Exhibit 10.12
TAKE-ALONG/DRAG-ALONG RIGHTS AGREEMENT
This TAKE-ALONG/DRAG-ALONG RIGHTS AGREEMENT (this "Agreement") is entered
into and effective as of November 10, 1994, by and among Austin Ventures III-A,
L.P. and Austin Ventures III-B, L.P., each a Delaware limited partnership
("Austin Ventures A" and "Austin Ventures B," respectively), and the holders of
the Warrants and the Issued Warrant Shares (as defined in the Warrant Agreement
referred to below), and their respective assignees, transferees, successors and
assigns (collectively, the "Holders").
Reference is made to the Warrants to Purchase Class B Nonvoting Common
Stock of AV Alarm, Inc. (the "Warrant(s)") issued pursuant to the Warrant
Agreement between AV Maim, Inc and Heller Financial, Inc., dated as of November
10, 1994 (the "Warrant Agreement"). All capitalized terms used in this Agreement
which are defined in the Warrant Agreement are used as defined in the Warrant
Agreement, unless the context otherwise requires.
In consideration of the premises and the mutual covenants herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Holders and Austin Ventures A and Austin
Ventures B hereby agree as follows:
1. Take-Along Rights.
(a) If Austin Ventures A or Austin Ventures B (each a "Seller") proposes
(whether alone or with Austin Ventures A or Austin Ventures B, as the case may
be) any sale, transfer, exchange or other disposition for value of Class A Stock
(or any securities convertible Into or exercisable Or exchangeable for Class A
Stock, including, without limitation, the Preferred Stock), other than (i) in a
public offering pursuant to an effective registration statement under the
Securities Act of Class A Stock (or any securities convertible into or
exercisable or exchangeable for Class A Stock, including, without limitation,
the Preferred Stock), (ii) a distribution by Seller of Class A Stock (or any
securities convertible into or exercisable or exchangeable for Class A Stock,
including, without limitation, the Preferred Stock) to its limited partners
after a public offering of such Class A Stock or other securities pursuant to an
effective registration statement under the Securities Act, (iii) a sale which,
when aggregated with all prior sales by such Seller and Austin Ventures A or
Austin Ventures B (as the case may be) of Class A Stock (or any securities
convertible into or exercisable or exchangeable for Class A Stock, including,
without limitation, the Preferred Stock), constitutes less than 33-1/3% of the
Preferred Stock and less than a majority of the voting capital stock of the
Company (any such non-excluded sale, transfer, exchange or other disposition for
value being referred to in this Agreement as a "Proposed Sale"), then Seller
shall make all necessary contractual arrangements in order to permit each Holder
to participate as seller in the Proposed Sale such that each Holder exercising
his or its right of co-sale hereunder shall be entitled to sell up to that
number of the issued Warrant Shares owned immediately prior to the sale equal to
the product of (A) one share of Class B Stock for each share of the Class A
Stock (or shares of Class A Stock issuable upon conversion, exercise or exchange
of other securities, including, without limitation, the Preferred Stock) that
the proposed purchaser (a "Proposed Purchaser") is willing to acquire in the
Proposed Sale, times (B) such Holder's percentage ownership, immediately prior
to the sale, of all outstanding Common Stock of all classes (assuming for
purposes hereof full exercise of all outstanding
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options, warrants and rights to acquire Common Stock of any class, including,
without limitation, the Warrants and the Preferred Stock).
(b) Seller shall give each Holder written notice of the Proposed Sale of Class A
Stock or Preferred Stock not less than 30 days before such sale is to take
place. The notice (the "Sale Notice") shall set forth:
(i) the name and address of the Proposed Purchaser,
(ii) the name and address of each Holder as shown on the records of
the Company and the number of Warrant Shares attributed to each,
(iii) the number of shares of Class A Stock or Preferred Stock and the
number of shares issuable upon conversion, exercise or exchange of any other
securities to be transferred by Seller,
(iv) the proposed amount and form of consideration and terms and
conditions of payment offered by such Proposed Purchaser, and
(v) the signed agreement of the Proposed Purchaser acknowledging that
he or it has been informed of this Agreement and has agreed to purchase Issued
Warrant Shares in accordance with the terms hereof.
(c) Within 20 days after delivery of the Sale Notice, each Holder shall deliver
to Seller a written notice (the "Take-Along Notice") specifying the number of
Issued Warrant Shares, if any, that each such Holder desires to sell in the
Proposed Sale, whereupon each such Holder (an "Electing Holder") shall be
obligated to exercise his or its Warrant and sell such Issued Warrant Shares at
the closing of such Proposed Sale, if and when it occurs.
(d) Any Issued Warrant Shares purchased from the Electing Holders pursuant to
this Agreement shall be purchased at the same price per share and otherwise on
the same terms and conditions as the Proposed Sale, after giving effect to any
applicable exercise price payable upon exercise of any securities sold by Seller
(it being understood and agreed that such terms and conditions do not include
the making of any representations and warranties, indemnities or other similar
agreements other than the representations, warranties and indemnities as to such
Electing Holders' ownership of such Issued Warrant Shares and the due authority
and power to sell such Issued Warrant Shares); provided, that with respect to
any sale of Preferred Stock by Seller, the price per share of any Issued Warrant
Shares purchased from an Electing Holder shall be reduced by an amount per share
equal to $1.00 (as adjusted for any stock dividends, combinations or splits with
respect to the Preferred Stock) plus accrued but unpaid dividends per share of
Preferred Stock.
