Exhibit 10.12
CO-SALE AGREEMENT
This Co-Sale Agreement (the "Agreement") is entered into as of May 17,
2002, by and between TLL Partners, L.L.C., a Delaware limited liability company
("TLL Partners"), and GM Holdings, LLC, a Tennessee limited liability company
("Holdings"). Holdings and, except as otherwise expressly provided herein, its
successors and assigns, are sometimes referred to herein individually as an
"Investor" and collectively as the "Investors".
RECITALS
WHEREAS, TLL Partners, Holdings and Teletouch Communications, Inc. (the
"Company") propose to enter into a Restructuring Agreement dated as of the date
hereof (the "Restructuring Agreement"); and
WHEREAS, prior to the execution and delivery of this Agreement by any party
hereto, TLL Partners has purchased: (a) from CIVC Partners I, a Delaware
partnership, 295,649 shares of Common Stock and (b) from Continental Illinois
Venture Corporation, a Delaware corporation, warrants to purchase 2,660,840
shares of Common Stock ; and
WHEREAS, as of the date hereof, each party "beneficially owns" (as such
term is defined in Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended) and each Stockholder is entitled to dispose of (or to direct
the disposition of) and to vote (or to direct the voting of) (a) the number of
shares of common stock, par value $0.001 per share of the Company (the "Common
Stock") and (b) the number of shares of Common Stock that may be issued upon
exercise of any options, warrants and other rights of any kind that are then
exercisable, and all shares of Common Stock that may be issued upon conversion
or exchange of any convertible securities which are by their terms then
convertible into or exchangeable for Common Stock, including without limitation,
warrants to purchase common stock and preferred stock, in each case set forth
opposite the party's name on Annex A hereto, as such shares may be adjusted by
stock dividend, stock split, recapitalization, combination, merger,
consolidation, reorganization or other change in the capital structure of the
Company affecting the Common Stock (such shares of Common Stock, together with
any other shares of Common Stock the voting power over which is acquired by TLL
Partners or the Investors during the period from and including the date hereof
through and including the date on which this Agreement is terminated in
accordance with its terms, together with the underlying securities which are
convertible into such shares of Common Stock, are collectively referred to
herein as the "Subject Shares"); and
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WHEREAS, as a condition to the willingness of Holdings to enter into the
Restructuring Agreement, and as an inducement and in consideration therefor,
Holdings has required that TLL Partners agree, and TLL Partners has agreed, to
enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Rights of Co-Sale.
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1.1 Investors' Rights. Each time TLL Partners (the "Transferring Investor")
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proposes to sell, transfer or otherwise dispose of Subject Shares other than
to any wholly owned subsidiary or parent of, or to any corporation that is,
within the meaning of the Securities Act of 1933, as amended (the "Act"),
controlling, controlled by or under common control with, such Transferring
Investor, in the case of a limited liability company, to its members, or
gift transfers to its family members or one or more trusts (each, a
"Permitted Transferee") for the benefit of the foregoing (in each case a
"Transfer"), each Investor (referred to herein individually as an "Other
Investor" and collectively as the "Other Investors") shall have a right of
co-sale with respect to the sale of Subject Shares owned by such Other
Investor in accordance with the provisions of this Section 1.
Notwithstanding anything contained herein to the contrary, the parties
hereto expressly agree that provisions of this Agreement shall continue and
be binding against TLL Partners and any Permitted Transferee holding Subject
Shares.
1.2 Notice of Proposed Transfer. Before the Transferring Investor may Transfer
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its Subject Shares, the Transferring Investor shall provide notice (a
"Transferring Investor Notice") to the Other Investor stating: (a) its bona
fide intention to Transfer such Subject Shares: (b) the number of Subject
Shares proposed to be transferred (the "Offered Stock"); (c) the name of
each proposed transferee; and (d) the cash price or other consideration
(including the cash equivalent value of any non-cash consideration) per
share for which the Transferring Investor proposes to transfer the Offered
Stock (the "Offered Price").
1.3 Right of Co-Sale.
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(a) Exercise of Right of Co-Sale. The Other Investors shall have the right to
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participate in the Transferring Investor's transfer of the Offered Stock to
the proposed transferee pursuant to the specified terms and conditions of
the Transfer as set forth in the Transferring Investor Notice and in
accordance with the terms and conditions of the Transfer as set forth in
this Section 1.3 (the "Right of Co-Sale"). For purposes of the preceding
sentence, the participation of the Other Investor shall be on the same terms
as the Transferring Investor. To the extent an Other Investor exercises his,
her or its Right of Co-Sale, the number of shares of Offered Stock that the
Transferring Investor may transfer pursuant to the Transferring Investor
Notice shall be correspondingly reduced. Each Other Investor shall be
responsible for its pro rata share of the reasonable fees and expenses of
the Transferring Investor relating to the negotiation of the transaction.
