Exhibit 10.21
SECOND AMENDMENT AGREEMENT
This Second Amendment Agreement (the "Agreement") is executed and entered
into on May 19, 1997 by and among Monitronics International, Inc., a Texas
corporation (the "Company"), and the holders (the "Security Holders") of certain
obligations and securities of the Company whose names appear on the signature
pages to this Agreement.
RECITALS:
WHEREAS, the Company and certain of the Security Holders are parties to the
following agreements (collectively, the "Existing Agreements"): (i) Preferred
Stock Subordination Agreement, dated as of May 10, 1996, as amended by that
certain Amendment Agreement dated as of November 22, 1996 by and among the
Company and certain of the Security Holders (the "First Amendment Agreement")
(as so amended, the "Preferred Subordination Agreement"), by and among the
Company, Capital Resource Lenders II, L.P., a Delaware limited partnership ("CRL
II"), Austin Ventures Ill-A, L.P., a Delaware limited partnership ("Austin
Ill-A"), and Austin Ventures Ill-B, L.P., a Delaware limited partnership
("Austin Ill-B" and together with Austin Ill-A "Austin Ventures"); (ii) Stock
Purchase Agreement, dated as of October 21, 1994, as amended by Amendment to
Stock Purchase Agreement, dated November 10, 1994, Amendment No. 2 to Stock
Purchase Agreement, dated May 10, 1996, and by the First Amendment Agreement (as
so amended, the "Stock Purchase Agreement"), by and among the Company and Austin
Ventures; (iii) Amended and Restated Shareholders Agreement, dated as of May 10,
1996, as amended by the First Amendment Agreement (as so amended, the
"Shareholders Agreement"), by and among the Company, Austin Ventures, CRL II,
James R. Hull ("Hull") and Robert N. Sherman ("Sherman"); (iv) Amended and
Restated Registration Agreement, dated as of May 10, 1996, as amended by the
First Amendment Agreement (as so amended, the "Registration Agreement"), among
the Company, CRL II and Austin Ventures; (v) Amended and Restated Co-Sale
Agreement, dated as of May 10, 1996, as amended by the First Amendment Agreement
(as so amended, the "Hull Co-Sale Agreement"), among the Company, CRL II, Austin
Ventures and Hull; (vi) Amended and Restated Co-Sale Agreement, dated May 10,
1996, as amended by the First Amendment Agreement (as so amended, the "Sherman
Co-Sale Agreement") among the Company, CRL II, Austin Ventures and Sherman; and
(vii) Amended and Restated Affiliate Registration Agreement, dated May 10, 1996,
as amended by the First Amendment Agreement (as so amended, the "Affiliate
Registration Agreement"), between the Company and Hull;
WHEREAS, the Company, CRL II and Austin Ventures have previously entered
into a Senior Subordinated Note and Warrant Purchase Agreement, dated as of May
10, 1996, as supplemented and modified by the Senior Subordinated Note and
Warrant Purchase Agreement dated as of November 22, 1996 (the "Original Note
Agreement"), pursuant to which the Company issued and sold to CRL II and Austin
Ventures (i) 12.0% Senior Subordinated Notes, due June 30, 2003, in the original
aggregate principal amount of$ 10,000,000 and (ii) Common Stock Purchase
Warrants for the purchase (subject to adjustment as provided therein) of an
aggregate of 467,201 shares of the Company's Class A Common Stock, $.0l par
value per share;
WHEREAS, as a supplement to the Original Note Agreement, the Company
desires to enter into a new Senior Subordinated Note and Warrant Purchase
Agreement dated as of the date
-2-
hereof (the "New Note and Warrant Agreement") with CRL II and Austin Ventures,
pursuant to which the Company will issue and sell to CRL 11(i) an additional
12.0% Senior Subordinated Note, due June 30, 2003, in the original aggregate
principal amount of $2,000,000 (the "Additional Note") and (ii) additional
Common Stock Purchase Warrants (the "Additional Warrants") for the purchase
(subject to adjustment as provided therein) of up to an aggregate of 102,556
shares (the "Additional Warrant Shares") of the Company's Class A Common Stock,
$.01 par value per share;
WHEREAS, the Company desires to enter into a Series B Preferred Stock and
Warrant Purchase Agreement dated as of the date hereof (the `Preferred Purchase
Agreement") with CRL II and Austin Ventures V, L.P. ("Austin V"), pursuant to
which the Company will issue and sell to CRL II and Austin V (i) an aggregate of
5,000,000 shares of the Company's Series B Preferred Stock, $.0l par value per
share (the "Series B Stock"), and (ii) Common Stock Purchase Warrants (the
"Preferred Warrants") for the purchase (subject to adjustment as provided
therein) of up to an aggregate of 961,700 shares of the Company's Class A Common
Stock, $.01 par value per share (the "Preferred Warrant Shares"); and
WHEREAS, as a result of the transactions contemplated by the New Note and
Warrant Agreement and the Preferred Purchase Agreement, the parties hereto
desire to amend the Existing Agreements.
