EXHIBIT 10.9
EXECUTION COPY
NEITHER THIS WARRANT NOR THE SHARES OF VOTING COMMON STOCK OR NONVOTING COMMON
STOCK ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, NOR UNDER ANY STATE OR OTHER APPLICABLE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF (1) IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND THE RULES
AND REGULATIONS PROMULGATED THEREUNDER AND ANY APPLICABLE STATE SECURITIES LAWS
OR (2) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE ACT AND ANY
APPLICABLE STATE OR OTHER SECURITIES LAWS.
WARRANT
To Subscribe for and Purchase Voting Common Stock and Nonvoting Common Stock
of
▇▇▇▇ TELECOM, INC.
THIS CERTIFIES THAT, pursuant to the provisions of that certain Letter
Agreement (the "Letter Agreement") dated September 1, 1998 by and among CellStar
Telecom, Inc., a Delaware corporation ("CellStar"), ▇▇▇▇ Telecom, Inc., a
corporation organized and existing under the laws of the State of Florida (the
"Company"), ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ for value received, CELLSTAR with
its principal business office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
or its assigns, is entitled to subscribe for and purchase from the COMPANY with
its principal business office at ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, at the Exercise Price (as defined below) and during the Exercise Period
(as set forth in Section I below), the following fully paid and nonassessable
shares (the "Shares"): (i) 1,190 shares of the Company's voting common stock,
$.01 par value per share (the "Voting Common Stock"); and (ii) 25,242 shares of
the Company's nonvoting common stock, $.01 par value per share (the "Nonvoting
Common Stock," and together with the Voting Common Stock, the "Common Stock"),
subject to the terms, conditions and adjustments contained herein.
The warrant purchase price (subject to adjustment as set forth in Section
VI below) shall be in each case $0.10 per Share (the "Exercise Price").
This Warrant is subject to the following provisions, terms and conditions:
SECTION I. Term. This Warrant shall be exercisable by CellStar, in whole
or in part, at any time or from time to time, during the period commencing on
the date hereof through and including the fifth anniversary of the date hereof;
provided however, that this Warrant shall not be exercisable prior to the
exercise of the Options (the
"Option") granted pursuant to that certain Stock Option Agreement by and between
CellStar and the Company dated September 1, 1998 (the "Warrant Term").
SECTION II. Exercise of Warrant. No fractional shares of Common Stock
will be issued under this Warrant. The holder hereof may exercise this Warrant
by surrendering it (properly endorsed) at the offices of the Company set forth
above (or at such other location which the Company may designate by notice in
writing to the holder hereof at the address of such holder appearing on the
books of the Corporation), and by payment to the Company of the Exercise Price
in cash or by official bank or certified check in next day funds for each Share
of Common Stock being purchased. Alternatively, CellStar may specify in its
notice that it is crediting the payment of the Exercise Price first to accrued
interest and then to principal payable by the Company to CellStar, Ltd. under
that certain Promissory Note dated September 1, 1998 executed by the Company in
favor of CellStar, Ltd. or to accounts receivable owed by the Company to
CellStar, Ltd. rather than paying the Exercise Price in cash or by company
check. In the event of any exercise of the rights represented by this Warrant,
certificates for the Shares of Common Stock so purchased, registered in the name
of the person entitled to receive the same, shall be delivered to the holder
hereof within a reasonable time, not exceeding five business days after the
rights represented by this Warrant shall have been so exercised; and, unless
this Warrant has expired, a new Warrant representing the number of Shares, if
any, with respect to which this Warrant shall not then have been exercised shall
also be issued to the holder hereof within such time. The person in whose name
any certificates for Shares of Common Stock is issued upon exercise of this
Warrant shall for all purposes be deemed to have become the holder of record of
such Shares on the date on which this Warrant was surrendered and payment of the
Exercise Price and any applicable taxes was made, irrespective of the date of
delivery of such certificates, except that, if the date of such surrender and
payment is a date when the stock transfer books of the Corporation are closed,
such person shall be deemed to have become the holder of record of such Shares
at the close of business on the next succeeding date on which the stock transfer
books are open. Upon the exercise of this Warrant, each certificate issued
representing the Shares of Common Stock underlying this Warrant shall bear a
transfer legend to the same effect as set forth above if in the reasonable
opinion of counsel to the Company such legend is legally required or advisable.
