the Placement Agreement shall be effective for purposes of this Agreement to
amend or waive such representations, warranties, officers' certificates or
conditions as incorporated by reference herein without the consent of the
Purchasers. Notwithstanding the foregoing, no Purchaser shall be obligated to
purchase and pay for the Notes and the Series A Shares unless all the Notes and
Series A Shares are sold hereunder.
6. COVENANTS.
(a) Each of the Issuers covenants and agrees with each of the
Purchasers and to their benefit to comply with all agreements set forth in
Section 5 of the Placement Agreement, which agreements as well as the related
defined terms are hereby incorporated by reference herein with the same effect
as if each such agreement was set forth herein in its entirety. To the extent
that any such agreement permits any person or persons to waive compliance with
such agreement or requires that a document, opinion or other instrument or any
event or condition be acceptable or satisfactory to any person or persons, for
purposes of this Agreement, such agreement shall be complied with only if it is
waived by the Purchasers and such document, opinion or other instrument and such
event or condition shall be acceptable or satisfactory for purposes of this
Agreement only if it is acceptable or satisfactory to the Purchasers. No
amendment to or waiver of such agreements or defined terms made pursuant to the
Placement Agreement shall be effective for purposes of this Agreement to amend
or waive such agreements and defined terms as incorporated by reference herein
without the consent of the Purchasers.
(b) From the date hereof until the Closing Date, each of the
Issuers covenants and agrees that it shall not enter into (or commit to enter
into) any amendment, modification or waiver of any provision of any of the
Transaction Documents without the prior written consent of the Purchasers;
PROVIDED that, in the case of any amendment, modification or waiver of the
Merger Agreement, such consent shall not be unreasonably withheld.
(c) From the date hereof until the Closing Date, each of the
Issuers (i) will give the Purchasers and their representatives full access to
its offices, properties, books and records, (ii) will furnish to the Purchasers
and their representatives such financial, operating and other information as
such Persons may reasonably request and (iii) will instruct its officers,
employees, counsel and auditors
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to cooperate with the Purchasers in their investigation of the Issuers.
7. RESTRICTIONS ON TRANSFER; THE SECURITIES ACT OF 1933.
7.1 RESTRICTIVE LEGENDS. The Securities shall not be transferable
except upon the conditions specified in this Article 7 and, with respect to the
Notes, the restrictions contained in Section 4.1 and the Indenture, which
conditions are intended to insure compliance with the provisions of the
Securities Act in respect of the transfer of any such Securities and, with
respect to the Series A Shares, upon the conditions specified in Article 3 of
the Investors Agreement and in the Share Price Adjustment Agreement.
Each Purchaser and each Designee hereby acknowledges and agrees that
it is acquiring the Securities in a transaction exempt from registration under
the Securities Act and that no Security may be offered, sold, pledged or
otherwise transferred in the absence of registration under the Securities Act or
an applicable exemption therefrom. Each of the Securities shall (unless
otherwise permitted by the provisions of this Article 7) be stamped or otherwise
imprinted with a legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR
SOLD IN THE ABSENCE OF REGISTRATION THEREUNDER OR AN APPLICABLE EXEMPTION
THEREFROM."
In addition to any other legend that may be required, each certificate
for the Notes shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS
NOTE MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) INSIDE
THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(ii) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904
UNDER THE SECURITIES ACT, (iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT
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PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (iv) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES
(i) THROUGH (iv) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE
RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE."
In addition to any other legend that may be required, each certificate
for Series A Shares shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER
AS SET FORTH IN THE INVESTORS AGREEMENT DATED AS OF OCTOBER 16, 1998, AS
AMENDED FROM TIME TO TIME, COPIES OF WHICH MAY BE OBTAINED UPON REQUEST
FROM ENVIROSYSTEMS CORP. AND ANY SUCCESSOR THERETO."