NOW THEREFORE, in consideration of the premises and the agreements herein
contained, and intending to be bound hereby, the parties hereby agree as
follows:
1. Addition of Austin V as a party to certain of the Existing Agreements.
The parties to this Agreement hereby consent to and approve of the addition of
Austin V as a party to the Preferred Subordination Agreement, the Shareholders
Agreement, the Registration Agreement, the Hull Co-Sale Agreement and the
Sherman Co-Sale Agreement, and acknowledge and agree that Austin V shall be
bound by all of the terms and conditions of such agreements, as amended hereby
and as from time to time in effect, and that such terms and conditions shall
inure to the benefit of Austin V.
2. Amendments to Existing Agreements.
(a) That all references to the term "Notes" in the Preferred
Subordination Agreement and the Stock Purchase Agreement shall be deemed to
include the Additional Note (as such term is defined herein).
(b) That all references to the term "Warrants" in the Shareholders
Agreement, the Registration Agreement, the Hull Co-Sale Agreement, the Sherman
Co-Sale Agreement and the Affiliate Registration Agreement shall be deemed to
include the Additional Warrants and the Preferred Warrants (as such terms are
defined herein).
(c) That all references to the term "Mezzanine Warrants" in the Stock
Purchase Agreement shall be deemed to include the Additional Warrants and the
Preferred Warrants (as such terms are defined herein).
-3-
(d) That all references to the term "Warrant Shares" in the
Shareholders Agreement, the Registration Agreement, the Hull Co-Sale Agreement,
the Sherman Co-Sale Agreement and the Affiliate Registration Agreement shall be
deemed to include the Additional Warrant Shares and the Preferred Warrant Shares
(as such terms are defined herein).
(e) That all references to the term "Mezzanine Warrant Shares" in the
Stock Purchase Agreement shall be deemed to include the Additional Warrant
Shares and the Preferred Warrant Shares (as such terms are defined herein).
(f) That all references to the term "Note Agreement" in the Stock
Purchase Agreement, the Shareholders Agreement, the Registration Agreement, the
Hull Co-Sale Agreement, the Sherman Co-Sale Agreement and the Affiliate
Registration Agreement shall, as applicable, be deemed to include the New Note
and Warrant Agreement (as such term is defined herein).
(g) That all references to the term "Purchase Agreement" in the
Preferred Subordination Agreement shall, as applicable, be deemed to include the
New Note and Warrant Agreement (as such term is defined herein).
(h) That all references to the term "Purchase Agreement" in the
Shareholders Agreement, the Registration Agreement, the Hull Co-Sale Agreement,
the Sherman Co-Sale Agreement and the Affiliate Registration Agreement shall be
deemed to mean and include the Stock Purchase Agreement as amended by and
through the date hereof (as such term is defined herein).
(i) That all references to the term "Preferred Stock" in the Preferred
Stock Subordination Agreement and the Shareholders Agreement shall be deemed to
include the Series B Stock (as such term is defined herein); provided, however,
that the term "Preferred Stock" in the Shareholders Agreement shall not be
deemed to include the Series B Stock (as such term is defined herein) for
purposes of the Recitals and part 3 of the Shareholders Agreement.
(j) That all references to the terms "Purchasers" and "Austin
Ventures" in the Shareholders Agreement shall be deemed to include Austin V (as
such term is defined herein); provided, however, that the term "Purchasers" in
the Shareholders Agreement shall not be deemed to include Austin V (as such term
is defined herein) for purposes of the Recitals ~f the Shareholders Agreement.