Upon the closing of the sale of shares of Voting Common Stock, at a price
of at least $105.0916925 per share (subject to appropriate adjustment for stock
splits, stock dividends, combinations and other similar recapitalizations
affecting such shares) in a public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, that has
been effected with the consent of CellStar, which consent shall be provided by
CellStar in good faith (subject to acting in the best interests of the
shareholders of CellStar Corporation), a new Warrant representing a number of
shares of Voting Common Stock equal to the number of Shares of, if any, with
respect to which this Warrant shall not then have been exercised shall be issued
to the holder hereof
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SECTION III. Covenants as to Common Stock. The Company covenants and
agrees that it shall at all times reserve and keep available out of its
authorized and unissued Common Stock solely for the purpose of providing for the
exercise of this Warrant, such number of shares of Common Stock as shall, from
time to time, be sufficient therefor. The Company covenants that all Shares of
Common Stock issuable upon exercise of this Warrant, upon receipt by the Company
of the full Exercise Price therefor, shall be validly issued, fully paid, and
nonassessable, without any personal liability attaching to the ownership
thereof, and will not be issued in violation of any preemptive rights of
stockholders, optionholders, warrantholders and any other persons and the holder
hereof will receive good title to the Shares purchased by it, free and clear of
all liens, security interests, claims, pledges, charges, stockholders'
agreements, voting trusts or encumbrances of any kind.
SECTION IV. No Stockholder Rights. This Warrant shall not entitle the
holder hereof to any voting rights or other rights as a shareholder of the
Company.
SECTION V. Transferability of Warrant and the Shares. Subject to
compliance with applicable federal, state and foreign securities laws and with
the terms of this Warrant, including, without limitation, the restrictive legend
set forth on the first page hereof, this Warrant and the Shares are
transferable, in whole or in part, by the holder hereof only to any of
Cellstar's Affiliates, including without limitation CellStar, Ltd., upon written
notice to the Company at the agency or office of the Company referred to above,
in person or by duly authorized attorney, upon surrender of this Warrant
properly endorsed. "Affiliate" shall mean any corporation, limited liability
company, partnership, joint venture, limited partnership, trust or
unincorporated organization directly or indirectly controlling or controlled by
or under direct or indirect common control with CellStar.
SECTION VI. Adjustment of Exercise Price and Number of Shares. The
Exercise Price applicable to Shares of Voting Common Stock and to Shares of
Nonvoting Common Stock shall each, from and after the date of issuance of this
Warrant, be subject to adjustment from time to time as hereinafter provided.
Upon each adjustment of the applicable Exercise Price, the holder of this
Warrant shall thereafter be entitled to purchase, at the applicable Exercise
Price resulting from such adjustment, the number of shares of Voting Common
Stock and Nonvoting Common Stock, as the case may be, obtained by multiplying
the applicable Exercise Price in effect immediately prior to such adjustment by
the number of shares of Voting Common Stock or Nonvoting Common Stock, as the
case may be, purchasable pursuant hereto immediately prior to such adjustment
and dividing the product thereof by the applicable Exercise Price resulting from
such adjustment.