7.2 NON-APPLICABILITY OF TRANSFER RESTRICTIONS; REMOVAL OF LEGENDS.
The restrictions imposed by Section 7.1 above upon the transferability of any
Series A Share represented by a certificate bearing the restrictive legends set
forth in such Section 7.1 (a "Restricted Security") shall cease and terminate
when such Restricted Security has been sold pursuant to an effective
registration statement under the Securities Act or transferred pursuant to Rule
144 (or any similar or successor rule thereto) promulgated under the Securities
Act unless the holder thereof is an affiliate of the Parent. The holder of any
Restricted Security as to which such restrictions shall have terminated shall be
entitled to receive from the Parent, without expense, a new security of the same
type but not bearing the restrictive legend set forth above and not containing
any other reference to the restrictions imposed by Section 7.1 above, PROVIDED
that a holder's right to receive, and the Parent's obligation to issue, a new
Security not bearing such restrictive legends and not containing any other
reference to the restrictions imposed by Section 7.1 above shall be subject, in
the Parent's discretion, to the delivery to the Parent of an opinion of counsel
of the transferor (which may include in-house counsel to any Purchaser) that
subsequent transfers of such Restricted Security by the proposed transferee will
not require registration under the Securities Act. As used in this Section 7.2,
the term "transfer" encompasses any sale, transfer, pledge or other disposition
of any Securities referred to herein.
11
8. EXPENSES, ETC.
(a) The Company or the Parent agrees to reimburse the Purchasers
for all reasonable out-of-pocket expenses (including without limitation the
reasonable fees and expenses of one counsel for each Purchaser) of the
Purchasers incurred in connection with the Transactions, unless this Agreement
is terminated prior to the consummation of the Transactions as a result of a
breach of this Agreement by the Purchasers.
(b) Subject to the provisions of the next sentence of this
Article 8, each of the Company and the Parent agrees to pay, and hold the
Purchasers harmless against liability for the payment of, all stamp and other
similar taxes (together in each case with interest and penalties, if any) which
may be payable in respect of the execution and delivery of this Agreement, the
Indenture, the Investors Agreement and the Registration Rights Agreement, if
any, or the issuance, delivery or acquisition by the Purchasers of any Notes or
Series A Shares pursuant to this Agreement and the Indenture, other than any
transfer taxes applicable to any transfer between a Purchaser and a subsequent
holder of the Notes or Series A Shares (other than the Company or the Parent),
and reasonable fees and expenses incurred by each Purchaser in connection with
any filing by the Company or the Parent with any governmental agency with
respect to the Company or the Parent that mentions such Purchaser. Each of the
Company and the Parent additionally agrees to pay, and hold each Purchaser
harmless against liability for the payment of, all out-of-pocket expenses with
respect to the enforcement by such Purchaser of any provision of any agreement
or instrument referred to in this Article 8 plus the Registration Rights
Agreement and the Investors Agreement and any proposed amendments or waivers
(whether or not the same shall be signed or become effective) under or in
respect of any such agreement or instrument, PROVIDED that in each case the
Company or the Parent has been or, without such amendment or waiver, would be in
default in respect of its obligations thereunder.
(c) The obligations of the Company and the Parent in this
Article 8 shall be of full force and effect whether or not any Notes or Series A
Shares are sold hereunder (unless the failure of any Notes or Series A to be
sold hereunder is due to a breach of, or default under, this Agreement by a
Purchaser or Designee) or the Closing ever takes place and such obligations
shall also survive the payment for or transfer of any of the Notes or Series A
Shares, the enforcement of any provisions of any agreement or instrument
referred to in this Article 8 and any amendments or waivers with respect
thereto.
12
9. INDEMNIFICATION OF PURCHASERS. In addition to all other sums due
hereunder or provided for in this Agreement, each of the Issuers, jointly and
severally, will indemnify and hold harmless each Purchaser (which term for
purposes of this Article 9 includes any agent of or any person controlling each
such Purchaser) from and against any losses, claims, damages, liabilities, costs
and expenses (including reasonable attorneys' fees) incurred by it pursuant to
any investigation or proceeding instigated or brought by any governmental or
administrative entity or other person against the Parent, the Company or such
Purchaser arising out of or in connection with this Agreement (including the
Offering Memorandum or any other document or instrument delivered in connection
herewith), except to the extent that such losses, claims, damages, liabilities,
costs and expenses resulted primarily from any wrongful action on such
Purchaser's part which was not taken by such Purchaser in reliance upon any of
the warranties, covenants or promises of any of the Issuers herein or the
documents contemplated hereby or the certificates delivered by any of the
Issuers pursuant hereto or thereto, whether or not the transactions contemplated
by this Agreement are consummated, which investigation or proceeding requires
such Purchaser's participation or is commenced or filed against such Purchaser
because of this Agreement or the transactions contemplated hereby. The
obligations of the Issuers under this Article 9 shall survive the payment or
prepayment of the Notes and the Series A Shares, at maturity, upon redemption or
otherwise.
