EXHIBIT 10.7
EXECUTION COPY
AMENDMENT TO SHAREHOLDERS' AGREEMENT
This Amendment to Shareholders' Agreement (the "Amendment"), dated as
of September 1, 1998, is entered into by and among Xxxx Telecom, Inc., a Florida
corporation ("Company"), CellStar Telecom, Inc., a Delaware corporation
("Investor"), Xxxxx Xxxx ("Xxxx") and Xxxxxxxxx X. Xxxxxx ("Xxxxxx" and together
with Xxxx, the "Individual Shareholders") and each future holder of Voting Stock
who executes the Shareholders' Agreement or a separate agreement to be bound by
the terms of the Shareholders' Agreement, as amended, and Xxxx Xxxx, the spouse
of Xxxx ("Xxxx Xxxx") (for purposes of Section 7 only of the Shareholders'
Agreement). Capitalized terms used but not defined herein shall have the
meanings given them in that certain Shareholders' Agreement, dated as of
November 4, 1997, by and among the parties hereto (the "Shareholders'
Agreement").
RECITALS
WHEREAS, pursuant to the provisions of that certain letter agreement
dated as of September 1, 1998, by and among the Investor, the Company, Xxxxx
Xxxx and Xxxxxxxxx X. Xxxxxx (the "Letter Agreement"), the Investor and the
Company have agreed to enter into this Amendment.
NOW THEREFORE, in consideration of the mutual covenants and agreements
of the parties made herein, and such other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound, hereby agree as follows:
1. Amendments. The Shareholders' Agreement is hereby amended as
follows:
(a) The first recital is hereby deleted in its entirety and replaced
with the following:
"WHEREAS, the Company has authorized 5,000,000 shares of Voting Common
Stock (the "Voting Stock"), 5,000,000 shares of Nonvoting Common Stock
(the "Nonvoting Stock"), 1,043 shares of Class A Convertible Preferred
Stock (the "A Convertible Preferred Stock"), and 17,988 shares of
Class B Convertible Preferred Stock (the "B Convertible Preferred
Stock")."
(b) The following new definition is added to Section 8 after the
definition of "Public Offering":
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"Securities. "Securities" means collectively, the Voting Stock,
the Nonvoting Stock, the A Convertible Preferred Stock, the B
Convertible Preferred Stock, any shares of Voting Stock, Nonvoting
Stock, A Convertible Preferred Stock and/or B Convertible Preferred
Stock acquired by the Investor upon the exercise of that certain
option dated September 1, 1998 granted to the Investor by the Company
(the "Option"), any shares of Voting Stock and/or Nonvoting Stock
issued pursuant to the conversion of the A Convertible Preferred Stock
and/or the B Convertible Preferred Stock acquired upon the exercise of
the Option, the Option, any shares of Voting Stock and Nonvoting Stock
acquired by the Investor upon the exercise of that certain warrant
dated September 1, 1998 granted to the Investor by the Company (the
"Warrant"), and the Warrant; provided, however, that for purposes of
Sections 4.1 and 4.2 of this Agreement, the references to Securities
shall only apply to the Voting Stock, the Nonvoting Stock and any
Voting Stock or Nonvoting Stock issued upon exercise of the Option or
the Warrant, and upon conversion of the A Convertible Preferred Stock
or the B Convertible Preferred Stock."
(c) The following new Section 3.2 is added:
"The Investor may make transfers of its Securities without complying
with the restrictions of Section 1 hereof to any corporation, limited liability
company, partnership, joint venture, limited partnership, trust or
unincorporated organization controlled by or under common control with the
Investor ("Affiliate"), provided that the transferee agrees in writing to be
bound by the terms and conditions of this Agreement. Upon any such transfer,
the transferee shall be deemed to be a Shareholder hereunder. The Investor
shall notify the Company in writing of any such transfer to an Affiliate."
(d) The following new subsections are hereby added to the end of
Section 6.1:
"(q) The recapitalization, consolidation, dissolution, reorganization
or merger of the Company; and
(r) Institution of any proceedings to adjudicate the Company bankrupt
or insolvent, including without limitation, the filing of any petition pursuant
to 11 U.S.C. 101 et seq. or approve the institution of bankruptcy or insolvency
proceedings against the Company or the filing of a petition or answer or consent
seeking or consenting to its reorganization or relief under any applicable
federal or state law relating to bankruptcy, or approval of the appointment of,
or taking possession by, a receiver, liquidator, assignee, trustee, sequestrator
or other similar official of the Company or any substantial part of its
property, or the making of an assignment for the benefit of creditors, or an
admission in writing of the Company's inability to pay its debts generally as
they become due."