(k) That paragraph 4K of the Shareholders Agreement is hereby deleted
in its entirety and replaced with the following:
"4K. Exception for Pledge. The parties acknowledge that pursuant
to the terms of an Amended and Restated Pledge Agreement, dated as of
May _____, 1997. (the "Pledge Agreement"), by and between Austin
Ventures Ill-A, L.P., Austin Ventures Ill-B, L.P., Austin Ventures V,
L.P., Capital Resource Lenders II, L.P. and James R. Hull,
individually, Robert Sherman, individually, Michael Gregory,
individually, Michael Meyers, individually and Stephen Hedrick,
individually (collectively, the "Pledgors") and State Street Bank and
Trust Company (the "Secured Party"), CJBC Inc., Heller Financial, Inc.
and
-4-
BankBoston, N.A. (collectively, the "Lenders") certain securities of
the Company, as identified on Schedule I to the Pledge Agreement (the
"Pledged Securities"), have been pledged by the Pledgors to the
Secured Party for the benefit of the Lenders. The parties hereto
acknowledge and consent to such pledge of the Pledged Securities and,
notwithstanding any provision in this Agreement to the contrary,
hereby agree that any purchaser of such Pledged Securities, including
the Lenders, which acquire the Pledged Securities pursuant to the
terms of the Pledge Agreement shall take the Pledged Securities free
and clear of all terms of this Agreement and neither such persons nor
such Pledged Securities shall thereafter be subject to any term or
condition of this Agreement."
(l) That subparagraph 1(c) of the Registration Agreement is hereby
deleted in its entirety and replaced with the following:
"(c) Registrations on Forms S-2. S-3. Following its initial
public offering of securities under the Securities Act, the Company
shall use its commercially reasonable best efforts to qualify for
registration on Forms S-2 or S3 or any comparable or successor form or
forms. After the Company has qualified for the use of Forms S-2 or S-3
or any comparable or successor form or forms, in addition to the
rights contained in the paragraphs 1(a) and (b), each of (i) the
holders of at least 25% of the Underlying Common Stock and (ii) the
holders of at least 30% of the Common Stock issued and issuable upon
exercise of the Warrants shall have the right at any time and from
time to time to request registrations on Forms S-2 or S-3 or any
comparable or successor form or forms; provided, that the Company
shall not be obligated to effect more than two Registrations on Form
S-2 or S-3 or any comparable or successor form or forms during any
twelve-month period. Such requests shall be in writing and shall state
the number of shares of Underlying Common Stock or Warrant Shares, as
applicable, proposed to be disposed of and the intended method of
distribution of such shares by such holder or holders."
3. Miscellaneous.
(a) Effect. Except as amended hereby, the Existing Agreements shall
remain in full force and effect.
(b) Descriptive Headings. The descriptive headings in this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
(c) Governing Law. The construction, validity and interpretation of
this Agreement will be governed by and construed in accordance with the domestic
laws of the State of Texas without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas.
-5-
(d) Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and each of the parties hereto may execute this Agreement by signing
any such counterpart.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-6-
IN WITNESS WHEREOF, this Second Amendment Agreement has been executed by
the parties hereto as of the day and year first above set forth.
COMPANY:
MONITRONICS INTERNATIONAL, INC.
By: /s/ James R. Hull
---------------------------------
James R. Hull,
President
SECURITY HOLDERS:
AUSTIN VENTURES III-A, L.P.
By: AV Partners III, L.P.,
Its General Partner
By: /s/ Blaine F. Wesner
---------------------------------
Blaine F. Wesner,
Authorized Signatory
AUSTIN VENTURES III-B, L.P.
By: AV Partners III, L.P.,
Its General Partner
By: /s/ Blaine F. Wesner
---------------------------------
Blaine F. Wesner,
Authorized Signatory
AUSTIN VENTURES V, L.P.
By: AV Partners V, L.P.,
Its General Partner
By: /s/ Blaine F. Wesner
---------------------------------
Blaine F. Wesner,
General Partner
-7-
CAPITAL RESOURCE LENDERS II, L.P.
By Capital Resource Partners II, L.P.
Its General Partner
By: /s/ Fred C. Danforth
---------------------------------
General Partner
/s/ James R. Hull
-------------------------------------
James R. Hull
/s/ Robert N. Sherman
-------------------------------------
Robert N. Sherman