Promptly after receipt by an indemnified party under this Article 9 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Article 9, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Article 9. In case any such action is brought against any indemnified party and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party (which
consent shall not be unreasonably withheld), be counsel to the indemnifying
party), and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Article 9 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of
13
any pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action. No indemnified party may effect any settlement or
compromise of any pending or threatened action in respect of which such
indemnified party has sought or may seek indemnification hereunder without the
prior written consent of each indemnifying party.
10. CONTRIBUTION. If the indemnification provided for in Article 9 is
unavailable or insufficient to hold harmless an indemnified party under Article
9, then each indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of the losses, claims, damages,
liabilities, costs and expenses referred to in Article 9 in such proportion as
is appropriate to reflect the relative fault of the Issuers on the one hand and
the Purchaser on the other in connection with the actions which resulted in such
claim as well as any other relevant equitable considerations. The amount paid
by an indemnified party as a result of the losses, claims, damages or
liabilities referred to in this paragraph shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim.
The obligations of the Issuers under Articles 9 and 10 shall be in
addition to any liability which the Issuers may otherwise have and shall extend,
upon the same terms and conditions, to each Purchaser, its representatives,
officers and directors and each person, if any, who controls such Purchaser
within the meaning of the Securities Act or the Exchange Act.
11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, but all such counterparts shall constitute one and the same
instrument.
12. SURVIVAL OF COVENANTS, ETC.; SUCCESSORS AND ASSIGNS. All
covenants, agreements, representations and warranties made by the parties in
this Agreement or incorporated by reference herein and in certificates or other
documents delivered pursuant to it shall remain in full force and effect,
regardless of any investigation or statement as to the results thereof, made by
or on behalf of the Issuers, the Purchasers or any person controlling any of
them and will survive the execution and delivery of the Notes and Series A
Shares to the Purchasers and payment by the Purchasers therefor. All such
covenants, agreements, representations and warranties shall be binding upon any
successors and assigns of the Issuers. In
14
addition, whether or not any express assignment has been made except as
otherwise provided in Article 7 hereof, all holders of the Notes and Series A
Shares who hold such Notes or Series A Shares as transferees from the Purchasers
hereunder shall be entitled to the benefit of all covenants and agreements of
the Issuers made or to be performed or observed by the Issuers (but not the
representations and warranties made by the Issuers herein or in any document or
agreement which is incorporated by reference herein).
13. COMMUNICATIONS AND NOTICES. Except as otherwise provided in this
Agreement, all communications and notices provided for in this Agreement shall
be in writing and (i) if to any of the Issuers mailed by first class mail or
overnight courier to them at EnviroSystems Corp. c/o Environmental Systems
Products Holdings Inc., 7 Kripes Road, East Granby, Connecticut 06026,
Attention: David J. Langevin or any other office that such Issuer may hereafter
designate by written notice to the Purchasers and (ii) if to the Purchasers,
mailed by first class mail or overnight courier to the respective addresses of
the Purchasers specified in the signature pages hereto, or to such other address
and for such attention as any Purchaser may from time to time designate to the
Parent or the Company in writing.
14. LAW GOVERNING. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
without regard to the principles of conflicts of laws thereof.
15. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement or in any instrument contemplated hereby, or any
application thereof, shall be invalid, illegal or unenforceable in any respect,
under the laws of any jurisdiction, the validity, legality and enforceability of
the remaining provisions contained herein and therein, and any other application
thereof, shall not in any way be affected or impaired thereby or under the laws
of any other jurisdiction.
16. HEADINGS. The headings of the articles, sections and subsections
of this Agreement are inserted for convenience only and shall not be deemed to
constitute a part of this Agreement.
15
If the foregoing is in accordance with your understanding, please sign
and complete the enclosed copy of this letter on the signature page provided and
return it to the Parent and the Company, whereupon this letter shall then become
a binding agreement in accordance with its terms.
Very truly yours,
ENVIROSYSTEMS CORP.
By: /s/ David J. Langevin
-------------------------
Name: David Langevin
Title: EVP CFO
ENVIRONMENTAL SYSTEMS
PRODUCTS HOLDINGS INC.
By: /s/ David J. Langevin
-------------------------
Name: David Langevin
Title: EVP CFO
ENVIRONMENTAL SYSTEMS
PRODUCTS, INC.