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(e) The second sentence of Section 6.3 is hereby deleted in its
entirety and replaced with the following:
"The Shareholders acknowledge that the Board currently consists of
three members and agree that: (a) the fourth member of the Board shall
be appointed by the Investor, (b) the fifth member of the Board shall
be appointed by mutual agreement of the Shareholders, (c) the sixth
member of the Board shall be appointed by mutual agreement of Xxxx and
Xxxxxx, and (d) the seventh member of the Board shall be appointed by
the Investor; provided, however, that if the Investor exercises its
right to vote shares pursuant to that certain Irrevocable Proxy by and
between the Investor and [the Shareholders] dated September 1, 1998
(the "Irrevocable Proxy"), sub-clauses (a), (b) and (c) hereof shall
be of no force and effect."
(f) Section 6.4 is hereby deleted in its entirety and replaced with
the following:
"Except for the Irrevocable Proxy, no Shareholder shall give any proxy
or power of attorney that permits the holder thereof to vote in
her/his/its discretion on the election or removal of directors of the
Company or the size of the Board of Directors, unless such proxy or
power of attorney is expressly made subject to the provisions of
Section 6.3 of this Agreement. The Investor may give a proxy or power
of attorney to an officer, director or attorney of the Investor."
(g) Section 9.2 is hereby deleted in its entirety and replaced with
the following:
"9.2 Governing Law. This Agreement shall be deemed to be a contract
made under, and shall be construed in accordance with, the laws of the State of
Florida, without giving effect to conflicts of laws principles thereof."
2. Affirmation of Shareholders' Agreement. Except as amended hereby,
the Shareholders' Agreement remains in full force and effect in accordance with
its terms and conditions and is hereby ratified and affirmed for all purposes by
each of the parties.
3. Consent. The parties hereto hereby consent to all of the
transactions contemplated by the Letter Agreement, including without limitation,
(i) the issuance by the Company of the Options, the Warrants, the A Convertible
Preferred Stock, and the B Convertible Preferred Stock, (ii) the issuance by the
Company of Voting Stock and Nonvoting Stock upon exercise of the Option or the
Warrants, (iii) the issuance by the Company of Voting Stock and Nonvoting Stock
upon conversion of the A Convertible Preferred Stock and the B Convertible
Preferred Stock acquired upon exercise of the Option, (iv) the issuance of
Voting Stock upon the conversion of the A Convertible Preferred Stock, (v) the
issuance of Nonvoting Stock upon the conversion of the B
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Convertible Preferred Stock, (vi) the amendment to the Company's Articles of
Incorporation, (vii) the delivery of that certain Promissory Note dated
September 1, 1998 in favor of CellStar Inc., (viii) the granting of a security
interest in property of the Company as collateral to secure the Company's
obligation under the Note, (ix) the grant by the Company of a security interest
in all of the Company's accounts receivable, and (x) the financing of the
receivables by the Company, as more specifically described in the Letter
Agreement.
4. Miscellaneous.
(a) This Amendment may be executed in any number of counterparts,
each of which shall be deemed an original but all of which taken together shall
constitute one and the same agreement.
(b) This Amendment shall be governed by and construed in accordance
with the internal laws of the State of Florida, without reference to the
conflicts of law principles thereof.
(c) Any provision of this Amendment which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(d) The headings in this Amendment are for convenience of reference
only and shall not define or limit any of the terms or the provisions hereof.
(e) This Amendment 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 Amendment and the Letter Agreement, the conflict will be resolved
by giving the conflicting provision of this Amendment full force and effect.
[Signatures follow immediately on next page]
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IN WITNESS WHEREOF, the parties have hereunto duly affixed their
signatures as of the day and year first written above.
XXXX TELECOM, INC. CELLSTAR TELECOM, INC.
By: /s/ X.X. XXXXXX By: /s/ XXXXXXX X. XXXXXXX
------------------------------- -------------------------------
Name: X.X. Xxxxxx Name: Xxxxxxx X. Xxxxxxx
Title: President and CEO Title: U.S. Region President
/s/ X.X. XXXXXX /s/ XXXXX XXXX
----------------------------------- -----------------------------------
X.X. Xxxxxx Xxxxx Xxxx
For Purposes of Section 7 of the Shareholders' Agreement only:
/s/ XXXXX XXXX , Xxxxx Xxxx as Attorney-in-Fact for and
------------------------------- on behalf of
Xxxx Xxxx
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