(a) Except (i) in the case of any shares of Voting Common Stock issued as
a dividend or other distribution payable in respect of any shares of Voting
Common Stock, or Nonvoting Common Stock issued as a dividend or other
distribution payable in respect of any shares of Nonvoting Common Stock or (ii)
upon the exercise of a Convertible Security (as hereinafter defined), in the
event the Company shall at any time issue or sell
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any shares of Voting Common Stock, Nonvoting Common Stock or any Convertible
Securities without consideration or for a consideration per share, or having an
exercise price or conversion price per share of the Voting Common Stock or the
Nonvoting Common Stock, as the case may be, less than the applicable Exercise
Price in effect immediately prior to the time of such issue or sale, the
Exercise Price per share of Voting Common Stock and the Exercise Price per share
of Nonvoting Common Stock shall each be reduced concurrently with such issue or
sale, to an amount calculated by:
(A) dividing a sum equal to (1) the total number of shares of Common
Stock (as hereinafter defined for purposes of this Section VI(a))
outstanding at the date of this Warrant, multiplied by the applicable
Exercise Price at the date of adjustment, plus (2) the aggregate of
the amounts of all consideration received and/or to be received by
the Company upon the issuance of Additional Shares of Common Stock,
by
(B) the sum of (1) the total number of shares of Common Stock outstanding
at the date of this Warrant, and (2) the number of Additional Shares
of Common Stock which shall have been issued.
For purposes of this Section VI(a), "Common Stock" shall refer (i) only to the
Voting Common Stock when calculating the adjustment to the Exercise Price per
share of the Voting Common Stock purchasable pursuant hereto, and (ii) only to
the Nonvoting Common Stock when calculating the adjustment to the Exercise Price
per share of the Nonvoting Common Stock purchasable pursuant hereto. "Additional
Shares of Common Stock" shall mean any and all shares of Common Stock issued or
sold by the Company subsequent to the date of this Warrant, and shall include
the maximum number of shares of Common Stock issuable upon the conversion,
exchange or exercise of any Convertible Securities issued or sold by the Company
subsequent to the date of this Warrant. A "Convertible Security" shall refer to
any options, rights or other obligations or shares of capital stock of the
Company that are convertible into or exercisable or exchangeable for Common
Stock.
(b) (i) In case the Company shall at any time subdivide its outstanding
shares of Voting Common Stock into a greater number of shares or issue a
dividend or distribution payable in shares of Voting Common Stock, the
applicable Exercise Price in effect immediately prior to such subdivision shall
be reduced to a price determined by dividing (x) the number of shares of Voting
Common Stock outstanding immediately prior to such subdivision or distribution,
multiplied by the applicable Exercise Price per share in effect immediately
prior to such subdivision or distribution by (y) the number of shares of Voting
Common Stock outstanding immediately after such subdivision or distribution.
(ii) In case the Company shall at any time subdivide its outstanding
shares of Nonvoting Common Stock into a greater number of shares or issue a
dividend or distribution payable in shares of Nonvoting Common Stock, the
applicable Exercise Price in effect immediately prior to such subdivision shall
be reduced to a price determined by
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dividing (x) the number of shares of Nonvoting Common Stock outstanding
immediately prior to such subdivision or distribution, multiplied by the
applicable Exercise Price per share in effect immediately prior to such
subdivision or distribution by (y) the number of shares of Nonvoting Common
Stock outstanding immediately after such subdivision or distribution.
(c) (i) In case the Company shall at any time combine its outstanding
shares of Voting Common Stock into a lesser number of shares of Voting Common
Stock, the applicable Exercise Price in effect immediately prior to such
combination shall be increased to a price determined by dividing (x) the number
of shares of Voting Common Stock outstanding immediately prior to such
combination, multiplied by the applicable Exercise Price per share in effect
immediately prior to such combination by (y) the number of shares of Voting
Common Stock outstanding immediately after such combination.
(ii) In case the Company shall at any time combine its outstanding
shares of Nonvoting Common Stock into a lesser number of shares of Nonvoting
Common Stock, the applicable Exercise Price in effect immediately prior to such
combination shall be increased to a price determined by dividing (i) the number
of shares of Nonvoting Common Stock outstanding immediately prior to such
combination, multiplied by the applicable Exercise Price per share in effect
immediately prior to such combination by (ii) the number of shares of Nonvoting
Common Stock outstanding immediately after such combination.