The Right of Co-Sale of the Other Investors shall be subject to the
following terms and conditions:
(i) Each Other Investor may transfer all or any part of such Other Investor's
Subject Shares that is not in excess of the number obtained by multiplying
the aggregate number of shares of Subject Shares constituting the Offered
Stock by a fraction (A) the numerator of which is the
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number of shares of such Other Investor's Subject Shares, and (B) the
denominator of which is the total number of Subject Shares then owned by
the Transferring Investor, the Other Investors and investors, if any, who
are parties to any other similar co-sale agreement with the Transferring
Investor which is in existence at the time of the Transfer.
(ii) By written notice received by TLL Partners within fifteen (15) calendar
days of the mailing of the Transferring Investor Notice by the Transferring
Investor to the Other Investors, each Other Investor may effect its
election to participate in the transfer subject to this Section 1.3. Such
written notice shall contain the Other Investor's election to participate
in the Transfer of the Offered Stock setting forth the number and type of
shares that the Other Investor elects to include in the Transfer,
accompanied by one or more certificates or other documentation, properly
endorsed for transfer, representing those shares (if the Other Investor so
elects, then such Other Investor shall be referred to in this Agreement as
a "Participant").
(b) Delivery of Stock Certificates and Proceeds. Upon the closing of the
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Transfer subject to this Section 1.3, the stock certificate(s) or other
documentation representing the Subject Shares to be transferred shall be
transferred and delivered to the investor or transferee pursuant to the
terms and conditions specified in the Transferring Investor Notice, and
there shall be promptly thereafter remitted to the Participant that portion
of the proceeds from the Transfer to which it is entitled by reason of
participating in the Transfer.
1.4 Offering Investor's Right to Transfer. The Transferring Investor may
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transfer that portion of the Offered Stock permitted to be transferred by
the Transferring Investor, after application of the Right of Co-Sale
contained in Section 1.3 hereof, to any person named as an investor or
other transferee in the Transferring Investor Notice, at the Offered Price,
provided that the transfer: (a) is consummated within ninety (90) days
after the date of the Transferring Investor Notice; and (b) is in
accordance with all the terms of this Agreement. If the Offered Stock is
transferred in accordance with the terms and conditions of this Agreement,
then the transferee(s) of the Offered Stock shall thereafter hold the
Offered Stock free of this Agreement and the Right of Co-Sale set forth
herein. If the Offered Stock is not so transferred during such ninety (90)
day period, then the Transferring Investor shall not transfer any of the
Offered Stock without complying again in full with the provisions of this
Agreement.
1.5 Effect of Prohibited Transfer. In the event TLL Partners should sell any
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Subject Shares in contravention of the co-sale rights of the Investors
under this Agreement (TLL Partners in such capacity a "Violating Investor";
such a transaction a "Prohibited Transfer"), the Investors, in addition to
all other remedies available at law, in equity or hereunder, shall have the
put option provided below, and the Violating Investor shall be bound by the
applicable provisions of that option. Any attempt by a Violating Investor
to transfer Subject Shares in violation of Section 1 hereof shall be void.
1.6 Put Option. Notwithstanding Section 1.5 hereof, in the event of a
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Prohibited Transfer, the other Investor shall have the right to sell to the
Violating Investor the type and number of shares of Subject Shares equal to
the number of shares such Investor would have been entitled to sell to the
Violating Investor or transferee under Section 1.3 hereof had the
Prohibited Transfer been effected pursuant to and in compliance with the
terms hereof. This sale shall be made on the following terms and
conditions:
(a) The price per share at which the Subject Shares are to be sold to the
Violating Investor shall be equal to the price per share (on an as-converted
basis) paid by the transferee to the Violating Investor in the Prohibited
Transfer. The Violating Investor shall also reimburse the Investors for any
and all fees and expenses, including legal fees and expenses, incurred
pursuant to the exercise or the attempted exercise of the Investors' rights
under Section 1.
(b) Within ninety (90) days after the later of the dates on which the Investors:
(i) receive notice of the Prohibited Transfer; or (ii) otherwise become
aware of the Prohibited Transfer, the Investors, if exercising the option
created hereby, shall deliver to the Violating Investor the certificate or
certificates representing shares to be sold, each certificate to be properly
endorsed for transfer.
(c) The Violating Investor shall, upon receipt of the certificate or
certificates for the shares to be sold by the Investors pursuant to this
Section 1.6, pay the aggregate purchase price therefor and the amount of
reimbursable fees and expenses, as specified in Section 1.6(a), in cash or
by other means acceptable to the other Investor.
2. Exceptions, Termination.
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2.1 Exceptions. Notwithstanding anything in this Agreement to the contrary, the
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Right of Co-Sale set forth in this Agreement shall not apply to any Transfer
or series of Transfers of Subject Shares by TLL Partners: (a) pursuant to a
reorganization or merger of the Company with or into any other corporation
or entity, or a sale of all or substantially all of the assets of the
Company, in which the Investors and TLL Partners in the aggregate own
immediately after such transaction less than 5% of the voting equity
securities of the surviving entity; or (b) pursuant to the winding up and
dissolution of the Company.