By: /s/ David J. Langevin
-------------------------
Name: David Langevin
Title: EVP CFO
ENVIROTEST SYSTEMS CORP. (Delaware)
By: /s/ David J. Langevin
-------------------------
Name: David Langevin
Title: EVP CFO
ENVIROTEST HOLDINGS, INC.
By: /s/ David J. Langevin
-------------------------
Name: David Langevin
Title: EVP CFO
16
ENVIROTEST TECHNOLOGIES, INC.
By: /s/ David J. Langevin
-------------------------
Name: David Langevin
Title: EVP CFO
ENVIROTEST PARTNERS
By: /s/ David J. Langevin
-------------------------
Name: David Langevin
Title: EVP CFO
REMOTE SENSING TECHNOLOGIES, INC.
By: /s/ David J. Langevin
-------------------------
Name: David Langevin
Title: EVP CFO
ENVIROTEST WISCONSIN, INC.
By: /s/ David J. Langevin
-------------------------
Name: David Langevin
Title: EVP CFO
ES FUNDING CORPORATION
By: /s/ David J. Langevin
-------------------------
Name: David Langevin
Title: EVP CFO
ENVIROTEST ACQUISITIONS CO.
By: /s/ David J. Langevin
-------------------------
Name: David Langevin
Title: EVP CFO
17
ENVIROTEST SYSTEMS CORP.
(Washington)
By: /s/ David J. Langevin
-------------------------
Name: David Langevin
Title: EVP CFO
ENVIROTEST ILLINOIS, INC.
By: /s/ David J. Langevin
-------------------------
Name: David Langevin
Title: EVP CFO
WELLMAN NORTH AMERICA, INC.
By: /s/ David J. Langevin
-------------------------
Name: David Langevin
Title: EVP CFO
WELLMAN OVERSEAS LIMITED
By: [ILLEGIBLE]
-------------------------
Name:
Title:
NEWMALL LIMITED
By: [ILLEGIBLE]
-------------------------
Name:
Title:
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
The undersigned hereby agrees to purchase the Notes and the Series A
Shares as set forth below and agrees to the manner of payment specified below:
PURCHASER: DESIGNEE (name in which Notes and Series A Shares are
to be registered, if different than name of Purchaser):
18
DLJ INVESTMENT PARTNERS, L.P.
By: DLJ INVESTMENT PARTNERS, INC.
Managing General Partner
By: /s/ Ivy Dodes
-------------------------------
Name: Ivy Dodes
Title: Vice President
Address:
PRINCIPAL AMOUNT
OF NOTES: $32,323,000.00
NUMBER OF SHARES
OF SERIES A COMMON STOCK: 740.612
TOTAL PURCHASE PRICE
FOR NOTES AND SERIES A SHARES: $32,323,000.00
MANNER OF PAYMENT:
Designated Bank:________________________________________________________________
Address:________________________________________________________________________
ABA Number:_____________________________________________________________________
Account Number:_________________________________________________________________
Attention:______________________________________________________________________
Tax I.D. No.____________________________________________________________________
(if registered in the name of a nominee, the Taxpayer I.D. Number of such
nominee)
Notices for payment to be sent to:______________________________________________
Address:___________________________________________________________________
Attention:_________________________________________________________________
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
The undersigned hereby agrees to purchase the Notes and the Series A
Shares as set forth below and agrees to the manner of payment specified below:
PURCHASER: DESIGNEE (name in which Notes and Series A Shares are
to be registered, if different than name of Purchaser):
DLJ ESC II, L.P.
By: DLJ LBO PLANS MANAGEMENT
CORPORATION
General Partner
By: /s/ Ivy Dodes
--------------------------
Name: Ivy Dodes
Title: Vice President
Address:
PRINCIPAL AMOUNT
OF NOTES: $3,071,000.00
NUMBER OF SHARES
OF SERIES A COMMON STOCK: 70.365
TOTAL PURCHASE PRICE
FOR NOTES AND SERIES A SHARES: $3,071,000.00
MANNER OF PAYMENT:
Designated Bank:________________________________________________________________
Address:________________________________________________________________________
ABA Number:_____________________________________________________________________
Account Number:_________________________________________________________________
Attention:______________________________________________________________________
Tax I.D. No.____________________________________________________________________
(if registered in the name of a nominee, the Taxpayer I.D. Number of such
nominee)
Notices for payment to be sent to:______________________________________________
Address:___________________________________________________________________
Attention:_________________________________________________________________
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
The undersigned hereby agrees to purchase the Notes and the Series A
Shares as set forth below and agrees to the manner of payment specified below:
PURCHASER: DESIGNEE (name in which Notes and Series A Shares are
to be registered, if different than name of Purchaser):
DLJ INVESTMENT FUNDING, INC.