(d) If any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of Voting Common Stock
or Nonvoting Common Stock, shall be entitled to receive stock, securities or
assets with respect to or in exchange for Voting Common Stock or Nonvoting
Common Stock, then, lawful and adequate provision shall be made whereby the
holder hereof shall thereafter have the right to purchase and receive, upon the
basis and upon the terms and conditions specified in this Warrant and in lieu of
the shares of the Voting Common Stock or Nonvoting Common Stock immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby, such shares of stock, securities or assets as may be issued
or payable with respect to or in exchange for a number of outstanding shares of
such Voting Common Stock or Nonvoting Common Stock, as the case may be, equal to
the number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby had such
reorganization, reclassification, consolidation, merger or sale not taken place,
and in any such case appropriate provision shall be made with respect to the
rights and interests of the holder of this Warrant to the end that the
provisions hereof (including, without limitation, provisions for adjustments of
the applicable Exercise Price) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise hereof.
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(e) Upon any adjustment of the applicable Exercise Price, then and in
each such case the Company shall give written notice thereof, by first-class
mail, postage prepaid, addressed to the registered holder of this Warrant in the
manner provided in Section IX(e), which notice shall state the applicable
Exercise Price resulting from such adjustment setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is based.
The Company shall, within two business days of CellStar's request therefor,
provide to CellStar access to all books, records and other information
reasonably necessary for CellStar to confirm the calculation of any adjustment
of the applicable Exercise Price.
SECTION VII. Lost, Stolen, Mutilated or Destroyed Warrant. If this
Warrant is lost, stolen, mutilated or destroyed, the Company shall, upon receipt
of an affidavit from CellStar regarding the loss, theft, mutilation or
destruction thereof, issue a new Warrant of like denomination and tenor as the
Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall
constitute an original contractual obligation of the Company whether or not the
allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time
enforceable by anyone.
SECTION VIII. Investment Purpose. If the Company in its good faith
discretion determines that as a matter of law such procedure is or may be
desirable, it may require a holder of this Warrant, upon any acquisition of
Voting Common Stock or Nonvoting Common Stock pursuant to the exercise of this
Warrant and as a condition to the Company's obligation to deliver certificates
representing such shares, to execute and deliver to the Company a written
statement representing and warranting that such holder's acquisition of shares
of Voting Common Stock or Nonvoting Common Stock pursuant to the exercise hereof
shall be for such person's own account, for investment and not with a view to
the resale or distribution thereof and that any subsequent offer for sale or
sale of any such shares shall be made either pursuant to (a) a Registration
Statement on an appropriate form under the Securities Act of 1933, as amended
(the "Securities Act"), which Registration Statement has become effective and is
current with respect to the shares being offered and sold, or (b) a specific
exemption from the registration requirements of the Securities Act. The Company
may endorse an appropriate legend referring to the foregoing restriction upon
the certificate or certificates representing any shares of Voting Common Stock
and Nonvoting Common Stock issued to the holder pursuant to the exercise hereof.
SECTION IX. Miscellaneous.
(a) The parties hereto acknowledge and agree that this Warrant issued
hereunder is equivalent, in substance, to stock options. The parties also
acknowledge and agree that (i) the aggregate fair market value of this Warrant,
together with the aggregate fair market value of the Option, each calculated as
of the date hereof, does not exceed $1,000, and (ii) the fair market value of
this Warrant and the Option substantially depends upon the financial success of
the Company, which success is contingent upon the Company's obtaining additional
debt or equity financing.
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(b) Neither this Warrant nor any term hereof may be changed, waived,
discharged, or terminated except by a written instrument executed by the Company
and the holder hereof.
(c) This Warrant shall be governed and interpreted and enforced in
accordance with the internal laws of the State of Florida, without regard to
principles of conflicts of laws thereof.