2. Drag-Along Rights.
(a) If a Seller proposes any sale, transfer, exchange or other disposition for
value (other than in a public offering pursuant to an effective registration
statement under the Securities Act) (any such non-excluded sale, transfer,
exchange or other disposition for value being referred to in this Section 2 as a
"Drag Sale") of Common Stock, Convertible Securities, Stock Purchase Rights, or
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Warrants (collectively, "Securities"), Seller shall have the right to require
each Holder to sell a portion of each such Holder's Securities that represents
the same percentage of such Holder's Fully-Diluted Stock Ownership (as
hereinafter defined) an the Securities being disposed of by Seller represent of
Seller's Fully-Diluted Stock Ownership. The right of Seller to require the
Holders to sell in a Drag Sale must be exercised pro rata among all of the
Holders and may not be exercised by Seller selectively among the Holders, (For
example, if a Seller is selling 50% of its Fully-Diluted Stock Ownership, each
Holder shall be required to sell 50% of its Fully-Diluted Stock Ownership
represented by such Holder's Securities.) All Securities sold or transferred by
Holders pursuant to this Section 2 shall be sold at the same price and otherwise
treated identically with the Securities being sold by Seller in all respects;
provided, that if Convertible Securities, Warrants or Stock Purchase Rights are
being sold by Holder, the consideration received by such Holder shall be reduced
by the aggregate unpaid exercise price of such Convertible Securities, Warrants
or Stock Purchase Rights (such reduction to be taken first from any cash
consideration to be received by such Holder); provided, further, that with
respect to any sale of Preferred Stock by Seller, the price per share of any
Securities purchased from a Holder shall be reduced by au amount per share equal
to $1.00 (as adjusted for any stock dividends, combinations or splits with
respect to the Preferred Stock) plus accrued but unpaid dividends per share of
Preferred Stock; and provided, further, that, at the request of Seller, each
Holder shall be required to sell or transfer Common Stock in lieu of Convertible
Securities, Warrants or Stock Purchase Rights, provided such requirement shall
not cause any such Holder to be in violation of any applicable bank regulatory
laws or any rules, regulations, and interpretations thereunder (collectively,
"BHC Laws") and provided, further, that no Holder shall be required to
participate in any Drag Sale to the extent that any portion of the consideration
to be received by such Holder in such Drag Sale includes any securities and the
receipt by such Holder of such securities would violate any BHC Laws (unless the
transferee in such Drag Sale otherwise agrees to pay to any such Holder cash in
lieu of such securities); and provided, further, that no Holder shall be
required to make any representations or warranties in connection with such sale
or transfer other than representations and warranties as to (i) such Holder's
ownership of his or its Securities to be sold or transferred free and clear of
all liens, claims, and encumbrances (other than as set forth as part of the
terms of the Securities and restrictions on transfer imposed by applicable
securities laws), (ii) such Holder's power and authority to effect such
transfer, and (iii) such matters pertaining to compliance with securities laws
as the transferee may reasonably require. The term "Fully-Diluted Ownership
Percentage" shall mean, at any time with respect to any Person, the quotient
obtained by dividing (i) the sum of (A) all then outstanding shares of Common
Stock owned by such Person plus (B) (without duplication) all shares of Common
Stock issuable, whether at the time or upon passage of time or the occurrence of
future events, upon the exercise, conversion or exchange of all then-outstanding
Convertible Securities, Warrants and Stock Purchase Rights owned by such Person
by (ii) the Fully-Diluted Common Stock The term "Fully-Diluted Common Stock"
shall mean, at any time, the sum of (i) all then outstanding shares of Common
Stock plus (if) (without duplication) all shares of Common Stock issuable,
whether at the time or upon passage of time or the occurrence of future events,
upon the exercise, conversion or exchange of all then-outstanding Convertible
Securities, Warrants and Stock Purchase Rights.
(b) Seller shall give the Holders at least 30 days' prior written notice of any
Drag Sale as to which Seller intends to exercise its rights under Section 2(a).
if Seller elects to exercise its rights under Section 2(a). the Holders shall
take such actions as may be reasonably required and
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otherwise cooperate in good faith with Seller in connection with consummating
the Drag Sale (including, without limitation, the voting of any Securities of
the Company to approve such Drag Sale). At the closing of such Drag Sale, Seller
and the Holders shall deliver certificates for all Securities to be sold by
Seller and the Holders, duly endorsed for transfer, with signatures guaranteed,
to the purchaser against payment of the appropriate purchase price.