By: /s/ Ivy Dodes
-------------------------
Name: Ivy Dodes
Title: Vice President
Address:
PRINCIPAL AMOUNT
OF NOTES: $4,606,000.00
NUMBER OF SHARES
OF SERIES A COMMON STOCK: 105.537
TOTAL PURCHASE PRICE
FOR NOTES AND SERIES A SHARES: $4,606,000.00
MANNER OF PAYMENT:
Designated Bank:________________________________________________________________
Address:________________________________________________________________________
ABA Number:_____________________________________________________________________
Account Number:_________________________________________________________________
Attention:______________________________________________________________________
Tax I.D. No.____________________________________________________________________
(if registered in the name of a nominee, the Taxpayer I.D. Number of such
nominee)
Notices for payment to be sent to:______________________________________________
Address:___________________________________________________________________
Attention:_________________________________________________________________
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
The undersigned hereby agrees to purchase the Notes and the Series A
Shares as set forth below and agrees to the manner of payment specified below:
PURCHASER: DESIGNEE (name in which Notes and Series A Shares are
to be registered, if different than name of Purchaser):
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
By: [ILLEGIBLE] By: [ILLEGIBLE]
---------------------------- -----------------------
Name: Name:
Title: Title:
Address:
PRINCIPAL AMOUNT
OF NOTES: $40,000,000.00
NUMBER OF SHARES
OF SERIES A COMMON STOCK: 916.514
TOTAL PURCHASE PRICE
FOR NOTES AND SERIES A SHARES: $40,000,000
MANNER OF PAYMENT:
Designated Bank:________________________________________________________________
Address:________________________________________________________________________
ABA Number:_____________________________________________________________________
Account Number:_________________________________________________________________
Attention:______________________________________________________________________
Tax I.D. No.____________________________________________________________________
(if registered in the name of a nominee, the Taxpayer I.D. Number of such
nominee)
Notices for payment to be sent to:______________________________________________
Address:___________________________________________________________________
Attention:_________________________________________________________________
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
The undersigned hereby agrees to purchase the Notes and the Series A
Shares as set forth below and agrees to the manner of payment specified below:
PURCHASER: DESIGNEE (name in which Notes and Series A Shares are
to be registered, if different than name of Purchaser):
CHASE EQUITY ASSOCIATES L.P.
By: CHASE CAPITAL PARTNERS,
General Partner
By: /s/ NAL Stuart
------------------------------
Name: N.A.L. Stuart
Title: Partner
Address:
PRINCIPAL AMOUNT
OF NOTES: $20,000,000
NUMBER OF SHARES
OF SERIES A COMMON STOCK: 458.258
TOTAL PURCHASE PRICE
FOR NOTES AND SERIES A SHARES: $20,000,000
MANNER OF PAYMENT:
Designated Bank:________________________________________________________________
Address:________________________________________________________________________
ABA Number:_____________________________________________________________________
Account Number:_________________________________________________________________
Attention:______________________________________________________________________
Tax I.D. No.____________________________________________________________________
(if registered in the name of a nominee, the Taxpayer I.D. Number of such
nominee)
Notices for payment to be sent to: CHASE CAPITAL PARTNERS
---------------------------------------------
Address: 380 MADISON AVENUE, 12TH FLOOR, NEW YORK, NY 10017
-------------------------------------------------------------------
Attention: GEORGE KELTS
-----------------------------------------------------------------
SCHEDULE A
LIST OF GUARANTORS
Environmental Systems Products, Inc.
Envirotest Systems Corp. (Washington)
Envirotest Holdings, Inc.
Envirotest Technologies, Inc.
Envirotest Partners
Remote Sensing Technologies, Inc.
Envirotest Wisconsin, Inc.
ES Funding Corporation
Envirotest Acquisitions Co.
Envirotest Systems Corp. (Delaware)
Envirotest Illinois, Inc.
Wellman North America, Inc.
Wellman Overseas Ltd.
Newmall Ltd.
EXHIBIT A
[Indenture]
EXHIBIT B
[Investor Agreement]