(d) Each provision of this Warrant shall be interpreted in such a manner
as to be effective, valid and enforceable under applicable law, but if any
provision of this Warrant is held to be invalid, illegal or unenforceable under
any applicable law or rule in any jurisdiction, such provision will be
ineffective only to the extent of such invalidity, illegality or
unenforceability in such jurisdiction, without invalidating the remainder of
this Warrant in such jurisdiction or any provision hereof in any other
jurisdiction.
(e) All notices, requests, consents and other communications hereunder
shall be in writing and shall be delivered in person or by registered or
certified mail, return receipt requested, postage and fees prepaid, first class
mail to: (i) The Company at ▇▇▇▇ Telecom, Inc., ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention: President, and (ii) CellStar Telecom, Inc. at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel, with
a copy to Steel ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇.
(f) This Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors and assigns of the Company and the
holder hereof.
(g) If the Company or the holder hereof shall commence any action or
proceeding against the other in order to enforce the provisions hereof, or to
recover damages as the result of the alleged breach of any of the provisions
hereof, the prevailing party therein shall be entitled to recover all reasonable
costs incurred in connection therewith, including, but not limited to,
reasonable attorneys' fees and expenses, whether at the trial or appellate
level.
(h) This Warrant may be exchanged, at the option of the holder hereof,
for another Warrant, or other Warrants of different denominations, of like tenor
and representing in the aggregate the right to purchase a like number of Shares,
or portions thereof, upon surrender to the Company or its duly authorized agent.
(i) The issuance of any Shares or other securities upon the exercise or
conversion of this Warrant, and the delivery of certificates or other
instruments representing such Shares or other securities, shall be made without
charge to the holder for any tax or other charge in respect of such issuance.
(j) This Warrant and the Letter Agreement are to be construed so as to be
consistent and not in conflict, but should a conflict nonetheless arise between
this
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Warrant and the Letter Agreement, the conflict will be resolved by giving
the conflicting provisions of this Warrant full force and effect.
[Signatures follow immediately on next page]
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IN WITNESS WHEREOF, ▇▇▇▇ TELECOM, INC., has caused this Warrant to be
executed by its duly authorized officer as of September 1, 1998.
▇▇▇▇ TELECOM, INC.
By: /s/ ▇.▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇.▇. ▇▇▇▇▇▇
Title: President and CEO
Accepted and Agreed:
CELLSTAR TELECOM, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: U.S. Region President
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FORM OF ASSIGNMENT
[To be signed only upon transfer of Warrant]
For value received, the undersigned hereby sells, assigns and transfers
unto _____________________, the rights represented by the within Warrant to
purchase shares of [Voting Common Stock][Nonvoting Common Stock], $.01 par
value, of ▇▇▇▇ TELECOM, INC., to which the within Warrant relates, and appoints
_______________________ attorney to transfer such right on the books of ▇▇▇▇
TELECOM, INC. with full power of substitution in the premises.
Date:
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(Signature)
----------------------------------
(Address)
Signed in the presence of:
---------------------------------
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FORM OF SUBSCRIPTION
[To be signed only upon transfer of Warrant]
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, ___________ shares of [Voting Common Stock][Nonvoting
Common Stock], $.01 par value, of ▇▇▇▇ TELECOM, INC. and herewith tenders
payment of $________________________ in full payment of the purchase price for
such shares or [hereby notifies ▇▇▇▇ Telecom, Inc. that it is crediting
$________ against [that certain Promissory Note dated September 1, 1998 executed
by the Company in favor of CellStar, Ltd.] or [the accounts receivable owed to
CellStar, Ltd. represented by Invoice No. _______] in full payment for the
purchase price for such shares], and requests that the certificates for such
shares be issued in the name of, and be delivered to
___________________________, whose address is
________________________________________________.
Date:
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(Signature)
----------------------------------
(Address)
Signed in the presence of:
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