2.2 Termination of Rights. The Right of Co-Sale set forth herein shall terminate
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the date on which this Agreement is terminated by a written agreement to
such effect executed by TLL Partners and the Investors.
3. Restrictive Legend and Stop-Transfer Orders.
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3.1 Legend. TLL Partners shall cause the legend set forth below, or a legend
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substantially equivalent thereto, to be placed upon any certificate(s)
evidencing ownership of its Subject Shares:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN A AGREEMENT
ENTERED INTO BY THE ORIGINAL HOLDER OF THESE SHARES, AND
OTHER PERSONS, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY. SUCH
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RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES
UNDER SOME CIRCUMSTANCES.
3.2 Stop Transfer Instructions. TLL Partners agrees, to ensure compliance with
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the restrictions referred to herein, that the Company may issue appropriate
"stop transfer" certificates or instructions with respect to the Subject
Shares and that, the Company may make appropriate notations to the same
effect in its records.
4. Miscellaneous Provisions.
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4.1 Notices. All notices, requests, demands and other communications which are
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required to be or may be given under this Agreement to any party by any of
the other parties shall be in writing and shall be deemed to have been duly
given when: (a) delivered in person; (b) the day following dispatch by a
nationally recognized overnight courier service (such as Federal Express or
UPS, etc.) for next day delivery; (c) five (5) days after dispatch by
certified or registered first class mail, postage prepaid, return receipt
requested, to the party to whom the same is so given or made; or (d) in the
case of notice sent by telecopy, on the date of dispatch, provided that the
report generated by the sender's telecopy machine shows that all pages of
such notice or other communication were properly transmitted to each
recipient's telecopy number. Any notice or other communication given
hereunder shall be addressed to TLL Partners, at its principal offices as
set forth below or to the Investors at their addresses indicated on the
signature page hereto; or to such other address as the parties hereto may
designate by delivering notice thereof to such the other parties in
accordance herewith.
4.2 Severability. If one or more of the provisions of this Agreement should, for
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any reason, be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provisions of this Agreement, and such invalid, illegal or unenforceable
provision shall be enforced to the extent permissible.
4.3 Amendment. Any amendment, modification or waiver of this Agreement shall be
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effective only with the written consent of TLL Partners and Investors
holding more than seventy five percent (75%) of the then outstanding Subject
Shares of all Investors (calculated on a fully diluted basis as if such
Subject Shares had been converted into Common Stock); provided, however,
that any person may waive, reduce or release (in whole or in part) any of
its rights hereunder without the consent of any other parties hereto. Any
waiver by a party of its rights hereunder shall be effective only if
evidenced by a written instrument executed by a duly authorized
representative of such party.
4.4 Governing Law. This Agreement shall be governed by and construed in
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accordance with the internal laws (and not the laws pertaining to choice of
conflict of laws) of the State of Delaware.
4.5 Expenses. If any action at law or in equity is necessary to enforce or
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interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
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4.6 Counterparts. This Agreement may be executed in any number of counterparts,
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each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
4.7 Facsimile Signatures. Any signature page delivered by a fax machine or
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telecopy machine shall be binding to the same extent as an original
signature page, with regard to any agreement subject to the terms hereof or
any amendment thereto. Any party who delivers such a signature page agrees
to later deliver an original counterpart to any party which requests it.
4.8 Binding Effect; Assignment. This Agreement shall be binding upon the parties
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hereto and their respective successors and assigns. Except as expressly
provided in this Agreement, this Agreement shall not be construed so as to
confer any right or benefit upon any person other than the parties to this
Agreement, and their respective successors and assigns. The parties hereto
recognize that Holdings intends to transfer to its members its Subject
Shares or the right to receive such Subject Shares and it is expressly
acknowledged that, from and after such transfer, such members shall be
"Investors" under this Agreement. Upon any assignment as contemplated in
this paragraph, the assignor shall provide written notice of such assignment
to TLL Partners.
[Signature pages follow.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
TLL PARTNERS, L.L.C.
By: /s/ Xxxxxx X. XxXxxxxx
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Name: Xxxxxx X. XxXxxxxx
Title: President
GM HOLDINGS, LLC
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: Manager
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ANNEX A
LIST OF STOCKHOLDERS AND OWNERSHIP
OF SUBJECT SHARES
(as of May 17, 2002)
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Stockholders Address Common Series A Series B Series B
Stock Preferred Preferred Warrants
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TLL TLL Partners, L.L.C. 2,956,509(1) 13,200 36,019 324,173
Partners, 000 Xxxxx Xxxxxxx
X.X.X. Xxxxx 000
Xxxxx, Xxxxx 00000
Attn: Xxxxxx X. XxXxxxxx
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GM GM Holdings, LLC 405,276 1,800 49,375 -0-
Holdings, c/o Xxxx X. Xxxxxxx
LLC Aintree Capital
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Telecopier: 000-000-0000
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(1) Includes warrants to purchase 2,660,860 shares of Common Stock.
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