3. Exceptions. Notwithstanding anything contained in this Agreement to the
contrary, Sections 1 and 2 hereof shall not apply to any transfer, sale, or
disposition of Securities that is conducted pursuant to the terms of the Warrant
Purchase Agreement and Is solely among Austin Ventures A, Austin Ventures B, any
Holder, and any of their respective Affiliates (which, for the purposes hereof,
shall include any directors, officers, and employees of Austin Ventures A,
Austin Ventures B or any Holder (and any of their respective Affiliates), and
any family member of any such employee, officer, or director). Notwithstanding
the foregoing, no transfer, sale, exchange or disposition for value of
Securities may be made pursuant to this Section 3 unless the transferee of such
Securities executes and delivers to the parties hereto a joinder agreement in
form reasonably acceptable to all parties to this Agreement pursuant to which
such transferee agrees to become a party to this Agreement and be bound by all
of the provisions hereof.
4. Termination. The provisions of this Agreement shall terminate, as to any
Warrants or Warrant Shares, concurrently with the earlier to occur of (i) the
closing of Qualified Public Offering, or (ii) with respect to each holder of a
Warrant the exercise by such Holder of such Holder's Warrant, except that the
exercise of a Warrant for the purpose of effecting a Holder's co-sale rights
under Section 1 of this Agreement shall not be deemed a termination of this
Agreement until the completion of the Proposed Sale.
5. Miscellaneous.
(a) Remedies. Any Person having rights under any provision of this Agreement
will be entitled to enforce such rights specifically, to recover damages caused
by reason of any breach of any provision of this Agreement, and to exercise all
other rights granted by law or otherwise available to such Persons.
(b) Amendments and Waivers. The provisions of this Agreement may be amended or
waived at any time by the written agreement of Austin Ventures A, Austin
Ventures B and Holders holding Warrants exercisable to purchase at least 60% of
the Warrant Shares. Any waiver, permit, consent, or approval of any kind or
character on the part of Austin Ventures A, Austin Ventures B or any Holder of
any provision or condition of this Agreement must be made in writing and shall
be effective only to the extent specifically set forth in writing.
(c) Assignment. No Person may assign any of its rights or obligations under this
Agreement (except in connection with sales and transfers of Common Stock.
Warrants or Convertible Securities which are subject to this Agreement or to a
successor by merger or similar succession to the business or assets of such
Person).
(d) Notices. All notices, requests, consents, or other communications required
or permitted under this Agreement shall be in writing and shall be deemed to
have been duly given or delivered by any party (i) when received by such party
if delivered by hand, (ii) upon
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confirmation when delivered by telecopy, (iii) within one day after being sent
by recognized overnight delivery service, or (iv) within five business days
after being mailed by first-class mail, postage prepaid, and in each case
addressed as follows:
. If to Austin Ventures A or Austin Ventures B:
1300 Norwood Tower
114 West Seventh Street
Austin, Texas 78701
Attn: Elaine F. Wesner
Telecopy No.: 512/476-3952
with a copy to:
Jenkens & Gilchrist
2200 One American Center
600 Congress
Austin, Texas 78701
Telecopy No.: 512/404-3520
. If to any Holder, at its address set forth on Schedule 1 hereto.
Any party by written notice to the other parties pursuant to this Section
may change the address or the Persons to whom notices or copies thereof shall be
directed.
(e) Construction: Consent to Jurisdiction. This Agreement shall be construed and
enforced in accordance with and governed by the internal substantive laws of the
State of Illinois without regard to principles of conflict of laws. Each party
hereto hereby consents to the jurisdiction of the courts of Illinois and the
service of process ii] the State of Illinois. The headings in this Agreement are
solely for convenience of reference and shall not be given any effect in the
construction or interpretation of this Agreement. Unless otherwise stated,
references to Sections and Schedules are references to Sections and Schedules of
this Agreement
(f) Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed an original, and
such counterparts together shall constitute one instrument. Each party shall
receive a duplicate original of the counterpart copy or copies executed by it
and the other patties hereto.
(g) Legend. During the term of this Agreement, each certificate representing any
Securities held by any party to this Agreement (or any joinder hereto under
Section 3 hereof) shall bear substantially the following legend:
"The Shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, and any transfer thereof is subject
to the conditions specified in the Take-Along/Drag-Along Rights Agreement
dated as of November 10, 1994 among Austin Ventures III-A, LP, Austin
Ventures III-B, LP, and the Holders (as defined therein). A copy of such
agreement is on file with the Secretary of the Company at 12801 Stemmons
Freeway, Suite 821, Farmers
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Branch, Texas 75234, and will be furnished without charge by the Company to
the holder of this certificate upon written request to the Secretary of the
Company at such address."
This legend shall be removed upon consummation of any Proposed Sale, in
accordance with the terms of this Agreement, of the Securities represented by
such certificate.
(h) Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement
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IN WITNESS WHEREOF, this Agreement has been executed and delivered as of
the date first set forth above
AUSTIN VENTURES III-A, L.P.
By AV Partners III, L.P.
Its General Partner
By: /s/ Blaine F. Wesner
-------------------------------------
Authorized Signatory
AUSTIN VENTURES III-B, LP.
By AV Partners III, L.P.
Its General Partner
By: /s/ Blaine F. Wesner
-------------------------------------
Authorized Signatory
HELLER FINANCIAL, INC.
By: /s/ Timothy P. Costello
-------------------------------------
Senior Vice President
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